economy, and necessarily a like cessation of production, and resulted in the unemployment of 8,300,000 people.

When you do not produce, you do not employ. It necessitated a going down of "carloadings," railroad revenue, State revenue, city revenue, United States revenue, and of individual and corporate incomes; and of course interfered with the "balancing of the budget." The effect was that the people of this country lost, in what they thought they had, somewhere around $150,000,000,000; and yet, strangely enough, all of our lands, our forests, our fisheries, our factories, our skilled workmen, our industries, our intelligent people, are all here. Only one thing has happened: The stability of our credit system has been smashed by the operations on the New York Stock Market, entailing every economic evil.

Until you control the power to pile up billions of stock-market loans, subject to call in 24 hours, you will never have permanent stability in the purchasing power of the dollar or in the value of commodities or of human employment. Here is the weak spot. Here must be an adequate remedy. I urge you to give it attention. I beg you to study the tables and charts submitted herewith.

Gentlemen, to restore the price level, as this bill proposes to do, is a matter of supreme importance. Nothing could be more important. We are going to have difficulty in doing that. To get money out in circulation, although you provide a way, is not so easily done.

My good friend, Mr. John Simpson, gave you a very quick way to do it, and a very practical way, if it were not for well-known human weaknesses of Government. The remedy is as simple and easy as taking a drink of strong liquor; but there is great danger of wanting another drink soon afterwards, and then another, and your friends must take you to the hospital for convalescence. If we had dependable self-control the remedy would be perfect.

I was in Switzerland the day the death of our former President Harding was announced (1923) on the way to Germany. I bought German marks at the rate of 500,000 per dollar. They had been issued in just about the way some now want to issue money, to wit, to pay for Government debts. The next day in Stuttgart I bought a million German marks per dollar; in Berlin a week or two later 6,000,000 marks per dollar; and three weeks later, at Cologne, 120,000,000 marks per dollar. Before the year was out (1923) the rate was a billion and more marks per dollar. When the point came that the paper and ink was worth more than the money they quit printing such money and established the renten-mark on a gold basis of 23.8 cents per mark. There it stands to-day. That is an illus tration of what can take place, if money be emitted without adequate control. There was some control in what Mr. Simpson said, because he was proposing to issue it only against actual work done, work looking to the service of the people of the country and creating real value, but it would open a door to inflate the currency and a door without adequate control, a door hard to close.

I want to call your attention, gentlemen, that in stabilizing the dollar you must be thoroughly well apprised as to what you mean by the dollar.

We have had much talk about the gold dollar. I want to put in this record something on the question of the gold dollar, which I

oprove, a statement made by Gustave Cassell, who is one of the best thorities in the world on this question.

After pointing out that the American dollar, the Federal reserve ɔte, is issued against commodity bills, only using gold for redempon purposes, he justly holds that this system changes the old gold andard (where gold was used as pocket money) and speaking of e old gold standard says (Postwar Monetary Stabilization, p. 70): All this has disappeared. We now know that the value of gold can be conolled by suitable regulation of the world's monetary demand for gold. This ters the whole relation between currency and gold. Our ultimate purpose is ow to give our currency a fixed value in terms of commodities. We regulate the alue of gold with a view to making it correspond to that fixed value of our rrency.

On page 73 he says:

Thus gold exports need not cause a fall in the American price level, nor need ld imports cause it to rise. Under such circumstances the United States e in a position to exercise an independent control over the value of their curncy; the value of the dollar is simply the result of the way in which the monery authorities of the United States choose to regulate the general supply of eans of payment in the country. As the United States, in the way I have plained, is always able to buy and sell gold at fixed prices in the dollar so termined, the value of gold is bound to adjust itself to that of the dollar. he result is that the monetary policy of the United States determines the lue of the currency of every other gold-standard country.

The Federal reserve authorities therefore control not only the general level prices in the United States, but also the price level of all other gold-standard untries in the world.

You are not legislating for the United States alone, gentlemen; ou are legislating to fix the prices of commodities throughout the orld. The United States is leading in finance throughout the world. shocked the whole world by the debacle of October, 1929, and eply wounded the stability of credit all over the world. It drove any Nations from the gold standard in self-defense-You can and ould make speedy amends.

There has been a great hoarding of gold in the world for monetary rposes above the demand and use for industrial purposes.

Men talk about gold being taken away from the United States to r injury. The outside world owes us $20,000,000,000, and we uld demand payment, and get additional gold, if we should need it, at we do not need to take gold from any source. What we have was large part because of the productive power of the United States, nich in times of war, sent to Europe unlimited supplies at war prices, d was compelled to give them credit when the world's surplus of ailable gold was exhausted. The total supply of gold in the world about $11,000,000,000 of which we hold about $5,000,000,000 and ance about $3,000,000,000. The amounts required for industrial rposes are about $2 a thousand on the entire volume of gold or out $22,000,000 per annum for the world. The annual average oduction of gold in the world is about $28 a thousand on the volume gold or $289,000,000 absorbed for monetary and industrial purposes. Mr. GOLDSBOROUGH. Are you referring to annual production. Mr. OWEN. Annual, yes. The demand for monetary purposes is nat gives value to the additional gold which is being produced now ove industrial uses. For industrial purposes, it is only about oneurteenth of what is annually produced now; and to the extent that we n do away with the monetary demand for gold, we will increase

the prices of commodities, and we will also increase the prestige and power of the United States. I am not speaking from the standpoint of the United States alone, when I suggest limiting the monetary demand for gold.

For that reason we should take the gold certificates out of circulation and put them in the vaults as gold. That can be easily done. All you have to do is instruct the Federal reserve banks to exchange Federal reserve notes for gold certificates as they pass over the counter and redeem them. They can soon take them all up. There is about $1,000,000,000 of them.

Mr. GOLDSBOROUGH. $900,000,000, as I am told.

Mr. OWEN. The last statistics I saw was about $1,000,000,000, but that is immaterial.

I am speaking to the bill. I am not speaking outside of the purposes of the bill under consideration when I say a provision should go into the bill that these certificates should be taken up by the Federal reserve banks and put into the United States Treasury as gold bullion, to the credit of the Fedreal reserve banks, as security to the United States for the one billion, more or less, of Federal reserve notes that would be furnished to the reserve banks for such exchange purposes.

Another way in which the monetary demand on gold can be diminished is to strike out gold as a part of the 35 per cent reserve against about $2,000,000,000 of reserve deposits now secured by "gold or lawful money." I suggest that the word "gold" be stricken from this provision of the reserve act so the reserve shall be limited to lawful money, which is perfectly good for the depositing banks, and just as stable as the Government itself. These reserve deposits do not change substantially because they are on percentages fixed by law, and there is no real need of any gold reserve against deposits, which do not change in volume. These deposits can be safeguarded by 35 per cent of "lawful money," and that would release a monetary demand on gold of about $700,000,000.

On the bookkeeping side of the Federal reserve banks the country was under the impression there was only about $400,000,000 of gold in the Federal reserve banks now available as a basis of new credits or new reserve notes. The bookkeeping was correctly done, but it had the effect on the country of not enabling the country to clearly perceive that the reserve banks really had $1,000,000,000 more of gold available for reserve credit or reserve notes than the country thought. I mean the uninformed country, and I do not mean those who knew about it. There was nothing presumably intentionally misleading abca: it and I do not wish to imply that.

However, there was available for credit and reserve notes $1,400,000,000 of gold; add to that another $900,000,000, for gold certificates obtainable and add another $700,000,000 not needed as deposit reserve and there is about $3,000,000,000, of available free gold less 40 per cent of the gold certificates already used against the reserve notes exchanged. If you take the $3,000,000,000 of gold, you see what can be done, under the authority of the law as it exists, that you can use that $3,000,000,000 on the 35 per cent basis to increase the reserve approximately three times, or increase the reserves of the banks to over $8,000,000,000 additional, against which

e banks, under their normal practice of emitting credits of 10 to could emit credits of $80,000,000,000, which is of course twenty mes any probable need.

Mr. GOLDSBOROUGH. May I interrupt you right at that point?
Mr. OWEN. Yes, sir.

Mr. GOLDSBOROUGH. On January the 19th I introduced a bill, H. R. 26, for the purpose of taking care of the situation which you have st described. Will you read those two sections, sections 2 and 3, d see if they about approach what you have in mind? I want to ake this suggestion before you continue: This bill was sent to the ecretary of the Treasury, and the Comptroller of Currency, and each ember of the Federal Reserve Board, with a covering leetter, and, I understand it, it was from sections 2 and 3 of this bill that the lass-Steagall bill was finally framed. Now, the purpose of the Glasseagall bill was to do the very thing that you have been discussing. Mr. OWEN. Yes.

Mr. GOLDSBOROUGH. And it does do it, in part.

Mr. OWEN. Yes.

Mr. GOLDSBOROUGH. Now, will you proceed?

Mr. OWEN. The reason why the Glass-Staegall bill, perhaps, has not et functioned as efficiently as the country had hoped or expected, though it has the power, is that unless member banks want to borw the power is not used and the Reserve Banks are not using their dependent power to buy United States bonds and expand credit d currency as they should do by order of Federal Reserve Board. But I want to go back to "the dollar" and its true meaning in ance. I was speaking of the "gold dollar" a minute ago. Nobody rries gold in their pockets any longer. Gold is no longer a pocket oney. People are perfectly satisfied with Federal Reserve notes, or tional bank notes, or with any of the various kinds of money which e being circulated now. It is very important for this Committee d for Congress to realize what the dollar is that they are trying to abilize. It is not gold, and it is not the pocket money, either, alough they would be included. We have got about $5,500,000,000 currency, of which $4,500,000,000 are pocket money, with from a ird or more of it in hoarding. All of the banks combined have in eir vaults less than $1,000,000,000 of cash, against which they have credit structure of about $50,000,000,000 of deposits. Fifty times, much deposits due as the cash they have in their vaults in their nks. It is any wonder that they feel apprehensive, when the dear ople come in and say: "I want my money." It does not take but per cent of them to get "my money" out and leave the balance of our money" invisible and unavailable.

What is it that is actually functioning in this country as the Hollar"? It is the check, which was made current at par by the -deral reserve act, and the check that passes as money in this untry. I give a check for $100 to my hotel; they treat it as money, ey put it in the bank, and it goes through as money, and it functions money; "it is money." It is a "means of payment." As Gustave ssell says, "it is a means of payment", in effect money. It is a eck upon deposits subject to check. Make no mistake about that. What was the volume of these checks or exchanges in 1929? Seven ndred and thirteen billion dollars. In other words these checks ceeded the cash in every bank in the United States, more than

twice, on every average working day. That is the "dollar" you are stabilizing. The dollar of the check against the bank deposit. When you stabilize that dollar the deposit dollar, the check dollar and keep it stabilized, you will have rendered a service equal to that of any men that ever occupied a public place. This brilliant accomplishment will give this country its place in the world as the leader in finance and commerce, and the stabilizer of world commodity values.

In order to stabilize this "dollar," you have got to stabilize credit, and you have got to deal with and prevent those who know how to destabilize credit for profit, and you do not need to treat them as anything else except your own thoughtless or selfish children.

They who inflate or wrongfully contract have destabilized credit; those who are hoarding are destabilizing credit, although they do not realize it at all, much less do they realize that they are doing any harm or any wrong.

But the people go to the bank and say, "John, I have come for my money. Here is my check for $275 of my savings, and I want it." John says, "Of course, Charlie; here it is." And he keeps on doing that, unable to protect the other depositors until John has no more money for his other depositors and poor John goes into bankruptcy, and may be a suicide.

We have had about 4,000 banks going into bankruptcy since 1929 from this cause largely. There is one banker down in Mississippi, a Mr. Clark, at Tupelo, who had the fine courage to tell "Charlie," "No, Charlie, I am not going to pay you your money. I am not going to pay any depositors any money, except for the transactions of his daily ordinary routine business. If he wants to pay his taxes, here it is; if he wants to pay for groceries, here it is; if he wants to pay for his current bills, here it is; but to take out our common reserve of currency and lock it up and thus deprive every single one of my other depositors of their equal right of participation in the use of this currency, and leave this bank broken, and my name discredited, no, I won't do it," said Mr. Clark, of Tupelo. Mr. Clark, of Tupelo, was a man of splendid courage, of sound character, and of very high common sense. He appealed to the people and his depositors through the public press and they sustained him fully The bankers of New York showed equal sense when they issued clearing-house certificates, and cashiers' checks and other tokens for money in grave emergencies. These devices worked all right. So far as these deposits are checked on for business exchange or for current expenditures, they are within the implied contract. You must always realize that you are dealing with the "dollar" as credit, and you must realize that those who destabilize credit by overexpansion or by overcontraction are destabilizing the value of the (credit) dollar and of all commodities, which is surely against a wise public policy and ruinous to the social welfare.

In order to accomplish your real objective fully, I think you will finally come to the point where you will need to restrict the interest rates of call loans on the New York Stock Exchange, so that that great market place may not, against its will or purposes, be used as an instrumentality for breaking down the credit structure of the United States, bringing on a huge industrial depression, causing untold millions to be unemployed and miserable.