the ordinary requirements of the population in time of peace. What happened during the war was an extraordinary expenditure of productive energy. The national resources were used to their utmost possible limit.

The CHAIRMAN. Do you not know that the accumulated stock of everything disappeared during the war, and that at the close of the war there was no accumulation whatever?

Mr. WHITE. I do not know.

The CHAIRMAN. Was not that a loss of so much floating capital?

Mr. WHITE. No; because it was reproduced all the time.

The CHAIRMAN. Suppose that we had a thousand millions of accumulated stock at the commencement of the war, and that at the close of it we only had a hundred millions' worth?

Mr. WHITE. Then the difference would have been lost.

The CHAIRMAN. As a matter of fact I think that at the beginning of the war the manufacturers had a large stock of goods on hand; and, at the close of the war they had no stock.

Mr. WHITE. Then the difference between the two was the loss during the war. The CHAIRMAN. Does it not take a certain volume of stock of all kinds of goods to be on hand to keep the community properly supplied?

Mr. WHITE. Yes.

The CHAIRMAN. And that stock was lost?

Mr. WHITE. Perhaps.

The CHAIRMAN. Then that would have to be made up?

Mr. WHITE. Yes.

The CHAIRMAN. Do I understand you that the making up of that loss is an element tending to the activity of business or to the depression of business?

Mr. WHITE. That tends, of course, to produce activity in business.

The CHAIRMAN. Then may not that have been one of the causes of the speculative era which you have described-the era of activity in the building of railroads and other investments of which you spoke?

Mr. WHITE. Yes; if the facts are as you state (that there was a great surplus at the beginning of the war, and that there was no surplus at the end of the war), the replacing of the difference would have tended for a short time to produce an era of speculative activity.

The CHAIRMAN. At the time the crisis took place everybody had pretty large stocks of goods on hand, and they have continued to be large from that time to the presentand that may have been one element. Now, in addition to these causes, do yon see any local causes peculiar to ourselves that have tended to bring about this depression in business?

Mr. WHITE. Yes; I think that the railway speculation and the real-estate speculation together were mainly local to the United States. There was no great increment of railway mileage in England or Germany, I think, during that period-nothing like ours. The railway mileage of the United States was nearly doubled during this short period that I speak of.

The CHAIRMAN. What effect, in your judgment, has the gradual approximation of our paper money to the gold value produced on business? What has that had to do with it? Is it the result of the panic or is it the cause of the shrinkage?

Mr. WHITE. It is a result, most certainly.

The CHAIRMAN. That is to say, that if the speculative era had continued the premium on gold would probably have continued?

Mr. WHITE. Yes, sir.

The CHAIRMAN. And the fact that the speculation collapsed caused what?

Mr. WHITE. That fact caused the turn of the foreign trade in our favor. We ceased to import capital from abroad. Our exports, consisting of articles of prime necessity, not only continued in the same volume as before, but increased steadily, until they have now reached an excess of more than $200,000,000 in one year.

The CHAIRMAN. Then you think that the shrinkage (in other words, the approximation of gold to the same level as paper) is due to the fact that the current of our foreign trade is changed?

Mr. WHITE. Precisely so.

The CHAIRMAN. Then this shrinkage which has swept the debtor class ont, forced it into bankruptcy, and produced this distress to the country is the result of a cause which is healthy or unhealthy? That is to say, the increase of exports and the diminution of imports.

Mr. WHITE. It is most decidedly healthy.

The CHAIRMAN. Then what we are going through is a process of cure?

Mr. WHTE. Yes; emphatically.

The CHAIRMAN. And any attempt to get back where we were by an increase of currency, so as to make the difference between the value of gold and paper what it was, would it be an injury or a benefit to the country?

Mr. WHITE. It would be a great injury to the country. It would be a Herculean task, anyhow. It would puzzle the wisest (or the most foolish) of our members of Congress to devise any plan to do it. There is just one plan, and only one, by which it can possibly be done, and that is, if Congress should undertake a vast amount of public works (which very many people demand) and should pay for them by issuing new greenbacks to the contractors, then you may bring it about; but in any other way than that I do not see how it can be done.

What

The CHAIRMAN. Suppose that this committee should recommend to Congress, as a solution of the trouble, that the government should undertake great public works and should pay for them in paper stamped "This is one dollar" or "This is one thousand dollars "what do you think would be the consequence of the issue of that money? Mr. WHITE. I think that national bankruptcy would be the first thing, and pretty nearly universal bankruptcy the next thing-public and private bankruptcy. The CHAIRMAN. Let us see the process. We pay this paper money out at a moderate rate. How would this national or individual bankruptcy come about? would be the effect on the prices of commodities of paying out this paper money? Mr. WHITE. People would sell their property and their labor for that money at what they thought the money was worth for the time being, and if this paper was legal tender and could be forced on creditors, it would run long enough to discharge the greater part of the debts that are due to-day; and it would ruin the people who would be obliged to take it. Then the value of the paper afterward would be what anybody might choose to put upon it. It could not have any fixed value.

The CHAIRMAN. Would not people incur new debts very rapidly, foreseeing that this paper money was going to depreciate; would there not be a desire to run into debt and get property?

Mr. WHITE. I have not thought that out very far, and I would not like to give a hasty opinion about it; but I should suppose that people who could get houses and farms for that kind of paper would be very anxious to do so. The question would be whether anybody who owned houses and farms would part with them for that kind of paper.

The CHAIRMAN. But those to whom debts were due would be compelled at the outset to take payment in this paper.

Mr. WHITE. Yes. That would be equivalent to a forced division of property, a division of property on a communistic basis, veiled under the forms of law.

The CHAIRMAN. The result would be, as I understand you, that the creditor would be compelled to take payment in something less valuable than he expected, and, therefore, would have less property; and that the debtor, paying his debt in something less valuable than he expected, would have more property.

Mr. WHITE. Yes, sir.

The CHAIRMAN. It would be a transfer of property, to that extent, from the creditor class to the debtor class?

Mr. WHITE. Yes.

The CHAIRMAN. Do you think, from your study of this question, that the debtors or the creditors are in a majority in this country (I mean, of course, the net debtors and net creditors)? Which would gain the most, in point of numbers, in that process? Mr. WHITE. I cannot answer that question. Everybody is in debt more or less. The CHAIRMAN. And they also have debts due to them, and it is a question of balances?

Mr. WHITE. Yes. I should say that the net result would be very disastrous to all except insolvent debtors.

The CHAIRMAN. Insolvent people would become solvent; but, on the other hand, solvent people would become insolvent?

Mr. WHITE. Yes.

The CHAIRMAN. If the positions were reversed, would the community be any better off?

Mr. WHITE. No; it would be much worse off.

The CHAIRMAN. Would the thrifty and industrious people who have saved be likely to keep their property?

Mr. White. Judging the future by the past, I should say not. I was looking the other day over the list of failures for the last five years, as published by Dun, Barlow & Co., and I found that the failures for the past five years were about 37,000 out of 680,000 firms in business. Now the number of insolvent debtors (taking that as an index of the whole community) is less than six per cent. of the whole.

The CHAIRMAN. I can also say, in the same direction, that I took occasion recently to look over the books of my firm to see the percentage of persons dealing with us who have failed since 1873, and I found that the number of failures does not amount to 2 per cent. of the whole number of persons dealing with us. Hence, I conclude that the solvent people of this country are much more numerous than the insolvent.

Mr. WHITE. You may be an exceptionally prudent merchant.

The CHAIRMAN. Not at all; but I fancy that the percentage of insolvent persons is much less than 10 per cent.

Mr. WHITE. The tables of Dun, Barlow & Co. show it to be less than 6 per cent. The CHAIRMAN. This experiment of putting out legal money receivable only for taxes and not redeemable in gold and silver has been tried in the world several times, has it not?

Mr. WHITE. Yes, it was tried in France, and it was tried in the Southern Confederacy very fully during the war.

The CHAIRMAN. How about the experiment during the revolutionary war in this country?

Mr. WHITE. Yes, it was tried then.

The CHAIRMAN. And in all the cases that you know of, the attempt to make legaltender paper money not redeemable in coin has always failed?

Mr. WHITE. The money has become utterly worthless.

The CHAIRMAN. Do you see anything in the condition of things in this country, or in the power of legislation that resides in Congress, to prevent the same thing occurring again if it was attempted here?

Mr. WHITE. Nothing whatever.

The CHAIRMAN. Have we discovered any new financial principle that has not been heretofore broached, advocated, and tried?

Mr. WHITE. No, sir; nothing.

The CHAIRMAN. During the two hundred and fifty years through which you have studied this financial question, have these same doctrines been repeatedly proposed, and finally got into use, and have they not always resulted in collapse and disaster? Mr. WHITE. Over and over again.

The CHAIRMAN. Do you know anything about the financial condition of China? Mr. WHITE. I do not; I bought Vissering's Chinese Currency the other day, but I have not read it yet.

The CHAIRMAN. Then I have the advantage of you, for I have read it; and I may state as a matter of fact that during a period of a thousand years, the same thing has been tried three times in China, and always with the same result. It has always been advocated by the same arguments, and has always ended in the same way. And as the Chinese have managed to support a larger population than any other nation, I suppose that their experience must be of some value. Now, there is another sugges tion made. It is suggested that one cause of the difficulty among what is known as the laboring classes (I mean those who work for wages) is the immense tax levied on them by the necessity of paying the interest on the national debt in gold, and it is proposed as a remedy to pay off the national debt with non-interest-bearing noteslegal-tender notes, receivable by the government for taxes and dues of all kinds, but not payable in any other form than that-this paper to be the currency of the country and the interest on the national debt to be thus saved. What do you think would be the effect of that sort of legislation?

Mr. WHITE. That is repudiation of the public debt. That is offering the holder of an interest-bearing security a non-interest-bearing security of the same government.

The CHAIRMAN. These gentlemen say, "Why not repudiate the national debt? What obligation is there resting on these people to pay the national debt? There ought not to be any national debt. Why not pay it off in that way, giving the bondholders a representative of value, and let them take it? It will pay debts, it will pay taxes." There would be a loss by that process. On whom would that loss fall? That is the point.

Mr. WHITE. It would fall upon everybody, I think, because it would lead to anarchy. It would dissolve the bonds that hold society together-the bonds of honor. Society ultimately rests on the form of government that exists in the country; and if we destroy all confidence in the honor of the country, I do not see what else we have got to hold society together.

The CHAIRMAN. Of course the business of the country depends upon the use of eapital. A great deal of capital is movable capital. What would happen to that movable capital if such a proposition were carried out ?

Mr. WHITE. It would get out of the way as fast as it could.

The CHAIRMAN. It would retire from the country?

Mr. WHITE. It would retire from the country.

The CHAIRMAN. What would be the effect of that on the employment of labor? Mr. WHITE. I should say that it would throw ten men out of employment where there is one man now out.

The CHAIRMAN. Would any prudent business man who had capital be willing to let his capital go out of his possession at all?

Mr. WHITE. No, sir; the community would find itself dissolved. It would be in such a state of anarchy and chaos that it would soon have to begin right over again,

form a new government, and commence by reassuming the debt which it had repudiated. You cannot have a government in this country in any other way.

The CHAIRMAN. There have been nations that have passed through that experience; for instance, France in the French Revolution, the United States in their Revolution. The Southern Confederacy passed through it too, but it has not been able to rehabilitate itself. Did France and the United States reassume the debt which had been repudiated? They reorganized society successfully, but did they reassume the debt? Mr. WHITE. No, sir; they did not reassume the debt; and the reason why was becanse they could not. This, however, would be a case where a country that is abundantly able to pay its debts voluntarily repudiates them. The other two were cases where it was absolutely impossible for them to pay their debt; they were cases of bankruptcy; but this would be a case of repudiation-a vast difference; the difference between misfortune and rascality.

The CHAIRMAN. That brings us to the point that society may be so badly constituted that it ought to be dissolved; and, if it be dissolved, what is the course to be taken in order to reconstruct it? The reconstruction proposed is by some called co-operation and by some called communism, but the general theory is that the gov ernment is to be the owner of all the fixed capital in the country, to employ the people and distribute the proceeds of industry among them all, so that everybody can get a fair share. Do you know, in the experience of mankind, whether any attempt has ever been made to carry on society on that theory?

Mr. WHITE. No, sir.

The CHAIRMAN. There is no guide for us in that direction?

Mr. WHITE. No, sir; simply because it could not be done.

The CHAIRMAN. If you can make it perfectly clear that it cannot be done, perhaps that would help us a little on our road to a solution. These gentlemen of whom I speak decline to accept the assurance that it cannot be done, because they think that it can be done.

Mr. WHITE. There are, I suppose, from 50 to 100 persons in this room. How many of that number would submit their talents, and their property, and their labor to the direction of government? I suppose this is an average representation of the American people. How many of them will consent to do that? because you have got to have their consent first.

The CHAIRMAN. Do you propose that we shall take a vote now and see how it will stand?

Mr. WHITE. It would not alter my opinion if they should vote against me.

The CHAIRMAN. You do not think that they would be willing to pool their property and have a new subdivision?

Mr. WHITE. I do not think they would.

The CHAIRMAN. You would be unwilling to pool your property?

Mr. WHITE. I would be unwilling to pool either my property or my services.

The CHAIRMAN. Do you think it possible by any legislation to alter the distribution of the proceeds of industry?

Mr. WHITE. I think it might be done to some extent by the taxing power.

The CHAIRMAN. Is there any other method than the taxing power by which the distribution of the proceeds of industry can be altered?

Mr. WHITE. None that I know of.

The CHAIRMAN. Do you think that the method exercised by the government in the taxing power has altered the distribution unfavorably to the working classes?

Mr. WHITE. That involves the great tariff question, and I do not know whether the committee wishes to go into that.

The CHAIRMAN. If the principle on which the tariff is constructed produces that result, it is exactly the question which the committee wishes to enter into. We are here to discover the causes that have brought about this depression, and to remove the causes by legislation if possible. The tariff is a thing purely of legislation; therefore there is nothing more important than that. I see it has been said that I refused the other day to hear the discussion of the tariff question. That is not the fact. A witness offered to read to us a detailed tariff bill, and the committee declined to go into those details; but the committee never declined to hear a discussion as to the operation of the tariff on business and labor. On the contrary, the committee looks upon it as a most important subject.

Mr. WHITE. I think that a tariff can alter the distribution of property to the detriment of a portion of the community. I think that an article of necessity (such an article as quinine, for example) is made artificially high by the tariff; so that people who have fever and ague have to pay more for the quinine than they otherwise would. That is a distribution of property to the disadvantage of the sick people.

The CHAIRMAN. But if, by the imposition of that duty, the man who buys the quinine gets a higher rate of wages than he would otherwise get, is he not better able to pay a higher price for the quinine?

Mr. WHITE. If, by reason of that, he gets exactly a high enough rate of wages to cover the difference in the price of the quinine, of course, it makes no difference to him. The CHAIRMAN. What is your opinion as to the effect of protective duties on the wages of labor? Do they raise wages or not?

Mr. WHITE. I think they do not.

The CHAIRMAN. You think that the protective system raises the prices of commodities which the laborer buys, but does not raise the wages themselves?

Mr. WHITE. I think that, in certain cases, it does raise the price of commodities which we have to buy. I do not think that it permanently raises the price of articles the production of which is adapted to the natural condition of the country.

The CHAIRMAN. If it did not raise the price of labor, what is to prevent you from going into the manufacture of quinine and taking a share of the immense profits growing out of that manufacture, until, by competition, the profits are brought down to the usual profits of business? Why is not the price brought immediately down by competition to the general level?

Mr. WHITE. I think it would be. I said that the protective system would not permanently raise the profits.

The CHAIRMAN. In fact, is quinine dearer here than it is in France, or England, or ay other country?

Mr. WHITE. Yes; I have been told so by doctors. I have not investigated the subjest myself, but I have been told that it is a great deal dearer.

The CHAIRMAN. Then why do not other people go into the manufacture of quinine and bring down the excessive price, if there are such large profits? The business is open to everybody.

Mr. WHITE. I do not know. There may be some peculiarities in the trade.

The CHAIRMAN. I know that in the branches of business with which I am familiar people are free to go in and make what profits they can, and they have gone in so freely that the business now is not of any value to anybody; and I suppose the same rule apples to quinine. Now, unless the prices of these protected articles are made permanently dear to the consumer, and if his wages are correspondingly increased, how does he suffer?

Mr. WHITE. I think that it tends to produce an abnormal condition of things. I think that a protective tariff temporarily stimulates a particular industry and leads an excessive amount of capital into that business (just as it has done into yours), and eventually leads to bankruptcy and loss of employment.

The CHAIRMAN. But in England an excessive amount of capital went into the iron business at the same time that an excessive amount of capital went into that business in this country, and in England there is perfectly free trade, notwithstanding there was an abnormal diversion of capital into the iron and steel business. Was that not rather due to the speculative era, which created this enormous demand for iron, than to the tariff or to free trade?

Mr. WHITE. I am perfectly willing to admit that. I did not select the iron trade as an example. I am speaking about the usual tendencies of a protective tariff. In regard to the existing state of the iron trade, which is in a great depression all over the world, the speculative era, the railway era, that we have been discussing, was undoubtedly the cause of the excessive investment of capital in that branch of business. When the demand for iron ceased or fell off at the beginning of the panic, a large number of iron establishments had to close up.

The CHAIRMAN. The same state of things prevails in regard to the cotton business. There is the same depression in regard to the cotton business as there is in regard to the iron business. The building of railroads, of course, demands more cotton shirts for the laborers; but still these same men are wearing most of the cotton shirts yet. Now, if that depression had occurred locally here, and had not occurred there, then it might be fair to set it down, undoubtedly, to the tariff; but free trade exists in England. On the other hand, it is also clear that the protective system which we have in such powerful operation in this country did not protect us from the same depression that exists there. Therefore, there must be some cause, entirely independent of the tariff and entirely independent of free trade, to bring about this depression in business; for we in this country have not been protected against it by the protective system, nor have the English failed to suffer in the same way because they have free trade.

Mr. WHITE. I have not stated it in that form; that the tariff was the canse or even a cause of the existing depression in business. You asked me whether there is any form of legislation to cause a laboring man to receive less wages than he was entitled to, and I named the tariff as one of them. That is rather a different question from the one we are now discussing.

The CHAIRMAN. Accepting the situation as we find it, can we do anything in the way of a modification of the tariff which would tend to hasten the termination of this era of depression? Can we help ourselves by any legislation on the tariff subject? Mr. WHITE. Yes; I think we can very decidedly. A vast number of articles in the