The rest of his speech was as follows:
"Mark this: If we did not have the $346,000,000 United States notes or greenbacks, the $650,000,000 of legal tender silver and a part of the $750,000,000 national bank notes in the reserves of our banks, we would now have in the United States $2,500,000,000 of gold instead of only $1,850,000,000. Does all this prove nothing to us?
"Every intelligent student of economics knows that after Alexander Hamilton, with the acquiescence and approval of Jefferson, had fixed the ratio of the gold and silver dollar in 1792, a differential of only one-half to one per cent drove all the gold out of the country by 1832, and that from 1834 to 1860 the changed ratio drove every dollar of silver out of circulation. Who does not know that from 1861 to 1865 the issue of fiat Government paper drove every dollar of gold out of the country; that for seventeen years we were off the gold standard, resuming specie payments in 1879?
"Has any banker over fifty years of age forgotten the silver struggle from 1879 to 1894, when, because of the silver purchase act by which we only added $50,000,000 a year to our reserve money, we came to the very precipice of repudiation and national dishonor?
"These four great and significant lessons have been taught us—since the establishment of this Government—the poorer money invariably drives out the better, and yet we are confronted by such stuff as the following falling from the lips of the reputed author of the so-called Reserve Association:
"'The banks will be able to replenish their reserves indefinitely.' The counterpart of this proposition is that the banks will be able to make loans indefinitely. Think of such a proposition! And again, he says it was deemed necessary 'to provide such effective regulation of discounts and note issues as would enable the organization to respond promptly at all times to normal or unusual demands for credit or currency without danger of undue expansion or inflation.' If this proposition survives at all it will be as the curiosity of the century. I submit that neither of these propositions could have emanated from a mind capable of thinking in the terms of economics.
"I assert that if we adopt a sound financial system in the near future we shall have in the course of ten years upward of $3,000,000,000, possibly $3,500,000,000, of gold in the United States. I assert further that if we adopt the proposed so-called reserve association scheme we shall have at the end of five years thereafter in the neighborhood of only $1,250,000,000, allowing for a differential of $250,000,000 either way as a possibility. In other words, we would have as a result not more than 40 per cent and possibly not more than 30 per cent of the gold that we shall have if we pursue a wise economic policy.
"The scheme provides that any deposits with the association may count as reserves; also that any of its notes may be held as reserves.
"Since the average reserve of all national banks is and has been for many years about 20 per cent, let us assume, first, that a national bank called 'X' has $5,000,000 of deposits and holds a 20 per cent reserve, or $1,000,000 of gold; second, that X National Bank deposits this million of gold with the reserve association; third, that a national bank called the 'Y National Bank' exchanges $1,000,000 of commercial paper for $1,000,000 of the notes of the reserve association, which it puts into its reserves.