Had the national banks of New York City enjoyed the right to expand their circulation in the manner provided by the plan of the American Bankers’ Association, at least a part of the débacle would have been avoided. “The banks and trust companies of this city have in their vaults the largest store of good credit that can be found in any city in the world,” said one of America’s foremost economists as the panic raged, “but much of it is utterly unavailable because of our currency system. One of the trust companies that closed its doors has in its possession live assets amounting to over $50,000,000. All this credit is dead. It cannot do the work of a single dollar in the paying-teller’s cage. What is wanted in a time like this is freedom to convert the credit of banks into a medium of payment that will satisfy the people.”[72] True enough, and just what the whole financial community, including the Stock Exchange, had been repeating for years. Currency issues which do not provide for _all_ situations, including not only ordinary demands, but also such exceptional cases of shrinkage as this one was, can never be called perfect, nor even safe. There is no health in them.[73] The most effective and the most rapid means of regulating and protecting the general credit situation is by increasing or diminishing the volume of outstanding bank-note currency not covered by a reserve of gold or other lawful money. This method is employed successfully both in France and in Germany. The Bank of France and the Imperial Bank of Germany to some extent regulate credit conditions by acting as central banks of discount; but their most effective action is by increasing or diminishing the uncovered amount of their outstanding notes. When additional currency is needed as a circulating medium they supply this currency by issuing notes. When contraction of currency, or a check upon the further expansion of bank credits is desirable, they accomplish the result by diminishing the volume of their outstanding notes and by raising the discount rate. This system is as nearly perfect as any yet devised.[74]