The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1865-11-20

80.
Marcn, 1918
na aOd , iSS information on the same sbsci viii
found in the evidence OF Mr. John Smith, member Of
the House, Mr. Samuel Quincy and Mr.. Gilchrst
Whatever may have been the dmnution in the amosne
of the circulation Of country banks in 1915 and 1917
not In any decree caused by dimnution OF tho IL
Of the Bank Of England The circulation OF coan-
try paper liable to affected by want of confidence,
generally brought by extensive failures in some Of
those establishments and the result Of which that
other country banks however solvent participate more
less in the general discredit and obliged to 70
strict their issues from regard to their own security
In the opinion OF Mr. Tooke "a like effect is sometimes
credit Of their customers TO whom they the habit
OF advancing money; most OF their customers pelne
holders OF articles which likely to be affected BY
general depression Of price,"
THE COUNTRY BANKS FOLLOW THE COURSE OF THE
BANK OF ENGLAND.
Although there may be reason to infer from the 0pn-
ion of tho witnesses most with the manage
ment Of country banks, and to whose evidence your
committee beg leave TO refer, that reduction in the
would speedily and necessarily be followed by proper
tionae reduction of the country bank paper, stn u
must be very obvious that independent Of that cause
the latter is liable TO sudden and highly inconveniene
contraction under such circumstances OF disrust and
difficulty occurred in 1915 Tho effects Of this ooa
traction, unless obviaed by corresponding increase U
the issues Of the Bank of England the credit Of which
is fortunately unassaabe by the influence OF similar
circumstances, must have tendency, by diminishing
the amount OF the paper currency TO rase the value q
the whole.
CONTRACTION AN EVIL.
IN the OPINION COMMITTEE was ono OF tno
effects produced by the rapid contraction of or
In 1916 and 1877 and TO it may be ascrbod Ia part
the fall in the price Of gold and the favorable state a
tho foreign exchanges during that interval.
Such contraction is evil to which the system OF
country banks, resting upon individual credit may b
occasionally table, but your committee inclined -
nope that 1t will not be likely either to prevail to tho
ara extent TO endure for long period, when the
10 which inconvertibe paper currency IL
hcI the3ll be checked by the operation Of the plan
cash ACKNOWLEDGEMENT for the gradual resumption Of
| wbether II nav TpSCLusIoN.
against Inconvenience toracable further TO provide
vduaIs which arise from t6pblc and the loss 70 no
country banks, and TO make such insolvency e
interference with the rights q propert "nous -
actions of the community fountcd on coma ne ~
questions OF great difficulty respecting StoaA
committee could not without further evidence ~ 49,
siderable delay have enabled themselves 70 su,.a S
opinion TO the House, -
Your committee have foreborne rom enter;no IN.
any reasoning upon the effect produced upop tho ys~
Of our currency by variations In the Numerical amou.s
OF the issued by the Bank OF England 80 ms.v
circumstances contribute to affect that value ssch n.
instance tho varying state OF commercial credit .s
confidence; the fluctuations in the amount Of country
bank paper the different degrees OF Rpdty with which
the Of currency circulate at different Dc
riods that your committee OF opinion that NO salts
factory conclusions DO from reference
to the numerical amount Of the issues OF the Bank e
England outstanding at any given TINA.