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FEDERAL RESERVE BOARD WASHINGTON July 2, 1P1PB1AIRV 1919 . RERi.AI, FOUR vtbMK FEDER2./iRESERVE BANK My dear Strong: I tiok up with Kelley the question of arrangements to permit the use by you while abroad of State Department cable facilities. Mr. Kelley has arranged the matter with the State Department and will now try to secure from them some form of letter that can be handed to you as evidence of/the fact that the arrangement was made. Yours very truly, Mr: Benj Strong, Governor, Federal Reserve Bank, New York, N. Y. , ,27 ,t,itta-e4 et( V/76-A-4" 1644- "AMERICA AND THE DEBTS OF EUROPE" Address by EDMUND PLATT VICE-GOVERNOR FEDERAL RESERVE BOARD before THE AMERICAN ACADEMY OF POLITICAL AND SOCIAL SCIENCE Philadelphia, Pa Friday Evening, May 12, 1922. X-3399. For Release in Morning Papers, Saturday, May 13, 1922. X-3399 -1- The topic assigned for discussion this evening "America and the Debts of Europe" is broad enough to allow of considerable latitude and does not necessarily imply that discussion is to be limited to the debts of Europe to America, but I take it that it is with such debts that we are chiefly concerned, and I propose to speak particularly of the debts not of European governments to our government or even to our people who have purchased the bonds of European governments, but of the debts which business men, manufacturers and bankers of Europe awe to our business men, manufacturers and bankers. With regard to the great debt of our former allies or associates in the war to our government I merely want to say in passing that I have been rather surprised as to the source from which the principal demand for its early payment appears to come. If this demand came from the great financial centers or from men of large incomes who pay the most burdensome taxes, it would be explained by the desire for relief from taxes through the application of the sums received to the reduction of the war debt, but it appears to come from producing centers, and particularly from agticultural sections which are dependent upon export demand for their products for maintenance of prices. It would seem clear that early payment of any part of this debt must decrease the purchasing power of the people of the allied countries and must therefore make for lower prices for the products we sell to them. It is of course well known that European merchants, traders and bankers owe large sums of money to Americans. Even if we had no direct X-3399 -2- proof of this we should know that it must be true from the fact that large flotations of foreign securities have been made in this country without turning the tide of gold importations. Since last October the foreign financing in this country has at times almost equalled the current trade credit balance, but gold importations have continued, with only a slight slackening due evidently to the stoppage of gold production in the South African mines through strikes. How much of an unfunded trade balance is there? This has proven an interesting study for economists and statisticians and they have assembled many columns of interesting figures, but have differed considerably in their conclusions. I think the first serious effort to bring together the known facts, the visible items, with some estimate of the "invisible" items was made by the Federal Reserve Board's Division of Analysis and Research in the Federal Reserve Bulletin for September, 1920. A merchandise balance had accumulated in our favor of $6,062,000,000 between November 1, 1918 and July 31, 1920 and it had become very evident long before that such a one-sided trade could not be carried on indefinitely. The Federal Reserve Bulletin brought to light offsets that appeared to reduce this balance If more than six billion dollars to about three billion dollars, adding that "from this, of course, must be deducted the amount of indebtedness to European and other countries which existed at about the time of the Armistice." This was followed the next month by a much more elaborate study by Dr. B. M. Anderson in the Chase Economic Bulletin on Europe's unfunded debt. His conclusion was that "on September 15, 1920 Europe -3- Do x-3399 owed an unfunded debt of over $3,500,000,000 to private individuals, banks and corporations in the United States," this being in addition to the ten billion dollars which European governments owed to the United States government, and in addition to the debt of Europe to investors in the United States holding European securities. Dr. Anderson maintained that the primary explanation of the tremendous expansion of bank credit in the United States in 1919-20 was "our unbalanced and unfinanced export trade, together with the rising prices, fictitious prosperity, and speculation which have grown out of the unbalanced export trade." Our exporters had borrowed money from our banks in large amounts because of inability to collect what was due them abroad, or because they had taken payments in foreign currency balances which they thought they could convert into American dollars at more favorable rates of exchange later. Dr. Anderson declared that computations as to the unfunded balances owed us on our world trade were not par,ticularly valuable - that the European balance was the only one that countea, as the triangular exchange of goods and of credit by which America's credit balances in Europe had been settled through debit balances with South America and the Orient had broken down. This idea was combatted by Prof. John H. Williams in the June, 1921 Review of Economic Statistics of the Harvard University Committee on Economic Research. He gave reasons for believing that it is still permissible to subtract from Europe's debt to us the amounts we owe to non-European countries, and his final conclusion was that the un- funded debt to the American merchants, bankers and corporations was -4- X-3399 'considerably smaller than others had estimated. "Our international situation since the Armistice," he declared, "has been less alarming than has frequently been stated. It appears improbable that our unfunded balance exceeded a billion dollars at the end of last year" (December 31, 1920). Our unfunded balance from Europe was estimated at from half a billion to a billion greater than our balance with the world as a whole, but he concluded "It is not possible to believe that so prolonged and pronounced a recovery could have occurred (in European exchanges) had London and the Continent been indebted to the United States - besides the $10,344,000,000 of obligations held by our government and the private long term indebtedness - by some three to four billion dollar'. In November, 1921, the Federal Reserve Bulletin returned to the subject with a much more complete statement of items of credit and debit than in the study of September, 1920, the conclusion being that so far as visible items, and items which could be estimated with some approach to accuracy were concerned, the sum due our merchants, bankers and corporations was on October 1, 1921 no less than $3,403,000,000. The Bulletin mentioned offsets that might reduce this amount, such as the speculative purchases of foreign currencies by Americans, but did not attempt to estimate their amount. This sum referred to our trade with non-European as well as with European countries. the inclusion It was swelled half a billion dollars by of an item with relation to the cost of cancellation of European war contracts in this country in 1919, an item not included, I think, in any previously published estimate. -5- x-3399 The February 1922 Federal Reserve Bulletin pointed out that in October, November and December our favorable balance of trade was a little less than $300,000,000, from which gold imports of $125,000,000 were to be subtracted, leaving the net addition to the unfunded balance $175,000,000, and conjecturing that the invisible items plus foreign financing probably more than offset that amount. The unfunded balance on January 1, 1922 was therefore given as $3,400,000,000, lopping off $3,000,000 from the November estimate. There have, of course, been other contributions on this subject. The journal of Commerce on Monday, April 24th, published a number of articles by leading bankers and economists, and the economic magazines have published occasional papers, but generally speaking these have added only an item or two to the studies already referred to, or have expressed opinions without bringing much that was new to their support. It is noteworthy that the main studies of this subject cokincided with periods of depression or of recovery in sterling exchange. Sterling had been pegged during the war at 4.76, and when allowed to take its own course after March 18, 1919 began to fall until in February, 1920 it reached a low point of 3.13. It recovered to 4.00, then fell to 3.53 in August -6- x-3399 at the time when the first study of unfunded balances was made in the Federal Reserve Bulletin in September of that year, followed by Dr. Anderson's study of October. In the Spring of 1921 there was a remarkable recovery with cable rates at or a little above $4.0o for more than a week in the latter part of May, and it was during this period of recovery, or before the reaction from it had proceeded far, that Prof. Williams made his elaborate contribution to the Harvard Review of Economic Statistics. It was natural at that time to find reasons for believing the unfunded balance much less than had previously been estimated, and Prof. Williams' conclusion that so pro- nounced a recovery could not have occurred with so great an unfunded balance as three or four billions of dollars seems justified. By the time of its publication, however, in June the reaction was well under way and before the end of July sterling rates were' as low as in August of the year before, below 3.60 from the 19th of July to August 6th. v 00 -7- x-3399 When the Division of Analysis and Research of the Federal Reserve Board made its second and chief investigation of the question of unfunded debts for the November issue of the Bulletin there had been considerable recovery, but the study was published or was prepared, just before the notable rise in sterling, in French francs and in lira that began about the time the Conference on the Limitation of Armaments met in Washington. By the end of November British pounds had risen to about $4.00, and by December 31st to 4.21 1/4, and by March to advance $4.40. Since March the as proceeded less rapidly, but has been well sustained. There is no further talk of debasing the pound and British bankers express confidently their expectation that par may be reached before the close of the present year, or soon after-the end of the year. 1 i There is no necessary conflict between the figures on the unfunded balance as given in the November Federal Reserve Bulletin and carried . forward to the end of the year and other studies of the subject, with the exception of one or two items, for the reason that the Bulletin has (1 not attempted anything further than an appraisal of known facts with _such invisible items as had long been estimated as offsetting the balance of trade, such as tourists' expenditures, relief contributions, emigrants' remittances, etc., concerning which enough information could be obtained _ upon which to base estimates. As already stated it appears that the gold imports, the known investments of Americans in foreign securities, and the invisible items included in the Bulletin's figures have somewhat overbalanced the excess of exports over imports for several months, x-3399 but for more than a year imports have been slowly increasing while exports (in value at least) have been decreasing, so that this change alone is not enough to account for the very pronounced and well sustained rise in sterling and in the principal allied currencies. The conslus ion seems inevitable that no such recovery could have been made if there were still an unfunded balance due the merchants and bankers of this country as great as three billion dollars. That there was such a balance in the summer of 1920, when the Federal Reserve Board first undertook an investigation of the subject I have no doubt. Liquidation had scarcely begun at that time, and Dr. Anderson was doubtless also right in attributing a large share of the overextended condition of banks in the financial centres to the efforts of our exporters to carry this balance Whether it could have been cut down so much as Prof. Williams estimated by the beginning of the year 1921 seems more than doubtful, but that liquidation and invisible offsets had by that time become well started is reasonably certain. The Federal Reserve Bulletin has suggested that speculative purchases of foreign currencies may have been a large item and has also suggested that American exporters have doubtless charged off con, siderable losses. It seems probable that the major depressions of exchange mark periods when our people were seeking to convert foreign .balances into dollars and that exchange recovered when most of the conversions had been made and losses wiped out. Some very large American exporters are known to have taken considerable losses in -9this way. x-3399 They sold in terms of foreign currencies, and found them when payments became due considerably depressed, but when recovery was delayed beyond their expectations they finally bought dollars and took their losses. Very large losses are also known to have been charged off by some of our bankers. It should be remembered always that even if the balance of trade were actually against us European exchanges would not be at their old gold pars. The principles laid down in the well know Bullion Report of MO with regard to the effect of irredeemable paper currency on exchange still govern. With the English budget in balance and British prices about as low as ours,sterling might be nearer the old par than it is now if there were no unfunded balance due us, but it can not go to par until, the paper currency of England is actually and freely exchangeable for gold. Predictions as to the future course of exchange are rather thankless, however. As aleeady mentioned there were British economists and bankers who declared no longer ago than last fall that the pound sferling could never recover, or thatits recovery could not be attained without a ruinous decrease of prices, and that it would be better to stabilize it at about 3.65 or 3.70. There has in fact been a considerable decline in prices in Great Britain and that decline has been doubtless a leading factor in the recovery of sterling and also in the recovery of Britain's export trade. No longer ago than fpril 1st the editor of the Economic "Torld whose articles are always worth reading and usually sound predicted that "no 6 x-3399 person now living will ever see the value of the present French franc of actual currency normally and regularly equal to one-half of that of At the gold franc established by law as the monetary unit of France". the time that was published the French franc was quoted at about 9 cents in our currency. It had been as low as to 8.13 at the end of December. after 5.79 in 1921 but had recovered Within a little more than two weeks Mr. March made this prediction French francs sold at 9.37 1/2, and had little more than a quarter of a cent to go to reach half par. They have since fallen back somewhat, but I see no reaspn why they should not continue to advance, if France makes progress towards balancing her budget. They are not lower now than our Civil War greenbacks were at one time, and complete restoration does not appear impossible, though it may take a considerable number of years. I am not going to undertake to estimate how great an unfunded balance may still be due to the merchants, bankers and corporations of America. They had a severe lesson in 1920 and have since then - . preferred a diminishing business for which payment was reasonably sure in dollars. It appears at any rate clear that they have for many months been collecting or funding in some way, oil charging off debts due them. I believe that investments in real estate in Europe and in the shares of European enterprises have been a very large offsetting factor. Prof. ITTilliams states in the May number of the Quarterly Journal of Economics that foreign investments in Germany since the Armistice have been estimated at nearly $250,000,000, and a a 0 x-3399 it is well known that Americans have been large investors not only in German property, but in Poland, in Italy and in the states which formerly made up the Austrian empire. This item of foreign invest- ment, with the wide-spread spectlative purchases of foreign currencies might easily have amounted to a billion dollars. The debts of individuals in Europe to individuals and corporations in America, at any rate can not at present, I believe, be so large as to present any insuperable bar either to the restoration of the exchanges that seem within reach of restoration or to the stabilization of exchange with countries where inflation of paper currencies has -- Fluctuation reached a point beyond the possibility of restoration. of exchange, due to inflation, is annoying and introduces a very undesirable element of speculation in foreign trade. An irredeemable paper currency even if not constantly expanded is subject to changes of value from political and other causes not related to trade balances or international debts. Our Civil Tar greenbacks went up or down in value in accordance With the fortunes of the Union armies, and later with relation to policies under discussion in Congress. The deprebia- tion-of some European exchanges has undoubtedly been increased by the instability of some governments or by socialistic policies. as Secretary Hughes has well said, must precede credit. Confi4entle, Given good government and balancnd budgets something could doubtless be done in the direction of stabilizing exchanges between countries havin irredeemable paper currency and countries on a gold basis. an It would IP 0 a0 X-3399 - 12 - probably be in the nature of recognition for fixed periods, or in some cases permanently, of new pars around which fluctuations could be controlled within something approaching normal limits. No outside or international attempts at "stabilization", however, could perform miracles or take the place of the necessary internal conditions and efforts in each country. Stabilization of exchanges between the United States and the neutral countries, whose currencies are not greatly depreciated, such as Holland and the Scandinavian countries, seems within reaCh on the former gold par bases, and foreign trade would doubtless be benefited by such control of fluctuation as might be instituted in other cases, but so long as our own currency is sound and our prices attractive and so long as the pound sterling continues to maintain itself at a point so near par, with francs and lira showing progress, it can hardly be said that the continuance or recovery of our foreign trade are really dependent upon any such stabilizing measures. 0 Pf(ES FEDERAL RESERVE BARD JAN WASHINGTON OFFICE OF VICE GOVERNOR rIDERAL C's ESERVE BANN Of KEW YORK December 21, 1922. Dear Governor Strong: I read to the ers of the Board this afternoon your letter of December 1 th with' reference to the McFadden bill which provides for universal exchange charges of $1.00 It seemed to members of the Board present that the per $1,000. letter was timely and that the conclusions reached that the passage of the bill would be fatal to the par collection system and would have a very serious and fundamental effect upon the Federal Reserve System as a whole are well taken. The various numbered probabilities seem to sum up the results which might follow from the passage of such a bill. Such a meeting of bankers and business men, possibly with some of the meders of Congress, with a view to the development of some definite position by the Federal Reserve System may, it Seems to ma, become necessary or advisable but my information is that there is no likelihood that the bill will be taken up for passage or even reported by the committee As you know, the Crelit at this session of Congress. Association watches this matter very carefully and I keep almost in constant tote with Mr. 1-ea1ty, their agent here in Washington. He called me up Yesterday to say that he had talked with Mr. 7.c77adien told him he had no idea of brin,ing McFadden and I am not quits sure of Mr. ':c7adden . the bill Up at 'this session. own position but he often introduces bills by request which he does not fully a,ree with and I do not Itlieve he will be found to be an opponent of the rar collection system,in Trite of his former position in 1917 when we had the big fight in the Ecase of Representatives on the subject. yours very truly, a7--ee?r-Acting Governor. 1r. Benjamin Strong, Governor, Federal Reserve Bank, New York, N. Y. (J51 FitaR JAR Vi °TOM I HeAW 5101/1913VOD. :17.11V 70 331'1'10 FEDERAL RESERVE BOARD WASHINGTON OFFICE OF VICE GOVERNOR March 14, 1923. Dear Mr. Case: Your letter of March 8th, together with letter of Mr. W. L. Saunders, Deputy Chairman, dated February 28th, and copy of Governor Strongts letter to you, dated March 8th, was brought to the attention of the Federal Reserve Board at its meeting yesterday and the Board unanimously voted approval of the action of the directors of your bank granting Governor Strong leave of absence of six months with half pay. We all hope that the rest the Governor is to take may speedily restore him to a full measure of health and strength. . Yours very truly, ( Acting Governor. 1.. J. H. Case, Deputy Governor, Federal Reserve Bank, New York, N. Y. COPY FEDERAL RESERVE BOARD WASHINGTON March 14, 1923. Dear Mr. Cass: Your letter of March 8th, together with letter of Mr. W. L. Saunders, Deputy Chairman, dated February 28th, and copy of Governor Strongls letter to you, dated March 8th, was brought to the attention of the Federal Reserve Board at its meeting yesterday and the Board unanimously voted approval of the action of the directors of your bank granting Governor Strong leave of absence of six months with half pay. We all hope that the rest the Governor is to take may speedily restore him to a full measure of health and strength. Yours very truly, (Signed) Edmund Platt Acting Governor. Mr. J. H. Case, Deputy Governor, Federal Reserve Bank, New York, N. Y. (in) April 20 192.!. CONFIDENTIAL: S rs Attention of Mr. Platt AS I explained to you on the telephone this afternoon, we have received a confidential cablegram from the Swiss National Bank, Berne, stating that they may need a credit here of approximately *4,000,000. to be used by them in strengthening their exchange should that prove necessary as a result of the use of a credit recently premised by them to the Reichsbank. advance, presumably against gold, and short Treasury bills here. They inquire if we would make this whether as an alternative they could sell After carefUl consideration of the matter we have sent the Swiss Sationel Bank the following sable reply which I read to you over the telephone: "Replying your cable April 18th we believe your problem more readily met by sale here of Treasury bills which we believe If could how be sold in reasonable amounts on favorable terms. desired would gladly discuss matter with issuing bankers here. Your alternative suggestion of advance from us involves question of general policy not yet considered in developing our relations with foreign banks of iseue and which woad require discussion with Federal iteserve board in Washington and other Federal reserve banks. As this might delay eeeisien unduly suggest sale Treasury for present." bills postponing question of aevance Respectfully, J. H. Case, Deputy Governor. Reserve Board, Washington, D. C. Federal jEC/Lial. FEDERAL RESERVE BOARD WASH I NGTON OFFICE OF VICE GOVERNOR December 22, 1924. PERSONAL AOCNOWLED414-'0 DEC 2 C 1924 Dear Governor Strong: R S. DEC 26 i924 I read to the Board this morning your letter in reference to the McFadden bill, and your remarks with reference to the lack of protection to savings depositors in national banks provoked considerable discussion and I think was generally agreed to. It certainly is very do whether there ought to be any enlargement of the authority of national banks to make loan,l_preal estate unless accompanied by a provision for the segregation ofIneparate investment of savings deposits. It seems to me regrettable that the Board is only now beginning to mae a careful study of the McFadden bill apart from its branch banking provisions, which occasioned so much discussion and division of opinion that the other features were in a large measure overlooked. May I suggest, by the way, that if anyone wants to suggest amendments to the bill such suggestions in order to be effective probably should be addressed to Honorable Nicholas Longworth, the Majority Leader in the House, or to Senator Pepper who has charge of the bill in the Senate. The bill is on the House calendar and if the Majority Leader approves is likely to be taken up when Congress reassembles under special rule. This is the general understanding, but I think no actual rule has yet been presented to the House. I am not suggesting, of course, that you Should write to either of the persons mentioned, but merely that if anyone outside the Reserve Bank has amendments to proposethat would be the effective way to secure consideration. Yours very truly, Mr. Benjamin Strong, Governor, Federal Reserve Bank, Npw York, N. Y. i0FrIALRESZRVEAriENTAT N.Y. TANVED /W. 11 1925 !7!:.ERR ED FOR ATTENTION TO ,. .a. iNFORMAT1ON Or FEDERAL RESERVE BOARD AWN. STRONG WASHINGTON " D BSS OVOA/...,FORRESPONDENCE T 114 ppliViR-"Al .hESFRVF BOARS " " HARM:ION " IcksuwidJu tyl nude,T. Kr:-.14ZSL JAY X-4377 July 10, 1925. SUBJECT: Employment of Expert Services by Federal Reserve Banks. Dear Sir: At a meeting of the Board yesterday, the matter of Federal reserve banks emnloying the services of experts in the conduct of litigation, special studies, etc., was considered, and the Board voted that all reserve banks, before making or authorizing such engagements, shall first secure the approval of the Federal Reserve Board thereto. Very truly yours, Edmund Platt, Vice Governor. TO ALL CHAIRMEN P411.-.X am , Vulva lo - 7folikAUs-rw.:,t - . - I" - ..,,,, A-a's ,--- - ' - .: :... 7 ,, :.i.;..; .17,..- . 170 ,:-.'.' --;,, 4' .- 114i 4 .--53- WI INF., - . 7..ti cry., 0 t- ..' 41115 ad* Illear3011 - -,w-:. 0*091*: Vasil ruo7 -.4 - kiiiii ,L43AI:ital. il'et-,i . ,-z, . :/Z . FEDERAL RESERVE BOARD 0/ WASHINGTON OFFICE OF VICE GOVERNOR December 12, 1925. Dear Governor Strong: Following the meeting of the Advisory Committee of Governors and Federal Reserve Agents held on November 3rd, the Committee furnished to the Federal Reserve Board as an interim report, copies of the minutes of its three meetings. The legislative proposals approved by the Committee were referred by the Board to the Federal Advisory Council for consideration. The presentation thereof to the Council at its meeting an November oOth was made the Professor Sprague. A copy of the recommendations Council is enclosed herewith and also copy of a memorandum prepared oy Trofessor Sprague commenting on the Council's recommendations. The legislative proposals of the Committee will be considered by the Federal Reserve Board at a meeting to be held on Tuesday next and you are requested to wire the Board not later than Tuesday morning, December 15th, any comments you may have to make on the recommendations of the Council and the conclusions of Professor Sprague. a Edmund Platt, Vice Governor. Mr. Benjamin Strong, Governor, Federal Reserve Bank, New York, N.Y. (Enclosures) .:01:1]0 811014A0 Ci3A1 021 "--3 01 r.17,61 3-30 ; ENV.11, 50,3-28 AFTER 5 DAYS, RETURN TO FEDERAL RESERVE BANK OF NEW YORK FEDERAL RESERVE P. 0. STATION NEW YORK CITY, N. Y. FILE IN PRIVATE FILES OF GOVERNOR STRONG Correspondence with kr. Platt (YRBoard) at the time of appointment of Governor foung. ,77 Misc. 3:1.5031.8-25 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE FILES To FROM DATE June 15, 1926 SUBJECT: G. L. Harrison Tuesday a. m. June 15, 1.926 I telephoned this morning to Vice Governor Platt (having previously telephoned to Governor Crissinger's office and found that he is out of town) to tell him that I would be glad, if the Board cared to have me do so, to go to Washington to talk with them concerning Governor Strong's trip abroad. I mentioned that newspaper reports concerning him and his trip have been quite conflicting and generally misleading, but that I was not able to offer to report to the Board sooner because of the fact that only on Saturday did I receive Governor Strong's two final letters concerning that part of the trip up to the time when he went on his vacation at Antibes. I explained that we had a few cables from him, but that I wanted to await receipt of his various letters which he had cabled were on the way before suggesting a talk with the Board. Mr. Platt said that he thought it was a very good idea and that he thought the Board would be most interested to have me come. I told him that I would be glad to go any time that he suggested - at once, later this week, or next week, as he preferred. He mentioned that Governor Crissinger is away (which I had already learned from Governor Crissinger's own office and that it was uncertain just when he would be back. He also mentioned that Mr. Miller is away, having sailed for Europe, and that I might just as well come this Thursday as to wait until later. I said that would be wholly agreeable to me.' He then mentioned, however, that the Open Market Investment Committee is to have a meeting in Washington on Monday and that I might possibly consider coming at that time. I mentioned that that would be entirely agreeable to me, particularly as the Open Market Committee has general supervision over the foreign business in which all Federal reserve banks participate. He then stated that he thought there would be no particular advantage in waiting until the arrival of the Open Market Committee, the only question in his mind being whether there was any disadvantage in reporting at that time. I explained that there is no concrete suggestion or plan for the System to act upon, that I merely wanted to acquaint the board with the substance of Governor Strong's report on conditions as he sees them at thie time. I also mentioned to Mr. Platt that Mr. Winston was with Governor Strong during the better part of his trip, that he had just returned from Europe, and that he might be able to add something to the report as I had received it from the Governor. Mr. Platt said he would like to think it over and talk to some of the other members of the Board with a view to finding out whether they would like to have me come Thursday or later, and said that he would call me back shortly. 192_ FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To FILES FROM G DATE SUBJECT: .__HEtrri son Tuesday p. m. June 15, 1926 Wednesday August 25,1926 Thursday a.m. August 26,1926 Mr. Platt telephoned to me later in the day (1:45 N.Y.time) to say that he had discussed my suggestion with members of the Board and that they would be very glad to have me come before them on Thursday morning. He also said that they would be glad to have Mr. Winston supplement Mr. Strong's report in any way that he might care to do. I telephoned Governor Crissinger's office to ascertain whether he would be in Washington on Monday when I have to gàthere to see Mr. Winston and Mr. Dewey about gold matters, but was told by his secretary that Governor Crissinger was out of the office at the moment, but that he would zall back and advise me later. His secretary subsequently telephoned that Governor Crissinger was going away that afternoon and would not return until Monday or Tuesday - probably not until Tuesday. This morning Governor Crissinger, on his way through New York to Boston, telephoned to me to ask what it was that I wanted to see him about. I told him that while I had advised the Board fully of Governor Strong's movements (as stated in my letter of August 23, that he is now in Paris for discussions with Governor Moreau) nevertheless there were a number of letters about past matters, amplifying cables which I had reported to the Board, which the Board might care to have me talk over with them, although there was nothing substantially new. The Governor said then that while it was unlikely that he would be in Washington until Tuesday, that so many of the Board planned to be away next week, in any event, that he thought I had better postpone any discussions with them until later on. I reiterated that there was nothing new in the letters, merely background, and while it might not be necessary to report to the Board at all, I merely wanted to let him know that I would be glad to The matter was left that way. do so if he wanted me to. 192_ FEDERAL RESERVE BOARD WAS H IN GTON (P-27 4:1' 4V;-,Dk1,Aaw7414-2 (gtv)4 (c`f-42 , r C 0 P of handwritten letter dated September 24, 1927 to Mr. Platt, F.R.Bd. Dear Mr. Platt: Your letter le.ves me in some doubt as to what is in your mind except that you also have some doubts, aroused by the "Sun". Here is my attempt to reply: The "Skin" may at times have some information as to what is in my mind, but I doubt if it is to be relied upon! On the other hand, I have the only accurate data on that subject, - and I'll give it to you without reserve: Mr. Mellon has asked my opinion about some names suggested to fill the vacancy. Mr. Gilbert's name was never mentioned. Its the last name I would suggest and Im certain the Secretary would feel so, tho' I never asked him as the name never came up. Gilbert is too important where he is. I asked I would urge against it for that reason, if for no other. was never suggested nor considered, so far as I am aware. to me I would definitely and positively decline at once. clear. One; - I wouldnt take the job on any terms. Were My name Vere it proposed The reasons are It wouldnt suit me - my health wouldnt permit, and I wouldnt be willing to go through the grilling necessary to effect a reorganization of the Board's philosophy and its procedure to make it function as it should. Two:- The President wouldnt appoint me if asked for he is wise enought to know that it would raise a howl: Third:- the Senate would not confirm me, certainly without a big hull-a-ballo (sic) and that I wouldnt tolerate. Finally:- it would involve you in that I would not be willing to participate. I have enough income for my needs with no salary. The salary is of no moment. I have been hoping and expecting and trying to retire entirely for some time and have not been allowed to do so by my associates. In 1922 President Harding offered to appoint me on the Board and find a place for you unless I could do so. I declined to have anything to do MP with it for much the reasons stated above. Now as to what is or may be in say so and Ill put it up to our Board. your mind. If you want my job, just But I advise against doing so. are a number of reasons - but only one major one will suffice. our organization apart and destroy the work of years. most of our best men would leave. It would tear When I quit, the men w ho have labored loyally in the service are entitled to promotion; it and have reason to expect it. There they have earned Nere anyone outside the Bank to be appointed And they should: Its test that / should write you in this downright fashion and it will help all of us a lot if suspicions of what Im about are allayed by such frank letters as yours which enables me to reply with equal frankness. My ambition is to have a garden and read books, but surely that shouldnt arouse sympathy. My best to you. B. S. Copied - 9.27.27 L. FEDERAL RESERVE BOARD WASHINGTON Aee06e7,6 at4 ;ee4- 41i\UI\j 4 10 i - 1 , , 1 4. 4 '74-, kf-r,eeee. K4.'°sC 1 ,/ / a"., 0 .Aea , aY- C62-dee,( ? aa, 60:e zr 9 A4 ,Z4 9t<Ltcfl>/;