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- December 23, 1914. Dear Governor akens am arceedingly- grateful to you for Christmas greetings and hasten to wish the sane to your good self. Please be aspired that I waxmly appre- ciate yuux co-operation with us in all the problems you mention, and want to givo you apple evi- dence that we desire to co..orerate with you in the same way. With best regards, believe me, Sincerely yours, Alfred 1,..Itifobitsiqs, Governor,Pederal Reserve 3auk, Boston, Mass. W.TriVOM.,24 July 28th, 1915, dear Liken: Thank you for your nice note of the 24th. I use passing through your town yesterday, but unfortunately my train connections did not allow me enough time to stop off aal have a visit with you. Our relations in the new banking system have been a great pleasure- 7nd satisfaction to me lad I hope they will last a good many years. Sincerely yours, Alfred L. Governor, Pedern1 Reserve Lank, Boston, Xass. BS Jriirm Copy sent to each of the Governors. e6:j arch 24th, 1915. Dear Sir: Enclosed please find copy of a letter written to Mr. Strong by Governor Ham- lin, which Mr. 3trong wishes you to see. Very truly yours, ecretary to Mr. Strong. Alfred L. Aiken, Esq., Governor, Federal Reserve Bank, Boston, Mass. VCM PERSON:1. September 2nd, 1915. My dear Jr. Aiken: OPP1 It really.is impossible to give a very satisfactory answer to yours of the 1st on account of our having at the present time no knowledge whatever of hat may develop from this visit of the committee of iltglish and French bankers. They should be here shortly and disclose what plan they are considering, or would considere I am absolutibey clear, how- ever, that this matter should not interfere with your vacation. to run over to New York some day next -hy can't you arrange reek and then we can exdhange vie. s very much better personally than by correspondence2 There are many matters in the present situation which have led me to abandon tamporarily my plan for getting away, but some of these are personal, having to do with my boy's college plans. tioni Others, I am frank to s. y relate to this exchange situa- If you find it impossible to come over next week, Je might have a little chat on Tuesday or ednesday by telephone and I think I can make it perfectly clear that vacation plans come first. Very truly yours, Alfred L. Aiken, Esq., Federal Reserve Bank, Boston, :lass. BENJ, rT7ONG, Jr. PERS --NAL. October 14th, 19M Dear Mr, Aiken: Thank you very much for sending Mr. Stone in to see me. I had a. most interesting chat with him and am glad to have m,de his acquaintance. Very truly yours, Alfred L. Aiken Esq., k, Federal Reserve Boston, Maus. VCM /1 December 23rd, 1915. Alfred L. Aiken, Governor, Federal Reserve Bank, Boston, Yass. Congratulations upon the past year's work, good wishes for next year and ferry Christmas. Benj. Strong, Jr. Charge to Benj. 'trong, Jr., 62 Cedar -:.treet. The above telegram sent to the Governors of all Federal Reserve Balks. December 24th, 1915. y dear Mr. Aiken: cannot thank you enough for your nice letter of eeember 23rd. Looking back ov r the past year's work, I can truth- fully sny that the greatest petisfaction it has afforded me, has been the asuociatio, aith the Governors of the reeerve banks and the feeling that after all we were accompliehine something by es- tablishing relations of confidence and friendship. Your influ- ence in develoeing a harmonious relatioeship at these reaetines has been felt by all of those who have attended them, but by none any more than the writer. lease accept from me may th'nks for your letter and the friendly sentiment that inspired you to write it Cordially yours, Mr. Alfred L. Aiken, Care The Federal eserve Benk4 Beaten, Mass. January 5th. 1916. Ify dear Mr. AikaLs......, I hope you will be able to get ever next weqk Qn6 77o shall be de7ighted to see you. killdest nersonsl r,T.ards, I am, Very truly yeurs, 'red L. Aikm. Hag., ederal Reserve rink, 3osten, V ONT, PERSONAL and CONPILENTI L. January 11th, 1916. Dear Governor Aiken: At the first Conference of Jovernors held in Washington on fecember 10th, 1914,1 year, and of was appointed course, my term of office has expired. :Jr. Curtis' apnointment was for It is ceed with its Chairmin to serve for one a I think like period of one year. hiTly important that this organization should pro- ;.ork without the slightest possibility of 'iny personal feeling being permitted to interfere with perfect harmony. therefore, writing you to suggest the desirability of I am, appointing another Chairmn at the meeting on the 19th. 'chile I have enjoyed the work very deal of a burden in many ways, relieved me of a great a much, it has been, good notwithstanding part of it. that Mr. Curtis has It was inevitable that during the first year a certain amount of eressure would be required to develop orderly procedure nd a systematic discussion of the program. That eart of the work has now been done and it seems to me that some one else can take over the responsibility of conducting the meetings and give the impression that should prevail, that there is rotation in office and that these Governors Conferences are not being run from the New York bank. Jan. 11, 1916. To Alfred L. Aiken, eq. I am writing you personally and confidentially about this because, as I rec..11, you were responsible for proposing My name, and am, also, sending a copy of this letter to Governor McDougal because he is the Chairman of the _%ecutive Committee. I would ap- preciat, it if you would have a word with him about it and do the needful. Thanking you in anticipation, I am, Very truly yours, .red L. Aiken, 78q., '.;overnor, Federal Reserve Bank, Boston, Lass. BS Jr/VOM -1 1913. I very gratofIll to you indeeci for sending me Oliver's 1st bock and frnnkness compels re to admit that I have already red it, fact, so absorbod in it one night that It was throe 0'010037 in t.j.:enorninE.: before I felt willing to lay it down. ClvInge a fewwords liere and there, and it applies with evual force to this country. There is E!..nother book, which you mpy h-ve read, but if not, which every .,nexiacn should road vnd that is Fagnet's "Cult of Incorniletece". I am seudin!: P copy I on locate it. It Jo rther rd to get. SuA as soon :!:; Am sorry not to soo you again before 1ving for %rope, Thank you heartily for your good wishes E4nd your interest in my experiences,whioh Twill recount to you immediately on returning, if you vul.t give me the opportunity, 'ith: best 'incerely yours: Alfrel L. Aiken, Esq., Federal reserve tiank, Foston, rase. BO Jr/70:1 Misc. 34 FE, L RESERVE BANK Sent by NEW XI (SEND TO FILES) 4Z COPY OF TELEGRAM (t. <`"\ AS) N 1\ AA> c's" Nov YJr-e, Aril 14, iv16 devernn.., redoral Resorve Bank, Boston, Maao. iieart;,, thanks for your wire "ion is most oharnotoristIO and gmatly approolAtcd. Am feeling Inv' fit awl looking formird to our :ueeting In Teehincton nday i,rong, Jr. Charge to 7ed,./ral 'Asnrvo 62 Cedar Street. B-5 !Jay 29th, 1916. Dear Aiken: Thank you for your note of the 25th. If I carry out my plan of going to Maine, I shall certainly try and arrange to stop over in Boston. If I go away in June, it will seem like desertion during the time when I should be here on account of the inauguration of the collection plan, but, as a matter of fact, it is only the preliminary work that will occupy that month and I suppose I will be here when the battle really begine. What would suit me best 'scald be to get you to go to-the woods with me. Faithfully yours, Alfred L. Aiken, Esq., federal Reserve Bank, Boston, li:az;s. BS JR/VCM Personal. ine 8th, 1916. .lar Aiken: It was might goo' of you to send me thqt book called "The Tent -yellers" and i ar going to read it with n rood deal o interest and p/eneure. -here are some mntters that I am anxious tn eiscuss with you personally nt the earliest possible moment even if it make it nr,cessnry for you to run over here especially. I am writing from ny apartment at 903 "ark Avenue, where I am lnid up in bed with little prospect of b ing around for some tine. ill you kindly keep this information in confidence and telez-ranh me on receipt this whether there is any chance of my st,eing you in the near future? Best regards and mnny thanks. inceroly yours, Alfred Aken, Req.. Care The Fede l neserve BnA, Boston, Vass. jr/VOM Estes Park, Colo., July 19, 1916. Mr. Alfred L. Aiken, % Federal Reserve Bank, of Boston, 53 State Bt., Dear Aiken: It is mighty good of you to write me and I enjoyed your letter of the 14th almost as much as a visit with you at the office. Just now I am engaged in organizing a little office up here in Estes Park myself and will be able to keep up correspondence with you and others Who are good enough to write me. My address will bett f the Lewis- ton and in all liklihood I will be h re-all ter. In some wa:s you fellows in B ton beat in New York and now that I m away from the office, It:seems only good natured to admit it. year-eRrangements/fer re-discounts strikes me as admirable so 00 uil of the New England Banks to remit at/ 1, inc$ntaTI gobbling up the Boston Ulearing House, stir kes me a real aohievment. You are to he congratulat for hav*ng set the pace. / I read the .Gua nctoe\ . ompany's report, which really struck me as a apr affair,, so many of the answers being noncommittal. \got replies from 20,; of the banks of the United Btat ,arid. .,f. that about one-third expressed no opinio f vq,de, the other two-thirds were : equallr t w /about as much of a fiasco as the 3 corn \campaig.k,t t'eaected Mr. Wilson. On the other hand, I 1,q4ediot that the Guarantee Trust Co. will he a member ofthi:System in due time and a very loyal one. 20T-i I a 4igging out literature to read and will try Mrs. O'Bhaughnessy's book, which I saw very favorably reviewed. Ifou would enjoy this wonderful place; it is as beautifultks any I have ever visited and the air is fine. We are surrounded with mountain peeks, some of them with lots of snow; every night is cool and, fortunately, the hotel is very comfortable. I am, With warmest regards an many thanks for your letter, Faithfully yours, Estes Park, Colo., July 27, 1916. W. Alfred L. Aiken, % Federal Reserve Bank, Boston, Mass. the interview you gave the I have just readcongratulate yokli on the answer Boston News Bureau and Company's-aor!oalled "canvass". to the Guaranty Trust same-thingL but was reto do the I was much tempted some\*gotiations effect, on strained by possible illare,uhde* way, wit.h\a view to which, confidentially, /It 14 )impossible to say their taking membership" Whether anything will c me o now there are three or and State Banks in four of the larger-TrIpt 0 ôpanies nd that are giving very New York, ChiCaglis-aiid,Ale, matter and I am hopeful th serious consideration It happens thatN 4 that by fall, Ike will s e some new members and important ones; this hO'ever is A#ite confidential. et/rIanCh news I can send you about /here\ik mybelf. I am a g-o-o-d--dea.1 better, but find it dis- on the, bank of a good trout tressing to o7 living be able to cast a fly. s zieam and 'warmest regards, Sincerely yours, Estes 1:ark, Colo., August 7, 1916. Alfred L. Aikens, Esq., Federal Reserve Bank, Boston, Mass. Dear Aikons: It was a great pleasure to rec4ive your letter of August 2nd and get all of the news, and let me tell you, as I recently have Warburg inea_10ter, that I think you have beaten all of us in yeter-Diatript in almost every department. If you sueceed in rot04ing up the Trust Companies, it will efea roe be fuJ,Nther evidence of the soundness of our,Nirk to ate, but'Ytrthermore I would consider it a ' sona ibute to yaur'own_influence and standing You -twelfth of the 2yetem. You express MC t my views about the postmaster businees.--Ittl oorest kind of an effort on the part or/our Was eto riends and I am sorry they ettempteei it. Curl ueinees should be developed on the basis oW service/41nd not force. A letter from Governor_liam14kjust ' 91eived intimates that at the end/pf_a.eiotheze fter the postmasters have been bondett and the detal a worked out, the order will be rev ved; I would like to make a little wager that the ord r will ,n t be revived, at any rate until after the fi t week 1) november. 1 / N--__23,padking of fishing, I have been out twice. The first time with no success, but yesterday we managed to 3et some very nice trout. I have completed some work here on the matter of our foreign arrangements, with which you are familiar. A little later this will be submitted to all of the-2.eserve Banks, and I am anxious to get your views about it. Write me whenever you have a chance and you may be sure that your batters will be very gratefully received by your friend in exile. Paithfullf yours, Estes Park, Col., September 2nd, 1916. My dear Aiken: Yours of the 29th reached me just aftini I had mailed a letter to you so this gives me the excuse for another one. I was delighted to get yo4r. account O-NtiRe Conference. a N,\ They wrote me from New York tha,te' 4u got the prograIerthrough /// in great shape, as I knew you deeming feature of the 41 layerid meeting weatAhe so you see the reacvifin in ea Kains says that the re- dinner at the aahant Club, \a_ ea0\116-s characteristic of the \- actor. / YrIL-Pr. a ----___-- / ,---- e ort of the meeting, I you and/hg managed to hold down the judge that development of that same old ,. i heresy fib ut that this checkfln Federal Reserve Banks. ,' Nattece give immediate Don't you think direct routing, combined with the scheme to credit for drafts on Federal Reserve Banks, will result in breaking down the whole plan of deferred credit? I am afraid of it and likewise afraid of the possibility of kiting to which you refer. About the foreign business, I hope the memorandum was clear. Kass objects to the New York bank acting, as I had sug- gested in the memorandum, and prefers to have an independent agent there. This I do not agree with at all. To illustrate -2To Alfred Aiken, Esq. my objections: Sept. 2, 1916. How would you feel if an agent of the other eleven reserve banks had office room in your bank and occuiled his time, not only in handling these foreign transactions, but in making investments for the other eleven banks in your market? Personally, I don't care a rap about the compensation so long as the New York bank is not losing money and takingla whole lot of responsibility for nothing. I do, however, seriously object to the idea that the New York market, botle-ta, bill8, etc., and in rates for foreign exonange, will b arrants, bject to the uncontrolled influence of the 2Unds of 'tqhe twelve reserve banks. We have avoided a serious ment, which would i vanl-sh-it--once".4 -- o , ed. dang$'4Ite I am writingiy u frank' \15, ! I is bound to come up ------ nd some the others --7of.te,,m / Another no auth /4 1 by the existing arrange- this agency scheme was adoptc\i ctions because the question ' should be prepared to diocuss hen the time comes. oint is that the Yederal Reserve Act contains for-A/ ncies of that character. )ty Alualt-the fiscal agency matter, I have asked :A.. Treman to furnish the Committee with copy of a memorandum prepared some time ago when Elliott's suggestion was first received. The fis- cal agency arrangement has so far not been develoned as it should be and I hope your Committee will be able to work something out. It occurs to me that this may provide opportunity for showing the Treasury Department that the whole scheme of note issue is wrong: and if corrected, the Government can be r lieved of a good deal of expense of the present Issue of gold certificates and consequently, To Sept. 2, 1916. AlfVed L. Aiken, Esq. Incidental- can afford to assume the expense of our note iv-9u°. ly, an your work on that Committee will take you to Washingion a good deal, be sure and give my best regards to 1718 H Street, of which organization, by the way, I am now a full-fledged member and proprietor. I have already answered your comments about the Kansas If you get there, as I hope you will decide City Convention. to do, block out enough time to run up here. Tiee chances are I I N that Warburg will come and if you two f0114$71ieuld spend i few the purpose days with me here,(or in Denver/pherwr\would go''b \ I am improving out il'er* , always/tddi-tex if you prefer)0iyou would be lrig m back, and it hear that you Ifotwithstanding a recent seton to hurry and get well to \\ // % 100 really t,4es me and would like fe1117 Ae_I to have me . . back. great favor, eatedly,s id to you, the moot gratifying e result ythe last tviyear* work is the relationship which has been 44bliehed I th the men in the different banks. It is worth a 1-4.11tj, put together. Should you by chance be able to spare the time and reach Estes Park before the fishing is over in September, I have some tackle here for fly fishing and we can take a crack the trout and you would not have to bring your own. When I get back home, if you are still of the same mind, we will try some of the tuna together. at 0 4 To Alfred L. Aiken, Esq. Sept. 2, 1916. Many thanks again for your letters. I hope you do not get discourgged by my not answering them promptly and from now on I will be a better correspondent, se please keep them up. With warmest regards, Faithfully yours, ;0(red. -4kFrio Fedi-ma Reserve -flank* Bosotn, BOCH stee Park, Colo., September 13th, 1916. Dear Aikeza. ____-- I was delighted to receive your letter of the 0th. It was so full of news and Just the kind of letter I like to get. Warburg expects to reach Denver on the 25th or 26th and to save traveling time, I am going down to Denver and spend a oc)uple of days with him. Of course, you realized that when I wrote you thed I had no knowledge of your plan for a trip to laine or would never have thought of suggesting Kaneae City and Denver. Just the seme, you know how giald I will be to see you. Warburg is covering Cineinnati, St. Louis and Kansas City, sandwiching in these two days here betwPon, and it is I am also expecting a visit from mighty goo of him to come, Frank Vanderlip and Frank Trumbull around the first of the month. About the Committee on fiscal agencies: This is the second Committee of Governors appointed and the work which was done in our office before was in connection with the earlier Committee, of which I was the Chairman. Inasmuch ac this is a brand new Committee, there is not the slighteot reson in the world why you should not act as Chairman of it. You know Treman well enough by now to realize that he will place everything in the office at your disposal. There will be some adventages in your eating as To Alfred L. Aiken, Esq.. Sept. 13, 1916. Chairman, because Mr. Treman does not expect to continue permae nently in New York and if this is a standing Committee, as imagine it will be, his retirement would neceeeitate a change in the Chairmanship. You car be ver y sure that he and Mr, Cur- tis will do all tho work possible in this connection and that they will always stand ready to run over to Washington with you to attend meetings. Why don't you write Treman about it, ask.ing him how he feels, and at the same time ask him to get out all the material on the subjectt We have quite a mass at the bank, some of which you will find or value. The above is ten frankly, as you asked, and wita full knowledge of what I know is Mr. Treman's feelings in thee matters. Kains and I have exchanged letters about the foreign arrangements. HQ is dead againitthe idea of the hew York bank assuming too much management of the account and would rather have a special representative appointed who would act under the direction of the Goveenor or Deputy Governor of the New York bank This is as near tweedledee and tweedledum as one could get, and argued to a logical conclusion, simply means that the accounts of salaries and expenses are kept a little differently by one method than by the other. To be quite frank with you, so far as the New York bark is concerned, we are going to exercise the most cam.. piste control possible over our own share of the transactions The business is too important to leave it to some sort of joint control such as is suggested, and your letter again emphasizes in my mind the extent of the misunderstanding that exists in the minds of To Alfred L. Aiken, Eee., Sept. 13, 1916. most of the Governors a e to whaJ kind of businese we are going to do. The margin of profit will be very much greater than on any class of investment we are now reeking. Were we dealing in exchange Tee would realize a profit on each turnover of anywhere from one-quarter to onoesixtyfourth. in this account, we will simply buy exchange whenever it is below the gold import point, remit it to London and invest the proceeds in bills which will %, pay, not 2i as in the case of New York bills, but 5 to which ic now the current -London rate, r:hese bills will be discounted and reported exactly as our other bills are, except, of couree, they willbbe reported in sterling and the amount of discount realized on the fund invested will be more than double what we are now getting on American bills. / am Most anxious that all of the Governors dismiss from their minds absolutely the idea that we are going to deal in exchunge as the exchange houses do, or buy long bills in this country as the large institutions do. As a matter of fact, I do not care a rap about this mate ter of compensation so long as the New York bank is not both di- viding its own field of the butiness with the other eleven banks and at the same time paying the expenses of conducting the business. There is enough profit in the account for everybody and a sufficient margin to pay a reasonable cost and comething for the responsibility and supervision The commission at present charged by the liew York bank for handling local investments would probably be double xhat would be required to cover a fair allowance of expense and compensation To Alfred L. Aiken, Iscle Sept. 13, 1916. for handling the foreign account for the simple reason that the rate of discount would be twice as big ae under present conditions and it would have the effect of doubling our cemmission. I have always agreed,At you knowithat whenever the eiecoutt rates in New York advanced materially, our compensation should not advance eith it and the same rule would apply to foreign business. The really important thing is that the account be operated, not for the pure pope of scalping profits in exchange or for the purpose of purchase of documentary bills in this country, discounting them and selling demand exchange against them, but really for the purpose of-stabilizing exchange und getting, ne they say on the other side, "a position counter to the market." To do this successfully will require the employment of as much money ae we can safely afford and uee it ac that it will have the greatest possiVle effect on exchange; in other words, in one account instead of twelve. I have been contemplating out here preparing a detniled statement of exactly how the business would be done, describing each variety of transaction and making an assumed calculation of profits. I have already prepared a memorendum of a scheme for managing the account and when this is all coecluded I ill take the liberty of sending it to you in ordee to get an expreesion of your on viewe. enjoy your letters and hope you keep them up. With best regards and hoping that you hada bully holiday, I am, Faithfully yours, .1fred L. Aiken, Esq., Yedenal Reserve Bank, Boston, liass. Pets Park, Colo., Octoller 6th, 1916. Dear Aiken: was delighted to have your letter or the 2nd. The Convention dovelOsed about as 1 thought it would, provided you follo-ze turned out in a good body to exercise simply the rstraininj; influence of your presence. Had the Ndoral Reserve Sy tem not been well repro7snted, it would have run 1 can cos this clearly from the accounts receivrburg, YeDougal and yourself, as well ae the newspaper lit: us. ed from account of 'hat transpired. EM glad Tarburg's spach went off so sell. he is ex- codingly senetive about the ores or criticism, Find if he kept his voice up so that they hoard him, ac he eeere to have done, I know that his speech was enjoyed and appreciated, Your let4rs give me a gr,et deal of pleasure and your visit although too short, an a delight. After the TWI of this month, my address will be 4100 Vontview Boulevard, Denver. The ,Aronicle is literally daft on this subject of our note issue. I am getting up some material to publish but will probably not Use it until after election. It may do a little good if it can be properly circulated. With warmest regards, Sincerely yours, Alfred L. Aiken, Esq., Governor, Federal Reserve Bank, 4100 Moutview Boulevard. Denver, Colorado, October 24th, 1916. Dear eeken: You may be sure teat I wae none vieit last month. It was altogeth4Ltaaella orse for your r .1,, but fine as long as it laoted. The first inetallme f th office and I presume Jay we some one of the hew York apers rticie hae gone to the to have it published in t I have net heardfrom him about it. You are s(u sly rjht a out the Governor's Conferences. They must nct be di come topi ,eeritinu d I will write 6urtts about Just now,--ia-lat the System neede is the develop ment of(g eatet uniformity in a lot of our metheds rind tefuse meetins assi meeting pro n bringing that about, besides that, every euggestions feom one or more of the Governors about various metters of weich advantage ean be taken by the other banks for the improvement of their own work. It is very good of you to write me franly about the personal mRtter mentioned in your letter and I am glad that you turned !Jr. Wing down, at any rate, for the preeent. He will be around again and then I hope you will do the same thing. It is a choice between a public service and making more mcney. I believe your personal inclination favors the former if it does tkx To Oct. 24, 1916. Alfred L. Aiken, Esq. broaches the subject again, I hope you will feel that it is worth while to write me about it before coming to a decision, or if you o n make it the excuse for coming out hers, so much There are a great many things in connection with the better. the proposal mat we could discuss with more satisfaction per- sonally than by letter. uiie recnttly, one of our Govern° vary tempting offer from a largo ir titution mnletion o to decline it, believing that th 0 and work is of much more im)orta \ has received a d ha 7 decided present I give him more satis- faction than malang more il Xad somewhat the same ex- penance myself within the pas ar, One of the large bankome a partner and i sup- ing houses in New Y ten tim pose it meant fiv the income that I will ever get from the hesetBank, b t I doubt if I would ever back in t e,arilna ap,alm be happy I have equal doubts as to whether wou d be. am glid t (you I ence. fie -is_ learn th t Mr. Wing is no longer on the ays a strong partisan and will do us 0.9 much good working with us as he would do harm working against us. Thank you for the auggetion about Lord fledesdale's book. if this Winter is a drying one in memy ways, it will Ri least give me opportunity to do some rending *doh I am going to enjoy. So far the treaiment out here is doirrg every- thirg I could expect. "j -3 To Alfred L. Aiken, Esq. Oct. 24, 1916. he Board is lust putting itF foot into it, I an afraid' in regard to those new French credits. I hope Mr. Jay succeeds in persuading them not to make public the telegram they sent to the Reserve Agents yesterday. I hope you can get out here again some time, With warmest regards, Faithfully yours, Alfred L. Aiken, Esq., Governor, Federal Reserve Ban Boston, as/vcm ; November Gth, 1916. Dear Aikent various reYours of November 1st just reaches me and ports from the office of your doings while in Am glad the government 3s are being N w York. 1 o d. The System OVVS too rany long time government bon or you fel vs to get / tter aid I am relieved to find next to that French credi wn attitude. You know that Curtis w,e misinformed au nly say in brief that p0,the facts better than I do aid a it was also an excellent <*rigat eonally I do net agree h th is nature couragirg credits of ard\&all in any policy die\ long as they are not ultra ))s At some pers1 risk 3/prophecy thet in years to come financial rather than these credit,/,' artieularly-fse which are Tires. commercial ill save Our own situation. e toV and, the bankers made a terrible blunder in sending out'4"-ci cular assuming to commit the reserve banks acted hartily without consulting them end I feel that the Board taking more time to invesin sending out their telegram without I The matter seems to have been straightened out and tigate. headlines. hope the incident Images without any newspaper I am amused at what you say about the meetings. not let any possible embarrassment with continuing them. get together. Do of that character interfere Something is gained every time you fellows -2o Nov. 6, 1916. A. L. Aiken, Esq. Also, 1(1 hope when the next Governors Conference is held that the program can be cleared Jp, particvlprly on the collection matter. Do not let too great haste in making Federal reserve Bank checks par for immediate credit and do not let any outburst of enthusiasm suggest that it is wise for us Parring to do all of this collecting business fs,r not Federal reserve bank chocks can be done later strong enough and experienced enough teLwipnd lecting checks for nothing is somew At n we are acket. Col- par witivkransport- er things for nothing. ing mail for nothing and doing 1cof bli 0 in the Reserve System, If we once get that principle d upon to do for noth- there is no telling what we may b ing, and it is surely as the fruit. l'any thanks ing".".40 your it h full 17-6urq Alfred L. Aiken, 4 Covornor, Federal Reserve Bank, 2oston, Rase. th e . bear lots of trouble December 2nd, 1916. Dear Aiken: I was delighted to have your let with so much news and will answer it by par of the 28th ult., aphs. Those meetings in New fee I hope you deal of good. ve of a great t tht time is About a different wal bills, I recommended that our Board establish in rate, not because I believed in the principle b y to show deference to expressed in Washin wishes that it is a departure from every known There can be no dif- ference in the bills accepted by the save acceptor that wo discrimi spent. ference in rate. When London ills issued by any accepting house, again it d' iminates against all bills of that house on the theory that is straining bill the credit. same ac tor is but I d To distinguish between two really anomalous, as I view it, views ex)ressed by Warburg and his aoco- ciates. That press statement issued by the Reserve Board gave me a great shock. but really I cannot I do not want to appear to criticize them, agree with the statement itself or the method of putting it out and possibly I had better say no more. -2To Dec. 2, 1916. Mr. Aiken. It certainly looks like more active work for the The with- reserve banks while the flurry in money continues. drawal of offerings of short government obligations of England and France will cause heavy gold shipments to New York and unee money cheelper less I aim mistaken, early in January, we wilt than ever. At the Washington meeting, bunch,will be I know can control that o energies which s clearing directed t llection whole me is the The most important subject udied by a Committee and of domestic exchange which s . e tion with the up the many unsettled matters i system. o some uniform arrangement effects possible. If you can de- -- further advanc exchange problem i and we have more experience achievementth accomplishing. in it, it will be Treman to e foreign until the domestic rve bank fer making Federal r angements at cussed the greateet it over ith TreMan and in, up the question of our t Governors' meeting to be disonfidence and would suggeot your talking urtis before the meeting. hose Boston trust companies in your sys- tem, come ove ew York and see what you can do with our timid ones. Don't worry about the future of the Federal Reserve System. It has come to stay'. What it needs is sane, courageous and con- structive management during the period of formation, which happens To Dec. 2, 1016. Mr. Aiken. to be the period when our greatest responsibilities are falling on us. If there is any way by which you can get our here to see me, just send and will be me a wire and come. I need no advance notice delighted to see you here. Withers' books are old friends of ni sonally a very warm friend. be in London together and e and he is Some day, you an I promise yo a trea are going perto n meeting him. came out here is still satisfact s when I first of this the irksomen banishment when I am feeling er sometdmes gives me Dr. Sewall says is more of a problem My progress while of course not as rapi the dumps. than my lungs. ter and warmest re- Thank you garde. Alfred overno Boston BS/VCM Aiken, 1",sq., Federal Reser ass. Bank, Denver, Colorado, December 24, 1916. Dear Aiken: I was delighted to 15th have your letters-of h have to get the report of doings in Washington, me in rather frag:nentary shape. have said o get back, but ersonally, 1 you underrate your own success at these meetings o follow rota ion in office think it has coon a gra,ld thi 's work was in danger of being in a job Vhere the import s for what you may. thank you n -a preliminary meeting with The practice est ,,ht at first create thin the Board with result at all, - it will mean a thin n o better the f the Board to crack the whip appearance of a but I don't so far reached that you and others The kind thi abccutZ my absence make ma exaggerated, but 19th and fforts and a better understanding e Board as to general policies, etc. ala much ariposo serv KS country the plan of making checks on Pederal Re- par exchange, and at the first opportunity ough Seay's report and send a memorandum which I am h you fellows may want to use at the Committee Meeting. and tact in the appointment of that committee will action and we are all to be congratulated. Confidentially, Your own skill insure no hasty :a.rburg has sent me drafts of the proposed amendments and I confess I am not as much shocked as you are except in one respect. I think the amendment to the Reserve Provisions of 2. To - the r. Aiken. Act, the December 24, 1916. amendment in regard to the retiring of greenbacks in and the amendment regard to retiring National bank notes, also the one in regard to Associate members, are guess work and too d upon too mach little accurate study of t situation, and have so written 7arburg very f facts of the present tidy. I think I eould favor all but one or In principle, Lendments, provided thorough investigations disclosed that they would weaken our re- serve position throughout the In brief, the amendme o impressed ma as follows; The associate membership re probably not effect the attitude of the large state in large cities one way or the other; they prob does have this advantage: if this more t s not bring any response, it seems to me the way 1 to Lida., by t Le some very strong measures, not r o enforce it, either by discrimination, tion or by some o aer kind of legislation which they canuot rebut the qaesti'. is - will it be safe to open the door in this way is e t further stUd. -. the c .f the effect on the country's reserves. 01 1ed reserve provisions, I am sure after reading the Minutes of the conference of agents that sufficient study has not been given to the figures. Some are claiming that it will increase the re- serve requirements of country banks, others, whose ability to guess is just as good, claie, that it will dangerously reduce reserve requirements, it hale I believe in the principle of this amendment, I don't think shoula be based on guesses. The greatest danger is that the bi in the Federal Reserve cities, particularly New York ghich always banks To - Mr. Aiken. December 24, 1916. carries a great deal more vault cash than is needed for counter purposes, will gradually take advantage of this provision and the effect will be a considerable release of cash reserves in the big cities. They wont need so much vault cash w. they feel they can get it right around the corner on a moments n ice. You are quite right about its necessitating big money depart nts for all of us and that we would imiertake to establis The supertax proposed on gat" think has been sufficiently handled under broader dis Reserve Board, but by all ma should be accelerat v t once. 1 Bank note cl ation I don't would rather see this matter ers to be exorcised by the etirement of National bank notes ofsible, as they now ipterfere with our Fedora 'sit to discuss these various Don't matters: Maybe oMe way or other Lnd, if you can, .tis' plans as he is talkin find of making dismay about that announcement of the Board's. e out only a few days after Mr. Masson of the d paid me a social visit here of a few days, at which he told me of all their financing plans, 'ditch struc -ne as being ver well considered. 1 almost had a relapse when that announcement came out. Success to your efforts with the Trust Companies. We might have landed some of the big ones in New York last spring had it not been for December 24, 1916. To - Mr. Aiken. the Clayton Act, but I fear all hope of success in that line has been spoiled by this announcement about international loans. A great mtlry thanks for your greetings Christmas and the New Year. I rejoice to thi good wishes for that you are on hand all the time, with unimpaired strength, 1 sy for any emergency and with that sound, level head of With ever7 good wish for C and the New y yours, Alfred L. Aiken, Esq. Governor, Federal 1 Boston, Mass. Bs/cc I am, Denver, Colorado, December 24, 1916. Dear Aiken: This is replying to yours of the 19th ab the foreign ar- rangements, and please hold it in personal con ence. I am glad Curtis submitted the to the governors and wish you the this matter itten me a litt re-action of the meeti e as to ement is one of such con- siderable scope and impo_ Word was conveyed to me that the Board will approve le plan and that existed as to its accomplish- ment, but that t milertaking any to transactions without their f s is a perfectly unworkable scheme and I wrote ivately to Warburg, that I was un- willi tha the able New lly to the embarassment and criticism subject ould be sure to result if we went ahead with the plan and oard's final con ad dignified t was withheld. then It does not really seem honor- a deal with a matter of this importance in such cavalie This letter is particularl..; about that trip to London. You may be sure that I would not go unless it was absolutely all to do so. right for me Dr. Sewall is careful beyond description and, in fact, wits an autocrat, but encourages me to believe that I will be able to do it without possibility of harm. without you if you could In that case I arrange the trip. certainly would not go It is a matter of the utmost 2. To Mr. Aiken. December 24, 1916. importance to the Whole system and, personally, I do not care to take all the responsibility alone of reaching final conclusions. It has occurred to me that you would be willing in a preliminary way to do a little study that would help us n we got down to work- ing on details, and for that purpose let me the following sugges- tions: Read Hartley -;dthers' two boo The Meaning of loney", Alexan Sinascou 'oyes' new boo Chapters of the ?Xr" and Go inancial n Foreign Exchange; get the figures in relation to th gold coins; the exact cost in ' American, English and French times of Shipping gold between London and New Yo our mint; the circular Issued by the A o he charges for treating precious metal of the Treasury Department made in July I regard to United States bonds, pap° renal/ and c The one open qu stion to be dealt with of real importance is th thod of dealii e of an a kno' while de with gold shipments; it really requires the to make the figures Lnd if you think it worth will send you later an exact statement of the problem, Which I confess I have not yet worked out to my awn satisfaction, and you might be interested in taking a crack at it. I have said nothing in regard to the situation with the Bank of France. This is equally important, and, to use a vulgar expression - is just as ripe. I have been in correspondence with Pallain, the 3. To Mr. Aiken. December 24, 1916. Governor, ever since my return, and the docks are all cleared for discussing more exact terms as to an arrangement with them, just as soon as it can be taken up on the ground. to find anti take with me a comnetent Secretary who speaks Fre fluently. If you know of such a man, keep an eye on him for fut e Use. So much for the present. i am d already to makin; the trip, particularly if you can go along. Alfred L. Aiken, Leg Governor, Federal Boston, Mass. BS .CC Denver, Colorado, January 3, 1917. It was a great delight to have a few we tough strange to say voice over the telephone on New Year's day, the telephone connection was a rather poor one December I talked with Curtis from e with your real On the 26th of in up on top of the Rocky Mountains and heard him as clearly as tho': e were in u to call me- up and I wish the same room. It was mighty I might have been able to boy of yours about some of Our experiences In the mounta Yours of the 28 me on my return. If you will keep an eye aks French, it will cer- tainly be a area s, however, that he should be a first-class sten had occasion to take a man abroad both cases needed a man Who could get a pile of stenographic work. ometime when 'ye) confW rice my variou re in New York ask Treman to show you in mmoranda on the subject of amendments. I think ost of them. Curtis I hope will be out this month. If you can join him, don't hesitate to do so and we will find means of housing the parti either in the house or in the neighborhood. Your letter of the 26th was also awaiting my return from the mountains and I cannot thank you enough for writing it. These letters Cheer me up a lot. My temperament was not meant for this sort of 111 2. January 3, 1917. To - Mr. Aiken. treatment and keeping in touch with you fellows is my greatest pleasure. Tell that boy that some day I will send h'm an account of the Christmas meek spent on to of the great 2oc What you say about that announcementid oi mind, but I really ought not to Mountain divide. tes my own state e abo with the nossibility of doing injustice to those fellows in Washington touch with the office on the u gest that at the first opp Curtis. In the meantime do may be a little more di My warmest kte1ephone right Alfred Gave Bos 35/CC ea, Federal Rose , Mass. long and sug- t particulars from Treaan and bout those negotiations; they can put them over just the same. for the New Year. incerely yours, e have been in Denver, Colorado, January 18, 1917. Dear Aiken: It was fine to read your letter of the 12th d the enclosure th, it is pro- Which accompanied it. As for the ace gressing very favorably. I am still gaining weight an Sewall is most optimistic about my conditio ess. He says a good thing for me to get a 1 so 1 have arranged to meet Arizona about the 29th of Jim Curtis and Jerome Green stay dawn there, but you this month. I don't know sit. can imagine haw kee probably go d e you, and have just now received the first ose proposed Some of I do net improvemen a few days before that. ad amendments to the Act, as 1 ha Lecently I only wish you th you. Curtis plans to leave could join the part on the 26th but I wi will be rovements over the original printed bill. drafts, but the proposed Reserve requirements is nk the chant,. an rather makes matters worse, but what aan you and I do when the Board closes its ears to suggestions from the bank managers and apparently is not willing that bankers generally, or even those of the system, be encouraged to offer suggestions to Congress, or even be heard. I do not altogether agree with you about the Associate membership . cheme as finally modified. I wrote Warburg that I did not think it would effect the State bank problem one way or the other very materially, but 2. if it was a first step in the program of ultimate coercion, I thought it might be advantageous. Personally I am coming to the view that by tax on checks, or some other similar method, State banks should be driven tate charters. to take membership, but permitted to retain their is in encountered the saLet difficulty in Boston that I believe that if it were not for the Clayton Act, w some of the large companies to take xnembD. Ban,: did. auld have coaxed the Corn ;xchange s rieties" is vp y much to ential to the development The work of the go the System and they of ed by a lot of machinery and should not be restrictions, but I hope tee edure Will not be stifled by having members of cussion. New York, and 1 wish you greater success than we accctxxpli What you say about the"fif the point. You restrain freedom of dis- I hope yo ccess in your Washington con- ferences. ng the United Which I unfair thing longer found interesting and which some matters. known of t States Investor, struck me as being very article in the copy you sent me is the best printing. on and many thanks for keeping no in mind. prospects of that trip to Europe brighten daily, providing of course some of our friends in Washington don't step on me. Yours Alfred L. Aiken, 4:sq., Federal Reserve Bank, Boston, laass. very sincerely, The Denver, Colorado, January 25, 1917. My dear Aiken: As yo e doubtless know, Mr. Treman, When 1 to accent the office of Deputy Governor of the D taken ill, arranged Reserve eank of NOW York at great personal sacrifice to himself in ore to avoid the necessity of the imuediate election of a suceesso n my offic to afford me opportenity to recover good health a an stronday in ted by the doctors was nuite to be exnected It is unfair that he sh to continue the present ar- rangement any loneer than is absolut business of of the bank for us to have a ne cessare and, furthermore, the as to mate it necessary ha ent Deputy Gov or in any event and generally to strengthen our offic i organization, that the wore will bear less heavily on those who e really be ly overworked ever since the fall of 19 matter-has bee of our B for sometime in the a, consisting o now writt our own bank hands of a Committee essrs. Woodward and Peabody, and they have t they have condleded that the interests of test as a ehole would be best served if you can be persuaded to accent the position which r. Treman now holds tempora- rily and join our organization. It now looks as though I would be able to return sometime in June, but 1 am frank to say that it would be highly inadvisable for me to return at all, if it should involve such long hours of wore and each continued pressure as characterized the first two years of our work. therefore, be my It would, own wish that as much of the burden as possible be carried 2. V° - Mr. Aiken. January 25, 1917. by you and that we should so shape our organization that the pressure would not bear unduly hard on any one of us. I Iiot authorized to maze any suggestion at all in regard to salary, and t the liberty of suggesting that if this arrangement makes any appeal t you at all that it night be a good plan for you to have a Peabody. Who stand ready to make an e convenient time. I am selfish enough to this arrangenent appeals to me personally very strongly inde will give me a feeling of great confidence as to the date future of the bank whether I am able to stay or If this sugge profitable for both n a visit with Wit , are the time to run out here for only stay a day or two. rmest,regards and hoping to hear very shortly the result of your d iberations, ithfully yours, Alfred L. Aiken, Esq., Federal Reserve Bank, Boston, Mass. BB/CC. I am sure that it would be Denver, Colorado, January 25, 1917. ? MSONAL. Dear Aiken: My separate letter of this date you may con this is quite personal for your own eye ale. Y just what my situation is and what the me, also somewhat of my own plans fo that I can return around June e reasonably short a short visit out here. those of the 1 and break down tters being a ITIX) fairly aas really ha much my A,4 He tions, involving continuous sume a my return dope ve in store for t place, ture. In the ure seems go immediately to Europe. He thinks I may on returning need to work and pressure 1 e entitled to know ly well and he is hopeful my doctor says that I am going t says, however, that if er official and six r eiett years, I will last in. In fact, the permanence of arranged that I can take things ight of the work without doing too to tie myself down with too many resolutions s to the future if that can be avoided, but I have it generally 7/years' of good work left in me, but that the there are in mind t and plan uncertainties health really make it necessary that permanent plans for the strengthening of our organization should be merle at once. I have even considered the desirability that later on when the bank is in applepie order, it might be a good plan for me to go abroad for a year, or even more, in some capacity to represent the Reserve System and organize its foreign business in good shape. All of these are very indefinite plans and of course subject to the views and wishes of my associates. You are ex- actly qualified to step into the bank and do most all of the things that Aiken. To - Mr. January 25, 1917. I have been doing, if not all of them, and I can assure you that all of those who are in our confidences as to this plan, welcaw it most heartily. It involves relinquishing, at any rate for chief position in one of the banks for a e time being, the e ut felt upon considering this phase of the matter that 7 important work being done in New Yo of title or position, and that the office were such that that Needless to say that I await word from you as to y Nith warmest Alfred L. Federal BOston, BS/co en, Esq., erve Bank, iss. orship, but I have nterest in the eater than any relations with onsideration all of ns at tter would present no obstacle. test interest; even anxiety, some Phoenix, Arizona. February 10, 1917. Dear Aiken: Yours of January 30th has reached me here where -Curtis and I are spending a week or ten days, and in order :that you may make plans for trip west, I am telegraphing you today as per inclosed confirmation. If, after seeing Mr. Woodward and Mr. Peabody, you are still inclined to come to Denver, I am onfidett that the time will not be wasted, and it will afford me no end of pleasure to have a visit with you. We have plenty of room to put you up at the house. I will be delighted to learn that there is a possibility of the proposed plan appealing to you. With warmest regards, in which Curtis joins me, I am Faithfully yours, Denver, Colorado, February 20, 1917. Dear Aiken: 41ipart your letter of the 14th is answere letter on the subject of the New York position, particularly with regard to the decision y my separate I the am writing now Board, Which has been apparent to me for sometime past, to take th own hands. Nothing has caused me ns into their h concern as e repeated evidence of this decision, Whi me from many quarters. wont review them here, but they ble and convincing. greatly appreciate your wri as I shall as hold your letter in confidence, since the Rese ject has been debate refully by th decided to ac Board was reorganized, this sub- mbers of the Board and they have instead of supervising them. elude simpressing-The activities of the Governors' Conferences. impression on the very c member as I you to I believe tha This will I mind that I can hardly describe. In the first ement of our work it has been apparent to some a. the Reserve Board, high-minded and conscientious y are, were almost all of them profoundly i6morant of banking matters and such knowledge as they had was highly theoretical and in many cases im- 411. liallh _ praeticable. In illustration I will only recite the two years of /*angling over collection matters. Had the Board's wishes been carried out, we would today be carrying between 4100,000,000 and .A50,000,000 of float and be shy just that much gold. to me. The Annual Report to which you refer was a great shock At first I was inclined to feel that it was distinctly dishonest to ir Mr. TV- rI Aiken. February 20, 1917. state the history of the collection matter in that way, but I have come to believe that it is more ignorance and sort of an intellectual autointoxication, rather than any intention to mislead law undoubtedly intended that the twelve The fact is that the s should be reasonably eserve autonomous, with supervision from ashington, and consciously doing e Board is now unlty of doing - grasp- at every Federal Col, ing for increased powers - and I dread and fear the co big men are generall:; willing to d are the men who accomplish everything themselves. uences. thority to oth Really a, and those kind that feel they must do MUD greatly fear are not men of that Our supe type. ed and the Reserve Banks If the Govern() are put under such that their business is really run from Washington, I a work is done I am not 1 result in a situation where my Mo. .uld f I did not say that by temperament ified for that kind of a members the Board are trusted h actually Washington, position, and I am convinced that the yet experienced enough as bankers to be en, these twelve banks and to accept orders from result, would be absolutely intollerablo for me. Don't think that I say this in a spirit of complaint. The Reserve Systea is drifting towards centralization and towards a central bank in fact though not in form. I could not possibly be satisfied to run a branch of such a system, although I confess to a certain amount of sympathy with the development, which is a logical one and almost a necessary one, but it Mitld not come yet. 3. To - Mr. Aiken. February 20, 1917. My belief is that the wisest course now would be for SOITO of the governors at the first opportunity to have a frank discussion of these matters with the members of the Board, and endeavo u/e unwisdom of interfering with the status quo. to convince them of ur governors' meetings have in a great measure made the system, although Reserve Board has gotten all the t the:: let well credit for it as they sho alone until the subject of centralization can be dealt to face and in such a way that we enough face squarely, erstand each ether and avoid dispute and dissention? In conclusion, let me say talk With the Board about being made. were home I would have a frank try Being a personal letter to Fred Delano, not referrin d tell him just how I feel. Board adopts and per B ?.,s described in a. separate letter, t. ween ourselves, authorit work needs to be t is needed in Washington is a stronger of the Reserve Board, and a more liberal policy in dealing f autonomy with Reserve Banks more centralized and authoritative and encouraged to develop independence and self reliance. will deal with the matter as you think best. believe it is wise, and The Board's own the banks _lfred L. Aiken, Boston, Mass. should be I hope you and Rhodes Show this letter to him if you then tear it up. Best regards to you, old man, from a very restless partner. BS/CC If the I shell hore to get in shape to return home, and then convince them that a mistake was bh) Denver, Colorado February 20, 1917 PERSONAL Dear Aiken: In part your letter of the 14th is answered by my separate letter of the subject of the New York position, and I am writing now particularly with regard to the decision of the Reserve Board, which has been apparent to me for some time past, to take the reins into their own hands. Nothing has caused me quite so much concern as the repeated evidence of this decision, which has reached me from many quarters. I won't review them here, but they are unmistakable and *Q0Vrinciaag_. I greatly appreciate your writing me and will hold your letter in confidence, as I shall ask you to hold this reply. I believe that since the Reserve Board was reorganized, this subject has been debated carefully by the members-of the Board and they have decided to actually run the Reserve Banks instead of supervising them. This will include suppressing the activities of the Governors' Conferences. It makes an impression on my mind that I can hardly describe. In the first place, from the very commencement of our work it has been apparent to some of us that the members of the Reserve Board, high-minded and conscientious as they are, were almost all of them profoundly ignorant of banking: _mat-tett, and such knowledge as they had was highly theoretical and in many cases impracticable. In illustration I will only recite the two years of wrangling over collection matters. Had the Board' s wishes been carried out, we would today be carrying between $100,000,000 and $150,000,000 of float and be shy just that much gold. The Annual Report to which you refer was a great shock to me. At first I was inclined to feel that it was distinctly dishonest to state the history of the collection matter in that way, but I have come to believe that it is more ignorance and sort of an intellectual autointoxication, rather than any intention to mislead. The fact is that the law undoubtedly intended that the twelve Reserve Banks should be reasonably autonomous, with supervision from Washington, and the Board is now unconsciously doing what every Federal Commission is guilty of doing -- grasping for increased powers -- and I dread and fear the consequences. Really big men are generally willing to delegate authority to others, and those are the men who accomplish much more than the kind that feel they must do everything themselves. Our supervisors I greatly fear are not men of that type. If the Governors'Conferences are abandoned and the Reserve Banks are put under such directory supervision that their business is really run from Washington, I am afraid that it will result in a situation where my work is done. I would not be honest if I did not say that by temperament I am not qualified for that kind of a position, and I am convinced that the members of the Board are not yet experienced enough as bankers to be entrusted with actually running these twelve Banks and to accept orders from Washington, as will undoubredly result, would be absolutely intolerable for me. c Mr. Aiken Page 2 February 20, 1917 Don't think I say this in a spirit of complaint. The Reserve System is drifting towards centralization and towards a'central bank in fact though not in form. I could not possibly be satisfied to run a branch of such a system, although I confess to a certain amount of sympathy with the development, which is a logical one and almost a necessary one, but it should not come yet. My belief is that the wisest course now would be for some of the Governors at the first opportunity to have a frank discussion of these matters with the members of the Board, and endeavor to convince them of the unwisdom of interfering with the status quo. Our Governors' meetings have in a great measure made the System, although the Reserve Board has gotten all the credit for it as they should. Why can't they let well enough alone until the subject of centralization can be dealt with squarely, face to face and in such a way that we will all understand each other and avoid dispute and dissension? In conclusion, let me say that if I were home I would have a frank talk with the Board about this and try and convince them that a mistake was being made. Being away, I am going to write a personal letter to Fred Delano, not referring to your letter, and tell him just how I feel. If the Board adopts and persists in this policy, I shall hope to get in shape to return home, finish my part of the job, as described in a separate letter, and then quit. Between ourselves, what is needed in Washington is a stronger authority in directing work of the Reserve Board, and a more liberal policy in dealing with questions of autonomy with Reserve Banks. The Board's own work needs to be more centralized and authoritative and the banks should be encouraged to develop independence and self-reliance. I hope you and Rhoads will deal with the matter as you think best. Show this letter to him if you believe it is wise, and then tear it up. Best regards to you, old man, from a very restless partner. [unsigned Benjamin Strong] Mr. Alfred L. Aiken, Boston, Mass. BS/CC Denver, Colorado, February 20, 1917. Pats CEAL. Dear Aiken: When your letter of the 9th reached me I -Iso appointed that I was tempted at first to telegraph u and urge a recon- sideration of your decision, but after municate in such matters and I feared grievously dis- s no way to corn- at it might be in the office and cause trouble. I cannot advance much respecting personal and family reasons for your remaining if they prove to be a b as very deep regret. ideraone, possibly I other hand, as to all in writing you again y uncertain. e resto ly so that I can return to the office chances are tha to Europ d I hope wit* duration, bu am justified Dr. Sewall thinks but neve ve such strenuous work as the last few years. think t On the ust how I feel. My own future mg health ; those are beyond my ken and Personally, will get back some time this summer, then go ou, then put in a period at the bank of indefiniee ot very long and then quit. When I say pit I mean specifically as Governor of the Bank, although it may develop that I will want to try and arrange to go to Europe for a year or two to represent the bank there and work out to a reasonable perfection our foreign banking arrangements. These are matters, somewhat indefinite but nevertheless important, which all bear on your decision and which I had hoped to discuss with you out here. In other words, I should think the chances would be almost nine February 20, 1917. To - Mr. Aiken. Out of ten that in a year or two you would step fully into my awes. You will never realize as fully as I do, until you are in the New York office, that it is in a way the biggest banking position in the country. It is, of course, desirable that the man Who occupies it should not know what your be reasonably independant outside of his aa situation in that regard would be, but barring the cannot help but feel that it is a mist for you net to ependende, I me to New York, and unless the personal and family reasons present a definit If, upon receipt of thi way to a change of mind, ma ing a possibility P-d then u can by absolute bar. ossibility see your call up Woodward, Intimaton the train and come out here to see me. . would accept your decision If this was sol without demur. It is not however, but much more than that, for I -Id in that matter I know you will take regard it as a matter off your hat to nobod very keen to you in New York, and you are the one man in .spuld pick as an associate and successor; this I say the thole with the utmo t franknegs in the hope that it may influence your decision. Telegraph me I 'ou see any possibility of a change. :;'aithfully yours, Alfred L. Aiken, Esq., Federal Reserve Bank, Boston, Lass. BS/C0 Denver, Colorado, March 15, 1917. Ma dear Aiken: Disappointed though I am at the outcome o nevertheless hardly you in Chicago. detracted from the keen enj too It was, however, only our discussion, it ent of my visit with brief. While this jotter is particular or making the trip, which I do most heartily, I a :nt to say the your position and feelings abou+ them. New York and sympathize with I have about determin run along in orstand ssociates there to let matters their present shano as there seems to oe such an excellent possibill ew York in a couple of months and it would be a stil also hold your own eyance, merely to the extent of keeping yourself in ich would enable me to have another n Jais bout with Let me suggest that you get home. ve a long letter from Montague Norman today, in Which he expresso trip to is conviction t aon before arrangemen , it would be necessary for me to maee another an finally close no the detail of our English ve all along considered to be likely. Best regards and once more many thanks for a bully visit. Faithfully yours, Alfred L. Aiken, Esq., Pederal leserve Bank, Boston, Mass. Denver, Colorado, March 27, 1917. Dear Aiken: Many thanks for your telegram and letter of the 21st. I am now satisfied that no changes will Je made in New York before my return, which is almost certain to be June 1st, or thereabouts. It has been a great help and comfort to me to feel that you have been able to take a little hand in this matter and help along. I am not going Exchange from here. to attempt any agency about the Federal Reserve /t would not be fair for it is a complicated matter and needs discussion rather than academic Now as to the Federal treatment from a Reserve Board situation. distance. I think possibly that some of my correspondence with Mr. Delano has helped; he has just been here and I have had a most satisfactory visit with him for two days. Things did get stirred up for awhile; in fact the whole atmosphere was lectrical. and I believe what appeared to be the the Board added sense of responsibility. The approaching crises gave crises was more imagination than actual and I am sure things will lot up so far as tension is concerned and Chicago. you find it possible, carry out the plan we discussed in The meeting in Washington on April 4th will provide the oppor- tunity. I have a pretty heavy mail today and won't attempt a detailed account of my doings with Delano, but i had a delightful visit. Once more, many thanks for that fine visit at Chicago. it tremendously and it did me a world of good. Faithfully yours, Alfred Aiken, Esq., Boston, Mass. I enjoyed 2. March 27, 1917. To - Mr. Aiken. P. S. On giving further thought to the subject of your meeting in Wash- ington on the 4th and before any private discussion with the Board on the subject of friction, etc., I thinic it might be a good plan for you and Delano to have a quiet discussion along this line. believer in the principle of management of each Reserve in bringing about what to your efforts. BS/CC He is a thorough developing autonomy and responsibility in the Bank and his suggestions you and 1 discussed, will be of great value viz.- better relations. Success Denver, Colorado, April 4, 1917. Dear Aiken: I an very much obliged to you for your nice letter of march 30th and for sending me copy of your letter to the Reserve Board on the subject of the Treasury bills. Quite confidentially, I have just written Curtis on this subject as follows: "About the 2%. certificates of indebtedness, i agree entirely with the attitude of the Board as to the way this matter was handled by the Secretary, but think had I been there I might have recommended that no resolution be prepared, at any rate in exactly the form as finally drafted. Personally, I would like to have talked this over with LicAdoo to get his point of view before taking action. In the first place, he is under great nressure r'id in the second place I think he is not very well posted on transactions of this character and rossibly has not had time to get information from those who might be of assistance to him. The British Government borrows immense suns of money even in times of peace on short bills of various kinds. Sometimes those are placed in the market on tenders, in fact I think that is the usual procedure. Announcement is made by the Bank of England that they will receive tenders for so many millions at 30 days, so many at 90 days, so many at 6 months. Bids are made on the basis of a rate of discount and allotments are made by the Bank of Lngland to bidders, according to the rates bid. The other type of borrowing conducted by the British Government is directly from the Bank of England. This in an operation that is constantly taking place and insteaa of reqpiring in each instance a protracted negotiation by custom, the Government always pays the 3ank of England 1/2 of 1;4 less than the bank's minimum discount rate. Our minimum discount :ate is 2,, our maximum 4, consequently our arrangement would be a/2 of 1% below the mean rate. The mean rate being 3, would make the rate on these borrowings 2-1/2;1, and, as the rate for bills is uniform with all Reserve Banks, it would apply equally to each lender." The Reserve banks In the middle west may have been courting favor or displaying ignorance and lack of experience. I really think best patriotism just now will be displayed by doing business conservative lines, rather for some unsound financing. that the on sound and than 'laying the foundation by excessive zeal To April 4, 1917. Mr. Aiken. The subject of the Fiscal Agency of the Reserve Banks is just now one of very great importance with the Government about to embark upon some huge financial operations. I wish we might agree upon a sound, conservative program with the Secretary of the Treasury, so as to avoid airy difficulties which may otherwise mann. There is noth- ing I can do from here because, it means a lot of discussion and inquiry -but I hope that you and the others have it in mind that our money market may have some bad jolts if arrangements for government loans are not ii very skillfully handled. Best regards to you and success to your Washington meeting. Very sincerely yours, :\1\ Alfred L. Aiken, 12;sq., Federal eserve Bank, Boston, Mass. Form 1217 PCLASS OF SERVICE DESIRED .'ast Day Message ly Letter liVESTE 3 UNION WESTERN UNION Night Message 7i")Night Letter Patrons should mark an X opposite the class of service desired; OTHERWISE THE TELEGRAM WILL BE TRANSMITTED AS A FAST DAY MESSAGE. TEL 1 1V.Vg z7712V I irv Receiver's No. Check AM Time Filed NEWCOMB CARLTON. PRESIDENT Send the following telegram, subject to the terms on back hereof, which are hereby agreod to Denver, Colorado, April 5, 1917. Alfred L. Aiken, Chairmany Shoreham Hotel, Washington, D. C. Hearty thanks for your message aa affectionate greetings to you and your comrades. I confidently expect to be with you at the next mooting and wish you complete success with your program. Benjamin Strong, Chg. Benj. Strong, 4100 Montview Blvd. ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERMS, To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office for comparison. For ne-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR AS SU consideration whereof it is agreed between the sender of the telegram and this Company as follows: The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, beyond the amoum, eceived for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty times the sum received ar sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lines; nor for errors in cipher or obscure degrams. In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery, of this telegram, whether aused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued, unless a greater value is stated in vriting hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be paid based on such value equal to one-tenth of me per cent. thereof. The Company is hereby made the atrent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach its lestination. Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such office in other cities or owns. Beyond these' limits the Company does not undertake to make cleliv,ery, but will, without liability, at the sender's request, as his agent and at his expense, endeavor to :ontract for him for such delivery at a reasonable price. No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sent to such office ,y one of the Company's messengers, he acts for that purpose as the agent of the sender. The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the telegram is lied with the Company for transmission. Special Wins governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in addition to all he foregoing terms. No employee of the Company is authorized to vary the foregoing. THE WESTERN UNION TELEGRAPH COMPANY INCORPORATED NEWCOMB CARLTON, PRESIDENT CLASSES OF SERVICE 'AST DAY MESSAGES A full-rate expedited service. I G HT MESSAGES Accepted up to 2.00 A.M. at reduced rates to be sent during the night aid delivered not earlier than the morning of the ensuing business day. DAY LETTERS A deferred day service at rates lower than the standard day mescage rates as follows: One and one-half times the standard Night Letter rate for the transmission of 50 words or less and one-fifth of the initial rate for each additional 10 words or less. SPECIAL TERMS APPLYING TO DAY LETTERS: In further consideration of the reduced rate for this special "Day Letter" service, the following special terms in addition to those enumerated above are hereby agreed to: Day Letters may be forwarded by the Telegraph Company as a deferred service and the transmission and delivery of such Day Letters is, in all respects, subordinate to the priority of transmission and delivery of regular telegrams. Day Letters shall be written in plain English. Code language is not permissible. c. This Day- Letter may be delivered by the Telegraph Company by telephoning the same to the addressee, and such delivery shall be a complete discharge of the obligation of the Telegraph Company to deliver. This Day Letter is received subject to the express understanding and agreement that the Company does not undertake that a Day D. Letter shall be delivered on the day of its date absOlutely and at all evcnts; but that the Company's obligation in this respect is subject to the condition that there shall remain sufficient time for the transmission and delivery of such Day Letter on the day of its date during regular office hours, subject to the priority of the transmission of regular telegrams under the conditions named above. No employee of the Company is authorized to vary the foregoing. NIGHT LETTERS Accepted up to 2.00 A.M. for delivery on the morning of the ensuing business day, at rates still lower than standard night message rates, as follows: The standard day rate for 10 words shall be charged for the transmission of 50 words or less, and one-fifth of such standard day rate for 10 words. shall be charged for each additional 10 words or less. SPECIAL TERMS APPLYING TO NIGHT LETTERS: In further consideration of the reduced rate for this special "Night Letter" service, the following special terms in addition to those enumerated above are hereby agreed to: Night Letters may at the option of the Telegraph Company be mailed at destination to the addressees, and the Company shall be deemed to have discharged its obligation in such cases with respect to delivery by mailing such Night Letters at destination, postage prepaid. Night Letters shall be written in plain English. Code la is not permissible. No employee of the Company is authorized to vary the foregoing. Denver, Colorado, 1917. April le, My dear Aiken: I am vore sorry there has been delay in answering your telegram of the 14th and your letter of the 9th, but I have jeet Deem off on a short trip to Trinidad eith so ee friends which explains the delay. .eany thanks for your letter and the interesting aocount of your activities. Both the Boston and New York Banks too e the correct position in regard to the snort note issues of the Government and I am sure it has done MD harm. Of course alcAdoo is under great pressure. As you say, the actual placing of the large loan by the Government, say $1,000,000.000, is a mechanical matter so far as gettine subscriptions is concerned, but the handling of the payments will require great sill to avoid disturbance to business and i have yet to hear froi anybody that the people in Washington are alive to the importance of that feature of the matter. On that and other points covered by no memerandue you send the following comnents seen justified: Ag3Uil2e it is essential that the first issue should at once sell at a premium, I.thina the amount should be limited to say ;1,000,000,000. In my opinion he bonds should be exempt from all tax except the inheritance tax or the Federal Government and income tax, or possibly only the surtax. I realize the impossibility of getting an agreemeret as to the income tax liability, but nevertheless in my Vielff tee exemption of the bonus of the Government froa taxation is an unsound and mi,ht a dangerous principle. in time of war prove to be It creates a preferred class of richer people who, theoretically, might represent billions of the country's wealth, but who 2. To - Ur. Aiken. April 16, 1917e would pay no taxes whatever if all their pronerty were invested in Government bonds. Federal Reserfe.banks should be allowed to convert their 3's and some steps should be taken to protect the National Banks i their ownership of the 2's. It would be a sad blow to the National banks to have the value of their 2's rarked down to 90, or oven below that, and some plan should be devised for protecting them. I would prefer to see an arreneement by Whichtheycould convert a proportion of their holdings into the new bonds which would not have the currency privileges. and make that the means to reduce the amount of outstanding National ban- notes. EAU: 3-1/2, is the minimum. Bonds should be convertible into eny now bonds issued at a higher rate during the period of the war. PRICE: By all means they should be sold at par and accrued interest. TillAS: It is difficult to arrive at ane determination on this point without knowing more of the Government's program. 1 do not think we should borrow for any long neriod but should rely upon teeation to clean up the whole war debt in e short tine. Provision for sinking fund, or for retirement by annua.L drawinns, should I believe be modified so that the Government could make purchases privately at the discretion of the Secretary of the Treasury. It would strengthen the Government's credit if sinking fund pro- visions were made mandatory in regard to all the old outstanding issues of the Government. DMJUIIATIONS: 4100.00 bonds ar e the smallest that can be economically issued, but I believe it would be well in a popular loan to provide for some of a smaller denomination. To - Mr. Aiken. April 16, 1917. SUBSCRIPTIONS: Much as I would lice to see the Reserve Banks handle the Whole job, I cannot help but feel that we are ss yet not very well equipped to do so and to maae certain of success, accuracy and a It will be neceseara to solicit the assistance of the best bond houses. They can assist in a publicity intaxm of Inconvenience to the public campaign and cooperate in obtaining large advance subecriptions from big institutions and bond buyers, /ike the Savings banks, Insuaanue cmpaaies, etc.; that always helps a bond sale. aaTH0a ea PariaaffT: I would not like to exprese an opinion on this point without the data as to number of subscriptions and =mats received for the Saanish aar loan. It night be dangerous to have all amounts of e1000 or leas paid in full at one time. On this point of avoiding disturbance to the money maraet the analish and arench sastea is andeubtedly the best. The Government borrows on short obligations la anticipation of day the taxes and proceeds of bondsaales, short loans are iaseed every/throuah the Bank of Lagland so that the maturities are saread daily over a wide period and whoa a big loan is made, to a great extent, ore band washes the other, the loan being payable in installments and the ahora borreainas repayable from day to day. The larger, of course, the amount of the short borrowings. the less the disturbance resaltina fram the collection of sebscriptions. DISPOSITICU OR PROCEEDg OP SUBSCRIPTIONS: The plan suggested strikea me as being allright, except nothina is said about security. The Reserve barge shoull have ample security and a good deal of latitude should be per- mited as to the kind of security which they might accept. Of course this To - hr. Aiken. April 16, 1917. raises the questioe of interest, also the question as to whether or not we are interferine with the discount operationc of the aeeerve banes. On the laole, I am inclined to thine the deposiearies should be required to allow say 2% interest. If that plan is adopted, the records of the Treasury Department and Comptroller's office should ee made available to the Reserve banks in order that We may be protected as to any shakey or nsound banks. ArVISORY COMXIle This is, of course, ae excellent suegestion. rieferring to the comeents attached to your memorandum, of whose authorship I am not advised, the following occurs to Xe: I agree with everything on the first page exceet as to the possibility of 42,000,000,000 of bohds selline readily at 3-1/2;1.. That is tee kind of an opinion which would naturally develop in the east Aeon) there is a reat deal mere enthusiasm than there Is throleffieout the West. It would be resa4 better finencine to offer only $1,000,000,000 at first for safer and the following reasons; 'ee'e (2) facilities. it will test the market. It will-bc eaelar to handle eith our present inadequate (30 it will reduce the preportion of ben& subscriptions. (4) It will minimize money (b) It will aesist the development of the plan of temporary borrowing. market disturbances. (60 It will assist in creating a premium on the first issue, eich is most important. (7) procedure. Generally speaking, it is a more conservative plan of ?RICA:: I do not agree to the plan of 120 maximum limit. prevent there being a good premium from It will the outset, unless allotments are To - .4r. Aiken. April 16, 1917. very greatly reduced in case of a heavy subsovAotion, and it does destroy some enthusiasm, everybody feeling that they can get all the bonds they want. tr.w bids can be dealt with by the exercise of care in making al- lotments, for Whioh absolute dlscretion should be retained. ,77E77-:3- la general. I would agree to this content. :41.TB07). OP I have covered most of this above. it will be dangerous to provide that payment of subscriptions of WOG and over be made at one time. It is not at all unlikel!7 that 2,000,000 subscriptions, not exceeding ,11000 each and averaging possibly WO each, be received for this loan. That would be 11,000,000,000 to be paid at one time and bring about the very condition we seek to avoid. In other words, whoever prepared the comment is still thinking in terms of hundreds of millions instead of thousands of millions. I am inclined to think qnarterly distributions of payment of larger subscriptions, or possibly five payments sixt days apart, would fir the case. But again, it is absolutely necessary that this scheme be combined with the plan for short borrowing which is of suorene impor- ce. The elaboration of the scheme of deposits with member banks and oroopective member banks imoresses me favorably. WorWing along the lines su6gested in this memorandum, I doubt if any serious disturbance would re- sult from the handling of $1,000,000,000, but would be less certain of avoiding disturbasces were the amount doubled at the outset and at a time when the Governoent's short borrowings had not been extended to a very large sum. Very sincerely yours, lfred L. Aiken, Lsq., Wore' Reserve BanY, Boston, Mass. April 16, 1917. To - Mr. Aiken, P.S. Since dictating the above, letters from the office indicate much discussion an0 some uneasiness as to the position of State banks and Trust Companies, if they are not made depositaries of the proceeds of the loan. I have given this much thought and, frankly, while it is a close question, am inclined against the plan of making State banks depositaries for the following reasons: The are not and never have been fiscal agents of the eovern- ment and it would mean a departure from a 50 year precedent to make any change at this time. If they want the proceeds deposited with them, let them come forth and dhow good reasons, the best reason being membership in the Federal Reserve System. We cannot, however, discriminate against State banks that are members of the Reserve System, who should act as depositaries just as tional banks would. This presents a difficulty in that any legal grounds of objection to State institutions acting as depositaries would, I believe, apply to both member and non-member state institutions. The chief objection is the great number of state institutions of little known responsibility who will be most clamorous for deposits. Vie have power of supervision and examination of member banks and, therefore, means of getting information Which would justify making or declining to make a depositary of each one of them in detail. be the case with State banks Who are not members of the Reserve System. National banks and Federal Reserve banks have a a certain monopoly of fiscal agency relations with the State banks do not and should not have. This cannot right to enjoy Government which i do not see Why the State banks 7. Awl]. 16, 1917. To - Mr. Aiken. should erect this appointment now, any more than they would in ordinary times, exeept a national emergency made it impossible to handle Government finances without their cooperation and assistance. 1 do not believe that their cooperation and assistance is absolutely essential because i think the Government loans ean be handled smoothly and effectively through the Reserve and member banks alone and it would seem unfortunate to have the Government admit any necessity for their cooperation in the matter of government deposits. It would look as though their allegiance was being pur- chased, because they have never had government deposits in the past. The only argument in favor of having them appointed is the that they are constructively American citizens just fact as much as National banks are and in time of war discrimination between the various business agencies of the country should be avoided to ever, extent possible. I only wish it wore possible to put the matter on strictly legal grounds so as to avoid any antagonisms. The best thing, of course, would be to have them take membership. Summarising therefore, on the whole I favor limiting deposits to member banks, but think it is a very close question and am open to convictim on the subject. 85/0C P.S. Please refer to page 14 of the publication of the Treasury Department of JUL, 1915, entitled "Information Hespactin,: United Statc:, bonds etc." for data in regard to tie 4200,900,000 loan of 1898. hay 1, 1917. Dear Aiken: Nothing could give ne more pleasure than our nice note of April 29th. I can't tell you how mach I miss our rep- ular meetings, nor do I need also to tell you that these past two and one-half years have developed a personal affection as well as a feeling of partnership with you which nothing can alter. I am looking forward to a little meeting with you before returning to Colorado for another month or six weeks of golf. Faithfully yours, Alfred L. Aiken, Esq., Federal Reserve Bank of Boston, Boston, Mee. 13.9,41AB September 15, 1917. PRIVAIT AND ODFFIDENTIAk Dear Aiken: I have been thinking over our talk in regard to those offers you have, and the first thing that occurs to fle is to take your own directors into your confidence just as soon as possible; next, to see that the Federal Reserve Board is advised also; and last, that you decline them both. I do not say this without consideration. This war is going to last some time, and the after-effects will last longer. During all of that period you may be suro no change in the political status of the Reserve banks will occur, and you will be in a position when the Isar is over and your war service in completed to get many a bank presidency just as attraccive as either of those offered. In general, I think you would be sheathing your sword in the middle of the fight. - This is stating it vary frankly and bluntly, but I know that is what you prefer. I highly appreciate your taking me into your confideKce. Very truly yours, Alfred L. Aiken, Zee., Federal Reeerve Bank of Bewton, Boston, Pass. BS/RAH it 11 rr.F. sit !I, I 4, November 14, 1917. Mr. Aired L. Aiken Federal Reserve Bank Boston, Mass. My dear Piknn: This is my first opportunity to reply to yours of the 3d. It is really a privilege to pro- pose you for membership in the Metropolitan Club but do you wish to becemo a resident or non-resident If the former it will take somerehat more member? time and the latter I think could be arranged without much delay. Then, 1 think there is an arrangement by which you could be posted for transfer to resident membership if you desired to do so later. I won't write to the Club until I hear from you, and please write me here. am taking good care of myself down here, loafing mornings and playing golf after lunch. I hope to return to Now York some time next month better than ever. Mr. Winser turned up here yesterday and I was tempted to reproach him for defection. Noone will miss you from the ranks more than I will and I do hope that when you become 'Irosident of that great bank you won't let it in anyway interfere with our regular meetings whenever opportunity for them arises. OtheriAse I am going to miss you very much indeed. You will maim a great success of the work and I will watch your progress not only with satisfaction but with pride. Mr. Alfred L. Aiken ANS ,a1 With every good wish Very sincerely yOurs December 7th, 1917. Dear Aiken: I know you will understand my not replying sooner to your letters of the 12th and 16th. I just allowed mail to accumulate while I was away because that seemed wiser than struggling every day with a mass of mail. I missed the Washington meeting very much but hone to see you there next week. Also, I am putting your name up for non-resident mem- bership in the Metropolitan nub and will attend to the neces- sary details in Ingard to a seconder, letters, etc. I wish you would send me the full particulars - the institutions which which you have been corrected in the oast, your class at college, fra- tennities and clubs, etc. This will enable me to send a full and irtelligent letter to the governors and I want to he the first to welccne you to membership as soon as you are elected. It is a sad blow to me to hnve you leave the System. The association has been the bright spot in the work because I have been conscious that amidst all MI@ jealousies and pulling and hauling in a new thing where New York was naturally and in- evitably at a discount, you have been the one man in the whole bunch to see that thing straight and to impress straight views upon the others, not only in the reserve banks, but in Washington. Don't let us let this friendship drift backwards. I have it in -2- To 12:7:17. Governor Aiken. mind that some day we are going to have some weeks in the woods with fishing rods and no business cares to think that, I don't think you can divorce yourself System entirely when you are President of bout. Besides from the Reserve the Shawmut Bank, and will expect to see you at the office every time you are in New York and I will expect you to reserve a night for me whenever (you come over. or a big one We will have some sort of a party, either a tyro-some a5: you prefer. of can only close this letter with another expression and my regards coupled with wishes for your success, prosperity happiness much warmer and more cordial than you realize. Faithfully yours, Alfred 1.,Aike41, 11341., Federal Reserve Bank, Boston, C,ass. B31VCV U PER3ONAI; January 24, 1918. Dear Alfred: Thanks for yours of the 21st instant. I can only answer it with one word and that is "courage"! erom first to last, the banks of the second eederal reserve dittrict have managed, one way or another, to take and pay for over 43,500,000,000 of short loans of the Government and nearly 42,000,000,000 of the long loans, or, roughly, $5,50o,000,000 and they are a long way from being "broke" yet. Don't forget that there is a circulation of credit taking place which will not, permanently, deplete bank deposits. And the banks of New agland, or even the banks of Boston, are not go- ing to lose 43,000,000 a week in deposits, even if they lend 43,000,000 a week to Uncle Jam. We must talk this over in the near future and I hope you can get down to New York and let me introduce you to the Metropolitan Club. Best regards and once again "courage": Paithfully your friend, Alfred L. Aiken, Esq., President, National Shawmut Bank, Boston, M465. BS/M3B June 17, 1918. Dear Alfred: I find your note of the sixteenth on my desk this morning and hasten to tell you how very greatly I appreciate what you say and your thoughtfulness in writing it. The meeting at Princeton was delightful in every way, but very serious. Out of nearly 1,700 under graduates, Princeton has about 1,000 In the service and this year they are undertaking a very extensive and thorough military course for all under graduates who elect to go into the services Commencement this year was, therefore, more war than university and I was tremendously impressed, as was every one else who attended. I wish you had been there, not as a spectator but as a partici- pant, and, to tell you the truth, I felt very guilty in receiving the honor when you, more than any other, deserve it just as much as I do. I am going to make I a point while at Woods Role this summer to have some Good visits from you, fishing or loafing, or doing anything that fits your humor at the moment. With a thousand thanks and best wishes, I am, faithfully your friend, 411E2114 Am44,4;pq., Piiiiaefit, National Shawmut Bank, Boston, lass. BS/MSB June 21, 1918. My dear Alfred: I was delighted to learn of your having' been honored by Yale at commencement this year and wish that 1 might have been there to witness the ceremony. I shall never cease to regret your lelving us, not withstanding that your successor seems to be quite equal to the job, With waruest congratulations, I am, Very sincerely yours, Pireiiident,UationarShawmut Bank, Boston, Ness., I BSIMSB NO 1-1919 CONF1 - 111111fr FEDERAL RESERVE BANK November 5, 191. ALA ter elfred: Thank you for your letter of the fourt.. I think I an ju '.efied in ldvising you Liu:te confidentially that Ir. Leffingwell h at : not determined upon a roiicy ie regere to let. th e moment, and I believe will not do ::.o without tbe fuileEt posAble con.ultation wail the officere of the Reserve Banke. 11111° - u. ryin .. - iCE rolicy. That hau been hie; Further, taet Lne rate of 4-1/4%, which a6 you know to only about'106,0e, jCi of certefice,te_ now lergely hold by taweeyere, was eAabliehed simply for the ur,oe?, of mainteinine that rate, - althoueh it will not-be an effective one, - eo that the Tree:Airy is not foreclobad entirely in borrowine, at that rate in ease circumetances should develop to make it desirable.'ee far as this bank is concerned, , I have definitely ,.tet d to Secretary Glees an- to Mr. Leffinovell, 38 well , to the Federal heaerve-loerd, ter,t our hands mut be free in mte mak- ing, although ,ve, eieee, ;:rc, 0 e, es heretofore, to consult freely with the Treeeury in all of these mattere. I am optiMirtic that we are etertie;,: in the ri,ht direction and can exct rood reeults in due time. on't you dro, in to see me the next te Sincerely yoLe L. Ain:, EL., ,et, Natiopel Zhawmut Lank, I-. er-1, Mass. gia'-) you are is'eew York? Novembor 5, ig19. CONFIEShTIA-i: Der Alfred: Thank you for your fetter of the fourth.' think I412 juatifiod in advising you .,4uAe confidentially . t Ir. Leffingwell 114-1 not determined upon a ioiicy in rogrd, to nass at the moent, :Aid Ibelieve aill not do o ithout trio fuilest pozAble conulttion with the officers of the Reeerve Eanke. uhvaryin policy. That has been his Further, that the rate of 4-1/4%, which az you know apt:lies to only about of certific-te now largely heid ty taxpayers, was stablished aimply for the .uri,ose of miliztaip.ini; 0.1A, rtAe, - although it will not be an effective one, - o that the Irou:ury L, not foreclosed entirely in borrowing at that in c':e circumetanoes .o far au this bank it, concerned, 311ou1d develop to make it denirablo have definitely stat d to Secretary Gls,ss &tic', to Mr. Leffingwell, as well t,o the Federal hesrve Board, that our hands mutA, be free in rate ma.k- ., altho.igh we, also, propwre, as heretofon2, to consult freely with the in 611 or thosb matters. am optimietic that we are stLrting in the right eirecticq. and can expect good results in due time. Won't you dro, in to aee me the next time you are in Now York? incereiy yours, :i.fred L. Aikon, Esq., Shawmut Eank, '6osten, Mans. CONFIDEO21AL: November 7, 1919. My dear Alfr000 Won't you write ma your test of.ioion k4,on tho cholooter and ability of Tom F croon? I just heard that ho is foot-l000e and I know of an impottant ond attrootive poaitioo which ho might. be qualified to fill, but will need to h,vo; the test poboible information. First, would ha do for thio boak in ony coLocityl !:eoond, if not, would no do as a vico presidant of ono of the oldoot, most conoarvotive and best monagod comi.:onies in New iork/ Thio letter is most confidentiol; your reply will be Led 46 such, ond I would be glad to have you write me ae fully as poesible. r",incarely your), Alfred L. ikon Es, o.o.ox!, Notional-rr];-mu tank, Booton, Moos. BS.MSB October 21, 1921. Dear Alfred# I have your letter of October 18 before me for acknowledgment, which is somewhat delayed owing to absence for a few days. I am entirely in accord with your suggestion that a meeting should be arranged of the original Governors of the Federal Reserve Banks, to be held either in New York or some other place agreeable. thaj: may be Such a meeting should surely prove most pleasant and enjoyable, and be the means of bringing closely together those who so ably conducted the affairs of the Federal Reserve Banks during the early days of their inception. I note from your letter ef October 20 that the report of the Hearing before the Joint Commission on Agricultural Incuiry was re- ceived, and hope you will find it With my best interesting wishes, believe me, Yeurs sincerely, Alfrei L. Aiken, Fee., c/o National Sbawmut Bank, Boston, Mass. GB:MM reading. November 22, lS22. Dear Alfred: accent your much indeed if I could please ma very It would already arrantpd with half-ay invitation I nave a invitation, but and I go over on the Monday day train, with him in oa:le torso to stop that I must go on the nilht train besides that, I think the chances are anyway. and I regret very much It is mi ti) good of you to ask 74e, visit and However,we shall have a little that I cannot accept. chat. possibly have time for a little i:rivate lith best regards, I am, Yours sincerely, Alfred L. Aiken, Esq., ?x,a-eidant-r-Ittil5T11 lioston, Mass. Snawmut Sank, {Th FEDERAL RESERVE BANK OF BOSTON ALF :I) L. AIKEN GOVERNOR December, 21, 1914 04(Xe Jr. BENJ. STRoNG-, 1 4. ijiG PERSONAL. 8, 194 Dear Governor 'Strong: I am sending this short personal note just to wish for you and yours a very merry Christmas and my best wishes for a happy and prosperous New Year, which I trust will result in great progress toward the working out of problems that we all have in hand. best 7ith wishes and warm personal regards, believe me to be, Yours very truly, -N 2 Benjamin Strong, jr., Esq., Governor, Federal Reserve Bank, New York, New York. ofititioA-c° FEDERAL RESERVE BANK OF BOSTON ALFRED L. AIKE N DOVER NO R April 6, 1915. MY dear Governor Strong; / Thank you very/Much for your letter of the 6th instant. I am sorry to say that/1' have had to change my plans as to going to,Vew York, and shall not be able to get over/there until next week. I shall be gla to lunch with you if possible, though I have /a sort of half promise to Mr. Woodward, over At the Hanover Bank, that I should impose on hjth the next time I had a free day in New Yor. I certainly should not be in New York, hoWever, without coming to pay my respects. I h Hot Springs. that you had a good rest at W th warm personal regards, I am Very sincerely yours, Benjamin Strong Jr., Esq., Governor, Federal Reserve Bank, New York, New York. 0 -0),( ,.. , ., 44.4 L.7 i_ /.5 c4-7 / 5222.- -te , A4.t.,%. _ ( G-L-- G.t AA-A- FEDERAL RESERVE BANK 'ED L. AIKEN GOVERNOR OF BOSTON FLORRIMON M. HOWE CASHIER DIRECTORS FREDERIC H. CURTISS, CHAIRMAN AND FEDERAL RESERVE AGENT WALTER S. HACKNEY. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT ERNEST M. LEAVITT THOMAS P. BEAL, BOSTON, MASS. CHARLES G. SANFORD. BRIDGEPORT. CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS. POET°, MASS. EDMUND R. MORSE, PROCTOR. VT. CHARLES G. WASHBURN. WORCESTER, MASS. ALLEN HOLLIS. CONCORD. N. H. ASST. CASHIER gor PERiI F A utucRq nhititt ember 1, 1915. 14 Dear Mr. strong; I have been planning to go to Maine with Mrs. Aiken for a fishing trip the 9th or 10th of this month, to be gone two or three weeks, but have been talked to so much about the foreign exchange situation that the prospect of being absent at this time for such a length of time has rather gotten on my nerves, and I am writing this to ash you what you think will be the future course of development in the situation. Do you think it probable that any conditions would arise in the course of the next two or three weeks to create any demand on the Federal Reserve Banks? I do not see myself how they should, because I should suppose that the effect of a continued fall in sterling would be to check our ammunition and supply business for the allies, thus making for a sharp reduction in the activities of our industries engaged in filling such orders. Are the commitments of our manufacturers such in your judgment that they would be obliged to borrow heavily to take care of obligations they had already incurred,from which they would not be relieved in the case of a cessation of orders or cancellation of contracts? Is it possible that as a result of the Conference to be held in New York with the English and 2rench bankers, the balance due .us will be financed in such form. that a large amount of the obligations created might come to the federal Reserve Banks? I should greatly appreciate it if you would write me your views of the situation, because you are in the thick of it and we are not, and I do not care to go very far from home if from your point of view it seems as though we would be called upon for an very active operations in the course of the next month. I hope that the situation is not such that it will prevent your going on the vacation that you have planned yourself, for certainly if anyone is entitled to a respite from business activities, you are. Witn warm personal regards, Benjamin Strong, Jr.Esq.,Verw Governor,Federal Reserve Banl, New York, New York. am :74,0 Governor. )111A8 3vf3e3s tetoTeos 70 WAWBEEK, SUNAPEE - H. r 09,4 L A .Z7a-A-x-.6c1 _ t/-7-z-t--- - c35: 4/S-7 1-4-,C A CZ,t-4 -4 L N A ti A ''34) GOVERNOR FEDERAL RESERVE BANK OF BOSTON ./N M. HOWE CASHIER FREDERIC H. CURTISS. CHAIRMAN AND FEDERAL RESERVE AGENT WALTER S. HACKNEY. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. SEAL, BOSTON. MASS. CHARLES G. SANFORD, BRIDGEPORT, CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORS, BOSTON. MASS. EDMUND R. MORSE, PROCTOR. VT. CHARLES G. WASHBURN. WORCESTER, MASS. ALLEN HOLLIS. CONCORD, N. H. _RNEST ItIVLITTFNO DEPT. NOV't; 0 1,1)10. PEDERly.111g DIRECTORS 44r o ng , Jr . , vern r, FLettal Reserve Bank, New York City. ttill A Dear Mr. Strong: Novemb2, 1915. 4/°//;. I find on my desk this morning a leer from the Federal Reserve Board enclosing a buy of a letter from the Secretary of the Treasury advising them of his intention to designate the Federal reserve banks as fiscal agents for the Government, beginning January 1, 1916. May I inquire as to whether or not this is the result of the conference of your Committee with the Secretary, and if it is, as to the scope of the Federal reserve banks activities when the transfers of Government deposits have been made. The handling of the larger Government accounts in the Government. depositories here involves a great deal of detailed clerical labor for which we have at the present time no organization, and I am anxious to get all the requirements before me at as early a date as possible in order that we may get the matter in hand. The question arises at once as to the method which we shall pursue in collecting checks which we may receive for deposit collecting officers of the United States in this district, and I shall be glad to have more light on the whole matters than I have at the present writing, and shall be grateful for any that you can shed on it. Governor. EN GOVERNOR FEDERAL RESERVE BANK AND FEDERAL RESERVE AGENT OF BOSTON .ION M. HOWE CASHIER DIRECTORS FREDERIC H. CURTISS, CHAIRMAN WALTER S. HACKNEY. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT _RNEST M. LEAVITT ASST. CASHIER December 29, 1915. THOMAS P. BEAL, BOSTON, MASS. CHARLES G. SANFORD, BRIDGEPORT. CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORS, BOSTON. MASS. EDMUND R. MORSE. PROCTOR, VT. CHARLES G. WASHBURN. WORCESTER. MASS. ALLEN HOLLIS. CONCORD. N. H. ATTENDED TO DEC 3 1 1915 1#" Benjamin Strong, Jr., Esq., Governor, \,Pederal Reserve Bank, New York. CLIRTIS. Remarks below My dear Mr. Strong: I enclose herewith copy of letter received today from Assistant Secretary Malburn. I judge from this letter that he has come to the conclusion that the Federal Reserve Banks should bear whatever exchange charges may arise through the acceptance Collectors of checks drawn an non-par points. from You will note from his letter that Mr. Malburn deals with this subject as a matter of extediency, apparently based on the profit which he seems to assume will arise to us from having government deposits. It seems to me, however, that it is a matter of principle and we feel here that it is a matter that should not be allowed to go by default. we are disposed to carry in a susnense account any such charges that may arise in the first few weeks of handling these deposits. I feel that this is a problem to take up at the conference of the Governors next month and see if they cannot arrive at a unanimous opinion in the matter and then present it to the Treasury Department. I should be glad to know your feelings in the matter. ALA JJJ V_e sincerely oursu/s. Hilltig EPDA ,44: 7 AV3 ;;.3 :10 .iti113(73.1 4'.71 FEDERAL RESERVE BANK OF BOSTON ALFRED L. AIKEN GOVERNOR itef , 1915. 0,c9 Benjamin Strong, Jr., Esq., Federal Reserve Bank, New York. Go4cgar, My dear Mr. Strong: I am sending this note just to express my hopes for a merry 3hristmas and a happy New Year for you and your household, and, so far as the New Year is concerned, for the organization which we have upon our hands. Perhaps this is an opportune time for me to express to you, as I have before, my sense of obligation for all that you have done in the last year to lighten the burdens and anxieties that have gone with the starting of the Federal Reserve Banks, and I am sure that I am voicing the sentiments of all those with whom you have been associated, in telling you what a pleasure our association with you has been and how we realize the imrortance of your efforts in the organization of the whole Federal reserve system. Witli warm personal regards, believe me to be Faithfully yours FEDERAL RESERVE BANK OF Ei3do TON 4144 1( ALFRED L. AIKEN GOVERNOR January 26, 1916. 49/6, My dear Strong,- I have asked Putnam & Co. to send you a copy of Oliver's "Ordeal by Battle," which I think you may find interesting reading on shipboard. I have read it with much interest, and it seems to me one of the most readable and interesting expositions of the English point of view as to war, that I have ever seen. , I thought it possible that I might get to New York on Friday and have a glimpse of you before you left, but I now find that I shall be unable to do so, consequently this takes by very best wishes I for a successful trip and safe return. shall often think of you with some envy because of your interesting experiences that I should like to have shared. With warm personal regards, believe me to be, Sincerely yours, Benjamin Strong, sq., 62 Cedar St., New York, N. Y. ,MME, YORK No. A Copy 1016 TELEGRAM 1,/ Interestea Check Code used O. K. To File Clerk t-ttstr>i4-4 te:fr 'au) d417z amdiy12,144. le4 /6/1/6/ Ae1444.4 tt 1 DIRECTORS "RED L. AIKEN FREDERIC H. CURTISS, CHAIRMAN GOVERNOR Fl ,RRIMON M. HOWE CASHIER ERNEST M. LEAVITT ASST. CASHIER AND FEDERAL RESERVE AGENT FEDERAL RESERVE BANK OF BOSTON 53 STATE STREET WALTER S. HACKNEY, VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. BEAL, BosToN, MASS, CHARLES G. SANFORD, BRIDGEPORT, CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS, BOSTON, MASS. EDMUND R. MORSE, PROCTOR, VT. CHARLES G. WASHBURN, WORCESTER, MASS. ALLEN HOLLIS, CONCORD. N. H. May 25, 1916. Benjamin Strong, Jr., Esq., Governor, Federal Reserve B New York, N. Y. Dear Strong,- 4k9 If by any chance you9 ay&going through Boston on your proposed fishing trip to Maine, I wish that you could arrange to have dinner with me. I suppose the chances are remote that we should be fortunate enough to have you have some time on your hands between trains, but if you do I should greatly enjoy having you have a non-business dinner with me. Check collection matters are so pressing with us that I cannot get away for any length of time myself, because of course our organization is small, and I have to be on hand, but I am thinking of going to Maine the first week in June for three or four days, over a week-end, just to get under canvas out in the woods. With warm personal regards, I am, Faithfully yours, LIWG/ 4 ALF 53-, STREET Set T N rA C H US ETTS <94 4-7 77 4e-z-f--e A 1?id ( I\ ASS OF SERVICE SYMBOL v Message Letter it Message Blue WESTE CLms OF SERVICE WESTERN UNION Nite hght Letter NL If none of these three symbols TELIND appears after the check number of words) this is a day message, Otherwise its character is indicated by the symbol appearing after the check. NEWCOMB CARLTON. PRESIDENT BELVIDERE BROOKS. VICE-PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT Day Letter Blue Night Message Mite N L' Night Letter If none of these three symbols appears after the check number of words) this is a day message. Otherwise Its character is indicated by the symbol appearing after the check. RECEIVED AT F 30 NY rG 24 AB BOSTON MASS 1018 Am JUNE9/16 BENJAMIN STRONG UR 903 PARK AVE NYC I CAN GO To NEWYORK APARTMENT AND SEE YOU AT YOUR TUESDAY OR WEDNESDAY NEXT WEEK AS IS MORE CONVENIENT FOR YOU AM WRITING SYMBOL Day Message ALFRED L AIKt, 10 35 AM ALFRED L. AIKEN 53 STATE STREET BOSTO N, MASSAC HUSETTS June 9, 1916. Benjamin Strong Jr., Esq., 903 Park Ave., New York, N. Y. Dear Strong,- I was very sorry indeed to learn from your letter of the 8th that the trouble with your back was going to incap&citate you for some time. I have telegraphed you that I could be in New York either Tuesday or Wednesday of next week, and shall be glad to have you telegraph me as to which day would be more convenient for you. I had expected to leave for Maine tonight for four or five days in the real woods, with my two guides, but my small son has been sick all the week, and has developed a serious case of measles, making me feel that I should not be comfortable out of immediate contact 'with home, but I should be very glad to go to New York and see you. If I hear from you some time tomorrow that will be ample time for me to arrange my plans. I cannot tell you how sorry I am for your mishap, and its interference with your plans for a vacation. Faithfully your DIRECTORS ALFRED L. AIKEN FREDERIC H. CURTISS. CHAIRMAN GOVERNOR RRIMON M. HOWE CASHIER ERNESTM.LEAVITT ASST. CASHIER AND FEDERAL RESERVE AGENT FEDERAL RESERVE BANK OF BOSTON 53 STATE STREET WALTER S. HACKNEY, VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. REAL. BOSTON. MASS. CHARLES G. SANFORD. BRIDGEPORT. CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS, BOSTON. MASS. EDMUND R. MORSE. PROCTOR, VT. CHARLES G. WASHBURN, WORCESTER, Mass ALLEN HOLLIS, CONCORD. N. H. July 14, 1916. Benjamin Strong, Jr., Esq., c/o Rev. F. W. Oakes, 2825 W. 32nd Ave., Denver, Colo. Dear Strong,- I suppose that before this you have gotten comfortably located in Colorado, and I was glad to learn from the men in New York that you had had a comfortable journey. I am not going to tell you how much I miss you on my trips to the New York bank, but though everybody there is courtesy itself it resembles a good deal the omission of Hamlet from the show. As you know, I spent the Sunday before you went West with Warburg, and was glad to find him entirely sympathic with out ideas as to continuing the conferences of I hope that we shall not have one, before the Governors. October because I do not want to go to Washington in August, and am very anxious to go away for three or four weeks in September for a vacation which has been waiting me now for three years, and which I think is about due. Things are developing interestingly here with the hardening of money. We have put up our acceptances rate to 2i% for bankers' acceptances with differential of 1/8 for such acceptances with member bank endorsement. I like our differential of 1/8 better than the one that is maintained in your bank of 1/4,*and think on the whole it works more satisfactorily in this market at any rate than in the larger districts. We have practically cleaned up the holdings of the local banks on acceptances, and from now on shall only get such acceptances as are made from time to time, as there will probably be no accumulation in the banks' portfolloS here with the increased commercial demand for money at advanOing rates. I have arranged to take rediscounts for the First National, the Shawmut, Old Colony Trust Co., Second National, Merchants National, and probably two of the smaller baialdn Monday, acamea this is the initial transaction with themwe will probably have in the neighborhood of 0,000,000. All of our banks have been (mite hard up for some time but none of them wanted to be the first one to rediscount, and so they Benjamin Strong, Jr., Esq., #2. ?) () - are all coming in together, which seems to me somewhat amusing. We are all ready to begin the check collection game tomorrow, and have gotten all the banks in New England, with the exception of seven small Vermont Trust Companies,to I have found a way to compel these banks to remit remit at par. at par, and before the first of August all the banks in this district will be on a par basis. Our clearing house has stuck to the plan of making all points that are collectible at par through the Federal Reserve Bank discretionary with the clearing house banks, and the clearing house banks are going to absorb the service charge. This plan was engineered by Wing primarily to get the business coming through his bank, rather than direct to the Federal Reserve Banks, and I think we shall have a very small volume of business except the normal country clearings. I do not know whether or not you have seen the press reports of the Guaranty Trust Company's activities as to the attitude of the banks in the country toward the Federal Reserve System, but assuming that you have not I will send you a copy of it tomorrow with some newspaper comments thereon, and also an article that I wrote for the Boston News Bureau for their Saturday issue. It seems hardly fair to burden you with all this "shop talk," but I am assuming that you would probably rather hear What we are doing than not. I hope that you are getting a really fine rest, and are putting on weight and gaining strength. I quite envy you the prospect of your stay in Estes Park. This suOmer like most of my summers is domestically very much mixed. We are theoretically spending the early part of the summer at Marblehead, but Mrs. Aiken divides her time between our house in New Hampshire, Marblehead and Worcester, while I am of necessatilysomewhat nomadic in my habits. If somewhat disconnected letters of this sort do not bore you I shall inflict them upon you from time to time. If you are looking for books to read by way of diversion I would like to suggest "A Diplomat's Wife in Mexico," by Mrs. O'Shaughnessy, which I ha7e found one of the most readable and delightful books that I have struck for some time. Do not bother to answer my letters. I shall take it for granted that they reach you safely, and do not wish you to be burdened with acknowledging them. With best wishes, I am, Faithfully yours, ALA/M ..+CerEWPCTITe,r-r Benjamin Strong, Jr., Esq., #2. are all coming in together, which seems to me somewhat amusing. We are all ready to begin the check collection game tomorrow, and have gotten all the banks in New England, with the exception of seven small Vermont Trust Companies,to I have found a way to compel these banks to remit remit at par. at par, and before the first of August all the banks in this district will be on a par basis. Our clearing house has stuck to the plan of making all points that are collectible at par through the Federal Reserve Bank discretionary with the clearing house banks, and the clearing house banks are going to absorb the service charge. This plan was engineered by Wing primarily to get the business coming through his bank, rather than direct to the Federal Reserve Banks, and I think we shall have a very small volume of business except the normal country clearings. I do not know whether or not you have seen the press reports of the Guaranty Trust Company's activities as to the attitude of the banks in the country toward the Federal Reserve System, but assuming that you have not I will send you a copy of it tomorrow with some newspaper comments thereon, and also an article that I wrote for the Boston News Bureau for their Saturday issue. It seems hardly fair to burden you with all this "shop ta"k," but I am assuming that you would probably rather hear What we are doing than not. I hope that you are getting a really fine rest, and are putting on weight and gaining strength. I quite envy you the prospect of your stay in Estes Park. This suOmer like most of my summers is domestically very much mixed. We are theoretically spending the early part of the summer at Marblehead, but Mrs. Aiken divides her time between our house in New Hampshire, Marblehead and Worcester, while I am of necessa±ilYsomewhat nomadic in my habits. If somewhat.disconnected letters of this sort do not bore you I shall inflict them upon you from time to time. If you are looking for books to read by way of diversion I would like to suggest "A Diplomat's Wife in Mexico," by Mrs. O'Shaughnessy, which I ha-e found one of the most readable and delightful books that I have struck for some time. Do not bother to answer my letters. I shall take it for granted that they reach you safely, and do not wish you to be burdened with acknowledging them. With best wishes, I am, Faithfully yours, ALA/M ALFRED L. AIKEN )iRIMON M. HOWE GOVERNOR F CASHIER FEDERAL RESERVE BANK OF BOSTON ERNEST M. LEAVITT ASSISTANT CASHIER 53 STATE STREET CHARLES A. RUGGLES MGR. COLLECTION DEPT. DIRECTORS FREDERIC H. CURTISS, CHAIRMAN AND FEDERAL RESERVE AGENT WALTER S. HACKNEY. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. BEAL. BOSTON. MASS. CHARLES G. SANFORD. BRIDGEPORT. CONN. ARTHUR M. HEARD, MANCHESTER, N. H. CHARLES A. MORSS, BOSTON. MASS. EDMUND R. MORSE. PROCTOR, VT. CHARLES G. VVASHBURN. WORCESTER, MASS ALLEN HOLLIS, CONCORD. N. H. August 2, 1916. Benjamin Strong, Jr., Esq., The Lewiston, Estes Park, Col. Dear Strong,- Thank you very much for your letter of the 27th ult., which I find waiting for me on my_return from New York this morning, also for what you say about my article an the Guaranty Trust Company's canvas. After it had gotten into print it occurred to me that it was possible that negotiations might be under way with the Guaranty Trust Co., looking to their joining the system, and that it would have been just as well for me to have let the whole matter go by without any answer, but I think on the whole no harm was done by it, and that an analysis of their figures might safely be made by us without having any effect upon any negotiations that you had under way. be interested to know that I have been You negotiating for some time now with the American Trust looking to their coming in, and they have been discussing the matter with the State Street Trust Company and the Commonwealth Trust Company, and I have great hopes that we will get all three of them in I have been in almost daily confersome time during this month. ence with Russell Fessenden, President of the American Trust Co., and he is negotiating with the other two in the hope that they Frank Hart of the Old Colony Trust will all come in together. Company is a member of the Executive Committee of the American Trust Company, and he told me confidentially this morning that the prospects there were first-class. Our little meeting in New York yesterday evolved itself largely into a discussion of the check collection situation, and was a very interesting experience meeting. The expressions in regard to the authorization of the collection of checks through postmasters were somewhat heated to put it I think that was about the worst break that has been mildly. made, both from a banking point of view, and viewed entirely as a politbal matter, The best evidence of it was the alacrity with which it was taken up by both Kitchen and Carter Glass in the House, and made the basis of political speeches. There was no demand for any such radical step from anybody, and nothing at all was gained by the promulgation of any such plan, and a great deal of animosity was instantly aroused. Fortunately for us in our small corner of the country we have not had to resort to either the express company or the postmaster to get all our non-member banks in, but I should have been loath to have used Hon. Paul M. darburg, 2. the latter at any rate under any circumstances. As a result of our conference .-esterday we decided that it is desirable to have a meeting of the Governors some time this month, and I have been consulting with Mr. Harding and Mr. Delano by telephone today, and I think we shall arrange for a meeting either in New York or here for the week beginning the 21st. I think it will be devoted almost entirely to the matter of check collections, and should result in a very interesting discussion. These parties without you are N.G., and the mental attitude of all of us toward them is very different, but we are counting on having you back to preside over them in the near future. I understand that they send you a weekly report from New York as to what is going on in the Federal Reserve world, consequently I shall not bore you with any general information. We are getting a good demand for money here, and to celebrate my return from New York I rediscounted 02,600,000. for our member banks today, and have bought about 0500,000. acceptances. The latter we are distributing among other Federal Reserve banks. If I can get the three trust companies that I referred to above into the system this month, I shall really feel as though, taking everything into consideration, I am entitled to a real vacation in September, and what is more I propose to take it. I only wish that it was going to take me for a few days out to Estes Park. I saw some pictures in New York yesterday that you had sent them, and it certainly looks wonderfully attractive. I cannot tell you how much I hope that it is doing for you all that all of us want it to. hot We have been having beastlykweather here for the last week or ten days, but it has been much more comfortable for the last day or two. I am going to try to get away for a week-end next week to go to Block Island and see if I cannot catch a tuna. I have just this morning received word that they caught fifteen there yesterday, and it quite whets my appetite, because they run up to a size that almost staggers one's imagination, and I have seen many taken in seines in that neighborhood wha' I was a youngster that were over 500 lbs. If I can get fast to one on my week-end expedition I shall be glad to report details. The political situation here in the east waxes warmer with the Hughes' formal speech of acceptance $ accomplished, and I think the general feeling around New England is that Wilson will have a hard time beating Highes, though apparently this feeling is not as strong through the middle west, judging from many talks that I have had with men there. I hope that my occasional letters do not impose unduly on your time, either because of their length or because of their somewhat garrulous characteristics, and if you do not mind I shall continue to send them time to time, or until you advise me that your patience is exhausted. With best wish believe me to be phAl21 6 - CI) AL FRED L. AIKEN GOVERNOR FLORRIMON M. HOWE CASHIER FEDERAL RESERVE BANK OF BOSTON ERNEST M. LEAVITT 53 STATE STREET ASSISTANT CASHIER CHARLES A. RUGGLES MGR. COLLECTION DEPT DIRECTORS FREDERIC H. CURTISS, CHAIRMAN AND FEDERAL RESERVE AGENT WALTER S. HACKNEY, VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. BEAL, BOSTON. MASS. CHARLES G. SANFORD, BRIDGEPORT. CONN. ARTHUR M. HEARD, MANCHESTER, N. H. CHARLES A. MORSS, BOSTON, MASS. EDMUND R. MORSE, PROCTOR. VT. CHARLES G. WASHBURN, WORCESTER, MASS ALLEN HOLLIS, CONCORD, N H. Aug. 11, 1916. Benjamin Strong, Jr., Esq., The Lewiston, Estes Park, Col. °77 Dear Strong,- Thank you very much for your letter of the 7th inst., which reminds me that I started to write you yesterday, but had to postpne it under pressure of other work. I am much more interested to hear that you are doing a little fishing and getting a little fan, than that you are devoting much time to Federal Reserve Banks, because it is plain that the more time you devote to out-door things now the sooner you will be able to devote your energies once more to us, to which we are all looking forward. I am frankly looking forward with some dread to our meeting of the Governors here the week after next, for it will be at best a pretty hollow affair with you in Colorado. I am sure I do not need to assure you that you will be constantly missed by all of us. Of course you have seen of the appointment of Mr. Harding az Governor of the Board, and Mr. Warburg as Vice-Governor, a change that has caused some comment hereabouts. much that is new or exciting here in the bank. There is not I feel as though we now had a fairly well rounded institution, that is, we are doing something in most of our normal activities. I greatly appreciate what you say in regard to our -2- operations here, but I do not forget the fact that our situation here was in many ways a peculiarly favorable one, and that while we had a good many pretty hard-shelled bankers, (or so-called bankers) that were entirely out of sympathy with us and opposed to us, most of these men were broad-minded enough to be open to argument, and I think many of them are being gradually converted. As I wrote you, I think that this particular baby is growing strong enough now to be left alone for a while, and barring an attack of measles or something of the sort in my own household, I expect to be away practically all of September in Maine with Mrs. Aiken, going up to Jackman first for some fishing, and then taking a short canoe trip into Moosehead. Fishing in the streams is closed after the 15th of September, so we shall have to devote the rest of the time to fishing in the big lake, but primarily it is a matter of being out of doors, and getting away from the detail of work. I should be very much interested to hear the status of the foreign negotiations. My interest in the matter is some- what selfish, because frankly I had looked forward to imposing myself upon you for a trip abroad one of these days, to get in personal touch with this business, and my Directors were sufficiently interested in it to be very anxious to have me go. However, I shall look forward to this if you will let me, until a later date. I hope that the plans outlined and developed by you can be carried through, for it seemed to me a most remarkable piece of financial diplomacy, and it certainly ought not to be allowed to go by default. I had a very characteristic and entertaining letter from Kains a day or two ago, in which he stated that he thought -3- this meeting of the Governors on check collections was somewhat premature, and that it reminded him of the child who had just planted a garden the week before, and could not resist the temptation to dig up the seeds to see if they had begun to sprout. In spite of that, I think it is a good plan to have the meeting, and of course we are glad to have it here. Speaking about trips abroad - I am in hopes that one of these days we can take a little vacation together, that will be devoted to something besides business, and some time when you are back on the street in New York, and we can get away for a week for some fishing or shooting, and temporarily leave the Reserve Banks and their various problems behind, let's see if we can't do it. I hope that every week puts on a pound or two of flesh, and that you are gaining faster than your highest hopes led you to believe. With warm personal regards, and renewed thanks for your letter, believe me to be, Faithfully yours, HOTEL SOMERSET 0011INONWSALTH AVENUE, BOSTON FRANK 0. HALL a:ity MANAGES Ng/ 6g- A--44;41, 6(-/AA C5cfri -Ci_d/dr-c_/1 6L-e-c cLitAL-oce:cZL-de Gtf aJ- 41; -15 C&. 4:1 H N c'. FEDERAL RESERVE BANK OF BOSTON I. FRED L. AIKEN GOVERNOR .PRIMON M. HOWE CASHIER ERNEST M. LEAVITT AND FEDERAL RESERVE AGENT WALTER S. HACKNEY, VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. BEAL, BOSTON. MASS, CHARLES G. SANFORD. BRIDGEPORT, CONN. ARTHUR M. HEARD, MANCHESTER, N. H. CHARLES A. MORSS, BOSTON. MASS. EDMUND R. MORSE, PROCTOR. VT. 53 STATE STREET ASSISTANT CASHIER DIRECTORS FREDERIC H. CURTISS. CHAIRMAN CHARLES A. RUGGLES MANAGER COLLECTION DEPT. kf* CHARLES G. WASHBURN, WORCESTER. mAsS ALLEN HOLLIS, CONCORD, N. H. Aug. 29, 1916. Benjamin Strong, Jr., Esq., Estes Park, Colo. Dear Strong,- No doubt Mr. Treman has given you reports of our Governors' Conference here, so this will be by way of supplement. As you know, the program was devoted largely to the matter of check collections, and as I saw it the meeting was valuable more as an interchange of ideas than because of anything very definite that was done. The real truth of the matter was that it sadly lacked the guiding hand that has overcome the inertia of past meetings, and forced a dozen tired and perplexed governors to come to an understanding and conclusion. From our own point of view here the meeting was valuable because I felt that we got a good deal closer to Mr. Harding than we ever had before, for which I was very glad. I greatly enjoyed having him for a neighbor at the meetings for most of the time, and I think he enjoyed and found interesting his stay here. The meeting was devoted entirely to business, and I headed off any suggestions of entertainment locally, and the result was that we cleaned up our program in two days and everyone got away by Thursday afternoon. We went down the harborto the Nahant Club for dinner one night, and I think all found it a relief from the tremendously hot weather that we had for the two days that the meeting was on. min Strong, Jr., Eso., #2. One of the most important things on the program was the matter of immediate availability of drafts on Federal Reserve Banks. I went to the meeting with a very definite opinion, gathered from correspondence and conversation, that it was the opinion of some of the members of the Board that such checks should be available anywhere at par. The discussion of this question developed some very definite opposition, and the whole subject was left for further consideration and discussion, 47b4,41A was agreed that such drafts should only be available at the Federal Reserve Bank as designated on the draft, a very different proposition from that originally made. I am not at all enthusiastic about the practice that is apparently growing up of making drafts drawn on member banks located outside Federal Reserve cities immediate available in Federal Reserve cities, and I think that it is certain to result in experiences very similar in the matter of overdrafts to those experiences under the first check collection plan, and were it to become general would lead to most unsatisfactory results. I read and re-read with much interest your very remarkable memorandum in regard to foreign relations, and our committee discussed this at length with Mr. Harding and Mr. Delano, and were all of the opinion that the relations 'outlined in your plan should be established as soon as possible, though there are some minor details in it that will have to be taken up for adjustment. Of course some skillful diplomatic handling will be necessary to convert some members of the Board to the belief that this is the proper time to begin such undertakings, but certainly there is going to be very strong pressure looking toward it. I have not had a chance to see Mr. Warburg for some weeks, but I am going to try to arrange to see him in New York next week, and will talk with him about this matter at that time. jamin Strong, Jr., Esq., #3. We appointed a committee to investigate and report on the Federal Reserve Banks' acting as real fiscal agencies for the govern- ment, a matter which has got to be worked out in connection with the treasury department, and is of course extremely complicated because of its relations with the sub treasury system. Unfortunately I had the chairmanship of this committee wished upon me, and I can see some hard work ahead. You of course will be furnished stenographic report of the meeting, and can gather from it how desultory a good deal of the discussion was. It was practically agreed that the next conference of Governors should be held in Washington late in November before Congress reconvenes. I have been disappointed in the way Congress has handled some of the amendments, and wish that more of them had gotten through as outlined. I imagine that with the pressure for adjournment and the very perplexing situation as regards the railroads nothing more can be done at this session. So far as our local situation is concerned things are pretty quiet with us, and the banks have more money than they had a few weeks ago, consequently our rediscounts are running off rapidly, and I have had to appeal to your associates in Pew York once more to put us on the list for distribution of acceptances. Our market is very bare of city and town notes, and I am advised that taxes are being paid in advance to a much greater extent than is normal. My conscience pricks me somewhat as to the Kansas City A. B. A. Convention. I have been very anxious to get away for a vacation in September, and have made up my mind to go to Maine about the 10th, and stay there until the first of October for some fishing and bird shooting, but I do not like to have anyone feel that I am shirking my responsibilities in not going to Kansas City on behalf of the Federal Reserve Banks. If you think that I really ought to go min Strong, Jr., Esq., /- wish )(//11 44. you would frankly write to me to that effect, though I won't promise tb cancel my vacation plans, even though you counsel it. I was delighted to hear from Mr. Treman of your reported improvement, and hope that a winter in the open will put you right on your feet again. I am sure that you would have been touched as well as gratified by all the expressions of affectionate solicitude from the men who were here last week as to your health and your early return to New York. While it is a great piece of work to have done what you have in the Federal Reserve system, I cannot but think that it must be almost as gratifying to you to know the relationship of confidence and affection that you have established in this group of men who were practically all of them entire strangers to you less than two years ago. I note that you are doing a little fishing, and you may therefore be interested to know that we are having some real tuna fishing at Block Island, wherKhave gotten up a little club that we hope some day will be as attractive as the Tuna Club at Catalena, and I think that we have better fishing than they have out there. I killed a 24* pounder on light tackle two weeks ago Sunday, and had about an hour of very strenuous work in a very heavy sea, which made some fishing that I had out at Catalena three or four years ago seem like a parlor game by comparison. Some time when we all get back on the job I think it would be a good plan for us to take a week-end off, and try them out. Don't be paralyzed at the length of this letter. 1,Iy only apology for it is that I do not have the opportunities to talk things over with you that I used to have, and consequently take it out of you in this way. With warm personal regards, and very best wishes, I am, 111 Fa T. W. GILBERT H. C. 8c A. COMBS The West Outlet Camps I T. WILLIAM GILBERT, Manager One of the Many Camp. 7 West Outlet, Maine, /Z1 C Cji47t,c4,Ze:: f 1 Jf Z-Z44/ G/ C7 A_a/ifzzeil ctid e e c4-4, kk\ 1-2 r4 ..\t .[N'' T. W. GILBERT H. C. & A. COMBS The West Outlet Camps T. WILLIAM GILBERT, Manager One of the Many Camps West Outlet, Maine, 191 A co-i 77c4 27 dc42---x4,,_, 6z-r- cc-ee .../12L-c/L At.t a..A.e z,t /Lf 777:(5-e/1, 0 FEDERAL RESERVE BANK OF BOSTON LFRED L. AIKEN GOVERNOR ORRIMON M. HOWE CASHIER ERNEST M. LEAVITT 53 STATE STREET ASSISTANT CASHIER CHARLES A. RUGGLES MANAGER COLLECTION DEPT. DIRECTORS AND FEDERAL RESERVE AGENT WALTER S. HACKNEY. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. BEAL, BOSTON. MASS. CHARLES G. SANFORD. BRIDGEPORT, CONN. ARTHUR M. HEARD, MANCHESTER, N. H. CHARLES A. MORS, BOSTON, MASS. EDMUND R. MORSE. PROCTOR. VT. CHARLES G. WASHBURN, WORCESTER, MASS ALLEN HOLLIS. CONCORD, N. H. Benjamin Strong, Jr., Esq., Estes Park, Colo. Dear Strong,- Thank you very much indeed for your very interesting letter of the 2nd inst. I am delighted to hear that you have gotten by the set-back that you had. I suppose that such an experience is inevitable, and that if the general trend of the curve is upward that is the really important thing. I was much interested in all of your letter, but particularly in your suggestion that I join Mr. Iarburg and go out with him from Kansas City to Estes Park to see you. To.be perfectly frank, I debated as to whether for a vacation I should choose a trip to Maine, or a trip to Colorado, incidentally inflicting myself upon you for a few days, not to talk shop primarily, but just because it seemed such a long time since I had seen you, but I decided in favor of Maine because I was a little afraid that it might not be best for you to see me, and that with your customary Chesterfieldian politeness you would not tell me so, and save yourself this infliction. At present I am pretty well committed to a couple of weeks in Maine, but your plan is tempting enough so that I am writing to Mr. Warburg to find out just what his plans are, thinking that I might perhaps get a week or ten days // FREDERIC H. CURTISS. CHAIRMAN Benjamin Strong, Jr., ESQ., +2. in Maine, and still get home in time to go out to Kansas City and from there to Estes Park. Frankly, 1 do not want to go to the Convention, though I am willing to do it if it is my plain duty. I have gotten temporarily tired of meeting the assualts of our friends the enemy, and I rather dread the necessity that may arise of getting on my hind legs, and into a strenuous controversy at Kansas City. I may, however, feel differently about it after a week's fishing in Maine. As soon as I hear from Warburg as to his plans, I will write to you definitely in regard to it. I am sure that you know without my telling you that nothing would be a greater pleasure to me than to have a few days with you, and I Should certainly try to go to Estes Park a day or two before the law shut down on fishing. In your letter you spoke of the matter of a committee on fiscal agencies. I find myself somewhat embarrassed in this connection, and wish you would advise me about it. At the Conference of Governors, Mr. Miller of Kansas City, moved the appointment of this Committee, which should consist of the chairman of the conference and two others, and I very stupidly misunderstood him, and thought that his motion created the chairman of the conference not only a member of the Committee but the chairman of it. not the case. I see from the records that this was The Committee that I appointed consisted of Mr. Treman, Mr. Fancher and myself. I am now disposed for obvious reasons to change the chairmanship, and am disposed to appoint Mr. Treman chairman, instead of myself. Your bank has made investigation of this matter, and as it is a matter that will require much consultation in Washington, and as you are Benjamin Strong, Jr., Esq.; #3. only half as far away from Washington as we are, and that further Mr. Curtis is so familiar with the governmental machinery, it seemed to me that the chairmanship might much better be lodged in the New York Bank. I wish you would let me know how you feel about it. I have assumed that you will write me with perfect frankness, understanding fully that I have no personal feelings in the matter, in fact I take for granted that you will do this in all matters pertaining to the bank, because I have no purpose in mind except to work these things out as effectively and rapidly as possible, and in this particular instance I think that lodging the responsibility of this matter with your bank would work to this end. I heartily concur with you in the matter of agency in connection with our foreign operation, and I think that the arrangement that Kains suggested would be intolerable from your point of view, and would be impracticable as a working basis, entirely aside from the legal rights of the banks to establish such an agency. I think that a different basis of compensation from that suggested by you would have to be arranged because it seemed plain to me that most of the governors felt that in view of the narrow margin of profit on which all foreign business is done, 1/8 would be too large a commission, and that a large part of the profit d of the operations in this connection would be absorbed in commissions by the Federal Reserve Bank of New York, but this is a minor matter, and one in which I know that you are disposed to deal generously. I quite sympathize with you in the theory that the control of the New York market in this matter should be in the hands of the New York bank, and Benjamin Strong, Jr., Esq., #4. this bn-nk would entire7y concur in operations on this basis. In your letter you mention delays in answering my letters. As I have written you before, I want you to feel that there is no obligation on your part to answer any of them except so far as it is convenient for you to do so. I should not feel free to write to you as I do if I felt that it would inflict a burden on you, and one of the conditions of my doing so is that you will not permit it to be a burden to you. nothing would please me more than to have my plans work out so that I can see you the last of the month. With best wishes for your continued improvement, believe me to be, Faithfully yours, AIA/M ALFRED L. AIKEN F 2RIMON M. HOWE CASHIER 'FEDERAL RESERVE BANK OF BOSTON ERNEST M. LEAVITT ASSISTANT CASHIER 53 STATE STREET CHARLES A. RUGGLES MANAGER COLLECTION DEPT. DIRECTORS FREDERIC H. CURTISS, CHAIRMAN AND FEDERAL RESERVE AGENT WALTER S. HACKNEY. VicE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. BEAL, BOSTON. MASS, CHARLES G. SANFORD, BRIDGERORT. CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS, BOSTON. MASS. EDMUND R. MORSE, PROCTOR, VT. CHARLES G. WASHBURN, WORCESTER, MASS ALLEN HOLLIS. CONCORD, N. H. Oct. 2, 19 Benjamin .Strong, Jr., Esq., The Lewiston, Estes Park, Colo. Dear Strong,- I greatly enjoyed my little visit with you and Mr. Warburg in Denver, and was only sorry that I had to depart after such a short stay, particularly as it involved breaking .away from the Ruth St.Denis party. When I got to Kansas City I found that the most strenuous meeting in opposition to the Federal Reserve system occurred on Tuesday, at which time the meeting of the country bankers largely from the South and West was held,with a great deal of very loose talk in regard to the Federal Reserve Collection Mr. Fancher and Mr. Caull-ins were both present, and system. told me that the country bankerspassed a resolution at that meeting agreeing to take whatever steps they could through Congress to so modify Section 16 of the Federal Reserve Act that they could retain their collection charges, and failing in that committing the American Bankers' Association to:suit As a result of a to test the constitutionality of the Act. good deal of missionary work by all the representatives of the Reserve Banks and their friends, all the teeth of this resolution were drawn, and I enclose you a copy of the final resulution which was presented to the Convention and passed. The following men from the Reserve Banks were in attendance: McDougal Fancher Wold Caulkins Hendricks Hardt and myself. I am very glad indeed that we were all there, because the Federal Reserve system was by far the most engrossing topic of conversation, and it would have been the greatest mistake possible to have had the matter go by default so far as the Federal Reserve Banks themselves were concerned. All the speeches that were made in the Convention were it seemed to me distinctly favorable on the whole toward the Federal Reserve Banks. Mr. Warburg's speech WES a very great success. He spoke so that everybody could hear him, and ought Benjamin Strong, Jr., Esq., #2. to have been flattered by the universal expressions ofapproval of what he had to say. On Thursday afternoon Joe Chapman also made an excellent speech, which was followed by a little informal speech by Governor Harding, which was really quite a masterpiece, it was so friendly and conciliatory and so completely free from any official formality. When we left, I think we were all agreed that if the Convention WPS a waste of time from most points of view, it certainly had been worth while from the point of view of the Federal Reserve Banks, because the attitude of the country banks was much more conciliatory at the end of the week than when the Convention began. Thanks to Mr. Hoops, of Dallas, I with the southwestern bankers, who were the exchange proposition, and found that it was sit right down and go over the whole matter and a good many of them were disposed to be spent most of my time keenest on the well worth while to with them frankly, reasonable. The most exasperating thing of the whole meeting was the apparent entire lack of capacity of most of the men present to see anything in the Federal Reserve system beyond a check collection scheme. Mr. Warburg's speech was particularly opportune in overcoming this idea. It is needless to say that the pleasantest part of my trip was the twenty-four hours I spent with you and Mr. Warburg, and I only wish that my stay might have been longer, and that we need not have been obliged to confine ourselves to talking shop all the time. I found things pretty quiet here, with no change in rates, and in general conditions. I am going to continue to write you every week or ten days as to conditions as I see them here. I hope that you will have a fine winter, and that the spring will see you restored to your usual health and activity. With warm personal regards, believe me to be, Faithfully yours, z4 , 09 RESOLUTION. WHEREAS, The purposes of the Federal Reserve Act are to mobilize the reserves and to unify the National Banking System, thereby providing an elastic currency and a system of rediscounts, and WHEREAS, The Act has in it the possibilities of preventing the suspension of cash payments by banks, thereby making the country safe from currency panics, and WHEREAS, Section 16 of said Act providing for the so-called par collection of checks is not a feature necessary to the attainment of the objects sought by the Federal Reserve Act, and the system of collecting checks now in operation under the law, as interpreted and applied by the Federal Reserve Board, works serious hardships upon and heavy losses to thousands of country banks, and WHEREAS, It is the belief of the majority of bankers that Congress did not intend to de- prive the banks of legitimate profit, therefore BE IT RESOLVED, That the American Bankers Association, while approving the funda- mental principles of the Federal Reserve Act and expressing loyalty to the Federal Reserve System, protests against the provisions of the Act relating to the collection of checks, and instructs the Committee on Federal Legislation of the American Bankers Association to endeavor to secure amendments to the Federal Reserve Act, providing for the establishment of a collec- tion system which is fair and equitable to all Banks and to the general public. BE IT FURTHER RESOLVED, That the President of the American Bankers Association be authorized and directed to appoint a Committee of twenty-five bankers, fifteen of whom shall be country bankers, and ten of whom shall be reserve city bankers, and that this Committee co-operate with the Committee on Federal Legislation of the American Bankers Association in bringing about the enactment of the desired amendment. FEDERAL RESERVE BANK OF BOSTON INCA, FRED L. AIKEN GOVERNOR RRIMON M. HOWE CASHIER ERNEST M. LEAVITT 53 STATE STREET ASSISTANT CASHIER 4,, CHARLES A. RUGGLES MANAGER COLLECTION DEPT. 4,;(,-;:. 4 le Benjamin Strong, Jr., Esq., 4100 Mount View Blvd., Denver, Colo. 615; DIRECTORS FREDERIC H. CURTIBB,CHAIRMAN AND FEDERAL RESERVE AGENT WALTER S. HACKNEY, VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. BEAL. BOSTON. MASS. CHARLES G. SANFORD. BRIDGEPORT, CONN. ARTHUR M. HEARD. MANCHESTER, N. H. CHARLES A. MORSS. BOSTON, MASS. EDMUND R. MORSE, PROCTOR. VT. CHARLES G. WASHBURN, WORCESTER, MASS ALLEN HOLLIS, CONCORD, N. H. October 16, 1916. 1% Dear Strong,- I was glad to receive your letter of the 6th, and to learn that you were none the worse for our visit with you the last of last month. I am glad to know that you are busy writing something to publicly combat the absurd arguments of the Chronicle in the matter of our note issued. I was in Washington lest week, and while there talked with Mr. Harding and Mr. Warburg about a meeting of the in November, and I am writing this to ask you to suggest to Mr. Curtis such topics for discussion as may occur to you. As I told you when in Denver, I felt that the last meeting here was more remarkable for what it side-stepped \\Governors than for what it aceomplished, but in spite of that 1 think a year it is very important that three or four timesove should get together for an exchange of ideas on the general operations of the bank, for it seems to me that the effect is to dampen some of the wild ideas of some of the more radical Governors from whom we get an outbreak Every little while, like the disinclination of two of our associates to issue Federal Reserve notes because of the expense. My feeling is that it would be a good plan to have a meeting in Washington the last part of next month, and I think 2 0 that Mr. Harding and Mr. Warburg agree with this. These meetings will be much more interesting gatherings When we get you back again to put a little real life into them. Since I saw you in Denver, I have been almost tempted to go out and see you again to consult with you about a matter that has troubled me a good deal, and as to which I have been in a great deal of doubt. Our friend Mr. Wing has been trying diligently for some weeks to get me to go into the First National Bank, as VicePresident, next to him in command, and of course at a salary much larger than the Federal Reserve Bank could ever afford to pay. I have been much disturbed about it, because while I am sure that I shall enjoy and find interesting a future in the Federal Reserve Banks, yet I feel that the comfort of my family and their future prospects because of a largely increased income, is a matter that is entitled to very serious consideration. As a matter of fact I told Mr. Wing on Saturday that I had decided to stay where I am, but I must confess that I did it with some slight misgivings as to the wisdom of my decision, leaving out of account the personal satisfaction that 1 derive from the interesting and constructive work, and the pleasure that I have derived froM-my association with you. Mr. Wing told me on Saturday that he was not going to go any further in the matter for the present. Some time in the near future I shall hope to have an opportunity to see you and to talk over the whole future of the system. Of course the above is confidential, but I knew that you would be interested. Incidentally, you will I am sure be interested to know of Mr. Wing's complete reversal of attitude in the matter of the reserle system, and of this bank. He has rttalked with me a good deal about it in the course of the last week, and I think he is disposed to do all that he can to further the development of the activities of the banks, and is on the whole very well satisfied with the developments of the last two years. His attitude is certainly distinctly favorable. By way of amusement I would like to commend to you, if you have not read it, Lord Redesdale's "Memories." It looks like a rather ponderous two volume book, but is one of the most deligtful ones that I have seen in many a day, and I am sure that you would enjoy reading it as much as I have. I hope you will have a good winter, and that you will make real progress in the way of increasing health and strength. With warm personal regards, I am, Very sincerely yours, AeED FL INKENGOVERNOR RIMON M. HOWE CASHIER FEDERAL RESERVE BANK OF BOSTON ERNEST M. LEAVITT ASSISTANT CASHIER 53 STATE STREET CHARLES A. RUGGLES MANAGER COLLECTION DEPT. DIRECTORS AND FEDERAL RESERVE AGENT WALTER S. HACKNEY. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. BEAL. BOSTON. MASS. CHARLES G. SANFORD. BRIDGEPORT, CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS, BOSTON. MASS. EDMUND R. MORSE. PROCTOR. VT. CHARLES G. WASHBURN, WORCESTER. MASS. ALLEN HOLLIS, CONCORD, N. H. November 1, 1916. Benjamin Strong, Jr., Esq., 4100 Mount View Blvd., Denver, Colo. My dear Governor,- Thank you very much for your good letter of the 24th ult. I spent yesterday in New York with Messrs. McDougal, Fancher and Seay. While %There we arranged to sell $5,500,000. 3% Governments at 1013- & interest, which seemed to me a very good price, and spent the rest of the time in a somewhat animated discussion in regard to the French credit, during which we had a most interesting hour or more with Mr. Kent. Judge Curtis showed me a letter that he had sent you, in which he, without malice, absolutely misstated the position of our bank here in regard to these French acceptances. We have never told anybody that these acceptances would not be eligible, nor that we would decline to buy them, in fact, we have pursued quite the opposite course, and 1 have told all the banks that have inquired of me that if the bills were eligible, and 1 saw no reason why they were not, we should be entirely willing to buy them, simply using ordinary business discretion as to amounts and rates, but I did not want the banks to get the idea that we should be prepared to have them go in to an indefinite amount on this credit, on the assumption that they could immediately turn over all their acceptances to the Federal Reserve Bank at the present rate for such bills. Apparently the misunderstanding about our position arose through the fact that the telegram of the Board reached here one afternoon after I had left. I had that day been talking with Mr. Farnum, Vice-President of the New Haven Bank, in regard to this matter, and had been so liberal in my attitude with him that when Mr. Howe, our cashier, reported to me by telephone the receipt of this telegram, I hold Mr. Howe to call Mr. Farnum up, and suggest to him that he pursue a conservative policy in the matter, and that I would talk with him the next morning by telephone, which I did, and during this conversation I told him just what I have written above as to our attitude. There was no foundation of fact at all for Curtis' statement in regard to our attitude. II FREDERIC H. CURTISS, CHAIRMAN Benjamin Strong, Jr., Esq., #2. I did not know until yesterday that the Chicago bank had taken formal action in this matter, but I did hear from Mr. Wold that his barillrad done so, and wrote him quite on as tothe irdesirability of such frankly, expressing my op formal action in the matter. I left New York yesterday with the feeling that this situation is pretty hopelessly mixed up now, though Mr. Kent seemed to be fairly optimistic that they might be able to arrange for a $50,000,000. credit, instead of $100,000,000. as originally planned. Our meeting in New York suggested the old days of our executive committee. The perfectly informal meetings of Mr. Rhoads, Mr. Fancher and I, which / talked over with you last June before you went West, were arranged to avoid entirely Just exactly any suggestion of a formal committee meeting. how Mr. Seay and Mr. McDougal were annexed to the meeting yesterday I do not know. They were both on hand, and it looked very much like the old executive committee which was anathema to the Federal Reserve Board. I was somewhat embarrassed by the situation, and made as adequate explanation as I could to Mr. McDougal and Mr. Seay that Messrs. Rhoads, Fancher and I were not trying to put anything over on them by having little quiet meetings of our own without saying anything to anyone about it, but I am not sure that our Scotch friend from Chicago was fully convinced. I think that we shall have a Governors' meeting in Washington either the last of this month or the first of next, and before that time I will write you definitely as to when it will be, and as to what questions of real interest are coming up. I hope that you continue to mend, and that you are enjoying your winter in Denver. With kind regards, believe me to be, Faithfully yours .a' ALA/11 . // DIRECTORS AFRED L. AIKEN FREDERIC H. CURTISS, cHAIRmAN GOVERNOR F, AND FEDERAL RESERVE AGENT FEDERAL RESERVE BANK OF BOSTON .2RIMON M. HOWE CASHIER ERNEST M. LEAVITT ASST. CASHIER 53 STATE STREET CHARLES A. RUGGLES MANAGER COLLECTION DEPT. 4.4e WALTER S. HACKNEY. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. DEAL. BOSTON. MARS. CHARLES G. SANFORD, BRIDGEPORT, CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS, BOSTON. MASS, EDMUND R. MORSE, PROCTOR, VT. CHARLES G. WASHBURN, WORCESTER. MASS ALLEN HOLLIS, CONCORD. N. H. Nov. 28, 1916. Benjamin Strong, Jr., Esq., 4100 Mount View Blvd., Denver, Colo. Dear Strong,- I am sorry to have let such a long time go by since my last letter to you, though nothing very important has happened in the meantime. I spent a very pleasant day in New York a week ago Friday, with Mr. Treman and Mr. Rhoads, discussing largely the matter of acceptances drawn under the various French credits that have been established here, particularly as to the difference in rate between them and the ordinary foreign acceptances drawn in the normal way. With no intention of straddling between the position of the New York bank that there should be no discrimination agains't these bills,and of some members of the Board that there should be a very distinct discrimination, I do feel that we should get perhaps 1/4 of lc'7, higher rate on these renewal bills than on the ordinary commercial bill. I have had several discussions with the presidents of some of the larger banks here in regard to the matter, and I think they concur in my feeling. I think, however, that it would be a great mistake to make any formal announcement that might give the impression that there was a disposition in the Federal Reserve Board or the Federal Reserve Banks to seriOusly discourage the establishment of such credits, for I fully recognize the great importance of them under existing circumstances. In this connection I suppose that before you receive this you will have seen the statement of the Federal Reserve Board through the 21ssociated Press in regard to the policy of the national banks in buying British exchequer bills that Morgan Co. is trying to iilace and create a market for. This statement has in a teapot" here, in both the larger and the LaZIP:n .the feeling seeming to be very general that the national banks "t714'41 were quite competent to deal with this matter discreetly, and did not appreciate even a semblance of dictation as to policy from the Federal Reserve Board. My personal feeling is that the banks can deal with this situation just as discreetly as they can deal with the matter of handling increased gold imports. I think that the position taken in the Press notice that they could deal with the latter discreetly ..,enjamin Strong, Jr., Esq., §2. 41t4r(:, but not with exchequer bills is entirely untenable. I think I The money situation here is distinctly firm. wrote you that we had bought all the bills that the First rational Bank had in its portfolio, and are buying from day to day such bills as they come along. We are also making contracts for arrival bills in considerable amounts both with them and and the National Shawmut, at 1/4 of 1% higher than our spot rate. We are getting a pretty fair demand for rediscounts, principally from the Boston banks, who are practically all loaned up close. The rediscounts are most all for short time, and at consequently low rates, but we are making very good earnings, and I expect that we shall pay a dividend at the rate of 6% for the first full year of operations, and perhaps up to Jan. 1, 1916. We have had about 50 of our banks rediscount with us at one time or another, and at the present time one or two new ones are coming in every week. We have been considering quite seriously advancing our short time discount rates, but I do not think we shall do so at once. Our check collection system grows slowly, but I think that we are developing a very much better feeling among our member I have had one of our junior officers banks in regard to it. go out and visit a good many of the more important country banks to talk over with them the check collection operations of the Reserve Bank, and find that it has proven very effective missionary work. I look forward with the usual dread because of your absence, to the Governors' Conference in Washington, and everybody will be much relieved when you get back on the job, toward which I hope I will see to it that you are making real and rapid progress. this time that some of the ouestions that were left unsettled at our meeting here in August are brought to a definite issue. I must confess that it worries me more or less to find so much feeling as to making checks of the Federal Reserve Banks good for I immediate credit at par at any other Federal Reserve Bank. judge that Hr. Delano feels very strongly in favor of this, and I think that he is vigorously supported by Mr. Seay. I keep writing Mr. Delano that it seems to us that we have been making about as rapid progress as we .could expect, and that I think we had better digest what we have already undertaken before we try any additional developments of our collection system. The New York bank have doubtless advised you that there is to be a meeting of the auditors and transit men before our Governors' meeting, and I imagine that with the subjects that they will turn over to us in addition to our own program, we shall have a long I wish there was something that could be done to and busy time. press the carrying out of the tentative arrangement that you made That seems to be pigeon-holed somewhere between the in London. State Department and the Federal Reserve Board. I have talked with Mr.Jaebuiza number of times about getting busy on it, but you know without my writing you what his consistent attitude is in this If you can suggest to me any way that we can press this, matter. and get some action on it, I should be delighted to see that it is carried out. ,jamin Strong, Jr., Esq., 43. °N kv=-I am very busy at the present time trying to get some of our , larger trust companies into the system, and have been working on the Clearing House Committee to get them to bring pressure to bear to effect this, and am conservatively optimistic as to the future. I really feel as if we might acomplish something on this line in the course of the next month or six weeks. If we can get three or four of the larger trust companies here to apply for membership I am sure that most of our larger and more important country trust companies will almost at once follow suit. Things have been pretty busy with us on the whole, and the result has been that I have been pretty close on the job, though I took one day off early in the month for a day's shooting up in the country, but only got two birds, and last Saturday I took my small boy and his Mother to Lew Haven for a week-end, to see a demonstration of the shortcomings of the "Haughton System" as applied to Harvard football, and I must confess to a large amount of middle-age satisfaction at the result of the game, althongh the score really did not show the superiority of the Yale team that actually existed. I wish that circumstances were such that I could get to Denver for two or three days, to talk over w7th you many things that are coming up from day to day in our operations, and that would make too bulky a letter if I included them all. I think on the whole that the system is making friends, and is making slow but sure progress. 4e certainly see an increasingly friendly attitude aMong the more important banks in this district. I hope that you are continuing to gain, and are thoroughly enjoying your stay in Denver, and shall hope to hear continuing good reports from you when you find time to write. With best wishes, and warm personal regards, believe me to be, Faithfully yours, P..S.Have you read Hartley Withers' "Poverty and Waste?" If not, I wish you would let me send you a copy, for it is well worth reading. DIRECTORS ALFRED L. AIKEN FREDER/C H. CURTISS. CHAIRMAN GOVERNOR RRIMON M. HOWE CASHIER ERNEST M. LEAVITT ASST. CASHIER FEDERAL RESERVE BANK OF BOSTON CHARLES A. RUGGLES 53 STATE STREET MANAGER COLLECTION DEFT. A LP. 4 AND FEDERAL RESERVE AGENT WALTER S. HACKNEY, VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. BEAL, BOSTON. MASS. CHARLES G. SANFORD, BRIDGEPORT. CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS, BOsToN, MASS. EDMUND R. MORSE, PROCTOR. vi. CHARLES G. WASHBURN, WORCESTER. MASS. ALLEN HOLLIS, CONCORD, N. H. December 18, 1916. 4 Benjamin Strong, Jr., Esq., 4100 Mount View Blvd., Denver, Col. Dear Strong,- Doubtless you have already heard from Mr. Treman of our conference in Washington. Every time we have one of these meetings I am more than ever impressed by what you have contributed to their success, and feel more keenly the lack of your advice and leadership. I hope that before we have many more you will be back with us again. The Board established a new practice in asking us to meet with them before we began our own meetings, in order that they might advise us of matters that they had pressingly in mind, and which they would like us to consider. This seemed to me on the whole a good thing, as it saves a good deal of possible lost motion. I was very much impressed at this first meeting with the apparent disposition of the Board to take a much more active part in the activities of the banks themselves than in the past, in fact, Mr. Harding stated quite frankly that they and some members of Congress, including Mr. Glass recognize the Federal Reserve system as a central bank, with the Federal Reserve Board as the real power in its conduct and operation. Mr. Harding advised us of a number of amendments that the Board is urging as matters of principal interest at the present time; The matter of making drafts of Federal Reserve Banks immediately available at par anywhere, was discussed, and the necessity of taking some action to expedite this matter was presented somewhat forcefully. I suggested because of the large size of the Conference and of the Board that it would probably be best to have a Committee deal with the Board's Committee on Clearances upon this subject. Mx. Harding acquiesced in this, and said that while he did not wish to interfere at all with the appointment of committees, it seemed very important that the Committee of Governors should be made up in such a way that its members should be easily accessible to Washington, and repeating that he did not wish to interfere in any way suggested that the Committee might consist of Mr. Seay, Mr. Fancher and Ur. McDougal. As Mr. Seay and Yr. Fancher are the strongest advocates of the plan making drafts of Federal Reserve Banks immediately available, this did not look good Benjamin Strong, Jr., Esq., 2. to me, so I at once said that Ogt it seemed to me the Committee ought to be larger than three, and while I welcomed his suggestion, and was very glad to appoint the three men that he named, I would take the liberty of adding two more, and appointed Mr. Treman, as Chairman of the Committee, and Mr. Rhoads as associate, both being strongly opposed to the par proposition, and thereby changing the complexion of the majority. MT. Treman asked me if I would not take his place on the Committee, but it seemed to me that he had better stay on, because I can keep in very close touch with the Committee, and if they go to Washington will arrange to have a meeting of some other Committee of which I am a member at the same time, so that I am very sure that some of the Board feel I will be there. that I am a reactionary in this whole matter, and that if I put myself on the Committee I would be rather stacking it to the prejudice of the development of their plans. You will learn of the disposal of the items on the program from the minutes which will be sent you in due course. Some of the proposed amendments submitted by the Board were a good deal of a shock to me, particularly the provision for associate membership in the Federal Reserve system, the plan being to bermit state banks and trust companies to become associate members, they agreeing to keep their reserve deposits with us, but not being obliged to hold any stock, and apparently being outside the scrutiny of the comptroller, and of the Federal Reserve Banks. In return for their balances they would have the privilege of rediscou_ting with us with the endorsement of a member bank on their paper. It seemed to me that this plan would be entirely ineffective in attracting satisfactory membership. The best of the trust companies would hot be willing to go to their depository banks and ask for their endorsement, and the poorer ones that would be willing to are the ones that we do not want Further than this, I think that we have gone far as members. enough in offering inducements to state banks and trust companies to come in, and I feel that the trust companies themselves would feel that we arp sacrificing principles to expediency, and I also think that the member banks would be dissatisfied with any further apparent laying down on the members. It seems to me that such an arrangement would lower the prestige of the Board in the minds of the best state banks and trust companies, and that we would not attract any desirable membership under it. A few weeks of fairly firm money will do more to interest the outsiders than the plan proposed could possibly do. There is another amendment proposed to change the reserve requirements of the member banks, eliminating all requirements for vault reserve, and simply making mandatory the reserve in the Federal Reserve Banks. No satisfactory basis for the establishmentof the percentage of such reserves has apparently been arrived at, though there have been suggestions of 6% or 7% for the country banks, 12% to 14% for central reserve city banks, and 9% or 10% for reserve city banks. The proposed change in reserves for country banks would probably result in enjamin Strong, Jr., Esq., #3. reserve requirements in the country banks, and would alienate them still farther from the Federal Reserve system. (Ziincreased Further than that, if they were allowed to reduce their cash reserves to the irreducible minimum, a considerable part of the hoped-for increase in resources of the Federal Reserve Banks would in my judgment be used in more or less chronic This change is so radical rediscounts with the country banks. and its erfects would be so far-reaching, that I should be very loath to undertake it at the present time. It would certainly require the setting up at once of a large and active money department in all the Federal Reserve Banks, to take care of their varying cash needs, and I think that this subject should be very carefully worked out before we plunge into it to such an extent that we cannot extricate ourselves. As you may remember, I am somewhat radical in my ideas about reserve requirements anyway, and it seems to me that as an academic propbeition if banks were competent to operate in that way that there should be no required reserves, but I do not believe that any such ideal condition is possible In this country with the banks operated as they are. Apparently the real underlying motive for the proposed amendment is the desire to make Federal Reserve notes good vault reserve for banks. Almost everybody seems to be in favor of this now, but we were told in Washington that Mr. Glass was opposed to it, and was not willing to change his position in this matter, but that he was probably willing to work for the proposed amendment, which accomplishes the same thing in an indirect way, plus a great many complications that apparently have not been very carefully worked out. Personally, I should prefer to see continued missionary work in the matter of an amendment making Federal Reserve notes good reserve, until I had very much more data on which to base the necessary percentages of reserve requirements. I am afraid that it w,s a good deal of a shock to P. W. to find unanimous opposition on the part of the Governors to both these plans. The Board also submitted a plan for a super-tax on national bank note circulation to force its retirement. I am not clear in my mind that the country is prepared for any such coercion as this heavy super-tax suggests. I wish tremendously that I could go out to Denver for two or three days to talk over with you the whole situation, which is full of interesting problems. These meetings in Washington always depress me a little, and I think it would do me good to get some of your views on the matters in hand. We are still getting a very savage reaction about here in connection with the Board's attitude on the exchequer bills, and when I was in New York Friday I was jumped upon by all my old friends there. It seems a great pity that this whole situation was not handled differently. The general situation here has eased somewhat since last week, and the week before, but money is still fairly close, and we are doing a good deal of rediscounting. Benjamin Strong, Jr., Esq., #4. We are pressing the matter of getting some of our trust companies in, and I think are making some progress, but it is slow. This will reach you just before Christmas, and it is needless to say that it takes my hearty greetings to you and your household, and the hope that the new year is going to bring you renewed health and strength, and bring to us your most welcome return for active participation in what we are doing. With best wishes, I am, Faithfully yours, ALA/M L. AIKEN DI R ECTORS FREDERIC H. CURTISS, CHAIRMAN GOVERNOR F RIMON M. HOWE CASHIER ERNEST M. LEAVITT ASST. CASHIER AND FEDERAL RESERVE AGENT FEDERAL RESERVE BANK OF BOSTON WALTER S. HACKNEY, VICE-CHAIRMAN 53 STATE STREET CHARLES A. MORS, BOSTON, HAS, CHARLES A. RUGGLES AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. REAL. BOSTON. MASS. CHARLES G. SANFORD, BRIDGEPORT. CONN. ARTHUR M. HEARD. MANCHESTER. N. H. EDMUND Ft. MORSE, PROCTOR. VT. CHARLES G. WASHBURN. WORCESTER. MASS ALLEN HOLLIS, CONCORD, N H. MANAGER COLLECTION DEPT. liag December 19, 1916. Benjamin Strong, Jr., Esq.,°w-4100 Mount View Blvd., Denver, Colo. Dear Strong,- It is a good deal like riding a willing horse to death to inflict another letter on you in addition to my rambling and desultory one that I wrote you yesterday, but I find that I have omitted from it any mention of the development of the foreign relations matter. As you doubtless know, Curtis submitted this for the confidential information of the Governors present, not to be transmitted by them to their banks until the matter had We were given to understand that this developed further. had been released from the limbo of the State Department, and Governor Harding was now up to the Federal Reserve Board. advised us that they felt they ought not to commit themselves on it until they had had an opportunity to confer with Secretary McAdoo, and they hoped to have that conference on Saturday, when he was expected in Washington. We impressed on the Board with all the force that we cou144Ihe impossibility of endeavoring to close this arrangement aneZdo any business under it until after the war, and I told Governor Harding and Mr. Warburg quite frankly that it seemed to me that asximatter of common courtesy and honorable dealing between such institutions, that we could not make any such suggestion to your British friends - that I did not think the volume of business was of as much importance as the immediate setting up of an active relationship under the agreement that you arranged. If such an arrangement could be made now, and we entered into active business relations with your friends abroad, it seems to me that it would do as much as anything could to soften the impression made by the announcement of the Board in regard to foreign loans, and to dispel the idea that their position was taken because of any international prejudices. Mr. Curtis showed me your letter to him in regard to the proposed trip to London if this plan should be approved. I think that you should not only for your own sake, but for the sake of all of us, go very slowly in undertaking any such expedition, unless you have the most complete approval from your doctors, but Benjamin Strong, Jr., Esq., #2. 0 if you do have, and are disposed to go, and would like to have me go wit- you to learn the ropes, I see no reason why I could not arrange it, and of course would count it a wonderful opportunity and privilege. Entirely aside from any personal interest in the matter, it seems to me that it is of the greatest importance that the Governor of one of the banks should go with you, in order that more than one officer of the Reserve Banks should be personally known to the bankers abroad, and should have learned at first hand some of the business conditions and methods existing there. With kind regards, I am, Faithfully ALA/M yours, RESERVE BANK FE ALFRED L. Al KEN .03 OF-06105TO N GOVERNOR December 26, 1916. Dear Strong,- Thank you ever so much for the very charming card that I received from you this morning. I doubt if you know to what extent I reciprocate the good wishes contained therein. I had a bully Christmas yesterday, as my Father and Mother (Father is 84, and Mother is 80) with one of my sisters came and spent Christmas with us, and as it was the first Christmas that I have had with them for over twenty years, it gave an unusual flavor to the day. Mrs. Aiken's family had dinner with us, so that with a family of twelve we had a real old-fashioned Christmas party. I had just one disappointment in the day; I had promised myself a Christmas present of a talk with you by telephone, and had a call in for over seven hours, but when they finally told me at about eleven o'clock that they thought they could get a connection through in the course of the next hour, it seemed to me that there was a chance that you might have gone to bed, and that it would be a crime to disturb you. My whole family were lined up with the hope of having a talk with you to express their best wishes for a very happy New Year. The last thing that my small boy of nine said when I went up to r_ay good-night to him was "Wish Mr. Strong lappy New Year for me." He was as much dlJappointed as I, and he had been hovering around the house most of the afternoon in hopes that he might add his good wishes to mine. You must accept the intention in lieu of the reality, but I am not going to give it up, and will see if on New Year's Day I cannot have better luck, because I should like to hear the sound of your voice. This isn't a business letter, and I'm not going to put any business in it, but in the course of the week will write you about some matters that are of interest locally. I do not know of anything that I hope for more in the New Year than a complete restoration of health to you, and I hope that before 1917 has gone we shall have you back with us again. With affectionate good wishes, believe me to be, Faithfully yours, Benjamin Strong, Jr., Esq., 4100 Mount View Blvd., Denver, Colo. pay go( '48,PR. diJappc around hopes 1 mine. lieu o: ( to giv Day I should not go in the about locall: hope fl plete I hope have believ, Ben jam cRED L. AIKEN FEDERAL RESERVE BANK OF BOSTON GOVERNOR ORRIMON M. HOWE CASHIER ERNEST M. LEAVITT ASSISTANT CASHIER NTATE CHARLES A. RUGGLES MANAGER COLLECTION DEPT. a STREET kg DIRECTORS FREDERIC H. CURTISS, CHAIRMAN AND FEDERAL RESERVE AGEN WALTER S. HACKNEY. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. BEAL, BOSTON, MASS, CHARLES G. SANFORD, BRIDGEPORT. CONN. ARTHUR M. HEARD, MANCHESTER, N. H. CHARLES A. MORSS. BOSTON. MASS. EDMUND R. MORSE, PROCTOR. VT. CHARLES G. WASHBURN, WORCESTER. MASS ALLEN HOLLIS, CONCORD, N. H. December 28, 1916. Benjamin Strong, Jr., Esq., 4100 Mount View Blvd., Denver, Col. Dear Strong,- Thank you for your two very interesting letters under date of the 24th inst. As to the first one in regard to a possible trip abroad, it is needless to say that I should look forward to it as a wonderful privilege, and should certainly arrange my plans to go with you at any time that you could get away. I am ever so much obliged to you for the suggested books as to which you call my attention. I have all of them in my library, but have only nibbled at Noyes' book "The Financial Chapters of the War," and have not read Withers' "The Meaning of Money" at all. I should be very much obliged to you if you would send me as you suggest an exact statement of the problems involved in gold shipments. My efforts to solve it would probably be entirely futile, but I should learn something in the process. I note what you say about a competent secretary who speaks French fluently. If later on the plan takes definite enough shape, and you care to have me, I would be glad to look around to see if I can get on the track of such a man. There is a man whom I know of here at present employed as bookkeeper in the Old Colony Trust Company, who is about 32 years old, was brought up in the Old Colony, and six or seven years ago went to France in the employ of the American Express Company, and was I think for five years in Paris, coming home some time after the war broke out. I understand that he sneaks French well and easily. There is also the son of the treasurer of the Old Colony Trust Company, a boy of about 25, a Harvard graduate, who was I think for about two years in the employ of the American Express Company in France. This boy is a gentleman by birth and breeding, and comes of good, old Salem stock. How good his French is I do not know. Benjamin Strong, Jr., Esq., #2. 0 Speaking of French reminds me of the efforts I have been making, having the future in mind, to acquire some speaking knowledge of French myself. I can read it mildly, and prevailed upon Mrs. Aiken to let me join her in sessions that she has been in the habit of having I was every Wednesday evening with her French teacher. morals were as bad as my informed last night that if my I confess that I have French, I would be hopeless, and become discouraged, and have come to the conclusion that I am too old to acquire a foreign tongue. However, I am struggling with it, and shall continue to struggle with it in the hope of at least being able to keep fed on my next trip to Paris. Please keep me posted as to your plans in this matter as they develop, as there will be a good many preliminary arrangements to make before departure. Your other letter, bearing upon various amendments, also interested me greatly. I think the disposition on the part of the Governors to oppose most of the amendments was because of their natural disinclination to commit themselves upon snap judgment, to a proposition that dealt with fundamentals rather than because of any well settled ground for objection to most of the amendments proposed. As you say in your letter, there was distinct disagreement as to how an amendment changing the reserve requirements of member banks would work out, and hardly any two men were of the same mind as to the percentages of required reserves, and upon any given percentage one man felt that it was too little and the next man that it was altogether too large, with the consequent result that everybody felt that we were not favorably disposed toward the change until we had a great deal mor'e light upon it. I think that the plan proposed This is exactly my feeling. is a much better and more scientific one than anything we have had in this country, and I would like to see it made effective, 'but not until we get a great deal more information as to the effect upon bank reserves than we now have. This same mental attitude applied to matters of retirement of national bank notes, and T think we were all agreed that this matter should be expedited I think, however that we ought as rapidly as possible. to have something a good deal more definite than we were told in Washington before we give definite and formal axproval to these amendments that were suggested. In the matter of associate membership for trust companies, I frankly do not see anything in it, except perhaps as you suggest a preliminary step to force the trust companies and state banks in by coercion. I recognize the fact that it is absolutely essential that the trust companies in some way should be gotten in, and Benjamin Strong, Jr., Esq., 13. I think that the longer they stay out, the more firmly fixed will be their disinclination to come it, and their determination to herd by themselves, and leave the burden on the rational Banks. Perhaps the associate membership plan is a necessary step to their coercion, but I need some showing in the matter before I should feel favorably disposed toward it. I only wish that I could arrange matters here so that I could join Curtis and go out and makeyon a little visit, and talk over some of the nuestions under immediate discussion, but I am sorry to say that I see no itmediate prospect of its being possible for me. If our trip abroad materializes we will doubtless have plenty of time to talk them over on the way over and back. With warm personal regards, and thanking you again for your good letters, believe me to be, Faithfully yours, ALFRED L. AI KEN 53 STATE STREET BOSTON, MASSACHUSETTS January 50, 1917. Benjamin Strong, Jr., Esq., 4100 Montview Blvd., Denver, Colo., Dear Strong,It goes without ,saying that I was very much interested in the two letters that you sent me just received. The matter is of such serious importance that I think in fairness to all concerned I should talk this matter over with you, rather than try to discuss it by correspondence. I shall see if I cannot arrange to go to New York some day next week, to talk with Mr. Woodward and Mr. Peabody, and shall try to arrange to go put to Denver to see you as soon after that as is posSible. I understazid from the office in New York that you have give; up the Arizona expedition. Please let me know whethst or not you expect to be in Denver for the next three or four weeks, so that I may make my plans fit intq yours. I want to tell you how much I appreciate your courtesy in thiS matter, and the confidence that you show in me. Looking forward to seeing you in the comparatively near future, I am, Faithfully yours, 'ED L. AIKEN .,-,..-,....a.se1FeKNo F FEDERAL RESERVE BANK IRIMON M. HOWE CASMER ERNEST M. LEAVITT AssT.cAsHIER CHESTER C. SULLEN ASST. CASHIER CHARLES A. RUGGLES MANAGER COLLECTION DEPT OF BOSTON DIRECTORS FREDERIC H. CURTISS, CHAIRMAN AGO FEDERAL RESERVE AGENT WALTER S. HACKNEY, VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. SEAL, BOSTON, MASS. THOMAS W. FARNAM. NEW HAVEN, CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS. BOSTON, MASS. EDMUND R. MORSE, PROCTOR. VT. CHARLES G. WASHBURN, WORCESTER, MASS. ALLEN HOLLIS, CONCORD. N. H. January 12; 1917. Ben;lamin Strong, Jr., Ese., Denver, Colo. Dear Strong,Thank you very much for your cheerful letter of last week. I hope that every week brings its reasonable accumulation of health and strength. I am somewhat selfish in this expression, because I greatly miss the opportunity to discuss with you matters that are pressing in the development of the Federal Reserve Banks. We recently received, as doubtless you did, a copy of the proposed amendments to the Act, and I enclose herewith a copy of letter that I am sending to Mr. Warburg discussing them separately - also discussing them temperately. As a matter of fact, the amendments in regard to changes in reserves and giving the Board power to increase the reserve requirements are going to raise particular "hell" in tr.'s district, and I am (mite ready to take to the Rocky Mountains or any other place to escape the situation that will arise. I wish the mountain might be moved to Mahomet - a courteous way of saying that I wish Warburg and I could go to Denver again, and inflict ourselves upon you, and discuss this whole trust company, non-member bank matter. I do not agree with you and Warburg about the associate membership plan, and think that it would be entirely ineffective, but Heaven knows I am anxious to find a loop-hole through which we can get them in, and if you and Warburg can show me that this is the way, the plan will have no more ehthusistic supporter than myself. I think that the proposed plan for clearing membership of non-member banks is "punk" and will amount to nothing, and I cannot escape the feeling that this sort of groping around gives an impression of indecision and weakness in dealing with this whole matter. As T wrote you, we have been pressing the matter of state bank and trust company membership, but have gotten no results yet. The American Trust Company, one of the most important of the middle size institutions tell me that their Board'of Offiders would be unanimously in favor of coming in were it not for the fact that the operations of the Clayton Act made necessary the elimination of Mr. Saltonstall, a partner. in Tucker, Anthony & Co., from their Board and Executive Committee. Mr. S. has been one of their most active and interested directors, and they are not willing to give him up. This is very disappointing as it has taken a great deal of time and talk to get these people to acquiesce in the general proposition, and I fear now that the matter is indefinitely delayed. With two of the other middle size trust companies I think we are still making progress, and I understood a day or two ago that the Commonwealth Trust Company had definitely decided to come in. I understand that these amendments have been introduced into Congress. I may be presuming in feeling that it would have been better had they been discussed by the Board with the operating officers of the barks, and perhaps with the Advisory Council, before they wereintroduced, for after all is said and done the operating officers and the members Benjamin Strong, Jr., Esq., #2. of the Council have had a good deal more practical banking experience than most of the members of the Federal Reserve Board, and contribution of advice based upon this experience ought to be valuable and save mistakes. Mr. Delano was here on Monday, and I had a talk with him in regard to a consolidation of the "57 varieties" of committees of the Governors, made up of various arrangements of about the same men, and suggested the desirability from the point of efficiency of some kind of single committee, call It what you may, to deal with these things in a systematic It is plain enough that the present plan is and orderly way. ineffective. We have to use the men who are wasteful an geographically available for these Committees, and the result is that they are made up of the same men who constituted our original Executive Committee, and the present distribution of responsibility seems to me perfect child's play. Mr. Delano acquiesced in my general proposition, and seemed to think that it might be a goad plan to have some sort of a standing committee, and suggested that one member of the Board be made a member of this committee, a suggestion which if carried out would to my mind greatly interfere with the frank interchange of views and effectiveness of I am going to talk this matter the action of the Committee. over with the Board when in Washington the week after next, and hope that we will get somewhere on it in the interests of progress. I think that if a member of the Board was on this Committee, as a practical matter most of the Committee meetings would be held at the lunch table, and in the mens' rooms outside the formal meetings. We are going to have quite a meeting in Washington on the 22nd, and I expect that Treman, Rhoads, Seay, Fancher and McDougal will all be there for meetings of different I only wish that you were to be one of the party. Committees. Do not trouble yourself to answer the rather rambling letters that I send you covering conditions as I see them, unless there is some specific matter in them upon which you want to comment. It is needless to say that I am always glad to hear from you, but there is no reason why you should be burdened with letter-writing by way of mere acknowledgment. - With kind regards, and best wishes, I am, Faithfully yours, , I am sending you today a copy of the United States Investor, containing an article in which you may be interested.. P. S. Jan. 12, 1917. Hon. Paul M. Warburg, Vice-Governor, Federal Reserve Board, Washington, D. C. Dear Mr. Warburg,- beg to acImowledge receipt of your letter of the 3rd inst., and must apologize for my delay in answering it. I was anxious to give the amendments proposed by the Federal Reserve Board, as reoited in 2, 1917, careful your letter p944, under date of January them, which consideration, before writing you about accounts for my delay. I am very sorry indeed to learn that your Christmas vacation was so unsuccessful, and particularly that it should have been made se by the illness of various members of your family. I hope that cause has long since been removed. In regard to the trust company matters here, *I am sending to the Board today under separate cover a Company, copy of letter received from the American Trust In at the present advising us of their decision not to come Board enclosing this time. As stated in my letter to the the fact letter, the realsreason for their decision was that coming in necessitated the retirement of Mr. Philip 3altonstall, of Tucker, Anthony & Co., from their Board of Directors, and Executive Committee. All the objections on other grounds had been overcome, but Mr. Fessenden told me that the oast member of their Executive Committee had been converted, and that they no doubt would have come in had it not been for the operatIon of the Clayton Act in alive, Mr. Saltonstall's case. I shall Itee this matter impasse so far but I am afraid that things have come to an It is a source of very as this Company Is concerned. real regret, as I have spent a great deal of time with them, and think that their coming in would do more to help than that of almost any other trust company inttown. The Commonwealth Trust Company tatter Is, I think, working are also still favorably. The International crust Company fact that they would favorably disposed in spite of the partner in Hornblower & lose one of their active directors, a Weeks, under the Clayton Act limitations. I note what you say about Mr. Strong's attitude Hon. Paul M. Rarbul-g, #2, In the matter of associate membership trust companies, and the matter of reduction of capital. I had a letter from Mr. Strong myself expressing the same opinion as you suggest. I know of no two men with whom I would prefer to be in perfect agreement than with you and Strong, and regret that it still seems to me that the Proposed associate membership would be ineffective so far as getting the trust companies to come in is concerned, though I admit its possible usefulness as a step toward coercive measures later on. To take up the amendments as recited in #944, of January 2, 1917: 648-A. Amendment to Section 16, in the matter of circulation for Federal Reserve Rotes, and counting of gold held by the ngent as part of the bank's reserves. I think this is admirable. 945. Amendment to Section 19, changing the reserve requirements of member banks. I still feel that I at any rate have not sufficient statistical information to pass intelligently upon the percentages recited in this amendment. I suppose because of the fact that my experience in legislative matters has been confined largely to our State legislature, t db not appreciate the difficulties of legislation on a larger scale, and because of tkls I cannot help harking back to the idea that the way to deal with this question at present is simply to make Federal Reserve Notes good reserve money for member banks. I cannot escape the feeling though I amhot in position to support it by figures that the changes suggested in this amendment, plus vault requirements, will mean an added burden to the country banks, and that we shall have a perfect storm of protest from them on this point. If any figures have been prepared controverting my feelings in the matter, I should be very much interested to see them. As you know, 1 have been in favor of fixed reserve in the Federal Reserve 3anks as the only reserve requirements of member banks, but I am in grave doubt as to the wisdom or practicability of such a plan at the esent time for the very reason that you suggest, namely the danger of undue expansion. That being so, I should much prefer allowing the reserve requirements to remain as they are, and making Federal Reserve Eotes good reserve money, and 1 cannot quite understand the aeparent objection to this an the ( part of some members of Congress, because this proposed amendment effects the same thing in a roundabout way with some additions which I think undesirable, the principal one being the counting of national bank notes as levet' reserve money. It seems to me that these are the poorest reserve money that we have because of the small actual cash reserve behind them, and that they are not in the same class at all with Federal Reserve notes, and I cannot quite see how one can consistently oppose an Act making Federal Reserve notes good reserve money, and at the same time favor an . Hon. Paul M. Warburg, #3. amendment which has the same result, and In addition makes national bank notes good reserve. Of course I can only speak from experience in this district, but here I am satisfied that our banks are getting well accustomed to the present reserve reeuirements, and are bearing them with I am sure that practically all of increasing complacency. them would welcome making Federal Reserve notes good reserve money, and would look upon it as a most effective measure for the concentration of gold in the Federal Reserve Banks. That be'ng so I dread any upheaval that will inevitably arise from a change in the reserve requirements, particularly because I am confident that it will mean increased reserves for the country banks, and will act as a stimulus to conAth versions from national charters to state charters. the ez:oeption of the bank oommissionets office here in Massachusetts, which I think is an the whole favorable disposed toward us, most of the other states are doing all in their power to encourage conversion from national to state charters. We get confirmatory reports of this constantly from our member banks in the various states other than liassachusetts. It is an extremely difficult thing to point out to the satisfaction of member banks the advantage to be derived from the concession made in time deposit reserves, and I am Quite positive that most of them will not believe 14 the wisdom of counting national bank notes as reserve at all. If this amendment Is pressed I hope very strongly that your suggestion of a reduction of I% in the country bank reserves will be included. I am sure that a great row will result from the percentages as stated in the text of the amendment that we have. As a matter of technical wording I would suggest that on Page 3, #945, first paragraph, the words "for till money" in the second line, be stricken out, as I do not think they add anything to the force of the amendment. 906-B. Amendment to Section 11, giving the Reserve Board power to increase reserves. Theoretically it seems to me that this is enti-rely logical authority. Os the other hand I think there is a very essential difference between the actual result of the Board's authority to decrease the reserve requirements, and its authority to increase the reserve requirements. With the reserve requirements decreased the member banks would expand their loan slowly at best, and further than that it would be entirely optional with the officers and directors of the individual banks whether they should avail themselves of the reduction or not, and create expansion in credit resulting therefrom. On the other hand, under a mandatory increase In discretionmwould be left with the member bank, and the contraction would become effective immediately upon the order of the Board. simply suggest this not by way of criticism, but because it seeme.to me that this must be taken into consideration innoonnection with the possible changes in the personnel and the character of the Federal Reserve Board. -%111.1011 ////,. , Hon. Paul !:. Warburg, 4. of 947. Amendment to Section 13. Collection better checks for non-member banks. I think perhaps Iofhad the Board talk this over with you and the other members next, for I do not when I am in Waehington the week after is going clearing membership believe that this proposed of the What the non-members in this partwhat to be effective. they and country want is the opportunity to rediscount, have very definitely about is the threat that we are worrying discriminating ir the made that we will find some way of that are loaning *mount of credit we grant to member banks companies. As leavily to non-member state banks and trust collect their checks content to I see it they are perfectly collect them through rather In the present way, and would being passed is member banks paying our service charge which the same time getting and at back to them by the member banks, depository balance with their interest on their supporting service charge is passed back by the member banks,- If that done here member bank te the non-member bank as is being present time, the be :Boston with local trust companies at the maintain as large a non-member bank will not be required to of cost supporting balance as heretofore, becauee.thefactor the analysis of was included in of check collection Which because of this account by member banks will be eliminated, for this service. the direct charge being made to non-members with you I wish I could sit down for an evening and Mr. trong, members of the Board, and some of the other this whole of and devote the time to a frank discussion to persuasion and converMy own feeling, subject subject. the present cannot get them in on sion, is that if we we can do so Is by some liberal basis, the only way that Bank coercive legislation, as was the case when the National circuAct proved ineffective until a tax was levied upon lation of state banks. Amendment to Section 22. This needs to me excellent. Also Amendment no comment, and seems to minimum States holdings of United Section 17, in regard to 905-A. and Bonds by national banks; also 026, branch banks, to Section amendment to Section 25; also 950, Amendmentavailable for5, 3% Gold I;otes making United States. One-Year also circulation in the hands ef -net, Federal Reserve Banks; to Amendment 951, Membership of Mutual Savings Banks, of this is in the rules Of course the essence Section 9. by the Federal Reserve Board. and regulations proscribed expert In the country 7it4,ee-eetthink that '1,1r. Jay is probably the best regulations, and I am in the development of such rules and This is a matter in much interested. sure that he wcaild bepersonal of interest, because my intimate which I take a great one of the largest connections as Treasurer and 12resident with State, and my very banks in the and oldest mutual savings friendly personal relations with the officers and directors of tho-secO4d largebt in Connecticut. regard to 949. Amendment to Section 4, in This needs no assistants to the Federal Reserve Agent. cement. ?lease accept my apologies for the length of this on. Paul M. Warburg, #5. All of these matters I should be most interested epistle. to discuss with you at your convenience the week after next. I expect now to get to Washington on the evening of Sunday the 21st, and to be there for probably two days, and hope we will have time for an intimate discussion of matters other than the specific committee meetings for which I am going down. lith warm personal regards, I am, Very sincerely yours, Governor. ALA/fl If ALFRED L. _AIKEN 53 BOSTON, MASSACHUSETTS MASSACHUSETTS Benjamin Strong, Jr., Esq., 4100 Montview Blvd., Denver, Colo. kif.k February 14, 1917. FEB,!, 0 Dear Strong,- I am in receipt of your telegram from Phoenix, and am ever so much obliged to you for your invitation to come to Denver. I am very anxious to do this, because I should like to relieve my mind upon many Federal Reserve Bank questions which are perplexing me. I cannot, however, get so far away from Boston until we know a little more definitely how the international situation is going to work out. As I wrote you, I had a very pleasant day in New York with Messrs. Woodward and Peabody, and I also spent Monday in Washington talking over matters with the Federal Reserve Board, and I told them as I did your directors that I did not feel that I could accept the proposition to go to New York. I imagine that this whole matter has caused me as much perplexity and anxiety as it has you, and I only wish that it were possible for us to get together and talk it all out. I hope very strongly indeed that the present temporary arrangement in New York can be maintairEd until you can get back on to the job, and we can discuss the matter on the ground. I fully appreciate the fact that it would be most unwise for you to tie yourself domn to any such strenuous work as you have been undertaking in the past few years, and I think that it is of the greatest importance to the Federal Reserve System that you should not do so, and that you should conserve your health and energy to the fullest possible extent, and it ssems as though some working arrangement should be possible by which this could be done with satisfaction to everybody. When in Washington I had a talk with Governor Harding the result and impressions of which are perhaps best conveyed to you by the enclosed copy of letter that I am sending today to Er. Rhoads. I am quite disturbed by the apparent disposition of the Board to take upon itself the initiative in even small operating matters in these banks. I feel very strongly that the organization of the Board is not and will not in the future be of such a character as to make them competent to deal with this detail, and with such a policy once established it seems to me quite c nceivVe that with a radical change in the personnel of the Board.flal4ay filled with the very gravest dangers to the whole system: I wish on teceipt of this that you would write me whether or not you think it would be discreet for me to talk quite frankly with Mr. Warburg about my feelings in this matter, and whether or not this would be the most effective way to get to the Board on it. Certainly if a governmental board made up of appointees /7 Benjamin Strong, Jr., Esq., #2. by the President is to handle even the minute operating details of the Federal Reserve Banks, the tendency would be to encourage the Governors of the banks to ultimately accept situations where they can exercise wider responsibilities than under such control, and will make increasingly difficult obtaining firstclass men for the heads of the various Reserve Banks. I think that this is a matter of the utmost importance in the development of the Federal Reserve System, because as a matter of fact the confidence of the member banks in the system is largely inspired by the impressions they have of their own Federal Reserve Bank, and their confidence in that is largely a matter of confidence and satisfactory personal relationship with the Governor of the bank. We are seeing evidences here of gradual hardening of money. Our excess reserves in the Boston clearing house banks was reduced 40% last week, and we have been buying large amounts of acceptances from the portfolios of the various large banks. The Old Colony Trust Company is practically baled out, and I think that they may rediscount at any time. The Commonwealth Trust Company which has just come into our bank celebrated its arrival by a considerable rediscount, and the First National Bank has been selling us acceptances from their awn portfolio in very large volume. We have put up our buying rate to 3-i% for 90 day prime member bank bills, less 1/4 of 1% for additional endorsement. I do not get anything definite for plans for government financing, but hope that when it is undertaken itwill be done on such a basis as will make an investment that will appeal to the public, and that the bonds will be lodged in the public's hands. I am fearful, however, that the Federal Reserve Banks will be relied upon to absorb a largerproportion of government financial issues than I feel they should absorb in these parlous times. Forgive me for boring you with such a long letter. I shall be glad to go to Denver for a little visit with you as soon as circumstance b make it possible. Meantime I hope that you will continue to gain in healthand strength, and that nothing will happen to interfere with our anticipated trip to London some time in the summer, to which I am looking forward not only because of the pleasure it will be to me to go with you, but from an educational point of view as well. With warm personal regards, believe me to be, Faithfully yours, Yebreary CCrIPTDENTTAL. 1917. ries J. rhoaes, Esq., Governor, Federal reserve Philade/ph4a, ra. Dear rheads,2pent the day in ,rehington an Voneay discusning bus mattere with the 7edoral Y.e.serve Board, among then the stion nnCcested by ;/,. 7:reel= at to the desirahllite of having another Governors' 'Ionference some Clue in March. Governor Harding Deemed to think that this was herd17 necessary, and proceeded to elaborate his viers on the whole eubject of the Governors' Conferences. He said that he felt that there wad no necorsity for wing them more than teice a year, thns putting them on the same as the Conferences of the 7ederal eserve egente, and the al Advisery :ouncll, and then went on to say that it seemed to him best that matters of operation should be handled more and more by the Federal Reserve Board, On the theory of the concentration of w rh as well as authority in that Board. He told me that they hoped to add to their staff an expert transit man to whom all transit problems could be referred, oe that the: corld be nettled Th. the Board, apparently with the idea that this would meh unnecessary diccuscion of these problems by the Governors in comeronce. I was somewhat disturbed by the apparent very definite eolicy t his talk suggested, for feel that it is. neiter w7se nor 0 to have the operations of these banks settled In such a ray. all know that a transit expert in like a goof many other specialists - not always sufficient17 broad-minded to see his problems from all points Of view. . The beat illustration of this is a pert of the report of the Organisation Committee bearing an clearances and collections by the Federal F.eeerre Banks, whinh was I understand preeared by 7.1r. 7olfe, whose services were enlisted in the matter because he was looked upon as an expert transit man. My errerience has been that almost all the transit men develop a one-track mind, and evolve a god eany fantastic elms because of this. -:;ith a specialist of this sort as an advisory man ' having in mind that, there probably will never be at any time more than two men an the Board Who have had the practical bonMng experience acquired by c)ming up through the ranks in the ordleary eorreercial bank, it seems to me that we are certain to get much less satisfactory and sound solution of the perplexities that will constantly arise than we would If these questions were thoroughly discussed by all les J. Rhoads, 753n. 011111 the Governors of the banks, representing as they do the point of view of all the chief sections of the country, and applying to , the questions the experience seined i- commercial banking by most of the Governors themselves. It has seemed to me in the Conferences of Governors that the soundness of the suggestions and criticisms of trahsit matters has varied directly with theamountof practical experience that these men have had in commercial banking operations, and I think it Of great imp rtauce that all of these questions should be subjected to the scrutiny and criticism of the Governors in joint session before they are put in force as .operating policies of the banks. Naturally the criticisms and suggestions of individual Governors to the Federal I:eserve Board upon these matters 8.1- not and will not in the frtmee prove nearleyfas effective as an expression from the Governors as a whole. It is quite conceivable that under the policy that ' Governor Harding has inmind that the plan as to soundness of which the Governors were in grave deubte would be made operative, and the responsibility In each district would be placed upon the Governor of the bank of that district, and eculd not be passed back to the :ederal reserve Bank0 so far as the judgment of the . banking public in each locality is concerned. I should like to have you write me quite frankly of your feelings in this matter, and if you agree with me I should be glad to take it up with some of the other Governors with, the idea of a frank expression to the Board of our feelings in the matter. My personal feeling is that it is one of great importance, and that we should courteously and yore frankly state our feelngs in the matter. As evidence of the disposition of the Board to appear as te operating power in the Feeerve eyetem, I would call ;our attention to Page 9, of the Annual Report of the Federal Reserre Board, under the head of Clearances and Collection, in which the Board stated that they left the actual initiative in the establishrent or the &eel,- collection buslaeos to the Ieseree Banks, and that "with their instance i.e., at the banks' instance the Board authorized a voluntary system. They point out that this system which you will note was started under the initiative of the banks was not a cuceess. in this 1.aragra'h it stated that for this reason "the Board decided in April 1916 to establish a uniform and more comprehensive system, and it formulated a plan of clearance and collection system whi."-cT it directed the Federal Eeserve Banks to put into effect." I simply cite this quotation because it seems to me a very definite reflection on the mental attitude of the Board. I think it highly proable that with the Board appointed as it is,it is not likely to be in position to develop the purely operating problems of the hanks as satisfactorily as it could be done by the Governors themselves, and I for one should like to go on record as to my feelings in the matter. I am sending a copy of this letter to r. Strong to get his opin5on, which I shall be glad to report to you. Tharles J. Rhoads, Esq., P. 0010 I expect tobe in flew York on Saturday morning, March I do not know whether Saturday is a convenient day for you to be in town or not, but if it is I should be glad to meet you that mern!ng, and to ta7k over some of these matters with you. With warm personal regards, I am, Very sincerely yours, 2n1. Governor. 44710-ED L. AIKEN GOVERNOR lettRiMON M. HOWE CASmER FEDERAL RESERVE BANK DIRECTORS FREDERIC H. CURTISS, CHAIRMAN AND FEDERAL RESERVE AGENT OF BOSTON WALTER S. HACKNEY. VICECHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. REAL, BOSTON. MASS. THOMAS W. FARNAM, NEW HAVEN, CONN. ARTHUR M. HEARD, MANCHESTER. N. H. CHARLES A. MORSS, BOSTON. MASS. EDMUND R. MORSE, PROCTOR. VT. CHARLES G. WASHBURN, WORCESTER, MASS, ALLEN HOLLIS, CONCORD. N. H. ERNEST M, LEAVITT ASST. CASHIER CHESTER C. BULLEN ASST. CASHIER CHARLES A. RUGGLES MANAGER COLLECTION DEPT March 5, 1917. Benjamin Strong, Jr., Esq., 4100 Montview Boulevard, Denver, Col. Dear Strong,- Your clipping from "Punch" passed on from Kains is a very delightful reminder of the fact that spring is coming, and that I can once more resume my normal evocation. I wish we could go on a little fishing trip together, and get some of the cobwebs out of my head that have been accumulating there for two years. Yours should be swept clean by this time, and consequently you should be a most inspiring companion. To get down to business, I enclose herewith confirmation of a somewhat long letter I have sent by wire tonight. I had an interesting meeting in New York Saturday with Messrs. Woodward, Jay, Treman and Curtis, and I left with a very distinct impression that we were all agree'd that it was not practicable for me to go over to New York as Deputy Governor, and that the thing to do was to make some temporary arrangement until we could get you back in the harness for a while on the ground to look it over. I have a good many ideas on this whole matter that I would like to express to you first-hand, and I am also anxious to tell you something of my own circumstances as they affect the matter, so that you may have no misunderstanding as to my feelings in regard to your proposal, nor shall think that I am unappreciative of what it offers. Consequently I am anxious to talk the matter over face to face, and at the earliest Benjamin Strong, Jr., Esq., #2. possible date. I would not think of asking you to come East from Denver at all if you had not suggested it in your telegram, and was not the international political situation such that I am really afraid to get more than twenty-four hours away from my post, because our banks here in I:ew England are very well loaned up, and it is quite / conceivable that we may have precipitated upon us overnight a demand for credit such as has never arisen in New England before, and I have to be within hailing distance. In case there is any risk involved in your coming to Chicago, of course you must not consider it, and I will do the best I can by correspondence at present, until things straighten out enough for me to go to Denver, but if you can come to Chicago I will write to our friends the Drake's at the Blackstone, and arrange for comfortable quarters for you and me to have a conference of a day or two. My idea would be to get away next Sunday on the "Century" and get to Chicago on Monday morning, and then we could stay as long as was wise. I am afraid that you will find me a dull companion, as I am a reformed man, and neither smoke nor do any of the other things that make life worth while, but we will try to have a good visit together in spite of it. I went to New York Friday for a Class Dinner, and almost died because of my abstemious habits. As a matter of fact it was an almost equally great shock to a good many of my friends. There are so many things that I want to talk to you about in connection with the Federal Reserve Bank that I think we shall find our time pretty well occupied, and I hope that it will i( Benjamin Strong, Jr., Esq., #3. CI not seem imprudent, but will seem practicable for you to meet me as I suggest. It is needless to tell you with what pleasure I look forward to the possibility of a little visit with you. With warm regards, I am, Faithfully yours, erRED L. AIKEN FEDERAL RESERVE BANK GOVERNOR IRRIMON M. HOWE AND FEDERAL RESERVE AGENT OF BOSTON CASHIER DIRECTORS FREDEMCMCURTMS,CHAMMAN WALTER S. HACKNEY. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT ERNEST M. LEAVITT THOMAS P. BEAL, BOSTON, MASS. THOMAS W. FARNAM. NEW HAVEN. CONN. ARTHUR M. HEARD, MANCHESTER, N. H. CHARLES A. MORSS, BOSTON, MASS. EDMUND R. MORSE, PROCTOR. VT. CHARLES G. WASHBURN. WORCESTER, mAss, ALLEN HOLLIS. CONCORD, N. H. ASST.CASMER CHESTER C. BULLEN ASST. CASHIER CHARLES A. RUGGLES MANAGER COLLECTION DEPT MAR2 7 1911 March 21, 1917. Benjamin Strng, Jr., Esq., 4100 Montview Blvd., Denver, Colo. Dear Strong,Thank you very much for your letter of the 15th inst., and the positive evidence that it gave me of your safe return to Denver, I hope none the worse for our little outing in Chicago. I hope I made plain to you while we were there, better than I can do so by writing, my feelings in regard to your proposal to me. My little visit with you was a very stimulating respite from the routine of the office here, and I enjoyed every minute of it. I have just gotten back this morning from two days in New York, where I attended a meeting of the committee on Federal Reserve Exchange. Your office will no doubt report to you the results, which werejaot entirely satisfactory to me, but were I think about the best we could do. I was the only one who was insistent upon making such exchange payable at a designated bank and subject to advice, but as I was not a member of the committee, and had no vote, my expression of opinion was not particularly effective. I had quite Otalk with Mr. Woodward and Mr. Peabody, also with Governor Harding, about the New York situation, and emphasized as much as I could the great desirability of letting things remain in statu quo until such time as you could get back, and I think that they were all agreed as to the desirability of it. o61-uti6, _4.1111il I do not know whether you have succeeded in sending the personal letter which you spoke of to Mr. Delano or not, but I suspect that you have because of the apparent complete change of the attitude of the Board toward the Governors, as evidenced by Governor Harding's attitude at our meeting. I think that he enjoyed being there, and we enjoyed having him, and everybody took an active and strenuous part in the discussion of this Federal Reserve exchange matter. He told us that they were anxious to have a meeting of the Governors before the special session of Congress, and to have a full discussion of the proposed amendments that they expect to put in, and I thought his whole attitude bespoke a distinct change of heart from that which was in evidence when I last talked with him in Washington, and I know that my impression as to his friendly attitude and desire for co-operation was also felt by all the Governors there, as it was a matter of general comment. We are going to have our meeting in Washington on April 4th, and you may be sure that you will be greatly missed, and that we are all looking forward to the time when you will be back to preside again. Things seem to be very quiet indeed, both in New York and here. The international situation has developed quite fast in the last few days, and it really looks as if we were going to find ourselves at war with Germany, and I hope in alliance with England and France. I am watching with much interest to see how the treasury department handles its loans to take care of its financial needs. It seems to me inevitable that if we ally ourselves definite. ly with the allies and begin borrowing heavily that we are going to see our rates for government loans gradually approximate those abroad, for after all there will be a common gold base under all these _,--- ,/Strng, Jr., Esq., #3. I would therefore like to see a practically simul- borrowings. taneous offering of a large government loan with the declaration on the part of Congress that we are at war with Germany, and for a large amount, say a billion dollars, and I should not be greatly surprised if in the first flush of excitement and patriotic enthusi- asm a loan of this size could be placed on a 3% basis by popular subscription. lain a little fearful that if the borrowings are made piecemeal, in a comparatively short time the government will be confronted with very much higher rate for such loans, and the temptation to draw upon the resources of the Federal Reserve Banks will be almost irresistible. No one in Washington seems to have any definite idea as to what the Secretary contemplates in the way of financing. I am much interested in what you wrote about Montague Norman's letter to you, in regard to the proposed trip to London. I think you want to be sure that you are not hasty about making plans for such an expedition, and that your health is reasonably assured before you undertake it. Thank you again for coming to Chicago to meet me. It was the greatest sort of pleasure to me, and did me a lot of good. 'Faithfully yours, March 28, 1917. Hon. W. P. G. Harding, Governor, Federal Reserve Board, Washington, D. C. Dear Sir,In connection with the issue of 050,000,000. 90 day Treasury bills, in discussion of the matter with the members of our Executive Committee, it was the feeling of the members of the Committee that the rate of 2% was lower than the present market for even such a desirable issue justified. It is our feeling that had these bills been issued at ai%, $50,0,30,000. of them would have been readily absorbed by the commercial banks of the country, and that in view of the existing state of affairs in the country it would have been -better to have had these bills placed in the commercial banks rather than to have 050 000,000. of the resources of the Federal Reserve Banks absorbed even for a period of 90 days. We feel that it is of the utmost importance that at the present time the resources of the Reserve Banks should be available so far as is possible for the benefit of their member banks, and we should have preferred had the taking of this issue by member banks been burdensome to them to have rediscounted for them to meet their reouirements, rather than to have taken the issue direct, and our Committee are in hopes that should future financing of this sort become necessary that it will be dealt with in this way, and the loans placed at a rate that will induce the commercial banks to absorb the issue. e cannot quite agree with the suggestion that investment on the part of the Reserve Banks in these notes demonstrates the Federal Reserve Banks' usefulness as fiscal agents of the Government. Such agency functions would have existed had we placed these notes with our constituent banks for the Government's account, but it does not seem to us that it is an agency function for us to invest in them. In this connection I would call your attention to my expression of views on this aspect of Government financing, in relation to the Federal Reserve Banks, in my letter of March 24th. Very truly youIs, Governor. ALA /M FEDERAL RESERVE BANK CCIFED L. AIKEN GOVERNOR FLORRIMON M. HOWE AND FEDERAL. RESERVE AGENT OF BOSTON CASHIER DIRECTORS FREDERIC H. CURTISS, CHAIRMAN WALTER S. HACKNEY. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. BEAL, BOSTON, MASS, THOMAS W. FARNAM, NEW HAVE, CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS, BOST°, MASS. EDMUND R. MORSE. PROCTOR, VT. CHARLES G. WASHBURN, WORCESTER. MASS. ALLEN HOLLIS, CONCORD, N. H. ERNEST M. LEAVITT ASST. CASHIER CHESTER C. SULLEN ASST. CASHIER CHARLES A. RUGGLES MANAGER COLLECTION DEPT ppilb 1917 March 30, 1917. Benjamin Strong, Jr., Esq., 4100 Montview Boulevard, Denver, Colo. Dear Strong,- I suppose that Mr. Treman has written you about the attitude of the New York bank in the matter of the purchase of $50,000,000. Treasury bills, 90 days, 2% interest to follow, direct from the Treasury. This proposition developed a feeling of con- siderable warmth in our Board, and I found some difficulty in restraining our Board from expressing in a formal and quite savage way their emotions. It seemed to me that nothing would be accom- plished by formal action regarding the matter, but I did write the Board our feelings in regard to the matter, and enclose herewith a copy of my letter. I was interested to see in the papers the Secretary's comments upon the enthusiastic reception with which thye issue was received by the Reserve Banks, resulting in aver-subscription of the issue of bills, and when I also read that a similar issue was probable the first of July, I promptly called up Mr. Warburg on the telephone and told him that he could countus out on any repeat on this operation an the same basis as the first one. I found Mr. Warburg entirely sympathetic with our feelings in the matter. I was rather interested to see the difference in attitude between the Reserve Bank's in the Middle West and West and those in 71 in Strong, Jr., Esq., ff2. the northeastern section of the country. I understand that our friends in Kansas City and Cleveland could not get to the wire Quick enough to offer to take amounts considerably in excess of their pro rata share, which is interesting in view of the fact that if they get sewed up tight they are going to come down on New York, Boston and Philadelphia to carry the load. It is easy to be full of patriotic enthusiasm if you know that when it becomes expensive the expense will be borne by somebodyelse. We are going to have our Conference in Washington as on Wednesday of next week, and while the program is notAlong in the number of items as some we have had, there is a field for endless discussion along the lines provided. I am sorry to say that I have done nothing worth while in the matter of a resort for the Committee on Reserve Banks as Fiscal Agents of the Government. I wish that you would contribute some ideas from your fertile brain in this matter. I have reams of memoranda both from your bank and from various officials in Washington, and I have had several interviews with Mr. Malburn in regard to this whole subject, but I confess that I have not developed any new lines of activity for the banks.' The essential thing is the taking over of the money departments of the subtreasuries, and with the present temper of the Secretary, and the present facilities of the Reserve Banks, this seems to be out of the question. As a preliminary step to the proper development of the plan by this Committee, there should be a careful investigation made of the operations of the money department of the government, and this should be laid out in clear and comprehensive form, as a basis for the development of the plan that will ultimately take over this work, but such an investigation and report involves more time both here and in Washington in conferences with officials there than I have had to give to it, or will have to give to it in the immediate future, so far as I can see. General conditions here are very quiet, everybody marking time until Congress takes some action next week. The people's ideas as to the activities of this country as a belligerent are so vague and hazy no one seems to have the slightest idea of what will develop in the immediate future, and an atmosphere of uncertain- ty and consequent anxiety is very much in evidence. I wish it were possible for you to be with us in Washington next week, as T am sure that it would result in a much more effective and interesting meeting than we can have under other circumstances. I hope that you are making steady progress, and are none the worse for your kindness in coming on to join me in Chicago. 6/72, Ath warm personal regards, believe me to be, Faithfully yours, - L-4.-- 9(7 17/ a7 A--1-4-4/6 Form 1201 CLASS OF SERVICE SYMBOL Day Message Blue _otter ia ight Message Nite Night Letter NL If nona of these three symbols appears after the check number of wards)this is a day message. Otherwise its character is indicated by the symbol appearing after the check. RECEIVED AT UNION WESTE4, WESTERN UNION TEL_ AM Si. COR. SUMMIT ST. AND , M IS 9N Day Letter Blue Night Message Nile words)this is a day message. Otherwise its character is indicated by the symbol appearing atter the cheek, VE., TOLEDO, 0. Atatils I APR5 Day Message NL Night Letter If none of these three symbols appears after the check number of GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT NEWCOMB CARLTON, PRESIDENT CLASS OF SERVICE SYMBOL 7 APR 4 PM 4 27 1917 A136CH 35 BLUE T.;..1LEGRL.'2, tO SM WASHINGTON DC 140P 4 - ----- to be BENJ STRONG 110 4100 MNriW BLVD DENVER COLO YOUR COMRADES ON CONFERENCE ASSEMBLED SEND YOU RENEWED GREETINIS "ID WARM CONGRATULATIONS ON 'OUR RETURN TO HEALTH AND VIGOR KEEP THE GOOD WORK AIKEN TREMAN RHODES FANCHER SEAY NICTOUL MCCORD LD VANZANDT CALKINS CURTIS NO SIG. ALFR ED L. AIKEN 4 53 STATE STREET BOSTON, MASSACHUSETTS April 9, 1917. ai4r. Benjamin Strong, Jr., Esq.a 4100 Montview Blv . Denver, Colo. APR1 61917 . . 10. W4 Dear Strong,- Thank you very much for your letter of the 4th Inst., and for the interesting comments from your letter to Jim Curtis. I have not time at the present moment to write you in regard to the general doings of our Conference in Washington. The most important things were the discussions with the Secretary of the Treasury in regard to the temporary financing that he is doing, which I think will result in his giving us a chance to discuss with him or with the Federal Reserve Board the matter of the rate at which he should borrow. He will no doubt be in the market for $50,000,000. more some time during May. We had one or two interesting conferences with him, particularly one on Friday afternoon, discuseing the prospective ouestion of loans. I enclose herewith ramorandum that I drew up, which was submitted to the Governors of the banks, and approved by them, and then submitted to Mr: McAdoo by us as a basis for discussion, and he asked me if I would elaborate it somewhat and send him a new copy of it, which I am doing. I think there is no question but that the country and the Government expect that the Federal Reserve Banks will be used as fiscal agents for handling this coming loan, and the reason that I put in no report for the Committee on Fiscal Agencies was because of the fact that this idea seemed to be very definitely established, and it did not seem worth while to discuss other activities, such as a money department of the banks in their njamin Strong, Jr., Esq., #2. relations to the Government at the present time. Really, the most difficult question in dealing with this loan is the method /71/4 of handling the transfers of balances that will result from the payments on the loan, and this is an aspect of it that is not thought of at all by the country generally, or by most of the country bankers, but must be worked out with the greatest care. I wish you would comment on the somewhat haphazard suggestions made bearing on this in my memorandum. The matter of getting subscriptions and issuing bonds of course is mechanical, and the publicity of the business is psychological, but it seems to me that there is a wonderful opportunity for the Reserve Banks to show their usefulness in the ultimate payments, and if a plan can be devised by which we can carry the loan of several billion dollars without any serious financial disturbance it will be the best advertisement that the Federal Reserve system could have. I do not believe that the Government is going to go Into the market for this money as soon as some people expect, because there is sure to be a long discussion in Congreas both as to the bond issue, and as to taxes to take care of it, though I think that these two matters will be dealt with as separate measures in order to expedite the plans for the bond issue. Income tax returns suggest I am told that the preliminary a very much larger revenue from this source than has been anticipated, and this coupled with the issues of Treasury bills already made and proposed, will, I think probably carry the Treasury through into July, and of course in addition to this the mechanical details of starting such a bond offering and of organizing a publicity campaign that must precede it are matters that will have a good deal to do with issue of the loan. http://fraser.stlouisfed.org/ the actual Federal Reserve Bank of St. Louis _denjamin Strong, Jr., Esq., #3. Washington was interesting and very serious, but with no trace of any expressed excitement. I cannot tell you how much I wish that you were here on the job to handle this whole situation, because I know how much you would enjoy it, and I know how well it would be done, but we are to seeing you in June. forward Doubtless the New York bank keeps you posted as to the detail of what I shall not inflict it all looking upon you, is going on, and consequently though I will write you later in regard to specific matters discussed at our Conference. With warm personal regards, I am, Faithfully yours, 474 11/1114011ANDUP CONCIIRNING 1302ID ILISURS OF VI% MIT= STATICS GOYERITIMT Ill CONIMCTION VAR Amount. 31,000,000,000 or more without maxinum limit, free frms all taxes (except inheritance taxes) with privilege of conversion into subsequent ioue of higher rate bondrs irsoued during the period of the war or within none specified time. lie would .11.1gge3t that a provision should ra so be riacie for the convertiom of United States 30-year 3% Conversion Bonds aoquired by the Federal lionerve Banks under the provisions of !.:,ection 3.8 of the :ederal Eeserve. Act. TM o seem only fair to the purchaser's of such bonds. The new issue of bonds should not be avail abl e for circulati on privil egos. Rate should be EU fficiently high to insure the ,sorption of the issue by ultimate investers, DO that the i'undo of the banking, institutions should not be absorbed.. Zi% minimum. Price. Par and accrued interest. Terms. Redf.homable at par and interest five yearn from date of issue; to be retired annually thereafter at the rate of five per cent of the total loan per year - retiring the whole issue in twenty-five yearn. Bonds to be drawn by lot for retirement; provision to be made by taxation for the payment of bowie so retired. Kr Denomi- I nation. Coupon or registered, 13100" $500., $1000. Regietered only in excess of 411000. Subscription.. To be handled by Federal reserve banks as fiscal agents of the government; subscriptions to be received 'by all nations, banks, state hanks, trust companies, caving ri banks and designated privete bankers and post officers, acting for the account of the 2ederal Reserve Bank of the district in which such subooription agencies are located. Methods of publicity to be worked out. de woule eugvest that a publicity campaign 'should be ntarted at once, and that a committee of fireteclase publicity men be assembled who shall be aeeigned to the work of handling the whole question of ma- terial and distribution. The actual expenses to be paid by the government. We feel that this i a question of the utmirot importance, and should be developed an fast and to an wide an extent as nessible. Method of payment. As the full proceeds of the inane will not be needed at once it is proposed to isaue to et becribern: For amounte of $1000. or less in negotiable reacipto or bondn, the full meonnt of their Bub scriptions. For subscriber or mounts in excesn of 41000. negotiable reeeipte oalling for quarterly paymentn, date of such peyments to correepond with intereet date of ouch bonds, reeeipte to onrry interest on the payments on merle, finnl delivery of bonds to be made on delivery of fullepaid receipts. Interim neede of the government between payment to be financed, by iseue of short time Tretteury bills. Di opo ti on of proceedo of eubecriptione. In order that there may be ao little disturbance as oesible of the money market at the time of pfkra ...1.1t of aubmeription, it is ennential that so far au poseible paynente be left on deposit in inntitotions receiving mibscriptione. It in suggested that legisletion be obtained authorizing the Federel Reeerve Banks for the purpose of aceieting ow% financing, to maintain baloncea in member banks to an oriount not tO 4,'XOCCICI the capital of such member bank, or perhaps it would be more conni stent with various sections of the Federal Xteeerve Act to limit such depneit balance V51 cf the eapital and wurplus of eember banks. -41111111111/1 Such a credit to the Treasurer of the United States upon the books of the Federal Reserve Banke will seriously affect the reserve situation of the Federal Reserve Banks and exemption from reserve requirements applicable to Government special detosito dhould be made. Failing such a provision, the servo position of the Federal Reeerve Banks will be seriously affected, a matter that should have most ooriounconsideration because of its relations to the commercial interests of the country. It is suggested that the cervices of the Federal Advisory Council should be availed of to "set am definite information possible as to the local conditions in the different sections of the country represented by the Federal Reserve janks, and probably the opinion* of the members of the Advisory Council would accurately reflect such conditions both as to the general public c attitude, and more ont ally the effeot upon the money situation in each dic'crict. GOMENTS FiDF.RAL PINANGING. sUGGESTIONS OP TM GOVNBNOR3 OP THE BANKS IN REGARD TO GOURNAnT ***** 04100414.11**.p. Amount. The suggeetion of no maximum limit of the amount of the issue would eliminate the factor of straw bids, an If there was no maximum limit the bonds would not sell at a premium, and no profit oould be derived by the sale of accepted bid upon which no payment had been made. it might also be possible for the Government to receive the full benefit of all the patriotic intereet nnd enthusiasm created by the publicity campaign. If I am not mistaken this practice has prevailed in both England aid rranoe in connection with their war loans and it has prored eatiefactory. Rate. I belteve that a rate of 3,?.4 would float a loan of 'probably up to apLroximately 02,000,000,000. Hy opinion is based an interviews that I have had with partners in large distributing houses here and In flew York during the last month, as well se on my mn judgment. While I had not oontemplated a loan exceeding in amount 10,000,000,000 I feel that to insure subscriptions in C7C0C8 of this nnount we would require a rate of 4%, though I have no supporting opinion of experts as to the latter auggestion. The eesential thing SOOMB to me to be a rate that is high enough to insure immeVate and overwhelming success of the issue, both because of its effect on our feelings at home, and Ito impresslons abroad both with our allies and with our enemies. I feel that It would be a mistake to make a rate so low that the bonds would not be readily absorbed by the investing public, and aouceouently would be lodged in the banks, ind that the impression might arise that the patriotic impulses of the Feorae are being traded upon unduly. I should count an additional 1/2 of 1% in rate r, not undue price to be paid for the inin'ance of the success of the loan. mmunii/ Price. Terms. Par and aocrued taterest. It ceeme to me that in a loan the size of the proposed loan it would be imposnible to haedle competitive bids at a price not less than par, and the difficulties of ellotment would be almost insuperable. Tia my informal talk with representative bond houses during the course of the last month, Falax this has always been a subject of discussion, and the feeling has been uniform as to this basis of sale and that it would be dentrable that there be no maximum limit set on the loan. This has been the uniform practice 30 far as I 7/31ow in connection with such bane abroad. The redemption feature suggested would be useful to the government in ease the mo4e7 market at the end of five years made it desirable to refUnd the issue. I 1nlaid a very general feeling among the find in public that so far as in practicable taxes should be levied to pay the expense of the war during the current generation. Upon this is based the reoommendation that bonds be retired in twenty voila installments, the money to be used for such retirement to be raised by taxation. I personally am in favor of a large direct tax to accomplish this end. A reduotion of the exemption from income taxes to the level at which such taxes will be profitable to the government, and heavy taxes upon 1u7uries such as alcoholic liquors, cigars, cigarettes, motor vehicles other than those used for commercial purposes, gasoline, and ouch stamp taxes an could be practically and profitably established. The suggeotion that small subeoriptions be paid in in full an the first payment Is in order, that what one might cal/ the small change of the loan might be cleared up and gotten out of the way. It seeme to me that a quarterly dietribution of payments of the larger subsoriptions would probably fit into the financial needs of the government 'Wren eonstdered in connection with Issues of short time Treasury bills between euarterly payments,. As to the disposition of the proceeds of the subeeriptioso, I should like to see the deposit of the proceeds for the account of the Federal Reserve 3anke limited to deposit in member banks with the proviso that such deposit would be made In state banks and truet companies that had applied for membership in the Polders' Reserve system, the deposits to be maintained pending the approval or disapproval of their applioation, and to be ooa- tinued if the application was approved, and withdrawn if the application was rejected. It seems to ma that this plan, while it provides faollities that will cause the erne/leet possible disturbasce to the ,oaey market also provides en opportunity at once 1a solidify and. unify the Federal Reserve syetem, Jad to do It not by coercive measures or by the Aavytng of taxes, but by an appeal to both the patriotism and financial interests of the non-member banks, for no state bank or trast company of any impertanoe would be will to have it known that this depoeit was withheld from them because of their unwillingeesa to join the Adorel heserve n;paitom. The effect of this arrangemetit au the deposits and the consequent reserve position of the 1Pederel Eoser7e llanks and their availability for the earneroial needs of their districts Is fto groat that careful study should be given to the matter, end I would suggest that the opinion of tIe members of the Federal Advisory Counoil representing both the Federal lieserre ?anks, the important member brinks, and indirectly the commerolal interests of thl, country would be moat valuable In this connection. would eageest that deposits with member banks be penured by collateral approved by the Federal Reserve Bank of the di3trict in vhich the depositary is located; such collateral should ceelsist of bonds or commercial paper eligible for rediscount except as to time of maturity which for thia purpose might be ewtended to sly months. ALFRED L. AIKEN 40 ELM STREET WORCESTER. MASSACHUSETTS gt-t-t-6Pf h- z,-i/a,-- ii--4,/,,f-e.,,-g,,,,,4 Luk---/ -7- (--4 ./Zt ii--1 &4,-1 -X 4--.---- _ EIL/CL-CC. ej A-t--4e 2-f--ir d .:. dal --- .-c' ---t-C4A__42 4-- i/- L-; C29-CZ--_. 2c.-7 GA----e-L_( zi-Z--0 al.,4--z-c 6(-------, ,iL, / ,e =ecJ c. (G, 1-4 ,il zd-Li,--et 9 6(-7 C7/C-&( v1- 1 -G-V21-e /C3 et/ -1/1-.4-4 FEDERAL RESERVE BANK 'RED L. AIKEN GOVERNOR F RRIMON M. HOWE AND FEDERAL RESERVE AGENT OF BOSTON CASHIER ERNEST M. LEAVITT ilOWOONliWPW' DIRECTORS FREDERIC H. CURTISS, CHAIRMAN ANDREW J. PETERS. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT , THOMAS P. BEAL, BOSTON. MASS. THOMAS W. FARNAM. NEW HAVEN. CONN. ARTHUR M. HEARD, MANCHESTER. N. H. CHARLES A. MORSS. BOSTON. MASS EDMUND R. MORSE. PROCTORVI. CHARLES G. WASHBURN,WORCESTER, MASS, ALLEN HOLLIS. COHDORD. N. H. ASSISTANT CASHIER CHESTER C. SULLEN ASSISTANT CASHIER CHARLES A. RUGGLES MANAGER COLLECTION DEPT. May 10, 1917. Benjamin Strong, RE.00IVED- Jr.,,, ----Governor, Federal MAY Reserve Bank, New York,N.Y, Dear Strong,- rr 1917 t =.2 I feel most apologetic because of my hurrie 411,L A. Pew departure of Tuesday afternoon without saying "Good-b$6411 you were busy and I was in a hurry and I felt sure understand. Mortara* SERVEbut I want to express to you once more what I did by telephone, that I think your,.. coming East and getting into the present situation has inspired all the Reserve Banks with new confidence and I only hope that the trip has not been too great a tax on your strength. I will develops kbep you posted of anything new that here,and hope by the time that you get back in the summer that the worst/ of our Present troubles will be behind us and our bond organizlttions all running smoothly. I am sure that A you know without my :telling you how much I hope that the added stay in the West will complete your cure. Wit4 cordial best wishes, believe me to be, Faithfully yours, AL F Governor. OF BOSTON ALFRED L._ AIKEN s/-. /f/7 GOVERNOR c " CT) r .- 7 J1/4 / ,_-____ /.Z c,c(1.- 6-7Z-CA-e' ..-e-/-7-C z-c-A A A -Xi-2_ z.t a&t-.7 /4A--6_,--CC CP,,,/ / ED L. AIKEN FEDERAL RESERVE BANK GOVERNOR F ZRIMON M. HOWE AND FEDERAL RESERVE AGENT OF BOSTON CASHIER ERNEST M. LEAVITT DIRECTORS FREDERIC H. CURTISS, CHAIRMAN ANDREW J. PETERS. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT ASSISTANT CASHIER THOMAS P. BEAL, BOSTON. MASS. THOMAS W. FARNAM, NEW HAVEN. CONN. ARTHUR M. HEARD, MANCHESTER, N H CHARLES A. MORSS, BOSTON. MASS. EDMUND R. MORSE, PROCTOR. VT. CHARLES G. WASHBURN. WORCESTER ASS ALLEN HOLLIS, CONCORD. N. H. CHESTER C SULLEN ASSISTANT CASHIER WILLIAM WILLETT ASSISTANT CASHIER HARRY A. SAUNDERS ASSISTANT CASHIER fr; September 17, 1917. 14/171 3o '1l ,,enj amin Strong Reserve Bank, __Gov mrw,,mrew York, New York. PERSONAL Dear Strong: Thank you very much for your letter in regard to the personal matter about which we talked at breakfast. I have just about come to the conclusion to stick here, although in my case patriotism comes pretty high, to the extent of probably about 035,000 a year. I shall not make up my mind definitely until I have an opportunity to speak to one of my intimate friends on our Board of Directors, but I think probably I ought to see this job through. Thanks 'very much for your frankness. I shall be sorry if you did not feel that you could always write in that way. Faithfully yours, AL/VD \ / RED L. AIKEN GOVERNOR ORRIMON M. HOWE CASHIER DIRECTORS FEDERAL RESERVE BANK FREDERIC H. CURTISS. CHAIRMAN AND FEDERAL RESERVE AGENT OF BOSTON ANDREW J. PETERS, VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT ERNEST M. LEAVITT THOMAS P. BEAL, BOSTON. MASS. THOMAS W. FARNAM. NEW HAVEN. CONN. ARTHUR M. HEARD. MANCHESTER. N. H. CHARLES A. MORSS, BOSTON. MASS. EDMUND R. MORSE, PROCTOR, yr. CHARLES G. WASHBURN. WORCESTER, MASS. ALLEN HOLLIS. CONCORD, N. H. ASSISTANT CASHIER CHESTER C. SULLEN ASSISTANT CASHIER WILLIAM WILLETT ASSISTANT CASHIER HARRY A. SAUNDERS ASSISTANT CASHIER c Octiiber 22, 191/. Benjamin Strong, Jr., Esq., President, Federal Reserve New York, New York. A. Bank, ..04* My dear Governor Strong: I return herewith letter of Alfred D.44444.1, ed ;7777/71etter under date of October 19th, forw have not had time to Frankly, of the 20th inst. read the letter, but, from glaring it through, see it dler has said to me many is a repitition of what Mr. C times. Mr. Chandler is a lawyer here, in good standing, who has interested himself for a long time in municipal and government financing nd has for a long time been a very active and aggresspie exponent of serial bond issues, and I think, had a good/deal to do with the enactment of a lax in this State requiting issues upon this basis by Like both the Commonwealth and our cities and towns. a good many men whose minds work along one channel, he cannot see much outside of his own particular hobby, but his intentions are of the best and he has given a long I know and very intelligent study to this question. Mr. Chandler quite well personally, as he is a neighbor of mine in the summer, up in the country, and I have of purpose and a good perfect confidenee in his sincerity deal of resp 't for the tremendous amount of work that he has put in u on this subject. Very truly yours, Governo Enc. AED L. AIKEN GOVERNOR F FEDERAL RESERVE BANK RRIMON M. HOWE DIRECTORS FREDERIC H. CURTISS. CHAIRMAN AND FEDERAL RESERVE AGENT OF BOSTON CASHIER ERNEST M. LEAVITT ANDREW J. PETERS. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT ASSISTANT CASHIER CHESTER C. DULLER ASSISTANT CASHIER WILLIAM WILLETT ASSISTANT CASHIER HARRY A. SAUNDERS ASSISTANT CASHIER Li Personal 1 0 1917 1C) FZDzP41,Rs BANK THOMAS P. HEAL, BOSTON. MASS. THOMAS W. FARRAH. NEW HAVEN. CONN. ARTHUR M. HEARD, MANCHESTER. N. H. CHARLES A. MORSS, BOSTON. MASS. EDMUND R. MORSE. PROCTOR. VT. CHARLES G. WASHBURN. WORCESTER. MASS ALLEN HOLLIS, CONCORD. N. H. Nov. 3,19327. Dear Strong,Mrs. Mac Lar en has written me that she has sent me the Year Book of the Metropolitan Club, and adds a postscript to her letter saying that you would be glad to propose me for membership. Thank you ever so much for your kindness, which simply adds one more to the many obligations under which I am to you. I am more sorry that I calk tell y oil that you hale been laid up since my visit. Do take care of yourself, and take life as easily as you can, though I know with your temperament such suggestions are somewhat futile, but please remember that not only the Federal Reserve Bank but the whole country needs your wisdom and ability in these strenuous days, and in justice to the whole situation you should safeguard your health in every way that you can. We shall be very sorry indeed not to have you at our meeting in Washington next week, but I think you are wise to sidestep it, and I shall think of you as having a real rest in some quieter and less harassing environment. Faithfully your 9FRED L. AIKEN GOVERNOR DIRECTORS FEDERAL RESERVE BANK ,RRIMON M. HOWE CASHIER ERNEST M. LEAVITT FREDERIC H. CURTISS. CHAIRMAN AND FEDERAL RESERVE AGENT OF BOSTON ANDREW .1. PETERS. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. REAL, BOSTON. MASS. ASSISTANT CASHIER THOMAS W. FARNAM. NEW HAVEN. CONN. ARTHUR M. HEARO, MANCHESTER. N. H. CHARLES A. MORSS, BOSTON. MASS. EDMUND R. MORSE, PROCTOR. VT. CHARLES G. WASHBURN. WORCESTER, MARS. ALLEN HOLL/S. CONCORD, N. H. CHESTER C. BULLEN ASSISTANT CASHIER WILLIAM WILLETT ASSISTANT CASHIER HARRY A. SAUNDERS ASSISTANT CASHIER November 1,p, 191T; Benjamin Strong, Esq., The Homestead, Hot Springs, Va. AV kA't; Dear Strong; YSV16 ,a.1431 41. I know that you would hare been much gratified could you have heard the universal expressions of regret that you were not able to attend our meeting in Washington last week. As a matter of fact, I doubt if you would have enjoyed it very much except for the association with your associates in the Reserve banks, for, while the meeting was a very pleasant and friendly one, it resulted in nothing except an interchange of views, with no definite conclusions. We had our meetings in the Board Room with the Board on Thursday morning and afternoon, and informally Thursday night at the Metropolitan Club and on Friday afternoon, and had a little meeting of our own on Friday morning, but as we had no secretary and no program that had been previously arranged, most of the talk was futile. Treman will undoubtedly report to you the difference of opinion between your bank and myself in the matter of open market rates for bankers' acceptances, which I have expressed to you. Your bank was confronted with a very heavy debit amounting, I believe, to about 4100,000,000 in last week's gold settlement, and the different Reserve banks bought of you 455,000,000-of bills at your rate. I telephoned this over to our bank, where our directors happened to be in session, and it raised something of a riot, in yiew of the fact that our banks were losing acceptance business to New York because of the fact that the New York Reserve Bank would not buy our bankers' acceptances except at a hdgher rate than bills of similar quality made in New York, and with this discrimination against our bills we were taking 45,000,000 of New York bills at your rate. I tried to impress on Treman our full appreciation of all that New York had done in the whole acceptance matter and that we were only too glad to take these bills. I also told him that I thought either there should be no discrimination against buying Philadelphia or Boston bills or else the New York buying rate Should be put up. Far be it from me to suggest what the New York policy should be, but I cannot escape the feeling that Benjamin Streng, Esq. a higher buying rate woiild do no harm to the whole situation. I feel quite strongly that after the 15th of November our discount rate should go up somewhat, including the rate for carrying Liberty Loan loans, as it seems to me absolutely essential that the loans created by Liberty Loan bonds should be liquidated as rapidly as possible, and the most effective measure for bringing this about is an increase in the carrying It seems to me, in view of charge on these loans. the enormous amount of financing ahead of us, it is absolutely essential that the Liberty Loan loans be liquidated as rapidly as possible, and that it Will be impossible for us to go on simply increasing the pyramid of credit as these loans succeed one another. I did not mean to devote this letter to business, and so I am not going to discuss Reserve bank I hope that you are having a matters further with you. real rest,with good company, and that by Christmas time you will feel more like your old self again.. Mrs. McLaren was good enough to send me the Metropolitan Club book, and some time, when you get a chance, I should be ever so much obliged to you if you will be willing to propose me for membership and look I have marked in the book a after my offences. number of Men whom I know well, and who, I am sure, A number of them would be glad to second my nomination. are college friends of mine and some simply business I shall, however, be quite content acquaintances. I am sending the book to leave my fate in your hands. back to Mrs. McLaren. I am going to write to you from time to time keep you advised as to how things seen to be going from our point of view. Do not bother to answer the letters or to burden yourself with any unnecessary correspondence inspired by them. just to With warm personal regards and best wishes, believe me to be Faithfully yours, Governor. 'RED L. AIKEN GOVERNOR F %RIMON M. HOWE FEDERAL RESERVE BANK OF BOSTON CASHIER ERNEST M. LEAVITT DIRECTORS FREDERIC H. CURTISS. CHAIRMAN AND FEDERAL RESERVE AGENT ANDREW J. PETERS. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT ASSISTANT CASHIER THOMAS P. SEAL. BOSTON. MASS. THOMAS W. FARNAM. NEW HAVEN. CONN. ARTHUR M. HEARD, MANCHESTER. N H. CHARLES A. MORSS. BOSTON. MASs EDMUND R. MORSE. PROCTOR. VT CHARLES G. WASHBURN. WORCESTEn, MASS ALLEN HOLLIS, CONCORD. N. H. CHESTER C. SULLEN ASSISTANT CASHIER WILLIAM WILLETT ASSISTANT CASHIER HARRY A. SAUNDERS ASSISTANT CASHIER Ae 44: Nov. 16, 1917. 1:94A 77)1, Benjamin Strong, Jr., Esq., , 0 4311 The Homestead, Hot Springs, Va. Dear Strong,- Thank you ever so much for your letter of the 14th inst . I should like to be put up for non-resident membership in the Metropolitan Club if that is possible, which I understand is the case because of the remoteness of Boston from New York. I am more obliged to you than I can tell you. for your kindness in this connection. I am glad. to know that you are really getting a rest, and. hope that you will continue to take the best of care of yourself, and not overdo in the matter of golf. I am going' to try and. get a little vacation myself before taking up my new job, and I received a letter from Mother this morning insisting with all the force of a very energetic old lady of eighty that I should pack my grip and go to Hot Springs for a vacation that she prescribes. I should like nothing better in view of the fact that you are there, but I am sorry to say that I see no immediate prospect of such a pleasant experience, though it is possible that Mrs. Aiken and I may run down there far perhaps a week the last part of December. You may rest assured that I am going to keep in the closest sort of touch with the whole Federal Reserve situation, and particularly with you personally, because I am going to repeat what I have already told you, that my acquaintance with you in the last three years has developed into what has been to me about the most delightful aril ;P stimulating friendship that I en49yOirol- sbtould not be WI I willing to take any position l'that 4.-nimaved as a ny a necessity the termination of it. I .aof course tremendously interested in the whole future of the Federal Reserve System and I told Mr. Warburg when in Washington malt seemed to meet his sympathetic interest and approval, that I proposed to be in Washington frequently, to keep closely in touch with what was happening. One of these days I want to talk over with you some things that I would like to see charged in the Federal Reserve Act, because I believe that they would help to insure its future. They probably camot be taken up however until after the war is over, and we begin to get straightened out again, but I am inclined to think that I can do quite as effective work along these lines as president of one of our large banks as if I were governor of a Federal Reserve Bank. We had a very satisfactory day yesterday in dealing with the initial payment on the loan, a rd had only about $25,000,000. rediscounts, and everything went with perfect smoothness. Our oath reserves this morning are 56% and 60% reserves on our outstanding notes. We have gained very heavily at the clearing house today, and undoubtedly shall have some heavy rediscounts, but I think that our total loans for these two days will probably not exceed p40,000,000. or $50,000,000. I am looking forward with interest to hearing how the -payments went off in your bank. With very best wishes, and renewed thanks for your kind offices in my behalf, believe me to be, Faithfully your s , RED L. AIKEN FEDERAL RESERVE BANK GOVERNOR ./RRIMON M. HOWE AND FEDERAL RESERVE AGENT OF BOSTON CASHIER ERNEST M. LEAVITT I DIRECTORS FREDERIC H. CURTISS. CHAIRMAN ANDREW J. PETERS. VICE-CHAIRHAN AND DEPUTY FEDERAL RESERVE AGENT ASSISTANT CASHIER THOMAS P. BEAL, BOSTON. MASS. THOMAS W. FARNAM, NEW HAVEN, CONN. ARTHUR N. HEARD, MANCHESTER, N. N. CHESTER C. BULLEN ASSISTANT CASHIER CHARLES A. MORSS, BOSTON, MA. WILLIAM WILLETT EDMUND R. MORSE, PROCTOR, VT. ASSISTANT CASHIER CHARLES G. WASHBURN, woRc ..... MARE. ALLEN HOLLIS, coNcoRO. NIU: HARRY A. SAUNDERS ASSISTANT CASHIER ' Deoemb1344p17. FZDhkill, PP Dear Ben,- I do not know whether it is the traditional reserve of the New England Yankee that males it impossible for me to say to you answer to your letter of the 7th. Certainly I cannot reduce it to writing, and must trust to a loosening of my tongue the next time we meet. It was a lovely letter, and gave me a very great deal of pleasure, and I want to assure you that you say nothing in it in regard to our relations that I cannot sa4to myself many fold. I need not tell you that the growing intimacy with you has been to me a help and an inspiration in the work that we have been engaged in together in the last three years. all that I would in I have just been talking with Mrs. MacLaren over the telephone, inquiring as to your whereabouts, and she tells me that you are to be in Washington for the Liberty Loan Conference next week. I expect to go to Washington with my successor, Yr. Charles A. :Morse, on Wednesday afternoon from New York, and shall be at the Shoreham Wednesday night, and in Washington all day Thursday. I have asked the members of the Federal Reserve Board to lunch with me at the Metropolitan Club on Thursday at 1 o'clock to meet Mr. Mbrss, and it would be a great pleasure to both Mr. Mores and me if you could join us at luncheon on that day. Will you be good enough to wire me me know whether or not it is possible for you to be with us. letting I am ever so much obliged to you for your kind offices in the matter of the Metropolitan Club, and I enclose obituary notice which gives a summary of all the commonplaces in my experience. Hoping to surely see you in Washington on Thursday, I an, Faithfully yours Benjamin Strong, Jr., Esq., New York, N. Y. h A. RED L. AIKEN GOVERNOR FEDERAL RESERVE BANK .,RRIMON M. HOWE OF BOSTON CASHIER ERNEST M. LEAVITT DIRECTORS FREDERIC H. CURTISS, CHAIRMAN AND FEDERAL RESERVE AGENT ANDREW .1. PETERS. VICE-CHAIRMAN AND DEPUTY FEDERAL RESERVE AGENT THOMAS P. DEAL, BOSTON. MASS. THOMAS W. FARNAM. NEW HAVEN. CONN. ARTHUR M. HEARD, MANCHESTER. N. N. CHARLES A. MORSS, BOSTON, MASS. EDMUND R. MORSE, PROCTOR. VT. ASSISTANT CASHIER CHESTER C. BULLEN ASSISTANTCASWER WILLIAM WILLETT ASSISTANT CASHIER CHARES G. WASHBURN. woRcEirraN. NABS. ALLEN HOLLIS, coNcoRo. HARRY A. SAUNDERS ASSISTANT CASHIER Dezt%3ZiNic Dear Ben,- I do not know whether it is the traditional reserve of the New England Yankee that makes it impossible for me to say to you all that I would in answer to your letter of the 7th. Certainly I cannot reduce it to writing, and must trust to a loosening of my tongue the next, time we meet. It was a lovely letter, and gave me a very great deal of pleasure, and I want to assure you that you say nothing in it in regard to our relations that I cannot sa4to myself many fold. I need not tell you that the growing intimacy with you has been to me a help and an inspiration in the work that we have been engaged in together in the last three years. I have just been talking with Mrs. McLaren over the telephone, inquiring as to your whereabouts, and she tells me that you are to be in Washington for the Liberty Loan Conference next week. I expect to go to Washington with my successor, Mr. Charles A. Morss, on Wednesday afternoon from New York, and shall be at the Shoreham Wednesday night, and in Washington all day Thursday. I have asked the members of the Federal Reserve Board to lunch with me at the Metropolitan Club on Thursday at 1 o'clock to meet Mr. Morss, and it would be a great pleasure to both Mr. Morss and me if you could join US at luncheon on that day. Will you be good enough to wire me letting me know whether or not it is possible for you to be with us. am ever so much obliged to you for your kind offices in the matter of the Metropolitan Club, and I enclose obituary notice which gives a summary of all the commonplaces in my experience. Hoping to surely see you in Washington on Thursday, I al, Faithfully yours C7D Strong, Jr., Esq., Benjamin New York, N. Y. Alfred L. Aiken. Born Norwich, Conn. July 6, 1870 Graduated Yale 1891 Connected with State Mutual Life Assurance Company, Worcester, until July 1, 1894 Assistant Manager New England Department New York Life Ins. 'Coo until October 1, 1899 Assistant Cashier National Hide & Leather Bank, Boston, until January 1, 1901 Assistant Cashier State National Boston, until July 1, 1904 Bank, Treasurer Worcester County Institution for Savings, Worcester, until January 1, 1908 President of same, until Jan. 1, 1913 President Worcester National Bank, Worcester, Jan. 1, 1913 to Nov. 15, 1914 Governor Federal Reserve Bank of Boston since that time. Have been elected President of the National Shawmut Bank of Boston to take effect January 1, 1918. Have been a director in a number of banks and business corporations, all of which I gave up when taking the position of Governor of the Federal Reserve Bank. Member of Union Club of Boston Worcester Club of Worcester Graduates' Club, New Haven Yale Club of New York Metropolitan Club, Washington, D. C. besides numerous country clubs. My most interesting outside activity is my trusteeship of the Worcester Art museum, an institution of very high standing in its In college was a member of D.K.E. ccel line. THE NATIONAL SHAWMUT BANK CAPITAL, SURPLUS AND PROFITS 418.500, 000 At BOSTON ALFRED L. AIKEN 2 PRESIDENT January 21, 1918. Dear Ben - Thank you very much for your letter of the 18thwinstant and for the list of men that you sent me to whom I am writing today. 1 I am much interested in what you write as to the question of priority of securities issues and shall try to get to New York in the course of the next ten days or two weeks to see you and talk this whole matter over. Frankly, I am somewhat anxious about the immediate financial plans of the Government and would like to get more information from you than I can obtain here. I understand from Mr. Morss that the Government expects to issue certificates of indebtedness to the extent of about $300,000,000 a week; that our share of this in New England will be about ten per cent, which means about thirty millions a week for our banks, pro-rating this amount among our commercial banks on the basis of resources. Our share here would be about 0,000,000 a week. Speaking for ourselves, and I know that the position of some of the other large banks here is the same, we would have to practically pass the zihole of this burden back to the Federal Reserve Bank as we are all loaned up here very closely. We have had extraordinary demands from our cotton mills, most of which are engaged to a large extent on Government work, and from our wool dealers and woolen manufacturers, with the result that in all of our banks our commercial loan is at a very much higher point than it is normally at this time. I fully appreciate the fact that whatever the Government necessities are, they must be met and, of course, we are only too glad to do our share, but I want to get a little more definite information thcn I have at present as to what the Government's necessities are really going to be and I THE NATIONAL SHAWMUT BANK OF BOSTON. know of no such satisfactory source of information as yourself. I hope that the cold has disappeared before this and that you are feeling much better than when I was last in New York. With warm personal regards, and looking forward to seeing you in the near future, I am Faithfully yours, Hon. Benjamin Strong, Care Federal Reserve Bank, New York City. 40 WATER STREET BOSTON June 24, 1918. him the atmosphere of the whole Commencement. Thanking you once more for Dear Be your letter and with warm personal Thank you very much for your regards, I am kind letter of the 21st. Faithfully yours, I imagine that my experience at New Haven was akin to yours at Princeton. re" I had a wonderfully interesting and inspiring day under most impressive conditions. One of the greatest pleasures to me was the pleasure that Hon. Benjamin Strong, Care Federal Reserve Ban New York City, New Yor my Father and Mother, both of whom were in New Haven, derived from my degree, not to mention my small son who, I think, will always carry with .IN1 71918 FORTY ELM STREE )t-ot4 ( 7 Zt/te-, Ze-4- aW' 9e /C-t,t J al-4 4 tA- A ex-c x z-4/2..e-e/e, (4-1 Pe4-7/A-c "'I; 614A p,LA--c-cr jit-c e;( I ex 41;2,1 A AX;2A tA -24 r 44 6/- /L-1 ,e-6 2Ce--L1 - ke-t-r);,L4/ Xfrizt 1-i 47 ite-ti- t- 71/4Y-zz,4 c-cv( - 6e, >' X e(.., d A7rdt -f/ec-a. tLi THE NATIONAL SHAWMUT BANK OF BOSTON CAPITAL, SURPLUS AND PROFITS $ 1 9,5 0 0, 0 0 0 BOSTON ALFRED L. AIKEN DEPT. PRESIDENT P(91Ye !he 9 FEDERAL RESERVE 1919. BANli Hon. Benjamin Strong, Care Federal Reserve Bank, New York City, New York. Dear Ben: As you doubtless know, our Federal Reserve Bank here raised their discount rates yesterday a step which meets with my hearty approval with one exception, namely, a preferential rate of 4-1/4 per cent on notes secured entirely by certificates of indebtedness bearing a 4-1/4 per cent rate. There is a plain inference from this that Leffingwell proposes to put out his coming issue at this rate and depends on the artificial stimulus of a preferential rate at the Reserve Bank to get it across. I do not believe that this is spund and I wish some influence could be brought to bear on Leffingwell to meet what seems to me plainly the market for even such good loans as our Treasury bills, which I feel to be 4-1/2 per cent. I understand that in Washington they feel very strongly that there is going to be a very great recession in business soon after the first of the year and money is to be a drug. We cannot see that here although I recognize the fact that things are gradually slowing down, and fortunately so, but whether the assumption is correct or not, it seems to me that with rates as they are and with the Federal Reserve Banks putting up their rates to restrain the situation, it is hardly the time within the next THE NATIONAL SHAWMUT BANK OF BOSTON Hon.Benj.Strong-2. 11-4-1919. few week d for the Treasury Department to come out with a 4-1/4 per cent issue and insure it by this low preferential rate Which seems to me out of step with the general money situation. I am not at all sure that you will be sympathetic with my viewpoint in this matter, but if you are I hope that you can influence Leffingwell to see the light as we see it. With kind regards, believe me to be, Faithfully yours, ALA:R THE NATIONAL SHAWMUT BANK DAPITAL. SURPLUS AND PROFITS OF BOSTON 19. 5 0 0, 0 0 0 BC S TO N ALFR ED L. AIKEN PRESIDENT November 7, 1919. Dear Ben Thank you very much for your good letter of the 6th. I expect to be in New York on WOdnes- day and shall certainly find time to drop i you. to see I had been planning to see if you co id not arrange to dine with me Tuesday night, bu /my small boy told me this morning that Tuesday was/a holiday and that he had plans for some joint operations that would necessitate my taking the sleeper to New York that night as he did not propose to hav any of the day on the train. In view f this, I must postpone the anticipated pleasur date but shall certainly hope to see Very sincerely your/, To Hon. Benjamin Strong, Care Federal Reserve Bank, New York City, New York. me spend until a later ou next week. 40 WATER STREET BOSTON November 8, 1919. Dear Ben Confirmiir OUT telephone con- versation this morning, I am look- ing forward to breakfasting with you on Wednesday morning at eight o'clock at which time we cpn take up the Farnam matter. I hope that I am not impos- ing on your hospitality but in view of your engagements on Wed- nesday and of my own, and my very short stay in New York, it seems a to me that this is the simplest solution the matte(01224 Looking forward to seeing you, believe me to be, Very sincerely yours, To - Hon. Benjamin Strong, Care Federal Reserve Bank, New York City, New York. Ponm(11. No. ANGLO - AMERICAN DIRECT UNITED STATES Via Western w wr RECEIVED AT 22, GREAT WINCHESTER STREET, LONDON, E.C.2. DEC 24 42 A 5021/24 BOSTON 11 BEltAMIN STEONC CARE MORGAN LONDON BESTWISHES FORMERRY XMAS AND=HAFPY NEWYEAR AIKEN DATED 24 No inquiry respecting this Message can be attended to without the production of this paper. THE tESTEJ iliCON TELEGRAPH-CABLE SYSTE THE LARGEST TELEGRAPH 1\ND CABLE SYSTEM IN EXISTENCE. DUPLEXED ATLANTIC CABLES. OVER 25,500 OFFICES AND 1,500,000 MILES OF WIRE, Direct Wipes from Cable Stations to all the principal commercial centres in Great Britain, United States and Canada, and Direct connection with Central America, West Indies, South America, Australia, New Zealand, Fanning, Fiji, and Norfolk Islands. DiRECT AND EXCLUSIVE CONNECTION WITH MEXIC RECEIVING OFFICES IN THE UNITED KINGDOM LONDON: Telephone Western Union House, 22, Gt. Winchester Street, E.C.. (Primle Manch Exchange) The Baltic, St. Mary Axe, E.C.... 82, Charing Cross, s.W. 10, Holborn Viaduct, E.C. Mark Lane, E.G. Royal Exchange, E.C. Donington House, Norfolk Stre-,t, W.C. 48, Tooley Street, S.E. Also Regent 3073. London Wall 800 .. Telephone Non. en.tral LIVERPOOL: C ,I. & 5, Exchange Buildings (corner C(Private B2274 of Chapel Street and Rumford Street) Exchranchanon) BRISTOL: Canada House, Baldwin Street Central 309 .,. BRADFORD: 10. Forster Square ... Bradford 771 DUNDEE: 1, Panmure Street ... .., ... Central 1351 EDINBURGH; 50, Frederick Street 400 ... 771 ( GLASGOW: 23, Waterloo Street ... , (Private Branch ,- ( Exchange) City 1455 MANCHESTER: 30, Brown Street ... { Central 1174 NEWCASTLE-ON-TVNE: 1, Side ... Central 1329 ... YP PP ... ... City 3717 Hop 5275 General Offices . WESTERN UNION HOUSE, 22, GREAT WINCHESTER STREET, LONDON, E. C. 2. TELEPHONE No.: LONDON WALL 800 (Private Branch Exchange). PRINCIPAL CONTINENTAL OFFICES AND AGENCIESAMSTERDAM: ANTWERP: BERGEN: BARCELONA: BUDAPEST: BERLIN: CHRISTIANIA: 4, Weesperzijde 6, Chaussee de Malines Leppen Tyskebryggen Paseo de Gra.cia 94 Gaspe 57 Csengery-Utea 7 VI 2 140, Kurfuerstendamm 4, Prinzensgade COPENHAGEN 4, Jernbanegade Via San Lorenzo 11-14 118, Boulevard Strasbourg HAMBURG: 22, Monekeberstrasse Corso Vittorio MILAN: Emanuele 31 MADRID: Juan de Mena 15 GENOA: HAVRE: MARSEILLES: NAPLES: PARIS: 5a, Rue Beauvau Via Marina Nuova 14/19 1, Rue Auber 37, Rue Caumartin PRAGUE: Heinrichgasse 7 ROME: Piazza di Spagna 49:50 STOCKHOLM: Regeringsgatan 10 VIENNA: Zelinkagasse 13 ZURICH: Pelikanstrasse 22 The Public are recommended to hand in their Telegrams at the Company's Stations, where free receipts are given for the amounts charged. Telegrams for this Company's Cables are also received at all Post Office Telegraph Stations ; but in order to insure transmission by the Western Union Telegraph-Cable System, the forms upon which Telegrams are written should be marked "Via Western Union," "Via Anglo" or "Via Direct." This indication is signalled free of charge. Cable addresses are registered free of charge. All important Telegrams should be repeated, for which an additional quarter rate is charged. THE NATIONAL SHAWM UT BANK OF BOSTON CAPITAL, SURPLUS AND PROFITS ALFRED L. AI KE N PRESIDENT 22.500,000 ACKNOWLEDOEE BOSTON OCT 211921 October eighteen. Dear Ben - Sometime ago, in corresponding with rancher, we developed the idea that it would be pleasant if it could be arranged to have a meeting, perhaps in New York, of the original governors of the heserve banks - having dinner together and having a chance to talk things over. I know how busy you are but venture to submit such a suggestion. Some of us who have wandered from the fold of the elect would welcome such a meeting with a great deal of pleasure and I wish you would let me know if satisfaction. you think such a scheme is practicable. I would also like to remind you of your generous suggestion that you would send me a copy of the report of the hearings before the Congressional Committee at which you appeared on behalf I am very anxious to have of the heserve banks. this and shall appreciate it if you send me a copy when it is ready for distribution. faithfully yours, To Hon. Benjamin Strong Care Pederal Reserve Bank New York, New York. 3HT TU WAR JAHOITAII 1206 0,1 40 WATER STREET Ci%) BOSTON 192 November seventeen. Dear Ben I am terribly disappointed to find that I am going to lose an opportunity to dine with you at Andrew Peters' on Saturday night, but another engagement makes it impossible for me to be on hand. I assume that you are coming over for the game and will be here all day Saturday. If that is so, can't you find time enough to come in for a few minutes in the morning to see me? I shall be in the bank until about quarter before twelve and should like very much indeed to have a chance to have a few minutes' talk with you. With renewed regrets that I am not to dine with you and with warm personal regards, I am, Pai hfully yours, To Hon. New BenjamiStron York, New York. 40 WATER STREET BOSTON 4 ()"'l April twenty-five. Dear Ben Governor Morss has been kind enough to ask me to dine with you at his house tomorrow, Wednesday evening, but unfortunately I find that it will be impossible for me to get back from New York in time to do so. I tried to arrange my plans to come over on the one o'clock train with you but cannot manage it very well. Would it not be possible for you Thursday afternoon to motor up to Worcester with me and spend the night with us? I could have my car come into town and pick us up at any time that would suit your convenience and nothing would please I:rs. Aiken and me more than to have you with us for dinner and overnight and as much longer as you can stay. Do not bother to answer this as I shall see you undoubtedly for a few moments on Thursday. I am greatly disappointed that I cannot dine with you at the Morssl. Faithfully yours To - Hon. Benjamin Strong Federal Reserve Bank New York, New York. THE NATIONAL SHAWMUT BANK NOV 22 OF BOSTON ALFRED L . AIKEN PRESIDENT November 21, 1922. Dear Ben - I am looking forward with a great deal of pleasure to meeting you at luncheon in Cambridge a week from to-day at the Colonial Club, and I am writing to ask if it will not be possible for you to come over by way of Worcester, spending the night with me on Monday night, the 27th. You could come over on the Boston train via Springfield, leaving New York at 12:00, which would land you in Worcester at 5:00, giving you time for dinner and the night with me. It is so long since I have really had a chance to sit down with you that I would welcome such an opportunity and I hope that it will be possible for you to arrange it. You could come in to town in the morning at any hour suiting your convenience, getting here in time to meet any early engagements. Hoping that we may have the pleasure of seeing you, and looking forward at any rate to meeting you at luncheon, believe me to be thfully yours, To - Honorable Benjamin Strong, Care Federal Reserve Bank, New York City. c, a 4.4 "t tA40" A.) 11N