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Denver, Colorado, January 2, 1917. Dear Mr. Trenan: We all went to the mountains on Christ did not return until Sunday and yesterday was a Day, and, as we liday, this is my first opportunity to give attention t which, as you realize, is both I have your letters as f ton, hand-written (which mus interesting and impo amber 14th fro 7:ashinglayed in transit), December 20, 21, 22, 24 (hand-written), answer ulation of mail 28 and two of the 29th. I will them in dhronol rence to the matter of amendments. The rburg wore sent personally and in confidence and m with a separate each of t all b howev memorandum on d understanding now that they have atbmitted to you, please held i send you copies of these comments, Which fidence and consider only as an expression of myrsonal views. writ of the is memorandum ,arburg has sent me a revision plan for retiring greenbacks, ahich I have net yet had time to study, but when I do and reply, I will send you a copy. mind pointing out any Would you particular statements in my memoranda with which you do not agree? Yours of the 20th. I note your remarks about Mr. Jay's re- appointment, also about the statement by Lazard Freres. understood that they were rich. I have always They have very close affiliations with 2. Mr. Treman. January 2, 1917. the Bank of Franee, but, as you doubtless know, they have at times been regarded as indulging in stock market operations of rather ex- character. This is only tensive jhat it is worth, but Reserve Board when I street gossip and I give it the same reference was discussed the names, made by a member of the henc Also bear in mind that Mr. Blumen terested and doubtless will tions. inquire as to h in- r Bank of Franc I do not think they should be disclosed to him in About Mrs. McLaren, I had position and be considered wit matters. el under a obligation to her, Whic wa y. Her stay very iy deep tion of the bank's. You may be sure, if neces to send for her again. I have written Mr. St f the Bank of Mentclair, expressing ti on for membership. personally a The memorandum yo issued °gotta - her regular here was of such tremenduous my pleasure to you for nig volume and maturities of bills renewal credit thoroughly s vinces me that our policy has been riticism by the Reserve Board has been warranted at any Yours of finished. It wil 21st. I am glad to hear that that vault is about o much facilitate our work and give us such greater assurance as to our cash and securities that it will prove a lief to my mind. Please don't attempt great to send inc any combinations during my absence. You doubtless have observed year are about equal to ours. that Chicago's earnings for the This indicates the inequality of the re- 3. January 2, 1917. To - Ur. Treman. present basis of distribution. I had hoped that our earnings justify a larger distribution so as to clean up accumulated to July 1, 1915, but submit to your better unde Hot receiving your letter of the 21st un rate letter. returning from the ject of salary mountains, I am unable to get word to Of course Mr. Sailer dividends tending of conditions. Will refer to foreign banking connections in a changes. would should be increased t e figure origin- ally discussed. n opinion about the other It is difficult for cord of their salaries in their officers, without having befor made since coming with us. previous positions an clined to fec s and Gann Should be On the whole, I am increased equally Ir. Higgins shoul that Mr. Kenzeolo)ould receive about $6,000, that eceive a small Term advance loss than dolla -Ur. Kenzel. it make more defi increase on account of his recent d receive possibly a few hundred This is a very general statement which is as you will nnaerstand. inc these men are exceptional in ability and ility; they are really conducting the business satisfactorily of an institutions with 4300,J00,000 of assets, must not Prd we be niggardly in our appreciation of their loyalty and ability. About the bonus or emergency salary, I should say that the should be limited to distribution those who are receiving not over a maximum salary and should be graded from a minimum of say 10-,; to a maximum of 15% or 20%, the larger percentage applying to those receiving the Salary. smllest 4. To - Mt. Treman. January 2, 1917. Yours of the 22nd. Thank you for the copy of special instruc- tions No. 2, which I have read with interest. This and other matters indicate an intention by the Reserve Board to t control of the management of the Reserve Banks. ten up their direct hope they don't over- do it for it is sure to give rise to a clash. The dinner given by Mr. Woodwa ductive of good results. ing House charges Mr. Hendr knows nri view z.nd I hope 7 t the Clear- use them with him and keep the pressure on to eliminat omalous situation. Clearing house can afford to coo The with us and should do so. George Allen y body and I hope he does not make trouble f estionairre. about associate My own views the enclosed memorandum. It was all directly hear was pro- letter to Larburg. 400te rem I wrote him rte in this matter seem to have sue- n some respects and been defeated tn others; it has taught me aceede. les. .:. e of Which I the .1 . This relates almost entirely to salary ha above. \411114.1i6a44.1°111" Yours of the 26th. This is entirely about foreign arrangements concerning which I write separately. Yoers of the 27th. only refers to the ?Acent for the foreign arrangements, this letter you are writing to Monsieur Lewandowski. I notice that your reply fails to refer to one important matter and that is the possible liability for taxes in New York state. Would you mind having that subject investigated and Bend him the necessary infornation? 5. Yours of the 28th. This principally refers to the foreign arrangements which I answer separately. About free telegraphic trans- fers, will you please ask Mr. Hendricks to communicate at once with Mr. Caulkins of the Federal Reserve Bank at San Francisco so that he may feel free to carry out his desire of making telegraphic York without charge to his member banks? us of loss of geld in the gold settlement heavy, and we ought to take at being able to this opuortun He z- e as the vol of .440 dealt with t about Ref in a senara tte here. out atly interested in the he is literally foaming at the mouth MU I agree patience is justif rates wrote me a splendid letter about the foreign matter, and, non-member banks forever. scounts for member banks. Yours of the 29th. I if it ign banking relations reports of purchases of bill but no pleasure 'right matters drag It is impossible for are s I am much gratified to learnprogress serve them. the 28t relieve will be expressing jam5 otherwise thos Yours of greatly . in the Clearing House arrangement is followed transfers at New e program about still hold out. collections of items on Lets be eationt with them as long as d and then put on the screws. It will take e a few days to prepare that memorandum about drafts on Federal Reserve 3anks being available anywhere at par. I have some notes worked up on the subject and a copy of Jay's letter to you, and will hope to get something off the As stated above, closed herewith. last of this week or early next week. my confidential memorandums to Warburg are en- 6. January 2, 1917. Treman. Roberts will probably be here this week or next. We are )4,ing to discuss this subject of silver certificates, greenhac,cs and national bank notes and I want some special information from him about our Bank of England arrangements, which I think he alone can give us completely and satisfactorily. Seay has sent me his memoranda, whi, 1 will be referr to in my o. on paring Federal Reserve bank chec The bank of Montreal suggestion on its merits. hould be conside it Personally, I d e present time, - as we doubtless would not buy any relations established there would be of more value ut it might be well to ous ask Mr. Meredith to s that we cannot allow interest; as terms for accounts both I am telegraphing you the s e may have, as well f this today as follows; eal for statement of terms and conduct in our behalf. Se no as we would not buy bills in Canada vantage in re onsidered antagonistic to present reangpments migh our own member banks." "Suggest asking what lyusiress they woul present and ou. lations What is e of the large discount for the alerchants National Bank? the change of management cost them deposits anti are they liable to me with difficulties? Mr. Jay ought to be thoroughly posted on this situation. Thank you for the copy of letter from Pallain, also for the memorandum respecting reserves, which i.e most interesting. Your second letter of the 29th. you to keep reasonable I hope that desk clock loads hours, which are just as necessary for you as for 7. To - Mr. January 2, 1917. Treman. any of the rest of us. I am replying respecting the report on foreign arrangements by separate lettlik, ipci Now please don't worry about my behavio very good care of myself, although I did succeed sut here. picking up a little settling in my cold last week Which followed its cu antrum, but I am having it treats I will be all right in a day o scie along except some of Thank you many times for deeply appre BS /CC I am taking very good spec t Who says e meantime I am letting mail ant letters. ou say in your letters, all of Denver, Colorado, January 2, 1917. Dear Mr. Treman: This letter is in regard to the Bank o gland and Bank of France matters and 1 shall not send confirmati grams, as it will take me some time to 'brai of our various teletet out the longhand copies of those sent from EStes Park, but I will f firmations in a few days for th on of we first emplaini general 101w. 110010 I a fa In the first place _Out sAy definite p , Bank of England 0 even mentioned it count of h Er. Gr ems: went in on, as you will recall, with- na Ting ..yone else on io Er. -Morgan, nano n with our ell, being a al your rec ir letters on this subject Before replying speci ,.440t h you with con- communicated with the s subject, nor, in fact, had I h would have been natural on acand on account of his partner, of the Bank of England. My trip, to use t language vihich recall using at one of our directors' meetings, was a couting expedlt for the purpose, first of sizing up conditions abroad second, fling information as to the character of the foreign arrangements w should have and when it would be advisable to attempt to establish them. be with the It had always been in my mind that these relations should great central banks of Europe, if that was feasible, but I had always doubted the possibility of direct business relations because both the Bank of England and Ban of France are governed by so many hide- bound traditions that we could not in all agency the required service. In probability obtain through their a general way, it had been in my mind 2. To - MX. Treman. January 2, 191V. that we might be obliged to open an office over there, either in London or Paris, or both, and remain absolutely independent of any single connection. in From the very outset, however, of my ries ahomad it became apparent that we would not only be able to make of these institutions of immense adva. -; - angements a.. prevailed. ad every in favor of a close relatio Bane of France, the result bel Bank of rrance and the mp plans success with the Bank of England. etened necessary to go further toward them when I dly in left aew York, all of Which my letters free London, addressed ay. Let mc say furtl ally t of other r were so far more advantageous you will to Mr thole, know a good deal of progress with I had though concluding and under con- T the Bank of England end the The arrangements c than both 'ut probably on terms such as never would have been possible except in wa ditiens such as then with cussed edth ' that two years ago this subject had been gonerurg, who at that time had expressed the view that Reserve Banks in some way with the great central banks. of Europe. in He may have forgotten this, but it was certainly in his mind the early days of our organization, and further, let Beare in Washington is not justified in suggesting that me say that the they did not expect me to go so far as I did go in these negotiations, because the matter was discussed very confidentially, but quite fully, at ference in Washington before I sailed, a the last governors' con- committee was appointed to consider 3. To - Mr. Treman. January 2, 1916. the matter, the Board was advised of the appointment of this committee and Mr. Kains was charged with the duty of preparing the report on the subject to be submitted to the Reserve Board. f know on the subject and all that I knew, becat ;. necessarily was not definite and could not be o investigations to be made on y knew al/ there was to the object of mu trip ined L, advance of the er Nay, as to the Board's auth restricted one as I understand it, but th desire, as has been intimated to ne,privately, to be ad Operations. of the probable scope of our I thirW in a gene the Board should be fully advised of what we intend t t iA any way that would tie our hands, risk our act fact, cond keep th or t on by the armed, for u ording to our best judgment business conducted with a string, or put us in a p or a Reserve Board. We should be in a position -where it is necessary o continually ask their permission as to our specific transactions r amounts. o the Boa you in th exzw,j, announcement, I think I am justified in writing y possible just the way I feel about it. They knew and fully recognized that I was bound by a written undertaking not to have any announcement it was a made without Cunliffe's prior willful violation of agreement. In other words, sacred undertaking, dhich they were obligated to respect just as fully as I was. Their failure to do so would have re- sulted in my instantly resigning had I been in New York, or even in Denver. The fact that I was up in the mountains away frma mail communications and 4. To - Mr. Treman. January 2, 1917. trying to have a good time with the children I suppose had a good deal to do with mg taking a more sober second thought, but in all honesty I must say that a repetition of this business means that I am through with the Federal Reserve sank forever. The r s for this are not so much my own personal relations with Cunliffe allain and the others because they will not suffer, as I shall at the opor time maze it per- fectly clear to them that I was in n The real reason is as follows: for the break. and I had agr that the ma- chinery of our Reserve System boated that it would be mad- visable tors the tentative terms pro- for him to submit t posed, which involved the Bank o of a century,until 'al progress toward getting all the authorities n ey consisted first of an amend- ment to the Fade ngress; second consent of the Federal Reserve Board; thi own directors; fourth, an arrange- ment wi and, and setting aside the traditions e Banks and their boards of directors; ined confidentially to Cunliffe, some sort of th, Which I an an al or disc/ai anno uent by the f interest by our State Department. may, in The fact, have been the first notice to all the directors of the Bank of England that any such but three plan was contemplated, and I am sure that Cunliffees friendly message which you quote to me was inspired as much by his personal friendship for me as by anything else and doubtless covered a world of chagrin and mortification which he was unwilling to express. The other reason for my considering resigning so seriously was the effect upon the Bank of France. They are peculiar people in Paris and have to be handled with 5. January 2, 1917. To - Mr. Treman. no end of delicacy to avoid bad blood. The situation was in perfect with Pallain because Lord Cunliffe and I had agreed that a shape similar arrangement ought to be perfected with the Bank of France, and, as you My idea had been to will find in the memoranda, that was so expres oint of actual conclusion bring the Bank of England arrangements up to th and then so arrange matters that we co d lt ously, if possible, offer oth at the same time. a similar arrangement to Pallain, possibly announc The result, as you will s friendly co- observe The Whole operation and arouse the dis unexplainable and Your letters and Curtis' tele- to my mind lanations only: phone message give me the ity; 2 assumed all respons confidence had no ight with them a garbled st that there er reason 1st t that the Board should be disregarded; 3rd, that which he threatened to publish; 4th, o sacred for them even to repeat to the their nnwarrans is.ouncement. This is all too possi 1st,. blic body, mg obligation of , some newspaper victim thing is absolutely diculous for sensible men to entertain. The explanations' their actions are, as I view it, as follows: to offset the ill effects of their previous unforhey dosi tunate announcement about treasury bills and violated my undertaking for their own benefit; 2nd, that it was inspired by some international political motive in connection with Mr. Wilson's peace proposals; 3rd, that it was intended as an intimation to Germany of some sort which I cannot fully comprehend; 4th, which to me is incredible, that it was a method of de- feating the operation of a plan Which they had just authorised, by malcing the other party to the bargain unwilling to go ahead with the arrangement; 6. To - Mr. Treman. ' 5th, that it was a means taken by the Board to January 2, 1917. exhibit the strong arm in the general direction of the affairs of the Federal Reserve and sunpress somewhat the Bank of New York System the Federal Reserve independent activities of and particularly myself. inclined to suggest On this phase of the whole subject I that care be exercised that negotiations of thi haracter be submiuted hereafter to the Board in such shape ANWIFTMNW ; "yes" and "no" answer is required, and all arrangements b made for govern . .ur own actions In other words, in advance of submitting any a f this character. I think y our own rights as set out in we should be govern e that the Board can be trusted with the statute until we get ample .nft; knowledge of negotiat ial character. i feel justified So far as in writing him frankly, exp this occurrence and telling him just hem it happened; early mail and send you a copy. In Washington on this subject and until the me 'a the r from them direct you may be sure that I am not doing to mention ter. be a r that I could send with any self respect would The only :ve decided not to ignation and. do that, at least for the present. e course to be pursued - after time for a good deal of consideration I think the following is the best: As to the Bank of England - in a few days I will prepare and send you a letter outlining a method by which I think we can start operations at an early date, and in that letter I will try to cover all details. necessary This will be official and I will send a signed letter, but if you and the others think it should be modified, please don't hesitate to do so and sign it yourself. At the same time I will draft a letter Which January 2, 1917. To - Mr. Treman. it would seem to me desirable to noa send to the other eleven Reserve Banks, preliminary to a more formal treatment of the matter. Just as soon as we hear from Lord Cunliffe, if his respo.-e is favorable, I think the Federal Reserve Bank of New York should its England in making identical announcements oil bo of the arrangement, using care that th 4, 04, join with the Bank of r" sides of the conclusion k oursw, are not known, which the Federal but making it perfectly clear that it is an arran lieserve Bank of New York has ne th the Bank o good many months of discussi ondence. In that announcement t already made by the Board, as I think we should ignore the otherwise it would appe and after a we taken the matter up with the Bank the Board, Which of course of England only would not be the vs received a As to the personal cable from ?al lain St "Ai repondu par Mille bons so er courrier a votre derniere lettre. h I am replying or your good wishes which are heartily reI await your letter with interest and will cipro h regard to our negotiations and respecting reply p announcement of possible arrangements in London." "Many thank The situation in Paris is quite different from that in London and the sensibilities of the officers and regents of the Beni: of France are such that I feel we would be guilty of a serious blunder if we did not proceed at once to conclude an arrangement with the Bkin, of France, even though we did bus. MD business at the present time, or only a nominal 8. To - Mr. Treman. January 2, 1912. The Bank of France, as you will find I advised the Board and Mr. Jay in writing, held a special meeting of the regents While I was in Paris, authorizing Pallain to conduct negotiations with a view to establishing some sort of relations, 'which were \ then defined. we should proceed at once and conclude them, p I think are willing ded they to accord terms at least as favorable as those _ zited by the Bank of England. As for de Neuflize, he has from the Bank time with egotiation of commercial Pallian having advi ha Chamber of Commere t Paris and t relations I had that two institut he matter with of cone'lug arrange France were Bank f France in that matter. subject of was simply by reason of one talk suggested that something of about. I told him that I had already dislain and pointed out to him the impossibility ts for any such relationship, except the Bank of to give us guarantee in gold and that I point in any discussions with them where I felt they their credits, represent the ti write Pallain on tie ize himself in will should be bro cuss this country to uf/ize happened between You ilea in Which we were requested will find all the correspon The way de uthority in these negotiations. of Prance to rep to assist him in connection produced willingness to go that far. had not reached had disclosed He undertook to write Pallain on the subject, entirely on his own responsibility, although with my knowledge, and he later advised me that he had heard from Pallain, but he did not diselude what ?villain had written, and suggested in place of a gold guarantee simply a guarantee of rates of exchange. The matter so far never went any further as de Neuflize was concerned, because Pallain later wrote me direct, 9. To - Mr. Tremens January 2, 1917. copy of Which letter you have and in which, as I recall it, he made no reference to the possibility of our negotiating through de Neuflize. de Neuflize fails to distinguish betue informal discussion of his own unofficial and and the official uthori zed negotiations Which we are condu ing direct with the Bank of France, and WIlith which I ha His father, Baron to his de Neuflize, s rather dangerous to t e that he the matter and was relim nary statement, my would be to write for us , the un that had heard something about of France wanted to establish close relations wi outl an arrangement it would be 3'J explai this plan could to go to Fr should ope ;ly the Bank of t be necessary gland situation and the suggestion concluded without a personal visit, I was sometime this year, but in the meantime that we accounts with each other and await more elaborate arrangements until I was able to do abroad. This long letter so far is intended simply views about the proposal tter, Which I will draft upon re- ected announcer nt in regard thereto, and containing expecti undertake lize until we have authority. I did hear from Masson when he ceipt of his familiarity. nt of the Bank of course, fully informed. It any negotiations with or suggestion to express my personal \ announcement and what we should now do.,,Let-ie now comment on some of war references to the matter in your last letters. SP!--1,nd notice to Mr. Jay of the action of the Board in an envelope marked "confidential' was a strange performance when the Board had already determined to ea an announcement to the press. I am glad you and the 10. To - Mr. Treman. others feel January 2, 1917. as strongly about it as I do. I doubt if negotiations wit n the Bank of England are jeopardized so far as 1 am concerned per- sonally, but I think it will make them more cautious in their relations with us, feeling that we have a leaky and unre our affairs and 1 am sure that the situation wi complicated because these ble Board supervising Pallain will be greatly 7rench bankers are exc ingly suspicious and liable to take fright at any evidence and the others insist upon our gett all matters effecting the y. direct advices bank I hope that you the Board on The governors' conferences have developed that this indiree unication by private letters to the Reserve Agents is repeatedl, use of mistakes, misunderstanding and sometimes hard f One sent enc ng's tter strikes ma as most un- usual and indicat tude by the Reserve Board. that as the Board ody, its acts are of a public charac- ter. He says o inspect its Minutes and that it must repo Congress even matters Which are of a confidential nature and un- finis If the Board ta,_es the attitude that all of ations, etc., must at once be published notaithy be of the most confidential character, the minute our they are submitted to the Board, and that the Board alone is to be the judge of the character and extent of the publicity, then it becomes essential for the protection of the management of the Reserve Banks that the Board should not be advised of confidential transactions. To illustrate -.1.1 feelings on this -subject, sunless the Board should demand the confiden- , ial s4. . Iu hi private bankers. What protection of 11. January 2, 1917. To . Mr. Treman. confidence can we afford to these men who are relying upon our pledges? I cannot accept any such doctrine so long as I am an officer of the bank and if the Board insists dentially that matters shtch sh be dealt to be published whene r the Board sees fit, are nevertheless I certainly cannot continue my connection with t Wont you let me i have read over the Cl ^ This institution. doubt if that time should be conveyed to them at the pro has yet arrived. with confi- how you feel a it? oposed report and your letter mid admirably, with the possible to the Board, Which seems t exception of one or two points d in my telegram sent yesterday, of which confirmation to mention There are place. may have been One is th worded announce- on where a good deal of jealousy exists engotia joint stock banks as to the operations of the Bank of England. among Duri causedLord Cumliffe areful and cautiously because of the nee ment of in their proper the course of I .v, . iscussions he stated to me once or twice that the banks wereAp;r7 big lo that in so jealous of the Bank of England, and it developed _e_viefelt .:1-;firly invaded their own fields of activity. He thought they might feel so in this matter and I assume that his reference to it indicated I a desire to so handle the matter that it would minimize criticiam of the management of the Bank of England; this was rendered impossible by the pre- mature announcement. Another unfortunate feature of this matter seems to be the feeling intimated by Warburg in one of his letters that I had forced the Board in pressing this application for immediate consideration. , Such a feeling 12. To - Ur. Treman. January 2, 1917. is entirely unwarranted. If you will examine carefully the official memoranda, you will observe that it is based upon the hypothesis that transactions would not necessarily be undert before the oonclusion of the war, but if it became possible, or nece ;ry, notice to that effect would be given. Board that this was a I have all al ng taken matter which simply of dissent by the Board, altho e attitude with the sent or notice requir ongly recomme Immediate assent. It has all along b ir power to say that they would not approve the arran the war continued and they cannot possibly have read the me da without realizing that no conunderstanding in existence mitment was made the Reserve 3oard in any way to which committed cause any embar at the pre ined to authorize the appointment it t a long letter but it seems necessary sorry to wr er the whole gr d as some sort of a etter belie re it is In cone see it, and now I will get busy pre- to Lord Cunliffe for I wish 3urtis was here to submission to the help me. on, let me say that this episode has very much altered mg feelings toward the whole Reserve System ara1, generally, the work that they are doing. Difference of opinion on our policy, etc., does not influence me in the slightest degree in my loyalty to the work, but this deliberate disregard of what I considered to be a very sacred undertaking is really a little more than 1 can stomach. 13. To - Mr. 1reman. January 2, 1917. am delighted, however, at the attitude the bank and particularly of you and the officers who were on the job and realize the situation. /47 best to you all. _- Faithfully yours, R. H. Treman, Esq., Federal Aeserve Bank New Yon:. City. Form 1201 WESTEOAEM UNION TEL s.ttew- AM WESTERN UNION WNW,' 24T use three sYmo.is the check (number of ac E'ssage. Otheractor is indicated by the ,,aring after the check. NEWCOMB CARLTON, PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT BELVIDERE BROOKS, VICE-PRESIDENT S, MBOL Day Message Day Letter Blue Night Message Mite Night Letter NL 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. Amer, Colorado, January 2, l9170 I) AT R. H. Treman, Federal Reserve Bank, New York City. , CLASS OF SERVICE DAY LETTER. Replying yours twenty-ninth ma,:e following suggestions regarding resolution. Stop. Selection of London Agent was entirely open question before I reached London and nocessit:, of making that connection developed after my arrival. Stop. Would modify top of page two LI that respect. Stop. Resolution and letter should point out absurdity of confidential communication of Boards action aLdressed to Jay when it had already decided to make public announcement at once. Stop. Further emphasis could be given to embarrassment caused Cunliffe Who was awaiting sufficient progress here before submitting matter to his own directors. Stop. Copy cable to Cunliffe not enclosed with Curtis letter. Stop. More by mail. Benjamin. Strong. Chg. Benj. Strong, 41)0 Montview Blv., Denver, Colorado. DAY li Form 12.',5 IRED WESTE7,2SEINT UNION WESTERN UNION TELAO an X oppovice desired; TELEGRAM ITTED AS A SSAGE. Check AM "Cr 4IP., Receiver's No. Time Filed NEWCOMB CARLTON, PRESIDENT BELVIDERE BROOKS. VICE-PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT ng telegram, subject to the terms f, which are hereby agreed to Denver, Colorado, January 2, 1917. R. H. TreE4n, Care Federal Reserve Bank, Now York City. Suggest asking Bank of Montreal for statement of terms and at business they would exnect to conduct in our behalf. See no present advantage in relationship as we would not buy bills in Canada and our arrangements might be considered antagonistic to present relations with our own member banks. Benjamin Strong. Chg. Benjamin Strong, 4100 IJontview Blvd., Denver, Colorado. lip TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FO. ALL TELEGRAMS ,VING office for con To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the °rig, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED ,.,EUhAM AND PAI in 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 received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, bey,m, fifty tire for 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 telegrams. 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 thi caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued, unless a great writing hereon at the time the telegram is offered to the Company for tra,namission, and an additional sum paid or agreed to be paid based on such value ono Der cent. there°, S. The Company is hereby made the agent of the sender, without liability. to forward this telegram over the lines of any other Company when nc destination. 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 off, towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his contract 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 by 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 a filed with the Company for transmission. Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective elm the foregoing terms. No emplcryee of the Company is authorized to vary the foregoing. THE WESTERN UN ION TELEG RA INCORPORATED NEWCOMB CARLTON. PRE. CLASSES OF SERVICE FAST DAY MESSAGES A full-rate expedited service. NIGHT MESSAGES Accepted up to 2.00 A.M. at reduced rates to be sent during the night and delivered not earlier than the morning of the ensuing business day. DAY LETTERS A defened day service at rates lower than the standard day message 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 enu- Letter shall be delivered on the day of its date abso events; but that the Company's obligation in this to the condition that there shall remain sufficient to mission and delivery of such Day Letter on the day regular office hours, subject to the priority of the tra ular telegrams under the conditions named above. No employee of the Company is authorized to vary the f NIGHT LETTERS Accepted up to midnight for delivery on the mor ensuing business day, at rates still lower than standa rates, as follows: The standard day rate for 10 words for the transmission of 50 words or less, and one-fifth. day rate for 10 words shall be charged for each additl less. merated above are hereby agreed to: SPECIAL TERMS APPLYING TO NIGHT LE' 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 In further consideration of the reduced rate for th Letter" service, the folloWing special terms in at Day Letters shall be written in plain English. Code. language Night Letters may at the option of the Tel( be mailed at destination to the addressees, and the delivery of regular telegrams. 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 lomplete discharge of the obligation of the Telegraph Company to diver. D. This Day Letter is received subject to the express understand; and agreement that the Company does not undertake that a Day enumerated above are hereby agreed to: be deemed to have discharged its obligation in such cc to delivery by mailing such Night Letters at dest prepaid. Night Letters shall be written in plain English. is not permissible. No employee of the Company is authorized 10 vary the fo Denver, Colorado, January 5, 1917. Dear Mr. Treman: I have been meaning for sometime to wri you this letter by t dictate it instead. hand, but my correspondence is so heavy that I After some months of very diffic it work o you, i realize that the skies seem to have opened and let down a ble deluge of a good deal. difficulties and troubles; it op certain want of consideration which has be in some matters recently is utterly unexplainable to me a lize, tired as you are, that P beyond expression. it has been dispiriting and disco ve been in harness now for t thos ?lease realiz over two years hay eve loped eallo chafe and a new at the job, bad to develop this. managed to some or in the situa do th ame and do not is. spots where the collar and breeching li1e Jay a yourself, will at first be certain Curtis and I have been all through ertain amount of self-respect and find on, and I a writing to you now to urge that you y about these unfortunate developments. handicapped by a certain lack of familiarity with past de 7enta and it seems to me that no one could have possibly dealt with the situation with greater skill and judgment than you have, and I hope that you are not getting discouraged or feel that tqe work is not worth while. To the extent that it is for mc; benefit, I deeply ap- preciate it, and the work for the whole system will bring its own reward in the great satisfaction you will feel When you look back an it. 2. To January 5, 1917. Mr. Treman. This, therefore, is to urge you to cheer up and not ,set anxious over these unfortunate recent develo With many good wishes, I am, AB' Faithfully yol Al11111111Milli R. H. Treman, Esq., Federal Reserve Bank, New Yori. City. r Denver, Colorado, January 5, 1917. Dear Treman: Warburg has sent me another memo rand on greenbacks . Olt enclosing copy of my letter to him, togethe with memo. in ,! the plan, which please hold in confidence until you hear f r,ell direct, as he has sent it to we f R. H. '41E2. , Federal Reserve Bank, New York City, 1. Y. BS /CC En c . ,400, Denver, Colorado, January 8, 1917. Dear 1r.r2reman: I have been reading Governor Seay's ar drafts on the Federal Reserve 3anks imediate/ Reserve Banks. It would involve to ticular of his plan and argument a this comment to certain parti ciples underlyiag the plan overlooked or has failed to re nt a-id plan for making vailable at all other analyze every par- am, therefore ing to confine relating to the general printo me Governor Seay has either of controllin, importance. THE CENTRAL BAIL: ID The plan is with branches, one office, are where t Such nciplo of a central bank, thiich the eusto s, while having their accounts at all the breeches of the system yable at the election of the payee. plan is only possible with a central bank, where the physical an of its reserv is a minor consideration and where the expense of m , reserves fr one office to another is not a material considerat hey all belong to one institution, and where, in lee fact, the amount held at any office need be only such amouat as is required for till money. Governor Seay Is led to maKe this mistake because of the facilities which we arc noa enjoyin6 through the Treasury Department; instead of our gold reserve being one reserve owned by one institution, we are able to deposit a large part of it with the Treasury in a common fund and have gold certificates issued aiAinst it at any Sub-treasury, and by that device secure scree of the medhanical and physical 2. To Mr. Treeen. January 6, 1917. advantages ehich would be enjoyed by a central bank with branches. This is a ficticious situation however, eeod so long as it lasts, but ehicl will disappear if our sub-treasury system is materially modified, as nee seems likely. !hen that hagpens, all the advantages of a central bare_ now enjoyed through the sub-treasury we will be obliged either to constantly ities wi isapeear and ft the physical Istody of s our sold reserves at great expense to our lves, or else other with ear-marked gold funds, each of the Reserve Banks fro To summarize this po Banks. transfers of balances caused Reserve Banks would b without the facilities of t tine the net I st each ces due by the other eeserve ignores the fact that tion of checks on Yederal conduct for no compensation 41d. sooinent fund and the treasury. MILLION:a CLUTLRS. GovernorZeay are', an will obviate the necessity for banks carryin at reserve centers for exchange pur- the memb poses. essary corollary of the argument being that if member banks no longer as the exchange breach. This ar quire su accounts, the eeservo Banks nevertheless eill, I be required just the same and we must stand in the nt overlooks many important facts, the principal one being that surplus funds always eo to the money centers and alwaes will, in order to find temporary anployment during periods of slap local demand. One of the greatest causes of demand for exchange on New York at certain times of the year is the flow of money there for the purpose of tempoaary employment in stock exchange or other loans and has no direct relation to commercial transactions; that is to the commercial demand for exchange as January 8, 1917. To - Mr. Treman. distinguished fro ,n what ,;ovornor Seay would consider the illegitimate machinery by Which the enormous flow of funds k and forth between and money centers for inveat*nt, loaning and other country districts purposes :mild be facilitated and conducted wi ut expense to the banks from Hew York at some But instead of dra of the country. establishing The Reserve Banks b, his plan would be financial demand. for to New York. seasons of the year, it might even facilitate its d logical m Furthermore, each movements country and the countries of the always shift between the se world according to sunply an and credit will. and no argument in support of this ited States should be chopped up plan, based upon the t for business and banking into twelve indep purposes appeals b1LITZ POUT& OF At he d ff. may on w twelve with a bank account pays a bill, ese a cheek and sends it to his creditor, no matter where hii creditor s only one place of payment, which is at the bank and that check h it is drawn. es nf . overnor Sony proposes that the 4nt; check shall have an unsound proposition from every point of view, and particularly When these twelve points of payment are not offices of the same institution but of twelve different institutions. There is a very simple principle underlying this matter. a man in Birmingham draws a check on the First :ational sank awn today of Birmingham and sends it to Detroit to pay for an automobile, the payee in Detroit takes. the cheek to his bank and deposits it in order to get his money. The question of di-edit instantly arises between the Detroit Ban.: and the de- Jaauar; 8, 1917. To - Ur. Treman. positor of the cheek. If the Detroit Bank considers its customer suf- ficiently responsible to insure that MD loss will fall upovl it if the check is not paid as its depositor endorsing i then the good for the amount, diate credit; in Bank of Detroit may give its customer other words, advance the money on the check for t e period of collecss of its customer, If the Detroit bank is doubtf tion. it will take the check for collection and turn over roceeds to its depositor only when received. any difference arise case of a Reserve Bank ha Other a check on the a and sends National Bank of If it to the First 125,000 capital) and that bank de- posits the check must determine whether the endorsement Aationa If ins Corners is :,'ood enough to justify OUT Jag immediate credit. the se National the case o might be willing to do so in the case of f New York, but will we be invariably willing to ry °heck of this character, no :wetter for what o us from any bank of our district, amount, weak it may be. Jewry() Banks and the abama, with 25,000 capital, draws the First National do so the iple there is no difference. transaction above described? of the in Presumably not, no matter how and the only way in Which we would be satisfied to do so would be upon receipt of obligations from the other aeserve Banks on Which those they are good or not. checks are drawn agreeing to pay them Whethe, jovernor Seay clearly appreciates the weakness r his plan at this point 1372 preposing that a limit be placed upon tie of these checks, for 4hich immediate credit would be given, the 17 5. To - Mr. Treman. January 8, 1917. being a percentage of the capital o the drawing bank. That is a plan for extending credit! Credits cannot be extended by any such4.t-rule method. the strong banks, a would be an tnjustice to bans an dangerous for the Reserve nanks. s co of danger to the weak Los ng at the other side of this picture, I would never willing serve Bank of liew York enter into It ving the iederal Re- obligation with .ther eleven Reserve Banks, undertaking to ble for the payment of any check drawn on us by our member jat be deposited with them even though the 107 limitation appl whether this 10,g / a series of check o is to tell and how can we tell Suppose a n25,000 ban,: floats a number in of its capita/ - o is going to a loss fall when ch s came in rep district, each one for 10,, c: up the amount and where would the enting the excess and upon jhich checks would i THE D AT. Hendricks 11 tell you, during the days when Treasury one of the Malted States depositaries, banks which rob checks on deposit were in the habit of sorting them and shipping them for collection to those points where they happened to have need of exchange. The unrestricted use of checks serve banks for exchange purposes would have on Federal like result. Tne- Sanks through- out the country would seearate checks on Federal Reserve banks and ship them all over the country, according as they mint have need of exchange at different points, and we would immediately see a new kind of float develop - not only of dangerous proportions but dangerous in character. The irst To - Treman. January 8 1917. National Bank of Birmingham might draw a cheek on the FederalReserve Bank of Atlanta and send it to Detroit at a time when Detroit automobile manufacturers had made large purchases of mac needed Boston exchange. The Detroit bank inst or in Hartford and of depositing the chece with its own Federal Reserve Bank eould s p this chece to the Shaw- mut National i Boston; at that tim some demand for ?hila- delbhia exChange in Boston and t out all Federal Reserve bane checks, no matte drawn, and ship this check payable in Richmond to the Philadelphia might be in need n Philadelphia. In the same nay, ork exchange and the Girard bank, instead of denositil Philadelphia Reserve Bank, eould send it to New Yo aper result in the or n shipping currency and might chain of checks on !ederal Deserve banks in constant SERVIC all hazards the Reserve banks should desire to avoid getting in- to t positiOn with t sorts services fo penso of r members where they are expected to perform all othing; this is one of those eases. While the exr reserves is now trifline, it may not always be so, and a nroper plan for transfers by Reserve Banks for the benefit of member banks should recognize that expense is involved and a suitable charge should be made to cover the cost and a alight profit. EXCHANGE ACCOUNTS OF RESeRVE BANS. The Federal Reserve Act contemplates that the Reserve Banks shall carry exchange accounts with each other, undoubtedly for the purpose of handling transfers of the character contemplat ed by Governor Saay's plan. 7 To - . Treman. January 8, 1317. If his plan is put into operation and there is a daily settlement through the gold settlement Pend, there will be no occasion for exchange accounts between the °serve Sank°, the credit in the gold settlement fund being in fact that very account. It et s me that the use of the gold settlement fund for this purpose is a he o sion of the real purpose of the organization of the Reso r as domestic exchange Is concerned, and in the exercise of this function bank out of the system through established for the purpose Ind a central of a fund alit h was primarily alences which arose through the collection departments of the LEGAL ASPECTS OP TILE? once aria The gnostic) her a Reserve Bank Which gives imasdiate dit is making a it is paying the eck as agent of he bank on Which it is drawn. 1 am ohly pre,. plan. med Whic who en vance to its depositor, or whether d view as to the legal points of the strikes me that we have got to ch,ose between having the in- e credit take th form of an advance on an uncollected check, in e the advents s the bank must rely upon the goodness'of its depositor or accept the principal that each of the Reserve Banks pays these checks in behalf of the Reserve Bank on Whice drawn. The Reserve Bank in New York In the first case would accept all the risk of loss where credit was extended to weae banks which were net entitled to credit of this character, and in the second alternative it would be obliged to assume undertakings to the other eleven eeserve banes, to be responsible for the Daynent of any checks which might be deposited with them, drawn upon its member banks. I would net be willing to see our bank assume 8. January 8, 1917. Treman. unlimited responsibility of this character on either theory of the transaction. On the whole, I think the best answer ti his sueeestion for narrine Federal Reserve Bank checks is to comb the present telegraphic transfer service which we have recently put intperation with the plan suggested in Mr. Jay's letter to you th; the latter with a slight modification. 1.1r. Jay pr able only at a nominated Resev and not to so ne other diet that suitable advices be excha eayment. He apparen Reserve Bank on lo that special Bsnc, s be used, pay- ich must eo direct to destination no in which it is payable, and as to insure the regularity of the upon the advice to be sent by tho do not think that would meet the situation an t by taking the Texas district. If a member bank in on the Federal Reserve bank of Dallas and ser ean ne it payable at the Reserve Bank of San Fran co the advice would take one day at least from El Paso to Dallas and o and a half day'rem Dallas to San ,'rancisco, makine three and a half draft; s at the lea 'efore Sari Francisco would be authorized to pay the t might be presented in San Francisco in tee days. It seems to me that the drawing member bank is the one to send advice, both to the bank on which it draws and to the bank where the payment is to be made. aght it not be nossible as a modification of Mr. Jay's plan to provide that ane member bank might have a drawing credit arrange d betaeen its own Reserve Bank and the Reserve Bane of any other district up to a snecified limit? In each instance Reserve Banks to be responsible for the 9. To - Mr. Tremans Januar', 8, 1917. drawings of its awn . in s up to the limit named, and, insure correctness, signatures, etc., to be furnished in order to each case. common by which interior This would be similar to arrengements now nu oorrespondents of NewYork banks and bankers d foreign exchange on London and continental banks, under drawing or s Which are guaranteed kers Trust Company by their New York corresnondents. might enter into an arrangement le Cleveland T ampany, by Which the Cleveland Trust Company d draw ci efts or issue travelers credits up to a certain amount wi gives being responsible for the payment of land Bank, the Banears Trust C and protecting itself by what- idl the drafts at the ever form of obi cried on the London City and Lid- tiot or socuri that t thought necessary from the credits, Cleveland Trust the signatures, etc., of the nany are furnished to the London City officers of the C paid are charged to the account of the Bank s Trust Co. In reading Goya f A r Seay's memorandum, I am very much struck with it, to take a correct view of certain fundemental Cm the first page in stating the purpose of the plan he emphasizes that it avoids imposing upon member banns the necessity of maintaining accounts with correspondents for exchange purposes and gen- erally lessons the accumulation of bank balances in centers outside of a given district. This exhibits a good deal of confusion of thought as to our present banking system. The Federal Reserve Act aimed to decentralize the unnatural and forced accumulation of balances at the Reserve centers 10; To - Mr. January 8, 1917. Treman. which had been denignated as "Reserve and Central Reserve Cities", thereby necessitating banks in the interior to carry balances there for reserve purposes. Certainly this was a de rable object, but I cannot understand any experienced banker claim that there Ls any- thing improper, uneconomical or unsound in bank arrying accounts for ks are for. .exchange pureoses with each other interchange of commerce the world over necessitates tions of this character. rise to tee sane necessity for loaning and investment m that accounts of that character .o overlook the very first prin.- should be avoided, ctples of banking e is the unnatu purposes and the .r is the une nate pose avoi actionable features in our There have b.:. banking system. sate a bushing rela- ds from one ma ket to another The and to base aim argument upon The col accumulations of balances for reserve ral accumulation of balances to compenThese two developments we want to elimi- om eer banking system, but to eliminate accounts for exchange pur- would be just ab.t as sensible as elimincting railroads so as to e expense of ipments of goods. at the foot of page 2 and the top of page 3 that aosk,; o! the National banks keep balances in New York for exchange purposes, al- though many of these banks have very limited direct relations with these cities. This I cannot understand - no bank keeps an account for exchange purposes that has no demand for exchange. They keen accounts for all sorts of purposes, some of which we want to eliminate and some of which we cannot possibly eliminate and one of the latter is exchange purposes'. take issue with him absolutely with the statements in the first 11. January 8, 1917. To - 71r. Treman. two paragraphs of page 4. The cause or the breakdown in domestic ex-. obauges in past years has been due to unreasonable impulse, due to four, of the interior banks to yank their balances of New York correspond- eats in order to have currency in their own va its, and formerly the only - kind of currency they could get came out of the °serves of their corres- and the breaking up, pondents. The power to issue redere wo ultimately must, of the sys payable at distant points wil f giving immed milt for Checks r banking system against similar breakdowns in the future. On page 8 Governor Seay that the amount of checks cashed about offset. His personal ax- by the Reserve Benk- days of the Reserve System and since perience in this Richmond checks should convince we started givin him that this is be seasons of the year When immense Reserve Byrks to others, and doing this s without char busi At the foot of advantages sune enjoyed which will make it difficult to control it. 11 he states that the Reserve System has making transfers. It has no advantage not now ks9 except through the courtesy of the Treasury Department: in conclusion, I believe this plan does violence to the principles for Whioh we have contended for two years ie devising a collection system Which will be sound; that it violates sound banking principles which it war; the object of the Reserve Act to develop and foster; and that the same objects sought by this plan can be perfectly well accomplished without To Mr. Troman. Oanuary 0. 1917. ignoring the principlee Which we have now established, by employing a system of telegraphic transfers and a system of Oleo,: transfers such as suggestod by Mr. Jay. Very sincerely yours, R. H. Trecan, Federal Reserve Bank, Now York City. BS/CC Denver, Colorado, January 9, 1917. Dear Mr. Treman: I have yours of January ot tell you how 2nd and 3rd and greatly I regret the difficulties that seem to with our Washington relations. ve arisen in connection It certainly Be unfair that you should difficulties be burdened with these Which are real you have inherited and for Which you were not in any responsible. to them unofficially, or Possibly it is just as least that Bank of France, but I informally, about no or authority the wisdom of any formal apPlic to negotiate. at doubt Nego- seem like aiimission of a false tiations are already simply required to give move to make appli its otiations are necessarily subject to consent to an app their ultimate con . , ,.. /111111' c we need vol . e acceptance rates. worry about a domestic market for acceptances when the of.:141usimdm:410001 as 1 have frequently written. will .. o cultivate v whenever Personally 1 do The difficulty ume and there will be plenty of buyers for bills ance a little. Governor Harding's letter is to me unexplainable and unpardonable. It is difficult for me to subgest a course in such a matter without being in intimate contact with everything that has transpired, but personally I have made it a rule never to permit anyone to address we in that without demanding fashion justification and getting it, but I shall, of course, do nothing at all about the matter, which would only complicate things them -werse. and make 2. To - Mr. Treman. January 9, 1917. No letters will be sent to France or England, nor in fact have any been sent which have not been sent through the bang and copies furCopies were omitted of the letter to the Bank of England and nished. are enclosed with this. Lr. Locke's comment I think is justified d sound. am wondering to what extent these matt rs that e recently developed may result in some criticism of my own direction o Please do not fail to advise me and fully of character that develops so t in comments detail. The co ing side because it and possibly othe Your about 0 in th ourth. advises I h and yet it has an amus- ur good directors (yourself) ter understanding of the difficulties Bank than woul otherwise be possible. vance in the acceptance rate of ve in mind that the advance is being made ace of increasi g bank reserves and reducing interest rates. am delighted and t h the salary changes reported, whicn are fine in my opinion. directors present se serious through you a of th hing of that ure will I hope straighten every- s at 1 of running a Rose fairs at the bank. ish you with information or The whole thing is o thing out. Of course I r11 pnreciation Also will you not convey to the of their action in re-electing me to my office and my regret that I am not there to say this personally and to take up my duties. You again refer to application for negotiations with the Bank of France. I do not think I would make that application formally cuss it informally as a matter of information. but dis- 3. To - 2Jr. Treman. January 9, 1917. Confidentially, Mr. Roberts of the National City Bank is here at a most opportune time on account of his familiarity with our coinage system, mint practice, assay office practice, etc., and I have taken the liberty of consulting him in regard to th, 4 he as you know having been consulted once befor n these matters. would be just as well, however, to consider that of England letter, It was acting in a con- fidential capacity in advising us. I am enclosing a letter f Foreign Trade .t, il Which was really intended for the b Don't worry about my the doctor is keeping a very clos Warmest rega getting along all right and on me. e bank. things come out at cerely yours, R. H. Tr Fedora New Yo Let me know how Denver, Colorado, January 10, 1917. Dear Mr. Treman: Thank you for yours of the 5th. comment is in regard to the acceptance Board has made a mistake in advancin t requiring The lame tes at this ti need the Let me repeat that the first thing to acco lish is to dev volume of bills. The way to it, so much below the Loud make our p a large , and keep rate that in t-tutions the world over are forced even against t ir will to open Lw York credits. If the Board desires m to d o, I will pre a memorandum Which hope will be convi Yours very truly, R. Fede 4eman, Zsq., Row York BS/CC erve Bank, Denver, Colorado, January 10, 1917, Dear Mr. Treman: Yours of the 4th is just received. My suggestion that no formal appli for consent to negotiate with the Ba. been elaborated. ...be fl,-; to the Board ,f France possi The statute contempill i.tes no such proc certainly arrangements of that character should be the initiative of the in alien upon f the Beak of France, negotiations have in fact of course to ure and of the Reserve Furthermore, Board. should have nearly a year, subject the ard. unusual procedure for It would be a most to negotiate and would es- tablish a precedent t arrass us in the future. tions of this champ always originate with must be in positi this c Negotia- us and we e are obliged to reply to advances of ter made by foreign institutions, but we must seek per- uerelations. mission bef. My best If Monsiemr ews of the deNeuflize situation are as follows: 1 n desires us to negotiate with him, or if deNeuflize desires to acta intermediary, he should be the one to take the initiative in securing authorities; we should not make the suggestion. Again, it is highly important exist in that no material difference of terms should the arrangement with the Bank of England and the arrangement with the Bank of France, so that the arrangements with the Bank of England should be first concluded and form the basis of negotiations with the 2. To - Mr. Treman. Bank of France. Pallain *t January 10, 1917. If, on the other hand, it will be satisfactory with have a temporary account between the two institutions, I can see no objection to going that far at once, but difficulty is bound to arise as to the terms of our account with them. deposit rands with the Bank of France about the gold basis. 4e cannot afford to but a de I aan assure y e understanding as i think yo after reading my draft of the letter the Governors England, that this is a very tee precise matt with accurately and withoussibility 11 realize the Bank of to be dealt d relations could the broad net possibly be °stabile with the Bank France along lines of those contemplat with the Bank England without a very care- ful study of the very dif So my suggestion as to or the t understanding in writing. present es is on the of Pallaints letter cable from'Cunliffe to await the receipt way, and Slhe receipt of a our letter, then we will know where ot think.you recall advices contained in my former letters both with the Bank of France and the Bank of about my co England. I e written no letters to either received any the bank and institution, nor have I either, of Which copies have not been furnished to 1 of my correspondence has gone throngh the bank. would be quite improper to conduct it otherwise. It The correspondence i with Pallain consisted first of a letter from him introducing deNeuflize and my reply written while I was Pallain in suggesting in New York; later a long letter from relations and our purchasing bills and then my letter reply, pointing out the difficulties of that course, which went through 3. To - Mr. Treman. January 10, 1917. the bank. At the same time I wrote him about our Clearing 11011B0 arrangements, also through the bank, and asked to in reply to which he recently wrote us a letter or Which you sent send certain date, me a copy; this copy by the way has been miel ) send me another on receipt of this. was the cable received and my reply, the above answers the matter prom cables to France eve Bank of F when Pella a le esrlier action advocate the course above suggest. to g e 1 ies. I think and I am sure I will go r comes and, of 11 write at once, but lease do not forget that 4,'ugh British censor channels of any of the and we cannot risk the di parties to this nego- any slips. Your questions an re wita 2allain Which you have to pursue course, if the Board pref tiation by last exc tie questions contain d in your lette is the correct course ahead with I will ask you f England negotiations is fully n the 8th and on that by my letter a Dsrsona tter from Mr Jay tely and replying Sep Recent ment and die now have he will show you, to which I am I am asking him to show you that letter. ters from you t *Itch subject I indicate a faction which certain amount of discourage- effect me very much indeed. At no time have I felt the slightest uneasiness regarding affairs at the bank long as you were there and these unfortunate occurrences in so Washington really should not be permitted to disturb you as they do for we always get past them some way or another successfully and we will in this case. I don't believe you are tempermentally fitted for scrapping the way I am and don't get the enjoyment out of it. A period of rest at hone will 4. January 10, 1917. To - Mr. Treman. clear your mind a good deal about these difficulties. The last word from Dr. Sewall indicated that he would probably be willing to have me ;o to Europe in June. 1 thins it is of the utmost importance that 1 shoula do so, and if it can be arranged, take Governor Aiken with me. Then whe I can take a short rest and afterwa permanently. it is necessary get back, resume paw work With that program, even f my health sho ficulty in my successor returning perfectly well I would appr me how the different the Bank of Bugland With warmest R. H. Trer Federal Res New York Cit BS/CC Esq., a Bank, prevent ren which I have maining permanently, these pa been dealing would be put the bank would be no dif- of course, counting an than ever. soon as possible, advising of the Board lined up on this question of Denver, Colorado, January 11, 1917. Dear mr. Treman: The enclosed copy of a letter to ' ments supplements the wemorandum alread others will dive this consideration an strongly to the Board. R. H. Treman, Esq., Federal Reserve 3ank, New Yorc City. BS/00 lune. ing amend- ent you. Iho o known your o yOu and the views Denver, Colorado, January 11, 1917. Dear :Jr. Treman: I am returning herewith the statements of Acceptances Purchased, Liabilities of Drawers, Endorsers, etc., which They are very interesting, particularly i ve just been over. ibiting growth of the business and the variety of names oftutions and fi ing. There seems to be no particular co ents required now acceptto the names as I have written so recently on I wrote you rather ha out or two matters and upon reading over the I elt that they might have read a little short; it is ying to economize my working time a bit. The principal quest f internal policy is the one about rates for bills, and I am gett anxious at the policy of the bank in advancing its rates in the face of an inevitable decline tee in New Yo Lond Your le ole considera velop a wider he certainty, I believe, of an artificial in 7 , annection with the new war loan. Pdn r, as we 1 as others from the office, indicate that the n actuating the Board in making this advance is to det for bills anong our banking institutions; this strikes me as the last consideration to influence the Board at the present time. At the risk of reiteration, let me described just what the situation is as I view it in the development of American credits. of bills in The normal volume linglanA prior to the war was 500,000,000 sterling, of all varietiesi the volume of bills in this country today is probably between 4200,000,000 and :;250,000,000, certainly not over 10; of London's normal volume. Our first 2. To Mx. Truman. January 11, 1917. problem is to develop volume of bills , and you may be sure that the market tor good bills will take care of itself. It will develop almost -.op* ett _ over night with astonishing rapidity whenever rates for that class of The only means at our command now to paper are permitted to advance. develop volume of bills is to make our ra rates in London that the pressure on dr it is practically our only leverage and re rs of bills be ne that we shoul long as we are in position to use the resources of the At the present time es irresistable; ot forego so ral Reserve strength keeiioeptance rate rican banks ar epeesented in foreign System without impairment of damn. vorably with countries by about one-half .esen branches iiy,ondon, Paris and Berlin, of three or four IewA. £ Companies, City Bank in South Ameri the Balking Corporation thro Llercantile Bank of Ame system. the branches of the National branches of the international Last and, in a very limited way, by the ns in S Banks of other America; this is our foreigm banking re represented in New York by the agencies an banks, the two English chartered banke, the Yokahima Specialties of the Bank, Bank one ca. Ite-beel;;;;;?ng business in South America, and that is about all. As against thl agencies, and t the Englisfi system has the world covered with branches and great banks of the world are to a Large extent represented by their awn age cies in London, so that, in fact, outside of the 76 joint stook banks doing a purely domestic business, there are no less than 150 agencies of foreign banks with offices in London, net to apeag: of the great number of foreign trade banks of English ownership authorized to do business in all parts of the world. Furthermore, biglish trade has given them direct mail routes to the Z. January 11, 1917. To - Mr. Treman. remotest parts of the world and we have practically none. Just consider the variety of haadicaps which our system encounters, offset solely by the advantages of lower rates and possibly more certainty of gold payment. Foreign bankers who buy bills don't know the names of American banks even, they don't have the benefit of pr New York, they don't understand the cred don't get quotations regularly of New Y reliable and dependable forward rates how to convert foreign currenci il communication with of American ding houses, they - discount rate, they don't get ted to them, th y don't even know Jars, there very few conversion tables printed adaetable to cur encies, there are few local newspapers printing on finance and trade, whereover and foreign bankers and as newspapers are printed ne or more English papers. merchants almost un v ealand and South Africa the Lnglish banks so.° parts of the world l' orted to actually discriminate against have arranged cartons, American bills. verte In I ed that bills drawn in dollars are con// g and sterling into rupees, giving us all om dollars int ish rate at a discount, as contrasted with ours the disadv s of the at a premium figured correct. These In not all the obstacles to be overcome in establishing dollar exchange I. the different parts of the world, and if the difference between the New York and London rates is not kept attractive, so attractive indeed that it will advertise itself and establish itself, the absence of banking machinery, of ownership and knowledge of American banking affairs may make it impossible for us to develop a sufficient volume of business during the short period of the war to make it of permanent value to us after the War is aver. 4. To - Mr. Treman. January 11, 1917. It is undoubtedly a fact that unless American rates are maintained below foreign rates for the use of liquid banking capital, there will be no inducemeat for our institutions to open branches abroad, and it is for these reasons that 1 so strong/y urge the directors to continue / 6- with courage and independence the policy s for bills low and steady. Midst all of the perplexities o he past few wee : I hone you get time for rest and some change, that you don't getdi,..uraged and that you will always remember in Denver Who is longin you run out and see me? RH. Treman, Esq., Federal Reserve Bank, New Yoe,: City. BS /CC to natheti ociato out here y with you. Why don't Denver, Colorado, January 15, 1917. Dear Mr. Treman: I have your two letters of the 10th.ents during the past two weeks have necessitated a franK hange of v by mail on various matters Which ordinarily would t. discussed in ti of course I am most anxious that my lett rs should not b and particularly that they shoul office. May 1, therefore, a where in your judgment it s necessary to Of course Mrs. McLaren is ughly acquain connection. to reli ?Mile I marks I sunderstood ly to the et that the and I have no doubt w office and o int your oersonal files feguard their contents. with all of these matters or. of any bother in that t long letter regarding Bank of England relations "confidential" course, intended to be used by you and your associates in. this matter and 1 made it as full as possib so that you.wo conveyed "dated in every particular. I am glad you aatents to Mr. Peabody and non I am awaiting with a good deal of intere and ay the.result of the Committee's Washington visit. Mr. Lock' it did me good to etter, with characteristic brevity and forcefulness, ead. I judge from the last sentence that difficulty has arisen regarding Mr. Curtis' salary; that is most unfortunato. I think the Reserve Board should be broad minded enough to accept the judgment of our directors in these matters. 2. January 25, 1917. To - Mr. Treman. The work of framing Up the Bane_ of Lngland and Bank of France letters is, of course, exacting. '70 cannot afford to ma u mistakes but the real work of putting the plan into operation must be condueged personally in London and Paris, and I hooe our Board will see the wisdom of 1 1 another trip there for that purpose. have been more than good in keeping me to get well posted. is the fate of the letter to the Bank 0 England as soon the preparation of the letter to will necessa know what possible, as depend upon the outcome of the London eorre am glad to hear t r has been successfully completed. With warmest R. S. Tremor, Esq., Federal ileserve Bank. City. New oi4 BB/CO "MD 1/W1 r111Ut INJIAO OF SERVICE DESIRED K/QP my Message Day Letter Receiver's No. WESTERN UNION Night Message Night Letter °irons should mark an X °poem the class of service desired; THERWISE THE TELEGRAM /ILL BE TRANSPAITTED AS A FAST Ks/ 47/i IESSAGE. TEL 11\7V! AM Time Filed NEWCOMB CARLTON, PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT BELVIDERE BROOKS. VICE-PRESIDENT d the following telegram, subject to the terms back hereof, which are hereby agreed to 0n R. H Check Denver, Colorado, Januar] 15, 1917. ix..van, Federal Reserve Bank, New York City, N. Y. Believe Board should only be informally advised of French negotiations latch will be conducted subject to their ultimate consent stop. Formal application and consequent publicity might BOOM to COMMit US to concluding an arrangement of some kind whereas it would be more prudent to ascertain first what kind of committed stop. an arrangement Paris and firvrcially stop. oan be effected before appenring to be situation much more uncertain than London both personally Am writing fully. Benjamin Strong. Chg. Benj. Strong, 4100 Montview Blvd. 1 111=1111F pivow ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO . Ti FOLLOWING TERIL.-; 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 f one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR AS SLIC in consideration whereof it is agreed between the sender of the telegram and this Company as follows: 1. 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 an received 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 rem? for 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 otec telegrams. 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, whet caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued, unless a great,,, vklue is state, writing 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 e, one-tentl onr; 7er cent. thereof. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to ma,' destination. 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 towns. Beyond these limits the Company does not undertake to ihake delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeavo, contract 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 o; by 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 telegrE r filed with the Company for transmission. Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in addition 0 the foregoing terms. No employee of the Company is authorized to vary the foregoing. THE WESTERN UN 1014 TELEGRAPH CONI PA INCORPORATED NEWCOMB CARLTON. PRESIDENT CLASSES OF SERVICE FAST DAY MESSAGES A full-rate expedited service. NIGHT MESSAGES Accepted up to 2.00 A.M. at reduced rates to be sent during the night and delivered not earlier than the morning of the ensuing business day. DAY LETTERS A deferred day service at rates lower than the standard day message 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 enu- Letter shall be delivered on the day of its date absolutely and a events; but that the Company's obligation in this respect is sul to the condition that there shall remain sufficient time for the ti mission and delivery of such Day Letter on the day of its date dt regular office hours, subject to the priority of the transmission of ular telegrams under the conditicas named above. No employee of the Company is authorized to vary the foregoing. NIGHT LETTERS Accepted up to midnight for delivery on the morning of the ensuing business day, at rates still lower than standard night me rates, as follows: The standard day rate for 10 words shall be cht for the transmission of 50 worcls or less, and one-fifth of such star day rate for 10 words shall be charged for each additional 10 wor, less. merated 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 in all respects, subordinate to the priority of transmission and 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 is, delivery of regular telegrams. deliver. This Day Letter is received subject to the express understandand agreement that the Company does not undertake that a Day D. http://fraser.stlouisfed.org/ iin Bank of St. Louis Federal Reserve SPECIAL TERMS APPLYING TO NIGHT LETTERS: In further consideration of the reduced rate for this special Letter" service, the following special terms in addition enumerated above are hereby agreed to: Night Letters may at the option of the Telegraph Coin be mailed at destination to the addressees, and the Company be deemed to have discharged its obligation in such cases with rt to delivery by mailing such Night Letters at destination, pc prepaid. Night Letters shall be written in plain English. Code Ian; is not permissible. No employee of the Company is authorized to vary the foregoing. Denver, Colorado, January 16, 1917. Dear Ur. Truman: Your night letter regarding the 3ank of England letter is just received and for the sake of accuracy I quote it as follows: "Kent makes following letter stop. arding seven section B if we suggiistioParagraph should der gold e rked at seventy seven three quarters When our corresp0 out was oblig o pay say seventy eight for gold in times of ak4 ve bidding, it uht occasion him loss star.. Kent has no suggestio that will meet s nation but thought possibility should be understood on both sides 'stop. Page four section A line two he .luerieswhether word "less 4liould not read "plus" stop. Same section he hqther if ondent required us to earmark large quant it' rs Whic lat ased to us we might not under agreement e to absorb y of ce charge stop. Paragraph fifteen he sugg s adding at on ()flowing words "and should it be possible to so" stop. Thi otherwise we indicate willingness to do somethi which may be i ssible stop. Please instruct dhich if ap of ese points you dealt with either in original letter or supp eatery lett /s In reply I have j firmation. ent'Iton These tele e the desirability in a matter of this sort of repeated ohe a litt The tm n t. , rtant mistake glad tha letter as per enclosed con- slip may involve serious e of the word "less" and I am now so cautious in having everything checked over. Refe estions Cokayne's lett of June 15th in in order, first please read copy of Which he states suggested the rt of 77 s. 9 d. and the the basis of consequences. at that Lord Cunliffe had establishment of the account on ard" gold rather than "fine" gold, so my letter was prepared accordingly and I hardly see the necessity for makin, an tion to him in this regard. the Ban. of Zngland Possibly you don't realize the carries gold in standard bars. sugges- extent to which If it an not mistaken the great bulk of its gold stock is always in bars and the great bulk of its dealings in gold is in bars rather than coin, so that the suggestion of 3. 2. January 16, 1917. Traman. any possible loss when the Bank of England is paying a premium for gold doubtless never occurred to them. The transactions of the Benz of England in normal times very inory price of 77 s. frequently involve paying any premium over th 9 d. If war conditions no policy in Furth° as to any modification of price. ment should to be settled between the t the principle of a s uto jhich accounts are e for gold- is 77 s. 9 d. rather than ted uations above that minimum. On, I am of course mortified at the error Roberts and me. To illustrate the old for the BanA of England and receive bar from the assay office of US - exactly 1000 $18,604.651 plus the assay offi charge of 54 per 2000 in value - that the total would be - - at of the 1000 ounces of gold the amount that recognition of Whole plan is based upon point, if we should be ounces wet our arrange- institutions. WIttCh seemed to have e States standa de by them I don't t rate a effecting t a minimum price for go As to the second a ore, should be contemplate in fairness to our w a premium on gold in Eagland one stion that regard, naturally the s of the barios se to a c or later gtv 9.302 so to us 018,613.97, jhiCh is ould be charged to the account of the Bank of England in order that we might sustain no loss. On the other hand, when we came to re- credit this same bar of 1000 ounces under the terms of the arrangement, we would be expected to credit their account with 418,623.97, and I understand that Mr. Kent raises the queery as to whether we might not be called upon pay a further charge to the assay office for melting and assaying this bar to 3. January 16, 1917. ase we surrendered it for exchange into gold certificates. That may be the case ana of course it is desirable that the at- titude of the assay office or of the treasury department be ascertained. charges if There seems to me no reason Why we should pay further an undertaking willing to enter into to with we are re-deliver to them in our transactions in this etc t only United tee standard mint bars Which We have received direct from the assay rice and Which have never left our possession; ight in that ea ssaying. tag charge but we would avoi not be so Of course an accoun that all of these necessa rate of exchange. (See my letter in reply to Cokayn the 4t1.1 sugestion, g t adl paragra une ette 5, I t Ur. Roberts i to go cave vice and assie the assa7! offic 15th on this point). Js to rds "and should it be possible to do so" it is wise and prudent. amiliar with this matter, it would be wise e proposed changes with him, assay office t conducted the other side of the ae- count for some of t at the end of e a small melt- and I am hopeful that with his ad- 11 be able to effect some arrangement with the sbviate superfluous charges on bars Atich we receive from nd later re-deliver to them. If necessary, I think the matter should be taken up with the Secretary of the Treasury. In this connection you doubtless now realize the Importance of the suggestion made sometime ago about dealing with the Whole subject of gold bars. groat If we can carry a large stock on hand at all times, it will be of advantage in dealing with this account, and the present time when the Saauary 16, 1917. To - Mr. Treman. assay offices are so crowded is a most desirable one to neectiate an arrangewant, as we could doubt/ess hold a stock of fifty or a hundred millions without inconvenience, if we could avoid the charges. In this connection I thine we should consider the terms of a concluded end possible announcement to be made when the i am enclosing a tentative suggestion you and the ot and if it meets with your approval, thiS it might be We letter to the Governors of the Bank of Eaeland, asking of their view on the subject to consider to address a to advise us aneous release of the announcement on both des at a date .o4 hour to be fixed by cable. ?lease don't hesitate to W, any changes tee- 800M wise in my enclosure. Another sugge to this arraneenent be v in a. confidential eempart at all of t einal papers relating Mbled in one file and located vault, as they should not be subject to examination in the elm anxious to this mat ersion of the views of our Board as to as well as any views that Ur. Kent expressed and hope that you will writ Also I the other Res d like 'to be advised of that steps are being taken with Beaus, who should be particularly cautioned as to the confidential na re of the plan and scene expression from the office as to the extent of our operations when the agreement is concluded. Me idea is to do a very limited business at the outset and only under exchange conditions Which have been very carefully studied .2.1d then later, If I am able to go to London this summer, elaborate and extend the operations While on 5. January 16, 1917. To - Mr. Treman. the ground personally, and do the sae thing in Paris if we make suf- ficient progress to justify doing so. While on this subject will you and the others please consider whether we might not advance some similar su Netherlands just as soon as we get an an o the an of the r from Lord iffe. I am hopeful now that this.matte will be promptly oncludod and will prove to be the beginning of a grea advance in our Many thanks for your tel R. H. Treman, Federal Reserve Bank4 New York( City. BS/CC ggostions stem. Denver, Colorado, January 16, 1917. Negotiations for establishing relations between the England and the Federal Reserve an Bank of of New York, which were commenced by the Governors of the respective institutions ondon in ilardh 1916, The arrangement providea\bat the Bank of have now been concluded. England will act as the correspondent an,tinndon of the Federal Reserve an of New York will act in a similar capacity in N or the Bank f gland. It titutions engage in commer- is not the purpose of the plan cial foreign exchange transactio y will maintain with each other mutual accounts of d sent each other in the purchase of bills and the conduet f transa Provision Of New York and that the Federal Reserve and gold coin. is e for part icipa on by other Federal Reserve Banks of the United tee desiring to oin in the transactions contem- plated. Ph lationship is y for the purpose of affording greater bility to rates of exchange in normal create inery by Which manta of may be r times and in order to ensive and unnecessary international shined or avoided. Form 1200 LA SERVICE DESIRED Fast Day Message WESTE me F., 4712:SE'N Day Letter WESTERN UNION Night Mc-sage Night Lei. atrons should mark an X oppote the class of service desired; l'HERWISE THE TELEGRAM VILL BE TRANSMITTED AS A FAST DAY MESSAGE. TEL UNION Receiver's No. Check AM Time Filed NEWCOMB CARLTON, PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT BELVIDERE BROOKS, VICE-PRESIDENT nd the following telegram, subject to the terms m back hereof, which are hereby agreed to Guyer, Colorado, JAimary 16, 1917. H. H. Troman, redoral ',Geary° aamt, 4em Yor4 City, 3. Y. Night letter received sten. letter stmply accents Cunliffes suggestion of seventy semen and throe quarters rnte for earmariting oold thtoh -Jam contained in Cokaynes letter of June fifteenth of *itch you have copy therefore doubt wind= of any other sugostion sten. sten. Word "nlus" should be substituted for 17ord "less" Su,geet yo,1 have conference 7ith assay office authorities ,nd kieorge 4. rte to ascertain possibility of further assay office cares provided 'ee surrender only mint bars I su ,Astion about policy of miss of recrodits sten. holdind have yo, follo4od up mg W rs whichpas su,gosted for this reason stop. Agree t) wisdom of suggested addi6ion paragraPh fifte°,1 stop. The changes should be mado in original -letter instead of bv sunplement If possible and first nag° Opted on bank letterhead sto. If further °hang° desirable folio 4n w_slay office 4 11IIIIIIIIIIIII 41 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 comp Foi one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR AS S in 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 md the am received 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 re, for 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 oh telegrams. In any event the Company shall not be liable for damages f or any mistakes or delays in the transmission or delivery, or for the non-delivery, of this telegram, wf , caused 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 sta, I writing 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-ten onc per cent. thereon The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reac dastination. 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 citi towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeal contract 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 by 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 telegra filed with the Company for transmission. Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in addition : the foregoing terms. No employee of the Company is authorized to vary the foregoing. THE WESTERN UN ION TEL EG RAPH COM P, INCORPORATED NEWCOMB CARLTON. PRESIDENT CLASSES OF SERVICE FAST DAY MESSAGES A full-rate expedited service. NIGHT M ESSAGES Accepted up to 2.00 A.M. at reduced rates to be sent during the night and delivered not earlier than the morning of the ensuing business day. DAY LETTERS A deferred day service at rates lower than the standard day roesrates as follows: One and one-half times the standard Night Letter -Wsage 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 enu. merated above are hereby agreed to: A. 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. B. 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. D. ing This Day Letter is received subject to the express understandand agreement that the Company does not undertake that a Day Letter shall be delivered on the day of its date absolutely and at events; but that the Company's obligation in this respect is sub to the condition that there shall remain sufficient time for the tr, mission and delivery of such Day Letter on the day of its date du regular office hours, subject to the priority of the transmission of ular telegrams under the conditions named above. No employee of the Company is authorized to vary the foregoing. NIGHT LETTERS Accepted up to midnight for delivery on the morning of the ensuing business day, at rates still lower than standard night me, rates, as follows: The standard day rate for 10 words shall be clu for the transmission of 50 words or less, and one-fifth of such star day rate for 10 words shall be charged for each additional 10 won less. SPECIAL TERMS APPLYING TO NIGHT LETTERS: In further consideration of the reduced rate for this special "l Letter" service, the following special terms in addition to - enumerated above are hereby agreed to: Night Letters may at the option of the Telegraph Corn be mailed at destination to the addressees, and the Company be deemed, to have discharged its obligationi n such cases with re to delivery by mailing such Night Letters at destination, po prepaid. Night Letters shall be written in plain English. is not permissible. Code lanv No employee of the Company is authorized to vary the foregoing. A MI I I MJI III II I I I I I MI 111111111111 II I I I III I I 1111 I I II I 1111 IT WNW" Form 1206 c' ERVICE DESIRED y Message Day Letter WESTE WESTERN UNION Night Meesane Night Lett tons should mark an X oppothe class of service desired; HERWISE THE TELEGRAM LL BE TRANSMITTED AS A FAST DAY MESSAGE. UNION Receiver's No. , TEL 11. 41! 44.7r-v Check AM Time Filed NEWCOMB CARLTON, PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT BELVIDERE BROOKS, VICE-PRESIDENT 2, the following telegram, subject to the terms back hereof, which are hereby agreed to conforonce please to1e6raph .A9 particulars stop. Aow proposed chanoas to Roborts for final choch ston. 'leaso aire we h.. our Board and ilent view proposod lottor and send mo copy as finally mailod. 5onjamin StrOnd. 3 ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TER.: 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. Fo one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR AS in 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, ond the a, received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty the sum re for 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 ob telegrams. 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, wl caused 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 stat, writing 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-ten per cent. there°, The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to rev c destination. 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 ell i towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeav contract 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 suby 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 te, filed with the Company for transmission. . Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in additio the foregoing terms. No employee of the Company is authorized to vary the foregoing. THE WESTERN UNION TELEGRAPH COL INCORPORATED NEWCOMB CARLTON. PRESIDENT CLASSES OF SERVICE FAST DAY MESSAGES A full-rate expedited service. NIGHT MESSAGES Accepted up to 2.00 A.M. at reduced rates to be sent during the night and delivered not earlier than the morning of the ensuing business day. DAY LETTERS A deferred day service at rates lower than the standard day message 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 enu- Letter shall be delivered on the day of its date absolutely and E events; but that the Company's obligation in this respect is su to the condition that there shall remain sufficient time for the t mission and delivery of such Day Letter on the day of its date d regular office hours, subject to the priority of the transmission of ular telegrams under the conditions named above. No employee of the Company is authorized to vary the foregoing. NIGHT LETTERS Accepted up to midnight for delivery on the morning of the ensuing business day, at rates still lower than standard nigl rates, as follows: The standard day rate for 10 words shall b. for the transmission of 50 words or less, and one-fifth of such st day rate for 10 words shall be charged for each additional 10 woi less. merated above are hereby agreed to: A. 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. D. 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 understandagreement that the Company does not undertake that a Day Digitizeding forand FRASER D. SPECIAL TERMS APPLYING TO NIGHT LETtERS: I In further consideration of the reduced rate for this special Letter" service, the following special terms in addition to enumerated above are hereby agreed to: Night Letters may at the option of the Telegraph Cm be mailed at destination to the addressees, and the Compan3 be deemed to have discharged its obligationi n such cases with to delivery by mailing such Night Letters at destination, 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, January 16, 1917. Dear Mr. Treman: Realizing the value of tent's advice in such taking the liberty of writing him s per enclosed he will doubtless stop at the Urs. McLaren to take some dicta satisfactory to you. R. H. Tr4112.4n, Federal Res New York BS/CC py, and nse to this and ask 1 hope will be entirely Denver, Colorado, January 16, 1917. Pear Kr. Treman: Yours of the 11th is just received. e much interested I in getting a detailed account of the Washington ex mittee and it is tenses of the corn,- rather important that I em so as to keep straight on future procedure. As recipe you to- day in response to your inquiry the plication to the_Federal Reserv oard fo banking relations with the Ban,;. nor does t in negotiating to c vd.li.ikt our negotia theliNtv, . In each Bank of ns subject It is a great advantage to ratification and instance those institutions require similar later into rel meaning a go e made. d alai.. should be the case with the ratificaMi. s from their B mission t embarrassment, as template that any pre- this kind shal liminary application aoproval, wh lead to 1 I 4110111 rmission to enter into Confirmation is enclosed. This course, if fo I have previously wr om of making formal ap- announcing now so that that we had per- ons might be construed by these Frenchmen as an it really does. Rad you dealt with these Paris Bankers as I have on a number of occasions, you would realize that .hey jump at conclusions with much greater freedom than the Englishan does and an asmouncement similar to than the last one would imply much more to them it does to us. Another reason for deliberation is conditions betwoen Paris and London. making the ;or the difference in methods and London is a free gold market and )u means no more to the Bank of England than January 16, 1917. ar. Treman. entering into any other obligation. That is not the case in Paris Where the Bank of France secures certain pay in protection from its right to silver, which it sometimes exercises, the effect being to throw There will the burden of the foreign exchanges at times upon London. be much more difficulty in arranging matters than in London and it is important that pression that we are ready to conclude torily in Paris t the imshould no y arrangement on y terms but our awn. Still another conditions point is nearly as stable as in Loud se, much more liable to invasion than is Englan safeguards in our ar ranee are not able to introduce some id not consider necessary em ln London. In general, you wil and cautious so far as theless proceed promp timat ent, and tha her that I think we should be deliberate Reserve Board is concerned, but nevergotiations, subject to the Boards ul*large I exnect to do as soon as Pallain's I hardly see how it is possible to do any- et that I may ask Pallain to make clear de Neuflize' position. I h ate to make any such suggestion. Which Pal/ain should take the initiative? Is not it a matter in Inquiry as to de Neuflize status might be construed that he is assuming authorities to deal with us and of course we don't want to get him in trouble, so on the Whole mu incli- nation is to go right to him with direct negotiations unless Pallain voluntarily desires us to deal with deNeuflize. January 16, 1917. To - Mr. Treman. There is one feature of the question of foreign banking ar- rangements Which ought to be carefully considered at once and taken up with the Board in Viashington, but I think directly by the bank rather . The Board takes than by me; I am sorry to have overlooked it be the position that the authorization for o appoint Bank of England is a matter which the Board must report o Congress and e public and that their making the announcement was n violation of m -.,:ent rather which applied to the terms of th the anpointment. plat It was nev the Reserve Board %I by Lord Cunliffe or Can it be possible that two instituti known to annne outside of to the fact of r be published or made elations would by me that the terms of ou onfidence, osition -dOr the terms of this pa ment when ratified must a shed? . .rrange- It may materially modify the attetude of the Bank of certainly we would not be justified in concluding an arrang in the expectations that it would be y informed of this feature in without having advance. goat that inquiry be made of the Board as to whether we may The rely upon the confidential tever arrangement we rms of not made public. enter into bola.; guarded as Can this be done at once and advice sent to me? tope our Board will continue without abandonment to pursue policy of marketing government converted and that efforts long bonds just as rapidly as purchased and will be made to induce Treasury to convert additional amounts of also can be marketed. the Secretary of the the one year notes so that they A year or two from UON we will be mighty glad to have pursued this policy. the To - Mr. Treman. January 16, 1917. It does not seem as though our Board and the Denver office was in agreement as to the policy for open market rates on bills. We must be very careful to avoid creating the impression that our rates ramble ararmr1 in an aimless fashion, following the vagaries of the call money market. The effervescence of December was bound to my own feelings about the rate were pret developments. A letter mailed a few da and it seems that well justifi a googives this Please always bear in mind one thing about my correepon nothing is in the nature of offi sent to you for eYaminat 4 y subsequent more detail. e out here here excelt it and approval, you may be sure that no slips will occur by our get ng at oross-purp es, for i send all the mail about this foreign b Please write me fn ,11 best regards R. H. 141,St. Federal Re New York City BS/CC abo Denver, Colorado, January 18, 1917. Dear Mr. 31:gman4 I am hurrying to get off the B ter so will simply call attention to the fact be re- written an our letterhead, a cop should be attached Pnd there Should forms to enable the Bank of Eng itable instructions and en a deposit account with 1115s I sincerely t satisfactory to the Best regards 4Prn C eJEeq., R. H. Federal Nw York C no. rvo Bank, form absolutely ors of the bank. Denver, Colorado, January 18, 1917. Dear Mx. Treman: Yours of the 13th is received and tite for a more detailed account of the Washington meeti that there may have been considerable had been I fear fro th, ema if thee alert to their rights, they would have gentlemen insisted copy of the stenographer's rep in attendance. our letter having a no more be Later on I full particulars and write me all Mr. Curtis wi hen he comes. 1 am looking forward ice About the lette of the Bank of Montreal. ut in replying that the Federal Reserve Act contemplates the etblis pendants to a very con bills and regulati and for the character, e relations with foreign correstent for the purpose of purchasing the international changes o BOMB extent t our purpose to make appointments of that we anticipate active relationships; therefore, we feel obliged t, '.old his su6gestion in abeyance until developments would make clea the necessity of our undertaking transactions in Cenada, but that he need not understand by this that tne subject is finally dis- missed. My thought is that we would be very unlikely to buy bills in Montreal, consequently any funds sent to Canada would simply lie idle 2. To - Mr. Treman. January 18, 1917. on deposit without advantage to us or anybody. If we opened an account of that character simply for the purpose of dealing ia Canadian exchange, we would accomplish nothing of advantage to our member banks e business. and might appear to be interfering with th am open to conviotion on this knows that situation well, can throw a business relations. With best regards, H. H. Treman, &sq., FederarrGerve B New York City. BS/CC possibly ar. ,n, who ibilities of WESTE WESTERN UNION G. -E W. E. ATKINS, VICE-PRESIDENT 1.--RECEIVER'S No UNION TEL "CiFf4 AM NEWCOMB CARLTON, PRESIDENT TIME FILED BELVIDERE DROOKS, VICE-PRESIDENT CHECK SEND the following Telegram, subject to the terms on back hereof, which are hereby agreed to Denver, 'Colorado, January 18, 1917. R. H. '1.2sgmala Vedcral Reserve Bank, New York City. Am vomiting and will mail EaglIsh letter today, with all changes suggested. Stop. Think they are all iosirable and hope 'lent and Roberts approve. Benjamin Strong, Chg. Benj. Strong, 4110 Montview Blv. Form 260 ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TEI- S: 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 this, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND, PAID FOR AS SUCH, in 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, be the amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fi times' the sum received for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lin or for errors in cipher or obscure telegrams. tele-. 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, unless gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby vol a greater value is stated in writing hereon at the time the telegram is offered to the Company for transmission, and an additional suns paid or agreed to be paid based on such value equal to one-tenth of one per cent. thereof. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach its destination. 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 towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeavor to contract 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 by 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 filed with the Company for transmission. THE WESTERN UNION TELEGRAPH COMPANY No employee of the Company tie authorized to vary the foregoing. INCORPORATED NEWCOMB CARLTON, PRESIDENT CLASSES OF SERVICE TELEGRAMS A full-rate expedited service. NIGHT TELEGRAMS Accepted up to 2.00 A.M. at reduced rates to be sent during the night and delivered not earlier than the morning of the next ensuing bus'ness day. ETTERS '94 day service at rates lower than the standard telegram ,ws: One and one-half times the standard night letter -ansmission of 50 words or less and one-fifth of the each additional 10 words or less. Subordinate 44k .ransmission and delivery of regular telegrams. lain English. Code language not permissible. Telephonic delivery permissible. Day Letters received subject to express understanding that the Company only undertakes delivery of the same on the day of their date subject to condition that sufficient time remains for such transmission and delivery during regular office hours, subject to priority of the transmission of regular telegrams. NIGHT LETTERS Accepted up to midnight for delivery on the morning of the next ensuing business day, at rates still lower than standard night telegram rates, as follows: The standard day rate for 10 words shell 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. Must be written in plain English. Code language not perMail delivery, postage prepaid, permissible. missible. 0! Denver, Colorado, January 17, 1917. Dear Mr. Treman. nd, in some Warburg and I have had some rather and I sometimes wonder whether he is Inclined to deal matters too much from the standpoint of the theorist ten as a practical banker. I ha expression of views about t with this carbon copy of ence, truly, vi BS/CC Eno. th various tudent than rfectly frank points of cont versy and am enclosing alone, Which i will ask etter for your ar it in c you to return to me. two matters about one respects, rather heated correspondents Denver, Colorado, January 19, 1917. Dear hr. Treman: Thank you for yours of the 15th. hat Mr. Roberts 1 am 81 gave you a good account of me for I sometimes thi not taking as good care of myself as I you imagine I am ould. It is just as well to discuss the matter of a ty Governor, that par- but of course I am always wonderin arrangements ticular are exactly in accordan own plans and wishese not be allowed to disturb These recent developments in you in connection with your own wor in this important matt If you really arrangements, might come to New Yo k he the Bank, or hasten a decision terest to all of us. ich is el that it is e to make a move for permanent not be well to lisider Whether if Aiken can -4.uld not def doing so until I am able to gat and then let hi a go with me so as to important mat- fami1ia4 et himself thero ly with the details of that ter, be the principles on the other side and be in tep position Dr. Se tire. into oes in case i were ultimately obliged to re- s confident of my being able to o by June and I suppose I could make a short visit to New York before that almost any time after the weather improves. I cannot make any very definite plans until I learn what progress you make at the office in these matters. I do not agree with the attitude of the Board about Mr. Curtis, salary. The salaries of the executive officers of the bank are not un- duly large when one considers that we are one of the largest banks in 2. January 19, 1917. To - Mr. Tremens New York, that we have immense responsibilities, that our work is without peculiarly difficult because so new and that almost exception they are hardly more than half in amount those h are paid to officers holding corresponding positions in the big banks d trust companies. Besides that Mr. Curtis has peculiar qualificatio s which make him of unusual value to us and to the other R should be adequately paid. r all of Which he hould be in- Besides that Mx. Jay's sa if that is not promptly done. creased and 1 will be very much sly ill, but 1 hear from Mr. Rains has, as you him still quite regularly and he improving wonderfully well. lication to negotiate with No comment is nee the Bank of France, een 17 covered by my former letters and the act About Mr. Ken Calkins, I am sorry not to agree s upon the desirability of developlug a br burg er market for bills. of which I sent emphasizes c - and starve the This is fully covered in my letter to a copy confidentially. ly the inconsistency of our position and the 00111L us to assume to hold rates Whole system. We will be obliged to pretty promptly now, or the Whole system will suffer of earnings and one consequently above the market reduce our rates a serious reduction will be the renewal of the charge by member banke that we are competing with them. power to make an This San Francisco Is not it also beyond our exception of San Francisco by executing special orders 3. To - Mr. Treman. January 19, 1917. acting under an agreement at rates below our own rates when we are I am afraid we may be criticized. to which all Reserve Banks are a party? t rial credit with inabout the French i I have road the letter terest and am wondering what sort of responses it 111 1 bring in view of the telegram of the Federal Reserve Board 'Llany thanks to you for keeping me so fully post to det a letter today diving furth R. H. Tremem4 Esq., Federal Reserve Bank, New York City. s of the '.ashi am hoping Denver, Colorado, January 25, 1917. Dear Mr. Troman: My absence in Colorado Springs, where I been visiting Robert Masson, has delayed mc reply to yours of t 16th, 17th (2), and 19th (3). The sample report of renewal bil y your otter. ut the Washington meeting Mr. Peabody has not yet irr and I await a letter from him rest. me quite fully of what transpired formal ment helps to give me a sugge at last been made his state- ion.for reductions has et more nearly in line with the market and build up h we can well afford to do. j and b ter regarding the Buenos Ayres day or tomorrow and i am constrained to depart rather radical to me as meeting and of the situation. About rates, business Mx. Towne has written burg's sw;gestions, which do not appeal cticable. You been able to ship our Bank of Englnrd letter by the Finland, following our exchange of telegrams. Let me suggest sending a duplicate by separate steamer and that both should go by registered mail. I return the questionaire of the dentially, Mr. Kent had already sent me. State Bank Section which, confiOn the whole, I do not believe these questions will do any particular good, nor do I think they will do 2, January 25, 1917. To - Kr. Treman. any particular harm, excent as to questions 7 and 8. Concerning those let me say that Mr. Kent wrote me very confidentially, asking my opinion of these questions, Which did not include #9 in his draft and I enclose Jith this copy of my reply for your confidential use, explaining how I felt about those two questions. Please letter. Mr. Thank you for the further expl si ion of :hoesiodoi)ulty about ort: the announcement. Now about the permanent o you with the tion, I must wr c' to do I know. utmost frankness because tha 1',' For a long time I have bee eed at the bane: of a larger permanent organization an you the burden of filling upon the assumption that I the gap during my a e year and then be able to carry would be able to return the Frankly, this is not going to be same head of steam possible. I do not work o every member o under only as to my own work, ization. They have all worked too hard, t pressure for the good of the bank. n can live organization but as to the We need a large enough civilized lives and the ban4 need, whether return or not, at least one additional Senior executive ()Meer, so 1 t that taking that matter up now and not waiting until the last minute was justified in the interests of the bank, in your per- sonal intereat and in mine as well. I do not want to impress my own viees too strongly upon those who are on the ground, but I think the following program is the wisest one, if it is for the convenience of everyone: First, we dnould, if possible, 3. To - ,r. Tremen. January 25, 1917. secure the appointment of Governor Aiken as Deputy Governor of the Bank. econd, it would probably be a good plan for him to remain in Boston until I am able to go to Europe, say in June, when he id accompany me, not as an officer of our Bank but as one of the Commit e of Governors to con- clude the foreign arrangements. Third, 1' 'ou coals remain until he re- turns to take office; then about August 1st the shift d be made. I realize that this imposes one or two mon ' sacrifice beyond that was originally plena 11 see the importance of carrying out the Committee sche hand and the necessity for avoiding the absence of two active o pe, if Aiken and I both go t rs of the Reserve Bernc, should your place. discussing is trip abroad hope that you and the others realize that the arr ement, particu ly in Paris, involves the dis- details, hich one must be on the ground in Ie cusaion of man order to having various objec en of the echrn. there gives acquainted furthermo which I regard as the advantage of having at least two officers 1' ersonall great or suggestions that are raised, and the Whole subject from the ground up, and, quainted with the men with whom we are to deal, importance. I would have been very anxious about the bank's affairs had you been unable, or unwilling, to make the sacrifice that you have so generously made for us all and, as you know, anxiety retards progress in cases like mine more than anything else. My anxiety to effect permanent arrange- ments at the bank is as much on your account as any other, for you have had a strenuous time, it has been a gratuitous gift, so to sneak, and I 4. - Mr. Treman. January 25, 1917. think if something is not done pretty soon, we will be imposing upon your good nature. I shall always be deeply grateful to you. Regarding our policy and Governor Harding' s suggestion that We keep liquid -- no bank could be more li amm4.144441 are and the sug,,,... realize. gestion is a belated one, as you doubt Department desires us to ta,-,a 3 moth . A notes, we are le Treasury . . so without interfering with our rate po icy as to pure My letter regarding th overs th as to the question of guar ng bills. und, excepting your letter. if we are up to .A00, it is not a ciple of this plan is wrong only expected to guarante serious obligation t position to do uncle in having it modified or as laid out by Seay, suppressed. ; we will talk that over when he I am sorry abo arrives. am My best reg all. Don't worry about my condition -- ng along fine. Very sincerely yours, R. F. Treman, Federal Reserv New York City. BS/CC Enc. q., Denver, Colorado, January 26, 1917. Dear Mr. Treman: Just a sutzestion that caution be exercised oenalties for deficient reserves. Once the impost \on of penalties is dealt with on the basis of favor, matte basis just rs lb was be eeibut an autod money, we are ain to be criticised for relaxing our cases and enforcing them in others. directors pass a resolu- might it not be w tion jhich would protect the offic cent after fortrol actio 414 n rebating , R. H. Tre, Federal R New York e Bank, t. declinin_ readjustments exis just a sugcestion. 57,,t ,.4do Cr' " CP Denver, Colorado, January 26, 1917. Dear Mr. Traman: enclosing Mr. Since receiving your favor of the 17th ins Warburg-0 letter regarding the development of baisg relations in the good deal of seri- Argentine Republic and in Spain, I have been givin ous thought to what such a development 10kEmpaii-e0 e Federal Reserve to be enter- System and particularly as to whether the view Which a tained by Mr. Warburg are in those -which I understand acco r own bank are held by the officers and d in this regard. ortance and I suggest that The matter is one of fun our directors, or at any rate this letter be brought t tion, as I feel unable to of our executive co to Mr. 4arburg's views without prepare letters desi first knowing Whethe ggests will be approved by our directors. ion 14 of the Federal Reserve Act, sub-section (e) provides S Federal Rose that * * * to Open appoint eor Bank shall have power maintain accounts in foreign countries, and establish agencies in such countries Whereso- ever it may deem best for the purpose of purchasing, selling and collecting bills of exchange, and to buy and sell, with or without its endorse- ment, through such correspondents or agencies bills of exchange arising out of actual commercial transactions which have not more than 90 days to run, exclusive of days of grace, and shall bear the signature of two or more responsible parties, and with the consent of the Federal Reserve Board 2. To - Mr. Treman. January 26, 1917. such foreign to open and maintain banking accounts for correspondents or agencies." These are all of the powers exoressly conf red upon the Reserve Banks for the conduct of business in foreign coin ally referred to in sub-sections (a) and (b) of power is conferred to deal in gold coin es except Se gener- on 14, under which on i those to buy and sell United States and municipal bonds and n home or abroad and at home or abroad. Without desiring to pl oo na meaning of sub-sections (a) and ( a construction upon the nevertheless generally of the opinion that the Federal Reserve Banks contemplate that Federal shall d the the purpose of condub tug upon American accept , ante n bills drawn in foreign countries directly and aggresively into g business Which is normally con- °reign countries by National and purpose State banks and private bankers. Warburg will elf, I believe, confirm my recollection of the these two sec s of the Act when the bill was in course of preparation the thereby ial competition ducted busines establisil accounts for Reserve Banks rily and possibly exclusively designed to enable to establish offices, or to appoint correspondents, in foreign countries, through the agency of cvhich Federal Reserve Banws could buy bills payable in those foreign countries, thereby establishing a fund which could be drawn upon at times when the exchanges were adverse to this threatened. This matter was considered most country and gold exports carefully while I was in London as, of course, the opportunity exists there just as well as in the Argentine, o. To - Mr. Treman. to buy bills January 26, 1917. of English origin drawn on American acceptors, but I re- jected any thought of enterint, into arrangements of that ch,racter with the Bank of England, or even with the Union Disc .t Company, through whose hands occasionally bills of that character s, solely upon the theory that that kind of business was a legitimate ction of the member banks and not expedient for us to attam Ten the power, because it would bring us reet conmetitti 0 the Ur. earburg's suggestion though we had h our members. de la Eacion Argentina is briefly as follows: e/.6kT That we shall undert chase long bills from that bank quoting discount ive that purpose, so that acting as our agent in tha ills will be made in our behalf in competit with the busin National City Bank, now endeave sk, wi advantages Whic conduct r this busine s which New York banks, such as the to develop at great expense and substantial profit for some years to e enjoy over even the National City Bank in are in my opinion so great that they could not possibly co-.us and our entrance into that field would be a factor of such discouragement as to greatly retard, if not absolutely block, the development of a foreign banking system by American banks generally. The principal advantages are: The enormous prestige enjoyed by a so-called central or government bank over any private bank, no may be. matter how strong the latter Our ability to avoid all expense of a local organization by reason of our emlmloying correspondents as distinguished from the January 26, 1917. To - Mr. Treman. branches which American banks are seeking to establish abroad. 3. The enormous resources of the Federal Reserve System for Which they pay no interest and for which the interest charge in the case of member banks is very heavy. 4. The cooperation of the various depart such for instance as the State Dep be considered to enjoy for the furtheran ernmentt might and which naturally are not at the disposal of ate of the govnt, which we of our business mbar banks quite so effectively. One of the most profitable, if not at profitable, department of the business of a branch of an Amerie in a foreign country will be American acceptors. For the established of bills drawn dollars an ustration, the National City the Bank has but one or two branch() tine., consequently they must rely to some extent upon ished with in that country to success. These °to: e e ire the vo bill buyers d ter, with t3 Nacion a correspondent, agenei now in operatio busine to National ue instead other bill buyers ess necessary to their tless havin6 a net-work of branches If we should stablish relations of this charac- throu6hout the Nat service let ntina, we would at once secure which has no less the than 153 branches and and which conceivably would direct el of this dealing with the branch office of say the Bank. I an not aware of the relations which mow exist between the Banco de la Nacian Argentina and other banks and the agencies of forei n banks in that countryl probably all of the banks, maintain accounts of some character with the Banco de Ia Nacion Argentina. If that is the ease, it is not impossible that rates Allah we quote to our correspondent would -esult in divortin; the large stream of bills dram in dollars Which are now coming to various New York banks throuJa the various Argentine benks 5. January 26, 1917. To - Mr. Treman. and agencies to us instead of to their present correspondents, thereby azain inflicting an injury upon American institutions which are now cultivating South American banking. connections. There is just one possibility which I can imagine that sill make de la Nacion Ar- this argument ineffective and that is r by reason gentina, either as a matter of polio legal restrictions, in this tions with any has not 3nd will not establish co country except a Pederal Reserve Bank, for the purpose of c. ,. cting their busi- ness in bills. already have close I am under relations with the Natio1i City Bank ossibly other New York banks, ness and this could be con-, for the purpose of cond ting this very firmed by inquiry Witdout, the er int disposed to recommend t ion on this subject, I am not directors at the present time that we seek ing bills for the Banco de la Nacion to make any arran Argentina, unless d be an emergency arrangement only our member banks to loa employed at a are unequal to dealing tuation and, consequently, When the market for bills drawn with t l. in dollars Buenos Ayres becomes impalmi. 7ia b g's second suggestion relates simply to the establishkMr. ment of reoik1Q,ca1 accounts, nnder which one of our functions would be to take the custody of gold when exchanges were adverse to as at present. able. and gold this country, shipments were either too expensive or undesir- There is certainly no objection Whatever to the establishment of relations of this character and I would favor doing so as promptly as possible, provided certain points were thoroughly understood and safe- 6. To - Mr. Treman. January 26, 1917. guarded, to which Mr. Warburg seems to make no reference whatever in his letter. I shall not enumerate these in detail now as they would be the subject of our correspondence with the whenever that is formulated, but in understanding Bepur act= Argentina eflta1 they won' that the mutual accoun must be conduct basis, with an agreement in every particular as to Whitt I refer of course to the nee should understand just as he Banc() early as the understand all the van. of our coinage, th limit '. gold shipments, or t institution for the ac As we certainly gold settlement with essary to bea it ards, tha de la Nazi upon a bold at means. Nacion Argentina of England will be made to in re1 tolerance elate to an ion to the intrinsic value the conditions under which , would be dealt with by each , the other. rd to offer them an arrangement for similar mutual understanding from them, .ind that the Argentine nation has dual stand- y of account as well as gold, and that the Banco ;:entina, Which has liabilities of approximately 4600,000,000 currency, ho It is es a general gold reserve of only about 28,500,000. tial that the distinction should be borne in mind between the arrangement contemplated with the Bang of England, which I believe conforms to the real purposes of the Federal Reserve Act, and the arrangement suggested by hr. Arburg for relations with the Banco de la Nacion Argentin:. With the Bang of gland we propose to accumulate balances which will 7. To - Mr. Treman. January 26, 1917. be invested in sterling bills, our purchases of sterling being made at such times as they can be purchased below the point at which gold can be nrofitably imported to this country. The e investments we would exnect to liquidate and we would exnect to wit w the balances re- sulting whenever sterling advanced to a point wh profitably exported from this country. gold could be nt does not con- template that we shall compete with our member ba>1i his country by We should comp te with our buying long bills drawn on Londo member banks in London by blKer drawn on this country in dollars. for Argentina contemplates The arrangement quite the reverse o that through the principal buy bills drawn would pass through hands of our re on this bank in Argentina gestion fo that we drawn tionshi ould compete with country Which otherwise mber banks and conversely his sugturally Implies, without so stating, our member banks in this country by buying bills e upon Argentin cceptors. onviction is v strong that the whole theory of this arrangetions at any rate for normal times Should be con- fined to those suggested for the Bank of England, and before undertaking to make such arrangements we should consider carefully any present need for our purchasing bills in Buenos Ayres and, if so, whether it is a business which we can afford to risk, except under the whether there is undertake without undue most careful understandings as to gold settlements. We must never overlook the fact (and I say this with all respect to the pressing need for closer banking relations with South America) that 8. Juauary 26, 1917. To - Mr. Treman. these South American countries are most inflamable liable to ODMO ex- themselves, and any tent to political upheavles, as well as wars, betaeen arrangement which might contemplate our carrying considerable balaaces, or considerable bill investments, in those countries, should be safe- guarded in the case of the Reserve Banks ,'with very clear and definite understandings. No one desires more than I do t ee the Federal R erve Banks exercising these functions as to foreign banking conne thinA we mould go very slow ons, but I ies in the rather generous way conIemplated that we should be very sure, particularly in these S tee, that every detail is understood on both y amply safe-guarded. des Will you, there o send me as promptly as pos- sible an expression of general policy, and i consideration at the le\los of our Board, as the matter is one of Boa floe, sires / will prepare a letter for ing to carrying out the policy of the Boa Whil let me briefly re?eat that I believe if similar nego tions should be ini ated by having some of the interested parties suggest to the Spanish are to be undertaken with the Bank of Spain, they ssador that the Federal Reserve Bank of New York would be glad to entertain any suggestions which they might desire to offer for the purpose of relieving the exchange situation and the establishment of relations Which would enable us to deal with the subject and export of the import of gold. Again, it must be borne in mind that Spain many years ago abandoned 9. January 26, 1917. To - Mr. Treman. an absolutely gold standard, that there has for many years been a premium on gold in Madrid and that a special study of conditions in that country Should be made before we undertake any comprehensive bankin,; arrangements. As to the Netherlands, as we have Weady eat hed a limited relationship with the Bank of the Net rlands, i belie to him that good policy to send a letter to Dr. V Bering, suizest estions which we would be glad to consider an posed to advance for the e be forwarded preferably in Correspondence with him available, the American Embassy Pou through the undesirable to needlessly Dutch Minister at acting this correspondence to the complicate matters in scrutiny of the Briti t I very much fear a La conclusion of d possibly with some of his associates who nion with Mr. versant are 1 with this ther have outlin ferences on preliminary i contained in serious difference subject that he is, as to the policy which I than risk the consequences of is matter, you may decide that it would be wise to tries, somewhat less comprehensive in . Warburg's letter, Which would result views but no decision prior to my in an exchange of return to the office, when I could take Yours very truly, New Yom City. inaugurate their scope than thos4 the matter up personally with the Federal Reserve Board. R. H. Treman, Esq., Wederal Reserve Bank, serious dif- Denver, Colorado, January 27, 1917. Dear AI'. Treman: Enclosed is a translation, which still req of the letter just received from Monsieur Pallai es some polishing, I will retain the original until Mr. Curtis arrives, w d improve this .1,nal and the r work somewhat and send you both t d transla- tion. practically no qualification Please observe that he the real basic principles of the In view of this, wil D'ement with the Bank of England. your associates and advise thei !act as promptly as iews are as to the form of our reply. What I have to one memorandum, changed so as to appl he original Bank of England memorandum and m est letter and submit it to him in the form of a memorandum to be acted on by the Bank coura is su6gestio beyond wha France officially. I would, of course, disto the amount of our transactions, which is far e should contemplate at present. It would also be necessary to at least make inquiry as to whether there is any governmental regulation or law as to gold exports which would mae it necessary for us to get governmental approval or consent to the gold obligation to be undertaken by the Bank of France. hope you write me promptly about this so that I can have a letter ready to be dispatched by the time we hear by cable from the Bank of 2. To Mx. Treman. January 27, 1917. England. Curtis arrives tomorrow night and i will probably do some work with him on this matter. R. H. Treman, Esq., Federal Reserve Bank, New York City. BS/CC Denver, Colorado, January 27, 1917. Dear Mr. Treman: With this I am returning Mr. Argentine matter, retaining, for use in preparing a sugg Yours R. H. Treman, Esq. Federal Reserve New York Cit , N. BS/CC Enc. ts letter abo raft which he prepared to send. ruly, CLAS, r Form 1206 *ESTE ERVICE DESIRED say Message Day Letter UNION WESTERN UNION Night kile,,ge TEL Night L. Patrons should ina.!< an X oppos site the class of service desired; OTHERWISE THE TELEGRAM WILL BE TRANSMITTED AS A FAST DAY MESSAGE. Receiver's No. Check AM Time Filed NEWCOMB CARLTON, PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT BELVIDERE BROOKS, VICE-PRESIDENT Sc nd the following telegram, subject to the terms on back hereof, which are hereby agreed to CO2Y. Colorado Springs, Jan. 30, 1917. R. H.Trer, D3puty Governor, isdelal Reserve Bank, New York City. Sugest substantially following' reply to Boards request quote - At Strongs reouest we sent informal message and inquiry through mutual friends eisi received through same channel satisfactory reply stop. He greatly prefers not to as friends for permission to furnish copies of their cables for transmission to Board stop. Enclosed herewith is copy of only cable sent by the bank. End quote. (Sc) Benj. Strong. ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERN..,; 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 one-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 in consideration whereof it is agreed between the sender of the telegram and this Company as follows: 1. The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, amour received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty tim le sum recefvt for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lines; nor for err., ua cipher or atm,' telegrams. 2. In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for thenon-delivery, of thin telegrs.ta, whethe caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued, unless a gret, value is statq i writing hereon at the time the telegram is offered to the Company for transmison, and an additional sum paid or agreed to be paid based on such valuotilual to one-tenth enc :ler cent. thereof. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach i destination. 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 in other cities towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at hisaloe ii,apense, endeavor contract 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 offi by 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 4itt presented in writing within sixty days after the telegram filed with the Company for transmission. . Special terms 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 the foregoing terms. No employee of the Company is authorized to vary the foregoing. THE WESTERN UNION TELEG RAPH COMPAr INCORPORATED NEWCOMB CARLTON. PRESIDENT CLASSES OF SERVICE FAST DAY MESSAGES A full-rate expedited service. NIGHT M ESSAGES Accepted up to 2.00 A.M. at reduced rates to be sent during the night and delivered not earlier than the morning of the ensuing business day. DAY LETTERS Letter shall be delivered on the day of its date absolutely and events; but that the Company's obligation in this respect is su to the condition that there shall remain sufficient time for the tr mission and delivery of such Day Letter on the day of its date dt regular office hours, subject to the priority of the transmission of A deferred day service at rates lower than the standard day message 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 NIGHT LETTERS 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 enu- ular telegrams under the conditions named above. No employee of the Company is authorized to vary the foregoing. Accepted up to midnight for delivery on the morning of the ensuing business day, at rates still lower than standard night me rates, as follows: The tstandard day rate for 10 words shall be chi, for the transmission of 50 words or less, arid one-fifth of such stai day rate for 10 words shall be charged for each additional 10 w less. merated 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 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 is not permissible. deliver. This Day Letter is received subject to the express understandingforand agreement that the Company does not undertake that a Day Digitized FRASER D. 4.- SPECIAL TERMS APPLYING TO NIGHT LETTI: In further consideration of the reduced rate for this specia Letter" service, the following special terms in addition t enumerated above are hereby agreed to: Night Letters may at the option of the Telegraph C be mailed at destination to the addressees, and the Comp be deemed to have discharged its obligationi n such case, with to delivery by mailing such Night Letters at destination prepaid. Night Letters shall be written in plain English. C is not permissible. No employee of the Company is authorized to vary the foreg, Form 1206 SERVICE DESIRED ast Day Message Day Letter WESTE Wow Message Jter TELw ./Zir Patrons should mark an X opposite the class of service desired; OTHERWISE THE TELEGRAM WILL BE TRANSMITTED AS A FAST DAY MESSAGE. MD Check AM Time Filed NEWCOMB CARLTON, PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT BELVIDERE BROOKS. VICE-PRESIDENT Send the following telegram, subject to the terms on hack hereof, which are hereby agreed to UNION WESTERN UNION Receiver's No. Denver, Colorado, February 1, 191741 R. H. 2.emaN 'odoral Reserve Bank, New Yorlc City. Telegram received. Do not think our bank ohould =coot pla adopted at lAlshington conference without our full Boards approval and if that plan aporeved wish my objoction noted in Liinuteo eton. 2rincipal objections as follows. 1.1rst our interest in plan is different from other Tleeerve banks as we would make bulk of advances involving our extonding unlimited credit without protection of any obligation from othor Rosary() banks. Second if volume of business largo and we were required to give immediatocrodit irrespective of volume liability of any one member bank to us as endorsor of those uncollected chocs It be for immenso sum. Third tho ten thousand dollar limitation is too largo to afford protection against dishonosty and applies equally to smallost and largest banim which is unsound. Fourth if immediate °malt is not based upon instructions from other flederal 7:esorve Bank to pay and chargo account the plan forcos us to make involuntary unlimitod extension of credit Athout regard to goodness of endorser. Pifth the bankers you cononitod naturally doeire payment rather than credit as otherwise they are in position of making similar advances thommolves colrespondonts or else withholding proceeds for their own protection. Their mggestions Jhile sound are prompted b7 their own interests stop. ,;srtis and I believe plan can be mac safe only based upon advice from other Federal ilesorve Bank. to their ir Benjamin Strong. 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 this, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN TJNREPEATED TELEGRAM AND PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the telegram and this Company as follows: amount The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any ITNREPEATED telegram, beyo' received 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 a received for 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 ius cipher or obscureN, telegrams. 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 caused 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 writing 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 .2er cent. thereof. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach its dcstination. 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 towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeavor to contract 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 by 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 Sled with the Company for transmission. Special terms 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 the foregoing terms. No employee of the Company is authorized to vary the foregoing. THE WESTERN UN ION TELEG RAPH COMPANY INCORPORATED NEWCOMB CARLTON. PREsniEra CLASSES OF SERVICE FAST DAY MESSAGES A full-rate expedited service. NIGHT MESSAGES Accepted up to 2.00 A.M. at reduced rates to be sent during the night and delivered not earlier than the morning of the ensuing business day. DAY LETTERS A deferred day service at rates lower than the standard day message 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 enu- merated 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 1).. Letter shall be delivered on the day of its date absolutely and at all events; 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 Lotter 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 midnight for delivery on the morning of the next 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, postagc prepaid. Night Letters shall be written in plain English. Code language is not permissible. No employee of the Company is authorized to vary the foregoing. Denver, Colorado, Uabruary 1, 1917. Dear Mr. Treman- sit with Judge Just a line to say that I have had a bully now tomorrow we Curtis, spending a few days in Colorado Springs, are leaving for Phoenix, Arizona, on an . ' without knowing exactly where we will land. rt of a trip, I will by wire of our movements and Miss along to keep in touch with co Best regards to you and al 1:11 nd telegrams. bank. ly yours, R. H. TEINan4 Esq., Federaf-Rese e B Sew York Ci ou advised se right Denver, Colorado, February 1, 1917. .,1, Pear Mr. Treman: This is to confirm the receipt of your tel .en regarding the plan for immediate credit of checks on Federal Re rve banks and my reply, composed with the its me to say that assistance of Judge he thoroughly endorses the views expressed therein. this matter so frequently that o repeat what seems to me to be the cardinal objection to the present time we have the rightjto say how much credit we end to any one of our member If this plan i banks. that there is imposed upon us the obligation or exten unlimited c y of our members without re- gard to their respi.. ibility, the o this character whic ve been over hey may happe limit being the total of checks of o receive from their correspondents and deposi plan violates every principle of sound banking emythi about in the ma porton° sf all Eurob familiarit r of handling checks, is that I know contrary to the ex- ountries with whose banking systems 1 have any , I have therefore taken the liberty of asking that you get permission from our directors to have my objection officially noted on the Minutes of the bank. Don't you think that the Board has overlooked the fact that we are the bank that will make the bulk of advances while the other Reserve banks will simply pay the checks which we send them when they are good them back to us when they are not good. and send They undoubtedly have a legitimate To - Mr. Treman. February 1, 1917. demand from their members for New York exchange and in their desire to meet this demand from their member banks, they are no doubt all of them quite willing to adopt a plan Which would impose real responsibility and risk upon us rather than upon themselves. In a former letter you referred to a limitat of course, I was influenced by that in Nevertheless, the principle is WTO on reading over the vote of the . of the committee are so diffe pondence that I am led to recomme the plan. R. H. Trug , Esq., Federal 74411111111.11-serve3ank, New Yo BS/CC Enc. City. of i'500.00, and, o sane extent. ount, and, find that the recommendations se contemplated in our corres- t our directors decline to accept 2enver, Colorado, February 1, 1917. Dear Mr. On returning this morning from Colorado Springs with Mr. Curtis I find telegram in regard to your two letters of January 26th, also y Federal Reserve bank checks, which I answer by s rate letter. -which is being pursued ally, I feel very much dissatisfied wit:, the oli by the New York bank, and which of course is adonte Reserve bank in to inconsistent that the one It does running along with say 80., the System Whi re- -old accumulated in the note fund serve, Which has over $10 smallest percentage of and which is shold earnings of any of on of deqerence to tter of ournvestment and the wishes of the Reserve Board, purchases of bills. Person- , should now withdraw from the market making special perdhases of bills bills at the please, buying warrants with longer for other a for our own an matur ur bank carries e largest reserve and is ditio f any bank In- which ha nee System. in the most liquid con- In contrast with Chicago, for instance, s of government bonds and Which earned as much last ear as we did, the position appears nothing less than ridiculous. I have read Governor Harding's letter, which strikes me as moderate and possibly in sane respects justified as to some of the banks, but it certainly is not justified as to our bank, Which reported over 82; reserve last week and which has only about 35,000,000 of investments and nearly 2. To - R. H. Treman. February 1, 1917. 300,000,000 of gold. If there is any situation known to the Reserve Board ghich flea their requestinisus as a matter of policy N bills, it certainly would even more justify that Banks to sell more of rates should I believe carry not present tter before purpose of securing a formal vestments in our Board for that we would tha, their letter r 'cation unnerstand to those bans in the System 0th as to amount of reserve and Pich were not as e are. of of gold is concerned, it seems that t - bank as ong as it shoul. on all of these ma . . frank expression of views which I know you want tem Yours very truly, R. H. Treman, Esq., Federal Reserve Bank, New York City. to me bU:i:: :hfet7e that policy has been monopolized by our nse of 1:1;,:: pardon t.. BS/CC the the Federal Reserve Board that that is the best jud - and at present its views as to the amount which we should keen invested, and then liquid char:ea equesting other Reserve .50,000,000 0 bills, and if I were you 1 wo % educe our holdings of their government b nds. As a matter of policy, our bank at the . justi- Form 1206 SERVICE DESIRED ...ay Message ,Letter WESTE TEL Check AM Time Filed NEWCOMB CARLTON, PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT BELVIDERE BROOKS, VICE-PRESIDENT Send the following telegram, subject to the terms on back hereof, which are hereby agreed to UNION WESTERN UNION '"iht Message ..ght Letter atrons should mark an X opposite the class of service desired; OTHERWISE THE TELEGRAM WILL BE TRANSMITTED AS A FAST DAY MESSAGE. 5. Receiver's No. R. H. Tr,an, CO2Y. Denver, Colorado, February 2, 1917. Federal ReserVe Bank, New York City. Prefer to have drafts receivable and not payable but either method is safe if prior advice is required, neither is safe if it is not required stop. If principle of advice is adopted my main objection is removed and I would certainly stand on that stop. See no objection to five hundred dollar limit if confined to that. Benjamin Strong, Collect. 4 ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERh 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. one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR AS in 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 ',,yond the received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty the sum f or 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 ohs telegrams. 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, wheth caused 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 writing 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 one :ner cent. thereor. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach i destination. 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 towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeavor contract 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 by 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 filed with the Company for transmission. . Special terms 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 the foregoing terms. No employee of the Company is authorized to vary the foregoing. THE WESTERN UN ION TELEG RAPH COM PA INCORPORATED NEWCOMB CARLTON. PRESIDENT CLASSES OF SERVICE Letter shall be delivered on the day of its date absolutely and at events; but that the Company's obligation in this respect is suL to the condition that there shall remain sufficient time for the trt mission and delivery of such Day Letter on the day of its date dui FAST DAY MESSAGES A full-rate expedited service. NIGHT MESSAGES Accepted up to 2.00 A.111. at reduced rates to be sent during the night and delivered not earlier than the morning of the ensuing business day. DAY LETTERS A deferred day service at rates lower than the standard day message 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 enu- regular office hours, subject to the priority of the transmission of r( ular telegrams under the conditions named above. No employee of the Company is authorized to vary the foregoing. NIGHT LETTERS Accepted up to midnight for delivery on the morning of the neensuing business day, at rates still lower than standard night messa rates, as follows: The standard day rate for 10 words shall be charg for the transmission of 50 words or less, and one-fifth of such standa day rate for 10 words shall be charged for each additional 10 words u less. merated above are hereby agreed to: A. 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. D. 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 undergtanding and agreement that the Company does not undertake that a Day D. SPECIAL TERMS APPLYING TO NIGHT LETTERS: In further consideration of the reduced rate for this special "Nigh Letter" service, the following special terms in addition to thos enumerated above are hereby agreed to: Night Letters may at the option of the Telegraph Compan be mailed at destination to the addressees, and the Company shal be deemed to have discharged its obligalion in such cases with respec to delivery by mailing such Night Letters at destination, postag prepaid. Night Letters shall be written in plain English. Code langua{ is not permissible. No employee of the Company is authorized to vary the foregoing. 3rm 1206 aRVICE DESIRED ay Message Day Letter Receiver's No WESTERN UNION ght Message Night Leth atrons should a WESTELe7AA UNION tr TELIWW,V, AM an X oppo- fte the class of ,,Vice desired; )THERWISE THE TELEGRAM NILL BE TRANSMITTED AS A FAST DAY MESSAGE. !NI Check Time Filed NEWCOMB CARLTON, PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT BELVIDERE BROOKS, VICE-PRESIDENT :nd the following telegram, subject to the terms on back hereof, which are hereby agreed to COPY. Denver, Colorado, February 2, 1917. R. H. Treman, Federal Reserve Bank, New York City. Have written fully today suggesting course to follow in making formal application to appoint French correspondent stop. Would make confidential inquiry of James Brown as to his investigation of French law before consulting Coudert which may be unnecessary. Better await my letter. Benj. Strong. Collect. 417* ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERI'vh... 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. lb one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR P in 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, ',..'ond die ass received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty tin the sum rect for 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 oh, telegrams. 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, whetl caused 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 writing 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 on ner cent. thereor. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach it destination. 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 towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeavor contract 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 o by 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 filed with the Company for transmission. Special terms 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 the foregoing terms. No employee of the Company is authorized to vary the foregoing. THE WESTERN UN ION TELEGRAPH COM PM INCORPORATED NEWCOMB CARLTON. PRESIDENT CLASSES OF SERVICE FAST DAY MESSAGES A full-rate expedited service. NIGHT MESSAGES Accepted up to 2.00 A.m. at reduced rates to be sent during the night and delivered not earlier than the morning of the ensuing business day. DAY LETTERS A deferred day service at rates lower than the standard day message 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 Day Letters shall be written in plain English. Code language delivery of regular telegrams. 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 18 received subject to the express understandDigitized FRASER ingfor and agreement that the Company does not undertake that a Day D. IMP Letter shall be delivered on the day of its date absolutely and at events; but that the Company's obligation in this respect is subj to the condition that there shall remain sufficient time for the tra mission and delivery of such Day Letter on the day of its date duri] regular office hours, subject to the priority of the transmission of re ular telegrams under the conditions named above. No employee of the Company is authorized to vary the foregoing. NIGHT LETTERS Accepted up to midnight for delivery on the morning of the ne> ensuing business day, at rates still lower than standard night messag rates, as follows: The standard day rate for 10 words shall be charge. for the transmission of 50 words or less, and one-fifth of such standa,i_ day rate for 10 words shall be charged for each additional 10 words or less. SPECIAL TERMS APPLYING TO NIGHT LETTERS: 11110 In further consideration of the reduced rate for this special "Night Letter" service, the following special terms in addition toil 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 language is not permissible. No employee of the Company is authorized to vary the foregoing. LA Form 1206 FRVICE DESIRED WESTE TELEL UNION Receiver's No. WESTERN UNION trans shou:. ',lark an X oppoe the class of service desired; fHERWISE THE TELEGRAM ILL BE TRANSMITTED AS A FAST DAY MESSAGE. Check AM Time Filed NEWCOMB CARLTON, PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT BELVIDERE BROOKS. VICE-PRESIDENT ad the following telegram, subject to the terms m hack hereof, which are hereby agreed to Denver, Colorado, February , 1)17 R. H. Treman, 7ederal Reserve Bank, ----- New York City. Curtis and I are deferring leaving for Arizona until further news of developments roaches us. Do not hesitate to telegrajh for his return if thought nooeosary f:.nd there is not tho sli8htest reason vOhy I should not come back for a short period If any emergency mq,ces it desirable. 'lease wire at once. Benjamin Strong. Ch.. Benj. Strong, 4100 Liontvielr Blv. ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWIN( To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office ne-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM Al, 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 telem SUM rtuiceived for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty ,r 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 (...pner or ob., legrams. 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, whet iused 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 state. citing 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-tent ic Der cent. there°, The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to react :stination. 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 citie 'ions. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeavo intract 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 o 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 telegraz :ed with the Company for transmission. Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in addition It .e foregoing terms. No employee of the Company is authorized to vary the foregoing. THE WESTERN UNION TELEGRAPH COMPA INCORPORATED NEWCOMB CARLTON, PRESIDENT CLASSES OF SERVICE 'AST DAY MESSAGES A full-rate expedited service. IIGHT MESSAGES Accepted up to 2.00 A.M. at reduced rates to be sent during the night nd delivered not earlier than the morning of the ensuing business day. )AY LETTERS A deferred day service at rates lower than the standard day mesage rates as follows: One and one-half times the standard Night ,etter rate for the transmission of 50 words or less and one-fifth of he 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 ,etter" service, the following special terms in addition to those enu- Letter shall be delivered on the day of its date absolutely and at events; but that the Company's obligation in this respect is sub to the condition that there shall remain sufficient time for the trt mission and delivery of such Day Letter on the day of its date du; regular office hours, subject to the priority of the transmission of ular telegrams under the conditions named above. No employee of the Company is authorized to vary the foregoing. NIGHT LETTERS Accepted up to midnight for delivery on the morning of the ensuing business day, at rates still lower than standard night me& rates, as follows: The standard day rate for 10 words shall be cha, for the transmission of 50 words or less, and one-fifth of sucli, stam day rate for 10 words shall be charged for each'additional 10 word less. nerated above are hereby agreed to: Day Letters may be forwarded by the Telegraph Company as a eferred service and the transmission and delivery of such Day Letters 3, in all respects, subordinate to the priority of transmission and Day Letters shall be written in plain English. Code language elivery of regular telegrams. 3 not permissible. c. This Day Letter may be delivered by the Telegraph Company y telephoning the same to the addressee, and such delivery shall be a omplete discharge of the obligation of the Telegraph Company to diver. D. This Day Letter is received subject to the express understand-. that the Company does not undertake that a Day rig and agreement SPECIAL TERMS APPLYING TO NIGHT LETTERS: In further consideration of the reduced rats for this special "N Letter" service, the following special terms in addition to t enumerated above are hereby agreed to: Night Letters may at the option of the Telegraph Com: be mailed at destination to the addressees, and the Company be deemed to have discharged its obligation in such cases with re, to delivery by mailing such Night Letters at destination, po prepaid. Night Letters 'shall be written in plain English. Code lam is not permissible. No employee of the Company is authorized to vary theioregoing. Denver, Colorado, February 2, 1917. Dear Ur. Treman: Can I trouble you to show my telegram and in regard to parring Federal Reserve Bank checks he telegraphed me on this matter and with you and would send him a cop Yours v R. H. TriNap, Esq., Federal Reserve Ba New York City. BS/CC ter of yesterday Mr. Woodward, as was communicatine Denver, Colorado, February 2, 1917. Dear Mr. Treman: Mr. Curtis and I discussed the propriety 0 cables addressed to Lord Cunliffe by the Federal finally sent you telegraph from Colo iling copies of serve Board and er enclosed con- firmation. It would be quite proper t Board that the cable was sent in mg behalf personally avoid the appearance I had wilfully violat be glad to Which othe personal friend in order to uld be certain to develop out consulting them. You will know t from Deputy Gave that oat cordial personal letter nk of TIngland, in which he ex- presses great sati good progreas is being made towards concludi sure that arran feelin Yours sincerely, R. H. TramonT-Esq., Federal Reserve Bank, New York City. BS/CC they bear us no hard Denver, Colorado, February 2, 1917. Dear Mr. Treman: a, I am writing you As Ex. Curtis and I may be away for a few bsenoe. on these foreign matters to avoid the delay of our desirable now to address a letter to Mr. isserin, the Bank of the ing sure, with- Netherlands, as suggested in my letter of January 26 er in the out fail, that such letter is fo or through the Dutch cc. of tA Net e lands Which might result in applica- (tress a letter to th eserve Bank of w York for authority to appoint the correspondent in Holland, and that be- 1 o we would like ve informal advice from the Board as to their skappointment and an understanding as to the method attitud especting such of anno ement at the pr,fer time. ir 40f e clear ernor I thin a I would communicate that we are proposing to ad- informally with Cove fore doi ibassy pouch ld again be desirable to pursue the course suggested as to tha_Bank Bank of the N nie Minister a Before dispatching this tion from the Federa It seems to me In communicating informally with Gov- to him the proposed extent of the sugges- tien to be made to Dr. Vissering, so that they may not jump at the conclusion that we are offering an arrangement as extensive as the one proposed in London. The enclosed draft of a letter to be addressed to Dr. Vissering outlines Mott that I have in mind and as there is no particular hurry about this matter. you may wish to return it to me with suggestions for changes before it is http://fraser.stlouisfed.org/ BS/CC Federal Reserve Bank of St. Louis 1TAT A dispatched. Yours very sincerely, Denver, Colorado, February 2, 1917. ear Ur. Treman: 4 ranslation of By now you have had opportunity to study Governor ?anoints letter of December 27, 1916. You will observe that the princi negotiations Pallain in his letter, so I am wond may n ow be justified the authority which I understand ors, I thin,: the following has already been grant and, if an course should witho consultation with rgested cannot be followed, I be- the Federal Reserve present withheld. -tion y to make this appointment should be ouncement of cables have be effect: VD correspondent in France. If this application is made lieve the app ether Governor eserve Board for consent to to the appointment of the Bank o followia cepted by with the Bank of England are in princip in making formal application made un olved in our points "Your Prelimi dispatc intend making D exchanged with Pallain, substantially to the tter December twenty-seventh received stop. our official reply outlining final proposal we cation to Federal Reserve Board for consent to annoint- ment Ban,: of France as our agent stop. If consent is granted we propose making announcement in newspapers similar to the Bank of England announcement stop. Will it be agreeable to you to have such announcement made prior to our arriving at a definite understanding of actual terms stop. Federal Reserve Bank New York." Please reply This cable can be sent over my name and 1 2. To - Mr. Tremens February 2, 1917. ip think be dispatched prior to the formal application to the Board, but cnly after they had been sounded unofficially so as to avoid any misundt,rstanding either as to the appointment being ,ithorized or as to the method of announcement, in view of the doctrine SA il unced by Secretary Mc- Adoo that all official actions of the Reserve Boar If Pallain's reply is favorable, . . : . t be made public. .... d be made formally 1144401.. ado after agr at once and, if possible, an announ with the Federal Reserve Board upon its t The object of sanding t able is to avoid creating the - )ression in iallaints mind that h 'tale at letter is in all respects ac- c ..qd that we aoposin, and do business on the terms he suggests. I have ready written ly explaining the character- ; ,stics of the French necessity for his believ ahead s ution that everyt r and, part avoiding or rly, of Monsieur Pallain and the ing an impression Which would justify ncluded and that we were ready to go do business. sincerely yours, R. H. 2mata4P, Federal Reserve Bank, New Yor4 City. BS/CC 0 Phoenix, Arizona, February 10, a 1917, Dear Mr. Treman: IreTerring to your letter of January 31st, in which you suggest my returning to you the original drafts of a letter prepared by Mr. Warburg for transmission to the National Ban1r of the Argentine, I have to oay that I would have the original to you but for pressure of work at Denver. returned Aa soon as I return there I will have copy and send you the original together with sore sucestions of my own. Yours very sincrrely, Yr. R. F. Treman, Govrrnor, Federal Reserve Rank of New York, New York City. 1917._ Phoenix, Arizona, February 10, 'eear Mr. Treman: I would like to acknowledge receipt of your letters of Janury 30th, 31st, February 1st, 2nd, and th, and I am ver7 glad to be kept to fully advised of affairs at the Bank. various matters Curtis and I have been over discussed in your letters the and I have venous comments and suggestions to rake as follows: 1st. Purchase of bills. tion that pnesibly the federal I note your sugges- reserve board had more knowledge of international affairs than we aA4L,1 believe however, that a careful scrutiny of their letters and memoranda will show that tl,is was not the case. Their original letter urging all the reserve banks to withdraw from the market so far as acceptances were concerned, was dated Januery 19th, and contained noreference to possible International complications. And a long Tremerandue from later also containe arguments In favor of their plans, none of which were based upon the Yr. rarburg prepared some days International situation, or the possibilities of any chan.le therein. this Powever, the chief criticism I have to make of matter is not so much one of a question of judgment or of a foreknowledge of establishment ef the ending events but concerns the principle that the banks policy 40. 0 "2" shoul(i not be dictated from Washington or adopted only after telephonic approval had been received from there. Fven assuming that the board knew of the intended move of Germany, still they ought not to ex ect that our Board of Directors or our Officers would alter a policy upon a blind suggestion from them giving no suggestions or facts upon wITich our board or off1cer:3 could exercise an intelligent judgment. I am not consoled by the thought that no harm has resulted in this particular instance because I fear that the board now has received the impression that the purchase of bills by the New York Rank and possibly other matters can be controled by them on a mere suggestion adequate reasons being given. with or without The whole question of the independent and autonimous character of the reserve banks is being decided by o'r day to day- action in these matters, and I fear that we are slipping backward from the position originally taken at the opening of the system. 2nd: Federal Reserve Bank Drafts. I note that you arr proposing to send to each of the Federal Reserve Banks a copy of the plan proposed b the flvernors' com- mittee, with a suggestion that the plan be laid before each Board of Directors for suggestions and criticisms with the idea of having the whole matter presented to another conference of governors, before the plan is put into final peratio . This seems to me to be a good idea as I do not 0 n3r believe that a majority of govr,rnors would agree that the plan was sound as now proposed. Of course, however, you must rralize as I wrote you before, that our position is any other reserve bank as entirely different from that of they are all anxious to provide some form of New York Fxchange, with a knowledge that the weakness of the plan will expose New York to danger while keeping the other banks *Or_ comparatively free from tket.e. I till think that notplan is safe which requiresV New York Bank or any other to make an advance upon such drafts bank without having received adviOe from the drawee bank. Mr. Fancher has sent Yr. Curtis some blank forms for drafts and letters of advice, which we have not yet had an opportunity of considering in detail. In a day or two we will send them on to you with our comments and suggestions. 3rd. Remett charges at assay office. Yr. Jay is to take the matter up with Yr. he will be able to arrange this matter I note that Boyle and hope that promptly. I have a letter from Yr. Harding under date of February 3rd stating that he will bring my letter on this matter to the attention of the Secretary of the Treasury but that in view of the v-ry critical state of our useleso for a few days to attention. international ask affairs, it will be him to give this matter any In view of this situation I think it most important that the matter be pressed to a conclusion from your end, both through Yr. Boyle and with the Treasury Department direct. "I;." 4th. Reserve Board. Confidential Relations with Federal T note that Messrs. Woodward and Peabody received an Imder3tanding from diffPrent members of the board that they had guerdecg. and would continue to hold in confidence all detalle of cur arranTements rade with foreign banks, and that they had not broken confidenceinthis. respect and that they had and would respect the arrangements which the 7ew York Part entered into in The above language is taken from your It seems to indicate that these matters. letter of February 2nd. the position of the board is that what they did in the Bank of Fngland matter was a complete and perfe t keeping of confidence and they propose the same perfect confidence about our If this is a correot analysis of the have keep future arrange.ente. situation it ie a very dangerous one from our point of view, and I do not is safe for us to attempt to to thin' it confidential relations with the board in the absence of specific assurances that the matter will be hanc7led on a different basis from our recrnt experience, especia'ly dictum oonoerning VcAdoo's the necessity of publicity remaihs un- contradicted and-unmodified between the board so long as Secretar7 and our in the records of the meetina. committee. "5 IT "Te do not want to have the same sort of main- tenance of confidence in the future inthese matters as we have had inthe past. 5th. Report of Amounts of Renewal. Credits. Answrring your question as to continuing to send. these, I would be vcr- happy to receive these reports once to Referring further u week. the matter of purchasing gold bars, I think it would be advisable for us to accumu- late a considerable quattity of the bars as soon as possible, Irrespective of our negotiations with the Treasury Depart- ment conc-rning the waiving of the remelt charges. I would suggest ten or twenty millions as a p:ood amount to start. ,ith. It ought to be possiblo to make satisfactory arran ements to obtain these through the co-operation of Worgan and Company and possibly the assay office. 7ith reaf.sct to the purchase of bills during this period of pncertaintY, I approve heartily of the course of the bank in bills that holding the rate firm and taking all the are offered. The reat desideAtum is a known eteainess of rate, which will give the banking public confidence in the ability of the bank to keep control of the situation. Am returning to Denver this week, and will write further from there. With best regards Faithfully yours, Phenix, Arizona. February 11, 1917. R. H. Treman, Federal Reserve Bank, New York City. Dear Mr. Treman: Inclosed with this is a first draft of a proposed letter to be addressed to the Bank of France and a draft of a proposed memorandum to accompany the same, which Mr. Curtis and I have prepared as n sugzestion for the consideration the officers and dirsotors of our bank. The following points require special comment:I an not as well informed of some details of the law and customs in France as in England, and the inclosuree should therefore be carefully discussed with say, Mr. Roberts and Mr. Kent, who wi21 no doubt be glad to give U3 advise. Blanks have been left in the memorandum where reference i3 made to the values in French currency of gold bullion and gold coins which aro dealt with in France by kilogram and not by ounces. There is no statutory price for gold purchased by the Bank of France as in the case of the Bank of England, and therefore, it will probably be necessary to take the value at which gold is coOputed for coinage pur Pc se e. Please notice the provisions of paragraph S. respecting withdrawal of balances when rates of exohange will not allow withd0awals without loss to the creditor This feature of the memorandum should be carefully considered as we must be certain that the understanding is not only fair but absolutely safe for both institution. parties. I am not aware of the provisions of the French law as to the limit of tolerance and this should be investigated. We should also investigate, as suggested in my last letter,on this subject, the condition of French law as to gold exports. We should confirm my understanding that French gold coins are ninety (94) per cent fine gold and ten (10%) per cent copper alloy. If the suggested cable was sent to Pallain a confirmation should be inclosed, or the letter changed. I understand that application for the consent of the Federal Reserve Board to the appointment of the Bank of Franue will be made aa soon as we hear by cable from Pallain that we are justified in doing so. If, on the other hand, no cable is sent to Pallain, it would be just as well to defer making application until his reply to our letter justifies doing so. It will, however, be safer to arrange this preliminary by cable. I suggest your sending a revision of the enclosures to me at Denver for further study after you have had opportunity to confer with our own people and those 10. suggested above. Vith best regards, Faithfully yours, Denver, Colorado, February 16, 1917. 'ear Mr. Treman: The enclosed cable has just been received from Monsieur Pallain. His letter of December 27th was delayed, a sent by registered mail it did not get ecause having been with my regula delivery here a correspondence was necessary appar by with New Yor be released. I have cabled him as per enclosed Jand copy a papers at once, together with original of Vhich I am retaining a c ith my correspondence, 'I am endeavoring at once in regard to that Best regards t , but am writing you separately tter from Harding. floe. sincerely yours, ireman Bank, New York City, 1 . Y. BS/CC Baas. correspondence the files of It will take Federal Rose end you these of December 27th, Ilii Should be in °fore it could Denver, Colorado, February 15, 1917. Dear Mr. Tremanfollowing reply to your It seems desirable to send you at once the closed cony of Gov- confidential letter of February 7th, with tin' ernor Harding's letter of In the February 6th. first place, your ssad to 'Tebruar7 2nd letter fear was not Governor Harding, transmitting copies of the cablegrams ; so worded as to give the Fedora of just what tranaoired. was justified in the first tion of December 26t Grenfe4 in of I oard an ac e understanding .,e been sati.-..zd all along that the Bank tance In acting an informal 4 .* my behalf, on my telephone sugges.squiry throne" Morgan and the ground with the Federal _ Reserve Bo4r_ that the In and in order to clear se sent was made at my personal request e of bad faith in my engagement with the Bank of Agland. refore, it see been more nersonally,no that your letter to Harding would have tated that the inquiry was made on my behalf f the Bank of ngland directly, but of one of the directors of the Bank of cable was land throujildr. Morgan, and that so far as that concerned, it could either a personal affair of mine and that the Board accept your assurance that direct an inquiry to me On the subject or possibly it was a personal inquiry and let it go at that. Ur. Morgan's cable was partner,1.1.r. Grenfe14, who not directed to the Bank of England, but to his undoubtedly exercised judicious discretion in the matter. 2. Mt. Treman, February 15, 1917. Now as to Governor Harding's remarks, my first temptation was to write him fran here, telling him exactly how I felt about the whole performance, but that might prove embarrassing to you and further complicate the situation, so I suggest that you submit the following suggestion to our Board: Inn3 conversations between Lord C iffe and mysol cter Lnd neces of a somewhat personal and informal c such without I had full authority from the Bank and the s no negotiate a relationship, Whi reduce our discussion to t form of a memo barest outline of the resu started with the we sedarate pc:ragraph No garding the contents o institutions". These o the Reserve injune was discusse Board was ua The first "Seer e' points confidentially a 4 f a good many nta cas were, of course, ily must have been serve Board to s thought best to um, whicn of coulee gave the stings. This bare outline ragraph read "The following upon, etc." and concluded with ment directly or indirectly to be mode reum without the explicit consent of both ressions as to secrecy were fortified by oard, repeated i believe every tine the matter ore convinced that the announcement made by the ted, was a violation of my confidence and that no such letters as tho Which have beea written to you by Governor Harding and no such statements s those made to the Committee of our Board aro justified or should be permitted to pass unchallenged. The Board assumed either to deliberately violate a confidence or at ' any rate to judge of their own account in making an announcement without :11 consulting me, the only one who could really pass upon the Question as to 6, 3. February 15, 1917. Ur. Treman. whether this was a violation of confidence, and the result of their an- nouncement therefore in ray opinion juatified me in pursuing any course that I thought fit to make clear my position with the Bank of England. Federal Reserve I shall never assent to the propos hall be in a Board has any right to determine whatersonal actiol matter of this kind. Having failed to suit me about announcement a uthoritative and as I was the only one who could really give them o send any explana- t..atement on the subject, tions that i see fit to th This I should not hesitate to sa:1 to Governor Harding we d our directors are dealing to farther complicate matters. with this matter an If an: one is sub n this matter, it is those who violated my confidence i matter drop, I am sati not he tate to 1 will 1-,7 can assure y ton. ed to d. If you and the others wish to let the ., but if you decade not to, pleaso do put thility for that inquiry on my shoulders, and glad to continue the correspondence ' 4giii=iWbe with Governor Harding. as mild as your most courteaus and temperate letters have Much of e rancor displayed by is based upon t e incorrect Ildig tly to the Bank of Governor Harding's letter I think supposition that Mr. Norgan's cable went direc- mgland. His suggestion that Lora Cunliffeis reply discloses r: delicate ap preciation of the impropriety of the actd)on of quite at variance 'iht the facts. the bank is i am satisfied Lord Cunliffe undoubtedly meant just I 4. February 15, 1917. To - Mr. Treman. what has been stated in the English Press so frequently -- that this was an effort on the paxt of the Reserve Board to correct the unfortunate im- oressions resulting from their earlier announcement on the subject of Treasury bills. er after consulting I await your further suggestions a the others and, of course, will do not P. that is net the directors of the bank. Faithfully yours, R. H. "roman, Esq., Federal Reserve Bank New York City. BS/CC irely agreeable Denver, Colorado, February 19, 1917. Dear Mr. Tremont-, Replying to yours of the 16th, I think it d be unaise at present to accumulate any German coin. let. The German exchanges are 1 our favor for quite a long period and no advantage would be gained coin, at any rate nothing like th standard mint bars, so I would coin melted and Iding German we would gain n holding tainly ange to have the German take standard ba place of them, if the charge of 50ç a 1000 can be avoid 2nd. French go ght at a e of some value, but, confidentially, the is a possibilit before the end of th war undertake uus for but it 1 coin as 3 me to believe t th German, at hat the French Government will t emonetize their old gold coins. or the sources of ray information, same policy should be pursued with French rate for the present. It is impossi, e to answer regarding bars received from lief is Prance. t French standard bars are identical with ours, 900 fine, the alloy consisting of copper, and if such bars are to be retained, it could only be after arrangements are effected with the Assay Office which would determine their value likewise relieve us of future beyond peradventure and would assay office charges in case we had to tarn them in. 4th. You make no reference to English gold coin, and as to that I would be rather inclined to hold sovereigns, if we can do so after dotermin- 2. To - Br. Treman. February 19, 1917. ing absolutely their bullion value, so that we might later ship them in conformity with the arrangement suggested with the Bank of 5th. ngland. The most important thing is to get gold bars, if we can do so without paying the assay charge of 54 a 1000 and without rendering ourselves liable to later remelting char All of the detail of this 1)ank. must, I hope the above answers your course, be we g. out at the 1 uiry. Yours very sincerely, R. H. Treman, Esq., Federal Reserve Bank, New York City. BS/CC Denver, Colorado, February 21, 1917. Dear Mr. Treman: I have just been over the last reports of various lines of bills Which we are carrying and they strike me cellent shape indeed. It is a delight to think of dition the bank is In and you may well being in very ext eve a gre al warrants I would not bother much about buyI splendid con- to me. mfort g as we can get bills. these credit matters Do you have the occasi 4ow well they are keeping up- Mr. Kenzel and Mr. Cann jointly and to-date on their info various credits? Th but when times ehaa tell the sheep ted they are as to the peace in money matters pretty well posted so as to nt s notice. rely yours, R. H. Pre Federal Res New York City. 133/CC with LI Denver, Colorado, February 19, 1917. Dear Mr. Treman: I have been laid up in bed for a few days doctor's excessive precautions, so I am in shocki a co: and by the arrears in answering letters; will hope to clean up this we ime would you a mind advising me if I am expected t or will that be done in New Yon letter to Buenos Aires ing Mr. Warburg's draft, retaining a copy. I am deeply disappointed abe en's decision and am writing again personally, but, of co Now the question is It is a tern. need. that he will change his mind. If anything o man with just the experience we of the committee, I hope they write you of any suggestions that occur Sincerely yours, R. H. Treman, Esq., Federal Reserve Bank, New York City. BS;CC. P.S. During the process of catching up with mail my letters are liable to be rather brief, but will not indicate any lack of interest in What is going on. Denver, Colorado, February 21, 1917. F2DLT4L FISERVE BOK DRAFTS. Dear Mr. Tremaa: I harea7humber of letters from you on thi with a copy of the committee report and ubject, together other coi from lir. Jay, mile- What different from the one you send ma. His, though dated, seems to be the latest revision. The decision of the Ease to have another Governors' Conference is serious indeed. this decision. eve that they will adhere to Most of the real work Qdeveloping these various questions and elucidating them vernore' Conferences, and it would be a real d Now, as to th report, or two points, be delay ss1bly I report slur 5 I think the Fede here Reserve Bank and I fear that the workir ef the plan 1177 reluctant bank. discontinued. it str es me as admirable except in one am t. stupid to get the meaning. On page tion of delay in recei7t of advice by ich is to pay ey the draft. There will certainly will be of sufficient consequence to rake many cases awkward and unsatisfactory. e to hold over drafts at the request You know of the paying They assume a liability for delay of protest Which it is impossible as a legal matter to avoid, without the consent of other endorsers. .1].so the provision for telegraphing means a lot of trouble and expense which should, if possible, be avoided, and these telegraph charges will be very difficult of readjustment, because they really shou)d be paid by the bank that draws the draft in every ease in another district than the Reserve Bank 2. February 21, 1917. To - alex. Treman. Which pays the draft. Another point is in regard to the signature cards. I do not see how the paying bank can pay any draft without assuming heavy risks, unless it has a full set of signature cards and instructions as to the poWers of- the offiegrs of the member banks to draw; otherwise, how is it a payment. The Federal Reserve Bank on Which the draft is drawn would naturally not be liable fotethe payment of a draft which *was Wholly fabri- cated and fraudulent, although that draft might correspond exactly with \.\ the advice sent so far as amount, name of drawer and name of payee was con- earned; I thin 4 the plan is weak at this point. I do not agree with the report that advice between Federal Re- serve Banks would not prove cumbersemSe(butkdo agree that either that \\ e . plan of advices from one Reserve bank to the other must be adopted, or else the whole subject dealt with on a credit basis, each member bank being given a certain line of credit for exchange purposes, for Which its own Reserve bank would assume responsibility to any Reserve bank that acted as a paying agent. I agree that the responsibility assumed under paragraph b., page 5, is possibly a reasonable banking risk for the if, and only if the paying bane has - drawee bank and - b. full particulars paying bank to assume, a. advice and instructions from the ae to the signatures and authorities of the member bank drawing the draft. The principle underlying this proposed arrangement is after all simple enough. If the bank which pays the draft does so on instructions from the bank on which it is drawn, then the only responsibility of the paying bank is to be sure that the draft paid is the one which it is in February 21, 1917. To - Mr. Treman. Those instructions can be specific as to each draft, structed to pay. in which case the draft must be identified beyond peradventure, or the instructions may be general as to any draft drawn by the memther bank, in which. case there must be a limit as to the amoun equal care must be exercised to make sure that t 1 think you will find that Judge Curtis not only a ft is a valid one. es with this view, not even enjoy but possibly will go a bit further and the protection of the endorser's liabi f the drawing and ty under certain umstances. I have been a good deal im Van Zendt's remarks about this plan, as well as McKay'srandum. t is all right for the Reserve Banks to go ahead ir honey. abunnnnt reserves and free these days o move of exehanges in tmd4Ø.do to the member banks. will find. orts of things without charge some of these things will prove a tremenduous burden t danger When another turn of the Wheel brings close m rves and uncertainty zexi distrust. only had a lot of experience but thinks about these matters with who has n an eye or zed wager that my friend Will Woodward, e a p am willin he future, will have written believe will - about the situation ee with every word of ore, i do not like the Gidney plan, which I :' -ncy to lure us into a sense of false security as to silver certificates and greenbacks. this difficult matter, Which Faithfully yours, R. H. Treman, Federal Reserve Bank, So much on I sincerely hope will be worked out to peer entire satisfaction. New York City. this statement. Denver, Colorado, February 21, 1917. BANK OF FRANCE. Dear Mr. Treman: Referring to yours of the 10, 14 el 17th On 0.1s suggestion of asking James Brown about the French he had dealt with this subject in connec at $ t. I have a c mplete set h to my regret. Pending the reeei . Brown's inquiry, it might be well to get an opi ert, but, as you realize, employiby the French ernment in this country and ' might not feel free 1 would also suggest that Mr. Curtis d Bloch, the French Commissionere, ave a talk with Mr. Robert Liasson on the subject, as 1 exoect to see the last as Mr. B orthi s, would not thought it week. Of course, an informal inquiry, such a sufficient basis for our agreement, but I de in developing the subject. The memorandum for the Ban,: of Franca point which Hr. possible France, or away somewhere among ng books, but I think they are in st and I wi was made because are to be of the statutes covering these he is already Lay first export credit. It seems to me that if inquiries of Mr. Coudert, the bank shOUld do subject. Curtis effect of a failed to deal with one and i discussed, and that is the question of the Moratorium upon the settlement of our accounts, or the payment of bills which we might bey. i suggest your getting out the file containing the Brown export agreement, as well as the Bonbright, and see hew the matter was dealt with in those agreements. Er. Curtis knows 2. To - Ur. Treman. February 21, 1917. mw views, as far as I have any; it is a legal rather than a business :uestion. I hone this matter can be pushed along pretty promptly for the mail de/ay is terrible just now and I don't that we are stalling. Sincerely yours, R. H. Treman, Esq., Federal Reserve Sank, New York City. 13S/CO t Pallain to think Denver, Colorado, Pebruary VD, 1917. Dear !Ir. Tremar: letters on different I have been trying lately to write separa, , of the accumulation subjects, but cannot very well do so today on acc of mall. This letter will relate to matters of mi s importance. makes the mis- McDougal's letter is distinctly take of taking the position that the 1 Reserve B rictions and provisions of Reserve Bank's are entirely free the Federal Reserve Act as to . seem to get it into his head that the :Federal He will not and cannot ot make the law and that all we can do is to comply with your I am hoping to w director, particularly as I would like to e 14th that we are beginning to I am glad to 1 1,s accumulate fully han d aro, for,the but stan. _mint bars, un in. good cs ition, r. Jay, this matter needs to be care- I in whi resent I doubt the wisdom of holding ything s we should have a shipment of sovereigns case we might be justified in holding them at bullion v About rates. it strikes me now that the rates are about right. As nearly as can be judged from here, reviewing the past two months, I believe had we stuck to a lower rate until the early part of February, developments at that time would have justified an advance and our earnings possibly would have been a little better, but after all it is a small matter and it looks as though we were certainly on the right track now. 2. February 21, 1917. To - 114r. Treman. I am sorry that my letter from Phoenix appeared to you to be unjustified as to our policy in dealing with the Board and with our investment matters. The last thing I would want to do is to give you any imnression that 1 awn opinion does not am dissatisfied or critical, even if sometimes my coincide with yours, fortunate job, with its many disagreeab so largely for my benefit. Possibly y I do the change which has Washington in managing when your un- episodes, was rust on you may not realize lat strongly as Board in taken place in the policy of the sy and, on the other hand, the necessity bank ourselves, so far as its policy and transaction ny of these matters. have talked this ma I urtis, who knows my views in detail, and I am sur ass them to you better than I can by letter. It is a great and are being reduced recomm lye e 7_- reduction pro ;d tinkering with Don't y requirements down to say greater extent than was by the Reserve period of sp right. ear that the reserve ard. *Vie are in the midst of the greatest sion the country has over witnessed and this will make it all the worse. That is what comes of e law, necessary though it is if we are ever to get it thinx that this matter justifies some representation being made to the Reserve Board as to the serious danger Which may result. So much has been said about loss of earnings to banks that take membership in the Reserve System that I should think it would pay for the Reserve Banks Board to get a precise statement on this subject from those State Which have taken membership and Which have had long enough experience 3. To - February 21, 117. r. Treman. to determine what the advantage has been. This might be quite a convinc- ing argument to some of our critics. 1 cra thinking of you and your troubles and labors all the time, particularly now that Aikon seems to have tun sibility of relief is not in sight. nting on I must have been, and am grievously disa down and that Dos- 'ted. 3est regards to you and to the ot rs. yours, R. H. Tremnn, Esq., Federal Reserve Be. New York City. BS/GC as I know:Ica , co. 0-15 Denver, Colorado, February 23, 1917. Dear Mr. Treman: BANK OF GLAND C ES. Replying to yours of the 19th, the correspondence and talking with C understood than it was when sure that aft tie, this situa of yours w reading over on is better o 7;ashington. You may be sure that 1 di stion, first about the inquiry through Morgan ding that particular cable of which by the way 1 ha ver reeeived copy up tr, the time my let- . ter was sent to you, points. B. reman, LEK., Feder serve Bank, New York BS/CC f thought on all of these Denver, Colorado, February 23, 1917. Dear Jr. Treman: BANK OP ?RANCE. Thanks for yours of the 19th. I hope the randum is given a very careful overhauling and then shi ther consideration, after all suggestions have been embodied. Hope LIT. Jay makes a sa ngement about the Bank of pe that the views I expressed about the announcemont cabling and giving to make the appoin important and dhoul R. H. omen, Esq., Federal esorve Bank, New York BS/CC 'ty. e it up with 11 have some thoughts. Mr. 700dward as he is much into 7rance appointment and I partiou Be sure a ed. e tha The suggestion about he announcement of authority that the whole job is done is Denver, Colorado, February 23, 1917. Dear Mr. Treman: PREPARADNESS. /burs of the 20th is just received 1111 re satisfaction than any letter I have r ived from the floe in a long time. That report sounds real snapp nd surely indic that the suggestions sent by the Special Committee were large]. nevertheless the report Et At the risk of repetition 1. NOTE SUPPLY. see me tremenduusly. a: no or two headings: dred millions seems a Al little bit large not be needed but because While say the first ons were bein,; issued large ad- ditions to the stock co de. hundred millions, pc, Reserve ecessary, but Liy further suggestion is that one e carried as a minimum reserve by the Agent in our under special Wei;uard. require no comment. 4. f having the orodit department right up-to- date and cam e, with all information about member banks and about acceptors jho bills we buy cannot be exaggerated. LsdI would keep the pressure on in .his department just as stiff as nossible. ez 7 require no comment as everything seems to be 5, 6 done or under way. 6. need POIREIGN MATTEES. I agree absolutely with NI% Forgan, but that not mean that we should not employ promptly a first-rate man who understands the detail of figuring exchange, keeping exchange accounts, 2. To - Mr. Treman. February 23, 1917. conducting exchange correspondence with foreign banks, keeping suitable records, running foreign bank accounts, Mr. Gann can doubtless supervise allthis b or experience to take charge of the office work business. This does not mean that we A111 compe we ought to have a man wing out of our forei6n with our meebers in any senee of the word. GOLD. I have answered the I. AoAluilli:71:714:111:!!!1101 I believe quite fully. tether the lone' distance EMPLENT. I do no telephone connections mean prlva wita the heavy expense in- cy connections. For the volved, or simply arr. a switch could be present I should th private lines on short nctice. made to e same applies to the 'Astern Union. is and i discussed this subject in great d "1 and he can tell you my own view better than I can express them i letter. -One o g of work by over-la-. ordination he greatest difficulties in our office is le officers themselves and some lack of co- so as to make it effective without waste of time. He will elaborate. No. comment required. I believe that the matter of amendment to the Clayton Act and the member State Banks and Trust Companies should be followed up. The above covers all I have in mind and now success to your efforts. Very sincerely yours, R. H. Treman, Lag., Federal Reserve Bank, New York City. Denver, Colorado, February 26, 1917. Dear Mr. Treman: Yours of the 21st, enclosing Mr, Peple's memorandum in regard to Federal Reserve exchange, is just roe It is a clearer and more concis tatement of th we have seen, but really contains not with theexception of one new ca11in6 e marked. the present collec- was adopted tha could not be accurately laid was planned to make readjust- out without experience, bat where Where the time established ments from time to uce transit time by was too short and at th the schedule wherever e showed that tion to Richmond now with an:' comment, statement on page 5 which 1 We all admitted and t tion plan lan than others the to be possible. fact that cases, and I think we em is too db.° shortening the time schedule should at once look nd see that readjustments are made. The analysis of our transit into account she in addition less arises i carrying the normal roughly two and a New York Clearing House he Richmond District and here half millions of float. float Some of it doubt- is a good opportunity to correct it. I realize the objection which Mr. Hendricks will these schedules can I agree that be so accurate as to eliminate that is true. but a certain that is no reason at all with the schedule as at first prepared. The effort raise, that none of amount of float. for resting satisfied Should be to make it To - Mr. Treman. February 26, 1917. accurate and this will require continuous study. This part of Mr. Peple's argument seems to be an effort to demonstrate that two wrongs mace a right. In other words, if we are willing to admit some weaknesses, or unso , collection plan, we should therefore b tablishing this plan for Federal exc unsound. R. H. Twgn, Esq., Federal Reserve Ba New York City. lling to acc , which of co in the present them in esis thoroughly Denver, Colorado, February 26, 1917. Dear ;Jr. Treman: I am just advised that arrangements have been made for the bank to reimburse Miss Canton's salary. It seems to me that this is hardly necessary and I am wondering whether the matter has received. full consideration bTJ all the officers, or possibly was inspired by sentiment, which is not cold business. I hope that you keep well and are not depressed by the various combinations of depressing circumstances. Very sincerely yours, H. Treman, Esq., Federal Reserve Bank, New York City. BS/CC Denver, Colorado, February 26, 1917. Dear Mr. Treman: Thanks for yours of the 21st, one 010 Pallain. I an awaiting with much int eat further de matter. Very sincerely yours, R. H. Treman, Esq.. Federal Reserve New York city. BS/CC ble to opments in this Denver, Colorado, February 27, 1917. Dear Mr: Truman; Today's mail brings a copy of the statement of the bank as of last Friday in papers, and I am the form regularly furnished wondering whether progress is being ma form Which will be More accurate than wards the .. '3tion of a new one now in use This statement, some way or other, offends my s q74 000 of last accurate and in a way truthful 375,000 of earnings year's net earnings, earni Items of the current year Might it not well sect of the current year. committee of the Junior officers to make roe sincerely yours, Tr.v= Feder New Y BS/CC Esq., Bank, Reserve ity. of What is FEDERAL RESERVE BANK OF NEW YORK January 2, 1917. JAN10 M/ dear Governor: At the request of Govern() you a memorandum in re a new rat kept in Federal reserve banks vault reserves for the membe Seay, I am sending of reserves to be h no requirement as to banks, as he was not clear as to your present address With kind reglds, I remain, / Sincerely yours, 7ff.A-4:4g""--- q., Benjamin Strong, 4100 nontview Boulevard, Denver, Colo. RPT/CEP 7nc. f 11'1.144' -*y C 0U, ( et, 1-1LL.'" e 0 FEDERAL RESERVE BANK OF NEW YORK January 2, 1917. .JAN 9 1917 My dear Governor: We have just had a telephone from 7!r. Jay, who is at Tashington on his way up from Aiken and I hope he will be home in time for the meeting of our directors to-morrow. We received a communication from Mr. Locke, stating that he thought we ought to take even a stronger position than had been indicated in the proposed letter to the Board at Washington in regard to the method of communications between the Board and the bank and in regard to the publishing of the Bank of England matter. --re will take um to-morrow probably the ques- tion of milting apnlication for authority to negotiate with the Bank of France, and it would seen as though permission granted just now might help the entire situation. Mr. Curtis had a long talk with Mr. Delano, who was at Piping Rock yesterday and he will Undoubtedly write you in detail, but he stated that cur,/ there was more or less irritation in Tashington concerning matters there and also advised that he took the position that it would be better for us to send a committee than to send a. communication to 7ashington. I have no doubt but as a result of this stirring up all around, we shall have more cooperation on the part of the Board at Thshington with this bank, or at least I hope so. Having made quite a canvass of the acceptance market, I am inclined to think that the directors to-morrow might well authorize a somewhat higher acceptance rate; that is, making 3% our minimum rate, because, while indications point to an easy money market for a while now, I am inclined to think that the rate mentioned would be justified and might have the effect of our not securing as many acceptances temporarily, but if rates are from 3 to 3 q/2%, , FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 2 1/2/17. there will be many more banks in the country purchasing acceptances and thus helping to develop the open market. 7e will probably have a very busy meeting to-morrow, at which probably . Locke will not be present, to my regret. The question of the advances in salaries and the report of the committee on an emergency salary due to the high cost of living will come up in the form of a recommendation, I assume, from the committee of Messrs. Peabody and Thompson. Mrs. 7cLaren expects to begin work to-morrow, I believe, resuming her old position. I hope that we shall have no further disturbances from Washington to straighten out, as a large part of our work last week was caused by the unexpected announcement of the Board, and I understand that Governor Farding took exception to ny stating that a considerable portion of my time was spent in defending the acts of the Federal eserve Board. I have no excuses to offer, because that is a statement of fact and I only used it in justifying my contention that as I had since my occupancy of this position been defending the acts of the Board, if I were to continue, I must have information as to some of the reasons for the actions taken by the Board or otherwise I could not explain same to others who might be disposed to be very critical, as had been the case in the past. Oh, this " position is certainly a real love feast when one has to deal, as we do, with the Federal Reserve Board. If we caM be left alone, I hope, after Mr. Jay returns, that we can do a few things of a constructive character in developing the operation of this particular banking institution, which is really our principal function, as I interpret it. I trust that your stay in Estes Park did you good and that you will just continue the good work which you have been doing of building up your physical strength and energy and restraining the impulse to overdo, which seems FEDERAL RESERVE BANK OF NEW YORK 3. Benjamin Strong, Esq. 1/2/17. -` C:r to be an inherited and quite a natural impulse which you possess. 7y very best regards to you and my appreciation of the New Year's greeting. Sincerely yours, Benjamin Strong, Esq., 4100 7ontview Boulevard, Denver, Colo. RHT/CEP Later --- Since dictating the above, I have received a letter from Governor Harding in answer to my letter of last Friday, December,29th,(a copy of which I sent you for your information. I have no comment to make on Governor Farding's letter to me but when I receive information from you as to what stens you are taking in the matter of the Bank of England, I shall attempt to inform him in a dignified way of the progress being made. R. H. T. FEDERAL RESERVE BANKali k OF NEW YORK JAN 9 1917 January 3rd, 19177. Dear Mr. Strong: I assume tat you will keep me posted as to whnt correspondence you h-ve in re the Bank of France matters. This morning soon after reachIng the bank, Mr. Curtis tele'lloned me that in running for a street car, he twisted his ankle and was flat on his back waiting for a doctor to take an 7 ray to determine whether any bones were broken or merely an ankle sprained. It looks as if he wo-ld not be able to be around for some 7ittle time and May have to go on crutches for a while. We had a. very interesting meeting of directors this morning, all being present except Yr. Locke who wrote as follows: "I have thought over the London matter ever since I heard from Mr. Curtis on Saturday and the more I think of it I hop. and pray that you will not the more angry I become. you change your proposed communilet dowa a particle and It is percation you will simply make it more vigorous. fectly evident that w'aoever issued that announcement to the It without justification. press did it knowing that it You remember how vigorous was no mere oversight of a clerk. Strong was in emphasizing that particular clause of the mem-* I, for one, have never dared to open my mouth on orandum. the subject to any human being and I presume the same obtains My only fear is that you will with every member of our board. temporize." if . After a full discussion of the Washington e7isode and after Peabody had reported that he had received a telegram from M. McAdoo asking that he come to Washington in re New York Reserve Bank matters, and a telephone message from Governor Harding suggesting that no resolutions be passed by our Board, as well as a further report as to FEDERAL RESERVE BANK OF NEW YORK -2- To Mr. Strong. Mr. Curtis' conversation with Mr. Delano on Sunday when Mr. Delano was visiting Mr. Charles Norton, it was decided to appoint a committee composed of Messrs. Towne, Peabody and Woodward who are to go to Washington next week on Wednesday for a conference with the Reserve Board as to the of England matter and the relations between the Board and the New York Bank so as to induce greater cooperation if possible. IBank The matter of resolutions was held in abeyance until after thnt committee hod reported as to their visit. Evidently, Curtis, Jay end I are not in very good repute just at the mament in Washington but, seriously, I believe that more will be accomplished by personal frank discussion of the various matters than by any written communications. The rates of discount were continued and it was thought advisable to raise the acceptance rates about * %. Mr. Peabody reported on the committee on salaries and the committee recommended the following advances to be made: Mr. Curtis: L. F. Sailer: L. H. Hendricks. E. R. Kenzel: H. M. Jefferson: $3,000 2,000 1,200 1,200 800 They also advanced 59 employees listed as "Class A" who had been recommended by Mr. Sailer and the other junior officers jointly as being specially worthy of small advances. They also mode a supplementary list "Class B" and another "Class C" of other employees whom they recommended should be advanced provided funds were available. I* Recognizing that the salaries for 1916 were determined at a time when the cost of living was much less, there having been an advance of about 20 % in food and clothing during the year, the committee recommended that a temporary emergency salary compensation be made to meet these abnormal conditions and to all employees o' the bank receiving ;1200 or less they To FEDERAL RESERVE BANK OF NEW YORK ................. Mr. Strong. recommended 10 % of the amount of salary actually received by them during 1916. It was further recommended that 7 I-% of salaries be paid to those receiving between $1200 and $3000 inclusive and a further payment of 5 be paid on salaries of '3000 and upward app'ying to all the officers ex- cept the Governor and Deputy Governor. The recommendations of the com- mittee after a few questions were asked was passed unanimously. The Board reelected the same officers, Governor, Benjamin Strong; Deputy Governor, R. H. Treman; Counsel, J. F. Curtis and also a new 7xecitive Committee, electing Messrs. 7oodward and Peabody as permanent members for a year, the others to be rotating. At Mr. Jay's suggestion, the ouestion of electing a member of the Advisory Council was laid over until the next meeting owing to the late hour at which we adjourned. I asked the Board at their meeting to visit and inspect the new vaults. I was authorized to make a formal application in behalf of the bank to the Federal Reserve Board for permission to take up negotiations with the Bank of France, but Mr. Peabody siggested later to me that we should not make this application until after the visit of the committee to 7ashington next week. The matters connected with the Philippine Bank and the Bank of Montreal were referred to the Executive Committee to report. 7e did not adjournuntil about one o'clock. Am very glad that the Board was so generous in its action in raising salaries, etc, and hope that it will be appreciated as I feel that we have a fine organization here in the bank and things seem to be moving FEDERAL RESERVE BANK OF NEW YORK -4- very smoothly internally. To Mr. Strong. Where our greatest difficulties seem to arise is with the Federal Reserve Board and I hope that our Committee will be able to establish closer and more friendly relations betwe-n the Board and this bank as I believe we could work more satisfactorily and successfully. Bear in mind some of the advice Dr. Treman has given you because you have now reached a point where if you do not behave we aught to summon the high sheriff of Colorado to call upon you and read several chapters of the riot act. 7ith kind personal regards, I remain, Sincerely yours, ft Benjamin Strong, Esa., 4100 Montview Boulevard, Denver, Colo. RHT/VCM P. S. 7hle the directors accepted the recommendations for the "A" list, they did not feel justified in doing the same with Classes "B" and "C". R. H. T. TRANSIT DEPARTMENT siNe' FEIK1L RESERVE BANK OF NEW YORK Close of business is MS Number of Items handled Totaling //45-.9 1/41/f Short Difference Over Time out: A-E F-N J-M-Z ./-4 0 - Z 4/-0 J-A-L Federals - City Federals - Country Mail out 5,/- $7,17 j itij# At a meeting of the Board of Directors of the Federal aff.,e1,1i*-64444 en..14;. Reserve Beek of New. !Ore on January 3, 19160 all of the directors being present eece ting lhairman Jay an0 Mr. Locke of Buffalo, the Acting .;overnor, hr. Treman, submitted a report and statements concerning the announcement in the public press of authorization by the Federal Reserve Board to thie bank to appoint the Bane of england as our agent and correspondent with the privilege to the other Reserve banks to share in the relatioeshin. efter full discussion of the embarrassment occasioned to the officers and directors and the bank itself by this manifest evidence of the leek of confidence and cooperation on the Reserve Board with the executive officers, it was voted to reread u,on the minutes of this meeting these statements res;ceting the art of the Federal situation develoied including clippings from the newspapers proporting to be statements giv n out at ashington. It wee also voted to epe .ove the folloeing statement of the sentiment of this Board respecting this ledication of the lei* of effective cooperation with this Lank 1r0 the Secretary was directed to forward the same to the Federal Reserve Board. STATZLeOT The directors of the Federal Reserve Ban. of Now York deem it eseen- tial to their own self respect as entrust,d with the obligation to properly conduct the affairs of this bank to make this formal record 'or transmission to the Federal Reserve Board of the history of the negotiations undertaken on their direction by Governor Strong with the Bane of i; neland, and further, of their view of the unfortunate lack of interest shown by the Federal Reserve Board in the oblieation of secrecy assumed by Governor Strong and the directors and later by Deputy Governor Trenan in dealing with this neeotiation. early in the year 1916 Governor etrong, in order to promote the -eneral purtotes of the Federal Reserve System, particularly as to the operations of this bawc, undertook a trip to .Ourope to investigate the possibility ol - 2- establishing desirable connections there, and especially the possibility of such a connection with the Bank of Zngland. -;;,a were then advised that the purpose of this trip was made known to the Federal eserve Board and had its approval. In this endeavor Governor strong was Attuaately successful, par- ticularly in estatlishing cordial porsonai relations with the Govornor of the Bank of land, PI Pk.t.44-s. with the result that a tentative under- standing for reciprocal relations between this ban?: and the Bank of ;Lngland was agreed upon for submission,at a time to be fixed,to the governing bodyi. of each bank and to the Federal Reserve Board. The last paragraph of that agree- ment reads as follows: "No announcement directly or indirectly (is) to be made re6urd1ng the contents of this memorandum without the ex- plicit consent of both institutions." It was farther stated by Governor Ounliffe that he hai carefully rofrained from advising his Owd diroctore of the ne,otiation. Soon after his return Governor Strong reported these facts to the Federal Reserve ioard, advining that the negotiations thus commenced should be continued, and especially emphasizing the contidentian feature of the undersubsequently and standing. during Governor Strong's absence, by letter dated August 28, 1916, signed by the deputy governor under the authority of this board, this bank requested authority from your board to enter into the relations oontemplated in the memorandum agreed upon with Governor Jetrong. This communication of August 28th was considered by Deputy Governor Traman of such a confidential character that it was not entrusted to the mails but carried to Washington by the secretary of this bank and presented in person or of the Federal to the Govern- Reeerve Board, with the request then renewed that all mattere pertaining to the subject be kept in strictest confidence. now informed, no action on this request was taker. until So far as ee are December 19th, on which date, we now understand, the Federal Reserve 'Board authorized this bank to ap. point the Bank of England ao one of its foreign correspondents and agents. The information of this action on the part of the Federal Reserve Board first reached as on December 26th through the public press. received a letter from Although the Tarburg an December Deputy Governor Tremazi in which he stated matter at issue end been brought to the attention of the Federal Reserve Board by our letter of August 28th, signed by the deputy governor of this bank, that board, in making reply, ignored the responsible executive head of this bank by addressing their reply to the Federal reserve agent and markiag it "Confidential." it was known to the Federal Reserve Board that e:r. Jay was then absent on account of illness and of course this communication marked "Confidential" was forwarded to him unopened, and its contents only beeame known to the deputy governor of this bank when it was received by him from ese Jay. on December 27th In the meantime, on December 26th, the daily press of the country published a statement, purporting to be furnish- ed by the Governor of the eederal Reserve Board, announcing the action of the Federal Reserve Board above referred to, and as shown in the attached, making further remarks relating to this arrangement. It thus results that the agreement made by Governor Strong in behalf of this bank with eir has been violated by the Federal Reserve Board and that Governor Strong and this bank are thus placed bDfore the Governor of the Bank of england in the position of having apparently been responsible for an extraordinary breach of confidence. With all due respect for the Federal Reserve Board, with full recoge. nition of its right of control over the regional banks in matters of policy, but also with a keen sense of our own responsibilities in the conduct of the business of this bank, and of the absolute need of coordination and of reciprocal recognition of duties and responsibilities between the Federal Reserve Board and this bank, the directors of the Federal Reserve Bank of eve York submit that we were entitled: first, to a direct response to o'er letter of second, to prompt information to the executive of the board concerning decision on the matter in advance of its being given to the public August 28th; press; and third, above all, to your protection of our good faith and good repute in regard to fulfilling the explicit obligation entered into by Governor Strong with ell- A4 that no publicity should be given to the negotiations save with the previeus knowledge and consent of bothmarties, of which fact you had been so fully and 30 carefully advised by Governor etrong and other officers of this bank. In letter of December 27th to Deputy Governor Treman, Governor Harding argues that the transactions of the Federal Reaervo Board constitute public fully business, and, as sueh, are subjeot to the call of Jongress. While/reeogniziag this fact and its obligation, we respectfully call attention to the coincident fact that in MO3t, if not all, departments of the Government, notably in the state Department, many confidential matters are constantly dealt with under every possible precaution against publicity until conditions permit of their release, and that the negotiation of many matters of the utmost importance would become impossible if a rule of unlimited publicity were enforced. eb submit that the proposed foreign relations of this bank come as a matter of course in this class. rn:) venture to point out that the necessary confidential relations between your board and the acting executive of this bank would have readily provided oppor- tunity for our securing the permission of the Governor of the Bank of England to any desired publicity an thus fully protected Governor Strong's aereement, and as well given assurance to the Bank of England that the Federal Reseeve Board appreciated the character of such confidential agreements. This board respect- fully submits that such understanding respecting the appreciation by your board of confidences of the greatest importance to the future initiation and completion by this and other banks of delicate and highly valuable negotiations to further the broad policy of the Federal eserve Act. In view of the continued absence of Governor etrong and the conduct of the bank's affairs by the deputy governor, this board deems it necessary to assure the proper management af the bank's affairs to now report formally the request which we cations understand was frequently made by Governor strong that communi- from the Federal Reserve Board affecting the operations of this bank be addressed to its executeve officers, rather than to the Federal reeerve agent, who is as regards these matters net the responsible executive but an active and most helpful director and member of the executive comeittoe. ee fear that, unless such practice is at once established, unfortunate occurrences similar to the one now under discussion will take place and in active excited markets it is readily to be seen that costly and far-reaching damage might result. FEDERAL RESERVE BANK OF NEW YORK JAN1 01917 January 4th, 1917. My dear Governor: We received your telegram in connection with the suggested report or letter to the Reserve Board in re foreign bank matter and noted your suggestions. Probably no letter will be sent, however, the work being done by the Committee in person, as they visit Washington next Wednesday. Mr. deNeuflize called again to-day and told us that he had been in communication with Monsieur Pallain, that he was authorized to discuss informally matters pertaining to reciprocal relations between this bank and the Bank of France, that he greatly desired us to suggest informally some of the principal transactions which would be mutually beneficial, (that is, what operations could be carried on between the banks, that he, Mr. deNeullize, contemplated returning to' France in about two or three weeks and would be glad to ta141 up the matter now by cable and then more in detail after he reached Paris. He said further that he could furnish us with amiitle, official .4authority direct from Paris as to his beihg authorized to represent tne Bank of France in these informal negotiations. This summarizes his statement to us, I think. FEDERAL RESERVE BANK OF NEW YORK -2- To Mr. Strong. 1/4/17. Mr. Jay and I told Mr. de Neuflize that there had been an informal exchange of views between you and Monsieur Pallain continuing at intervals your conversations when you were in Paris, that all negotiations were being carried on through you and that we would ascertain by writing you just the present status of the correspondence. I informed you yesterday that I was authorized to make formal application to the Reserve Board for permission to proceed with these negotiations, but Mr. Peabody suggested waiting until after the Committee had been to Washington. Will you kindly advise me whether you are in direct correspondence with Monsieur Pallain now and are expecting a letter from him; if not whether it would be advisable for you to write him that our Board had made application to the Reserve Board to enter into formal negotiations for reciprocal relations: Will you not also secure from Monsieur Pallain specific instructions as to the status of Mr. de Neuflize since should he remain here one or two months longer or return shortly to France, we at the bank should know just what standing he has. He has been informed emphati- cally that you have been carrying on and will continue to carry on in behalf of this bank all correspondence and negotiations with the Bank of France, but as he will undoubtedly continue to call on us you will, we assume, keep us informed in order that we may know how to handle such particulars as we are obliged to handle at this end. Mr. Jay and I both feel that you should ascertain, as stated above, direct from Monsieur Pallain the status of Mr. de Neuflize and advise us of same. r FEDERAL RESERVE BANK OF NEW YORK 3 To Mr. Strong. 1/4/17. Will you, therefore, write me just the present condition of the negotiations and will you be prepared to continue them as soon as the Board at Washington grants our request? Meanwhile, will you continue the informal correspondence:, Have you done anything about the Bank of England matter, as we have done nothing since sending the cable to Lord Cunliffe expressing your wishes in the matter and advising that negotiations would be continued by you. Curtis is better today but thinks that it will be next week or the week after before be can get around. Mr. Jay expects to spend tomorrow at his home writing his annual report, material for which has been gathered by Mr. Cann and others. I hope to go home tomorrow, Friday night, and remain there Tuesday for our annual bank meeting. It has been arranged that the Committee composed of Messrs. Peabody, Towne and Woodward will go to Washington for a meeting next Wednesday with the Reserve Board. Nothing new has developed in reference to filling my position as Deputy Governor beyond what I have already written except that Messrs. Peabody and Woodward have discussed the same a little and are making some inquiries in certain directions. Mr. Jay had an offer of a bank position here in New York but I assume he will write you the details. In view of my correspondence with Governor Harding, it is difficult for me to know my status at Washington, but I am still on the job at New York and hope to continue for a while longer until matters are shaped up here to permit me to leave. I 4 _FEDERAL RESERVE BANK OF NEW YORK -4- To Mr. Strong. am frank to say the treatment from Washington with which you are familiar does not encourage me in my desire to remain. As I wrote you yesterday, the old officers were reelected and I think among the directors it is understood that you will not return before next Summer to take up active work, but that they are expecting you to do so as soon as you and your doctor deem it wise and that an arrangement somewhat along the line I wrote you should be consummated- having some one to carry the detail and you handle the bigger problems. of your gaining give I want to assure you that reports a great deal of pleasure to all of our direc- tors and that they are most agreeable to your staying until you are thoroughly restored. I wish I could drop in occasionally and read the Riot Act to you in a forceful way because I feel that it must be a temptation to you as you grow stronger and more vigorous to feel that you can put the globe and all of its troubles on top of your shoulders and carry it, but we want you to assume only the most necessary ones and not worry about matters here which will work out all right I am sure. My very best wishes to you and in this the officers and directors would join if they knew I was writing. Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colo. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK JAni January 5th, 1917. o 191/ My dear Governor: Mr. Curtis is improving and hopes to be around early next week. The Reserve Board approved of the application of Mr. Charles M. Schwab to permit him to become a director in the Chase i4tional Bank and the Empire Trust Company. I wrote you I think that the Board on Wednesday raised the acceptance rate to 3 i for member bank acceptances at 90 days, subject to the usual % for additional bank endorsement. I have notified Rhoads, Aiken and Fancher and they will adopt the same. Mr. Woodward told me yesterday that banks were buying acceptances very freely and Bernard, Scholle & Company offered us 3 1/8 for one million of our bank acceptances if we cared to sell. While we may ,not get as many just now, those we do buy will pay us a better rate and later we may think it wise to drop our rate, but I feel that we have made some headway recently in the development of an open market. Mr. Kent told me that he had sold all the bills they had in their portfolio yesterday (about one million), at rates somewhat lower than ours. you approve of our action. I hope that To EDERAL RESERVE BANK OF NEW YORK kr. Strong. Jan. 5, 1917. Probably six of the Governors will meet in Washington January 22nd and 23rd on work assigned to the various committees. I hope by that time we shall have as a result of the New York bank committee going to Washington next week, a better working basis between the Board and.this bank. Money seems to be working much easier in New York and the general irpression seems to be that we shall have easy rates for the next few months. I hope to go to Ithaca tonight to remain until Tuesday night when I hope to bring Mrs. Treman back with me for a few days. I shall try to arrange some of my private affairs which have been somewhat neglected of late and two or three days will enable me to clean them up in nice shape I trust. Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colo. RHT/V0M FEDERAL RESERVE BANK OF NEW YORK January 10th, 1917. My dear Governor: I beg to acknowledge receipt of your favor of Jan- uary 5th, enclosing confidentially your letter to Mr. Warburg in re memorandum on greenbacks which I am to hold in confidence until I hear from him direct, and the same will be so treated. 6incerely yours, C&FV,14-1-twee,t_ Deputy Governor. 3enjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colo. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK JAN1 5 1911 January 10th, 1917. My dear Governor: I returned from Ithaca this morning and brought Yrs. Treman with me for a week or two of change for her as she has been living too strenuous a life recently and if she comes down to the quiet of New York City, it should help her. I went up to Ithaca Friday night and stayed over yesterday so as to clean up some of my personal affairs which have been sadly neglected and incidentally to attend some meetings of the banks which were held yesterday and especially our own, it being the annual meeting of our stockholders. They re-elected me President and I explained to them that, whereas, I thought the limit of my stay in New York would be January let, it looked now as though I might have to stay for a somewhat longer indefinite period until matters could be adjusted satisfactorily here. Apparently they wire entirely satisfied to have the arrangement go on so long as there was to be a termination later and it relieved somewhat my anxiety as to the situation at home to find that they were so willing to cooperate with me in working matters 011t I assume that matters here will develop gradually but surely. In any event I feel that there is no need for you to feel at all anxious about taking all the time necessary to To FEDERAL RESERVE BANK OF NEW YORK Mr. Strong. 1/10/17. build up your strength so as to resume the work which they are all so anxious to have you do, not only here, but I fully beSo grit your teeth and stick to lieve in Washington, also. the regime, though monotonous and arduous it may seem, and the results will be most gratifying to all, I believe. I find your mighty nice letter of January 5th in regard to the "difficulties and troubles" which have developed to an unusual degree recently. Our Committee of Lessrs. Towne, Peabody and Woodward are in Washington to-day and I hope they will be able to straighten out the situation so as to bring into closer relations the Board and this bank. Mr. Delano advised me that he would be here on the 15th and Mr. Jay telephoned me this morning that he had asked Governor Harding to come over with Mr. Delano and spend a day at the bank and I am in hopes that they may come as think that such visits cannot but be helpful and bring us into a more harmonious relationship. So far as I am concerned personally, I confess that Governor Harding's letter did disturb me and while I laughed when I first read j.t (as I did see the humor of the situation and felt more sincerely sorry for him than for myself), yet it hurt somewhat. However, so far as I am personally concerned, I have had sufficient hard knocks myself to try and take them standing up and remain so, and believe that all this misunderstanding grew out of an unusually unfortunate combination of circumstances and I have faith that to-day's meeting in Washington will clear the atmosphere and result in better feeling all FEDERAL RESERVE BANK OF NEW YORK Mr. Strong. around; so dismiss this from your mind. 1/10/17. As for my being dis- couraged or feeling that the work is not worth while - if that comes, it is temporary only and passes away, and the antidote is the great pleasure I have enjoyed in my association with my colleagues and others in this bank who have treated me with the greatest courtesy and have always upheld my hands. do thank you for your cheering words and hope that there will be nofurther occasion arising for your feeling that I need any encouragement of this kind. Since writing the above, I have read Mr. Locke'snexplosion" and thinking that you would enjoy it as much as I am sending you a copy herein. Dr. Treman is impressed with the fact that you are overwhelmed with mail and that you should not be interfered with in your careful and mature thought which you nust necessarily give to the framing up of our relations with the Bank of England and the Bank of France. So as far as any an- swers to my letters are concerned, I want you to cut them out entirely or postpone the answers indefinitely or forget them altogether. We will probably send you more or less unimport- ant gossip to throw a little lighter coloring on the picture, but please don't fell under any necessity of following it up in your answers. If it is necessary for Dr. Treman to associate himself with Dr. Sewall, and if he needs any real expert assistance in reading the medical riot act, tell him not to hesitate to call upon me and I will do my part, as the patient is worth our very best skill and ability. ,-DERAL RESERVE BANK OF NEW YORK -4- To 1/10/17. Mr. Strong. With kind personal regards and my very best wishes that every week will add something to your surplus strength and that you are having more and more peace of mind. It certainly has been a great joy to me to have been brought into such close relations with you, my dear Governor, and this association has developed in me a very sincere affection for you. Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM C 0 P Y. January 5th, 1917. Hon. R. H. Treman, Federaf-77serve Bank, Corner Pine et Nassau Streets, New York City. dear Mr. Treman: I have your letter of yesterday. that any committee was appointed. I regret very much After Harding's letter to you of December 30th, of which you enclose a copy, and which 1 should regard as a direct personal affront to the whole Board, I would have refused to colgply with any suggestion that the members of the Board might make touching the committee or anything else. very sorry for Curtis. Yours very truly,' (Signed) Franklin D. Locke. I am FEDERAL RESERVE BANK OF NEW YORK JAN1 1 1917 January 10th, 1917. My dear Governor: I reached the bank late this morning because of a delayed train and found your document in re Bank of England and Bank of France matters. Glancing hurriedly over it, I saw that it pertained to the situation as it had developed and contained recommendations as to future action, and as it was then 10:20 and our Committee was expected to have its session with the Board in Washington at 10:30, I 'phoned the Committee, talking with Mr. Peabody, reading him the essential extracts from your letter which had a bearing on their mission and having him take a copy of same at that end so he could transmit it to the other two members of the Committee. I impressed upon him that this was marked "Confidential" and that in transmitting it to him I assumed that he would treat it as such in every way, but use -Che information contained therein because of its very great bearing on the matters which they were discussing with the Board. He told me that he would see that it was treated in accordance with my request, and I hope you will approve of my taking the liberty of conveying the knowledge to him. I felt that without question they should have this information if they were to properly represent this bank and its position and especially your own position as you were the one most concerned in the violation of the agreement. ..:SERVE BANK OF NM YORK To ................ Mr. Strong. 1/10/17. Mr. Curtis is still at home with his ankle but hopes to be around some time this week and Mr. Jay is home to-day writing his annual report so that it was a matter necessitating immediate action and I used your letter as stated above. Hoping that you will feel that I was justified in taking this liberty under the circumstances, I remain, Very sincerely yours, Psq., Benjamin Strong, 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK g4,P January llth, 1917. JAN16 1317 My dear Governor: Messrs. Towne and Woodward returned from Washington this morning and Towne telephoned Jay and myself giving some details of their experience making the summary that the trip was well worth while, that he felt they had accomplished practically all that they had set out to do and that much of the trouble was -due to Governor 1-larding's illness. Secretary McAdoo presided at the conference which lasted nearly two hours, then they lunched with the Board. Mr. Woodward is coming in later today to give us more detail and Mr. Peabody remained in Washington to go into the matter more fully with individuals in order to clean up the situation, if possible. The Directors at their meeting last Wednesday authorized me to make application to the Federal Reserve Board at Wash- ington for permission to enter into reciprocal bankng relaticns with the Bank of France and I contemplated making the same formal application that I had made 1,st August in re the Bank of England matter. Mr. Peabody asked that the matter be held up until the Committee had been in Washington and I assume that he personally will talk over the matter with Mr. Warburg, Governor Harding and the others, although Mr. rlowne stated that the Committee did not 1/11/17. To Mr. Strong. .AL RESERVE BANK OF NEW YORK -2.- touch upon that subject yesterday. We do not wish to do anything., however, in this matter without your knowledge and approval unless we have to act quickly, as you are expected to carry on the negotiations with the Bank of France and I am writing to ask you to wire me on receipt of this letter whether you approve of our making formal and immediate application to the Reserve Board for permission to complete negotiations with the Bank of France. We assume that there is the possibility that if we make such formal application and they approve of it and authorize it, they will immediately make announcement of this action and this you Personally, I feel that as the news- will, of course, consider. papers published within a day or two after the Bank of England matA, ter came out, a cable apparently originating in Paris that the Bank of France would enter into the same relations with the New York Bank presumably as the Bank of England, since Benjamin Strong, Governor of the Federal reserve bank, was in Paris last spring making preliminary arrangements looking toward such reciprocal relations- the announcement by our Reserve Board that they had author- ized this would have no effect other than a favorable one at the present time. - We shall await your telegram, however, before mak- ing this formal application. Governor Rhoads care over to-day and lunched with Curtis, Kenzel and myself, at which time we discussed the sale of the 3 per cent foreign bonds. About', ..6,000,000. will be offered by the re- serve banks and I enclose copy of a letter which we are proposing to send to possible purchasers, it being understood that each reserve FEDERAL RESERVE BANK OF NEW YORK -3- Mr, Strong. To 1/11/17. bank will be advised of this action and will be requested to send a similar letter to any parties in their district who they thrink would be interesled in such purchase. In view of the announce- ment made in the newspapers that a government bond issue was to be expected soon, we may not have very strenuous bidding. So far as we can learn unofficially, it is thought that the government may put out some 3 one year notes tempora- rily to tide them over the first of duly, after which they will be in better position to determine the need of a bond issue. Our new vault is practically completed, just a few finishing touches being put on this week and on Saturday we hope to move into it. This will be a great saving of time, especial- ly for the officers. Call money is 1 3/4 % to-day and there are indications We arc not securing any ac- of very easy money for a period. ceptances of any amount as the open market has absorbed practically all that are being offered. I assume that it would be well for us to maintain our rates at least for two or three weeks longer until we can see more clearly the trend of things, and meanwhile aid in the open market development. M. do Neuflize called to-day and we informed him that we had received a letter from you stating that you had received a cable from M. Pallain to the effect that he had answered your letter and same was coming forward by the next mail, that such letter had not arrived, but we understood that negotiations looking toward reciprocal relations were thus being carried on and that from the cable grams exchanged we though there was complete understanding between FEDERAL RESERVE BANK OF NEW YORK -4- To Mr. Strong. 1/11/17. M. Pallain and Governor Strong and that we anticipated a favorable result of such negotiations. M. de Neuflize stated that he would prObably sail soon but did not give a definite date and we told him that if he called before sailing, we might be able to give him further information, but we could assure him that it would be our sincere hope and belief that arrangements entirely satisfactory to both insitutions cwould be concluded. I assume that you will ascertain from M. Pal- lain the proper status of :.. de Neuflize. With kind personal regards and best wishes, 1 remain, Very sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM - FEDERAL RESERVE BANK OF NEW YORK 'U. JAN1 9 1917 January 13th, 1917. My dear Governor: Enclosed, I hand you copy of a letter received from Mr. Meredith, President of the Bank of Montreal. I shall be glad to have yolk' comment upon it and advice as to our action. Messrs. Woodward, Jay, Curtis and myself are inviting Messrs. Vanderlip, McCarrah, Wiggin, Baker and Alexander to a luncheon on next Wednesday to meet Messrs. Harding and Delano. Mr. Woodward gave us an account of the meeting of our Committee with the Federal Reserve Board at which Secretary McAdoo presided. As soon as Mr. Towne began speaking, the presiding officer suggeste_d that it would be necessary to have an official stenographer at the conference and he then proceeded to set forth his views as to the Federal Reserve Board being .a public body and thcre were no individual rights; that the Board was subject to investigation and bound to make public their actions for the benefit of the great American public; that the actions of the Board were not subject to review or criticism, etc. etc. uneasy and restless. Audience seemed Mr. Towne proceeded with the statement of the position of this bank and Mr. Woodward during the discussion injected the inquiry as to whether this was a meeting looking toward cooperation or one of investigation. Mr. Strong. To FEDERAL RESERVE BANK OF NEW YORK 1/13/17. Mr. Towne pointed out that the Directors of the bank were acting at considerable sacrifice to themselves and it was necessaryto have harmony Federal Reserve Board. in the relations between them and the r. Woodward wanted to know, whether in future it would be advisable in view of the attitude of the presiding officer, for the Federal Reserve Bank of New York to consider in matters requiring secrecy and confidence that they could be transmitted to the Federal Reserve Board before it was time to announce them publicly, or whether they would be able to feel that matters submitted to the Board would be treated in confidence. No answer advanced. It was the general impres- sion of the Uommittee that Mr. Towne presented the subject very well and five members at least of the Board were in favor of developing proper relations with the New York Bank and assurance was given to that end. Apparently, it was a very interesting conference and lasted for two hours, probably resulting in a betterment of conditions, whatever the stenographer's record may show. I hope that matters are moving along smoothly with you and shall hope to write you more fully tomorrow. With kind regards, I am, Very sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK JAN 19: January 15th, 1917. My dear Governor: We were all very much delighted to receive a call from Mr. George Roberts who came in this morning to report his visit with you, especially since he was able to report that you were apparently in such good health and vigor. Had he not been inform- ed that you had been ill, he would not have known it from your actions and appearance, all of which is most encouraging. I anticipate having a talk with Messrs. Woodward and Peabody this week as to permanently filling the position I am occupying temporarily and I shall be glad to have you advise me your own views as to what date you think we should work to. Per- sonally, I should be glad to be relieved not later than around the first of May, provided satisfactory arrangements can be made for filling my place by that time. be able to return to I have thought possibly you would New York for a visit in May and could then discuss with the new occupant of the position plans, etc. before you go abroad should it be 'thought advisable for you to do so. You must have enjoyed having Mr. Roberts with you and giving you opportunity to discuss many matters. I gave Mr. Kent the copy of your letter and he reported Saturday afternoon that being unexpectedly absorbed with another matter, he would not be able to report on the letter until to-day, Monday, and I assume that it will be returned to-day. FEDERAL RESERVE BANK OF NEW YORK To ... Mr. Strong. 1/15/17. We had a call on Saturday from ex-Senator Burton who has just been elected President of the Merchants National Bank, the specific motive for his visit being to pay off a note rediscounted with us a few days for a little less than four millions. We received a letter this morning from the Reserve Board approving payment of the emergency salaries except they exenwted the Federal Reserve Agent from participation in this payment. They approved of all the salary advances recommended including that of Mr. Curtis, but the approval in Mr. Curtis' case was based on the condition that he no longer receive a salary as Secretary of the Governors Conferences. They state further in this connection that should a charge against the other reserve banks be justified by reason of the time given by an official of the New York Bank to their work, the bank itself and not the individual should receive the payment. Mr. Curtis is in Washington to-day attending a meeting of the Bureau of Research but will return to-morrow morning. I am enclosing copy of a letter which we are sending Mr. Calkins, Deputy Governor at San Francisco, which I would be glad to have you look over and if you think our position not please advise us. sound I conveyed to Mr. Kenzel before he wrote the letter my own views that insofar as we could we should accomodate the Federal Reserve Bank of San Francisco because conditions there are somewhat different from those in our district. By the way, I heard through a friend of mine in New York who is close to Governor Kains, that he has had quite a .serious time with ulcers of the stomach and that while he has not had an operation he has been very seriously ill, but is now reported improving rapidly. "RAL RESERVE BANK OF NEW YORK - 3- To Mr. Strong. 1/15/17. I learn from Mr. Curtis that inadvertently I told you the officers were authorized by the Directors to make application to negotiate with the Bank of France; what I should have said was that they were authorized to make formal application to appoint the Bank of France as our agent and correspondent in France. This we have not done yet and will hold it in abeyance until I am advised by you whether we shall make this application now while negotiations are pending or wait until we have concluded everything and then file our formal application and advise them at that time as to details. Very sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK 134.k j42 5 1917 January 16th, 1917. My dear Governor: These arff exceedingly busy days for us but if we are all permitted to 'keep at work we can handle things very nicely. We had our Directors meeting to-day and elected Mr. Morgan a member of the Advisory Council for 1917 and wr. Jay and I have just returned from his office, having notified him of his appointment and election and he seemed very glad to serve. etc. Said he was deeply interested in the Reserve System, I told him that our new vaults were now completed and that they were at his service in case he should desire to store some gold es they have done before. I will try and write you more fully about the acceptance rates to-morrow but this week the $50,000,000 French Industrial Credit acceptances will he on the market and we are inclined to hold a little, above the market for a few days longer when we shall undoubtedly Place our rates more in accord with the mar.., ket andpIrchase more acceptances. I am enclosing a sample report which Washington sends us now each day giving the renewal credits held in the System. With kind regards, I remain, Sincerely yours, Deputy Governo Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. POSTAL -r IEL.em Ft .45, COMPANN, H NIGHT LETTERGRAM THE POSTAL TELEGRAWBABIE64PAPCII.PICORFkiBATZ17.4 TRANSMITS AND DELIVERS THIS NIGHT LETTERGRAM SUBJECT TO THE TERMS AND CONDITIO CPRiT.N EcJ OF THIS B K. CLARENCE H. MACKAY, PRESIDENT. liECEIVED AT DELIVERY 1,19. 1LEPHCIaE MA114 404:04. - INDEPENDENT 4--P! PROGRESSIVE COMPETITIVE 165 NI TT, y" 2244M Tan 16 cb York NY Jan 15 17 Denjamin Fltong 4100 7ontview 7ouievard -flenver Colo 7ent makes following suggestions seven, section B .If we should seven three quarters when our say seventy eight or gold occasion him loss.Stop, kent regarding your letter stop, paragraph order gold earmarked at seventy correspondent was obliged to pay bidding,it might has no suggestion that will in times of active meet situation but thought possibility should be sides.gtop,Page four,section 4, line, TO, '---ether word "Less" shoul.d not read "Plus". understood on both Stop queries . a . S. OPERATOR'S NOTATK*41,, TIME SENT, ETC. ENGLAND N WROVHOLAND Id ti\ ? PACIFIC 1110'..I°A.PAN VANCouvE OCEAN SAN FRAN SCO _..8YOKOHAMA 1111%0 AIM all a TAW* irOMPV. MIDWAY to, THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY (INCORPORATED) TRANSMITS AND DELIVERS THE WITHIN NIGHT LETTERGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS: The Company will receive, not later than Midnight, NIGHT LETTERGRAMS, written in plain English, to be transmitted only for delivery on the morning of the next ensuing business day, at rates still lower than its standard night message rate, as follows: The standard day rate for a ten-word day message shall be charged for the transmission of a ,NIGHT LETTERGRAM, containing fifty words or less, and one-fifth of the standard day rate for a ten-word day message shall be charged for each additional ten words or less in such NIGHT LETTERGRAM. To guard against mistakes or delays, the sender of a message should order it REPEATED: that is, telegraphed back to the originating office for comparison. For this one-half the unrepeated message rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED MESSAGE AND PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the message and this Company as follows: 1. The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED message, beyond the amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED message, beyond fifty times the sum received for 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 MESSAGES. I. 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 message, whether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED message rate, at which amount this message, if sent as a R REPEATED message, is hereby valued, unle unless a greater value is stated ni writing hereon at the time the message 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 one per cent. thereof. 8. The Company is hereby made the agent of the sender, without liability, to forward this message over the lines of any other Company when necessary to reach its destination. 4. Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be made to cover the cost of such delivery. I. No responsibility regarding messages attaches to this Company until the same are presented and accepted at one of its transmitting odic.: and if any message is sent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the message and any notice or instructions regarding It to the Company's agent in its said office. e. This Company shall not be liable for damages or statutory penalties in any case where the claim is not presented in writing within thirty days after the message is filed with the Company for transmission. In further consideration of the reduced rate for this special "NIGHT LETTERGRAM" service, the following special terms are hereby agreed to: NIGHT LETTERGRAMS 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 LETTERGRAMS at destination, postage prepaid. NI5iT LETTERGRAMS shall be written in plain English. Code language is not permitted. T1 ve terms and conditions shall be binding upon the receiver as well as the sender of this NIGHT LETTERGRAM. NO rMPLOYE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING. CHARLES. fii.A.DF ADAMS. CLARENCE H. MACKAY, PRESIDENT. EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER. CHARLES P. BRUCH, VICE-PRESIDENT. TH... 'FASTEST TELEGRAPH SERVICE IN THE WORLD Ros-rAL TELEGRAPH CABLE COMPANY NIGHT LETTERGRAM THE POSTAL TELEGRAPH-CABLE COMPANY (INCORPORATED) TRANSMITS AND DELIVERS THIS NIGHT LETTERGRAM SUBJECT TO THE CLARENCE H. MACKAY, PRESIDENT. .R.IWtfi..A.t4 K. TERMS AND CONDITIONS P019,14ttib 6-NFrFd VA'dK 920 -17 ill LREF'StER M.Inaner DELIVERY NO. 1314, "TELEPHONE MAIN .4500 - COMPETITIVE IN 4-622 23 Try PROGRESSIVE 7? en ctrong Denver Colo he'..yt 2- Same section he queries whether if correspondent required us to earmark large quantity bars which we might not under agreement ston;Paragraph And should it it later released to us have to absorb asssay office charge. fifteen he suggests adding at end following words be possible to do so.,, Stop. 7hinks otherwise we indicate willingness to do something which may be impossible.Stop. 'Please instruct which if any of these points 7,rou wish dealt with either in original letter Or in supplementary letter R H Treinan POSTAL TELEGRAPH-COMMERCIAL CABLES a - EWPOUNDLAND 11111112E41rieli.JAPAN 10,-.4:0KOHAm. PACIFIC OCEAN VANCOL/VE SAN FRAN ISCO WA BERMuow ATLANTIC OCEAN Ft eT. VINCENT THE GREATEST TELEGRAPH AND GABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY (INCORPORATED) TRANSMITS AND DELIVERS THE WITHIN NIGHT LETTERGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS: The Company will receive, not later than midnight, NIGHT LETTERGRAMS, written in plain English, to be transmitted only for delivery on the morning of the next ensuing business day, at rates still lower than its standard night message rate, as follows; The standard day rate for a ten-word day message shall be charged for the transmission of a NIGHT LETTERGRAM, containing fifty words or less, and one-fifth of the standard day rate for a ten-word day Message shall be charged for each additional ten words or less in such NIGHT LETTERGRAM. To guard against mistakes or delays, the sender of a message should order it REPEATED; that is, telegraphed back to the originating office for comparison. For this one-half the unrepeated message rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED MESSAGE AND PAID FOR AS sum, in consideration whereof it is agreed between the sender of the message and this Company as follows: I. The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED message, beyond the amount received for sending the same; nor for mistakes or delay's in the transmission or delivery, or for non-delivery, of any REPEATED message, beyond fifty tunes the sum received for 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 MESSAGES. 2. 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 message, whether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED message rate, at which amount this message, if sent as a REPEATED message, is hereby valued, unless a greater value is stated in writing hereon at the time the message 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 one per cent. thereof. S. TheitsCompany is hereby made the agent of the sender, without liability, to forward this message over the lines of any other Company when necessary to reach destination. Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be made to cover the coat of such delivery. No responsibility regarding messages attaches to this Company until the same are presented and accepted at one of its transmitting offices; and if any message is sent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the message and any notice or Instructions regarding it to the Company's agent in its said office. ft. This Company shall not be liable for damages or statutory penalties in any case where the claim is not presented in writing within thirty days after the message is filed with the Company for transmission. In further consideration of the reduced rate for this special "NIGHT LETTERGRAM" service, the following special terms are hereby agreed to: NIGHT LETTERGRAMS 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 LETTERGRAMS at destination, postage prepaid. NTf'LETTERGRAMS shall be written in plain English. Code language is not permitted. TL T /ove terms and conditions shall be binding upon the receiver as well as the sender of this NIGHT LETTERGRAML N EMPLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING. . . . CLARENCE H. MACKAY,. PRESIDENT. CHARLES C. ADAMS, EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER. CHARLES P. BRUCH, ......... t-,VICE-PRESIDENT. VICE-PRESIDENT. THC-,)FASTEST TELEGRAPH SERVICE IN THE WORLD OPERATOR'S SENT, NOTATIONTIME ETO. :CABLE. CDNIP PD 91ALE 1.-EGR,A10 NIGHT LETTERGRAMI .1, . THE POSTAL TELEGRAPH-CABLE COMPANY (INCORPORATED) TRANSMITS AND DELIVERS THIS NIGHT LETTERGRAM SUBJECT TO THE CLARENCE H. MACKAY, PRESIDENT. TERMS AND CONDITIONS PRINTED ON THE BACK OF THIS BLANK. CHECK TIME FILED COUNTER NUMBER . U. DEPENDENT COMPETITIVE PROGRESSIVE BEND the following NIGHT LETTERGRAH. subject to the tarots on back hereof, which are hereby agreed to. Lc, January 15th, 1917. Benjamin Strong, 4100 Montview Boulevard, Denver, Colo. Kent makes following suggestions regarding your letter. Stop. Paragraph seven, Section B. If we aaould order gol e-rm,Irked at seventy seven three quarters wh,n our correspondent was obliged to pny say seventy eight for gold in times of aeive bidding, it might occasion him loss. Stop. Kent has no suggestion that will meet situation but thought possibility should b understood on bot.,-, sides. FA-op. Page four, section A, line two, he queries whether word"less" sh,uld not read "nlus". Stop. Same section, he queries whether if correspondent required us to elrmark large quantity bars which it later released to us we might not under agreement havc to absorb Assay office charge. Stop. Paragra7lh fifteen, he sugge:As adding at end following words, "and should it be possible to do so." Stop. Thinks otherwise we indicate willingness to do something which may be impossible. Stop. Please instruct which if ny of these points you wish dealt with either in original letter or in sup'lementary letter. PJ/VCM Charge R. H. Treman. Fe:Aral Reserve Bank, 120 Broadway, New Yor' City. 'AL TELEGRAPH-CABLE COMPANY CONNECTION THE COMMERCIAL CABLE COMPANY Es AND 4] THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY (INCORPORATED) TRANSMITS AND DELIVERS THE WITHIN NIGHT LETTERGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS: The Company will receive, not later than midnight, NIGHT LETTERGRAMS, written in plain English, to be transmitted only for delivery on the morning of the nest ensuing business day, at rates still lower than its standard night message rate, as follows The standard day rate for a ten-word day message shall be charged for the transmission of a NIGHT LETTERGRAM, containing fifty words or less, and onefifth of the standard day rate for a ten-word day message shall be charged for each additional ten words or less in such NIGHT LETTERGRAM. To guard against mistakes or delays, the sender of a message should order it REPEATED, that is, telegraphed back to the originating office for comparison. For this, one-half the unrepeated message rate is charged in addition. Unless otherwise indicated on its face. THIS IS AN UNREPEATED MESSAGE AND PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the message and this Company as follows The Company shall not be liable for mistakes or delays in the transmission or deliver, or for non-delivery, of any UNREPEATED message, beyond the amount received for sending the same ; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED message, beyond fifty times the sum received for 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 MESSAGES. 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 message, whether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED message rate, at which amount this message, if sent as a REPEATED message, is hereby valued, unless a greater value is stated in writing hereon at the time the message 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 one per cent. thereof. The Company is hereby made the agent of the sender, without liability', to forward this message over the lines of any other Company when necessary to reach its destination. Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be made to cover the cost of such delivery. No responsibility regarding messages attaches to this Company until the same are presented and accepted at one of its transmitting offices; and, if any message is sent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the messageand any notice or instructions regarding it to the Company's agent in its said office. This Company shall not be liable for damages or statutory penalties in any case where the claim is not presented in writing within thirty days after the message is filed with the Company for transmission. In further consideration of the reduced rate epee' '!NIGHT LETTERGRAM" service, the following special terms are hereby agreed to (a) NIGHT LETTERGRAMS may at the opticni. Company be mailed at destination to the addressees and the Company shall be deemed to have discharged its obligation in such cases wI1 respe 'y by mailing such NIGHT LETTERGRAMS at destination, postage prepaid. (6) NIGHT LETTERGRAMS shall be written hi plain Englis Code language is not permitted. The above terms and conditions shall be binding upon the receiver as well as the sender of this NIGHT LETTERGRAM. NO EMPLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING, CHARLES C. ADAMS, VICE-PRESIDENT. CLARENCE H. MACKAY, PRESIDENT. EDWARD REYNOLDS. VICE-PREST. AND GENERAL MANAGER. CHARLES P. BRUCH, VICE-PRESIDENT. FEDERAL RESERVE BANK OF NEW YORK JAN2 5 1)1/ January 17th, 1917. My dear Governor: At our Board meeting yesterday, the special committee appointed to visit Washington reported the result of their visit and I asked Mr. Peabody if he would not write you in detail so that you might have his impressions at first hand, since he remained two days longer than the other members of the committee and had some personal interviews. The discount rates remain unchanged. In discussingac- ceptance rates with Mr. Woodward and afterward with Governor Aiken by telephone, they agreed that it would be wise to continue for a few days longer rates which are, as you state, higher than the outside market. This week, however, the new French Industrial Credit acceptances will be on the market and as they are renewal credits, it seemed wise to wait a few days and then we will undoubtedly bring our rates down nearer where they should be, probably 1/8 or 1/4 less, as ruling rates now seem to be about 2 1/2 to 2 3/4 instead of 3 to 3 1/4. The matter of negotiations with foreign banks was referred to the Governor of the bank and the Executive Committee and we will try to keep in touch with you. We had a suggestion as to making an arrangement with the Banco de la Nacion, Buenos Ayres. Mr. Jay and I felt it would be wise to ask Lr. Warburg Mr. Strong. To FEDERAL RESERVE BANK OF NEW YORK Jan. 17, 1917. to suggest the individual whom it would be best to address and make any suggestions as to our correspondence to this particular bank, he having visited it. We will submit the matter to you, of course, before sending anything forward. We have your telegram as to suggestions made by Mr. Kent and I expect 1ir. Curtis to go over the detail matters with the Assay Office and you can be sure that we will lose no time unnecessarily in the Bank of England matter. Regarding the collection of checks on non member banks, it was thought wise to hold the matter of collecting on non member banks through express companies for a short time until the fate of the amendments in Congress might be determined. I invited the Directors to inspect the new vaults which they did and apparently seemed highly pleased. I wish you could see them yourself as, of course, you will later. Today, we are to have Governor Harding and Mr. Delano with us and expect to give up practically the whole day to them, having them for luncheon at the Bankers Club with Messrs. Hepburn, Martindale, Alexander, McGarrah, Thorne, Clarke and possibly one or two others. Mr'. Wiggin was away and Mr. Vanderlip accepted but last night was subpoenaed to go to Washington with Mr. Morgan and others in the "leak" matter. I will take up the other matters as soon as I can reach them. With kind regards, I remain, Very sincerely yours, ---11±1.177-77) Deputy Gdvernor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colo. FEDERAL RESERVE BANK OF NEW YORK January 17th, 1917. My dear Governor: With further reference to negotiations with the Banco de la Nacion, Buenos Ayres, I enclose copy of letter I wrote to Mr. Warburg together with his reply outlining a letter. It seems to me,and Yr. Curtis and Mr. Jay concur, that all this correspondence should be sent in your name and with your knowledge. I should frame the letter I think somewhat differently from Mr. Warburg's which I assume is in the nature of a suggestion only. I suppose you will write a letter, sending it to us to forward and keeping a copy for your own files. I assume then that we should send a copy of this letter to Mr. Warburg as he suggests for translation and his additional personal letter. I expect to write you to-morrow the result of the luncheon to-day but ,cannot reach such letter now. Kindly return Mr. Warburg's letter for our files. With kind regards, I remain, Very sincerely yours, ATV'7:'":1-1744444n Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM 7T prir/AL RESERVE BANK JPC/CPP New York, January 18,17. nub BE MAIM)) JF NEW YORK _ienjamin Stronp, 4100 7entview Poulevard, CONFrOKATIcON OF TELEGR AM Page taree Suggest following chanaes in your letter to England chan7e Pritish to English Paragraph E change it was to they were line five Last WehavIANWASIdgraNdUmilinWu ltfiatgl3Pm9t:the Bank of rngland quote to quote the Panic of England and char e it ac z agrapa clance L1erLCAI laint to jniteo Jto.tes Paragraph D change it was to they were At end of sentence odd the following quote excluding Assay Office charge above mentioned which will be borne by the If gold bars are returned they may be subject to a amountin to one dollar The Fode2a1 Reserve r.ank of thousand ounces wich is the existing charge New York hoaever will endeavor to have this &large abrogated by the Assay Office and if successful will immediately notify the Bank of 'England quote Pace six Paragraph tine next to last line change dealt with to undertaken line seven after the word bills insert quote bearing the names of English Add at end of paragraph the following quote drawers or indorsers quote should it be possible to do so quote Paragraph seventeen omit whole para- lank of Ragland stop further Assa7 Office charge for remelting graph stop Suwrest you rewrite letter making such changes as you R. H. TREMAN red. Res. Bk., Equitable Pldg. Chge. B-2 desire. Form M ., _ Night Me ege NT, If no CLASS OF SERVICE Blue me&C.A Nile WESTERNUNIOA words)th is is a day message. Otherwise its character is indicated by the .ox. BRANCH °MGR, 2301 E. COLFAT TELEPHON1 TUX 2645. 29DRH 214 BLUE RECEIVED AT Day Letter Blue Night Message NIte Night Letter NL '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 N EWCOM R. CARLTON DRESIDENT symbol appearing after the check. symbol appearing after the check. Fe/fr Cc*ir Q NEWYORK 415P JAN 18 1917 BENJAMIN STRONG 4100 MONTVIEW BLVD DENVER COLO SUGGEST FOLLOWING CHANGES IN YOUR LINE FIVE LETTER TO ENGLAND PAGE THREE CHANGE BRITISH TO ENGLISHt PARAGRAPH E CHANGE IT WAS TO THEY WEREILAST OF THE BANK OF ENGLAND LINE CHANGE QUOTE FOR ACCOUNT QUOTE TO QUOTE THE BANK OF ENGLAND AND CHARGE ITS ACCOUNTIQUOTE PAGE FOUR LINE TWO CHANGE LESS TO PLUSI PARAGRAPH B CHANCE AMERICAN MINT TO UNITED-STATES/PARAGRAPH WERE AT END OF SENTENCE OFFICE CHARGE ASSAY D CHANGE IT WAS TO THEY ADD THE FOLLOWING !QUOTE EXCLUDING ABOVE MENTIONED SYI'BOL Day Message TELIL. 1, AM '.etter NL these three symbols appears after the check number of 112 4 1 WHICH WILL BE BORNE BY Form 1204 D Blue Night Message Nite Night I after NL If none 'se three symbol appears arter..ie check (number of words)th is is a day message. Otherwise its character is indicated by the WESTE ,r.vo U ION . ,WESTERN UNION TEL AM NEWCOMR CARLTO. .RESIDENT symbol appearing after the check. CLASS OF SERVICE SYMBOL Day Message Day Letter Blue Night Message Nite NL Night Leiter 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. is L RECEIVED AT TELEPSONS YORK 2510. 29D RH 214 BLUE --.2ND PAGE--- A FURTHER ASSAY OFFICE CHARGE DOLLAR PER THOUSAND OUNCES WHICH FOR REMELTING AMOUNTING TO ONE I::. 1 4k-- IF GOLD BARS ARE RETURNED THE BANK OF ENGLAND STOP THEY MAY BE SUBJECT TO '''' IS THE EXISTING CHARGE.THE FEDERAL RESERVE BANK OF NEWYORK THIS CHARGE ABROGATED BY THE HOWEVER WILL ENDEAVOR TO HAVE WILL IMMEDIATELY NOTIFY THE BANK ASSAY OFFICE AND IF SUCCESSFUL NEXT TO LAST LINE CHANGE OF ENGLANDIQUOTE PARAGRAPH NINE DEALT WITH TO UNDERTAKEN/PAGE SIX LINE SEVEN AFTER THE i WORD BILLS INSERT QUOTE BEARING OR INDORSERS QUOTE ADD AT QUOTE SHOULD IT BE POSSIBLE THE NAMES OF ENGLISH DRAWERS END OF PARAGRAPH THE FOLLOWING TO DO SOIQUOTE PARAGRAPH SEVENTEEN OMIT WHOLE PARAGRAPH STOP SUGGEST YOU REWRITE LETTER MAKING Form 1204 VICE SYMITOL iessage Uay Letter Wee Night Messrge Nite 111,, Letter NL If run ,base three symbols appears after the check number of words)th is is a day message. Otherwise its character Is indicated by the symbol appearing after the check. WESTE UNION Le,, 4 WESTERN UM TEL AM NEWCom m CAR LTO. n RESIDENT PRA NCH OFFICE, 230/ E. 0OLP Ai , -2, I e7,;k:-prgtrUZ 29D R H 21 4 - Batir.TatAt MEWED AT X SUCH CHANGES AS YOU DESIRE R H TPEMAN 417PM CLASS OF SERVICE SYMBOL Day Message Day Letter Blue Night Message Nita NL Night Letter tif 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. FEDERAL RESERVE BANK OF NEW YORK Janu:: 19th, 1917. Dear Governor Strong: "N25 1;;7 Answering yours of January 9th, plense do not worry about the difficulties that arose in connection with our Washington relations. When Governor Hamlin was here on Wednesday he went into detail as to this matter, the pressure that was brought to bear upon him when he was in bed with the grippe. requiring him to get up and go to the office, that he had left certain matters to Dr. Willis for attention and they had not been taken care of as they should have been and thst his illness and his condition because of his illness were really the contributing causes of the unpleasant situation which developed. He was very nice about the whole matter and I think his visit here taken with the visit of our Committee to Washington have very greatly improved the situation. Governor'Harding assured me that hereafter so long as he was Governor, all matters pertairing to the operation of the bank and its administration along those lines would be sent direct to the Governor and such matters as belonged peculiarly to the Federal Reserve Agent would be sent to him and where there was a question between the two, they would forward it to the bank so that it would re=ich.the proper one or would send a copy to one of the two officers and a carbon to the other, which would seem to be a good working basis. FEDERAL RESERVE BANK OF NEW YORK -2- To Mr. Strong. 1/1V17. Personally, I did feel hurt at the letter he wrote in answer to mine, as it did not seem to me that arything in my letter could be interpreted as requiring the reply which I received. I, of course, have felt the responsibilities of this position, and the administration of its duties was made more difficult be- cause of the absence of Mr. Jay for practically three months be- tween his vacation and his illness and his complete absorption in the Clayton Act matters for most of the remaining time up to January 1st. However, matters seem to be running along smoothly and my greatest embarrassment is the feeling of my limitations. I understand that Mr. Woodward has been writing you about the permanent organization, that is, some one to act as Deputy Governor to supplement your work and to take my place. I merely want to reiterate my position that I am willing to step out whenever the directors and you feel that it is advisable for me to do so. If it should be your desire to have my successor accompany you to Europe in May or June in case that should be decided upon and you should think it advisable for me to stay here until immediately after his return, or on the other hand, should it seem best to you to have my successor come earlier to be here for a time before going to Europe,to familiarize himself with the details of this work, I am willing to stay for a while with him to help him get hold of things or I will withdraw before he comes, as may seem best. My only desire is that I shall not be expected to remain all Summer. Now, my dear Governor, be perfectly frank and tell me when the time arrives for a decision on these matters just what FEDERAL RESERVE BANK OF NEW YORK -3- To Mr. Strong. 1/19/17. you want and feel sure that I will do my best to carry out your Most important of all is to have you arrange these desires. matters so that they will best serve the purpose of bringing you back to this bank in the best shape possible to continue the great work you have done and are to do. In your letter of January 10th. you state "at no time have I felt the slightest un- easiness regarding the affairs of the bank so long as you were there" and this did me, I assure you, a vast amount of good because I have personally been uneasy many times about my inability to contribute more to the successful operation of the bank. So long as I stay, I shall do my best and shall be very glad if the bank does not suffer by my connection with it. Mr. Palmer and Mr. Starek were evidently quite surprised .at the suggestion in regard to the reorganization, but Mr. Palmer called at the bank yesterday and I had quite a long talk with him and I think he now understands the matter and things will be all right as far as he is concerned. Regarding acceptances, Mr. Kenzel is writing you fully to-day I think, but there seems to be general agreement that it would be wise to try for awhile having our rates above the market and results have shown I think that there is a market for acceptances when the rates are satisfactory. ed that in Governor Harding suggest- view of the proposed British loan of $250,000,000, the French Industrial Credit of $50,000,000 coming out now and in addition the l00,00O,000 of 3 per cent United States notes which the Secretary of the Treasury will probably bring out run quite liquid. soon, we should It is possible that the Board may have in mind FEDERAL RESERVE BANK OF NEW YORK 0 ... To 7! ..... Mr. Strong. 1/19/17. that the Federal reserve banks should absorb a good proportion of the 3 notes, but he did not so indicate. Regarding the Bank of France negOtiations, as I wrote you, we have made no move officially to take up the matter with the Board and our disposition is to await your advice in regard to this matter. I was sorry that I gave you the wrong impres- sion in regard to our making application to "negotiate". That was not the intention, but it was to ask for authorization to appoint the Bank of France our agent and enter into reciprocal banking relations with them. Speaking of Mr. Locke's comment, you wondered if these matters had resulted in some criticism of your affairs at the bank, but it has not, at least, I have not heard the slightest intimation of that. The Board seemed to be unanimous as to the position they should take and they certainly supported me to the limit so I think you need give no further thought but that this "stir-up" will result beneficially. You ask in your letter of January 10th how the different members of the Board lined up on the Bank of England question. If you mean the New York Board of Directors, they have all approved of the general proposition and have left to the Executive Committee the detail. As soon as we receive your letter I shall probably call the Board together for final approval, or the Executive Committee can take the responsibility I think of going ahead. JERAL RESERVE BANK OF NEW YORK 0 ....... To Mr. Strong. 1/19/17. If you mean the Board in Washington, Mr. eeabody told me that he would write you in detail and after reading his letter if there are any questions unanswered,, advise me and I will endeavor to see that you have more definite information. Your last two letters of January 11th and 15th indicate some apprehension in regard to our position on acceptance rates. Please understand that before making any change we endeavor to secure the judgement of some of the best posted men and if the opinions seem to be quite unanimous, we have moved along these lines. It is somewhat difficult to always know what is the best course to pursue as with the suggestions which emanate from Washington as to being cautious and conservative especially as to renewal credits and the other view that we should do all we can to develop the market, there seems to be a little conflict occasionally, but taken as a whole, I am inclined to think we have moved along without serious criticism. We shall probably enter the market next week at lower rates again and hope that our proceedure will meet with your approval. I hope to go home to-night as I have some important matters there to-morrow to look after, then leave to-morrow night for Philadelphia to spend a few hours with my son at Pottstown, going on with Messrs. Aiken and Rhoads Sunday night to Washington. We had a long meeting to-day, Messrs. Jay, Curtis, Sailer, Hendricks and myself, both before and at luncheon, discussing Governor Seay's plan as to drafts on Federal reserve banks being made available at par and have framed up the matter I think quite definitely. We will probably telegraph you on one or two points ...IERAL RESERVE BANK OF NEW YORK -6 To Mr. Strong. 1/19/17. because from your letter on Seay's argument, it seems that you would not approve of our guaranteeing to other Federal reserve banks the payment of drafts of our member banks up to $500 each in case the other reserve banks should gdarantee us in the payment of their member bank drafts in like amounts. We, of course, do not know just how things will shape up but want to be prepared to commit the New York bank only along lines of sound banking practices. With warmest regards, I remain, Very Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Nontview Boulevard, Denver, Colorado. RHT/VCM Dictated by rlIAdtan but signed in his absence. FEDERAL'RESERVE BANK OF NEW YORK apary 19th, 1917. g Dear Governor Strong: JAN2 5 19 ) I beg to advise you that the steamer "Finland" sails Thursday next for England and we shall hope that your letter reaches us in time to get it off on that steamer. Yesterday, I spoke before the National Wholesale Dry Goods Association members at their convention at the Waldorf on Trade Acceptances. An informal dis- cussion developed showing that while a number of firms represented were giving this consideration, there is, of course, reluctance about changing an old established custom even if it is not quite as economical and sound. If we can do the missionary work now it seems as though the results might show later when a tighter credit situation develops. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK ,OF NEW YORK 16(15. /IC JAN2519)1 January 19th, 1917. Dear Governor Strong: I have been a very poor correspondent for you for the last week or ten days, but L:rs. Treman has been with me and we have had engagements for practically every evening and the days crl have been very full with our Directors meeting, the visit of Governor Harding and ir. Delano, but I shall hope to be more faithful hereafter. I have received your communications enclosing copies of your memoranda in re proposed amendments, etc., and also copy of your memorandum to Mr. Warburg. I note that you will not hesitate to send for LT's. McLaren if you find that you need her. In judging of the work you are doing by the amount of your correspondence to me, all of which has been necessary and greatly appreciated by us, it must have been a burden upon you and I want to again urge upon you the necessity of your conserving all of your surplus strength and hold yourself strictly to a regular regime, all of which must be within the limits of weariness. Remember that it is not your own interests and those close to you but the great responsibility you have to fit yourself for continued service to the country in the matter of the development of the Federal Reserve System, the problems of which seem to be constantly arising and of about as much importance as those in the earlier stages. FEDERAL RESERVE BANK OF NEW YORK AT4iy, bil JAN25 January 19th, 1917. Dear Governor Strong: I have been a very poor correspondent for you for the last week or ten days, but Lirs. Treman has been with me and we have had engagements for practically every evening and the days have been very full Governor Harding and with oUr Directors meeting, the visit of - . Delano, but I shall hope to be more faithful hereafter. I have received your communications enclosing copies of your memoranda in re proposed amendments, etc., and also copy of your memorandum to Mr. Warburg. I note that you will not hesitate to send for ::re. Laren if you find that you need her. 17,c- In judging of the work you are doing by the amount of your correspondence to me, all of which has been necessary and greatly appreciated by us, it must have been a burden upon you and I want to again urge upon you the necessity of your conserving all of your surplus strength and hold yourself strictly to a regular regime, all of which must be within the limits of weariness. Remember that it is not your own interests and those close to you but the great responsibility you have to fit yourself for continued service to the country in the matter of the development of the Federal Reserve System, the problems of which seem to be constantly arising and of about as much importance as those In the earlier stages. ---7 FEDERAL RESERVE SANK OF NEW YORK 0 To Mr. Strong. 1/19/17. We will not send you any combination to the vaults. Governor Harding and Ur. Delano were impressed most favorably I think not only by our vault, but by the work we were doing in our Transit Department. As to the inequality of the present basis of distribution based on the earnings of the Chicago bank, would state, first, that I learned confidentially that the Board is fully cognizant of the way the Chicago bank is operated in re these matters and, further, that Governor Seay's uommittee is now at work on a new apportionment based on the net deficits or earnings of the reserve banks up to January 1, 1917, and 1 personally.believe that they desire to treat the New York bark equitably. You have been advised of the salary changes and the reasons for conditions as to Mr. Curtis' salary. The officers seem to be very appreciative of what was done for them and I think in one or two cases they were genuinely and most pleasantly surprised. George Allen, of the American Bankers Association brought over copies of his questionnaire which he gaveto Governor Hamlin and Mr. Delano while here, and I will endeavor to secure one to enclose with this letter, but if not will send you a list of the questions as i understand he has them framed up. I have your telegram this morning approving suggestions which were raised in the Assay Office and Mr. Woodward has made one or two suggestions which we are telegraphing you to-day so that you may incorporate them in your letter which you will send to us with copies for our files for immediate forwarding to the Bank of England. _AL RESERVE BANK OF NEW YORK 3 To Mr. Strong. 1/19/17. Mr. Jay has written you in regard to the luncheon so I will not repeat. I have your favor in regard to Governor Seay's memoranda on making Federal reserve bank drafts available at par at all banks. We are to have a meeting this morning of LAessrs. Sailer, Hendricks, Curtis,Jay and myself to agree upon the position we will stand for on this matter, and I think I shall take Curtis and Hendricks down to the meeting on Monday at Washington, when we expect to consider this matter in session with the Board aftor a preliminary meeting of the Governors Committee. Mr. Hendricks telegraphed Calkins at San Francisco in regard to our telegraphic transfers to his bank. With kind regards, Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM Encs. P. S. After consultation with Mr. Curtis and after talking with Mr. Aiken over the telephone, it was decided that only Mr. Hendricks would go to Washington on Monday. POSTAL TELEGRAPH RECEIVED AT MAIN OFFICE Cr T & CRAMMER BUILDING 424 17TH STREET DENVER. COLO. TELEPHONE: MAIN 4800 The Po POMMERCIA CABLES TELEGRAM 3 DELIVERY NO. I Telegraph-Cable Company( Incorporated)transmits and deliNpf s thip message subject to the terms and conditions printed on the back of this blank. /01414,14-14. 160-29018 Mg2111 JAN25 62c1m 26 1010a ti OD Newyork Tan 24 1917 pnjal-ain Strong esq 4100 Montview Boulevard Denver Col. Am forwarding English letter today All think it advisable to omit sending signature cards and other data until after their reply is received Please telegraph if you agree R H Treman POSTAL TELEGRAPH-COMMERCIAL CABLES OPERATOR'S NOTATIONS, TIME SENT, ETC. ENGLAND NEW/C./NOLA. PACIFIC VANCOLIVE OCEAN JAPAN BAN FRAN YOKOHAMA MIDWAY WICArg-UNITED DSS:-PrWs. ',WOWS** "AV:. ORK BERNII.P0A ATLANTIC OCEAN AFRICA T. VINC11117 PANAMA THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AIVUND THE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY ( ,INCORPORATED) TRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS; To guard against mistakes or delays, the sender of a telegram should order it REPEATED; that is, telegraphed back to the originating office for eomparison. For this one-half the unrepe,ated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN TJNREPEATED TELEGRAM AND PAID FOR AS SUCH, in considpation 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 amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fffty times the sum received for 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 TELEGRAMS. 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 caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED telegram rate, at which amount this telegram, if seal as a REPEATED telegram, is hereby valued, unless a greater value is stated in writing 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 one per cent. thereof. 5. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach its destination. Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be made to cover the cost of such delivery. No responsibility regarding messages attaches to this Company mitt the same are presented and accepted at one of its transmitting offices; and if any message is sent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the message and any notice or instructions r-vifding it to the Company's agent in its said office. .. The Cl. Any shall not be liable for damages or statutory penalties in any Caie where the claim is not presented in writing within sixty days after the ielegram is filed with the Company for transmission. The above terms and conditions shall be binding upon the receiver as well as the sender of this telegram. S. NO EMPLOYEE OP THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING. CLARENCE H. MACKAY, PRESIDENT. CHARLES ADAMS, Ve.,E-PRESIDENT. EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER. CHARLES P. BRUCH, VICE-PRESIDENT. THE FASTEST TELEGRAPH SERVPCE IN THE WORLD FEDERAL RESERVE BANK OF NEW YORK FEB January 25th, 1917. .;; ]ji Dear Governor Strong: We had a meeting of our Committee on Purchase and Sale of Bonds yesterday at which were present Messrs. Rhoads,McDougal and myself of the uommittee, and Uovernors Aiken and Fancher by invitation. We had asked for sealed bids on U. S. conversion 3s in amounts of from five to seven millions, the exact amount being indefinite because some of the reserve banks attached conditions to their offerings, based on the price at which they could be sold. We received quite a number of bids and sold all the bonds. The bids were as follows: $5,000,000 First National Bank of Chicago, $1,000,000 Lerchants Loan et Trust Co., " $4,000,000 National City Investment Co. and Harvey Fisk & Sons, . 101.665 101.55 101.1876 The Committee thought it not advisable to give out the names of the buyers or the prices paid,bUt to announce simply that they had sold the bonds. After receiving the bids and agreeing that they would not accept any bids under 101-1 and interest, they accepted the bid of the First National Bank and Merchants Loan & Trust Company, etc. bids, leaving nearly $2,000,000 of bonds still unsold. We offered them to the First National at their (:) 2 ,..AL RESERVE BANK OF NEW YORK To Mr. Strong. 1/25/17. price and they declined them so then we fixed a price to be sold to any broker, at 101 3/4 and within an hour or two Harvey Fisk Sc Sons agreed to take the entire bqlance at 101 3/4, thus giving us an average of about 101 2/3 and interest for our bonds. We felt quite satisfied with the result of the sale which indicated, first, a demand, and second, good prices in this present market. It might be advisable to have some of our one year notes converted into bonds and sell these also if the Secretary of the Treasury should be willing. In Washington, we heard that the Secretary of the Treasury now contemplates issuing between $100,000,000 and t250,000,000 of 3 one year notes, issuing them at different periods between now !,nd next July to keep the U. S. Treasury in funds as needed. I should be glad to have your views as to what extent you would think it advisable for us to take these notes. It would seem that the plan to market the Panama bonds or other bonds at the present time has been abandoned in favor of the one year notes, thus carrying over the bond issue until after the income returns of next July and into the Government year of 1917-18. With kind regards, I remain, Very sincerelyyours, Deputy uovernor. Benjamin Strong, Esc., 4100 .Wiontview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK January 25th, 1917. Dear Governor Strong: I returned from Washington Tuesday night and will write you more fully as to the action taken there under separate cover. We have received yours of January 16th enclosing copy of your letter to Mr. Kent and I am so advising him. Your second letter of January 16th enclosing copy of our night letter for comparison is also received. I would state that Mr. Curtis has handled this matter and has had the details checked up by Cann and others. Yesterday we sent forward by mail the letter to the Governors of the Bank of England, marked "For attention of Lord Cunliffel We had Mr. Roberts check the matter over as you suggested and he approved. Yesterday, Governors Aiken, McDougal, Fancher and Rhoads stopped at the New York bank on their return from Washington and we showed them (except Mr. McDougal who was obliged to lenve at 2:30), the copy of your letter in. re this foreign matter and they approved of same and will treat it confidentially. We thought it would be advisable not to send any further communications to the other reserve banks until we have received a reply from abroad after which we can take such steps as may seem best in advising the different reserve banks. As relations with other banks depend somewhat upon our arrangements with the Bank of England, I assume that we should ?....-"EDERAL RESERVE BANK OF NEW YORK -2-- To Mr. Strong. 1/25/17. 64 A" defer taking up the matter with the Bank of the Netherlands, the Bank of Spain and others, at least to any further extent than mere generel negotiations until the English matter is settled. I omitted to add above that the Executive Committee of the New York Bank approved of the form of your letter and having same checked up as to details felt justified in forwarding it yesterday. If you have, not heard from Mr. Peabody as to the details of the Washington meeting with our Committee, kindly advise me and I will follow it up. Mr. Curtis will certainly give you the par- ticulars when he sees you as he expects to do early next week. Regarding our purchasing bills for San Francisco at lower rates than those we were holding, will state that Lr. Calkins understood that this was an exceptional crise and done as a matter of accomodation, that we could not continue this practice and that we must either work together or work separately. If we work to- gether, there will be hardships at different times, but taking a year at a time, I believe that the cooperative plan is better than having each individual bank coming into the market and making its own bids. Of course, under the latter plan, the Federal Reserve Bank of New York would-be able to hold its own, but I firmly believe it is contrary to the spirit of cooperation which should exist in the operations of the twelve banks. Regarding the French Industrial Credit, would state that Chicago at a meeting of their Executive Committee on Monday, decided to stand by their original position not to buy any acceptances under.this credit, but Governor McDougal was not present at the meeting and I think, judging from his expressions here yesterday, he would be inclined to buy same with the further light he To .RAL RESERVE BANK OF NEW YORK now has. Mr. Strong. 1/25/17. Atlanta does not wish us to buy any, nor Richmond, but the other banks so far as heard from seem desirous that we should purchase French Industrial Credit acceptances under the same allotment as before. Governor Seay told me in Washington that his Committee on Apportionments were receiving from each bank new statements of their deficits from the opening of the banks up to January 1, 1917. I have your favor in reference to our making application to the Federal Reserve Board for permission to appoint the sank of France as our agent or correspondent but would state that the matter is now slumbering and will continue to sleep until we hear from you with suggestions as to our making another move. I am having prepared for you an exact copy of the letter as sent to Lord Cunliffe for your files. With kind regards, as ever, I remain, Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK FEB 11917 January 26th 1917. Dear Governor Strong: I went to Washington Sunday night, meeting Governors Aiken and Rhoads in Philadelphia and we all traveled together discussing more or less the making available of Federal reserve drafts at par and other reserve matters en route. We were joined Monday morning by Governors Fancher, Seay and McDougal, also, Hendricks and McKay were present at all of our conferences. We were in session from 10:30 Monday morning until 6 P. L., taking Governor Seay's brief for making drafts on the Federal reserve bank immediately available at all other Federal reserve banks. We discussed the matter thoroughly, Governor Seay being the only one in favor of making them immediately available at all other banks, but there seemed to be general agreement that we must provide some machinery in connection with the Reserve System to take the place of drafts on I' ew York which had circulated at par in all parts of the country. I am enclosing herewith a sta+ement which we prepared And submitted as a report of the Committee of five Governors, to the Reserve Board. They asked some questions end there seemed to be quite a sentiment in the Reserve Board towards making drafts immediately available at all reserve banks but we urged that in this FEDERAL RESERVE BANK OF NEW YORK TO Mr. Strong. 1/26/17. sensitive financial period and in view of the uncertainty as to ac- tual results of the transferring of remaining bank balances now with correspondents into reserve banks to count as reserve, we should only begin this in a limited way and for that reason we had imposed a limitation of 00,000 for the amount drawn by each bank and we recommended that at first it only apply to country banks. We discussed at length a plan to have each member bank in drawing these drafts on its reserve bank to advise its or reserve bank and also the reserve bank of the district at which it was made payable. Mr. Jay favoreda plan having the Federal re- serve bank on receiving advice from the member bank of drawing of draft immediately advise the reserve bank at which the draft 7 was made payable, such advice being mailed or wired, according to the amount, but the concensus of opinion seemed to be that it was too cumbersome and that the mail advice would not reach the banks until after the draft had been presented, etc. The Board stated that they would take the matter unO..er advisement and would decide this week. At one time in the dis- cussion I had a chill because so much sentiment seemed to be expressed in favor of making the drafts available at all banks. I took the position with the Governors that we favored the New York sank being advised by either the member or rererve bank when such drafts were drawn, but if we were to receive such drafts at par without advice the same as we had checks, then we ought to have some limitation as to the amount we would receive at par.daily for each member bank, and to begin with, the amount of 0.0,000 was decided upon. ,,,FEDERAL RESERVE BANK OF NEW YORK 0 3 To Lr. Strong. 1/26/17. We received this morning from Governor Harding notice of the action of the Board taken yesterday, Thursday. letter I enclose herewith for your information. Copy of his Mr. Jay, in con- junction with Mr. Fancher, will work up a proposed form of draft and other forms necessary for further consideration and Mr. Jay and I are to discuss with Mr. Woodward to-day this whole plan for his criticism and suggestions. One interesting incident in connection with this was that, whereas, at the meeting on Tuesday with the Reserve Board it was stated that the Board would not decide the matter that day but would take it under consideration on Wednesday morning, the New York papers had articles stating that the Board had inaugurated this plan and gave an explanation of what was intended and the way in which it would ope'ate. This surprised the Governors who were in conference in New York in connection with the bond sale, and I telephoned Governor Harding stating that I had seen these notices in the morning paper and asked him if the Board had approved of the Governors' report after we left Tuesday afternoon. He said "no and added that they hnd not discussed it since and he did not know from what source this report had been sent out, all of which demonstrates that there should be some method inaugurated by the Reserve Board to prevent leaks, or some one connected with the Board sending notices of this kind prematurely. Regarding the daily settlements, the Board seemed to feel that it was desirable to inqugurate daily settlements soon and Hendricks and I stated that the New York bank had no objection to their doing so. FEDERAL RESERVE BANK OF NEW YORK 4 To Mr. Strong. 1/26/17. I think we disposed of the Gedney plan for the present and it will probably be left dormant. If you have any suggestions in connection with this matter after discussion with Mr. Curtis, I shall be glad to hear from you as it will probably be at least a week or two before we have these forms and the proposed circular formulated. Mr. Tappan of the National City having noticed the newspaper article, called at the bank to know what it meant as he apparently was somewhat disturbed over it. With kind regards, I remain, Very sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM Encs. FEDERAL RESERVE BANK OF NEW YORK FEB 1 1917 January 26th, 1917. Dear Governor Strong: Mr. Curtis is leaving this afternoon and will probably be able to give you much of the current news. Messrs. Fancher and Woodward lunched with Jay and me to-day and we discussed the report of the Governors in re making available at par Federal reserve bank drafts and Mr. Woodward felt that we should have same considered by our Directors at their next meeting on Wednesday, so if you have any suggestions, kindly wire us. I am sending copy of Governor Harding's letter to the various Governors for their consideration. In the matter of acceptances, we are buying for San Francisco and will buy for Chicago, or any of the other banks upon their specific instructions as to amounts and rate, leaving it to the Reserve Board to settle with the reserve banks so purchasing whether it ie in accordance with their letter of instruction as to general policy. Copy of the letter from the Reserve Board under date of june 19th is enclosed herewith. Here in this bank we are following the policy of keeping out of the market temporarilyibecoming more liquid. FEDERAL RESERVE BANK OF NEW YORK To ...2" Mr. Strong. 1 /26/17. To-day we purchased q51,500,000 New York City warrants at 2 5/8, early June maturities, about which time we expect to have higher rates prevailing in connectien with the income tax payments. We sold to-day t250,000 1 year, 3 % U. S. notes, April let maturity on a 2t basis and $750,000 October 1st maturity, on a 2.45 basis. I had a very nice letter from Mr. L. Ward Bannister of Denver stating that he had seen you and found you "looking very well indeed", all of which is good news. We have secured now statements from Goldman, Sachs & Co. and E. Naumberg i Company, both of which show very substantial and satisfactory gains for the past year. Answering yours of January 19th in re Deputy Governor, our letters have crossed so that you understand by now that if you should deSire me to remain until you go to Europe and return not later than July let, I would,. of course, try and arrange accordingly, but I do not want to stay throughout the en- tire Summer because I ought to have a good vacation at that time. I assume that Mr. Woodward is keeping in touch with you on this matter. I hope that you are continuing to feel well and with kindest regards, I remain, Very sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colo. IIHT/VCM Enc. FEDERAL RESERVE BANK OF NEW YORK January 30th, 1917. Dear Governor Strong: Greetings to you this morning, and I am very glad to note in yours of January 25th the statement "do not worry about my condition. I am getting along fine." Yesterday we had a meeting of the Executive Committee of the National Bank Section of the New York State Bankers Association of whiCh Mr. S. G. H. Turner of Elmira is the chairman and those present were Mr. herzog of ALbany, Ir. Irish of Brooklyn, Mr. Alley of Cortland, Mr. Ward of the New York Bank of Commerce, Mr. Smythe of Bronxville, Mr. Weldon of Olean and Bridges of Liberty. Mr. Jay and i attended their morning ses- sion and took luncheon with them at the Bankers Club; we showed them our Transit Department work and the vault, both of which seemed to impress them most favorably. The general impression with them seemed to be-that if the amendment as to reserves, that is, relieving the banks of any requirement as to vault reserves, and simply requiring them to keep CA or 7 %. with the Federal Re- serve Bank, should go through the Congress and become law, it would solve a great many of the troubles of the country banker. I note that you have visited Robert Masson and also th,A you have just received a letter from Monsieur Paltain, a copy of which you will send us after it is transleted. FEDERAL RESERVE BANK OF NEW YORK -2- o Mr. Strong. Ian. 30, 1917. Your letter in regard to the Buenos Ayres business came in this morning and I will have it presented to either the Executive Uommittee or to our Directors at their meeting to-morrow. We will send a duplicate letter to Lord Cunliffe of the Bank of England as you suggested, by registered mail. I note your comments as to the State Bank Section questionnaire and am returning the copy of your letter to Mr. Kent. Regarding the permanent organization, I noted your comments and suggestions and will present them to Mr. Woodward and Mr. Peabody, leaving it to them to report to the Board if they see fit. Governor Fancher, when he was here last Wednesday stated that he felt that it would be most advisable for some one of the Governors to accompany you to France should you go, because it would be desirable that two in the System should have more or less personal acquaintance and be familiar with the detail. This only indicates that others would share in your viewpoint probably. . So far as your suggestion as to my staying longer is concerned, it seems to me that the decision as to this can be held in abeyance until you know definitely about the one chosen to be the permanent Deputy Governor and you approach more nearly the time when you expect to go abroad. Now that you have indicated your views I can discuss same with the members of our Committee Woodward and Peabody - and it will give me a better line on what the Board may desire as to my staying longer in this position. Evidently I, can plan to remain two or three months longer and will date act on this basis, leaving the exactAto be taken up later. ,ER AL RESERVE BANK OF NEW YORK ,o To ... Mr. Strong. Jan. 30, 1917. Regarding your going abroad, Dr. Treman is not quite clear that it is a wise move for you personally to take upon yourself the strain incident to such a triy and the carrying out of your purpose in making it and I hope that before you make your final decision you will seriously consider whether you can not arrange for a working relation between the Bank of France and this bank, leaving the question of details to be worked out later, but not feel that it is absolutely necessary that you should make this trip now. Of course, no one interested in the development of our foreign banking relations would feel but whet you are best fitted to do this particular work, but I am approaching the thought of its effect upon you, which I hope you will consider and be perfectly sure about before making your final decision. The impression here seems to be that call money will rule low for some time to come but that time money will gradually harden. ties, 2-4- Acceptance rates yesterday were 2 % for February maturito 2 3/8 % for March and 2-4-. to 21 % for April and May. We have purchased about $1,000,000 of acceptances for the Chicago bank around 21 % but I have a lurking suspicion that the Board will call d'own the Chicago and San Francisco banks for making these investments, which suspicion will be verified by the facts sooner or later. With kindest personal regards, I remain, Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK January 31st, 1917. Dear Governor Strong: I am in receipt of your favor returning Yr. Warburg's letter of January 15th and note that you did not return the draft or suggestion which Mr. Warburg enclosed with his letter. Would it not be best to have the original draft sent on to us for our files, you retaining a copy for your own use! Very sincerely yours, e;i7k.3)1 Deputy Governor. Benjamin Strong, Esq., 4100 Wontview boulevard, Denver, Colo. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK January 31st, 1917. Dear Governor Strong: We have received Your letter of January 27th containing a translation of the letter of Y.onsieur Pallain, and also received your telegram containing suggestion as to an answer to the Board's request for copy of cables, etc. I will lay these matters before the Board of Directors of the Bank at their meeting to-day and will advise you later conceltning same. As I understand, you will frame up your reply and discuss same with Mr. Curtis and I will advise you as to any suggestions which our Board may be disposed to make. I assume that you run over to Colorado Springs for a change of scene and hope that it proves beneficial. With kind, regards, I remain, Ver sincerely yours, CrtsWCluitif4A_Th Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VC7 FEDERAL RESERVE BANK OF NEW YORK January 31st, 1917. Dear Governor Strong: In your letter of January 26th, you suggest caution in rebating penalties for deficient reserves. You understand prob- ably that in the earlier months in which our Collection Department was in operation, we were often delayed in our mail going out until late in the evening, re ulting very often in the mail not reaching member banks until th second.day. There are other reasons also which led us to feel t at we were not justified in imposing penalties on apparent defic ent reserves, but in December we 'began to be more particular an about January let we sent another circular letter to all our merger banks advising of the law and that we were obliged to penaliz for deficient reserves without any fear or favor. So far as the rebate of the Octo er charge of the Marine Bank of Buffalo is concerned, the matter w s thoroughly considered by the officers at their meeting and it as felt as a matter of equity that this particular rebate should be allowed. I trust this explanation is satisfactory. "fiery sincerely yours, Ytvrg)fsttA4-1/4., Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK February 1st, 1917. Dear Governor Strong: We had a Directors meeting yesterday, all being present except 1r. Starek, who was summoned to Washington but as to any information concerning his resignation we have no knowledge. After the usual routine business, Ur. Jay read a let- ter from Governor Harding which had been issued to all reserve banks in re our investment policy and after discussing the present'low rates, from 2 to 2.1 %, the fact that our total investments were now below 125,000,000 and that we have some other investments running off very rapidly, the question of any change in policy was referred to the Executive Committee. Ts-day's news as to the proposed German submarine blockade created a flurry in Wall Street,at the beginning stocks dropping from 5 to 15 points. money The market is more stable now, call 2 %; but in the first hour or twc of the morning, we pur- chased 12,500,000 of bills at 3 to 3-4;% and stood ready to purchase more at theserates, but doubt if many will be offered. naturally expec, the outside rate to advance to about 2 3/4 sibly. Would T. pos- Rates closing about 3 %. Mr. Sailer submitted a recommendation as to vault control and it was referred to the Executive Committee as was also the question of compensation suggested for employees of the Clearing FEDERAL RESERVE BANK OF NEW YORK -2-- To Mr. Strong. Feb. 1, 1917. House and Subtreasury who had contributed their time and services during our occupancy of their vaults. I made a report tis to the Governors Committee meeting at Washington, stating that Governor Seay's plan had been discussed, that we had been in session nearly all day, most of it on this question and that the report seemed to be the best plan to which unanimous consent could be secured; that we judged from the action of the Reserve Board when we presented the report that were the plan to originate in the Reserve Board it might be more radical. The plan proposed was then discussed at length in a very long meeting resulting in the appointment of the Class A Directors with Messrs. Palmer and Jay added, to consider a report on this matter. In the afternoon, the Committee invited Messrs. Alexander, Frew, McGarrah and Townsend for an informal conference at the Reserve Bank on this matter, Mr. Locke being present with other members of our Committee. They discussed if for an hour and it seem- ed to be the quite unanimous opinian of those present that the plans should be changed or modified 80 that the member bank drawing the draft should send immediately two coupon advices to the reaerve bank of its district on receipt of which, this reserve bank would charge the draft against the member bank's account and would forward the extra coupon duly countersigned to the reserve bank where payable; that no draft should be paid until advice is received; that in drawing up the form of draft instead of using the words "Receivable at Reserve Bank", it should be made "Payable at Reserve Bank, it evidently not being satisfactory to the bankers present to have the draft received at par, but requiring -3- FEDERAL RESERVE BANK OF NEW YORK ........ To Mr. Strong. Feb. 1, 1917. that it onl:i be payable when it re9ched the reserve bank of the member bank's district. Mr. Woodward stated that you had telegraphed that a letter to me was en route, so we are awaiting its receipt before proceeding further, but assuming that the next steps after receiving your letter will be to take up with the members of the Governors Committee the points at issue and see if we can get concurrence in these changes, after which we will take it up with the Reserve Board. I trust that you will discuss with Mr. Curtis a form of draft which would be desirable to use and such other detail matters so that we can have the benefit of same on his return. Regarding the copies of cables already sent in re foreign bank matter, I reported the contents of your telegram and it was left for me to write a letter to Governor Harding along these lines, but unless I hear from Governor Harding again I think I will hold the matter in abeyance until we have a further request for the cables. When we were discussing the rates for acceptances, I read your letter of January 11th oir this subject to the directors for their consideration. By this time, it was half past one and the Board decided to adjourn, so we did not reach a discussion of M. Pallain's letter, the amendments and one or two other matters, but we hope to have a meeting of the Executive Committee to-morrow or Monday for consideration of several matters referred to them. c:RAL RESERVE BANK OF NEW YORK -4- To Lr. Strong. Feb. 1, 1917. I am sending you a copy of the House bill of January 22 thinking that possibly you may not have received same. While dictating this, a telegram came in from Governor Harding that tenure of office of Charles Starek as Class C director has been terminated as of this date, but no intimation as to his successor. My very best to you and Curtis. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHTPCM Eric. Misc. 34 TAT/lial P' 4,AL RESERVE BANK ix! NEW YORK Postal 2/1/17 (TO BE MAILED) 1415 a.M. CONFIRMATION OF TELEGRAM We have today telegraphed you as follows : February 14 1917. Colorado Springs, Col. (Try leading hotels) Directors yesterday appointed special committee oodward Locke Palmer to consider Federal reserve draft plan of governors committee. Stop. Committee discussed matter yesterday with Alexander Frew lo G arrah Townsend who sugest unanimously that to make plan effective draft:: should be not receivable but payable alai, on advice at Federal reserve banks. Stop. This necessitates advice between Federal reserve banks which bankers consider practicable. Stop. Otherwise bankers say such drafts would be merely acoepted like any other check payable ,t the home Federal reserve bank and would therefore not be e:iicient instrument of transfer. Stop. Our committee favorable to endeavoring to secure such amendment of plan but wish first to have views of yourself and Curtis. Pleaae wive as time is limited. R. H. Treman. charge Federal Reserve 6ank 5e2120Broadway - Rr -.I POSTAL TELEGRAPH NEST COMMERCIAL CABLE CLARENCE H MACKAY, PRESIDENT TELEGRAM ED AT MAIN OFFICE CHARMER BUILDING 920 17/14 STREET DENVER. COLO. TELEPHONE: MAIN 4000 DELIVERY NO. I Telegraph-Cable Company(Incorporated)transmits and delivers this message subject to the terms and conditions printed on the back of this blank. DESIGN PATENT 114, 11010 CB NEWYORK FEB I 17 355 BENJ STRONG ESQ 4100 MONTV1EW BLVD DENVER COL DIRECTORS YESTERDAY APPOINTED SPECIAL COMMITTEE WOODWARD LOCKE PALMER TO CONSIDER FEDERAL RESERVE DRAFT PLAN OF GOVERNORS COMMITTEE STOP COMMITTEE DISCUSSED MATTER YESTERDAY WITH ALEXANDER FREW MCGARRAH TOWNSEND WHO SUGGEST UNANIMOUSLY THAT TO MAKE PLAN EFFECTIVE DRAFTS SHOULD BE NOT RECEIVABLE BUT PAYABLE ON ADVICEAT FEDERAL RESERVE BANKS STOP THIS NECESSITATES ADVICE BETWEEN FEDERAL RESERVE BANKS WHICH BANKERS CONSIDER PRACTICABLE STOP OTHERWISE BANKERS SAY SUCH DRAFTS WOULD BE MERELY ACCEPTED LIKE ANY OTHER CHECK PAYABLE AT THE HOME FEDERAL RESERVE BANK AND WOULD THEREFORE NOT BE EFFICIENT INsTR- Mal AOL ECE Er NOTATIOKEt rdb*TIM "WEggENT0 ETA. ASKA EVEIA VC QE,Ja,l, E WtflID PACIFIC r.44,c1,6 OCEAN JAPAN voilVAIKE 2 ANI DE El rrEtixiaalr K2 beb 1-4 ViNC.IT VI THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. 1 0 M 2 F_ VI D j4k 219,Egi..}4 A EXTENDS OVER TWO THIRDS OF THE WAY AROUND THE EARTH. Wile LE CO feugulatllottlin4trilTylvi,L-1.E..,J3.RAr. .Mtfp X° VE12 ANY (INCORPORATED) 1140E4 ribiete4teV V -mis s de a s, t en e o a temgram should order REPEATED; that is, telegraphed back to the originating office for maparisen. For this, one-half the anrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNIZEPEATED2 arismission, ELEGRAM AND PAID FOR AS SUCH in ponsideggivt, ittratrazIrar biteetterpigEggOganv000144c +44 rivbe ibgeaeliatcs oKh, HffilafPLVIVX1ouRf 0b ereQiQe/nor sWndIng the same; nor for mistakes or delays in thetrainsmissiot' or deliver;, or for non-delivery, of any 11. EVEATED telegram, her= .fty times the sum received for sending the same, UNLESS SPECIALLY VALUED; not in any case for delays arising from unavoidable interruption in the working of its lines; 1.1OR FOp. Aitiop.Rts, kcivHwaztgrLF-o 2pidoeeitwdmpi,ar_,....,ii.b. foNd 'poi...4=W), E thPORLI 4-,,Edve#,!9,0S?ilflott,tiPtdit:iisrrtegCografKmtEici tel .r ma; whether ether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED telegram rate, at wh ch am amount h el sent as a REPEATED telegram, is hereby valued, unless a greater value is stated in writing hereon at the time the telegram Is offered e Company and an additional stun paid or agreed to ' - paid based on sueh value eimal to one-tenth of enie percent. thereof. S. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary . KI.,41 its gpstuka 41.., blessiga 4.43higerek.&flevithin thi Aablished free delivery limits of the terminal office. For delivery at a greater distance a special charge will be made to cover the cost of such delivery. 6. .. al no . 6. No responsibility regarding messages attaches to this Company until the same are presented kid accepted at one of its transmitting offices; and if any sett It gehVcole of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the message and any notice .or s might-MN; if t ompany's agent in its said office. T....*:,,,mpany shall not be liable for damages or statutory penalties in any cure where the claim Is not presented in writing within Sixty days after the aSlegiam ie-tded with the Company for transmission. 1,. The above terms and conditions shall be binding upon the receiver as well as the sender of this telegram. °N.NO EMPLOYEE OF tIII5 COMPANY IS AUTHORIZED TO VARY THE FOREGOING. itCAC. ADAMS, CLARENCE H. MACKAY, PRESIDENT. EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER. CHARLES P. EPOCH, VICE-PRESIDENT, tA. t'STEST TELEGRAPH SERVICE IN THE WORLD ci tA :vs POSTAL TELEGRAPH - COMMERCIAL CABLES 7CEIVED AT MAIN OFFICE :FINEST & CRAMMER BUILDING 920 1773./ STREET DENVER, COLO. TELEPHONE: MAIN 4500 Th 130-1,01$1 TELEGRAM DELIVERY NO. l Telegraph-Cable Company(Incorporated)transmits and delivers this message subject to the terms and conditions printed an the back of this blank. DESIGN PATENT N. 4063* UMENT OF TRANSFER STOP OUR COMMITTEE FAVORABLE TO ENDEAVORING 70 SECURE SUCH AMENDMENT OF PLAN BUT WISH FIRST TO HAVE VIEWS OF YOURSELF AND CURTIS PLEASE WIRE AS TIME IS LIMITED R H TRENIN 'POSTAL TELEGRAPHCOMMERCIAL CABLErS LASKA OPERATOR'S NOTATIONti TIME SENT, ENI, ENGLAND NEW, FOUNDLAND o VANCOUVER PACIFIC OCEAN JAPAN SAN FRAN YOKOHAMA 'wgrotrgn. AVAPalga051744 "41t.4.11Kr MIDWAY FIERMWM ATLANTIC OCEAN HONOLULU GUAM PANAMA VINCENT SOUTH AMERICA THEAZATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY ( ,INCORPORATED) rRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECV LI TWI4i.g8INING TERMS AND CONDITIONSI To gnard against mistakes or delays, the Bender of a telegram should order it REPEATED; that is, telegraphed back to the originating office for 's,esutiattli ttio,ff F48. pre baraeek in sdsliapn, 1.4.eejs otiterrias incliusdpfl on its face, THIS IS AN UNREPEATED -404,441. 'son. jipi Lelba and this Company as follows: ,111.114111tA.MTSRIWPAUCI areJLAISOldnUoCratirdeatiblititlirrof itifsOgreal letitilgen thifindet 01 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 111,,n, received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond I. f,'21 =kr pun 233Mr Vett= 01)M1PaTLEISVI.SPEWIEltriyi variEp; Rprlielar ette ITEellys rieg T.fat yveolciAbt EiedeptiLot theA 0 nu2.. R ERRORS' 1.M CFMER OW 11./BSCWRE.TELEWRAtiS. , 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 ....1.6,6libliansedlhy4igge4 °cite:Fits vadd, t L. fitprwisidgindi,,ty ,eLs t.sr111.7,04Fn,Olpgm rote., at w,h4iiiiziatiageiieiviad, ifi for he tkWrant it tidInberittn hwvio ter on such value equalo One- ent o one per cent. thereo be pal ha S'S ad tional sum paid or agr I. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary h. Rs n. and K- t eSr sa . reaoh its destination. Xesaages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be At.t., to cover the cost of such delivery. 6; W.:, responsibility regarding messages attaches to this Company until the sameare presented .and accepted at one of its transmitting offices; and if any LI;',..44 is sent to such office by one of this Company's messengers, he acts as the agent of the sender for thepurpose of_ delivering the message and any notice or nitnitiatons regarding it to the Company's agent in Its said office. Company shall not be liable for damages or statutory penalties in any case where the claim is not presented in writing, within sixty days after the -5tegrai......, pled with the Company for transmission. The above terms and Conditions shall be binding upon the receiver as well as the sender of this telegram. :_MPLOTEE OF TSB COMPANY IS AUTHORIZED TO VARY THE FOREGOING. C. ADAMS; VICE-PRESIDENT. CLARENCE H. MACKAY, PRESIDENT. EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER. CHARLES P. BRUCH, VICE-PRESIDENT. --VASTEST TELEGRAPH SERVICE IN THE WORLD 0 Misc. 34 PtT/ ppr Postal RESERVE BANK OF NEW YORK 1050 a.m. (TO BE MAILED) CONFIRMATION OF TELEGRAM We have today telegraphed you as follows : Febru-r,. 1, :1917. Benjamin _tronL, 4100 :ontview Boulevard Denver Colorado Telegram received but your position not quite clear. Our committee reconriends that drafts be made actually payable instead of merely receivable at a Federal reserve bank. This entails our receiving advice froi home Federal reserve bank before we would pay. Stop. Shoull we stand on this basis or should we urge the advice butalagsly receive the drafis. Stop. If drafts are made payable we could wherever,pay small drafts say under five hundred dollars even if advice not received. Please wire promptly as committee meets this afternoon. R. H. Treman. Harp;e Federal Reserve Bank, Broadway. B-2 Misc. 34 PJ/Rai Postal 1:15 p.m. 13,ESENVE BANK OF NEW YORK (TO BE MAILED) CONFIRMATION OF TELEGRAM We have today telegraphed you as follow pt s H February 2, 1917. Benjamin strong, Esq., 4100 Yontview 'ioulevard Denver, Colorado. x.ecutive committee today approved of your plan regarding Pallain letter. Stop Reconrended immediate formal application to Reserve Board for permission to appoint Bank of France correspondent subject to your approval. Stop. Should we consult Codert about French law as to gold exports as per youl letter January twenty seventh . Treman, Charge Fed. Reserve Bank 120 Broadway B-2 POSTAL TELEGRAPH cREC-.IVED AT MAIN OFFICE . COM CLARENCE Ii. MACKAY, PEtzsmENT. DELIVER GRANMER BUILDING -20 17TH STREET DENVER, COLO. TELEPHONE: MAIN 4300 The Po al Telegraph-Cable Company(Incorporated)transmits and delivers this message subject to the terms and conditions prit ter 1°-5219CHM 90 I0574 DESIGN PATENT NA ca k -r cp ni blank. aws CB NEWYORK FEB 2 17 BENJ STRONG 4100 MONTV1EW BLVD DENVER COL Time TELEGRAM RECEIVED BUT YOUR POSITION NOT QUIET CLEAR.OUR UUT. / RECOMMENDS THAT DRAFTS BE MADE ACTUALLY PAYABLE INSTEAD OF MERELY REC... EIVABLE AT A FEDERAL RESERVE BANK .THIS ENTAILS OUR RECEIVING ADVICE FROM SOME FEDERAL RESERVE BANK BEFORE WE WOULD PAY STOP SHOULD WE STAND ON THIS BASIS OR SHOULD WE URGE THE ADVICE BUT STILL ONLY RECEIVE THE DRAFTS STOP IF CRAFTS ARE MADE PAYABLE WE COULD WHEREEVER DES IREABLE PAY SMALL DRAFTS SAY UNDER FIVE HUNDRED DOLLARS EVEN IF ADVICE NOT RECEIVED PLEASE WIRE PROMPTLY AS COMMITTEE MEETS THIS AFTERNOON R Y TREMAN POSTAL TELEGRAPH-COMMERCIAL CABLES OR, ENGLAND 11%, ma . PACIFIC JAPAN NEVVP0t/NDLANO VANCOUVER CiCEAN SAN FRAN YOKOHAMA UNITED movoranlie MI DWAV VORK HERM1v0A ATLANTIC OCEAN AFRICA $1. VINCENT PANAMA THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY (IN CORPORATE D) TRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS: 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 this, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the telegram and this Company as follows I. 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 amount received 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 8UM received for 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 TELEGRAMS 2. In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for tile non-delivery of this telegram, whether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED telegram rate, at which amount this telegram, if sent as a REPEATED telegram, is hereby valued, unless a greater value is stated in Writing hereon at the time the telegram is offered to the Company for transmission, and an additional 8UM paid or agreed to be paid based on such value equal to one-tenth of one per cent. thereof. The Company is hereby made the agent of the seEder, without liability, to forWard this telegram over the lines of any other Company when necessary to reach its destination. 4. Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be made to cover the cost of such delivery. 6. No responsibility regarding messages attaches to this Company until the; same are presented itritt accepted at one of its transmitting offices; and if any Message is sent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of _delivering the message and any notice M tostracciptis regarding it to the Company's agent in its said office. Ilrillrinpany shall not be liable for damages 02 Statutory penalties in any case where the claim is not presented in writing within sixty days after ths telegram U flied with the Company for transmission. The above terms and conditions shall be binding upon the receinv as well as the sender of this telegram. S. NO EMPLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING. CLARENCE H. MACKAY. PRESIDENT. ADAMS, VICE-PRESIDENT. EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER. CHARLES P. BRUCH. VICE-PRESIDENT. THE FASTEST TELEGRAPH SERVICE IN THE WORLD W-C111/1 I VIVO raLpIstatt.t, TIME SENT, lEv., POSTAL TELEGRAPH - COMMERCIAL CABLES CLARENCE H. MACKAY, PRESIDENT. R -slySTED.ARTA.M.EARIPJ.DZICEG 920 ITTU STREET DENVER. COLO. TELEPHONE: MAIN 4800 TELEGRAM r D EL IVERY 140. ,b1 Telegraph-Cable Company(Incorporated)transmits and delivers this message subject to the terms and conditions printed on the back of this blank. 160-20018 435CHM 49 1230P DESIGN PATENT Its. 405111 C3 NEWYORK FRB 2 17 To BENJ STRONG By 4100 MONTVEDE BLVD DENVER EXECUTIVE COMMITTEE TODAY APPROVED OF YOUR PLAN REGARDING PALLAIN LETTER STOP RECOMMENDED IMMEDIATE FORMAL APPLICATION TO RESERVE BOARD FOR PERMISSION TO APPOINT BANK OF FRANCE CORRESPONDENT SUBJECT TO YOUR APPROVAL STOP,SHOULD WE. CONSULT CODERT ABOUT FRENCH LAW AS TO GOLD EXPORTS AS PER YOUR LETTER JAN TWENTY SEVENTH R 1 TREMAN POSTAL TELEGRAPH-COMMERCIAL CABLES ENGLAND EWPOUNDLAND EFIMUDA ATLANTIC OCEAN OT. VOMICNT PANAMA SOUTH AMERICA THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY (INCORPORATED) :RANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS: To guard against mistakes or delays, the sender of a telegram should order it REPEATED; that is, telegraphed back to the originating office for omparison. For this, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED ELEGRAM AND PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the telegram and this Company as follows: I. 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 mount received for sending the same; nor for mistakes or delays in the transtalssion Or delivery, or for non-delivery, of any REPEATED telegram, beyond fty times the sum received for sending the same, UNLESS SPECIALLY VALUED; nor in any case for delays arising from unavoidable interruption in the .orking of its lines; NOR FOR ERRORS IN CIPHER OR OBSCURE TELEGRAMS 2. 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 .legratn; whether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED telegram rate, at which amount this telegram, if -et as a REPEATED telegram, is hereby valued, unless a greater value is stated in writing hereon at the time the telegram is offered to the Company for ansmission, and an additional sum paid or agreed to be paid based on Such value equal to one-tenth of one per cent. thereof. I. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the tinge of any other Company when necessary reach its destination. Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be made to cover the cost of such delivery. No responsibility regarding messages attaches to this Company until the sw.Ase presented-vmd Accepted at one of its transmitting offices; and if any melliage isSent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the message and any notice Or isislcsetthans DegsretrigIESD tatte (leisrgearril agent In be Said office. Tp----,-;pmpisny shall not be liable for damages or statutory penalties In any case ;where the claim is not presented In writing within sixty days after dfiled with the Company for -transmission. The a'bO4Pe terms and conditions shall be binding upon the receiver as well SS The sender of this telegram. S. I.;R) EMPLOYEE OF THIS COMPANY IS ALTILORIZED TO vAity THE FOREGOING, trn t ( viT. Assistfra, ADEPRESIDENT. CLARENCE 14.. WACKAy, PRESIDES,. cvstrATES IlItCYND4AZ , cs-rs-Expr. AND GENE1AL MANAGER. CHARLES P. SRUCH, !ME-PRESIDENT. THE FASTEST TELEGRAPH SERVICE IN THE WORLD OPERATOR'S MONIANIVaq% TIME SENT° WO!. FEDERAL RESERVE BANK OF NEW YORK February 2nd, 1917. Dear Governor Strong: Answering yours of January 27th, I understand that you will send us Pal lain. 11. revised translation of the letter from M. Meanwhile, I submitted the letter to our Executive Committee to-day, reading only one or two extracts from it and they approved of your proposed way of treating this matter and of the continuance of our negotiations;.they also passed a formal resolution authorizing us to make a formal application to the Federal Reserve Board in re Bank of 7rance as correspondent, subject to tour approval and we have wired you to-day as per enclosed copy. We will await your advice before making application. They also desired to know whether you thought it advisable to consult Uoudert Brothers about French law about gold export, as per your letter of January 27th. I also read to the Committee extracts from your letter of January 16th, page 3, in which you suggekthat inquiry"be made of the Reserve Board as to whether we may rely upon the terms of arrangement we enter into being regarded as confidential and not made public." Both Lessrs. Woodward and Peabody were present and they agreed that when the Committee from the Federal Reserve Bank of lew York was in Washington this matter was die- \whatever ' cussed and the understanding from different members of the Board -2- FEDERAL RESERVE BANK OF NEW YORK To Lr. Strong. Feb. 2, 1917. that they had guarded, would continue to hold in confidence alLl details of arrangements made with foreign banks, that they had not broken confidence in this respect and that it was the understanding iwas 1 that they had and would respect the arrangements which the Bank entered into in these matters. .ew York After a discussion, the Exec- utive Committee felt that it was not advisable to take up the matter with Washington at the present time unless you feel otherwise. On the matter of gold bars, the Executive Committee was that you had written to Governor Harding and Mr. Jay will call at the Assay Office in New York and discuss same with the head of it so Iinformed that he will also be informed of our desire. I hope that you will have a very pleasant time at Phoenix. Both you and Mr. Curtis deserve it. I shall try and run up to Ithaca to-night for Saturday but hope to be back Monday morning as I like to be on the job during these strenuous days. I am sending you herewith some information as to the new reserve notes we have furnished, and other information which I thought might be of inbrest. As to that portion of your letter of January 25th pertaining to our permanent organization, I have submitted same to -r. Woodward and Mr. Peabody. I understand that Governor Aiken expects to be over her on next Tuesday to meet Mr. Woodward and at that time I think perhaps we will have Governor Rhoads over so that we can have an exchange of views again on Federal reserve draft matters. With kind regards, I remain, Sincerely yours, Benjamin Strong, Esq., 4100 Y,ontview Boulevard, Denver, Colo. eEDERAL RESERVE NOTES PAID OUT BY THIS BANK TO OTHER BANES Burin Janu 1917 as re orted b Teller the Pa'' 11E400-1----3AEK3 20,000. 280,000. 910,000. 1,925,000. 10,000. 110,000. 500,000. 360,000. 110,000. 330,000. Bank of New York, N. B. A. Merchants National Bank Mechanics & Metals National Bank National City Bank Chemical National Bank Atlantic National Bank American Excharge National Bank National Bank of Commerce Chatham& Phenix National Bank Hanover National Bank Citizens Central National Bank Market & Fulton National Bank Importers & Traders National Bank Second National Bank Irving National Bank New York County National Bank Chase National Bank Lincoln National Bank Garfield National Bank Seaboard National Bank Liberty National Bank Coal & Iran National Bank Union Exchange National Bank Nassau National Bank, Brooklyn First National Bnnk, Brooklyn Gotham National Bank Harriman National Bank Farmers National Bank, Adams, N. Y. First National Bank, Albany, N. Y. First National Bank, Amsterdam, N. Y. Burrows National Bank, Andover, N. Y. Cayuga County National Bank, Auburn, N. 100,000. 73,000. 60,000. 240,000. 200,000. 20,000. 1,000,000. 560,000. 320,000. 255,000. 660,000. 110,000. 50,000. 74,000. 85,000. 70,000. 115,000. 6,000. 5,000. 11,000. 2,000. Y. First National Bank, Binghamton, N. Y. First National Bank, Blairstawn, N. J. Boonton National Bank, Boonton, N. J. First Bridgeport Nat'l Bk., Bridgeport, Conn. Marine National Bank, Buffalo, N. Y. First National Bank, Camden, N. Y. Canajoharie National Bank, Canajoharie, N. Y. Florida National Bank, Florida, N. Y. Fort Edwards National Bank, Fort Edwards, N. Y. National Bank of Glens Falls, Diens Falls, N. Y. Hackettstown Nat'l Bk., Hackettstown, N. 3. National Hamilton Bank, Hamilton, N. Y. First National Bank, Hoboken, N. J. First National Bark, Ithaca, N. Y. 15,000. 17,000. 1,500. 3,000. 313,000. 20,000. 6,000. 19,000. 3,000. 8,000. 5,000. 6,000. 3,000. 15,000. 6,500. MEMBER BARKS Irvington National Bank, Irvington, N. Y. First National Bank, Jersey City, N. J. First National Bank of Rondout, Kingston, N. Y. Farmers National Bank, Malone, N. Y. First National Bank, Mineola, N. Y. Manufacturers National Bank, Newark, N. J. Union National Bank, Newark, N. J. Exchange National Bank, Olean, N. Y. First National Bank, Paterson, N. J. Paterson National Bank, Paterson, N. J. City National Bank, Plainfield, N. J. National Bank of Commerce, Rochester, N. Y. Farmers National Bank, Rome, N. Y. National Bank of Skaneateles, Skaneateles Union National Bank, Schenectady, N. Y. United National Bank, Troy, N. Y. Farmers National Bank, Union, N. Y. First National Bank, Utica, N. Y. Jefferson County Nat'l Bk., Watertown, N. Y. First NationP1 Bank, White Plains, N. Y. First National Bank, Morristown, N. J. 3,000. 5,000. 5,000. 9,000. 9,000. 6,000. 5,000. 5,000. 1,000. 6,000. 10,000. 5,000. 5,000. 10,000. 25,000. 5,000. 5,000. 10,000. 2,000. 16,000. 5.000. Q9,164,000. NONMEMBER BANKS 60,000. Greenwich Bank Bank of the Metropolis 80,000. New York Produce Exchange Bank 50,000. Guaranty Trust Company 70,000. Empire Trust Company 70,000. Equitable Trust Company. 40,000. Lincoln Trust Company 285,000. Lawyers Title & Trust Company 10,000. N. J. Title Guaranty & Trust Co., Jersey City,N.J. 5.000. 4.?9,834,000. TO ITELTeAR BANKS Received 2%vment New Bills 6,927,000 Checks 3,562,500 Sorted Bills 2.237.000 Gold 5 601 500 9,164,000 9,164,000 TO NONMEMBER BANKS New Bills 395,000 Sorted Bills 275.000 670,000 Gold 670,000 670,000 FEDERAL RESERVE NOTES RECEIVED BY THIS RANK Daring Janaary, 1917, as reported by the Receiving Teller. OUR NOTES NOTES OF From U. S. Treas., Fit for Circulation From Out of Town Banks From City Banks Other Federal Reserve Banks 1 2 3 4 450,165 362,385 310,915 315,980 9,000 136,700 120,800 103,600 91,900 4,000 66,000 192,000 161,000 14,000 616,665 376,550 370,130 579,015 588,570 75,000 192,100 112,100 123,300 175,600 182,800 25,000 29,500 38,000 103,000 81,000 14,000 80,000 487,525 422,535 502,220 527,320 432,245 28,500 146,200. 127,400 180,700 162,400 125,300 9,500 217,900 9,500 114,000 100,000 77,500 96,900 48,000 601,325 576,255 586,175 450,340 511,880 106,695 120,200 127,200 129,200 93,600 102,400 69,300 129,800 31,000 52,500 96,000 496,510 400,670 531,395 97,300 80,100 115,550 5 6 7 8 9 10 17,790 217,200 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 48,000 27,000 20,700 175,400 855,850 1,517,390 855,850 10,715,965 Total of our Notes Other F. R. Bank Notes 13,089,205 2,944,900 grand Total 16,034,105 -.- 10.A.tigg 10,715,965 2,944,900 FEDERAL RESERVE BANK OF NEW YORK February 2, 1917. My dear Governor: I am glad to note that Mr. Curtis is now with you. your telephone to-day ' Mr. Jay I was in a meeting with the execu- whi17 tive committee. )received / At the moment the mar t is normal while active and things are simply marking time awaiting thi next development. The general impression 1 be drawn into war but personally I am in- in the "street" is that we sh / clined to doubt it although we may sever diplomatic relations. Should we be drawn into war, I imaIgine that we shall then have some test for the reserve bank system and w 'shall have some more problems in the New York bank. I hope that on will not defer your trip to Arizona but will keep us posted and if/We deem it desirable we shall not hesitate to Wire you for Mr. Curtist,treturn. With ki4d regards as always, I remain, Very truly yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/ELS FEDERAL RESERVE BANK OF NEW YORK February 2nd, 1917. Dear Governor Strong We had quite an active day in New York yesterday because of the new German propaganda. It is rumored in the city to-day that Wilson has sent another "note" to the German, Government, but owing to present disturbed conditions has not made it public. I enclose report of the Federal Reserve Board as to renewal credits as of February 1st. Shall I continue to send you these two or three times a week? Yesterday, we bought about ;4,000,000 of acceptances at from 3 to 3* %, buying nothing less than 3 and to- day are having quite a fair volume of bills offered. The market at the moment is quite active, but prices about the same as ln.st night. 2ij2-454y A.114 3-4774 74-4-e5t67 a '7 I understand from the copy of your letter to Governor Harding in re accumulation of gold bars that you will have G....IL 1-14.4_, ef-ce-1-51,7", 6,-,. the opinion of the Federal Reserve Board through him, after receiving which you will advise us as to the course to pursue here and the amount to be accumulated, if any. We have your telegram this morning in reference to the Federal Reserve draft plan adopted at Washington, with LAC .5- 077-24--0. To EDERAL RESERVE BANK OF NEW YORK your criticism thereon. Mr. Strong. Feb. 2, 1916. We have called a meeting of our Executive Committee to consider this. In view of the unanimous report of the Governors present at Washington and the fact that the plan is published in the Federal Reserve Bulletin of February 1st, I assume that our method of proceedure here after our Committee has agreed on the position which should be taken by the New York Reserve Bank in this matter would be as follows: We would advise the other six Governors who were not present at Washington of the action of the Conference, give them a report of the proceedings and accompany it with a letter setting forth the position of the Federal Reserve Bank. Then that we should proceed as originally planned in Wash- ington with the preparation of the proposed form of draft and other machinery necessary, sending same after it is prepared. to each of the reserve banks for consideration and then have a Governors Conference, probably about the 1st of z.arch and if such Conference should think some modification of the plan advisable, we could then properly go before the Reserve Board again, stating that the Governors Conference had after full consideration of the report of the Committee, decided to recommend such and such modifications of the plan, provided the Governors did agree upon the modifications. In this connection, we must. bear in mind that some educational work will probably be necessary to bring about the changes desired. I understand that Governor Aiken is coming over to New York next Tuesday for a conference. I assume from your letters that you are continuing to gain in health and strength, keep it up. all of which is fine and we just want you to You are such a human dynamo that I have the feeling ERAL RESERVE BANK OF NEW YORK -3 To Mr. Strong. Feb. 2, 1917. 7....0",/ C) constantly that you should have a governor or regulator of your work attached to you every day lest you break loose. Our very best wishes to you and M . Curtis. As ever, Sincerely yours, 7/44-4 Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM Enc. 420 APPRCKIMATE AMCUNTS OP ACCEPTANCES BASED U2ON CREDITS WITH RENEWAL PRIVILEGE imp BY EACH PEDERAI RESERVE BANK AS PER SCHEDULES CM PILE WITH THE FEDERAL RESERVE BCARD, FEBRUARY 1, 1917. (In thousands of dollars) Amounts held January Bank Bought Matured 29,1917 Amounts held Rebruary 1, 1917. Date of last schedule received Boston 1,390 647 743 New York 6,503 (a)1,773 4,730 " 30, ?hiladelphia 2,371 139 2,232 A 31, A Cleveland 1,575 254 1,321 ty 30, A 299 It 3D , Of " 29, tr A Richmond 299 Atlanta January 26, 191.7 Chic ago 2,709 549 2,160 A 17, St. Louis 1,247 367 980 A 27, Anneapolis 615 145 470 ?I 13, Kansas City ,45 76 269 ,, 13, Dallas 641 391 250 n 13, 1,198 124 1,074 A 25, 18,893 4 465 14 428 San Fran el s co Tot al , A PT " (a) Comprises p277,000 of ordiaary accept armee previously included in total ofvpaper held by the iOAr York Bank. renewal credit DIVISION Cilf RTPCRTS AND STATISTICS, ?EDE1 PRVE BCARD, February 1, 1917. ...... FEDERAL RESERVE BANK OF NEW YORK Febii-uary 6th, 1917. Dear Governor Strong: Your letter of February 2nd in re making formal application for permission to appoin the Bank of France as our agent came in this morning and i e pect to present it at the Directors meeting tomorrow. Sinc rely yours, Deputy Governor. Benjamin Strong, E 'he Adams Hotel,/ Phoenix, Arizona. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK February 5th, 1917. Dear Governor Strong: y, I am glad to know that you are having such a "bully" visit with Judge Curtis and I hope you will find the weather very pleasant and the environment an interesting one in Phoenix, Arizona. We are wiring you to-day that conditions are quiet here, the stock market having opened strong and higher; we are having acceptances offered to us in moderate amounts and are buying at from 3 to 3i % but no less. - I note that you are very much dissatisfied with the policy being pursued by the New York bank in the matter of purchase of bills, etc. I confess it has been somewhat difficult to steer a course amid so many conflicting opinions of wht the New York bank should.do, but evidently the Reserve Board had more knowledge of probable war clouds arising than we appreciated and I think that probably led Governor narding to sending out his letter on investments. At the directors meeting last week we discussed the question quite at length, reporting that we were now down below the $25,000,000 of investments which we felt was necessary to pay our expenses, but at the time it seemed wise to continue for a little while longer, but as usual, the "Lord helps out those who are in trouble" and the war news changed the FEDERAL RESERVE BANK OF NEW YORK -2- To IdIr. Strong. 2/5/17. situation so that we have purchased in the last few days nearly ,10,000,000 of acceptances and warrants at rates mostly from 3 to 3i %. I hope this change will relieve your anxiety because I do not like the feeling that you are not in accord with our policy. I think Warburg and the others in Washington have en- tirely approved of the position we have taken during the month of January and have recognized that it operated against our own interests. Perhaps, however, in the next few months, we shall be able to make up enough so that it will not seem ill-advised that we pursued this policy for a while. I suggest that you transmit to "Judge" Curtis your criticisms and suggestions so as to get them out of your own sys- tem and let him bring them on to us when he returns and we will give them the same careful consideration we always do anything which emanates from your fertile and active, as well as sound, mind. Regarding the Federal reserve bank drafts, we expect Governors Aiken and Rhoads here to-morrow and will go over the matter with them. Also talked with Fancher over the 'phone be- fore he left for a mo-nth's vacation in Florida where he is stop- at the Hotel Ormond, Ormond Beach. We have sent out a report to the Governors, together iping with a copy of the proposed plan as outlined by the Governors Committee and asked them to go over the matter with their directors and make such suggestions and criticisms as may occur to them, our thought being that between the 1st and 15th of ::.arch we might have another Governors Conference and thrash the whole thing over before the final plan is put into operatidn. FEDERAL RESERVE BANK OF NEW YORK 0 To -3- Mr. strong. 2/5/17. We are having a fierce blizzard and snowstorm to-day while I hope you are basking in the sunshine of Arizona. My kindest regards to you and Curtis. 7e, Sincerely yours, Deputy Governor. Benjamin Strong, Esq., Adams Hotel, Phoenix, Arizona. RhT/VCM 7,44-it,.#44-0/a /ry, ci4 .712- 47. 7,17-11sea= 11441 ptA-1-4' FEDERAL RESERVE BANK OF NEW YORK February 6th, 1917. Dear Governor Strong: I showed the telegram and reserve bank checks to ,T. in regard to parring Woodwa d and it was done beletter/ fore your letter reached me. IFederal / Mr. Locke sent on a suggestio port but will not be present to-morrow for the committee's re- Lr. Woodward has been working on a report and :r. Jay also, for presentation and action at the Directors meeting to-morrow. Governors Aiken and Rhoads were in to-day and after an exchange of views as to the war sit ation and its effect upon the financial position, we discussed fir about an hour the parring of Federal reserve bank drafts, and I Mr. Jay joined in the discussion. . ',Xoodward dropping in, he and The views are somewhat diver- gent as yet, but I believe we art working towards a clear view i point and hope we may frame up ur position in a way to have a beneficial effect on the views of the other Governors and the Reserve Board. We did very little o day in bills, buying only about t50,000 for delivery to-day. We had an offer from the Bankers Trust Company but were about 1/8 of a point apart and they said the open market would take ithem, so we passed them up. ERAL RESERVE BANK OF NEW YORK -.2" To Mr. Strong. 2/6/17. We did a little rediscounting today, but not much. -a The city and the market seem quiet with no evidences of excitement, but there is always the feeling that almost any day something may develop. I am enclosing a report of acceptances based on renewal credits which, of course, will now begin to show additions because of our recent large purchases. I hope that you arehaving a most satisfactory jaunt with Curtis and that it will do both of you good. Sincerely yours, Deputy Uovernor. Benjamin Strong, Esq., The Adams Hotel, Phoenix, Arizona. RHT/VCM. Enc. AP PROXIMATE AMC LINTS OF ACC 74:Pr 1,11 C!4.:3 BASF:D tVO II CREDIT 8 W/TH RENEWAL PRI VI LEGE HELD BY EACH REDF..RAL RES FR V.F. :BANK AS PEE SCHEDULE'S ON PILE WITH Ta FEDEF.AL RERVF 5CARD, PEB3.; ARY 5, 1917. ( In thousands of do 11 ars Amount hold Bank February AmcRlnte bought Matured held Februory 1917. 1, 1 91 7. 743 Bost on ) 743 Date of last ache Aul e r ee iv ed. January 26, 1 917 New York 4,730 1,009 979 4,761 Pebtuary 3, Philadelphia 2,232 331 662 1,901 3, Cleveland 1,321 74 1,247 January 31, Feb= ary 1, 299 Richmond 299 It 2, At 2,160 CM wag° 134 135 2,159 1, " January 31, 13, " St. toui 880 25 855 Yinne a po Li 3 470 EO 420 911 S SS City 269 25 244 " 13, 250 25 225 te 13, 1074 99 975 " 25 2,073 1,829 Dal las San Fra.no sco Total 14 428 14474 DIITISICNOFR FP CRT AN) 3 T AT TS T ICS , FALiL R F, SFR V '41 B OA2.1) ?ebruary 5, 1917. AT ()A6.1742-7t(? FEDERAL RESERVE BANK OF NEW YORK February-6th, 1917. Dear Governor Strong: Answering yours of Fe ruary 2nd about the propriety of filing copies with t e Federal Reserve Board of the cables addressed to the B nk of England, will state that upon further investigation it developed that when our Committee was in Washington th Board asked them to furnish copies of cables which had pa sed, and Mr. Towne promised that the bank would do so an this was acquiesced in by both Mr. Peabody and Mr. Wo dward, so after presenting your telegram to the Executive Committee it Ws decided there was no other course to pursue and I am enclosihg herewith copy of the letter I se t in connection therewith for your files. Am .pleas d to note that you had a cordial let, ter from Deputy Gove nor Cokayne of the Bank of England. incerely yours, Deputy Governor. Benjamin Strong, Esq., Care The Adams Hotel, Phoenix, Arizona. RHTP/CM FEDERAL RESERVE BANK OF NEW YORK February 7th, 1917. Dear Governor Strong: In re Foreign Banking Relations. I presented your letter of February 2nd in re letter to Dr. Vissering of the Bank of the Netherlands to the Board meeting this morning and after an exchange of views it was felt that it was advisable to defer sending this proposed letter for a While until war conditions cleared up somewhat, and I hope that in this view you will concur but being free to advise us whenever in your judgement we should forward the letter. After hearing your letter of February 2nd, the directors approved it and authorized the officersto proceed along the lines suggested by you in this letter. The Board received with pleasure the report from Yr. Curtis that you were looking unusually well. My very best re- "gards to you and Curtis and I hope that you are enjoying every day of each other's society. Sincerely yours, Deputy uovernor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK February 7th, 1917. Dear Governor Strong: In re Acceptances. I am enclosing herewith copies of report made to our Directors this morning as to acceptances held, by whom and the amounts. Kindly destroy same after reading and not bother to return. If I am imposing too much upon your time and good nature by sending you this voluminous correspondence, do not hesitate to advise me as I do not wish to overtask one particle of your surplus strength. You can know the joy I feel in the news I am receiving constantly as to your improvement. I confess that I have a little fear that you will become so frisky that you will overdo, but hope for the best. Do not answer all of these letters as some of them are merely sent for your information. I am asking Mr. McKay of Chicago, to send you a copy of the brief he has prepared on free telegraphic transfers. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM Enc. FEDERAL RESERVE BANK OF NEW YORK February 7th, 1917. Dear Governor Strong: At our Directors Meeting this morning, it was decided thnt no change in discount rates would be made and as you know we are not purchasing acceptances now, at any rate, under 3 but are securing quite a number of bills at from 3 to 3* %, today picking up from $4,000,000 to $5,000,000 at these rates, a large proportion of thembeing renewal credits or French Industrial credits. I read to the Directors your two letters as to the policy of cur investments and especially as to our being prepared to handle any situation with courage and ,speed, but always on a sound basis. The question of vault control was also presented and approved of. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Yontview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE rrespondenc Office BANK OF NEW YORK DatVe 4-17: Subjectdoippliqt- To From AO relocated, the nedification of the plan, to a.Lko Federal reserve tank drafts lanediately available t one other baW4 ao sumestod by the ow). matte° of our beard has bean givrn verw crlreful oenWoratien and we prolent below the conditions-surrounding both piano. If Close drafto are nnde payable t a resElrve badt It will entail 0 If these drafts are wide receivable CalaaJarL4C1EXEMLLL* . t it I riag ,:edera1 reserve Wan (l) it will be unnnouss47 to maim any to be prepared to speoLal arrangements, 00I2t any drLift dra7a by'over MX) banks.. ( 2 ) 2he preeent'method of dolic basimoo would coatlaue, but the de.. 44 2o pay three aiods of drafts - forrod time vaml - one without advice, thin- second Oil recolTA of Alvieeby lull, and tae third on rim advice. (3 (a) To have on ftle oilmatares of thoso twZ,to_ane Reap all ohaoGon corrected ur to date. This Will -low) about 00,qr øInc- be reeneved. 'Zho rresoot oastol is to r000lvo on dopoolt for,Lmlediato credit or Oah all "77m1 Yorh esehonco Zheco-Pe&ml relervo bcvlh drafts would be receivnd on the cam bards. tare cards; or Zo have an advice of oaoh and every - draft 2n, and the number of thoso cool& molly ran Into thou.. sands. 2m0 advices munt be nude by the.drumlaa bank, both forward.. od to the hone rescrvo bank, one .o be cortifiod by We's and fornar'ed to the 1a7i7r reserve bank, ither to pay the drsft vithout advice or attosrt to secure advice by vire to prevent Zo protostinc of a drnft advice of which had failcd.to arrive. It Is evident that wben tte reserves of the cou..itrY Waal have been !many tranilferrod to the reserve trunks of their -respective :4.,;triatn a -rof aountry banks will, of necessity, be oblied to disooAintic their uith oorrosrendents la the-oenLra roserve oities eS thew c..-.iot Word LO split their .4eoanto one olirry haLunces in t:-.eoc ocatres-for ex immimp-wes,oki.cdRK espon s ence Date Febro4r1517. Subject 4.410. moles only and earn 2 interest en such balanocs. axis v111 hx11In not 110n1. able to sell or supply excharce on t-ene centres whea led upoa by their austoners. 20 avoirom this difficulty, the federal rt- banks aro arrwaginc, for anew form of prilie osohnnce to be kaornias llrel ftniVP exchaare to take the plow of -low Yort ems/4nm, vellah in the t has been :Averted at per for immeilinto oredit th al7 past of the !:nitod Lf these drafts (Federal reserve esehanrm) are mnde pcqable -t in toad t;e11. pp reoeiva10 at 6 reserve ban, the only pcisty interested or many benefitod in the derosltinc bank. :bo merchant or bank at Dromsville and the reserve balik.at 41las are not interested Mallhat haprenn in 7ovi York. Lord. . 2aylor ill be satisfied if their bank nivns them iusall-to °relit or ca-0, for the draft, krAch is the nresent practice).- 7auld .a Isiu York bank consider 7erm4ttiaa all to ban:z depwitors of a 'Albany to dr= on them nnd pay the drafto on receipt with or without ad'2here is a practioo at the present timr of country banks drar1nr7 "r:Xts vtoe ilte.4w, for instance, and markinc thon "payable if desired" at a ow York :hose banks ,Lre selected and it is a speoial arrnacement, whioh is more itlioult to lake over 114, aad the lewYork bank insists upon an advice, slims. J cards awl a limit of the amount to be paid la any one ay.- Thu naafi!. len prorosed by the solmittee of the direotors contemplates givinr this Alegi, to over 74,00 bcmks and with the (Melee of any One of twelve places -sest . in view of the fore-lolec, we reosAasnd, as 6n esperinental first Mkap, that the rlan as acrood nron by the :7over.oro.aad the ibderal reserve be adopted for them reaeoact (1). :he simplicity of operatiOn. RESERVE --BANK OF NEW YORK ce C orresponden 9 Date Subject: Nrorn It mOles no abaire in pr000nt prootioes. It v412 corivenleatlyiroplace the prewnt draPlAg of 'c orPcmohanm. if the roo4Irleation a roposod by. the oolrdtteo obenld be accepted by the Aderal :oserve Board and the other Federal reserve,banito, e lhould ti.. dist upon the foillwing: draftl to be Nyable only after rossirt of advide. 77Ou1d obviate the necessity Of 1121,tag siwAure oars. 451..4 tire In no peed of placlic.0 limit on the amolLit of the drafts. N.01 %.A.n IebpJ11,641CAiCe .1%. ) /ur total purchases from 17(*ibrea1y- let to 9th Inclusive for ourselves and for-Ilistribution amounted to about 01,000,000 re were drawn under renewal credits almost 14,000, 00) - r amount there are indorsed by member bank. 2,0'0,000. Durirk, the same period there have matured and paid througb this bank, for account of ourselves and 441ftother ?ederal reserve banks, bills amounting to 11,191, Ocr ing the same periou the renewal bills paid amounted to 5i117oon This gives net increase On pur operations of all bills- 20,000,000 ich renewal bills total 9,000,000 This larce increase of renewal bills is accounted for by our purchase of izoximately Q6,51/000 of bills drawn under the INnic.111 Industrial Credit of no- -r 11, 1916. The names that we have bought under that Credit include the Chase National 3ank, American n.xehange Uational dank, . National 3ani: of Commerce, :Abort!' National 3i1c,, - Bankers TruA ompanY, S. .,:organ CorrranY, Cuarant7 Trust Company,. .. Guaramy Trust Company bills amount .to about ,5M010 alp are indorsed by the ;cers Trust Company, also by the American nichax4,e :ational Bank. All of these bills have been bought at rates varying from 3r, to 3 - high rate ;:enerally obtained for the nonner-.ber bills of the loncer maturities. The maturities of aIl.purchases are well distributed over,:lareh and several millions af very short ?ebraary and early naFch. th. The Aeneh Industrial Only a moderate =Mit of the valume run into .:4y . re ...In C11 cc Subject --a4r. Jay- ° From F Date PO firriia1.7 9, 19 7 IboarM,FAAViNroAilioN,r 14.%. =1 '!V 13RUA-3Y 1917. Len 2u1. Our pafticipation in the more rscent purchases will be larger than as*ton does riot participate at present and Philadelphia, on account their district where some meTlber banks in the mining region heavy withirawals, also will not participate for a few days trancisco Is limiting the amount of their :I.rticipationi to the fact thatChicago and ,jinneapolis do not take billi drawn under the ch Industrial Credit. Other buyers in theArmd. market to-day show little dispositioa to take any bills under 3 l/4;_, although'there are exceptions to this, as, for instance, one member bank told me that they had sold_ their 90-day renewals tzlci.er the ion- bright Credit to-day at 3 1 3/16%. FEDERAL RESERVE BANK OF NEW YORK 0.0f. veo 09A February 9th, 1917. 1 My dear Governor Strong: Federal Reserve Bank Drafts. The committee on Federal reserve bank drafts has been ?utting in a good deal of work and thought on the subject. I en- close memorandum from Messrs. Sailer and Hendrickson this matter and shall endeavor to send you later in the day copy of the report as framed up to date, but same has not been submitted to Mr. Locke and will not be sent out until properly approved. The discussions seem, to be largely over whether the drafts should be made "Payable at" or "Receivable at" and while I have been in favor of making them "Receivable at" on the theory that this plan is proposed to take the place of the present circulation of New York bank drafts and as they have been for years received at par in every important point in the country and credited or cashed upon presentation', after which they have been forwarded to New York for payment, I personally see no reason why they should not be made "Receivable at". However, as W,essrs. Woodw-rd and Jay, also the New York bankers, feel strongly that they should be made "Payable at", I shall not object to the report of our bank committee recommending this to the Governors conference later. In any event, I hope that a workable and sound scheme will be finally adopted. Sincerely yours, Deputy 6977-rnor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. http://fraser.stlouisfed.org/ RHT/VC:: Federal Reserve Bank of St. Louis ,f tti""7 r 1;,* te 1 114 7770 understand that in sone of the Federal reserve districts the transfer plan adepted by the Federal Reserve ,:ystern is not considered satis- /Ray-eseeeeesessmsseseesses.sesee factoxy by the menber ban. They wish to be able to draw their own checks to transfer funds instead Of ordering the transfers made through their Fed- eral reserve banks. Various plans for making drafts dram by nnmber banks on their Federal reserve baWe more acceptable and available than at present have been snggested and a committee of the governors has been appointed to confer with the clearing committee of the Federal Reserve Board to see if a plan can be worked out. The officers of the Federal Reserve Bank of New York have considered the various sugeestions Which have been made and are of the opinion that a satisfactory plan can be worked out seeking drafts drawn on Federal reserve banks imeediately available at Federal reserve tanks provided the principles of the .resent transfer system which have been tested and pVoved satisfactory and sound for the past eighteen months are followed. The enggeetiou of the Federal Reserve Bank of New York, therefore, is as follows The member bank draws,on a specially prepared form of draft,on its ouusksiseeJtc Ce-e-s.NA' Federal reserve bank, marking the draft pereA4e a1 the Federal reserve bank of the district to which the draft is to be sent. The menber bade advises its Federal reserve bank the particulars of the draft Pelt requests it to write or wire to the Federal reserve bank at which A-12-t-tev-e-0,-4-4) PLg-e-e-ee.,c the draft has been made fort-411e, directing it to tete, the draft on presentation and furnishing sufficient pertiaulars to identify it. The Federal reserve ban% charges the amount of the draft to the ac- count of its member bank on receipt of tile advice from tYe latter. The Federal reserve bank which "wyr-e the draft should 'oe rere44 by (A) -2the Federal reserve bank on which the draft is drawn on day of paywant. The member bank may maim the draft riRreiria--only at the Federal reserve bank of the district to which it is to be sent; and such Federal reserve bank will receive the draft only for deferred credit if its first indorsement is not that of a person, firm or corporation situated within its district. As this service is undertaken for the convenience of the member banks and without cost to the Federal reserve bmks except for telegrams, which presumbly the member bank will ray, the Federal reserve bank /lakes no charge for but the member bank should be at liberty to charge excharce to their customers when practicable . FEDERAL RESERVE BANK OF NEW YORK February 9th, 1917. My dear Governor Strong: I beg to enclose rewith copy of a letter received yesterday from the Comptoir National D'Escompte de/aris. We assume thhre is nothing further for us to do althouzh I did have further in- / formation secured/as to taxes and forwarded it under letter mail. Sincerely yours, 6/4-7)14.44,44A_Th Deputy Governor. ienjamin.Strong, Esq., 4100 Montview Boulevard, Denver, Golorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK February 7th, 1917. Dear Governor Strong: Federal Reserve Bank Drafts. Mr. Woodward presented a report from our Committee on Federal Reserve Bank drafts at the Directors meeting this morning, stating that he had given a great deal of thought to the subject and that while the report was not finished, he read the the draft prepared which was approved of by the Directors in principle and referred i* Ir=ck to the Committee with power to modify and send it to the other reserve banks and to the Reserve Board at the proper time. We are having a conference this afternoon of Messrs. Sailer, Hendricks, Jay and myself to go over the report again. There seems to be general unanimity of the view that there should be advice from the member bank to the reserve bank of its district and by that reserve bank to the reserve bank where payable and that no drafts in amount above, say, t250 to 000 should be paid without advice, but no advice necessary for amounts less than t250 or *300. ZULAtoe. YkAAAr.7 It was further thought that drafts of this amount and less will constitute the large majority of those presented by the country banks who will want to use this system when inaugurated. 9 - RESERVE BANK OF NEW YORK To Mr. Strong. The difference between us now apparently is the drafts shall be "Receivable at" or "Payable at" designated. 2/7/17. whether the bank I think we can frame it up satisfactorily and it is possible that Mr. Woodward may have Messrs. Hardfng and Delano, also Mr. Jay, down at his Maryland home for a little holiday on Monday next, February 12th, at which time - if it is carried out - the matter can be thoroughly discussed. Everything is quiet here to-day and if we can only keep out of war, we shall be very happy. I shall be glad to hear from you as to mr. Curtis's plans and his probable return. Governor Aiken was here yesterday and lunched with Lessrs. Peabody and Woodward and you will probably hear from him or them soon. Governor Rhoads was over also but went back early in the afternoon to meet President Taft. My very hest wishes to you. Sincerely yours, Deputy uovernor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK \February 9th, 1917. My dear Governor Strong: It is fortunate fo,t Curtis and you that you are in the sunshine and dry clim te as we are having samples of all kind of weather, var,ing from day to day according to Nature's whims. I enclose repo t of acceptances held and would state that we have been veragirg about from $2,000,C00 to t4,000,000 of purchases of bills each day since diplomatic relations were broken. Rates 3 to 3i% Received a cablegram last night from Lord Cunliffe reading "Your otter January 18th received and will have attention but nclosures mentioned bottom page five are missing." Th section referred to is as follows: Letter January 181h, Section 13. "It is further suggested that the 'Bank of "ngland furnish the Federal Reserve Bank of New York with! the necessary documents and papers to ena- ble the opening of an account with the Bank of England and accompanying t is letter are directions and forms applying to the opening of an account by the Bank of England with the Federal Reserve Bank of New York." You will recall that after discussion here we thought it advisable not to send the signature cards, etc., 0 To FEDERAL RESERVE BANK OF NEW YORK ......... Mr. Strong. 2/9/17. until we heard from them as to their acceptance in general of your proposition. Unfortunately, we omitted to strike out that section end will cable to-day. With kind regards, i remain, Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM P. S. We have cabled Lord Cunliffe in answer to his cable as follows: "Cable received. We withheld send- ing papers and signature cards pending your decision on our proposals. from letter." Regret we overlooked omitting paragraph thirteen APPROXIMATE AMOUNTS OP ACCEPTANCITS BASED UPON CREDITS WITH RENEWAL PRIVILEGE HELD BY EACH FEDERAL RESERVE BANK AS .1).R SCHEDULES ON FILE WITH THE FEDERAL RESER 17 BOARD, FEBRUARY 8, 1917. (In thousands of do llars . Amount s held Fe br miry 7, 1917. Bank Bought matured h al d February 8, 1917. 743 Boston. Amo u. nt s 743 Date of last eche dui e received. February 6, 1917 New fork 6,029 150 6,179 ft 7 ft Philad el phi a 2,058 75 2,133 It 7 It Cleveland 1,656 1,656 9 5 9 299 299 n 7 ri 9 6 9, Richmond Atlanta Chic ago 2,159 2,159 " 5, St. Loui s 1,161 1,161 9 5, IT " " Minneapolis 420 211 631 Kansas City 287 18 305 .. 6, 6, Dallas San franc' sco 225 39 234 " 5, 975 n Tot al DIV IS ID DI 975 16 012 . 493 Cr R3RS Ablii ST al STI CS , FEDERAL RES:ERVE BCARD, 30 February 8, 1917. 30 16A75 9 tit 1.1 FEDERAL RESERVE BANK OF NEW YORK February 10th, 1917. Dear Governor Strong: I asked Mr. James Brown to come in yesterday which he did and I explained what you wanted to know in regard to the laws, if any, affecting exports of gold from France. He gave his opinion but afterwards said that he would write either you or us direct, but meanwhile, before writing would talk with the French Commissioner and also would secure information from his own counsel in France. I told him that we had not intended to make him any trouble, but he seemed very glad to do this and you will see, therefore, that it is under way. Kindly let us know when you are back in Denver and whether we shall continue to advise you daily by wire as to the situation unless it changes. With my very best wishes,I remain, Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCIA Dictated by Mr. Treman but signed in his absence. FEDERAL RESERVE BANK NEW YORK FEB211ji/ February 13th, 1917. Dear Governor Strong: Mr. Sailer has gone to Elmira for to-day and tomorrow to interview from that point various state banks hoping to induce them to come into the Collection System. Mr. McDougal is out with a letter, copy of which I secured from my brother-in-low in Ithaca yesterday and for your information am enclosing. I think we should go to the limit in trying to bring the state banks into the System of their own option and hope that the coercive method will be postponed until the very last moment. I enclose also list of acceptances held February 12th. Sincerely yours, Deputy Governor. Benjamin Strong, Esc., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM ENC. FEDERAL RESERVE BANK OF NEW YORK February 13th, 1917. Dear Governor Strong: I spent Sunday and Monday in Ithpica where the weather was very cold and clear and bracing so it did ine much good and I feel very much better than I have for the past two weeks. I note that mail has been de ayed so it has been wise probably that during the latter part of 14st week, we sent your mail to Denver. Am very glad to learn that/you and Curtis are having such a good rest with fine air and weatilbr. We certainly shall not hes- itate to keep you posted and plea,Se do not think that we are ir any way deceiving you in oUt telegrains as to actual conditions. It may be that we are having a calm Wore the storm, people are serious minded and thoughtful but ap arently without excitement. Evidently, we will not be plunged into.' war without very good reason for our go- / ing in. Meanwhile, we are living in a period of suspense, not know/ ing what the day will sing forth but constantly trying to strengthen / the breast works of finance so as to be in readiness, and this is being done by the ban / generally. I am se ding you copy of a memorandum prepared by Mr. Kenfor mr. Jay n Saturday. Possibly, he sent you one, but if not, /zel 1 this will be in eresting. Wit!i kind regards, I am, Sincerely yours, Benjamin Strong, Esq., 4100 Yontiew Boulevard, Denver, Uolorado. FEDERAL RESERVE BANK OF NEW YORK February 14th, 1917. FEB21191/ Dear Governor Strong: Yesterday Mr. Morgan telephoned that they were receiving $25,000,000 of gold and stated that part of it had already been delivered to the Assay Office, but asked if we cared to purchase it and as we had a meeting of our Directors this morning, we thought it a good time to take up the subject of the entire gold accumulation matter. I reported your suggestion that we should accumulate gold bars now without further delay and as rapidly as we could. The Board authorized me to take the matter up with Mr. iorgan, so Mr. J5y and I called on him this afternoon and told him we would take such portion of the present shipment as he cared to send over to us, but we did not wish to purchase it and leave it stored in the hall or other place in the Assay Office under guard for a week or so pending melting. We further told him that we would bewilling, if conditions did not change, to take more from him next week if it was coming in, simply asking that he give us gold bars instead of gold coin whenever he could conveniently. In the present lot, there is considerable German coin and they propose to weigh one of the boxes to secure its value and hen estimate the total amount in the boxes turned over to us, they FEDERAL RESERVE BANK OF NEW YORK 0 -2- To Mr. Strong. 2/14/17. guaranteeing the account, etc., and we paying them 99 %, balances to be adjusted after assaying. -hey seemed to appreciate our willingness to assist in this matter and I hope it will result in our accumulating an amount satisfactory. We told them we would be willing to take from t25,000,000 to t30,000,000 and they said they felt that this would be all they would want to let us have probably. Mr. Jay is writing to the Federal Reserve Board to-day asking that the question of re-melting charge be taken up and settled and he had the assurance, as a result of an interview with Mr. Bovee yesterday at the Subtreasury, that he would approve it, all of which is submitted for your information. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK February 14th, 1917. Dear Governor Strong: Your instructions signed by of the bank have been duly received, ontents noted and most of them have already been attended to, or next day to give you an itemize he uovernor and the"Judge" ut I shall hope tomorrow answer to your instructions so that you will know the present status of them. As we understand, Curt s will be here on Monday next. Things are moving aloqg very quietly and we have a govvernment flag hung up in the N ssau Street window as the building/ organization will not permit Ls to put out a flag staff as they have one or two flags floa ing from the top of the building. I understand tha Monday to confer with Mr Governor Aiken was in Washington on Warburg. With kind reg rds, I remain, Sin erely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK February 14th, 1917. FEB2 1 1917 Dear Governor Strong: Bank of France. Mr. James grown advises us that he has written to France making inquiry as to any and all laws affecting the export of gold and has asked them to cable an answer, provided a satisfactory answer can be given by cable; otherwise, the answer will be mailed. I assume that this will be in sufficient time but if not and you think it advisable for us to consult Coudert Brothers, kindly advise us. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK February 15th, 1917. Dear Governor Strong: I wrote you about a w ek or ten days ago asking you to return the draf burg of a proposed letter prepared by Mr. War- tJbe sent to the Banco de la Nacion of Argentina but have not received it as yet. Will you be good e ough to have it forwarded as it is needed to compl te our files here. Thanking you iadvance, I am, Sine rely yours, 'Deputy Uovernor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK February 15th, 1917. Dear Governor Strong: I met Comptroller Jo at the Waldorf last night and with him. Skelton Williams ad a little talk He asked in an in erested way about how you were progressing and seemed pleased that you were improving. His appointee, M/. Malburn, is being received with evident satis action by the banks in this district. With kind reprds, I am, Sin erely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK 11.4.fr February 15th, 1917. FEB21 1917 Dear Governor Strong: We had another Directors meeting yesterday and the new Class C Director, Mr. Saunders, appeared, was sworn in and attended part of the meting, all the other members being present. No change was madl in the rates for discounts or acceptances. Boston has 1/8 to 1/4 per cent, but to 3- aised its rate on acceptances t seems to me that our rates - - and we have bou ht some acceptances at 5 (pri- vate bankers), is high enugh unless conditions change. The Committee o am sending you a copy of it for sented their report and your consideration. Federal reserve bank drafts pre- ad thought that we might have a I March to take up this question, but Governor's Conference i e that he talked with Governor narding Governor Aiken informs Washington and found him distinctly concerning this while i non-enthusiastic about Jolding these conferences. In that ask the various banks to submit their case, we shall probabl views to our uommittee and call another meeting of the Committee before the first of Ap We adjourned or two weeks subject to earlier call if conditions changed. Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, http://fraser.stlouisfed.org/ Denver, Colorado. Federal Reserve Bank of St. Louis Deputy Governor. New York, February 13, 1917. To the Board of Directors of the Federal Reserve Bank of NOW York. Your special committee, to which tvas referred the report of the com,- mittee of governors recommending a plan whereby a draft drawn by a member bank upon its Federal reserve bank could be made receivable at par by another designated Federal reserve bank, has given the matter much consideration, and respectfully presents the following report: At oresent the great majority of the member banks keep accounts with correspondents in one or more of the large centres, drafts on which they and their depositors use in settlement of accounts due in various parts of the country. As balances with such correspondents will soon cease to count as re- serve, some of these members may deem it advisable not to carry such atcounts and it is planned to provide country banks and their customers with a method of transferring funds to points where payments are to be made which will be as satisfactory as drafts on corresoondents hitherto have been. This may, by elimination of accounts of country banks now kept in the large centres, prove detrimental to the interests of member banks in such centres, but the committee has endeavored to consider the paan with the sole objects of making it a practical and effective method of transferring funds for the country banks, and of assuring thorough protection to all concerned in its use. THE PRESENT METHOD OF SETTLING ACCOUNTS. The method of settling accounts throughout the country may be illustrated as follows: The merchant at Brownsville, Texas, who buys a bill of goods from Marshall Field & Company in Chicago on credit, unless it is expressly otherwise stipulated, undertakes to pay Marshall Field & Company in currency, or in a sight draft which they can at once convert into currency on presentation merchant's in check upon his local bank is not such a Chicago. Deliveryof the payment. At best, it is a postponement of the payment until the Cheek can be sent to Brownsville and collected and the proceeds transmitted to Chicago. To avoid the delay consequent upon the merchant is accustomed to procure from collection of a Brownsville chock, the his local bank a draft upon its corres- pondent in Chicago which, when remitted to Marshall Field & Company, can be converted into cash at once by them, THE FEDERAL RESERVE TRANSFER SYSTEM. Some eighteen months ago the Federal reserve fer banks undertook to trane- funds for their members from one district to another, either by mail or tele- graph. But the member banks and their customers are so much more accustomed to drawing checks than to ordering transfers in settlement of accounts that the present facilities of the transfer system have not been generally availed of. Your committee understands that the plan under discussion is designed to complots the transfer system by. enabling a member bank to transfer money to distant points by drawing a draft on its own Federal reserve bank which will effect pay- ment through the Federal reserve bank of the district in which such point is situated. It is in the interest of good business that payments promptly, effectively, and by a should be made method which will be generally acceptable, and to all efforts in that direction the committee wishes to give every assistance. THE PLAN OF THE GOVERNORS' COMMITTEE. The plan of the governors' committee is to make the draft of a member bank upon its own Federal reserve bank "receivable" at par when presented at any other designated Federal reserve bank, allowing such receiving Federal -3- reserve bank to e ege ne the draft to the hone Federal reserve bank and collect the amount thrangh the Gold Settlement Fund. The member bank issuing the draft protects itself by charging the amount to its customer. The reserve bank upon which the draft is drawn pro- tects itself by Charging the amount, when advised, against the account of the member bank. The reserve bank at which the draft is receivable at par, al- thou gh required to allow immediate credit for the amount, protects itself by making this credit tentative until the draft has been collected. Your committee does not approve the plan without modification because The proposed draft would not be an instrument effecting prompt payment, but an instrument postponing payment. Therefore, your committee believes the proposed plan will prove ineffective and cannot be made satisfactory to the country bank unless it is an instrument of actual rather than tentative payment at the Federal reserve bank of the district in Which the payment is to be made. The receiving Federal reserve bank will have to decide in each case how much credit it will extend to the member bank depositing such drafts. If it curtails this credit, the immediate availability of the draft disappears; if it is compelled by regulations to extend such credit regardless of the strength of the member bank, an element of weakness would be introduced into the system. Under section 16 of the Act, each Federal reserve bank has undertaken to perform two services for its members: To assist them in collecting funds (represented by checks) due from distant points: To assist them in transferring funds due to distant points. The purpose of the plan is essentially a transfer of money under No. 2. Yet the operation of the plan brings it under No. 1, since the draft has to be sent for collection and final payment to the distant point. Your committee considers it an unsound principle for a debtor, in order to make payment, to send his creditor a paper instructing the creditor to send to the debtor's locality and collect the debt. (d) The proposal to limit a member bank to not exceeding .10,000 of such drafts in any one day seems impracticable, since an effective limit can only be placed at the paying end; and it does not seem proper to limit a member bank in drawing on its own lands available for that purpose, Or to limit "availability," if the system is to be satisfactory. SUGGESTED MODIFICATION OF THE PLAN The plan, to realize its purpose, should be operated under the recognized banking methods of transferring funds. Your committee therefore recom- mends that it be modified so as to make such drafts payable on advice at any designated Federal reserve bank. This modification would entail two changes: That the home Federal reserve bank should advise the paying Federal reserve bank, usually by mail, but by telegraph if necessary, to pay the draft. That the -paying Federal reserve bank should be ready to assume the responsibility of actually paying the draft on advice. nis modification, every party to the transaction would be protected - the member bank by charging its customer's account, the home Federal reserve bank by charging the member bank's account, and the paying Federal reserve bank, upon advice from the home Federal reserve bank, by charging the amount to the account of the latter; while the merchant in the district of the paying Federal reserve bank would receive an instrument which would effect for him prompt and actual payment of his account. Against the modification suggested by your committee the following suggestions are advanced: The draft might reach its destination before the advice; It is cumbersome; (0) It adds to the responsibility and labor of the paying Federal reserve bank. With regard to (a) your committee believes that the advice would pro- -5ceed promptly by the most direct route, whereas probably the great majority of drafts would first go to parties in places other than the location of such bank, would be by them deposited in local banks, and in turn would be forwarded to the paying Federal reserve bahk. Were the drafts to be used in the paying Federal re- serve bank's city, a day would usually be required for the deposit of the draft and its passage through the clearing house. Should a draft arrive before the advice, either it could be held awaiting the arrival of advice, or instructions could be requested by wire. A member bank, fearing in specific cases, such as direct remittances, that the draft would arrive before the advice, could stamp the ad- vice to its home Federal reserve bank "Please wire." With regard to (b) your committee believes that advice reserve banks would not prove cumbersome. slips. between Federal The member bank would advise on double One of these advices the home Federal reserve bank would sign and for- ward to the paying Federal reserve bank. This is a simple transaction frequent- ly used to-day by country banks in instances far more complicated; i. e., in making foreign remittances. ,ith regard to (0) your committee believes that the responsibility is no more than a reasonable banking risk which must be assumed by Federal reserve banks if the system is to introduce a draft which will satisfactorily take the place of those hitherto used. In the case of the foreign remittances referred to in the preceding paragraph, it is certain that the foreign drafts would not give satis- faction if they were made only tentatively payable at foreign places and had to be returned to some point in the United States for final payment. Probably more drafts would be drawn on the Federal Reserve Bank of New York than on any other Federal reserve bank, and its officers believe that the machinery necessary to pay such drafts on advice would be entirely practicable. RECOUMNDkTION OF COAMITTEE Your committee recommends that the directors of the Federal Reserve Bank of New York, desiring to cooperate in every way with the Federal Reserve Board in its effort to provide country berate with a practical and effective method of transferring funds through the medium of their own checks, urge that the plan presented by the governors to the Federal Reserve Board be modified as above recomended so as to make able for immediate availability" drafts "payable upon advice" instead of at the Federal reserve bank of the district in which the payment is to be made. "receiv- (Signed) William Woodward Franklin D. Locke Pierre Jay Leslie R. Palmer Jffice Correspondence To Mr. Tremsn From J. D. Higgins STATE BANES AND TRUST COMPANIES FEDERAL RESERVE BANKOFNEWYORK Date February 16, 19', Subject: Par list District No. 2 TOTAL BANES CHECKS COLLECTED BANES AT PAR COLLECTED NOT New York 304 190 114 New Jersey 106 105 1 Connecticut 15 15 0 425 310 115 NOTE: This is the correct total but it does not agree with the Federal Reserve Bulletin because the Corn Exchange Bank and branches were not deducted when admitted to membership. The correction will be shown in the March Bulletin. FEDERAL RESERVE BANK OF NEW YORK Ye.bruary 16th, 1917. Dear Governor Strong: Accumulation of Gold. In accordance with our arrangement with srs. J. P. Morgan & Company this bank secured about 150 boxes of German coin Wednesday afternoon, valued at about $6,000,000 and yesterday took in about 300 boxes of French coin and bars, valued at about $11,000,000. I assume that we will se- cure more gold next week as there seems to be a probability of a considerable amount coming in soon. Would you think it advisable for us to have our coin and bars melted and then for us to take American bars in return to hold? Sincerely yours, ce,Kgyti. Deputy Govot7ror. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHVVCM Later: lAessrs. Morgan & Company win let us have $12,000,000 more next Tuesday. FEDERAL RESERVE BANK OF NEW YORK February 6th, 1917. Dear Governor Strong: I have received your/aver of February 10th from Phoenix, Arizona enclosin Governor Aiken. Also, note copy of a letter to hat you will send me copy of the letter prepared by Mr. Warburg in re Banco de la Nacion de Argentina. You may have ought me a very poor corres- pondent lately, but wit Mr. Curtis away, Mr. Jay and I have had our time qu e fully occupied so that there has been but little t' available to do more than the necessary work which evelops from day to day. With kind regards, I remain, Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. . RHT/VCM FEDERAL RESERVE BANK OF NEW YORK February 17th, 1917. FEB21911 Dear Mr. Strong: Mr. J. B. Forgan was in again Friday morning going over matters which are to be discussed next Monday at the meeting of the Federal Advisory Council. He took a copy of our Directors report on Federal reserve bank drafts and apparently seemed to be satisfied with the position outlined.. He reported that money was stiffening in Chicago and the West and he looked for higher rates. Mr. Morgan expects to be present at the meeting in Washington I believe and Mr. Jay has been down at his office going over some of the subjects which will be up for discussion. I hope they may accomplish some good but I learn that the House Committee on Banking and Currency last night laid aside again branch banks and decided to recommend that 6 % instead of 7 % be carried in the Federal Reserve Bank and 4 % instead of 5 % as till money, making a total reserve of 10 instead of 12 %. I assume that now the Senate and House Committees will consider these amendments in joint session. I hope you have had no ill effects from your Arizona trip. Sincerely yours, 2V Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. treau.. FEDERAL RESERVE BANK OF NEW YORK February 17th, 1917. FEB21131/ Dear Governor Strong: I have yours of February 10th from Phoenix and replying to same beg to say that I hardly think your criticism is entirely just as to the policy of our investments being dictated from Washington. it is true that either by letter or by telephone in talking to Governor Harding or Mr. Warburg (generally the latter), we have stated the policy under which we were working, or have discussed with them our viewpoint which I consider proportionately valuable to me and to the Reserve Board; they thus secure information as to conditions at the financial center and there has been a reciprocal benefit, but frankly, I do not think our proceedure has been based upon suggestions from Washington, although we have always taken any suggestions from them into full consideration. With kind regards, I remain, Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/V0d Dictated b y Mr. Treman but signed in his absence. FEDERAL RESERVE BANK OF NEW YORK February 17th, 1917. FEB211917 Dear Governor Strong: This matter I have left with Mr. Jay who has consulted with Mr. Bovee and has also written Governor harding. It may be of interest to know that we shall have a total of $30,000,000 of gold in the bank probably next week, this being an assortment of German and French and possibly other coin, together with gold bars. I assume we will have these remelted when convenient to the Assay Office and then unless you think it advisable not to, our plan is to take back, say, $25,000,000 in American bars to hold so long as it may seem advisable. Sincerely yours, /rv Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM Dictated by Mr. Treman but signed in his absence. FEDERAL RESERVE BANK ukOF NEW YORK FEB211917 February 17th, 1917. Dear Governor Strong: Purchase of Bills. We are holding to our rate of from 3 % to 3i %, sometimes 3,4 % on private bankers' ac- ceptances and unless conditions change will probably continue to purchase in moderate amounts as offered, but not reach for them. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. Dictat,d by Mr. Treman but signed in his absence. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK February 17th, 1917. D.Of Dytepte r Strong: We are today sending to each of the Governors a copy of the report of our Directors asking that their Directors give same consideration and send to me as Chairman of the Committee their approval or criticisms and any suggestions so that we may have a meeting of the Committee of Governors with Mr.Aiken some time early in March, as we understand Governor Harding does not approve of another Governors Conference just now. When Mr. Curtis returns, we will go into the matter of a form of bank draft and other matters for more definite action. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM Dictated by Mr. Treman but signed in his absence. FEDERAL RESERVE BANK OF NEW YORK February 19th, 1917. FE132 3 1917 Dear Governor Strong: Bank of France. In re Bank of France matter, I received your letter and sent it over to Mr. Kent on Friday and he has been in to- day discussing the proposals outlined, with Mr. Curtis and me. Later, Mr. George Roberts came in at my requeat and I have given him the proposed letter and he will return it to us with his comments on Wednesday. Meanwhile, Mr. Jay left this afternoon for Washington to go over with the Reserve Board the question of our formal application to appoint the Bank of France as our correspondent and informally to arrange with them as to the announcement - when to be made, etc. He hopes to return to-morrow night so that on Wed- nesday I trust we can begin to frame up the situation definitely. With kind regards, I remain, Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montvicw Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK February 17th, 1917. FEB211911 'Dear Governor Strong: Bank of France. We have letters in re Bank of France and the proposed arrangement. Mr. Roberts being out of the city temporarily, I am sending to Mr. Kent the proposals for consideration and his have arranged that he will look them over so we can have them Monday, at which time I hope Curtis will have returned and we can then go over them in detail. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM Dictated by Mr. Treman but signed in his absence. FEDERAL RESERVE BANK OF NEW YORK February 17th, 1917. Dear Governor Strong:FEB21191/ The Collection System. Mr. Sailer was in Elmira and Olean on Tuesday and Wednesday and from these points telephoned to a number of state banks, making some headway with some of them and none with others. Hendricks was in Albany Thursday with about the same result. Mr. McDougal came out in an article on the Federal Reserve Bank trying to coerce the state banks, but his letter has apparently not had much influence, at least, here in the city, but I assume it has with some of the smaller banks. I am enclosing a memorandum containing some information concerning banks in the System in tnis district by which you will note that there are 115 still outside. Next Saturday, February 24th, Group III is to have its meeting in Elmira and I learn from Mr. Turner that the Committee has invited Mr. McDougal and Mr. Skinner of the State Bank Department and possibly Representative Fowler. I shall try to be present but do not know what I shall be up against but rather expect there will be some radical opinions expressed ,DERAL RESERVE BANK OF NEW YORK -2- To Mr. Strong. 2/17/17. .11X' in re our collection system. Personally, I am convinced how- ever of the great advantages of our system and that if we have time to work it out its results will be most satisfactory. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM Dictated by Mr. Treman but signed in his absence. FEDERAL RESERVE BANK OF NEW YORK FEB2 3 1917 February 19th, 1917. Dear Governor Strong: Re Bank of En',1and Cables. Mr. Curtis returned this morning to the bank and we were all very much pleased to have him make so good a report as to your condition and feeling. I am sorry to learn from him how strongly you disapproved of our sending copies of the cables to Washington. Neither Yr. Jay or I realized from the letter you sent how strongly you apparently felt. I submitted this letter to the Executive Committee at the time it was considered and as Mr. Towne stated that he had agreed to furnish these cables and this being acquiesced in by - . Peabody and Mr. Woodward, I felt as did the others that the only thing to do was to submit the copies. So far as I was concerned, I did not know the detail nor the exact manner in which Mr. Curtis had discussed the Matter with Mr. Morgan. I knew, of course, that he had had the interview with him and Curtis showed me the copy of the cablegram which he proposed sending and this matter was all discussed with Mr. Woodward before action was taken, but I think that neither of us realized that it was your great desire and intention to conduct through Mr. Morgan as a personal matter to the extent that Mr. Curtis indicated to-day. -2 - FEDERAL RESERVE BANK OF NEW YORK To Mr. Strong. 2/19/17. I assume the responsibility and the criticism which I feel is just, when I stated in my letter to Washington that the cable was sent to the Bank of England which was, of course, an error. We have suggested to Curtis to make an exact statement of the different steps which led to the preparation of the cable and the sending of it and also to prepare the kind of letter which he thinks we should send to the Federal Reserve Board in order to keep our records correct, which he will do. The letter I wrote to Governor Harding acknowledging receipt of his letter of criticism will in no way preclude our sending another communication as I simply acknowledged receipt and stated that the letter had been read to our Board of Directors at their meeting, and I made no further comment or statement concerning it. I assume that the matter will come to our Direc- tors at their next meeting next week and receive their consideration. You, of course appreciate how sensitive the Reserve Board seems to be over this whole Bank of England matter, and on the other hand, most of our Directors at least feel very strongly as to the treatment afforded the Bank of New York and some of its officers by their action. This is one of the cases where I personally, of course, feel chagrined that matters are not better handled in your absence and regret sincerely that your appreciation of this fact must cause you more anxiety than I wish it to while you are convalescing. The fact that Mr. Curtis was theonly one familiar with the details of the conduct of this Bank of England matter and his _OERAL RESERVE BANK OF NEW YORK 3 To Mr. Strong. 2/19/17. being away at the time the letter from the Reserve Board was received, of course, made it still more unfortunate. However, aside from this matter, I hope that you are not unduly anxious or worried over the situation here as things seem to be going fairly well in most ways and it will not be long now I trust before you will be able to come back and go over important matters yourself. Once more, let me assure you of the great pleasure we have in hearing such good news of your condition. Things here are somewhat in suspense but there seems to be a somewhat better feeling in the stock market at the present time and the hope that grows that we may be kept out of war. My very best wishes to you. Sincerely yours, Deputy Governor. Benjamin Stromg, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM I FEDERAL RESERVE BANK a05 VW YORK 11101. Yr' FEB2 :1 191/ February 20th, 1917. Dear Governor Strong: The officers of the Federal Reserve Bank who are now resident here beg to acknowledge receipt of the report of the Special Committee consisting of Governor Strong and "Judge" Curtis, appointed by themselves to "consider ways and means for preparing the Federal Reserve sank of New York to render the maximum amount of service to the government and to its member banks." In considering these suggestions in detail we find that many of them have previously had consideration and provision made for carrying on the work as outlined. In order that Governor Strong and "Judge" Curtis may be fully informed as to each of the suggestions contained in the memorandum, I beg to enclose herewith a report in detail and hope that same will give some evidence that we are not"asleep on the job" and although we have at times done things which have had to be "condoned" by Washington, we are endeavoring to keep the Reserve Bank of New York in operation as well as it can be done during the absence of the real head. Be assured that suggestions from you are always welcome and it is our intention to give same full and careful consideration and we have constantly before us, not only the AFEDERAL RESERVE BANK OF NEW YORK -2- To Mr. Strong. 2/20/17. 1IP responsibility but the necessity for making careful preparation in anticipation of any sudden and great demands which might be made upon this bank at any time when an. emergency arises. Respectfully submitted, at./C7)414-1-0C4,ft/v-, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorndo. RHT/VCM Eric. REPORT ON EMERGENCY PREPARATION. NOTE SUPPLY: The Federal Reserve Bank hns about $15,000,000 of Federal reserve notes in their own vault, $55,000,000 in the hands of the Federal Reserve Agent in New York; about $175,000,000 are all prepared in Washington and instructions had previously been sent to Washington to have printed up to $600,000,000. DISCOUNT DEPARTMENT: We now have a permanent force of five men; have also trained five extra men for emergencies and contemplate training an additional five men more during the coming month. DISCOUNT DEPARTMENT: We have at present a supply of blanks and forms sufficient for six months normal business, are taking an inventory of all supplies needed in this department and other departments and will provide for an extra supply of forms used most frequently. CREDIT DEPARTME:T: Arrangements had alreedy been made with Mr. :jalburn and we have his agreement to supply us with information, particularly as to doubtful banks. MONEY DEPARTMENT: in this department. There are eight expert money counters (men) In December and January when we had some extra heavy work, we called upon six other trained money counters in other pats of the bank and with this force were able to handle 200,000 bills in one day. Mr. Sailer reports that none of the banks in New York City have a department that can handle half as much money as can this bank. -2- TRANSIT DEPAR: EMT: There are 56 persons employed in this de- partment, 46 girls and 10 men. During December and January, they handled an average of 40,000 items a day, a margin in this sufficient to handle one-third more and one day this week we handled practically 63,000 items, closing with a net difference for that day of 30 cents. PHYSICAL SECURITY: (a)Window guards have been promised us for the last three months; we have prodded them from time to time and are now advised that they will be installed within the next ten days, i.e. about :.:arch let. (b) We have a night force of five men on duty every night, five men on duty on Saturdays and Sundsys and holiday nights. These are distributed as follows: One man in the vault lobby, anoth- er on the main floor guarding the rear and front entrances, one on the fifth floor acts as watchman and night porter, one is a night porter giving signals to the Holmes Protective Agency periodically. We have extra men patrolling outside the bank on Pine and Nassau Streets night and day. In addition to our own force, there is an extra special force guarding the United States Treasury across the street. As to day patrol, two men are constantly on duty and we have an extra Holmes man who assists these two. There is also a watchman between 8 A.M. and 5 P. M. at the rear entrance all the time, beirgrelieved at night by the night watchmen. We have installed a special iron grill and gate at the head of the stairs leading to the basement and vault room, guarded by one man. Another man is assigned to the desk in the vault lob- by controlling access into the new vaults, so there is a total of -3- six men on guard, not including outside patrol. We have ordered uniforms for one man each night and day patrol. We had been in touch with Police Commissioner Woods' office for extra guards and yesterday Mr. Curtis took up this matter again with Mr. Woods. Since June 15th, no employees have been taker on unless their antecedents were Americans as far back as grandfathers and have been very careful to select only those who are thoroughly in sympathy with our government and institution. The rear entrance door is always locked and addition- al bolts have recently been put on the heavy door. Entrance is ob- tained only when the guard unlocks and unbolts the door. The matter of our rear entrance has been under consideration of a committee of our Directors and has been under discussion and consideration by our officers. We had the matter of transit people using fifth floor entrance under discussion yesterday and opinion seemed to be about evenly divided so far as the officers are concerned, but we are to take it up again at an officers meeting soon. (f)Watchmen,have been carefully instructed as to their actions in case of emergency. B. FOREIGN MATTERS: on foreign exchange. (a) We have not secured an expert Mr. Forgan when here seemed quite emphatic that the reserve banks should not undertake to deal in foreign exchange in competition with member banks. (b) You are kept informed as to our proceedure as to ne- gotiations with the Bank of England and Bank of France. _4_. GOLD: (a) As we have advised, we have accumulated about $18,000,000 of gold coin and bars and expect about t12,000,000 to-day, making a total of 00,000,000. to whether we should sell I await your advice as the coin, both German and French, if we have the opportunity or if we deliver same to the Assay Office shall we take and hold American bars, at least, for the present? (b) this Note Issue: We understand the Senate has put note issue amendment back into their bill and there will be a joint conference of the committees this week. Mr. Jay is in Washington to-day and will probably secure details. EQUIPMENT: We have already arranged with the telephone company to connect our switchboard with a long distance loop which will give us prompt connection with Washington, Boston, Philadelphia, Chicago and Cleveland. The manager of the tele- phone company is endeavoring to work out a scheme whereby we will receive still moreefficient service. We have also taken up with the Western Union Telegraph Company similar arrangements. ORGANIZATIC: : We have asked your colleague, "Judge" Cur- tis, to consider a report upon this matter in detail. DOMESTIC EXCHANGES: We have already taken up with the Clearing House Committee the matter of member banks settling through the Federal Reserve Bank and also as to their removing their charge of 1/40 of 1 %, both of which are under considera- tion by the Clearing House Committee. The Chairman has assured me that the 1/40 would be removed if we would be patient. After March 4th, when we know more about the amendments, it is our purpose to take up actively the settling of balances through the Reserve Bank. Daily settlements through the Gold Fund are already contemplated and we are prepared to begin them any time this may be decided upon. If the Federal reserve bank draft matter is settled, it will necessitate daily settlements. 13. GENERAL INSTRUCTIONS: We have already consulted with Mr. Morgan as to state banks and trust companies joining the system and he was of the opinion that it was not yet just the time to attempt this actively. After Congress adjourns and we know what amendments are decided upon and the collection system is a little more clearly worked out, we can then take up this matter more satisfactorily. (Mr.Morgan did not think the Clayton Act was the chief difficulty in the way of their joining.) This covers'the points contained in the report of the Special Committee, but we are glad to have any suggestions at any time. RHT/VCM ApTROXIMATE AMOUNTS OF ACCEPTANCES BASED UPON CREDIT S WITH RENEWAL PRIVILEGE -OLD BY EACH FEDERAL RESERVE BANK AS SCIIELULES ON PILE WITH fflEFEDAL RE MRVE BOARD, FEBRUARY 16, 1917. ( In thousand s of dollars ) Amount s Bank held. Amount s Bought Matured. Fob= ery 15, 1917. Bos t cn 743 New Yo 10,271 held. February 16, 1917. Date of last schedule ce iv ed 300 443 50 10,506 VI 15, TI 15, 285 February 14, 1917 Philadelphia 2,839 100 2,739 Cleveland 3,638 100 3,538 12, 300 11, Richmond 300 11 Atl ant a If TT TI TT It 14, IT Chi c ago 2,064 469 150 2,383 St. Louis 1 ,808 200 100 1,908 11 13, Minneapolis 672 235 907 11 13, TV Zan sac City 846 846 IT 13, TI Dallas 301. 301 VI 9, 11 San Francisco 911 911 TT 9, Total 24,393 ,189 800 DIVISION OF REPORTS AND STATISTICS, FEDERAL RESERVE BOARD, February 16, 1917. 24,782 13, It FEDERAL RESERVE BANK OF NEW YORK February 21st, 1917. FEB2 6 1917 Dear Governor Strong: I am enclosing a brief which came in today from Governor Seay, it being the work of Charles A. Peple, Deputy Governor of the Richmond Bank. I hope now to have a meeting of the Uommittee of Governors between the 1st and 15th of L-arch, depend- ing somewhat upon Governor Fancher's return from Florida. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Eontview Boulevard, Denver, Colorado. RHT/VCM Enc. FEDERAL RESERVE BANK OF NEW YORK February 21st, 1917. fo32(.19\i Dear Governor Strong: Bank of France. Mr. George Roberts Was in today and we shall .hope to send you tomorrow or Friday our suggestions on the proposed draft of letter for Monsieur Pallain. We are sending a cable to him today,a copy of which is enclosed herein. I assume Mr. Jay will write you as to what transpired on his visit to Washington and I will speak to him concerning it. With kind regards, Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/V0M Enc. FEDERAL RESERVE BANK OF NEW YORK February 27th, 1917. Dear Governor Strong: Bank of France. I have yours of February23rd and Mr. Jay has advised you of the Board's action. Today, we are sending a c le to Monsieur Pallain and are taking up with the Board the question of the form of announcement, the details of which I think Mr. Curtis will write With kind regards, remain, Sincere y yours, Deputy Governor. Benjamin Strong, E-q., 4100 Montvidw Boulevar Denver, Colorado. RHT/VCM P. S. Copj of cable sent Monsieur Pallain is being forw,,rded you by Mr. Curtis. FEDERAL RESERVE BANK OF NEW YORK February 28th, 1917. MAR 1913 Dear Governor Strong: I hand you herewith report of the amount of acceptances based upon renewal credits. I acknowledge receipt of return of draft of letter prepared by Mr. Warburg for our consideration in taking up, if we decide to do so, the establishment of relations with the Banco de la Nacion Argentina. In this connection, while our Executive Commit- tee yesterday decided to defer entering into such relations until after we hnd established relations with the Bank of England and the Bank of France because of the uncertain condition of matters now prevailing, I still believe that it would be well for you at your leisure to draw up a brief of suggestion as to the extent to which we should enter into relations with this bank and on wh:A basis, so that if later it should seem advisable for us to do so, we could take the matter up without delay. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM APPROXIMATE AMOUNTS OF ACCEPTANCES 13,, D UPON Tii RENEWAL PRIVILEGE HELD BY T.ACti FE L RESERVE BANK AS PIM SCHEDULES ON FILE WITH TW: FEDERAL RESERVE BOARD, FEBRUARY 26, 1917. ( In thousands of dollars) Amounts held Bank Febr-uary 24, 1 917 Bought Mat ured 493 Bost on Amounts held February 26, 1917 493 Date of last schedule r e ceived. Februaly 17,1911 10,858 200 10,658 9 23, 9 Phila del phis. 2,739 75 2,664 9 19, Cleveland 3,588 la) 3,488 9 750 9 17, 9 23, 9 16, 9 New York Ric'h.frond 750 Atl ant a It 17, 9 9 17, it 882 9 17, 9 17, 9 16, 9 Chicago 2,503 75 2,428 St. Louis 2,568 75 2,493 PT Mirneaoolis 907 Kansas City 846 846 " Dallas 480 480 9 9 an Fra ncisco Total 25 1,825 75 1,750 27,557 625 26,932 .)IVI3IOi OF FE 2C RTS LID 3 TAT ISTI CS , F E D EFL\ L RSERVe, AR D , February 26, 1917. 16, 9 FEDERAL RESERVE BANK OF NEW YORK MAR3 1917 February 28th, 1917. Dear Governor Strong: Yesterday we had a meeting of the Executive Committee, Messrs. Peabody, Woodward, Jay, Curtis and I being present; Palmer and Towne absent. We considered suggestions voiced by Mr. Curtis of your combined feeling that our records were incomplete in connection with the Bank of England cables. After a long discussion, it was thought advisable that I should bring the matter up informally this morning before the Board of Directors, stating that I found I had made some mis-statement in regard to the events which led up to sending these cables through Mr. J. P. Morgan, and ask that I might submit at the next meeting a letter correcting this misstatement, at which time it was thought we could then have the Directors discuss the matter fully. There seemed'to be unanimous agreement, aside from Mr. Curtis, that at the present time it was very unwise to enter into a further correspondence just now in this connection because of the irritation which had developed partly, in my judgement, through their not understanding all the influences which had led to our action in New York and also, in my opinion, because at the present time we should in all fairness, recognize that the members of the Board are not only now, but have been for some months past, under EDERAL. RESERVE BANK OF NEW YORK -1.1°19 -2- Mr. Strong. very great tension and pressure. 2/28/17. They have had very strong op- position develop in the Congress against the amendments, part of which I think (from what I hear), may be ,,due to strong opposi- tion of some of the small bankers, based on their feeling that the Kitchin Bill would not go through and if so, they felt probably that they would be justified in opposing any and all legislation suggested by the Reserve Board. Sincerely yours, / Deputy Governor. Benjamin Strong, Esq., 4100 Yontview Boulevard, Denver, Colorado. RHT/VCM Enc. FEDERAL RESERVE BANK OF NEW YORK IMee. MAR3 February 28th, 1917. 1917 Dear Governor Strong: I enclose herewith a letter from E. C. McDougal of Buffalo to the state banks of New York State. He is President of the Association of State Banks and you will note his Executive Committee. Confidentially, I learn that part of his Committee is not in sympathy with his movement and especially with the formation of a central bank or exchange through which New York state banks can clear. I thought this might be of interest to you. Sincerely yours, /16/177-1"f Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM 3 Enos. FEDERAL RESERVE BANK OF NEW YORK afrr. MA115 February 28th, 1917. 1917 Dear Governor Strong: I am enclosing copy of a letter which Governor Wold wrote in regard to your health and it is only an added argument to mine of this morning concerning the responsibility resting on you to make good in your recovery. I have to report that Mr. Cann has resigned, he having accepted a position with the Bank of Ottawa as Assistant Manager at a very satisfactory salary, his resignation to take place on March 12th, and we will have to look for a new credit man. have you any suggestions? I have yours of February 19th and note your disappointment in the Aiken matter. He and Rhoads are coming over to New York on Saturday and I shall try and have a talk with Aiken at that time. I have been giving some consideration to your thought of going abroad in June and am led to suggest that you carefully consider whether it would not be more advisable for you to postpone the going abroad even at the risk of having delayed or held up for a time the detail matters of adjustment in the banking relations with Prance and England until the Fall or Winter, or even late Sumfirst, mer,Abecause it would seem to me wiser for you to become acclimated to the change incident to your living in the high altitude of Colorado and then the lower altitude and also, because there are many r'EDERAL RESERVE BANK OF NEW YORK -2- To Mr. Strong. 2/28/17. things which would need your consideration in regard to the reorganization of the bank here. It seems to me most important that you should be in New Ynrk for a while in the Spring or early Summer to assist the bank in a reorganization which will permit you to be free to give consideration to the most important things, among which, is to straighten out our relations with the Federal Reserve Board at Washington and to assist the other Governors in maintaining for the individual banks their proper independence while still contributing in a cooperative way to the development of the System. You ask my views as to what can be done in case the Aiken matter does not develop satisfactorily, and as I feel at present I should think it advisable to secure some comparatively young man, say 35 to 45, who has had good banking experience, has demonstrated his ability to assume responsibility and to develop so as to take more, have him take my place, testing him out, and if he develops, co-operating with you in the management of the bank. Should he not develop, substitute some one else for him until you find one who has the ability, but if you should desire to be relieved after a few years of the burden, you then could consider being made Chair, man and would have available Aiken or Jay or some one of that kind who has had the experience, to be made Governor. I am inclined to feel that by coming back here to New York in May or early June, remaining perhaps a month or so, it would give you an opportunity to study the situation in New York and Washington and take such steps to straighten out matters which need to be and to develop a permanent organization under the new plan which you .:-.RAL RESERVE BANK OF NEW YORK ...... -3 To Mr. Strong. 2/28/17. should develop for yourself in a way that would be satisfactory to you, and then go away again for a month or two of rest, after which you could go abroad or stay in New York as seemed best. Please understand that this is merely an expression of my own personal views and consider them on that basis. I am giving some thought to a name that might be worth considering in case it becomes necessary to discuss them which we can tell better after a few days. My very best wishes to you. Sincerely yours, Deputy Governor. Benjamin Strong, Esq., 4160 Montview Boulevard, Denver, Colorado. RHT/VCM FEDERAL RESERVE BANK OF NEW YORK MAR3 1917 February 27th, 1917. Dear Governor Strong: I returned to the bank yesterday (Monday) morning after having spent Washington's Birthday and Friday in Ithaca and attended the meeting of Group III at Elmira on Saturday afternoon, where I met a number of your friends who inquired with much interest as to your progress. Mr. McDougal of Buffalo gave an address on state banks, making allusion to the better treatment the state banking department gave to state banks in bank examinations and other advantages over those afforded to member banks under the present administration. He further commented on the Federal reserve collec- tion system, stating that he believed every bank had a right to exact a charge for payment of checks on itself presented by mail, etc. I did not think he made as strong an address as I had ex- pected, nor did I thilak he make a very great impression so far as I could judge. After dinner, Honorable Charles M. Fowler of New Jersey, held forth for about an hour or so during which he pronounced the enactment of the Federal Reserve Act a stupendous blunder, stated that the Reserve Act was based upon false financial theories, that the only reserve should be gold, that the proper system was a combination of the clearing houses of the country, etc. failed in my judgement to make any deep on the majority of those present. He, also, and lasting impression r'EDERAL RESERVE BANK OF NEW YORK ............. To Mr. Strong. 2/27/17. Mr. Gregory of Rochester, who will undoubtedly be President of the New York State Bankers Association next year, called on me yesterday and spent about an hour discussing various banking questions, but especially urging that no undue pressure be brought to bear upon the 106 state banks that are not willing to remit at par for their own checks, saying that he believed if we would allow a period of, say, six months to elapse after 911 reserves were transferred from correspondent banks to reserve banks, that he felt that the majority of those state institutions would be brought over. As against this, of course, is the feeling on the part of the Reserve Board that we should without much further delay be in a position to afford our member banks a system which will receive and collect items on any bank in our district, at least. I assume that after adjournment of the Congress and provided that there be no extra session, we shall be in a position to determine the wisest move to make in order to induce the state banks to join the collection system, and also ways and means for inducing trust companies and state banks to come into the System. In this conneotion, I saw among others last night at the banquet of the Trust Companies of America, George Allen who is now acting as secretary of the State Bank Section of the American Bankers Association. He has on previous occasions assured me that many of the state banks, especially the larger ones in different parts of the country,were prepared to come into the System after they have secured all they think they can from the Reserve Board. Last night, he told me they were planning to have a large meeting Mr. Strong. To -0ERAL RESERVE BANK OF NEW YORK 2/27/17. of the state banks at the next convention of the A. B. A. at Atlantic City next Fall and that he was trying to prepare a program that would present the reasons for state bank membership and be believed that it would result after that meeting in many banks making the move. He seemed sincere in his belief that it was only a question of time when the leading banks will join. I sat next to Mr. George Fuller of Milwaukee, who nsked about you and spoke of you most pleasantly, as did a number of others, James Speyer and Lir. Alexander among them. It is pleasant to, me to see with what satisfaction the favorable reports are received by your many friends. With kind regards, I am, Sincerely yours, )4.44.14,4" Deputy Governor. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/VCM