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411 UNIVERSITY AVE -FT rfciK 24, 1915 rv My dear Mr. Strong I want to thank you again for a very pleasant evening on Monday, and only regret that by misunderstanding your words "very informal" I did not appear in a "wedding garment." If the paper recording the five questions and answers thereto which you read is not considered so confidential as to not permit of my having a copy, I would like to secure a copy of it in order to have infor.. mation contained in the answers, Be perfectly frank, however, in not sending it if you do not think it proper to do so. With kind regards to the "trio", I remain Hon. B. F. Strong New York Very truly yours, arSvroAaft -1,afettfriiin Pkirantu eit?,24.7. 2 hut CetAA, a, cla,, e tik 16e1A-1%. tAA c(_.2x "raw/LA, et- 2-- LLup t C', irt lii-t4Jt /27 o- 7144.,.... 'tut( tit",--J 'kJ/ '4111j caivtz,/, t$1 CiA4 et_ e-e-40--tw-I -7 Aid /raid cri:,e_Adatly CLI 14.1et-A-At.f. 174 "e- 1:,.ZN,T. Sri }ZONG, Jr. ROBERT H. TREMAN pERsoN. L. ITIIACA NEW YORK Dec. 24, 1914 Dear Governor Strong Two or three days since I sent you a box by Adems express, cherges prepaid, containing a few apples of two different varieties, which I hope you and yours may enjoy, with the compliments of one of your "country Directors". I wish for you the happiest of Holiday Seasons and that the New Year may bring you the richest blessings. Permit me, in addition, to assure you how great has been my pleasure in working under your leadership in the New York Federal Reserve Board, and in this association my respect for your ability and wisdom has constantly increased, and I trust that still further success may attend it. It is indeed a privilege to be associated with you and the other Directors, and I hope that the friendships thus gained may continue. With kind regards, I remain Very sincerely yours, Hon. B. F. Strong, Jr. Federal Reserve Bank 62 Cedar St., New York 0E RATE KAIN i'S: BANKERS MEET':r FIND NEW REEDY Pound Sterling Back to $4.67 Despite Success of Big Loan MAY FLOAT NEW ISSUE Dollar Threatens to Replace English Money as Standard of World' NEW YORK, Oct, 11./9/r reign exchange rates went down n today, in the face of. the successful ation of the $500,000,000 credit loan to Great Britain and France, to their lowest point since September 15. So disquieting was the situation that a three-hour meeting, attended by Wall street bankers and Sir Edward Holden, v of the Anglo-French financial commission, , held late in the day at the National y l, -k for the reported purpose of delew method to bolster the value of the English pound sterling. Since the arrival of the commission here September 10 the trend of sterling values has been steadily though slowly upward. For the last week sterling has been selling at about. $4.12. One day recently it went as high as a fraction above $4.73. Today it sold down to $4.6'7%, too low to make continued buying of American exports desirable from the British point of view. The meeting held today, it was 'reported, was Primarily to reach an under- , 1 - ---.V.,, SS to the best .... method of us,. ..... -...,, ing the $500,000,000 to stabilize and also with a view to arranging a private agreement between New York and London hankers for credits which woUld tend to send the value of sterling up in this foreign eXchange market. A. supplemental credit of $250,000,000, it is said, was discussed. To what extend American bankers would be prepared to advance credit to London bankers, if at all, was a Matter . of surmise. Many millions, it was thought, would be needed to,restore the rate on sterling to nearly normal. The arrangement would involve' private rin,,- ring on a scale secondary only to otation of the mammoth Angloch loan, and probably would be a private arrangement between groups of large banks. Al today's meeting were Benjamin Strong, Jr., governor of the Federal Reserve Bank of New York; Frank A. Vanderlip and James H. Perkins, Presdent and vice president, respectively, the National City Bank; Charles . - Sabin, president of the Guaranty ust Company: W. H. Porter, of J. P. organ & Co., James Brown. of Brown Brothers & Co.; J. S. Alexander, presilent of the Bank of Commerce. Foreign exchange experts of several 'al institutions also were present -,,erts were reported to be unan, the opinion that there would --lv left when the pro000 loan would have ial elimination of the e standard of world itution of the dollar the end of the war. f $250,000.000, it WaS loated under these banks and bank- offered to the S 1800 '0 DEATH If LOST AND 1 LOST, NEAR CHELTENHAM, Highland terrier, with blue co name of Robbie. Liberal reward. Pearse. St. David, Pa. LOST--LADY'S HA ND BAG, SW', ernoon at 13th and Walnut street 105 South Camac street. HELP WANTED-MALE BILL CLERK; LARGE ORDER TRADE; Hi 8-5; salary $18; advancement. T 28, North A jean. BOY, LIVING IN GERMANTOWN, TO EL errands and make himself useful in ship ping room; state age, reference, where lao emplo,d: chance of advancement. T 2t North Ammican. BOYS, 16 TO 18 YEARS OF AGE, NEAT Es appearance, as stock clerks. Apply Burea, of Employment. before 11 A. M.; 414, door STRAWBRIDGE & CLOTHIER. BOY, YOUNG, FOR OFFICE WORK. 201 East Letterly street, Kensington. CANVASSER, MUST BE OF NEAT AI' oearance, for a new house-to-house proposi don, salary and commission; good opportunity Apply 4 P. M., sixteenth fioor, North America: Building. CTGARMAKERS ON FINE HAND WORK. Al ply 932 Market street. APPL7 WEAVERS WANTED. CLOTH blanket millz John &/-James Dobson, Inc., Scotts lane, Falls of Schuylkill. CLOTHING SALESMEN, EXPF,R/ENC wanted. Perry & Co., 16th and Chestnut ni,EVATOR MAN, COLORED, WANT with license. Apply personally, Univer Hospital, 3400 Spruce. SITTERS WANTED IN A MASSACHUSE ehop, familiar with drawings; fitting str work: squad boss over 5 men; write Hem, age, etc. C. W. HigleY, 1238 Kiv' Ennycal street; Harrisburg, Pa. FOREMAN ON FLANNELETTgowns and house dresses. (=Mr, 121 North 7th. GOOD MEN 'FOR BOILER SHOP; STEA work. The Pueey and Jones Company, mington, Del. LABORERS WANTED FOR OUT-OF-TO work; positions permanent; wages. 20 cep per hour. Apply 36 North 16th, MAN, WHITE. WANTED FOR GENER work. Apply at hospital, 21 21 North lege avenue. NIGHT DOOR MAN WANTED. personally. APP 'University Hospital, 3900 Spr EFFIOM BOY, AGE 16, NEAT IN APPE ance; opportunity for bright, energetic b to learn business. Apply after 9 o'clock, tersfield, 32 Letitia street, near Front Chestnut. WANT,,ri rtE AND PLA hands; steady work, good wages; in desi shop and location; give references and ex perienee. Address Gurney Electric Elevate: Company, Honesdale. Pa. General CHAUFFEURSDON'T RE FOOLED; SPEN1 YOUR MONEY WHERE YOU GET RE SULTS; if you want to learn the AUTOMC RILE F.USINESS RIGHT, don't go to the tle cheap shop on the back streets, but go the OLDEST. LARGEST and BEST PLAC FOR AUTOMOBILE INSTRUCTION IN PH COUNTRY and ask for MR. ROBERTSOI, 1 MAIN OFFICE, 629-631 N. BROAD ST. YEARS AGO I STARTED SMAL mail-order business at home in spare tim with a few dollars capital; I wanted to mak 12 $80 to MO a month evenings; the net profits th first year averaged $200 a week; 5 years' wor netted ate $50,000. I will show you how t start a small mail-order business. Semi for my proposition. It's interesting. vassing. Heacock, Box 692, Lockport, ell NORTH BROAD STREE Robertson's old original AUTOMOBILE SCHOOL teaches you how to repair_ and how to drive autos. 911 NORTH BROAD STREET PROSPECTIVE CHAUFFEURSLEARN T business thoroughly while w,rking for 4 to 6 weeks; small cost; driving included;us;day or evening; license guaranteed; write or cal,. Modern Auto Company, 811 North Broad at, AUT OM OB I L E WORK IN ALL ITS branches taught quickly; road lessons given: expert teachers; complete course, $18. Day c night classes. R. 0. Gill:es. 619-618 Brown s RAILWAY, MAIL CLERKS month; Philadelphia examinatic, ;;° write immediately. Franklin partment S. Rochester. N. Y. INTELLIGENT PERSON MAI' $20 weekly during spare tit writing for newspapers. Send Press Syndicate, 507, AH1E-BODIED ME brakemen, $120 mor essary. 11 5, North fl BR: aluminum tri tachable handl one burner; sa. $300 per mon, 9 00 other an Manufacturi Lemont, Ill AGENTS ROBERT H.TREMAN ITHACA NE'W YORK My dear Governor Will you permit me at this season to express my appreciation of your many courtesies to me manifested at different times, and to further express my great satisfaction in being able to serve on the same Board with you, as I have grown to not only respect your great ability, but have valued more and more the friendship which, on my part, at least, has grown with these months, I desire that the New Year may bring to you and yours great hap.' piness and contentment, and that you may be given health and strength VO carry on the great work to which you are committed. Very sincerely yours, Hon, B. F. Strong, Jr. 62 Cedar St. New York City December twenty-third Nineteen fifteen )rttl_A-Th THE TOMPKINS CO-MY-NATIONAL BANK ESTABLISHED 1836 R.H.TREMAN, President J.C.GAIINTLETT, e e -Pre sident G.STONE, Cashier D.N.VAN HOESEN, As st.Cashier My dear Governor ITHACA,N.Y. April 21, 1916 : Just a word of greeting and an expression of gladness that you are back again safe from your somewhat perilous trip. I am anticipating with pleasure hearing an account of your trip, and have no doubt that it has been most useful, and I hope, in addition, that it has enabled you to have the rest which you had so well deserved, and that as well you feel physically benefitted by the trip. With kind regards, I remain Sincer ly yours, '7 g Hon. Benj Strong 62 Cedar St, New York City THE TOMPKINS COENTYNATIONAL BANK ESTABLISHED 1836 R. H.TREMAN, President J.C.GAIINTLETT, Vice -President A. G. STONE Cashier D .N:VAN H 0 E SEN, At.Cshie. ITHACA,NX. May Eighteen Nineteen hundred Sixte My dear Governor : I received your telegram last evening, and your letter by this morning's mail. . From you telegram I am led to think that possibly you may have thought the invitation 'was for this week May 20th, whereas the Spring Day and races are next week S%turday, May 27th, so I am writing to ralteat the invitation for Saturday, May 27th, next week, hoping that you can st"11 arrange to be here and enjoy the diver ion and recreation. May/I ask that you will kindly wire me on receipt of this letter as to the possibi ity of our having you with us next weell Saturday, May 27th ? Very truly yours, Gov. Benj. St*ong Federal Reserire Bank Equitable Bl g. New York Cit it ROBERT H. TREMAN 0 ITHACA. 8-/6 NEW YORK '24ty a-Ca/kJ eit-t vLA 7-7-c Gut-cit IDgyp)--Vo/d /kr - .&-/--0-6 cj-t/tAt-47 e7-7/-£A./a..4e,;7 2-14-i.e:tv a _Itya44 4. 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C64- tte4 CVu cat 74./ )-- -4-, c(4,,,et - ttax, 74G(z Al' -MA IAcs--zcz (4-4 Xtee) t/t-(41/ 0, livr& /-zAt-iff- --7y tt-1-7' - THE TOMPKINS C 0 IINTlig:WpWitektNK ESTABLIS HE R.H.TREMAIST, President 1 JUN 2 7 1916 J.C.OAUNTLETT,Vic-Presidet A. G. STONE Cashier D.N.NANHOESEN, As st.Cash ler 'FEDERAL ITHACA1 My dear Governor i-i4f1 v?3R P4 16 : That was a mighty nice letter you wrote me on June 21st, and I appreciated it. I had, by telegram yesterday, an announcement of the creation of the Deputy Governorship,and that I had been chosen to fill it temporarily, but Mr. Jay's letter has not yet reached me giving details. I hope to begin work next Tuesday morning, and shall do my best to contribute all that I can to the smooth running of the Federal Reserve bank, but at no time have I been over confident as to my ability to be of much assistance./ It willbe an thought, however, that I am doing something to help you get well and be back on the job, and this alone would be compensation sufficient for whatever sacrifices I may be called upon to make in taking up this work. lauttine During our association I have grown to not only admire and respect your ability, but with it has came a deep affection for you personally, and my very best wishes go with you in your rest, and I shall hope to keep in touch with you from time to time with the thought that you will be interested in the details and will contribute what you can from time to time towards our common goal. My very best regards to you and yours. Sincerely yours, Hon. Benj. Strong, Jr, 903 Park Avenue New York City FEDERAL RESERVE BANK OF NEW YORK ;ay (tø (7,tt 4 747 2117:- y fria &VL. Gt,t- a/0/0/C.4-J-C4144/ 2" '1.9" 4_4/2- kik -eoe e5-cA eo t3Eet_xe_o. x. 3 6 ---- g AAA-e-d' LAAA7AL /1( AA.,,a1-1-1- ct-t -1AA/ti " \? 744-: 4A-AAAA'ItA-11-n-a -QAY FEDERAL RESERVE BANK OF NEW YORK August 28, 1916. 7 dear Governor: I have your letter of August 24th and I can tell you that the last paragraph, in which you told me of your improvement, was the best news I have had in many a day, and I am sure will be most welcome to all of your old associates. By all means follow up religiously the routine prescribed, and I hope that Mrs. 7cLaren will limit you to a reasonable amount of work. 7e have just had a long call from 1.:r. Buck, president of the Jeffer- son County National Bank, who seems to be a loyal supporter of the reserve system and asked if there was anything he could do to assist in the work. I suggested that if he would have his tellers sort out gold certificates and send them in to us from time to time, and other banks would do the same, withdrawing the certificates from circulation, it would be a good thing. I will ask Curtis to send you a detailed report of his meeting with Secretary 7pAdoo, provided he has not already done so. He returned this morning from Boston, where he remained after the governors' conference. I sent you Saturday a very crude detailed report of the governors' conference, which I hope you will receive in due time. The general impres- sion at the governors' conference was that Governor Harding had softened and was quite judicial in his utterances. I am glad that you are writing 21-*. "'arburg about the Kansas City Convention, and I an writing to-day to Governors rancher and Wold, who have thought they might attend, urging then to be present, and it probably would have a great influence on such overnors as you would choose to write to, if you were to urge them personally to go, and to me their presence is high- VEBANKOFNEWYORK 2A_ Benjamin Strong, Esq. 8/28/16. ly desirable. I note that you will soon be ready to take on more work, to which we may assign you, but I nersonally should be in favor of prescribing certain regulations against your doing any more than what is absolutely necessary, except that in connection with the B. of E. matter, we shall have to call on you from time to time, if the Board approves of the plan. I will have )i.enared a memorandum in re gold transferred to other banks and to the Gold Settlement Fund, and forward it either in this letter or within a day or so. Mr. Curtis will write you about the B. of 7. matter, sending you a copy of our formal application, and I sent you Saturday the copy of the memorandum as it will go to Thshington. The letter for Deputy Governor Cokayne has not been sent, as we are awaiting the result of the action this week. Regarding the cost of operating the Transit Department, we are having figures made up by Mr. Higgins as to the cost, but we hope to reduce it to 1 1/4or nossibly lO per item. It was generally assumed that we would begin September 1st to bill out cost of this work, and a conmittee of Messrs. Hendricks and Fart was appointed to prepare a uniform bill for rendering to the member banks. Mr. Curtis goes to Washington to-night to present the application and to be there in case he can do any good in furthering the progress of our application. r. Jay will probably go with him to consult about the Clayton Act. . '"arburg telegraphed, inviting Messrs. Jay and Curtis and myself to dine with him at the 3elmont to-night, so I-assume they will all go down to 7ashington together. I note what you say about Mr. Morgan, and it is a very great disap- EDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 8/20/16. pointment that there should anything arise to prevent the coming into the system of some of the large trust companies at the present time, when it would do much good. . Higgins has had offers from the National City and from the American Exchange, and we are to bring this matter before the directors who meet this week. We are nutting into effect in the Transit Department the block system to-day, and two of the four blocks checked up the first tine through and they are now checking un for the second time in the other two blocks, but I believe that is the proper system for us to use. 7e had quite a fright in the bank this morning on reading in the Financial Chronicle of Saturday that the proposed amendment permitting the /three days of grace had not gone through, but on . Curtis telephoning Governor TTarding, he found that 7r. Glass had crowded it through just at the last minute, so that the conferees' recommendation will nrobably carry. I hope to get away for ten days or so on Thursday of this week and will probably be at Neachan Lake, Franklin County, r. Y., up to Tuesday, September 12th. I am very glad that you may begin to take some more exercise and hope that your cheeks will "blossom like the rose." ith kind regards, I remain, Sincerely yours, Benjamin Strong, Esq., "The Lewiston," Estes Dark, Colo. 20-1/ at-4A- yeL". - I2t1.4_,0 - "0-if, c(4t4.,,, v4- 27,r6<- /1 YI-Ef c--c4X ./3-1( AefrrA 4 X 74, td tv-c_ ,_ utauf 21e, ne,u7 1-t-011 oLLx- 7/Le- Aft AaAA-47 ca,f,t acut( Re44-1 'CW't6<, Ztte- /Cr-itt "e/ 0 0 7A&J e-e"1--"IAAAAj3. f6A, zeic-t& -Y6LitA//4-7 - 71741-417 di:ev"1-"-et 1-4-6.4A-17 VoAAjtuji, ;41- Aewi $.4,--rx291-r- 0=-4,til b Atcn7[dd an/ k,ke, N.Y. e3 frt- -7- 2, fd- t.9 - r_E- 2c0.- 6 AAA, /city cre,,cA,d, c/7/8 GI_ 4t41. 7 eGc44r-I4-#1 6- /14--ti 144-1-y Ct.AAZ1 '1'Cd--4-41 &A-A- 71freA 7-z, 744-iv IP" , 170 y /AL )- Co--er " 714) 744-0'7 0 76} 8-- .a7/ /4. c-e,o tLf raCLA-1-4 a99 1&/Yk.1A- h-evrAd- "t' 71A2t4-- fA17(CAct 7/4"( (.1"11/"- tiratt, ALY jrc°--) 21c°t/tL 9 / kei4/s 4e,ttotzt 9/ at/ 74- et- - 2cd.42,tv ,c-te 4ii.4'1:3f21"deifr" if/c-de c?Af-ey 44 4100- Z.604e /4. t.9.1774/114, g*.C4-,IZAA-4Z--ZO c a/a EAA,tie .7,4-c, , 6-- 2tet ?/6 7/CL44, OL//L4::%, e-114,-.- ci4I-g4-2A-4-7 TILL A LLAA1C-V-644 7G, °"5-4-tic 7(css, /47 ryanli LA' 'lead/ an? W.? N.Y. to--( -z. (AL.,/ e,p 1/45-tt-e-d_ %--7 - At`' - - ) 1.le-,&:/ /C-cA-4-;-,9 /La c9-t /-c-""11 a- 67 ,5) "4"-t 24"-'1-1711' W di° -.L t94-- au4u-- 0-4/,6e--s, e-cAt AUL, 2r61A-41-4A-3 C-C(-a- irlit"""-- 1, 20/1-' 9 ?CAA- ti/AAL.4(4.iz-3 71/C-L-1-- 1 Wat 4 c9 gut-Ay Ce/ e /(--,44,, o-t-t .;6)ez.- q 1111-214 "4wIV44-y /rcie4, '147747 \7'4. 5-6"-Cle -2 E-te-tz-z-z2-4e-.*--- - 411-47-Z- -- 4,1 Z-4-4L4-4f-tio::4,-c, 4-/-tJc -t,0L- ave.,f,d Iv: I 1-77 41-02 rt,", Lt-t e,4 Oran/4dd eaci? an/ 4e, N. Y. itimr 74-7 70-1*'-"e 74E-/- c-Act VI-42 r-0cIv7-, fdAvAlmi* 0)-e: eyz.-cd - "ez, 74,/, e:eviArr c.5-e--fret4d`e, t-e--44E-i a-2-a . 46-4-Ca' fr d-X-e Crt-,G ,S1-4,41 1-eltz_eAt- 71-7)-22 CeW {,72-C-44" 2/417 ak FEDERAL RESERVE BANK OF NEW YORK 3eptember 20, 1916. 0 Dear Governor Strong: I was mighty glad to hear that you had been taking a week off with your friend, nrofessor Crampton, and I an much pleased at your statement, "Results are at last being achieved," which is the best news I can have. I told the officers this morning that you were pleased that 7r. Higgins was to remain with the bank, and I will show him personally the extract from your letter. 7r. Towne told Mr. Jay this morning that while he personally would prefer not to stand again, if we thought it was best not to have any change now and if it Bo worked out, he would be willin7 to stand for re-election provided that after your return, or in a year or so, he would be free to resign, if he desired. 7r. Jay and I will have a talk with 7r. 'Toodward and meanwhile, this morning, we talked with 7r. Alexander and asked him to ascertain the sentiment of some of the principal bankers here as to Mr. W.'s reelection. When we receive the letter which you have had translated from Governor Pallain, we will give it consideration, as you suggest. Regarding 7r. Figgins, .1" think it would be a good thing for you to write him direct, expressing your pleasure that he has decided to remain, and I think he is happy in his decision. 7e will probably have to readjust others around, the first of the year, but that can be taken care of later. We had a directors' meeting this morning and all were present, including 7r. Locke. There was some discussion over the selling of the one- year 31, notes, of which we now have about two and a quarter millions, one and FEDERAL RESERVE RANK OF NEW YORK Benjamin Strong, Esq. 2 a half millions of which mature April 1st. 9/20/16. It was finally thought wise to sell some of the notes to get them started, and hold the balance. Ifle have made. application for the conversion of about two million government 2s into 3(1: bonds and one-year notes, which will be done as of October 1st, I assume. I am sending you to-da7 an analysis made of the cost in the Transit Denartnent of handling the items, and you will note that the cost now is about nineL-tenths of one cent per item, so that the directors decided, on the recom- mendation of the officers, that we charge the member banks 1¢ per item as being the approximate cost up to September 1st of the handling. have a report from Mr. Holmes, vault engineer, giving the present status of the vault work, in which he shows that the lining is about half finished, as is most of the other work, and that they expect to have it ready between January 1st and 15th. 7o change was made in the rates of discount but the special rate for fifteen day paper was made 3%. I expect to go UD to Mamaroneck to-night to stay with ny friend, Colonel Sackett, and to-morrow and next day play golf at Apawamis in the Seniors' Tournament, this ceppleting my formal vacation. Hoping that you are enjoying this season at Estes Park and that later you will be located satisfactorily elsewhere, as you suggest, and with kindest regards, in which all the officers loin me, Sincerely yours, el- 76 Strong, Esq., "The Lewiston," Estes Park, Colo. 7HT/CEP http://fraser.stlouisfed.org/ -Enos. Federal Reserve Bank of St. Louis fr/ii. I remain, SEPTEMBER 12TH, 1916. DIFFERENT KINDS OF CASH HELD BY MEMBER RANKS (In thousands) 1_tional Bank Notes Federal Reserve Notes Gold Legals 4,246 3,401 287,840 38,287 Reserve City Banks 21,295 5,141 165,263 24,300 Country banks 36 697 6.282 209.919 42.514 6;,238 14,824 663,022 105,101 Central Reserve City Banks ATIO OF qim Total Net Deposits HELD TO TOTAL NET DEPOSITS Lawful Money in Vaults % of Derosits 2,711,000 326,127 12.02 7,647 .28 12.30 Reserve City Banks 2,839,000. 189,563 6.67 26,436 .93 7.60 Country banks 4,697,000 252 433 5.37 42,979 .91 6.28 10,247,000 768,123 7.45 77,062 .75 8.20 Other Moneys % of in Vaults Deposits Total Central Reserve CIL:), Banks PERCENTAGE OF RESERVE TO TOTAL NET D17.POSITS R&UIRED UNDER ACT In Feaeral Reserve Banks In Vault Optional Total Central Reserve Cities (18) 6.88 5.90 4.92 17.70 Reserve Cities (15) 5.52 4.60 3.68 13.80 Country banks (12) 4.12 3.30 2.48 9.90 COMPARISON OF VAULT RESERVES CARRIED UNDER OLD LAI AND UNDER FEDERAL RESERVE ACT. % of Total Net Deposits Average from Feb. 5, 1909 to Aug. 9. 1913. Nov. 10. 1915. Central Reserve Banks 25.5 16.41 Reserve City Banks 12.7 7.42 7.5 5.75 Country Banks Dec. 31. 1915. 12.0!" 7.24 7.06 6.6, 5.56 5.52 5.37 Central Reserve Banks: ) 11.80 against 6.88 present Act 11 Reserve City Banks: 9% Demand Deposits 3% Time ) 8.28 against 5.52 present Act. Country Banks: 6% Demand Deposits tf 3% Time SeT;.12+16 14.86 15. RZSERVES REWIRED IN FEDERAL RESERVE BANKS UNDER SUGGESTED PLAN WHICH DUID MAKE NO REJ,UIRRMENT AS TO VAULT RESERVES. 12% Demand Deposits 3% T ime Jun. 30, 1916 5.10 against 4.12 present Act. FEDERAL RESERVE BANK OF NEW YORK September 26, 1916. My dear Governor: We were all mighty glad to have a telegram from Mr. Warburg, advising us that he had spent Sunday with you and that he had found you looking much improved. This certainly is good news to us. With this improvement will cone the temptation to you to let down in your training and to overdo in your work, and you must, for the sake of your friends, as well as your own, guard against this by living up strictly to the rules and regulations, playing the game fairly. I enclose a clipping from this morning's New York Commercial in reference to the provision that member banks could be permitted by the Federal Reserve Board to accept up to 100% instead of 50%. Possibly you have seen it through other channels. A letter from Governor Harding this morning proposes that we ship our surplus silver certificates to New Orleans Subtreasury and possibly to Cincinnati and St. Louis,'receiving gold certificates at the Subtreasury in New York in return for same, and this we will do if we can arrange the details satisfactorily. We are running rather shorthanded now with Ur. Kenzel, Mr. Curtis, and Mr. Hendricks way, but I hope that after a few more weeks we shall have our force complete and can perhaps give more attention to the more important problems. We shall have the question of election of directors in place of Messrs. Woodward and Towne before us soon, and I am not sure that Mr. Jay _RVE BANK OF NEW YORK - 2 Benjamin Strong, Esq. has had a talk yet with Mr. Woodward for a final decision. 9/26/16. It seems to me that we should keep Mr. Morgan as the Advisory Member for another year in view of rresent conditions. I am ordering two or three books to send you in hopes that they may interest you and that you have not read them all. With kind regards, I remain, Sincerely yours, Benjamin Strong, Esq., "The Lewiston," Estes Park, Colo. RET/CEP Pnc. P. S. --- I had a call from Baron Sakatani and Mr. Ichinomiya of the Yokohama Specie Bank to-day. The Baron is the minister of finance, and I entertained then for a while and had them lunch with me at the Bankers' Club. FEDERAL RESERVE BANK OF NEW YORK V. September 26, 1916. My dear Governor: I returned from my vacation yesterday morning, although I was here two or three days of last week. I spent Thursday and Friday with my friend Colonel Sackett at Mamaroneck and we played golf at the Apawamis Club in the Seniors' Tournament on Thursday and Friday. I made 92 Thurs- day and 93 Friday, and assume it was a fair score considering my inexperience with the course. It was really a great pleasure to see from 150 to 200 men from 55 to 80 years old driving off from the tee in pairs every ten minutes, and to note with what pleasure anialandon)they entered into it all. It recalled the pleasant day you gave me at Greenwich last year, and permitted the hope that we may have similar pleasure next year. We just receiv41 a telegram from Mr. Warburg, advising against the selling of the one-year 3r{, notes maturing in April and July. It is rather late, because we have already seld, as I reported to you yesterday, a large portion of then on the basis of 2 5/8. It is possible, of course, that we may have then offered back to us to some extent at least after the tax period. With kind regards, I remain, Sincerely yours, Benjamin Strong, Esq., "The Lewiston," Estes Park, Colo. RET/CEP FEDERAL RESERVE BANK OF NEW YORK September 27, 1916. My dear Governor: Yours of September 23rd reached me this morning and you need not worry about my holidays, as I had a very nice vacation, am feeling well, and my friends seem to think I am in fine condition. You will be interested in knowing that our Collection Department is working more smoothly all the time, and I talked yesterday with Mr. Jefferson about the advisability of our studying this department especially, and the other departments of the bank, as to the individual efficiency, just as soon as we have then so that the work is progressing smoothly and satisUnder the block system the differences are generally a few factorily. cents, and a number of the "blocks" give an even balance on the first lineout. They are still working at the differences in this department and they now have a surplus of about ,':14,000. and they have checked up all of the deficit. We will keep at it until we get to the end, and I hope will balance without much difference either way. I asked Mr. Alexander for the clearing house information you de- sire this morning, and found that they do not include awcqerhead in their cost and up to the present time their cost per item is 6.7 mills or 4O per thousand dollars. Mr. Gilpin told me that they included no overhead for rent, light, heat, administration, or any other item except the actual items incurred in handling the collections. You will note from the detailed sheet I sent to you that we have included what would seem a reasonable amount for overhead, and it is the opinion of the junior officers that we will gradually reduce our cost to Benjamin Strong, Esq. FEDERAL RESERVE BANK OF NEW YORK 9/27/16. 3/4 of a cent per item or less, so I hope you will have no anxiety further about it. I note by the morning papers that the country bankers had an infor- mal meeting and are to petition Congress to relieve then from the free collection system, but the testimony of a number of bankers who drop in at the bank is to the effect that the system is working very satisfactorily and they approve of it, and it is only the opposition of the small country banks, who have lost their exchange, that seems to be in evidence. I am glad that you are to see Governor Aiken and your other friends, and hope that you will have a fine time, but "keep on the brakes." Have you given any more thought to our accumulation of gold, and in what ways it may be done? Mr. Jay returned from Canandaigua this morning and is to have a talk with !Ir. Woodward to-night about his directorship in this bank for the next term. With kind regards, I remain, Sincerely yours, Benjamin Strong, Esq., "The Lewiston." Estes Park, Colo. RHT/CEP FEDERAL RESERVE BANK OF NEW YORK ;{ .4.4vs September 29, 1916. ,p/ My dear Governor: We are running somewhat shorthanded now as Messrs. Curtis, Kenzel. and Hendricks are away. I am awaiting with much interest the copies of the full addresses of Messrs. Warburg and Vanderlip at Kansas City. The Vanderlip address was given much publicity and evidently was very well received. I have not as yet seen much comment on Mr. Warburg's address but assume that will appear in the banking publications. Mr. Delano was here yesterday afternoon and said he had not been in Washington much of late. We discussed with him the selling of the 3% one-year notes, stating that our thought was to put out this sample lot to have them distributed somewhat and make them known. He seemed to think that we had acted rightly, as did some of the others, and I hope that you will acquiesce, even if it was against your awn judgment. We sold yester- day the balance of the July 1st one-year notes, J. P. M. & Co. taking ,;',500,000. and the other .. 250,000. we sold to Morgan, Bartlett & Company, all on a 2 3/4% basis. The Evening Post representative brought in your letter to-day in reference to their tabulation of the cash holdings not being correct. We will arrange to give him information as to the weekly settlement of the Fed) eral reserve banks also, and hope that the figures will be more correct. Mr. Alexander was in this morning talking with Mr. Jay about the ruling of the Federal Reserve Board against Mr. Mellon of 'ittsburgh remaining as a director of the National Bank of Commerce. Mr. Alexander feels RAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 2. 9/29/16. very much aggrieved at the way his board of directors has been shot to pieces by the Clayton Act. He stated that there is every evidence just at present that rates would rule law, in view of the large amount of gold coming in. We are having a very active market, this being the 20th or 21st consecutive day that they have sold over a million shares. Apparently there is a good deal of distribution going on, but with low money and so much prosperity I an inclined to think that we shall have a speculative frenzy gradually increasing in intensity for some time to come, and personally I think it is a good time to lean house and get on a conservative basis. We are installing a time clock, in order to make proper adjustments of the time put in, especially in the Transit 'Department. 7e purchased to-day nearly one and a half millions of acceptances, about t400,000. of the Bank of Commerce, part of it with the Metals Bank as additional indorser. '7e also had Lee, Higginson & Co., and a Philadelphia bank, as well as the Guaranty. We got some of the Guaranty on a 2 5/8% basis, and in the system we now have about t,14,000,000. of the Guaranty, of their approximate !40,000,000. they have issued. r. Jay will write you probably within a day or two about his talk .431 with Mr. De Neuflize. FeAfeels that he could conduct the negotiations with you, representing the Bank of Prance. We expect Mr. Turner of Elmira, President of the National Bank Section of the State Association, to meet next Monday with Perkins, Smythe, and Burden of Cazenovia, to discuss the directorship question and plan for carrying it out. I hope that you are not having so many visitors as to overtax your strength. A reasonable number and a reasonable length of visit would undoubt- FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 3. 9/29/16. edly be helpful to you. My best wishes go with this to you. Sincerely yours, Benjamin Strong, Esq., "The Lewiston," Estes Park, Colo. PHT/CEP ye, 4,4_4 AAA/ ye, 6 4../4 1-kut.tie YAW 2kAl X17-eilet--etr /-tt-efe itnA"A-41114.tt tAAALL ;pl&AiIr /r1 4-c4_ ct-te /- ccr CE 4A /02t, tvt-Aa--; i-74; :i7,14.6 -.Ara......a.kirAu (1,-FEDMILL RESERVE BANK oe NEW YORK Close of businesb SEPT.29, 1916. Number of items hanaied 25,681 $7,290,409.68 Totaling Short c'erenee 50 Over A.E.RACK PROVED P.R. T! 4.30 P.M. 6.30 P.M. 7--;.),ERAL RZSgi. ri; BANK OF ' YORK Close of businesz, ._.SEPT.30, 1916 Number of items handled Difference 23,893. $8,155,307.15 Short 19 Over O.Z. RACK PROVED F.R. 3.55 P.M. 4.40 P.M. 1.4.. 4. .1.....1.111,.4,41.,401 ILL RESERVE SANK OF NEW YORK Cloee of busines Number of items handled 1916. 27,871. $8,599,153.59 Totaling renee OCT. 2, Short .47 Over A.E. RACL PROVED O.Z. RACK PROVED 4.4n P.M. 5.15 P.M. FEDERAL RESERVE BANK OF NEW YORK mat ;Cee October 44 ,19161: cY;eir My dear Governor: I have your good letters of September 29th and I an delighted to know that you had a visit with Messrs. Warburg and Aiken, and have no doubt of your thorough enjoyment of it. I did not win the "old man's prize" at Rye, but it was an interesting experience, as there were nearly 400 men entered and it was largely a question of handicap, btt I believe I ended about number nine or ten on the list. Regarding the Collection Department, it seems to be moving now very smoothly apparently, and I enclose the last three reports concerning \J same, I having asked to have a report every day as to the situation, and I believe that you will agree with me that the results of these three days are very gratifying. I hope that you will not worry about our reduction to 1¢ per item, as we all feel that the volume will tend to increase--or not drop much below what we are doing now--and we ought tobe able to reduce the cost to about 75¢ to 80¢ per hundred items. Messrs. .Jay and Curtis are in Washington to-day, discussing with the Federal Reserve Board the question of private bankers under the Clayton Act. I hope that they may be successful in securing a most liberal inter- pretation, as this feature of the bill does not appeal to me as being sound and wise. Yesterday we purchased somewhat over three million dollars of acceptances, the American Exchange and Commerce being about 0300,000. each. We purchased 01,280,000. of the Guaranty at 2 11/16 for the longer periods FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 10/3/16. 0 or a sixteenth higher than we bought about ',900,000. of the Bankers. To-day we are getting about , 5,000,000. of the New York City warrants maturing December 1st on a 2 5/8% basis. As I wrote you, we have now about fourteen or fifteen millions of the Guaranty Trust Company acceptances in the system, scattered among the banks, and I shall be glad to learn if you have any thought that we should Iput any definite limit on the amount that we should purchase, as evidently I ithey are making heavy acneptances now in connection with cotton and other business. \ We are glad to have these additional lines being offered now, as our warrants and acceptances both were running off rapidly. In re allotment of purchases of warrants and acceptances, you will appreciate that when this matter was presented at the governors' meeting, I was not in a position, by reason of my knowledge, to offer any objection, and I assumed that they understood from former discussions haw the New York bank felt in regard to its business. I have been over the matter to-day here in the bank with :Ir. Cann (hr. Kenzel being away), and he advises me that there is a demand from the different banks for acceptances and warrants, we receiving almost a peremptory order this week from Kansas City for 500,000 I shall be glad of any suggestions as to what action we can take at the present time; otherwise I judge it will go over to the governors' meeting in November. The balances seem to be running quite heavy against us at the present U/7 time in favor of the other Federal reserve banks, and to-morrow we shall have about '25,001,000., I think, to settle with the Gold Fund of adverse balance. I think that there is quite general agreement of the wisdom of charging off items of organization expense, excepting the cost of unissued Federal reserve notes. I assume that this natter will be settled by the Federal Reserve Board, as it properly should be, because all of the banks FEDERAL RESERVE BANK OF NEW YORK 3.a Benjamin Strong, Esq. 10/3/16. should pursue the same policy in regard to dividend disbursements, and the Board has already stated that they would only approve dividends declared as of July and January. I hope Mr. Jay will be able to induce the Canandaigua National Bank to remain in. I took up the matter of our taking gold from J. P. M. & Co., unless we had silver certificates and legals to use in settling our C. H. balances. 7y impression was that we had had sufficient to meet these balances in nearly every case, and Mr. Sailer informed me that he could only recall one instance in which We were not able to do so, that day we losing about three million dollars in gold. I feel very strongly the necessity of getting under way our foreign arrangements with the different banks, and if there is anything that you could suggest for us to do from the bank here in the way of urging action at 7:ashington, advise us. In my judgment we ought to be able to begin buying bills in London this winter, and create a favorable balance while money and credit are in such abundance here. Mr. Sailer informed me that while I was auay, the Atlanta bank offered a million dollars of domestic acceptances put out by the 7hitney Central of New Orleans, if we wanted them at 2 5/8. Mr. Sailer and Mr. Jay talked with Mr. Rhoads of Philadelphia, who had had the same offer, and they both wired offering to take200,000. at 2 3/4 and were advised in reply that they had all been sold at 2 5/8. I asked Mr. Sailer to follow up the matter to see who bought them, as possibly Chicago or some of the other banks have bid against us. I shall be glad indeed if the books I sent may serve to brighten even a few minutes of our time there, as I feel quite helpless in my desire to make your stay there as pleasant as possible. It certainly is a great ,AL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 4. 10/3/16. will joy to us to feel that you are improving steadily and I hope that you keep the brakes on yourself. With kind regards, I remain, Sincerely you-s, Benjamin Strong, Esq., "The Lewiston," Estes Park, Colo. RHT/CEP FEDERAL RESERVE BANK OF NEW YORK October 4,01.21&60, < j, < My dear Governor: In reading over the copy of your letter to the Honorable Carter Glass in re issue of Federal reserve notes against gold, I am all the more impressed with my feeling that as there are so many features of the Federal :Reserve Act which are not understood, and so many policies that should be inaugurated for the good of the banking system of the country, you should, if you have leisure, write articles similar to your brief on the issuing of Federal reserve notes, which could be published in papers like the American Bankers Association Journal(which would reach every bank which has membership in that association, some fifteen thousandl, and thus you would contri- bute very much to the education of bankers generally, which, as you recognize, is necessary, in view of tl'ieir lack of information and their real ig- norance in many cases. Our directors' meeting was held this morning, all present except Starek and yourself. No Change was made in the rate of discount. The question was raised whether in making up our charge to the Yederlandsche Bank for services rendered, we should charge them the 1/20th of 1% for the first three months, which was of course as per agreement, or whether it would be better to make the uniform charge of 1/10th of 1/ per annum and have this apply to the three months instead of the original rate, which was, of course, much higher. It being a question of Policy, it was thought advisable to lay the matter over and to secure your ,ludgment on it before making a decision. I enclose detailed statement concerning same and think it might be well for you to answer promptly concerning this so we FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 2 10/4/16. would have same for our next meeting. The question of additional banking space, which some of the officers feel is quite essential, in view of the increase in business, was laid over for further consideration. Ladenburg, Thalmann & Company, havinr filed a statement with us and, with their consent, having same considered by Messrs. Jay, Woodward and myself the directors decided to make their paper eligible, with the understanding that we would temporarily have a limit of within a half million. I had a talk with Mr. Woodward this morning about his remaining as director, and he feels quite strongly that the principle of rotation so far as the elective directors is concerned should be established at this time. re expect Mr. Turner and his committee will have a meeting to-morrow, at which will be thoroughly considered this question, and I can report more fully to you then. I have accepted an invitation to address the National Hardware Association (manufacturers and jobbers), generally about 600 to 800 of the representative manufacturers and distributors of hardware from all over the United States, at Atlantic City, on "Trade Acceptances." mation at the present time, I am gathering some infor- Do you see any reason from a bank's standnoint why the substitution of the trade acceptance for the open book account is not a move towards making dead capital of the open book accounts into liquid cre- dits which can be utilized? I shall be glad to have any suggestion. "le are nurchasing about a million and a quarter of acceptances today at the usual rates. I hope that we may continue to have more warrants and acceptances offered us, so as to hold up our investments. There was considerable discussion this morning as to our policy as to dividends, but decision was deferred until the last of December when we will know more accurately, but I think the prevailing opinion seemed to be ; FEDERAL RESERVE BANK OF NEW YORK 3,- 10/4/16. Benjamin Strong, Esq. that if if we could declare a dividend, paying up to say April 1, 1915, or possi- bly July 1, 1915, and still have sufficient undivided profit as a "back log," it would be a matter of policy to do so. Mr. Jay will write you about some of the other matters which came up, all of which will prove of interest to you, I hope. I have not had tine yet to go over the Bank of France matter with him but will hope to do so within a day or so. nth kind regards and my very best wishes to you, I remain, Sincerely yours, Benjamin Strong, Esq., "The Lewiston," Estes Park, Colo. EFT/CEP Enc. ')-U1i 'et.y #71.---a4,--44, 44-44 14,4 SeutA 441, At 4( re c 4i IWP.444.44t 7414.ti-r4- Pieet etA,ae 44-17t. '1,64 Ar:4 1-1441-0:40,4G, L'rfrir* etA/- øf oleke" 240W/'°- Avg- 1;e/4. FEDERAL RESERVE BANK OF NEW YORK STATEMENT OF CUSTODY CHARGES - GOLD COIN FOR THEJVMUNT OF THE NETHERLAEISIL4ji,Alimaima. Number of ilaa. From 1,001 1,002 1,003 1,004 1,005 1,006 1,007 1,008 1,009 1,010 1,011 1,012 Boissevain & Co. 1,013 Bo:ssevain & Co. 1,014 1,015 1,016 1,017 1,018 1,019 1,020 1,021 1,022 1,023 1,024 1,025 1,026 1,027 1,028 1,029 1,030 1,031 1,032 1,033 1,034 1,035 1,036 1,037 1,038 1,039 1,040 National City Bank National City Bank Blake Brothers & Co. Blake Brothers & Co. National City Bank Kissel Kinnecutt & Co. Maitland,Coppell & Co. Bolssevain & Co. Blake Brothers &'Co. Kuhn, Leob & Co. Hayden, Stone & Co. Date ;Received March 16116 ft 23/16 ft 24/16 Amount 616,635 600,000 88,000 16,000 75,000 293,500 24/16 27/16 28/16 April 1/16 ft 3/16 3/16 4/16 515,000 64,600 10,000 E/16 7,600 PS ft It It 14/16 15/16 15/16 17/16 36,000 105,230 900,003 ft 17/16 17/16 160,000 125,000 Hanover National Bank Hallgarten & Co. Kan Loeb & Co. ft ft 18/16 65,000 17/16 17/16 43,000 3,000 Hausman & Co. Pt 17/16 Kidder, Peabody & Co. A. A. Hausman & Co. Kean, Taylor &Co. Blake Brothers & Co. Holland-American Line Is 10,000 11,194 18/16 19/16 June 22/16 Speyer & Co. J. & W. Seligman & Co. July " 12/16 " 13/16 Hallgarten & CO. National City Bank Kean, Taylor & Co. Guaranty Trust Co. Guaranty Trust Co. Boissevain& Co. Guaranty Trust Co. J. S. Bache & Co. Boissevaln & Co. Speyer & Co. Maitland, Coppell & Co. Kuhn, Loeb & Co. Blake Brothers & Co. Blake Brothers & Co. ft ft tl St 5/16 1.137,F a ,00W, 500,000 (Sliver 2.20) 91,094.70 ft k / A 3 o7 . 0 , St O 51 63,q04 44.2 ft 21/16 It vt et ft ft ft IS ft 5/16 20,000 It 5/16 20/16 10,600 19,000 It 05,955,459.99 Days to Oct.1/16 Custody Charge 199 545.21 166.56 313.97 46.05 9.42 58.63 150.37 13.24 255.38 27.08 .22AMIL1410. 192 191 191 191 188 187 183 181 181 180 Telegrama .0,Na 1,j3 15.12 6.37 6.37 6.37 6.37 15.78 15.78 11.20 21.37 21.37 5.32 .68 .68 .68 .68 .54 .55 .71 4.93 .67 179 3.73 .71 5.32 170 169 169 167 16.30 48.75 .77 .74 23.52 22.96 167 167 416.71 43.01 73.21 57.19 .23 .23 .23 .23 5.67 5.67 5.67 5.67 166 29.56 .39 167 19.67 .23 167 167 167 1.37 4.58 5.12 3.64 2.73 .52 .20 4.94 5.67 5.67 5.67 138.36 .68 17.22 21.96 .71 7.89 39.45 13.15 17.18 1.52 .86 .68 17.22 17.22 17.22 17.22 166 3.3 3,180 36,000 Aug. 14/16 " " y3.0% " 6,000 1,140 _rt. /2!) " 200,000 100,000 209,000 Sept. 1/16 " 1/16 (Silver 1.29) 79,286.29 " 1/16 116,000 " .Al24m 94,000' 17/16 (Silver 1.50) 18/16 Io 0 1,000,000' 24/16 It It ft tI Rate Per 166 165 101 88 81 80 72 48 30 30 30 26 26 11 -1_2'9613 9.53 1.42 .76 .57 02,554.43 .23 .23 .38 .38 .64 .66 .68 .70) .76) .76) .32) .32) 018.44 5.67 4.95 4.95 iO46.74 yet rerorted by rethorlande Legation FEDERAL RESERVE BANK OF NEW YORK It\d. ber 5, 1916. 41" dear Governor: I acknowledge the receipt of the copy of your letter to Mr. Towne and Mr. Jay arranged with Mr. Towne yesterday to hold his decision in abeyance pending the outcome of a meeting being held to-day at the National City Bank of the conmdttee of the State bankers in re selection of directors. Mr. Jay tells me that the Canandaigua National Bank has decided to remain in the system, as he and Mr. Curtis evolved a method to satisfy them. I have asked Mr. Sailer to write to you the details of his handling of the Gold Settlement Fund this week, thinking that you would be interested in the attitude of Dallas and St. Louis. Regarding Mr. Locke's proposed resolution, I do not think that after the directors have had a discussion of it, a majority would vote in favor of it, but it is to me disappointing that there should be even a minority who would think it wine to make si3ch a restriction in view of the efforts being made to develop the discount market. I hope soon to hear of your tramping and fishing instead of working your brain over time by discussions with your numerous guests. Dr. Treman suggests that you quiet down 'now and lead the simple life again, having the visits in memory and working your brain only on the most important of the problems. To my mind, just now the making arrangements with the foreign banks is of mch more importance than anything else. Mr. arburg's speech was very well received apparently and the 7all Street Journal has taken up cudgels against the Chronicle. It was a forceful FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 2.ft 10/5/16. address, delivered at the right time, and can-lot but have weight, and if you can later follow it up with an occasional article in some one of the principal banking magazines, the situation will be further strengthened. The political situation is a very interesting one, as many are apparently either undecided or are keeping their views to themselves. I do not think Justice Hughes has succeeded yet in developing any great heat in the campaign, but I believe he will receive the vote of the business men generally, while apparently Tilson as yet has a strong hold on the masses. Personally I think it will be a close race unless something arises to develop an unusual situation between now and election. Tith kind regards, I remain, Sincerely yours, (4------01-(cAA-eL Benjamin Strong, Esq., "The Lewiston," Estes Park, Colo. RHT/CEP FEDERAL RESERVE BANK OF NEW YORK 40/ ' \ 157 October 6, 1916. c9 es dear Governor: I have yours of October 2nd and when I realize that you are within three and a half to four days' mail service from us, it does not seem far. I am glad that you are to have Mr. Kains of San Francisco with you and hope that Messrs. Vanderlip and Trumbull will not overtax you. The Boston bank, when Governor Aiken was away last week, fixed a rate for domestic acceptances of between 3% and 4%, which has caused quite a furor up there and to-day the Old Colony Trust Company sold us of their own acceptances on a 2 3/4% basis. 100,000. I talked with Governor Aiken about it and he thought our doing so would help strengthen his position-that the rate should have been between 2% and 4%, as is ours. 7-e are having some offerings of acceptances, as you will note from the statement sent you, and are picking them up wherever it seems desirable. I trust that notiyithstanding the delay in the State Department, you will feel free to keen up your personal correspondence, working out details of what may be an effective arrangement at the proper time. To-day we have a report that Ambassador Gerard is one the way here with a peace proposal, which I question, but it has had the effect of making the first break in the market for about three weeks. I go back to Ithaca to-night for Saturday and Sunday but expect to be here again Monday morning, and shall hope to hear that you are taking a vacation from work after your guests go, and are slowing down again. FEDERAL RESERVE BANK OF NEW YORK 2. Benjamin Strong, Esq. I think of you often, and with this goes my very best. Sincerely yours, Benjamin Strong, Esq., "The Lewiston," Estes Park, Colo. RHT/CEP 7 S. --- Kindly remember me to Mrs. McLaren. 10/6/16. FEDERAL RESERVE BANK OF NEW YORK Octobe 1916. ';149P My dear Governor Strong: Your letter of October 4th reached me this morning. I was over at the subtreasury this morning as one of the officers and was impressed b7 the amount of gold which they have in storage and was equally impressed by what seemed to me to be a lack of security for the building and its contents. Regarding the one-year notes, we will have this week about one million of one-year notes payable October 1, 1917, which we will hold, and if occasion offers, will rebuy some of those we sold. The good work in the Collection Department goes on and now it becomes a question of haw soon we aught to consider making collection of items of different kinds for the banks--the same service that is being rendered now by the regular New York correspondents. 7hat do you think about it? Mr. Warburg is in the bank to-day, as he came over to register, and I have discussed several -matters with him. He seemed pleased that we had taken the action we did in regard to your salary, and I hope that this disposition of it was in line with our min thought, because that was the desire of the directors and they would have taken any reasonable action which would satisfy you, because they are looking forward to your returning here at the earliest possible moment consistent with your strength and health. I want you to understand that we are all much interested in every indication of improvement on your part; that more and more there comes a recognition of the great work you have done, not only for the New York bank, ,EsERVE BANK OF NEW YORK Benjamin Strong, Esq. 10/9/16. but for the Federal 'Reserve System at large, and this grows more and more im- pressive the longer you are away from us. It seems to me that it is provi- dential that you are able to continue to study the larger problems in their broader aspects while we are struggling with the details. I talked with Er. Warburg this morning, telling him that I was greatly impressed with the need of our opening relations with foreign banks at the earliest possible moment; that we had already received suggestions from different banks, among them the Netherlands, a bank in Greece, one in Java, another one in Italy, as well as the Bank of France and the Bank of England, with whom, of course, we should like to open relations, as well as the Reischbank in Germany. Quite to my surprise he said he saw no rea:son why we should not open an account with any neutral country as soon as it could be brought about, but as far as the belligerent countries were concerned, we should proceed more cautiously, which, of course, is good sense. Will you let me know whether you are taking up these matters in a personal and private way with the Bank of England and the Bank of France, and any others, and if not, whether you cannot bring about a quasi-permission on the part of the Federal Reserve Board for you to do this work, it being merely preliminary and without official sanction and recognition as yet; but if the preliminary work is done, when time for official action matures, we will then be able to start business promptly instead of being held up. Would you think it well for us to let Yr. Curtis go over to Washington in a diplomatic way to see if progress cannot be made, and if not advisable to do it before - election, would you think it wise to do so immediately after? Frankly I an strongly impressed with the desirability of doing these things now when apparently everything is in our favor, rather than having it held up until we will have to negotiate when things are less favorable and more certain to be in favor of the one with whom we make arrangements. B. ERVE BANK OF NEW YORK I understand Benjamin Strong, Esq. 10/9/16. r. Jay sent Hr. Turner's letter to you and that will advise you of what has been done and I hope will meet with your approval. I shall be glad to know what rate you think we should make on domestic acceptances. Should we act on the theory that it is a matter of credit entirely and that domestic acceptances should take the same rate, asTurning the strength of the credit is the same, as would foreign acceptances, or should we have in a general way a small differential which we charge additionally for domestic acceptances, on the theory that we should make our competition with the member banks as little felt at present as possible. I was glad to see for myself that the subtreasnry had about S370,000,000. of gold bars, coin, etc., and only wish that the Federal reserve vaults were filled with gold in the shape of reserve against troubles that may come. We had a shaking out in the stock market for about an hour this morning similar to the panic times of 1907, about a million shares changing hands in an hour or so, with fluctuations of from ten to thirty points on some stocks. With this goes my very best regards to you, and the hope that you are doing your level best to make good in health. Sincerely yours, 61.44.4*-te.- Benjamin Strong, Esq., "The Lewiston," Estes Park, Colo. RHT/CEP rftp .714."tr 10; 4.4A frtA144-:, Ytoprott s-0.44,4if iLkeit 11-04y CUtlj, '4)1(/ #4/1 eV$4.1--kie" AAA-Lk, )1..1-101, rf/4- FEDERAL RESERVE BANK OF NEW YORK October 11, 1916. dear Governor: By reason ,)f the shortage in the official force this week, I am taking my turn at attendance on the vaults and have been impressed by the amount of gold in the subtreasury, which emphasizes to my mind my constant wish that we could be accumulating gold more rapidly in the reserves of the Federal reserve banks. Did you and Mr. 7axburg give any consideration to a plan of settling our balances, in New York at least, by silver and legals and is such a plan feasible? Could you give it at your convenience some thought along these lines or make any suggestion of a plan under which we can accumulate more of this gold while it is coming in and before the crucial test comes later. Then convenient, will 7ou indicate your opinion of what would be a proper allotment for the Federal reserve bank of its investments purchased, and should it be taken up previously with the governors or that committee of which Governor Seay was chairman, or would it be better to leave it until the meeting of the governors the latter part of November. I expect that Governors Aiken, Rhoads and Fancher will cone to New York next Tuesday for an informal meeting. Have you any topics which you think we should discuss at that meeting? 77e had a request from the Bank of Commerce yesterday for a ruling as to whether bills created in the purchase by a foreign nation (probably Germany) of hides in Argentina, the sane to be stored in warehouses there, for a period longer or shorter, but with the understanding that there should F.DERAL RESERVE BANK OF NEW YORK Beniamin Strong, Esq. 10/11/16. be the privilege of extension up to two years' time, at which time, if the war is not over, the bills should be paid in full, would be eligible for purchAi.se by the Federal reserve banks. I shall be glad to know your opinion of such a transaction, as it may be a precedent for others of a similar kind. Our balances with the other Federal reserve banks sem to be running quite heavily against us and to-day we shall probably have an adverse balance of $.15,000,000. To-morrow being a holiday, Columbus ray, the bank will be closed, but I expect to put in part of the day at least in working on an address on "Trade Acceptances," which I an scheduled to make at Atlantic City next week. The connittee on directorship in the Federal Reserve Dank of New York of the New York State Bankers Association is having a meeting this afternoon to discuss the situation, and we have had !!r. Burden of Cazenovia to lunch with us. I shall be glad to hear a report as to how you are feeling, and assume you will give us ample time when you change your address. 'ith this goes our best wishes, as ever. Sincerely yours, Benjamin Strong, Esq., "The Lewiston," Estes Park, Colo. RHT/CEP P. 5. --- I am enclosing herewith report received from the Bank of France. FEDERAL R ESE RV E BANK OF NEW YORK 0 "A/ . October 13, r916. My dear Governor: I wish that you could properly understand the very great pleasure that we had to-day on receiving the news contained in Mr. Fendricks' letter, that you hnd gained so much in weight and were looking so fine. No news could give us greater pleasure and I just want you to know how happy we all are that yours is a constant gain. Do not let up a moment in your efforts to gain fifteen to twenty-five pounds more and to add to your reserve strength much more, so as to fit yourself for speedily taking up your work again. The bank needs you and, more than this bank, the Federal Reserve System and the country need your service and ability, so let this be a responsibility that you feel rests unon you to consecrate yourself to this one object, getting well. I have been struggling with trying to put together some thoughts on trade acceptances, but the interruptions make it difficult to concentrate one's mind for any long period, and when you haven't very much mind to concentrate, it makes it all the more difficult. I am not writing on business to-day, but just want to send you this message of cheer and best wishes. Sincerely yours, 'oenjamin Strong, Fsq., 4100 7!ontview Toulevard, Golo. http://fraser.stlouisfed.org/ rTIT/C7P Federal Reserve Bank of St. Louis FEDERAL RESERVE BANK OF NEW YORK z 007 , October 17, 1916. Dear Mr. Strong: I spent yesterday in Atlantic City in connection with the Hardware Convention and came up to-day to New York, spending the day here and finding your various letters. I cannot answer them in de- tail as I am putting the finishing touches to my address on "Trade Acceptances," which I have to deliver to-morrow in Atlantic City. Later, perhaps, I shall send you a copy which you can criticize to your heart's content as long as I get it out of my system. Oar Mr. Curtis brought his family back from Massachusetts today, having motored down yesterday and to-day. Things apparently are moving smoothly here, except that the balances run against us. and yesterday Chicago telegraphed us to ship them 41,000,000. silver certificates and legal. To-morrow we shall have a directors' meeting, and Mr. Locke wrote that he would postpone the introduction of his resolution until later and probably would not come down to the meeting to-morrow. Mr. Woodward has returned from his coaching trip to Maryland with August Belmont and other members of the Knickerbocker Club. ,.FRAL RESERVE SANK OF NEW YORK ........... Benjamin Strong, Esq. - 10/17/16. I hope to be more regular in my correspondence as soon as the "Trade Acceptance Address" is delivered and I am back on the job. With kind regards, I am Sincerely yours, CV/V., 1W Deputy Governor. LIBenjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/HAB FEDERAL RESERVE BANK OF NEW YORK Ciober 20, 1916. Dear Governor: I made my address on "Trade Acceptances" at the joint session the hardware manufacturers and jobbers in Atlantic City on "ednesday, peak- ing to probably 350 to 400 for about a half hour, during which they gave me very close attention and evidently were much interested in the Judging from the comments afterward, I think that it awakene 'estion. in the ninds of a good many the question of whether they should not ado .t the trade acceptance system. I understand that they contemplate having e address printed for circulation among the membership and also some on -ide, and I hope that at the meeting yesterday they apnointed a connitte to consider and report upon the advisability of their adopting this plan and cooperating as to the time and methods, but as I came up to the bank esterday morning and did not re- main for the last two days of the conve tion, I an not informed as to what action was actually taken. Thanks to the criticisms eminent colleagues, Jay and Cur printing and I hope will not the Tugf-estions, and the advice of my a, the address has been put in shape for ast any adverse reflection upon the bank, what- ever may be the criticisms against me personally. I an very gla as is possible and I statement is core. your part which to note that you are taking as good care of yourself hink that resplts thus far shown indicate that your I do not approve, however, of any mental attitude on ecognizes a poAsibility that you are not coming back to the FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 10/20/16. bank, as I am hanging on here, making a very evident bluff about even filling temporarily this position, and while this can be carried on for a reasonable length of tine, the stockholders and friends of this bank will be very glad when they learn that you are back on the job. the place. You are certainly the man for You have done a great constructive work already but no one can realize more than you do that there are other important problems to be worked out in the development of this great financial structure, the existence and improvement of which are so vitally important to this great country. I would be the last one to want you to come back too soon but I also appreciate most thoroughly the bank's need of your constructive mind, and when you do cone back later, I hope that arrangements can be made so that every unimportant detail can be handled by others, leaving you free to put in a few hours each day, probably in the morning, at the bank, and reserving the afternoon and evening for recreation, diversion, and meditation. Dr. Trenan advises against entering into the social life of Denver to too great an extent, urging that you will always keep within the limit of weariness and preserve your strength for the great work for which you are so eminently fitted. I hope your new house is in the midst of a pleasant environment, free from cats and dogs at night and German bands by day. Do not consider your idleness as irksome but as being a part of a great constructive plan for you personally, and remember that "they serve who only stand and wait" until the opportunity cones for action. "e hope 7r. rendricks will be back next week and also that 7r. Cann will be here, but 7r. Sailer will be away probably another week or two. I go back to Atlantic City to-night, where Mrs. Trenan is spending a week or so, and expect to be back at the bank on Monday morning and remain all next week until Friday, when I hope 7r. and Mrs. Jay will go up to Ithaca FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 3. and spend Saturday and Sunday with us. I never succeeded in getting you up there but have not despaired, and the visit is only postponed. 1th my very best wishes to you, I remain, Sincerely yours, Benjamin Strong, Fsq., 4100 7ontview Buulevard, nenver, Colo. RTIT/CEP 10/20/16. FEDERAL .RESERVE BANK OF NEW YORK October 24, 1916. e?,816. Dear Governor: Mr. Jay has returned to me some letters of yours which I had permitted him to read and I will go over some of the matters again, even at the risk of duplication. I do not feel that Mr. Warburg's plan of inducing member banks to nut all of their reserves in the Federal reserve bank will work out in practice, as I think there will be a general reluctance on the part of bankers who ha-e been trained to harbor reserves to discontinue the practice. cannot but feel that in some way we ought to be able to induce the menber banks to sort out gold certificates from their daily cash,- sending same in to the Federal reserve bank and permitting us to issue Federal reserve notes to them, they paying out sane through pay rolls; etc., to overcome their reluctance to take then, as they do'not count as reeerve. I believe, at least, that I could write to a number of bankers whom I know personally and induce them to do this without any stir, but whether enough could be accomplished to make any impression by doing it simply through those whom I know is a question. In regard to our foreign arrangements, I take it from ynur letter that you do not believe anything can be done more than what you are accomplfshing in.a personal way and through Mr. Morgan and in other indirect methods. -t does seem a shale, however, that we are not in a position now to be putting up the brest-works against the future on-slaught. Both Mr. Jay and Mr. Curtis are in Washington to-day, and I hope will discuss the matter informally with . Governor Harding and possibly Curtis may be able to discuss it with the State FEDERAL RESERVE BANK OF NEW YORK ...2 Benjamin Strong, 7sq. 10/24/1C. CA Department. I think it would be well for 7r. Curtis to prepare a brief for submission later when the proper opportunity offers. What do you think of this? I note your impression as to the amount of the Guaranty Trust Company acceptances. 7r. Jay has, I think, written to you about the stir-up in Washington over the newspaper articles on the newla00,000,000. French acceptance plan." I think the trouble originated in the circular issued by the 7ankers and Guaranty trust companies, especially the two paragraphs I have narked, indicating that there was some obligation on the Federal reserve banks to purchase these and indirectly urging State banks to put themselves in a position to handle them with the Federal reserve banks. The Federal Reserve Board telegraphed each Federal reserve bank as per the copy sent to you last night, answer to which is not yet at hand, and after a discussion with 7sssrs. Jay and Curtis last night until nearly 7 p. 71. I urged then both to go over to Washington, which they did, in order to straighten out the matter to-day and if possible prevent Washington from issuing some pronouncement which would tend to interfere vith the .development of the open discount market or night affect the placing of the French acceptances under the plan now being developed.' I am sending you a copy of the confidential information sent out, and I told 7essrs. Jay and Curtis that if 71.. Kent would issue another circular in which he would state that he would like to correct any possible misapprehension their statements made in the former one, may have led to, and then if Tashington would hold the matter in abeyance for a short time, we could of an find some opportunity Soon for the issuing of a statement or the making address in which the position of thee Federal reserve banks could be clearly stated and it could be done undoubtedly without jeopardizing the development of the acceptance business. FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 10/24/16. What would be your view about raising our acceptance rate about 1/6? 7oney, of course, is very easy and plentiful ,lust now, but it has seemed to me that we might nossibly make this mall advance without affecting adversely the situation, and it night be wise to do so. I am glad that yr. George Boberts of the rational City Bank is to make you a visit, as I have always tho,7ght him very wise in his discussion and viewpoint of foreign matters. I assume that you will gradually work up some briefs to be submitted to Congress in re currency legislation in December. I note what you say about Ladenburg and Thalmann and it is in line with our own views. Did you write to Mr. Locke about his proposed resolution? 7e expect Governors Aiken, Seay, Fancher and Rhoads to have an informaL conference at the bank next Tuesday, October 31st. (Later) I have just been talking with Mr. Jay at 7ashington and he reports that they discussed the matter of French acceptances with the Board this mornig and the Poard will permit 7r. J4:7 to work up some kind of a statement and later, next week, when 7:17. 7ardingnonesto make an address before the American Institute of Banking, he will discuss it somewhat at length in a general way, so that, as I understand from Mr. Jay, they thought they could put up the bars in a way to satisfy the Board. I am glad to learn from 7r. 7endricks that you are nleaaantly situated in Denver, and I hope that you may still keep up the self-denial regime so as to constantly add to your surplus strength. The country needs you, Governor, and yoU have a great responsibility resting on you to save every bit of strength which you can develop and not allow the things which .EDERAL RESERVE BANK OF NEW YORK 4 10/24/16. Benjamin Strong, T1eq. are not worth while to interfere with the bigger realities. (You need not worry about the amount of Pr. Tiernan's bill for medical advice as yet.) While dictating I have just received your telegram at 2:30 p. m. in re French acceptance announcement and will transmit same to Curtis or Jay if I can reach then. I am glad you feel so strongly, as I felt most clearly yesterday that it would be a very great mistake for them to make any announcement whatever--that they should allow us to handle the situation in "ew York, which we can do, and accomnlish what they want and at the sane time not interfere with the acceptance development. T"e are whipping into shape to-day the note which 7r. Jay ea-pects to have the New York state 73ankers Issociation Committee send out to bankers to-morrow. Regarding the rates for domestic trade acceptances, unquestionably the same rates should prevail as for foreign acceptances, but in the interests o' member banks we thought that temporarily we might discriminate a little, -nd in doing so, we have had no complaint as yet. pardon this long letter, but it see/is like talking to you every day or two to have this touch by correspondence, and it is a great sustaining force in the organization to know that we are in such close touch with you. 7ith kind regards, I remain, Sincerely yours, Benjamin Strong, Esq., 4100 Ilontview Boulevard, Denver, Colorado. "1111/EP TRANSIT DEPARTMENT EMIL RESlavN BANK OF NE'l YORY Close of business OCT.26, 1916. 30,781. Number of items handled ',)9,858,346.99 Totaling Short --,rence '7 4_ Over F.R. RACK PROVED A.E. " H 3.50 4.15 -6. n(- FEDERAL RESERVE BANK OF NEW YORK A:r5;ober 26, 1916. 7y dear Governor: 7e began our officers' meetings to-dau, although Mr. Jay is in 7ashington, having returned there last night after spending one day in 1lTew Mr. Jay had Mr. Kent of the Bankers Trust Company and ne for lunch York. yesterday and we discussed ways and means of urrecting the unfortunate impression occasioned by the telegrams sent out to the Federal reserve agents in re French acceptances. "r. Kent stated that they had already heard from the sane from different banks, and evidently the action of the Board created a hesitation which was unfortunate. 7r. Kent prepared a form of letter, which he was to send out to the banks circularfzed by the joint circular of the Guaranty and the Bankers, and he sent Mr. Jay a copy so that Mr. Jay could submit same to the Board to-day. -r. Kenzel is making an address to-day before an exporters association on the Federal Reserve System and its relation to export business, and r. Curtis and I spent most of ye,terday afternoon with Kenzel acting as critics to his composition. Mr. Pendricks has submitted the question of the bank acting as a clearing house for State bank items in Yew York City and the same is to be .considered further by the officers. I an in receipt of yours of October 18th, containing copy of letter just received from Mr. Cokayne and your Curtis and hold for M. Jay reply, which I will take up with Mr. to see to-no-row probably. I an hoping to take 7r. and Mrs. Jay b. ck to Ithaca with me to-morrow ) cDERAL RESERVE BANK OF NEW YORK Benjamin strong, Esq. 2 10/26/16. to remain over Sunday, rr. Jay going on t_ "tica to speak before a small gathering of the friends of T!r. Rogers of the First rational Hank of Utica. -te are arranging our securities in Vault A at the Clearing House pre- & Co., which begins to reach us paratory to receiving the gold from J. on Friday and will continue for the next four business days. "e were quite disturbed in the bank here over the action of the 'oard In the matter of the French acceptances, but hope that we may straighten out sae satisfactorily, as outlined above. I hoe that you are finding it pleasant and agreeable in Denver and that you are continuing your improvement. kindest regards to you. Sincerely yours, CleiWirtnA4,A4A----1 Benjamin Strong, Esq., 4100 Montviev: "oulevard, Denver, Colo. FEDERAL RESERVE BANK OF NEW YORK October 26, 1916. Dear Governor Strong: I had a pleasant talk this afternoon with nr. Roberts of the NationCity Bank, 7ho stated that he contemplated going out to you later if he could arrange the time so as not to conflict with some engagements he had made for addresses, although he had not heard from you directly as to the time at which you desired him to come. I told him that you had written me that you were anticipating with pleasure his coming out to see you and discuss certain important financial problems, and I assumed, without knowing your views, that it would be advisable for him to make the visit before Congress convened again, as I thought you were anticipating some sug-estions requirin legislation. 7e said he was to address the 'uffalo Credit 7Ten's ,".ssociation on November 16th and that the time following that, from November 16th to the latter part of the month, would be probably most convenient for him, but T think he hesitated to so express himself to you, so I am giving you the benefit of our exchange of views for you to act as you may deem best. 7r. Roberts stated that he had just returned from a meeting of the Indiana Bankers at Indianapolis and that Doctor !!iller of the reserve board had spoken the day before he spoke and both along the same general line: said that Doctor 7iller's address seems to have been well received. He Did nr. "iller send you a copy of it? I have just had a telephone conversation with yr. Jay, who advised me that they are having a spirited debate in the Board over the French accept Benjamin Strong, Esq. FEDERAL RESERVE BANK OF NEW YORK 10/26/16. ances and that they may want 7r. Kent to go to Washington and he, Jay, to It seems to me unfortunate that these matters stay over for to-morrow. cannot be handled at r"ashinFton in away which, while carrying out any conservative and restraining views they may have, still will not embarrass the development of the open market and other important matters of this kind. Kr. Kenzel has just reported that he was very well received at the exporters' meeting, about fifty to sixty present, and we will endeavor to have his paper given publicity for the general educational effect. 7ith kind regards, I remain, Very truly yours, Benjamin Strong, Esq., 4100 7ontview Boulevard, Denver, Colo. 6110,4. oft... e "RA-A-6, 09-Ny A,Ak (.4444.- 1<414.4-1 C.7-4.4"1 44-44, 74,1"40/1., e 0.1113 4k4,4-64 RHT/OEP tot- AaA Ois 4(444e4,4,,,,e_ 444r -(94.-41 FEDERAL RESERVE BANK OF NEW YORK r , 1916. Octobe0 My dear Governor: There is evidently "something doing" in the Federal Reserve Board about the French accentance matter. Mr. Jay, who was over there discussing the matter yesterday, telephoned late yesterday afternoon for 11r. Curtis to go over and also Mr. Kent and Mr. re-lphill, the two representing the Bankers From what I nick up, the Comptroller has and Guaranty trust companies. taken the position that as the French acceptances were arranged on the basis of the participating banks not only accenting but agreeing to rediscount the acceptances themselves for five renewals, making a total period of eighteen months, it was contrary to the nrovision of the Reserve Act. I hope that the matter will be strgightened out to-day in some way, so that the development of the acceptance business will not be interfered with. I attended as a guest the banquet of the Mew York Credit Men last night and from wliat T pic -A from my brother, who was down yesterday from up-state, it aprears that there is a strong movement just now towards rrilson, although, Whitman may prevail over geabury. I feel, however, that the whole situation is so sensitive that no one can tell until the votes are counted what the result will be. Yenzelis address was very well received and the Mew York Commercial gave over a column of space to-day to its reproduction, and I think it will annear in others, all of which helps the system. I will certainly be glad to send you a copy of my address on "Trade Acceptances," provided yo-fl will have restoratives at hand to revive FEDERAL RESERVE SANK OF NEW YORK ...... Benjamin Strong, Esq.. 10/27/16. you after reading same, as you will find it dry. I shall be interested to know what position Mr. Locke will take at the next meeting of the board, but in any event we must try and kill the resolution. I an mailing you a copy of the circular sent to the 7ational Bank Section of the State Bankers Association under date of October 25th. Possi- bly it has been sent to you, but I know you will be interested in reading it. Mr. Jay's being obliged to remain over at 7ashington to-day, will deprive us of the pleasure of having Mr. and Mrs. Jay at Ithaca over Sunday, as we had-planned, but we must keep on the firing line, especiary when such important natters as this French acceptance business cone up. "7y best regards to you, and I want you to know how many inquiries cone to us from every side as to your progress and how keen is the pleasure of those who inquire when they know that your progress is favorable. ent ones at the Credit ssociation banquet last night asked after you, among them Judge Hand. ever, Sincerely yours, rsq., Benjamin strong, 4100 Montview Boulevard, -enver, Colo, P.F.72/07P rncs. Differ- NEW YORK STATE BANKERS' ASSOCIATION ORGANIZED 1894 OFFICERS, 1916-17 PRESIDENT BENJAMIN E. SMYTHE, The committee has considered whether or not the principle of rotation in office should apply in the selection of directors of the Federal Reserve Bank and wishes to make it clear that by its action this year it does not wish to establish a precedent either for or against the principle. The committee recommends, with their consent, the following gentlemen as candidates for directors of the Federal Reserve Bank of New York : BRONIMLLE. N. Y. JOHN H. GREGORY, VICE-PRESIDENT ROCHESTER, N. Y. ALEX. C. SNYDER, BROOKLYN, N. Y. WILLIAM J. HENRY, TREASURER N .YORK STATE, 11 PINE STREET BANKERS. SECRETARY 11 PINE STREET, NEW YORK. N. S. New York, October 25th, 1916. NATIONAL BANK SECTION. To the Member Addressed: The undersigned committee appointed by the National Bank Section of the New York State Bankers Association and by the New Jersey and Connecticut Bankers Associations, has had a number of meetings to consider what policy it should pursue in carrying out the instructions of the resolution adopted last June, during the convention at Atlantic City, "to the end that all proper steps be taken to secure the best possible men as directors of the Federal Reserve Bank of New York." Specifically, the committee is authorized by the resolution to make recommendations to all member banks of candidates for directors of the Federal Reserve Bank of New York, to inform all member banks of the qualifications of all candidates for such directorship. In seeking for names to suggest as candidates for directors the committee has restricted its search to those who are not only of high character and business standing but also fitted by temperament, ability and breadth of experience to pass upon the important questions of policy, domestic and international, which must present themselves for solution in the Federal Reserve Bank of New York. In ascertaining and describing later the qualifications of those who are actually nominated for directors, the committee will apply the same tests. In accordance with the resolution of the Federal Reserve Board dated December 23, 1915, those active in political organizations may not appropriately be nominated for directorships in Federal reserve banks. The committee has considered whether it should suggest several names or only one name for each vacancy, and it is unanimously of the opinion that its policy should be, unless under exceptional circumstances, to suggest a number of names for each vacancy in order to make clear and preserve its position as a non-partisan committee. The committee has considered the geographical aspects of the second Federal reserve district, which embraces the entire State of New York, with 482 members, the twelve northerly counties of New Jersey, with 129 members, and Fairfield County, Connecticut, with 15 members, and believes that the various sections of the district may properly expect to be represented from time to time on the board of directors. It feels, however, that such representation may be obtained more satisfactorily by general understanding and co-operation on the part of the member banks than by a contest each year between the different sections. The two vacancies occurring this year are at present filled by residents of New York City. The committee recommends that these vacancies be filled by the election of residents of New York City because it is desirable that a certain number of the directors should always be available at short notice for consultation and service on the executive committee, and because the New York City banks, which are in the group voting this year, contribute so large a proportion (approximately 90%) of the total resources of the Federal Reserve Bank of New York. The committee will therefore suggest this year only names of residents of New York City; and while it will not assume to lay down any policy to be followed in the future its present view is that when an opportune time is reached for a certain section to expect representation on the board of directors, only candidates from that section should be suggested by the committee. FOR CLASS A DIRECTOR. HEADQUARTERS WILLIAM WOODWARD OF NEW YORK: Mr. Woodward graduated from Harvard University in 1898, was admitted to the New York Bar in 1901 and has since that time been connected with the Hanover National Bank, serving as its president since 1910. He is director of a number of banking and industrial corporations, a trustee of various charitable institutions, and has served as a Class A director of the Federal Reserve Bank of New York since its organization. Mr. Woodward has repeatedly stated to the committee his conviction that elections for Class A directors should be rotative, and it was only after considerable urging and an agreement by the committee that it would express his view that he has permitted the committee to suggest his name as a candidate. The committee has decided to suggest no other candidates for the Class A directorship because the intimate knowledge of its affairs which Mr. Woodward has gained is of particular value during the formative period of the bank's development. Furthermore, Mr. Woodward has held the office of a deputy governor of the bank since its organization, and during the temporary absence of Governor Strong on account of ill health the committee considers it of importance that the bank should be able to retain his counsel and advice. The committee in reaching this decision has also had in mind the fact that Mr. Woodward has not yet served a director's full term of three years. FOR CLASS B DIRECTORS. NEWCOMB CARLTON OF NEW YORK: Mr. Carlton graduated at Stevens Institute of Technology in 1890. He was managing director of the British Westinghouse Electric & Manufacturing Company in London, 1905-1910, and since 1914 has been president of the Western Union Telegraph Company. He is a director in a number of industrial and railroad corporations and a trustee of Stevens Institute and Columbia University. EUGENE H. OUTERBRIDGE OF NEW YORK: Mr. Outerbridge is sole resident partner of the firm of Harvey & Outerbridge, import and export merchants, and is managing director of the Pantasote Leather and Agasote Millboard Companies. He is president of the Chamber of Commerce of the State of New York. He is a student of banking affairs and was an active member of the special committee of the Chamber which reported on the Federal Reserve Bill after its introduction in Congress. HENRY R. TOWNE OF NEW YORK: Mr. Towne was educated at the University of Pennsylvania. He was president of the Yale & Towne Manufacturing Company form 1868 until 1915, when he became chairman of its board of directors. He was president of the Merchants Association of New York 1908-1913, and has served as director of the Federal Reserve Bank of New York since its organization. Mr. Towne has requested the committee to state that while not seeking reelection, and indeed preferring to retire, he is willing to accept reelection if in the opinion of the member banks his continued service in that capacity is desirable. Respectfully submitted, HENRY BURDEN, 2nd, Chairman, F. N. BENHAM, JR., JOHN D. EVERITT, JAMES H. PERKINS, B. E. SMYTHE, Secretary, Committee. 0 FEDERAL RESERVE BANK OF NEW YORK October 31, 1916. 7y dear Governor! Last week, with the trouble developed by the action of the Federal 7leserve 'oard at -ashington in re French acceptances, was a strenuous one, 7r. Curtis returning to the bank Saturday morning, but 7r. Jay remained until Sunday, taking a horseback ride to overcome the effect of the suffocating and depressing air of the city and the particular environment in which he was precipitated for a few days. Yesterday noon he went up to Utica to make an address before a few bankers there and will not return until to-night in time for the directors' meeting to-morrow. I had a telephone conversation with Governor Harding late yesterday wcfternoon and enclose a copy of my letter to him confirming the same, which Ives you the facts. Messrs. Kent and Hemphill thought that if member banks were permitted to accept up to e20,000,000. with what they could place with State banks, trust companies and individuals they night work out of it satisfactorily. 'le will try and arrange a meetinc between 7r. Kent and some or all of the governors to-day at the meeting which is to be held here in New York, thinking that 7r. Kent will put the governors ri-ht as to the general situation from the standpoint of the pr,actical handling of these acceptances which are developing so rapidly. Yesterday I interviewed 7essrs. Hepburn and '"i,;gin of the Chase and Clarke and 'Bennett of the .Anerican Px. in regard to whether they had any criti- cism to offer as to our handling of the acceptance business, our rates, etc., but incidentally directed the conversation so as to draw out from them without Benjamin Strong, Esq. FEDERAL RESERVE BANK OF NEW YORK 10/31/16. seeming to make it a pointed question, whether they thought it advisable for the Federal Reserve Bank of New York to purchase in the open market acceptances other than those accented or indorsed by member banks lution). in re Mr. Locke's reso- Hr. Repburn was most emphatic that to restrict it to member banks would be a very narrow viewpoint and action on the part of the New York bank, and that it certainly should be made as open as possible. Me questioned whether we shouldn't possibly have bought more acceptances to have helped out our earnings. The American Ex. people at first were somewhat inclined to think we might discriminate against State bank and other acceptances, but after exchange of views, finally accepted he broader viewpoint of purchasing in the open mar- ket other acceptances, leaving until a later time the question of discrimination against the State institutions. I shall hone to see "r. McGarrah, Mr. Griggs and possibly one or two others before the meeting to-morrow, so as to be primed in case the discussion becomes interesting on the Locke resolution. To-day we are expecting Governors McDougal, Seay, Aiken, Fancher and had expected Governor Rhoads, but I have just received a letter from him stating that he is called to be 'pall-bearer in Philadelphia and cannot be present, much to my regret. e have quite a programme for discussion, among the items the New York bank's proportion of investments purchased, the French acceptance lter, the question of selling more bonds and if so, at what price, and a number of detail questions, a report of which I will endeavor to give you promptly. I shall try to have Mr. T"oodward lunch with the governors to-day. Governor Yarding is to make an address before the Bankers Institute of New York to-morrow (Wednesday) night, which address will be on the acceptance business and the policy of the Board wi-1 be outlined. Fe intimated yesterday /A AL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 3. 10/31/16. that the Poard would send a confidential letter to each Federal reserve agent in re French acceptances and would probably recommend a discriminating rate against finance bills of from 1/6 to 1/4, and I assune that he would class the French acceptances now being put out as finance bills. I shall hope to write you more later, and with this goes my very best wishes. Sincerely yours, enjamin Strong, Esq., 4100.Montview 13oulevard, Denver, Colo. RET/CrD Encs. e741, er-qf ciA.4 )4-7 FEDERAL RESERVE BANK OF NEW YORK November 1, 1916. .7y dear Governor: In the Sunday New York Times, October 29th, you will find an article on Page 8, "Planned referendum of check problems," which I think you should read if not already read. Jerome Thralls of the A. B. A. framed 1111 the questions, I think, and has sent them out to the secretary of each of the State asgociations, asking then to take a referendum vote in their district on the questions submitted. The questions do not seem to be framed to bring out a perfectly fair consideration.and it would seem as though - there ought to be some speech made or paper written or influence sent broadcast to nut up the more favorable side of the collection system. In the :Tovenber 1st Journal of Commerce there is an item, "Reserve Board has new clearance plan," which would seem to have emanated from Willis, in my opinion, but which, as sent out, does not seem to me put in a way to be helpful. I told Governor 2dncher to-day of my anxiety lest this A. B. A. committee evolve some scheme, and if a propaganda was entered into and a big effort made on the part of the small banks, the movement might result in bringing much pressure on Congress and perhaps leading to unwise legislation unless It is headed off. He agreed and said he would call on 77r. Thralls, which he later did, and I understand yr. Thralls stated he would call on us here in the bank and discuss this question with us before his committee takes action. Would you think it wise for me to write to the various governors, asking them to try and reach dFferent members of the .SERVE BANK OF NEW YORK Benjamin Strong, Esq. 11/1/16. committee who reside in their districts? Yesterday we had a very good meeting of the governors, Aiken, Seay, Fancher and McDougal, Governor Rhoads being absent because of attendance at a funeral. With Governor 7cDougal came a renresentative of the First National Bank of Chicago, Mr. Hardenbrook, who made a firm offer to purchase C5,000,000. conversion 3s at 101 1/4 and interest. Farvey Fisk offered to take ",500,000. at 101 1/4 provided they had an option on C3,500,000. more for three months at the same price. By combination of the Scotch, Irish and 7:nglish brains represented by the governors present, negotiations were entered into, result- ing in the governors agreeing to sell C5,000,000. and the First National Bank of Chicago purchasing that amount at 101 1/2 and interest, deliveries one million per week for cash. To-day they purchased an additional C1,000,000., making a total of 6,000,000., and Parvey Fisk agreed to take whatever balance there may be in the pool, possibly C500,000., at this same price and will want the option on any additional amount developing for sale up to January 1st. INS all thought it a good deal to carry through and the governors felt repaid by the extra price secured. Kemel is handling the detail of it. Mr. Jay returned from -Utica last night but not in time to have dinner with the governors at the Biltmore or to attend the theatre afterward. We had a directors' meeting this morning, all being present except you. . Locke did not offer his resolution and told me privately that he had had a long let,er from you and thought it advisable for him not to present it as he did not care much about it evidently anyway. "Ye had a communication from Governor Harding, which Jay will write you about nrobably, in re 2rench acceptances and their suggestion to make a differential of 1/4 to 1/2 of 1% over the rate for pure commercial credits. The directors, however, after a full discussion, did not feel that we Ar.40''' ERAL RESERVE BANK OF NEW YORK 3 Benjamin Strong, Esq. 11/1/16. should differentiate at all at the present time, and I feel strongly that it is the function of the officers of this bank to decide our rates within reasonable limits, based on the credits represented by the bills and denendent upon conditions existing when the bills are offered for sale. The enclosed cony of letter dictated by Governor Harding will explain itself and you can destroy same. Mr. Peabody seemed to be impressed. with the idea that Wilson would carry the State of New York, as he believed the farmer vote, normally Republi- can, would swing over somewhat to 7ilson. On the other hand, the betting in Wall Street to-day _lumped to 10 to 6 on Hughes as against 10 to 9 earlier this week. It is a very mixed situation and opinions differ so widely that evidently it is to be a close election or else politicians are being very much deceived, as'leaders in both parties seem to be under the surface quite anxious. Governor Pancher remained over to-day, leaving to-night, but he was te only one who called at the bank to-day. it is supposed that there will be a meeting lf the governors in Washington about the 20th to 25th of November and if you have any matters that you think should be brought up, kindly advise our genial secretary or me. - Governor Harding is to speak here to-night at the Bankers Institute in re acceptances, and a copy of his address will undoubtedly apnear in some of the periodicals which reach you; otherwise advise us, and we will send on a copy for you. I enclose herewith a comparison of the activities of the bank a year ago and now, which, while not as complete as I hoped it would be when I asked for it, still gives you some interesting information. I think this is enough to weary you on this trip and I will defer ,VEBANKOFNEINYORK Benjamin Strong, Esq. the balance until to-morrow. With kind regards, I remain, Sincerely yol7rs, Benjamin Strong, Esq., 410n 71ontviem Boulevard, Denver, Colo. RHT/CEP Encs. 11/1/16. tY OF TRAWIT g.PARTA4g 40.NTH OY OCT-43i916. 50. OF DAM Oct, 2 3 4 5 6 7 V 10 11 13 14 16 17 -3 .9 20 21 23 24 25 26 27 28 30 31 Total Average lTUB 8,508,640.39 9,036,162.50 8,568,737.13 8,657,646.75 8,577,282.30 7,215,534.63 7,851,438.46 7,706.234.78 9,632,659.62 12,770,717.43 12,643029.87 11,383,961.52 12,918,493.87 9,686,482.43 9,524,090.08 10,469,278.32 8,675,775.12 10,012,091.56 8,859,919.04 9,431,199.44 9,724,758.45 8,736,492.31 7,626.465.96 9,314,625.78 D1YINTLIT0H 27,071 33,342 30,894 31,658 .36 .17 .X1 .03 .43 31..531 9,67AAP,§0 31,552 29,725 39,910 36,355 40,906 48,113 40,922 42,868 38,872 36,845 31,383 29,746 31,253 37,557 3202030,781 31,116 28,158 30,119 34.054 236,807,826.21 857,550 9,472,313.05 34,302 1.50 * 4. 1.44 .01 1.70 .40 1.26 2.27 1.67 .83 .63 21 .15 35 .15 .05 .66 1.87 .40 23 13.48 4. 5.ul .34 FEDERAL RESERVE BANK OF NEW YORK November 2, 1916. ::77 dear Governor: I have your favors of October 27th and 7:essrs. Jay and Curtis are going over your letter to Governor Pallain and we will endeavor to get it off to-day or to-morrow unless we find something in it objectionable, which does not seem at a11 probable. I note your favor to Pr. Miller and Shall enjoy going over it carefully. Personally I have no doubt that we could draw into the bank a con- siderable amount of gold certificates, replacing same with Federal reserve notes, if we were to take the matter up individually with people who we know are interested in the successful development of the Federal Reserve System. Governor yarding in his address last night spoke of the replacing of gold certificates in the rockets of the people by Federal reserve notes Of course, if as a desirable thing to accomplish, if it could be done. the Federal reserve notes could be treate,1 as bank reserves, it would be easy. I think if 7essrs.' Jay and Curtis approve, that i would try this mat- ter out in a small way and see whether we get any results. Governor "arding reached Mew York about 6 p. m., dined at the .0Alpin and left at midnight for Washington, so that Mr. Jay and I did. not have a chance to have any satisfactory talk with him. He made some verbal additions, which modified one or two of the objectionable statements in his address, and I think, taken as a whole, it was very good and well received. -.77 put him on the grill afterward and Same of the questions he handled very well but t-7o or three luestions rut up to him by the foreign exchange men he floundered. 0 ,ERAL RESERVE BANK OF NEW YORK 2._ Benjamin Strong, Esq. 11/2/16. Governor Harding told me that he thaughtimmediately after election the foreign arrangements could be taken up actively, but said that it was very difficult to accomplish anything satisfactorily just at present. I told him that I had not taken the matter up with him direct as you were in touch with him all the time but I did feel very strongly that we were losing valuable time and that we ought to make these arrangements so that the machinery would be oiled, and do it at the earliest possible moment. You speak of the necessity 'yt" looking up the old correspondence and I assume Hr. Curtis has told you that he took the files to Washington with him and I think the matter was put up to the Board as strongly as it could have been done. this matter came up I am personally convinced that it was a good thing that as it did, although the handling of this particular case was most unfortunate except that it brought to the surface the feeling in regard to these accentances, and I think cleared the atmosphere for the future so that such a condition will probably not arise again. It remains to be 41 seen to what extent they killed the goose which lays the golden egg at the present time. Regarding foreign vs. domestic acceptance rate, I think it is clearly understood by all of us that we should not discriminate against the domestic acceptance in the rate, and inquiry made among some of the prominent bankers here this week indicates to me that thus far we have not raised unfavorable comment by our handling of the matter. I cannot tell you how hapny your paragraph about your own condition has made us all feel here. Every report of your gaining in flesh and of your having more strength and better spirits (not alcoholic) gives us new inspiration to tackle the many problems which come to us every reek. If you will just keep on gaining and criticize us all you can, we will stand plenty of hard work and take the discouragement as it comes. e certainly RESERVE BANK OF NEW YORK 3 Blemjamin Strong, Esq. 11/2/16. expect you to be back on this job "as good as ever" and will welcome the day when you can be with us to direct affairs sgain. 77e have been talking about taking up immediately after election the question of bringing the State banks into our collection system and trying to do some other constructive work. We have been somewhat demoralized by the vacations this summer and fall, but now that all the junior officers are back I hope we can find more time for the bigger problems. he Hughes sentiment seems to be growing here in the financial district. Haw it is outside, it is difficult to tell and we mustawait the deci- sion at the polls. If the Comptroller was an elective office, we might secure some results by a vote. -ith this goes my very best wishes. Sincerely yours, Benjamin Strong, Esq., 4100 Ilontview Boulevard, Denver, Colo. RHT/CEP FEDERAL RESERVE BANK OF NEW YORK November 3, 1916. 77.y dear Governor: To-day Jay, Curtis and I had 17,. Thralls, Secretary of the American 7ankers Association for luncheon with us and aiscrssed with him the work of the committeeCf the American Bankers Associatioj twenty-five in number, of which Mr. Lyford of 7'aver1y is a 7ew York representative, which cummittee has in charge the legislation pertaining to the collection system. 71r. Thralls indicated that he had prepared the questions in the article to which I called your attention in the :Tew York Times known as the "planned referendum," and he statea that already the State secretaries were sending out these questions for a referendum vote. Fe stated further that the questions were not drawn in the way that he would naturally have nut them e7cent that he knew the temper of the member banks and wanted to have questions propounded of such character as they would answer. He proposes to go to r:ashington next week to discuss the matter with the Federal lieserve loard and others, and later after he has compiled his information, some of which he has asked of us, he proposes to call his committee together. - It is too late to change the form of question pro- pounded, so we had .a _rank diScussion and will try and keep in touch with him. He feels that the collection department should be handled by the Federal Reserve Banking System and that additional clearing houses or branch collection departments should be installed in places like Cincinnati, Pittsburgh, etc., to insure more direct collections. Fe further feels that.the member banks should be authorised tp make an exchange charge on checks sent cDERAL RESERVE SANK OF NEW YORK 2. Benjamin Strong, Esq. them as compeneation for the service, time, overhead, etc. 11/3/16. He did not seem to be very clear as to what that charge should be or how it was to be worked out, except that he would have a committee of competent people go into different banks and make an analysis of the cost of this work. There are more acceptances being offered now and they will probably increase. r7e are carrying, as Mr. Kenzel has advised you, $2,500,00. of Brown 7rothers, and I am led to ask whether it would not be well for you to write to T.Ir. James Brown, suggesting that he have his Boston and Philadelphia branches make statements to the Federal reserve banks in those cities and to consider further making a statement which he would permit us to send to other member banks like Chicago, St. Louis, etc., which banks might, if they had these statements, buy their acceptances in much larger amounts. I assume you have the record of the total amount of acceptances of each accenting bank or house, and if you find we are accepting too heavily of any one line, ",:indly advise. :7r. Sabin told me the other day that they had accepted about $60,000,000. of bills at the present time, which I assume is quite largely of cotton just at present. 7e have about t4,500,000. in the New York bank at present of the Guaranty and they are being offered, as well as Brown 7rothers, quite freely now. I am enclosing herewith a copy of our letter to H. Pallain and you wil- note therefrom that we are forwarding now the various pamphlets, books, etc., which you suggested, and -r. Hendricks made up a very good brief on the operation of our transit department. I assume that on receipt of a letter written to-day by .Mr. Curtis, making One or two suggestions, and especially in view of the $20,000,000. item mentioned by you, about which we seem to be in the dark, you will rewrite the letter and forward it direct to M. Pallain, sending us a copy for our files. I trust that we are handling this in a manner satisfactory to you. AL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 11/3/16. Your leter of October 31st came to-day but by this time you probably. have all the detail in regard to the French credit, which caused so much discussion. They are working now on the basis of a. 050,000,000. credit, of which the Federal Reserve Board permits 020,000,00 banks. . to be acceptances of me.lber Mr. Kent made a very favorable impression in his r=.tatements and atti- tude at the meeting of the governors here on Tuesday. Mr. Jay and .1 contemplate making an effort to exchange Federal reserve - notes for gold certificates with some of ourmember banks, who we believe are favorable to the Federal Reserve System. From what I learn from 7r.. Jay, the nominations which are coming in for Class B. director are decidedly in favor of Mr. Towne. I go hone to-night and expect to remain there until Tuesday noon, so as to vote on Tuesday. -Tilson had a very big reception here last night, wdather was favorable and parade big. The situation, however, is a very mixed one and I make no forecast of the result. r!ith hind regards, I remain, Sincerely yours, Beniamii trong, Esq., 4100 7ontview Boulevard, Denver, Colo. FEDERAL RESERVE BANK OF NEW YORK November 9, 1916. y dear Governor: You can imagine the tnnaoil in Wall Street yesterday over the closeness of the electoral vote for president, which was intensified by the conflicting news from hour to hour, first indicating Hughes' and then 7Ilson's election. Regarding the scheme of imposing penalties for deficient reserves, I would state that when .7efferson as at 'Richmond he secured all this informa- tion and at the meeting of the junior officers yesterday the matter was thoroughly discussed and the impression, I think, was that it would be better for us to keep two accounts, a reserve and a collection account, instead of one, but decision was postponed for further consideration and study. I think the French credit matter will come out better than 7:e figured and believe that after all the discussion of the question will lead to a better understanding and more care by those who handle the accentances in the future. Our bills discounte now are running about one million and our in- vestments keep about the same but are gradually running off. I regret that the Federal Reserve Board ruled as they did in regard to the 7echanics apnlication, as there is a demand at present for dollar exchange and personally I cannot see why'Italy, France, England and Russia should not be able to put into effect the machinery necessary, as well as South American or other countries. . I assume that you will keep in touch with what legislation in Con- session, and it might be helpgress you think is essential for this winter's FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 2.ot 11/9/16. 44, ful to us if you will write just what you contemplate attempting, so that possibly we might contribute a little along the same lines when some Gf the Federal Reserve Board or representatives in Congress can be reached from this end. After discussion with Mr. Jay, who is laid up for a couple of days with bronchitis, I shall write to a few bankers up the State, and as soon as possible Mr. Jay and I will visit some of the city bankers to discuss the substitution of Federal reserve notes for gold certificates, after which we will be in a better position to know whether there is any possible development worth while along these lines. Of course, if Congress will make the Federal reserve notes reserve, then our accunulation of gold will be simpler. Rave you any suggestions to make to us in regard to the State Department, now that election is over, taking up the foreign relation matter? I should think you might write to Governor Parding and possibly !7r. Delano and others to see if they will not take the matter up at once. Mr. Warburg was here on Monday and seemed strongly to feel that we shoUld differentiate against finance bills in our rates, and we shall bring it before our directors next Wednesday, although from my standpoint I should not be very particular about. developing this differential just now. I an glad that you are enjoying such fine weather and hope that you will keep out in the air and receive the benefit. of it. we are rendering a statement to the Nederlandsche Bank up to October 1st, .showing the charge for the first three months at 1/20 to be 15,704. and the later charge at 1/10 per annum ,1,597., the total, with telegrams and cables, of :!!7,707. The balances are still running against us heavily and we will be obliged to transfer e,15,000,000. in gold to the Gold Settlement Fund to-day to keep up our reserve there. I think we shall be forced to adopt :Tr. FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 11/9/16. Gibney's plan for pooling the holdings of United States notes and silvers, or work out some plan to hold our gold. I enclose statement of "Due to" accounts as of the close of business November 8th. To-day :Tr. Snithers has invited Messrs. Jay and Kenzel and myself to lunch with Mr. Darling of the London Join Stock Rank, who is at present in this country for a while. Mr. Jay, being sick, will not be able to attend. I think I told you that the governors' meeting would be held in the second week in December, and it would seem to me that we should at that time try to get a more equitable division in our investments and also that we should have some plan to suggest which will enable us to hold our gold in New York rather than have it slip out through the other banks into circulation. Thinking that this is enough for you to absorb in one day without weariness, I will stop and try and give you more to-morrow. 7)e have the annual meeting of the trustees of Cornell University in Ithaca on Saturday, and I hope to go up Friday night to attend that. rrith kind regards, I remain, Sincerely yours, 7enjamin Strong, Esq., 4100 Montview Boulevard, '`enver, Colo. RFT/CET3 Encs. ,. S. --- Mr. Hendricks has been away for a couple of days attending a funeral but is to go to Rutherford, N. J., to-night to talk to a group of bankers on the collection system. Next week he and I expect to attend a meeting of the Essex County Rankers at Newark, giving them informal talks. Do you not think it wise, when we have a request from any group of FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 11/9/16. 47)=1 bnflkers in our district for someone to talk to them on some phase of the Federal Reserve System, that we should attempt to do so, and is it not all right to let Lr. Cann or :;:r. Hendricks or Hr. Kenzel go out occasionally to talk on some particular phase of the operation of the system with which they are familiar? R. H. T. FEDERAL RESERVE BANK OF NEW YORK aTATENOT OF "DUE TO" ACCOUNTS At the Close of Business Nov. 8, 1916. DUE TO Boston Philadelphia Cleveland Richmond Atlanta Chicago St. Louis MInasapolis Kansas City Dallas San Francisco RETAINED 11,474,402.30 11,474,000.00 4 4 8,398,624.77 8,398,000.00 5,114,602.43 5,114,000.00 6,002,000.31 6,002,000.00 1,772,494.55 1,772,000.00 5,086,442.00 2,000,000.00 1,008,000.00 2,810,866.89 2,810,000.00 1,035,274.52 500,000.00 3,475,000.00 3,600,918.73 3,600,000.00 2,500,000.00 nrcusTmENT ACCOUNTS. Minneapolis Philadelphia St. LOUIS San Francisco 368,020.74 1,237,910.04 250,000.00 485,178.93 668,595.72 153,843.06 499,118.71 4 3,662,667.19 All of these balances have been retained by us. 535,000.00 3,475,652.81 DUE TO OTHER FEDERAL RESERVE BARKS Clevaand Dal/as 3,065,000.00 1,008,902.02 6 49 779 181 33 .Amton REPORTED 47,273,000.00 BULLION CHECKS RECEIVED BY THIS BANK THROUGH THE CLEARING HOUSE FROM OTHER MP.Mad,R BANKS WHICH WERE CASHED INSTEAD OF CHARGED TO THE GOVERNMENT'S ACCOUNTS ON OUR BOOKS. 1916. February 4 2,887,000. March 2,470,000. April 1,632,000. May 3,697,000. June 9,084,000. July 8,446,000. August 6,154,000. September 2,773,000. October 17,304,000. 054,447,000. FEDERAL RESERVE OlOrrapondenc BANK OF NEW YORK Date_November_B., 1916. Subject: ______Dia_erence___ka. count. Treman romq4_11. Jefferson COPI In response to your inquiry of November 3rd, I submit the following summary of thedifference account," as at the close of business November 4, 1916: SHORT OVER $40.40 Over previous ) 1 to From July 15th to,31st " Aug. 1st to 24th 0 69.14 0 109.54 Block System 41,041.59 Short since instalation of Block System Aug. 25th Sept. 1st Oct. 1st 1st Nov. " ) " " " ) ) ) 232.69 594.65 193.01 21.24 to 31st to 30th to 31st to 4th 0 109.54 Net short 01,110.73 - _,001.19 There are some big differences which occurred prior to the instalat ion of the block system of proving, among which the following are the largest: SHORT July 17th " 18th " 28th 4 OVER 254.09 1,306.09 366.14 July 19th " 20th " 22nd Aug. 24th 4 273.61 472.69 1,058.27 326.59 The net result of these differences is a shortage of 069.14 from July 15th to July 31st and an over difference of 0109.54 from August 1st to August 24th. Since the return, on August 25th, to the block method of FEDERAL RESERVE Correspondence BANK OF NEW YORK Date Difference Account. Subject: 4411Lgreman November 8, 1916. ARLAL,Jefferson COPY -2proving, the transit department is proving very much better. The fol- lowing large differences are the only ones that need any attention: OVER SHORT Aug. 30th Sept. 8th Sept.18th Oct. 6th Oct. 9th 4232.98 405.80 104.93 278.56 0.00.62 We found that in the operation of the transit department, in the early days, checks were sometimes left over from one day to another, in the rack, and that short differences of one day would be offset by While we cannot determine that some over differences on the next day. of these differences prior to the return to the block system on August 25th were caused in that way, the differences so nearly offset each other that it would seem to be not worth while to attempt to clear them from the books. I think we should make someeffort to locate the dif- ferences since August 25th. The men who have been engaged in this work have lately been spending their time on the ledgers, clearing up old differences occurring during the early stages of the collection system. They are making good progress, and as soon as they have cleared up the differences in the ledgers we shall have them return to the transit work and find the differences since August 25th. I do not believe that it will be possible to estimate the time that will be necessary to clear up all the old "shorts" and "overs," but I amyleased with the progress that is being made. FEDERAL RESERVE BANK OF 1F0k, ia 494 November 10, 1916. dear Governor: I have yours of Kovenber 6th and read extracts at the officers' meeting to-day, which meetings we are now holding again. I have asked Mr. Curtin to send you the text of the application covering the accentance credit granted the Bank of Comnerce for the purpose of carrying hides for German account in Argentine. "e had some discussion yesterday as to whether finance bills drawn, for instance, by a London stock bank on the National City Company would be eligible for purchase by this bank and Mr. Curtis said they would not, but a letter received from Mr. Thrburg this morning stated that such finance bills, originating in countries where the trade custom permitted such and in which the demand for dollar exchange would naturally arise at the present time, are eligible for purchase under the recent ruling. Governor Aiken expects to be here next Tuesday or 7ednesday to discuss various rates with us and we will go over with him the question of the American Bankers Association committee in re the collection system. This morning's pacers generally concede the election of 7ilson but the stock market has shown decided strength, and I hope that the result will not be detrimental to general business. Personally I am hopeful that there will he a Republican Mouse with a Democratic Senate, if the president is to be a Democrat, as we will then have more conservative and better digested legislation, I should think. Knowing that you are interested in the "difference account," I am enclosin7 a renort under date of November 0th from Mr. Jefferson, in response FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 11/10/16. to my request, and think that it should prove interesting to you. I had a talk this week with Mr. Sailer concerning his salary, which you will recall is at !lo,00n. whereas when he came he stated that he would like e12,000. He has been here since July 1915 but told me this week that he was leaving the matter entirely in the hands of the directors, and I suggested that I would report the matter to you but assumed that inasmuch as it was only six or eight weeks to the first of January when the officers salaries would be reconsidered by the board under an understanding to that effect, it might be well to let the matter now run along until that tine. Have you any suggestion to make for my action in this matter other than what is above outlined '' You will have the latest bank gossip in the office report sent you to-day, so I will not go into detail further. Be assured that we all maintain our very great interest in your life and improvement and want you to keep us posted from time to time as to your progress for the benefit, not only of the officers, but of your many friends who inquire of us. '-ith kind regards, I remain, Sincerely yours, Benjamin Strong, Esq., 4100 7ontview Boulevard, Denver, Colo. :/g70 FEDERAL RESERVE BANK OF NEW YORK 40k, November 13, 1916. My dear Governor: Mr. Jay has been confined to his house for about a week and this morning I called on him on my return from Ithaca, finding him still in bed with a bronchial cough, which is annoying. Fe hopes to be around, however, some time this week. Ne showed me a letter from Mr. 7arburg, in which was stated that a copy was being sent to you, in re finance bills. in view of the differences of opinion, it would seem that it must be a matter of educating the Federal Reserve Board and Congress to see the wisdom of extending the privilege to certain ther countries, leaving it to the officers of the Federal reserve banks to 11e their discretion in the buying. I assume that you will formulate a brief or in some way discuss the matter with Zr. '"arburg and the hoard, but so long as the regulations are as at present, we must be governed accoOingly. I heard indirectly to-day that there was serius consideration, if mot decision, at "rashington, rn favor of issuing !!%5. gold certificates. earnestly hope that this report is not true or that the action can be headed off and an writing to 7r. '-arburg concerning this. 7rUt The Assay Office is ready to take the gold which cane to us from J. Co. but would it not be well.for us to hold on "to it Somewhat longer, in fact as long as we can? Please advise. I am sending out to-day a number of letters to different bankers for Federal horn I know personally in regard to the gold certificate exchange reserve notes. matters. !Ir. Hendricks has given me a brief on the clearing house FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. ....... 11/13/16. I note that you have written Mr. Brown and will await further advice from you. I will go over the matter of the standing of the different banks with Mr. Kenzel and advise you later. Mr. Jay's illness unfortunately is holding up some of the more important things, as it keeps the rest of us busy with detail. We will, however, 'ry and keep matters going along and expect to have a meeting of our directors on Wednesday. earnestly hone that you are improving all the time and am glad to learn from your letter to 7r. Curtis that you are acquiring a knowledge of the French language. ith kind regards, I remain, Sincerely yours, Benjamin trong, Esq., 4100 Montview oulevard, Penver, Colorado. CO.A. reYtt1piqtet, 72'11 /41" WIrriA.41 gicatt,14... 714-4 1/11T/CEP /47 /1/'°' )-(D7tA,reo 0A/vett...,.,1.14 rif-144"a4 °' (i4FAAMA4ri FEDERAL RESERVE BANK OF NEW YORK )(47' Naki3 November 14, 1916. 7y dear Governor: Jay is somewhat better to-day but still confined to his house and will probably not be out before the latter part of the -ieek. I an enclosing one or two sheets from the ticker this morning, which may be of interest to you. You will note that the French credit has been closed up and quite a number of out-of-town banks participated. Tegarding Mr. Glass, I assume from what I have heard that if 7:r. McAdoo retires, it will be in order to engage in business for more money. I enclose copy of a letter being sent to-day to Governor 7arding by "r. John 7. Gardin, in which I thought you might be interested. I note what you say about finance bills and assume that there is nothing for us to do under the present regulations. but to follow instructions. In a letter from Governor }larding to Mr. Gardin he wrote, "Though there is no necessity for requiring that a draft should be connected with some specific exportation or importation of,goods, nevertheless the accepting bank should be Tare that the proceeds of the draft are to be used for the Purpose contemplated by the Act." Would it not be ,)ossible for the Federal Reserve Board to per- then, mit of finance bills being accepted by member banks and our purchase of not made then the even if they do emanate from countries where trade usage has satisfied, 7eneral custom, requiring of the accepting member banks that they be before accenting, that the proceeds are to be used for connercial purposes as indicated by the Act. If some arrangement of this kind should be made, it but at the would seen as if it might help develop the acceptance business, same time maintain proper restrictions as to the amount. .ZDERAL RESERVE BANK OF NEW YORK I enclose Benjamin Strong, Esq. copy of a report made to me at 11/14/16. mu request that the officers of the bank should consider the nroposed plan of /Ir. Gibney at Washington for the creation of a silver and legal fund, which will be of interest to you, I think, whether you agree with the conclusions or not. At the meeting of the directors to-morrow I shall bring up the question of increasing our acceptance rates a little, say 1/8 to 1/4, as I believe that by so doing we will not interfere seriously with the development of the acceptance business, as our rates seem to be below the market at the present time, and personally I think it is time that we should take this action, as a slight warning signal against undue expansion, as I find the country banks are in many cases well loaned up, having taken up the slack caused by the reduction of reserve requirements; and upon asking the opinion of T7r. Alexander and r_r. Hepburn, I find that they think it wise and that the conditions justify it. I expect to talk with Hr. Vanderlip as soon as I can reach him by phone. If the action is taken, I hope that you will feel that we are acting wisely. In view of the report that the government is considering the issue of 5. gold certificates, I hope that you will be able to work up your brief on the currency problem. Governor Aiken has written me concerning the fiscal agency matter, :closing letters from Fancher and 7a1burn, and I think we will arrange a meeting in Thshington prior to the Conference of Governors for a report. It seems to te that Judge Elliott's suggestions to the effect that the national banks be used_as depositaries for customs and revenue and the Federal reserve banks as agents for the disbursements is apparently sound, so far as my limited knowledge goes. Have you any suggestions otherwise? I find that in the year between rovenber 11, 1915-1916, the deposits in the Yew York clearing house bnrks have increased ::'253,000,000. while loans have increased :532,000,000. There is nothihg new in the clearing house rela- 110 FEDERAL RESERVE SANK OF NEW YORK Benjamin Strong, Esq. 11/14/16. tions as yet. 7e shall discuss to-morrow the advisability of our buyinf; any more 2'/ bonds with the idea of converting them January 1, 1917, or soon after, if they can be bought between 99 and 1n0. What do you think? 7ith kind mgards, I remain, Sincerely yours, AAW Pen.lamin Strong, Esq., 4100 Montview Boulevard, Denver, Colo. RHT/CEP Encs. Later --- I just talked with Mr. Vanderlip about the raising of our rates, say 1/4%, and he said that he thought it was wise to do so but that probably the market would not follow us just at present; on the other hand that we would be taking the right step in anticipation of what he felt would surely come later. That the directors will do to-morrow, of course, I do not know, but I knew you would be interested in the opinions of these men as to the wisdom of this proposed action. R. H. T. FEDERAL RESERVE BANK OF)/ November 16, 1916. My dear Governor: We had a long directors' meeting yesterday, lasting until after one o'clock, all being present except Mr. Starek, who, I understand, has been ill. The board authorized the purchase of one million dollars United States e bonds but put a unit of 99 7/8 on same. The narket is about par but we may pick up some at the price, with the idea of converting them in January. I have been thinking for some time that our acceptance rates were somewhat too low and that we could advance them 1/8 to 1/4 profitably, and after consulting with the three bank presidents and Mr. Woodward, as I wrote you, I brought the matter up yesterday and the directors authorized an increase of 1/4 of 1%, making our base rate 2 3/4% for member bank acceptances, ninety days, with the usual differential of 1/4% for member bank indorsements. are bidding 1/87 higher for non-member bank acceptances. 7e had a long discussion over the differential that Mr. Warburg suggested we should place against the "renewal credits," and his letters to 7r. Jay were read to the board, but I think the opinion of those who felt prepared to express an opinion, like Mr. Woodward and Mr. Peabody, was to the effect that we should not make any differential just at present but that possibly our advance in rates of 1/4 of 1% would clear up the situation so far as our accumulating too large a percentage of the renewal credits was concerned. The matter was finally referred to the two deputy governors (Woodward and Treman) with power to fix a differential if in their judgment conditions demanded it, and I have so advised Mr. Warburg. FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 2. 11/16/16. ILA Mr. Darling of the London Joint Stock Bank came in yesterday with Mr. Smithers and asked about the eligibility of certain kinds of bills, being particularly interested as to whether bills drawn against and accepted by a member bank here, provided the proceeds were used for the import and export of goods, would be eligible. So far as we could judge, he was considering the establishment of revolving credits here but did not so state definitely. This morning I had a talk with Mr. Gardin of the National City Bank, suggesting to him that he, Mr. Kent, and some others, representing the Mechan- ics & Metals, Chase, or such banks as accept, should go down to Washington and have a frank talk over the whole subject of the development of the open market for acceptances and that would give them an opportunity for discussion over details and rules and regulations pertaining thereto. a good idea and would see if it could not be done. He said he thought it If they do it tactfully, I think that they would do much good and it would help the situation all around. I am sending you a copy of my address on "Trade Acceptances," which the hardware association sent to all of its members, and one or two other associations have secured sufficient copies for their membership also. I wrote to about thirty banks up-state about the exchange of gold certificates for reserve notes but have not tackled the city banks, as I am waiting for Mr. Jay to return tc the bank, which I hope he will do Monday. Every bank, so far as I have heard, has taken kindly to the idea except one and he is an individual whom I know and he has his peculiarities. It raises the question whether if this should work out satisfactorily, it would be wise to send a circular to every bank in this district, sugcesting that this be done and that they send us gold certificates for reserve notes. I am enclos- ing copy of the style of letter I am writing to them and will be glad to have your views on the subject. To-night Mr. Hendricks and I are to appear before the Essex County, N. J., FEDERAL RESERVE BANK OF NEW YORK as_ Benjamin Strong, Esq. 11/16/16. bankers for an informal talk on the operation of the Federal Reserve Act, and I hope we may give them a little but I have been so busy that I have had no time to prepare any address. Mr. Curtis will write you about some new developments concerning Mr. Starek, who has not attended the last three of our meetings. I advised Governor Aiken and Governor Rhoads yesterday of our advance in acceptance rates of 1/4% and Aiken telephoned me this morning that he very much approved this action and that he would come over to-morrow to talk over the differentials and other matters with us. I have invited Governor Rhoads to come also, although I have a meeting of the finance committee of Cornell University at the bank; but I can arrange to see Aiken and Rhoads, as I think it is essential we all work together so far as we can. Evidently we must expect that we will not be able to purchase as many bills for a time but I believe that on the whole, from the comments made by different ones around town, our advance of rates is now justified. I enclose a memorandum of our gas tests on the concrete work for the vaults. We are pushing the matter and hope to have the vaults soon after January 1st. We discussed yesterday printing Mr. rarburg's address at Kansas City but the consensus of opinion was that it having been published in the American Bankers Association Journal and in various other ways, it was rather late now for our bank to attend to it. I am sending you herewith a brief prepared by Mr. Kenzel at my request, in answer to your letter about some of the acceptances we have nurchased. Regarding the Brown Brothers acceptances and the limit placed upon the purchase of private bankers' acceptances, the matter was discussed yesterday and it was thought advisable to keep the limits about as they are now, pending further developments. A. FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 11/16/16. I shall be glad personally to have you advise me as to how you are getting along, and with lcind regards, remain, Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. EHT/CEP Encs. VT Report of blau is tests held at the X-G Cutting & Welding Company's yard, 556 Went 34th Street, New York City, :Alivember 13, 1916, on samples of concrete. One sample, one yard square by one foot thick, composed of a four to one mixture and trap rook. Gas applied at 537 p. m. " off Heating Jledge & Chisel to Cutting 556" " 19 minutes 5167 p. m. 611" 17 minutes Hole made 6 in. by 10 in, and 5 in. at the deepest point approximately 133 cubic inches in 36 working minutes, or about 3.7 cubic inches the minute. Second sample similar to first except that instead of trap rock, glasL, slag was a component. Gas applied 6:17 p. m. " off leating Sledge & Chisel to Cutting " 18 minutes 6:36 p. m. 6;52 sv 16 minutes Hole made 12 in. by 12 in. and Zi in. at deepest point - about 168 cu. in, at the rate of 4.9 cubic inches the minute. While the glass slag sample seemed to out away faster on the surface, it was appreciably noticeable that the cutter could not gain the depth in it that he did In the trap rock. PIUSENT: L. F. 3ailer, L. H. Hendricks, Zenzel, J. D. Higgins, H. V. Cann and H. M. Jefferson M6,37 e)ffice Correspondence To FEDERAL RESERVE BANK OF NEW YORK DateNovember 14. 1916. Mk. Treman From Subject: Er. Strong's letter of Vov-Bth- Kenzel. Referring to the items that Er. Strong has remarked in his letter of November 8th, I beg to report as follows: FOURTH ATLANTIC NATIONAL BANK, BOSTON. This is a consolidated institution as the name indicates. Capital ,1,500,000., surplus ;1.,726,000, deposits slightly in excess of ;20,000,000, total resources 424,858,000. They are acceptors under the new Brown credit. Mr. Aiken has checked the name for us, and on October 25th wrote: "I enclose herewith copy of their last published statement. This bank is one of the smaller banks and specializes in the market men's businesses. It is, I believe, a conservative and well-managed institution. We have bought their acceptances in small amounts and at the same rates as those of the larger banks." BANK OF CHARLESTON, N. B. A. The directors November 3, 1915, authorized a line of this name of 4100,000., which we purchased shortly thereafter. At that time the bank was trying to establish its name in New York on practically the same rate as the bills of the larger New York banks. We declined offerings at the a-3 low rates and have not ought the name until this fall when it came at 2 3/4%. ANGLO SOUTH AMERICAN BANK. This bank particularly active on the west coast of South America is apparently doing an increasing and profitable business. checked up in this country and also abroad. We have had it The foreign comment was favor- able applying to the institution as at present organized but referred to antecedents that were not altogether prime. Their acceptances that we have pur- chased are bills drawn by the Calumet & Hecla Mining Company on exports Misc-37 Office Correspondence To From FEDERAL RESERVE BANK OF NEW YORK Date Nov. 14, 1916. Treman Subject: E. R. Eenzel. -2- of copper from Chile and are indorsed by either the Girard National Bank of Philadelphia or the Corn Exchange National Bank of Philadelphia. The name also appears as indorser on a great many bills originating in Valparaiso which are drawn to the order of the Valparaisian branch. MULLER, SCHAIL & COMPANY. We have taken this name only in very small amounts with banking indorsements. The Bank of the United States has indorsed and sold us most of this name now held by us at from 3 1/4 to 3 1/2% discount. NATIONAL CITY BANK. We get none of this name from or through the City Bank, which, I understand, buys all of its own paper that it can, and I have never heard Of it disposing of any of its bills to any one. BALFOUR, WILLIAMSON & COMPANY. We have no statement of this concern but all of their bills that we have purchased are well indorsed, the line at the present time being: 497,000. 29,000. 64,000. Indorsed Chartered Bank of India, Australia & China, f Hongkong & Shanghai Banking Corp. International Banking Corporation. A.2. KLINGSMITH This man has for a long time been a nominee for the Bank of New York, N. B. A., and more recently assistant cashier of that institution. We have had his name only on paper that has come through the Bank of New Jffice Correspondence To Mr. Treman From E. R. Kenzel. FEDERAL RESERVE BANK OF NEW YORK Date Nov. 14, 1916. Subject: -3- York either directly or indirectly and is also indorsed by the Bank of New York or indorsements guaranteed by them. MERCHANTS NATIONAL BANK, WORCESTER, MASS. We have had this name only as indorser on acceptances of the First National Bank of Boston, which come to us from the Federal Reserve Bank of Boston. F. D. V. TEIPAIR. This man is not of Paris but of New York. He is in charge of the commercial credit department of J. P. Morgan & Company in New York and is the drawee of a great many of the bills drawn under their syndicate credit to the Paris & Orleans Railroad. ERVIWB. FEDERAL RESERVE BANK OF NEW YORK November 17, 1916. et612; gAON My dear Governor: a'J1V I have yours of November 14th and regret that they did not reach me a few hours earlier, as by appointment Governors Aiken and Rhoads were here for a meeting this morning and fortunately Mr. Tarburg dropped in unexpectedly and I invited Mr. 17oodward to come over, so that we had, with Mr. Curtis, quite a satisfactory meeting and discussion of the renewal credits, our rates, etc. Governor Aiken cane with the idea of trying to persuade the New York bank to make our differential for member bank indorsements 1/8 instead of 1/4 but while Mr. Warburg agreed that ultimately that would be the proper way, evidently Governor Aiken stood about alone in his contention for action at the present tine. We had quite a discussion over the renewal credits and secured Mr. Tarburg's views as to our general attitude toward them, which seemed to me a reasonable one, but M ;Curtis will write you more in detail, as I was obliged to leave the conference before they had finished, having made an ap- pointment with the finance committee of Cornell University, who net in our directors' room for a meeting. rvidently our raise in rates has not made any material difference as yet except to have received commendation on all sides that we had taken this action, and to-day we secure a small piece of Bankers Trust Company domestic acceptances on a 3% basis. I had an appointment to-day with Mr. George Blumenthal of Lazard Freres, who called with the idea of making arrangements so that the acceptances FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. of his firm would be eligible for purchase. 11/17/16. I told him that if he would kindly prepare a statement and submit it to Mr. Jay and myself next Wednesday or Thursday, after Mr. Jay returns, I thought there was no question but that we could arrange the matter satisfactorily to him. After discussing the acceptances business, into which he said he was entering very conservatively to the extent of about 1,500,000. at present, he vouchsafed the statement 4.% that our rates had been too low and that he thought our raising them would be advanta-mous, and also stated that he was sorry to notice in the development of the acceptance market that some acceptors bought their own acceptances, which he thought was very bad banking practice. I noticed Mr. Darling of the London Joint Stock Bank with Mr. Kent at lunch to-day and I assume Mr. Darling is discussing some arrangements for credits for the London Joint Stock Bank. I think Governors Aiken and Rhoads felt very well repaid for their visit here and that the conference with Messrs. Woodward and Warburg helped all of those who participated. Mr. Hendricks and I spoke at Newark:, N. J., last night before some- what over a hundred New Jersey bankers from Essex County. They treated us very nicely and I think we each talked about twenty to twenty-five minutes possibly. Then they asked Mr. Hendricks a few questions about the Collection Department. 0* course it is always difficult to estimate impressions, but we felt that possibly we had given them a little light on the operation of the reserve banks and the function of the Reserve Act. There does not seen to be any end to the advance in commodity prices, especially those affected by the war, like cotton, copper, steel and iron products, etc., and I assume we must expect a continuous upward movement so long as the war lasts. Mr. Peabody told me this week that he understood from good sources that feelers were being put out and that possibly President FEDERAL RESERVE BANK OF NEW YORK .. Benjamin Strong, Esq. 11/17/16. Wilson would try and ascertain some terms on which peace might be worked out. You can take this for what it is worth. I understand Mr. Curtis is writing you two or three volumes to-day and so I will not send more than one as a contribution to the good cause. Doctor Treman is somewhat concerned, I find, for fear that in your great interest in the bank and its matters you will be led into over-work and side-sterping the everyday plain duties which you owe to yourself and to your friends to build yourself up in every way. If you think it necessary to serve an injunction upon you, let me know, so I can consult some good attorney out there. If you are bound to keep the peace and live rationally, we will accept your statement in the matter, without proceeding further. I hope to spend to-morrow and Sunday in Ithaca but to be back on the job early Monday morning. "7 very best to you. Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colo. RITT/CM) FEDERAL RESERVE BANK OF NEW YORK 4/ 4i *r$fir November 20, 1916. My dear Governor: I spent Saturday and Sunday in Ithaca and am now back on the job. Yr. Jay also showed up this morning for a half a day and seems to be improving each day but will probably only put in a half day at the office for part or all of this week. We are getting quite a large amount of acceptances, buying to-day some eight or nine thousand, and our total amount, as you have probably noticed, is something over $32,000,000. (high water mark.) The responses from member banks as to their willingness to cooperate in sending us gold certificates are very pleasing and in a letter from Mr. Warburg this morning he expressed the thought that it would be a good thing to send a circular to all the banks in this district, but Mr. Jay and our astute counsel, in discussing the matter this morning, thought that it would be better for me to continue sending personal letters to each bank, so that within a couple of weeks We will have circularized them all, and we can reach some of the larger banks in the city by personal interview. Mr. Curtis is sending out a notice to the other banks, requesting a conference of the auditors and transit men in the middle west about December 4th, and should you thinl,: of any matters which you would suggest to be considered by then, kindly advise and we will have Mr. Jefferson look after I will endeavor to have the governors prepared to vote upon the questions as outlined in a general way by you in yours of November 14th but =SERVE BANK OF NEW YORK 2 Benjamin Strong., Esq. 11/20/16. would like to discuss same with my colleagues as to the form of letter, etc. T!essrs. Jay and Curtis hope to go up to New Haven for the annual foot- ball game on Saturday, and the results of the games played Saturday last (Yale beating Princeton and Brown beating Harvard) only adds zest to the earning conflict. Do your best to keep in good spirits and if there is anything more that we can do to aid, do not hesitate to command us. With kind regards, I remain, Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/CEP FEDERAL RESERVE BANK OF NEW YORK November 22, 1916. My dear Governor: Vie had another call this morning from Mr. J. F. Darling of the London Joint Stock Dank, he making further inquiries as to the kind of bills which would command the best sale in this market and those which would be eligible for purchase by this bank. He was asking particularly as to how we would compare acceptances of the Chemical National and the Bankers Trust Company, and we advised him that af the present time there would be a 1/8% differential in favor of the Chemical National accertances. I asked Mr. henzel to give :Ir. Darling a list showing the rates now prevailing, with their differentials, for his guidance, the same, of course, being subject to change without notice, and assured Mr. Darling that we would be very glad to give him any information pertaining to our acceptances or other matters, which he might desire from time to time. We had an inquiry from the Credito Italiano from Milan under date of October 27th, asking if we are in a position to enter into reciprocal banking relations with them, and I am replying as per copy enclosed. herewith. I an enclosing copy of letter from Governor Yarding to the National City Bank, which has stirred them ur somewhat and Mr. Gardin, I think, will probably go down there this week to see them. That brings ur the question whether there is anything can be done to bring about better relations between the banks and bankers of New York City and the President and other officers of the Federal Government. We must recognize that the President and the democrats will be in power, and it would seem as though a committee of bankers from New York might make some impression FEDERAL RESERVE BANK OF NEW YORK 2, Benjamin Strong, Esq. 11/22/16. on certain people, if they should go down there occasionally and keep in touch with the situation. There ought to be the same cordial relation between the government and the bankers as prevails in other successful nations. I also feel that there should be more frequent interviews between the men who are actually transacting the foreign exchange business of the country and the Federal Reserve Board, and if once a month or so two or three of the foreign exchange men could visit and discuss matters with the Federal Reserve Board, it seems to me it would be productive of good. Have you any suggestions along these lines? I had a letter from Mr. Starek to-day, in which he says, "I have been on annual leave, of which I was greatly in nee erably better as a result. and am feeling consid- I am leaving the city again to-night but ex- pect to return in a few days," but he makes no mention of his taking WO his work again. Are you studying the currency question and do you propose to make any suggestions for legislation concerning these matters at the coming term of Congress? I will ask Mr. Curtis to prepare a memorandum on the liability of * Federal reserve notes being extinguished or reduced. Governor Seay writes that he is working with his committee on the question of investment allotments and Lir. Jefferson is working un a brief to submit to him. To-day we had offered by Bernard, Scholle Co., t300,000. of Brawn acceptances in connection with the Paris-Orleans Railroad, same being indorsed by the Girard National Bank. -hile we were up to our limit of the 'Brown acceptances, after discussion of the same with Mr. Toodward, he thought, and I agreed, that we should buy then, which we did, at 2 7/8. /Kt /4-4A-et 4- ye2-decti tetk.iCa..tt 6te' FEDERAL RESERVE BANK OF NEW YORK 3. Benjamin Strong, Esq. 11/22/16. Ct Mr. Jay came down to the bank Monday but was back in bed again yesterday and has a nurse, he did not follow Doctor Treman's advice) but is better to-day and I have suggested to LIrs. Jay that they go to Atlantic City for a few days before he takes up his arduous duties in connection with the Federal Reserve Agents' Conference December 4th. He probably will be away from the bank, however, for a few days yet. Am I unwise in sending you so much of this detail? will If so, I cut it down, because we do not want to overtax you and certainly to do want you to feel that you are under any obligation to reply in detail except in re matters about which we ask your advice. While ou are absent from us, you are still a great inspiration to us all and we rely very much upon your judgment, and it is a source of great gratification that while you are so far away from us, you are able to give your mature thought and judgment to the important problems which are constantly coming up and which will develop for a while yet in connection with the Federal Reserve System. Realizing as i do hum few men are fitted by natural ability, by training and experience, and by a rare combination, as you, my dear Qovernor, are for this particular work, I hope you will pardon me if I serm to be too persiStent in my urging you to be faithful in doing everything which will tend to improve your health and develop your reserve strength, and to refrain from anything which will interfere with that work, to which you should consecrate yourself. Just be good and give the country the benefit of your rare talents, as it certainly does need you, and there is much yet to be done and we all feel that you are the one to do it. With assurances of my sincere affection and interest in all that FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. you are doing, I remain, Sincerely yours, 67eheeVg>44-41-Lit-1.4-----, Benjamin Strong, Esq., 4100 rontview Boulevard, Denver, Colo. MIT/CEP Enos. 11/22/16. FEDERAL RESERVE BANK OF NEW YORK November 24, 1916. My dear Governor: Your personal letter came in to-day and as I am going home to-night I shall not attempt to answer but hope to talk with Mr. Peabody and Mr. Woodward in the early part of the week and will write you then, but I am perfectly clear in my own mind as to the arrangement the bank should make with you for a continuance of your service. We have had a regular forum on the question of and the mooted question of the "renewal credit" accer just finished of Messrs. "roodward and Curtis and this afternoon with Mr. Jay, who is still at h ly to instruct Mr. Kenzel to continue the p eptances rates ces. Had a meeting 4self, Curtis having talked -le have agreed unanimous- chase of acceptances based on the credit largely)represented in each bi 1 but without making any differential at the present time against the r ewal credits, and that if we are approaching a point where we think w have as large a proportion of accept- / ances in our investments as we can wisely carry, we will raise the rate and regulate future purchases accord ngly. I assume that Mr. Cu is will write 'you more in detail to-morrow but hope that you will telegyaph us, if you get this it time, as to whether you think this is right or riot. We have a meeting of the directors on Tuesday at 11 a. m. With kind regards, I remain, Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colo. RET/CEP 46;vg,4_,ez FEDERAL R RVE BANK OF NEW*K November 27, 1916. 4! Dear Governor Strong: I spent Saturday in Ithaca but returned t41,As morning, as Mr. Jay is still ill although Mrs. Jay has just reported-'t he is better and hopes that he will, by being quiet this week, be recovered to permit of his attending the Federal Reserve Agents' Conference in Washington next week Monday, after which he may go to Atlantic City for a few days before taking up his work here again. I wrote you Friday afternoon the result of our discussions during two or three days, trying to crystallize into a wise decision the various apparently conflicting views as to the handling of the "renewal credit" acceptances being offered, and Mr. Kenzel Sent you, I believe, Saturday morning a brief covering the situation. For myself, I can say that our con- versation with Mr. Smithers and my conversations with Mr. Alexander and NY. Woodward confirmed the opinion that we had better continue handling the acceptances as they were offered based on the credit of each bill, having in mind, of course, all the time not becoming too saturated with then, and in case they should be offered in such large volume as to be in any way a menace, we should raise our rates and continue doing so until we had found a proper level to control the situation. I hope that this action will meet with your approval and that we shall so conduct ourselves as not to have the disapproval of the Thshington authorities. The newspaper discussions about Mr. Glass succeeding Mr. McAdoo were nipped by Mr. Glass' statement, which you probably saw, that he was not a candidate, etc. The general impression here seems to be that Mr. McAdoo of the will consider retiring into business life some time in the early part FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 2,a_ 11/27/16. next administration. The junior officers are expecting to meet to-night to have an informal discussion over matters which will be brought up by the auditor and the transit men at their meeting next week in Chicago. A circular letter from the Federal Reserve Board this morning indicates that they favor having a bond committee to control the purchase, as well as the sale, of government bonds, which to my mind is most essential. I have sent to the various governors a copy of the letter we are sending out to our member banks about transfer of gold to us in excess of their reserve requirements. Governor Seay has responded by making an argu- ment in favor of Federal reserve notes being counted as cash reserves in vault and says, "Nevertheless it is advisable to corral that gold if by doing so Federal reserve notes can be forced into circulation. It will serve a good purpose to accumulate gold in the present fashion against the time when the Act shall be amended." Governor McCord has written requesting permission to have Mr. Walker, Manager of their New Orleans Branch, invited to the Governors' Conference. Mr. Peabody is here this week and has been in the bank this morning, at which time I discussed with him the question of Mr. Starek and suggested that he get in touch with the facts and keep a line on the situation. I judge from the fact that gold is beginning to come in again to- day that we shall have an easy market for money for awhile yet, as long as gold comes in. Curtis is feeling a little sore over the Harvard game with Yale on Saturday, but we must all take the bitter with the sweet. With kind regards, I remain, Sincerely yours, Benjamin Strang, Esq., 4100 Montview Boulevard, Denvor, Colo. http://fraser.stlouisfed.org/ RHT/CEP Federal Reserve Bank of St. Louis FEDERAL RESERVE BANK OF NEW YOI7 iivember 28, 1916. /816 MY dear Governor: We had an interesting meeting of the directors this morning, Messrs. Locke and Starek being absent. It was thought wise not to change the rates of discount, notwithstanding that Boston expects to make a change in their rate for short maturities. About our rates for acceptances there was considerable discussion. The announcement made by the Federal Reserve Board at Washington as to the foreign credits and the warning contained therein had a marked effect on many financial people this morning. We considered the many phases of the situation and it was thought advisable not to make any change in our acceptance rates but to continue purchasing bills as they are offered, assuming that they come in fairly normal volume; and that in case conditions should develop so they cone in such volume that we would desire to limit our purchases, we should do so by raising the rate, and the board then adjourned subject to call of the officers at any time within the next two weeks, it being sonewhat uncertain as to when we could have a meeting because of Mt. Jay's illness, the meeting of the Federal reserve agents next week and of the governors the following week. The general comment on the Federal Reserve Board's announcement has been that it was a proper function of their's to issue warnings but there seems to be in some circles a question whether they had not exceeded their function somewhat in going to the extent they did. Mt. James Brawn was in this morning and stated that he thought the warning as to the British Exchequer bills was timely and right, but somewhat questioned their covering as many matters as they did in this FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 11/28/16. announcement and applying sane to private investors as well as banks. Mr. Woodward said that the general comment among his board was that for the Board to 'issue a warning was not unwise. The matter of the amount of purchases was left With the officers and the matter of making a differential, if advisable, to Mr. Woodward and myself. The immediate policy as to acceptances, approved by the board to-day, was to continue purchasing prime bills, even if we should accumulate .D10,000,000. or so more for the New York bank, but to be conservative as to an over-accumulation 9 of renewal credits or others of which we might, in our judgment, be up to our limit. It is rather a mixed situation just now but we shall endeavor to handle it conservatively and wisely. i am expecting now to talk with Mr. Warburg over the phone concerning this and other natters. The board approved of raising our bid on United States 2% bonds to nar, as we have only accumulated about ,1,350,000. at 99 7/8, the price de- termined last meeting. I hope we may get some at par. The question of dividends was discussed informally, no action being taken., however. Apparently we shall have about t300,000. of net profits by December 31st and I should judge that the board will decide in favor of making a 6% dividend for the period from November 1E, 1914, to March 31, 1915, although if we should have increased profits, they might decide to pay up to July 1, 1915, although that would not leave so very much surplus. I am enclosing an editorial from the New York World this morning, which possibly you will not see, referring to the action of the Board. Mr. Jay has just called me up and talked with me, saying that he was somewhat better and would try and go to 7ashington for the meeting next Monday, Mrs. Jay accompanying him. I enclose statement showing liability as acceptor and indorser on FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 11/28/16. bills purchased up to date and would be glad if you would advise if you see among them any acceptances about which we should be cautious. I hope to go to Detroit tomorrow (Wednesday) evening to spend Thanksgiving, but will return promptly, or at least to be on hand for work Monday morning, unless something unforeseen develops, and Mr. Peabody and Mr. Woodward will be here Friday in case I should be absent. The board felt that it =Is wise for us to keep liquid by not buying warrants with more than thirty days maturity, and we shall try and keep in touch with the situation satisfactorily. With kind regards and best wishes, I remain, Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colo. z b/covt-4-42 -6-0-4y4/- c-e-044,eRHT/CEP Enos. eoLit - t°4 FEDERAL RESERVE BANK OF NEW YORK November 29, 1916. My dear Governor: Mr. Jay is better to-day and Miss Holmes has been at his house for some dictation. We have been very sorry that he has been laid up this way and it has, of course, kept us busy with more detail at the bank. Regarding the extension of our Collection Department to include State banks in this district, I would state that we have only had four or five State banks agree to cone in as a result of our letter appealing to We are following up now with letters where they have not answered them. at all. I discussed with Curtis to-day having Messrs. Hendricks and Higgins take a list of those who had not come in by, say, December 15th and go out to visit the banks in person, thinking that these two men might cover the ground within a few days, and then those which by the end of December we have not brought in, try and collect through express companies or in some Other way. Have you any suggestions contrary to the above plan? We had a number of City of New York warrants offered us yesterday, maturities, which we amounting to 02 700,000., mostly December and January bought. We also purchased about 04,000,000. of acceptances, retaining about t1,500,000. for ourselves. I am sending herewith a statement of the acceptances held under have to the various credits issued and shall be glad of any comment you may make on the quantity the New York bank is holding. have about You will see that we 13,500,000. of these credits out of a total of acceptances of about 035,000,000. now held by this bank. I have asked Mr. Kenzel to ad- held, and we will vise me from day to day as to the amount of renewal credits 4C;;;L ---FEDERAL RESERVE BANK OF NEW YORK 2 Benjamin Strong, Esq. 11/29/16 49 endeavor to keep them within a reasonable amount but from our discussion in the directors' meeting yesterday, I think the directors would not oppose our purchasing :71_0,000,000. or more of acceptances but holding within50,000,000 for the New York bank. I am enclosing sheets from the ticker as to bank acceptances, etc., as of to-day. We are having only a few acceptances offered to us to-day. Your telegram was received about two hours too late for our meeting but was considered later by Messrs. Curtis, Sailer and Kenzel and myself when we were formulating this bank's policy as to acceptances after the discussion of the board in the morning. I read extracts from your letters of November 18th and 22nd in re rates to the directors at their meeting yesterday; also read extracts from Governor Harding's speech, indicating the position of the Federal Reserve Board concerning same. We are having some gold certificates sent in to us every day and are averaging nearly a half million dollars a week thus far, with only a small proportion of our banks already written to. I am sending more letters to-day and will follow the matter up from time to time until we have practically covered the district, at least banks which would be apt to have a reasonable amount to send. I sent copies of my letter to member banks to different governors and Governor Rhoads thinks he will follow it by a similar one. Governor "iller writes that there is so much gold coin held by banks in his district that he does not want to stand the abrasion, although Richmond proposes to absorb that. Your letter of November 25th is just at hand. Doctor Treman has had Mr. Jay in time and has read chapters of the riot act to him and has made, I think, tactful suggestions to Mrs. Jay. FEDERAL RESERVE RANK OF NEW YORK Z Benjamin Strong, Esq. 11/29/16. I will talk with Mr. Jefferson and Mr. Hendricks about their respective approaching meetings. I am glad that you have some local doctors who are looking after your interests, as well as the professionals. It is a pleasure to note haw To-day while lunching at the India House with Mr. many friends you have. Curtis, I heard one of the head waiters ask, with evidently much interest, haw you were and how soon you would be back again, apparently, having missed you. I will talk over with Mr. Curtis the Governors' Conference, etc., as per your letter. He has been talking to-day with Governor Aiken about this being the psychological time to take up the Bank of England matter and he will write you more in detail. With kindest regards, I remain, Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colo. RHT/CEP Enos. FEDERAL RESERVE BANK OF NEW YORK December 5, 1916. :044 My dear Governor: We certainly had quite a strenuous day yesterday, with call money touching 15%, and we purchased acceptances up to $3,800,000. of which about !!1,900,00'. were renewal credits. be divided up. All of the acceptances, of course, will For your information I am enclosing the amounts we have Purchased in the last five days and the divisions. Yesterday morning Kenzel suggested my calling the executive committee together to discuss raising the discount rate, but it did not seem wise to me to make any change, believing that with the disturbance over call money, our increasing the rate just now would add fuel to the flame, so we maintained the same rate yesterday and to-day, and to-day have had fewer offerings and the situation has been quiet. We purchased $1,160,000. acceptances, of which ,583,000. were French credits, and we contracted for to-morrow for $2,500,000. of commercial credits at regular rates, no renewal credits among then. December 6, 1916. Tas interrupted, so an finishing the letter Wednesday morning. I discussed with Mr. Alexander this morning whether the big banks would not rediscount at the present time, setting an example to some of the others and using the money to reduce the call -money rate as while conditions might lustify 4% to 6, they to my mind do not justify 8% to 15%, and just now I think it unfortunate for a longer continuance of unusually high call would be bad Outside. money rates, fearing that the sentimental effect received some encouragement talked also with Messrs. 7iggin and Vanderlip and considered and decided to-day. with the understanding that the matter would be FEDERAL RESERVE BANK OF NEW YORK 2 Benjamin Strong, Esq. 12/6/16. e are continuing our acceptance rates but will probably think it wise to advance them when this flurry subsides, as apparently conditions justify our doing it, making the basis 3% for ninety day member bank acceptances. You will be interested in knowing that since May 1915 we have had credit balances at the NewYork Clearing House to the extent of .411,000,000. and a debit balance of 120,148,000. Mr. Frew was in yesterday, discussing some collection and transit matters, and I asked him why the member banks could not settle their clearing house balances by checks on the Federal reserve bank, saving the handling of so much currency back and forth to the clearing house. That would you think about this plan and is it worth pursuing? I wrote Mr. 7arburg about the Starek situation. vestigate but I have not received any information. He agreed to in- Will advise when received. I note that Mr. Masson has visited you and that he will call on us at the bank soon, and we shall have pleasure in doing what we can for him. Mr. Miller, vice president of the Chase, was in about five o'clock last night and said that if two or three of the other banks would rediscount, the Chase would do so to-day, taking e2,000,000. on their own note with collateral for fifteen days, and would sell us some acceptances besides. I have an idea that the sudden calling in of the British Exchequer bill plan at the time when it was expected they would have returns coming in has made a temporary pinch at the corner and pending the arrival of the gold imports in transit, there will be a stiff demand, as there are very heavy obligations to meet :Just now. I shall keep at the rediscount matter to as great an extent as would seem tactful and wise and hope for, but cannot count on, success. When I was in Detroit on Friday last, I learned from Mr. Emory Clark, president of the Old Detroit-First National Bank. that there is con FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 12/6/16. siderable hoarding of actual gold by the foreign element in Detroit, they bringing in cheeks and currency, asking for gold, and I assume that this is going on to quite an extent in other foreign element centers. I will talk with Curtis, to-day if we can get the time, about the Bank of ngland matter, but am inclined to think at the moment that it would be wiser not to lay the entire matter before the governors and they to their directors, but to have Curtis nrepare a brief for submission next week. Mr. Woodward is in Chicago this week attending the Clydesdale Association meeting but returns Friday. If conditions continue fairly normal, we will probably postpone our directors' meeting until next week after the governors' conference. Whether I shall go down will depend, I think, on whether Mr. Jay stands the week in -ashington this week all right and can be back here for next week, as otherwise it would not seem advisable to have Curtis, Jay and myself away. Dr. T. has given his advice freely to Mr. jay but confesses that he is somewhat anxious about his not taking better care of himself and living within the limitations of his strength, which by this time he ought to be able to gauge somewhat correctly. We had a very ,pleasant call this week from 7r. Ward Bannister of Denver, who stated he had been you within a week or ten days, and it was next best to, although not nearly so good, as seeing your good face ourselves. a also had a call yesterday from Mr. Smith, vice president of the Internation- al Trust Company of Denver, who said you gave a very interesting talk at a club recently. 1 naw York this fall has been more full of people than I have ever seen it before, and apparently the hotels have done the best business in their careers. Money, by some people who have made it easily, is being spent, not only freely but most lavishly and in many cases unwisely. A FEDERAL RESERVE BANK OF NEW YORK 4. Benjamin Strong, Esq. 12/6/16. The last two days have been very strenuous ones but I think thus far we are handling the situation fairly well, at least Alexander, 7oodward and the others seem to say so, but T try to keep in touch with those who know more about it. than I do and will hope that we will make no grave blunders in these more crucial periods. It is fair to say that the bank misses you but there a-e always compensations, and I am sure that being away from the petty detail, you are able to give better and sounder consideration to the most important problems in which your experience and judgment is invaluable. It is a great joy to me to feel that the doctor reports you doing as well as could be expected, and it would seem that it is only for you to continue living this strict simple life and to take time enough to put yourself on your feet ready for active service. Hendricks and Jefferson are away this week in Chicago and we are all busy but if we keep well, can carry the work all right. In yoursof December 2nd, you state that you approve of the board's action in not establishing a differential on acceptances as yet. I know that this has been your real opinion all the time, and having had some experience now, I fully agree that it is wiser not to have a differential, at least until it becomes much more necessary than it is at the present time. Regarding the accuyiulation of gold, it is certainly most gratifying to note the cheerful cooperation of the member banks to which we have written, and while re may not be able to retain very much under present conditions, I believe that keeping the importance of accumulating gold in each bank's awn reserves or with us before the member banks will repay the trouble we are taking, and it is interesting to note that Governor Van Zandt, without appar- ently knowing of our doing it, has within a week or two been sending out a circular along the same general lines to his members. T'a also may succeed in keeping out more of our Federal reserve notes in circulation, and if we FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 12/6/16. can substitute for them gold certificates, even to a fair amount, would it not be wise? My best regards to you, my dear Governor. Sincerely yours, Benjamin strong, Esq., 4100 7ontview Boulevard, Denver, Colo. RITT/CFP Fnc. ACCEPTANCES PURCHASla Ourselves Others Total Nov. 27 698,000 994,000 1,692,000 28 1,676,000 2,337,000 4,013,000 29 1,169,000 817,000 1,987,000 1 1,275,000 -1,849,000 3,124,000 4 1.653.000 2.139,000 3.792.000 6,471,000 8,136,000 14,608,000 " Dec. FEDERAL RESERVE BANK OF NEW December 6, 1916. PERSONAL MY dear Governor: Replying to your letter, in which you speak of your condition and the uncertainty as yet as to your ultimate plans, and in answer to your request that I give you my own candid opinion of what is best to do in the matter of the bank's organization, I will devote this letter to my views, which please construe as an expression of my own personal feelings. FIRST: After six months' connection with the detail work of the bank and in view of the probable continued increase of the more detailed work caused by the development of the collection system, the increase in acceptance business, and the expected greater use of the bank's facilities by member banks, T believe that an officer, probably a deputy governor, doing about the work which I have been doing, will be a necessary addition to the organization, such officer doing much of the same work that I am now doing but leaving the consideration of the more important problems, which will continue to develop for some time yet, to the governor. SECOD: Even if your health and strength will permit you to do it, I do not believe it would be wise for you to attempt again to carry the detail work mentioned above, as well as devoting so much of your energy and thought to the bigger problems, as you attempted to do before, resulting in your having to take a long rest. On the other hand, it would seem that with the assistance of a competent deputy governor, who would take the detail, you could continue as governor, devoting yourself to the more important questions and bigger problems, and acting as adviser and general director of the bank's policies; in short, keeping about the same position as Mr. Hepburn as chairman FEDERAL RESERVE BANK OF NEW YORK 2 Benjamin Strong, Esq. 12/6/16. does in the Chase, under which arrangement it would seem that you could have reasonably short hours at the bank and arrange each summer to take a long vacation (three months or so), which would enable you to live out doors and escape the heat and debilitation of a summer in New York, and then at such periods during the winter as seemed necessary, you could run off for a shorter time for rest and recuperation. THIRD: I know of no one available who can bring to the solution of the very important questions,which will arise for a few years yet at least in the development of the Federal Reserve System, the ability, the experience, the acquaintance, and the knowledge required which you, Governor, can do, and I feel that you should not give any consideration whatever to your giving up acting as governor of the New York bank but should rather feel that you have a call to this great service for which you have been fitted through these years of varied training, and that you should consider it your life work to continue giving your thought and strength to the working out of these problems. In expressing this view of your signal fitness for this great work, I feel confident that I an voicing the sentiment of the directors and the officers of this bank also. POUTTi Now pardon a reference to my position in this matter. As you know, I did not seek this position and took it up very reluctantly because I felt my awn limitations. It was thoroughly understood on ny part that I was asked merely to fill in temporarily to meet the emergency caused by your unexpected illness, and one of the deternin'mg factors in leading me to attempt it was the statement you made that if I would take this position, -,,au would go away contented, without anxiety, and satisfied with the arrange- ment, so I felt I would be contributing a small share towards your ultimate recovery, and if this could be accomplished, the question of any sacrifice on my part should not be considered. RESERVE BANK OF NEW YORK 3 Benjamin Strong, Esq. 12/6/16. crFEDERAL ...--"-.../ o. I have been here now nearly six months and am willing to continue until spring or, if the doctor should determine later that you aught not to take up. the work even in part here at the bank till next summer or early fall, I could probabl: arrange to stay such portion of that time as may be deemed advisable, but I should want it understood that that would be the extreme limit of my holding this position. On the other hand, one cannot be a fair judge of his own work and effort and I, of course, do not hear the criticism of the bank's conduct at the present time. I realize that up to the present time the directors have felt it wise to let matters run along until such time as you could indicate with some degree of certainty as to the future, and they undoubtedly will be willing to continue this policy for such time as is necessary for the doctor to reach a conclusion as to your future. Should you finally decide that a plan along the general outline above wouY be your desire, it would seem then advisable for the directors to select a suitable deputy governor, and I would hold myself in readiness to drop the work at once, or to continue for such time (not later than next autumn) as would seem best for your interests and those of the bank. Please, therefore, consider my position as that of a "fit-in" for a longer or shorter time according to the way matters develop, and I want you especially to use me in just such away as will best serve your interests, my dear Governor, as I am truly happy in being of service to you and to the bank. I have, since the receipt of your letters, suggested to Mr. 7oodward and also at a different time to Mr. Peabody that in my opinion they two, being the committee appointed, should have a conference and outline some general policy as to the future, and they have agreed to have this conference soon, probably within a week or two, after Mr. r7oodward returns. As Mr. '"oodward suggested that he would like to bring me into the conference, I shall be glad FEDERAL RESERVE SANK OF NEW YORK Benjamin Strong, Esq. 12/6/16. to have you indicate to me your own opinion as to the best arrangement and your personal wishes in the matter, so that I may govern myself accordingly in any suggestions which I may be permitted to offer. I apologize sincerely for this long letter, but you asked me to write candidly my opinion, and you have it now. Let me add that I have enjoyed my work and it has been a fine experience; I have been treated with very great consideration and kindness by my co-workers in the bank, and while I have had periods of anxiety and have realized the responsibility, so far as I can .iudge it has done me no harm physically, and, therefore, I summarize that I am at your service and the bank's to stop now or to go on for such neriod as may seem best. with kindest regards, I am, Sincerely yours, Benjamin Strong, Esq., 4100 MontvIew Boulevard, Denver, Colo. RHT/CEP 6 FEDERAL RESERVE BANK OF NEW 16) FR IA: 4°e/-: '44?1 4/6 December 7, 1916. My dear Governor: I enclose herewith copy of the vote of the district reserve director and I think it quite interesting. Had there been any organized effort, I think nrobably Mr. Carlton might have run closer to Mr. Towne as Carlton has quite a following here in the city apparently. You 'will be interested to know that yesterday we rediscounted for banks as follows: National Bank of Commerce National City Bank Liberty National Bank Chase National Bank American Exchange National Bank Union National Bank, Newark, N. J. First National Bank, Utica, ". Y. .1:33,255,000. 2,000000. 2,000,000. 1,000,000. 1,000,0On. 300,000. 174,000. I an enclosing two or three clippings from the morning papers in regard to the rediscounts for your information. I had talked previously with Messrs. Alexander, 7iggin, and Vanderlip, and this action yesterday was the result of their agreeing to do this,as a starter, but each one basing their rediscounting on others also doing it at the same tine. 7e also took in about 5,000,000. acceptances, of which .1'2,500,000. were purchased from the Guaranty the day before, delivered yesterday. The Chase National also sold us '1,500,000. accentances. Call money closed at 3%. A letter from Mr. Warburg this morning says, "I am trying to watch . Jay as closely as I can, but it is difficult to keep him from being right in the center of things. him." So far, however, it appears rather to agree with FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 12/7/16. You will be interested in knowing that a meeting Of the Association of State Banks was held December 5th at Syracuse, N. Y., at which I understand a plan to inaugurate some kind of a clearing house for State banks was promulgated, in which plan Superintendent Richards and 7. C. McDougal were the sors. spon- As yet I have been unable to get further details. I had a telenhone from "r. Jay this morning, stating that he was feeling fine and that the two or three days in Washington had brought improvement every day to him in his physical strength. He expected to go to Atlan- tic City to stay until Sunday afternoon and then come to New York to be here while Curtis and I are in Washington. Aiken telephoned this morning that his committee probably would raise 61tar4 atscrua" the avg&3:ctertat rates to-day, as he felt that conditions justified it and was --e0 a CLY-a.-cg- c-xt-pczia,241c 044) advised by acceptance brokers in Boston, in whom he had much confidence told him that we felt here that we were justified in raising the acceptance rate up to 3c/, for ninety days' bankers' acceptances, usual differentials for short maturities, etc., but thetweprobably would not do it until our meeting next week, although most likely we will do so then. -e are all very much pleased to-day over the news from Mr. Jay, which said he had telegraphed -;ou, in re foreign bank relations, and Curtis is tele- phoning that we assume that you will begin the correspondence as soon as you feel justified in doing it and send us a copy for our files. I assume that you know that the committee of twenty-five bankers of the American Bankers Association having in charge legislation which will kill the present Federal Reserve Collection System, is to meet next week at Chicago. They have been doing considerable corresponding and no doubt have worked up a sentiment among the smaller banks decidedly opposed to the present system, but I hardly believe that the Federal Reserve Board will permit adverse legislation if it can be prevented. FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 3 12/7/16. I an very sorry to learn to-day that Governor Kains will not be at the 17ashington conference. We had a debit balance against us at the clearing house this morning to the extent of about ,112,000,000. caused by the Commerce withdrawing Chase 2,500,0V., Corn Exchange 5,000,00fl., 3,500,000., and others smaller amounts. The enclosed clipring from the American of yesterday perhaps will give some inkling of the inside workings in the Federal Reserve Board as between them and the Comptroller, leading to the announcement they made about two weeks ago. I received to-day from Mr. E. C. "cDougal an extract from his speech made at the meeting of the State banks on December 5th at Syracuse, in which he asks for my criticism of it. I enclose a copy herewith. My best regards to you. Sincerely yours, Benjamin Strong, Esq., 4lO7ontview Boulevard, Denver, Colo. EHT/CEP Enos. J MEVORANDUM TO W. TfoldiAN ILAARDING PURJHASib Ji BA/al-2W AJOEliA2Jt2 BY,THE4#.4,JcIRAL RRVZ BANK JO NW YORK ITSELi AND 02114a 04DiRAL DISSRVZ BANKS. DECEIBER 9, 1916. U A000rding to the rewrap of the Federal Reserve Bank of New York its hold- ings of "Bills Purchased" on the dates named were as follows; the first column show- ing the total amount of bills held and the second showing the amount of those bills whioh were drawn under renewal credits; Total° Date $ 20,326,000 36,600,000 41,306,000 November 10th Deoember let 8th Rengeftle, # 10,406,100 14,063,700 16,451,600 On the same dates the records of the Federal Reserve Bank. of New York indicate that the system as a whole held "Bills Purchased" witsielott as per statement of November 10, 2916, - 90,913,000 of which the records of the Federal Reserve Bank of New York show as drawn under renewal credits about 26 or On December let total bills purchased held by system as per weekly statement 2Z,559,000 #106,379,000 Add estimated amount of bills bought by the iederal Reserve Bank of New York throuith the close of business Deoember let and allotted to other iederal reserve banks but which were probably in transit and, therefore, not included in the Above amount 3.o84soo0 109,964,000 aboat 28 1/3; or On December 8th in the absenoe of publiehed figures total amount of "Bills Purchased" held by the eyetem, estimated from transnotions that have been through the Federal Reserve Bank of New York Of which the reoordo of the Federal Reserve Bank of New York show as drawn under renewal credits about 28.0 or 31,249,000 120,000,000 34,104,400 (2) TOTAI, PURJRAES ut BANKIMS, AO0EPTANOBS BY THE OW0A1 RESKRVE BANK 0? NEW YORK VoR 1T4ELY aD 101 LUOTUStaTJ OTHR filIg&RAL Rii;J.4RVE SAM 'WU DBOB:31001 1 TO 8, 2916, INCA:AMY& BY DAUS AND 0HARAOTa, WERE Ali ?QUM: Totals Deoember let 4th . " . 410 .0 _ .04 OW . . . $ 3,124,463 $ 1,240,J00 2042900 4,89,316 1,963,1732 14u7,487 1,396i92.0. _imam /5,481,432 6,192,897 3,792,764 1,159,512 5th 6th 7th 8th 583,332 50000 ......101.111111101.1110 Of the above amounts the ioederal Reserve Sank of New York during the period from December lit to .aeoer. ber 8th retained for its own account totals uf bills as follows: DeoeHmir let 4th 5th 6th 7th 6th 1,275,665 1,652,805 696,824 2,262,312 588,012 k.029,673 4 285,443 844,166 508,233 875,0T) 25,000 413.333 7,505,26. $ 2,851,275 Tao oall money rates in 14ew Iorx during that period are &leo indicated he. dates: Openbougrawal DeMeeker let 4th 5th 4 2/2 4 1/2 6 6 4 1/2 4 1/2 4 4 a 1/2 .6th 0 ft 7th 8th 8 1/2 7 kliga 4 1/2 6 6 15 a 1/2 10 5 7 4 2/2 3 1/2 4 3/4 4 1/2 10 10 3 3 1/2 4 Of the above volume of bills the Vederal Resorve Bank of New York received and retained from the gederal neserve bank of Boston ,029,177 of which O6.,-.6.666 were is.. sued under renewal credits. (3) The following is an itemised memorandum of the 46,1920:J0 of bills drtLwn under renewal oredits purdhased by New York from December lst to 8th inolusives Days Deo. 1st Deo. 4th 90 Bankers Trust Jempany 90 tion9.1 Park Bank 90 Amerioan 'A. Nat. Bank keeheelcs & Metals Nat.Bk.90 3 Irving National Bank Lazard Awes 2 7/8 2 3/4 J. P. Morgan & JO. Brown Bros. & '..:0. 36/51 tirst Nat. Ba.,Boston Dec. 8th Member Bans 4- 406,270 166,666 333,3$3 333,333 3 2 1/2 2 3/4 2 3/4 Laggard dreres 2 3/8 2 3/4 5/27 2 5/8 33/48 2 3/4 2 7/8 72 500,000 333,333 500,000 530,000 100,000 Lazard ereres 60 2 3/4 80,000 26 2 1/2 2 1/2 166,666 146,666 J. P. Morgan & Jo. Rational Park Bank jhase National Bank Of ft *First Nat. Bk., Boston " 'Union Nat. Bk., 27 27 26 333.333 n.3.33,3 4 683,000 540,000 408,000 333,000 27,500 50,000 333,333 100,000 100,000 50,000 If Dec. 7th Indorsed by 86 3-1/8e2 7/8 2 3/4 62 2 7/8 62 2 3/4 55 Brown Brothers & Jo. Lazard ererea 01 Deo. 6th 60 60 Total liellew40 2 3/4 2 1/2 2 1/2 87 87 Bankers Trust Company Mechanies & Metals nat.Bk.28 Dec. 5th Rate $6,192,000 27,500 60,000 500,000 $1,244,166 Reoeived from Vederal Reserve Bank of Boston. Totals liammikt Of tbe total of bills bought by the Federal Reserve Bank of New York December 1st ta December 8th inclusive, say There were reoeived from the 1, R. Bank of Boston Leaving totals lurchased looally # 15,481,432 6,192,897 102v.aw 646,700 ; 14,452,000 s4. 5,546,000 Of whiah the e. U. dank of New York retained 6,476,000 2,369,000 And allotted to other E. R. banks 7,976,000 3,177,000 s (4) Totals Of the total amount of BBills Purehasod" held by the federal Reserve Bank of New York at the close of business December 8, 1916, say Renewals $ 41,386,090 4 Those drawn under renewal credits amount to - Of whioh those indorsed by the acoepters amount to 15,451,650 member banks other than 5,930,500 The total, ','41,2586,090, of bills purohased held by the iederal Reserve Bank of New York at close of business December 8th mature as follows: Within 10 ft 10/30 30/00 60/90 dads 4,105,635 9,601,606 17,096,794 10,581,854 1,671,000 4,547,750 7,397,600 1,635 300 $ 41,366,090 4 15,451,650 Bills Bills Drawn Under Renewals ft If The net increase in bills bought for the ystem by the Federal Reserve Bank of New York during Dedember is shown in the following tablet Amount bought Amount paid - Increases $ 15,481,432 6,960.675 4 6,192,897 2,100,000 $ 4 4,092,897 8,520,757 Of the total renewal bills bought December 1st to 8th inclusive, there will mature from December llth to January 2nd inclusive And there will mature later in January Renewals 1,580,000 - 1,121,666 A A total maturing within 60 days of 9 3,101,000 Of the total renewal bills held by the system according to the records of the iederal Reserve Bank of New York, say 04,100,000, about one half mature within one month, say 4 17,038,000 MATURITIES ge FRENCH AND RUSSIAN CREDIT RiNEWAL BILLS. Close of Business December 8, 1916. Other eed. lies. Banks New York December 11 4 1,101000 18 690,000 1,010,750 440,000 200,000 26 27 28 January 2 4:: 3,019,500 1,703,500 2,008,000 915,000 550,000 946,600 800,000 430,000 800,000 680,000 6,742,000 350,000 1,750,000 1,000,000 250,000 1,343,600 1,950,000 1,040,000 1,075,000 1,290,000 26 1,395,500 V77,500 183,000 244,000 25,000 50,000 300,000 1,179,500 997,500 241,700 6,000 150,000 350,000 350,000 2,575,000 1,976,000 424,700 250,000 175,000 400,000 650,000 1 833.300 1.833.300 2,666.600 015,451,650 08,652,750 034,104,400 s 9 11 15 22 23 24 29 1 9 13 15 16 oh 1,838,500 1,013,500 997,250 475,000 350,000 4,045,000 150,000 932,000 450,000 250,000 397,000 1,150,000 610,000 275,000 610,000 4 February 2,697,000 200,000 818,000 550,000 4 Total - RU33IAR CREDIT RENEWAL BILLS. December 8, 1916. Credits ionbright rown Bros. Marais Freres Lie Neuflize Pyxis & Orleans R. R. Co. Paris, Lyons & L. R. R. Co. Banque Russo Ourselves Other Yed. Res. Banks 4 5,194,900 4 5,774,100 4,662,700 905,000 400,000 2,400,000 1,540,000 350 000 5,947,700 1,775,000 1,000,000 1,500,000 1,505,000 1.150.000 115,452,600 018,651,800 Total 410,968,000 10,6/0,400 2,680,000 1,400,000 3,900,000 3.045,000 1,500,000 4 34,104,400 The total amount of renewal credits, a portion of the bills drawn under which the Federal Reserve Bank of New York has bought Is about 493,000,000. )1 110 l 'HAM 110(Ta 2t44&-(4,1 H STREET NORTHWEST AT FIFTEENTH 43C 1/ 1. RS. 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DOWNS, Man"aer 2ar ;&/a/t_ a-/- t-t-t-L A..--r . -,.., ,.,. /- 4/,,,,,,/,--,----- 2 -ve ia l/ .,-, c,i c,..1,/(4,,,,--,--z. y ), AAA/ /1 9 ct,c4,-fri-47 . -/10 fiLL4P-- (ALtro_ftet4W-- ifkaily i---c4ev = - Z- ,4--A/tAt4-X& ,t--''-"11 ..e.:7 -ger, w - - 0, - - d'i., /2:: fr-taAA-La /27. ---e-e 1.,f,-.4-41412 a vfr_>/e sAft, i. C7,0 )(A-It't,t -Ei' _rt.,,,- --xeza"--vc"' _t_i_t.,0_, JNL Le 7.--,,-cikp - i . - ,-vyr ilA -174----4/ t_Xt/ t-o--147 J- -L-47v yc -A-- ..*-71 4,, ,i-it ' X' /-` c;-'1"-- ---//m-, Tut-/-4-441044; 217c. - -6 4 A - i - P - 61-11._ 7 ,(,.,_/--, 59f ,-,44;, - 1-(-t-,, kw nvi)i/ct"-° ty____--P4a-A-: - - - 7AAA /24,4,4a- ir--, e9a2-.,0.-A_ 4o-, ,i4A,9 )4-4---6--) //we-4--; - 2tiAv Az)-e-z-i-h,___ 17-zdA, HOIViHAM H OcTa STREET NORTHWEST AT Fl FTEENTH OTWi //Von"? RS. DOWNS, Manever e--_tt.teA 2/v 7c via6t4( ciettv t./ --4.(4,1- 43,eitt 744} -"`"3 CAtitc, airwA--(4,A) itate-ip Yfct2wtt 40-fr )co-if --ka-tir. 6tA- 24-(y ye7t4_ -2--0-7147 -t-t -- FEDERAL RESERVE BANK OF NEW YORK December 15, 1916. JAN10 19;/ My dear Governor: In answer to yours of 'December 6th as to the statement given to the press and your query as to the net figures of 0,641.84, I am sending you statement of the items of which these figures are the balance, and would be glad of any suggestions from you as to how you would suggest our putting it out in our s,-1Elarized statement. I an sending you by mail the report furnished to the governors and to the Federal Reserve Board by Governor Seay, containing his recomnendations as to naking drafts on all Federal reserve banks immediately available at any one of them. There is unquestionably much pressure being brought to carry this through, but I think a majority of the governors would not favor this but might favor a plan for permitting the issuing of a draft on one reserve bank so drawn as to the paid at some other one duly designated Federal reserve bank, if proper advices are sent l Possibly Governor Seay has sent you a copy and in that case kindly return, this one, as we only have a few copies. 77'e are having a very heavy snow-storm, there being about eight inches on the level to-day. My very best wishes to you and yours. Sincerely yours, Benjamin Strong, Esq., 4100 7ontview Boulevard, Denver, Colo. FEALPRESERVE - BANK alp. '31 OF NEW YORK December 15, 1916. My dear Governor: The Governors' Conference adjourned yesterday after having a two hours' session with the Federal Reserve 3oard from 11 a. m. to 1:15, all present except Secretary McAdoo, Governor Harding (who was in Boston making a speech), and the Comptroller, who was there for a part of the time. As Mr. Curtis will undoubtedly give you a full detailed account of this, I an not attempting to go into details, simply sparing you. 7e were very glad to have a telegram stating that Mr. Kains was v/ much better, nnd I think we had quite a good meeting. I am somewhat anxious about a number of the proposed amendments, which have either been formulated. or are being considered by the Board, as a few of them seem to me unsound. Probably you know more about these than I, but I am sending you a confidential list of those which have either been formulated and presented to the Congressional committee or are being considered. We discussed them at the Governors' Conference and approved of Nos. 1, 5, 7, 8, 9, 10, 11, and la. 7o. 2 is embryonic yet and Governor Seay is preparing some statistics in more detail than those he presented, in which he showed that the average vault reserve of country banks had been before the Reserve Act about 7 1/2'7, and during the year 1915, about 5 1/2, including all vault reserve. At the meeting to-day Mr. 7oodward and, I think, mr. Locke, did not seem to take kindly to the idea of not having any vault reserves, at least in the central and other reserve cities. Regarding No. 3, Governors Aiken, Van Zandt and I voted against the reduction in capital to 1 1/2. 7e were advised later, at the conference FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 12/15/16. c3 with the Federal Reserve Board, that they meant to give the option to the Federal Reserve Board upon application of any(zember)bank for such reduction to have the power to grant it, which of course is somewhat different, as I had understoodthat it was to be obligatory on all banks, and I thought it a mistake and do still to reduce the amount below 3%, because having been paid in, it will have a sentimentally bad effect and there are other reasons why it did not appeal to me to reduce them. The question ce earning dividends upon them is one that is righting itself speedily and does not impose so great a burden that so far as I can see we need be anxious about it, at least until we have given the matter a test for a period of a few years. As to the proposed change 1n reserves, I think Mr. Woodward feels, and I share in it somewhat, that if we are to make the shift of the balance of the local reserves required to the Federal reserve bank in March instead of November, it is a question how wise it is to make other changes reducing the reserve and permitting of further credit expansion just now. No. 4 was approved of in principle, I think, but the question of the detail in the way of surtax, etc., was left in abeyance. No. 6, which proposed an associate membership for State banks and trust companies by keeping the same reserve with the Federal reserve bank as member banks and giving them no privilege as to rediscount unless their paper was indorsed by a national bank, did not seem to appeal to the governors. I hone that in their desire to make headway they will not undertake to make so many changes, some of which are quite radical, as to evoke further widespread criticism in these tines when things are becoming more and more tense. I have your letters, but as I am hoping to run up to Ithaca tonight for to-morrow and Sunday, I shall have to defer writing more until Monday. FEDERAL RESERVE BANK OF NEW YORK 3. Benjamin Strong, Esq. 105/16. So far as the matters pertaining to myself are concerned, I want you to feel perfectly free in your nind as to this and that whatever arrangement seems best can be carried out. Just go on gaining, doing your full part and leaving the time for final decision until it cones naturally, and Meanwhile I hope that the then we can begin to make more detailed plans. amount of rediscounting at the bank will please you, as it does me. With kind personal regards, I remain, Sincerely yours, 73( Benjamin Strong, Esq., 410r) Montview Boulevard, 7enver, Colo. RET/CET, Enc. Advancing date for final transfer of reserves. To reduce reserves and provide that no reserves need be held except those in Federal reserve banks; Say: 7% demand 3% time, Country banks, it 3% tt Reserve city banks, 10% It tt Central reserve city banks ,13% Federal reserve banks to keep a normal reserve of about 70%. Reducing paid in capital of- Federal reserve banks to 1 14/2%. Retirement of greenbacks and acceleration of retirement of national bank note currency. Branch banks in cities. Associate membership for non-member banks for clearing purposes. Put 100% acceptance provision back in law. Make 15 day notes legal collateral for Federal reserve note issues. Clarify section 22, about compensation for officers, directors, employees, etc. Amend section 5202 R. S. by adding a sixth exception to provide the bank's liability as an indorser upon acceptances. Issue of gold certificates in denominations of Issue of Federal reserve notes against gold. 100,000. FEDERAL RESERVE BANK OF NEW YORK DL23 December 18, 1916. si My dear Governor: I made a flying trip to Ithaca for'Ia.turday and Sunday 11 this morning. Curtis and I read the riot act to Mr. Jay returning on Friday and we least to build up told him that he should absent himself for two weeks at absence, he does his strength, as while he was here last week, during our not look strong and he has some cough remaining with him. He disliked very that he started much leaving the bank for a longer period, but I an glad to be gone until yesterday for the Hotel Hon Air, Augusta, Ga., end expects about January 2nd. directTo-day we are investigating names to suggest for a class C created January 1st, and will or for the vacancy which we understand may be probably suggest Messrs. Carleton, Outerbridge, Appleton and some others to ,Mr. Jay for him to pass on. Governors' Curtis advises that he has given you a description of the repeat. Conference and the directors' meeting on Friday, so I will not with Mr. Dow of e had a very satisfactory interview on Friday his good instiJamestown, a very high-grade man, who told us that fro7 now on items on other points in tution would cooperate with this bank in collecting Jamestown and in every other way. rediscounts of the last I am glad that yOu were pleased over our been most gratifying to me beten days and those during the Past week have before to secure the cooperation cause I felt when I made the effort the week others would consider it of some of the banks, that once the ice was broken, been verified. a normal procedure and this has already FEDERAL RESERVE BANK OF NEW YORK Z. Benjamin Strong, Esq. 12/18/16. We had notice this morning of an assessment of 128,000. for expenses connected with the printing of more Federal reserve notes, but I think it most desirable that we should keep up to our 1.300,000,000. stock. We expect to send out a notice on Thursday to our member banks that the directors have authorized the payment of thscumulative dividend on their stock up to March 31, 1915, and will notify each bank of the amount which they will receive, so that they will have the amount on Saturday to include in their earnings of 1916, if they so desire. Messrs. Woodward and Thompson were appointed a committee on salaries and also to consider the question of a bonus this year on account of the high cost of living. !7r. 7endricks is to-day in Buffalo seeing some of the State banks and I hope that he and Mr. Figgins will be able to visit some of the more important State banks, urging their cooperation in the collection system during the next month or so, but I am convinced that not later than February 1st we should put on the thumb-screws and collect all State bank items sent us either through the express companies or otherwise, and I hope you approve of this course. The absence of Mr. Jay, of course, makes it difficult for me to inaugurate any of the constructive matters such as clearing house settlements, etc., but if we are all on the job after January 1st, I hope we can take them up one by one. Personally I had hoped to write an article on the domestic exchange' problem and the collection of checks for the information of the pub- lic and esnecially of the business interests, so that they would better understand what the Federal Reserve Collection System is trying to accomplish and that the one for whom the service is performed is really the one who should pa- the charge equitably, but it seems difficult under present conditions to secure any time for thought and preparation of such an article. Can you suggest anyone who would be well qualified to put the matter fairly and equitably before the people either in an address or paper? FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 12/18/16. I have this morning received a letter from M. Pallain dated November 29th, acknowledging the reception of my letter of November 2nd announcing our sending information relative to the organization of the Federal Reserve System and stating that he appreciated our courtesy in so doing. Evidently some of the material had not reached him, but I assune it is due to the delay in the mails. I h'pe that we can do something in the Tray of advancing the arranging of the machinery not only with the Bank of England, but with the Bank of France. Curtis probably told you that Governor Aiken, in addressing the Federal Reserve Board at the last meeting with the governors, stated that it was the opinion of the governors that if such machinery was perfected looking to our having reciprocal relations with the Bank of England, that as soon as the machinery was ready we should immediately begin to operate, if only to a small extent, to indicate our good faith, and I hope that this view of the governors thus conveyed to the Board will have its good effect. The natter of the change in acceptance rates was left to the executive committee with full power to change then any day prior to the meeting of the board, which will probably not be held until the first week in January. I am in receipt of your favor of December 8th, enclosing a letter from M. Lewandowski, and we will try and give same our consideration to-day. Just keep up your good work and be assured that we will do everything we can here to keep things going in the right direction. I saw Comptroller Williams and Mrs. -illiams at luncheon in 'lashing- ton and he asked most kindly about you and said that he was clad to hear that you were improving, as you were so capable that you were very much needed, all of which goes to show that what we have been telling you as to the system and the 'country needing you is confirmed by this and many other similar remarks. FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 4._ Now, after this, will you believe us? with kind regards, I remain, Sincerely yours, Tienjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. RHT/CEP 12/18/16. FEDERAL RESERVE BANK OF NEW YORK December 19, 1916. ALP. My dear Governor: , In answer to your longhand letter of December 10th and your subse- quent letter of December 11th, I would state that I had quite a long talk with mr. l'eabody in Washington concerning the organization of the bank after your return, stating to him that in ny judgment it would not be wise for you to take up active work here again until next fall; furthermore, that I person- ally felt that it would be highly desirable to have a permanent deputy governor, who would continue to carry on the work which I an attempting to do at present. He said he would have a talk with 7!r. Woodward on his return to 77ew York, and I understand he is to lunch with Mr. Woodward to-day and they are to discuss the situation. I have shown Mr. woodward my letter to you and your answer, so that he is informed of the situation and I shall now leave the matter in their hands unless they consult me further. note your statement, "I an tremendously relieved to feel that I must not as yet be making plans but can go along for a while and just keep loafing," and I essime that both Messrs. 'Peabody and i-oodward will feel that there is no immediate hurry to bring this about but that they will probably begin now to consider one who would be best fitted and available for the position of deputy governor, and they also understand that so far as I am concerned, assuming ny health to remain good, I am willing to continue the work for any reasonable time to enable them to make satisfactory arrangements-all of which I hope is satisfactory to you and will relieve your mind from any anxiety and the feeling that you need rive any further consideration at present FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 12/19/16. to this natter. Regarding Mr. Starek, I was unable to secure any definite information at Washington, as aside from the fact that he is not and has not been for some time in the examiner's office, they seem to have no further information. From information I have picked up in the last day or two I am led to believe that there may be a vacancy in Class C directorship the first of January and to that end Mr. Jay is recommending a number of names for consideration. We have suggested a number and Mr. Curtis has given considerable thought to it and I hope that some very vise and able man may be appointed. Personally I have thought that the nomination of Mr. Carleton or Mr. Outerbridge, they having been recommended by the bankers committee of the State Association, would be eminently proper but as the appointment emanates from Washington, I assume that we must sit still and await developments. Answering yours of December 15th, I would state that Mr. Curtis tells me that he has already sent you a full report of the Washington conference, and we will write you more fully in regard to the foreign relations as soon as possible. we are doing some rediscounting from day to day and I should not be surprised if we were called upon during this week and next for further rediscounts, because until another foreign loan, which is contemplated, shall be floated, which I assume will be right after the first of the year, some of the banks are liable to have pretty heavy demands upon them from the "Corner." It is quite certain that we shall have very large importations of gold and undoubtedly an effort will be made to create an easy money market in January, or whenever it is thought advisable to float this loan. we are all awaiting with tremendous interest the speech of Lloyd George as indicating the peace policy of the Allies, all of which will have a bearing on the financial situation in the immediate future. <2 ,,DERAL RESERVE SANK OF NEW YORK Benjamin Strong, Esq. We had a telegram from Mr. Jay 12/19/16 to-day, indicating that he had arrived at Augusta, Ga., and I earnestl:* hope that his stay there may restore him to robust health again. I have been somewhat disturbed over his apparent inabil- ity to recuperate quickly, and I hope this rest will bring him out all right. "ye are having clear winter weather here, with plenty of snow in New York City. I hope that you will continue to gain regularly and systematically and that you will avoid overdoing. My best wishes to you. Sincerely yours, Benjamin Strong, Esq., 4100 r!ontview 7oulevard, Denver, Colo. EHT/CEP talk J2 1 FEDERAL RESERVE BANK OF NEW YORK : December 20, 1916. My dear Governor: We received notice this morning of the appointment by the Federal Reserve Board of Mr. Jay as a Class C. director and Federal Reserve Agent for the ensuing term. Mr. George Blumenthal made a confidential statement to Mr. Peabody (in the absence of Lr. Jay) and myself about a month ago. you, I think, at the time. I wrote This statement was very satisfactory and we indicated to Mr. Kenzel that he could purchase up to one million dollars of their acceptances and I trust you approve of this action. Later I sug..3ested to Lazard Freres whether they would desire to have this statement submitted to Philadelphia, Boston or any of the other banks, and ior. Blumenthal advised me that for the present they would prefer not to have the statement furnished the other banks, as he did not anticipate doing a very large acceptance business. I assume that you will write me your opinion concerning. the pro- posed amendments to the Federal Reserve Act now being considered by Cong-cess or which are soon to be presented to them. I have talked with Mr. Woodward and also LA*. Alexander, hoping that we might have a conference with a few of the bankers here and it is possible that we may get together next Wednesday or Thursday, at which time I hope to secure their opinions as to the various amendments proposed, feeling that the Reserve Board ought to have on such important matters the advice of practical bankers. FEDERAL RESERVE BANK OF NEW YORK a- Benjamin Strong, Esq. 12/20/16. Yesterday I lunched with M. Masson, also the Secretary of the French Legation and Mr. Curtis' friendkthe representative of the French government) and had a iery pleasant conversation with them, in which they expressed, rather guardedly of course, their opinion of the pronouncement of the federal Reserve Board in re British Exchequer bills. The stock market is in a somewhat nervous condition at present and it would seem as though we might have some erratic movements, both in call money and on the exchange, before the end of the year, but I hope nothing serious. I understand from you that Mrs. McLaren will return here for the Christmas holidays, and I assume that she will call upon us. Messrs. Peabody and Thompson and I expect to have a meeting tomorrow to discuss any changes in salaries which may be recommended by the cashier and also to consider the question of an emergency salary or bonus based on the higher cost of living. I enclose herewith information as to our acceptances up to to-day. At a meeting of the committee on admission of State banks yester- day, I asked Mr. Curtis to reach Mr. Starek, if possible, and he surprised us by coming into the meeting yesterday afternoon and assisting in passing upon the admission of the Montclair State Bank, whose application we forwarded to Washington last night. With kind personal regards and my very best wishes to you, remain, Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colo. AHT/CEP I -- .e Correspondence OM Date Dec. 21, 1916, Governor Strong's Letters of Mr. Treman Subject: E. R. Kenzel. November 20th and December 6th, MID ' FEDERA ,ZIESERV1 BANK 01- NEW YORK LETTER - NOVEMBER 20th BANK OF CHARLESTON Two and three quarters was a low rate for this paper but at the time of purchase was 1/4 of 1% above the best rates obtainable for members located in New York. MULLER, SCHA1L & CO. Mr. Strong's comments are noted and his suggestion will be followed out. KLINGSMIZH & TELFAIR This question was considered as to Klingsmith about the time we first purchased bills. Mr. Curtis has the sub- ject before him for further investigation as to the law. . LETTER - DECEMBER 6th , HIGGINSON & CO, and other private bankers th t have not filed statements with us. All our purchases are indorsby member banks. These Boston names are mostly indorsed by e First National Bank of Boston and are received by us from the Federal Reserve Bank of Boston. GUARANTY TRUST CO. This line reached its apex when we were purchasing freely in the early days of the December flurry. About one DERAL RESERVE ce CorrespoL .NK OF NEW YORK Date ... 21, 191A. Subject: Governor Strong's Letters of Mr. Treman From 1)Pr._ November 20th and December_flth. R. Kenzel. -2- million of it was indorsed by member banks and it is expected that the line will decrease. ENBURG THAIMANN & COMPANY All bear bank indorsements. .LAZARD FRERES All bills purchased bore bank indorsements until their statement was filed. WHITNEY CENTRAL NATIONAL BANK NEW ORLEANS These bills were all taken at least one quarter per cent. above rates for New York members and about ,25,000. of them bear banking indorsements. THIRD NATIONAL BANK OF SPRINGFIELD AND OTHER BANKS IN NEW ENGLAND OUTSIDE OF BOSTOY These are institutions that are taking the overflow of 1 acceptance business from the Boston banks which are getting more business than they can accommodate themselves. Their lines are principally credits for the imports from South America but recently have been largely increased by domestic credits on cotton and wool in warehouse. This class of bills comesto us from the Federal Reserve Bank of Boston and all bear the indorsement of some of the large Boston banks. eippor .,ice Correspondence - min FEDERAL RESERVE BANK OF NEW YORK Date Subject, Treman Dec. 21, 1916. Governor Strong's.Letters of November 20th and December 6th. S. R. Kenzel -3- All merchants such as Balfour,'Alliamson & Company and Tata: are all import trade bills and well indorsed - some cases by the Yokohama Specie Bank, Hongkong & Shanghai Banking Corporation, Chartered Bank of India and International Banking Corporation, and some by member banks, and quite a number of them by both the foreign and member banks SOUTH-AMERICAN BANKS The liability to us as indorser of these names arises from I their purchases in South America of prime bankers' bills which they indorse. Our purchases of bills indorsed by the South American banks have been on the credit of the acceptors or American indorsers, or both. 't The larger liabilities cover a diversity of acceptors. The principal acceptors who do this South American business are the Guaranty Trust Company, National City Bank, National Park Bank, National Bank of Commerce, Irving National Bank, Bank of New York, Mechanics & Metals National Bank, First National Bank of Boston, Philadelphia National Bank, the Bankers Trust Company, private bankers and to a smaller extent the Equitable Trust Company which, however, is developing its business in South America. mrimmitonio, ERK/IWB. MEMORANDUM FOR MR. TREMAN AS TO THE VOLUME OF BILLS HELD AND THE PROPORT/ON UNDER RENEWAL CREDITS, DECEMBER 20, 1916. According to aar records at the close of business December 8, 1916, the amount of such bills held by the Federal Reserve Bank of New York was - 15,451,650. and by other Federal reserve banks 18,652,750. 44,104,400. At the close of business December 19, 1916, these amounts had been reduced to: For the Federal Reserve Bank of Jew York - - - 13,931,122. Other Federal reserve banks 16,973,041. t30,924,163. There will mature daring December: Federal Reserve Bank of New York $ 1,650,750. Other Federal reserve banks- 1,822,250. 4 3,473,000. On January 2, 1917, maturities will be: Federal Reserve Bank of New York $ 2,697,000. Other Federal reserve banks - 4,045,000. 0 11110IGC 6,742,000. FEDERAL RESERVE BANK OF NEW YORK JAN2 1,;1 December 21, 1916. -7 dear Governor: I have received your favor enclosing a letter received by you from . Lewandowski and copy of your answer to same. I an writing to 9uperintendent Richards to-day, asking for certain information and then will, with 7r. Curtis' aid, make up a memorandum of the other information he desires and forward it as early as possible. Certainly we should give him all the information which he seeks in regard to the opening of a branch bank, and personally the establishment of branches of the most important European banks here should, I should think, facilitate an exchange of business between the countries. You will be interested in knowing that our vault work is progressing very rapidly and we are assured that if we desire, we can move in and occupy same on December 31st. 7e discussed the matter this morning, however, and will await further developments before making final decision as to the date of transfer, but will probably be able to move by the 7th or 8th of January. 7e are sending out to our member banks to-day the letters as to our dividends and will announce same this afternoon for the morning papers, they as Philadelphia did yesterday after the meeting of their directors, paying up to July 1, 1915, whereas we pay to April 1st only. Just at the moment the market is going through the throes of disturbance caused by the President's letter and Lansing's subsequent statement acts of that we were being brought to the verge of war by the intolerable the belligerents on both sides. It would seen most desirable that peace should be restored as quickly as possible, so far as the world's condition is concerned, but I an not prepared to believe yet that they are ready for http://fraser.stlouisfed.org/ an armistice Federal Reserve Bank of St. Louis rending settlement. FEDERAL RESERVE BANK OF NEW YORK 2 t_ Benjamin Strong, Esq. 12/21/16. Answering your letter of December 1th in regard to our foreign banking relations, I understand from Mr. Curtis that he has written longhand his personal impressions of the situation. Personally I agree that so far as we can judge Governor Harding and some other members of the Board agree with the 4-governors that we should not proceed to develop the machinery for such rela- - tions unless we are prepared to do some business under the machinery, and I cannot but feel that natters are tending strongly in this direction. Possi- bly the events of this week, i. e., Lloyd George's speech and peace suggestions, will all have a bearing and it would seem ought to hasten our action in this matter, so that we may perfect those arrangements at the earliest passible moment. I assume that you are keeping in touch with Washington direct but if there is anything we can do in New York to hasten the matter by suggestion, kindly advise us. I understand that Mr. Jay has changed his address from the Hotel Pon Air, which I assume may not be open, to the Palmetto Inn, Aiken, S.C. At this point I was interrupted, after which I received a confidential letter from Mr. Warburg, stating that the foreign agency matter had been disposed of in a manner which he thinks will be pleasing to you and that he is writing you accordingly confidentially to give you an advance notice, all of which is especially gratifying in view of the disturbed condition of affairs just now by the peace talk. I invited M. Masson to drop into the bank occasionally while he is here and assume that he will feel at perfect liberty to do so now. Mr. Warburg ,writes me that he is going to Pinehurst for a few days' rest but will be back at Washington next Tuesday or Wednesday again. I shall be glad to have your viers as to any changes in salaries of the junior officers, who are receiving as follows: PHT Colo. Denver, Boulevard, Montview 410C Esq., Strong, Benjamin yours, Sincerely remain, I regards, kind Tith medicine. the taken have you that sham will events subsequent that hope shall but present, at asked being fee no with along prescription this send I work. office to aprlication less and etc., motoring, as such activities, outdoor in interest more life, outdoor more rest, more prescribe better had Treman roctor that think not you do and much too fretting and worrying not you Are business. to closely too yourself devoting and letters many too writing not are you whether ask I May o'clock. one about to Up sold been having shares million two over to-day, turmoil big a having is market stock The 1916. of employees to apply to 1st January of as paid be to bonus or salary emergency an of recommendation the on agreed tentatively have we and Thompson and Peabody Messrs. with meeting a from cone just have I week. text early me to report to he best, deems he as recommendations such for others the of list the over go to Sailer Mr. asked have I discussed. originally figure the to raised be should Sailer Mr. that think but you from expression an have to glad be should I and 4th January about held be to meeting the at them upon nass will s Jefferson Higgins Kenzel Cann Hendricks Sailer 4,200. October) about (since 5,000. 4,800. ! 6,000. 6,000. (now) 12/21/16. Esq. Strong, Benjamin 3. Mr. Mr. Mr. Mr. Mr. Mr. YORK NEW OF BANK RESERVE FEDERAL FEDERAL RESERVE BANK OF NEW YORK December 22, 1916. Tly dear Governor: As there has been some mix-up in regard to the delivery of Special Instructions of the Federal Reserve Board dated September 15th and known as Special Instructions No. 2 of 1916, I am sending you herewith a cony. I also give to you greatly belated information in answer to yours weeks of November 20th and December 6th, which I asked Mr. Kenzel about three ago to furnish, but we have been short-handed because of absences for various reasons; hence the delay. 7r. Woodward has invited 7-essrs. Alexander, Vanderlip, Hine, 7cGarrah, Perry, Peabody, Curtis and myself to dine with him next 7ednesday night, and he has also invited Messrs. Warburg and Delano to come over, givBoard ing these gentlemen an opportunity to talk with members of the Reserve as to the amendments now being considered, etc. Would it not be well at discretionthat time to bring up the question of the New York Clearing House ary list and see if it is posgible to bring about closer cooperation. There to draw as is no doubt of the desire on the nart of banks in other districts the transmuch from New York as possible, and they are anticipating that with bank, the other fer of the reserves from correspondent banks to the reserve districts will gain. It would seem to me that the clearing house banks and after the interests we should cooperate in such way as is proper in looking of this district. As yet I have not been informed in detail as to the foreign arrangeadvised and ments but assume that before this letter reaches you, you will be that we shall later hear from you as to the developments. FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. ..... 12/22/16. George Allen of the American Bankers Association, who is now secretary of the new State Bank Section of the American Bankers Association, was in today showing me a crude draft of a circular he is issuing to all State barks in the United States, outlining the present basis on which State banks can core into the Federal Reserve System and asking a number of questions, such as whether they believe it is for the interests of State banks to be connected with the Reserve System, what changes should be made in the present law which would enable them to do so, etc. He stated in the conversation that from his knowledge, based on interviews all over the country, he was certain that there was better feeling towards the Reserve Board,(and I interpret it the Reserve System,) than was apparent on the surface, and that there were many banks, esnecially in the west, about ready to join the system. Personally I do not take very kindly to the plan of associate membership, giving the State banks privileges without perhaps properly safeguarding the situation. I should prefer that the larger State banks at least should come in under regular membership, like the Corn Exchange, and then if any associate membership is permitted, that it be on the part of the smaller banks. Mr. Peabody has gone to Saratoga to-day to remain next week. Curtis went this noon to Boston and I hope to get away to-night to snend Christmas in Ithaca. Referring to yours of December 13th, with which you enclosed an extra copy in case I desired to send same to Mr. Thrburg, I would state that I did not think it wise to forward the fetter and have held it, and the subsequent events have shown that it was better that it did not go forward, as I hope now, the decision having been made, that matters will develop quickly, unless the President's peace letter shall arouse more or less bitter feeling against us on the other side. FEDERAL RESERVE BANK OF NEW YORK 3.. Benjamin Strong, Esq. 12/22/16. with this goes, my dear Governor, the heartiest greetings and very best wishes to you and yours for a happy Christmas season. Certainly for many of us the fact that you are gaining in strength and are.able to cooperate so influentially in the further development of the system is one of the things for which we can be most grateful. Sincerely yours, Benjamin Strong, Esq., 4100- Montview Boulevard, Denver, Colo. RHT/CFP _ Z.Ze EQUITABLE BUILDING 134.P. eYuetay NEW YORK 2tty l-#.1"/ "7 /t-,YritAtvt- Pc 4 74- Ate,tAA s,4,611,, ft (tlij" ti(-&-"Af 6,._( & `/,/ 7--A, y0,t) Ativ-"A-A-7 -,_,_Lui -ett-- c e, a j- / f/ - ef k_ 3At, _ 1 (euet-it -;" Ca --- ol, /-170-(AA, il& 6t-tA-Li a-dA4f-tt--t-' agetA/VIA-11AY eA, tu---i- ' E,LA. Ci'tb-11-` Lttct,,t( tt-te-i-t3,--.--z_44 -/-ct . ,/,E( ert za-9, tc-c-c-4,( ,d-,t-e-4 ,," --:64,- aw - '''' Cre'-e'4, A", ir -e1A., c.--7 - -5-ef14 AS & -2- g °'/:if tA-L'47. A, - s 4( r --.--0-4iti- 4 /"AA7 7i 6aeo I' 1- " ; - t 1_. r.)- (1,0A-v -1- I 4 et4,a1--,- ,, /),,,,,--, - / lyt 5e-1,10" ov 6 Cuw-Lcit , 0 -A , A A -,41LA ie. 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P4-4-1-111AAA:ef "41 g4))/Ge-- a-c4it .,4647-a.o_et 1 FEDERAL RESERVE BANK a OA fr. tC6). OF NEW YORK December 26, 1916. JP-,142 gear Governor: I snent Saturday, Sunday and Monday in Ithaca, reaching New York this morning, and at our junior officers' meeting was greatly surprised by having my attention called to an article in the New York Times headed "Federal Reserve Bank has London Agent," and then later seeing the headlines in the New York American, clipping from which I enclose. If you could have heard our comments, you would have understood what a shock this gave us all who were conversant with the efforts that have been made to protect in every way the confidence and secrecy which you had at different tinesemphasized to protect the situation. T-e put in a call for Governor Harding, Mr. 7arburg being at Pine- hurst for this week and Mr. Delano having been away last week although he is in Thshington to-day. \Mile waiting for the call, Hr. Jay's telegram was .,'eceived, stating that he had forwarded on Saturday the official authoriza- tion of the negotiations with the Bank of rngland, the same having cone to him by mail forwarded from the New York bank, it having been marked "Confi- dential. He added that he had telegraphed you what he had seen in the papers. In a short time I talked with Governor ?larding and later Hr. Delano called up Mr. Curtis, memoranda of our conversation being transmitted to you herewith. -e telegraphed you, as per copy which 7'r. Curtis will send you, and also had a talk with Hr. re ITeuflize, a memorandum of the conversation with whom we will also forward, and are awaiting such instri:ctions as you think best to send to us. T"e discussed the same with Hr. -oodward at luncheon to- FEDERAL RESERVE BANK OF NEW YORK 2 Benjamin Strong, Esq. 12/26/16. day and the general impression, pending further light on the situation from Washington, is that this act on their part was a direct violation of confidence and may seriously jeopardize your negotiations with the Bank of England. I hope that we straightened out Hr. De Neuflize, as we told him in substance that this authorization of the Board would have no adverse effect upon the negotiations now being carried on informally between Governor Strong and H. Pallain and that we were awaiting a reply to Gevernor Strong's last letter to H. Pallain before proceding further. So far as we can learn at the moment, matters arose while most of the members at Washington were away and Governor Harding assumed the responsibility of letting this go out, but this surmise on our part may be changed later by additional facts. We have disliked very much to trouble you with this matter when you are trying to have a vacation with your boys, but there seems to be no alternative, inasmuch as you were the one who succeeded in bringing about in so successful a manner the preliminary agreement, and we assume that you will want to communicate by cable with the governors of the Bank of England, and we shall be ready to carry out any further instructions you are pleased to give us. Governors Aiken and Rhoads were very much disturbed by this action, as I assume the other governors are also. 7e are to have a meeting of our executive committee to-morrow at 3 D. M. and expect to have every director of the bank present, whom we can reach, to determine what further action we shall take. Personally it seems to me that whoever may be acting governor of this bank is entitled to have sent to him directly, and not through the Federal reserve agent, communications from the Board affecting or bearing upon the operation of the bank, and where instructions are sent to the chairman or Federal reserve agent as FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 3 12/26/16. now a matter of procedure, unless they be confidential communications for the Federal reserve agent alone, they should be duplicated direct to the governor, thus preventing occurrences like to-day, when this bank had no knowledge of the official action of the Board other than Mr. Warburg's confidential state- ment that the Board had acted in away which he thought you would approve. Tow, my dear Governor, we have done the sputtering and expect to do whatever, further protesting is necessary, but I just hope that you will rise to the occasion and pull the chestnut out of the fire and if possible, enable us, for the good of the country at large, to perfect the necessary arrangements with the Bank of England. Do not let the bungling way in which this has been handled, nor the breach of confidence, affect your trying to save the day, if it is possible. Certainly we want to assist in every way possible, whatever may be our personal feelings of what the Board at Washington has or has not done. We have taken the position to-day that we had no comment to make on the facts as sent out from Washington, but I have learned from some of the reporters that the fact that negotiations had been authorized had been most favorably commented upon in the Street in various quarters, as being a move which would be of great benefit to the country at large, if it can be carried through. We had a call to-day from Mr. R. Y. Rebden, agent of the Bank of Montreal, who stated that he understood we had completed reciprocal banking arrangements with the Bank of England and he thought that his bank would be very glad to enter into some similar arrangement to handle Canadian business. e also had a call from M. Alexander Bungener, who brought a letter from M. allain to you, introducing him as a director of the Banque Nationale de Credit. Re is here making a study of conditions with special reference to handling cotton bills. 4. FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 12/26/16. It is a perfect shame to have you disturbed at this tine by this unpleasant upset, but I have the utmost confidence in your taking the broad unselfish view of this situation and directing the handling of it in a way which, I hope, will be most satisfactory in its results. Woodward had asked Messrs. Warburg and Delano to come over for dinner to-morrow night but Mr. Warburg has a cold and is in Pinehurst for the week and Mr. Delano will not be able to come over until Friday night, when he spends Friday and Saturday with Charles Norton. We will probably have the dinner at Mr. Woodward's house, however, and I hope that we may have an informal exchange of Views on some of the amendments and the clearing house proposition. -ith kind regards, I remain, Sincerely yours, Benjamin Strong, Esq.,, 4100 Montview Boulevard Denver, Colo. 47 2Vt RPT/CEP Enos. fet-ZeCtst If L4-.4cc. ecc."4-Alz";11- 7Z47 f,,A.,1441,1:5 Pt-4-- -v`--Aed 1-4111t t;Va_sh POSTAL TELEGRAPH 400 COMMERCIAL CABLES CLARENCE N. MACKAY, PRESIDENT.' RE,9EIVVIotTF-ice,, E,ENtER 92r,s, St., Ernest & Cl-anmer Ridg :L.EpHoNE MAIN 4-500 The Post., 16L-21 TELEGRAM DELIVERY NO. ph-Cable Company (hcorporated)transmits and delivers this message subject to the terms and conditions printed an the back of this blank CH - DESIGN PATENT NO. 410529 184 MG- 6151311 Dec 26 1916 CB New York NY Benjamin Strong -4- 4100 Pontview Blvd, Denver Colo Newspaper headlines quote "the Board has to appoint as one of carry announcement by reserve board as follows the Federal correspondents and authorized its Reserve Bank of NewYork agents the Englandthere follows quotation from granting the authority to section fourteen continue qud;e `in establish the agency the board has authorized the Federal Reserve Bank of England of London Bank of NewYork to maintin accounts Bank of England so that either for or with the operations, both in England and in the United States are possible.Other Federal Reserve Banks may participate in the agency England uiron the mum terms relationship with the Bank of and conditions that will govern the Federal Reserve Bank of NewYork if they so desire 0 end qucte,we had no notice Board/Of Intended publicity copy of boards vote which either of action of except a sealed envelope contaning was forwarded I telephoned Harding our astonishmmt had developed suddenly make immediate Have failed to reach you by t8lephone with to today he replied that reasons publication expedient stop assume you will communicate England or advise us Jay Friday R H Traman Zj.` 44 flbi PCITFiTAL TELEORAPH-COMMERCIAL CABLES 't OPERATOR'S NOTATIONS, ALASKA _NEW ECU ND LA ND C A NA a 1161 a'. -*.t...7Lif .741 DI a War - AFRICA THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AROUND I rtE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY (.INCORPO ATEV) TRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT "ip THE FOLLOWING TERMS AND CONRITIONS. To guard against mistakes or delays, the sender of a telegram should order it REPEATED; that is, telegraphed back to the ori,Cmting office for comparison. For this, one-half the unrepeated telegram rate is charged in addition. Pule, ,therwise indicated on its face, THIS IS AN 1NREPEATED TELEGRAM AND PAID FOR AS SUCH, In consideration whereof it is agreed between the sender, of the telegram 11.1314.9#13 Company as The Company shallmot be liable for mistakes or delays in the transmission or delivefY,,it'for nondelivery, o anPUNREPEATED telegrati, 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 stun received for sending the same, UNLESS SPECIALLY VALUED; nor in any case for delays arising from unavoidable interruption in the working of its lines; l'CUR FOR Ti3IIRORS.LN. CIPHER OR' OBSCURE TELEGRAMS. ' In any event the Company shall hot 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, it 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 sum paid or agreed to be paid baSed on_ sun Sallie equal, to one.tefith of one per cent, thereof. T.; The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other CompS"tty 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. 6. 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 ill its said office, The Company shall not be liable for' damages or statutdry penalties in any case where the claim is not presented in writing Within sixty daysafter the telegram 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. NO EMPLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING. CHARLES C. ADAMS, CLARENCE H. NiACKAY, PRESIDENT. EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER. VICE-PRESIDENT. CHARLES P. BRUCH, VICE-PRESIDENT. THE FASTEST TELEGRAPH SERVICE IN THE WORLD MA TIME SENT, ETC, Form 1204 is OF SERVICE SYMBOL VVESTE 027., Lay Message Day Letter Blue Night Message Nile WESTERN UNION NL 74W40 etter If none these 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. TEL :14 lev7s UNION AM NEWCOMB CARLTON, PRESIDENT CLASS OF SERVICE SYMBOL Day Message Day Letter Blue Night Message N. '- 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 eYnibol appearing after the check. 20 D G fIRK NY-121 PM DEC 26 IN STRONG, eip tc--,. 183 71 EPH NED TO TIME CAMP HEWES,KIRKLAND, ESTES PARK. PAPER HEADLINES CARRY ANNOUNCEMENT BY RESERVE BOARD AS FOLLOWS QUOTEBOARD HAS AUTHORIZED THE FEDERAL RESERVE BANK OF NEWYORK TO APPOINT AS ONE OF ITS CORRESPONDENTS AND AGENTS, THE BANK OF ENGLAND OF LONDON ENGLAND --- HERE FOLLOWS QUOTATION FROM SECTION % FOURTEEN,CONTINUE, QUOTEIN GRANTING THE AUTHORITY TO ESTABLISH THE AGENCY THE BOARD HAS AUTHORIZED THE FEDERAL RESERVE BANK OF NEW YORK TO MAINTAIN ACCOUNTS,EITHER FOR,OR WITH THE BANK OF ENGLAND_,S0 THAT OPERATIONS BOTH IN ENGLAND AND IN THE UNITEDSTATES ARE POSSIBLE OTHER FEDERAL RESERVE BANKS MAY PARTICIPATE IN THE AGENCY RELATIONSHIP WITH THE BANK OF ENGLAND UPON THE SAME TERMS AND CONDITIONS THAT WILL GOVERN THE FEDERAL RESERVE BANK OF NEWYORK IF THEY SO DESIRE END ROUTE WE HAD NO NOTICE EITHER OF ACTION, OF BOARD OR OF INTENDED PUBLICITY EXCEPT A SEALED ENVELOPE CONTAINING COPY OF BOARDS VOTE WHICH WAS FORWARDED TELEPHONED TO JAY FRIDAY HARDING OUR ASTONISHMENT TODAY HE REPLIED THAT REASONS HAD DEVELOPED SUDDENLY MAKING IMMEDIATE PUBLICATION EXPEDIENT STOP HAVE FAILED TO H YOU BY TELEPHONE ASSUME YOU WILL COMMUNICATE WITH ENGLAND ADVISE US. I R R TREMEN. 303PM. rr- FEDERAL RESERVE BANK OF NEW YORK talk December 27, 1916. )1 JAN2 My dear Governor:%:, I mn enclosing herewith a copy of a letter I am writing to M. Maurice Ledandowski, and beg to advise you that the infornation is being forwarded to him to-day. I thought you might like a copy of the letter sent for your own files and shall be glad of any criticism, in case the matter was not handled as you desired. I beg to advise you that Mr. Jay wrote, which letter was received this morning, enclosing a copy of the resolution of the Federal Reserve Board, stating that the same had been received by him marked "Confidential;" hence we at New York were justified in forwarding it notwithstanding Dr. Willis' view. I also enclose for your information copy of a letter received from Governor Harding and would state that I shall bring the letter before the executive committee at their meeting this afternoon for their consideration. Personally I am convinced that no self-respecting man would care to continue as governor or deputy governer of the Federal Reserve Bank of Hew York unless important communications, such as the foreign bank matter, are sent by the Federal Reserve Board direct to him and not to the Federal reserve agent or through any other channel, and I expect to write Governor Harding to this effect as soon as I can find time. 7e received your telegram this morning and Mr. Curtis has already had an interview with Mr. M. and he has cabled and hopes to straighten out the situation nnd put us in the proper light, and we will keep you advised by wire as events develop. FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 12/27/16. I imagine that we shall have an interchange of views between the guests of Mr. Woodward to-night at dinner, and I hope that we shall be able to enlist their sympathy more heartily in the development of certain matters affecting the New York Federal reserve bank. with kind. regards, I remain, Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. "(014, "44 c.-Z. a"--ezA ke, 7,644( RHT/CEP Enos. uv, fre-eir >-/-0,44( FEDERAL RESERVE BANK OF NEW YORK December 28, 1916. 7y dear Governor: r7e have lust received an answer in re foreign banking relations through the channels you suggested, as follows: "The governor surmised exactly what had hanpened and was in no way put out by the premature announcement, nor does he consider that it need interfere with the continuation of discussion as to terns eventually to be submitted to the respective boards, but he thinks it would now be best neither to contradict nor confirm or explain it but to let the matter rest for the present." We will undoubtedly telegraph or nhone you the contents but I an merely sending this on to confirm it, and assume that you will make further suggestions as to our action as you may decide. :Tr. Towne formulated a letter for us to sign to the Federal Reserve Board and Curtis and I went over it carefully at lunch and it is now being put in shape for the final approval before sending. I hope that it will appeal to you as being a wise letter to send under the circumstsnces, and, further, that Mr. Jay will' not feel that the suggestion as to direct corres- pondence between the Federal Reserve Board and the executive officers reflects in any way upon his relations with the Board. In regard to the acceptance business of to-day, I give you these facts: Bills bought to-day We shall keep about Matured to-day (ours) (all) Our balance to-night about 02,250,000. 1,200,000. 807,474. 1,482,000. 40,600,000. and we rediscounted for the National Butchers & Drovers Bank !7100,000. at 4%. FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. With kind regards, I remain, Sincerely yours, Benjamin Strong, Esq., 4100 Montvievi Boulevard, Denver, Colo. RHT/CE? 12/28/16. FEDERAL RESERVE BANK OF NEW YORK December 28, 1916. Jr..I12 My dear Governor: Your letter, enclosing one from the National Association of Credit Men, is received and the same will be answered from this office. It was very gratifying to hear from Hrs. fcLaren, who called yester- day afternoon, that you were weighing more than ever before and that you were gaining steadily, all of which is confirmed by your own letter of December 24th. Let me caution you that you will be inclined, as your strength devel- ops, to call upon the surplus strength more and more, which it seems to re is the very thing you ought not to do, but you should steadfastly persist in self-denial and sacrifice of the pleasures and rigorously devote yourself to the daily regime, especially the living outdoors and the absorption of all the ozone possible. There will be much work for you to do and many problems for you to solve and the longer I am in this work the more convinced I am of the great need of the revision of our currency, the substitution of modern for antequated treasury methods, etc.:, and for this work I know of no one so admirably fitted as are you. I have wished during the last month that you could have been here to straighten out some of these difficulties arising from the actions of the Federal Reserve Board at Washington. We had a meeting of our executive committee yesterday, at which were present :7essrs. Peabody, Towne, '7oodward, Palmer, Thompson, Starek, and Curtis and myself. had a discussion of about an hour over the action of the reserve board in making public the foreign bank relations, and decided to have a comnittee of Tessrs. 7eabody and Towne draw up a letter, which will be .*DERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 2, 12/28/16. done to-day, to forward to Washington, expressing the views of the directors as to this action and also as to the relations between the Federal Reserve Board and the New York bank. 7essrs. Towne and Palmer both seemed to feel strongly that we should protest vigorously against their action. 7:r. Peabody seemed to sympathize also, while Mr. Thompson suggested milder action because of the abnormal conditions and our not understanding all of the influences which had led to the action at Washington, but all were in substantial accord as to our sending a letter and the lines along which it should be drawn. -e will endeavor to send you a copy of the same later. Last night Mr. Woodward entertained at dinner Messrs. Vanderlip, Fines, McGarrah, Alexander, Ferry, Curtis and Peabody and myself-Wiggin unable to be present, Warburg sick in Pinehurst, and Delano unable to come but will be in New York Saturday of this week. We had a very pleasant and to my mind rrofitable evening, Mr. Vanderlip leaving about 11 p. m. and the rest of us remaining until 12. We discussed some of the suggested amendments, the collection s7stem, and other matters, some in a very satisfactory manner although, of course, the dissatisfaction over the Clayton bill and various acts of the Federal Reserve Board came to the surface. "e informed them of our proposed offer to our member banks of telegraphic transfers free except cost of telegram. The same was freely discussed and approved by all as being apparently a wise move, but we shall in our circular, to be sent out. to-day or to-morrow, say that for the present we are offering this to our member banks. We discussed the New York Clearing House charge of 1/40 of 1% and Alexander said, while originally favoring this and while he still felt that should there be any effort to make drafts on Federal reserve banks available at par at all reserve banks, he should feel that the clearing house should Benjamin Strong, Esq. FEDERAL RESERVE BANK OF NEW YORK 12/28/16. impose a charge for such drafts and should be prepared to protect itself in other ways. 71e did feel personally that the clearing house might drop the 1/40% charge, at least to try it out. Mr. McGarrah, who is chairman of the clearing house committee, seemed to be impressed favorably, I thought, by the discussion, and I expect to take up with him to-day the question of whether he will not put the matter through. There seemed to be a very strong sentiment against the proposed amendment doing away with the necessity of any vault reserves and there were different expressions of the necessity for strengthening and keeping strong the position of the New York City banks and the Federal reserve banks against what may develop suddenly at any time. To my mind it was a most helpful meeting, and I urged upon those present their trying to induce members of the Federal Reserve Board to come over to New York more often and meet representatives of the larger banks for exchange of views informally, so that the Federal Reserve Board might be more in touch with the conditions prevailing and the views of the men in the finan- cial center, as I believe they would accomplish more by an occasional talk with the men in New York than by their going down to Thshington, as two or three of them had reported the reception they had received at Washington. I am inclined to think that we should raise our acceptance rate another quarter per cent., because the rates in the outside market for such acceptances as Brown Brothers, Morgan, Goldman, Sachs Co., Pte., are around 3 3A, while our rates are from 3% to 3 1/4%. The stock market is in a very nervous condition and probably remain so while peace negotiations are going on. "!ith kind regards, I remain, Sincerely yours, Benjamin Strong, Esq., noulevard, 4100 Montview http://fraser.stlouisfed.org/ Denver, Colo. Federal Reserve Banknum of St. Louis wil7 FEDERAL RESERVE BANK OF NEW YORK la Lk JAN2 December 29, 1916. i;:.? dear Governor: Jay writes, "I am in the dark about the foreign bank announcement. ft seems to me incomprehensible that they should have done it and about as stupidly worded as possible. I am simply foaming on the subject and hope something will reduce my pressure or there will be an ascension."' 7Te further reports that he is gaining but may want to stay a few days longer as he wants to be sure and get well, and I had already written him in a letter two or three days ago that he should stay until his cough was removed and I shall reiterate it. As a result of our discussion at the 7roorlaard dinner, I talked with Citarrah yesterday, asking him to exert his influence to bring about a removal of the 1/40 of 1(1 charge by the ITew York Clearing House from checks not on their discretionary list, so as to make all points in the ITew York district discretionary, thus doing away with the charge. He told me that he was in favor of so doing and that if we would be patient; he would endeavor to have it brought about but it might take some time to do it. At our officers' meeting to-1day we decided to continue arranging all the necessary machinery to collect from nonmember banks not assenting) checks on them through the express companies, so as to have everything in readiness to act but not to make a definite date for inauguration until we know more about what Congress does in the short session. We also decided to have personal calls made on a number of the larger institutions during January, so as to gain some more, if possible, before drastic measures are taken. FEDERAL RESERVE BANK OF NEW YORK 2, Benjamin Strong, Esq. 12/29/16. I will ask Mr. Sailer to instruct the Money Department that if the amendment to the note rrovisions of the Reserve Act is passed, the :7oney De- partment will send notes for redemption direct to 7ashington. The directors did not feel justified in raying a dividend beyond April 1, 1915, just at present but I shall hope that we will by July 1st be able to make a dividend up to December 31, 1915, as the Boston bank has just done: also Chicago, I believe. e shall probably have a meeting of the committee on making drafts on Federal reserve banks available at par the week of January 22nd in 7ashing ton, mid now that Governor Seay has nresented the argument in favor of this action (and I think it quite complete and exhaustive) I wish that you would prepare a brief on the objections to the plan for consideration of our committee and send it to me, when completed. I assume that our action, which will take ef.7ect next week, making telegraphic transfers free except cost of telegram, may have some bearing also on this question. As a compromise we may be obliged to accept the plan in its application to any one designated Federal reserve bank based on the member bank notifying the district reserve bank when the draft is drawn, stating upon what other Federal reserve' bank it is drawn, and then the reserve bank of that distridt notifying the other reserve bank of the draft and guaranteeing it against loss. I wish that you would send me a copy of your memorandum to Mr. 7arburg In re rroposed amendments to the Reserve Act. I had a call from !7r. George Roberts yesterday, during which he stated that he might be able to visit you between January 2nd and 15th and would telegraph you at once. 7r. Curtis also may be able to go out some time soon, he hopes. I am enclosing copy of some statistical information prepared by ,.."......* FEDERAL RESERVE BANK OF NEW YORK Benjamin Strong, Esq. 12/29/16. Governor Seay in re proposed amendment requiring member banks to keep all reserves in the Federal reserve bank and not to count money in vault as reserve. 7e are sending out a letter on telegraphic transfers, copy of which I will enclose or have mailed to you. I am sending copy of a letter received from M. Pallain, dated 7ovembar 29th. I assume that you will suggest any answer you think advisable, but apparently it is only an acknowledgment of some of the literature we sent him. I assume further that you will immediately begin negotiations with the Bank of England and will send copy of same to this office for our records. 17e are most happy over the knowledge that matters are not misunderstood on the other side. yr. Curtis is cabling, as you requested, advising as follows: "Strong expresses his deep regret at premature announcement. We will continue negotiations by mail." and it is now for you to direct same in such manner as you deem best. 7e received a communication from H. V. 7eredith, President of the Bank of Montreal, as per copy herewith, and will acknowledge same stating that it will be brought before the directors at their meeting next Wednesday for their consideration. If you think we should take any Other position than that of encouraging preliminary negotiations towards a.reciprocal relation at a later period, perhaps you had better wire me suggestions to nresent to the directors on 7ednesday. "e have just had an application from the Merchants Yational Bank of Yew York for a loan for fifteen days of 43,600,000., and yr. Woodward has approved in advance of the meeting of the committee, because he leaves at 1 p. m. for 7aryland for the week-end. 7ith kind regards, I remain, Benjamin Strong, Esq., Boulevard, 4100 Yontview http://fraser.stlouisfed.org/ Denver, Federal Reserve Bank of St. LouisColo. Sincer ate-, FEDERAL RESERVE BANK OF ARK Ducemb:r 29, 1916. JAN2 U7 Dear Governor Strong: I am deeply chagrined at not having sooner acknowledged the receirt of the beautiful desk clock which you sent me for Christmas. dzl.p.2z.aglriative of this I am more perhaps than you can understand, as I have a sincere affection for you; but thisl'as certainly been a most stren- uous week. for us in the bank in view of the additional work incident to the end of the year, and especially because of the Board's announcement in re foreign bank matters. I had both Mr. Woodward and Mr. Peabody read your letter of December 24th in regard to the organization and your return, and we are all mighty glad that you are gaining so regularly. Do not worry about the long absence as half of it has already passed and the bank is still ran- fling, and it will await your return which it longs for most earnestly. I am enclosing herewith crude rough draft of a proposed report from our executive committee which:will be:presented to the directors next Wednesday for their action and approval, such report then being forwarded in the shape of a letter to the Reserve Board at Washington. Minor de- tairg-will be corrected but we shall be glad of any criticisms as to any of the major parts of the report, should you desire to make them before Wednesday next. I assume the committee on salaries will report at that time. Sincerely yours, P. S. I enclose also copy of my letter to Governor Harding, which explaint itself. -- F ED ERA L RESERVE RANK OF NEW YORK Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. PET/BAH Encs. Benjamin Strong, Esq., 12/ 29/ 16 . December 28th, 1914. Ly dear r. Treman: The ppplos arrived in Tory good condition, and I can assure you that the members of the family have enjoyed them very much. Apples, as you realige, are an important part of the supplies of a family where there are small Children like mine. You will I hope pardon my taking advantage of this opportunity to send you a sample of some apples which are grown on the place whore Mts. Strong and I live in the country. As you probably know, it is awned by 215. Strong's father who has redo a great otudy of the cultivation of Nor- thern fruits. I m trying to get a box of lisakinteshes. If they are all gone, I hope to send something equally good. Accept my warmest thanks for your good wishes which are very heartily reciprocated. It is particularly gratifying to no just now to rr,00lve such expressions as are contained in your very kind letter. We have a bg undertaking ahead of us and if, in addition to accomplishing the work, ee make some good friends, we will certainly have been amply repaid. With kindest regards, believe me, Very truly yours, R. H. Troman, Esq., eeeeeeeeeee Ithaca, New York. August 2nd, 1915. My dear Mr. Treman: received your note of last 7:ednesday and felt a little guilty about that golf party after reading what you said. We put In rather a strenuous day, and possibly none of us realized how much of a gallop we took over the links, for I was pretty tired myself tAat night and usually 36 holes is just about a good day. We nue try it again, and soon I hope, for I enjoyed the party imnaasely. sincerely yours, R. H. Treman, Seq., Ithaca, New York4 '-;!3 Jr/VOM Aug. 21, 1915. Dear Mr. Treman: In the absence of Governor Strong, I beg to reply to your letter of the 20th instant and would advise you that ordinary business dress will be worn at the luncheon on the "Corsair." Very truly yours, Secretary. R. H. Treman, Esq., Ithaca, N. Y. PE October 13th, 1915. Dear Mr. Treman: Thank you for your note of the 12th. Although I have had a good many conferences with gentleman the referred to, the meeting Monday was the only one which brought my name into the affair at all. Illustrating the two points of view, I quote from a letter just received extract from Mr. Locke: "I was very glad to have your presence at the meeting ntional City Bank to talk over the matter of foreign exchange, noted in the Associated Press dispatches. The more we come forward in such things, the is for the Beak, according to my belief, end held at the bettor it I doubt if anybody there knew as much about the question of foreign exchange as you did, or was as capable of making meritorious mlggestions." At the Monday mooting, we haepened porters at the National City Beak and in that of the to walk into some re- way they got a list names of those who were present. I guess this matter is now about concluded, far as I am concerned, as Mr. Curtis and I leave on attend the conference in Minneapolis and the left by the time we return. 'th kindest regards, Very truly yours, at any rate, Sunday to Commission will have WESTE UNION WESTERN UNION NIGH . TTER NEWCOMB CARLTON, PRESIDENT IRGE W. E. ATK/NS, VICE-PRESIDENT TIME FILED ECEIVER'S No. \VI BELVIDERE BROOKS. VICE-PRESIDE4T CHECK I. SEND the following Night Letter, subject to the terms on hack hereof, which are hereby agreed to NoveMber 15th, 1915. R. H. Treman, Ithaca, N. Y. I am arranging fer our Directors to dine at in apartment Monday night very informally and discuss some bank matters. you can be there. Benj. Strong, Jr. B$ Jr/VCM Charge to Federal Reserve Bank, 62 Cedar Street, H. Y. C. Form 2289 I hope ALL NIGHT LETTERS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TE The Western Union Telegraph Company will receive not later than midnight NIGHT LETTERS, to be transmitted only for delivery on the the next ensuin, hosinese day, at rates still lower than its standard night telegram rates, as follows: The standard day rates for ten words shall be charged fc rate for ten words shall be charged for each additional tcn words or less. ' ' '1 standar ' ...ss, and r-' transmissio. -hould order it REPEATED, that is, telegraphed back to the originating office for eotnpari . a night 's or dei. To , .,rd in Unless otherwise indicated on its face, THIS IS AN UNREPEATED NIGHT LETT I night For this, c ' the sender of the night letter and this Company as f.ollows. eonside: AND PAI ,nsmission or delivery, or for non-delivery, of any UNREPEATED night letter at be liable for m 'I. , transmission or delivery, or for non-delivery, of any REPEATED night letter . same; nor f, tinor in any case for delays arising from unavoidable interruption in the working of .lig the sari. Ii t, ry, or f. aunt ti an add his the of any other Compar ' .1 . .R N TELEGRAPH COM PA: OR PORATED NEINCONIB CARLTON, PRESIDENT CLASSES OF SERVICE TELEGR,...i S 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 business day. DAY LETTERS A deferrer) day service at rates lower than the standard, telegram rate, :is follows: One and one-half times the standard night letter rat, Sro the i ransinissioa of50 words or less and one-fifth of the 10 words or less. subordinate inn to :H. and delivery of regular telegrams. . . Mtmi written E.105sii. Code language not permissible. Telephonic delivery permissible. Day Letters received express understanding that the Company only undertake, the same on the day of their date subject to conditions th, time_remains,fOr such transmission and delivery during IN hours, subject to priority of the transmission of regular NIGHT LETTERS Accepted up to midnight for delivery on the morning of t ensuing business day, at rat es still lower than standard mg gram rates, as follows: The standard day rate for 10 war charged for the.transmission of 50 wor, Is or less, and one-fl be c:ii,rired for t. standard day rate for 10 words 10 words or less. Must be written in plain English. not permissible. Mail delivery, postage prepaid, per Eecerpher 27th, 1915. , dear lir. Treman: Your note of the 23rd ha n afforded me a great deal of 'sleasure and satisfadtion. It was, of course, a good deal of a wrench to break off mv old associations in the ?rust Oompany and endeavor to create new friends and new surroundings. Your friendship and the constant encouragement you have always given us without stint has made it a good deal easier than I antickeated it would be I want you to know that it is warmly appreciated. th many good wishes, Sincerely yours, Mx. R. H. Tramaa, Ithaca, N. Y. BS Jr/MI April 25th, 191i.% Dear Mr. Treamn: Your kind note of welcome is just received on my return from :ashington where I was literally "yanked" immediately on ar- rival. It is impossible to say how perilous the trip was. There were perils - some of them, I am sorry to say, physical - but those involving the greatest danger to one's well-being consisted of din- ners every evening, lasting until all hours of the night with a superabundance of food survived the and all that goes with it. However, I strain and am back home sage and sound, I am glad to say. I am looking forward to seeing you on 'r;ednesday and make some account of the trip. One thing it is impoosible to do and that is to put into words the impreseion one geins from living for two months in an atmosehero GO different from aeything we gave ever ex- perienced. ith kindest regards aed many thanks for your note, I am, Sincerely yours, H. H. Treman, ?sq., The Tompkins County National Bank, Ithaca, New York. BS Jr/VOM May 17th, 1916. My dear Mr. Treman: As I was in Washington yesterday and the day before, your note of the 15th only reached me this noon, and I am telegraphing you to-day my regrets that I am unable to accept your invitation. This is the time of the year when the Spring eeting "crop" needs attention and vo are in the midst of our difficul- ties over the check collection ratter and I really feel obliged in the interest o-f the bank to attend the meeting at Garden City, as well as the one at Warwick, t e latter being the Group VI meeting on Friday. Mr.Jay and I have been dividing this work up but it still takes a lot of time and I am afraid I must deny myself the pleasure of this visit with yfaa and Mrs. Treman. I am very regretful indeed that this is the case. Very tuly yours, R. H. Treman, Esq., Ithaca, New York. ES Jr/VCIA err E IVESTEkaeLS WESTERN UNION TEL I TIME FILED the following Telegram, subject to the terms back hereof, which are hereby agreed to AM NEWCOMB CARLTON, PRESIDENT W. E. ATKINS, VICE-PRESIDENT '.11'S No. 111W11.17 UNION Form 260 BELVIDERE BROOKS, VICE-PRESIDENT CHECK 19, 1916. R. H. Treman, Ithaca, Ile! York. Very much regret will be out of town on twenty-seventh. about mistake of clato. Benj, f-3trong. Jr. Jr/V7,7' Charge to Federal Re 13erVe Equitabl.z: building. '3orry ____--- ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOL. 1%.11 .g offic To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the origi For this, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEr,'ED TEJ. 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 UNIth, 'ED telegra _legram, bey, amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEA7. 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 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 gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby v 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 1 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 tvhei 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 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 age: 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 teleg 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 a gram is filed with the Company for transmission. I No employee of the Company is authorized to vary the foregoing. THE WESTERN UNION TELEGRAPH C 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 business day. DAY LETTERS A deferred day service at rates lower than the standard telegram 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. Subordinate to the priority of transmission and delivery of regular telegrams. Must be written in plain English. Code language not permissible. Telephonic delivery permissible. Day Letters receive( express understanding that the Company only undertake the same on the day of their date subject to condition a time remains for such transmission and delivery during r hours, subject to priority of the transmission of regula NIGHT LETTERS Accepted up to midnight for delivery on the morning ensuing business day, at rates still lower than standard rates, as follows: The standard day rate for 10 words shal for the transmission of 50 words or less, and one-fifth of st day rate for 10 words shall be charged for each additional less. Must be written in plain English. Code langur missible. Mail delivery, postage prepaid, permissible. 111111E r TEL UNION WESTERN E W. E. ATKINS, VICE-PRESIDENT ER'S No. ; IliS la."1\ AM NEWCOMB CARLTON, PRESIDENT I TIME FILED Form 260 BELVIDERE BROOKS, VICE-PRESIDENT CHECK ) the following Telegram, subject to the terms back hereof, which are hereby agreed to w York, May 17, 1916. R. H. Treman, Ithaca, New York. Your letter Just receivdd on return from Washington. eorry am engaged for Group 3even meeting ex Saturday. - Benj. Strong, 3r. Jr/VC1,:, larP0 t P. --..;t1 Reserve Bank,....d. ,able LW `,.7 Very ALL TELEGFIAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE F( To guard against mistakes or delays, the sender of a telegrari%slitoujd °ray it REPEATED, that is, telegraphed back to I Fnr this, one-half the unrepeated telegram rate ischarged in addi *.:IiillesS otherwise' indicated on its face, THIS IS AN U.>, ,I, ,Bender of the telegram and this Company as follows: I AID FOR AS SUCH, in consideration whereof it is agreed betw The Company shall not be liable for mistakes or delays i PAinigsiorfor delivery, or for non-delivery, of any UNREP received for sending the same; nor for mistakes or delays in ansinission'or delivery, or for non-delivery, of any REPEAT' the sum received for sending the same, unless specially valued; nor in case for delays arising from unavoidable interruption in th4 offic,. 7 TEL ,D telegral ;gram, bey ..rking of its errors t ry cypher or obscure telegrams. In any event the Company shall not be liable for damagaa for,,any mistakes oridelays in the transmission or delivery, or for the non-delive gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby a greater value is stated in writing hereon at the time the telegram it offered to till Compdny for transmission, and an additional sum paid or agreed to ., 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 whe 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 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 ag 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 teleg 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 gram is filed with the Company for transmission. Lamount . THE WESTERN UNION TELEGRAPH ( No employee of the Company is 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 Telephonic delivery permissible. Day Letters receive express understanding that the Company only undertak the same on the day of their date subject to condition t time remains for such transmission and delivery during hours, subject to priority of the transmission of regul. night and delivered not earlier than the morning of the next ensuing business day. NIGHT LETTERS DAY LETTERS Accepted up to midnight for delivery on the mornin A deferred day service at rates lower than the standard telegram ensuing business day, at rat es still lower than standard n rates as follows: One and one-half times the stand-a4 night letter rates, as follows: The standard day rate for 10 words Si rate for the transmission of 50 words or less and initial rate for each additional 10 words or less. -fifth of the Subc>rdinate the priority of transmission and delivery of re;c.til,r telegrams. be written in plain English. Code language not permissible. for the transmission of 50 words or less, am:Lone-fifth of day rate for 10 words shall be charged for each addition less. Must be written in plain English. Code lang Mail delivery, postage prepaid, permissibl, missible. May 19th, 1916. Dear Mr. Treman: It is a shame to feel obliged to ask you to read your letter of the 15th inst., that led to my mistaking the date of your invitation to Ithaca. You did say 'Saturday of next week, but described it as May 20th and the figures naturally caught my eye. I might have been a little shrewder and noticed the dis- crepancy. I have made some plans for neat Sunday which I cannot very well change and only on that account feel unable to accept your invitation. I would have enjoyed having a visit with you very much indeed. My older boy and I indulged in the mortifying experience a couple of weeks ago of seeing your baseball team humiliate Princeton by a score of 1 to 0. I looked around to see if, by chance, you were not in Princeton to see the game, but was not able to locate you. Hoping to see you at our meeting next week and with many thanks for wishing me to spend the weekend with you, I am, Sincerely yours, R. H. Treman, Esq., Ithaca, New York. Jr/VCM JICE SYMBOL sage Ater Blue Message Nile ght Letter NL one of these three symbols pears after the check number of ords) this is a day message. Otherwise its character is indicated by the symbol appearing after the check. WESTEk UNION TEL AM WESTERN UNION NEWCOMB CARLTON, PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT BELVIDERE BROOKS, VICE-PRESIDENT Forn... 1201 CLASS OF SERVICE Day Letter Blue Night Message N it e Night Letter NL If nane of thee three symbols appears after the check number of words) this is a day message. Otherwise its character Is indicated by the symbol appearing alter the check. RECEIVED AT M6D CCO 16 NL litoL DENVER COLO., JULY 2 1916 R H TREMAN 8688 FEDERAL RESERVE BANK NEWYORK / ARRIVED LAST EVENINC AFTER COMFORTABLE TRIP BEST REMEMBRANCES AND MANY THANKS TO ALL AT THE OFFICE BENJAMIN STRONG JA 320A SYMBOL Day Message POST CA 661/10A970 lie. Lewiston, estesTlrk,-COIO:.' PA P 4-\ 03 j Rocky MoontainNatienal Colo, Playgrenntl tiiif the Vorla. eoak-t--4h"ok!,_ fa:ir 615121/tAAP e ON,= .16 . a f 'OCUYI1C1/3A1 agaga=1111man fitoeuIE )(curt' elrer iten . eilta kap, Aff catee_fe ativatir "Mut ata-ftaise acFc ;i th edrivo qtad6,_ ezo durt teajze >to, \ v3A ancl Ppiq' ter-g Offic.;2- arc.) icza4v a. THIS POR Estee Park, Colo., July 25, 1916. Mr. R. H. Treman, Federal -2ezerve Bank, Dew York City, 14. Y. ; My dear 4,1r. Treman: Yours of the 20th is just received 4, d I am puzzled to know what answer to send about Pr. Higgins. Of course Mr. Jefferson out ranks him>an4-ze_O'uld not make ing with Mr. F.r. Higgins an Assistant Cashier wrtImut-de very unJefferson, who I think you realistr- s a man I have a s regarded usual capacity. On the other: ia the kind f)ications Mr. Higgins as having unusua rganization, and when of work that has to be done very sure that in the our business is more active\ uture with us than he will long run he will have a bett al Bank. with the American Good men * so har to g that I am reluctant to see him leave. i Looking e, the future rather than to the present, I think\ the wh1 my judgment would be to keep and meke the necessary rehim if he-Itriaill , to 04i, And ;Jr. Jefferson's and Mr. Kenzel's adjustment-TT{ his as wel11if that provell-advisable. rider ourT-trrangement with :Ir. Sailer, hie salary in,o eased this year, but considering the amount is als o be-44'of these men have been called upon to de, of wor' I am not a-bit-reluctant to see them better paid. We have to bear in mind that if a considerable number of state institutions join the System, we will need a large examining force and a good organization to manage it. The same may be true if any change in the Comptroller's situation take place so that we woulj. have more direct relations with the examinatice of member banks. I am glad to know that hie two years' work for the bank turns out to his advantage whether he stays or leaves, and when the matter comes up for discussion with him I hope you will be willinc to say this to him aa coming from me. All goes well here and I am glad that you and the others keep me so well posted -- it keeps my mind occupied. with best regards to you all, Sincerely yours, BENJAMIN STRONG Estes Park, Colo., August 1, 1916. Mr. R. H. Treman, Federal Reserve Bank, New York City, U. Y. FEB WW1 Dear Mr. Treman: v/ Replying to yours of the 27tk, which enclosed Governor Delano's letter and Judge/Elliot's memorandum on the subject of Fiscal Agency, possibly the following comments may be of some interest: The theory of the independent treasury system contemplated that the Treasury of the United States should hold all of the funds of the United States in cash in the government's vaults. This was the way the government finances were originally managed 100 years ago, or thereabouts, and, as I recall the listory of the second bank of the United States, when the Charter was granted the independent treasury system was entirely abandoned pnd all the funds of the government were deposited in the Bank of the United States. Prior to the expiration of its charter President Jackson withdrew all the funds from that bank, notwithstanding that there was no legislation then in existence which re-established the independent treasury system. Later and, as I recall, some years later,after complete disorganization had resulted to the government's finances, and after a lot of very disreputable transactions between the Treasury Department and State Banks, the independent treasury system was restored and the basis was laid for the methods of the past eighty years, which have really gone from bad to worse. The present law really does not correct the evils of the independent treasury system; it simply gives the Secretary of the Treasury the power to deposit the general fund in the Federal Reserve Banks, which are constituted fiscal agencies of the government. de have inherited all of the bad effects of eighty years experience of the independent treasury system and vested in the Secretary of the Treasury complete power to remedy these defects, if The real question is how may his dishe sees fit to do so. cretion be so exercised that we may gain all the benefits of the proper system of government finance without, however, having any more than the discretion of the Secretary of the In a general way, Treasury upon which to base the reform. my thought is that the change should be in the direction of having the Reserve Banks act as the depositaries for all of the general fund of the government and pay all checks drawn by the government, but have all the accounts kept by the Treasury Department. To bring about this change, it seems to me many of Judge Elliot's suggestions must be adopted. For the general fund the government should carry only twelve accounts, one with each Reserve Bank, and these account should be so managed that checks drawn by the government cannot be BENJAMIN STRONG 2. used for the purpose of making exchange in any part of the country at the volition of the holder of the government's The development of this practice gives the government check. check some of the qualities of currency which is in every way bad, as pointed out by Judge Elliot. There seem to be few difficulties in the way of arranging the handling of checks There are, howdrawn on the accounts in the Reserve Banks. ever, many difficulties in the matter of depositing the govThere I think Judge Elliot's suggestion ernment's revenues. You will find t in the copy of a bill, known as is good. Mr. Curtis' possession that it was prothe "Burton vided that National Banks might be employed for the purpose of receiving and transmitting the government's revenues. That is just what should be done and I don't see why an amendment to the Act is necessary to accomplish it. If caa bank in Buffalo will furnish the necessary bond to cover u fixed balance of say 050,0D0 and in consideration of that account will receive on deposit all internal revenue and customs collections at Buffalo, the excess of ;;50,000 to be either transferred to the Federal Reserve Bank at New York or charged to that bank's reserve account on our books, we could still carry the entire fund, including that balance as a part of our account with the government, letting the bond run to us for the protection of the government and consider that we are handling the account in that way, simply as the government's fiscal agent. So far as the accounts of the various disbursing offices are concerned, I should think all of the accounting in connection therewith should be conducted at dashington and the various checks paid by the Reserve Banks to be charged against the one If disbursing offices draw too much, or general fund account. draw incorrectly, or without authority, that is the government's affair and they should obtain protection by bond of their offices in the usual way. You will gather from the above that I agree with Judge Elliot's memorandum almost in its entirety, my only doubt being If ;,,a,.; National Bank is as to the necessity for legislation. appointed a depositary for the government for the purpose of receiving and transmitting its revenues, certainly the government should have the power to direct that depositary to transmit the funds and render its accounts to the government's fiscal agent, that is the Federal Reserve Bank of the District. We could include the balance carried with the Buffalo Bank in our balance due to the government and show it as an a8set on the asset side of the account as due from government depositary banks, having of course no financial responsibility as to the balance, which the government would cover by the usual bond or security. In connection with this correspondence I believe it should be pointed out that the present system needs perfecting BENJAMIN STRONG 3. so as to avoid the shifting of funds at present thought necessary by the Secretary of the Treasury. If he made it his policy to carry in gold in the general fund a round amount of say fifty million dollars or one hundred million dollars, and deposited all excess revenues with the Reserve Banks and left them there, the country would rapidly readjust itself to the idea that the fluctuating account was not the cash held in the general fund, but the balances carried with reserve banks. I am very much impressed with what Judge Elliot says about the lack of care in scrutinizing checks paid when they reach the Treasury Department. The difficulty can be cured if the force of men which is now doubtless employed in keeping the hundreds of accounts maintained by the government were allowed to devote their time to making a proper examination of the government's vouchers. 1,1r. Curtis is interested in a little organization that is at present undertaking to look into matters of economy and efficiency in the government's service. While many improvements have already been made in the Treasury Department, I believe many more could still be made through cooperation by the Reserve Banks and such an organization as the one I refer to, provided of course the Treasury officials are willing to take a friendly interest in it. Secretary McAdoo has always evidenced the right spirit in these matters and I am sure his cooperation could be obtained. There are two other features of this work that should also receive consideration: one is the transfer of the accounts at the Post Office Department, which has already been investigated by eur Junior officers; the other is the development of some system by which the Federal Reserve Banks may be of service to the government in handling checks drawn in connection with redemptions of currency. This ia a rather sketchy dissertation in reply to your letter, but the fact is this subject requires study on the ground in dashington where the accounts are kept. I will be greatly interested in hearing the result of anything that is done. Very sincerely yours, Bates Park, Colo., August 3, 1916. Mr. R. H. Treman, % Federal Reeerve Bank, New York City, V. Y. Dear Mr. Treman: .7 1:5,....(1 The enclosed letter from Brien Cokayne, Deputy Governor of the Bank of England, should be placed with the papers relating to our negotiations with the Bank of England which, of course, are of the most confidential Shortly after I received i--I-wzpte the Bank character. of England, advising them of my illnoOrlTrida, at I would repared 11aave /am answer the letter a little later. and signed the enclosed answer, while it seem to me should not be sent until you and your associa, es have considered it very fully an .-a-pKoved of its oentents. --, If you do approve then be necessary for u cipation of favora e a -./ '11 it, it will \and two things more in antion lett' by th %)Federal Reserve Board: e o do t / / i ` \ salemexdadum, re or form of resoOne is to pr bm tato---the other eleven Reserve lution, or letter, to Banks and to the Fe 9,ra, \ Reserve Board, outlining the ,rig the obligation to be incurred) basis (as well a expre in th ficcount. My idea is to have the for participati /New York complete the arrangements Reserve ank Fede and, irrespective, of what the other Bank ol with s may determine to do in the matter. When the Reserve letigtawe can then offer participations to them plan is c if they nt them, but figure upon going ahead with the Ourselves whether they join or not. As a matter of courtes j however, the form of obligation, as well as a descriptiai accounti of the plan, might as well be submitted to the Board and to the Banks prior to its final adoption, with the request for criticisms and comments. The matter is of sufficient importance it seems to inc to require this course as a matter of courtesy. I am preparing a paper as a suggestioa for you and the others to consider, which will go forward in a few days. This, at the proper time, when you have made any necessary changes, could be submitted to each of the Reserve Banks in confidence, together with a copy of the memorandum of my conference with the Bank of England and a copy of the memorandum submitted to the Federal Reserve Board. dhen that has all been done, or while it is being done, we should be considering the Second matter, which is the employment of a competent man to take charge of transactions of this character. What I have in mind as a possible 2. solution of the difficulty is to give Mr. Cann charge of the handling of the exchange and the bill accounts, and imploy in addition a man from the Assay Office, or the SubTreasury, who is thoroughly familiar with the whole subject of coinage, gold and the assay office practice. It will not require a very expert foreign exchange man to handle the account, at any rate at the outset, and I believe Mr. Cann could handle the account perfectly well; but he would need the assistance of someone thoroughly conversant with making figures on gold. Such a man could work out the details of a plan by which we could hold sovereigns as they are imported so as to avoid melting charps. It will not be long now befor /16-i-317o to start this account in operation, 4n1 case we Reserve do so at all this year, and I hope t view of the plan. take a reasonable be moving re going to oard will /I If the Board makes prove sufficiently out he spend the last month or s and Paris and put the fin ..\ e to jus 4 weeks of Oing tou oriand I imdoidg so, I might ply exile in London hes on the arrangement. yely, P.S. MY suggestion about Mr. Cann is entirely tentative and it would require some discussion with him before determining whether he feels fully competent to handle these transactions. 6t.e Ant, BENJAMIN STRONG loaf zota: AL) 4f9N e _ 661-kavAt, 469. irerkd pruu: tia-q 4V 4 16 .90-14 ea414t eht, p (INA_ 5C1426, .1419-1,/ Of---Ettes?. ya-e.41 Ruwalegoilx,61 Cdt 3eet4 /kJ paatt a_r4 "c-tA3LI t1Ca. OAT.10.eef, atAxit6r a-604(A Sct4 agmtnifrnunt- awe 4;,714/th - PWriteeace.a4 Cce /Lehi ,i12.9 to- 11ted- ii cticuttd-nv-, Jove eft (24ticect eti catA- r act( ae4 uzA./v plar c etteajty laffi4 4t%-i--f;. ifriLettr_ 7n4Aff,,, claw?, Matt I kt,f9t1c CEett- CkA szig26Lutt itte-n if_ tt-tE)7 C2Log2ii oiteati-g: i-g_7kti/d /Iwo 77)cliteA cut /Mattea7k,LLti tOttai. /(a,1 Omer() dAelro4 W/ cite ejL cutc-z-a -tuft kem OAVE(.- c(42 wur CE Oteic amwnid-mvit7kuicurcitt4 662- tow 60-a 4o-eawo tu i1 T7L (t,o-- /Vto-ti_ 13-4<nfocR ) 46-A- Welt 14,g4a)-(17 6/ta/fkit t614/ delta ttCA) _ thinn -4_91krAk fr.i 710 fte_cd Itcu aanytx)-nwra- a Athi-f a ittezt.ottie ((CØ fre97K/ (9 WI 7 I4 4 ku/s-t,t449,41 4vrta,I-4 faitek'pk, altar - fc &3-/ActiltitA Qôiiuiaz- he, tu:atho f-tocu: 6af atti 42ati cifct cati-thei opuf.41 4- at Lou;L aft ttiffIto Wcatito' , Co-7A-1'eo fa& ticuea;, 7/dusitt:y .JVA9-kt/ tow' tro-Ls Oeof571- 0, `ru al- jJ,7 710----code)? d ik (6. (/;ct,n fae stab &tht of& DAI ade..9-ct 4cL1 tLilazatx,- di_ 4 11-9 etkalAt CCodai-rio WI( 10741 Vaeti-46Y , autakic ectici7 JoLLiii ea LLtL2. ft ideal4h id tkitx-J Prk-c 6a4---roc2.1 tow óttoate (fact frOn- .7tuo-o , ket.6 eit.q Wu/Au) re- C5-00C-ktil-f - auks', Pi, 01777Le 6eff 107 , chttx, re- ftW Pure (517,(4tii . Cktec c2flLtckw (Am cacco. A1A7,-, 46, Asikus 7Of) BENJAMIN STRONG OnereZ e07 ati_q AVITia/i1J - ,1dtEwa- 2t1etcoac4. 4/ oficonakt__-1- . 06y. tato, 77ut, -9-fostuzi tar tout' 6e klin/T-AWCV-cdu4 Mit#V), 6/ 44 A nlai4 liar-- 4, PAR hair-, .6E0 f &al( ite_eiAkf (Law . Oft-i tt olifa fizeu; Watix co-foti,; lb- A el. &or./ aRit` C&Oixt- WW1 apple et&A Zuzk_ ice-ecolev?, cat-md- Afro _cta Oerteigat451-- -4434 lb), 'Matt: ct_stux,:, Aoteto 7A-1-k) /0-x &hut-- ""xecti r turro abagai te-waio-t-f COTC Cute cor-c typet a frac; ccia Atit-vg Or ,tev-14-ab:4 cietta "621,k6 14,r- auda wit 1uk,411, tvocce4 1V7/k f4A2 7Le&e,f249aitr, Weaco. ..at ceti N t 147e fitatt:ga;,/ itg2a.LA etc; 6-t- (29- ictv enwe 7iy- *Frut4 tivut, orkatAcLAszkata.____P-Th fitgrir- c)-44._Ast.ct (f)tso wa-a-eto-cui-1 . Form 1207 DESIRED is. I TI sage Receiver's No. WESTERN UNION go :it Letter , should mark an X oppoAe class of service desired; IERWISE THE TELEGRAM .L BE TRANSMITTED AS A FAST DAY MESSAGE. TELP4---W- Co AM Time Filed NEWCOMB CARLTON, PRESIDENT :es Park, Col., Aug. Id the following telegram, subject to the terms on back hereof, which are hereby agreed to Fede. al Check 1916. 191 Reserve Bank, 7quitable Building, New York City. Confrorcee report on amendment bill printed in: full in Chronicle Paragraph "E" August twentysixth makes no provision for amendment toASeetion Fourteen in r,spect of days of FrrIce. Can it be possible that thie hae been olAtted with no possibility of amendment pacing at t' is session! Benja: in Strong. BS/Val SENDER'S ADDRESS FOR ANSWER ME SENDER'S TELEPHONE NUMBER ALL ELEGRAMS BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office for con le-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAI 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, bi eei red 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 . 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 ciphei !egr tins. 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 sued by the negligence of its se ru servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued, unless a greater value is s iti ig hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be pail based on such value equal to one-ti ie 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 rea ;ad iation. 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 cit. ,vsnt 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 hisexpense, endeav ntract 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 le 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 telegran 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 to e foregoing terms. No employee of the Company is authorized to vary the foregoing. THE WESTERN UN ION TELEGRAPH COMPANY INCORPORATED NEWCOMB CARLTON, PRESIDE. CLASSES OF SERVICE \ST DAY MESSAGES k full-rate expedited service. G HT MESSAGES Tepted up to 2.00 A.M. at reduced rates to be sent during the night ' delivered not earlier than the morning of the ensuing business day. Y LETTERS deferred day service at rates lower than the stnndard day mes- rates as follows: One and one-half times the standard Night cr rate for the transmission of 50 words or less and one-fifth of nitint rate for each additional 10 words or less. SPECIAL TERMS APPLYING TO DAY LETTERS: further consideration of the reduced rate for this special "Day cr" service, the following special terms in addition to those enuted above are hereby agreed to: Day Letters may be forwarded by the Telegraph Company as a red service and the transmission and delivery of such Day Letters all respects, subordinate to the priority of transmission and cry of regular telegrams. Day Letters shall be written in plain English. Code language permissible. This Day Letter may be delivered by the Telegraph Company phoning the same to the addressee, and such delivery shall be a ;e discharge of the obligation of the Telegraph Company to his Day Letter is, received subject to the express understandagreement that the Company does not undertake that a Day 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 Letter on the day of its date during regular office hours, subject to the priority of the transmission of reg- 1 ular telegrams under the conditions named above. No employee of the Company is authorized to vary the foregoing. NIGHT LETTERS Accepted up to 2.00 A.M. for delivery on the morning of the ensuing business day, at rates still lower than standard night message rates, as follows: The standard day rate for 10 words shall be charged for the trans-, mission of 50 words or less, and one-fifth of such standard day rate for 10 words shall be charged tor each additional 10 words or less. SPECIAL TERMS APPLYING TO NIGHT LETTERS: In further consideration of the reduced rate for this special "Night o, 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 shah 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. Estes Park, Colo., September 29th, 1916. (altr Mr. Treman: The pnckage of books had just been received from you and I am very grateful indeed for your contribution. If I stay here another six months, it will result in the accumulation of quite a library. I an gaid to have some light reading which is used to pass. the time while I am lying down. I have just returned from Denver after a fine visit with Warburg and Aiken. Aiken could only stay one day, but Warburg was therr for three days and we discussed every ponding matter. I will write you in detail a little later about 30M0 of them. Ath warmest regard°, and hoping tiazt you won the old ma:1LT. prile,at Rye, I am, 'Faithfully yours, R. H. Troman, Esq., Deputy Governor, Federal Reserve Bank, Equitable Building, New York City. , Estes Park, Colc., Cctober 4th, 1916. Dear Mr. Treman: Mr. Jay will show you my letter and telegram in regard to the directorship matter end the l'ederel Reserve Advisory councilmen. hope this Lite in with your own views end thet 1Vr. Vloodward and . Towne viii see it in the eame way. c-nnot always expect to agree about ttern of policy, while I am sorry the one yeer note were sold, you need not for a moment think that I feel badly about it. -t is just a oese of having a different view of the aevantages of the poliey adopted. I really do not teink that the dietribution of eeeee netes doss the government any good and, of eourse, wA lope earninge. I asked Mr. Venderlip how he felt about it, and he said he woeld be g'ad to take all we are selling on a 2 :0 basis. if he would be wile ling to buy them, it is r pretty good indication that he would teink it good policy for us to keep them. !bout shipping out silver certificates, 1 suppoee Governor Hardirg hae in A.ne that we will pay the cost, the government thereby being relieved of somr expense and we having the advantege of ge* ting the gold. .4.his would be an evasion by the government of its statutory obligation and I would rather le-t th stuff accumulate .nd go right to the he lork Subtreasury and ask them to give us gold for it. At any rate, I am vonvinced from the statements which come every day that you are succeeding in hanling thet situation without any expense and you can imagine how gratified I am. -2 To Get. 4, 1916. R. H. 'Treman, Esq. The report tf good progress in the collection denartment, contained in yours of the 27th, is very encouraging indeed. I am also tremendously pleared to her from Warburg that things went off so well in Kansas City. Fyster, wee well represented and that undoubtedly suppressed some kicks. I will write you more fully about a number of matters next week after my visitorr leave. Thank you very mach for your letters which keep we rested and encourr..ge me to believe that you are hepeful of soeing me hack there. i2 disappointing that the Eew York bankers sc, ag- grieved over the operation of tne Clnyton Act, but I do not see how it can be helped. It is the law and must be observed and the Federal Reserve Board could rot be expectsd to exercise discretion in such a. way aa to defsat the real lurnom of the 1:kr,. I :lave, not written about the Bank of iruce matter, as it renlly ledsmadot of careful thought and 1 in spending most of each day with my visitors. It will be interesting to *near Turner and the others think ebwit the dirso.tors:do matte:-. I do node that we h.v as a result of this year's effort some decent organIzaton to take this mIttter in hand on behalf of our stockholders. Ath best regards, I am, Faithfully yours, R. H. Treman, Deputy Governor, Federal :- eserve Bank, EqAitable Building, New York City. Lstee Park, Colo., October 11th, 1916. Dear Mr. Treman: There are one or two mfIttere mention in youia of October 3rd waich I do not seem to have rsferred to in my rocent letters. About the luaranty Trust Company acceptances, 1 think f14,000,000 or l5,OOO,OOO divided among toe ystem ia a pretty good line and should not be greatly exceeded. Other reerve ban%s hi, of their bills wnich they oeclined, net know- ing, of course, the total line for the whole System. I explained this to C/ains who has grumbled a bit about declining tpportunities to buy their bills hr, thought a total line of 0.4,000,000 or 115,000,001 las about large enough. Warburg and I discussed the question of apportionment of.investments made by the NOW York Pork. He thinks our allott- ment in too sm.P.11,'or 1 do, but 1 have no data on wnich to check the calculations made by the Committee. Certainly, it was a great surptiso to see our proportion reduced. It Jo out of the qunstion to execute special orders such :13 the one received from Kansv.0 City. If they are not satisfied with what they are getUng, theyabould deal with the matter with the apportionment committee, and not ask us to ignore the arrangement and make special purchases for them. Abut the foreign arrangements, it seems to me nothing can be done until the State Department has acted. 1 believe we -2To R. H. Treman, Esq. Oct. 11, 1916. ore entitled to a hearing on the subject and think some on should take the matter up officially with Harding and get it straightened out. There is a special committee of the Reoervo noard to deal with the matter and Warburg has expressed his determination not to interfere in the discossion. We ought to be buying bills in London this rall and ..diuter. I would not hositatc to write to teors. tary Lansing or Frank Polk from here, except that it would be a discourtesy to the Board and one which they woul>\ke justified in resenting. I am junt ae tentless an you are at the'lack or progress. r:lle decision about the iihitney Central :lank acceptances is it aeems to me,a wise one. They are not entitled to a better rate or a$ Good a rate, ae the boat O.ew York institutions and I think we should decline to buy thu bill. You will find that the "itney 1k deolined to furnish us with statements in the form required and that ia ample justificotion for declining to buy the bill. I wrote to Mr. 4exIer about it, and ha was very positive that he did not care to furniah us with the information we ought to have. Central .' Please let ma know if there is anything more 1 can do in the foreign matter. Sinoerely yours, R. H. Troman, Esq., Deputy Governor, r'eUerul Aeuorve Hanks Equitable Building, New York City. BS/VCM Estes Park, Colo., October 11th, 1916. Dear Mr. Treman: I have just returned ftom spending n few days in Denver where I was obliged to go to arrange about my boy's health cer- tificates, etc., and start him off for the Hill School. down with the Vie went Vanderlip-Trumbull party, meeting Kaine at Loveland where we spent the night in hr. Trumbull's car, and then next dhy Hendricks joined us in Denver. The weather wes so bad that I was obliged, willy nilly, to observe Dr. Treman's orders, although we did eenage to get one drive about town when I was able to point iut my new Winter residence to Hendricks. I also heard Vanderlip and Trumbull speak at the Mile High Club luncheon and then went out with them to a little informal tea in the afternoon. Dr. Sewall whom 1 saw twice, seems to be quite satisfied with my progress and has greed that a little later it would be feasible for Oegge Roberts of the City 3ank, to come out. and male me a visit to help formulate some of the piens we back and forth about some changes in our have discussed currency laws. I wilt send you the meterial when it is in anytning like good shape. Hendricks has returned to the Park with me and will stay for a few days. To R. H. Treman, Lsq, Oct. 11, 1916. I find yours of the 4th and 5th here and I hope you will pardon rather a cryptic reely. About my letter to Garter Glass, that as well as -Wier material is gradually taking shape with the idea that immediately after election the question of further currency legislation must be preseed. I have been all over the matter with Mr. Vanderlip who, of course, has hnd four years in the Treasury at Wash- ington and is thoroughly posted on this whible question. He ap- scheme which I outlined and believes if it is not adopted pretty soon, we are going to have a terrible smash. do not share his views quite, but realize the urgency of doing proves of the something, and would like to make my contribution from here. Regarding the Nederlandsche Bank, it seems to me that the bill we ace now rendering which covers services from }Aarch practically to Cctobor let, is moderate and fair. 16th The 1/20 per month charge at the outset was during a period of very high rates for Dutch exchange and the transactions resulted in a very large saving which one might construe as profit due the Nederlandsche Bank, and I believe the charge is justified. It would be a good plan to submit the bill promptly, but I would se,gest that it be done by communication with the Ambassador in Washington, and the There is no necessity for exposing the extent ef our operations to the British censor. bills sent by him in the Embassy pouch. The best plan would be to write to the Ambaseador and ask him if he would be willing to transmit the communication to the bank, of wnich a copy should be sent him unsealed, so that he can read it and return it if it violates their policy or rules. 3To R. H. Treman, :Keg. Oct, 11$ 1916. In taking additional banking space, might it not be well to so arrange the departments that the cost of additional space can be added to the cost of the Tranbit Department! I would be a little cautious about lines to Ladenburg Thalmane. My recollection is that both the Ladenburg estate and the Thalmann estate business. withdrew large amounts of capital from the Furhermore, a considerable part of their financial strength came from foreign connections wnich not now be valuable or as strong as they were prior to commercial banking the war. They do a large business and, as you know, a considerable amount of stock and investment business as well, and the two do not go very well together. Have telegraphed and wrieten Mr. Jay about the directorship and Advisory Council matter, so will not repeat hero. doubt whatever that the use of trade acceptances in place of the open book accounts is About your address, there is no sounder and OE* It makes the our merchandising on the proper banking basis. open account a much more liquid asset, but should not be construed as justifying complete abandonment of the practice of obtaining borrowers statements, ns some people have incorrectly ascriticism oumed. A for book accounts grows out of the old custom of merchants or job- frequentaof the proposal to substitute trade acceptances bers drawing on customers whose credit is not very good. This is an added argument for developing the practice. It educates buyers to pay bills promptly; it substitutes a epecific claim for a general ciltim against the drawer of a bill, in other words, it is To R. H. Treman, Esq. Oct. 11, 1916. the same as pledging the customer's account as security for the It will have the effect of cutting out a lot of had prac- loan. tice in the matter of deducting discounts not justified by the terms of the aale, return of goods claimed to be defective or otherwise not as represented, and out mercantile practice. I think in many was improve On the other hand, it would be a great deal better for the country as a whole not to encourage the use of drafts in settlement of accounts between retail merchants and their customrs. Drafts should be drawn by manufacturers, whole- salers and jobbers on retail houses, they presumably being the last handlers who convert goods into cash. attained from our standto give automatic evidence that advances made to manufacOne very point is important object to be turers and merchants are nct for the purpose of furnishing perma- nent capital to be used in melting I the turn-over. nm glad to learn that or investment ac:ount is being have written Mr. Jay about Mr. Locke's preposal and built up. suggested by telegraph deferring a vote for another meeting so that I could write to Er..koc'ee personally. About our dividend policy, if we wipe off of organization expense, except our books all the cost of printing Federal reserve notes not yet issued to the bank, it seems to me that we woeld be justified all but a very moderate amount of our ings earn- anu catching up as far as possible with out dividend accruals. If we have in pnyint out say, $15,000 in excess of the amount required to pay T-3 5 To Oat. 11, 1916. R. H. Tremens Esq. the dividend to that date. Mr. Curtis is acquainted with the recommendations of the Dividend Committees of the Governors and the lateet euggestion of tee Boerd as to the dividend period, end i thine some object will be gained by promoting uniformity among all of the reserve bailbsin that matter. Our expense account will be helped out by the Transit Department which as I figure contributed about V75,000 a year and provided for some part of the rent and other overhead. Neve not yet prepared the Rank of ?ranee letter but will do so shortly. Please congratulate Mr. Jay on the outcome of his talk with Canandaigua. I an interested in the particulars of the Gold Settlement Fund and, of course, we cannot club those fellows into withholding settlement but they ought to make their contribution to help our situation. Warburg's speech was very good. I am glad it was 71111 reeeived and am all ready with one article along the line of our correspondence, but feel that it should not be published until after election day. I hope eughes is elected, but he is making a wretched campaign and is not making the kind of impression at here that is really needed. So much for the present. other topice mentioned in your two I will write ::r.Jay on the letters. With beet regards, Very sincerely yours, R. H. Treman, Esq., Deputy Governor, Yederal Re erve Bank, New York qty. R. H. Treman, Esq. Oct. 11, 1916. P. S. Yours of the 6th is received since dictating the Am writing lAr. Jay about the delay in the State Departabove. ment and, of course, nothing can be done so long as they hold us The matter should be brought to a conclusion, but I would up. deplore an unfavorable decision. My hands aie tied out here as it would be the heighth of discourtesy for me to correspond with friends in the Ltste Department about the muiter when it lhas suitmitted by the Federal Reserve Board. I think Mr. Curtis should be permitted to discuss the matter with Rr. Folk. Be S. To R. H. Treman, Esq. Oct. 11, 1916. P. S. Yours of the 6th is received since dictating the Am writing Mr. Jay about the delay in the State Departabove. ment and, of course, nothing can be done so long as they hold us up. The matter should be brought to a conclusion, but I would deplore an unfavorable decision. My hands aie tied out here as it would be the heighth of discourtesy for me to correspond with friende in the State Department about the mutter when it viae submitted by the Federal Reserve Board. I think Mr. Curtis should be permitted to discuss the matter with Ur. Folk. B. S. 4100 Montview Boulevard. Denver, Colorado, October 17th, 1916. Dear Mr, Treman: Thank you heartily for your nice letter of October 13th. I believe from all accounts that Im taking as good care of myself as it ever will be possible for me to do, considering the At any impatience of the patient and the irksomeness of idleness. rate, the results so far acoomAished seem to give some indication of My being fairly reasonable in following orders. Of course, it is always in my mind that I may not get back to the bank. Should that develop to be finally the case, would be inclined to ask the directors to permit me one last flicker before the flame goes out, by letting me go abroad once more and conclude those foreign arrangements. I am all settled in the new house. It is delightful and attractive beyond my expectations and fortunately, the owner, who is a very nice fellow indeed, left the house practically as it every blessed thing we-need,including servants. was with We are having the most won-erful weather, the thermometer above 70, brilliant sunshine and a background of the Rookies, now well covered with snow. Once more, many thanks for your constant thoughtfulness of me and my welfare, of which I despair of giving you adequate evidence of my gratitude. With warmest regards, which I hope you will extend to the boys at the office, I am, Faithfully yours, R. U. Treman, Esq., Federal Reserve Sank, Deputy Governor, http://fraser.stlouisfed.org/ New York 6ity. Federal Reserve Bank of St. Louis 4100 Montview Boulevard. Denver, Colorado, Uetober 18th, 1916. Dear Ur. Treman: Thin is really my first day of office work since moving to Denver as the office has been packed up ardeit took some time to get the necessary accomodations for typewriter, etc. We are now all straightened out and 1 can take care of mail as fast as it comes. The statement of the Bank of France enclosed with your letter will come regularly to the bank but it really is not necessary to send it to me. We should have a file at the office and I am returning the one you have sent me. ebout a week aeo I wrote you about the matter of accumu- ting gold. There seems to be noteing that we can do until the Act is amended. There are only two ways of mcumuleting it; one is by the deposits of member banks which Mr. Werburg advocates and which I do not think willbe a Permanently effective plan, and the other is by note issues for the development of which we must await the pleasure of Congress. Some of the other rererve banks might do more than they are doing, but I think they all hesitate to incur the expense involved. . Warburg and I did discuss at length various plans settling balances in silver certificates and United States noteu but it will be a cumbersome and expensive method. To uct. 18, 1916. R. H. Treman, Esq. The law provides by the Act of Larch 4, 1866 that silver certificates may be issued in denominations of one two and five dollars, the ,Act of Match 14, 1900 provides that thereafter issues of silver certificates shall be limited to iesues of ten dollars and under except that 10 7. of the total volume of such certificates may in the discretion of the Secretary of the Treasury be issued denominations of twenty, fifty and a hundred dollars. There is in no provision for the i7eue of large certificetes in any form and con- eequently they cannot be surrendered at one Subtreasury and reis- sued at another. The issue of United States notes is I believe also surrounded by eimiler limitations. Themamimum denomination now being issued being notes of one thousand dollars and no order certificates are ever issued or, in fact, is their issue authorized by law. This state of the law makee it imprectioable to settle balancee in silver certificates and United States notes unless we are willing to incur the expenoe of physical shipment. the gold situation. the liability for Federal reserve One suggestion has occurred Our prenent method of notes is treating based upon a ruling of ing, the liability of Federel to me about the eeserveBoard. Under that rul- reserve notes is extinguished 'hen gold is deposited in place of commercial paper. The law however providee that the liability is reduced When gold is so depositThere is nothing in the law requiring any specific bookkeeping ed. method in dealing with this operation and as a matter of fact the reserve bankc will always remain liable for the payment of notes outstandingthather secured by gold or by commercial paper. We might Oct. 18, 1916. A. H. Treman, Esq. be able to persuade the Board to change their ruling in this respect and do by ruling what was contemplated should be done by amendment to the Act. It might be well to have Mr. Curtis look this up and prepare a memorandum on the subject which I would like to see. It should be done promptly so that any change in the present ruling etan be put into operation promptly. About the allottment of warrants: I have just received a memorandum of dividends paid by reserve benke indicating that six of the banks are now paying dividends and it seems to me that their allottments should be reduced and the allottments of the three or four which are without dividend prospects should he materially increased. Mr. Warburg's view was that the New York bank should he allowed about one-third present. of all purchases, instead of 23 % as ae Of course his suggestion was only a guess and 1 think more accurately than that but nevertheless should give us a conaaiderably increased proportion. till, basis should be figured This is a good subject to take up with Aiken, Rhoads and Fancher when you have your regular conferences. 1 an sorry not to have been able to get something to you before the meeting of last Tuesday but it was impossible as mail was delayed in reeehing me, having first gone to the Park and been forwarded. I have a letter from Curtis about the request of the Bank of Commerce about ruling on certain bills to which I have replied by separate letter and will not repeat. Warmest regards to all at the bank. Faithfully yours, R. H. Treman, Esq., Deputy Governor, Federal Reserve Bank, New York ciiy. http://fraser.stlouisfed.org/ BS/VCM Federal Reserve Bank of St. Louis Denver, Colorado, October 20th, 1916. Dear Ur. Treman: Enclosed please find copy of a lette just received from Brian Cokayne, Deputy Governor of the B- k of England, to- gether with original and two spare copieo of a eply which have prepared to be mailed in case it Z. meets withsa, royal at \ss\ the office. In eau° it appears t yu th4 he Bank of England people are a little dense abou change matter, 1 think the explanation is that k o Fband has never done a foreign exchange busine other t an cidesional transactions The air ngement p with France. osed between our banke and that inatitutio 1 ment and 1 h tain unoffi new departure for them. e most irksome to be held up by the State Departyou we find it possible in some way to ascer- ly wk t their attitude will be. Very truly yours, h. H. Treman, 'Deputy Governor, Federal Reserve Bank, :riuitable Building, kiew iork City. nspem Denver Colorado, October 23rd, 1916. Dear Mr. Troman: Yours of the 17th is just received. 1 sympathize with you in your stru g es over the ad-, dress. / Nothing bores no more than doing jt--1-h t you had do. A long letter from posed the introduction of th were a little ntimates that he proution because the Lettings / ought it might provoke unintere,kettITIr am sure he will not press the interestirg d s ussion. matter. Br copy of your trade acceptance addre5e. am writi letters w lay on other matters and presume the d around, wo will not repeat. Sincerely yours, R. H. Treman, Esq., Deputy Governor, Federal Reserve Bank, Fquitable Building, New York Gity. TATIU.1 .,..2,zEDLIIIL RESERVE 1411: f' 1011/ Close of business Number of items handled Totaling Difference OCT.24, 1916. 37,557. $8,859,919.04_ Short 2.96 Over O.Z. RACK PROVED 4.10 JERSEY " 4.50 TI . Air .11.,..1.1611. --MAL RESERVE 3ANK OF FR7 YORK Close of businesu OCT.'5, 1916. 32,020. Number of items handled Totaling Difference $9,090,738.55 Short .59 R.R. JERSEY RACK PROVED 4.10 5.30 Denver, Colorado, October 26th, 1916. Dear Mr. Treman: A flock of letters from Mr. Jay to ch 1 have been replying seems to have temporarily d verted the stream from you to him but now 1 have/oaugh_ up,,, fill around \gradually on correspondence, as he has, and again. With this is a pro have dated October 31st to co mail time. I am sor undoubtedly arrived /t develop of an arrangement w4 seems to work alopt begin to Or you 't to M. Pallain which ,/ ond with its New York ong but the t]me has some detail the character be desirable if he is willing sameweAris the Bank of England. Won't you and t e others reftd this carefully and please do not hes- itate to p Two out ay,)objections which may occur to you? al.e_-pies are also enclosed for the bank's qncerely yours, R. R. Treman, Esq., Deputy Governor, Federal Reserve Bank, Equitable Building, New York City. BOCM Denver, Colorado, October 27th, 1916. Dear Mr. Treman: I was delighted to receive your fin long letter of October 24th. It is amusing after reading I dianapolie s\ speech to find that you credit, or rge,'Warbu )vith being the author and promoter of the 1 of ducing member banks to deposit all of their reaeti,ey ear spare with the reserve banks. He does believ general plan for enlapIi. less believes just a .0tg. n old he plan as a part of the urces, but he neverthe- strongly nthe principal of accumulating gold by note issue*. MO : 1 nglesed 0-iroy_ot a let'er recently written Miller expressesyviewssoI_11y that I won't attempt to repeat here. You undoub e ly have ': ler's speech in the office. If draiO utei- nquiry can be made of a few banks along the lines of your su zeetion, it might indeed be a good plan. In my former letter, I expressed some doubt of the wisdom of doing anything to excite comment or cause alarm and of course that still holds good. cannot be made a Ly real feeling is that our note issue permanent means of accumulating a large vol- ume of gold until the whole currency problem is new legislation is passed. worked out and To Oct. 27, 1916. R. 11. Treman, Esq.- About the foreign arrangements, aside from the Bank of France correspondence, I really do not see how we can do anything in England until the State Department has acted. right ahead. Thank you for sending me the copy of the confidential circular sbout the French credit. A long t egram from Curtis indicates that he is in Washington today, g away on the Just as soon as they have acted, I think we can go subject. I have telegraphed him my 9aenaina nd to the office and won't repeat in this letter good enough to ask him for them at headquarters a dealt with report. domestic glad the 11 written him will be matter is being uch interested in their It is most important "4 t e protection of our own situation in aretD uild up the lergest vole. Ns. urns of these credits/ ossible. The more obligations the bel- ligerents enter ld at future intctp pay us weAreVe aganit-th protection it is very later demands upon us for gold portant in dealing with this Jay ehoul eview the matter th7A Curtis and ld correspondence and memoranda relating \ to the Brow ice the more dates, otherwise it may not be apparent how completely the Board has already committed itself just to the principles underlying these transactions. About increasing our acceptance upon the comdition of the money 1/8,or even 1/4 in market. rate, it all depends If we are the case of the best bills,under the rate at which other banks are buying bills, I do not it. no more than think 1 would change Our steady rate at this 16w level is attracting all the time to this country. business To Oct. 27, 1916. R. H. Treman, Esq. of outlining currency to prepare one or two more articles along Before doing anything in the way legiclation, I want the line of the one already sent you and see wh,lt the effect is,essides that, it helps crystallize one's views to get them down on paper. e about the resolution and advised Jay that there was no p o ability of his I am in correspondence 7:ith Mr. Lo 1 z\ pressing it. ..4% Don't worry about my progr--8 s or the 7 I following your advice. he ered that I had gainid a Be is now recommending a cart pretty good ev iden' AO man's bill for ad i ways that it woul I o t me n which I am tor yesterday and discov- o)urnds since I last saw him. ount of exercise which is or do I worry about Dr. Trese. him so much already in wrious sttle the debt. I will be back as goiil-as ver, or good enough to finish the job there soma before u tting ent/i7ely. out the domestic d i crimination in rates between foreign and t im rather illogical to make any difference and there is one very strong argument for not doing so. course, we want to develop our foreign Of banking business, but there is always the possibility that when the war is over, we will lose what we have gathered in London. It would leave our market bare of bills; in other words, the very thing we are endeavoring to develop, which is a large volume of banking paper To Oct. 27, 1916. R. H. Treman, Esq. for which there is an immediate market, on the drop of the hat would be indefinitely deferred in accomplishment and we would have to start all over again with a big campaign of education to get our domestic business on a bill basis. Why not use our resources now when they are abundant, to stimulate the donamgest argument velopment of this domestic business/ Th to the drawer of a bill will be a lower rat he has heretofore paid; so I am in TOT 0 cerns that are willing to adopt s w basis, f interest than ang these con- benefit of a preferential rate. sus weather. We are enjoying th m s and to-day were perfect warm ngh to be out without a coat, and one is always 004;r5-11,3, just now white wit Best regar the nd man hanks for your bully letters. Deputy Governor, Federal Reserve Bank, Equitable Building, New York aity. BS/VOM kground of the Rockies, snow. Faithruill-yours, R. H. Treminsq4 Yosterday _ November let, 1A6. Dear Mr. Treman: A letter just received from Seay of Richmond advises me that hs 'i:as adopted the scheme of imposin penalties for deficient reserves and that last month he h d collected 000 in penalties from member banks/ that ho is h v ng no overdrafts but that, on the contrary, his depos bz ased from #15,000,000 to nearly 22,000,00 Conditions in his d' materially and I am still ve ict or from those in ours 1 of the wisdom of invok- ing penalties, but benefit of his,vk erience the benefit that sion some change of\ lewe. ( ells me that Nr. Jefferson has lan to ask Seay to give us matter, as it might occa- , been therean *ed. 1 1/2:letter ter teilef ifhat ment for story u he "n ormation is already in his hands. from Mr. Curtis on the to date. French credit mat- It is a grievous disappoint- sue,ithe Reserve Board made a great blunder. Mth testlesgardb, I am, Sincerely yours, R. H. Treman, Esq., Deputy Governor, Federal Reserve Bank, Equitable Building, New York City. November 6th, 1916. Dear Mr. Treman: have yours of ectober 31st and Nove or let. The French retter seems! to 11F:ve been after a fashion and I nally eettled suppove considering the m s akee made by both the benkers snd the Ecerd, it was the best t a could be done. Tould you mind sendin the submitted to the Boerd covering the granted by the Berl,: of Co 68for German account in rgenti Board's ruling, which eire most I nots,xhat y 7 and others cry , t of the application years acceptance credit urpone of carrying hides together with text of the oyx ous to see? --abo't the position taken by Hepburn policy of the reserve bank in buying bills. It / is just whatI1 would exe t Mr. Hepburn to do. cle in the Sunday Times about the A. B. A. eeferendum on the collection systen. The questions proposed by Mr. Thralls are bad in that they seggest a further poorly coneidered alternative. As they have already gone out, T belicve it is too late to do anything about it. the result of this arise as referendum and possibly of discussion at Waeh- ington, as intimated movement by an Some temptation might offer in the Journal of Commerce, to head off this on the part of the reserve banks to perform 2 R. H. Treman, Esq. To Nov. 6, 1916. these services for nothing. 1 If the circulars have not gone out, believe it might be wise to endeavor to reach all the members possible, to have a meetgotten together for a meeting of the committee of twentyfive and, if ing with them. eith the 4oveenors, If they cannot be there is danger of twelve different suggest- ions being made from twelve different sources a d a good deal of confusion resulting. In no event, would I we o see the re1\ serve banks undertake the check collectfon seesing tne cost. to. It There is no kno is wrong in principle, serve Act and might well be bneine'sj. without as- ng-what it mi.not lead r r the spirit of the Re- cd4 ued47pening the door to a N uc of which the reserve banks policy of paternalism for the con would indirectly use g eerfiii5;n nds. I really think it is a ...,... very dangerous preced . 1( About discrimi ation ates between the new French , bills and tne/t7e for litile---1O-re directly ceMmercial in ter, i do n at any rats charac- arg such policy can be adopted with safety, til t1ieJb,siness develops further. Why is the see how bill of the iaiv tional Bank drawn by a French manufacturing establishment worth any less than is the bill of the Hanover Na- tional Bank drawn by an American ex.porter? a distinction without a difference. I am rather inclined to think election are much the best 'hank you for interesting. It seems to be almost the although office that Wilson's chances of much will depend on New York State. reports which are very full and 3 To R. H. Treman, Esq. Nov. 6, 1916. Just as soon as election is over, I hope the question of our foreign arrangements can be actively taken up. With kindest regards to you all, I am, Very sincerely yours, #. H. Treman, Esq., Denuty Governors Periers.7 Equitable Building, New York City. Bs/11T' Penerve Dark, 3 R. H. Treman, Esq. Nov. 6, 1916. Just as soon as election is over, I hope the question of our foreign arrangements can be actively taken up. Sith kindest regards to you all, I am, Very sincerely yours, H. Treman, Esq., Deputy Governor, Pederal Reserve Bark, Equitable Building, New York City. Bspcm November 7th, 1916. Dear Mr. Treman: Thank you for your letters of the 2ndA and 3rd. Both you and Mr. Jay write 1116 about he question of do no getting more gold by issues of notes. ate my hearty endorsement of such a pla 3red to reiter- ottnco,ver the rec- ord of last year's note issue howev t we do not'l* gel a permanent hold on more tha a/ninirAn amount of the gold so of the large accumulated because as soon ns demands for curr hold about 475,000,000 fee a mini r and redemption of not*s subs m. \ beyond are issue,, a that most of them will z' .----1 em a more p a li T the extent that notes 1 ----- ,- 1 holding We seem able to get and e tain mini we may expect with certainty e deed/in a few months. It does seem -___ to be a needle i expense. ly will give realizes t The .plan of distributing them rcre wide rmanent circulation and make our gold manent, so I really think it is Tort trying. Your views about foreign vs. domestic acceptance rates are exactly mine and I am glad they are confirmed by the opinions of other bankers. I wrote r. Jay a little program of development work, the result of considerable cogitation out here,and it is growing t, in my mind that we should start an aggressive campaign to bring state banks into the par collection scheme. It is a point of con- tact which may result in augmenting our membership in the System. To Mr. Treman. Nov. 7, 1915. Yours of the 3rd crossed mine in regard to the Committee of 25. It is too late I think to do more than watch the situation and cooperate with Thralls. He exaggerates, in my Opinion, the present antagonism of country bankers. An able leader at Kansas City could have brought about a revolt and many withdrawals. Now that that meeting is passed, I believe the 'at is behind us. If the Committee has a meeting, i woula establishing cooperative relations with the eational Bank Section. It hem 1 means advocate us *.s, we did with makes,i4-mightyhard them to de- /iberately adopt a eolicy injurin Sy tem when they have convincing evidence that the officers o the eserve banks are endeavoring to help them and not injure them. psychology of this situation is simple enough efter a le rares0e bank officers invite co these gentlemen to moat( em to di o a ss plans for mutual benefit and show them that we are wil ng to e p within the scope of the law. ) It ,to \ mehae. 'ne of ro acceptances is a fairly full one alt gh, as Mr -lay will tell you, Jim grown is an exceedingly careful,* d conser *tive banker. The affairs of that firm to the'eatate ent made to us, are so conservatively handled ;:/according that I would not feel uneasy about this line or even a larger one any emeriency necessitated enlarging it. I am writing Jim Brown as you suggest. On the question of lines generally, I will write separately. Thank you for sending the documents to Pallain. mr. Cur- tis has written me about the letter and I will revise it to cover the points raised. 3To Nov. 7, 1916. Mr. Treman. The other matters mentioned in your letter will be covered in one I am writing Mr. Jay to..day or tomorrow. Best regards to all of you. Very sincerely yours, R. H. Treman, Esq., Deputy Governor, Federal Reserve Bank, Equitable Building, New York City. BS/VCM November 7th, 1916. Dear Mr. Treman: The dai1y statement now snows our bullion as distinguished from coin and I a erty of suggesting that in the figures/4e pu not separate these but should show one Coin, Gold Certificates and Bul what upon the SAMS ----, now r banks in reporting th4 reserve Rae: u horizing national o show qs one item, "Cash e Bank." y yours, R. B. Treman, Deputy Governor, Federal Reserve Bank, Equitable Building, New York City. BS/VCM iteold 0lose to the public what we are doing, which would be Ver we snould 7 is particular ac- , in Vault and Due to F Is the lib- ) count should not be so expose principle that the Com g of gold November Sth, 1916. Dear Yr. Tn____121.Lperl___ The weekly report of November 2nd contains one or two matters to which I want to refer briefly: Mr. Hendricks is working on certain discussed when he was here and one ofitneee ugestionswhich we re- of Clearing House charges and our rgeLations with House. e inco I certainly hope that orke apparent in this matter can whole subject Clearing istencies now perfectIS and eliminated. I won't go over them in detail for. Hendricks is thoroughly posted. I have been disturbed b \ einees c Board in ruling thet ionalNbala permission drawn for h of Europe. the attitude of the Reserve s cm does not justify granting o accent finance drafts which are nking trade settlements by the banks purpose le'makes u the tail of the kite. We cannot es- ./ tablish a bus ss stor between this country nnd some other country until the principal banks of Europe have taken the lead by establishing such n custom. It may be that the statute is too restrictive to permit any other ruling, but I believe the Reserve Bank of New York can afford to make representations to the Board pointing out that fsw York banks for the fact, Isinich is a wellestablished one, many years have drawn finance drafts on European banks in anticipation of grain. our exports of cotton and Bills of that character are recognized in both London and Paris as being legitimate finance bills justified by our -2- Tremar. Nov. P, 1916. seasonal business and they have the highest market. standing in the and Just now, conditions ara reversed. Inglish Conti- nental banks 'Tian to draw biite on New York banks. Why is it not perfectly appropriate for the board to rule that a custom has already for many years beer established and give the necessary rulingt At any rate, I ould like to argue the question with them. have opportunity Please ba ir mind that -burg's experience in these matte ,onfinad to his lianking experience While in Ger y d London, , he has not had occasitn to deal practio ),y/wiI, hese matters from the American standpcint eince C/41 fAis country. He may not appreciate what an important p 'nee° finance bills have played in our busin s with odon Paris in past years. The Board o ruling he case of South America,,of which Mr. Kenzel wrt me course is perfectly sound. R. LS H. ?T Deputy Governor, Federal deserve Bank, iquitable 3uildihg, New York City. BOCU November 8th, 1916. Dear Mr. Treman: his I enclose copy of a letter I am writ g Jim Brown about firm's acceptances, wnich I hope will ent r ly meet your views. In case you feel that this letter is a little explain that Ir. Brown is not only a very warm but in some in order e of these matters I h to get his frank, let me nal friend, lted him rather freely judgement The boys sent me a eta eett showing the lineu we are now holding, and of bills eng comments occur to me: FourtheAtla t c Nation]. Bank, Boston, $150,000. I know 1 ttle aboqt this bank but presume that Aie has chi ed it and we hew> full state men Charleston, $50,000. This isialfine old bank a4 Anglo but should not command /rates as apply to New York prime bills. American Bank, :7,52,'14. This is a comparatively new nene. I checked it up abroad if i am not mistaken and got only a fair report. The line seems all ri3ht and I presume the bills are endorsed anyway. Brown Brothers & Company, Covered in Muller, Schall separate $2,216,588.02 letter. Company,$36,520.41. i am not sure whether these bills are endorsed. to be taken very cautiously and only aftrr careful investigation. It is a rilme National City Bank, $76,099.69 They should give us more of their bills unless -2To !r. Treman. Nov. 8, 1916. of course, they are distributing them to their correspondents. Balfour, Williemson Co.,01 6,(.95.62 Kains can give you some information about this name. is an English concern add a very old and respectable one. I know the head of the firm in London, Sir obert Balfour, who is .a Member of Purlia e T and stands high in the city. This 1 m however never makec a statement. They h e offices in London, New iork and San Fran a co and on the west coast of 5outdAmerica. While I regard the bills as absolutely goo , would not buy It them without res.-vs/1,4b1° get satisfact The long list of nua Company I presume all bear end bankers. 5ome of thea- only slightly known. While I bills drawn or endor(s d by Germ ordinary prud ors for al req'i endor ent unless we a ements from them. r g Balfour, Williamson ollo //s of responsible banks or ly unknown to me, others uld not discriminate against any banks in South America, I think we have good endorsers or accept- f that paper. . A. Klin s i h ew York, $60,435.71 not mistaken, t.A.s man is in the employ of he Bank of New York and the bills doubtless have good endorsements. The question arises however, as to the character of these bills and the legal status of the acceptors. it might bd well to look into that situation a little. chants National Bank, Worcester, $357,F30.50 This is a good line for a comparatively small bank but I presume Aiken knows all about it and checks it. F. D. V. Telfair, Paris, '4,500,000 This name is unknown to me, but I presume checks up all right with endorsers, etc. To m Nov. 8, 1916. . Treman. Generally speaking, the statement of foreign trade acceptances strikes me a3 being very conservative and well within the limit we are justified in carrying. The same ap- plies to the list of bills of private bankers, the only special rmarks being those in my separate letter bout Brown 'Thos. know Mr. Kenzol is watching this m tter with a great deal of care and intelligence, but the busine s is new and it anted. This might be well to caution him to take in peculiarly the ease where we a for the other r serve banks. I return the list herein. Very trul R. H. Treman, Esq., Deputy Covernor,.Fed Equitable Blkini]ng, New YorkAt'i. 357V CM B,nk, November 14th, 1916. Dear Ur. Treman: I have yours of the 9th and a h and thank you lacartily for all the news. Do I understand ours of from)( ..._ 10th that War burg thinks that the present ruliaFf the our banks in accepting bills English and banks for the purpose of exchange! any possibility of starti take advantage of it. can now be encour would justify mental If there is tice, I think we should The mo mportant development which A woul theColonial banks draw bills on New Yor particularly ose is too obvious course, to n seitate any argument. I had a we program legisl says est r lk with Sen at except by. ssibility of g House That mean Act must ocated in the East. It r Thomas last week about the ext session of Congress and h nanimous consent there is not the slighting any measures through the Senate and of course, that amendments to the Reserve e with the Reserve Board, come before the Com- mittees of Congress and very strongly supported by the reserve banks,be dealt with as nonpartisan legislation. It can be done if handled right and the only amendments I are interested in are those having to do with our currency, concerning which I have written separately. That is the only matter in which I am doing anything and to be effective, it must be dealt with by the Governors. -2To Nov. 14, 1916. Mr. Treman. hear that Mr. Jay was laid up. contained in your letter and previous I am sorry to Somtthing ters indicates that possibly you and Mr. Jay in dealing the our member banks in New York are developing their offices to discuss ing to matters at I be wi er those fellows to come over wanted. X have not bee ed in se past run to train they are to ask any of them, or whoever it may be, to while a trifling matter, it is nevertheless one should be am entirely Reserve Bank Vanderlip, Jack Yorgan come to the bank,amd he 1 n It is a ter of policy, but right and you entirely wrong in a little I really believe it would with habit of go- th them. small matter and I do not want to assume let- which it seems ngs reg to me This is just a OMS. suggestion. dealing with the State opportunity to g make our own er- s on the que tion of neutrality and on the merits of the to foreign accounts. proposition I do not work we ke;Jr. Gedney's plan and fear that to aid in effecting a postponement eration of more important plans for long as we are importing will arise as to our that I Depart- have always gold, reserves currency think I do not it will of consid- legislation. So any real danger and it is no exaggeration to say pressed this matter the other reserve banks very largely with the for the strating how weak our currency position is. Board and with purpose of demon- -3To Mr. Treman. Nov. 14, 1916. / hope you are successful in effecting a more equita- ble division of investments. It is certainly speech-making and of desirable to shift as much of attendance at conven men whose names you mentioned. It is go education, but it might be well to review the ons, etc., to the practice and good 1 at they contem- plate saying. I would like to see that difference a to smaller figures.As lo there may e is any difference net, be some large My recollection o was that his salary If his services in the bank, p nt reduced gross. rangement with Mr. Sailer sod at the end of a year at matter is of record tes and, certainly, in my private files. your good letters. Sincerely yours, R. H. aman # Deputy ederal Reserve Bank, Equitable Building, New York city. BS/VDM November 14th, 1916. Dear Mr. Tremane I have recently been in correspc nee with Dr. Miller of the Reserve Board in an effort to get lei to modify the views on the subject of which he expressed in his Indianap issues or iederal reserve notes. donee his memo andum No. 854 He has now sent me 'prepared for his associate very definitely set out an eroposel that the gold rd in which his views are 1m altogether opposed to the ch we eive through issues of r-ites erve should be made to This ethf;r surprised to find, is based largely upon the !federal reserve notes reserves for member nks elop the note issue powers of re- serve make a great cantrel bank of the Fed- s would eve eral serve System. This is the most important argument dealt ith in his In hapolis address. In the would be inc 1ette I had from him, he not states that he to subordinate his views to those of his asso- ciates if he finds himself alone or substantially alone in disagreeing with them and states that he thinks this question is of such great importance that the Reserve Board and the Governors of the reserve banks whould at once take and endeavor to agree upon a policy. it up for discussion -2To Mr. Treman. Nov. 14, 1916. Of course, this means that if all the Governors are in agreement and make strong representations to the Recerve Board, they may be able to get practically unanimous support from the Reserve Board to plans for amending My 1, therefore, sugast that a let sent to all the Governors prior to the nex ubject ing that each of them consider the the Act. be prepared and eeting, request- or to the next meeting end be prepared to discuss and vote u lowing questions which are on Should the the fol- tively augges cinbacke. se retired Should th of national bank notes be rome accelerate otes issued against gold Shot lities and th, gold so obtainasset of the reserve banks? Sh merber h e be permitted to count Federal tee as cash reeerves? Should our currency laws be so amended as to vest ci d r tion in some government body or official that the denominations of silver certificates and gold certificates could be readjusted from time to time and thereby become a means of forcing more silver certificates into cir- culation and more gold into These questions can be elaborated constructive program that to suit your taste. should be discussed, the meeting be asked to bank reserves? If a my suggestion would be vote upon various methods which might 0 3 To Nov. 14, 1916. Mr. Treman. be employed for perfecting a complete reform of our currency. won't elaborate this as I think you and r. Jay already know my views. With kindest regards, 1 am, Sincerely yours, R. H. Treman, 2sq., l'Oputy Governor, Federal Reserve Bank, Equitable Buil.ding, New York City. BS/VCM 4100 MONTVIEW 3319ULEVARD DENVER, COLO. OW. November 17th,17th, 1916 Dear Mr. Treman: I have been doing a little work with Professor Kemmerer of Princeton University in connection with their course in Economics and last Spring arranged to assist the University in getting the documents mentioned in the enclosed letter. On account of my uncertain absence, it seems to me a good deal better to have the correspondence and all the data handled at the offic'e in New York, and I am sending the papers to you to ask if you could have a letter prepared to each of the institutions named, addressing it if possible, to the President, Governor or head in each case, explaining the character of the request and enclosing with eabh one a copy of the letter addressed to me, which gives the signatures of all the men connected with the course in Economics. The letters'when prepared I will be very glad to sign and I presume it will be proper to send them on the bank's regular letterhead. '-hese letters should request that the reports be addressed directly to the Pliny Fisk Statistical Library, Princeton University, Princeton, N. J. This is in the nature of a public service which I think the 'sank can well afford to promote. Sincerely yours, R. H. Treman, Esq., Deputy Governor, Federal Reserve Bank, Equitable Building, New York City. ovember 17th, n16. Dear hr. Truman: I have been doing a little work e h Professor Kemmerer of Princeton Univcreity in eonnection th their course in Economica and last Spring arran the Univcesity in getting the documents mentlned in the enclos bsence, it seems to me good deal better to hay ondence and all the data handled at the office in New id I am sending the papers to you to ask if you a ter prepared to each of possible, to the Pres.,.-inctitutions 1111111111P* ideet, ".overnor , explaining the cbaracter requeat a cf each one a copy of the letter * -eddreesed give YT signatures of all the men conreel:6d h the coeree jr Economies. en prepared I eill be very glad to sign and I esure it will se proper to eend them on the bank's regular le lead. se letters should request that the reeorts be addressed directly to the Pliny Fisk Statistical Library, Princeton University, Princeton, N. J. This is in the nature of a public service whien I think the bank can well afford to promote. Sincerely yours, - R. e. ereman, Esq., Deputy Governor, Federal Reserve Bank, Equitable Buildine. New York City. yacivnu November 18th, 1916. Dear Mr. Treman: NEW _Yours of the 14th is just receiv I do hope Mr. Jay gets about in shape end is not rash in coming out too soon. Thank you for the cli i belie Glass is an honest earnest and publi representative, far above the average in Washingt o man to be at the head ofthe Treasury. His health he is excitable and rathAmer truculent and a of the work of that dopartment is the() ry sorry to see the appointmene muds sider him an unfortunate driving force in em where his radical ideas might p dist nee. His insistence upon an unsou collection plan in the earlier days of our development caus us all a good must his accept that in a1 of trouble and uneasiness, but I e of present conservative plan shows at least he was willing to have an open mind. the I have already written you about the Gedney plan. The report the boys made seeme to me all right so long as they stick to the recommendation of the last paragraph of the second page. It is a good scheme to have the plan all ready for operation, but i would not think of attempting to operate it now when we are able to deal with greenbacks an. silver certificates by a less expensive, and for the time being, effective method. -2To Nov. 18, 1916. Mr. Treman. In answer to what you say about finance bills, wont you ask Mr. Kenzel to show you my letter to him which I think If the drafts are so covers exactly the point you raise. ts, they would be ot. If they can drawn that they can be identified with exp covered by the original provisions of the non the amendment not be so identified and reliance is placea anctior drafts to the Act, then I fear the Board of the character Mr. Gardine suggests.. I am not sure tha bers of our Board have u market eo cers of the b nk and memn other in regard to our open rate policy mentione The objec course, tes by a to buil fluence higher n money rnd ney rates. bank is, of thereby in- raising rates at the pr. sent 0 time would not d would be at the expense of dred millions invested in New our ear needed only fifty millions York reserve nly to pay our expenses and div- advancing rates now, idea , thro rig the burden f carrying sixty millions, say, of our in- vestme we might cer on be justified in general market, but we have to expand before t. we can effectively few million dolof rates, would be no contract and to pull in the lars w-ich would result from this advance ligible in the present expanded situation and would siply cost us earnings. I am sorry to disagree Alexander, Hepburn and and associates. Vanderlip, not with such authorities as to mention your--good self Nov. 18, 1916. Mr. Treman. To Rather than make any general advance in rates, might it not be wiser to mark up our rates a trifle on purely finance paper, which is what the Reserve Board wants and which would, of course, ilve some effect as to that particular class of paper! Pe:sonally, I doubt if I would do it at all except,as a concesg in our own Board, sion to their feeling and possibly the f it. might be a good plan. I have written Warbur, about t 5 gold certifi- *ust as soon as cates and will send tha.L article or publicati in Washinggive offe I have assurance that it is /1 ton. About the fisca ncy to do a lot of work for the g ter, I think if we are going ant, we ought to carry a larger ational bank depositaries paid outside of our own re- proportion of the as collecting a serve cities and king disbursements. vor of huy am in fro ce more 2s, if we can get asuuran- ersions will be promptly made. a9hington The mail ha been rather heavy lately so I am trying to conde e my letters. to all of you. Best rega Faithfully yours, R. H. Treroan, Esq., Deputy Governor, Federal Reserve Bank, Equitable Building, New York City. lapcm T November 20th, 1916. Dear Mr. Treman: so I will send only Monday is always a heavy mail d a condensed reply to yours of the he rate changes can b 16th. than by me out here. the one outdoubt is al right. Rates easily be reduced at any eft at the new levelif that lined in my mined on The program is not exa last letter b on bills of commercial time and those for financ later the ground seems desirab having a committee of There As I recently wrote York bankers gain the impres- ggest. bankers meet Warburg, we mu ily gather from suggestions of thi ind, that the New ork bank is obliged to ask permission fr Washington evefl time any important matter comes up. We 1 lose the led Person which the , Reserve Boerd wants us to de- I would like to see advantage the taken of the Reserve Board in New York from time local bankers to our office to meet them. This members of to time to invite is only a suggestion. I like your letler about the gold was to send out two or three to your best very much. '!'y thought friends, following -2!o Mr. Treman. with them up Nov, 20, 1916. others if you found the rroponse favorable. too many are sent at once, some one be unfortunate to have is sure to talk and it would it get into the newspapers. danger in advertising the necessity for so Ing is one of those curious suggestion which mind of the public to develop If s There is currency. It etimes work on the to panicky f5T ings. I do not understand the o the vault. Are they satisfactory or not? 'thank you very much rt ull report. comments occurred to me a el's memorandum: strikes me as a Bank of Charleston. rate for The following pretty 16w this paper. 'n lo names of the endorrers make t d I have no rcason drawer and to doubt the goodness of the This name ought to be strict- ly 11 ed and not much strength to the paper. the Bank o Klingsmith: would buy the by the Bank o the United States as an f he is acting for Is simply upon the ew York. guarantee of whether Mr. Curtis is that all questions of "consideration" are arrangement between Klingsmith and his endorsement satisfied fully covered by the employer. The same remarks would apply apply to the Klingsmith bills. the Bank of New York, I They give an unqualified endorsement of the bills and I am wondering Telfair: endorser does to this that 3 To r. Treman. Nov. 20, 1916. mr. Curtis' letter about Mr. Starek has not yet arrived and naturally my curiosity is aroused. With kind regards to you all, Sincerely yours, R. H. Treman, Esq., Deputy Governor, Federal Reserve ank, Ne w York City. 3S/VGM November 20, 1916. PFRSONAL. I have not been ver good about le fact is I have had a very much larger corres ers lately but the ndence than any of you realized, endeavoring amon membersof the Federal Reserve o without being stir pp the tnsive, to start something going in th rency legislation and to keep things smooth about credits. as you know, a certain amount Besides that, me spent in the open air is necessary every day mys This is I see him at least once a ,:eek most encouraging s me with the when he makes me have had covers thefar Friday, utmost care. I ads recently from which he dis- hat the number of TB bugs is less than one-fifth of what e examination last July and, as he says, re when hemade they The doctor is still . nguid and tired. etting very sound of moisture in When he examined me on r5 lungs at all; by moisture, he means the accumulation of secretion caused by irritation of the areas of infection. slight infection in my right About a month ago, I had a lung caused as he thought quite nat- rally and probably inevitably, b coming down here from the ?ark ore to this altitude and to somewhat less pure air. Soft coal smoke -2- To Nov. 20, 1916. Mr. Treman. was a very likely cause. then I have been tatooed He got at it riht away and sirce like a South Sea Islander with iodine. The spot has entirely cleared up and the only very unfavorable development is an occasional digestive upt caused almost itably by taking more food, accustomed pazticularly cr inev- rn, than I have been to for years. will not be able There is always the pos to live in the :(3w York climate a ain or possib for long periods. I fregu live there guilty in retaining my po- in regard to your affairs sition at the bank, and .crifice which you are making, when I realize the 'xtent and that I have no right to largely for me as ask Of expect it ink that a time is approaching If you n my enforced absence, I am when a time lim ly enough on you f I justified e.-1 At this wri imprment, I real any time in so advising me. g, unless I should show unexpectedly rapid do not see how it is possible to plan for der a year from now. of suggesting this subject to make Sometirres I ha;e thought that my place be filled or, at any rate, that a per- manent jeputy Governor be appointed night away who would be competent to fill my position, and then if I were able to get back only temporarily, the Board might be willing to let me go and finish up our foreign arrangaannts and then finally abroad retire. To Lgr. Treman. Some Nov. 20 time ago I told Dr. Sewall that I would want from him in the dition and prospects of my complet: recovery intending to send near future a full written report of my present con- it to you and to the Board in Washington. however, and saw Dr. Sewall and got the wh 1 have not asked the doctor to prepare a ro if you think it would ' arburg came rt. well as the members of the more consideration than frankl thing. R. Feder New reman, Esq., 1 Reserve Bank o k City. I will do so be desirable deep obligation to you and, Please write me out here, e story froL-3 him, so It is unnecessary for me to repeat th 7.4 ' 1916. to all at feel a very the sank, as showing me a good deal umstances really justified. that it is time to do some- November 22nd, 1916. Dear . Treman: Yours of the 17th is just recei It seems quite derirable to meet 'rburg's views about lusion reter rerate differential. I have cor-, luctently but feel after all that it is advise. renewal creAte. r..:urtis about the whole Ae to the gener bankers thereon and purticu our rates, the comments of umenthal, I would nat person- heir vie:s. ally be too strongl ers want to see #- Am writing All the bank- itably employed. all exaggerateur operations upon think, almost w vantage dire out exception is They rates and I they overlook the ultimute ade volume of business whic- can be influenced by the maintenance of low and stable rates this country. I believe I have written ted this ten ousand times in the last two years, - but and too frequently,. ... tha, it is the strongest es it can Aimftak, elost effective influence for the establishment of dollar exfor c.mmercial bllls AP ear chan?;e. You have already found no doubt, a I did, that it re- quires- a mulish disposition to st nd out against the current of opinion. To Mr. 'rreman. 1916. I have recently had more mail than for some time past, but it does not take me Thank you for your constant thoughtfullong to dispatch it. Do not worry about my overworking. ness. Beet regards, Sincerely yours, R. H. Troman, Esq., Deputy Governor, Federal R Equitable Building, New York City. BS/VCM November 25th, 1916. Dear Mr. Treman: I have written you and Yr. C suggestions for discussion at the Governor tie about various Conference on the 11th and am now inclined to reco meeting be asked to consider the subject of arrangements of pointment foreign corres!)ondents. There is some d as to the wisdom of submitting in detail the ngland memoranda. ado public in respect of imperative that not engagemen that matter, as It is Cunliffe.was not to permit publici without the c ent of both parties. see no reason, wever, to def discussion of the plan out- you for managing such an ac- .which 1 coun is ern with or the twelve reserve banks. at the letter at the meeti Board My suggestion, therefore, mimeographed and submitted to the Govwit. a statement of the negotiations the State Department and that all progress possible be made in the direction of concluding arrangements promptly between the reserve banks. This should be done in such a way that we are protected from any "leak" by reason of submission of the matter to the respective Boards of Directors. If you and the others believe that it is safe to go into the terms of the proposed arrangement itself, I do not want to obstruct progress by suggesting -It that this is not the thing to entirely as to how that should be do. 2- Mr. Treman. To Nov. 25, 1916. The most important thing is to put the Reserve Board Into motion Department. the State Department sibility of any official decision which strongly tempted to go to Washin personally, if the Board had Ly old friend, be adverse, asson been out here spending two me an 11 on you at the bank as soon as he He is a man of very great ability and en h. ly conn onfidence. ticu1ar in any ,overnment la. he had to 'say s interest in ion discusse of the G edit Lyon- Government in negotiating financial arrangements. Fren doing so. the French Army and sent over here to represent t Us ha the matter up no objection to :r. for ion, I would be a nais has recently been d of advance of the pos- they are inclined to an unfavorable op days with State I urge very strongly that personal unofficial inquiry be made at if from the so we can get some sort of reply est While we none in the negotiation of the thought you would enjoy hearing bout conditions in France and particularveioping the use of dollar exchange in nch imports from this country. with fully the We have possibility.of an arrangement with the Bank of France along the lines of those considered in London and he tells me that M. Pallain, he is favorable in every way to the suggestion and believes that a close arrangment and the reserve banks would after the conclusion of the between satisfied, is he personally the Bank of France prove of great advantage to both war. -3To Nov. 25, 1916. Mr. Treman. 1 arranged a little luncheon for Wr. Masson here when he met most of the dously interested in local bankers and they were treme n- hearing him talk. Won't you let me have your views 4 regard to the suggestion for the meeting* Sincerely yours, R. H. Treman, Esq., Deputy Governor, Federal Equitable Building, New York City. BS/VGM November 25th, 1916. Dear Ur. Treman: It has disturbed a good deal to alize that who has written me from his house, makin has really been laid up for ten a ight of hie illness, -osibly quite ill. - Dr. Treman must take him in hand and make h reading him a lecture mys The decision t gold certificates by per is certainly wise Mr. Jay by separate I am have. etter. correspondence about ter rather than by circular, a matter that should not be agitated publ Abou only suggesti auditors and transit men, my son is to urge cooperation among $ nearly as possible absolute -t,ne ormity of methods in all departments and to reduce and sirs- fy.the volame W statistical material now being prepared for ington. transit men, I would like to see them work out some scheme looking towards progress in the matter of domestic exchange. There is no news be. cnd what I am separate letter. sending you in a I wn taking good care of myself, following 2 Nov. 25, 1916. Mr. Treman. To doctoreorders and when I say "doctors" I mean plural because I seem to have a good many, including some right on the ground here. Best regards to all the boys at t e office. Sincerely yours, R. H. 'reman, Esq., Deputy Governor, Federal R Equitable Building, New York City. -4 Ban k, -2Mr. Treman. To Nov, 28, 1916. If you do not agree with me in this it is locauee heve you are much more charitable and, e great deal more confidence in the good will of human nature than I have, in my experience, New York bankers generally go to Washington when they want something. The mere fact that they want something ar es distrust and opposition. If these matters can be arranget through the intervention of the Reserve Bank, much that be avoided and better feeling result. So I am sorry to be d to state frankly that I disagree with e xws expressed i our letter. ' P,bout currency on the subject and I am 46 seer your inquiry. I have jr-6, d gr:at additional statement that a e the Roser carried out by the Democratic Act legislation and be the dminietration in the way of construetive rform. There s little more that can do from here. have ven urged the rd to take the matter up with the ?resident and t to get him put it in his message to Congress, but have not yet h they propoee to do about it. IV mail fluctuates a good deal, some days, particularly being quite heavy. Dr. Sewall. stoped p to see me yesterday and told the that while I was doing wonderfully well, he would be glad to h2va me take a little more rest for various . Voe-, e- compl long letter which will anwritten you to what extent -orsisting of recommends- aCti en tions repeated program of this party woul Jay hes just telegraphed me 1111111iays, -3To Mr. Treman. Nov. 28, 1g16. reasons and temporarily at least I am going to reduce work. am all right, so you do not naed to feel uneasy about me. Many thanks for your bully letter. Faithfully yourz, R. Treman, Deputy Governor, Federal Reserve Bank, C Equitable Building, New York City. BS/VCM I 3 To Mr. Treman. Nov. 28, 1416. reasons and temporarily at least I am going to reduce work. I am all right, co you do not naed to feel uneasy about me. Many thanks for your bully letter. Faithfully yourc, Treman, Zsq., Deputy governor, Federal Reserve Bank, Equitable Building, R. New York City. BS/VCM 00°' November 29th, 1916. )ear r. Troman: Cur exteneive correspondence cn o subject will have mede clear to you my vieee about theee fore n credits under e aoo.t proposed action have sent as by our Board and asks for telegraphic reply whie differential rate. Mr. Kenzel por enclosed confirmation. so as to discusx another feature of the matter. 1 have been consc Boerd taking a very the possibility of the Reserve about theee renewal credits by Warburg in a recent and of the furtil notify national banks that rewere ultra viree. Besides letter that the volving credito hat I have been exceedingly that, ,tiff-necked in my attitude toeards the Board on these riei nett s whenever we 'agreed. M.ehing, therefore, to avoid esult in ceme radical ruling and not wishe which migh OM 1 ing th eerve ' to feel that I was trying to unduly influm.. ence either the NeW York Bank or the views of the members of tie: Roe.rd themeelves I reluctantly recommended establiening a differential between regularbills and those issued under renewal credits in order to convince the Board that 1 did not telne ihe position that I was always right and they eere always wrong. Jr. Treman. Nov. 28, 1916. My personal view is that a differential between one bill accepted by a national bank and another bill accepted by the same b,ank in an anomalous treatment to accord to that bank and would lead to untold difficulties. Discrimination of that character should he applied when any given bank is accepting excessive amounts of bills and if we ht a ank, such as the Bar. of C,ommeree, was accepting excessive am t of french finance bills, then cur policy uld be diF:crim ite against all bill* accepted by the National '3an: of C,o _roe, rather than some oC the parti r bll.0 ich nnd accepted. I h']ve further f that it ic u e reaonable for the Reserve Board, which is responsible, to be oatisfied at all'an k invests for ihe whole as to the amonnt of p amount of any one eines erence for any psrticul of New York which a conservative course purchaser, particularly the ch might indicate Undue pref- business or bills of any oar- .tution or class of institutions. rate if we decide to establish it ouLht 'o convi the Bco.:.rd that we res)ect its views and are not pig-headed a t thes.e mattrs, 30 reluctantly I wrote you recently, urging is change in our policy. I would not be honest, if i aid not tell you frankly that i personally do not think it a one' and that it ill prove to be impracticable, but it can he better oroven by experience tnan by letter writing. If I am wrong, I would naturally like to e shown. Pr. reman. Nov. 28, 1916. Since sending the telegram enclosed, the Denver papers . ve an account of an announcement by the Reserve Board in re- *- gard to these foreign credits. This is not a matter in which I feel that I am justified in attempting anything ih the nature of a protest. The Tleard is ot liberty, oursa, to express ite views on any metter, but candidly I do entertain their views on this subject anci believe at this neunoement is the Torst is-take that could he made at thie time. own conceplion of the country's bolicy ally differen from theirs. Instead of ,impoeing reetrai ncial transactions which are recersery nnd invite eeent conditions of cur ex port trade, I think the effort the Reserve :-..00rd and of the Reserve 93 ke, boll advice and influence, should be to dev the this commerce and the financial trans, m it will not later prove aemenace. by fortifying the reserve banks and by lation. Such a course woul-, be 1 - 410 ) 1 const evid which ctive rather t an repressive and I greatly deplore tis is timidity in the face of u situation uires a re y bold an,.1 _constructive policy. would be right in meking thi announcer.:Ient if they thought that lot:mete belligerent governments would not ' . be olid. They say in their stalement that they have no :i.teh thought but the mere feet of making the statement discloses that' it ilethere, elthough possibly latent. al* ....I NI. ix'. Treman. Nov. 23, 1916. 411c. Issues of Treasury bills by-:rance and England 4;e are rf n"concerned with but ac general eervisors of member banks , _At may 3assib1y be ecme concern of the Reserve Board or certain , -r5 2y of -the Comptroller's. ir hope the matter passes off wit t difficulty, but have very muuh 'fear it will ivet a disastrous eno ebressing effect. A th war m regai,is, mP Sincerely yours, lif it. H. Treman, Deputy Covernor, iederal Reser% Equitable Building I4ew York December 2nd, 1916. Dear Mr. Treman: This is answering yours of the The action of the Board in the ma er of acceptances hat of course pleases me for two reasol ing my suggestions about a differential, to follow a course which I notwithstandhas seen fit the B. but state h7'reslly ap- peals to me as the best; that you and your associates do not feel that you must influenced view I have in these matters fairs. distance from I am sur iscussion that I suggest of ret real seat of at- about gold recently circular to member banks e co ing it the detached ht in Washington. There throughout the by We have no means ositing gold. until involve expep that o r small denomi issue is made right and it will without much gain, except to the extent lion notes are carried in the pockets of the p e glad to learn further developments in the Starek matter as any change would make it desirable for us to submit recommendations concerning a successor. Best regards and thanks for all Sincerely yours, R. R. Treman, Esq., Governor, Pederal Reserve Bank, l'eputy the ne s. December 6th, 1916. Dear Er. Treman: Replying to yours of the 26th, I am lad the Board .hat it may be made no change in rates, but realize of cours forced on us and certainly the situat en A change in careful watching. is on hat will bear a greater our rates would h effect sentimentally than actua ways have this in mind. hope the Boa will al- Curtis separately on this subject. would not be at all a bills and as our hol We are finally rea re our policy will have some inporte.nce in uently, no change would eume that endorsements are not out the line but ohl warrants run off. ,urting effect. be desirable shnwn f to accumulating more many of the b is following the ax-ant our books and Tr held such as Lee, Higginson, ments occur to me: Com any.: This is the largest beyonli the present amount. in this going much On the other hand, many of the bills line may be already endorsed,in which case I should consider the line fairly moderate. line on in an emergency, in which case we would only get endorsed bills, I see no good reason for included et al, -2To Mr. Dec. 6, 1916. Treman. Ladenburg1, Thalmann: I judge these bills b(ar member bank endorsements. These also I suppose bear meuberbank Lazard Freres: endorsements. Muller, Schall and Company: This robably endorsed and I have already suggested great caution of t Whitnay Centre t bill. bank should not National n former get any such rates as the best tew York banks enjo years, the Whitney Central has b. eaviest th and while national system bovro r in the it t is perfectly good, ank of even equal is not entitled to the same ra ize in New YorkCCity would The Third I know nothing ield: about this name. Third National of Spring- All the n endorsed bills and if they were field would not endo hold of certainly. would not take even as much es we now Co., Hadden and Tata. lfour, William mm not well e ough informed in regard to rican banks to be able Sout} to the standing express an opin- ion end certainly would not attempt to do so from here without having available all the credit information in our files. would not be fair either to the brIk or to the ceptors of these bills. information and ac- This is the time, however, to watch these credits with the meet avenue of endorsers It discriminating care and I hope in connection with the every various obligors Mr. Treman. Dec. 6, 1916. will be will be considered and the lines watched very carefully by the me.n in charge. Would you mind askihg'Mr. Kenzel to ad- vise me of the status of the bills endorsed by-those.South American banks, as well as those accepted by vari e New York imThe list is getting so long that feel very much porters! out of date as to my own information.. fors. 'Thank you very much for a Sincerely yours, R. H. Treman, Esq., Deputy Governor, Fed Equitable Buildin New York City. BS/VOY December 6th 1916. Dear M. Treman: Replying to yours of the 29th. I am very glad to hear of Mi.. Jay's provement and also pleased that energetic steps ar the state banks. In that matter get after ould repeat t ggest- ion in my former letter that sonal acquaintance of officers of state banks can e basis of correspond- ence with them, it will be foun effective than., either general circulars or s of the banks where no personal relati ors° undoubtedly necess l visits, however, are time has come to get after all thc state bank t renewal.drafts. thihk t by our I do not lines are excessive as shown by the statement, either 44 ly the k or the othe judge o eserve banks, but really that is hardhis matter. We should base our consid- 40.4 the character and responsibility of the accentors. 7Ye hold, for instance, only $500,000 drawn under the de Neuflize credit. These bills might all be accepted by, say, one of the smaller banks like the Bank of New York and we might hold in addition two or three millions of their bills by the same acceptor and the basis of discrimination would not be the character of this particular $500,000 of bills, but the total 2 Te Ur. Treman. Dec. 6, 1:116. line of the Bank of Nev York. This illustrates the difficulty of discrimination and between bills of this character and any other character. I am writing separately regarding the lines shown it Mr. Kenzel's statement sent me with About gold certificates, it is a go the stream coming in but I doubt if it Faith full R. H. Treman, Esq., Deputy Governor, F Equitable Buildi New York City. BS/VCM thing to have will be t all effective until the Act is amended. Thank you very much for sure of the 28th. our letter. December 7th, 1916. Dear r. Treman: Some tiMe ago I wrote Dr. Willis a welcome on his return from the Philippines an ttle letter of aked him for e, he sends come account of his doings out ther which I hnve me the enclosed letter and papers ed as per copy of leter enclosed. essons why Federsl Re- rihere seem to be to form a connection with serve MJnks should make every ny as these institu- the Philippine nation tions are fiscal governments and have connections with tha a natural associa on through the eral Government. waver, which can be dealt ny detail from Denver and I am taking the liberty of son rig you the car pondence with the suggestion that you ma eel willing o discuss the subject personally with with i Reserve Board when you are in WaE-h- Dr. Willi ington next week. If this 1et,er should reach thg office after you have left for Washington, possibly yc:ur secretary will be good enough to forward it with the enclosures. Faithfully yours, R. H. Treman, Esq., Deputy Governor, Fede al Reserve Equitable Building, New York City. Bank, December 6th, 1916. Dear Mr. Treman: The enclosed statement'which I is the one given become misle-ding in that it as now to the press, on both sides of the vani to the conclusion that net figure of t70,641.84 m dicating an actu Don't you thin to give theils s and might lead osing D E . Treman, Esq. ty Governor, table Build' ark Cit eral money. The 11 be construed as in- rried as an asset. into etter shape fur the newspaper . derstand Reserve Bank. December 8th, 1916. Dear Mr. Treman: ....semeR.M.ferr I am enclosing a letter just reeei -nrice Lewandowski, one of the directors Comptoir and from Monsieur nagers of the ational d'Escompte, which the second largest and most important joint bank in Fran andowski is an old friend who years was second man in charge of the foreign b a man named Ulman, was regarde Lew- at bank. His senior, eying pro-German sympathies when the aar broke 0 fficult experiences was obliged to retire Copy of tter enclosed, details cer- tam n information w and whic does n sed that you will send him ope you sitate to do quite fully. seem al4ogeth r wise for me to conduct a correspondence of this sort when away n general frequently cies. It om the office. t me repeat observations which have been ondon on this subject of foreign bank agen- While some of the English bankers have at times claimed that their busidess was taken away from them to some extent as a result of the liberality of the English law in permitting foreign banks to establish themselves in London, I think the soundest opinion in London is altogether faverable to this development on the ground that it brings just so much grist to the English banking mill. There are no less than 150 foreign bank To Mr. Treman. Dec. 8, 1916. ggsncies in the City of London. They do an immense business and they, together with the English, Colonial and foreign banks, furnish the London discount market with the great bulk of bills for which that market is est view of this famous. subject, Taking, ther fore, I would personally d power to facilitate such a first class foreign the broad- everything in my k as this one in establishing itself in New Yirk. During the past four years, the French ji banks have been very severely cr banking. stock for doing a 1. The Credit Lyonnai of bad he largest and strong- est, entirely escaped this on d its management has al- ways been above reproach. r National d'Escompte was subjected to some or y had made bad loans and investments so ch as because system of branches, it was claimed, fied and som in Paris thei sore rapidly than was justinot profitable. carrying in ex bilities Under the s When I was their figs which disclosed that wandowski show they wer French ban ey had established their se of 50 of reserve of sll their lia- ter of the French moratorium, all the d house and aside from the hazards of war, aste c I should say that as a whole they are in better condition than they have been for some years. With this general statement, I hope you will feel willing to write Lewandowski very fully and send him all the data he asked for. Faithfully yours, R. H. Treman, Esq., Fed(ral Reserve Bank, New York City. December 11th, 1916. Dear Mr. Treman: This is my first chance to answer y.r 5th and 6th which, letters of the however, were pettly answerd by my longhand letter of yesterday. The rate situation it se and if souleof the big New to me was h id Yor I think we could view the s ber of times about Clearing House settlements and ject do some rediscouling, equanimity. I have written fully fully. perfectly ffice know my views quite You will an open mind on the sub- and probably ell. arranged as soon a The matter should be Clearing House will agree to it. About our rates for acceptances, I doubt if it would be wise t a large advance it morortfolio th an a fraction before the bank accumulates at. present provided, of course, that we do special lines which might become embarrassing. not get My recommendation about a deferential was, of course, made in def erence to the wishes of the Board, bu my confidtrce in their judge- ment has had a sad jolt lately on account of that wretched annour teement of theirs. As to yours of the 6th, I agree entirely with yumbers 1 and 2. As to number 3, I really feel that you and the others -2- To Lr. Treman. Dec. 11, 1916. have greatly exaggerated the importance of my connection with the bank. As to number 4, no one could have handled th, sit- ualion with greater tact and skill than you have and your willingness to continue takes a great load off o niy mind. I am not back there by next Summer or early 1, the bank If should not wait for my any longer. bank, it I am satisfied that if I must be under some arrangement by which 1 need not the long hours or take as much war I have done in the past and that means, of course, the bank and a permanent deputy Governor, who could ste shoes at any minute, either temporarily or Aiken were availeble, that would be a f ccount should you and the others feel t f the bank should b3t in any way sacrificed in overy or take any chances as to my retu There are four things which I am anxious to see accomplishe and which I wou is the elusion of a satisfact make every sacrifice to promote. One foreign arrangements6 another is a more of the domestic exchange and collection system, the third is to see the Reserve System successfully meet the after-war crisis and the fourth is to see some sensible, to-date currency legislation adopted by Congress. These are the important things ahead of us just now and if it is worth while for me to continue my connection with the bank although a little To Dec. 11, 1916. Mr. Treman. less actively than formerly, my work might be so arranged that I could give more particular attention to some of these matters, as you suggest, and be relieved of the bank detail. in any event, I am entirely in the hands of the dire tors to stay or go as they think the interests of the bank rq ire and am more than grateful to you and to them for the unus 1 consideration which has already been shown. With warmest regards, Sincerely R. H. Treman, Esq., Deputy Governor, F Equitable Buildi New YorLk City. BS/VCM December 12th, 1916. Dear Mr. Treman: Thank you for yours of the 7th. sfactory and The result of the election ie most it is far while Mr. Carlton would have made n better for the bank to have 14. 1. continue -Landing riot :\ that it means a real sacrifice a the report you sent I am tremendously New York. of discounts made for member ban me and it begins of business in one da our as been admira. y handled and the fact of willingness und meet the r materia as 1 re such onditia as those of last week to ers in a big way und without emonts hange of rate will have a greater effect sentimentally ntly suggested t, han actually. tions systems there are, the more com- he more col petition to a real bank. look as though the think the situatio t16,000,000 ; the more competition, the lower the charges, and I think every move such as that inaugurated by Riohards and rcjougal will eventually make our work emsier. It does not worry me a particle. I am without particulars so far about the decision of the Board in re foreign banking relations and as soon as they -2¶o Mr. Treman. Dec. 12, 1916. are received, will prepare something to submit for your consideration. The matter really should be handled by a visit to London and my mind now strongly inclines to making a temporary Bank of Priglend simply to get the machinery organized and explain to them that more exte ve arrangements arrangement with the will be completed later by a personal visit. Was anything done to bring 'le Coned_ tc of 25 tankers into relatione with the Governors and mcmhers Board: If that could be done, robbed of its dangers. o the movement You Reserve d be sent a suggestion *along that line some months What McDougal said in me an extract, is tr ddress, of which you sent ere much the s. me thin coming from the pe War R. M. Tr Deputy Go Equitable Yeq. New York City. BS/VCM ral Reserve Bank, sey ane you will find lett monthly circular December 13th, 1916. :ir Yr. Treman: For some time, I have been debatin letter in regard to our arrangements abroad a of riting you this the developments the last few days seem now to ma copy is enclosed in case you th: A spare desirable to it to r. Warburg. am advised by and letter from Mr. Curtis tha to Mr. Jay had stated verbally d complete our arrahgebusi ments as we may m es under such arrange- authority from the Reserve Board. ly to a formal application made by ank to .eserve Board in accord!ince with s of the statute, requesting their consent to of a corresp pointm all sat Harding that we m ments in England b the t om Yr. Jay and a telegram factory to briefly th the ap- ent in London, and naturally is not at for a number of reasons. Let me review ces leading up to the preEent situation: After our Board authorized my trip to Europe and after advising the Federal ReserveBoard informally of my intention of going and the object of the trip, I finally returned home in April and submitted to our Board of Directors and to the Reserve Board a formal and tentative plan for the establishment of relations To Mr. 'reman. Dec. 13, 1916. with the ' ank of England. shortly following that, a formal written request was submitted to the reserve Board for its consent Bank of to the appointment of the England as our correspondent and for its approval of a plan by which other res rve banks could par- ticipate with us upon equal terms in our tran Bank of England. ctions threugh the This matter has been formcl Board for seven and a half months, before the Reserve ubject of volumes of correspondence and of personal discussion, has n submitted to the State Department and f r all this de ay, the Board says informally in ritten reply to our appli- effect, cation,that we may complete ements, but must not do any business. You can i o which we will be sub- jected if we now c and ements with the Bank of then are obiig r'ngland that the Reserve Board has aps unwilling that we should do any bun ss with them for the present. have given have co good deal of thought to this matter and to the concl a on that it is time that a definite and mitted to the Board for its consent or its disapproval of our application correspondent. to appoint the Bank of England our Any consent with a string attached to it, ar present one, and any informal consent in reply cation impresses me as being much less than to our formal appli- the Reserve hew York should expect from the Reserve Board. Bank of To Dec. 13, 1916. Mr. "-reman. After all, the principle underlying this matter is a The Board is authorized by the statute to give or simple one. withhold consent. It is not authorized to conduct the business, what bills to determine we shall byy or how much money we shall cted to do more use in investing in bills abroad, nor is it e tem as a whole. than generally supervise the operation of the 'he delay in saying "yes" or "no" to our applic placed me in a position of a good deasent f a successful fear has jeopardized the possibilit elusion ther to do with negotia- tem. Personally, I would hav might and rice to our banking sys- of an arrangement of unpreceden tions abroad which ion has already her embarrassment and crit- result the Federal Reserve Bank icism if the Board sho no to speak, as seems Of New York must do to be indicated by aling my true feeling in this There is g or from the Reserve Board. om you matter eit am griev ly disappointed to have met with apparent developed in jected t important matter resistance which has and to have been sub- e criticism .;used by this unfortunate delay. 4401,00 of a conference ly appreciate being advised of the result on this subject between yourself, Mr. Jay and Mr. Curtis. Sincerely yours, R. H. Treman, the Deputy Governor, Federal Eauitable Building, Reserve Bank, I December 13th, 1916. Dear Mr. Treman: It has be' n whispered to me that so roe urc in Washington were stirred up at our when money jumped up. On no account allow your The action of the bank not a supervising body 250 fly right, was the strong in doing just what it did do was disappointed had any policy and I would ing to watch closely under other course been of any one house or bank such conditions hand it or sug refully considered in all pur- at t 'I would joyed being there to have had a the episode an particularly to answer any criticisms stions from Wa ington, which I am sure were not justi- e. fied. Faithfully yours, R. H. Treman, Esq., Federal Reserve Bank, Equitable Building, New York City. gb BS/VCM o be in ge in these matters and Reserve Bank of New York mus chases ses of bills Federal the least degree disturbed by and I assume of our friends 1-* Denver, Colorado, December 15, 1916. R. H. Troman, Esq., Federal Reserve 3ank, New York City. Dear Mr. Treman: Thanks for yours of the 11th from Waenington vintorests me very much. By now you will relations. Of course I am kee you or Warburg before prenari 1 wish yo'i or Curtis ments in Washington importance with B9/CO , but await reply from rs, etc. a full report of develop°mos of increasing I hope your meeting is in ever; way a succee With y letter about ur foreign ega ""11. Denver, Colorado, December 15, 1916. R. H. Troman, Federal Reserve 3ank, New York City. Dear Mr. Treman: Thanks for yours of the 11th me very much. By now you will relations. Of course 1. am kee you or Warburg before prepari 1 wish yo,:, or Curtis ments in Washington importance with every wa-! a succes B3/CO - from Wastiington , y letter about interests r foreign , but await renly from re, etc. a full report of developones of increasing 1 hope your meeting is in Augusta, Ga., Decembr 19, 1916. Dear Mr. Treman:- In leisure hours of which I have a few down T sometimes think of that plan of parring P.7.:Rank here, drafts which the Richmond and other banks want. Yow does this stri"e you as a summary of the situation? A year or more ago the F. R.Tlanks established a transfer system for Under the use and convenience of member banks. this system and through the medium of the G. S. Fund, the F. P. Banks undertook to transfer funds between one another by mail without charge and by wire at a small charge. The theory was that funds which a memher bank had in, say, Richmond, could thus be transferred on its order to the 7. Ranks of Dallas for account of any of the Da4las banks, The member G. S. Fund did away with interdistrict shipments of currency and therefore with the expense of making transfers. This savinp was handed on to the members in the shape of free mail transfers. This was sound and a proper service to render. But, it is claimed, the members have not used it much because it is cumersome and their own checks. they would much rather draw That can he arranged, I believe, rith soundness and safety, if we follow the principles laid dorm in the transfer system, which are, 1. The member hank in Raleigh has the funds in the F. P. Bank at Richmond at the time the order to transfer reaches the latter. The P. R.Bak of Dallas makes the transfer only on the order of the P.P. Rank of Pichmond. It is a transfer of funds from one district to another specifieddistrict. The F. R. Rank of Richmond owes (and should pay) the F. P. Bank of Dallas the day Dallas credits the funds. As this is ddine for the convenience of its members and without cost to iyself the 7.P. system make no charge. The same thing can he done as follows: The Paleigh member bank draws its draft on thp F. P. Rank of Richmond to the order of Rotan (lrocery Co., Waco, payable at F. P. Rank of Dallas. The Paleigh Bank advises the 7. P. Bank of Pichmond the particulars of the draft, the amount of which, on receipt of such advice, the P. P. Rank of Richmond charges to Paleigh's account. The F. P. Rank of Picbmond writes or if necessary wires the F. P. Rank of Dallas Sufficient advice of particulars of draft to justify the latter in paying it when presented. The P. P. Rank of Dallas declines to receive it if it bears the endorsement of any bank outside the district. The F. F. Rank of Richmond owes( and should pay) the P. P. Bank of Dallas the day Dallas pays the draft. As this is done for the convenience of its lembers, and without cost to itself, the P.R. System (Possibly it might charge the drawmakes no charge. ing bank the cost of telegraphing the paying 7. T. Rank, but those banks which are so anxious to grant this facility co their members !ray be willing to absorb the charge. With proper coding it ought not to cost more per annum than an extra clerk or two Which they wluld not hesitate to employ for the convenience of membOrs. But T believe it is sound to charge the member banks the telegraphic cost, if any.) Seay's plan to draw checks and par Chem all over the :ountry of course goes too far and T believe has no chance of acceptance. is suggestion to call it " P.P. Rank Exch- 3. meaning far broader than plan which I have outlined justifies. What he wants to do is to rive Raleigh the right to draw, through Richmond, on New York and send the draft w to Taco to pay a debt there. This simply incrPares the volume of checks in transit, and vitiates that important principle which someone wrote into the collection plan, namely, that checks passing through the collection system must ro directly to the district where they are payable in order to assure their conversion into cash as promptly as possible. That Raleigh is entitled to do, and the P.P. System should help him do it, is to pay his debt in the Dallas Dis- trict as cheaply as possible. This should be done by a draft payable at Dallas, not at New York. Not only does the draft payable at New York postpone for two or three days the final conversion into cash, but the transfer of the money takes a triangular course, Richmond - Ne': York - Dallas, instead of a direct course, Richmond - Dallas. trachanre" has a much broader si7nificance than the limited function which these transfer checks should perform. The surrestions which have been made that the 7. P. Rank of Richmond should "ruaranten" the paying v. P. Rank, and that the ambunt of such drafts a member bank should draw r4411 should not exceed at any one time ten percent of its capital and surplus are both .7tire indications of the fundamental un- soundness of the 'Dian. They mean, first that the paying P. P. Bank ddesnot know whether the drafts are good and there- fore cannot trust the F. R. Bank of Richmond surely to pay them; and second, that the F. P. Rank of Richmond cannot trust its member banks, but will take a chance on them up to ten per cent of their capital and surplus. The 77. P. System ourht to have nothinp to do wit" funds until they are on deposit ith it. Then once deposited it should transfer them wherever directed no teansferrinp matter . what they amount to. It ha v already .apreed to do so under the transfer system. Tf a member bank wishes to draw its drafts apainst uncolected--or even undeposited-- funds, a ripht to do SO and to send it where it wiebes, but it no responsibility attaches to the F. P. System for thP payment of such a draft, which ir everywhere received for col- lection, as is proper. Another thinri I have an impression, perhaps incorrect, at eoine of these F. P. Tianke want to make an exchanre charre to their member banks who draw those drafts, just as they did in the early days of the system when 7. P. 'lank drafts were parred for about six month.. I believe that such a charpe when the funds are actually on deposit in -flank and when we have the q. S. 7undt wronr and should not be pernitted. the convenience of member banks. charpe 7e L. to operate,., is all We should do this for Thpre at liberty to the public exchanre as lonP as the Perhaps I the Piebmond Pet unduly concerned about public will pay it. this matter. T'ut it took a year of almost constant discussion to p,tittl-.,P collection system astablished on a sound basis, and T feel That this iv nearly as important as the collection system, and we should try just as hard to pet it ripht. If it is estab- lished on a wrong basis it is sure to throw our dwieetic 5 // exchanges all out of gear the first time the system runs into a strain. I am sending a copy of this to Clovernor Strong to see what his comments are and should appreciate having yours. They will make iteresting reading for a lonely winter's eve. With best repards, and hoping that you and all your family will have a very happy Christmas, I am, Sincerely yours, j. L$72.61F11976,1 Colorado, lnber 20, 1915. ear ' ?reman: 7.1ank you ver7 muc'l for yours of the 15th about amendments. drafts of all of them tnd I On each one. These will be is all Warburg wanted from me. Mr. R Tremont Fede 11 Reserve Bank, New Y BS/CC k City. for the report I was delighted t Avernors' views, as Warburg has - , record of the confidentiall ailed pare a little memorandum f oersonal views, ahich Denver, Colorado, December 1,0, 1916. Dear Mr. Trel,Isn: Thank you for yours of the 15th. It will otndy to reply, both in regard to the abkm of and Governor Seay's report, so I will e or an an some little veekly statement until I have been over them carefully. They are much more carol York - it dribbles a bit ev long. I rejoice to get tood news graph, for I was f which would be a Best rez;ards R. H. Feder Ilea' York BS/CC siren, Esq., serve Bank with snow than in New but does not stay very ectly from gr. Jay by telehere to keep me company, Denver, Colorado, December 21, 1916. = S. Dear Mr. Treman: Reading over the last weekly report, the bA.., reports to the directors and some of your recent letters suggest mind which I take the liberty of writi you will, no doubt, pass them along the line if 1. gestions appe: te to December 31st EARNINGS ..U1D DIVIDENDS dividend requirements to shows ii283,000 available for June 30, 1915 - you: 11 organization expense items 2£30,000, after dedu except cost of unused In view of our rnin situati. effort to clean up kvidends to June is considered insuf charge next year. writin ou sceetime. ag of compa I on, uniformi deal with th I Jove we should make every th and if the margin of ;;;2600 ot be improper of course to reduce Equipment Furniture , 7 ,ci,43,000, leaving say 420,000 to this connection, however, you will recall my ,esting the real importance for purposes , etc., that all Federal aeserve Banks should organization expense uniformly. up and disposed of with the Reserve Board? iias this taken It will effect our own policy as to dividends. 2. SAWIES. the usfle3 committee. This matter is no doubt having the attention of The officers and clerks have worked with such un- exampled loyalty and self-sacrifice and there is such an unquestioned increase in expenses for all of them, that 1 think they should receive 2. To - Mr. Treman. December 21, 1916. every consideration in readjustments for the New Year. REPORTS TO DIRMTCES. Z. The character of our bank makes it rig record of mat- highly desirable to preserve a permanent and e the directors. tors submitted to out the data upon Which the The Minute boo resolutions therefore, take the liberty of suggest a,; that arra inscription on 1915. the Ina or binding, with the back and with an from the organization of rac ion of 1914 firs 11 be that you and statements with them Ja:: arrange a in great confidence, policy for the New Year and tly to bring our statement . the private anuary let. As Ur. Jay and I dis- se their book e matter of th and all of rather fragmentary. Almost all of -2 suitable es which will make the contents Of course t J. P. Morgan at each node corresponding to our readily accessible. the bank, I, s be made, h is now submi in the blue binders as financial year, bound with- f the Be-are based. if not already done, to have the meeting incomplete files up to date. and Brown Brothers & Co. made verbal statements which were not even reduced to writing by Mr. Jay and myself for our own satisfaction. At the proper time it few words with Jack Morgan and Jim might be desirable to have a Brown to ascertain what, if any, important changes have transpired in their affairs. 5. NEELLY STATEUEUT FOR THE PRESS. closed with yours of the 15th, a grouping of I return the figures en- together. with a pencil the items, which, aline I 6C, not =MO. suggesting finall recommend us- 3. December 21, 1916. To - Mx. Treman. tug, will offer opportunity for discussion by the officers and, possibly, directors. You will observe that the difference between 4 will show our net earnings with fair items 1 ccuracy; also that it will eliminate item #3 entirely as the statei will balance without forcing a differendtentry of this charact e entirely If the policy of writing off or is adopted, item #5 will be elimina t th if you or the others think tern of uncollected de- ular objection to doing so posits should be published, suggestion on the ground that and if you see objection to the it exposes in mind that pract t detail, please bear the affairs be obtained by anyone taking the trouble 6. ES. CHICKS O. deal of thought. t Which on this s ANNUAL REPORT. freque,, get thi. absence for mee ,ut on time. delay can b., :,. I am writing separately Mr. Jay's rs, etc., illness will and the necessity for undoubtedly make it hard to was very late last year and I hope a similar his year by dividing up the work of its prepara- tion. If there is time to send me a draft of it, I would appreciate seeing it, but not at the expense of delay. Please don't think 1 am worrying you aith these matters. organization like ours needs someone whose job it is to do follow up matters An nothing but and these are everyone of them of that category, so ',- I hope you will keep the pressure on and get thon off the unfinished business list. Yours faithfully, BS/CC Denver, Colorado, December 21, 1916. Dear Ur. Treman: write a letter This lest move towards neace inspires me which I have long been considering end ahich 1 d th apologies for making sugestions of the character t erience and parthere handled ticularly after the magnificent way in which you and the situation during the money Cl I believe that the Presi his power to peace and that his efforts will any of us realize. I would brine about success possibly sooner than thin had he not stated his tion so positively to determina- country's influence in will be just as the scales in any bi ent. a factor in insuring he allies are determined to achteve as will be a ary It deciding t is all that makes me hopeful of the outcome. 1 for the portunity ling as I do, s time that we took council about policies ture and I wan rind pr upon the Reserve Board to of as many amendments as at this session the urge that you and the others take every op- secure the passage possible for the strengthening of the System of Congress. am writing Narburg a memorandum on all proposed amendments probably tomorrow. The Board should be urged not to confine this to single handed efforts, but to add to their own influence that of all the Reserve Banks and all important bankers Whose in- fluence would be felt in congress. 2. To - Mr. Traman. December 21, 1916. The second point I want to urge is in regard to our awn internal policy, and 1 know you will pardon my ref rring to personal and the fall ' 1914, because no one had any more intimate insight into the dif two periods than I had. u].ties of Lhose experiences during the panic in 1907 panics in New York gain impetus from two sours One is the timidity and selfishness of interi who lock up m ey at hame and withdraw money from New Yor s not so much the timidity or selfishness of New York banke s a rule, desire to be public spirited, but who are gene d, not by lack of leadership but by lack of the ve hing which and that is currency nd credit. is the result of act and I am cony of peace Bank Thi observations can readily furnish is not guess work, but rtatament times of serious difficulties, thingorarily break down as tha otiations, or i iey show a tendency to the result break down, that a skill and courageous iolicy by the Reserve Bank can be made the instrume for saving paper, to the ituation. We will bills need to discount commercial o issue currency at such a rate as to demonstrate the strength of Our awn resources and to kill panicky feelings. At such a time there are certain dangers to be guarded against, which I am going to enumerate as they appear to me: Arst, the danger that in our haste and anxiety to meet the situa- tion, we may extend credit to banks which are not id as good condition as they should be, and to guard against this we should take steps, if not already taken, to inform ourselves fully about every member bank in our 3. December 21, 1916. To - Mr. 2reman. district and every bank whose bills we buy. This does not mean with- holding credit from weaker institutions. Mhich should be saved from embarasmment if possible, but it does mean to require them in every instance to give ample collateral for advances. The second danger is that we may be too g .tly controlled by the supertechnical requirements of the Reserve Ac in respec and attempt too minute a discrimination of paper, etc. Don't ever forget that o the eligibility esult and no i t liberal int.r etation criticism will be caused if we appl on all these nd the regulations matters in time of of course, as we are careful to take only good pap The third is that our danger organization mi6ht break down short of competent men or in time of emergency, al because the men lost men, and the way to insure that making calls an m quire every man to stay at his our force will not b desk when of the d to take his time. king under p k, but not giv turbed or easy. show the AAg The . The ideal picture in an emergency is to see every man busy at eerve Bank worki his aan ys enlarge our force by , the 'ute the slightest evidence of being rushed, dis- men who are dealing with the public donee of loss of control of their own should be sent down to the work, they money room to count money - they do more harm than good. The last danger is one inherent in the Federal Reserve System. Emergencies require a combination of deliberation and promnt decision. One cannot wait to confer with associates who are 225 miles away and associates who are 225 miles away are not usually in position to judee 4. To - Ur. Treman. December 21, 191G. of the correctness of the policy to be adopted oh the spot and promptly. I dread the possibility of Warburg, or any other member of the Reserve Board, calling on the telephone at a time of cri timidity, or anything of that sort. , The manage. York on such occasions must assume responsibility if it makes mistakes and it is much mor between its aun judgment Lnd so limited period and which I hope you don , becaus hout serious ha egard as an '0;ctionate regara: am q ite able to do so for a 1 shall apologize for this letter icions interference with your own o you all. Yours faithfully, R. H. Treman, Esq., Federal Reserve Bank, Washington, D. C. BS/CC ates timidly ion developed, particularly at a responsibi A va bone of you need hesitate .rs m home 'stakes if it n in my mind on this score except that if at any time a real s to telegraph me to c. take the consequences judgment from a distance. This is pretty much all time when soue of Our the Bank at New la hington or attempts to shift its responsibilit. with a counsel of Denver, Colorado, December 22, 1916. Dear Mr. Tremor. The policy of the Federal Reserve Bank at present is to return Federal Reserve notes of issue for redemption. This may be reads. he banks of other reserve banks require Much expense could be saved in I shina notes to die if the notes of all Reserve Banks, except Boston aad Phil possibly Cleveland and Richmond, If tlae Reserve Act does not p this time, but wont you see bear in mind that if th Act proposed by the Federa it will permit us to redeem consent of the bank of i R. H. Treman, Esq. Federal Reserve B NewhinztoCity, N. it now the statute Nashi nt points, 'a, and r redemption. othing can be done at ent is instructed to °visions of tne Reserve d be passed by Conaress, Washington, provided we gain the ii Denver, Colorado, December 23, 1916. Dear Mr. Treman: Just a line to acknowledge yours of the 18th before knocking off work for a week, which we will spend in with the boys Who are here fron school and college. I fear the limitation that Class " bank connection whatever will disqualify irectors shall e no *Um most every sug advanced by you, Jay, Curtis and suggested that Curtis be appointed whe and I believe it is the best ap,lointment that I knew :dr. Dow, w you say, a nJ. man with an in,rowing is, egotism, however, as ys.ed. The policy about Feder 2 serve notes is absolutely correct, but as to the ditidend, to have seen it paid up e any time and possibly two bites June 30th, although ti- will b 4e I hope the bank -encouraging cated proc the compli he Board in this dividend matter, thus eivdencing our About an to ference to their wishes. _ sketch somethint, icle on the Collection System, t on- this subject after 1 will be glad to returning from the Park and send it to you in the rough, if you care to have me do so, but I an sure it will need a lot of polishing to bring it up to date. e ought to start our England arrangement pretty soon, but, as I said in a former letter, not until we have an unqualified consent from the Board. 111.nice to hear that Alliams thinks kindly of mo. With one or two exceptiona, he has shown me unusual courtesy and I believe the past two years have convinced him that we are trying to run the bank honestly. I have just received a bully telegram fr the good wishes of the Whole staff, which has very much. the office, containing died and pleased me I hope every man in the you Who stand in my shoes and bully Christmas. With much affection, H. Treman, Federal Reserve New York City. particularly u y of my trou have a eit Denver, Colorado, December 24, 1916. Dear Ur. Trem2n: of the 19th, Which Thank you most warmi-j for your mice 1 refers particularly to the matter of a Deput/cernor. of mullet, be ridiculous for us to be discussi is a possibility of your remain" mg, were riding a willing horse to tt this matter if there as though we oes nd guilty of a ous impo- sition upon your good natu he present arrangement to run along indefinitely, inter ur domestic and business plans and arrangements and kee ing milpir It would, vaing back and forth between New York and Ithaca. It is win °peat that I am deeply concerned me or my illness that no feeli f this matter. bet rthan ever, a is: 4 ever it is a very u and the I expect to return 11 has conditionally I might be abi th to make a trip to should interfere Europe in stated that he June. Ir absence and one that I deeply ere decide about the future will satisfacto With warmest regards to you all, I am, Faithfully yours, Neverthe- deplore. :That- be absolutely di* v%E 4rk7-1774%1 altWESTE IOW 'IMk UNION Farm 2580 WESTERN UNION DAY RGE W. E. ATKINS, VICE-PRESIDENT TER NEWCOMB CARLTON, PRESIDENT CEIVER,S No. TIME FILED BELVIDERE BROOKS, VICE-PRESIDENT CHECK 1 ND the following Day Letter, subject to the terms on back hereof, which are hereby agreed to COPY. "Estes Park, Colo., Dec. 27, 1916. R. H. Treman, Federal Reserve Bank, New York. Jay wires that de Neuflize requests authority to wire Pallain that we are willing to conclude arrangements with Bank of France same as London. Stop. As de Neuflize has never been formally authorized to represent Pallain in this matter I think you might wire Pallain direct that we have all along desired to conclude arrangements with Bank of France same as in London and had not expected to authorize any announcement regarding London which we would not also hone to conclude in Paris. Stop. If Jack Morgan agrees will be wise, would also say we had so stated to Cunliffe. Stop. Think matter may get tangled unless all communications handled through New York and you keep me posted by 'phone. Stop." If you wire Pallain better show message to de Neuflize. Strong." to\ 111110L. ALL DAY LETTERS TAKEN BY THIS COMPANY SHALL BE SUBJECT ,TO THE FOLLOWING TERN The Western Union Telegraph Company will receive DAY LETTERS, to be transmitted at rates lower than its standard telegram rates one and one-half times the standard night letter rate shall be charged for the transmission of fifty (50) words or less, and one-fifth of the initial .rate words shall be charged for each additional ten (10) words or less. To guard against mistakes or delays, the sender of a day letter should order it REPEATED, that is, telegraphed back to the originating office for compar For this, one-half the unrepeated day letter rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEA'ED DAY LET' AND PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the day letter 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 nay letter, beyon, amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED day letter, beyond 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 nor for errors in obscure day letters. In any event the Company shall not be liable for damage,for any mistakes or delay in the transmission or delivery, or for the non-delivery, cf thi: letter, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this day letter is hereby vs unless a greater value is stated in writing hereon at the time the day letter is offered to the Company for transmission, and an additional sum paid or agreed 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 day letter over the lines of any other Company when neee to reach its destination. Day Letters 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 cif 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 agc n at his expense, endeavor to contract for him for such dedvery at a reasonable price. No responsibility attaches to this Company concerning day letters until the same are accepted at one of its transmitting offices, and if a day letter 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 th letter is filed with the Company for transmission. In further consideration of the reduced rate for this special "DAY LETTER" service, the following special terms 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 LETTE 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. This DAY LETTER may be delivered by the Telegraph Company by telephoning the same to the addressee, and such delivery shall be a cot 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 LE, shall be delivered on the day of its date absolutely and at all events; but that the Company's obligation in this respect is to that there thesubject condition remain sufficient time for the transmission and delivery of such day letter on the day of its date during regular office hours, subject to the priority of the trc sion of regular telegrams under the conditions named above. No employee of the Company is authorized to vary the foregoing. THE WESTERN UNION TELEGRAPH COMF INCORPORATED NEWCOMB CARLTON, PRESIDENT CLASSES OF SERVICE TELEGRAMS A full-rate expedited service. NIGHT TELEGRAMS Telephonic delivery permissible. Day Letters received subji express understanding that the Company only undertakes de 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 regular office hours, subject to priority of the transmission of r( telegrams. business day. DAY LETTERS NIGHT LETTERS Accepted up to midnight for delivery on the morning of th( ensuing business day, at rates still lower than standard night tel, rates, as follows: The standard day rate for 10 words shall be eh A deferred day service at rates lower than the standard telegram 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. Subordinate to the priority of transmission and delivery of regular telegrams. Must be written in plain English. Code language not permissible. of the same on the day of their date subject to condition sufficient time remains for such transmission and delivery d for the transmission of 50 words or less, and one-fifth of such sta day rate for 10 words shall be charged for each additional 10 we less. Must be written in plain English. missible. Code language no Mail delivery, postage prepaid, permissible. urtivri 110 1r 1 r t TTER AIGH W. E. ATKINS. VICE-PRESIDENT IS No. NEWCOMB CARLTON. PRESIDENT TIME FILED BELVIDERE BROOKS. VICE- F oriel:5:89 IDENT CHECK the following Night Letter, subject to the terms back hereof, which are hereby agreed to NIGHT LETTER. Denver, Colorado, December 26, 1916. . H. Treman, Federal Reserve Bank, Equitable Bldg., New York City. Announcement by Board violates my definite written agreement with Bank of thgland and will certainly cause serious criticism and throw doubt on my good faith. Stop. Suggest following course. Stop. Advise Board in that owing to last clause my agreement you must notify Bank of England Stop. Then ask Jack Llorgan that announcement was made without my knowledge. to cable privately to Cunliffe and inquire What course sank of England desires -Is to follow respectinL; further publicity. Stop. As I have no kno;:ledge of 3oards reasons for violating my agreement suggest you get full particulars and 3rite Cunliffe in my behalf making any explanation necessary and expressing mg regret and hope no harm has been done. Stop. Please aire me fully here after . onferring with Jack. Stop. You can reach me by telegraph care Charles E. qwes Estes Park until Saturday. Jriting Benjamin Strong. JOLLWT. i ALL NIGHT LETTERS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOW..IG TERI% . The Western Union Telegraph Company will receive not later than midnight NIGHT LETTERS, to be transmitted only for delivery on the the next ensuing busines,day, at rates still lower than its standard night telegram rates, as follows: The standard day rates for ten words shall be char transmission of fifty words or less, 'and one-fifth of such standard day rate for ten words shall be charged for each additional ten words or less. To guard against mistakes or delays, the sender of a night letter should order it REPEATED, that is, telegraphed back to the originating office for con For this one-half the unropeated night letter rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPE,ATED NIGHT I AND PAID FOR AS Si_. CE-I, in consideration whereof it is agreed between the semier of the night letter 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 night letter the amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED night letter fifty times the sum received for sending the same, unless specially ettluod; nor in any ease for delays arising from unavoidable interruption in the working of I tier for errors in obscure n,ghl letters. elivery, or In any event the Company shall not be liable for damages for any mistakes or delay in the tr, amount letter, whether rose -'j ,;,.,.. i'n, negligence of its servants or othcrwic, beyond the sum of FIFTY DOLL mi an a unlc,, a greater vaiae is stated in writing hereon at the time the night letter is offered to the Company fa paid based on such value equal to One-tenth of one per cent. thereof. nes of any other y when 'flu, C,inpany is hereby made th, agent of the sender, without liability, to forward this night letter to rcaeli it- d,- iinatIon. l'Ci.zio. :et ten, will be delivered free within one-half mile of the Company's office in towns of 5,000 .1. in other eiti.- ot tow,. it,yiin.1 th., limits thc Company does not undertake to make delivery, but will, and at 1,1s -!,,,,, -,,!: a,i.c it it tact for ilior Cr :inch delivery at a reasoitable price. if a nigl [ i r t. 16, t,'h'-'' , ., t hi, 0,11!,11, ,..ni.erning Melt lettrirS until the same are accept fi,ni.17 eitCh ,11: by 1,:,, f ?hi. t'ompi.ny', 1:1,,,,Ers. ID1 ails for that purpose as the agent of the sen ' tfter 1,,T .1.,,,,,, ,,,,tiiiory pC1121111,5 in any case where the claimi.ti. Ti, (,,,,,,, ,11 ,,,,, I. 1,, . , : let: it- i, fili-.1 c-cii ii,-- I ..iiiiuity ,,, ,,,,11,-.H. 1,, fur. i.. , ...,,,,hi...,i..,, ,,, ii- H----------:- f,., 1!,i, ,,,, iI 'NIGHT LETTER" service, the follow/ 1,,,,i , .,- ,I.,.- -1 ,['1,1,11 Company be mulct at destintition I t f4!-IT LETTEFIS ,., .. ::1 rhat,-1 .,,i i.' .i_,,,i,,. ir, .,--!, ,:,:.- it-Id 1..-,,,, t 1-, (, ',. ry by mailing such NIGHT LETTERS at d r,.. hay, ei 1 - L. m : 'a, N T LETTERS ,-!...11 1,, v.1:t1,, in 111:tin E!,liA. Code language is nut permissible. C Of ti, COMPal, L (,,thlrii,t to zary iht, foregoing. 7. THE WESTERN .,,, o , ,,,, /,,,, UNION TELEGRAPH COI INCORPORATED NEWCOMB CARLTON, PRESIDENT CLASSES OF SERVICE TELEGRAMS A fuli-rate expedited s-ervice. 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 business day. DAY-LETTERS A deferred day service at rates lower than the standard telegram rates as follows: Om, and one-half times t he standard night. letter rate for the I imistoission of 50 words or less and one-fifth of rate for each additional in words or le,. Sitbordin, to I priority of itiansmission bid delivery of regular teleg,,,s. MI,FL be writfim in plain English. Code language not permissible. Telephonic delivery permissible. Day Letters received s express understanding that the Company only undertakes d the same on the day of their date subject to conditions the' time remains for such transmission and delivery durint hours, subject to priority of the transmission of `regt NIGHT LETTERS Accepted up to midnight. for delivery on the morni,, ensuing business day, at rates still lower than standard 11 gram rates, as follows: The standard (lay rate for 10 word charged for the transmission of 50 words or less, and one-flf standard day rate for 10 words shall be charged for each t in lainEnglish. Code 10 words or less. Mos .. not permissible. Mailits Office Correspondence To FEDERAL RESERVE BANK OF NEW YORK Date April 2, 1917. Subject: Miss Parker Bank Reports. Mr. Treman. From I note that copies of various reports of different Canadinn and foreign banks are beginning to come i The purpose of asking for additional reports from -them was in order that we might furnish to universities and libraries in this country copies of the reports should they desire them. A letter to Governor Strong from Princeton University requested him to write to a number of foreign banks in behalf of Princeton University, but instead of our doing it in thaLt way we asked for additional copies and I trust that you will bee that one copy of each kind is mailed to Princeton University, they having asked for them. Will you also send to Cornell University Library, Ithaca, New York, a copy of each as received ad whatever expense is connected with mailing them to Cornell University, please advise me so that I RHT/VCM may pay the same: