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MISC. 4. I -ZOOM- I -2.4 FEDERAL RESERVE BANK OF NOW YORK OFFICE CORRE-1-20NDENCE To Mr. Snyder FROM Governor Strong DATE January 8, 1925- SUBJECT: Thank you for sending me the memorandum on Trade for December, and I hope you will continue sending it to me, as I want to keep very closely posted. BS.LS 192_ 1 FEDERAL RESERVE BANK misc.4.1.1w.9-23 OF NEW YORK OFFICE CORRESPONDENCE To Mr. Snyder_ SUBJECT: Benj. Strong FROM 34( In reading over your confidential January 6 memorandum on pyramiding of deposits, I find no reference made to the fact that New York City banks, under the Clearing House rule, have now established a lower rate on out-of-town bank balances than the rates which prevail in the other central reserve city, - Chicago, or generally in the reserve cities of the country. That has been, probably, the most important influence in effecting a distribution of these bankers balances to other reserve centres and away from New York, and it strikes me that the point of the memorandum is missing without that. FEDERAL RESERVE BANK MISC. I. 1-6061-4-24 OF NEW YORK FFICE CORRESPONDENCE Mr. Snyder Palm Bea Fla., January 24, e925 DATE SUBJECT: Benj. Strong FROM Thanks for your two memoranda of the 19th and 20th. I have a suspicion that you are right as to the course of business this next year, when it will likely be good, but nothing in the nature of a boom or bulge. Good prices for farm produce cannot possibly do us harm when we have a big surplus for export. exchange speculation; Of course our bugbear is the stock and just how far we should feel a responsibility for what is happening there is, of course, a question. I only wish they would come to their senses! FEDERAL RESERVE BANK MK.3.1-60,41.24 OF NEW YORK OFFICE CORRESPONDENCE Mr. Snyder DATE Palm Beach, Fla., January 26, 1_9251,2 SUBJECT: Benj. Strong FROM If you will look back over some memoranda of mine, you will find, somewhere, that my opinion about the index of business activity was simply reserved until we had had more experience with it; all of this merely indicating that I am lacking in the enthusiasms of youth, or the specialist, and, in fact, bookkeepers have enthusiasms anyway: Now, I have watched the index much more closely than you believe that I have, and am very far indeed from being skeptical about it. I think, also, you will find among the memoranda a suggestion that my doubt arose from only two points; one was whether the weighting of the different factors could be properly worked out (and the reply that you gave me on that point was pretty convincing) and the other was whether it was feasible to project a normal line into the future. As to that, I have no opinion, simply doubt. But you know, in general, as to all of these charts, my principal comment is that the chief factor in all business activity, - that is the mood or state of mind of the public - cannot be allowed for, and that it will defeat any effort at prophesy. Your index is not an effort at prophesy, but is really an attempt to draw a line which will coxrectly express the true course of business in the past, and that, I think, has been very notably All that I gather from the experience of the last accomplished. that two years is substantially identical with your own view; there are no indications of a smashing boom, nothing to be frightened about, but that we have 'a situation which will require very careful watching. I read the business summary very carefully when it came out,. . MISC. 4. I-200M-1-U FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE FROM Mr. 3nyder Governor Strong SUBJECT Juet a reminder that you are to dine with me on Friday of next week, March 6, at tay apartment, Room 002, in the Hotel Marguery, 270 Park Avenue, at coven o'clock. MISC. 3. I-75M-9-23 FEDERAL RESERVE BANK OF NEW YORK ,--PFICE CORRESPONDENCE Mr. Snyder FROM SUBJECT: Governor Strong You heard something of the discussion the other night in regard to purchasing price parity. Don't you think it would be some little contribution to this discussion to pick out certain of our most important exports, such, for instance, as cotton, copper, Wheat and other commodities which are standardized, graded and capable of being dealt in promptly by cable with almost instant variation in prices to conform to changes in the rates of exchange. Then ascertain what difference in price between the point of shipment and the point of receipt in England arises through Shipping costs, interests, commiesions,etc.etc., and see whether, in point of fact, the prices of these commodities do not conform almost exactly to the purchasing power parity of the currencies. Such an inquiry should be carried through to indicate what proportion of our trade, say with England, is of a character Where the purchasing power parity is always automatically maintained almost from day to day or week to week, and how much of the trade is of a.character where there is a distinct lack in price changes; where it is possible to say that fluctuating rates of exchange are not a cause of price change, but.may indeed result from price changes because those are the prices of consumers' goods which result in an increase or decrease in the amount sold by competitive countries. BS.LS FEDERAL RESERVE SANK MISC. 3. 1-60M-4-21 OF NEW YORK OFFICE CORRESPONDENCE Mr. Snyder FROM DATE May 4, 1925. SUBJECT. Governor Strong I do think that Mr. Hoover would be interested in a discussion such as is indicated in the attached paper, but it strikes me, offhand, that it presents a point of view in regard to the steel industry which is and must be rather speculative as to its conclusions until it has been pretty thoroughly discussed with some practical steel men. There are a few men in this country who have a very thorough knowledge of this matter and are interested from the standpoint of the public, as well as from the standpoint of the success of their own enterprises. One of them is Judge Gary. Another in whom I have great confidence is Eugene G. Grace of the Bethlehem Steel Corporation. Before dealing with the suggestions such as you employ, might it not be well to talk this over with some of the practical steel men and see what their point of view may be? has not been considered. Att. BS.I,S They may bring out some slant which 192_ FEDERAL RESERVE BANK WM3.1404414 OF NEW *fORK OFFICE CORRESPONDENCE 0 Mr. Snider DATr May 21, 1925. 192_ SUBJECT_. Governor Strong FROM Replying to your memorandum, of course, every situation like the present one, is a puzzle. ity of harm. There seem to be three developments which do have the possibil- One is overbuilding and real estate speculation. Another is too much enthusiasm in automobile production, and the third, of course, is the everpresent menace of the stock exchange speculation. But where does our responsibility lie? every economic development in the country? We would have a large family of children. we might have to spank them all. tions. Must we accept parenthood for That is a hard thing for us to do. Every time any one of them misbehaved, There is no selective process in credit opera- If we undertake "direct action" in one case, we would be saddled with the responsibility for direct action in all cases. Have we infallible good judgment as well as sufficient knowledge to play the role of parent, and attempt to restrain every unwholesome boom, and as a concomitant undertake to correct every class of business which shows signs of languishing? May it not be the case that the world is now entering upon a period where business developments will follow the recovery of confidence, so long lost as a result of the war? Nobody knows, and I will not dare prophesy. Of one thing I am sure, however, and that is that we have no direct responsibility to deal with isolated situations, and must rely for the development of our policy upon estimates of the whole situation, and at the moment I see no reason for any particular action beyond what we are doing. BS.LS FEDERAL RESERVE BANK .c. 4. 1.100111.8.25 OF NEW YORK PONDENCE OFFICE To Mr. Snyde FROM Cove DATEOctober r Strong in France has newspaper article which was published some bearing on the memorandum you wrote about the French capacity to pay. BS.LS 192_ SUBJECT- The attached translation of a Att. 5, 1925. It can be filed after you have read it. FEDERAL RESERVE BANK MISC. 3. 140M-4-24 OF NEW YORK OFFICE CORRESPONDENCE Mr..:.-nyder FROM DATE October 26, 1.925-62_ SUBJECT Governor Strong Mr. Roberts' memorandum with your comnents attached only reached me this morning, three or four weeks after it was written; so any influence that it might have had on the decisions of the past few weeks, so far as I am concerned, has been lost. While a foundation has probably now been laid for dealing with the matter, I nevertheless am of the opinion that if the Federal Reserve Bank assumes too much responsibility for price movements, either of stocks or of any other particular thing, as distinguished from general prices, it won't be long before it gets into hot Att. BS.LS water. FEDERAL RESERVE BANK Mm. 3. 1.50m.8-25 OF NEW YORK DATE )FFICE CORRESPONDENCE To March 6, 1926. 192_ SUBJECT: Mr, Snyder Benj, Strcng_ FROM what is I have read the attached, and have been wondering myself just ahead of us. But, after all, is there anything that we can do? FEDERAL RESERVE BANK Misc. 3. 1-50M-8 25 OF NEW YORK 'FFICE CORRESPONDENCE To Mr. Snyder FROM Governor Strong DATE SUBJECT: March 13, 1926 Non-Agri cultural Prices The chart attached is one of the most significant I have yet seen. For two years now we seem to have had practically no important swing in the index of prices of non-agricultural commodities, the only important change in the general price level being that occasioned by the abnormal fluctuation in wholesale prices of unmanufactured primary agricultural products. The cause would seem to be the condition of world markets. The bearing upon such nice problems as purchasing power parity would seem to lie in the fact that agricultural production is capable of greater fluc- tuation, because of weather and other conditions,while the demand remains constant. There may be something here to explain the vagaries of the difference between price levels and external purchasing power. 192__ Misc. 3. 1-50M.8-23 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To Mr. Snyder DATE March 29, 1926 192 SUBJECTS Benj. _Strong. FROM Concerning your memorandum of March 18, you need have no concern about the stock market. Like most ills of the character, it prepares its own medicine, and has now taken it. Our problem now is to discover at that moment we should change our policy. Contrary to the statement in your memorandum, and one repeatedly reiterated, we are not in a period of cheap money. A minimum rate of 4-1/2%, with 5% or more for most customers loans, is not cheap money. And a bank rate of 4%, with the members borrowing $500,000,000 or more from us, does exert pressure and has been for some time exerting pressure for liquidation. fact the liquidation has taken place. In We cannot attribute it to our rate, nor to any other one particular thing, nor will we ever be able to do so. I am clear that there has been a widespread change of psychology; that some recession of business will follow it. Its first manifestation will be in retail trade, with production going merrily along and stocks piling up. As we cannot get prompt figures on inventories, we must rely upon our reports of distribution of goods to consumers, and the evidences of accumulating stocks of goods afforded by commercial borrowings, plus borrowings at the Reserve Banks. If this heavy stock exchange liquidation, with the consequent reduction in loans and deposits, does not result in liquidating our member banks' borrow- ings, but we see commercial borrowings of member banks advancing and borrowings from us not declining, we can be almost certain that production has overtaken consumption. Then what should be our policy? production is necessary. I think a little check up on Misc. 3. 1-5031.8.25 FEDERAL RESERVE BANK OF' NEW YORK OFFICE CORRESPONDENCE To Mr. Snyder FROM DATE 1 92 March 29, 1926 SUBJECT: Re.j st rnne This is the kind of thing that has got to take care of itself, certain but when the process has reached a/point, then I think we should buy securities . In _other words, I agree that some recession in activity may be a good thing, but, on the other hand, it will not be a good thing to see a decline in prices of agricultural produce, which is what I fear. Messrs. Jay .,/ Case Harrison Kenzel Saler Misc. 3. 1.50M.8.25 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE DATE Officers Council April 6, 1926. 192_ SUBJECT: Benj. Strong it^1ROM This memorandum is sent well in advance of my sailing on the 17th in order to make sure that the officers of the bank are alive to a situation which will require the most careful watching. The course of the money market since the March 15 fiscal agency transactions were cleaned up, has been a little unexpected, as to money rates at least, and as to the reserve position of the banks which apparently the officers of the bank were not alive to as promptly as sometimes is necessary. The reserve position still called for heavy borrowing by the New York I believe it was due principally to two or three factors which City banks. should always be closely watched. One was the unexpectedly large increase in Treasury's balances in the Reserve Banks due to unexpectedly large revenue collections; and another the gradual, but considerdDle increase in the amount of 9rmaçked gold for foreign account. part this,this, To be sure, gold importations are but the influence was undoubtedly felt in New York in ageneral way. I am convinced that a 4% discount rate in New York and the other' money centers, at a time when the banks are borrowing heavily and when business is hesitating a bit, exerts a very considerable pressure upon the credit situa*, tion. Others have not always agreed with me in this, but I am, nevertheless, convinced that it is so, and that if the borrowings of our members continue, and we maintain a 4% rate, and extend no relief to the market, we may well slide into a period of gradual, almost imperceptible, liquidation, which may Misc. 3. 1.5031.8-23 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To DATE April 6, 1926. Officers Council FROM Benj. 192__ SUBJECT: Strung -2- have an undesirable effect upon business.\ This matter must be watched. The reports of the retail trade which will now be coming in for the month of March, will probably make an unfavorable showing, because of unseasonIf the unfavorable reperts are attributed entirely to able weather. unseasonable weather, it may be that any action for open market purchases will be postponed again for another month, - until the April reports come in. As matters stand now, I em inclined to continue purchases of governments as rapidly as we carti It will not do harm after the liquidation that has taken place in the stock market and when prices are declining and business is showing some hesitation; Look back at the records following heavy sales of securities in 1922, and it will be seen how curiously similar the characteristics are for the two periods. This matter should be studied by the Officers Council, and no hesitation should arise as to acting. BS.MSB (Attached to Mr. Jay's copy of this memorandum is a memorandum "Bank Debits and Velocity of Bank Deposits", together with a chart *Weekly Bank Debits in 140 Centers for 1926" which kindly study in connection with the subject matt2ri' http://fraser.stlouisfed.org/ of my Federal Reserve Bank of St. Louis memorandum) _ 0 FEDERAL RESERVE BANK OF NEW YORK Hotel du Cap d'Antibes, Antibes, June 29, 1926. My dear Mr. Snyder: I have just been looking over your confidential memorandum of June 8th on the activity of bank deposits. You point to the divergence of the two lines on the chart which occurred in 1923 and again in 1924-25. Why don't you try and associate this with the activity or inactivity in the securities market? It has always struck me that, notwithstanding that New York City is excluded from the velocity index because of the speculative market, a nation-wide speculation which involves a very large number of payments and especially transfers in connection with loans and security transactions in New York would have a considerable effect upon the index of velocity as the tides of speculation ebbed and flowed. At any rate, it is worth thinking about. SiLcerely yours, Mr. Carl Snyder,. c/o Federal Reserve Bank of New York, New York. c.4A FEDERAL RESERVE BANK OF NEW YORK 180 M 1-26 OFFICE CORRESPON rl onyder To Mr. FROM Mr_ ,Iny LJP NCE DATE ikugue,t 12, SUBJECT Plet.se confer with me before attempting to reed this badly confused memorandum. 192g. FEDERAL RESERVE BANK Misc. 3. 1.5031-8.25 OF NEW YORK OFFICE CORRESPONDENCE To (3M Mr. Carl Snyder August 12, DATE 192_ SUBJECT Mr. Jay I am very much interested in your reply to the Governor. As to Stock Exchange accounts and their velocity it seems to me that they are almost sui genevis. Let us spy that there are 500 firms in the Stock Exchange (I don't know the number) and that they each keep a balance of $200,000. mean an average balance of t100,000,000. -This would Tl-is smell volume of balances has a daily turnover even in dull periods several times the mount of the balance, and in active times the turnover is correspondingly larger. In the Manhattan Company when I was there we had net deposits of around t50,000,000 and our brokers' balances were possibly t4,000,000 or .t5,000,000. In busy stock ex- change periods this small groupcf brokers' balances aggregated cent. of our total deposits. about 10 per while tl-is situation hes been somewhat reduced by the Stock Clearing kdorporation, nevertheless the activity volume arising out of the bplance of stock exchange firms is wholly abnormal and without parallel elsewhere. The foregoing figures are from memory only. MIGIC.3.1001141-1-20 FEDERAL RESERVE BAN OF NEW YORK FROM Governor Strong DATEr(L-. January 5, 192 rICE CORRESPONDENCE TO ' J A. serf Mr. Snyder itOkti Preliminary estimates indicate that volume of trade for the country for December was at somewhere near the same rate as the two preceding months. Bank debite outside New York City increased over November somewhat more than the usual 10 per cent, which is the normal increase indicated from our seasonal estimates. This brought the index figure up to 104, as against 99 for November and 106 for October. But, as I noted in a previous memo., the index figure for November was probably two or three points too low on account of the occurrence of five Sundays, together with a national election, which things are difficult to allow for, without an enormous amount of computing. Debits in New York City rose to a very high figure, 27 billions, This, of course, which carried the index up to almost a record figure, vie., 121. merely reflects the volume of speculation and general financial activity; but as a rule a rise in this index forecasts a rise in the volume of trade. It would not be surprising, therefore, if ourtindex of Trade should show a sharp rise in the next two or three months. As yet, however, outside of heavy steel orders, there still seems little to suggest the approach of a boom. R.FPFl"71 "Y FEDERAL RESERVE BANK ACW. 4. 1-20M-1-14 GOt- OF NEW YORK / 4.'64\ OFFICE CORRESPONDENCE Governor Strong FROM t;,1])...\ e_DATE SUBJECT Incr J4ipry in 6,J925 sits Snyder .tJAN 6 1925 You will recall sometime ago that I crepancy between the reported increase in the Reporting Banks and the amount of increase in and also between this increase as reported by and in the reports for the Comptroller of the drew attention to the disdemand deposits in the weekly their loans and investments, the weekly Reporting Banks Currency. It seems fairly clear that this discrepancy has been due to a marked increase in bankers' balances in the Reserve cities, and that this has It is quite a not been so much in New York as in the other Reserve cities. striking little development and I have written a little memorandum regarding this for the Business Summary this week. 101-6-ca,d c etK;7'.T -9ccep9 .uLJA 90-r wLice_ 192 !ESC. 4. 1-200M-1-Z4 FEDERAL RESERVE BANK OF NEW YORK ,lh OFFICE CORRESPONDENCE Nu\ Governor Strong 192_ SUBJECT B 1 Mark FROM ,..,,,,t Mr. S nyder tiAN 8 192 I note that the Standard Statistics weighted average of 202 industrials, which is now the court of last resort on stock averages, last Monday reached 123.9, which is two points above the highest point registered by this index in 1919, and therefore at the highest point in their history. Which finally makes good my prediction and steady be lief which I have had for two years or more that on this prolonged bull movement the average of industrials would peak higher than in 1919. Registered in view of the fact that some other expectations have not come out so well! - FEDERAL RESERVE BANK OF NEW YORK OFFICE CC)F/F3E:E5F2C)P4DE:INCE: Governor gtrong_ DATE SUBJ EET: _Eareign_Bs1 titti3,-. -9 1925 nces_in new York FRomh____MrSnyder You will see by the attached that Mr. Hoover's department is again asking for a questionnaire to our banks as to foreign balances and the holding of foreign securities in the past year. I took this question up with Mr. Jay and he asked me to put it up to you. It seelis clear that the figures are little representative and therefore of little value; we don't get some of the biggest houses and the questionnaire is burdensome and irritating to those to whom it goes. That should we say? 192 FEDERAL RESERVE BANK M/SC. 4. I-200M -1-24 OF NEW YORK e, OFFICE CORRESPONDENCE ro Governor Strong FROM Mr. Snyder 4859 I day DATE_Jan.-9,_ 1925 SUBJECT. St Market- er es AND NO 'B. S. As to your question: i3A11 6 1625 Very heavy volume of trade, with stocks at a very high point, We now have a wide has usually been the characteristic of the peaks. average of stocks at a record high point in their history, and over 75 per cent above the low point of 1921, and the last eight weeks have likewise seen the largest volume of trading of any eight weeks in the history of the stock market. The inference would be that the averages were reaching near or But I believe near to the universal belief is the are at their peak. opposite. 192_ Li ?CSC 4. 1-200M-1-24 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE Governor Strong FROM DATE_Jan--9,-1925__ SuBJECT._Frwich-F-Lahnce Mr. Snyder The memorandum on French finance, sent you by Governor Crissinger, eeems to me, as you very mildly suggest, very much exaggerated and overdrawn. You remember our friend, Dr. Anderson, had France going utterly bankrupt three or four years ago, and the old hulk is still afloat. As you say, French:Ifinance has been a long time wallowing in a good deal the same trough. But is it not clear that the internal debt of a country, where it is only within the country, is really only a question of lifting from the right hand of Peter to pay Paul, very uncomfortable to Peter but not ruination? 192_ ry ilke'lIC. 4. I-2OOM-1-Z( ......, FEDEI/AL RESERVe JaiRE.0 MAD NO1E3, OF NEW Y013 \111(7'. OFFICE CORRESPONDENC DATE__JR:n )2 ,1225_ 199 , to Governor Strong_ FRom Mr.Znyder ' 1.1 C., 925 For a second week our index of the20 great basic c to show any advance, although Fisher's wider but soMe)hat er A% a slight advance. But i should imagine this pause in,-the:19.dv-:-. pause and that the increase in prices might continue or\some t 1 ities fails dex shows s only a We are endeavoring to work up a current estim the volume of trade from the weekly bank debits outside of New York It has been a rather difficult job, owing to the influence of holidays, tax payments, etc., on particular weeks. But the three weeks ending last Thursday showed an increase in debits outside of New York City of 8.3 per cent over the corresponding three weeks of a year ago; and our index figures indicate that debits were then running very close to the estimated par or normal. From now on we can keep you advised of the trend of this estimate on Monday of each week. MO FEDERAL RESERVE ,ANK OF NEW YORK ...ZO0M4-14 OFFICE CORRESPONDENCE Mr. Snyder FROM DATE SUBJECT: January 19 1 90 Bank Debits in 140 cities Kay_ser The following figures show a comparison of Bank Debits in 140 cities for the three weeks ended January 14, 1925 compared with the Three weeks ended January 16, 1924 Three weeks ended January 14. 1925 $14,118 millions $14,806 millions corresponding period of General Price Level, January 1924 = 182 1924. Per cent increase over 1924 4.9 Is I GOV: FEOERAL,RESERVE BANK OF NEW YORK ,..SC. 4. I -ZOOM .1-24 OFFICE CORRESPON To Governor Strong FROM Mr. Snyder ENCe 0 OW oiruftsB - DATE Jan. 19,19_4_5_ Volume of Current Trade 192_ S. 4/ 1P.25 JAN Our three-weeks moving average of bank debits outside of New York City do not show, for the latest three weeks, nearly as large a gain over The total debits outside of a year ago as did the computation last week. New York City in 140 identical cities for the three weeks ending Jan. 14 showed a gain of 4.9 over a year ago, as against nearly 9 per cent for the This is partly due to the fact that debits moving average of a week ago. last January began to rise in the middle of the month, so that the difference over a year ago is not so large. But the two sets of figures apper to be closely comparable, and we estimate that the general price level or average of all kinds of payments has changed not more than one or two points from the computed index of a year ago, 182 on a 1913 basis. - Ic cli FEDERAL RESERVE SANK OF NEW YORK OFFICE CORRESPONDENCE TT-r FROM Mr. Snyder DATE SUBJECT. January 20 192_5 Annual Bank Debits in 140 Cities Kayser The following table compares the annual bank debits in 140 cities for the years 1920 - 1924 inclusive, together with the average yearly General Price Level for these years. Annual Bank Debits in 140 Cities (In millions) 1920 1921 1922 1923 1924 $ 239,595 191,4.59 198,954 224,481 228,161 General Price Level Yearly Ayerm,e, 213 178 170 181 181 FEDERAL RESERVE BANK nano OF NEW YORK OFFICE CORRESPONDENCE 7 FROM Mr. Snider DATE__ January 20 SUBJECT: 1925 Annua2 Bank Debits in 140 Cities Kayser The following table compares the annual bank debits in 140 cities for the years 1920 - 1924 inclusive, together with the average yearly General Price Level for these years. Annual Bank Debits General Price Level 239,595 191,459 198,954 224,481 228,161 213 178 in 149 Cities (In millions) 1920 1921 1922 1923 1924 $ Le-alaP.9 170 181 181 FEDERAL RESERVE BANK 1.-200M-7-M OF NEW YORK OFFICE CORRESPONDENCE .-r- FROM Mr. Snyder DATE SUBJECT: January 20 i92_5 Annual Bank Debits in 140 Cities Kayser The following table compares the annual bank debits in 140 cities for the years 1920 - 1924 inclusive, together with the average yearly General Price Level for these years. Annual Bank Debits in 140 Cities (In millions) 1920 1921 1922 1923 1924 $ 239,595 191,459 198,954 224,481 228,161 General Price Level ISIILLL.ALMaLl 213 178 170 181 181 FEDERAL RESERVE BANK MISC. 8.1-200M^1.4 OF NEW YORK OFFICE CORRESPONDENCE To 'N2Sovernor Strong DATE____Ian-20, 1925 SUBJECT: Growth of Deposits FROMMr. Snyder Here is a piece of silliness from the American Banker. The facts are, of course, that the deposit gain in these hundred biggest banks was very near to five-sixths of the total gain for all the banks of the country, which was apparently only a little over 3 billions of dollars. -vo 192_ .419C.3.10004-1-20 PC FEDERAL RESERVE BANK OF MEW YORK LL, 'FFICE CORRESPONDENCE TO FRO DATE Jan. 20, 1925 I Governor Strong SUBJECT Mr. Snyder Volume of Trade in 1924 --ACKNOW-1--XDOE-oAN 24 1925 JAN ,O 1925 In view of the extraordinarily close corrAlonSnce we have found between our Volume of Trade index and bank debits outside of New York City, it is of interest to compare the total of these debits for 1924 and the preceding years. According to our computations the general price level, or average of all kinds of prices, was the same for 1923 and '24, viz., 181. On this basis then the debit figures should be very closely comparable. And it is interesting to see that they come out less than 4 billions apart. Inasmuch as 1923, allowing for a small rise in prices, estimated at about 6 per cent, did not show much more than about the usual or normal rate of increase over 1922, it seems evident that trade in 1924 did not This, at least, is clear expand at the usual or characteristic rate. proof that there was nothing like a boom in 1924, and I am wondering, therefore, if this does not provide the basis for at least a reasonably good year in 1925. distinct Of course it might do much more than this, but there is no evidence yet of its appearance, so far as we can discover. CI" "-"°4- FEDERAL RESERVE BANK OF NEW YORK C-').OFFICE CORRESPONDENCE f"o FROM Mr. Snyder DATE,Lan SUBJECT: Miss Carlson Car loadingsMerchandise and Miscellaneous. Total, latest three weeks, 1925 Total, corresponding, 1924 Per cent 1925 to 1924 457,245 433,256 105.5 21, 1925 192 MI9C.3.10011-1-20 RAL RESERVE BANK YORK OF 10 . ICE CORFREEE3P Governor Strong Mr. Snyder 1 4fWEARZIel, cram/ SU/4 r 83 $BJECT : Tr) 7471.4ira (M41 DATE January 21. 1925 Today's Business Summary DOED 2'.( Ate I should be indebted if you could read with some care the little memorandum accompanying today's Business Summary; on "Trade It seems to me that the very close correspondence which for 1924." we have found in the annual averages for our volume of trade and two other extremely good samples of general business or trade, viz., bank debits, corrected, and car loadings, speaks pretty strongly for the reliability of our calculations. These correspondences are so close as almost to raise a question as to whether they have not been ingeniously doctored. I can only assure you that nothing could be farther from the fact, and that I myself have been astonished at the results. I know your doubts about the soundness of this work which, I take it,have been carefully instilled into your mind by those who are unfamiliar with or unsympathetic to this type of work. It seems to me that the internal congruences are about the strongest answer that could be given to these doubts, aside from the conscientious care with which each and every one of the 56 or 58 indexes which are here included have been worked over year by year for the past five years to make this composite.. The further fact is the strong support which the work has had from those who, like Prof. Mitchell and others, have followed it most closely and on this, as well as on general grounds, are the most competent to judge of its value. -EDERAL RESERVE BANK OF NEW YORK JAN §2 1925 2 *4O PM RECEIVED 30VERNOR'S OFFICE' Copy forwarded with yesterday's mail (1/21/25) (014-.1-"j / .:EDERAL RESERVE BANK 1. 4. I-2.00M-7-24 oFAf:51,4,44n.i7VSERVE BANK OF NEW YORK / I 6FFICE CORRESP01\381SygE3 Tor Governor Strong FRom Mr. Snyder 4pm SUBJECT:_ RECEIVED DATE January 22, 1925192_ AEn AND NOT t' 30VERNOWS OFFICE' I attach herewith the record of ear loadings for the latest three weeks, as compared with the same period a year ago. You will notice that, very curiously, the percentage of increase in these merchandise and miscellaneous car loadings is almost exactly the same as that shown by bank debits outside of New York for the same three weeks. This is very interesting because, in general, we have found that these merchandise car loadings are an excellent business indicator and forecast fairly well the general movement of our trade index. It would appear, therefore, that we are still without evidence of any marked upturn in business; and you will notice that our index of And it looks 20 basic for the third week running showed little change. as if the stock market had about reached its apex and was ready for a down turn. A sharp increase in street loans appears to be rather a characteristic just at the top of the market. FEDERAL RESERVE BANK MIS',-L0014-1-14 OF NEW YORK DATE_Ianuary 26, 1 925 OFFICE CORRESPONDENCE Tr FROM SUBJECT: Mr. Snyder 192_ Bank Debits in 140 Cities Kayser The following figures show bank debits in the 140 cities for the three weeks ended January 21, 1925 compared with the period of 1924 Three weeks ended Three weeks ended t 22,429 millions $ 15,349 millions $ 24,684 millions January 23, 1924 $ 13,589 millions Five weeks corresponding January, 1924 January 21. 1925 General Price Level = 182 Per cent Increase over 1924 12.95% 10.05% MI9C.3.1.0011-1-20 I FEDERAL RESERVE BANK OF NEW YORK 3F. ICE CORRESPONO,ENCEMI TO FR Governor Strong DATE SUBJECT January 26, 1925 Volume of Trade Mr. Snyder -U. 'JAN 1q25 Very heavy bank debits outside of New York ,,ity last week, at a time when there is normally a falling off, brought up our moving three-weeks totals very sharply so that the increase over the same three weeks a year ago amounts to 13 per cent. Just to make sure that this is fairly well sustained, I took also a moving five-weeks total, and even this shows an increase of This is a pretty stiff 10 per cent over the five weeks of a year ago. increase. We shall soon have our moving index of the current three or four weeks so that we shall express this figure much more clearly in But it index numbers, in percentages of the normal rate of growth. happens that the beginning of last year was pretty close to the normal line, and there has been in the meantime practically no change in the general price level, so that the comparisons given above have a real significance. It looks as if business was really taking a sharp upturn, and that the January figure for the volume of trade would show a very con-siderable rise, possibly as sharp as the upturn last September. FEDERAL RESERVE BANK OF NOW YORK MISC. 4. I -ZOOM-I-24 OFFICE CORRESPONDENCE Jan.28,1925 SUBJECT: Mr. Snyder FROM DATE Miss_Carlson Car LoadingsMerchandise and (Lec.20-Jan.17) Miscellaneous. Total, latest five weeks, 1925 Total, corresponding, 1924 Percent of 1925 1NH to 1924. 2,445,003 2.335.081 104.7 1 92__ ML 4. t -200M-7-24 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE Governor Strong MranYaer FROM DATE SUBJ ECT January 26, 1925 192 Car Loadings READ AND NOTED, E3. The running total of merchandise car loadings for the last three weeks does not show any such sudden increase as bank debits. For the last three weeks it was only 6 per cent over a year ago, and for five weeks the totals were only 4.7 over a year ago. It is not very clear just what have occasioned the heavy debits of the last two or three weeks. 4LIS DAN Is 1525 FEDERAL RESERVE BANK OF NOW YORK OFFICE CORRESPONDENCE mr. Snyder SUBJECT: February 24 1925 in_ Bank Debits in 140 cities Three and Five weeks C. Kayser A DATE comparison The following figures show a comparison of bank debits in 140 cities for the three weeks and five weeks ended January 28., 1925 compared with the corresponding periods of 1924. ,L Three weeks ended January 30, 1924, Three weeks ended $ 12,951 millions $ 14,500 millions Five weeks ended ISMUE.Y.-.12.1.1221 $ 22,525 millions Per cent. increase January 28, 1925over Jan.30. 8:n19215 .T:a717128 924. 12% Per cent. increase over $ 24,388 millions General Price Level for Jarwary, 1924 = 182 Jan. 30, 1924 8.3% e HEDERAL RESERVE DR OF NEW YORK IL8 1925 3 PM RECEIVED GOVERNOR'S OFFICE t.vr MS.4.1,004-7-24 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE lir Ran FROM_ DAlE Feb. 2 1925 SUBJECT: Mr. Snyder So far as I can discover, this thing has not been repaired at When I took it home it worked just about as much as when I sent it up to you, and then I gave it a thorough test yesterday and it is simply no good. They kept it an unconscionable time--over a month, I think-and I can't see that they did anything. Won't you be good enough to see what is the matter with it? all. 192 7 MI. 200M-7-24 FEDERAL RESERVE BANK OF NEW YORK /OFFICE CORRESPONDENCE 7FROM DATE._ Governor Strong SUBJECT: Mr-5nydex_ )11EAP AND -7/(-7 _i_eb-r11.1325 Volume of Exchanges Nen% 7,01 3, a )0,c_f_ The heavy volume o' bank debits outside New York City, as compared with a year ago, continues and the running total for the last three weeks shows an increase of 12 per cent over last year. The running taptal for five weeks is up 8.3 per cent, all this with practically no change in the general price level. /Just as an indicator, it is of interest that on the Times list of st377'averages the industrials have now failed to make a new high for four consecutive weeks, and rails for six consecutive weeks. Ahich would seem to indicate that the market had lost headway. 1 92_ MI9C.3.1-00M-1-20 FEDERAL RESERVE BANK OF NEW YORK DATE -WFICE CORRESPONDENCE TO FR. Governor Strong suB,,Volume February 2, 1925 of Exchanges in January Mr. Snyder BM AND NOTED, E3. S. Taking the preliminary figures o bank debits as reported weekly, debits in _the 140 cities outside of New York, used in our index, after allowing for the usual seasonal upturn, show an index figure of 12 per against 4 per cent above normal for December and cent above normal as 1 per cent above normal for January of a year ago. This index figure of 112 for January may be modified slightly; and it is quite possible that our composite Index of the Volume of Trade may not rise to quite the same extent; but the figure of 12 per cent above normal is unusually high and bears out the impression that we had from the weekly returns, that there had been a very sharp upturn of business in This figure of 12 per cent above normal is about the month of January. as high as we have had since the end of the War. It is very striking, it seems to me, that this upturn has not been accompanied by any corresponding rise in the great basic commodities. For the month of January our index of 20 basic was nearly stationary.' On the other hand, it does seem to bear out the idea that the rise in the stock market was based in part upon extremely good business prospects. Possibly you would suggest that it might be, also, that the buoyancy of the stock markets had imparted some enthusiasm to business and trade. One might also infer possibly that the considerable increase in demand deposits last year may now be having its usual effect. EDERAL RESERVE BANK OF NBA/ YORK ft2 E5 3 iPM RECEIVED GOVERNOR'S OFFICE FEDERAL RESERVE BANK MISC. 4. I -200M-7-24 OF NEW YORK OFFICE CORRESPONDENCE Govarnor-Strong_and ROM Mr,Alay DATE_ February 1,119 25___ 192_ SUBJECT: Mr. 34y4Or_ You key be interested to know that the Federal Valuation of the Railroads of the U. S., Eaetern Group, have asked permission to reproduce at their expense severil hundred copies of the Prticle describing end containing our index numters of a generel price level from 1875, for use in connection with their railwq valuation Ivor*. Al9C.3.1-0014-1-20 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE Governor Strong DATE SUBJECT Feb. 16, 1925 Volume of Trade Mr. Snyder BEAD AND NOTED, The volume of bank debits outside of New York City (as well as in The running total both for the last it) continues to run pretty high. three weeks and the last five weeks shows about 13 per cent over last year and our monthly index of outside debits for January was 113 as against 101 for January of 1924. Merchandise car loadings are not running so high, about 5 per cent over the same periods last year, but other car loadings, of coal, ore, lumber, grain, etc., are up very sharply. The interesting thing is that all this heavy tide seems to carry with it no expansion of bank credit. The usual seasonal run-off from the The increased high point of the first of the year has been quite heavy. volume of trade has been accommodated 4ra sharp increase in the turnover or velocity of bank deposits. A part of the increase in debits is doubtless due to the very heavy volume of speculation which affeats clearings in Eoston, Philadelphia and other centers as well as New York, though in a lesser degree. The index of bank debits in New York City for January shows 23 per cent above normal and, as you will see by the attached chart, the total volume of trading on the Stock Exchange for the last three months has exceeded any three months in the Stock Exchange history. GOVERNOR'S OFFIO7 RECEIVED ttp i61925 12 OF NEW YORY "EDERAL RESERVE BANK FEDERAL RESERVE SANK MISC. 4. I-LOOM-7-24 OF NEW YORK OFFICE CORRESPONDENCE Governor Strong I-ROM DATE._ Fall._ 174_1925 _192 SUBJECT- McKenna!_h_ Speech Mr. Snyder The Rt. Hon. ex-Chancellor, like so many others, continues to dream, as you will see, that the pre.ssure of gold will bring down the dollar to the value of the pound. Queer thet these distinguished advocates of a "managed currency" have no good word to say for about the best managed, all difficulties considered, of any I have ever known of. Nor would his argument for a more stable pound than dollar hold if we consider the general price level or average purchasing power and not merely commodity prices at wholesale. 1419C.3.1.00.1-1-20 I FEDERAL RESERVE BANK OF NEW YORK -)FFICE CORRESPONDENCE TO Gove;:a FP' Mr. Snyder DATE SUBJECT: February 18, 1925 Dinner Is this about the list that you were thinking of: Kemmerer Mitchell Hollander .Allyn Young Chandler Foster Bullock Rorty Roberts Is this too many? .., RIO bf,614> Sivititk It is the same number, I think, as last year. I imagine that some evenings are easier than others for Kemmerer and perhaps also for Hollander and the Cambridge folk. We could easily sound them out by telephone, and possibly you would indicate what evening of the week would suit you best. If a topic is desirable there are plenty of good questions, but it seems to me that, for one thing, it would be quite interesting to get the varying views as to the general course of prices in the next four or five years following the general restoration of the gold standard. I imagine there would be quite a diversity of view. 07-n /;) 4-142 ht-f&P " 67e LI* Pi a&c.,--ererit Attor,,/m (Peiv-e '&7111 44,4140 eaniar 4,g7te 644444e0 104014,0-- (Prer-&-Attfitt 127 afctlePoteeAt )6t-/4tr 4A* let 30VERNOR'S OFFICE RECEIVED i 4 !,:ti 11 18 1925 EDER,' C2OF FEDERAL RESERVE BANK:, NEW YORK :":5Li MSC. 4.1-200,4-7-24 I c...: Lio OFFICE CORRESPONDENCE Governor Strong_ -1- FRom4- krnycLer / 0 ' Ckl. ._ _ SUBJECT:4_3 .._. !..., L.;..1 DA_Tx 91 I ) r, Feb - 04._ 19 25 192 / and Business Or W'..7. 0-, ...e, E 40. The weekly Reporting Banks again report no expansion of bank loans, ...-:,..-- ...0 although demand and time deposits continue to rise slowly. This is in the face of unquestionably a very heavy volume of both production and trade. The Standard Daily Trade service report that their index of production for January rose to 111, which was a fairly high point, and this is an extremely good index, much better than that prepared by the Federal Reserve Board. That in spite of this the tendency of iron, steel and other soften metal tstiT:atjoirais:ndeleTpl=ndirdii=ns treircee;.ghlilea: :ralltiheer: I of a runaway boom. The stock market began its spectacular rise in the middle of October, and the strong upward move in business came in September, and if any runaway tendency as in prospect it would seem as if it ought to de- velop by this middle of February. a& in! kow . ua r, 'EDERA' ! ttli 16 1925 12 ;fe'l PM RE'CEIVED GOVERNOR'S OFFICE FEDERAL RESERVE BANK MISC. 4. I -200M-7-24 \ OF NEW YORK OFFICE CORRESPONDENCE FROM d- - < c s'd F0414TY 20. . .0 SUBJECT: Governor Strong Mr. Snyder Mr. W. T. Layton has asked Franz Schneider to write two articles for the "Economist," and one is on the question of the ability of the Federal Reserve Banks to curb any severe inflation; and Mr. Schneider has asked if you would care to look over the article before he sends it and give him any criticisms. irinaliT rit4 dell11.4.14441442s. 192_5_ 1 -TUDA.1 OOLE.,1 SC 7, itfjf: TAIT I. 'TUN 'a T".1' A1,9 MI9C.3.1.90.1-1-20 I FEDERAL RESERVE BANK OF NEW YORK -1FFICE CORRESPONDENCE TO Governor Strong FROM Mr. Snyder DATE Feb. PO, 1925 SUBJECT C' It really seems to me extremely interesting, what I was showing you today, that the average of our index of the-General Price Level for the last two years should be so close to the average for the last six. The individual figures ran: 1919 1920 1921 1922 1923 1924 Average, 1919-'24 inclusive 186 213 179 170 181 181 184 This does not give very much present comfort to the whilom prophets of "a long, continuous price decline." It also gives me a little bit of superstitious faith that the present levels could be '. maintained without a great deal of difficulty--unless something blows up. http://fraser.stlouisfed.org/ cr, Federal Reserve Bank of St. Louis '4 1925 " 11 is; RECEIVED 30VERNOR'8 OFFICE j -I FEDERAL RESERVE BANK MISC. 4. I -ZOOM-7-24 OF NEW YORK OFFICE CORRESPONDENCE Governor Strong FROM L: CtUf-E_ SUBJECT: 'The February 24, 19251g2_ bainffes Prospect "PI Mr. Snyder Here is a very interesting view of the business 1i uation. Their Index of industrial production is necessarily, Prom the material which is available by months, rather heavily weighted with iron, steel, coal and coke production, and therefore showed a very heavy 41ump last summer, and also very high levels through 1916 and 1917. AL, tr, But their suggestion that anything much above 10 or 12 per cent over normal is Aomething of a danger signal is interesting. Our three and five-weeks running total of outside bank clearings continues to show about 10 per cent over last year, while car loadings are only slightly above the normal rate of growth. 'It .21 1925 I RECEIVED CiOVERNOR1S OFFICE MISC. 4 I -200M-7-54 FEDERAL RESERVE BANK OF NEW YORK C' OFFICE CORRESPONDENCE DATE Feb. 244 1925 r, T- Governor_fftrong FROM Mr. SAy4er 1 92. SUBJECT. Prof. Bu1lo4k replied that he wife was to have an operation this week, End that he could not be &,t, all certain abouL his attendance on this account. I wonder, tho,-efore, if you would like to su6gest to Prof. hullock that if, at the last moment, he was unable to attend, it might be possible Lc mend Prof. Wa--ren M. Persons in his steau. latter is a quiet person and does not talk as much as Prof. Bullock, but he has a good heLd. The FEDERAL RESERVE BANK MISC. 4. I -200M-7-24 OF NEW YORK c()_ CORRESPONDENCE ....,. CiFFIC!'W DATE March 6, 1925 , Governor_arcng FROM iik, Snyder c) SuBJECT'ilthste_A1.._ (g_td---< :.10111_1! bmary -- ,, Our preliminary figureTb7;trad'edn February would be about 106. Bank debits, allowing for ususl seakinal 1/9.riation, are down about three points from January and our revised.i,ndex4f trade for January will run _... we. about 108. AO. . S-74 In making up these February estimates we found clear evidence that our index figures for February of a year ago were about three points too high, owing to leap year and an extra business day. Curiously enough, in the previous leap year, February of 1920 had five Sundays, thus compensating for the extra business day, so that this defect did not appear. These calendar differences, which can now be allowed for, seem to make clear how very sensitive and therefore, I should think, how accurate, so far as the available data go, the index of trade actually is. th/1/1.7:4 (074 go- t-ceet4afrvo__-- 192_ EGFP R1925 I ,i PM RECEIVED 30VERNOR'S OFFICE MC.3,1404444 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE SUBJECT. Governor Strong r FROM. Mr. DATE _March 10, SnyderEngland _192 5 Purchasing Power Parities with As to prices of such things as cotton, wheat, copper and similar commodities in, say, Liverpool and New York, it occurred to me we might get a direct answer to the first part of your inquiry from ootton factors here. I have consulted with a cotton arbitrage house having offices in Liverpool and New York, and the tell me that the only reason that there is the slightest variation between the equivalent price of cotton in the one city or the other, at a given rate of exchange, is that there is a speculative position forcing the price higher or lower in the one city or the other. This rarely amounts to more than 20 points, or 1/5 of a cent a pound, and is almost instantly seized upon, as a rule, by the brokers as an opportunity to make a trade in the difference, that is, for an "arbitrage." The situation between New York and Liverpool seems exactly parallel to the differences which arise between New York and New Orleans cotton markets, when a speculative difference of opinion appears, and may create a similar small difference in prices. A gamble in exchange would have the same effect, but would tend to be met immediately by others of a contrary opinion. Of course the "equivalent'price" allows for the current cost of shipping, insurance, interest, etc. They tell me that practically the same is true of wheat, copper and other things for which there is an extremely liquid market; that is, that there are always on hand traders and brokers keen for any chance to extract a thin profit from any difference which may arise. exchange In other words, it appears that any variation from the exact parity in. these prices is very slight, and quickly erased. The second part of your inquiry looks to me like a rather difficult piece of investigation, unless we can find something regarding this already done, as it is extremely difficult to get at exactTy comparable prices of articles or commodities outside of the big speculative raw products. I will report later. ct---cmike cagun,L9nt (Peuts24,14 O-11-0-h, ;vvra-Lete: /ier;-rveyvt, he; carit Ut-o-v-SPCL---4)4 714-4 RECEIVED 30VEMOR'S OFFICE tMP lo 1925 II - POW FEDERAL RESERVE BANK MSC.4.1,001-7-24 OF NEW YORK DFFICE CORRESPONDENCE Governor Strong_ FROM DATE Maroh 12, 1925 SUBJECT: Mr. Snyder Just on the chance that you may not have seen it, and you latest article probably haven't, I am sending up Jim Corbett's in the Saturday Post, which I happened to be reading last night, with to me a great deal of interest in what he had to say about the sports of other days, and likewise of the characteristics of some of the fighters like Young Griffo, Terry McGovern and Benny Leonard. Very shrewd observation, I should say. 192,__ 4119... 4. -LOOM-7-44 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE Governor Strong C.) DATE March 20, SUBJECT ALADAN k.kOM Mr. Snyder fL: You may be interested to look ver a study made by a, Chicago engineer of prices back for three centuries or more, which a friend of mine brought in to me yesterday. The most interesting thing to me was the suggestion that the Napoleonic wars were a period of really profound disturbance, quite comparable with the World War of this century, and that apparently there had been nothing like it for England at least for a long time preceding. The figures from 1800, of course, are quite reliable and comparable, and while the estimates for the preceding two centuries are on a much more slender basis, they do give a suggestion that the really great disturbing influences on price levpls are the great wars and the attendant debasement of the currency. &Oa-, &IA ec 711"-- 14: 30VERNOR1S OFFICE RECEIVED 195 4 09 PM gAq misc. 4. -zoom-1-44 FEDERAL RESERVE BANK OF New YORK COFFICE CORRESPONDENCE Governor Strong ,4RON4 March 25, DATE 192A, SUBJECT- Mr. Snyder C TheliP and down blue line gives Here is, to me, a quite amazing chart,. the aggregate sales by quarters of 24 big chain store eystans, with total sales Just of around $600,000,000 a year; adjustment made for changes in the price level. You look at the thing grow and the astonishing regularity of the fourth quarters. could drew a line across the tops with a ruler. The calculated rate of growth is aboutla per cent, per year, while national income grows at a little over 3 per cent. I gg44 k. Utters'ikd 614 30VERNORIS OFFICE RECEIVED pft1. 6 1925 4 OiNvl (IF f!' PFRFP,VE, Pi,",!01,( EDPAL FEDERAL RESERVE SANK MISC. 4. 400m-1-2.4 OF NEW YORK FFICE CORRESPONDENCE Governor Strong FROM 19254 DATE----- tifkr-ola SUBJECT: --The Taylor System. Mi. Snyder I we very much interested in these reviews of the work of Precierick Ta:,iory coo of the best hen 6 the diEest. by Fisher. work, it eeems to hne, pardlele to a oonsiderable .stunt the policies you hE.ve developed in this bark. Perhp he we overlytl-egr es.ei v e5, and he encountered the usual fate of the piollez°.r, the man 1,ho tries to (feviF,te in any way from the trodden path. But he old a work, aLd I was astoniEhed to find that he died t 59. An elnusing story about fiviab at the Slaci of p. 51. s MISC. 4. -2004-1-44 FEDERAL RESERVE BAIN, OF NEW YORK UFFICE CORRESPONDENCE L440) TD FROM G.)vernor Stmng DATE SUBJECT: Maroh 25, Volume of Trade. Snydor Bank debits outside of New York continue to run about 10 per cent. hove 1nt yr, which in turn was rather above normal; !,._tai with tic. signs as yet of any let-up, the running total for the lateet three weeks being higher then for the latest fire weeke. There err; come signs of a softening in prices, F. 1'1 a I understand the steel trade does not feel very buoyant, in spite of about a normal rate of production. 1925! MM. 4 FEDERAL RESER1,_ BA,r, OF NEW YORK 100M-7-14 bFFICE CORRESPONDENCE GIverr-or Strong_ FROM DATE suBJECT: Narnh 25, 1925_ Malden lams.- MrSnyder is Frankenstein and Etz 7! ere t the Public Library yesterday to see what they could aig up tbout Maiden Lane, and the library he ransacked what we have here, and I am sending their recults up to ise Oleedrer in the hopes that some of it may be what you klehed. There is probably not much that #4,s cE..r, get now thp,t the Eietcrical Scoi.ty bk,e: not bed mlrevdy; eo it seems to me it might be interesting to tell them a little about the etert of banking within stone' throw almc.,,st of the present site of this hank, At least it might have been stoney s throw if, as Senator Everts declared, George tashinaton could surely throw a dollzx across the F'otoma.c since he thrc r. ovareign Lcross the sc.:a. 5, Mies isurnett is sending you up some bite with this thought. FEDERAL RESERVE BANK MX.4 -2NP4-7-U OF NEW YORK OFFICE CORRESPONDENCE DATE Governor Strong FROM March _31,_ 1925 SUBJ ECT CD Mr. Snyder L. es, The indications are that fairly complete returns on our Index of Trade for February will carry the figure up nearly to 112, or some 3 points higher than our preliminary estimate. This is equal to about the highest points which the index has ever reached in the last six years. The running totals of bank debits indicate that this high pitch of activity has been continued in March and that the volume of trade for this month will be only slightly lower than last month, making due allowance for the number of business days in the two months. / This, with the sharp decline in basic commodity prices in the last threefaittseems to suggest rather strongly that we may have hit another of activity, just as in February of last year and in March of '23, and that the next few months might show another rather sharp reaction, It would be very curious if it just like last year and the year before. should thus come three times in succession, about the same period of the year. c249 a4447kat:f 'ina/ntvg-01 Cunlitust9i 192 .1may bluo.ds actiJ omoo es-1AI aamij al .0acia1spous Juoda ot1J tfl3, b011Or4 ao f30 9001-rop 11 .1.1 JaLt, 1J Jeol leoy ban ad,/ aeoy .olotpd i1 brucw ofol Jed./ iI1 wan lenJons ledina glade tE0.1.10A91. baa aril Jzign mal adJnom to ,y.tivpom Jut, as ni taAuldei la IBA' mot ban al tioTeM 10 rev 7,0= 8111908' ola Jaessua.cJ leastml tianol/s indl e, tmm evta 41A lettoas ganda anifb al alazd yilbommo* meolag al edi tJ aasalaud ,Itsb Ei od 1JaT Illw vino yiJnal.le yilvlJos atd notpc fleipaliaop n1 ' alelosT to J BAJ ledmun Oi .L lfl Of LI aohya?, fincrlie onro add* lol alsti ai 416 (long lo 3 aJ'alpq doll* odd xebai aari love amdl wo yatialm1101q starer acl ylnuidegi lliw tiac en.1 soblJmolbal ele eon/simile vbelJ .a.tasx JLodij e nA 1 a Odioniciff J6Sdlad a,taloo[ auc xsbal lo 0.4) MISC. 4. I -200M-7-24 FEDERAL RESERVE BANK yon, OF NEW ve" ORRESPO Yr , FROM eD M any i Lt.! ..-.:-.1: -1,4 l t-ifik, , sie \ /20 -v neRende) pre \t up M ch DATE _ March 31,-1225 suB3434JAbolt'a Managed Currency Goverwor Str_gn_g _Ir., LL1 logarA\and,1---In) seems to me, on whether we should have a I don't see how it can keep building boom. told that the activity is quite feverish. the rest, I get the impression that business has been going Already oo fast and will have to do a bit of readjusting. about half the recent rise in basic commodities has been lost. a littl If we get a liquifying stock market, and slackening in business, Then I should think it that might ease money off a good deal by summer. might be a fine time to rebuild the investment account--? 192_, LLJ tr- CD 0E_ T-, > cf) be8ana fid 0,1 c) .l8byn73 .7M LLJcr t- j. fr.) a 5Vfid q9ei run a.fiBil$V ,4, AV a: 4 ea i-tnob I 811; 4 i Lip al xi iv .301 le 414 Lima Jc bio-J aolsefrup9l.11/ ..te obo arl ael.tiborawoo taaeobaud xnid. b Woe jaJj. n I ,sinaq 3Ia8d al S-oodanixlitiotl btia Jaa'l ooYktaeoeq ads t1 s coda ,fa, w II .lentaue Lest) bocp. .8 Tie "canon! sa.as ±a3107 Jatfl ipso:lesion/ sit bilucfsl o emiJ sail a sd IL MISC. 4. I -200M-7-24 FEDERAL RESERVE BANK OF NEW YORK #"OFFICE CORRESPONDENCE Governor _Strong, FROM_ SUBJECT: Mr. Snyder My reason for suggesting in this morning's Business Summary that we might have a pretty severe set-back in the building trade, and that this might have a rather wide repercussion, was mainly based on the two attached charts. Building contracts for 1925 have started off at the same tremendous pace as last year (and the year before), and I do not see hop it can possibly keep up. Just for a shot I have made a guess on what the year might show. This article is protected by copyright and has been removed. The citation for the original is: “F.W. Dodge Corporation’s Building Statistics (Vol. 6, No. 2)” F.W. Dodge Corporation (New York, NY), February, 1925. MISC. 4. 1-n0M-7-24 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE Governor Strong FROM linSnyder 7.7 :JR C-D t' 'DATE April 13, 1925 01 ' SUBJ ECT 192_ -Volume of:Trade CI it-, ...., C) t Apparently there is no let-up as yet in the tide of trade, the running total of outside debits for the last three weeks standing at about 10 per cent over last year, and last year was not low. This compares with a cumulative total for the first fourteen weeks of this year of 11 per cent over 1924. The normal rate of increase is, of course, about per 4 cent. In other words, business is still at about the same high levels that it struck last October, and this has continued without any let-up But that, in the face of this large volume and continued high ever since. constructional activity outside of New York City, the average of commodity prices should fall off so sharply in the last monthseems pretty clear eoiedemm that there is no present tendency to inflation; if it does not mean that from now onwards the tendency will be rather downwards. ON 7O ( etti-/4/3-- c-wiAdct6v9 (1() dece evntuetc-4 bece-tjtaa ( (Liam 1,-cAj 1 won atrumono edl xonsbne.t tSIw sd 7eff,tP7 *.gblawnytob olt)s,biNe Jattt s7ed4 al on insasIg yonebnest oJ ool/tilat qs.:,17q bluona rill off--11,3 xfq7843 it asob Jon /3431 amesa,:oldnom ylIa7q 73810 Lanoifoullaum Iiv1Jo.a sbIaJii we1lo N7e JIU leas .sonia JO MO al on4 s3plavadf lc 4.11bommo* 803/ sm44ov Liu OsunlJnoo iihJ le:1J sul.ta JiiI 1acfoJ3 btu airt.tto ai6J 8f seh beuniJnoc Jaodltw it jj bi Isejo. telloPm easillaud af qu-J6I-yna co& elf tatd.emaa if4vel Je 1E111 -Ices Jnec, lavb .11,ser erff ols7,4111on esealonL,lo 01 ±0 itiie svii.diuctura 14.104 lot si.A. Ia71.1 allsow Isq Jaeo Isito JaAf ,Iiiiy bao Jaal oottlluot 126 4AW 801a lestO lo sbiaJuo adide.74 101 ;) Illds7ETIA slsitt al on if CD C.) la ..e, .1.:. a _ . . ..,71.cii. .7] ,Tabyna 70n/evo.. 3.nctE >.. LL = LI - ZE , 7.C Cr ._ SD CD E, ILI 11 LI p_., >9) cp Li..- 0F-2_ CD 1.1..., C: . -.0 ..e .t r tiJ =a 1.-1-4 ,- 4,0 L, 1. ' FEDERAL RESERVE BANK !..60.14.74 --...-OF NEW YORK OFFICE CC) il FaS P a N D E Nt C E I "ro Governor Strong " \, VI ESERVEMaili flailtk Mr. Snyder Or DATE SUBJECT April 13, 1925 Bank Debits and Speculation \ WUK-g.- ' ------mm,,-...i, I don't think that there is much evidence that bank debits outside of New York City are very heavily influenced by large security issues or speculation. You know that Chicago clearings only run about 30 or 40 Boston and billions against 8 to 10 times that number in New York City. Philadelphia are only about half as large as Chicago, and after that none over 10 billions. Bank debits in the 140 cities outside New York are only just about as large as those for New York City. And even for New York City the evidence seems to be that speculation and financial activity now represent, with the Stock Exchange clearing house in operation, only a small part of total New York clearings, since the difference between times of low and high speculative activity is not very great. But the main point is that our index number of bank debits outside New York City runs very close with our Index of Trade, and therefore gives us a reliable indication of the current volume of general trade, since we can get it from week to week. This seems to me a very valuable finding. In our Index of Trade both new financing and stock speculation are included, but with a weight of only 2 per cent each, so that even a very heavy rise in these counts for very little in the composite total. _192 00VERNOWS OFFICE. RECEIVED i3 1925 4 I4 PM RANK EDERA! FEDERAL RESERVE BANK lil$C.4.1-200M-7-24 OF NEW YORK ( OFFICE CORRESPONDENCE Tc Governor Strong_ DATE April 21, 1925 192_ SUBJECT: Mr. Snyder I wonoer if your eye, last night, caught this amazing chart and the statement about it. You will note that the statement is that in seventy years the populauion of New York State, outside of this narrow belt, has been stationary, and in this narrow strip today is four-fifths of the population. Amazing if true. 1111.. FEDERAL RESERVE BANK I. 1-100M-1-24 OF NEW YORK ( DFFICE CORRESPONDENCE To Governor Strong DATE__ SUBJECT: April FrAncb_Debt -in 19-14 1111r. Snyder The figures I spoke of last night that were given me as to the The official figures French debt in 1914 appear to have been correct. at the end of the year 1913 were: Fixed debt Floating debt 2,081 33,538 11 On July 51, the latest statement before the War broke out, this had risen to a little over 34 milliards. 31,457 milliards 1925 FEDERAL RESERVE BANK OF NEW YORK 3FFICE CORRESPONDENCE To_ Governor Strong_ FR ,v1 Mr. Suder DATE April P14_ 1921_ SUBJECT: This aTticle seems to me worth glancing over, as revealing a really desperate situation that may ariee from the pressure of economic forces outside of the nation itself. Here is a great and basic industry that is apparently being crushed Our by the rise of another industry, and the whole nation must suffer. troubles look very mild when we consider their.. FEDERAL RESERVE BANK I -200M-7-24 OF NEW YORK 'OFFICE CORRESPONDENCE To__ T FFOM Governor SUBJECT: Strong Mr. Snyder C READ NOTED, DATE April 27, 1926 Volume of Trade t_.,i Apparently thetre h s been as yet no let-up in the high level of trade which has prevailed in recent months. Our running totals of bank debits for the latest three weeks and for the latest five weeks stand at about the same, 10 per cent above last year, as do the totals for the first sixteen weeks of the year. This is in spite of greatly reduced activity on the Stock Exchange, and, in all probability, a similar abatement in speculative activities, like wheat and cotton. But in the face of this heavy volume of exchanges prices continue to soften, and the stock market shows no tendency to a ralp#al of the boom, which would suggest that,probably,general activity not continue at the present pace. iiiht 192_ . a a cs -.. ,..... " n 0-> co , PM -EDEIAL PBERVE BANK APR 27 1925 4 56 RECEIVED 00VERNOR'S OFFICE - FEDERAL RESERVE :DANK 4. I-LOOM-7-24 OF New YORK OFFICE CORRESPONDENCE )11 Crw,_ Mr. Snyder ithAD AND FROM C. Kayser --luBJEcTI El DATE 17 April 27, 1925 /92_ Bank Debits in 140 Cities and 0):Jamlative totals for 1924 and 1923. 7,5 5 Ari1 23, 1924 Three weeks ended APLL122.212.1 $ 13,101 millions $ 14,479 millions Three weeks ended Five weeks ended April 23, 1221 $ 21,959 millions First 16 weleks of 1924 $ 69,755 millions Five weeks ended April 22, 1925 Per cent increase over 10.5 Per cent increase over 1924 $ 24,018 millions First 16 weeks 2L222.1 1924 9.4 Per cent increase over 1924 $ 77,362 millions General ?rice Level for April, 1924 = 180 10.9 jOUOLUI wTTITome roAGT tQL VoL41" T4Z4 = TO * 1V3e5 MTYIT,3e TO.4 77757 OA.. Tø* ot T651 LTLat Te AO4F3 t S7 LTL3f Trcrf-n 874 * T-.2'TOT wr.T7T9t Uels.p TUC/AMMO .4tE1GY2 Se0T9 WI1T°112 TITomq Tma Avore emoct 1* -677.7fStV beL col); TmcLeucti vb7-47 -MT ETAs aeoFu enguq t wTTTTuus TO" -)LTT7rTrTe..ST xpLeo ta,Ailut empq co4 T.AL4W4T, C. kk/4\89I. Te5I w,;(7 T(We ys;Ton wrq 011-Tel Ok COESBE2b0PIDEL, _l .. aM -.r.. .. FEDERAL RESERVE BANK MISC. 3, i-Lt.h.4-74 OF NEW YORK < OFFICE CORRESPONDENCE FROM DATE April 30, 1925 Governor Strong sueJEc-Business Stability and the Mr. Snyder Steel Trade If it were really desirable to attain a rather high degree of stability of industry and of employment, I got to thinking last night of the following: (The vast volume of buying and spending for the necessities and usual enjoyments of life,goe3on with little change from year to year, save of steady growth. This makes up probably from 75 to 85 per cent of the total expenditure. This applies even to such luxuries as the use of silk. I attach a chart showing the amazingly steady growth of silk imports in the But one case of a two-years decline. last half century. The wide variations are, of course, in construction work of all kinds and in the industries supplying these; and of all the important industries showing the most extreme variations, steel and iron stand at the Within the last five years steel production has shown a drop of head. 60 per cent from one year to the next, and then back again. Practically no other industry of any social importance shows such variation of product and employment as this, and, it may be added, outside of crop products, of prices as well. In other words, the chief and dominating factor in businese instability is here, and it seems as though it would not be very difficult to overcome. It is not at all clear that these wide swings are in the least necessary. The cost of production of steel varies little. You spoke once of the policy the steel companies have of stackLast night I was making a calculaing up steel before they shut down. tion that a whole quarter's maximum product, 10 or 12 million tons of steel, could be stored in a single warehouse a hundred feet high and seven Divide this among ten distributing depots over the hundred feet square. country and it would scarcely be noticed. The cost of storage and interest charges on 10 million tons of steel at, say, $50 a ton, would not exceed $35,000,000 per year in an industry whose annual product now exceeds in value 2,000 million dollars. But once in fifty years has the consumption of steel ever It would seem perfectly feasible dropped off 50 per cent in a single year. to stabilize the production to meet the probable demand so that it would And it would seem as if the resulting gains scarcely vary by 10 per cent. FEDERAL RESERVE BANK MISC. 3, 140M-4-24 OF NEW YORK OFFICE CORRESPONDENCE DATE April 30, 1925 To Governor Strong SUBJECT: FROM L Mr. Snyder Steel Trade Business Stability and the from steady employment and the higher efficiency thereby attainable would far more than cover the carrying charges for such a storage of steel as would preclude any scarcity or scarcity prices. If it was possible for years to stabilize the price of steel rails, why not of all steel products? As a matter of fact, a normal surplus of 5 million tons would probably be far more than ample to supply any possible access of demand. From a social point of view, the business practice of the steel companies is probably the worst of any great industry in the country. In the long run does not this also injure the companies themselves? If their own practice is a powerful contributing factor to the very instability from which they suffer, would not an intelligent policy suggest that they work their own reform, greatly to the gain of their employees and of a considerable part of the country? The most formidable difficulty, apparently, would be the question of assuring the steel companies against any sudden fall in the general price level, such as came in 1920. 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I-2DOM-7-24 FEDERAL RESERVE BANK OF NEW YORK FICE CORRESPONDENCE To FROM Govern_or _Strong DATE SUBJECT: May_1_, 1925 192 The attached memo. _Mr. Loyder Do you think that Mr. Hoover would be in any way interested in the attached memo.? Its practical importance is that it now looks as if we might run into a rather serious slump in the building industries, this year or next; and as the prosperity of the motor car industry in the last three years has been bound up largely with the tremendous building boom, I suspect that if this slump comes it will occasion a corresponding slump in what is now claimed as our first manufacturing industry. The combination of these two might be of considerable weight, and if the steel companies continue their usual practice of shutting down hard and throwing a large number of people out of employment the combined effect of all three might, I should imagine, be sufficient to bring on a rather serious industrial depression. This was in my thought in going into this question. Colonel Rorty. thinks that the steel companies are great social sinners and that they ought to be brought to book for their practices. po pa pLont'p.r, .co pooN 47.p r uKe mirc pin; creel 3,p1 zox. TL 994.i on a TUT-repLrgi0; art filL99 llt,Ttj/P gorimmerou T tiponrcr ppLoittru ir L3TWpG. o 3t7 bx. QOJDLJ1GE I1B9ru 1.1711. r1.7041pr pLi b rc 8 COUrf wig rpeT.I. )13 01, 4'p-999 roc, 11).! tfIt' pe 0;, 'LT 4r T Of;1291, c:;# *T .rPG w J_. !E Srli115 or03., cfr< -71 --n 0 CD NI! ep ,911191. (Tog 92 MISC. 1. I -200M-7-24 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To 'ROM Mr. Jay DATE SUBJECT: MaY 4, 1025 192. Commodity Price Fluctuations Mr. Snyder In regard to your inquiry: The attached chart show& the fluctuations of the Bureau of Labor index of commedity prices at. wholesale, which with all its obvious and very distinct defects, is still the best commodity price index that we have. You will note that when reduced to a percentage or ratio basis, as here, the differences from the pre-war period do not appear so large. The fluctuations in the last three years, from about Nay of 1922, have been within ft range of about fifteen points. This is something like three times the average fluctuations shown by the same index in the ten years preceding the War. But it seenee clear that a good part of these later fluctuations, as well as the extreme depression in 1221, has been due to farm prices, many of whIch have'..).3.en at the mercy of worldwide conditions. A comparison of other than farm prices for the three-year period from the spring of 1922 would, I think, show pretty well with those of pre-war years. The real test of our aoility to maintain the balance of credit and traie, I should think, might come within the next to or three years. FEDERAL RESERVE BANK MISC. 4. I-ZOOM-7-24 OF NEW YORK OFFICE CORRESPONDENCE Governor Strong FROM ____ DATE SUBJECT: May_44_1925 Volume of Trade Mr. &actor Last week's bank debits outside of New York City (taken in connection with volume of debits for the preceding week), shows about the first sharp turn down of the present year. There may be a little seasonal in this, and it will be interesting to watch whether there is any sharp recovery in the next two weeks. If there is not I should think that this would be pretty definite indication (taken in connectiolu with the continuous weakening of commodity prices) that the boom of the last six months is distinctly over. 192 FEDERAL RESERVE BANK MISC. 3. 1.60M.441 OF NEW YORK OFFICE CORRESPONDENCE overnor Strong Ta\ FROM DATE_ May 5, 1925 192 Steel Trade Policy SUBJECT Mr. Snyder In a memo. for the Business Summary tomorrow, I have set forth a little more fully my reasons for thinking we might have some reversal of the business trend of the last three years. If this should come, it seems to me that much could be done if, for example, the policy of the steel trade and perhapa some others could be radically altered so as to supplement Federal Reserve policy, in the direction of trying to mitigate ae-idierity of slumps and unemployment; and for this reason I should think it would be very well worth while to talk the question over with Mr. Grace and possibly, also, with Judge Gary, if this were feasible. Another matter: The problem of the young man who was in yesterday was whether we are to have the "long fall in prices," thethirty-years fall, that Anderson, One reason I sugAyers, and so many others have so confidently predicted. gested for doubting this, I had not thought of much before. This was that OW.lija6""644"45/5,4 reviewing the tremendous outcry at the full in prices which came in the 70's (with the Greenback movement), and in the 90's (with the Populist movement, Sockless Jerry, Peffer, and Bryan, too), and considering the quite distinct advance in popular education as to the cause of the rise and fall in prices which we have gained in the last ten years, that the 2eople would not stand for any prolonged and drastic decline; and that this strong popular feeling would he a tremendously strong a rational Reserve policy directed, as in the past three am of support for years, against any such sharp and, as it would seem, needless decline. I feel as though this was really something that could be counted on. Alieir _4614 PC4/"" 114 (10- AV 74.wr , i)1( -as )1,0-bt, ,e1/1- ay.&ittl #-Y az. JiCatt '51 DEP. is 195 11 ItA RECEIVED GOVERNOR'S OFFICE FEDERAL RESERVE BANK MISC. 4. I -200M-7-24 OF NEW YORK OFFICE CORRESPONDENCE rL FROM Governor Strong DATE SUBJECT: May 5, 1925 Retail Sales in April Mr. Snyder The Times thie morning, has a sensational article about the sluMp toe have made up a preliminary total of the 44 depattment stores whose returns have been sent in for April. in retail sales. As compared with a year ago this shows an average increase over a year ago of 3.8, and for New York City, excluding Saks' new store, of 6 per cent. This suggests that business has been better in this dietrict in New York City than outside. 26 show decreases. Of the 44 storee only 18 chow increases and all the large stores show increases, so But almost that this brings the dollar figures up higher than last year. 1 92__. lc lli(,-ZOOM-7-4 C=I FEDERAL RESERVE MD AND ' OF NEW YORK. To DATE May 11, 1925 192_ Bank Debits in 140 Cities and SUBJECT FROM S. 111' \TICE CORRESPONDENCE . Cumulative totals for 1924 and 1925 Three weeks ended May 7, 1924 Three weeks ended $ 13,034 millions $ 14,498 millions Five weeks ended Mav 7. 1924 $ 21,828 millions First 18 weeks of 1924 $ 78,482 millions LIALL-1.2.2.1 Five reeks ended May 6, 1925 Per cent. Increase over 1924 11.2 Per cent. Increase Over 1221 $ 24,119 millions First 18 weeks of 24 10.5 Per cent. Increase over 1924 $ 87,002 millions 10.9 General Price Level for April, 1924 = 180 for May = 180 Volume of Trade for April, 1924 for May = 101 = 104 bebne ee.11:1T 1813 e beL ebne FrAeal evil eieew evil 8S8,1S eL;c111.:: .*V03 4t1ILL.L. eveIllIm SOO,V8 081 = veZ '!ol 101 = xx041 tol 81 teal. eleew 31 Jvtil 081 = 401 = t du1irS84,8V 4 e1l:14 lel Levea eLi Islerie0 4R(N. obe/T lc eix,J1cV FEDERAL RESERVE BANK MISC. 4. 1-240M-7-24 OF NEW YORK OFFICE CORRESPONDENCE o FLil Governor Strong_ DATE SUBJECT: May 11, 192 5 Gold Figures Mr. Snyder Cassel's estimate of what he calls the "normal" gold supply for 1920, that is, the amount of gold that, according to his interesting curve, would be required to keep the price level relatively stable, was 68,466 million gold marks. Increasing this for five years, at his estimate of the required 3 per cent addition per year, would bring this up to 78,599 million. This, reduced to dollars, would amount to approximately 19,650 million dollars. The estimate for the total existing amount of gold in the world for 1925 is derived by taking Cassel's estimate of the total amount for 1910 and adding to this the subsequent reported gold production. This is to be decreased by the very small estimated annual loss of .2 per annum. See pages 443 and 453. READ AND NOTED, --E3. FEDERAL RESERVE BANK MISC. 4. I -200M-7-54 OF NEW YORK OFFICE CORRESPONDENCE To, Goitornor Strong FkOM lir._Sayder DATE SUBJECT: May 1210 125 __rederea_Reverms Questions__ I .am wondering if it might not be excellent strategy to cooperate with Senator Shipstead in his demand for an investigation of the control of credit under the Federal Renerve System, and, so to speak, take the enemy into camp, at several years ago. This struck me as perhaps a real possibility for driving straight ,s,t the questions which have been raised by Mr. McFadden in his demands for a change. 192 /c- FEDERAL RESERVE BANK tAr' .-24o4-7-u OF NEW YORK ( OFFICE CORRESPONDENCE To Governor Strong Fkom Mrnyder iqr DATE__ May14-1925 SUBJECT: Volume_ofTrade__ There seems little let-up in business. Outside bank debits make a big jump this week, car loadings are very high and building contracts awarded for April show a fantastic increase over last year, continuing our index at something like 50 or 60 per cent above the estimated normal. And the general expectation seems to be for another big surge in the stock market. The current volume of trade apparently continues at about the maximum points above the normal which our index has shown. READ AND he' ,c11-1,4- L. 192_ ";"-.' ec . Ot.,\( 30\10- RE.GE.\\/ OV1OL 10qS o0 12 V2,5 FEDERAL RESERVE BANK MISC. 4. I-2.00M-7-24 OF NEW YORK OFFICE CORRESPONDENCE To Governor Strom__ DA.TE.-__May 14_1925_ SUBJECT _192_ McFadden Mr. Snyder have looked througb Mr. McFaddents article and it rather seems to me as if he had driven in the wedge and wae forcing a fair fight on the question as to whether this country is to have a unified bank policy and some reasonable control of extremes, or whether we are going to go back to the headless monster of pre-war days. On the whole, it seems to me a very fortunate time that it should come. Could anything really serve the interests of the System better than that the instructed public should come tc understand thpt the System is being attacked by bankers on the ground of bankers' profits, and that the supposed intereets of the bankers are to be put above those of the clear public and social interest? And does it not seem to you that a clear statement of all this by someone in no way asoceiated with the Federal Reserve System should be made In the next issue of The Bankers' Magazine? FEDERAL RESERVE BANK MISC. 4. t -200M-7-Z4 OF NEW YORK OFFICE CORRESPONDENCE To Governor Strong FROM Mr. Snyder DATE SUBJECT: May 15, 192 A. B. A. Oosaittes Apparently the two persons most responsible for the A. B. A. resolutions of last 3ctober were Traylor and his fidus Achates, Lichtenstein. The latter, former Curator of the Hohenzollern Collection at Harvard, Librarian in Northwestern University, etc., considers himself an economist and banking authority. Be is apparently well read and I have a fancy could be reasoned with. If you feel as I do, that this "report" might really be a matter of same considerable impostance, I should think be was a person to be considered, as perhaps the voice of the opposition and one who would make it difficult to put through a clean-cut report that was not an amiable compromise. 5 MISC. 4. I-MOM-7,4 FEDERAL RESERVE BANK OF New YORK OFFICE CORRESPONDENCE To _OM Skaernor Strong DATE SUBJECT May 14.4925 Th* Balding Book_ 13nycter_ I suppose it is just that supersensitive balance downstairs, but the indications seem to be that in the half century or more over which the record extends, we have had no such building boom in this country as we have had in the last three and a half years, and I find it very difficult to believe that it can keep up. The showing for 358 cities does not materially differ from that for 50 cities, and very close to one-half, about 45 per cent, by value, of this construction has been residential. With this building boom has been associated a parallel boom of like proportions in the auto industry, and my belief is that they are closely linked together and the motor boom largely the product of the building boom, and that if there should be a collapse in the one the other would go with it. Building permits and motor car production for April both break all Does it not look as if both industries were near a previous records. condition of saturated demand? 192_ : 4. 1.200M-7-24 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To Governor Strong FRo'`1, Mr. Snyder 0420 DATE SUBJECT: Parental May 22, 10P5 ties As to the memo on building d auto. production: that was just a report and a conjecture. No th..ght whatever as teparental duties:I Quite agree we have none, not ev as to stock exchange speculation, though that often has a powers effect and rocks the boat. 192 poe1, p cizsGy per:., flT,::,?Lco MC p',JAG E.,-)IT(0,1!pc a CaLllecTOL.,'' vE Pi) 1 At) -30AGLIJOL mo fik)41`!.4 pnINTV:',! vo.po' !A:A-Kim:4ov: pvt 4lueJtY LpUq 310 FEDERAL RESERVE BANK MISC. 4. I -ZOOM-7-24 OF NEW YORK OFFICE CORRESPONDENCE To__ Governor Strong FROM Mr.Snyder DAii May 26 1 95_ SUBJECT: Our_Trade_Indexea 192 In a little memo. for the thusiness Summary this week, on a new index of trade for this Federal Reserve District outside of New York City, I have made note of how closely this new index runs with our Volume of Trade Index for the whole country; and how this is parallel to a similar resemblance between the wages and employment figures for New York State and for the rest of the country. In other words, that New York State is an extremely good sample. But I do think that this steady tying in of one kind of index with another has a real bearing on the question of how accurate and reliable the different indexes are. MISC.3.i4W4-24 FEDERAL RESERVE BANK OF NEW YORK )0FFCE- CORRESPONDENCE To Governor Strong FROM Mr. Snyder DATE_ June 1, 1925 Si' AD MO14OTEsuBJctC,General.. Price Level E3 . 14.1 a4 8hriri tN)..< C) As to the question as to what is the present general price level, relative to 1913, raised by Mr. de Sanchez, I would call attention to the index given on page 103 of a very careful volume of statistics issued by the Metal Bureau, which has just come to my desk. By quite different methods Mr. Ingalls, who is a competent statistician, has reached the same average figure for the last two years, as our own, viz., 180 as compared with 100 for 1913. I do not think that any economist of standing now believes that any index of commodities at wholesale is now an accurate measure of general purchasing power. 192 GOVERNOR'S OFFICE RECEIVED 1925 ,4 6iPM JUN OF NEW YORK -EDERAL RESERVE BANK 3. ,60M.4-24 FEDERAL RESERVE SANK OF NEW YORK OFFICE CORRESPONDENCE To Governor Strong FROM Mr. Snyder DATE June 1, 1925 _192 SUBJEC?J The Burden of French Debt -I t .t It does not seem to me that either the attached letter or the comments touch very seriously upon the main point of my memorandum on the French debt; which was, very simply, that, measured in terms of either foreign or internal purchasing power of the franc, the present burden of that debt is not crushingly greater than the debt before the War. I take it that my memo. was read rather hastily and with a hostile eye, for I did not, for example, say or suggest that: "Germany and France, by inflating their currencies, have somehow enhanced their financial and economic strength;" or that: "The present situation of France is better and not worse," with respect to her debt. The letter states that the loss of lives and the devastation of industrial France "is a real economic loss of immeasurable importance." What I said was that France, by virtue of her territorial gains, is now richer "in so-called natural wealth." The letter states that when the job of reconstruction "is completed it will only put France back where she was before, and where England and I do not think this is the general impresAmerica were on Armistice Day." sion or the evidence from the available facts. I an sorry that the writer does "not think much of the memorandum," but this would not be the first time I have found myself at wide variance with his economic ideas, and I have a recollection of your showing me some letters of your own; upon the same subject. GOVERNOR'S OFFICE RECEIVED 4 6PM JUNI 1925 7.1,1'1K 7 c EDEP,!_ ONIMP IS-2-25M I1424 INTEROFFICE DERAL RESERVE BANK ROUTE SLIP OW/ YORK 'IMF °O *MARKS FROM V f V MESSENGER SECTION DATE /1, DEPARTMENT DIVISION SECTION p DEPARTMENT DIVISION SECTION I. B. USE THIS FORM INSTEAD OF OFFICE ENVELOPE WHEN POSSIBLE. INSURE PROMPT AND ACCURATE DELIVERY ALL COMMUNICATIONS SHOULD BE DISTINCTLY LABELED FEDERAL RESERVE BANK MISC. 4. 1-200M-7-24 OF NEW YORK OFFICE CORRESPONDENCE ToV Goirernor Strong DATE__ June .21925 SUBJ ECT French_Restorations- FROM:\T Mr. Snyder Just as bearing on the question of the nature of French "restorations," raised in the correspondence you sent me yesterday, I was interested to note the first two paragraphs from the London Times' correspondent's report, in their current Banking and Financial Review, On a preceding page (p. 28), Mr. B. M. Anderson has renewed page 30. remarks on the effect of Federal reserve policy. READ AND NOTED, 192_ FEDERAL RESERVE BANK MISC. 4. I -2.00M-7-24 OF NEW YORK ( OFFICE CORRESPONDENCE To Governor. Strong FROM gr.nyder. S, DATE "la. to Growth June 4, 1925 (1:f:itailwayTraffic r r) In an old Poor's Man al we found figures on railway freight traffic, on the principal lines, running back to 1852; and it seemed It seems to me a quite to me worth while to have them plotted up. amazing picture, and another illustration of how largely the steady growth of traffic covered up the reactions and depressions, even the greatest and those that seemed so violent and perturbing when they occurred. I do not know when I An increase of 400 fold in 73 years. have seen anything that quite so vividly depicts the irresistible growth of trade. 192_ J c cv,1.7 firkir !A J t00 VU TUCL4''' IC 1 C4 7.-1.1. UOt !L-11:10 MP''U 11,1 3 r ClU r Z cP G414 ':3. k., i o taw C) . , 951 . rri -i' _,.:-. 1, CCA 72: 0 VS Vii cp < .0I. ; CI Ill e C) 1,3 ''. --31ca 0 rT1 my rin 03 C3 in i'lernea 1t-rpf= ,- cLr) rrl -1-1 --...- -7, rrl --, .....-..-,P--1 --:,- r1:1 -...- -,... 'V.t. , -:31.: 7044Y 1 FEDERAL RESERVE BANK MISC. 4. 1 -2001-7-24 OF NEW YORK OFFICE CORRESPONDENCE DATE_ June 5, 1925 - To Governnr Strong__ FROM Mr. Snyder St...4BJECT: GurAevisod 10(ol(/ ( We have just completed the final revisions of all the series in our composite Volume of Trade Index, which we have been You may like working at at odd moments for a year and a half or more. to see a few of the group indexes. incl.Ided The red line is the revision. I wonder as to the implication that comes from turning these slowly over to the last page. 09t, ( rlf!. a a c. , 60111 00VERNOWS OFFICE RECEIVED JUN 6 1925 5 OF iliPN YOps/.. -EDEPAL RESERVE BANK !ABC. 4. I -201M-1-24 FEDERAL RESERVE BANK OF NEW YORK C".1 r OFFICE CORRESPONDENCE To Governor Strong FROM mr.L. 71 DATE-2 SUBJECT: June lh, .Belanee: of Paynente Snyder Remembering the difficulties we had in the two efforts that we made to get some idea of the amount of foreign balances and foreign funds held for investment in this city, for the Commerce Department (and the fact that returns from some of the most important sources were unobtainable), one cannot but marvel at the accuracy which it is here announced has been obtained; and likewise the perfect and comforting concordance with the amount required to balance the ledger. You will recall that in the previous year the same authorities computed a debit balance against the United States of something like half a billion dollars, to be settled somehowat a time when gold imports continued at an unusually heavy pace. 1 94, ben4IJ Ja cLe. xfasuauau xvaed .9oaq noiLlid o/allob oJ d beljJaa Ja---wodemoe smiJ nee', blog -ro3.al1oom1 bed-nrop a .Hd& eoneLed Jan1.6.0 eJj beilnU F.9.1-3Ja lo no air e)111 -Thd uoT Ifiw Ilaooa Ja0 ii 9t.,1" ouoIvelq 1,19x 90 exaa oolji.reittua itti et belinpeq °I flafad ;berfaJdo bra eotweill t(elaa eno /ucloonao lenam Joal Jalij 9aludeI uioi emoo bled lot J-n9r7Iesval aid4 ebam oI leg 91110E1 sebi to r JIL.WMA asd ne9d gliqedmemeR sit .1bef Joalev ,irtf; Ablooroo 7.3.!L,":., Jul , maL LLJ fif-AD AND NOTED, MiSC. 4. 1-2004-1-24 4.5 onai FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To Governor Strang FROM Mr, Snyder DATE SUBJECT 4 June 16, 1911_ New_ComparLson- I should be especially interested if you could take note of the comparison of our index of electric power production with our volume of trade and bank debits for this week's Summary. Although the growth of electric production is three times as fast as the average growth of trade (and debits), the percentage of deviation from the line of growth in all three cases is very much the same. I can't help feeling, despite Dr. Stewart's skepticism, that this is added evidence that it is now actually possible to measure the trade of the nation with an accuracy that no one dreamt was possible a few years ago. And very, very few believe it now--and, maybe, ever will! You remember that practically all the learned professors in astronomy in the universities of Europe refused to believe in or teach Newton's law of gravitation for nearly forty years after the "Principia" was published. But it is much better now. man impT:i-41sq. 34cy MGA_NU,ti bLOLOWVSOLS TU 8rr ai; 1 Ci c-9 T-- OSC. 1-200M-744 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To DATE SUBJECT: June 16, 192.5_ Street Loans and Speculation GovernorFROM Mr Snyder . I was curious to see how far the increase n street loan was due simply o to the increase in the average r As you wi ie see by the attached, the relative vo ume of securities from the 19 to the low of 1921 appeared to fall about 25 per cent and then increase to the high point in the spring of '23, and again at the present time, by something like 40 per cent. It is interesting that almost all of the difference between the high point of 1923 and the present time appears to be covered by the simple difference in the average level of prices. Similarly the expansion of the volume of speculation from the boom of 1919 to the present boom would appear to be about one-third; which is a pretty stiff rate of increase. AND NOTED, -1") fa. a firu7-41 CO,A,L Y1.1. ).1(2.1) ii 3 I 4-, 4-1(.., 6-0-of 9° cis) -14/1n) . I 3 5 .a) troo )vUcI I9I./ S, Goctob6 9 0,1V (Q1A-00 1, 50,%1 6, 0-0-0 , L 4 C, 1,g ,., 11'11 V 31, st 2, 1-s-qo "7 Li' (-3 A-, s-4-1 0_,; s-)-( 641s-/. I. 130, 0 7 , S32. 330 5-1s-,--1g7 , 17,1-41,-77V MISC. 3. 140M.4.24 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To FROM DATE SUBJECT: '4iSC. 4. I-ZOOM-/-24 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE DATE To4 Governor Strong SUBJECT . FROM Mr_Snyder of Trade Railwa June 18, Traffic and Our Lon 1925_ Index You will recall a plotting I sent up a week or so ago, showing the amazing inorease in railway traffic--400-fold since 1852. It seemed worth while just to take,the deviations from the line of growth and compare these with our Clearings Index of Trade (by years). It is very interesting to see how closely the two lines have run together, from 1875, until about the last ten years, when in the War, and in the slump following 1920, the divergence was very wide--very much as has been true in the case of pig iron and other basic production. Undoubtedly, too, the big rise in exports in the War and the violent slump which came in 1921-122 strongly contributed to these wide variations. AND NO-TO, Vi S' ) .18 qm Ao1dw 911140 II RS'I-ISOI 71gaille b9lud11Jnoo tylbeldvobnU tool erfl aelaId obIw 0,3* nI elTogie al edl TeX .enollzi/Pv 0CJarm Ineloiv sold ai e 93130 'to sic; / trot bite -16,110 :)leed .nolJeuboui qinola Eat ahrof OcL siIJ 90119uivib a.e.v rev dou:r els sari rra,3d .31.30X ostiJ93(..ht Lilac uode Jae! 4-134. zeds i1 add* 0./ait: bi ni II 1 V19V vliJaeled-iii 03 198 woe yleeola aril' owl 8.94t1 eVlirr. 001 ON 3anilael0 Aebal efiea-2-cto yd) .(eqsey &t-jisot Ol:$)iiant cIivltk Sol/ edi all 9 /0 snIs.sm ease:loaf al yowItel eenia A031 i a :gaillplq I I&le lu s 3W uoY -Too .1A1 19D1(fle. .:,0 v. Tonle 331.13( ( 8no-Lia to CD CD . ,- til CD m. L,s3 > cn c3 ti.1 U Li- 0 Ca. :- _v eiscipao iasdi J1 bares &low bme io os -.=-, 0-1 cp !ols ,stniwoda edI FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To Governor Strong FROM Mr. Snder DATE SUBJECT: June_25, 1925 'MP RATI1C_Rate in 1020 Since you are delving into ancient history, may I produce a bit of my own? No need to look at more than the two or three paragraphs have marked. You will note that my proposal on December 1 was to reduce the rate to 6 per cent, as a notice that the worst of the crisis had passed; and to keep it there until the larger part of the loans of the Federal Reserve Banks had been paid off. 192_ aer EDE' ' 1011, ai 3141A )(Az ! Jijt orfoJka Jfl ifl Jfl1 1925 nivi9t; '91A 'tiLEqswieJ lo ofo etht 0461 elom IT Non' oJ 15,erl RECE.1VED SOVERNOR'S w I ledura. to 51J 10 3nAL- rt oJ bmd 11i 8d co liologolq vin Jettt arts JenI aoljor. o J1Pq asAaAl ed.! .110 f OFF131: FEDERAL RE'SERVE BANK OF NE d YORK OFFICE CORRESPONDENCE To Governor Strong DATE_June 26, 1925 SUBJECT: _192 State of Trade Mr. Snyder The volume of trade is still running at a Iligh figure, as high as at any time since the Coolidge boom started; and this means as high as anything above normal growth as we have had in the last 'varter of a century or more. Building activity and motor car production conti nue at a breakneck pace, at least so it seems to me. The bunco artists are out in force--you doubtless noq ced the hashish dream of Mr. Simon Strauss in the morning papers, which i,attach herewith. N\ . I am wondering this: the urban building boom, for it has bei>i, almost wholly urban, has attracted to the cities large numbers of carpenters, fsicklayers and artisans from the country, so that in the last four years ther4\ must have been a very considerable migration to the cities from the country,,,, 0 ,41,4Azi 044,4 strongly stimulated b.y.the collapse iQuir,..1:ey and thecv iling farm 1. , 4 A 61 1; . depression. VV.& A 1- gl There must be a limit to this somewhere and when the building boom drops, and with it the motor car boom (10 million new cars since the War closed), where will we be? And especially if we do not have the stimulus of steadily rising prices, as we have had practically ever since 1897? Is it so certain that prolonged depressions, like '93-'98, are a thing of the past? t:D \ FEDERAL RESERVE BANK 3, f-60111-4-24 OF NEW YORK C)FFICE CORRESPONDENCE Governor Strong FROM DATE_ August 6, 1925 192 SUBJECT: Our Business Indexes Mr. Snyder Just as indicating that our work here on business indexes has not been without some direct fruit, I should like to note the following: Mr. J. H. Barber, of the Walworth Manufacturing Company, Boston, makers of cast iron fittings, with several plants over the country, was telling me yesterday that as the result of their statistical work and planning based on that, they have been able to shift their peak of production from the summer, when costs are relatively high, to midwinter when they are low; that they have been able to regularize production and employment so as to raise heavily the product per man (almost double); to buy their pig iron near the bottom of the market and to stabilize their prices so that there has been little change in the last three years, whereas they used to be jumping around all the time; and in general to reduce their business to a highly scientific basis. The especial point of reporting this is that Mr. Barber is good enough to say that their work is very largely based upon the methods and the results of the business indexes devised by this department; that they did not seem to be getting anywhere at all until they began to make use of these new indexes; that at first they regarded these indexes as "just bunk," and that things could not be done that way; and now that they are the background of all their work and their forecasting. Their rate of business is now expanding at about 18 per cent per year. All of which is not a mountain but at least some small satisfaction. FEDERAL RESERVE BANK OF NOW YORK misc.4.14m4-1-24 OFFICE CORRESPONDENCE T, Governor Strong FRO Mr. Snyder DATE Sept. 29, 1925 SUBJECT.B 1 9 tmentA Just as indicating how closely the operations of the Reserve Banks are being watched in various quarters, you may be interested in the attached chart showing the ratio of investment holdings to the total earning assets of the Reserve Banks, prepared in the Research Department of the Irving Bank. I gather they were imbued somewhat with the L'hronicle's idea that the great rise in the stock market has been due in some way to the investment operationa of the Reserve Banks; but the chart does not give very much support to the idea. `4,41,,,4adivo, ettro-x-t-rritim FEDERAL RESERVE BANK W5.4. 1400M-7,4 OF NEW YORK OFFICE CORRESPONDENCE T- .,oTeraer4tropg FROM Mr. Snyder DATE SUBJECT. October 7, 1925 Railway Equipment Prices seems to me quite interesting that railway equipment prices should continue to range about 100 per cent above pre-war prices, while the general average of basic commodities is less than 60 per cent above pre-war. Is this possibly evidence that the extremely high wages which are being paid in many types of industry really do have a serious and notable effect upon the prices at which the manufactured product can be sold, and that it is an illusion to think that it could ever be otherwise? The average of wage earnings in manufacturing industries in New York State has been pretty steadily around 120 per cent above pre-war, for the last two years. The index numbers are based upon the average price per pound of the total sales of the large equipment and locomotive companies, and therefore are genuine sales prices and not mere current quotations as so large a part of our price indexes are. oxe.4 ttah9 192__ FEDERAL RESERVE BANK MISC. 4. 1.00M-7-i4 OF NEW YORK OFFICE CORRESPONDENCE To _GavemaciLlitrong_ FROM Mr. Snyder DATE Oct. 8, 1225 SUBJECT. You may be interested in the attached which is a part of the money market studies which we are making. It aims to show what would have been the increase in bank loans, in National Banks, and in all banks, since 1900, if there had been no change in the general level of prices, i.e., what would have been the rate of growth due wholly to the expansion of trade. It seF,ms quite possible that the decreszent rate of growth shown---". in the last ten years is due to the steady increase in the proportisgi--51 hank investments to loans proper. This might explain in part whyIho.4 has been so little increase in so-called commercial loans within the past few years. 192_ FEDERAL RESERVE BANK MISC. 3. i-60M.4.24 OF NEW YORK OFFICE CORRESPONDENCE \P ,Governor R Strong 4 Mr. Snyder DATE Oct. 13, 1925 192 SUBJECT: BEAD AND NOTED, As you will see from the attached plotting of bank debits outside of New York City, there appears to have been a heavy surge of activity in the last three or four weeks, bringing the three-weeks cumulation to nearly 19 per cent over the same period of a year ago, and you will remember that September of a year ago likewise showed a very sharp recovery from the depression prevailing through the summer--in fact, the largest increase in a single month for two years or more. So the comparison this year is from a rather high level, about 5 per cent above normal, for last year. Nor is this increase principally in the large financial and speculative For example, the comparison of 246 clearings centres for the last week, over the same week a year ago, with New York, Boston, Philadelphia and Chicago eliminated, shows an increase of 17.6 per cent; which is really a quite extraordinary jump. centres. All this can scarcely be due to mere Stock Exchange activity, as it is equally in evidence in the remoter Reserve Districts of the country. And, as you know, our outside debits index has, throughout the huge stock market boom, run steadily under our composite Volume of Trade, which, of course, includes several series reflecting stock market activity. d24.7) All the more remarkable, then, that in he last three or four weeks our sensitive index of twenty basic commodities, and likewise Fisher's more inclusive index of over two hundred commodities, have shown a slightly sagging tendency, instead of any disposition towards runaway markets. Furthermore, we have ample evidence that production in the basic industries has been only slightly above normal, and some of them below normal for the larger part of the year. It is a paradoxical situation. Six years ago this fall we had just the opposite conditions, viz., a sagging tendency in the actual volume of trade, with wildly rising prices and expanding bank deposits and loans. Airid V ,. 1.1") ()1 (NI Cr, t I cr, qg 1.44(.) Id.08 eriJ -rev° kJ .1. r 1435y, rt.! F "I Oft 04,,) ')C5). -`A 81 o .1, 40106r 'Orr e 11 14.! tit3 _ 1E; FEDERAL RESERVE BANK MISC. 4. 1-100M-7-24 OF NEW YORK ,3FFICE CORRESPONDENCE To FROM _ DATE Governor Strong SUBJECT. Mr. Snyder the Business Cycle °Ct._ 16, 1925 Tile "Deliberate Regulation" of 192_ You may be interested to look over the Harvard comments on the role of the Federal Reserve in the course of business in the last few years, and The article, their opinion of "the probable result of efforts to control." which has just come in, is nominally by Prof. Crum, a young man whom I tried to get into this department a couple of years ago, and who went to the Harvard pretty clearly a Bullock-Vanderblue-Crum composite. folk instead. But it is It is interesting to note their idea of the last two and a half years as "one of deliberate regulation of cyclical fluctuations by those having control of the credit resources of the nation." Pages 231-233. 071-o 641vvy ( 01. ,r-bLeL) Scige S2T-642' .pL0j cot pp G ovIcup LevonLcouo ppe implou-g aa 0110.0t qaT7pGr.gce LOinTowou ot aciTcv/ LiAcpauf,uu pX cgoee puguR coufp Te TuculmepluR po uoce ppeIL Neu (34, cpG prec pm° GIN W palt WOVIA Bf Tf TR bLeca o/e0141, u Bariocfc-pougetpInG-0Lnw ookoboGIc 'Of{ Tuvf.3wq* co 01:' fur() cp-v gobe.Lcaleur u Gon5je AGVL9WO GIN kpo soup co cpe HaLAuLl mprcp care lnec 00WO pi' Te uowfuvirl. pW 0$0710:w Wortu 014U *pow cLIeg 117911. obTnrou O, gape 111,09$:foe LetnIc a; el,toLcv pc) 00W. leu Ipe 1414-foiel cpG pINGLoi v.GGIGLAo To ;ye 0,111.28 Ot ptkT pt9sirigivuLe6 Ion wG1. pA4 TOf8109rOg pa TOOK °Alt S RILSialt pp° 1.0 j 0 .< rn ;0 fiL. 217W(Ter, A4tual. 2pLdrIM fTYG - )LLICE C01:1 E.' 2 SallA r C) CD rn cn < cnir1 C) 71( .1 - tri 03 0 tjf3 msc.3.4*,74 FEDERAL RESERVE BANK OF NEW YORK OFFICE. CORRESPONDENCE lovernor Strong F4/ Mr. Snyder DATE SUBJECT, Oct. 16, 1925 Growth of Bank Loans READ AND NpTED,' E. 7 a. - You may be interested in the attached, which is part of the money market studies which we are making. I wished ta see if it were possible to show how much of the increase of bank loans was due to the growth of business and trade, and how much to mere changes in the level of prices. So, as you will see, we divided the actual dollar figures by our index of the General Price Level, with the results attached. For comparison we introduced our index of production, first, because it is a purely quantity index, and secondly because we have found that this runs very closely parallel to our index of trade, i.e., there is apparently not a great deal of change in the rate of turnover of the goods produced. One chart shows bank loans proper and the other bank loans and investments. The proportion of investments to loans has shown a rather rapid increase in recent years. The indication is that, with no changes in the general level of prices, bank loans grow pretty steadily with the growth of trade. 192 30VERNOR'S OFFICE RECEIVED AJUI. id 1925 12 3.i3 Dti MISC. 3. 140M.4-21 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To -Governor Strong FROM Mr. Snyder DATE OCt. 23, 1925 192 Outside Street Loans in SUBJECT New York It is curious how steadily outside funds continue to flow into the call market, while the advances of the New York banks through the market remain almost stationary. In the last four weeks there has been a further reported gain of 160 millions. The present bull movement in stocks began in the summer of last year, and since then, say from August 1, 1924, total outside loans to the market, including the unreported loans, have increased probably by 1200 to 1400 millions, and now stand, on a rough computation, above 2 billions. This is a rather staggering sum. In the same period, from August 1 of last year, the street loans of the New York banks have fluctuated around one billion dollars. In other words, the larger part of the financing of one of the greatest stock booms ever known has been with funds from outside banks. The interesting thing is that this boom has taken place in the face of a net outflow of gold of about 150 millions. It seems, therefore, evident that this expansion of stock loans could not have taken place except with the increase of about 400 millions of Reserve Bank credit which has taken place in this period. Almost all of this Reserve Bank expansion has been in the form of rediscounts, and about one-half of this increase has taken place in New York City. As in this period total loans and investments of New York member banks have not greatly expanded (about 300 millions), while the loans and investments of outside banks have increased heavily (about 1700 millions), the inference would be that, on balance, the New York banks have lost funds to the interior banks, which have then been reloaned by the outside banks directly to the stock market. In this period there seems to be very little change in the balances of correspondents in the street loan reporting banks of New York City. The increase of loans for correspondents, therefore, has not been due to the conversion of balances into loans. If it should happen the great stock boom should eventuate either in (1) a disastrous collapse, with a corresponding reaction upon trade, and large unemployment; or (2) a great burst of general speculation and rapid rise of prices, as in 1919-'20, with subsequent collapse, would not the Reserve System be held accountable as having supplied the funds? With a current inflow of perhaps 50 millions of new gold, I am wondering if some measures should not be taken to avert the possible consequences. Mr. Roberts has been thinking along these lines, and I attach a memorandum from him which went to Mr. Jay and may have reached you already through him. FEDERAL RESERVE BANK MISC. 3. 141/M-444 OF NEW YORK OFFICE CORRESPONDENCE 4Governor Strong FR' DATE SUBJECT Oct. 26, 1925 Reserves Credit for Speculation Snyder N DA4OT ED; a S: It seemed onediat the point of Mr. Roberts' memorandum was that credit created by rediscou ts at the Federal Reserve Banks is being used to finance a gigantic speculation in stocks, and not for legitimate business. This seems to me quite a different question from the matter of stock prices, high or low. From the minimum of speculative loans, reached in 1922, the market has now absorbed about 2 billions of additional bank credit. In part, at least, such an expansion would have been improbable except for increased rediscounts at the Federal Reserve Banks. From the point mentioned, in 1922, the total expansion of bank credit has been enormous--amounting, for the weekly Reporting Banks alone, to some 5 billion dollars (the total of loans and investments). This total is now 2 billions above the highest point reached in the period of post-war inflation. Yet, commercial loans, so-called, in these banks, are still about 1300 millions below the peak of 1920. On the other hand, loans on stocks and bonds, as nearly as we may estimate, are now nearly 2 billions higher than at the peak of 1920. I wonder if this is an entirely healthy development. You will note from the attached that comments on the situation are beginning to multiply. It is evident that Mr. Roberts, Sr., is a little uneasy over the outlook, and Prof. Chandler has expressed the view that we are not likely to escape a general spread of speculation and a period of inflation. 192_ MISC. 4. 1-200M-7,4 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To FROM :ovornor Strang Mr Snyder DATE Oct. 2e,, 1925 sueJEcT.Volume of Tr-Pie Another et.iff shoot in the volume of exchanges outside of New York, as recorded in bank debits; and again this was not confined to the larger centers. Excluding the five largest clearing points the increase was &Lill 12.7 in 243 outside cities. This seems to indicate that the volume of trade in October 4.11 show a very high point, even after nacing allowance for normal growth and s6asonal upswlag. 1 9 2__ Mit MISC. 4. I-200M-7,4 FEDERAL RESERVE BANK OF New YORK OFFICE CORRESPONDENCE To FROM ' ,1;vernor Strong DATE SUBJECT, Oct. 26 1925 Dr. Schacht Mr. Snyder We had a most enjoyable dinner, but with much regret at the absence of our host. Dr. Schacht gave us an extremely interesting and very incisive talk, revealin?, clearly enough what a different type is at the helm now in Berlin. One could not but contrast hie clear grasp of economic relations with the curiously strabismic impresoioa which I got from an extended interview with his preaecessor in the summer of 1921. 1 92._ miSC. 4. I -200M-7-Z4 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To_ FROM Mr, Jay DATE SUBJECT, November 10, 1925 The Nstionts Savings \-Mr Snyder This brief report on the question of national savings is a part of the studies we have been making, trrihg to get at what are the forces which influence the amount and incregse of bank credit; and seems to throw an interesting light upon the ideahat there has been some phenomenal saving in the United States in ti last few years. 4 192 FEDERAL RESERVE BANK MISC.4.1,00M-7,41 OF NEW YORK OFFICE CORRESPONDENCE 4 FROM Governor Strong DATE SUBJECT. Nov. 10, 1925 Street Loan figuren Mr. Snyder Thie student for a Ph D. asks for street loan figures given in your testimony before the Joint Agricultural Committee, brought up to Will you plet,se tell me wht reply should be made to the end of 1924. his request? a4.,; II o /41 / 192 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE N\Governor To. DATE SUBJECT, Strong f.t774 r, FRom_mr. Snyder Nov. 23, 1925 Volume of Trade - READ AND NOTED, U. S. .441 After a low week which seemed to be due in part to the Artistice Day, debits came back again very strong this week to the highest week yet known-about 17 per cent over last year, which was in turn just about the highest week ever recorded. The actual figures for 140 centers outside New York City for the last four years have been, for the same week: 1922 1923 1924 1925 4262 4776 5173 5974 In other words, the surge of business continues at very high levels. It seems to me highly instructive for the formulation of both sound theory and sound policy that this heavy expansion of the last few months should not have been accompanied by a clearly defined rise in prices. In this connection it seems significant that demand deposits in the Reporting Member Banks should show today almost no change from a year ago. You remember that our finding was that the ',cyclical swings" of seem about compensated by corresponding changes in the velocity of deposits, and therefore that the price level does not tend to rise unless the increase in bank credit exceeds the normal secular increase in the volume of trade. business You will agree, I think, that the present instance is at least very interesting. .192 FEDERAL RESERVE BANK MISC. 4. 1-ZOOM-7-Z4 OF NEW YORK OFFICE CORRESPONDENCE To_Governor Strong DATE SUBJECT November 24, 1925 192_ Discussion of Federal Reserve .06E3 FRoA_Mr. Snyder Problems You will note by the attached that the session of the American Economic Association devoted to discussion of Federal Reserve policies comes on the last morning, on Thursday, December 31. Dr. Chandler thinks that most everybody will be then in a hurry to get away and that the attendance will be largely limited to those seriously interested in the subject. In view of this it occurred to me that it might really be worth while, in case you were in the city, if you could find time, without any notification of any kind, to attend. There will be no reporters present, and it might prove well worth while, in case you felt like joining very informally in the discussion which will follow. It might be sowing very good seed. avuLtiti nEAD AND t Li. :0. V.) FEDERAL RESERVE SANK MISC. 4. I-ZOOM-7-24 OF NEW YORK - OFFICE CORRESPONDENCE To Governor Strong FROM Sr, Mr. Jay DATE November 24, 1925 SUBJECT: Snyder Did your eye happen to catch Premier Painlevele little wail on Sunday, as to the utterly coiltradiotory advice he had received from the financial "experts"? Mr. Leffingwell, I believe, haa told of almost exactly the same experience as to our financing when wa went into the War. Does not all of this pretty vividly illustrate the need of definite or concrete knowledge as to the relations of business or trade to bank credit and allied things, precisely such as we have been seeking to find in the recent work described in the memorandum sent you? 192__ FEDERAL RESERVE BANK MISC. A. OF NEW YORK JFFICE CORRESPONDENCE4 To Governor Strong DATE_NOV. 24, 1925 SUBJECT: J 4. Mr. Snyder ,cn c r Here is the work-sheet chartftf the attempt to take out the effects of inflation from industrial enam!prias. It really seems to me quite extraordinary that the estimatedaverazp for 1925, deflated in this manner, should land directly on the comlifit4id llie of pre-war growth. vr.s, With it I am attaching several other graphs of this same work, attempting to take out the element of price change in the growth of bank loans, bank clearings, savings deposits, etc. I should deeply appreciate it if you could give this work a little attention, for I can't help thinking that it is an interesting new slant and really gives us a clearer idea of the nature of business demands for bank credit than anything we have ever had. Such different series, treated in this way, yield such singularly parallel results that, in its cumulation, it seems to me the evidence is very strong. 192_ "istm L) ')Oke c. 0 Opp, /-/r, Taw. 3. 1-50M 8 25 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To Governor Strong DATE SUBJECT. Loans December 8, 1925 on Stocks and Bonds rzomMr. Snyder The figures as to loans on stocks and bonds in all National Banks are available for only once a year. They are given on the attached chart, from 1890, and with this the nearest division to what we now call "commercial loans." With this I have put in at the top, dettedline, the figures for loans on stocks and bonds in the weekly PirfilianTEATTInf the System, so far as they are available,from 1919. You will note that these seem to fall less in 1920-'21 and to rise faster than the corresponding loans in National banks alone. It is evident that the National Bank figures furnish only a fair approximation, and of course do not give the extreme ranges of the cyclical swing, such as we now possess. But it still is of great interest that these loans appear to have risen pretty steadily with so-called "commercial loans," and that, for example, in such a period as 1906-08 the fluctuation appears to have been slight. All the annual figures are as of June 30 each year. of any other figures now available for long-range comparisons. I do not know 192_ FEDERAL RESERVE BANK kisc.cf-zoom-7-24 OF NEW YORK OFFICE CORRESPONDENCE To Governor Strong .-14om Mr. Snyder DATE SUBJECT .. December 8, Lord Grey If you are interested in Lord Grey's Memoirs, you might like to read what seemed to me a very penetrating little review by Leonard Woolf, in the English Nation, which I attach herewith. 1 99._ FEDERAL RESERVE BANK I -200M.7-24 OF NEW YORK -TFICE CORRESPONDENCE To Governor w 4- 411, DATE UBJECT Dec. 94_12 2_5 ______ 192_ Bustiman_ixt_1225_ Mr. Snyder I should be glad if you had time to look over the figures given for 1925 in this week's comments in the Summary, and note the very striking agreement between just a straight average of a very wide number of items of all kinds of production and trade, 74 in all, and the actual average of our monthly Index of the Volume of Trade. Slowly, I believe, the evidence is piling up that we have in our monthly index a pretty sure and reliable guide as to what is going on. MiSC FEDERAL RESERVE BANK 4, I -I0404-7-Z4 OF NEW YORK jFFICE CORRESPONDENCE To Governor Strong DATE SUBJECT: Dec. 9, 1925 192_ Hirsch Book Mr. Snyder As you will note, this book on his American visit, 'r4f Reichsminister Dr. Hirsch, is dedicated to your friend, Logan, and in very warm style. It reads: "In deeply grateful recollections of the first courageous steps towards the solution of the post-war chaos of Europe, especially in the days of the deepest need of the German people." The title of the book is "America, the Industrial Wonder." FEDERAL RESERVE BANK Misc. 3.1.501 OF NEW YORK OFFICE CORRESPONDENCE To Governor Strong .tdmMr. Snyder DATE SUBJECT: Dec. 10, 1925 Realiaavinge EAD AND a i NOTE]' El. yef_a.,_ time to take a look I wonder if you would have we have made as to real savings in the country. to know your feeling about it. at these computations I should be much interested The extraordinary thing to me is the way that savings deposits, time deposits, building and loan assets, and life insurance assets seemed to grow along in such an even way throughout the whole quarter of a century, in spite of the tremendous price upheavals that occurred therein. Deposits in savings banks, especially, seem to me simply astonishing, in view of the enormous rise in wage levels and in the actual money increase of the wage earners. 770 ;-14. a(0.4W04, ci,t4 ,,te, The third chart shows how wages and workers' incomes rose in the period, along with our composite estimate of savings. In the fourth chart we have divided our index of wages by the cost of living, with the result that "real wages!' seem little higher now than in 1913, and were considerably lower kh44(in the War. The same result has been reached by other workers in this field, especially Paul H. Douglas, of the University of Chicago. It is all so different from one's offhand impressions. 19 00 Avynda lonlavo0 . _ - C,7 labina .1M, a iL1_ i: COcf5 ....'' 60 t.r.> c--.3 Tfloamitillgoo sataii',2? )10 beiefffc. L ,c..1 Li., hJ : odtloc:. od b le 1 k caCii?sAad ad amid evad bluow.uox ti lebnow I LL4 LI-:- .10J:woo odd ni egnivas Leal oJ se ahem avA4 am .di JuodB ylliael luox wool od .,ba&T--or i-1-1 6 ;$ :-192,0,, add al am oi . n1rLf reulbaokaixe edT sontlusni 5111 boa ,sdesee nolo' bat', aninilLd ,s4isocleb arid ie-,eIodwsdi uodauoldI xaw cove at dsus ni snola :wols .71uono.da4d slalh;adqu song avobnemeld ed4 10. °Jig* \ 1ICIM13 am od maes-,xlitioaqae oined WI/VAS ppm-1400e sel a bn RtvI eaaw ni esli suomlone neS `,4 te soo edJ ni nzik t.c )P1 8,1,% j,45 .81011180 A :moat isIellow boa new sod swodo iTtdo blind sin .a.r6niv45a lo edsoldswellsocimoo luo dile gaols tbolasq lo xabni luo bsbivib toted aw aledn ddauo/ ed/ (ii LTtiI moss "ai Irudadd diuselsdJ dliw aniwit lo .1e* odd ni ist lawol vidaasbisno* slew bna ,M1 hedaeta need and ifusea emus edT lo tehigiJoU .H fuaq xlieioaqss /Jislewinti fTto slano MO7a dnelellib os ifs el di m..3.1.50m.8-25 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To Governor Strong tROM Mr. Snyder DATE Dec. 10, 1925 SUBJECT: Total Stook and Bond Loans As some further light upon the question of total outstanding loans on stocks and bonds, the Federal Reserve Bulletin for this month gives for the first time a classification of loans in all (ember Banks of the System. Loans secured by bonds and stocks other than U. S. Government (which latter was very small), as of last June 30, amounted to 6,474 millions, which was 31 per cent of the total loans and discounts for all the System. The figures for previous years are not available. But I find that on June 30, 1919, when the stock boom of that year was well under way, total loans on stocks and bonds in Vational Banks only, amounted to 3,437 millions, which was again just 31 per cent of the total loans and discounts in these banks. It is quite possible that this percentage is a little high for all the reporting banks of the country, but if we take a round 30 per cent of the total loans and discounts reported for last June 30, in all incorporated banks of the United States, excluding the mutual savings banks and private banks, 29,464 millions, we should have a total of about 8,800 millions. This compares with a reported amount of loans on stocks and bonds in all Yember Banks of the System of about 6500 millions, which would leave an estimated amount of about 1300 millions in stock and bond loans in banks outside of Lhe System. Since June 30 last stock and bond loans in the Weekly Reporting If we applied this increase to the Banks have increased about 8 per cent. whole System, this would give a present estimated total of such loans for all incorporated banks of somewhere near 9600 millions, or, say, in round figures, between 9i. and 10 billions. 192_ FEDERAL RESERVE BANK /disc. 3. 1-501.8-25 OF NEW YORK OFFICE CORRESPONDENCE Governor Strong To FROM Snyder bond loans DATE SUBJECT. Dec. 11, 1925 Stock and Bond Loans tr;319_ As to the black line at the top of the chart, comparing stock and in the weekly Reporting Banks with those in all National Banks, from 1919: These loans in the large banks in the large cities would naturally tend to rise more rapidly than would be the case with all National Banks where you have included some 8,000 or more small banks and country banks. I was not, therefore, loans on stocks memo., I am not inclined to think from this that the National Banks were very representative of the total for the Whole country, of and bonds; but from a new computation given in the attached so sure about this. It is certainly of interest that the percentage of these loans to all loans and discounts, in all Member Ranks of the System, was, on June 30 last, exactly the same as the percentage of these same loans in all National Banks on June 30 of 1919. We have good evidence, as you know, from 1919 on, that street loans in New York City vary much more widely than the total of loans on stocks and bonds in the weekly Reporting Banks of the System. Does not this indicate pretty clearly that in the total of these loans for the whole country,only a portion is directly for speculative purposes? s oimt- Mc. 3. 1.50M.8.25 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE Governor Strong FROM DATE December 26, Volume of Speculation. SUBJECT: Mr. Snyder SOD "Fi, S' It seems very curious how much of the increase in brokers' loans appears to be due rather to the rise in prices than the increase in the For example, if you take street loans at the volume of speculation. lowest and highest points of the market swings and divide these by a very wide and properly weighted average of stock prices, like the Standard Statistics average of 201 industrials and 31 rails (and estimate that the shares are largely at $100 pauvalue), then we should have the following for the estimated number OfAmargined on street loans: Low of 1918 (Feb. 1) High of 1919 (Nov.3) Low of 1921 (Sept.3) High of 1925 (Dec.21) 97,140,000 13,850,000 8,814,000 19,558,000 In other words, from low to high in the two big booms of which we have definite knowledge,margined stocks just about doubled in the one case and rose about 150 per cent in the other. But the amount of bank funds engaged, of course, varied much more widely, especially in the last four years. Where the volume of loans little more than doubled in the 1918-19 boom they are not more than four times what they were in 1921, i.e., the rise in prices in the present boom has been very much greater. 1925, -354 AC1 ,7.411JW)..e, 10 WWI& ,o 04 z Ki Lii id_-3 to 0 ,-,. ill.r cv C) G) a ti 4 o 7,7067...3fd .4. be 1-1.21; ,a 811100 LA e..) > CO i x il_ CD ro -, FEDERAL RESERVE BANK Misc. 3. 1.501.8-25 OF NEW YORK OFFICE CORRESPONDENCE To FROM Governor Stro DATE SUBJECT. Jan 11, 1926 Trade in December r. Snyder Apparently trade in December was very close to the high point reached in November, which in turn was the highest point shown by our index of the Volume of Trade in the seven years for which it is available. This, of course, is allowing for the normal growth in each of the several lines included. Outside Our debits index for December is down two points from November, but this may be due to the fact that many firms closed on the Saturday following Christmas, and this may have cut down the average slightly. Outside This view is borne out by the fact that clearings last week were the highest ever recorded in a single week, and the first week of January is, as a rule, below the high points of the preceding year. In other words, there seems nothing as yet to indicate any decline in the high pitch of current trade. 192_ t. 0 --: ', \\J 4 rtf,^ FEDERAL RESERVE BANK MI.:. .1. 1.50M-8-25 OF NEW YORK 3FFICE CORRESPONDENCE DATE SUBJECT: January 11, 1926 192_ Bark Debits and Velpqity_of Bank FROM Deposits Rough Method NEW YORK CITY READ AND- NaT Et), Dec. 1925 Nov. 1925 Dec. 1924 $ 30,313 $ 27,009 $ 27,327 1,166 1,174 1,051 109 106 11 Monthly Bank bits - In Millions Average daily bank debits - In millions Seasonal Index Average daily bank debits (Seasonal Removed) 1,070 1,108 109 964 121 125 116 62.8 116.5 65.0 120.6 100.4 Index of Bank debits Velocity of Bank Deposits (Seasonal Removed) Per cent of Normal (1919-1924 Average) 54.1. OUTSIDE NEW YORK CITY Dec. 1921 Nov. 1925 Dec.1924 $ 24,038 $ 21,314 $ Average daily bank debits - In millions Seasonal Index Average daily bank debits (Seasonal Removed) 926 108 856 108 874 Index of Bark Debits 109 Monthly Bank Debits - In m illions 944 ' 32.0 99.1 of Bank Dersits (Seasonal Removed) 1 Average) l' er cent of Normal Velocity 21,830 840 108 777' 111 104 33.3 103.1 29.7 92.0 141 CENTERS Nov. 1925 Dee. 1924, $ 54.351 $ 48,343 $ 49,157 Average daily bark debits-In millions 2,131 2,102 1,891 Bank Deposits (Seasonal Removed) Per cent of Normal (1919-1924 Average) 44.5 108.8 45.6 111.5 39.6 96.8 Dec. Monthly Bank Debits - In millions Velocity of 195 L IL RECEIVED 11V" VERPOR'S , L. It Pvl _ Irl'e)e 4 I FEDERAL RESERVE BANK OF NEW YORK MISC. 3. 1.50M.8.25 OFFICE CORRESPONDENCE To Governor Strong FROM DATE Jan. 19, 1926 SUBJECT: (Were Book Mr. Snyder Turning it over, it has occurred to me that, in skillful hands, an extremely colorful and moving libretto might be made out of Joseph It seems to me that the Hergesheimer's interesting story of "Java Bead." story of the Chinese princess who saved her life by marrying the American sailor might be woven into some highly picturesque and original music. I could see the first act with a Chinese wedding, a whole blaze of Oriental color and effective five-tone melodies, then perhaps a scene at sea and then the vivid contrast of the arrival and reception in old Salem. Of course it parallels a good deal the story of "Madama Butterfly," but I do not think that this would needfully music was extremely well done, and, for that matter, the book, too, it would suffer very sadly by comparison and contrast. hurt it, though unless the wielq d like to t d act -mo-re techaiaItrMThd then-Rlenty of--- time, i t mysellt: A lifetfme's fantasy'. 192_ 4. 1-2004-7-24 FEDERAL RESERVE BANK OF New YORK OFFICE CORRESPONDENCE __Governor_Strang FROM DATE SUBJECT: Jan. 224 192.fL Opera Book Mr. Snyder I have made a few inquiries just on my own account, and have collected the following suggestions: maid, etc. "Lorna Doone," an attractive story (I believe) of robbers Once an extremely popular novel. and a stolen "The Garden of Allah," which would provide lots of desert color. "Venetian Glass Nephew," by Eleanor with lots of color. Wiley, a mediaeval story, "Green Mansions," by W. H. Hudson; a story of the discovery marvelous voice in the wilds of South America, and lots of things. likewise of a Q11 of these seem very promising, though I oannot speak of them at first Perhaps for that reason I still think that "Java Head" offers the largest possibilities for lovely music and scenic effects. And it is much the same in theme as perhaps the most popular light Opera of the last generation. hand. MiSC 4 1-20404-7-24 FEDERAL RESERVE BANK OF NEW YORK ..EFICE CORRESPONDENCE Governor Strong FRom_ DATE January 25, 1926 19Z__ SUBJECT: Snyder As you will see by thE attached, outside debits, which we find such a good index of trade, are still running well ahead of last year, although last year was high. The extreme high point of the first week was accounted for in part by the general bftlf holiday following Christmas. This high level of business has now continued for over fifte.en months. lum.3.1.5m4,25 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To Governor Strong FROM Mr. Snyder DATE March 4, 1926 SUBJECT There seems an interesting situation in the iron and steel'trade. In the face of a great boom in building and notor car construction and pretty fair railroad and general buying, the industry has not been as prosAnd latterly the price perous in the last year as, for example, in 1923. of scrap steel, which is a very sensitive index of conditions, has shown a It rose very little( even when the coal strike put up declining tendency. the price of coke, and has now been sagging for eight or ten weeks. You know there is a saying in the trade that three weeks of steady This decline in the scrap steel price forecasts a downturn in production. hapoened very strikingly in the first quarters of each of the last three years. These things, and the steady sagging in our index of 20 basic commodities, since about last August, suggest that we might see a sharp downturn in the high rate of production and trade which has been generally charBut outside of these things there are almost no specific signs acteristic. The volume of trade, as indicated by outside bank debits, still yet. of http://fraser.stlouisfed.org/ continues high. it Federal Reserve Bank of St. Louis 192 a MISC. 4. I-ZOOM-7-24 FEDERAL RESERVE BANK OF NEW YORK _.IFFICE CORRESPONDENCE T. Governor Strong FRom Ir. Snyder DATE_ SUBJECT: March 10 1928192_ Non-Agricultural Prices I have been very ruch interested to follow the course of a new index of Non-A rioultural commodities at wholesale, prepared by the Agricultural Department. Chart attached herewith. This new index is simply the Bureau of Labor 404 commodities minus only 30 current crop prices; i.e., it does not exclude the immediate derivatives of farm products, as wheat flour, eto., but simply the primary farm crops. It is very striking what a different picture this presents in the And if farm product last five years--for over two yeers now almost stationary. derivatives were excluded I should imagine that its tendency would be still firmer In other words, farm products seem in recent years the wide variables; and because they have been given undue or overweight, I feel that they really ---And that our nwn averages of the General Price Level distort the picture. are much more representative. Misc. 3. 1-50M-8-25 FEDERAL RESERVE BANK OF New YORK OFFICE CORRESPONDENCE To ir. Harrison_ FROM itra_Snyder DATE__MarchalD,a1Q28 SUBJECT. _iota _on_the Ussof_Purchasing Power Parities (Re. mary onaBelgium) paragraph 5, Sum- In times of great disturbance of price levels it may and does happen that Wholesale prices of commodities, for example, may all an accurate measure of the general internal purchasing power of Such, for example, is very clearly the case at the present time in frequently not be at money. the United States. The depreciation of the dollar, or its average purchasing power over goods, lands and services, compared with 191$, appears to be at least 20 per cent greater than as indicated by our familiar indexes of commodity prices at wholesale. Wages, for example, which are so important a part of total payments in exchange, have risen nearly twice as much as commodities at wholesale. An attempt, therefore, to measure the supposed internal and external value of the Belgian franc by comparison of rate of exchange with wholesale prices has little value. In fact, anyone who has had much experience with the attempt to compute the p. p. p. of a currency has learned to his cost how For another thing, uncertain are the results for any purposes of prediction. Belgium's exports are largely of raw materials and her exports largely finished goods. This further complicates the problem. 19; Misc. 3. 1.50M8.25 FSDERAL RESERVE BANK OF NEW YORK - OFFICE CORRESPONDENCE Governor Strong DATE March 18, 1926 SUBJECT Fnom Mr. Snyder I have been a good deal impressed with the figures I gave in this week's Summary, as to the increase in bank credit in the last four years; and it seems to me that this increase has potencies which should be considered. As you have seen from the chart I sent you, the chief factor in the decline of commodity prices in the last six months or so has been farm In the face of prices, subject more or less to international influences. this there has been a distinct tendency to rising wages, and this, coupled with the great wave of speculation and financial activity of every sort, backed by the steady increase in bank credit, might, it seems to me, readily breed an unhealthy situation. We have had a. sharp drop in brokers' loans; but it is rare that a bull market breaks in the face of continued easy money--1917 may have been due to war conditions. The building boom continues at an accelerated pace--the total of contracts let for the first two months of the year are up over 30 per cent of last year. And motor car sales are enormous. Inevitably the farther the building and motor boom goes the sharper will be the reaction. Contrary to what one might expect, we have gained a net of about 65 millions of gold since the first of the year, that is, in about ten weeks. This does not make for contraction. to hake a look some ways ahead; I am wondering if some recession in activityo.might not be salutary, and make for a more healthy course of trade in the latter part of the year. 92__ MI. 4. FEDERAL RESERVE BANK OF NEW YORK 11-4(4.04-1-24 )FFICE CORRESPONDENCE FROM DATE_MA 192_ The State _of_Tracts, -and Interior Governor Strong_ SUBJECT Mr. Snyder Demands The volume of trade, as indicated by bank debits outside New York City, appears suill to be running high, and continuously above last year, although last year was, in the first quarter, very much higher than the two preceding years. But since January 1 it seems clear that the volume of production and trade has been below the very high peak reached in October and December; and this impression i.e borne out by the weekly deekits. Business el:pears again to have mane a peak about the same time as the stock market. It is interesting that re should have lost approximately 300 millions in security loans, withdrawn to the interior, with a very alight gein in bank balancee in INew York in the laet throe weeks. Poesibly it iP mother instance of the general tendency of commercial loans to increese an bueinees recedae from a high peak. But the extent of the recezeion to date eppeare to have been very email. FEDERAL RESERVE BANK or NEW YORK MI, 4. 1-11104-1,4 .DFFICE CORRESPONDENCE .1 .4 FROM Gov ernorjgt rang_ DATE March 30. 1926 SUBJECT: Mr. Snyder \ George Harrison tells me that a George 11,.: Shibley, of Washington\, of mine in\his testimony at made several references to some that I don't know the man, by correspondence Just like to say Washington. or otherwise, but I have always underetood he hadn't much in hie bean. article 192_ M454. 4. 1-W04,24 FEDERAL RESERVE BANK OF NEW YORK \-aFFICE 'CORRESPONDENCE Governor Strong FROM M DATE MarD11_30, 1926 SUBJECT: . Snyder The chart on the attached seems to me to give a very interesting and quite definite picture of the Florida boom and how sudden it really was, at least for heavy public participation. 192_ FEDERAL RESERVE BANK MISC. 4. 1-2004-7-Z4 OF NEW YORK iFFICE CORRESPONDENCE 4 FROM Governor Strong DATE April 5, 1926 92- SUBJECT: Mr. Snyder Our index of bank debits outside of New York continues to run high, but the gain over laet year has been distinctly lower in the last four or five In the last two weeks there seems to be a perceptible shading off. weeks, If this should mean some decline in business and the end of the boom, it would again happen that the top tide of business snd of the stock market would have been reached in nearly the st,.me month (Deeember or January). FEDERAL RESERVE BANK MISC. 4.1.100M-9-22 OF NEW YORK OFFICE CORRESPONDENCE ro "-ROM Governor Strong j ,fir. DATE SUBJECT: April 15, March adverseinernhandiRe balance. SnTder It is interesting that the adverse merchandise balance shown for March is the third consecutive month now, in a period normally showing and that to find the next previous instance of a an export balance: consecutive adverse balance in these three months one must go back for And back of that to 1873. 33 years, namely to 1893. It looks a little as if the tide were turning. del%) If ;49 7-6r-fitritI re rot( ar-kw107 co"),4(A.,, /00 _190 Rut FEDERAL RESERVE BANK MISC. 4.1.100/4.9-22 OF NEW YORK OFFICE CORRESPONDENCE co FROM Governor Strong DATE Alturik :15, SUBJECT: Mr. Snyder This was the quotation which Professor Cannon dug out of General Walker' s "Poll ti cal economy," wri tten nearly a half a century ago: "Men who are c.-.4ndid and even liberal in politics alio re- ligion become furiously or stupidly fanatical as soon as their views on money are controverted. When Sir Later Scott made a surly critic say to the author of certain Letters on the Currency, 'In your ill-advised tract you have ehown yourself as irritable as Balaam and as obstinate as his ass,' he evidently intended to characterize the whole race of writers on this theme." ..._ 192' FEDERAL RESERVE BANK OF NEW YORK MISC. 4. I-200M-I-24 OFFICE CORRESPONDENCE Governor Strong om Ir. Snyder DATE SUBJECT. aPril 20 1926 new compilation by the A.T. dc T.00. You Tney be interested to know that the iinerican Tel. & Tel. Co. has been making up a new Tafiex of the trade of the country-, a weighted averge of nearly 150 separately computed indexes; and that especialy in its time relations, th major turns; this new index compares quite closely with our own composite of the Volume of Trbde, - and rather better than with their own index of "general business," which they have been using for a number of years. This ,:ew index is £. weighted composite of 15 regional indexes, for different sections of the country, each made up of 8 to 12 separately computed series, on the basis of which they make up their budgets of projected expenditures. MSC. 3. 140,1421 FEDERAL RESERVE BANK OF NEW YORK 'OFFICE CORRESPONDENCE To_ iOM Governor Strong DATE__ Su ELI ECT April The State of Trade._ Mr. Snyder Though there is some decline from the very high levels reached from November to February, outside bank debits still continue well above last year, both for the last three weeks and five weeks. Very little evidence yet of any let-up in industrial activity. Actual retail deliveries of passenger care (outside of Ford cars), for the first quarter, were nearly one-third higher this year than lest, and stocke on hand April 1, while 50 per cent above last year, were still much below the high point of April 1, 1g24. sides have been much beyond most expectations. In a word, motor The declines in the stock market so far seem to have brought very little liquidation of total loan. The decline from the high point of the stock market, about February 10, in loans secured by stocks and bonds in the weekly reporting member banks, all districts, has so far amounted to only about 150 million dollars, or less than 5 per cent of the total. _192_ misc.4.1400.-1,4 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE ,_Governor Strong OM Mr. Snyder DATE SUBJECT: April 25, Seawall_ variation.a in thi bank a gold hol din A. Ile have tried a number of ways to attempt an answer to your question as to whether there is a seasonal movement.in thi& bank's sold holdings, masked by open market operations. We really have only the last four yeExs for a real test, and in the first two of these it looks as if there was such a seasonal and that in the following two years this had been masked by other factors. But this is very far from being proof. 19P THIRTY THREE LIBERTY STREET NEW YORK July 16, 1926 My dear Governor Strong: The question you raise in your note of June 29, as to the relation of turnover of bank deposits to activity in the securities There is, I market, is one that has intrigued us a good deal. think, no doubt that the latter is a strong influence, but apparently not a dominant one. About the best index of the securities market that we can The get is the number of shares traded in on the Stock Exchange. reported turnover of bonds on the Stock Exchange does not seem to be, so far as we can learn, a very good index of that side of the market. As you will see by the enclosed chart, even the variations in rate of turnover of deposits in New York City alone correlate only in a broad way with volume of shares traded in, and there are frequently very wide differences. The index of velocity, or rate of turnover, which we use for comparison with our Volume of Trade Index, is a weighted composite of It is very interesting that 141 cities, including New York City. neither the variations for New York City nor for the outside, alone, gives the striking congruence with the Volume of Trade Index that we find for the composite. There is no question, I think, that, as you suggest, there is a close general correspondence between activity in the securities market and deposit activity; but so, also, and still more closely, is the association between business activity and the share market. In other words, as you know, we find that, in its time movements at least, the stock market and even stock market prices, are a pretty fair index of the business of the country as a whole. Of course the swings of the stock market are much more violent than the fluctuations of trade, but, in the last ten years at least, their time relations seem to correspond pretty closely. We have also, as you may have noted, been working out a new price index of twelve early-moving commodities, which in its ups and Hall. Benjamin Strong--2 downs corresponds likewise very closely with our Volume of Trade. In the last seven years the turns of the two have been rarely more than a month or two apart. The advantage of this index is that we can have it weekly, and it is, I believe, a very sensitive barometer. The down-turn of this index, as you may have observed, which began late in December, seemed to end about the first of May, and since that period the index has had a 4 or 5 per cent slow rise; the last five weeks about stationary. cm This index gets away from prices about as far as any commodity price index can; and it is interesting to observe how closely its movements have corresponded with the stock market prices. Its recent course, like that of the stock market, does not suggest any serious down-turn in trade as yet. Neither does our Index of Outside Debits to date. Nevertheless, I should not be surprised if last mid-winter marked the peak of trade activity for the present phase of the "cycle"-if any suchuanimile there now be. But the degree of recession is slight and the country seems The Florida moving along in a strong current of prosperity and optimism. boom has, of course, gone very flat, and this last week has seen the failure of a chain of sixty-four banks, principally in Georgia; and probably there will be others. There has-been deep interest in your movements in and conjectured mission to Europe; and I should imagine that the English settlement of the French debt would somewhat predispose our people towards rather more friendly cooperation with Earope, and especially countries like France, Belgium and Italy, with their currency troubles, than has recently been manifested. At any rate, I am quite sure that this would be true of the more enlighted and informed. Otherwise, scarcely a ripple of large interest. We have, of course, been watching the steady sag of francs and lires, but with little greater profit than instruction in how slender a hold has economic teaching upon the political or popular mind, and how little one country or generation seems to be able to learn from another. I should add that the figures for total building contracts awarded in thirty-seven states show, to July 1, no letup in the steady average of gain this year over last year, and of course, therefore, over Hon. Benjamin Strong-5 And the motor car industry flourishes in a fashion any previous year. But you can buy thousands of secondhand no sane man could predict. Fords, cars that will propel themselves, for $25 and up. We hope you are having as enjoyable a time as the romantic accounts in the newspapers would suggest. Sincerely yo Hon. Benjamin Strong, Hotel du Cap d'Antibee, Antibes, France. I -2001-1-a4 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To r. FROM Governor Strong Mr. Snyder DATE September 25. 1926192_ SUBJECT: Mr. Brand, of London, is coming in for lunch 40, on Tuesday, at 12:45, and I dare say would like to pay his respects either before or after, unless perchance you wevid be able to lunch. Misc. 3. 1.5031.8-25 FEDERAL RESERVE BANK OF NEW YORK FFICE CORRESPONDENCE To DATE SUBJECT Covernor_Strong September-27t-1926-192__ _Exporting Percentag 88 Snyder FROM domestic exports Below are the percentages of total indicated (yearly averages): for the periods 9,,orl: 1 Year or rea:sly Average Crude Crude Mate- Foodrials stuffs Manufac- Semi- Finished MMis-\ Crude Crude tured Manu- Manufac- Food- i fac- tures stuffs tures Semi- FinManu- ished tured fac- ManuFood- three facstuffs tures Manul- cel- \Mate- Food, fac- stuffs lane- rtals 0U8 , CseellaneOU8 1906-10 31.26 8.90 18.12 14.23 27.07 .42 31.58 10.98 11.80 17.82 24.68 .76 1911-15 29.78 8.83 14.32 15.41 30.70 .96 34.00 12.80 12.56 17.37 22.36 .91 1923 29.39 6.29 14.26 13.78 36.12 .16 36.55 9.58 13.98 19.00 20.34 .55 1924 29.49 8.73 12.75 13.57 35.32 .14 34.24 11.77 14.45 18.17 20.76 .61 1925 29.4 6.6 11.9 13.7 38.2 .2 40.7 11.8 10.3 17.9 18.8 .6 25.7 1925 (Fiscal) 7.3 12.2 15.2 39.6 40.0 11.5 11.7 18.2 18.6 1926 22.6 (Fiscal) 5.5 10.8 14.7 46.4 42.4 11.7 9.2 18.2 18.5 The proportion of manufactured products steadily for the last forty or fifty reached the highest point ever, save for 1916. has, of course, been rising years, but this last fiscal year it I shall have some figures on North American to Europe tomorrow. exports of foodstuffs Misc. 3. 1.50M-8.25 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To Mr. Case Deee_eitovemher lg, SUBJECT: 192_8 fieleri cat a Prnfit iathOi *Fir FROM _Mr. Snyder Shepard Morgan has written a letter to Harper's Magazine, suggesting to them that a very timely and helpful article could be written on the question: Did America Profit Greatly by the War? What he had in mind were the curves of long-time growth of production in steel and coal and copper and cotton consumption, and the like, which we have o puted in this department, the upshot of which was to show that the actual expansion of our total product in and after the War was not greater than in several peace-time periods in the past fifty years, and that actually in some lines the rate of growth had been considerably diminished. Of course our exports were very considerably stimulated, even when the effect of a great increase in prices is eliminated; while our imports were considerably curtailed with the result of giving us (even relatively) very heavy merchandise trade balances leading to very heavy imports of gold. While all this was, of course, a very considerable stimolus, the effective increase in actual production of goods--and that is, of course, the real wealth of the country--has been much less than popular imagination, and especially European imagination, has painted. Morgan's sugeestion to Harper's was that they aek me to write such an article, and they telephoned down this morning to know about it. Unless it should seem a worth while contribution at the present time, to counteract prevailieg erroneous impressions by means of a very careful and detailed statement of the facts, I have no particular interest in doing the article. But I thought I should bring the matter to your attention in CaB6 you felt it is something which ought to be done. k.",62?-44/ (kier.,:( Misc. 3. 1.50M.8.25 FEDERAL RESERVE SANK OF NEW YORK friCE CORRESPONDENCE Governor Strong & Mr. Jay FROM DATLDecember SUBJECT: 192A State of Trade Mr. Snyder As an evidence of the trend of trade, bank debits in 140 leading cities outside New York have now fallen below the corresponding weeks of last year for three consecutive weeke. This is the first time this has happened since the midsummer of 1924, and of course the normal or usual relationship is that, Kith no particular change in the general price level, bank debits should show an increase of from 3 to 4 per cent each year. Taken with a decided softening of a very sensitive price index in the last six weeks, this seems distinct indication of some lessening in the volume of trade. But there does not now seem much to suggest that any very drastic recession is in prospect. 192_