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CABLE ADDRESS"WHITECASE WHITE S, CASE 14 WALL STREET a November 10,1914. NEW YORK GBC- -KVC NOV 10 1914 Mr. Benjamin Strong. Sr.. 62 Cedar street, New York City. Dear Ben: I have your letter of November 10th. We haven't done anything about looking up the question of the legal method of calculating discounts in this state, because it was my unde?iiraEding-that-U-Were going to send over a memorandum which would describe just what you wanted, and the reason of the difficulty experienced. I said at the time, you will remeTaber, that I didn't know anything about it and wanted to be a little clearer as to the precise point. Will you have somebody do this and we will be glad to do what we can? Very truly yours, cT73 CABLE ADDRESS FARMTRUST. If4Winia.a-oxwy /yol4« ,(27/)? /of /*/(w8-21-74:&40/,Wee,4 EDWIN S. MARSTON,PREsioeN7 SAMUEL SLOAN,VicE PRES, AUGUSTUS V. HEELY, VIcePwss,& WILLIAM B. CARDOZO,Vrcc P,S7. BRANCH OFFICES NEW YORK 475 FIFTH AVENUE. xff-4,10/Z CORNELIUS R. AGNEW, Vtcm. PRES, CASE, Vtcm PwEs,. J. HE LON DON 15 COCK SPU R STREET, S.W. 26 OLD BROAD STREET, E.G. PAR IS HORACE F. HOWLAND. Ass, Sc'.e ROBERT E. BOYD, Ass, Scey. 4-1 BOULEVARD HAUSS M AN N. BE 56 UNTER DEN LINDE N,N.W., 7 WILLIAM A. DUNCAN, As Sec, EDWIN GIBBS, ASS, Srev. FREDERICK GELLER, ArroRtm-e. May 18, 1915. Hon Banjamin Strong, Jr., Federal Reserve Bank of New York, 62 Cedar Street, New York City. 44,1, -a Dear M. Strong:I am taking the liberty of handing you with this a copy of an address which I delivered before the New Jersey Bankers, Association L45,480 in f i lc May 3, 1912, on the general subject "The Desirability of con r' as a Bank Investment - An Analysis". As this was prepared a long time :Mta, before the inception of the Federal Reserve Bank Act, I have just a little feeling of pride in that some of the ideas therein expressed were sound enough to be incorporated in the Act itself. you will accord this a place in your library. Very truly yours, Enclosure. I should be very glad if CABLE ADDRESS: FARNITRUST. t_WZX-ofx S,4-ed/X11/ weg,2174:eta, /54ge EDWIN S. MARSTON,PPEstoENT BRANCH OFFICES NEW YORK SAMUEL SLOAN,Vice PRE., AUGUSTUS V. H EELY, VICE PRES, & Sm,y. 475 FIFTH AVENUE. LONDON 15 COCKSPUR STREET, SW. 26 OLD BROAD STREET, E.G. PARIS ,JZ WILLIAM B. CARDOZO, VICE PRES, effrj(*0 CORNELIUS R. AGN EW, VICE PRES.T. J. HERBERT CASE. Vice Pwes, HORACE F. HOWLAND, Ass-rSsc, ROBERT E. BOY 0, ASS, Src,.. WILLIAM A. DUNCAN, Ass, Sec, 4-1 BOULEVARD HAUSSMANN. BERLIN 56 UNTER OEN LINDEN,N.W.,7 EDWIN GIBBS, Ass, Svc', FREDERICK GELLER, ATTORNEY. 1l5. May .4% 19,4 Jr., Hon. Benjamin Strong, Federal Reserve Bank of New York, 62 Cedar Street, New York City. Dear mr. /or .Ar er 6 A & w 494, strong:I was very glad of the opportunity of listening to your very able address before the New Jersey Bankers' Association at the opening session last Friday. The stand taken by the Federal Reserve Board and emphasized by you, that all oomaeroial paper to be eligible for rediscount must be predicated upon quick assets having a proper ratio to current debt and the proceeds thereof used for commercial purposes, is, I think, absolutely unassailable; moreover, I believe that this ruling will do much toward standardizing commercial paper and tend to place it on a much higher plane than it has heretofore had. Very cordially yours, FEDERAL RESERVE BANK OF NEW YORK February 10, 1919. - Benj. Strong, Esq., The Cluneden, Lake George, N. Y. 1.14,1 3 191) rD7'11A1., RESERVE PINK Dear Yr. Strong: I am in receipt of your letter of the 6th instant relating to the subject of having commercial paper payable at the office of member banks rather than at the office of the commercial paper dealers through Whom the notes are sold. This matter was taken up by us, at the suggestion of several of the note brokers; and in order that you may have a complete picture of just what has taken place, I am enclosing herewith a copy of a communication sent to the fifteen commercial paper dealers who were represented t the informal conference held here on January 27th. When the regulation of the New York Clearing House became effective, on August 1st last, (a copy of which is hereto attached) we adopted the practice of charging one day's extra interest on all commercial paper payable at brokers' offices, which could not be collected or cleared through the exchanges at the clearing house on the day of maturity and, consequently, created one day's "float." When this clearing house regulation became effective I under- stand that many of the clearing house banks insisted on an allowance, from the note brokers, of an extra day's time upon this type of paper, Which has, of course, tended to reduce greatly the volume of such paper offered. During the past month a number of note brokers have called here to ask if they could not arrange to take up such paper on the day of maturity by means of a Federal Reserve Bank check, Which would do away with this extra charge of one day's interest and put all paper sold in the open market on an equal footing, FEDERAL RESERVE BANK OF NEW YORK Benj. Strong, Esq. 2- 2/10/19 Upon discussing the subjectwith the dealers it developed that they considered the matter of having the paper made payable at their offices more or less of a nuisance anyway, and that they would be glad to be relieved of the details connected with the payment of the notes at maturity; further, that they would work to bring about a change that would do away with this practice. The matter was, of course, discussed among the officers of the bank, and the unanimous opinion was expressed that we should follow the course sug gested. Er. Ardrey, of the National Bank of Commerce, who was informally discussing clearing house matters with me a few weeks, ago, alluded to the clearing house arrangement as to the clearance of notes and bankers' acceptances, and said that the only possible criticism he had to make was purely from a selfish standpoint; that, While this plan enabled his bank to get the payment one day earlier on all paper which they held in portfolio, they, in turn, had to pay, one day earlier, all paper payable at their bank, and that the latter represented a larger amount than the former. I received the impression from him that on the whole he thought the plan a very good one, eliminating, as it does, a large force of messengers heretofore used for presenting notes by hand. In view of the fact that the dealers have unanimously agreed to bring about a change in this small volume of customers' notes made payable at the brokers' offices, do you still consider it desirable to talk with Ir. Alexander about it? I shall await an expression of your views on Friday. Very truly yours, pvti, 7/4.;> foreo.z,) f JHC/HAB Encs. (2) 1114--/f0,--'ee i,5ezz-071 - Deputy Governor. -eee This article is protected by copyright and has been removed. The citation for the original is: “J. Herbert Case is Dead at 99; Headed Federal Reserve Here.” The New York Times (New York, NY), August 5, 1972. ktitetA.:1, imAlt \1174-14 etuA 114121X- -"Alt e i 4° Acts.ck scc.tra_Lt ovt/k_ 61014111111 i tre- PL/Ko Pr a Aet, Ai l4 4 viar. e" tecivt-tAAAdt-t.. %jai sfror7dts, 04-11-1, tior 114v1IV t.;4 0,4 kW- /taE, 74144k, I:- SYMBOL w EsTE kra Z blue WESTERN UNION Nab TEL NL these threemnul Akita, the check rramber at Athis 'sudsy me.age. Othei...e Its character is indicated by the ,si1iD01 appearing atter the check. NEWCOMB CARLTON. PRESIDENT 11.M. jir 7er.' UNIN CLASS OF SERVICE AM ORGE W. E. ATICIN: SYMBO Day Message Day Letter Blue Night Message Nite Night Letter N ie sane at these three symbol appears after the check number a wordsfthis is aday message. Other wise its character is indicated by th symbol appearing after the check FIR ST VICEPRESIDENT ECEIVED AT 20-22 NORTH CENTRAL AVENUE_ PHOENIX; ARIZONA 1920 FEB io PM 5 24 A2538 63 0, NEWYORK NY 628P 20 1 BENJAMIN STRONG IPHOENIX NAT-Mat BANK PHOENIX AR IZ 1 DISLIKE TO BOTHER YOU ABOUT PERSONAL FACTOR SO, STRONG SUBMIT FOR SUGGESTIONS AS TO PROCEDURE STOP LETTER VAN. DER REST BRUSSELS . REFERRING YOUR - V I SIT AND PERSONAL KNOWLEDGE DESIRES YOUR INTERVENTION WITH BOARD BEHALF , FAVOR ABLE CONSIDERATION ONE YEAR EXTENSION THEIR FIFTY MILLION CONSORTIUM ACCEPTANCE OBL I GAT ION STOP SUGGESTS YOUR TELEGRAPHING THEIR. AMBASSADOR WASHINGTON AND REQUESTS ABSOLUTELY CONFIDENTIAL TREATMENT UNTIL FURTHER NOTICE IALSO STOP WIRE Mt CASE. NICE ESTE St Mb ge Blue Nits . Message sidaysse bol appearing at bo etcat y tho Check. NEWCOMB CARLTON. PRES/DENT CLASS OF SERVICE SYMB0 Day Message AM TEL .ght Lettet, ,...5,0d.kts:hecttr,e1 UN 10 Day Letter Blue Night Message Nito NL Night Letter It alone ut theop throe symbo oppears after the check (number wordsithis is a day message. 0 thei wise its character is indicated by th GEORGE W. E. ATKINS. FIRST VICE.PRESIDENT symbol appearing after the shedl RECEIVED AT 20-22 NORTH CENTRAL AVENUE: PHOENIX, ARIZONA NL 1/8C 1920 V PLAINSFIELD Nj FED 19 STRONG '7,81 FE8 .. G1 4 /4 PHOENIX NAIL BANK PHOENIX ARIZ E ATTENDED TO ALL MATTERS REFERRED TO IN YOUR RECENT LETTER NDisSTAND FROm DAY THAT YOU HAVE ACCEPTED RESERVATIONS ON US NILE SAILING APRIL TENTH RATHER THAN TO SAIL MARCH THIRTIETH ON KOREA ARU STU WILL FORWARD INTRODUCTIONS AND OTHER PAPERS IN A DAY OR TWO STOP DIRECTORS RAVE APPOINTED COMMITTEE ON NEW DEPUTIES STOP I THE FOLLOWING IN ORDER NAMED ARE THE MOST PROMISING SUGGESTIONS ARTHUF, M HARRIS RAY MORRIS J Y G WALDER EDWIN G MERRILL STOP CROSS - NATIONAL CITY dessage it Letter UNFII AM WESTE Sloe Nits TEL N t. Ane Of the. [Web .yitibul, dears utter the check numbei !urds)tbis Ise day awissage. OtherWise its character is Indicated by the [ Symbol appearing after the check. NEWCOMB CARLTON, PHE.,06.NT GEORGE W. E. ATKIN,. FIRST VICE-P, CLASS OF SERVICE: SYMBO! Day Message Day Letter Blue Night Message Nite Night Letter NL it 11.6 at thtae aymbol apilEtais after the check number o wordstthis is aday message. Other these wise its character is indicated by th symbol appearing utter the cheat, RECEIVED AT 20-22 NORTH CENTRAL AVENUE. PHOENIX, ARIZONA SHEET 2/94 NK FORMERLY DEPUT KANSASCITY BANK PROFESSOR KEMMERER OF NCETON AND KENZEL ALSO SUGGESTED STOP -FARNUM NOT HIGHLY SPOKEN Y FEDERAL RESERVE BOSTON THEY ARE ALSO IN MARKET TO REPLACE SPENCER WHO GOES WITH FIRST NATIONAL BOSTON APRIL FIRST STOP mAY I HAVE YOUR FRANK VIEWS ON THE FOREGOING ALSO YOUR'OPIN1ON IC DESIRABILITY OF APPOINTING TWO OF THESE MEN IN ORDER THAT E MAY FULLY ROUND .OUT OUR 04ANIZATION,AT THE TOP STOP EVERYTHING PROGRESSING WELL AT THE BANK HOPE YOU ARE ENJOYING CAMPING TRIP _ JAY JOINS ME IN SENDING BEST REGARDS CASE. 111110111 FEDERAL RESERVE BANK OF NEW YORK February 21, 1920. Dear Mr. Strong: I was very glad indeed to receive your recent letter and to know that you I judge from this are about to embark on horseback for e six weeks' camping trip. that you are feeling physically fit and I certainly hope that the trip will do you I shall never forget a good and that you may get a good deal of fun out of it. It is still a very month that I spent in the Colorado Rockies a few years ago. pleasant thing to look beck upon. As this is my first letter to you since you went away you will see that I have taken you at your word and have avoided troubling you so far as possible with matters that relate to the operations of the bank. As I indicated in my night wire to you Thursday, everything thus far is running along smoothly here at the bank although, as contrasted with the war period, there are many widely divergbnt views as to what the policy of the Federal Reserve System should be. A week or two ago our directors appointed a sub-committee on new officers The committee and I wired you Thursday night the names of several possibilities. feels that, just as soon as practicable, the organization should be further strengthWe both felt, however, that In this view Mr. Jay and I concur. ened at the top. we would like to have your reaction on the names that were under discussion. I was obliged to send you a further night letter yesterday reporting the substance of a communication just received from Mr. Van de Rest, governor of the National Bank of Belgium with regard to the maturity of the $50,000,000 Belgian acceptance credit in June, in which he asked if you would be good enough to negotiate The tone of the with the Federal Reserve Board the matter of a one year renewal. letter rather implies that it would be exceedingly embarrassing to Belgium to retire I assume that I shall hear from you on this in due these obligations at maturity. course. The Treasury The certificate of indebtedness program is in good shape. has at present only the followhas retired all outstanding loan certificates and ing four issues of tax certificates outstanding, March 15, $847,627,000; June 15, $726,130,000; September 15, $657,469,000; December 15, $703,026,000, making a total of $2,936,252,000. Mr. Leffingwell contemplates that by the end of the year the amount of Mr. Leffingrell these certificates will be reduced to at least $2,250,000,000. states the Treasury will retire on March 15, on receipt of taxes, the $847,000,000 of certificates then due and will also pay off the $125,000,000 War Finance CorA most bncouroging program.: poration bonds due April 1. Mr. Leffingwell thinks that between now and June 15 it will be necessary for him to float only $500,000,000 of new certificates, all to mature on March 15, $300,000,000 to be dated March 15; $100,000,000 dated April 1921, as follows: 15 and $100,000,000 dated May 15. 1 made inquiry a day or two ago of twelve of our largest institutions as EOERAL RESERVE BANK OF NEW YORK 2. 2/21/20. to the secondary distribution of all outstanding certificates purchased by them. I found that of the total subscription, aggregating $816,000,000 to the four issues, they now have on hand but $214,000,000, or practically 26%, the balance of 74% having been distributed to their customers. There has been, however, during the past week, some $50,000,000 of certificates overhanging the market which the owners would like to sell on some basis, even though this would involve selling them under par. My own view was that as the Treasury was practically out of the market it would facilitate the distribution to the ultimate consumer if they were now freely traded in, even though they were sold at a slight discount. The Treasury Department, however, has frowned upon this and think they see in it some scheme to compel them to pay 5% (a perfectly proper rate for the $300,000,000 which they expect to borrow on March 15.) Mr. Leffingwell continues to hold the fort against all comers with respect to his general view on the rate question. Ithink it likely that our present rate of 4 3/4% on certificates will shortly be fixed at a higher point. The pressure upon our member banks and upon us for credit continues unabated. It appears to be greatest among the strictly commercial banks and many of them have been obliged to borrow here sums largely in excess of their capital and surplus and not infrequently sums considerably larger than the amount they contribute to the common fund in the way of reserve deposits. I am convinced that the group of banks up-town conduct their business very unscientifically, sending out solicitors during a period of easy money to invite all the new borrowing accounts they can get and then fail to make any appropriate record as to the amount of money they are obligated to loan, so that at times they find themselves quite surprised and embarrassed by the extent of their commitments. I am discussing this phase of the subject with the officers of the up-town banks and in addition to obtaining their closer cooperation am requiring in many instances additional collateral from them. Our present reserve is but 37%, or, after setting aside 40% on notes, our reserve on deposits is about 33%. Our information is that during the past six weeks there has been a curtailment of our export business to the extent of 20% to 25% and there is a good bit of evidence that the rise in discount rates is beginning to make itself felt, and, in my opinion, within the next 60 or 90 days we shall see the credit situation in a better position and under more effective control. loans. There has been a real liquidation in the total aggregate of stock exchange The reduction is now somewhat more than 20% from the extreme high point. The exchange of definitive for the temporary Liberty Loan bonds is to be I anticipate we shall have a good bit of activity made beginning with March 15. in that department. Governor Passmore will retire as governor of the Philadelphia bank on March 1 to become president of the Bank of North America, Philadelphia. Mr. Jay has no doubt informed you that we have selected as counsel, Mr. Edward H. Hart, who has been for some time associated with the Treasury Department. He comes with us on March 1 and I hope will prove to be the right person. On receipt of your letter from Mr. Hartley Withers of the "London Economist" AQERAL RESERVE BANK OF NEW YORK 3_ 2/21/20. I took up with Reuters the matter of transmitting our weekly statement to that paper in the form suggested and they have agreed to the program mentioned. This gives you a bit of the current gossip about the office. With respect to your trip through the Orient' am taking care of the details set forth in your letter of February 1. Mr. Hamaoka has resigned as Superintendent of the New York Agency of the Bank of Japan to return to Tokio and act as Superintendent of all Agencies of the Bank, and he has been succeeded by Mr. N. Nagaike who was recently introduced to us by Mr. Hamaoka. The latter is at present away from New York and I am therefore arranging with Mr. Nagaike to notify the Bank of Japan of your visit and to send you a letter to them. I will also notify the Bank of Japan direct. Regarding our relations with de Javasche Bank, I have prepared a summary of our agreement with them which was negotiated with Mr. Van der Berg with whom, T believe, you are acquainted. I will also send you a brief resume of our operations under this agreement. I have written to Mr. Bedford of the St,andard Oil Company, who is just now at Pinehurst, and to the three American banks with branches in the Orient (Asia Banking Corporation, International Banking Corporation and Park Union Foreign Banking Corporation) with whom we are transacting the silver business, requesting letters of introduction for you, and I will assemble them and all other papers desired, forwarding them to you presently in one packet, sending at the same time several conies of our last Annual Report and that of the Federal Reserve Board. As you are aware, we have been in touch with Day of the San Francisco bank regarding passage on the Jap line. Through the good offices of Mr. Nagaike we were able to reserve a de luxe cabin on the "Korea Maru" which was scheduled to sail March 30. However Mr. Day wired us on February 11 that it would not be convenient for you to sail as early as March 30 and that you would use the reservation previously made for you on the steamship "Nile", sailing April 10. Personally, I am sorry that you could not use the reservation on the "Korea Marti", as I am inclined to think you would have found it more comfortable. Mr. Nagaike told me yesterday that Mr. Vanderlip, Mr. Alexander and one or two other New York bankers were contemplating a trip to Japan, sailing from Seattle, the early part of April and that through some of his Japanese friends he was making the necessary hotel reservations in Japan. If I can ascertain any additional information with regard to the plans of these gentlemen, I will let you know. My only excuse for making this letter so long is that it is the first one I have penned you since you went away. I hope that your camping trip has proved to be a great success and that you will come out of it much refreshed and ready to enjoy your trip to the Far East. I am mighty glad to know that you have had Mr. Miles and your son Ben as I have been careful to see that their names were mentioned company on this jaunt. in all the letters of introduction which I have obtained. Very cordially yours, Benjamin Strong, Esq., Phoenix National Bank, Phoenix, Arizona. . POSTAL TELEGRAPH - COMMERCIAL CABLES CLAAENCE H. MAGNA,. RAL 5,cdrv-, TELEGRAM RECEIVED AT 20 BROAD STREET ALWAYS OPEN N YORK CITY .014tottC 1279. 1279 RECTOR DILLIVERY The Phstdi Telegraph Came Company(Incorparated)bansmits and delivers this message subject ta the terms and conditions printed on the back of this blank. at bg signal after the number of worda"N.L." (Night Letterirarn) ol 'Wile" (Night Telegram). This Is a fast Dag Telegram unless otheruds, (SIV16 S D 90, LE CT CNZ)9.54 H. A r') St) 'NASH I GON D 0 a.E3 2'4- '1920 ..1 - 0_,......- -------- _ ---,-- B EN JA:.1 I Il SCAIT,G..........c..:./... , %.., :1 e ...i. ;4 .-. 131i ----- -FED E R AL RESERVE BANK 14Y Ofite . -----'.---'` PLEASE REQUEST YOUR SON TC FORWARD COMA, PASSPORT APPLICATIONS HE 7:AS INFORMED 9F1. i. --- TTERS TC ACCOMPANY S REQJ I REL,ENT SEVERAL DAYS AGO IN THIS DIVISION CHARLES K '3EL S ACTING CHIEF DIVISION OF PASSPORT *-28436 POSTAL TELEGRAPH-COMMERCIAL CABLES gur-_,a PACIFIC Nc"4"Trarg AS A 40....avni.,...:NawroumoLAAA Wm* ., tt OPERATOR'S NOTATIONS, TIME SENT, Erc. ENGLANDOM 1,&74 VANcouv OCEAN '?::),OKOHAM. SAN FRAN M.IDWAy FO , THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY (INCORPORATED) TRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS: REPEATED: that is, telegraphed back to the originating office for To guard against mistakes or delays, the sender of a telegram should order itUlkleSs addition, otherwise indicated on its face, THIS IS AN UNREPEATED comparison. For this, one-half the unrepeated.telegramrate is charged in TELEGRAM AND PAID FOR AS SUCH, in consideration .whereof it is agreed between the sender of the te/egram and this Company RS follows: of any UNREPEATED telegram, beyond the The Company shall not,be liable for mistakes eis'delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty Same; nor for mistalawor,delays in the transmission or delivery, or for non-delivery, amount received for send 'the from unavoidable interruption in the working times the sum received, for- 'riding the same. UN LESSSPECIALLY VALUED; nor in any case for delays . .. . of its lines; NOR FOR ER ORS'IbT plrliElt OR GENCHRE. TELEGRAMS... in the transmission or delivery, or for the non-delivery of this telegram, In any event the CotripiinY shall not be liable for: demages for any mistakes or delays liF.PEATED telegram rate, at which amount this telegram, if sent as a whether caused by the negligenee of its servants or otherwise, beyond fifty times the for 'transmission, REPEATED telegram, is hereby valued, unless a greater value is stated in writingliereco at the time the telegram is offered to the Company ,. . and an additional sum paid or agreed to be paidhased on such value equal to one-tenth of one per cent /thereof.' forward this telegram over the lines of any other company when necessary to The Company is herebymiade the agent of the sender, without liability, to I. , reach its destination. Messages will be delivered free within the established free delivery limits of the terminal office. i Ed'r. delivery at a.greater distance a special charge will be made. to cover the coat of such delivery: 'presented a,,j1 accepted, at one of its transmitting offices; and if any S. No responsibility regarding messages attaches to this Company until the same are and any notice or agent of-the send for the purpose of delivering the message message is sent to men ottice by one of this Company's inessengels,Messages he acts assent the to the Company's office by private wire Or telephone are sent at the sender's risk Instructions regarding it to the Company's agent in its said office. of errors or failures in such service and all of the terms and conditions herein shall apply to the message throughout. where the aaine is not presented in writing within sixty days after the it The Company shall not be liable for damages or statutory penalties in any case telegram is bled with the Company for transmission. this message shall be presumed in any action for recovery of tolls therefor, subject, 7. It is agreed that prompt and correct transmission and delivery of however, to rebuttal by competent evidence. , The above terms and conditions shall be binding upon the receiver as well as the sender of this telegram. in each of such respective Special terms governing the transmission of messages under the classes of messagetenumerated below shall apply to messages s' _ classes in addition to all foregoing terms. NO EMPLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING. : '. .. . _ CLARENCE H. MACKAY. PRESIDENT. CHARLES C. ADAMS, ' EDWARD REYNOLDS, VICE-PRES, AND GENERAL MANAGER. VICE-PRESIDENT. , CHARLES P. FRISCH, VICE-PRESIDENT CLASSES OF SERVICE FAST DAY TELEGRAMS. A full rate expedited service. NIGHT TELEGRAMS, Accepted to be sent during the night andffelivered not earlier than the next if' My business day, at reduced rates but in no case for less than twenty e.t.a tolls for A...Are Message. SPECIAL TERMS APPLYING TO NIGHT MESSAGES. Pbe Company shall not be liable for damages or statutory penalties in any case where the claim is not presented in writing within thirty days after the message is filed with the Company for transmission. NIGHT LETT E R GRAM S: Accepted up to midnight, for delivery on the morning of the next ensuing bust' hs day at rates still lower than standard night message rates, as follows: The ',for ale-word day message shall, be charged for the transmission of te night standard MN ining SO words or less, and one-fifth of the standard day rate for a le-word lettergram m. day message.shal be charged for each additional 10 words or less in such night lone/gram. SPECIAL TERMS APPLYING TO NIGHT LETTERGRAMS. In farther consideration of the reduced rate for this special "Night Lettergrani" service, the following special term. in addition to those enumerated above are hereby agreed to: Night Lettergraans may at the option of the Telegraph Company be mailed at destin. obligation lion to the addressees, and the Company shall be deemed to have dischargedatitsdestination, In such cases with respect to delivery by mailing such Night Lettergrarns Postage prepaid. Night Lettergrams shall be written in plain English. Code language is not permitted. any ease where The Company shallnot be liable for damarms or statutory penalties in is filed with the the claim is not presented in writing within thirty days after the message Company for transmission. THE FASTEST TELEGRAPH SERVICE IN THE WORLD FEDERAL RESERVE BANK OF NEW YORK March 10, 1920. Dear Mr. Strong: I have assembled the data which you requested in your letter of February 1, in connection with your trip to the East. Mr. Nagaike, successor to Mr. Hamaoka as New York Representative of the Bank of Japan, has sent word to his bank that you are sailing via the Pacific on April 10, and will visit Japan, and has also sent the Bank of Japan. us a letter of introduction for you to present to I have notified the Bank of Japan of your visit direct, and enclose a letter of introduction for you to them, together with Mr. Nagaike's letter. I have also advised the Javasche Bank and enclose a letter of introduction to them. The three banks which are handling the silver business for the Treasury, and the Standard Oil Company of New York, have given us letters of introduction to their people in the East for you to carry with you. I am sending you two copiss of the Federal Reserve Board's Annual Report. As our own report for 1919 has not yet come back from the printer I am unable to enclose it with this letter, but understand it will probably be ready in time to be sent out when your son, Ben, leaves, the latter part of this month. Thinking that you might desire to cable us confidentially, we have prepared a set cf test numbers, and enclose copy of Bentley's Code, which you may want to take with you. You will find with this letter the following enclosures: 1. Letter of introduction from Mr. Nagaike to the Bank of ..EDERAL RESERVE BANK OF NEW YORK 2. Benj. Strong, Esq. 3/10/20. Letter of introduction from us to the Bank of Japan. Letter of introduction from us to the Javasche Bank. 4. Letters of introduction from the Guaranty Trust Company to their managers in the East. (These were furnished in lieu of letters from the Asia Banking Corporation.) 5. Letters of introduction from the International Banking Corporation to their Eastern branches. 6. Letters of introduction from the Park Union Foreign Banking Corporation to their Eastern branches. 7. Personal letter to you from Mr. Pratt of the Standard Oil Company of New York, and letters of introduction to their Eastern managers. Summary of Bank of Japan agreement. Summary of Javasche Bank agreement. Summary of Special Silver Agreement. Two copies of Federal Reserve Board's Annual Report. Test numbers and Bentley's Code. Very truly yours, J. H. Case, Acting Governor. Benj. Strong, Esq., c/o Phoenix National Bank, Phoenix, Arizona. 'arch 11, 1920. Dear Mr. Strong: have your letter of March 1, In which you enclosed a latter from your son 3ents old room--nate at Princeton, mho signs himpelf "Thug." T agree with you in ii you s')y regard- ing the desir9bility of h9.ving in the bank more men of this type, man with good eduction, manners and blood. From your letter I note that you have asked him to call on me, and when ho comps in I shall be glad to do the necessary. This morning I talked the fritter over with Mr. qilbmit, who is orly too vlad to cooperate in this regard. I strongly advise thrt a men of this type be ussd Personally, as a supply man nd shifted around to the various ',apartments. If he were to spend P few months , ch in the foreign, loan, bill,-and investment departments, mrd accuint himself with 'omn of the operations of the b;nk, it rould be e desirmble thing. I sent you, yesterd-y, by registered mdl, 11 of the letters of introduction for which you risked, and I -m enclosing with this copy of my letter, for your informntion. I am glad to know that you are having a Rood rest mnd that you have enjoyed your c.-mping trip in the woods. Sincerely yours, Benj. Strong, 'En., 0/o Phoenix Nytiona..1 1 FEDERAL RESERVE BANK OF NEW YORK March 16, 1920. Dear Mr. Strong: I had a very satisfactory talk, last Saturday, with young Edward Douglas and learned at first hand just what is in his mind with regard to his entering the banking field. He is a very pleasant young fellow to meet; and after I had chatted with him a bit I turned him over to Mr. Gilbart, with whom I had previously had a few words. You will be interested in Mr. Gi/bartis report to me, which is as follows: "Mr. Edward Douglas, whom I interviewed at your request on Saturday, made a most favorable impression. He is by far the best of all the young college men whom I have had the pleasure of In my opinion, he possesses the interviewing. fundamental qualifications essential for success in banking - strong character, cautiousness, firmness, determination, an affable manner, and more than average intelligence. "Although we have been paying college men $1,200 a year to start, (most banks pay from $900 to $1,200) I felt that he, being of superior type, was entitled to a little higher remuneration and, therefore, offered him $1,500, which he said was entirely satisfactory. "He has a few matters in Troy, N. Y., which he would like to settle before coming to the bank, and we therefore set June 1 as the starting date. "He had no difficulty in passing ,our physical examination. When he reports, I will see that he is properly taken care of and will so arrange it that he will have an opportunity to work in all of the important departments." We have been having some extremely interesting days here at the bank, and I will just mention one or two of the "high spots." TREASURY OPERATIONS: The Treasury Department redeemed, yesterday, some $S50,000,000 of As a tax certificates, about one-third of which was paid at this office. result of this operation, our member banks temporarily increased their reserve balances $140,000,000, paying off approximately $50,000,000 in loans. The other side of the picture is that we had a temporary overdraft of the Government for $125,000,000, with an increase in float items (exchanges of The Treasury is offering, as of March 15, a new issue about $65,000,000). of certificates, which will run for one year, at 4 3/4%, with the hope of selling about $350,000,000. .L RESERVE BANK OF NEW YORK Governor Harding. 3/16/20. Mr. Leffingwell, who spent Monday, March 8, with us at the bank and talked with a number of members of the old Liberty Loan Committee, was advised to make the rate 5%. This suggestion was also conveyed to Secretary Houston some two or three weeks ago at a dinner tendered him by Mr. George Foster Peabody. However, Mr. Leffingwell argued that, by reason of the vacuum created by paying off so large an amount as $850,000,000 on March 15, there would be automatically created a demand for the comparatively small amount he desired to sell. It rather apOur subpears, at this writing, as though he had misjudged the market. scriptions are but $55,000,000, or one-third of normal, which, I understand, is approximately true of other districts. Personally, I am very sorry that he insisted upon the 4 3/4% rate in the face of the almost unanimous opinion expressed to him here, that a higher rate was imperative. I think, however, that he had a jolt of this sort coming to him. The total subscriptions for the whole country approximated but $150,000,000. GERMAN GOLD ACCOUNT: On March 12 we made a final payment, amounting to $2,541,903.17, to the United States Grain Corporation, which represents the balance due them on the German Gold Account. Up to this writing we have received in London gold representing a total value of $173,000,000, of which some $60,000,000 has been sold, leaving a balance of $113,000,000 with the Bank of England. Expenses incurred by the Bank of England, de Nederlandsche Bank and the Federal Reserve Bank of New York amounted to $619,966.47 and $563,900.55, the latter amount being one-half of one per cent. of the value of the gold still with the Bank of England, which is withheld here in Suspense Account to cover the cost of moving the gold to New York, should it be found ultimately necessary to do so. A very recent estimate from the Bank of England was but one-quarter of one per cent., but our directors, the Grain Corporation people and the Federal Reserve Board all felt it was desirable to make an allowance sufficient for emergencies. It is expected that if this money is not used, by reason of the gold being sold in London, it will eventually be returned to the Grain Corporation or the German You may be interested in the enclosed photostat statement of Government. this account, as of March 11, 1920. BANK OF JAPAN: The Bank of Japan agreement was signed a week or so ago, and they are to make their first deposit, amounting to $20,000,000, with us to-morrow, March 17; four-fifths of this amount, I understand, is to be immediately Under present conditions we will welcome the opportunity invested in bills. of putting that amount of bills in their portfolio. - 0 - new for had the Our earning assets during the latter part of February reached a The pressure high level - a total of $1,148,000,000 as of February 27. credit has continued unabated, although during the last few days we have some evidence that the situation is getting under control. During period between January 2 and March 6, the net deposits of our city banks raA-,_ RESERVE BANK OF NEW YORK 3. Governor Strong. 3/16/20. were reduced from $5,422,000,000 to $4,904,000,000, a decrease of $518,000,000. This large reduction was financed by withdrawing about *280,000,000 from their street loan account, by increasing their borrowings here $60,000,000, and by A net reduction of about 25% has liquidating $180,000,000 of other assets. taken place in the total amount of street loans. March 18, 1920. It has been interesting to observe the comments and criticisms stirred up by reason of the recent export of the comparatively small amount I am glad to say, however, that the opinion of gold to South America. is quite general that if we are actually to be a real, financial center and not a make-believe one, we should not be disturbed by a reasonably free movement of gold in and out of this market. Argentine has fifty-millions of bonds maturing here on May 15, which amount is likely to be paid and will absorb a considerable part of any surplus funds she has in New York. The recent announcement that Great Britain of Anglo-French bonds maturing and France are to pay off the $500,000,000 In spite of the load she is carrynext October, has had a wholesome effect. ing, one cannot fail to recognize from time to time that Great Britain continues to "have her nerve with her," and knows just when and how to make an announcement that will be beneficial. I observe on the Dow-Jones news-sheets of yesterday a statement of gold imports and exports, set up on a monthly comparative basis, from I am enclosing this for your information. January, 1914, to January, 1920. Beginning March 15 we have had great activity in our Bond Department, Mr. Sailer tells me due to the exchange of temporary for definitive bonds. that on Monday, on the 24th floor alone, the transactions cleared aggregated We had a meeting of the Building Committee over six hundred million dollars. yesterday; and while progress in our plans seems somewhat slow, I am sure that So some headway is being made towards whipping the plans into good shape. much for the gossip of the office. I am enclosing with this what I consider a rather interesting extract from a pamphlet published in the London Magazine in the year 1767, entitled "Thoughts on the Causes and Consequences of the Present High Price of ProWhile this was written more than 150 years ago, it really applies visions." with equal force to conditions at this time. The fact is, it is written somewhat better than most of our articles dealing with economic subjects of the present day. The Dow-Jones news-sheets of March 17th , report that you are to sail for Japan very soon and that Mr. F. A. Vanderlip and party will leave for the Orient within the next ten days, as the guests of representatives of the Japanese Government. A memorandum of this announcement is enclosed. I am glad to know that you have so thoroughly enjoyed your camping trip and that you are feeling fit for your visit abroad. I sincerely hope you and your party will have an idea/ time in every respect and will return home in due course, ready to "eat 'em alive." Cordially yours Benj. Strong, Esq., C/o Phoenix National Bank, Phoenix, Arizona. http://fraser.stlouisfed.org/ Encs. Federal Reserve Bank of St. Louis FINAL STATEMENT - GERMAN GOLD ACCOUNT March 11, 1920. DR. ADVANCES TO OR FOR 4/C OF U. S. GRAIN CORPORATION FINAL OUT-TURN OOGOLD FROM '2 CR. 1 0:0,000 Marks, melted and assayed Fins 050.3,330,220.731 . a 159,842.215 680,000 Sovereigns, Exchange of Aug. 8, 1919 Payment to U.S.Grain Corporation 485,2)8,303.90 . . . 4,372,627.35 " 1919 . . . 4,372,285.02 16, 1919 " 5 N 4,372,182.32 18, 1919 * N N 1,624,601.41 23, 1919 " " a Guaranty Trust Co.a/c 20, 1919 Com.for Relief in Belgium 2,747,478.21 4,371,703.06 a. .. .. . 25, 1919 * .« .... * a* 42,880,818.73 Sept.12, 1919 " U.S.Grain Corporation 8,231,905.80 * 1919 N N N 1,386,406.24 12, 1919 N N * Dec. 8, 1919 Total 4420.67183462 .111128.,22144. .1 SI 1111 AMSTERDAM Kilos bar gold » 874,481 Sovereigns, Exchange of 14,130,630 Marks, 10 Foreign Coins 305,869,370 Marks, 18,300,00 Austrian Crowns 5,500,000 Russian Roublass Total « " N 701,991.850 205,675.960 162,318.937 2.229 3,510,364.720 179,064.322 / 6,2 0.949 11.3 5.7 1.913 .. .. $169,923,106.52 CHARGES FOR EXPENSES, etc. Expenses paid by Bank of England £22,269:19: 3 Freight do Nederlandeche Bank's ) charges for packing & ) transmission to Hook of) ) 5,491: 8: 7 Holland and Personal expenses Bank ) of England's represen- tatives National Bank of Belgium charges for pack- ) ) ing and transmission to ) Antinsrp and Personal expenses Bank 1,501:13: 3 ) of England's representa-) tives Melting and Assay charges Miscellaneous 12,125:15: 1 792: 6: 8 £42,181: 2:10 643.688147211.$ 155,570.26 Total de Nederlandsche Bank's charges Custody 0161.8 8,450.48 37 154160 .$ 33,555.90 Federal Reserve Bank's out-of-pocket Expenses $ 126,725.30 Insurance Gov. Strong's ex1,997.12 penses in Europe Ur. Fred I. Kent's expenses in Europe- - - - 1,000.00 Cable colt. Total Total char.ee for Expenses p 130.840 319,966.47 Amount withheld to cover cost of moving gold to N. Y., namely 1/2% of $112,780,109.84 563,900.55 BALANCE DUE U. S. GRAIN CORPORATION . Total value German gold - $173,348,876.71 . (8,385,751.913 fine oss.) Amount sold to date - $ 60.568.766.87 (2,910 014.098 Balance with Bk. of England- $112,780,109.84 (5,455,737.815 2 541 901.17 4173 348.876 71 eeienMea: Copy of erticle published in the London Magazine In the year 1717. Extract from a Pemehlet ntitled "Thoughts on the Causes end Consequences of the Present High Price of Provisions." According to this writer, "The present high price of orovisione arises principelly from two sources; the increase of our netionel debts, and the increase of our riches; that i5, from the poverty of the public: and the wealth of nrivete individuals. Whoever remembers the many millions ennuelly borrewed funded and ex- pended, during the lest war, can he under no diffioulty to eccourt for its in- crense. To ;ay interest for these new funds, t_i_ewtexeswereiltyLliletz_eimposed, end additional burdens laid on every comfort, and elmest every necessary of life, by former taxes, oactasioned by former wars, before sufficiently loaded. These must unavoidably increase the nrices of them, and that in a much greeter ,ro-ortion than is usually understood: For e duty laid on any commo,iity does not only add the velum of that duty to that commodity, but the demler in it must advance the price double or treble times that sum; for he must not only repay himeelf the original tee, but ouet have oomeensetion for his leases in trade by bad debts, nnd lose of interest by his Increased capital. r'esides this, every new tax does not only effect the 'rice of the commodity on xhich it Is laid, but that of all others, whether taxed or not, and with which, at first sight, it seeme to have no manner of oonneetion. Thu, for inetance, a tax on candles muet relief) the price of a coat cr a pair of brenches, because, out of these, all the texee on the candles of the kool-comber, weaver end the tailor must be reld. A duty ueon ile must raise the price of ehoeu, because from them 11 the taxes uyon ale drank by the tanner, leather dresser and shoemaker, which is not a little, muet be refunded. Po tax is imeedietely laid non corn, hut the price of it must necessarily be advanced, b8OMUSG, out of that, all the inrumberable taxes paid by the farmer on windowe, soap, canrles, ma/t, hops, leather, sten..., and a thousand others, must be repaid; so that corn is es effectually taxed If a duty by the bushel had been primarily laid upon it, for taxes,like the various streems which form a general Inundation, by whatever channels they separately find admission, unite at last end overwhelm the whole. 'he man, therefore, oho void sand upon an ess and rained the price of it during the late war, although abused for en loposition,meet certainly acted uron right rensons, for, though there were no new taxes then imeosed either on sand or asses, yet he found by experience that, from the taxes laid upon almost all other things, he could neither maintain himself, his etre, nor his ass, as cheap Its forme,ly. He was, therefore, under e necessity of edvencing the price of his sand out of which, -lone, ell the taxes which he -aid must be refunded. Thus, the increase of te,es must increase the price of everything whether taxed or not; and this is one principal ceese of the present extraerdinFry advance of provieions and all the necoseeries s live. The other great eouroe, from whence this oelamity arises, is certainly our vast incrense of riches.. That our riches are amazingly increaned within a few years, nA one eho is the least noqueinted eith this country can entertain a doubt. Whoever eill west his eyes on our public works, our roads, our bridges, our pavements and our hositele, the prodigious extension of our ceritel, end,in some proportien, that of every considerable town In Great Britain; whoever will look into the possession and expenses of individuals, their houses, furniture, tables, -2- eluipegea, te,rks, gardens, cloth, Clete ,n1 jewels, wili !id everywhere rourd him sufficient mirks to teetify to the truth of this rro7olitton. Thie greet increase t.f 1;rivete ofulence is undoubtedly eying to the very elme ceece which increeeed our nationel debts; that le, to the enermoue expenses unperelleled succese of the lete war; end indeed very nuch erieee from that very debt Iteelf. Pvery million funded ie In feet e nem creatior ef ao much wevlth to inlividuCle, both or :rinclpel end intereat; for the :rincipel, being eeeily treneferrsble, eferetes exeetly es ea muoh oesh; end the interest, by enebling 90 ny to .onaume the comeedittes on whieh testes are laid or the Teyeent of it, Ir greet eeesure froduces ennuelly en inc-ee to discherge tevelf. Of ell the enermeue sume then eveended, little besides the subsidies grented to Germen POnoee, ,%8 lrst to the individuels of tilt onentry, though the .4,n1+1 wng irrerevershly elienated from the ubiie, ell thereat annuelly returnine Into the ozkets of the meretveIts, contrectore, brokers and etock Jobbers, enabled Chem to lend it -gein to the eublic on new mortgage, the folloeing ye-r. every emission c° ,eper-credit by beak not, excheeler end Navy Mile, so long ts they oirculpte, 4nswers 01 the purposes of 40 luoh edlitionl gold end eilver, as their velue If we edd to theee the Immense riches daily P;-wing in qinee thet eericd from our comeerce extended over every euerter f the globe, from the nee ohnnel of trade orened from 'merle-, and the eme2ing sums imeorted flem the "mounts to. Feet Indies, it *ill not sure be difficult to ecoount for 'he meulenee of the eresent timee, ehlch hea enabled men to Inorele their exeeneee and oerry hxury to si eitoh unknoen to ell fernier egos. The effecte cf this vast end sudden ineresee of riehee ere no lees evident then their cauae. The first and most obvioue effect of the incresee of money is the decree of its vale, !tee filet of ell other eommodities, for money, being but e comeodity, Its velue must be relstive, thet le, dependent on the euentity of itself and the quantity of the things to be purehesed ei+h it. in every country whore there ia greet plenty of Trovielone end but little money,. there ,provisions euet be cheep; that is, e greet dell of them win be eecaned for h little money. On the ooetrery, where there ere but little provisions in proeortten to the- number of oensumere, n-A a groat Tlenty ef money or abet r41MSSI fo money, there they ell/ inevitebly be deer; Viet is, e greet deel of money must be given to purchase then. These effects meet eternelly follew their eeeses in all egee end in ell countriee, and that they have done co, the histcry of k1l countries in ell vete suffielently informs us.. Tho v1ue e money et the time of the Niemen conquest wee neer twenty times greater then at ereeart, And it her been gradually deoreesing flem that Forted, in eroi7ortien es our riches helm Int:moused. It bee decreesel net less then one-third during the erosent lentury, end / believe one-helf at twist of that third,since the commencement of the leet ear, ehtch, r doubt not, could it be oeactly eomputed, would be found to he in due le-oportion to the increese of its quantity either In reel or fictitious eesh, and the price of provielone in elycLreed !n the memt proportion during the aeme eericel. The increeee of money does not only operate on the 7:17ine of erovielone by the diminution of its on velue, but by onebiing more peo0.a to purchese and, eonsequently, to eonsume thee, which must unevoidebly likewise ineretee their scarcity, and thet meet still add more to their erioe. Tgenty rich femilies en' consume ten theca as much meet, breed, butter, eoep end cendles, ee twenty 1:,or,Ir femiliee oonsieti g of the eeme number, and the prloes of ell qlese meat eerteinly rise in proportion to the demand. This effect of the increeee of eeelth in many countries of Europe is very vieible ut this dey, an In none more than in the northern pert of this Islend, who bevine of lete see-uired riche by the introduction of trade, menufecturee and tillege, 011 new well afford to eat roast beef end, therefore, consume much of those (settle, with which they were formerly glad to aupply ue,end will not part with the rest but at priees greatly edyenced. The eoneumetion -3of everything Is also amazingly Incre,,sed from the increase cf wealth in our metroTolis and, indeed, !ri every corner of this kingdom; and Che lunner of living, Ilroughout ',mks and conditions of mbn, Is no lees amazingly altered. The merchant who formerly thought hi,tself eortunate If in course of thirty or forty yeLtra, by 9 1,trge trade And strict economy, he ame_ssed together es many thousand pounds, now ocuires in a quarter of that time double that sum, or breAks for a greater, nnd vies all the while with the first of cur nobility, In his houses, table, furniture and e-:ui;,,age. The shopkeeper who used to bc veil contented with one dish of moat, one fire and one maid, has now two or three times 4s mny of each; his wife hs her tee, her card-rsrties and her dressingroom; -fnd his rentice has climbed from the kitchen fire to the front Inxes the Any-house. The lowest manufacturer and the meinest mecbnic will touch nothing but the very best pieces f meat anl the finest white -'read, and if be cannot obtain doublet the wages,for being Idle, to what be formerly received for working tva.d, he thinks he has a right to seek for of his grievances by riot and rebellion. Since, then, the value of ourredress money is decreased by its luantity, our consurr:tion increased by universal luxury, and the sur^lies which we used to receive from roorer countries, new also groL4n rich, grently diminished, the present exorbitant price of ail the necessaries of life can be no wonder. EQUITABLE BUILDING NEW YORK 0 ,o7 /41eus,t fey,. Z/4-t_es-e / /271- Ae -7ete_ Vzo -- /g---et April 1, 1920. Benj. Strong, Esq., C/o Federal eserve Bank of San Francisco, San Francisco, Cal. Dear Mr. Strong: Just a word or two of farewell before you embark on your trip received the letters of introduction we recently forwarded to you at to the Far East. I presume that you to various institutions abroad, which Phoenix. _ I'114104 With this T em enclosing a copy of a communication from Mr. Eigo Fukai, a director of the Bank of Japen, together with a copy of my reply. Mr. Fukal wee a delegate to the Peace Conference and was introduced to lie' last year by Ir. Famoake, as he was paesing through on his way to Paris. You will note that he is looking forward to meeting you in Japan during the latter part of April. 'Mr. S. Imemurt, of The Sumitomo Bsnk, Ltd., Osaka, japan, with offices at 140, Broadway, New York, celled here one day last week, to say good-bye before he sailed for Jepan, and expressed his pleesure and satis- faction upon learning of your proposed visit to his country. He further expressed the hope that you and your party would,find it convenient to call at The Sumitomo Bank during your visit, and, at hie suggestion, I. am enclosing a letter of introduction. In my last letter to you,I mentioned the fact that there was then being offered an issue of one-year 4 3/4f certificates, dated March 15, the sale of which was not going any too well. The truth is, the issue was a failure; total subscriptions throughout, the country emounted to only *l80,00,000, which, together with "40,000,000 received from Treasury sources, brought the grand total to :4,200,000,000, whereas the Treasury The net of it all is that really wanted from t!50,0,00,000 to t400,00P,000. Seoretery Houston and Mr. Leffingwell have at last become alive to the They are situation and now recognize that they are missing their market. at present offering, as of to-day, t200,00r.",000 of three-months 4 3/4% certificates, which I think eill be subscribed for largely through the We efforts of the Federal Reserve Banks in urging the banks to subscribe. I told Mr. have our quota. of 480,000,000.- obtained by that method. Leffingwell, to-day, that he would have to pay at least 5f for subsequent issues of short bills, and he has indicated his readiness to do this. Thinking that you may be intereeted, I am enclosing a copy of my confidential letter to Secretary Houston, under date of March 22; also a copy of my telegram to Mr. Leffingwell, under date of March P. Bankers acceptances are now moving freely, from 5 3/4f for indorsed The dealers report a strong bills to 8 1/0 for unigdorsed 90-day paper. Some demand from country banks and a good demand from large corporations. of the former certificate buying is being diverted to bankers acceptances P. Benj. Strong, Eso. ,4/1/20. and short municipal notes (such as The City of New York) which are now selling on a 5 1/21 basis for April to November maturities. This seema to be an era of bank consolidation. The following in- stitutions have consolidated or are in process: Bank of the Manhattan Company absorbing - Merchants fictional Bank and Bank of nLong Island. Citizens Nat'l Bank. Irving Trust Cc. Franklin Trust Co. Chemical National Bank Irving National Bank Bank of America Mechanics & Metals Nat'l Bk. tt New York Produce Exchange Bank. I am looking forward with governors, conMonday night and all day Tuesday with Governor Morse in Boston and bad the pleasu.e of meeting at luncheon a number of the imnortient Boston Bankers. I find it rather interest to attending the ference at qashington, April 7 to 10th. I spent refreshing to get away from the office now and then and to gather some other fellow's viewpoint. Jay ran off last night and will be gone over the week-end. Shepard Morgan tells me that he sent you, this morning, by special delivery, twenty-five copies Annual Report of the Federal Reserve Bank of New York, the publication of which has been delayed. I hope you will receive them promptly. of the Fifth the last word that you will have from me before 5m glad to knot that you have so thoroughly enjoyed your stay in This is probably sail. I you Arizona, and my earnest hope is thet your trip to the Orient will be extremely enjoyable as well as restful and that you will presently return to is with renewed vigor and a full measure of good health. Sincerely yours, JRC/RAB Enos. (5) 40:3r OM-11-19 RAL F.ESERVE BANK F NEW YORK (SEND TO TELEGRAPH DEPT.) SENT BY Vi3 COPY OF TELEGRAM Arril 14i10420. Benlamin Stro, ,ere of Fodert1 Feserver!,,anx 7r 8CO. few of the high spots at the For your information Irx reporting notion t-,x.on o !3sCretary Houston outlined Certificates. of Indebtedmt* governors conference. probable reuiroments of Tremsury for next to months, as follows: kpril fifteenth, two hundred fifty millions; Wy first, one hundred twenty riY6 fifteenth, one hundred twenty- five million; Junr, first, ono hundred twenty five millions (these last four figlftes representing 1-obable issue of sh. rt-term loan certificatec Kt five ;..orcent or better); and June fifteenth, three hundred mi131ons, (this last figure ro2reeenting ;Tobnble issue of tmx cErtificmtes of longer maturity). Proceeds or the lastnamed issue to refund nbort-torm loan certific,tes maturing in July:- (Notes Amount of outstanding tax certificates due June fifteenth, seven hundred millions). Governors considered 7n=',tter of rstos and maturities for pronosed current issues *nd-recommended combination issue of short maturitiee for April titter ms follows: three monts tt five percent, and oix monthe at five pIld one.-Jarter percont. This recommendation wref or-Toyed by the Treamury, (Chicago, :4oston ;nd Atltnta voting for one-uarter percent higher rite on both 'roues). I rill here to interrupt my report on the action taken at the governors conference, lon7 en 91 -q". FED t ft6y UF-4)1'EWY.0:R.K K or FrOSTW Page 2. (SEND TO TELEGRAPH DEPT.) COPY OF TELEGRAM 41, ) t.'c.t both of the current thrse-nontbs five percent 'issue rond thelerg-months,five and oes-quarter 7stroent issue. Apc.m,r to ba going well in our district. 111. to resent writing, Our full quota has beon subscribed to fi4uros ranohirA 01:,^ ,olndred miil- on odd. To go on with my report on the conference, the Treasury broke into nsw gi.oun6 by eTTrovine olicy of c-en mrket trding,by ether outstanding cortitios.tes, in interest bases approximating those now established on new certifletes. Credit Control: Fffect of recent rate incmIss upon li7uldation fully alscussed. Several districts, including New Tork,'Weported some liuldation due directly to 1-cremsad rate, indicating ::reaent rates were becoming effect:1,0.th exercising credit control. Ni.ljority of western %nd southern district reported ro real lirluidation as yet. Considor-,tion given to the A71!Jndment to Yederal neserva Act, authorizing Fieserve banks to fix progressive rates for borrowings beyond normal discount line. :rajority ointcn we that .it should not be availed of at prorent, but should be used only when ;.ossrve bAlk mantRoment cannot control abnormal berroging. 3tlanta and Kansas City voted for immediate use. aankers Accepts-noes: New York reportee wide distribution among banks And investors, at six rercont. ,Ionference -greed to principle that stabilization of New York open bill market is incumbent iron Pesorve lystem as a whole, and appointed committee to make such support effective. Discussed mothods for encouragink continuous investment by member banks. Discount Fates: In this connection, you have doubtless observed that 3ritish Treasury hes.s r,ised its rate from five end one-half rcent to el* and one-hraf T:ercont on Ari -40M-11-1. 1AL Re-SERVE BANK F 5.:;(1S,NnDiT(9.TELEGRAPH DEPT.) NEvt4o!lhin Strong, Cals4rfrsr!,.1 Peserve COPY OF TELEGRAM .4n , w\g'ia Tre*sury bills, and that the &Ink of Tneand has today raised iCadlscount rrl.to to sewn Terofmt. hilo consider,lble eifferenos o;,inlon exists aa to further 1 0w was a Au shopld nn In. ,7.e now bul should zaoh situation closely, ' 4th vieh sexotriently to increase rates any tials such courao (moms necessarY or de3irble, *y beet wishes for a pleasant t voymgo. .0.rr y v Coo4bye. CASE. FEDERAL h VE BANK OF NEW YORK OFFICE CORRESPONDENCE Mr Case FROM DATE___Znne_29192.0.. Saliant_Foatures SUBJECT: of Accompanying Report. R. G. Bellah RESERVE PERCENTAGES Our reserve percentage on June 25, after allowing for rediscounting for other Federal Reserve Banks, was 39.2 per cent. If there had been no necessity for any rediscounting our reserve percentage would have been 42.8 per cent. The rediscounting was for six banks. The amounts, and the actual and adjusted reserve percentages of these banks follow: Amounts Rediscounted with Fed. Res. Bk. of New York Atlanta Chicago Minneapolis Kansas City Dallas St. Louis $ 4,160,000.00 14,950,000.00 11,623,300.00 9,958,000.00 2,000,000.00 19.269.682.96 Actual Reserve Percentages 36.4 36.7 21.2 33.9 37.4 27.8 Percentages after Rediscounting 40.6 40.0 41.1 41.1 41.4 41.9 6196O982. 96 The highest actual reserve percentage was again that of Cleveland. 63.1 per cent. and the adjusted 51.1 per cent. Boston was second with 61.1 actual and 56.8 per cent. adjusted. San Francisco was third with an actual 52.1 per cent, and an adjusted of 52.0 per cent. Philadelphia stood fourth actual and adjusted both of 45.0 per cent. New York dropped from fourth to place. It was per cent. of with an fifth Of the banks rediscounting with us on June 25, Atlanta has gone down 2.6 per cent., Minneapolis 3.1 per cent. and Dallas 1.7 per cent.; while Kansas City has gone up .1 per cent., and St. Louis 1.8.. It is of interest to note that all six of the banks rediscounting with us have an adjusted percentage much higher than ours. WEEKLY REPORTING MEUBER BANKS OF THE COUNTRY A decided increase in al/ loans is noted for the four weeks ending June 18, and also for the week ending June 18. The increase for the longer period was $113,000,000. and for the shorter period $85,000,000. All the loans for the balance of the country showed a decrease during these two periods; for the four weeks of 055,000,000. and for the week of $56,000,000. All the loans of the City decreased $119,000,000. but the increase in the balance of the country was $216,000,000. The net result has been that during all three periods, the year, the month, and the week, there were increases throughout the entire country. There has been a slight increase in the loans on stocks and bonds in the City for the four weeks ending June 18 and the one week ending June 18. For the entire year, however, there has been a heavy decrease of $243,000,000. In the balance of the country the loans increased the last week: $10,000,000. As the lag point was touched on June 11, this means that -.3A-90MA-20 .VE BANK OF NEV. t'ORK FEDERAL RE. OFFICE CORRESPONDENCE Mr. FROM DATE CaseSUBJECT : Jure 29, 1920. Salient Features of AccnmvanyingLReport. R. G. Bellah -2- the loans on stocks and bonds in the balance of the country stood on June 18 just The deposits of the Reporting $10,000,000, above the low point for the year. The Banks of the Country increased $148,000,000. in the week ending June 18. deposits also increased in the four weeks ending June 18, but for the entire year there was a decrease of $107,000,000. DAILY REPORTING BANES Net Deposits Decreased in Week ending June 25 Borrowings of City Banks from Federal Reserve Bank Increased in Week Street Loans Increased in Week. Balances of Out-of-town Correspondents Decreased in Week Street Loans of Out-of-town Correspondents Decreased in Week. 07,455,000. 28,827,000. 8,912,000. 37,259,000. 15,393,000. It is of interest to know that the balances of the out-of-town correspondents of the Daily Reporting. Banks was on June 25 at the lowest point of the year, and the Street Loans of the out-of-town correspondents were only $1,285,000. above the low point for the year. C.3.1 .00M-I-20 .RVE BANK I FEDERAL R OF NEW YORK Mr. Case FROM street Loans, Borrowings and SUBJECT P. G. Bel'all, 000 omitted Street Loans 22.1015Elie ELPIEapils Borrowings City Banks -------.77,:14 1918 High Point NR NR Jan. 15 NR $854,302 Apr. 15 July 30 Feb. 15 463 Nov. Jan. 15 Nov. 1 749,373. 1 868,670. 847,7 76. Feb. 19 May 64 -...-A-L--------.-3-2----224-21-6*6. 914 661 ....1.11Lnavi.2ULI22 .123.2. A ril 2 1 1 4 . : 4 70; .1 . .1° .52 120. 0. 1 -- - ---681-1-04-----646-8 3. June - June 26 High Point LOW Point 4,966,551. Jan. 5 4824 .. 44 820 436. 70 : 1. 733 -12. 40 Q 4. _AL/4 .4*. 2 1- 634 K66. 1 0 [,082.(----___L11._2___ -- 685 022. 536 103. 436-14 . ---11-szrz=gwassoctzsar-w4 - 584,090, 440,035. 643,093. Mch. Jan. J an. 726,560. 864,298. may 27 2 15 - June 26 64 0.1 : 750,698. June 17 5,441,286. Feb. 21 Jan. 29 22 505,566. ---------------------___ Fe 683,186. June 24 50.1.,28 Net Change for Year Jan. 2-June 26 456 433. 77,667. 274, 74. 177,343. 129,000. Net Change for Month May 2 6.June_26 37, 816. 37, 954. 47 68 a 23 761. 73. 114. 37,455. 28 827. Na r- . 02 1 1 .....ViV ... 0' . Dec. $234,924. $639,912. NR _ma Low Point ______I_B_LB_ 1919 High Point Out.° f.Town 211.221mi Go amondents F. P. Bank ------ Street Loans # Balance Out- f-town C4Lx_Banks from Februe. March June 29, 1920. DATE OFFICE CORRESPONDENCE Change for week Jone19..June 26 Increase June 26 from Low Point Decrease June 26 f crwt Hi aL Pertnt. 4 081, 81 811. 4744 715,, 166 608. $1.221,__JL.2.9. 4 880. 0 286 52 221 20 -111.222L-1.28 . 1 7 7 620. # Included in Net Deposits City Banks. From January 2 to June 26 inclusive, the net deposits of the City Banks declined $456,433. This decline was met, in whole or in part, as followe: Decrease in Street Loans Bo rrowin gs from Fed. Res. Bank e Decrease in Other Assets $274,721. 77, 667. 104,045. 14456,4n. FEDERAL F :RVE BANK OF NEW YORK OFFICE CORRESPONDENCE DATE Mr. Case June 29, 1920 Loan,, DepnAits SUBJECT and Street Loans of G. Bellah Weekly Reporting Member Banks. -2. The following table shows the amount of all loans and also the amount of loans on stocks and bonds of the Weekly Reporting Member Banks of the country. The figures for the seventythree weekly Reporting Member Banks of New York City are contrasted with those of the rest of the banks of the country and a total is shown. (The seventy.three Weekly Reporting Member Banks are not the same as the Daily Reporting Banks, although fifty-one of the are among the seventy.three banks.) The high and low points are indicated in each case and the net change for the year, the month and the week. In addition, the increase from the low R. FROM latter point and the decrease from the high point are show. WEEKLY REPORTING MEMBER BANKS 000 Omitted ALL LOANS Date NewYorkCit, Bal. ofCountry No. Amount Nov.15 191:HighPoint Feb.1 tee* 1 191:LovPoint 0t.10 Nov. 7 8 0 422 726 71 1919LowPoint 1920 5 April 2 June4 MU ot No. Amount N R N R N R N R 1 Dee.2 ---57-8--.2 9 7 248 797 3 300 331 Aug. 29 Aug.15 1 455 6171 726 1 Dec. 5 757 13,636,545 71 1,256,169 702 i,63,64 774 2,912,458 2 460 1 1 418 107 27 1 '74 986 7.8 78 1 72 2 040 ,07 7 10 9 . liaitffliEfflialla 1 1 0 4 22 14 34 10 71 2.,4 Empjummaj 1 17 50 JIM o8 73. 71 7 * Jen.3 Feb. 21 Oct.31 I. 15 626 75371 65 5,050,042 698 March a. Amount N R 670 11,494,5'6 1 1919HighPoint 2 Ba/ a fCount Fe'. Me1-Dec*31 Januar Februar INswYorkCitv No. Amount o. Amount Nov.] 7 0 14 040 7771 N R . 64 26 1 Total LOANS ON STOCKS AND BONDS a _ 3.7 2211O 10 4 pm 1 . 7 .4 ijjEmiloW '29 June 18 5,475,987 741 10,413,762 814 15,8899749 73 1,175,256 741 1,937,885 High Point January 2 5,595,089 Low March 5 5,242 /45 Jer.2 - June 18 Change for Month liay21 - June 18 01 110 March 12 10,614,866 January 2 10,197,371 119,102 1'2 07 :10 : .TEHEIROMI/41 1 9.9 302 L3 1 Eillitfialtliir2 MUM 1 2 3L 19; 41 MOW] io 441 2 I 74 Point Change for Year 3.3 ota_. ' 94 34 EiVigaW41341413011 3 I II 3 , 111 0- 814 3,113,141 February 2,020,726 June 11 1,928,029 January 2 16,030,294 1,418,107 February 13 May 14 15,714,921 1,154,371 97 289 242,831 37,103 279,952 April 161 January 2 55,004 7 -32 13 447 9 843 8 34o 56,326 014 7 948 98( 17 804 23 8- 216 3 1 1741828 20 88 -- 985E 17,804 119,102 Included in ALL LOANS 201,104 140,545 242,851 82,841 279,952 Junell. June 18 creas une from Low Point Decrease June 1 from Bi h Point * The high and low points for LOANS ON STOCKS AND BONDS during 1919 cover August 15 to Decomber 31. i 3,393,093 June 11 3,095,337 36 Change for Week p 4a:1-- the period from FEDERAL R .:RVE BANK OF NEW YORK OFFICE CORRESPONDENCE DATE Mr. Case R. FROM SUBJECT G. Bellah. June 29, 1920. Net Deposits of Money Reporting Member Banks. -3NET DEPOSITS OF 'EFXLY R.EPORI'ING MaLBER BANKS 000 Clnitted. Date New York Cit No. Eejlt_i_r_nps..3.1_ High Point 122.2 1919 Low Point No. Nov. 8 1918 High Point Feb. 1 - Dec.31 1918 Low Point Amount Total Bal. of Countr Amount No. ' Amount Nov. 1 Nov. 1 680 7, 345, 422. 70 12,104, 471. 1 10 935, 2p. 70 4 7 6 21. 8 4.416.703. 618 6,368, 882. 70 5, 414, 799 725 8,926,328. 65 Feb. 7 4, 607, 465. 692 Jan. 3 7,307069. 770 11 985 328. July 19 Feb. 3 Mch. 15 Sept. 19 Dec. 19 De c. 19 796 14 136 367. Feb. 1920 7 January 2 71 401 166. 727 9 17]. 089. 798 14 572 255. Februar 6 71 5,064699. 733 9 113, 216. 804 14,1 77,915. March 5 3 4,918 828. 734 224 23. 807 14 143 ern 2 72 5 1 0 077. 73 811 14 306 07 7 72 044 527. 737 9 127 019. 80 14 171 546. 74 04 31 73 9 161 265. 813 14 255, 580. 73 5,193,162, 741 9)271,752. 814 14, May June June 18 --Trui.--2- High Point 5,401,1 66. Low Point 5 9* 8. Mch. 12 082. 464, 714. Jan. 16 14,600,225, Feb. 20 4,877,867. 9,329,972. Feb. 20 9,108,113. 13 986,000. 208,004. 100,663. 107,341. Feb. 20 Net Change for Year Jan. 2 - June 18 Net Change for Month May 21 - June 18 Net Change for Week June 11- June 18 ---11,24.4.5.7s_ 101 74-6. Increase June 1: from Low Point Decrease jr.,. -oint 46211_ ......3m1.25.1 163 619. 208, 004. 58,220. June 18 . .., ]3,3f,7._ 235. 824,, __ALLi 311.____ 4781211._ 135,311. - 3.1.90M I-2, ,-2VE BANK ORK - OFFICE CORRESPONDENCE DATE Case Tr SUBJECT June 29, 1920. Reserve Percentages of the Twelve _Federal_Raserva_Distrinta._ -4- COMPARISON OF THE RESERVE PERCENTAGES OF THE TWELVE FEDERAL RESERVE DISTRICTS New Rich, Atlan- Chi- St. Minna-Kansas San DosTo. Iork rialia.uleve, mond ta cago Louis =oils ulty vallas rran A 1918 High Point Aug26 Aug10 Aug. 9-Dec. 31 67.9 64.0 1918 Low Point Oct30 Dec30 .;lug. 9-Dec. 31 39.0 40.3 Aug14 Sep18 1919 High Poin 56.1 56.3 Nov12 Dec30 4. . P.T.t 7 3: 7 10 January 2 Jan.-WI. High Point Jan.-117bh. D C B Aug23 69.2 NoV21 39.3 Jan20 46.8 June3 :', 8 E F G Aug23 Oct24 Aug23 Dec 2 69.9 60.4 56.5 67.6 Dec17 Aug10 Dec3 Nov 6 46.0 44,6 39.6 49.3 Nhy20 Nov 8 Decl Mch15 66.5. 52,7 53.5 74.3 Nov25 June Sepl: Dec29 43 0 38 3 39 3 49.3 43,7 38.7 41.0 48.1 42.3 510 Meal 4 Mcb31 Mcb12 Mch20 Feb Janl 54.3 41.8 41.8 52.7 47.0 55.4 1JKL H Aug23 70.5 Ceti° 43.0 Feb 8 68.6 Mch22 4L Nov13 Aug23 75.9 68.7 Aug23 Nov14 39,2 42.8 Jan27 Aug23 72.4 62.3 Dec26 Dec17 59.4 39.0 June 56.8 Low Point May High Point May 25 39.2 45.0 51.1 41.7 40.6 Aug23 59.1 Nov20 37.E 44.5 49.1 JRn16 54.2 Dea0 ' 0.5 46.8 40.6 44.2 48.6 52.6 Jan13 Jan 7 Mcb2O'Ftb 5 Jan 7 Mch25 59.5 54.7 51.3 53.1 59.3 52.9 Low Point June High Point June Low Point .t,pril Sep12 Nov22 54.4 62.6 Dec16 Oct25 38.2 46.3 Nov18 Feb 4 59.7 60.2 Jun18 No 1 46,2 ifeb 7 Jam13 Jan31 lich15 lich16 Lich Idch31 libb15 Jan 2 Jan 3 39,7 34.7 34.5 44.1 38.9 40.7 38.6 38.5 40.6 41.2 26 22 19 20 22 13 9 12 3 5 54.6 44.5 44.5 51.2 44.2 49.4 41.1 43.8 48,3 44.5 1 5 14 9 1 30 2 1 24 15 44.2 38.8 *39.5, 45.2 39.4 1.4 (3.7 68.6 39.3 38.0 1 20 25 18 24 27 11 26 13 10 55.1 42.4 42.3 52.7 44.6 41.4 42.1 41.6 42.0 45.2 14 3 4 26 28 25 20 7 8 19' 47.8 394 ...W.:- 49.3 40.2 39.0 '9_.1 39.2 39.0 38.9 17 25 25 2415 17 16 10 2 7 56.8 43.3 45.0 55.2 45.2 43.0 41.8 43.2 44.6 42.9 15 7 11 15 7 10 22 15 19 15 46,7 38.3 39.3 49.1 39.4 39.5 39.0 39.5 40.0 38.3 Low Point April High Point TOt 40.0 41.9 41.1 41.1 43.7 Jan 8 45.8 Iich15 Feb.3 39.0 5 1 LIcha5 40.9 46.4 23 38.8 5 41.9 11 39.2 16 44.3 3 41.1 10 43,6 49.4 29 5 3890 12 42.6 42.3 28 42.7 1 15 40.6 42.0 18 44.5 22 53.7 3 38.1 41.8 41.4 52.0 5 42,5 43.6 .... Change for Year Jan 2-June 25 13 .1 Change for Montt May 25-June 25 6.3 Change for Week June 18-June 25 4,2 Increase June 2' from Low Point 17.1 Decrease June 2 from High Point 0.0 0.5 4.0 3.0 0.6 11.2 6.2 4.9 0.5 3.1 7.2 0.6 1.0 2.7 0,8 0.8 1.6 1.9 0.8 0.4 0.2 1.3 10.5 3.3_ 34 3.5 1.9 0. 0.1 02 3. 10 2.1 1.3 4.5 10.5 7.0 2.8 1.6 1.4 3.4 2.1 3.1 3.3 14.0 2.5 5.3 0.0 4.1 5.3 14.L 19,5 12.8 10.2 12.0 17.9 1.7 2,2 The Net Exports of Gold from Federal http://fraser.stlouisfed.org/ Jane 26, 1920 inclusive, were 4101,515,500. Federal Reserve Bank of St. Louis 0.1 1.1 0.9 Reserve Bank of New York from January 2, 1920 to SECURITIES AND CUSTODY ACCOUNTS ACCOUNTS WITH OTHER FEDERAL RESERVE BANKS BEFORE SETTLEMENT Securities Department Custodies held Securities held in vault Safekeeping awaiting delivery DUE FROM $ SIM Boston $ Certificate of Indebtedness Department .41.6 Ottegicti t . _ 4 346,400 747.97 11,500-000,00 10-651,438060 13-700;138037 9730266,786,00 250;473,944078 64,829,830057 3_131,709.84 92,282,19 7Z-.2.41.-05(^ 59 227,639.08 660.,,225,28 1628,306.03 611:043,. 37 Government Deposit Department Securities held in vault as collateral to Government Funds, W. S. S. etc " by outside custodians as collateral to Government Funds W. S. S. etc. awaiting delivery jap4E e.a4 1,0902'7" ooliQ to t frr," lq 619;906028 e 000;00 320 000,00 1 I Loan Department Securities held as collateral for Rediscounts and Advances it awaiting delivery 412c732.82 237,020.20 244' 3240528,08 303,592.64131:837083 202e 153 ) 2977542,433 36 18,062.98 . 4,515,473024 aQg 2749515.42 21;122038 601 395,721051 93,, 688064 Total 1700545.83 252,416055 602,249,971051 Federal Reserve Agent's Department 44,4, Unissued Federal Reserve Notes held by F. R. Agent Commercial Paper held by F. R. Agt. for F. R. Agts. of other res. bks awcounts " 1za:600. 000._ 00 14 492:223.43 $ Temporary Receipts issued for Subscriptions to U. S. Securities, etc. Buffalo Branch Account (Cash Balance) Cumulative dividend liability to Liberty Loan Funds with Depositary Banks Certificates of Indebtedness Funds with Depositary Banks Special Deposit Funds with Depositary Banks 4-726:518,45 5;102,323068 Atlanta New Orleans Br. 2;315.720.62 933.659,67 2: 017,297 56 Minneapolis 1 435:875.68 Kansas City Denver Br. Omaha Br. Oklahoma City Br. 10205:3690e3 NET DEPOSITS TODAY 7,939_238.73 ONE WEEK AGO 125 52700000 96;57546 509,190017 189,150019 ; 22451060 22,760.16 804266086 Dallas El Paso Br. 25,900023 102r 800,46 Houston Br. 0:549406010 149:688.69 14,015.04. San Francisco Seattle Br. Spokane Br. Portland Br. Salt Lake City Br. Los Angeles Br. 455,043,, 27 126439 759,4/4 TOTALS IN THOUSANDS (000 OMITTED) YESTERDAY $ 2.805375:18 COMPARISON OF IMPORTANT FIGURES -'1,742,812079 33_000,00 14 010,709,38 St. Louis Little Rock Br. Louisville Br. Memphis Br. $84,689,817.3-, uk. 30708 9954073 Grand Total Liability for Custodies and Securities Held Richmond Baltimore Br. Chicago Detroit Br. 2;028,622.45 1-3619514,615,94 Total Cleveland 379-386,43 Total usu,s4e4 41,4 far Fort' 325790463415 2418 7C23079 000- Securities held in vault custody awaiting delivery " for exchange of denomination Canceled securities held awaiting shipment to Washington Total 15 970,151,27 6, 000 ,00 int ettatedlm hilad -.4011.11. USG Philadelphia 370.47 028-,10553 -.4g./01302.4= 19.44. 15.c 617:851.42 3000'n5C0c00 34.270,50040 10,977 000,00 " War Finance Corp. Bonds - Government Bond Department A 518,191,026.S) .2o90o0t00oo00 Securities held in vault custody " awaiting delivery and exchange Canceled securities held awaiting shipment to Washington Temporary Receipts for Subscriptions to U. S. Securities Total DUE TO 13.11 Total Ism 30, 192U. T 04 ne .v. 1 '. - 12' AVERAGE THIS MONTH TO DATE AVERAGE LAST MONTH -5 F. R. NOTES IN F. R. BANK NOTES IN ACTUAL CIRCULATION ACTUALCIRCULATION / q658tr 78,37 23.o ? '503 TOTAL EARNING ASSETS r' & , 95,: 13:1 "*a / 04. 'V ry 0i, TOTAL RESERVES - -,- ,,V, % OF TOTAL RES. ro COMBINED NET DEP. A NOTE LIAO. BK 7.1-12M-3-20 STATEMENT OF CONDITION FEDERAL RESERVE BANK OF NEW YORK ACCOUNTING DEPT. BOOKKEEPING DIV. CLOSE OF BUSINESS RESOURCES LIABILITIES AMOUNT ITEM TOTAL TOTAL AMOUNT ITEM - RESERVES Gold settlement fund Gold bullion and coin Gold certificates FEDERAL RESERVE NOTES Outstanding Less held by bank " f or'd for redem. $ 55,9450000.00 282,655,450.89 45,940,081.54 .6,801,575.14 Gold redemption fund F. R. notes Gold with Federal Reserve Agent 507,956,970.90 41,584,720.00 46,577,845.40 201,000.00 Total Gold Reserves Treasurer U. S.General a/c 73,775053 3,115,470,00 5 % fund against F. R. bank notes 866,556,975. nc 38,579,4000'00 DEPOSITS 625,099,554.50 Other cash on hand no In Actual Circulation 1,163,583.60 Total Cash Reserves Total Reserves A ?sr FEDERAL RESERVE B'K NOTES Outstanding Less held by bank 7,890 100 " for'd for redem. 40,9510660.51 Legal-tender notes Silver coin and certificates Mutilated currency for'd for redemption 1 In Actual Circulation 1,461,560.00 Bank of England gold a/cOurs ' Member banksReserve balances Non-member banksClearing a/c Foreign governments Foreign banks Officers' checks, etc. 974,008.83, 754,0910 144. 1,3 7.0010215.55 36, 858 688.98 5,424,472,65 4,353,318. 76 OverdraftsU. S. Government Total DEFERRED ITEMS 3,187,248083 DEFERRED ITEMS 5,520,500.00 F. R. notes of other F. R. banks Deferred debits other F. R. banks Due from other F. R. banksColl. funds 3, 661, 038.39 .7,160,744.'33 5, 261, 337. 09 5,756, 654,87 Remittance accounts Exchanges for C. H. and other cash items Deferred items Treas. U. S. Suspense a/cTreas. U. S. Total Deferred Gross Deposits 468,501.07 1,014,12.4.63 A.Affalo Br. Suspenae A/00 Due to other F. R. banks Deferred creditsOther F. R. banks Deferred creditsMember banks Gold in custody withheld for expense a/c 1,422,701.18 48,825,990.12 1,115,907.94 Allotments to other F.' R. banks Argentine Govt a/c Due from foreign banks of . . 74 98 657, 74E. 16 594,809.96 Participation of F. R. banks in Bank of Eng. gold and 709598,559053 Reserve against undetermined liabilities 200,000.00 Reserve for tax on F. R. bank notes Reserve for depreciation, etc. 430,116,35 Reserve for self insurance Participation ctf. L/L bonds tber V 2. Virgo :1 A/00 93,583, 969, 37 242.45 MISCELLANEOUS LIABILITIES exchange accounts Total Deferred 16,590,684.68 92, 740. 4 2 255,706. 62 16, 280. 00 Suspense a/cGeneral 20 552, 000. 00 Difference a/c iitpatorve tor irr anehise 178.45 140 962,518, 24 4,094,599026 Total Deductions 3.S)D 909.57 Total Miscellaneous EARNING ASSETS Member bks. coll. notesU.S. securities Member bks coll. notesCtfs. of Indeb. Bills disc.MembersU. S. securities Member bks. coll. notesComl. paper Bills discountedMembersUnsecured Acceptances purchased Acceptances purchased with agreement 3ke. CAPITAL Paid in by members Paid in by applicants for membership Surplus 155,422,807.51 171,595,000. 00 1$7,928,418.45 Pftol Total Capital and Surplus EARNINGS 48,874,67703 Discount earned on bills discounted acceptances Interest earned on municipal warrants 974,272,338.69 Total Bills Investment a/c self insurance reserve U. S. bonds owned 00. 0 1,256,800. 00 U. S. sec. to secure F. R. bank notes 59,276,000,00 U. S. certificates of indebtedness U. S. C. of I. purch. with agreement 42# 505, 0000 00 15,501,000e 00 Total Other Investments 49,344,800.00 1,962. 934. 66 Super-surplus 240,527,920.64 179,145,414.10 12,941,595.51 240 672v 300. 00 tt " U. S. securities non current funds Discount profit on bills sold Commissions earned Sundry profits Penalties on deficient reserves 105,684,900.00 Municipal warrants Par value of earning assets DEDUCT Unearned discount Dep. res. on U.S. sec Total !,nr' no0. (In U. S. Sec. Gross Earnings 2,326,76140 1 Liquid Value of Earning Assets MISCELLANEOUS ASSETS Bank of England Sterling gold a/c held for other F. R. banks Expenses paid in advance Expenses adv'd to Gov. Loan Organiz'n Suspense Account disbursements U. S. 1 st L/L bonds held a/c Participation Ctfs. Internal revenue stamps Difference a/c Real estate New building bills sold ?,,958 222.78 Less Mt. accrued on Suspense a/cGeneral Less Discount loss on notes rediscounted 1082,859,258.49 70,598,559.53 90, 214.65 291,845.25 9,326.78 374,089.72 36, 250. 00 398.20 5,591,459451 171,096.58 0800552,47712 Less Current exp. Deduct Inc. 1 Add Exp. Ireal es. Net Earnings Add Ace. div: rec'd Less " " paid Amt available for dividends & surplus Total Liabilities RESERVES Gold against net deposits Gold and lawful money against net clepos. % Gold against F. R. notes in actual circulation Ratio of total reserves to combined net deposit and note liability Actual 42.4 Zoc4 360 4000 59.2 Contingent liability as indorser on bills rediscounted with other F. R. banks. Total Total Resources isatt or Contingent liability on bills sold to foreign correspondents Arbitrary 6 088,751,52 42 - - -..,46 , /0 e GreZ erezd Zer---e 114' ,9 issu e of k;ertificate3 0:: InLeotecine 0 - o outstndir of June 14, 1920. June 15, 1920 728,130,000. Tax Loon Loon Taz July 1, 1920 July 15, 1920 jept.15, 1920 Oct. 15, 1920 llov. 15, 1920 Dec. 15, 1920 Lax. 15, 1921 200 ,669 ,500. 63,903 ,000. 657,469,000. 170,633,600. 102,863,000. 703,026,000. LAX121 Lovx irt,Z ,....taLi:L_7(j......at.) 50 Total as of June 14, 1920 ,2,848,064,500. :.1he three isoues maturing in June awl July which are fully provided for are: -.4q4 June 15, 1920 July 1, 1920 July 15, 1920 328 430,000. 200,669,500. 13.9 "?0,.WXV. .....14aL6,47.914k19.8. ,Z.,)12.702.390. TOTa Deducting from above total leaves a balance of ./1,835,362,000. To which we must add two issues June 15 (mount cold) . . 2ota1 O. of I. es outstaxxling as of Jima 16, 192) .2,235,362,000. to a net reduction of .,..,2,702,600 has token place. ITUIATIODI OF 0"0"26,151DING OLIVIPICATIE ,IIDIDG JULY KAIZURITV,S ALIOH,M PROVIDED AMMT Sept. lb, 1920 Tax- 15, 1920 15, 1921 Tax Dec. Iota-. a= tkert---"451494a.) June 15, 1921) .A57,469,000. 703,026,000. 201,370,500. 200,000,000. Total tmc certificates (self 11 uidatinr) Oct. Ilov. an. 15, 1920 15, 1920 3, 1921) Loan Loon soli ,aavii--4171-49.14) . 41,7G1,865,500. 170,633,500. 102,863,000. 200,000,000. utal loan cortificates which 37AT require tolporary refine= 0 0 ,,235,362,000. June 53, 1920. STATENENT OF WOVE AND EXPENSEr FOR SIX WRITES GRJ86 EAR.IIGS FWJti OeFRATIeN mut JAHUheY 1, 1920 TO JUNE e -DING JUNE 30 1920, INCLUSIVE .. Discount earned on bills discounted.. meobers Discount eerned on scceptences 'interest earned on U.S. Securitiee Discount profit on bills sold Interest on noncurrent funds Penalties on deficient reserves Profit on sele of French coin (Napoleons) . Sundry profits Earnings from operation for 511,234,955.78 5,097,884.19 981,798.21 571.15 4,357.68 78,173.84 5,308.15 3.693.81 27,378,751.00 65t348.75 Lees Discount loss on bills sold and notes rediscounted Gross 1920. 427,193,404.47 six ponths Deductions 3,E19711-70 Current Expense from January 1, 1920, to June 30, 1920 w P4,045092.48 ontha Net Eareines from aeration for six Additions to Net Earnings Net Income from Reel Eet0..e Kfil per eehedule "i09 eWched 143,373.82 Assessment of F.R.Board for expensee for the first nix eon hs of 1920. This amount yea charged to Profit A Lose Acct. Dec.31,1919, by instructions of the F.F.Boerd but In order that the &mount might be included in the ex2enses of the °emelt period it wee necerApary to credit Profit i Lose Acct. ELF4 an offset to the monthly charges to "Current Expeuve" Acct. 180,891.70 Sundry edjuateent items fie per schedule "B" attached 1.82506 Total Additions to Net ZerdiaLl 214.eaval 24,188,575.18 De4uotioee from Net Earnings Suatiry, .',:justeent Items ae per schedule "C* atteched f! 472.17 Net Income Available for Dividends nd Additions to Suroua Accounts 24,5S,)'94.49 Deduct Dividend reauireeents Januery le 1.920 to Juno 30. 1920 Dividend rweeiremente 124,572,500. et 8% per a-nnum Jobe* eccruale said in Add accruals paid to liquidating beaks Net Prof Lt 1740,169.00 45060.47 698,284.53 17.450.10 for eix months ending Juee 53..1910 715.736.81 "2,542 ms.as 10% of Net Profits for six months ending June 30, 1910 retained IX P-ofit A Loss Account by instruction of Federal Reserve Board Tranefer to "Surplue" account an amount sufficient to bring Surplus up to 100% of subscribed cepital or 249,344,810 Belence remaining 2,354,155.54 21,186,120.27 4.583000.00 16,525,020.27 "remoter to "SuperSurplus" account la% 1.581.502.03 Transfer to "Reserve for Government Prenohise Tax* account 90% 14,982,518.24 After closing the bookc June 33, 1920, Capital and Surplus hocounto stend as follows: --spite'. (Paid in) Surplus! (1001 of Subscribed Ceeitol) SupereSurplue Profit P Total Dose 114,872,300.00 49,344000.00 1,962,954.58 P.5$4,23!.59 178,334,070.25 FEDERAL RESERVE BANK OF NEW YORK July 2, 1920. Dear Governor Strong: Your very interesting communication, written from Tokyo under date of May 29, has been received, and I have enjoyed very much reading your account of conditions in Japan as you have found them during your I have passed the letter around to a few choice souls, sojourn there. Including the members of our executive committee and Messrs. Jay, Sailer, Kenzel, and J. F. Curtis, all of whom say they find it both interesting You have had, I am sure, some delightful experiences and enlightening. in visiting the Far East at a time when you have not been obliged to hurry on from place to place but can stay on or move on at your leisure, and I hope you will continue to enjoy the balance of your trip. I am anticipating with keen interest an account of your views It seems to me that she has vast, respecting conditions in China. potential possibilities, if she could be gradually awakened and guided The general feeling here is in line with the in the right direction. one you have expressed; namely, that Mr. Lamont has done a splendid piece of work in standing by his guns and carrying out American ideas as regards the Chinese Consortium. A few days ago I had luncheon with Mr. Bromley, President of the Shanghai Baptist College, who gave me a short but interesting account of conditions in China, and her relations with Japan, based upon his persona/ observations during ten years of residence there. It is hard to believe that you have been gone for quite half a year; and I am sure you will agree that Mr. Jay and I have held to the course suggested in not bothering you unnecessarily with bank details. We all hope sincerely that you have greatly benefited by your rest and traveling experiences and that you will return, the first of the year, in the very best of condition. I am planning to leave the office, to-night, to spend a short time with my family at Rangeley Lake, Maine. As Mr. Jay will be out-of-town until the first of next week, I am not sure just what matters he has covered in his recent letters to you, and I shall, therefore, briefly touch a few of the high spots. He has probably mentioned our new director, Mr. Richard H. Williams, of Williams & Peters Coal Company, who is a very intelligent, cultured gentleman and a real addition to our board of directors. He succeeds Mr. William Boyce Thompson, who resigned in order to become Chairman of the Finance Committee of the Republican National Committee. Our new counsel, Mr. Edward H. Hart, formerly of the Treasury Department, is working out splendidly, and we are all very much pleased with him. Mr. George L. Harrison, one of our two new deputy governors, arrived here yesterday, and I am sure that, with his wide knowledge of the Federal Reserve System, he will readily slip into harness and relieve other officers in a great degree. Mr. Kenzel, the other appointee, needs no word of mine as to his capability. He was out on the Pacific Coast, attending the Foreign Trade Convention, when appointed, and he was naturally much pleased to receive our wire advising him of our selection. FEDERAL RESERVE BANK OF NEW YORK___.2- Governor Strong. 7/2/20. Mr. Jay has probably written you of the other promotions in our official staff, which have placed Mr. Hendricks in the position of Controller at Large, Mr. Leslie R. Rounds as Controller of Accounts, and Mr. J. Wilson Jones, Controller of Fiscal Agency functions; these promotions, of course, please the organization, and assumption of these functions by the men named will enable Mr. Sailer to devote more of his time to other matters. Mr. James M. Rice, formerly assistant to Mr. J. Wilson Jones, has been appointed Manager of the Government Bond Department. On Tuesday of this week the bank distributed to its employes the regular quarterly bonus, based upon the figures for the last bonus, which, as you will recall, were: 20% on the first $1,500 15% on the next $ 500 10% on the next $ 500 No additional percentage and $5,000 or or or on part thereof part thereof part thereof amounts between $2,501 Both at the present time and during the January distribution, we have received many expressions of thanks, verbal and written, from various department heads and other employes, for our action in this regard, and a general feeling of satisfaction appears to prevail, some of which may be a "hangover" The from the liberal action taken by the bank at the close of last year. cost of living has not decreased to any appreciable extent, the reduction in price of some commodities being offset by the rise in others, while the housing and high rent problems are most serious. FOREIGN MATTERS: With regard to the special arrangement made with the three banks for shipment of silver dollars to China, about which I gave you a memo to take on your trip, the sensational drop in the price of silver has of course made unnecessary,shipments in addition to the $13,000,000 exported in December, January, and February. These silver dollars have all been melted in China and final returns made to us by the three banks on the They show a profit of $190,000 on the exchange operations involved. three shipments after deducting all expenses, and we have been instructed by the Federal Reserve Boaid to pro rate this profit among the Federal reserve banks. I presume you are aware that the Director of the Mint is now buying American-born silver at $1.00 per ounce to replace the The initial regulations 200,000,000 ounces sold under the Pittman Act. issued by the Treasury, governing the purchase of this silver, were so rigorous as to practically nullify the whole arrangement, but amendments have since been made as a result of conferences between miners, smelters and refiners, and Treasury representatives, so that actual purchases by the Mint are now being made. I understand that about five or six million ounces have been bought up to the present time. This has resulted in establishing two markets for silver; one, the domestic-mined and reduced silver, which is eligible for purchase under the Pittman Act and is quoted regularly at 99 1/2 cents, and the other, foreign silver, which is now quoted at about 90 cents. I see no reason why we should not buy silver for the Bank of Japan, if they request it, and I do not believe it would interfere in any way with the Treasury's program. In fact, I understand that the Treasury is not anxious to make purchases under the Pittman Act at $1.00 per ounce. FEDERAL RESERVE BANK OF NEW Governor Strong. 7/2/1920 We have recently gone through the formality of raising the limit from $10,000,000 up to $40,000,000 on the amount in gold which we agree to earmark for de Javasche Bank. They reached the previous limit of $10,000,000 in May and, anticipating considerable expansion in their currency during the coming export season, inquired whether we would grant them further facilities for earmarking, in view of the removal of restrictions on gold exports. We were of course glad to accommodate them, but,rather than remove the roof entirely, we thought it advisable to place some limit on the amount which we were willing to earmark. We informed them that this was done merely in the interest of definiteness and that we saw no reason why the amount could not be increased if they later found it recessary. We received a letter from de Javasche Bank the other day in answer to our notification of your visit, stating that it will he a great pleasure to them to see you. They further stated that Dr. Vissering had informed them of your trip to the East and that they had accordingly communicated with you, in care of the Embassy in Japan. Since your departure the Argentine Government has been making rather heavy withdrawals from their deposit with us. The rate of exchange turned against them early in May after heavy shipments of gold had been made from this country in January, February, March and April, and when our dollar went to a premium the withdrawals commenced. Since the middle of May, their balance has decreased from $72,000,000.00 to $34,000,000.00. I understand that the dollars are released by the Argentine Government, however, only against payment in Buenos Aires of the equivalent in gold at a rate of about 104.25. The Treasury has advised us that beginning this week the Indian Government has removed all restrictions on the private importation of gold. I understand that this is in accordance with the recommendation of the Committee on Indian Exchange and Currency, but that little gold is expected to go to India as a result of this action, owing to the fact that the premium on gold in the Indian bazaars has been reduced to about 4%. Furthermore, in conjunction with the fall in silver, rupees have been weak, being quoted to-day at about 36 cents. The Bank of Japan agreement has been working smoothly. They still keep $4,000,000 in current account and $16,000,000 in bills. In line with the suggestion made by you at one of the recent governors, conferences, we have offered the other reserve banks a participation in the account, and they have all accepted. The current deposit has been split up among them on a pro rata basis and each reserve bank has assumed a proportionate share of the contingent liability involved in guaranteeing payment of the bills. This is, I think, a good principle to work by, as it spreads any shocks which may occur over the entire system. After discussion with Mr. Jay, I will take up with the Board your suggestion with regard to increasing the $20,000,000 maximum provided for in the agreement. We will discuss with Mr. Nagaike, the new representative of the Bank of Japan, in New York, the matter of a possible exchange of confidential data. There have been no changes in the German gold account except an occasional sale of gold bars in London to the Bank of Montreal for account of the India office. These are becoming very infrequent, the last two being for $1,500,000 on February 11 and $1,250,000 on lelay 24. We now have $111,500,000 earmarked with the Bank of England. FEDERAL RESERVE BANK OF NEW YORK 4* Governor Strong. 7/2/20. The preparations which it is generally believed have been made by the British Treasury to meet their share of the Anglo-French bonds maturing next October have been very interesting to watch and the subject of much As you have probably noticed in the press, they have favorable comment. shipped to this country during the past three months about $75,000,000 in gold, and in addition there have been persistent rumors of further large It was reported that approximately shipments to meet this maturity. $50,000,000 of this gold was used by the British to pay off the Argentine Our banks were unloan of that amount which came due here on Way 15. willing to renew this Argentine loan, as the balance of trade was against It was generally us and Argentina was making heavy withdrawals of gold. understood that Great Britain came forward and furnished the dollars to Great Britain pay off the loan, but this has never been confirmed. has probably made provision for her share of the Anglo-French loan by In doing so she has undoubtedly sold securities in this this time. market and has already retired a substantial portion of the maturing bonds. It is not so clear what, if any, steps France has taken to meet her share of the obligation, or whether she will ship some gold or endeavor to refund some part of the bonds. CREDIT SITUATION: The 7% discount rate which became effective June let is undoubtedly working good results, but as yet the improvement effected in our Its general effect, however, is to reserve situation is practically nil. exert a steady and continuous pressure upon our banks and borrowers, and I am sure the improvement will come, though somewhat gradually, within the In any event, it has doubtless prevented loans increasing next few weeks. I should like to see an extra accumulation in our to still higher figures. reserves between now and Autumn to furnish a little slack to let out at that Undoubtedly the "acid test" of the Federal Reserve System is to time. come this fall, and I feel certain that it will stand like a rock and meet all calls which are likely to be made upon it. Unfortunately, we are in a political year and, in consequence, will have to undergo a good deal of criticism from time to time, most of which is not justified. Ii]nclosure No. 1. Our loans to banks and the volume of Federal reserve notes outwithin the last few months we have standing are now at the Maximum point. shipped nearly $50,000,000 of Federal reserve notes to Cuba and our Insular This, together with inflated wages and inflated prices that Possessions. The accompanying prevail, tends to keep our circulation at a high point. statistical information relating to our reserve position as of June 25 will, I am sure, be of interest to you You will observe that New York has undergone a substantial liquidation in net deposits, in loans and in its This reduction, however, has been more than borrowings by "city banks." absorbed by the rest of the country - labor troubles and inadequate transThe portation facilities are responsible for this in large measure. volume and value of "goods in transit" has increased amazingly this year. In reviewing the clearing house statement for last Friday, June 25, I notice that, while the clearing house member banks carried with us a reserve of $550,000,000, they have in addition to this nearly $100,000,000 in "Cash in Vault," which includes their gold holdings, the gold item having been eliminated from their statement some time ago. Of this large surplus cash, the National City Bank has approximately $15,000,000, the Mechanics & Metals, $11,000,000, and the Hanover National,about $8,000,000. As the first two banks are large borrowers here, our executive committee has authorized FEDERAL RESERVE BANK OF NEW YORK 5 Governor Strong. 7/2/20. me to suggest to the proper officers of these institutions the idea that, at a time when their borrowings here are excessive, we think it inappropriate to lend them additional roney for the purpose of locking it up in their vaults,when they could reduce their line with us by depositing some of their surplus gold or other cash holdings. Enclosure No. 2. In this connection, I see in to-day's paper that the Bank of England is having its own troubles, which appear to be due largely to the semi-annua/ window-dressing carried on by the joint-stock banks. Their reserve, as of June 30, 1920, was but 8%, against 15% the previous _week. This was apparently caused (8% is said to be the lowest reserve on record). by an increase in deposits of 55,000,000i. sterling and an increase in I am enclosing a memorandum on this, circulation of 5,000,000 E sterling. showing some interesting figures. BANKERS ACCEPTANCES: Enclosures Nos. 5, 4, 5 and 6. This market is in a fairly satisfactory condition, with a steady growth in the number of country banks throughout the district which are accumulating them as secondary reserve. We of course have had a large portfolio throughout the year. I am anxious to see the time come when these bills will constitute the real secondary reserve of our member banks. In ç connection with the bill market, I am enclosing with this a memorandum prepared by Mr. Kenzel and his assistant, Mr. O'Hara, together with two booklets recently published by the American Acceptance Council. 1r- CALL LOAN SITUATION; The call loan situation leaves much to be desired. My judgment is that the "sharp call loan," based upon non-liquid - in fact, absolutely In the rigid assets, constitutes the missing link in our financial chain. last week we have had high rates, ranging all the way from 8% to 15%. NORTHERN NEW JERSEY CLEARING HOUSE ASSOCIATION: The Northern New Jersey Clearing House Association, which embraces practically all the institutions in Hudson County, is now in operation, using one of our buildings at 37 Liberty Street for its clearing house. This is, I think, a good, constructive piece of work and greatly expedites the prompt collection of checks across the river. I have no doubt that presently Newark, Paterson, and other nearby towns will knock at its door for admittance. BANK EARNINGS: Enclosures Nos. 7 and 8. The earnings of the bank for the six months period ended June 30, 1920, I are approximately $24,000,000, or equal to about 100% on our capital stock. am enclosing a copy of some *intimated figures which Mr. Rounds has prepared for me, as of June 19, which are substantially correct. These figures have not been published, but I am expecting to hear a very loud wail from our member banks when our earning figures for 1920 are given out. I further enclose a copy of our balance sheet, showing resources and liabilities as of June 30, after closing our books, giving figures for total capital and surplus of more than $78,000,000. Governor Harding recently advanced the idea of assessing monthly against each Federal reserve bank a tax based on the averageemount of its notes outstanding. This suggestion did not find favor with this bank, and Mr. *June 30 actual figures now given. FEDERAL RESERVE BANK OF NEW YORK 6- Governor Strong. 7/2/20. Jay has written to Governor Harding, opposing the idea. CONSOLIDATIONS: Since you have been away there have been many consolidations effected between our New York City institutions, with most of which you are There is a well-recognized tendency towards larger banking familiar. units - a movement which I am glad to see, always providing, of course, we are developing bankers sufficiently trained to handle the work properly. CERTIFICATES OF INDEBTEDNESS: Enclosure No. 9. Enclosure No. 10 The United States Treasury Certificates of Indebtedness market has Up to May / the Treasury very materially improved during the past two months. was very much averse to having the certificates traded in at any rate other I finally succeeded in convincing Mr. Leffingwer that than the coupon one. his policy was wrong and was very harmful to the certificates, and he eventually concurred in my views, with the result that open market trading has worked a decided improvement in the certificates situation. In this connection I am enclosing copy of a letter from Messrs. Salomon Bros. & Hutzler addressed to us under date of June 28, which speaks for itself. We have from time to time purchased small amounts of these certificates from them under a sale and repurchase agreement. The Treasury has at last come abreast with the money market by writing in its last issue of certificates interest at the current market rates; 5 3/4% for the January 3, 1921 maturity, and 6% for the longer, June 15, 1921 maturity. These certificates were distributed through the usual channel - the banks, and have been absorbed largely by private investors, such as savings banks, life insurance companies, trust departments of financial institutions, and individuals, so that few of them remain in the banks. I enclose a memo showing the amount of outstanding certificates as of JIlly 15, at t2,200,000,000. LIBERTY LOAN BONDS: With regard to the Liberty Loan bond market, as the credit pressure has become more and more pronounced there has been a great deal of selling on the part of industrial concerns which originally bought the bonds for patriotic reasons and which have since felt obliged to sell in order to supply themselves with necessary funds for current business operations. The Liberty Loan bond market nom, however, is standing on its own feet, the Treasury having withdrawn from the market some six weeks ago. Buying is good and comes largely from those concerns and individuals who regularly accumulate investment funds. Section 6 of the "Victory Lan Act" provides that for the fiscal year beginning July 1, 1920, and for each fiscal year thereafter until all bonds and notes are retired, there will te an appropriation equal to 2 1/2% of the aggregate amount of Liberty Loan bonds and Victory notes outstanding on July 1, 1920, less the amount of any obligations of foreign governments held by the United States on July 1. Estimating the total outstanding at $20,000,000,000 and deducting the foreign obligations of $10,000,000,000, leaves a total of (approximately) $10,000,000,000, 2 1/2% of which amounts to S250,000,000 to be purchased annually by the Treasury. FEDERAL RESERVE BANK OF NEW YORK 7. Governor Strong. 7/2/20. The War Finance Corporation and the United States Grain Corporation are being liquidated and will soon be out of business. Mr. Leffingwel/ has resigned and leaves his position at noon, Mr. Gilbert, his understudy at the Treasury, is to to-morrow, July 3. I am very glad to report that our relations with the Treasury succeed him. Department are of the most cordial nature, and that they are inclined not to fix any interest rate for certificate issues without first obtaining our views on the subject and then following them. NEW BUILDING: Mr. Jay has doubtless written you about our recent real estate purchase on Maiden Lane, acquired for the purpose of erecting immediately a storage warehouse, with the thought in mind that it will be completed by May 1, 1921, thus enabling us to move our staff from 37 Liberty Street to the new building, before we begin tearing down the property on our new home site. CONCLUSIOAL This letter is somewhat of a hodge-podge, because I have merely I hope, however, that you hopped around from one high spot to another. will find some of the information of interest. Tr. Jay and I have not arrived at any definite understanding as to your suggestion of meeting you in England this winter. It is my belief that Mr. Jay rather hopes to go abroad next year with his family. If this is his conclusion, I shall be very glad to adopt your suggestion. I will have a frank talk with Mr. Jay about this matter very soon, because I fee/ that if he would really like to go over this fall, he should have the opportunity of doing so. With the best of luck to you and your party during the balance of your time, I am, Cordially yours, t - BANK OF ENGLAND'S STATEMENT June 50 1920. Circulation Public deposits Other deposits Government securities Other securities Total reserve Bullion Proportion of reserve to liabilities Bank rate June 2.3., 1920, I. 120,060,000 1, 115,240,000 15,647,000 17,869,000 Dec. 2,222,000 175,956,000 118,471,000 Inc. 57,465,000 91,097,000 53,003,000 Inc. 38,094,000 103,188,000 80,139,000 Inc. 23,049,000 16,274,000 21,025,000 Dec. 4,751,000 117,882,136 117,815,415 Inc. 66,721 Dec. 6.91% 8.49% 7 15.40% Inc. b 4,820,000 V 112 6 MARTIN E AVENUE PLAIN Fl EL D, N. J. -41-ee /4.,7, p92c(--- /dre-72e .0 c ,Cv7e-r-rAlt Aee gi97- &,5-etz,6 . /4K& 7,zz 7ke %)1 frg2 1- lel 1/7-e fe,262_ /g17 otAt4_ -7`-at .y :7Th ee_ z'ZP CcA4 A-zete ,12L7 /i1, Pefb 94, L\R 0 112e MARTIN E AVENUE PLAIN Fl ELD, N.J. -r 71J 1J h-dicc 5,-C^C:71A '7G,7 iZecLe-K_ A7° -ee-e_ce 1v4,%a_e_ eee&e 4,et-ree -z z5 /&_sa_ "er. G4( t_vse Q-c7 Ft-t N.)? 1?X'ia Z64 -A:a "7°94 FEDERAL RESERVE BANK s, OF NEW YORK October 21, 1920. Dear Mr. Strong: It seems scarcely possible that we are in the middle of autumn and that three-fourths of your year's vacation has slipped by. We are all delighted to know from the messages you have sent to us and to friends outside that you have fully regained your strength and are longing to get back on the job. This has the right ring to it. All this month I have had it on my mind to sit down and write you a long letter but have permitted various matters to interfere. This afternoon, however, I am determined to fly at it. Acting upon an invitation from the directors of our Buffalo Branch and at the suggestion of our own board, I visited our Buffalo office for the first time about two weeks ago. The impression I gained of the way in which their activities are carried on is altogether favorable. Mr. Gidney has proved to be exactly the right man for the place and the Buffalo bank presidents have taken him not only to their hearts but out on their golf links as well; so that, in some instances, they are calling each other by their first name. I had a most delightful visit with our mutual friend, Mr. Locke. He was good enough to put me up at the Buffalo Club, entertaining me there at a luncheon which most of the Buffalo bank presidents attended, and altogether was exceedingly kind. For Mr. Lockets perusal I took with me your letter written from the Fujiya Hotel at Miyanoshita under date of May 29. He has just returned it, with the comment that it is one of the most interesting letters he has ever read and that there are but few men who could prepare such an exposition. He also told me that he is looking forward to the fulfillment of your promise to spend a week with him at his home in Buffalo some time after your return. He said he proposed that you should be ft free lance, to come and go as you please; but I do know that he is eagerly anticipating such a visit from you. I hope you will try to make it. In my last letter I suggested that the Federal Reserve System would undoubtedly be under fire this autumn. It is - both from political and economic angles and then some/ And while the System as a whole has come through all of these attacks with flying colors, it has at times been just a bit distracting. Applying David Harumts theory that "a few fleas are good for a dog,because they keep him from brooding over the fact that he is a dog," these annoyances serve a useful purpose and should grow less after November 2nd. Mr. Jay is in Washington to-day reading a paper before the National Last week Bank Section of the American Bankers Association Convention. he and I attended a joint conference of the chairmen and governors of the twelve Federal reserve banks with tha Faderel Reserve Board. After the joint discussion, the members of the conference separated, the governors holding their own meeting in one place and the chairmen holding theirs in In this connection I am enclosing for your information a brief Enclosure another. resumed' of the topics considered by the governors and a statement of the No. 1. http://fraser.stlouisfed.org/action had thereon. Federal Reserve Bank of St. Louis 2. FEDERAL RESERVE BANK OF NEW YORK.- Benj. Strong, Esq. 10/21/20. GENERAL CREDIT SITUATION: Enclosure No. 2. Enclosure No. 3. This topic is uppermost in the minds of the commercial, industrial Of and banking world and is one about which volumes are being written. course, there are many vital factors in credit granting under present conSuffice it for me to say that the fall in commodity prices has ditions. The not yet penetrated generally to retail trade, which is quite dull. decline in cotton and wheat, however, is causing great pressure on public authorities for banking accommodation to enable growers to hold off their products from the market for higher prices. Secretary Houston and Governor Harding have had to bear the brunt of their appeals and criticism and have We, like all the countries of stood like a rock - "more power to tem." the world, are feeling the effects of the readjustment period which, I take The it, is going to last quite a spell before normal conditions obtain. editoilal by Dr. Frank Crane, entitled "The End of the Vicious Spiral," expresses, I think, the general feeling that the end of the expansion spiral has been reached and that we are beginning more nearly to approach normal. The sobering-up process, although necessary and wholesome, is always disagreeable while being gone through. I well remember my discussion with you, before you left, on the subject of a general raise in discount rates as the one important means of effecting a control, and while we were somewhat tardy in applying this remedy practically everybody is beginning to recognize that it is the one There are,of course,some critics, notably Senator most effective measure. Owen, Comptroller Williams, and the Manufacturers Record of Baltimore, representing that school of thought whose adherents want the throttle left wide open at all times and who seem to believe that the measures taken This view is vary graphically pictured in the achave been too drastic. companying cartoon by Ding, which I recently clipped from the New York Tribune. Mr. A. Barton Hepburn, who, you will recall, is now a member of the Federal Advisory Council, confirms Mr. Alexander's view that the demand for credit is still fierce. Our directors have invited him to meet with them each month. BANK OPERATIONS: On October 15 the total earning assets of this bank reached a new As a matter of fact, the week of October 15 high total - $1,148,542,000. On October was a red-letter week in many of the departments of the bank. 14, for instance, the transit department handled a total of 327,000 items, a new high record volume of business and 80,000 items above the previous highest single day's total, which occurred just a year ago - October 14, 1919. The reason for the handling of such an enormous volume of items on October 14 is due to the fact that business generally is not held up on October 12 (Columbus Day) as is the business of banks, end the total given above is, consequently, representative of nearly two dayst business. Mr. Sailer has had prepared for me a statement of the turnover transactions of the bank as of Friday, October 15, of which I am enclosing You will observe that the grand total turnover of the bank for that a copy. one day was just a bit short of one billion dollars. The interesting feature of these transactions is the comparative ease with which the turnover was The redemption of $225,000,000 Anglo-French bonds on October 15 effected. was not, of course, reflected in our figures until the following day and merely http://fraser.stlouisfed.org/resulted in some large shifts of reserve balances. Enclosure No. 4. Federal Reserve Bank of St. Louis FEDERAL RESERVE BANK OF NEW YORK 3. .Benj. Strong, Esq. 10/21/20. REDEMPTION OPERATIONS: Enclosure No. 5. In connection with large redemption operations in this market, I am beginning to recognize the fact that we have to think of these in two terms; that is, Federal reserve funds and clearing house funds. All Government operations are, of course, settled in Federal reserve funds. The accompanying comparative statement shows the effect that the quarterly tax certificate redemptions have exercised on our reserve here during several quarterly tax periods. You will observe that in each instance the process results in: (l) An increase in reserve balance of member banks; and (2) A decrease in their borrowings here, the two items approximating the amount, of certificates redeemed, which inevitably necessitates a temporary advance to the Government. Thereupon, checks sent for tax payments proceed to go through the works, bringing down the excess reserve balance of member banks and building up the Treasurer's account, enabling the Treasury promptly to liquidate its indebtedness. Shortly before September 15 I found that we were steadily losing money to other districts through the Gold Settlement Fund. At first I was inclined to think that these heavy withdrawals of funds from our New York member banks were for crop-moving purposes, but a study of the estimated tax receipts and certificate redemptions to be effected on September 15 convinced me that these losses were due, in some measure, to an inequitable distribution of the maturing certificates. Out of $650,000,000 of certificates to be redeemed, New York, with but $210,000,000 of taxes to pay, held some $400,000,000 a large oversupply; while Chicago, for instance, with $125,000,000 of taxes to pay, held but $35,000,000 of the certificates - a large undersupply. In view of the fact that we were sliding under our reserve, I arranged, about one week prior to September 15, to purchase from our member banks some 45,000,000 of these certificates and resell them to some of the other districts that were undersupplied. This sale furnished us with $45,000,000 additional gold and obviated the necessity A little synopsis of Enclosures for rediscounting with other Federal reserve banks. Nos. 6, "movement of funds" appears in Mr. Jay's monthly review under date of September 7, 8 and 30. You will be interested in looking it over, together with the accompanying charts which tend to visualize these figures. The Gold Settlement Fund is 9. certainly a smoothly working machine. CERTIFICATES OF INDEBTEDNESS: Enclosure No. 10. The certificates of indebtedness market is now in excellent shape. J1 active open market obtains for all issues, with the result that our member banks are no longer complaining about certificates of indebtedness being a frozen asset. The interest terms of all Treasury certificates have for months been vary satisfactory, and our relations with the Treasury Department are on a most cocdiel basis. Mr. Gilbert, the Assistant Secretary of the Treasury, has just sent me a statement of the Public Debt of the United States as of June 30, 1920, showing on the reverse side "Securities Owned by the United States Government." FEDERAL RESERVE BANK OF NEW YORK 4. Benj. Strong Esq. 10/21/20. You will be interested to know that Mr. Leffingwell has, as of October 15, rejoined his old firm of Cravath & Henderson, which will hereafter continue under the name of Cravath, Henderson, Leffingwell & DeGersdorff. BILL MARKET: The bill market is slowly but steadily developing on a fairly The one outstanding weakness, to my mind, is the disincline, sound basis. tion of our city banks to make substantial loans to dealers except at I am hoping that rates comparable to the call money rates then obtaining. the educational work along this line, which is steadily going on, may The number of out-of-town banks which presently be productive of results. are purchasing bills is constantly increasing. So far this year we have purchased in excess of $31,000,000 for the account of 186 country banks. BANK CONSOLIDATIONS: The growing tendency towards bigger and fewer banks, which I touched upon in my last letter, continues, and there are numerous consolidations and several large capital increases taking place. The National City Bank is putting out some new stock, increasing its capital from $25,000,000 to 40,000,000, and, with its surplus and undivided Profits of will have a total of more than $100,000,000, thus retaining $65,000,000, first place in this regard. MISCELLANEOUS: The second Organization Chart was brought out September let. Our member banks were notified of this and upon request we furnished them with copies as desired. The comments upon it are most favorable. I feel that Mr. Hopf has done a good piece of work in this regard and believe the adoption of the policy exemplified by the chart has resulted in developing a I am enclosing three copies of the manual Lnclosures great many of our junior officers. 11, 12, 13 for your information and use. ,nclosure To. 14 Our statistical department is now furnishing the general officers with a daily summary of newspaper items relating to the Federal Reserve System and general financial topics, which service we find very useful. FOREIGN MATTERS: Bank of England. The first shipment of gold from the Bank of England arrived here on the Baltic on October 1 And was transferred to the Assay Office on the following day. Since then we have received five more consignments. The Bank of England has sent a schedule of the proposed shipments which shows that they are sending the gold in twelve instalments, the first eleven consisting of 1,000 bars each with a value of about $9,500,000 for each shipment, and the last or twelfth being made up of 750 bars with an approximate value of $7,000,000. According to this schedule, the last shipment should leave England about October 50; so that we shall probably have all of the gold here early in November. FEDERAL RESERVE BANK OF NEW YORK Benj. Strong, Esq. 10/21/20. We left the detailed arrangements for shipment of this gold entirely in the hands of the Bank of England, and I am very favorably impressed with the thorough and expeditious manner in which they are Each shipment is accompanied by an elaborate handling the transaction. statement in book form, showing the number, weight and fineness of each The bars are very carefully packed in saw-dust in boxes, three bar. bars to a box, and a box of assay pieces, carefully wrapped, accomianies All of the gold is being transferred to the Assay each shipment. Office, but from present indications we will not receive the final returns for some time after the last consignment is deposited, as the Assay Office cannot remelt and assay the bars as fast as we are delivering them. However, this will not inconvenience us, as the gold has not been taken out of our reserve. Sir Charles Addis, who, you will remember, is a director of the Bank of England, called here to-day with an introduction from Mr. Montagu I understand that he comes to represent Great Britain at the Norman. conference to be held here in connection with the Chinese Consortium arSir Charles is a most delightful fellow and has a ranged by Mr. Lamont. His observations on some of our laws are well-developed sense of humor. He commented upon the notice posted in the subways very interesting. warning that the "penalty for spitting might be a fine of $500, or impri'eonment for one year, or both," and facetiously remarked that in England the fine for killing a man might be thirty shillings or thirty days. Mr. I made arrangements for Sir Charles to spend next Monday with us. Jay, I know, hopes to have a talk with Sir Charles and we shall want to entertain him at luncheon and extend whatever courtesies we may during the balance of his short stay here. OurErrangement with the Bank of France to asBank of France. sist them in retiring their share of the Anglo-French loan which matured October 15 by accepting a deposit of earmarked gold with them, was not The terms upon which we agreed to accept such a deposit as availed of. outlined in our letter to the Bank of France dated September 9, copy of which I understand was enclosed in Mr. Jay's letter to you, were accepted We recently received a letter from M. de Sieyes, by the Bank of France. their representative in New York, inquiring whether this arrangement was limited to deposits made on or before October 15, 1920, or whether it was I am enclosing a copy of Enclosures intended to continue in force until canceled. Nos. 15-16 this letter which was dated October 13, together with a copy of our reply. You will note that I have explained to M. de Sieyes that the proposition was considered by our directors and the Federal Reserve Board only in the light of an emergency transaction undertaken to assist France in the retirement of her share of the Anglo-French bonds and not as E. continuing We do not feel that we should enter facility in force until canceled. into a commitment to accept gold earmarked with the Bank of France for an indefinite period in the future and without knowing in advance the reasons If an occasion should arise in the future similar for such earmarking. to the retirement of the Anglo-French bonds, we would, in all probability, agree to accept a deposit of earmarked gold with them if they so desired. It was felt that the best way to handle the matter without giving offense to the Bank of France was to grant an extension of three months, thereby intimating our unwillingness to make an indefinite commitment, and bridging the gap until the matter could be discussed personally with M. Robineau when you visit the Bank of France, at which time I presume you will wish to take up with him the question of establishing our relations upon a broader basis similar to the Bank of England agreement. FEDERAL RESERVE BANK OF NEW YORK Enclosure No. 17 Enclosure No. 18. Benj. Strong, Esq. 10/21/20. You will recall that in Mr. Jay's last letter there was enclosed a copy of a cable which we sent to M. Pallain upon his retirement as governor. You will be interested in the enclosed copy of a translation of M. Pallain's acknowledgment of that cablegram. We have been informed by the New York representative of the Credit Commerciale de France that M. Pallain has just joined the board of directors of that institution. I am enclosing for your information copy of a Russian Gold. cablegram received from the Bank of England as to the status of importations of Russian Gold into this country, together with our reply. Recently, about five million Russian gold rubles arrived in New York from Sweden consigned to Brown Brothers & Company which, together with a small importation to some unknown importing concern in New York, was offered to the Assay Office. The Assay Office refused to take the rubles until instructions were received from Washington, and the Treasury Department has advised 'Brown Brothers that before a definite answer can be given, the Treasury must know whether Brown Brothers & Company will warrant without qualification the title to the gold and assume responsibility for any complications which might arise in the future as a result of the Assay Office's accepting delivery of the rubles. Brown Brothers have given an unqualified guarantee as to title but, to my knowledge, the matter has not progressed beyond that point, the Treasury still having it under consideration. The State Department has received confidential information from Sweden that the five mil/ion gold rubles mentioned above are being sent into this Mr. Montagu Norman, in a recent country to finance radical propaganda. letter, stated that their policy in England in regard to Russian gold had been practically the same as that outlined in our cable to the Bank of England. Bank of Japan. I have talked with Mr. Ichinomiya of the Yokohama Specie Bank, Ltd., regarding the matters outlined in your recent letters from Japan. We are giving Mr. Nagaike each week some information regarding business and credit conditions for his cable to the Bank of Japan, and he is sending us some data as to conditions in Japan. The special representative from the Bank of Japan, Mr. Yashikawa, whom you mentioned in a recent letter, called at the bank a short time ago and is now making a thorough study of our operations under the guidance of Mr. Jefferson. He plans to spend about six weeks here examining carefully the workings of each department. We are collecting a set of books to be sent to Governor Inouye, in accordance with your recent request. Mr. Ichinomiya called at the bank to discuss Japanese operations in this market, their balances here,and the probable withdrawal of gold during the autumn. He said that his bank had pursued a very conservative course since last February, with the result that they are now in a strong cash position and have accumulated substantial cash balances both in this market and at home. He further stated that, taking the Japanese banks as a whole and including balances of the Japanese Government, they have in this market, in the form of cash, Treasury certificates, and bi/ls, approximately $300,000,000, one-third of which is invested in United States FEDERAL RESERVE BANK OF NEW YORK 7- Benj. Strong, Esq. 10/21/20. They have, within the past few Treasury certificates of indebtedness. months, shipped to Japan about $20,000,000 of gold, and Mr. Ichinomiya is of the opinion that it will probably be necessary to ship a further moderate amount of gold (not exceeding *8,000,000 to *10,000,000 a He stated also that they fully appreciate the general month) this year. credit situation that exists in this country at the present time and that they propose to make their gold withdrawals just as moderate as possible. I thanked Mr. Ichinomiya for coming in and chatting over the situation, and assured him that we are of course quite prepared to facilitate the export of gold to which he alluded. Mr. S. Imamura, New York Agent of The Sumitomo Bank, Ltd., called to say that he has had the pleasure of meeting you in Japan and left with me a few snapshots of your party, which we have all enjoyed looking at. You may be interested to Japan's Plan to Stabilize Silk Prices. know that in order to stabilize the prices of raw silk in Japan the silk houses, in conjunction with the government, have organized a concern,"The We Imperial Raw Silk Corporation," to purchase raw silk at a fixed price. learn from the New York representative of the Bank of Japan that the capital of this company is 15,000,000 yen, all to be subscribed by the In addition to exporters, manufacturers, and other branches of the trade. exercising general supervision over the activities of the company the Japanese government is empowered to lend up to 50,000,000 yen for the purpose of purchasing silk, these transactions being done through the All purchases are to be made at 16.50 yen Hippottiek Bank of Japan. (about $8.00) per 1,000 kin (about 1,325 pounds) "extra" and 1,500 yen for These are approximately the prevailing prices, and "Shinshui No. 1." for that reason it is not likely the purchasing by the Imperial Raw Silk Corporation will be extensive for the present unless raw siik again drops to its low price of about 1,000 yen for "extra" reached during the crisis in April and May. It has occurred to me that in connection with your stay in London and Paris you might like some information regarding British and French loans There are the $50,000,000 City of maturing in this country' during 1921. In addition, the Paris five-year 6% gold bonds maturing October 15, 1921. new $100,000,000 twenty-five year external French Joan just floated in this market calls for an annual payment to J. P. Morgan & Company of *4,400,000 as a sinking fund to be applied to the reduction of the principal to the During the first five years payments are to amount of $4,000,000 annually. be made by the French Government quarterly and to be used to buy up these bonds in the market at 110. The British Government has a maturity of $150,000,000 to meet on November 1, 1921, when the United Kingdom of Great Britain and Ireland fiveWe are informed that at present there are year 5 1/2% bonds come due. about *129,000,000 of these bonds outstanding, the difference representing The Canadian Government bonds already bought up by the British Government. has two loans falling due here next year, one for $25,000,000 being five-year 5% gold bonds due April 1, 1921, and the other for $15,000,000 in two-year 5 1/2% gold notes due August 1, 1921. FEDERAL RESERVE BANK OF NEW YORK 8- Benj. Strong, Esq. 10/21/20. CLOSING: If so, both he and Your son, Ben, I take it, is still with you. you will be interested in the following report from Mr. Gilbart regarding Mr. Edward Douglas: "During the short time he has been with us, Mr. He has covered Douglas has made remarkable progress. almost every position in the discount department with credit to himself and the highest commendation from his He is an exception to the average chief and supervisors. college man - sticks to his job, does not hesitate to do anything that is asked of him to the best of his ability, does not think that he knows more about the work than his chief, and is well liked by all in the department, because he has a splendid personality and because he does not try to impress upon his co-workers the fact that he is better He has a quiet, determined manner and educated than they. is ambitious to learn everything he possibly can. "When he came with us, I told him it was our idea to have him work for short periods in all the various departments in order that he might eventually qualify for an With this in mind, executive or semi-executive position. I spoke to him two months ago about transferring him, but he said that he felt there was a great deal more that he would like to learn about the discount department and reniested I spoke to him again, last that I defer the transfer. week, about taking up some new work in another division, but he again requested that he be left in the discount department a short time longer, as he had been given some new work which he said he had not quite mastered." The political campaign has been rather a quiet affair without quite At this writing, it looks very like Harding. the usual public interest in it. Mr. Jay has cabled you that under existing credit conditions it seems wiser for both of us to remain hereon the job this fall rather than to make the suggested I am sure you. will appreciate the wisdom of this decision. trip abroad. We are all looking forward to your return to the bank the first of the year and are glad that you are feeling so fit. Possibly this may be my last line to you before you return; in any event, it may not reach you much before the holiday season, so I just want to take this opportunity to wish you and your party the Season,s best. Sincerely yours, J. H. CASE. C.._ L c .s NEWSPAPER REVIEU ON rlDERAL RESERVE SYSTEM AND FINANCIAL SITUATION October 21,1920 No.35 Daily summary prepared by the Federal Reserve Bank of New York, Statistics Department, Reference Library. The original clippings may be obtained from the Library, phone Automatic 230, Bell 343. A.B.A CONVENTION Federal Reserve. State bank relations - Resolution adopted "condemAng and doprociatiLs method employed by the Board" in its relation with State banks which are not members of the System. (New York Tribune, p.1) Par collection - Par clearance of checks subject of heated debate, Charles Claiborne, of New Orleans, contending that banks were entitled to compensation and C.H.Wolfe, of Philadelphia defending staunchly Reserve regulation which "saved bankers and commercial interests 4135,000,000 last yearN." (New York Herald, p.20: New York Commercial, p. 1 and 3) Credkta - Position of Board on essential credits endorsed by Dr. Parker Willis, who pointed out it involved the same general principles of sound banking that had always been recognized. (Journal of Coerce, D.9) EstimAtes for coming fiscal year. Government estimates - 44,000,000,000 of Government expenditures, during next fiscal year forecast by Secretary Houston. Plans to redeem entire "floating debt" by end of fiscal year 1922; to this end tax basis must not be so law as to allow revenues to fall below expectations. (Journal of Commerce, p.9) Export financing - 4100,000,000 corporation to aid United States foreign trade and to operate under :dge act will be established about January 1921. One of the recommendations is that representatives from Federal Reserve districts should be on board of directors. (Journal of Cbmaerce, p.1 and 9) Liberty bonds - Treasury is opposed to refunding of Liberty bonds into obligations bearing a higher rate of interest. Mall Street Journal, p.7) Editorial comment - A.B.A. and not Reserve Board proper source of possible help for farmers. (World, p.12) Report on "stabilized dollar " emphasizes injustice of a scheme which does not stabilize the goods side at same time as money side, as only real stabilizing factor is larger output. (Journal of Commerce, p.6) Newspaper Review, 10/21/20. No.35. 7. 2 A.B.A. CONVENTION Editorial comment (continued) 8. Proposed Edge law corporation will provide machinery for financing exports with investment rather than commercial banking funds and thus will secure greater public support. (Journal of Commerce, p.6) UNITED STATES - GENERAL Farmers 9."Strike of the Farmers" useless in face of world downward trend of prices, as is criticism of Federal Reserve Banks which have extended five times asmmuah credit as was possible under old gystem. Orderly marketing only possible basis for further advances. Wall Street Journal, p.1, Editorial) "Country cannot afford to bond itself any further far the benefit of a special interest." (Journal of Commerce, p.6) Trade acoeptances. Trade acceptances are gaining in favor as indicated by result of questionnaire sent to paint trade which shows that 40% of members are using them. (New York Commercial, p.9) Waterway for wheat trade. Deep sea waterway through Great Lakes and St. Lawrence river endorsed by Herbert Hoover as means of increasing production of wheat for export,through estimated saving to farmers of at least 10 cents per bushel. (World, p.17) (kJ& 12. Gold stock of United States 42,704,672,504 on October 1, which is highest figure since March 1, 1920. (New York Commercial, p.3) Monev market. Easier money market soon is predicted by M.L.Farrell, who gives detailed reasons. (Financial America, p.9) Savings deposits. Savings deposits grow in New York State inppite of high cost of living. The number of depositors on July 1 being 112,047 more than on January 1. (Tribune, p.11) Taxation Repeal of excess profits tax,recommended by National Industrial Conference Board, - the loss of revenue to be offset by other taxes. (New York Times, p.17) Philippine bonds. Philippine 46,000,000 bond issue had three other bids besides high offer of W. A. Read & Co. and Kuhn, Loeb & Co., bidding jointly. (Financial Ameriaa, p.4) Newspaper Review, 10/21/20. No.35. - 3 FOREIGN. Cuban loan Cuba needs aid of American banks to finance sugar. Similar condition might result in this country if our banks could not obtain loans from each other. Moratorium probably be lifted November 1. Wall Street Journal, p.12) Dollar securities committee. Operations of American dollar securities committee summarized from official report. Of interest in connection with approaching date for paying off Anglo-French 5% bonds. (Journal of Commerce, p.9) French loan. French national 6% loan of 1920, is intended in part for redemption currency of national banks of France. Subscriptions are opened. (New York Commercial, p.5) of officially French public stirred by high interest rates on $100,000,000 loan, but newspapers point out that it is reasonable when compared with Belgian and Swiss loan. (Tribune, p.19) Capita for Germanv. Germany would like United States capital in Ruhr coal region to remove menace of French seizure. Speech by Deputy in Bavarian parliament. (New York Commercial, p.1) Germany Germany's financial misery grows, due to new depression of the mark, discouraging industrial reports, withdrawal of German credits (Journal of Commerce, p.11) by Americans and fe4r of Bolshevism. Brazilian loan An attempt to confirm report of 440,000,000 Brazilian loan is without (Journal of Commerce, p.10) result. China. United States signs trade treaty with China, providing graduated increases in 5 per cent flat rate permitted on imports. (New York American, p.9) Russian currency. How new Russian "czars" are deluding their own people and flooding world with promises to pay not intended to be kept is described by (Wall Street Journal, p.6) Fred. J. Kent at A.B.A. Danish loan. Amount given today is 425,000,000 instead of 420,000,000 given yesterday. (Financial America, p.4) ,IC/24.A_AAv FTL_c Lu_s urC COPY OF CABLE FROM BANK OF ENGLAND. "Can you inform us in confidence whether gold from Soviet Government or of Soviet origin is allowed to be imported into United States." COPY OF OUR REPLY. "onfidential Replying to your telegram of September 17 there are at present no legal restrictions on physical import Russian gold into United States. Russian gold from Sweden has been offered for sale here to several banks but we understand without success banks being unwilling to buy such gold because of uncertain title and possibility of future attachment. not care to buy Russian gold at this time. For similar reasons we would As to purchases of Russian gold by United States mint or assay offices we understand none has yet been presented and action of Treasury will depend largely on particular circumstances prevailing at that time but Treasury would insist that depositors of such gold be thoroughly responsible parties and that they warrant without qualification or reservation whatever title to the gold. Furtheremore in case Bolshevik gold presented to any mint or assay office Treasury would probably desire assurance from State Department that title to the gold if purchased would be valid internationally and such assurance will not be sought until specific case presented." FEDERAL RESERVE BANK OF NEW YORK November 26, 1920. Dear Governor Strong: Both Mr. Jay and I have written you regarding our arrangement with the Bank of France to accept earmarked gold with them against corresponding credit to their account here in New York, but it occurs to me that since your mail has been sent to Morgan, Grenfell & Company, London, you may not receive these letters before your visit to the Bank of France, and as there is one phase of the matter which Governor Robineau will undoubtedly discuss with you, I thought it best to write to you again on the subject direct to the Bank of France. I am enclosing copy of our letter to the Bank of France dated September 9 which sets forth in detail the terms upon which we agreed to accept earmarked gold with them in order to assist in the retirement of France's share of the Anglo-French loan which matured October 15. The conditions set forth in this letter have been accepted by the Bank of France. However, they did not avail themselves of this arrangement prior to the maturity of the Anglo-French loan. On October 13, M. de Sieyes, the representative of the Bank of France in New York, inquired of us whether this arrangement was limited to deposits made on or before October 15, 1920, or whether it was intended to continue in force until canceled. I am enclosing a copy of this letter together with a copy of our reply. You will note that I have explained to M. de Sieyes that the proposition was considered by our directors and the Federal Reserve Board only in the light of an emergency transaction undertaken to assist France in the retirement of her share of the Anglo-French bonds and not as a continuing facility in force until canceled. We do not feel that we should enter into a commitment to accept gold earmarked with the Bank of France for an indefinite period in the future and without knowing in advance the reasons for such earmarking. If an occasion should arise in the future, similar to the retirement of the Anglo-French bonds, we mould, in 911 probability, agree to accept a deposit of earmarked gold with them if they so desired. It was felt that the best way to handle the matter without giving offense to the Bank of France was to grant an extension of three months, thereby intimating our unwillingness to make an indefinite commitment, and bridging the gap until the matter could be discussed personally with M. Robineau when you visit the Bank of France, at which time I presume you will wish to take up with him the question of establishing our relations upon a broader basis similar to the Bank of England agreement. On October 30, the Bank of Franca earmarked for olir account gold to the value of $3,300,000, for which we have given them credit here on our books. This deposit of earmarked gold has been prorated among all of the Federal Reserve Banks. Wepaid the t3,300,000 to J. P. Morgan to-day by order of the Bank of France. The foregoing was all included in a letter which I wrote you under date of October 21 and which was mailed to you at London and, es I explained in the beginning, this present letter is written merely to avoid the possibility of your visiting the Bank of France without knowledge of this whole matter. e FEDERAL RESERVE BANK OF NEW YORK-2.---- 11/26/20. I had hoped to write you a good newsy letter by this mail, but the pressure has been particularly heavy the past few weeks and I have not succeeded in my purpose in this regard. Everything is moving along just as satisfactorily as could be expected with the liquidation that has been going on. Whenever a weak situation develops, our bankers are disposed to sit in and nurse it along. Sincerely yours, /712' J. H. CASE 4! Benjamin Strong, Esq., C/o Bank of France, Paris, France. 169/176 words December 4, 1920. enjamin Strang, c/o Morgan, Grenfell & Co., Loddon - We all send you our affectionate greetinge upon your return to this side of the world. Conditions now as we see them here show a recurrence of drain upon New York by interior. Our reserve percentage last night was 37.8 after selling to Boston 20 millions of certificates maturing December 15. of rediscounts still out. Have 6 millions Decline from 40.8 per cent. last week result of heavy wire transfers_ out of district and increase of 65 millions in loans. Reserve position of system last week was 44.4 highest since July, but some decline expected today. Possible cause may be preparations for December 15 tax payments, which come at a.bad time for manufacturers and others Who have been caught on declining cmmodity market. Reg4rd banking situation in this district perfectly sound, and one or two flurries outside city involving member banks have been nipped in the bud. Experience of Massachusetts and North Dakota nonmember state banks has furnished vivid example of system's complete adequacy at this time. You probably will hear rumors about largest trust company and largest foreign trade house in New York. These are malicious and unqualifiedly false. Definite statements were cabled abroad by a newageney Which had tie name of German uropagandists before our entrance into the mar. Similar rumors circulated here for stockmarket purposes and have been entirelydiscredited. Harding and Houston are still bombarded by western and. southern inflationists in and out of Congress, but are adamant. Trice declines con- goods tinue but chief difficulty seems to be slow movement or complete stoppage of in some lines. This last is necessarily temporary and will yield to consumer demand as soon as retailers cut prices cdrreenondingly to reductions by wholesalers. We are taking over sub treasury Monday. Zeilinga arrives next Tuesday, leaving for Amsterdam Saturday, and we are planning to takegood care of him. CASE OX-18 Cable Order FEDERAL RESERVE BANK OF NEW YORK (Outgoing Message) Decembe-r-O., Data of Cablegram sent to CODING DEPARTMENT. From Mr. Case - a-at, Please code the following message addressed to the amOSS, 1101ea, Care of Hiarjee, Parity. Number of Cable Cr, (If Payment Cable) Clad to learn your safe arrival proposed itinerary stop Ravo no suggestions regarding your In vies of first earmarked gold transaction recently consummated with Bank of Prance you will doubtless actual procedure under such transactions indefinitely stop Zeilinga here as been entertained a§ PP Due Ameterdam twentysecond Banks appointment as our a erected to ascertain their i Res asked probable duration as it does not feel that gold held by forel believe he os -v21 \a4 aye en ( unted as reserve hould hVslil visit with him and u1'4 w sails on Rotterdam eleventh e\-to e top Have advised him Java agentia cor4spoaden and have discussed with him informally more comprehensive reciprocal agreement along following lines which meets his approval One Each bank to act \\\ maintain an account be kept free of -,\ d correapondent thhe\dtheVeubject to check Charges erid commissions, except custody charges for the ether F Two Each bank may Three The respective accounts to s to actual outofpocket expenses or bank to purchase bills for account of the other as and when \F,a,c//A so requested such purchases to be at current market rates Five as agent for the other in receiving and holding bills remitted for collection Six No interest on aalances in current account Each bank will act acceptance and Seven The debtor Time (Dept. Head's Initial) (Officer's Initial) FX18 Cable Order FEDERAL RESERVE BANK OF NEW YORK (Outgoing Message) Date Coy of Cablegram sent to CODING DEPARTMENT. From Please code the following message addressed to the 3 iklq S ."1921 Number of Cable -2- (If Payment Cable) institution will set aside and earmark gold on a bullion basis representing balancer due Eight Information will be exchanged respecting r 't matters nnd financial conditions stop Pending receipt your views guaranteeing payment bilis bought for their their indorsement stop conclude srrangements with Nedeilc I a, am'tamed November 1918 ,ozt when we opened account with Neder1ande4 tip& such bills without t N erlandsche Bank our eserve --LIkaA0 count g disd Executive Committ agent and correspondent and approval, are investing five mi discussed question cu4,61,.ct4rl1A' Assume you will want to aMury kri3O444....c dsche Bank bill lar to thoseA withJava stop We Java Bank CASE Time (Dept. Head's Initial) (Officer's Initial) A-1996 a Obviously if "liquidation" or "stabilization" of the existing Note; situation are to be regarded as the objectives of the Feaeral Reserve policy of credit control, a condition which can be regarded as "normal" will be attained very much more quickly than if the objective is a reduction in considerable amount of the total volume of credit. credit Methods of credit control. different methods of credit control. 5. Consideration of the efficacy of Horizontal increase of rates, especially of commercial rates; a canvass of the experience of banks which have put into effect a 7% commercial rate, to wit, New York, Boston, Chicago and Minneapolis. Progressive rate schedules starting with 6% as a basic rate; a canvass of the experience of Federal Reserve Banks of Kansas City, Dallas, St. Louis and Atlanta. Other methods of dealing with the situation, such as the implication that increased offerings by member banks will force higher rates or recourse to the progressive rate; a canvass of the experience of the Federal Reserve Banks of Cleveland, Philadelphia, Richmend are San Francisco. Restricting issues of Federal Reserve notes Reserve Banks as a potential Means of enforcing canvass of English experience and views. to Federal credit control; 6. Inter-Reserve Bank reaiscounts as related to the problem of credit control. Is the existing policy and practice with respect to such rediscounts satisfactory and sound? To effect an approximate equalization of reserves? At the same rate fixed for its member banks by granting the accommodation? the bank Note: When recourse was first had to inter-bank rediscounts it was thought that the value of a Federal Reserve Bank's endorsement was entitled to recognition' in the form of a reduced discount rate. lore recently this idea has been abandoned and rediscount transactions between Federal aeserve Banks are maae at the rates established for member banks by the Federal Reserve Bank extending the accommodation. The question now arises, however, whether a Federal Reserve Bank which has been able to maintain high reserves by reducine the demands for accommodations from its awn member banks, which are its depositors, should be required to extend accommodations to member banks in other districts through the medium of their Federal Reserve Banks at the same rates as are established for their own members. -3II. Y-1988 a Ikelib bWURED BY LIBSrTY BU.NJkOV VIJTORY Is there any moral obligetion resting upon any of the Federal Reserve Banks to establish rates lower than commercial rates for paper of this classification? Would liquidetion of loans of this class be retarded or promoted by the establishment of lower rates? If lover rates are deemed desirable, would it be equitable and practicable to have such rates apple to originel subscribers only? Should. member banks' collaterel notes be fully secured, taking market value instead of face value as a basis? If so, how and when could the new policy be put into effect with a minimum of friction? XII. DER A L R ESE: VE NOTE ISSUEL Is the note-issue policy of the Federal Reserve system subject to legitimate criticism? What connection is there between chenges in the volume of credit and the volume of currency? Is there any difference in relation to effect upon prices between the volume of credit and the volume of currency? properly 'Jan the note-issue policy of the itderel reserve system be charged with any imeortant responsibility for inflated prices, If so, what has been the responsibility and in whet way coos the issue of Federal Reseeve netes promote or assist inflation? Oen the aooepted principles of bank-note currency regulation, applicable in normal circumstances when the eommeroe of the world is conducted on a gold standard, be safely teken as a guide in the abnormal eircurnstanoes now eeisting, when the gold standard it virtually suspended, exoept In the United Ltates and Japan? 6.1h oonnection with tbe pollee. of credit control should the present note-isoue police of the Federal Reserve system be changed and restrictions be thrown around the issue of Federal Reserve notes? 7. If the Iseue of Federal eserve notes should be restricted, what fort should the restriction take and what effect yould different methods of restriction have? eae Xe.1998 a Imposition of charges against Federal Reserve notes upon the uncovered part of circulation issued to them at a given rate, for example, a fixed rate of 5% or a rate varying with the commercial rate. Would it be practicable to establish for each member bank a so-called normal currency limit and to impose charges upon member banks calling for notes in excess of their limit? Would it be advisable while continuing to have the Federal Reserve Banks pay all transportation charges on incoming currency, to have shipments of outgoing currency made at the eepense of the consignees? Restriction by definition of the character of the paper acceptable as collateral by the Federal Reserve Agent against the issue of Federal Reserve notes. ahould member banks' collateral notes or customers' notes secured by Government obligations be taken as collateral for Federal Reserve notes? Limitation of the total volume of Federal Reserve notes by the Yederal Reserve Board, the maximum amount being fixed pro (Jae Federal Reserve each Federal Reserve Bank. power to accept in part or to Federal Reserve notes.) rata for Board has statutory reject entirely all applications for Would restriction of note issues in any of the above mentioned ways at would be the effect upon the commerce and business of the country? operate to promote a better control of credit, and if so, It is suggested that the Chairman of the Board of Directors of each Federal Reserve Bank bring this tentative program to the attention of the Executive Committee and that a committee of the Governors confer by correspondence with a committee of Federal Reserve Aeents, and assign to each Governor and Federal Reserve Agent a part of the foregoine program for discussion. It is desirable that the program be covered fully and that each partictpant in the conference prepare carefully a paper treating upon the particular subject assigned to him. CDE I ,1514-4-20 1 FEDERAL RESERVE SANK COPY OF TELEGRAM SENT IN CIPHER OF NEW YORK DICTATED BY CASH DEPARTMENT CODES & TESTS SEC. TIME COPY FOR WIRE TRANSFER DIVISION December 15, 1920. stronik_ 0/0 Harjes, Paris. k #8 referring to your 11 executive committee cordially agrees delay your sailing date and Approves reciprocal guarantee of bills with both Java and Nederlandsche ban'yx Reserve Board also approves. Els. heLaren and Hendrickm married last Sunday sailing from Frisco for Honolulu December 22. e CDE 1.I-15M-4-20 COPY OF TELEGRAM SENT IN CIPHER FEDERAL RESERVE BANK OF NEW YORK TIME DICTATED BY 14 Cords Via CASH DEPARTMENT CODES & TESTS SEC. !: COPY FORTANIRE TRANSFER DIVISION -4-imi2% Strong, Joe IL; :JOr Bank of .ngland, London. '7) (Tos7were) Reserve Board sends you greotings and bust wishes or Merry Christmas and prosperous Now Year. Case. 1910 MISC. 34.1.1161.4.0 FEDERAL RESERVE BANK OF NEW YORK SENT BY SEND TO FILES Albt COPY OFt'llAiLtditAisi J:VW Lvi,cemir ...4,J1jam1n Strong C61.* Bank of gingtibd dokt, itfel%nd - tiolleoprweler-recelkopod. bt;ct hrietms ,sreetinkA to vu Yrom dl. mebehge number fifteen tomorrow. Ce Jey Cr.ge. Fed. hrs. bk. of het York. ill .anster (7.\ _ P km (IL EST 1404 UNION ANGLO -AMERICAN 7,Z21- CA B WESTERN UNION DIRECT UNITED STATE' "illo 'G RAM Via Western Union. RECEIVED AT 22, CREAT WINCHESTER STREET, LONDON, E.C.2. DEC A Fl 2C9/24 NETYORK 22 BENJAMIN STRONG CARE BANK OF ENG LAND LONDON BEET XMAS GREETINGS TO YOU FROM ALL WI LL ANSWER MESSAGE NUMBER FIFTEEN T OMORROT CASE JAY DATED 2i No inquiry respecting this Message can be attended to without the production of this paper. THE WESTERN UNION TELECRAPH-CABLE SYSTEM. THE LARGEST TELEGRAPH AND CABLE SYSTEM IN EXISTENCE. DUPLEXED ATLANTIC CABLES. OVER 25,500 OFFICES AND 1,500,000 MILES OF WIRE, Direct Wires from Cable Stations to all the principal commercial centres in Great Britain, United States and Canada, and Direct connection with Central America, West Indies, South America, Australia, New Zealand, Fanning, Fiji, ancl Norfolk Islands. DIRECT AND EXCLUSIVE CONNECTION WITH MEXICO. RECEIVING OFFICES IN THE UNITED KINGDOM : LONDON: Western Union House, 22, Gt. Winchester Street, E.G. Telephone Nos. Telephone Nom. 2274 LIVERPOOL: C 4 & 5, Exchange Buildings (cornerCentral (Private Branch (Prhae Branch Exchange) The Baltic, St. Mary Axe, .E.C.... 52, Charing Cross, S.W. 10, Holborn Viaduct, E.G.... Mark Lane, E.C. Royal Exchange, E.C. Donington House, Norfolk Street, W.C. 48, Tooley Street, S.E. 5 Also Regent 3073. CO5Perall Offices ...1 London Wall 800 City 3717 Hop 5275 of Chapel Street and Rumford Street) BRISTOL: Canada Rouse, Baldwin Street BRADFORD: 10, Forster Square ..., DUNDEE: 1, Panmure Street ... EDINBURGH: 50, Frederick Street GLASGOW: 23, Waterloo Street .., '71 . MANCHESTER: 30, Brown Street ... NEWCASTLE-ON-TYNE: 1, Side .., ' BUDAPEST: BERLIN: CHRISTIANIA: ... (Privnte Branch Exchange) City 1455 Central 1174 Central 1329 WESTERN UNION HOUSE, 22, GREAT WINCHESTER STREET, LONDON, E.G. 2. TELEPHONE No.: LONDON WALL 800 (Private Branch Exchange). PRINCIPAL CONTINENTAL OFFICES AND AGENCIES AMSTERDAM: ANTWERP: BERGEN: BARCELONA: Central 309 Bradford 771 Central 1351 400 4, Weesperzijde 6, Chaussee de Malines Leppen Tyskebryggen Paseo de Gracia 94 Caspe 57 Csengery-Utca. 7 VI 2 140, Kurfuerstendamm 4, Prinzensgade COPENHAGEN GENOA: HAVRE: HAMBURG: MILAN: MADRID: 4, Jornbanegacje Via San Lorenzo 11-14 118, Boulevard Strasbourg 22, Monckeberstrasse Corso Vittorio Emanuele 31 Juan de Mena 15 MARSEILLES: NAPLES: PARIS: PRAGUE: ROME: z 5a, Rue Beauvau Via Marina Nuova 14/19 1, Rue Auber 37, Rue Caumartin Heinrichgasse 7 Piazza di Spagna 4950 STOCKHOLM: Regeringsgatan 10 Zelinkagasse 13 VIENNA: Pelikanstrasse 22 ZURICH: The Public are recommended to hand in their Telegrams at the Company's St,lions, where free receipts are given for the amounts charged. Telegrams for this Company's Cables are also received at all Post Office Telegraph Stations ; but in order to insure transmission by the Western Union Telegraph-Cable System, the forms upon which Telegrams are written should be marked "Via Western Union," "Via Anglo" or "Via Direct." This indication is signalled free of charge. Cable addresses .are registered free of charge. All important Telegrams should be repeated, for which an additional quarter rate is charged. I FEDERAL RESERVE bANtk OF NEW YORK COR "SPONDENCE Governor Strong FROM DATE x July 29, 1921. SUBJECT J. H. Case I strongly recommend that steps be taken to bring about emergency legislation; "To enable a national bank to obtain relief in emergency by use of other than eligible paperOr United States bonds: Under existing laws no member bank can obtain funds, lawfully, from its Federal reserve bank however urgent the need except upon security .of-Uhited States obligations or upon paper of a certain character and description shown to be eligible under the regulations of the Federal Reserve Board. There are many member banks, including some of the largest and most ably and conservatively managed, which include in their assets large amounts of securities of a high character including state municipal bonds, prior lien ra4lroad mortgages and industrial mortgage bonds of unquestioned merit and value. If banks in this condition should have the misfortune to be subjected to a run upon their deposits, they would be unable to obtain loans or advances from their Federal reserve banks except to the extent of eligible paper and United States bonds which they may have on hand. In times such as we have been through in the past few years, they would also find it impossible or impracticable to convert even their high class securities into money except at a grave sacrifice, if at all, and attempts to realize upon large blocks of securities might precipitate further trouble on such markets as .we have sometimeS had in the past." An amendment to the Federal Reserve Act which would make it possible, under proper safeguard for a member bank which is found to be in sound and solvent condition to obtain in an emergency from its Federal reserve bank upon its obligations, other than eligible paper or United States Government securities, when such loans are recommended by the reserve bank of its district and approved by not less than three-fourths of the members of the Federal Reserve Board, would prove distinctly sAlutary and would largely dispel the nervousness which sometimes arises in financial circles because of the possible dangers of the situation as the ANIMMIIIIMIr '11111r11- ,CE CORRE I I C=1-1C011i L., OF NEW YORK I DATE NIDENCE olternor_Strong I July 29, 1921. SUBJECT. J. H. Case - 2law nowstands. This memorandum is largely based upon a recommendation made by the former Comptroller of the Currency and found on pages 52 and 53 of volume 1 of his report, t0444, leA4 for the year 1920. , 9A, For your further information Treasury Department Circular Yo. mw (copy of which is attached) dated October 6, 1917, under conditions therein set forth permits us to receive as eligible collateral to secure deposits of Government funds, approved bonds listed on some recognized stock exchange and other securities not eligible as collateral in obtaining loans from Federal reserve banks. Mr. Barrows has just handed me a copy of a bill covering this subject, which he found among the Liberty Loan records of kr. Curtis and which he thinks A bill enacted in substantially this was pending during the latter part of 1917. form would, it seems to me, about cover the sitUation. P. S. 1 FEDERAL RESERVE BANK OF NEW YORK September 6, 1921. 2:45 o'clock p. m. Dear Governor Strong: Everything opened up very quietly here at:the bank to-day. Our loans increased approximately $1,000,000, with a/loss of $20,000,000 through the Gold Settlement Fund, which left our reserye position at 72.5. Mr. Gilbert, of the Treasury, was palled back to New York from Washington last night, owing to a sudden t rn for the worse in his father's He came into our office this/morning and had been here but condition. minutes when he was summoned tack to the hospital. a few Before leaving, he told me he did not believe it possible for ;his father to live through the day, and he has, consequently, arranged to spfind a few days in this city, making our (The Treasury has practically agreed to the terms office his headquarters. we discussed with regard to its new security offering.) Mr. Cromwell, of the few York Stock Exchange, called at the bank and I had a very/satisfactory talk with him. He is in full ac- V::::Morning, cord with the idea of substitAting Mr. Frew for Mr. McGarrah, in the matter Mr. Cromwell discussed briefly the question looking after call money affairs. of 'making a change, from a mission by members of the 4aily kock of to a weekly basis, in the matter of the sub, exchange of reports to this bank, the thought being that if, later, this change should prove undesirable, the present method of daily reporting could be resumed. As it is Mr. Cromwell's opinion that there is no haste about making the change, we are leaving the matter open, with the understanding that he will see Mr. Frew and urge upon him the desirability of stepping into the breach and taking Mr. McGarrah's retires. place, when Mr. McGarrah le> Benj. Strong, Esq. fl 9/6/21. -2- For your information I am enclosing the following: Translation of cablegram received to-day from the Bank of England; Current letter from Whaley-Eaton Service; Memorandum, in comparative form, showing borrowings (10,000,000 or more) of New York City banks, as of the close of business January 5, 1921, and September 3, 1921, respectively. I had a talk, this morning, with Mr. W. p. Potter and Stuart H. Patterson, and they have very cordially agreed to our suggestion with regard to bringing down the papers we are reviewing to a more recent date, so that the information may be assembled in more orderly form. Mr. Norman and Sir Charles Addis contemplate having a motor trip to Quebec, and I suggest that careful inquiry be made at Bar Harbor as to the best route. I sincerely hope you are enjoying your holiday to the utmost. Cordially yours, Benj. Strong, Esq., C/o Mrs. Markoe, Bar Harbor, Maine. Encs. (3) frie
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