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[RCADIOGRAM WORLD WIDE WIRELESS CONTINENT , SHORE TO SW 14, AND ,L.' RADIO CORPORATION OF AMERICA SHIP TO SHIP IN CONNECTION WITH "TR ANSRADIO" THE ONLY DIRECT TELEGRAPHIC A.G.FUER DRAHTLOSEN UEBERSEE VERKEHR, BERLIN CONNECTION, AMERICA- GERMANY EINZIGE DIREKTE TELEGRAPHISCHE VERSINDUNG DEUTSCHLAND-AMERIKA oommulwompimmipipowwwwwwietsi FORM No 112 G RECEIVED AT 64 BROAD STREET. 1815AG\NSN NEW YORK, AT M. DATFt9Z5 19 JUN t 10 D 1335 BERLIN 59 18 827 P /0 NYK FEDERAL RESERVE BANK FOR STRONG A AS I WILL REACH AM DOUBTFUL vJHETHER /LETTER YOU BEFORE CONFIRM BY CABLE YOUR KIND YOUR DEPARTURE J BEG TO TO SAY THAT J SHALL BE LETTER OF MAY 25-TH AND BEG I N CON4;y4T THIS SIDE J AM VERY GLAD TO MEET YOU ON BEST REGARDS TOUCH WITH OUR LONDON FRIEND /14//...soop 19 1025 SeHACHT TELEPHONE: BROAD 5100 To secure prompt action on inquiries, this original RADIOGRAM should be presented at the o' of the Radio Corporation. In telephone inquiries quote the number preceding the place of or 'er{ht SW lilt Ter qPriiii6entbes sen 18.6.25. IfteifiTobanft -Tireftforiums Benjamin STRONG, Esq.. Prosident of the Poderal 7eserve Bank NE:I Dear President Strong YORK : I beg to send yo herewith copy of my cable I forwarded to-day to your ad rocs : As I an doubtful whether a otter will reach you before your departure I bog to confirm b cable your ::ind leter of Hay 25 " and beg to say that I s all be very glad to meet you on this s I am in constant touch our London friend. Best regards. Schacht." and boj to believe me Yours sincerely I I RZICESBANR POLICY (Lipeech made at Cologne on June 25, 1925, by Dr. Hjalmar Schacht, President of the Reichsbank.) remain stable. The German currency is stable and will 1. strangely enough there are still people who strueele aesinst 3o far as this struggle is not a recognition of this fact. questionable interest, based on ignorance, nor on any kind of sea it rests upon two facts. In the first place, that the place that prices of goode are not stable, and in the second the value of the gold upon which our currency and the money Economic of the entire world rest is likewise not constant. entirely impossible to create a history proves that it is stability of prices since the prices of goods are dependent other factors. upon innumerable factors of production and Undoubtedly an exact calculation and observation of price movements is necessary for all measures of currency policy, but to make a price index or a combination of several indices just as much the basis of a currency itself would be a mistake in the Rhine as if'ir tried to measure the depth of the water by a floating peg. ee need as a currency basis a measure as stable as 2. posEible, such as the metre for the measuring of distance, and tha gramme for the measuring of weight. Thrauebout the centuries, in spite of its own fluctuations in value which gold has take place only within moderate limits and slowly, provcn to be such a measure. Iurthermore, Germany is today more than ever a country dependent upon the international economic system, bri cannot afford to experiment on a peculiar derreacy, but must adjust herself to the currency principles of the countries ruline tha world market, above all, America tld Ln7land. - 2 3. To all those who today speak too liehtly the word 41 "inflation", which only a fee years aro teas carcely known to the public, I ben to pcint out the fact that the bank note circulation of the Reichsbank may in theory be reduced to lG narks, but that the value of the Reichsmark notes in relation to the notes of foreign gold currencies may be changed in important respects onle by e violation of the bank law, which the present administration of the 7eichsbank as well as any German Government wouli never permit. The tasks of German currency policy include. therefore, not only a formal maintenance of eold value of the T7,eirhsbank notes, but go far beyond thisoled are directed towards a sufficient supple of the German economic life with such full value Reichsbank currency. Therefore the Reichsbank law is the basis of German currency only in a formal respect. The real basis of the German currency is the German economic system. If German economy does not of its own strength suprly the bases for a sufficient note circulation, the notes will indeed remain stable but owing to the lack of a sufficient quantity will be of no use for German economy. 4. The necessity of maintaining at their gold value the quantities of Reichsbank notes in clirculation at a glven time prevents the 7eichsbank from meeting the far-reaching desires of industry for the opening of the !ieichsbank as a source of credit in greater degree than hitherto. A policy of a restriction of credit is therefore indispensable for the Reichsbank. Moreover, this policy is nothing new. It was also applied regularly in time of peace although by other means. In addition to the question of the solvency of the applicant for credit, which naturally plays its role today unchanged, the Reichsbank in time of peace made use aesinst too large requests for credits of the means of defence in increasing. the discount rate. Theoretically speaking, thiE same means could 4e made effective today. However, in view of the fact that the capital requirerents of industry as a result of losses throe a1'. the war ard inflation are so extraordinarily. r'reat, and are, furthermore, not as in time of peace temporary but continuous, the Tleichsbank has added to the means of defence of the fixing of the discount rate the further instrument of defence in the en-called restriction of credit. This restriction is not applied to the individual customer but it is a self restriction, that is, a mathematical licit which the eeichsbank pieces upon its own branches. 5. series of objections, not unjustified in themselves, is brought forward arainst this policy of restriction. These objections are that such a policy of restriction amounts to a certain arbitrariness in so far as the enterprises involved in the Reichsbunk disccunt trshsuctions receive preferential treat- ment as compared vAth the enterprises not participating. It is objected, furthermore, that an artificial holdinm down of the discount rate as is made possible by the policy of restriction prevents savin7s activity and the formation of capital, and finally, we are told that a policy of restriction causes the banks to keep lancer liquid reserves than are necessary during an automatic functioning of the discount policy. In reply to these objections it may be said that the whole commercial administration of the eeichsbank is based upon the desire to erant applicant:: rcr credit as just as possible a treatment. It is to be emphasised that in the whole period of the application of the eelic7 of tee restrietion of credit really serious complaints in this re Bard have never reached the e.eichsbank. 3o far as the promotion of savines is concerned I believe that a Reichsbank discount rate of gie is entirely sufficient to promote savings, and I do not believe that under the present conditions of German industry the formation of capital would be hastened in any way if instead a Reichsbank discount rate of l2e or l5e, existed. S Finally, so far as concerns the necessity for the banks to 41 maintain large liquid reserves, the statistics of the two months' balance sheets show that the liquidity of banks is today not at all greater than in times of peace, .but remains a few per cent below liquidity of the last year of peace. 6. Cn the other band the question of the restrictions of credit policy offers the great economic advantage that it makes possible the relative holdin down or the Reichsbank discount rate am thus is the stron!est means to force down the interest rates 17 the 3erman economic system. If we should abandon the instrument of credit restriction the aeichs- bank discount rate would have to attain much higher figures in view of the enormous capital requirements of German industry. Perhaps the more speculative part of industry would be able to bear this higher rate anal also numerous enterprises which are not accustomed to maldn7 cloy calculations, but sound and closely calculated industry woull have to suffer most from such a measure. 7. In spite Of the reserve which the Reichsbank must practice in the granting of credit, the total amount of the credits Riven to industry by the 7.eichsbank directly and partly currency institutions is not inconsiderable. y othe At1,7iddle June the credits at the 1?eichsbank amounteel to al:out 1,400 millions, at the ligntenbaclk to 756 elllions (aside from. the Rentenbank creditse0, the Reich) , at Private rote banks to about 22C millions, and at the Golddiskontbank to about 100 millions. This makes a total credit granted of about 2.5 milliards which is given purely on tne basis of the currency. Thus the maximum of the endurable at present has been reached. unless industry forms a better basis for the amount of the note circulation. 8. At this time conditions in industry do not, however, indicate that any considerable improvement will take place; covered by too much inflationAust. http://fraser.stlouisfed.org/ apparatus Federal Reserve Bank of St. Louis we are still In particular, the whole of distribution of our industry is still inflated in - 5 - ,`the most enormous proportions. Furthermore, the attempt is oft9n made to cover the lack of capital power by transformation mte Orexpansion of the ternal fcbrm of the enterprise. In Berlin, for example, the number of the firms included in the trade registry has increased from 31,600 at the end of 1913 to over 61,000 in 1924. The increase in the number of stock Companies is estimated at easily four times the pre-war number. The address book of directors and members of supervisory boards indicates an increase in such positions of 600 to 70% above peace time conditions. The number of banks and banking firms in Germany is still far beyond twice the peace figures. The number of Stock Exchange companies is still disproportionately great. These are all factors which point to a positively terrifying unproductivity of our economic apparatus. 9. air large part of the superfluous enterprises has its final effect in the form of links in trade, and thus in unnecessary increases in price. It is very regrettable that great increases in the price of almost all raw materials took place as a result of the war, but this difference in price is far below the difference between retail prices and manufacturing prices. Zven in the cases of most necessary food stuffs this difference is today often twice and three times as great as in peace time. In the cases of other articles of daily use, textiles for example, the difference between the retail price and the price of production is still much greater. 10. The figures of the bankruptcy statistics are lower than in peace time, but it must be remembered that the statistics do not include those bankruptcies which are never actually openr owing to the small sums involved. This number may, nevertheless, be today considerably higher than in peace time. 11. b severe burdening of the apparatus of production is also represented by the unemployment which the economic system must 41 still carry. In Enrrland it is often pointed out that our unemployment figure amounts to only a few hundred thousands. German economic system Actually, the charge upor. through unemployment is much greater because the whole cost of reduction of employees and of pensions must also he borne by the economic system. The exact figures in this respect are at hand only for portions of the system. In the case of the railways, for example, in 1913 an expenditure of 100 marks for wages contrasted with an expenditure of 17 marks for pensions and allowances, whereas in 1924 37 reichsmarks were necessary to meet in 1925 there Pere 339,000 active employees these charges; of the railway Company as compared with 230,000 employees receivincr pensions, including widows and orphans; that is, for every three active officials there were two persons entitled to allowances but not employed. 12. Among the phenomena of inflation which have not yet been eliminated is the disrespect for the pfennig. calculates is pfennigs. No one today In every case round numbers are used and naturally in the upward direction. 13. Unfortunately the cartels for the most part occupy no satisfactory position from the point of view of national economics in the price policy directed -401~6e-ern upward tomesmeT. The number, and especially the number of price cartels, has grown enormously as compared with peace time. German industry can be aided only by increase of productive capacity one must regard with skepticism in a very large degree the policy of cartels. The price cartels attribute in a large degree to the circumstance that the overstaffing of our distributive apparatus, complained of by me, is not more quickly eliminated. l',ore than ever the German policy of production must be directed towards lowerine prices and thereby attaining enlarged sales. The reduction of the costs of production, and thus of prices is the only really effective means to maintain our competitive capacity. 4w 14. But ahatever we may do in our internal economic pdlicy to bring about greater production all will remain in vain unless the fundamental cause of all the evil brought about by the constant disquiet of for,:ign policy is eliminated. It now proves that the great laws Of judicial and economic reason cannot be broken, even by the victorious powers, with impunity. Our situation in Germany is very bad to be sure, but conditions are not good in almost the entire remaining economic world. The confidence indispensably necessary for the revival of the national exchange of goods is constantly weakened by the policy of the :Entente. The inner insincerity Um: thus the unworthiness of confidence can no longer be concealed in a policy which has disarmed Germany but is itself bristlinfr with arms, which sets up the ritit of self determination of the nations but would like to prevent for ever the union of Austria and Derrany, which declares plebiscites decisive for the ownership of an area but has assigned Upper Silesia to a foreign power in spite of such plebiscite, which creates the League of Nations as the protector of a policy Of justice towards all,' and through this same League of Nations deprives the Saar district of its rights, which delays the payment of its own debts but gives others credits for military purposes, which demands the right of private property for itself but disrespects it for the enemy, w:Ach emphasizes the supremacy of the white race, but misuses the coloured race to fight and suppress members of the white race, which demands reparation payments but would like to fight an increase'in the production and exoort of the debtor, and which declares th German people incapable of colonial activity but is itself constantly involved in colonial wars. 4!.11 these are internal untruthfulnesses which violate the natural laws of _ievelopment of humanity. 3o long as the political plindness which leads to such inner untruthfulne2ses is !lot .elim-Lnated, so long will the economic 8 k. restoration of Europe be delayed. 15. of It is a further misfortune that the shortsightedness our opponents has caused us to take highly unwelcome measures if we do not want to be ground between the foreign millstones. Only from this standpoint are our present proposals with regard to customs policy comprehensible. Never was the free inter- national exchange of goods so necessary in the world as today. Instead of this we see how every European State, even the smallest of those newly created, withdraws behind protective tariff walls, and chases after the phantom of a separate national industry. Every .Mate would like to sell as much as possible to the others but buy nothing from them, whereas only the combination' of really great markets will assure a rational economic development. 16. It is no yonder that in such an atmosphere voices are raised which already today deny the possibility of a transfer of the payments under the Dawes\ Plan. These predictions of kV/ regard" the Transfer Problem, it seems to me,r premature assettions to the contrary. But we see here Also again that the formal provisions of the Dawt* Plan have been understood everywhere, but that the great economic and human fundamental ideas of the Dawes Report threaten to pass over the blinded world without a trace. The Dawes* Report is a serious and well considered attempt to remind the political rulers of the world of their economic res- ponsibility upon which the material and sniritual welfare of the nations depends. (drily if thd sense of this responsibility prevails in authoritative quarters shall we save Europe from Bolshevism and chaos. ihe attempt to prove the figures of the Dawohl Plan to be impossible may possibly result in a weakening of the sense of responsibility. e shall theeefore do well to remind ourselves that the Dawes' Report clearly emphasizes that the estimates cunt fined therein are based onnassumption that Germany's economic activity will be hampered and restricted by no other foreign organisation than the control organs contemplated in the 'report and that the Plan is founded on the condition precedent that all measure: lich hamper this activity shall be made retroactive Or shall be sufficiently modified as soon as Germany has begun telkarry out the proposed Flan. I believe that a public state- ment is necessary and useful, that also in this case Germany has fulfilled and her opponents have not fulfilled , and that this declaration is necessary to make clear to the world the responsibity for the consequences. 17. That Germany and her economic leaders have not lost their extremely taut nerves in such a difficult situation, that on the other hand they have always been conscious of the great responsibity devolving upon them, is a fact which will be accounted to our credit by all the seriously thinking merchants of the world. I note with thanks and satisfaction that especially the English and American banking world have maintained their confidence in us in spite of the difficult situation in which we are. hen the Stinnes case became known offers were received from abroad to aelp by the supply of foreign credits. ;,e have expressed our tha.ks for this, but added that we should settle such matters ourselves and had sufficient strength to do so. We wished thus to thow our foreign creditors that there is no c'reater security for the creditor than a sense of responsibility on the part of the debtor. 18. In the difficult struggle ahich we are carryina on for our national existence and which we can and will conduct only with intellectual and economic weapons, the Reichsbank policy covers only a small section, but within this field it will always work towards the end that responsible circles abroad may not deny their respect and aid to a great nation which was perhaps once; led astray, http://fraser.stlouisfed.org/ but which has Federal Reserve Bank of St. Louis always been honest and competent. Ter "-)rii1i6ent 2ertin SW111, m, Sco 21.7.25. etch banf -Tirehforiunm (761k1 Dear Er. Strong ! I gladly received your very kind letter of the 20 and hope you -.All have a nice holiday in Spa. As promised to you I beg to hand you enclosed a translation of tho items of the Reichsbanki weekly statement. Furthermore I have ordered, that a copy of each weekly statement will be sent to you as lone; as ve can reach you during your european stay. On Monday I had a very nice and extended talk with Er.Hautaii who seems to be auite willing to let his colleitgues in saris and Rome all alone andtoin our policy. However he thinks that ho is depending upon a settlement of the german mark nuestion, about which Mr, Norman be able to give you some details. He has re- duced his portfolio constr-.1t1:-, as lie tells me, but his total circulation is still far too high, as it is about 50 Dollars per head. But the chief thin;: is, 4 that he is willing to stabilise and in consecuenco to reduce this amount, so that a conversation with him and Mr. Normar thdbyou will certainly have,may be very useful. Mrs. Schacht and I have been very glad that you keep a kind remembrance of your. Berlin stay and we hope that it has not been the last time, that we have seen you here. Please Live our best regards to Mrs. Humphrey and to fir. Norman and believe me dear Mr. Strong, Yours very truly 11±.Benjamin STRONG Governor of the Federal Reserve Bank of Nov York, _S_p_a__ Brussels, Belgium 7/27/25. IVEEXLY STATEMENT OF TNE REICHSBANK July 7, 1925 ASSETS: 1. 2. Reichabank shares, not yet issued Gold (bullion) as well Pe German and foreign coin, one pound (the pound equals 1/2 Kilo) fine calculated 1392FM, divided es follows: a. Gold at Home RM 974,947,000 b. Gold (no t pledged) al foreign central banks RM 90,654,000 3. ForeiEn valuta (DiAsen) used es cover 4. 5. 6 7. 8. 9. Rif 177,212,000 Portfolio of bills and cheques German ;,.)in NOt'3 of other German Banks of issue (not including the Rentenbs.ak) Loans against securities Soeuri ties Sundry Assets 1,065,601,000 355,200,000 1,579,680,000 67,930,000 18,936,000 15,611,000 P0.I. 344,000 685,708,000 LIABILITIFS: 1. Cspi Lai a. 2. Issued and paid up ... RM 122,789,000 b. Not yet issued Reserve funds 177,212,000 regular reserve 'Hda, provided in the law special reserve or future dividend payments sundry r-serve funds 3. Outstanding Circulation 4. Other Liabilities on cell 5. Liabilities on term a. b. c. F. 7. Debts toward the Rentenbsnk Sundry Liabilities Bills rediscounted 2,403,000 33,404,000 127,000,000 2,442,639,000 573,994,000 - -2,142,000 661,650,000 RM 543,406,0a0 (Translated by the Reichabank in Berlin, July 10, 1925, and sent to B.S. at Spa) Memorandum July 29,1925. . DISCOUNT &TD CURR7NCY POLICY 077 'MR REICTTTIANT. The morning newspapers of July 29,1925, publish the account of an address made yesterday by Dr.Schacht following to the Central Committee of the Reichsbank:"Since the last session of the Committee on March 23, 1925, the still depressed situation of German industry has been reflected plainly in the money And capital market. The great demand for long- and short-term capital has not diminished. It proves now that the reduction of the Reichsbank discount rate from 10 per cent to 9 per cent, which was made in February lest, occurred at the proper moment for an interest concession to German industry; in fact,the curve of interest rates from the beginning of the year to the end of April shovm a declining tendency but from that time it begins once more to rise slightly. "In the past quarter, the Reichsbank has regarded it as its task to aid German industry so far as is reconcilable with the protection of the currency. We continue to hold the theory that the maintenance of the German currency, which has been completely successful, must take precedence over all other demands. In this connection. if we do not want to create a situation of complete disorder on the interest market, we cannot renounce also for the future the process of rationing credit. We note with satisfaction that the original objections to this polic7- have been almost entirely silenced and that all important industrialist circles have expressed their approval alley. On the other hand, in view of the fact that ideas have recently been expressed, based exactly n the fact of the rationing, wh ch desire a further reduction of the Reichsbank discount rate, we should like today to take occasion into to explain to the Central Committee in a special report the reasons why such a reduction cannot be considered at the present time if the Reichsbank is to maintain the influence on the fixing of interest rates on the open market, which it has had so much difficulty in obtaininp,.. "It is no secret that in the p-:st few months the demand for foreign exchange has been very stron7 on the German market. The reason for this outflow is partially to be found in our trade balance. Without attempting to discuss the reasons exhaustively, I should like only to point out that a considerable portion of industry dos not devote to export that attention whic;- is to be desired in the interest of our balance of payments. On the other hand, the purchasing power of the domestic market is artificially increased by an administration of public monies, which is often mistaken, and thus gives the appearance of a stimulation of business activity which, in vieN if the tax charges upon industry, must necessarily reach a speedy end. The permanent strengthening of domestic purchasing power which is so neces -'ary can be obtained only through the cheapening of production especially through an increasing of agricultural production. "fi further cau-e of the demand for foreign exchange wasth refusals t' renew short-term foreign credits, owing to several reasons, partly political and partly economic in nature. The Reichsbank has pointed out repeatedly to German industry the objections to such short-term foreign credits. The careful colic: of the Reichsbank is to be thanked that difficulties se_ have not arisen in repayment. Industry will, ho-.;ever, have t) keep in view the possibility that even in the future, under certain circumstcncel, the Reichsbank will not give up forei=m exchange against credits but only against payment in marks. "Finally, it must not be forgotten that the reparation obligations also resulted in a serious burdeninl. of German industry in foreign exchange. The payments for tYe interest service on the Dawes Loan, for the Recovery Act and for those costs of administration and occupation which are transformed their receivers into foreign exchange, have thus far certainly exceeded the amount of 25m million Reichsmalts in foreign exchange. Furthermore, the deliveries in kind naturally also burden our balance of payments directly throw --h the imports of raw materials necessary for these deliveries in kind, whereas, on the other hand, our trade balance as a whole is made considerably more unfavourable by the crratis del:veries 'n kind. "Nevertheless, the Reichsbank has been in a position to increase its holdings of gold now to over 1100 We intend to continue still million Reichsmarks. further to increase our gold supply. We regard the partial foreign exchange cover permitted by the Bank Law merely as an emergency measure and believe that regardless of the small loss of interlst, cover in coined and uncoined gold is far preferable for a bank of issue. Although, therefore, we have hitherto shewn regularly one-fourth of our total cover in foreign exchange http://fraser.stlouisfed.org/ fourths in Federal Reserve Bank of St. Louis a d only three- gold, we shall in future endeavour, by transforming foreign exchange cover into fold, to modify the ratio in favour of gold. "It is fortunate that the Reichsbank has been in a position to meet all the demands for foreign exchange made or it, without having to undertake a reduction of the credits hitherto granted by it. Neither, as things are at tl-o moment, is there reason for anxie'Aes as to the future. On the other hand, no incr,ase in the amount of credits granted by the Reichsbank can be counted upon at this time. 'Wherever concessions to industry on the part of the Reichsbank seem possible, we are endeavouring to make them. Thus,recently, in order to promote payment transactions without cash and to simplif:- our business with clients' bills, we have undertaker a considerable reduction of the fees for such bill business. We hope that the Banks and other organisations concerned will do ever thing on their part which may lead to simplifyin-,. our payment transactions and to reducing expenses and costs." The Vice-President of the L-eichsbank Directorate, Kauffmann, then explained in detail the reasons against a lowering of the discount rate of the Reichsbank. The Central Committee, almost all of the members of which were preseilt, approved unanimously the standpoint of the Reichsbank Directorate and considered a further redi2ction of the discount rate impossible in view of the present situation on the money market. 2RA7SLA:HOTT. Extract from "7rankfurter -eitung" 1st August 1925 The T:eserve 7olicy of the :ieichsbank Gold instead of Davison On Tuesday after an interval of several months a meeting of the Central Board was called. At this meeting the Reichsbank ''resident explained fully why a reduction in the Bank Rate was not being considered at the present moment. The members wore surprised to hear such an explanation at a time When, in view of the strained situation of the money market, the possibility of a reduction in the rate could hardly be discussed in serious economic circles. The unanimous approval which the Board has given to the point of view of the Reichsbank management will have strengthened the latter in the view that there is no room for non-economical considerations in decisions regarding the discount policy. %.t the same meeting another announcement in the programme was made which in a certain sense shows a turning point in the gold policy of the Roichsbank. The Bank management having hitherto been out to stren-then as much as possible the gold and devisen position of the Institution, they now surprise us with the announcement that they merely considered as a measure of exnediency the partial devisen cover allowed to the :eichsbank by the Bank Law and far preferred cover in minted and unminted gold for the investment of their reserves. It is known that the Bank Law binds the Bank always to hold a cc - o77 at least 4.0 per cent. in gold or c7sorisen a-:ainst their notes in circulation. consist of gold. Of this at least three quarters must Hitherto the Reichsbank has arranged in accordance with the authority granted to them that a quarter of the total cover should only consist of devisen and only three quarters should consist of gold. In future by the conversion of the devisen forming cover into gold they will endeavour to alter the proportion in favour of the gold. They renounce voluntarily the .oseibility loft (r,.en to them in the Bank Law of Aacing 25 oer cont.of the total °over in interestbearing devisee. The opinion that cover in actual told le preferable for a note-iesuing Bank le not uncontested. The legal reEulation re:arding minimum cover is on the whole only a conce tion of currency policy which is out of date. reserve which is prohibited from its ell.ef meanin. bein, .:very touched has forfeited Always the devieen conceasion stands in contrat to the costly hoardin of sold an the rational form of thie kind of reserve policy. i)evisen are - excepting for wartime conoiderations which need not be taken into account superior to gold as an invest:3ent for the available reservee of a Central 3;.: because the stocks of gold in order to become available for balanoing temporary fluctuations in the pegoent boaanas - their particular oureose muet first in all oases astAn be converted into the currency concerned. in the addition] advantage of intere.A. Ale Le For irioveriehed Germany this is certainly not without imorteace. he Reichebankpmanagement moots each objections by pointing out that to-day only five currencies zae) conoldered for investment purposes. IT meAns are oo limited a utL.to of undesirable dependency might (molly axle°. Currency looses must be absolutely avoided by the Central Bank. The German eeichsbantie etocka of gold are suitable for use in the exchang mo.rket because, one hears, the object in view for a lone time hue been to erocure chiefly minted ;-old. the lose of interest cannot be oveLestimated. irre)rtance of :ku the lArmik Law only :iermita of a quarter of the cover being head in devieon, three quarters must in any case reAlin non-interest bcv:rine. 3 There are surely other points of view which have influenced the T,eichsbank to decide to give up the proportion of 3 to 1 of covering gold and covering devisee. The ',,olution of the Rreat problem, of the threatened redistribution over the orld of the accumulated American gold reserves, will depend on what gold polio: the german 'eichsbank pursues as the chief of the rehybilitute continent. great note-issuing banks on the The conduct of the 7eichsbank, .hich of course only has scope ithin the narro.: scope of the Dawes Laws, will stand as an exti-ole of the practice for Central 'Ranks to follow when their currencies are similarly stabilised. Only when America succeeds in effecting the return of the gold to Europe will the duration of the danger of an international -ePreciation in the value of gold be checked. There is no better means of ensuring the maintenance of the value of gold than propaganda for actual gold cover. According; as the -eichsmark is fir-ly pegged to the gold currency the lerman 7eichsbank feel themselves, as guardian of the value of Thrman money, responsible for turning the gold currency to goo- account. They could not then logically refuse their active cooperation in the distrib-ition of the American gold. If such a polio brings with it the advantage of a closer rel &tionship of confidence between the man: gelent of the Anglo-American currency banks and the reichsbank, if the support which the lerman central bank gives in this manner to the -'eaeral reserve system also enables them (the Bank) to be considered to a certain extent as being in trust of common interests on the Europe n continent. those who are not convinced like our -eichsbank of the superiority of actual gold cover but are of the opinion that -4devisen deserve the preference as an investment for reserves will be able to reject such principles. For Germany in her )resent position more depends on the firm establi:hent of her international credit relations than on the materiali2ation of a reasonable currency theory. The conjecture is not amiss that a thorough discussion of all these questions took place with the Governors of the Bank of England and the Federal Reserve Bank on the occasion of their recent visit to the Reichsbank ?resident in Berlin. Mille the anxiety, which the decentralisation of the stocks of gold has for a long time caused the Americans, is not under-estimated, it is to be emlhasised that no acute reason for definite measures is present. Therefore, as we already stated in No.311, only an agreement as to principles was established between the three Bank chiefs, business agreements on the contrary not being made. For el:ample, re- discounting negotiations between the Golddiskontbank and the American Banks were not brought up at the conference. These were conducted independently tiald quite unceeLioniously with various Banks after the Institute had increased the loans granted by it to £6.5 millions and had thus exhausted its own means. Just as these negotiations have nothing to do with the visit, no conditions were made regarding the purchase of gold. The heichsbank has, as before, a free hand, and it is not to be assumed that they will shortly enter the geld market in great style as buyer. the That a readiness exists on >art of the Reichsbank to hoard gold does not depend on a promise which may vanish to-day or to-morrow but on the assurance based on principle of the money-producing countries. The American currency policy only fits in with the granting of credit to :::urope when a movement of the yellow metal is thereby occasioned: he stocks of devisen of the -eichsbank as we know after the wa,, in which they have been chained during the last f 1 5 months, are not o rlentiful as at the beginnin-, of the year. The gold The total reserves shown have considerably increased. reserve rose from the end of 1924 to the :3rd July 1925 by 343 millions to 1,103 millions and the stock of cover devisen by about 115 millions to 7"367 millions. Against this rise of 458 millions in the cover shown ho,ever there is a greater decrease in the stock of free devisen. connection are not available. Exact figures in this In vie. of the present condition of the devisen market the Reichsbank shuns the disclosure of their special reserves. Consequently one has to dra!: circumstantial conclusions from the movements to which the account 'ether Assets" is subject after deduction of the 7-enter- banK-notes entered therein. Exclusive of '-,entenban!-_-notes, it still onl: came to 339 million -7. on the 23rd July. An indication of the extent of the free devisen stocks of the 7eichsbank is not provided by this figure. for according to the not inconsiderable credit- entered in the devisen account during the past year the position of the Reichsbank is stron'er than appears from the balance sheet. '.-hould the influx of foreign credits be shortly renewed, should in particular the Fenten bank loan be satisfactor:, in its first instalments, the proceeds of ":hich will hsrdly he directed et sll to the financing of foreign imports but similarly to the 800 millions Dawes Loan :ill go entirely to the 72eichsbank and %e exchanged by them for ^-er an increase in the reserves 7:ould result. In vie., n ',onev of the contraction of the circslation of 7entenbank notes .;hich is to be expected in the late Autumn, such an increase not be undesirable. ould perhaos lip Ter qt?recribent -13ertin SW 111, ban bes 10.9.25. "Ilteichsbanit -Tireitforinins ACYNOWLEIXIED SEP 4 1925 fl Dear Lr. Governor ! d' I boL. 'o send you enclosed copy of my latter, I sent AuLust 20th to :Ir. Paul 7;arburg, uhichIthink, after our conversation, will find your interest. 2elievo no, dear Govornor, Yours very truly BonjaminSTRONG Governor of the Federal Ilesorve Bank Uo- York Ter P-grafibenf "A4rfin SW 111, ben 21.9.25. bes lieicitobank -Tirektoriums Dear Kr.Strong, enclosed I beg to hand you a list of acquaintances on your side for your lists. I keep strictly to our arrangement that I do not accept any invitations unless they are you . To-day Fr. Herring, who is as I understand 40-ea by your commercial Attach6 in Berlin, asked me whether I should like to accept an invitation of the American Bankers ,scociation and I asked him to apply to you. I am sailin, with Mrs. Schacht , my daughter and Lr. -;leismann as Secretary October 9th by the i)eutschland of the lianburg-AmerikaLino and hope to arrive in the course of the 19th. Believe me, dear tar. Strong, 'Tours very sincerely Benjamin STRONG, Esq. Governor of the Federal floserve Bank of Yew York New York RADI O GR A WORLD WIDE WIRELE-SS CONTINENT SHORE SHIP CONTINENT SHIP SHIP TO TO TO RADIO CORPORATION OFAMERICA ._ 11:1M NO 112 ECEIVED AT 64 BROAD STREET, M DATE NEW YORK, AT 1/ is fdC / 192_ CW CE 135 RAA0 3S DEUTSCHLAND D_JT RC:IEOORK 18 FEDRESERVE FOR GOVERNOR STRONG NEaORK MOST GRATEFUL YOUR 2 TELEGRAMS EVLYTHING YOU ARFANGE IS PERFECT BEST REGARDS SCHACHT LEPHEJE: 'EAU NFLI To secure prompt action on inquiries, this original RADIOGRAM should be presented at the office ,,f the Radio Corporation. In telephone inquiries quote the number preceding the place of origin 14 " Tv 10,1(0,s" if2.1%..tit440 ti3101,41., AV,..'4.ryre t-eadc.c.e/ There h ye rious rumors afloat to this country to the effect that I ction,, of the Dawes plan, or I wish to say egrin, as I without foundation. I bed concerain, the purpee of my visit, came to exranre credits or to euggest to negotiate some kind of world modifi- financial coup,. et. e, id on my errival, tht thee rants solutely nothing of the sort in mind before costing here, nor has anything of that nt,tura. developed .'it.tring fly visit. I hove bed no esoret motives whatever in coming hare end the atetement which I made upon landing here w. a a frank -nd complete stetorrent of tiff purpoaes. As far as the Dewse plen is concerned, I hi, ye only one comment to make and that is en expression of appreciation of the Kork which is being none in connection with the Dawes plan by the conk:et. These gentleman Jv:ricen repreeentetives with whoa I come in A'e working in perfect harmony with cials and with the Peichetank. We our govt.rnatt,nt offi- see frequently Mr. Gilbert and Mr. Shepard Morgan, his economic ,dvieer, Mr. '..terrett of the Transfer Committee, and Mr. McGarrah, who is a member of the toard of the Reichsbank, and we hrve come to feel the highest respect esteem for them. tactfully and so wisely that we hi.ve come They he,,ye conducted their business so to look upon tl_ent friends who k re helping us in working out some -f our difficult problems. Concerning the object of my visit, let me repeat what I veld in a pre- vioue statement thct the purpoef. is, first, to pay my ree?ects to the Gov,.rnor of the Federal Fieservc Balk of Now York with atom .f.e h: ve many important bueiness relations. I have alto been to Wilshington to pey my respects to my to membsrs of the Kellogg. Federal ReeervF )3otrd, end to Socretar,- Mellon an ambassador, Secrethry -2- di becond, the visit co this country hes given me en opportunity to meet bankers here many of lithos I bees met before is Gernany, and to exclienge with Vlore views regarding the sorle credit a;tuttion, giving them information ebout German conditions and securing from them informetion about conditions here. We are, or course, iartieularly interested in conditione fn the Aserictn money market Lecause financiers and the invewting public here nerve teken such e-ir intereet in aiding in the reconstruction of Germany by slaking loran to us. °tummy apprecietes gret.tly the help given by this country. Concerning general conditions in Uorneny, we have many difricult problems to face end much herd work to do before *6 eh,.11 recover to our old time but so now heve r working basis. 11,uid aeaets sere dissipated. Our greatest need is working csoital, rosperity, Our Fortunately t he currency to e now become reestablished on a eound basis end we no longer fear tiny recurrence of infletior. The Peichebank is in e strong position. recognise ti,r t ltri furnishes e basis for 6 wise use or crodit but re cr dit must be discriminating t ve recognize our responeibility in that regard. It is For this reason t,iet the government end the heichebenk keys dieoouraged borrowing by at, tee end aunicipelities for any but productive and essential purposes. An edviaory board hers been created by the government, with the minieter of finance e6 chuirnant which 1 exercises rigid control over ap,licstione of stetea and sunicipelities to float lone ':brood, commerce in trude. .11,1 only epproves those lone enich promise to essiet eue to the feet that mny municipalities own .roeuctive plente, such as electric lants, harbor improvements, etc., there ere many municipal loess ehich may hews e genuinely productive iurpose. therefore, hes to be dudged upon its own merits. teleh CC60, he such control is needed fcr industrial and egriculturul lo. ns, Witch are favored because they ere of direct rid in increasing the country's productivity. Besides the lack of li ;uic funde there are otLer problems Germany le facing. One is the dif"iculty of finding nerkete for our producto. ith the erection of Imlay nes ',tete& in europe, customs burriers have been bet up and it will t!lico boa. time either to find new merkets or to open up the old markets by setiefectory commercial treaties. e ere not nieceuraed by thee. robleme. Germen ineuetrial ;1-nts Lre in good shape and scientific invention is increasing their efficiency. Farming prospects ,re txonising with the Lid of N wider use of fertilisers Ald etehinery than before the war. still prevails es before the war. lost our courage. German industrial and commercial enterprise Although as have lost money as have not Our banks are handled along the old, sound financial lines nd e believe perhape the greatest security chich those who ueal with Germany hive is the continuence of complete resioneibility in meeting our commercial engugemente. I went to pepress my thenke for the hospitality which has been extended to me eere and to say hoe sorry I aa th!..-t I have not been able to ccept sort than a limited member or the many invitations ehich hove been so Form 1201 ;LASS OF SERVICE WEST SYMBOL TELEGRAM DAY LETTER T MESSAGE WIT LETTER BLUE NITE UNION TEL NI none of these three symbols iCiPears after the check (number of girds) thillbiNci telegram. Other- rise its character"; ndicated by the .ymbol appearing after the check. NEWCOMB CARLTON, PRESIDENT AM GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT CLASS OF SERVICE SYMBOL TELEGRAM DAY LETTER BLUE NIGHT MESSAGE NITE NIGHT LETTER NL If none of these three symbols appears after the check (number of words I this is a telegram. Otherwise its character is indicated by the symbol appearing after the check. The filing time as shown in the date line on full-rate telegrams and day letters, and the time of receipt at destination as shown on all messages, is STANDARD TIME. .eceived at F1:77CC 'GC 22 R, SS Na,AMSTERDAM NY NOV 141 925 FEDRESERVE FOR SENIOR OFFICES NEV,YORK (NY) MANY THANKS FOR KIND WISHES AND GIFT AND ONCE MORE FOR ALL COURTESIES EA TENDED TO ME SCHACT 1152P POSTAL TELEGRAPH - COMMERCIAL CABLES TELEGRAM CLARENCE H MACKAY PRESIDENT. RECEIVED AT This is a fast Telegram unless otherwise indicated by si t after the number wards-" " (Day Letter) " ." (Night tter) or "fir" TELEGRAMS (:) TO ALL 1111 AMERICA C'ar.P4 Telegram) . DELIVERY NO. mCABLEGRAMS TO ALL STANDARD TIME INDICATED ON. THIS MESSAGE THE WORLD 8 6 N A IbtnA t.1 RECTOR 9 15 NY RU 41 BLUE HOBOKEN NJ NOV 14TH 1925 FEDER TANK FOR GOVERNOR STRONG 33 LI ALL YOUR COURTESIES EXTENDED TO MANY THANKS ONCE MORE FOR US V IF WE WOULD HAVE KNOWN T3EFOKE WHAT YOU DID WTH OUR MOTOR CAR VIE WOULD NOT HAVE USED IT SO FREUENTLY AND LARGELY FRIENDS SCHACHT FAMILY EilTY ST NY 1 2PM PLEASE REMEM.PER US TO ALL TEN DIVISION TELEGRAM W.T.11.1 50M 1-25 DECODED FEDERAL RESERVE BANK OP NEW YORK COMMERCIAL WIRE-INCOMING N CHECKED TRANSLATION COPY -18P0 MQ 118 BLUE COMPANY HN HOBOKEN NJ NOV 14 OV STRONG. IN THE MOMENT OF LEAVING YOUR COUNTRY I WISH TO EXPRESS Y FULL SATISFACTION WITH THE RESULTS OF MY STAY THE MANY ONVERSATIONS I HAD WITH YOU WITH THE WASHINGTON AUTHORITIES ND WITH A GREAT NUMBER OF LEADING FINANCIAL AND INDUSTRIAL EM HAVE GIVEN ME THE FULL CONVICTION THAT THE AMERICAN PEOPLE AS DECIDED TO HELP RECONSTRUCTING OLD EUROPE IF THE EUROPEAN EOPLE ARE WILLING TO COOPERATE IN FRIENDLY UNflERSTANDING EACH THER AND PEACEFULLY DEVELOPING THEIR ECONOMIC AND INTELLECTUAL W.T. 11.1 50M 1-25 FEDERAL RESERVE BANK OF NEW YORK A .No WIRE TRANSFER DIVISION TELEGRAM DECODED COMMERCIAL WIRE-INCOMING N, CHECKED COMPANY V TRANSLATION COPY FORCES, I S I RCTNu. HIGHLY APPRECIATE THE SHARE TASK AND ADMIRE YOUR CLEARNESS OF THOUG IN CARRYING THEM THROUGH YOU WILL ALWA COOPERATE WITH YOU IN THE SAME SPIRIT. HJALMAR SCHACHT 1 2(1) W.T. 11.1 50M 1-25 FE / TELEGRAM OF NESRK COMMERCIAL WIRE-INCOMING AP ATTENTION 10 TRANSLATION COPY RE JAY 0/YORK THANKS FOR KIND GIFT AND E MORE FOR ALL KINDNESS SHOWN TO US HOPE AU R OIR DECODED CHECKED COMPANY VU C 25 RADIO SS NEWAMST7RDAM NY NOV 14 FRB FOR WIRE TRANSFER DIVISION IN GERMANY SCHACHT FAMILY 07io% NOV 16TH Ter 2Pthrioent qReici 41artil- alerfin SWiii, 21.1.26. irektorimm Confidential Benjamin S t r o n g, Esq. Governor of the 4deral Reserve Bank ew York Dear Mr. Governor ! It is very kind of you to trouble about a special arrangement for our cables andIappriciate very much getting a special shuttle for the Hammond used already with Governor Norman. I quite agree with you that only our secretaries have to handle this method and all cables for you sent directly by me shall be addressed: Strong Reichsfed hew York. As soon as I have the shuttle inhand I shall let you know by cable. Believe me, with kind regards very truly Yours er Trdri6ent ert in SW 111, Son 6.5.26. bez -4eicriara -Tirektorimm Governor BenjaminStron g, Hyde Park Hotel London Ny dear Mr. Strong it was a groat disappointment for me that the circumstances did not allow me to come to England these days.The telegram, which Governor Norman sent me arrived just half an hour : before I had to go to the railway station.Nevertheless I am grate ful that Li. Norman advised me not to come, as perhaps it would would have been have been difficult important for me, as to-morrow I have to be in Darmstadt. I was so glad foreseeing thapportunity of seeing you in London that I feel very sad learning from your letter, that I may not see you before July. I hope howev3r that you will find a full recovery for your health on the Riviera and that the various european problems, which are vaiting for your help, will develop until July so far that a solution Mon can be reached. I shall stay in Berlin the whole summer except a few weeks in July but if you can let :ne know in time, when you expect to come to i3orlin, I can easily arrange to be here when you come. Please give my best regards to Mr. Norman, who was kind enough to write me th© same day you did. I am waiting for some further news of his part telling me when my visit to him will be convenient. I remain, dear Strong, very sincerely Yours Ter rii 'Perlin SW111, bes ben 11.6.26. -1Reattf)-banit -Tireftforiunus My dear Li.. Governor ! I am much obliged letter of June 5th. In order shall be in Berlin, when you my holidays already the 27th for receiving your very kind to make it absolutely sure that I pass here, I have arranged to begin of June. My address in Holland is Hotel Rembrandt,Noordwijk aan Zee. If you will kindly let me know a few days before when you expect to be in Berlin, I shall certainly be here. In the meanwhile I hope you will have a perfect rest so that I shall have the pleasure to meet you in full health. Believe me, dear Lr. Strong, Yours very sincerely Governor ljenjamin 3trong Hotel du Cap d'Antibes Antibes WW. T. 11. 1 50M 11-26 EDERAL RESERVE BANK OF NEW YORK WIRE TRANSFER DIVISION TELEGRAM DECODED COMMERCIAL WIRE ATTEN110.N..._ INCOMING CHECKED COMPANY_ TRANSLATION COPY 12WUO 131 NL NEVNORK NEVYORK JULY 13TH GOVERNOR STRONG. AT THE MOMENT OF LEAVING YOU DEAR MR STRONG FOR ME DURING ORKING ON A THIS COUNTRY ISH TO FOR ALL THE KINDNESS YOU MY STAY STOP ALTHOUGH WE SPECIAL PROGRAM I THAT OUR FRIENDLY CONVERSATICNS ILJTUAL UNDERSTANDING ENLARGEMENT ' THANK HAVE EXTENDEE WERE NOT FEEL ABSOLUTELY SURE HAVE CONTRIBUTED A GREAT DEAL TO THE FURTHER DEVELOPMENT OF I INTERNATIONAL PEACE OF ViORLDS TRADE AND WINE TRANSFER 4T. 11. 1 50114 11-26 TELEGRAM DERAL RESERVE BANK OF NEW YORK 11 COMMERCIAL WIRE ATTEN11_ TRANSLATION COPY GOVR STRONGi ( REALIZE HOW LARGELY FRIENDSHIP THE GOOD - DECODED_ CHECKED_ COMPANY_ 2ND SHEET) ECONOMIC RECONSTRUCTION THESE INCOMING DIV IS' STOP MAY PEOPLE MORE PERSONAL CONTACT KNOWLEDGE AND ARE BOUND TO FOSTER SUCH OF ALL I HOPE WE ME TO ALL MY FRIENDS FEDERAL RESERVE BANK SYSTEM A DEVELOPMENT TO SHALL TO CONTINUE ALONG LINES ON WiANY OTHER OCCASIONS PLEASE REMEMBER AND MORE TO COME STOP WITHIN THE AND BELIEVE ME TO REMAIN WITH WARMEST PERSONAL REGARDS VERY SINCERELY YOURS. DOCTOR HJALMAR SCHACHT. 9AM M. DEN REI CHS BANKPRASIDENT /1- DR. HJALMAR SCHACHT 07&& 7,g_r--k,fre.eeta? 1-7-e 41k_47,-1..AlereeizA.see,c4,/i43 dt.t.s<pec,zev,ree ,7-tr) itezazei,4_47, -feicot,tee 440, 7-14.1.1:v e&&,a,-te7 ea/7474 ,,,_._4(.ze4tyzt_ce-26,., -zre_ (V delf t41 /f6YL < VGC37FW/ t-41,7&t.44 -mot ;6 11 7-Lree4 F:Z-e4.Z.4 ;Lt,11e4y7 .4<1 4-X 7z-eae.,7 4.61,4 64 t icA-t&-c 41te, r Ter 213thriSent P?Bertin SW111, den bes e4 balt -Tirek forimm 29.7.26. Dear Mr. Strong I still have to thank you for your letter of the 15th and I beg to say that I shall be in Holland (Noordwijk Hotel Rembrandt) from the 3rd of August in the morning. I shall ! stay there for a week. I hope that you and Norman, whom I have informedielljhe same end, will give me an opportunity to see you there/.--trf course I am also ready to come to London from Noordwijk, when-ever you prefer me to do so. Believe me dear Mr. Strong Yours very sincerely Governor Benjamin S t r o n g, Esq. Hotel du Cap d'Antibes Antibes France. 7:Serti SW111, ben 3.8.26. Ter '-(ringiSenf bes qkeicf-t6cmh --/Areizforiu-nui Dear Lir. Strong Thanks so much for your letter of the 11th. The Eupen and Lialmedy nuestion has become a general object of the Belgian papers. As far as I can see all the rumours come from Brussels. he -erman papers behave so far well in that matter and show a great reservation. I do not pay attention to all the various news about you or me or any other friend, because they are all guessings and everybody really concerned knows that they are guessings and do not touch the real ground. I absolutely agree with what you sayin your letter about political affairs and I myself shall absolutely keep out of the political side of the whole transaction. I had a long talk with Gilbert about the whole matter, whom you presumely will see in a fey days. I hope you will enjoy your Evian stay very much, should circumstances arrive I may come to see you there. I remain, dear 7221. Strong, Yours 44 Benjamin S t r o n g, Esq. Governor of the Federal 2,eserve Dank of c/o Lessrs Morgan,Earjes & Company 14 Place Vendome Paris ew York Ter2Praoen1 Der Tt-60ent ---)-3culin 2:eichc,balift - SW111, MI trek foridniti Dear 1:x.Stront; I think you micht be interested in havinL; a . report about tie events: of the last weeks on our money-market and therefore I bob to enclose copy oC a let r vhich I have 3( to-day to Nr.Norman. I remain dear Strong; You-:s very sincerely ,1 , .!:onournLlo ti/ :7ontnL.,uNorua n, Covarnor of tho 1.1un% of .'i> %.: Loudon 1; Covornor ;enr ::nciosod picas° find copy of our mi-chon;.:o of and lot vzo thnnh yo6 for the confidence ,;:hich (1,:nin you have shom no by your anm;or, It ia not vGrr on37 to cot n e]oar picture of our ituntion by zy:rrly follw:inz no C=02 do not prom t.:1 yoLr roca. 7h:A crontc .31;C: 1-.-;a1c.tod for no;,1th3 fivo nom .1:aid unfturi'ltsly in otTwit do corps, whic', much noi:lo )1070 VI(' nortlls to tho ndvico ovory bodr v:as cl,:r:wiT3odtbnt situation nootly lonctor.:1 foroija lonns n for: or Doiaon flo..; in no t ta,on. to s.%44.1 "sr14' Uti_O v=ount it.7-.odioi al :.:011/00. for finr.:10 o bu t sd f:LOC, , 2,70CULf16 Lino, ns you -3 ler' hard contra, ovor tho zo-callca public funds, croditc to tho tours°. courso Al 'o. - to r:.3....co t o," tho 7cich-bhn!: vns nnlmdid but Exit or zoz.oy. 1 lo:t total17 control o: tho n.e.ot, )oreUlTo :en t to almoct 1:0thirCO ro thcrororo v down t 1 a cood doal of foreiL,n short mono:' loft tho county!. :nfortunato. ly tl!o fornor *Anis:tor uod tho !inanco for intornal nolitical roasons 7:eichs-lonn, in mv abnonco (I snont a short timo in. :lor(Jnce) without civin:i any notice to ml in timo 'and out com)ly-in- with .c;y Irish ,ohicb I toloraphod) to postpono tho rootinj.; c-C the s;:ndicato until my imlodihto rcturn. ?ha loan had not a bad succons but vas to bic for boinc totally placod. loroby tho bond narl:ot 1.ocano disturbed for a lonz whilo rnd spoculotin:7 in sharos as still mor fovourod. 2ome tino later short-tor m =nay flow in ricainfor vhich thoro wan no neod in co:-,orco and trod° but which was olacod noroly into credits on the stoch exchonco. no continuous boom in shares attractod oocially a comparatively onornouc amount of w:nrican =nay, '.;&ich was partly given as liourco crodit and partly invostod on joint account an tho hours°. As to tho ;ovison nituation, this tic tLincsdevolopod not as toy did in vAlon o:ports woro favourod by your coal ctriko, 'out o.oinc:, to the groat delicioncy in our Lalanco of trade tho Dovicon did not cono to tho eichsbank but wore absorbod by the inportors. I'Ijo cony Lmhinc of proCits on tho bourso contributed a groat deal to to incroaco of imports, as can be'soonfrom the orticlos importod for nero consunption. Go the tine was roachod that T. had to chance my porpotuouc warnincs to the banhs into direct action. I cot the banks togothor and told than that 1 considorod tho businons thoy did not nl-: to be a dancorous one from tho statidpoint of the mark oxchango, but that I also say a.croat ;:ancor in their loch of liquidity, as I could not conoi::.or thoir t.11.V.W.0O2 on sharcs civen so frooly to be a liquid nosot. no I inhinc busi- lichod on the vordin of loft it to aninc to con- ing bolero inotec ou L,; conuonces. seci 2one anh bc, trosjvins. I on the stock er:ohall:e, incimted before me that should raise tho rate &lotion in businosn. 113-:; -05x:11z:bank interost inntead of ashin;:. for a ro- answer was that this was just wiint tho watcd, :)ccause they thought that b' raising the rate, ctill mom foroi;:nmonoy wolld cone in and woulk! finance thoir. sloculatione. On the other hand the portfolio or the eichsbanh had Imanwhilo increased but not to such an extent, that I could not moot all regular doand of couuorco and trade.," , 7:von to-day after the colla-)se-the portfolio of th,:i is only about 1:?(;0 7.:larhs and ir 1 cm not going to loose =o2'° Dovicon I can oLsil:- toot another concidorablo increase of tho portfolio. i0, I told thou that I imp not going to raino rato boi'oro not thoir anount of business was reduced. Airthermore, I you, Kr. Govoraor, to undorstand from all these from should Mr Charles controlhow of important the Iy,blic events, itfunds. .oas, and dtill learn is, that! got thin (3oh, that wc have not yet Adis, who car :o to coo reached an unCorstanding about the Colddiscountbank and that Gilbert as m311 as ,delis aro blaming mo for taking public funds into the Golddiscountbank by payik; intorost, uhich ti o 7eichcban is not allowod to do. I want you to I:now that oven to-day soma hundreds of millions of railway money are placed with the private banks and T would lne you to toil mo ho7i I can mank:s the currency and how T can control the market if hundreds rind hundreds of millions public money is left outside or the control.k :::ow the Consor:uonces : a good deal of the short money is Join- withdrawn and of course I am loosing Dovison. Tbo has come down to 2.0:)0 million marks now of gold and :evisen, - i.hich of course is still satisfactory but which ma7 be further reduced during the next 7/oohs. IC the %.-indoncy continuos, the 1.41uk shall certainly be obliged to raise the rate which will beco:.:o more ofrectivo now after I have cut down (2,11alin;2,. I cannot toll you when the time for a raise will havo boon reached bocauso that depends upon how many Davison I am going to loose akid ho;, many bills will como to tho )ank. I -A- coorso no D'a'rn 2oymonto contributo a Lood dool to ny loosinf] 7)cvioon and it cloorl sbown that so far no transfor ic LoinL modo out or borrowed foroigi. clonoy. thinl: you wM oL;roo with co that on no run a countrylc curroncy cannot 1+13ed on boovowin:_, Povioon m certainly not on short foa.oiLn lonno. u. :,oforo iotorin upon that, nostion, TAI:ich at all cvonto oP1 have to ix. solvod ono day, 1 think 1 Lava to do ovortin:.7 to cut down spcculation, luxury conoumption and to induce pooplo to be thrifty and ocononizin, which is a very difT'icult thin,: to do in a country, wbicb has imnsoa such n frightful imflotion no ro havo. I oc;: in cl.oco touch with Cilhort and ho ic all7nEs iuforrod about ovor:itbinc what i3 goin on bore and I think tic is clearly awaro of tho situation and undorstando it. Now Lhcro is one tochnical noint which I 'Mould liko to deal with. V:c [Ain have 301;O goroign Lalancos on torsi with .rlorica. 2110 sold which lieo with yoo rand arong most he absorbod Droboy. Yo J sh and as I do not ::a n moturc, 1 call moot or',':. II' you ?mow a advico, as collin rojIrding tho stow rronch oporntiono h naret. f-lontually I a tologram after hov I bopo that thoco hopponin4Joro and i Ali:;11 ratlor, whic :)th. I think it Wou the credit to the ' 'ancuo do 'ronco, b nosoot to the uholo anxioun. Purthormoro i'olos towardo the . theca lnst ooks, t \01 Ter ')raribertt 23ertirt SW1 11, den bes 21.9.27. Rieick-kanit-Tirehforium.,:, Dear Mr.Strong: I was very much pleased to learn from your letter of August 31st about your health and about your European plans for the winter. Needless to say that I shall have great pleasure in meeting you, be it in Algeciras or whereever you are going to ask me to come. Of course Algeciras would suit me perfectly because I know so little of Spain and it may give an opportunity to Ers. Schacht and to myself to combine a few holidays with my visit to you. I hope that Norman and Moreau will agree and that also Visserint and Bachmann will come. So I am looking forward to further news and in the meantime I remain, dear Yr. Strong, Yours very sincerely Benjamin Strong,Esq. Governor of the Pederal Tleserve Bank New York Ter P-..ra Pent Ter 3rafilSertt 0 DR.REicHsBANKpRAsIDENT HJALMAR SCHACHT BERLIN, DEN 2.7.928. Dear Mr. Strong! As I see from your very kind telegram that my visit at Evian about the middle of this month will be convenient, will you please give me the name of your hotel so that I may telegraph the exact date of my arrival in time. Hoping to find you well I remain, dear Mr.Strong, Yours very sincerely Benjamin S t r o n g Esq. Governor of the Federal Reserve Bank of New York, c/o Morgan & Co., Place Vendome Paris. lir REICHSB.A.NEPRASIDENT DR. HJALMAR SCHACHT BERLIN, DEN 6.7.1928. Dear Mr. Strong! Thanks for your telegram. I shall arrive at Evian in the course of Thursday Morning and would be grateful, if you would kindly reserve for me at your hotel (if convenient to you ) a bedroom with bath for two nights. Thanking you in advance I remain, dear Mr.Strong, Yours very sincerely Benjamin S t r o n g, Esq. vernor of the Federal Reserve Bank of New York, Evian- les Royal Hotel. - Bains Ter '-'riiii6ertf 'A3erfirc SW111: bes ben 5. Jun; 15)28. tcfmbank i - Tireilforiu$ nt /I/ 5/04. gn bet jamiworf iff 6ic porNhenber Junmer erroanrchf Lieber Herr Strong ! Die deutsche Ausgabe von Dr. Burgess' Ruch "Vie Reserve Bankrn and der Geldmarkt", welche ich emit einem Geleitwort vrrsehen habe, ist jetzt fertiggestellt and im Buchhandel er sehienen. Ich erlaube mir, Ihnen ein Exemplar zu ilberreichen, und bin mit den besten GrEgen Ihr sehr ergeener TRANSLATION: (O.E.M.) Dear Mr. Strong: The German edition of Dr. Burgess' book "The Reserve Banks and tle Money Market", which I have written a preface for, has now been completed and has appeared I am taking the liberty of sending in the book Shops. you a copy, end remain with beet regards -- An X.4 Ilerrn Ernjamin z.:7t. S t r o n g, Evian/Schw eiz. 1 14.-4 ARCON !GRAM reiix RADIO P No. of Words 12 Service instructions Number Handed in at Time handed in SCHACHT ubject to the conditions printed on the back hereof. ENQUIRY RESPECTING THIS MARCONIGRA 12)49 2 Date Recd. 2 To S S 1 NCEREST REGARDS TO SHIP BERLIN Date handed in GOJERNOR STRONG .0.1_ SHORE I C KA J Time Roc'd. 1514 Ree'd from K.A J By KSC This article is protected by copyright and has been removed. The citation for the original is: “Dr. Schacht Dies; Nazis’ Economist.” The New York Times (New York, NY), June 5, 1970. This article is protected by copyright and has been removed. The citation for the original is: “Schacht is Buried in Munich; 150 Attend Rites for Financier.” The New York Times (New York, NY), June 10, 1970. FEDERAL RESERVE BANK W6(.4.1-7.0014-1-24 OF NEW YORK OFFICE CORRESPONDENCE Mr. Jay FROM _ OAT May 25, 1925. SUBJECT: Governor btrong. The attached draft letter to Dr. Schacht explains itself. I would like to know how you feel about it. 742 992_ a y 25, 1ki25. My dear Dr. Schacht: I DI srritin3 you xell in r'.civeince of the development plans for the Gunnar in the hope theit I may be able to cAsrry out my seilins for Furops in July, and, 'it that time, bh.ve the intention as it id oossiblo pleasure or n_.eting you. the futures J 1341. d :lope to spend .-.,bout, two lontnw this time ad. el e lisic to )1e:rlin. late July. 'this r to anticipate and during :likely be in ..:kueuet or liky I nek you to a.lvise me if you ar: ;:llni-king to be there th,:o and if it will be in evuy way corvenient for me to carry out taie program. Dependent sokecah t ;.12on ;:-,y friend 6w/et-nor Ao man' a i/lfind, shall ex..;ect to ret.ra to thie country srly in ,:isptember, but may be in Lurope :again in Octoocr. !lave you considers° the possibility of mlkin6 a visit to this country? If co, I woulo certainly *dell to be here. ,fter :: h re the opportunity 4erc you abla to ret,:rn from .tbroad, 1 ouid hope to m.ke your presence m4ike you acoueinteci it the members of our °realization and to err:tags for you tc meet any of our ttaikero whom you will be interested in hawing. My home just now is at the Llotel k,.rguery, Sc. 270 Para Avenue, (au I k111.91; rbcantly 6iveira up houdeke,...ping) but if you felt disposed to kitty there with se I would Lid very to la fxVii ;cu do so, and I think br. 3c&i:cnt you woula find it quiet and comfortktie. ,with asturtnotle or reg,rda, bEdieve me %fy Lruly yours, br. Setrat, ?rcaideat, %AGurt,.n.c, III Berlia, Gerrny. 5.2b.25 a June 15, 1525. Dear Dr. Schacht: I wish to acknowledge the receipt, and thank you for your radiogr of June 1B, 1925, reading as follows: "As I am doubtful whether a letter $11 reach you before your departure, I be6 to confirm by cable your kind ietter of Nay 25th and beg to say that I shall be very glad to meet you on this side. I am in constant touch 4th our London friend. Beet regards." and to confirm the reply which I sent you by cable this morning, reading: "Yours received. Our Lc:I:lora friend has probably advised you we shall be in Berlin before Riddle of July. Many thanks." I am looking forward with pleasure to our mbetinb shortly, and with assurt...nces of my estecm, I beg to remain Very truly yours, Dr. Hjalmar Schacht, President, Ratchsbank, Berlin, Germany. Brusoels, Belgium July 27, 1925 My dear Dr. Schacht: Your kind letter of the twenty -first reached me just as we were leaving Spa, and I hasten to thank you for the statement which you were good encugh to send me. You must realize with what interest I shall watch the figures from now on, especially to learn what success you enjoy in your difficult task. As I telegraphed you, we decided to come up to Brussels on Sunday in order to have a visit with Monsieur Fantain. And from here we o%all probably go to some seashore resort for another week. After that our plans are net made. Mrs. Humphrey and Mr. Norman join me in warmest regards to ycu and Mrs. Schacht, and we all still remember with great pleasure your many courtesies to us and the enjoyable time we had in Berlin. I beg to remein, Sincerely yours, Dr. ftalmar Schacht, President, The Reichsbank, Berlin, Germany. Hotel du Palais, Biarritz, France, August 7, 1925. My dear Dr. Eehacht: As I premised you, I wrote tc New York reporting our conversation in regard to a possible sale of some of the portfolio of the Gold Discount Bank. And I was sorry not tc haws been longer in Berlin so as to learn the result of your conversation with Mr. Max Marburg. It seems desirable that I should advise you right away that 80130 slight impreosion seems to have developed in New York that a number of different inetituticne were figurinE on this transaction, and, of course, this might result to your disadvantage, especially whore the paper is not very well kno'em, and any feeling developed that a number of different concerns wore working on the same business at the sam3 time. This, I have no doubt, is due to the importunity of various bankers My con feeling, you will recall, in approaching you to buy some of the paper. was that an initial transaction with raxturg meld be desirable because of the and that in this buenles in the interest it might be possible to meet the criticism that you were dealing exclusively with his by retaining the freedom, in some way which would be entirely agreeable to rarburg, to dal with others later. ' I am adv"sed that Mr. Paul irarburg reaches Hamburg the middle of this month, and I am taking the liberty of writing him, as per the enclocod copy, which will keep you fully informed. Could you conveniently sondes MOUS of the statement of the Reichsbunk for he weekly periods subsequent to the one which you were good enough They may all Alsc similar statements et the Cold Discount Bank! to give me! I shall be mailed to me in care of the Hotel Majestic, Avenue Klerber, Paris. find them a convenience to refer to in connection with any cables which may be exchanged with my office. Please do not hesitate to write willing if you please, whatever you feel to the portfolio of the Gold Dismount Bank, some service in rew York in connection with me quite fully your impressions, sad, to toll me of your plans in regard as, indeed, I may be able to be of this matter. Mr. Norman is still with me, but is returning to London next rednesday And we shall go to Paris on Thursday, remaininE there probably until about night. After that my address will be in care of the Bank the twenty-fifth of August. of gland. Biarritz, France 8,7,25. lit Dr. Schacht (2) if daMliapments prior to my sailing for home about Vie ninth of September make it NM deslre7e for us to have another meeting, I hope that you 11 feel free to gems to Lon:on, and, in any event, I hope you will not hesitate Ilikeep me informed of how your program develops. Te have many pleasant memories of our visit in Berlin, and Shall always be most grateful to you for your courtesy. With kindest regards, believe me Sincerely yours, Dr. Hjalmar Schacht, President, The Iaielsbank, Berlin, Cermany. P. S. (8.8.25) be good enough to see that Mr. Paul Marburg May I ask you receives the enclosed letter, as I am not certain whether he into stop in Berlin or you are to meet him in Hamburg. ,nc. It BENJAMIN STRON. SS Mr CV:HOUR:I OL?IG RNOR [cations de service. LE PORT EST GRATUIT. Le facteur dolt deltvrer on reeepisse a !ouch. lersqu'il est chargé de recouvrer one Laze. 1,:1o1opniout. N. 1.1 . n JRA V L NI-IA 30CE 502, 13. ..L; I SHE S A ND £ KC INCE ST REGA RCS cAzt GAT ., t Ittek ita MENTIONS RE SERVICE. EN2;0' Oar e_Aairwi, Ace ar he ,nie A DECHIRER Wce Sr-41-1A CHT or 1111111WIDIMITIAL: September 19, 1925. ify dear Dr. Schacht: Ath this I am enclosing a copy of the telegram .hhich I sent you this mornin6, concernim; which, however, I shall not hrite you until I her from you, when I will write you full parti cul Sincerely yours, Dr. iljalmar Schacht, The Reichabank, Berlin, Germany. Enc. *0. Ee2t.atb,3r 2.1, 1925. My dear Dr. Schacht: This will semisc you of my safe r;:turn home with many plese:Ant memorise to look beck ui,on, not the least of whibh being ay visite with you. shrill ho?e to make your trip hers one. of profit as The progma whioh I laid out Weil ms one o!' enjoyment. or your stay with 118 seem° to meet the views of my seaociates, and es soon as definite word comae of your date of sailing, I will proceed with the neoesbf.ry trraniImente. %on't you give my kindest rqlarde to Frau Lichacht to your dtuahter, and tte same to your good self. Sincerely yours, Cr. Hjalmitr Schacht, Tde Reichebank, Berlin, Gerany. snc do- September 24, leVa. My eter Dr. Schacht: I am asked by my friene, Dr. Lemuel McCune Lindsay, presi, ent of the Academy of Political Science, to transmit to you the enclosed invitation to eddrees their organization et a banquet to be given in New Tort on October 28, at the conclusion of the annual meeting of the organization. I Lave taken the liberty of writing him as per enclosed copy of my letter, which I am sure you will understand. Naturally, I eo not Cant to attempt to impose any restrictions upon your freedom in accepting invitations of this character, but I know you expect M6 to advise you, and my best advice is that the invitation should not be accepted. The general subject of Anti-Trust Lets has for many years been one involving considerable political controversy in this country, and it might well be that the topic would prove embarreesing for discussion just now by someone from abroad. Even if you die accept the invitation, it would be neceseery to speak with the utmost caution and reserve sc.. to any phase of this problem which might give rise to contro- versy or criticism. This is partly the reason for my advising ,that the invitation be not accepted, but I also hive in mind a discussion we in London, at which I recall that we concluded that addresses before large public meetings might be inadvisable anyway. Of course, my first eeaire is that your visit snould be not only successful but agreeable to you in every way, ho I am sure you will urv'erstend my desire to you the bast information and epinion which I am able to do. ive Dr. FIJEdmar Schacht 12 9/24/L5. We are looking forward to your visit, r-nd I am Psbuming that you will carry out your plan of sailing on the ninth, but will still word before concluding the arrangementa. With kinleet regards, believe me, sincerely yours, Ls. Ejaimaz Schacht., President, The Reichebenk, Berlin, Germany. Encs. P.S.L. wait more definite http://fraser.stlouisfed.org/ InpSember 21, Federal Reserve Bank of St. Louis 1926. September 21,1928. Dr. Hjaiwar Schaacht If you can plan year trip to America so ate to be here Aron October 28th, I hope you will cable me your accep*OCO of this invitation so that we can announce your prmsenos it ihe,dinner at as early date as ossible. We can give you any fuettkir information _ I or arrange details concerning your speech and such pnilicity as you may be milling to have given it either by cable or letter after the receipt of your acceptance of our invitation. Looking forerd with such pleasure to seeing you in the United States, and nopir.g that you can arrange your plans to be here by the end of October, I tim, Tours sincerely, Preoident. My cable address is Lindsay NewYork eptember E4, 1925. Derr Jr. ?resident: ' I have to scknolNledge and thank you for your kind letter of the 10th instant, which I rind on my return from WF..ehington. Ne both quite undtrstand the situation in this matter, tnd I h%ve had opportunity for a talk with Warburg on tLe subject. When you reach New York, we can have some further discuasion, and I fuel sure tLat it will be helpful in avoiding the possibility of any future misunderstanding. Nith essdrtnces or my esteem, believe le, Faithfully yours, Dr. Hjalmer Schacht, Preeit eat, The ileichaCanic, Berlin, Germany. Ao GUESTS Dinner, Metropolitan Club, October 22, 1925 Dr. Hjalmar Schacht #2 all of this I hope may be helpful to you. With a.surftnces of my wriest regardb, I beg to remain, Very truly yours, Dr. Hjalmar Schacht, Pres1-!eat, T..s EAchatank, Germany. 9/24/25. DINNER AT METROPOLITAN CLUB OCTOBER 22, 125 411 Mr. Albert Wiftin, IN HONOR OF DR. H. SCHACHT. Chase National Bank 4e-f Mr. Geo. F. baker, First N,tional Bank Mr. J. E. Reynolds, First National Benk James S. Alexander, National Bank of Commerce Mr. Otto H. Kahn, Kuhn, Loeb & Co. Wm. C. Potter, Guaranty Trust Company Mr. Cla,rence Dillon, Dillon, Reed & Co. Seward Prosser, Bankere Trust Company Mortimer N. Buckner, The New York Trust Company Mr. Lloyd W. Smith, Harris Forbes & Co. Mr. Fredk. W. Allen, Lae Hi. inson & Alvin W. Krech, Equitable Trust Company Lewis E. Pierson, Irving Bank - Columbia Trust Company John McHu01, Mechanics & Metals National Bank Mr. Berl Von Lewinaki, Counsel General Governor D. R. Crisoineer, Federal Reserve Board Mr. Rufus C. Dawes, H,rrie Trust bldE.Chicego, Ill. \//' P. M. Warburg, International Acceptance Benk, Inc. Challis A. Austin, Seaboard National Bank Richard Delafield, National Park Bank Welter E. Frew, Corn Exchange Bank invited by Governor Strong. Mr. J. Herbert Cese, Federal Reserve Bank of New York Mr. Thomas W. Lemont, J. P. Morgan & Co. Charles E. Mitchell, National City Bank Wm. Woodward, Hanover National Benk Mr. Pierre Jay, Federal Reserve Bank of New York Mr. Joe. E. Sterrett, 55 Pine .Areet, New York Mr. Jerome D. Greene, Lee, Hi:Eineon & C. Mr. Roger Whittlesey, Central Union Trust Co. Mr. John H. Fulton, National Park Bank. Mr. Gent Weismann, kmba9eadJr Hotel Sir Charles iddis, Ritz-Carlton Hotel Mlbl. 4 I-ZOOM-1-24 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE DATE lot To SUBJECT FROM 1 7' 410 ECONOMISTS who expect to attend dinner on Saturday evening, October 24. H. ti. E. Chandler David Friday George E. Roberts Wesley C. Mitchell Walter W. Stewart 0. M. W. Sprague Edwin R. h. Seligman Allyn Young Leonard P. Ayres Jacob Hollander JOURNALISTS who expect to attend dinner on Tuesday evening, October 27. A. D. Noyes Geoffrey Parsons !alter Lippmann Franz Schneider B. C. Forbes Paul W. Garrett Misc . 24. 1 40 M 6-25 FEDERAL RESERVE BANK OF NEW YORK SENT BY SEND To FILES 09b, /9j_ 111, COPY OF TELEGRAM cp OctobalV28, 1925 CARTER care CPISSINGER ,JASHINGTON Please send following by hand to Mayflower for Schachts arriv-1 five this afternoon Messase in question sent both to washington Embassy and New York Former notified of your arrival this afternoon and Consulate Please collect from Embassy that you are not aware of contents. El eecker Misc. 24. 1 40 M 15-25 FEDERAL RESERVE BANK OF NEW YORK SENT BY .tr,1,6,44=e) FILES COPY OF TELEGRAM onj ro n6 -z3_,A=s;1=tAat:e.t._ ==- r- IMMEDIATE Meelmge in fueetioki; QM. Wen Lo 1,T.1.6hint;ton _ , New York Coneulnte th,.t. you Former notified mS .1rrivIll tbiH 9:rternoon sad a m :, co r'i not a,,littre of conLento. i'icwise collect from EmbE:boy. - Ioentic,d zne...ig,e to M-Iflowel throu,;hrO,rter Falt.p.itiey had Y. 5. bloacker DINNER - LINKS CLUB - OCTOBER 29, 1925 Yes No Mr. Gates W. McGarrah Mr. Delmer Runkle (V( Mr. Samuel W. Reyburn Mr. W. L. Saunders Mr. Robert H. Treman 11/ Mr. Theodore F. Whitmarsh 3 Mr. Clarence M. Woolley Mr. Owen D. Young Mr. Weisman 1,111r Mr. Pierre Jay it°$° Mr. J. Herbert Case Mr. Louis F. Sailer Mr. Edwin R. Kenzel Mr. George L. Harrison 9_. Dr. Schacht / Gov. Strong ta November 9, 1925. FEDERAL RESERVE BANK OF NEW YORK 4 DATE OFFICE CORRESPONDENCE Dr. Schacht To FROM November 12, SUBJECT: W. F.. jurgess It ha:; occurred to me that you may be interested in looking over score of the periodicals which were mentioned during the lunch conference the other day. I have, therefore, had this little collection made. You will find that a number of them try very hard to be literary, at the expense of Pxcluding informative .A.ticles. My own belief is that you will find most valuable the Literary Digest, the Review cf Reviews, and the Monthly 'levies of the National City Bank, the Cleves and Trust Company, and this bank. I should be very Oz,d to make the necessary arrangements for you tc receive whatever of these publicstionc you wish. It is my hope that they may at least provide some amusement /for your steamer journey. Att. 1 926_ FEDERAL RESERVE BANK KIK. 4. .40011-7-44 I OF NEW YORK OFFICE CORRESPONDENCE DATE November ' 4 SUBJECT: To FROM CO y . r on g Teo co ler, of the .tinched memorgclum, which rPs recd by Mr. may echrict Pt Mr. Owen vounF s and Inter by 'hr. Owen Younk, were hnn,'ed to nnrrment lest nikbt, November 'F, with the atRtement mRdc verbnlly thRt while it was not nossible to make it . nprt of +he memor,neum, I wished to refresh his memory ns to the stPtement which I hpd mode to Pr. Luther of the im-crtance of the ndontion Rnd rPtifir..tion of the Securi ty Pnct which since t)-.pt date wis negot:Pted at Locrrno. t'tt. Tau (01 1 3r , AR.,ctici ToAlt"Ai , 1 192__ 'NORA/1MM LCF/aCHT Our converectione regarding, poeeible purcbeeee of Dille by the Fecerel Reserve Beak of New Tort from the Reichebenk lead we to sake the following eueeeetioner 1. Any Wale eo purcheeed by this beak or by it for account of other Fecierel reeerve benirs, would be jrime c.oaers-rciel bi i t o growinr out of commercial treaseetions her ring et leeet three good nemas, one of which would be the toceptence or endorsement of e firet-cltes bank or benker, the bills having a maturity of not over three /writhe, excluelve of deye of grace. t. The Reichebenk oot.ld gutrente.e repayment of the bill° c.t maturity in dollars ir riew Tort end ship gold in order to lest thee, if neceseery, un -torte/Le t t the Federel 14.40,:sOrTe Bank will eustein no lobe on exchange. 3. :.o obstacle will be interposed by the German Government to gold shipments by the Reichebenk in order to reps,' bills held by the /Peden,' re.,erve bents et maturity, it not otherwise paid in dollars. 4. LttteAento would be rendered weekly by the Reichebenk giving perticulers of all bible purchteed end rr.tee *meld be fixed by exchange of cables. 5. The obligation of the Peichvbenk would be expreseed in fora eatitraotory to the Federal Reserve Rena or iito, York, and conform to the law governing the operetioha of the Reichebeek. 6. The establis.heent of reletione which would result in purchases of bills e,d deecrited, suet neeesearily be predicated upon the confidence which our Directore would have in the independeece ens efr,-..ctiveneee of the etnegement see Toney of the Feichebenk in both. monetary ant. credit ieattere. It le hoped, tqfyrefora, that in eonaidering any such plus for utlee of bible to the Federal -2- a Reserve Bank, the Reichebank will be able to tdvise the Federal fiescrve Bank of oom;leted arrtngemehte ta to ttle handling and management of the ilinds of the keioh and funds of similar character, such tlrooe of the postoffice, the rail- ways, the insurance office, etc., which af.& . ,molly satisfactory to the Reichebank and to the FeJeral Reeerve Bank. By this, or course, it ie meant thtt they should to under the control of the Rtichshtnk ;,enline, Choir disbursement. 7. in vie% of tht im,ortance of the whole ;rotlem of the service of external obligations by Germtn borrowers, it is cleo hoped that the Reichebank will be able to advise the Federal Reserve Bonk of estiLfactory arrange5lents for control of borrowings in the United Btates by estates, municipalities and other establishments in Germany, 60 that they may be confined to those which are not only useful, but actually productive end helpful to the development of German economy. Xew York, Rovesher 16, 1925. ISC. 34. 1 40M 1-24 FEDERAL RESERVE BANK OF NEW YORK CONFIRMATION OF TELEGRAM 44, TO BE MAILED oar E HAVE TODAY TELEGRAPHED YOU AS FOLLOWS: November 14. 1125 Hj,Amar 3chacht 3. Nitsve imdterci,m Thanks both telegrams .,4e (Holland imericen Line) all wish you a safe and comfortable voyage home Have enjoyed your vieit greatly h. nd join in hearty good wic-lec to f,.11 the BLEJ. STRONG RADIOGRAM WORLD WI DE WI RELESS 411E FILED CONTINENT f-- TO ,--1 CONTINENT CLASS OF SERVICE DESIRED Full Rate Radiogram Deferred Radiogram SHIP SHORE .4r-i/ TO ---i-i-" Patrons should mark an X opposite the class of T0 SHIP SHIP service desired : otherwise FULL RATES will be of charged. See back this blank. " fialmE- " RADIO CORPORATION OF AM ERICA FORM No. 100P-100 Send the following Radiogram "VIA RCA" subject to terms on back hereof, which are hereby agreed to HJALMAR sCHACHT SS. Nisuve Amsterdtm mler 14, 1925. Am just able to thtnk you more expresoivel:, for your tslegr= mcs which htve given me the gret test poeALle st.tisftction e peci!,11y to knon ti.: ; your visit here wt.s t Euccess for yourself t s v,e certainly it fit reciproct,te the kind uxpressions oonttined iL your teleErtm v.:y fully the spirit which prompted you Lo ir us I stront,:ly she re with you it UT: ONG FULL-RATE RADIOGRAM UNLESS MARKED OTHERWISE a November 17, L)25 My dear Dr. Schacht: 4.th this I m Jencint; to you the eollt,ction of -retie which were fgatbered curia; your st4 here. I believe you have seea .11 of them, but you may find both inteke,:t anu use for them in this form. It was indeed a pleasure to ilve you .:ith us, nd the benefit to 1.16 both, I Ja sure, t'rom these personA. exch,Ft.n , is well worth the eacril'ice of Lsin, sway from home ehen there .are so mluly pre_sin;; m.tters to be dedt With. I 5h: All shortly hope to .rite you more fully. comfortale trip ite,intime, I hope that you have h home. -,ith cordial regards, I %.m Faithfully yours, ), Dr. Schacht, President, The heichabank, Jseberstrsese, Berlin, Germlny. inc. January 7, 1928. ky dear Mies Steffeck: Almost kiirectly we hail tiii.,,patch.:, our letter of yesterday concerning the special shuttle to be employed 4th the Hammond type- writer in the coding of mesa ea between Dr. Schhcht .,.nd our Governor, we learned from the manufacturer that there 4ould be sn unavoidlble lay of possibly 6wo weeme in the completion of the shuttle. I yonder if you will be good enough Lo explain this to Dr. .?chacht, so that he will not be disturbed by the non-receipt of it. It 411 go for*ard just b.8 promptly as possible. Your thoughtful Uhri tmas greetines 'were very such sp- preciated, and I sm hoping for 813 early opportunity to *rite you personally my thane. 4th all good wishes to my Reichabank friends for the New Year, I em Sincerel use Clars. Steffeck, Secretary to the Presioent, The Reichsbank, you,- Jenuery 18, 1926. My deer Dr. .6checht: We here juet had a most interesting visit from Governor Norman, who defied for home lent Saturday on the MaJestic. He expects to see you within a couple of weeks, and you will hear in general t'rom his of the various matters we have been diecueeing. Mr. Gilbert ie &mill here, end I expect Lim to be at the bank most of this week. This is my first opportunity to write you tome explr_mstion of the edvence in our diecount rate. The feeling bye been eloxing that while possibly the advance which hee taken place in tee stock market hee been justified by the intrinsic position, neverthelead it has involved employment of a large ea ount of credit, and a aceeewnet simila r eevelopeent her: taken place in some parts of the country in real estate speculation and in tee general activity or building. The tendency for the amount of Federal Reuerve credit, that is, the amount of our portfolio to expend, also became rather pronounced lute in the year, although the major part of it ie accounted for by the usual year -end activity of windowdressing, etc. All of this led 116 to feel unwilling to facilitate in any way the employment of the year-end funds released to the market in the speculative eccount, and tho advance in our rate to 4% promptly after the turn of the year rather insures that there will be a prompt return of tte currency and a prompt reduction of our port!olio. Thee hha, in fact, taken place moat satiefectorily at New York, end ie ereeuelly taking place throughout the country. Since the rate advance stele in the fall by the other Reserve Banks, #2 V Dr. Mjslmar Schacht 1.13.28 there has been a noticeable tendency Imt the volume of dealinge on the stock exchange tatocrease, end rather shurp periods of recession in price° occasionally, but as yut no 'v .:Ty material reduction in the total of the loan account which /mu nether con- tinued epsmodically to increase. Realizing, ce we all do, the possibility that any wort of speculative spirit is liable ultimately to reach comimoditiewan tive about tile use of the facilities advance. commodity prices, wo have felt coneerva- this bank, and hence determined upon the Legitimate buninesu will not be penalized by a 4f rate. We noticed, with such interest, the reduction in 'four rate, hope that it is an indication that the readjustments which you htt in mind are now being completed. If my present olrne materialize, I shell ces you in the early summer, posAbly in May, as I hope to sail th. 50th of March, stopping first in Italy. If you find it possible to send figures, concerning which I recently write you, I think it would be helpful. They may arrive while Mr. Gilbert is here, which will be perticularly fortunate. With kindest regards, believe me, E.incerely yours, Dr. Rjp1mar Schacht, Presiaut, The Reichobank, Germany. PS. LS .44 Hyde Park Hotel, London, ley 3, 1926. ny dear Doctor Sehadht: I would have written you ore thin, had I not expected to pee you in London today, but Governor Normanehowod me the telegrnms exchanged with you about your visit, and it racy be that the strike situation will pormit you to come to London before I leave about the middle of this month. My awn plans have been somewhat modified, because I have not boon well and it will be necessary for me to take at least n month's cost after I am through in London; place on the Riviera. untll July. I am hoping to do so in some quint This means that I probably esnriot read: Porlin If you do not reach London before I leave, I hope you v111 roc hero in care of the Bunk of 3.neland, advising me of your own plans, and especially of any possiblo abeonc from Berlin, no that I may bo sure of finding you there when I come. 7ith kindest reeards, believe one Sincerely yours, Cchacht, ..rooident, %110 ',.eichsbank, S Hyde Park hotel, London, 1.:e.5 14, 1926. :V dear Doctor Schacht: Your kind letter of the 6th has just reached me, and indeed I share your disappointment that our meeting is to be delayed. Pos- sibly it may be better, as I have not teen at all well, and after a rest I shall not only have more leisure than I had in London but will to in better shape to enjoy our talks. My present plan is to leave for Paris Saturday and spend only about four days there, after which Mr. Winston and I will be motoring to the Riviera. I shall keep you posted from time to time and see that you get word well in advance of my going to Berlin. I shall certainly give your message to Mr. Norman. With kindest regards, believe me Sincerely yours, Dr. Hjalmhr Schacht, Fresident, The Reichsbank, Berlin, S.W.111. B5:1! Hotel eu Ccp d'Antiber, Hotel du Cap d'Antibes, Antibes, July 15, 102e), PERSCIAk Dear Dcctor Schacht: Your letter roaches me today, and I am very glad to have it. .chile I have not been quite well, the rest at Antibes seems to have been effective, and I an feeling veil enough now to continue my trip. !y plans are a little indefinite, except that I suet be in Switzerland about the first of August and after that will be free to keep an engagement with you concerning which Norman is writing you today. He has been with me here for a month. No one is quite co well qualified to disregard newspaper stories as I am, so I have never for a moment imagined that you wore in Paris. "e are both glad to have the good news of your flank position. will remedy itself in time. The rest Norman joins me in warmest regards, and we both look forward with much pleasure to seeing you during the first half of August. I an leaving here on Monday, and my mailing address will be care of Messrs. Morgan, Harjes & Company, 14 Place Vendome, Parini. With best wisher as always, believe me Cincerely yours, Dr. fijalmar Schacht, President, The Reichabank, mum:, 57.111. 11-Lf Hotel de l' Europe, Amsterdam, August 11, 192G. PRIVATE My dear Dr. Schacht: Our visit was moot enjoyable to me and most enlightening as well. I certainly hope that you found as much profit as I did. Unfortunately, this morning the Dutch papers print despatches from Berlin referring to supposed conversations which we had on various matters, including a discussion of the Ilapen and Malmedy matter. I hops you realize that I shall continue to take no notice of newspaper rumors of any kind, and especially those relating to political matters. As I explained to you and to the others during our talks, T can take no interest in a discussion of political adjustments or affairs, which are entirely outside my province, for as you so well realize, my own interest is confined to discussion of monetary questions, even though in some instances these may seem to have an intimate association with what appear to be political questions. I hope you agree with me that it is desirable to pay no attention to these irresponsible statements in the press. I am leaving tomorrow morning and am not certain of my address, but if you have occasion to write or telegraph me, I think the quickest communication will be through Messrs. Morgan, Harjes d Company, 14 Place Vendome, Paris. 7ith kindest regards as always, I beg to remain Sincerely yours, Dr. Hjalmar Schacht, President, The Reichsbank, BERLIN, S.W.111. a Hotel Grand F tiler, Basle, August 13, 1926. a Dear Mr. President: You will recall that I cabled to New York in regard to the possibility of getting bars at a lower cost than coin to cover the shipments now being made to the Reichebank by the Federal Reserve Bank. A reply has just reached me advising that the coin now being shipped is uncirculated coin which has been specially furnished by the Philadelphia Mint at an extra cost of only 893.75 per million, whereas the charge which the Treasury makes for fine bars is C500 per million. You will therefore see that it would be very much more expensive to ship bars than coin. In fact, the shipment of new coin as now arranged is very much more advantageous than shipment of the ordinary used coin, which we find on investigation involves an abrasion loss which will aver- e in the neighborhood of 4600 per million. In view of the very economical arrangement which has now been effected, I have no doubt you will prefer to have us continue the shipments of coin. I am also advised by cable that a statement has been made to the press in regard to these shipments, in substantially the form suggested in my cable, of which a copy was sent you. In the same message, they advise me that the rate of discount has been increased to 0, of which you have doubtless been notified direct. ly plans from now on are still uncertain, and unless you hear from mo to the contrary, I suggest that any communication be sent, as already arranzed, through Messrs. Morgan, Harjes & Company, 14 Place Vendome, Paris. 7ith kindest regards, believe mo Sincerely yours, Dr. Hjalmar Schacht, President, The Reichsbank, BERLIN, S.T.111. DS:M Princess Hotel, tl 411 Diltmore, N C February 14, 192 ?. My dear Doctor Schacht: At last I seem able to at least make an effort to answer a grott accumuletion of mail, which I could neither read nor deal with during my Moose. You may understand this to indicate that I an considerably better, but still unable to return to the office or assume any responsibilities. This letter is really my belated thanks for the gift which you were good enough to send me through your Ambeseaeor ing us in 7,aehington. shish I understand le await- I very deeply apvreciate your thoughtfulnese indeed, and especially of this cnaracter. tray I hope to share my enjoyment some day with you! Until more is known about the consequences of my sickness, it will be impossible for mo to meke definite plum for this Summer, but I have net abandoned hope of a trip to Europe later on,ane il I am able to make it, shall look forward to a good visit with you either in Berlin or at soeis convenient place. I am still so much out of touch with the office that I can write you nothing of business, but an glad at last to Le able to gelid you my greetincs and cooLi wiahes. Won't you writ me when you have opperturity, addressing me in care of the Dania ith kiheest regards, believe me Faithfully yours, Dr. Hjalmer Schacht, President, The Reichsbank, Dorlin, Germany. Alisc 24. 1 40 M 5-25 FEDERAL RESERVE BANK OF NEW YORK SENT BY SEND To FILES COPY OF TELEGRAM 1* July 14, 19n. Hjaliar Schacht On Board S. S. New York All of my associates join me in expressions of good wishes and of rotitude for your message and especially of appreoiation of the high purposes which listinguiahas your work at: collaborator with all of us in the various problrms we he7e to deal with. Stop. The accomplishment of the results deqcribed in your message will only be possible if they are all attacked by those h,ving the vision and oourato May I express the hope that our meetings which you have no often exhibited to will become a tradition of centre/ benk mansi:ement and that they will lead to the stablishment of cooper tion and good will. Strong. Auguet 16, 1927. 14 dear Dr. ';chf..cht: ify friend, r. G!...rrard E. Ariston, is sailing for Europe in a few ditye, rill be in B.,rlin .nd I hove ti:en the liberty of assuring hits that you van bQ glr,.d to see him if he c%lie t the Rai chebhnk. You will nioa.11 ry or oar h t e. ci t e of mine. Tel &try t for a nuTter of ye -.re he ire Underrtincrit Inc in thtt oap!..ci ty a close He is now s,.soci...ted with Masers: .._.'ho-.r2L.n end :sterling, who sre, couneel for th-. liation,11 City B'nk in *ow Yuri. Ir. fact Mr. intton is ir,ikine; this 6"bro.e ritt: Yr. Chrles E. Mitchell, the Preeident of the Nt,tionl City P-r.;, .ho early all on 7ou '.ith kr. Ane-ton. I have given fir. ..incoo co letter of introdiction, 1 n eriu,ry to CO t:O. qi 0.1 gindest regards, believe ne nincerfly yours, Dr. lijA.m.,.r ?reeident, Thy Re-ichubrink, Berlin, Gerrn,-ny. it Auk:ust 31, 1927. PERSONAL My dear Dr. Schacht: Sine:-; enjoying your visit here I hove been rs subject of close scrutiny my physician, and I am gled to say he givers me very excellent reports. Be favors my leinc away from New York in ilanualy and February which are the two most severe and dangerous months for me, so I am now planning to nail from New York on th, Conte 'EsiancLunano on January 4 tin after spendint, a few days et Gibraltar, settle down for some ?0, k© at, Altecirus. I have advised Governor Norman of this and Governor Moreau, and em planning alto to write Dr. Visafring and Dr. 3achmann. This word to you, well in advknce, is in order that I may express the hope of seeing you while I as th. re, nd that it will not be a greet inconvenience to you that I should so arrange my trip as to avoid the severe wint-r climate both here and in Northern Europe. It will probably preclude my visit in Northern Europe at all. After some weeks at Algeciras I will likely spend a month in some :t,tractive place on the French fliviera before returning home. since our rate reduction I have been planning to write you some account of the situation h re, but SO far have hcd no opportunity to do so, by, you may :,xpeot a letter shortly. In the moantim-;,, with kindest regards, believe me, Sinoerely yours, Dr. kijalmar Schacht, C/o The Fieichebank, Berlin, Octot.er 3, 1927. Dear Doctor Schacht: Tour very , ind letter of the 21st hae just reached mu, and I have read it with much satisfaction. An unfortunate complication has arisen which may delay my sailing date, and in some respects, all my plans. tome people think that there may be efforts in Con .rose this winter to amend the Federal Reserve Act, and if so, I should like to be here as they may wish me to appear b fore the Banking and Currency Committee. I will know s little later and you may be sure I will keep you advised of my plans. With every z_,00d wish, believe me, my dear Doctor Schacht, Sincerely yours, Dr. Hjalmar Schacht, C/o The Reic.hsbank, Berlin, G,-rmany. BS /RAH November 10, 1927. PERSONAL My dear irec,Or Flobeobt: You oarcainly Lace en excellent memory, and you certain di.iplay tosarc.s your man -La. I have just raceivad copy ,)-f the English tranalation of "The ataoilias.tian of the Mark," and you may to ore that I am looting forward 'co reading it with the ksenset Shea I have done co, may I Cu privileged to ivrite jou ts,re comment& i t' 4-ny occur to me. Without reauing it, however, I as to expreec the view that in this great aohievement for Ct.rmany you Laub perforee4 a Service for your country and your countryrna. of a vi.lue far beyond whet is w.enerally recognisec. May I ev.iei that I have learned ,rery rscently, with much concern, that you neve oemn intilapobed to an extent possibly to ()twee some concr,rn to your friends. Gert,ialy that Le Ty era: feeling, and I wie very much you oulu write and relieve rny 11th coruhal h-lleve mu, Sitoorely yours, Dr. Hja lmar Schacht, The Reichsbank, Eer lin, G rn any . March 31, 1g2e. Dear Dr. Schacht: Herr Hans Furetenberg has come and gone, bee him. ',And I was not able to This is just another ciisappointmait due to the limitation which the doctor has put upon my working, hours, to the fact that it VI*2.8 nec- essary for me to be in a,ishington during pr..rt of the time Herr wuretenberg roe in New York. I am sure I have miseed a. real pleasure, but I hope that some clay I x111 have another opportunity to meet Herr tUretenberg. Please be Easurec of my sincere regret, anc of my tv:-.rm personal regards to you. Sincerely yours, Dr. Hjelmar 5'chacht, President, The Reichebank, Perlin, SI 111, Germany.