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de LoN DON NDDLAND AND SCOTTISII RAILWAY COMPANY. (Co NIA! FCRCIAL DEPARTMENT.) G. L. PERKINS. IDOsougE.Nrs 7D MU. A. 11. GROSE, bTRI AGENT. 10, ORCHARD PLACR, rT HOCTIO.A1PTON. TELEPHONEI SOUTHAMPTON 240T. London Encland, July 8, l925 A. H. Grose, strict Traffic Agent, Orchard Place, Southampton, Ln:laAd. My dear Sir: It was very good indeed of you to have -2erkins meet tie on arrival at Southampton recently, and I wish to take this opportunity to thank you for the courteous assistance which was rendered in connection with my luggage. It was most helpful. Very truly yours, ket 7.02s --- Zte gtorrtiN3 Post. CITY OFFICE' 168-70, PALM ERSTON HOUSE, OLD BROAD ST, E C. December 28th 1920. Benjamin Strong Esq., Tha Lark of England, Threadneedle Street..E.C. lear 141r.Stro%:, I expect to be in the Back of England this afternoon, somewhere between 4 and 4.30 p.m., and if you should hajipen to be free, perhaps I mijht have the Opportunity of a further word with you. Believe me, Yours sincerely, zt. Morning OOTYOFFMR, 168-70,PALMERSTON HOUSE, OLD BROAD SI, E.C. Iecember Nth 1920. Benjamin Stron,; Esq., lank of En,:land, Thrt.adneedle Street.E.0. leer Mr.Stronz, In case I should not see you when I call betl,een 4 and 5 o'c this afternoon, this is just one line to ,;ive you every ;ood wish for a safe return to the States and also many .;ood wishes for the New Year. Believe me, Yours sincerely, S ( LEPHONE-VICTORIA 8499. THE WHITEHALL GAZETTE, AND ST JAMES' REVIEW. 4. MAUNDY-GREGORY. H.R.HOLL AN O. September 11th, PP. 45, PARLIAMENT STREET, WHITEHALL, LONDON. The Editor pcesints ..:,otplimariLs to Mr Benjamin 'Strong; and would appreoilts the 3ourtesy of a short appoiTtment. Thelditor would be glad to see Mr Strong at these offioes at any time by appointment; but, if prefered, the Editor will pall upon him. The appointment desired is not in the nature of an interview, but is zon3ernei with s matter the gditor feels, will be of interest to 4 Strong.: The Editor is en3losing under separate 3ovar two re3ent mpie3 of the Gazette.* Benjamin Strong, Egg: 3/o The Bank of England. T.O. gh. London, Sertanber 12, 1919. J. Maandy-Gre;ery, Esq., 43, ParILI.ment at., Whitahall, London, 4ng_and. Dear Sirs Replyinz to your note of the 11th instant, as I am leaving London this ,..Xternoon and expect to sail for the United Staten ehortiy after my return next week, T rezret t at it will be most difficult for me to spare the tine for the aFrointment you are good enough to suggest. Thank you for sanding me the cojes of the Guzetto, which I ahull read with interest. I beg to remain, Faithfully yours, BS/11 Sent by ath (SEND TO FILES) x; COPY OF ILIPLifg-PANI Jr.24 11 1J1 ititz iot01 Bart or i a r ea( ry iLt; rocz:; iur (Jhurge /mural iosorre lb Namma Attr,at, ottcli' oirftrj tA. arr1Vnl January 13th, 1916. Gentlemen: IV friend, Hr. John F. Harris, is writing you today in regard to reservation of rooms for us on our arrival in London on the 9th or 10th of Feb- We will proceed rich to London from the ruary. "Rotterdam", via Plymouth. The rooms will be need- ed for a week, oossibly longer; just now it is impossible to definitely. Very truly yours, ?he :otel Ritz, London, ~gland. Jr/VCU Z ,r)( ti XvYe/ta. 4%4-7, ./6 TELEGRAPHIC ADDRESS EASTMAN. RAIL,LONDON" TELEPHONE, LONDON WALL 412 -------74014/022/E. C. 16th September 1914. Dear sir, I beg to acknowledge the receipt of you!, very kind letter of August 24th, and on behalf of my Loard and myself l thank you for the sentiments contained therein. The Great Eastern Railway Company and its officers were only too glad to have been of service to those who were temporarily embarrassed. ene reception of those who availed themselves of our offer and the attention of their needs was looked after by uUr officers at headquarters, and therefore what was done was representative of the kindly and hospitable attitude of Englishmen to Americans in distress, and is a further indication of the cordial spirit which has distinguished the recent relations between these two great countrios. It may interest you and your Committee to know that relief was extended to 1,212 persons and about M,000 paid at the full face value of the American cheques. The knewledre that the action of the Great eastern Railway has attracted the appreciation of your Co'nriittee is most gratifying to my associaten and myself, and i b-F that you will ti accept for your Committee and yourself my warmest thanks for your very kind letter. Believe me, Very truly yours, 13.,Arong Esql .losers Bankers Trust Company, 16, Wall ;Street, New York. LONDON PRIVATE BANKERS AND JOINT STOCK 7:ANKS WHOSE ti CHEQUES PASS THROUGH THE LONDON CLUEING HOUSE. Barclay & Company, Limited Bank of England (on one side only) Capital and Counties Bank, Limited Glyn, Mills, Currie & Company Lloyds Bank, Limited. London and South Western Bank, Limited. London County & Westminster Bank, Limited. London Joint Stock Bank, Limited. London City and Midland Sank, Limited. Martin's Bank, Limited. Metropolitan Bank (of England and Wales) Limited. National Bank, Limited. National Provincial Bank of England, Limited. Parr's Bank, Limited. Messrs. Robarts, Lubbock & Company, Union of London & Smiths Bank, Limited. Williams Deacon's Bank, Limited. ottut, 74tL4c f /a 4 dr. gab/ Xtel, c6"zea/L14, ,A-coll-eft /1 davo At.iete, Lake George, N. Y., February 5, 1919. Sy dear '-ithers: It seemed somewhat in the nature of an imposition to burden you and others of my friends in London ,-ith the entertainment of my friend Senator Owen. He has occupied an important place in our legislative program in bank- ing and financial matters for some years now, but I regret to soy that from our standpoint he has got some curiously mistaken notions and, I fear, some curiously tenacious prejudices against "all Street and Street people. It was most kind of you to help entertain him and doubtless furnish him with lots of information which he is seeking and of Lich I feel he is sadly in need. Th(ice, as you say, are wonderful times. I wish greatly that I could visit you and other friends in London and exchange viers about the matters in Which re are interested. Just now I as particularly keen to form some estimate of the extent to Which the movement, apparently led by Holden, to effect a change in the Act of 1344 is taking hold. Do you consider that there is any chance (to be honest I should say danger) of fundamental changes in the provisions of the Bank Act? I would regret greatly to see that happen. To be sure it might be a good plan to liberalize the power of note issue, but anything which weakens or impairs the prestige of the Bank of Fagland and the fine old traditions surrounding it would, in my ,pinion, be a calamity with wider consequences than simply the weakening of a grand old institution. Also do you see prosnect of any reduction, or the adoption of any specific plan for the reduction of those two glaringly unconstrvative items in the government's balance sheet, "short loans" and "currency notes"? Thy don't you seek the assistance of your stenographer and write me 2 Mr. withers 2.5.19. bt 3,ARUNDEL STREET, STRAND, 2. LONDON,W. C. 7th March, 1919. 4m, Benjamin Strong Esq. Federal Reserve Bank of New York, NEW YaRK, U.S.A. My dear Strong, Many thanks for your letter of F I fear from your 5th. asking me to se .k the as istance of a stenographer that you have been suffering pain in the act of trying to decipher my scrawl. It shall not happen again. I was very glad to see something of Senator Owen, and find him an interesting person, with prejudices which are widely prevalent and consequently are worth studying when one finds them in an intelligent man. As to your question about Holden and his attack unon the Act of 1884, I do not think that it will cut muchice, but it is very hard to tell; and of course if Parliament, asisted by the kind of Olot wisdom -ad Banking matters that it will get from Chambers of Commerce, gets to work on the banking machinery of the Country, Lord knows what kind of a rues:: they will make of it. However this and other ' matters I am to :king forward with very great pleasure to the chance of a talk with you before many months are out. Mr. Vanderlip has asked me to go back with him for a visit to New York, as the guest of the National City Bank, and you may guess that this was a Ubt Etortomizt, ti March 25, 1919. My dear Withers: Tours of March 7th reached me in Washingtcn ant on the chance that your sailing may be delayed I am writing to express my delight at the prospect of seeing ycu in thin, country. Please do not think that my suggestion about a 1:tenographer was prompted by any difficulty in deciphering your scholarly handwriting. I have a few friends In Lon'cn *led send me handwritten letters ari as all of them are ,vry busy men I hesitate tc write them as often as I would like About matters over here when it seems tc impose so much work in replying. I hate to write a letter by hand myself and am reluctant to impose it upon a friend. Tcu will likely be hers when we are placing the next Liberty Loan and while it may imprer's you someAhat as a circus the experience will nevertheless be worth while and I sincerely hone that ycu will reserve ample time for me to show ycu the whole ope-ation. I lok forward to your arrival here with Icenest pleasur. With kind regard3, I am, Very sincerely your:i, Mr. Hartley Withers, C/O The Economist, 3 Arunle7 St. Strand, London, W.C. 2. \C\ 0.g..- ° AN' June 18, 1919. Dear dthers: Mich to uy delicht I an sailing for Jurope by the Baltic on or about July 1st, and am, therefore, looking forward to the pleasure of a visit with you in the near future. Faithfully yours, Hartl5C50,14wwev Leg., 6 linden Gardens, Nottinghill Gate, London, igland. B3/MB 1 ;'tom 2, 1919. der it1ira : 't last it sods -..4311sible far MO to carry out my plrn of 1431C Thr7 visit to Engi.L.-rid nd the Continent this :minor, rnd T :la plc sutinc7 to oral from ;low York on Vie Britio on ti-Lo 12th of this month. t pleasuro to ow you rgain, and I sinoeroly It will be hone tat you will bo in London ihilo faa tore, -Allah, off and T on, will --Irobcbly be for a month- Hopin7 that you lamp rce11, mid with kindest reInras, Oincoroly yours, Ilnet ley tQcirails 6 Yln,ion Gardens, Nottintli i 11: 'Ito 3301'1.' . gly.e. Ccrovanti ER:-:::NE: 2110 GERRARD 411IPLEGRAMS:ECONOMIST WSPAPER. LONDON:. 3,ARU'JDEL STREET, STRAND, ONDON, W.C. 2. 24th Nov. 1919. Jai DEc 1: on. 3enjamin Strong, 'ifteen Nassau Street, 191, NEW 7077. Uy de ^x Strong, L:eny thanks for your letter Octo. 3O and Ke-f-t4---e4e/tf% also for a Cop:i- of -azanook on the .etederal Reserve 2oard, the receipt of Which your kind offices. expect I owe to Ethan be very glad to look through the pamphlet sent me and am looking forward to receiving the communication you promise on the federal Reserve _rank Statement. Probably taou were too busy to notice an article on "2Rnking Systems" in The Economist of October 13th last, v:hich dealt with the federal Reserve 2oard from the point of view of the ignorant 3ritisher who is trying to find out what it all means. With very kind regards, yours sincerely, December 8, 1919. My de..r .ithere: You must not think that I have overlocked that stateeent I am to send you Greet ,,reesure of work and almost continued abF.ence from the office has made it impost ible for me to go over the figure , which ere on my .esk elmoA reeey to be sent, but I am hopine to have opportunity soon. I ae writing to if I ever can do so. little favor, whica I am prepared to reci rocete Our bank has a staff of ecout 3,003 peo,ie, they have a social and athletic clyb, and publish a magezine. The new editoried staff which is juLt now teking office asks me to get some snort articles from ;broad on jects which may be of interest to our em,loyer_. b- Do you cu pose you would over have sufficient leisure to write a little article, say a fen hundred words, and may I suggest the topic without teing too epecific? 'let we need in this country is a little preaching upon your specialty, - "Extrevegence." g nce of the individual. I refer to the excrete- This is suggested by your splendid book "Poverty an.. Waste," which I regret to eay caneet be ,urchaeed here at times because there is ,till a consideratle demand for it. If this particular subject does not appeal to you, pleese :.elect your own, or, if this is an unreasonsble re,uestlease don't heeitete to say so. One other suggestion which may and may not materialize! I hive had it in mind, at some convenient time, to ezk you to come to this oeuntry aL ..ur to make a few addresses. If this scheme materializes, I hope you may not dis- courage its succeee by aaying you are too busy to come. ith Lest reg-rd., I am, Faithfully yours, Hartley ,.M.IkLe, Lee, c/o The Economist, 3 Arundel L,treet, London. euet December 15, 1919. My do,.r Witheret Your letter of November 24th Luly reached ma, and I had, in fact, reiny red the firticie ii. the Oototer 18th i ay sympathy for you in your btru. pliwtted subject. ue of the "Eoonomi t le to .roduce 1- which arouet very c__- cLnini. for ue on thi I um mo.t grateful to you for your aid, and um cure the Lrtic: ire helpf.11 along the line of our discu,sion. Now, mt lart, 1 have tie to tttem,i an expin:.tion of our statement, phloh, as ,.ubiished in the "Economi to" doe? not, I feel, cuite reflect the fcte. The folio.ine,, figures and commentF tre t ken from a study of the repor of the Federal iesorve board of sli.temter 8, 1919 (enoloa, d) and of the figures a,pearini, on page 440 of your ua of ,:eptember 13, 1919. The ettItement telo. uses 15 lines, , inete-d of 8, but I believe in more comprehensive and corroot, besides which, the assets end liabilitiev ar, 11. taltnce, although the tot are not chowns DONWED 5,T.TEZT F CL02E CF . 5, 191 ASSETS --Total Gold reborn, -.regal tender noteh and silver -Bills discounted for member tanks bout in o,en mhrket Covernment oblivitions ouned Ali other resources is 413,410,000. 359,484,70,984,._,. 55,503,000. 8,897,000. LIABILITIL S Government deposite Otner deposits Federal Reserve motes in Actual Circulation Federal heeerve Eank Notes in Actual Circulation All other liabilities Capittl End ,.rplus Ratio of tot-.I reserveh to net deposit and Feder,i1 Re,rve note lithility oombined 11,82 315,- , 52!,:,66;), 44,713, 4,6co4i, 33,217, .... 2 Let we no Hartley 'zithers, Esq. explein each item is the ebove figures, which, in feet, comerqtely on the ledgers of the Reserve prise quite e lere number of items shown B-nke. 12.15.19 No explanation is made of items which obviouEly exlAin themselves. ASSETS: t 413,41:,C)=,3. Total Gold Reserves Gold coin and gold certificates in vaults ef Federal Reserve Banks Gold Settlement Fund (1) Gold with Federal Reserve Agents (2) Gold Redek.tion Fund - Federal Reserve Nte.(3) 48,647,000. 108,462,000. 234,434,000. 21 867 000. 413,410,000. (1) This Vic..E oriinelly a fund, Colt Fettlement Fund: extra legel in char cter, voluntarily contributed by eech bank to the custody of the Federal Reserve Dord, the share of ownership in which fluctuated the debits bet:..: en the 12 Reserve Ranks ech week a and credits arising between the Reserve Banks were settled once a week by a telegrephic, code message Recentsteting the amount to be paid or received. ly the law has been amendee so thet this common fund is transferred to the Treeeurer of the Unite, '.fates and held in trust for the Reserve Banks, nd, now that we have our o.n telegraph system connecting all Reserve Banks ano the Tre sury, a code telegrm goes to the Aeserve Board every day, giving the :.mount to be paid or received, so thet the respective interests of the Reserve Ranks in the fund change daily. Each bank carries two accounts pith every other Reserve Bank, one celled a "Due Toy end the other a "Due Fro©" acccunt, and, of couroe, only one side of the account is reported for settlement as bote sides cannot possibly belance with so many items in transit arm unMuch of the business conducted between settled. the ileeerve Fanke for their own accounts and for account of their members is now (ion. ty talegrahic code mesea_e, so tht. the transfers of credit between the Reserve Districts, perticul rly tho,e l-rge transfers for account of the Government *hich daily t ke place, are battled most expeditiously. (2) Gold with Federal Reserve Agents The 'I-% reuires that the total amount of Federal Reserve Notes issued by the Reserve Banks .hall be secured by or other eligible paper held by the Lank, which ILIA be physically deposited with the Federal Reserve e 'ent, who is a director of the bank, anointed by the Government to represent its interests in the bank's manageeent. In addition, the bank must at ell times : 3 Hartley Withers, Fbc. 12615.14 held a minimum r eerve in gold euel to 40% of the Federal Reserve otes outstanding, white ie, likeiae, deposited with the Federal Reserve Agent. The note icsue changee so rapidly, end there are Co many chengec in our loans and bill from day to dey, th t, as a matter of convenience, we leLve a round amount of bills and loans and a round amount of gold in the haade of the Federal Reserve Ats nt at ell timee considerably in exceee of the minimue permitted by law, but our reserve oelculetions are made *itheut regard to ,.hither the gold is physically held by the bunk or physically held by the Agent. The lew apocificelly euthorizee this. (3) Gold Redemption Fund, Tho law requires that we muintein e redemption fund for our Federal Reserve notes on deposit it the Treasurer of such amount es the Secret.ry of the Treetury may reeuire. This is due to the fact that the notes are redeemable eiteer in sold or lawful money et the officee of the Reserve Benke, or in gold only at the Treasury Department in Washington, 60 theta fun for gold redemption must be mainteined in the Tree Bury. This ie a theory without merit in it, because in prectios we redeem our note, in old at ell the Reeerve LankE, end will &leap: do eo, es we hold the netion/e gold reserve enyeay, end, in the event of heavy demands for gold redemption at the Treasury, we would simply heve to shift the gold over for the purpose and everybody would be subjected to the inconvenience end expense of centering the gold redemption func; -nd presenting note& for redemption in Washinston. Level Tender Notes and Silver 'Reserve& (4) (4) 4e 13,964,030. Legal Tender Notes and Silver Reserve:: You will notice that I have chenged the ,hreseology of this item slightly, end h,ve elimineted the comma beteen *Lender" andishoteso which ap,:eare in the "Economist" in :teestion. When the lag ;Tovided that we could redee:: our notes at The reserve _ranks in lawful money, it meant United States. note:: (commonly called greenbacks or 166,1 tender notes) and Silver Certificates. ince the war, the i;re_t mess of United ;?tetras notes has been :educed in denomination to one and t*o dollar notes and is so widely scattered in circulation that no very large amount of the t346,0:::0,000 outstanding ever stays in the posceesion of the Reserve Banks. The same is true of Silver Certfioutee, the ezount in circulation having been largely converted into one _lid two doller certificeteg, end, of course, 460,000,000 have been retired an the silver dollars melted and the bullion sold, largely to the 6ritieh Govern:heat for ehipaent to India. Most of the United States notes in our reserves ere held by the Federal Reserve Lank of Nee York and the total of both United fetAes note. and Silver certific tes only runs from 40,030,050 to 410,000,000 at the present time. PIP 4 Hartley A.thers, Esq. t 389,484,0:0. Bills Discounted for ".,,exber f-anks E 327,047,0 Secured by Government Aar obligations (5) All other (8) (5) 12.15.19 -12 437 030. secured by Government vita- obligations: The hrge amount of paper which we regularly hold secured by G,.:vernment war obligations (meaning Liberty Loan bonds, Victory notes., and United Statee Certificates of Indebtedness) is due to the Lot that for a long time we maintained a preferential rate for loans of that character -- unsound in principle, tut necesWe are now eliminating the sary in time of war. differential gr dually and when we have a.b&ok rate for credit, inste d of a bond rate for the Tresury, it is likely that the percentage of comnerci...1 paper and bills, in our portfolio will steadily increase and the others gr-dualiy decline. (6) Other" is By meant, principally commercial "All paper, as distinguished from a. bill accepted by a bank or merch.,mt. Bill. Bought in Oren M,_:rket 73,934,003. (7) No change - 0n3 figure on statement. (7) Bills Bought in Open Market consist principally of that you would call "salt cater bilis," i. e., drafts at 90 days ussnce or less accepted Ly banks and bankers end representing movements of good..., generally over seas, sometimes within the United States or its insular possessions. Government Oblisetions United States bonds United States Victory Nctes t ( United states Certifics.tes of Indettedneei. (8) 5,41'9,0. (8) 39,3JiC. ( (9) C45 00. 55,503,00. 5:- United States bonds and United States Victory Notes: The itam of United Ftate:: bon6s is, to a small exten16 an accumulation of bonds in adjustment of the v'rious subecriztions to the war loanE, but, 2rincipally, the result of purchaees 3f bones havin?7 circulation ,rivilage in the e_rly days of the Reserve System when we ..ere gr7dually retiring these bones for the purpote of reducing tame circul, Lion, Aid converted the 2s, partly into long time 3% bonds with the circulation ,rivilege, and , rtly into one year 3% notes This operation without the circul. tion privilege. was stop;ed e,:rly in 117 on aecount of the w r and only a small -J.il2ouni, of Federal Reserve Dank notes issued against the ion, time 3s which hear the lation crivilefle. 5 (9) United Stetes Certificates of Indebtedness: It might a,,ever to you from this statement .hat we here mekilIng it a practice of lending money directly to the Tnis, however, is not the ceee, .nu I reasury. hope never will be, for it sells rank infltioni Off and on, in adjusting the enormous tremsactions of the Treeeury, we co lend them money for a few caye at e time in crder to avoid overdrafts in the Treasury's a/c with us.The most, of the fifty miliioe leuncs sterling of certific tee. owned by the Reserve Banks at the date of the ettement coneieted of to ue by the Treasury, payable certific tee in one year, in exchange for silver certificates which we surrendered to the Trecury in order thet the silver dollsrs might be melted and sold to your Ne had to replece thin circulation, Government. ehich was needed for the country's business, end, of cour e, we hee to bet eomething from the Government in exchange fcr the silver certificates v:hich we geve uee and this ie the form th t it took. The certificates of indebtedness are, therefor©, on deposit witn the Treasurer of the United .tetes to secure the special issue of Federal Reserve Rank not,) made under authority of the litmetn Act, which authorized the meltint of silver dollars, and the notes eee,e,r on the liability bide of the statement, included in the email amount of Federal Reserve Bank notes described under #8 above. t All Other Resources t Bank Premises (10) 5% Redemption Fund - Federal Reserve Bk Alts (11) All other hebources (12) (10) 12.15.19 Hartley A.thers, Esc. 2,553,000. 2,232,3M. 902 000. 5,537,000. All the Reserve Benkehhave been Bank Premises: so t.reased for suitable accomeodetions for their tremennously expending business that thy hove been :riven to buy real estete in ev. ry one of the cities where they have their heed offices, and are now eng ged in prepwrine lame. be have -urohased a whole block to etocommodete oer two billions of bu iness and three thousand clerks in a new building to to erected on it some day, which will be 14 stories high and, I pore, the best and most modern thin, in b4lking buildings This item represAlts ..rincipalyet produced. ly real estate, Asthout buildings erected. This is the redemption fund 5% Redemption Fund: rseuirad by the Statute for Federal Reserve Bank notes, issued against retirement of National Bank The National notes, described under #111 and e9. 6,697,030. Hartley Athers, Esq. 6 12.15.19 banks, as you know, ere rs,uired to meintein a redemption fund of 5% and the same reculrement applies- to the Federal Reserve Banks. (12) All other resource,: This comprises a vast v riety of small items which cannot be taken into the accounts of the bank until the closing entri s eech They have no particular eiz month;: ere mede. significance, although now and then some lerge transecLion cannot be elsewhere pl_ced on our books and the item may appeer unduly seollen. LIALILITIES t Government Deposits (13) No &lnge - one figure on rt tement. (13) During the wer period our Government 11:_s maintained balances in benk run- Government Deoeits: ning free a minimum of W,I;,,0:0 or $500,3.A), were to a. maximum, et times, of ti53,0e0,000. this vast amount all to be turned into the Federal Reserve Banks, it woeeld require corre..ponding borrowings by the banks of the country from the Reserve Banks, and I need not ,oint out what a h_rmful deIn preference to such a velopment this ,ould be. difficult operation, the Government nominally mein- taine thee deposits with the Reserve Banks, ehich are specifically authorized by law to rede;oeit the mon.y with designated depositary benke, for which deOpsits the Reserve Banks must take cert in prescribed. The plan originally was confined to d&collateral. posits of subscriptions to Liberty 1-3onds and Certificetee of Andebtedneee but when our tax legielation began to pr_duce such enormous revenues we found it necessary to enlarge the scope of the operation and get authority to redeposit these hughetax payments, which at first were made once a yeer, then twice a ys-r and now four times a year, so thet the greet bulk of the Government's receite from loLns and taxation are noe handled through the ite,erve Lank, but are permitted temporarily to remain on dei.oidt ith the commercial banks again,:.t adequate colieteral. * 313,002,00u. Al. Other Deosite - Net t 351,529,000. Due to kembers - Reserve Account (14) 128,839,000. Deferred availabilit; items (15) Other deposits including foreign credits (18) 19,827.330. 499,9e5,3. LeE Gole in tr n it or in cuet_dy foreign countries (i7) Uncollected items and o',,her deductione (18) 1,424,0J0. 185,569,ee0. 186,993,0.0. 7 Hartley '"ither,, Fee,. (14) The meaber0 reserve Due to : :sabers - Reserve ecceunt: account"; of course, fluctuate rather widely, and are, from tice to time built u,, when the member benkel rebecome imp ired, by borrowings from us. eerve (15) This very it..rge) it3m is partDeferred availability items: ly an offset to #18 which, in our ledger, a; peers an asset, but is here deddoted on the otner Side from the liabilities so ae to give a little better picture of what is reelly taking plece. The Reserve Banks are now making the gre t bulk of the collections of checks throughout the country Alich are either deposited with us by hand in the -.cities *here ee heve our offices or eent ue by mail from throughout the le dc not give imilesdiete credit in the redistrict. serve account for these checks but defer the credit for one, two, four or eight deye accordinz to the lerth This of time which it t kes to collect the check. prevente the development of a big res rve account based upon uncollected checks which, of ccurse, old be a The operation of colveet inetru'ent of expert ion. lecting th se checks and keepin:; the accounte iE an Our department has no enormoucly com,licated one. lest, than 700 clerks in it end there are d yE when between 250,000 and 500,0e3 checks pass through the department. (16) Other deioeit includin6 foreign credits: These other deposits are ,rincipally the defoeits of foreign Governeents or foreign banks, .nd had their origin in the first inetence elmoet invariebly in the trLne,ctione of our Golerneent in connection with the vir. ;e) have, however, the right to receive deposite free: ienericn banks which are not membre of the Syetem but which, nevertheless, desir to u e our f cilitiee for collecting, checks, as This is a bed .plen which do:cribed under #15 and #18. we pro,ose to discontinue in !le, York beceuee we believe that it extende a very valuable service to btnke that are not rep uired to carry their ehere of the for e of suiiortine the 'ystem, but, nevertheless, get a service of great We are goin,',; to try and snake them importance and value. come in entirely, or sty wholly out of the Eyetem. (17) God in tren:At or in custody in foreign countries; This item is more or less tem2orery and at the d-te of the statement represented a portion of the gold which we took over from 54r. Hoover, who had receivec it ,rincipally from the Uermems in exchange for food, .nd which our friencE .t the Eank of :ngiand were good enou,h to h ndle for us. (18) Showine, under #15 Uncollected itees and other deciuctione: a deferred credit in the neture of a liability to member for tank' for checke not yet collected but in our hand th t ,uteoee, we, necessarily, u t shoe th t on the other The two ecceunte never t. ide of the Eittement ss an 2.15.14 Hartley 8 ethers, Esq. 12.15.19 bA.ance becauee in these same accounts ap:ear large amounts of checks oriinating otherwise than for aoilectien. Of course all ohecke in our hand: over nicht to be presented thrown the Clearing Hou n the next day appear in this item. They do not need careful description, for they ali are in the nature of book entries reprementing a ceferred eeeet or liability as the cans may be. * Inrteee or ehoein& totel of depoeite in addition to Coverement depocits, I have thought it wise to Atom Government depositor as one figure end other deposite Ole another figur the sum of the two givin totel net deposite. The Lostrdle _tatement, moreover, includes "Gold in transit or in custody in foreign countries, le 21,424,000." as a deduction fn.:al gross deposits hen figuring net deposits. You have not mede this aeduction when calculating net deposits. Federal heeerve Note in Aetul. Oircul, tion (19) ID 522,339,030. No change - one figure on eteteeent. Federal reserve eotee in Actual cirou.ation: In coneidering our note oirouletion, it it neceveary to Le careful to distinguish between Federal heeerve notee, which are true beak aote, a 40% gold reerve ie addition, and Federl Reserve bank note.: which ere iesueo either under the provisions of the Feeerel he. erve act, f r the pur,oee of gr dustily retiring the Nation-A. Funk noted, or under the Pitman AOL, for the purpose of retiring; eilver certific Led end Felling tne silver bullion. Th two latter are identicA. in appearance are the ,revielone in rezerd to their security and the redemption fund are eubeteetially identio 1. In the ceie of the Federal Reserve bank notes the security confists of bonds purchased from the NatiOnel roake end in the case of the "Pitman Act" notes of interest bearing Tre eury oertifiontee, ieedA to uu by the Treasury in exchange for silver oertifecates. (19) Federal v.euerve Fank Notes in Actual Circue Lion (20) (20) Federal reserve Bans. Notes in ectuel Oircueetion: These have been adecueteey ceecribed stove, under p19, 111, 19 and B. Ail Other Lie:ell/ties: (21) (21) 44,713,0_. e All Other Li,eilitlee: 4,6e-)10C)0. Thi item t: soeewhet simiLr to We have great eccumule,tion of ev-,rnine between the closing of our books every Six mentnL, a good many boic entries which cennot to finally taken into the permanent eccoante, and come teeciel reserves, like a re orve for depreciation on inveeteente, an insurance reserve, y reserve for deprecition of beak premieee, etc., etc. itene, , :11, and $112. 9 Hartle/ -th.here, .. 12.15.19 and Sur-lue (22) 22) 33,2170. Caiit nd ..,.rplus: Our capital, as you knoe, is all furnished by member banks which must subscribe for an amount of our stock eiuel to 6% of their own ;.hid in capital and surplus. Only one-half of the amount of the 0.4itF:.1 stook hap teen celled from the meaber banks. We ere, however, eermitted by the Federal Reserve Act ae recently amended to accumulate a surplus out of earning.; ciu.t1 to 10::% of the subscribed cepitLI, so net, with on.s-dalf of our /ub-cribed ce:pital raid in, we Ieve now over 30,000,0)0 of capital paid in, nd when our eImino aocumulAs the full 130% surplus, we will hve over 016.7.40;;3,00 of eurplue. The subscribed ce...eitn1 of the New *fork bAnk is, in round fij,ures, $22,500,30 paid in. Our eF.rn- in_s this ye- r will be eufficisnt to Give us the full &mount of our authorized eurplue - about c415, but we will be the only bank in that condition, the others not havin6 earned sufficient is yet to h_ve the tall surplus. In addition to this 100% surplus, the law h recently been emended to provide that all earnings of the Re- serve Banks, after (a) paying all expene, (b) meetin, ell losses and depreci Lions, end (c) after 6% dividends on the paid in ceitel stock shell be ap,lied, first to mAnt inin6 the cur,lue of 12L% (which, of ootur,::, fluctuetee e our a- pitel fluctu-,tes) and, after thA, surplus eernine ,ro divided, 90% going, to the Government fr,nchise tux, in lieu of all other Lxes, and 10% being aliowed as en addition to our surplus. This is a rlther curious provision of law, and, as you will observe, contemplates a cohstent add.ition to our -urplus fund, which, in the course of ye.1.,, a., amount to w_st total. I have no doubt thA taw d y 4,111 come *hen this 10% provision Jill be wooified in some way or repealed. 5. Ratio of Total Reserves to Net De-os t & Fed. Res. Note Liatiliti ComLinea - 50.4% (calculated as follows: Government depoeite Other deposits - net Fed. Ree. Notes in ActuA Circulation T. net deposit and Federal 11,6_, 313, 42k.3s,: Rea_rve note liability coined I:, 847,153 Total gold resurven Leg:,1 tender notes tp !diver ret-rvef, erves Total Ratio as above (23) (23) Ratio al, above: The c..lculation of our res,eve is a r-ther com.Acated affair z..nd depends a 427,374,0.)0. . 10 Hartley ItitLere, Esc. 12.15.19. IP little tit ueon onea point of view as to hoe it The law rewires us to maintain should be done. a reserve of not lose,: th,n 35%, oonsistine of old and lawful money, against our deposit and of not less th!.n 40%, in gold, egAnet our The reserve, Federal itessrve note. liabilities. teerefore, e:al be calculated in three tvy, (2) by combining both liebilitiee ene Loth gold end lawful money aseets and figurine the eercentage the of the i tter o the former, which ie the celculetion is made in the above statement; (2) but it mieht also be calculated by first deductine tie 35% reserve on deposits and then fie qine Vle emount of vie in excese of tlit 35% t1 the reserve against notes, which sould have the effect of shoring in our etetexent elways a coneteet 35% deeoeits res rve elm a much l -rger reserve eeeinet (3) On the other hand, thie erocese could notes) AO be reversed, firA deducting the minimum of 44 eetinst note liabilities, end selyin, the balance of our oeeh to the reserve on deeeeits, which would In the alweye shot. the deeoeitreeserve as larger. interest of uniformity ene symplicity, ene generally to shoe common sense in the m-tter, the reserve pebliuhed is the combined reserve. * leu will note the!. I have omieted the line apeeerine in the "Economist" entitled, "Of which held ty banks - L 157,110,000." lhile this line is, correct, it does not show the real situation. On the date in eueetion 42e,4850:0 of bills had been heneed to the Feder. I Reserve :,dente hs oolleteral to cur Federel Reserve note issueu, although we Jere m:uired -t the time to eerie only 4 524,388,000., leevine an excess of 15 7,a78,000. The banks eight h.ve re,ueEted the Agents to trenefer en eeuel &mount of gold to the bankst vaults, which would here increeeed the gold Physic fly hsld by the banks by that &mount, but our reserve is calculated without regard to where the old or rarer it physicelly held, e., u,on the total. The back ale() carried large hmounte of Federtl reserve notes both new end whet we cede "fit for of e" in their on vaults to meet such dem.!.nds e cey te merle upon them. These ere deducted from the total amount out,t riding in order to determine the aotuel .> count in oircul.tion, but the tenks could likewise turn those over to the Federel Reserve Aeents and demend gold. This would add smother large amount of gold to that ehymioelly hele by the leeake, but eoule not i. chnee the cAculetion. If you find it convenient to make this chanee in the manner of i_reeentine the stet.eent of Federel Rose.rve B nke in the "Economist" I shell be very glee_ to assist inhaving the fieuree ferniihed with comparisons dAtine ye.r t ck. You wil, I hcte, fermi e this eeteq. Po.sibly nothing lees would be ads uete Hartley 11 to describe ,ur complicated etatement. any If thi 1:.15.19 ithers, eeeay of any value and tUrowe u.on our System, and sugget,7 to your mine the neec: of any chane in th way your figures are published, please write se and let me be of any ios*ible service in seeing that you get the figures as you desire them. Kith ev,iry good ,i,h to you for the New YoLeit, I am, Sincerely yourL, hartle;, d.therc, Euc., The Economist, 3 Arundel Street, O. 2, EkJand. London, ES.PIEB Eric. gbt gconontizt, OEPPONF R RA RD. LEGRAMS:ECUNOMIST NEWSPAPER, LONDON:. 3,ARUNDEL STREET, STRAND, LONDON, W. C. 2. 2nd Jan. 192Q. Benjamin Strong Esq. Federal Reserve Bank, New York City, Y.Y. U.S.A. My dear Strong, I a:a very much obliged Yo you for your letter of December 15th, and its long and very informing explanation of the intricacies of the Reserve Board's statement. The form of statement that we use is one which was suggested by us to Mr. Skinner of the American Consulate, who arranged to have it telegraphed each week from your end, presumably from Washington, by Reuter. I suggest, therefore , that the best way to amend it wth be for you to instruct Washington to give the summary, in the new form that you propose, each week to Reuter, who will telegraph it to English papers in its improved form. Thanks very much also for your let-6er of date and for your very pretty New Year Card. earlier It will be a verb- great pleasure to me to send over an article on the subject you suggest to the Reserve System's Magazine but I hope you will excuse me doing anything of the kind immediately, as for t1 Cconi rnizt. 2;,0 GF.PRARD. 3,ARUNDEL STREET, STRAND, 111111tEGRAMS.ECONOMIST NEWSPAPLP. LONDON LONDON,W.C. 2. 2nd Jail. 1920. Benjamin Strong Esq. --2. the next six weeks I shall be very busy with a course of lectures on Banking. If your proposal should materialise that I should visit America and give some addresses, I need not say what a very great pleasure it would be to me to carry out such a scheme, and I hope that after the middle of February I shall not be too busy to do so. With allCompliments of the season, Yours very sincerely, tontrritis t ?,ARUNDEL STREET, STRAND, C:ER RAM). LONDON, W.C. 2. 4b.4 7^^ 44. g'14444.4v#44.4 ,Le1444.;4-44- Zi-/a, 1/4 4,--"Awfril44A- 4 14- -; elo-.di""4C It/4*-otc, 4- 4L-1-- /41/4,1 . /,, Au(iv 4k -.eke* /4-04'16.' .C C lit41-7 E. P DUTTON &COMPANY. 681FI FTHAVENUE NEW YORK. ESTABLISH ED.I852. August 16. 1920. Benjamin Strong, Esq., Federal Reserve Bank, 15 Nassau Street, Slew York City. Dear Sir: At the request of Mr. Hartley Withers, we have sent you under separate cover a copy-of his book THE' CASE FOR CAPITALISM. We trust this has reached you safely. Very truly yours, .2. ELM P. DUTTON & CO. August 17, 1920. Messrli. E. 7. Dutb)a A.. Company, 631'Fifth Avenue, flew York Cit.y. Octir Sirs: in Mr. String' i absence, pertpit me to acknowledge receipt of the tock "The 015.60 For Capitalism," which you w-re good enough to '. Strong !.;.t Mr. Hartley Withers' request. shall also acknowledge it,.= receipt tc Mr. Withers. Thanking y..:11, Yours very truly, Secretary. I August 17, 1920. My dear Mr. Withers: It was extrm,:lly thoughtrul of y)u to send Mr. Strong a copy of your took THE CASE F.jR OefITALISM. You may be assured that it is greatly appreciated, and that your book will ce read with intercet and pleasure by Mr. Strung on his return from abroad. Mr. Strong is now in the Far East on F plertsuro trip. His last cable indicates that he is bound for Bombay, India. It is moet likely that he will return by way of Europe and will be in Londorf about the middle of December. With many thanks, Y,:,urs very truly, Secretry. Hartley Withers, Eeq., care Economist, 3 Arundel Stret?L, London, England. 1\ 11,;,.; \- '' \-- :,--:,----- .. -- \ ,.,' \------ r . 1 /IIIN- , ;1::71:1 I 11 r7. 5,?."4"'S ?PH re" su %t/t x J To 4. ,V; SWAYNES /1;..LL, WIDDI NGTON, NEWPORT, ESSEX. - /31 2.4 c)ee__ v A-4 ( *t. )-d-f., c-e4e-c --AL'Ct47 Ad OW DEC 31 1824 s 00' 6 9:S 10 lieoemr.:er $1, 1924. !Cy dear :tithor&: 7i,rc:un the dictatea note. I an in the El itiLt 0 $0 many mttere tJat. 1 feu1 li!s'e the jus4rier who f.r?,ns trn ehm; »a1i is Lao air all at one Lille. So I dint to this line to thane you no liuch for yziur noto an for 41.a picturs vit4tion 1.0 Via:} LC:4; it, 011 i ouaes '0..un I C,11 uiJeao your uem home. ulPo `pr the in- slabil ho 4o -to Ly Deist to you ror auceroly yours, Al,Aers, d.ddi4tuu, NcrTcrt, E76. B:-..LS 1.712811,..nd. +Alvin that, happy time in ingiand 14littiont in my fi4yuf.'c ;..lo - AL:g