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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

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1/4

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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\

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WIDDI NGTON,

NEWPORT, ESSEX.

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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


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102