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STRONG PAPERS, Strong to Norman, 1925 (List redone 5/2004, to include all materials) 1925 January 15 January 15 February 24 (February 27) March 9 March 9 March 20 March 21 (not sent) March 24 (March 26) March 30 April 15 April 21 April 27 April 27 April 30 May 4 May 4 [May 9 (from secretary)] May 9 May 11 May 14 (May 15) May 18 May 18 May 21 (May 25) (May 26) (May 26) June 1 June 6 June 12 June 12 June 13 June 13 (June 16) (June 16) (June 16) (June 18) (June 18) [August 1 (to Anderson)] (August 16) August 19 August 20 August 23 [September 19] September 26 October 2 October 2 [October 3] (October 6) November 7 November 10 November 20 November 27 December 3 [December 7 (to Anderson)] [Misc. J.C. Robold & Co. to Strong; Nov 28 & Dec 2 on shipment of statuette] Note from original list: C = Cables Letters and cables with deputy governors also included in Strong's files with a few others, such as that to Osborne. Also letters to ER Peacock, a director of the Bank of England, which were marked private for BS alone Strong Papers Key: [ 06/01/04 ] = At earlier date, item was listed as present but no original or copy is now in Papers ( ) = At earlier date, item was not on list but original is in Papers and was copied if no copy existed STRONG PAPERS, Strong to Norman, 1925 - 1926 1925 Jan.15 .1zn.15 Wilk 24 Mar.9 Mar.9 Mar.20 Mar.21(not sent) Mar.24 Mar.30 Apr.15 Apr.21 Apr.27 Apr.27 Apr.30 May s+ May s+ May 8 (fromsecy.) May 9 May 11 May 14 May 18 May 18 May 21 June 1 June 6 June 12 June 12 June 13 June 13 Aug.1 (to Anderson Aug. 19 Aug.20 Aug. 23 Sept.19 Sept.26 Oct.2 Oct.2 Oct.3 Nov.7 Nov.10 Nov.20 Nov.27 Dec.3 Dec.7(to Anderson) 1926 Jan.6 (to Anderson) Jan. 10(to Anderson) Jan. 15 (to Anderson) Jan.18 Mar.3 Mar.6 Mar.11 Mar.17 C Mar.18 C Mar.18 Mar.18 Mar.26 C Mar.27 Mar.29 C Mar.30 C Mar.30 Apr.1 Apr.1 Apr.21 May 15 (to Harvey)r; May 15 May 15 May 25 May 27(to Harvey) June 5 June 5 (to Harvey) June 6 July 5 (to Harvey) July 22 Aug.10(Harrison to Trotter, with letter to Prof' Harr and letter of introduction) Aug.18 (from Harrison) Aug. 20 (from Harrison) Aug. 21 Aug. 27 Aug. 28 (to Osborn) ov. 8 rov. 23 N Nov. 26 Nov. 26 Dec. 28C ison to Peacock o Feacoc y Now.2,4-e24--Dee:1-eal-..1142Lnent of gretrIttte. C -Cables Note: Letters and cables with deputy governors also included in Strong's files with a director of the a few others, such as that to Osborn. Also letters to E.R.Feacoc t(.'1 (s-u-;Bank of England, which were marked private for B.S. alone. X p,`, January 15, 125. PL.I L.:011AL My dear Norman: It seems as though our conversations had left nothing further to be said or written, the ground having been so thorou6hly covered, and our opportunity for quiet talks having been unusually favorable. There are, however, two or three matters which afterthought leans me to refer to, simply to meet: sure than they remain in your own mina. One is the question %hich I once touched upon; in fact, as I recall, somewhat because you h a made a similar inquiry of me, - and that is ,s to continuity of munegelent in the Bank. is a delicate subject. I do not need to elaborate on this; in fact, it But I uo hope that you and your associates will have in mind that this is one of the elements which cannot be overlooked during the next year or two in striving for a successful conclusion to Whatever plans may be under taken, which, indeed, concern your institution and this one co vitally. Another matter is the currency note issue. I can only express the hope, which I cannot but feel, that your Government hill find means for placing an effective limit upon fiduciary issues of currency notes. for me to express this hope at all. Possibly, it is wholly needless But you were good enough to join me in die- cuesiug i,heee mactere from the standpoint of both countries, and it was on that account that I took the liberty o! enlarging somewhet u?on this subject, and of m e tioning it now. The third matter is the need f_r some sort of an arrengement or unaereteneing as to which of the two proposed revolving credits shall be used in this naeket from time to time, should they be put into operation. Right Honorable Montagu C. Norman #2 1/1.5/25. mi I think you understand my point of view fully enough without any repetition in this letter, wau am writing nc.w only that you may have in mind these three points which cootinue in my own as having an important bearing upon the success of whatever is done. I am leaving this evening or she South, but have arrangements made so that my secretary will to there, and messages will be re-coded at the bank und transmitted if needed. With best wishes, I am Faithfully yours, Right Honorable Montagu C. Norman, Thorpe Lodge, Campden Hill, London, Englund. 815.1.5 I Januacy 15, 1..)25. *f rrl**Af 1.3 :4 dear Yormaa: It UeilM6 as though our convereations said or written, the ground h:.ving ben left nothing further to be h o thoroughly covered, and cur opportunity for quiet tdks having becn'unueually favorable. There houcver, to or throe matters Olich afterthought leads ne to ere, ':hich I once t.-....iched upon; in :act, as I rec:11, Cac ie to ,ini1 r in'!uiry of me, - bccana-: you h d ui they ria in yo.r o.a Lure LL p1y to r,for to, of 71,3.1.c-li, in ia a (ielie_te tubject. '.,he Ea.:1 I that le -.3 to cot,tin- !o not no-1 to el:.bor,.to 0,1 ;; in net, it, Eut I eo hope tt...t you tard your ,Lceaci,Itee rill h-ve in caarlot be ovarlooked uurinL; tbc next this is one of the oie7onts ye.tr or t:o 1(1 otrivint; for LuccotJful conelueion to whF.tever piFma '3ty be Lnder- ccncern your inoGitution.and this one eo ten, Lnother iu.tter Ia the currency note ist.uo. unon fiduciary itioUCS of currency nete5. P.ut you for ne to express this hope F..t z-11.1 it is he hope, nceole3s ro good cnouLL to join Lie in ois- vatters frogt the etann?oint oE' both c.;untrie5, ,:ad it CU6A11,; P1'..: find me:,ns for pla.cing an iffeut- 7Inich I cannot but feel, that your Goverment iirit I can only on thlt );nd of tteconnt that I teas the liberty or eale.rin,; aorqe.,Lirit uun tail subject, tioning it now. uns.r.:tcndTile third matter is the need f,r tiome .-,ort of en errangeTent or inz to tilts; t-) revolving,credite eh all be ueed ir this from tif7:c to tic, thould tnc]y be put int-. PEI-150UL JaawAry 15, 1)25. Dear Monty: This 16 juut a line to le:, you know that a great pleasure you gave all of us, e_na especially me, by making s visit fl, -c at this time. but beyona the pleasure, it has been of the greatest possible value. So much do, indeed, that I fear at times I Vis an inconsiderate host on tte one hand, in keeping you too busy, alla on the other hand, in giving, you no opportunity little recreltion while here. Some time when you uave a me a line giving sornethin:;, of your I will be glua to have it. Possibly you the °other. It might be useful minute to spare, if you can drop impre:Aons of our crnizt:tion, Anderson would do it !,.nci Lave to me. Once more, every possible good wish to you and every possible success to your plans. Sincerely your rrifna, Right Honorable Vontgu O. norm%,n, Thorpe Lodge, Campoen Rill, London, Englan. BS.LE at 00` February 24, 1925. CONFIDENTIAL My dear Norman: This is to acknowledge and thank you l'or your personal letter of February 10, which I have read with much interest. It makes clear that our views are quite in harmony in the taAtere diecuesed, and I am very glad, indeed, to feel that that is BO. The parenthesis in the last paragraph of your letter is rather cryptic, and I assume that in due course some explanation will reach me. You will, I am sure, not overlook ti.-,at our program here, so far as it has a bearing u,on your on hopes ana plane, rill need to take account of prospecte ana pouuibilitiea just as much a.s it will of certaintiee, so I am relying on you to keep me advised. absence in Florida ana the need for a trip to Washington, for which place I am leaving today, have made it dirIcult to write you very Wily, which I hope to do on my return. In the meantime, with warmest regards, I beg to remain, Sincerely yours, Right Honorable fiontagu C. Norman, Governor, Bank of Eng lanu, London, England. P.S. Since dictating the above, your citlee 71 and 72 have been received and throw much light on the eituution. IcK 0 1925 Uerch, Detr Norman: If the statements made to the Commerce Committee of the House of Commons have been printed and c: re available to the public, I would like very sell to hove t copy. So far prece reporte indicate that the Commerce Committee tee heard etatemente from McKenna, Leaf and Keynes. Doubtless others have been made, and, Ps you have mentioned, it would be interesting reading for me. With beat regsfrds, I hm Very sincerely yours, The Right Honorable Mont%cu C. Norman, Governor, The Hank of England, Threadneedle Street, London. BS.MSB THIRTY THREE LIBERTY STREET NEW YORK 2 3/21/25. 3 3/21/E5. March 24, 1925. Deer hormen: Your cables Nos. 87 end 88 came yeetereey, but my talk with Morgan and hie partnere was too late in the day to enable me to send They have now been dispatched (my Nos. 48 end 49). replies until today. shell try to write you in some detail a little later in In the meantime, this ie to advice you that McGarreh is the week. ie planning to stop in London for a. day or two sailing tomorrow He will tell you something of the cry I feel before going on to Berlin. in Tigard to the ereoeneement of euch e decision as is made, and is eoeething which I believe should receive careful voneideretion. Also you will be interested to knoe that Vineton of the Treasury It will be hie vecetion, but he ie is aeiling for EUJ*116 on April E. anxious to hove a cent with you and I as propouing also to give him some which I will send letters of introduction to friends in London, a list you before he arrives. Finally, one of the young men from the bank, Mr. Edward O. Douglas, who is in Mr. Keneelle Department, is :eiling for Europe with his wife on the 18th of April, and be is proeosing to spend the second week of May in London, tnd while teere he would like to gein vome first -hand If it is all right knowledge of the die-count market and like matters. for him to do so, nos would like to knob eomethir; o' your eetUede in handling market trensactione, especially the discount market, the issuing eld handling of Trefeury bills, cieariuge and bettlementa of clearings for the eletring banks, and the money market in :elation to stock exchange settlements and contengo. Douglas wee a eehool-wete end college-1,-.te of Fen's, ens is his most intimate friend. he is e fine fellow and entirely dependable. If it is suite proper, eoseibly one of your young men could give him all that he needs in a few days, and you may be sure thet he and we will appreciate it very much. I hope my cables going to you today are in every way setiefectory and will be helpful. My beet es always. Ancerely yours, Right Bonoreble Montagu C. &omen, England, Governor, Bank of http://fraser.stlouisfed.org/ London, England. Federal Reserve Bank of St. Louis March SO, lga Lear Monty: eenng you an addition to Under seps.re.to cover the batch of eo-c1:11ed Prooldaritiel Medals whicb sent to you beck in July of 1924. It is not, howavor, the likenosa of any of our Preoldents, but r%thor t:iat of our first Secretary of the TreL,sury, - Alexandsr Ohmilton. The recent obLierv.:,nce of the one hundredth ennivereery of the deito of Hamilton promoted the iseue of these medals, p,nd I thought T would :send one f1onc for ouch interest es it may have it your collection of each thing . Alwaye. sincerely yours, The Right Honorable Montagu C. Norman, Governor., Henk of 6ngland, Threat.Incelle Arest, Lon6on. 192_. MISC. II. 1-200M-1-24 OFFICE To Mr. o IoM origi o PERZONA, Anr CO Apt' 15, 1925. It ly dear Borman: I am cabling you toclay na per enclosed copy of my meebege, but feel that the cable Dy itself may not be sufriciently explanatory to give you quite the point of view thich I hold personally as to the wetter referred to. You have observed the care with which es he urged that our proposed gold transaction should be entirely seperete and distinct from any credit or bar - rowing conducted by the British Government in this mertet in conneetion with the resumption of gold payment. It hes deemed to me that our disceeeioas end communi- cations have moat carefully observed this point, but now comae tne question of whet announcement Anil be mnde, how it shall be made, ale:: when. Thera appear to be three points to be especielly obeerved when the first announcement to the public is made. 1. That the treneectelon in which W3 are interested is s purely bank treneection between two banks of issue, relsting to the monetary problem with which we are confronted. net any credit issued to the British Goeerneent in this mtrket is quite a eeperete affair arranged by the British Ooveenment through their fiecal agents in thie eeuntry, end 3. That no statement should be made which could Le interpreted by the public as indicating that understandings, or commitment, have been made as to policy in the future which would in any wee '_e rive you or 141:1 of entire freedom of action in dealiee with our local credit situations or markets. I have elwaya felt that the suceeaeful conduct of this mutter depends upon the spirit of cooperation which can be and has been developed, end that that spirit, which ia so obviously present in this matter, is ell that ie needed. Right Honorable Montagu C. Norman #2 4/15/25. There have been e number of dispatches in our press recently indicating **existence of some opinion in Eng lend that a resumption of gold peyment by the Bank of England (especially if fortified by etle Get ti1C. London market in acme vay to likewise from time to time Nee creditr in this country) must necceserilyy York control or management. There have appeared statements here which would indicate that there is some possibility of the opinion being held in some suarters that key arrangement which we might have would necessarily imply obligatione ed to our coiestic policy, which might prove to be dangerous or burdeneome. Neither feeling ie justified, as we both fully unceretend, but certainly no encouragement should be Given on your side or on this side in any public statement as support for this unfortunate view. I am also quite in the dark is to your wishes in revere: to any statement which might be made April 28. It will se very difficult indeed to prevent the character and . here either at this bank or at Messrs. J. P. MOrgral 14.. Co. efter amount iiergen ee Co. of the credit arreneed for the. the public becoming awe.re of British 'i'oo army benke will be intereeted in it. Government by Messrs. To t, eowee hat lesser extent, the same will be true here, after the er:engement is concluded and the announcement is made by the Chancellor. the other Reserve Bulks, by the Many of the other Reserve Banks, and ?oesibly ell of usual interbank errengeament, will to some extent, and in sole way participate with us en the account. I am enxioue to beet: your v-ito.6 as to what, if taty, etetement enouici be made here, assuming of course, that tiessre. J. P. Morgan & io. *lit also sdvieed as to any statement which they shouic make, and we should agree pretty exactly as to the form of the etetement awl the extent to which details should be made known to the public. With all this in mind, I ea cabling you tooay ee per :inclosed confirmation, and you shoule receive my letter (which goes by Yr. TIP rkec hand) some days in edvence of the 28th, and in L6th. time for further exchange or cables, if that is necessary before the :13 4 Right Honorable Montagu C. 14orm,=n 4/15/25. An announcement, followed by fairly complete news coqiwant which is neither 4Weleading nor prejudiced, would were to be helpful. I fear that no tnrouncement would lead to mfny mibleading ane. possibly exaggerated btories which night eventually force 4 btatoilient for tLe purpoee of correction, but ribking in tre meantime. some harm. Litb beet regards, I am Finccrely yours, The Right Honorable Montagu C. horwan, Governor, BtAilc of Englelid, London, Englhnd. Enc. R5. LS h2 Right Honorable Montagu C. Norman 4/21/25. The letter which I sent you by Tierke was inspired by fear of Just what 4Ikeeils to be occurring, that ie, the Chancellor's reluctance to state the character and amount of the credits arranged in this country. When in the micet of active cable correspondence, letters sometimes become a bit confusing, and I shall only comment to tee following extent: You have lard years of tradition in doing things of thi3 sort without any publicity at all. We have bOLLI:=; yeere of tru,lition in which we are expected to keep the public fairly well informed. The resumption of a free gold market in London will be a matter of world-wide comment, and will be discussed in the press here searchingly and poeeibly controversially. If it is not disclosed st the outset that we have any participation in your program, it will undoubtedly become known later; in fact, very shortly after the budget address is made. In the meantime, the newespapere will be filled with surmise and misleading utatemente, which will force us to correct them. We will be charged *ith lack of frankness and en effort to conceal. In general, people on this side will cleim that they have e right to know something About en undertaking of that sort, of such great consequence to the country's affairs. realize that under our scheme of thine Then you e share of this undertaking must be offered to each of the other Federal Reserve Banks, their directors must neceeserily know &bout it. It would be, of course, known in detail by our aaeociatee in Weehington and in the Treasury. Under these circumstances, I am sure it is impossible o keep the fact of our participation from disclosure, end the minute it is disclosed, wa will be llooded We cannot deny participation, and if we cannot with inquiries. admit it, we are placed in the uncomfortable position of simply declining to give any information. Once we take that position we will invite adverse criticism by a large section of the press, and likely some sort of inquiry later in Waehington. On tee other hand, I don't went you to feel that we are unmindful of your difficulties. My cables and letter :elee referred to some of the press comment, and I #3 Right Honorable Vontegu C. Norman 01 25. ve even reed private lettere from London, indicating considerable opinion over 4110' that any arrangement for credits in this country when resumption is effected, 0there S must have the effect of subordinating the London market end the Bank of England to control from New York. We, on the other hand, are in a position where some of our critics may claim that we have surrendered our freedom of action in domestic policy in order to further your plans. All of these circumetanees lead us in lie bank to believe that the safest course is to make a brief statement at the outset, end then privately to explain to the press just sufficient to insure fair discussion of the fncts. sure, be impatient of ftete to they ere. You will not, I am We have different ways of doing things in our country than in yours, and I em eneee/oring only to meet the conditions here without doing harm on your tide. For some Lime I have been endeevoring tc write you newa of tne family, and will do so in e f or two. All r.,le news is gsoc. You may be amused by the enclosed slip, which appeared in the Dow, Jones Bulletin this morning. Now, i hope that your troubles will soon be over, and you know how gladly we will do anything that is poesible to further the plan which we believe is so greatly in tae interests of both countries. sincerely yours, The Right honorable Montagu C. iiormen, Governor, Bank of England, London, inglano. Enc. BS. LS trS Nnil Z7, ky deer Norman: The Committee Report which you were good enough to send me ie certeinly e moat orthodox .1nci comforting document for those who believe in the gold etande rd. Poebibly the only point where I tould like to see a little ctirterent slept given to the ergument ie in the price ciscubeion. On tee other hand, that lea6b to the upper and rerified atmcephere of economic Oibeaucion, whict it may be just ae well to evoid et the present time. When the final Cocument is iesued, I no.,Je you till bend me a copy for my tilee. Very sincerely youre, Right Honorable Montagu C. Noreen, Governer, Eenk of England, London, England. BS. LS CONFIDENTIAL April 27, 1925. My dear Norman: Tour letter of April 15 reminds me that I have not written you recently of my plans for the summer and fell. Tney will fit in very well with the tentative program you outline. If possible, I hope to sail in time to enable me to do the visiting I wrote you about and to eachpe bad weather - this means sailing sometime during August. It is possible that I may ask Dr. Stewart to accom-,)any me for Ft least a part of the trip. He wishes to acquaint himeelf more intimately with the foreign money markets, and would much prefer to do so while I hM there than to go alone. How extensive a trip I shall take depends upon circumstances, but if it happened also to fit in with your plans, I might for the first time in some years deliberately take two weeks' "European" holiday, hoping that you could spend it somewhere with me. Confidentially, I have received an intimation that Dr. Schacht might like to come to this country this summer for s short visit, but would prefer, as I understand it, to receive the suggestion from us. If this is arranged, I would probably propose that he come before I sell for Europe rather than await the uncertainties of my return. This is tte best prognosis that I can now give. As to the bank meeting, a feeling has been growing upon me for some time that the most important meetings of this kind have already been held and have had their results in the understandings between the Bank of England and this bank, and that the only question now to determine is the extent to which the same sort of http://fraser.stlouisfed.org/ relationship Federal Reserve Bank of St. Louis shell be furthered in other directions. I would agree without much #2 Right Honorable Montagu C. Norman hesitation as to Holland, Sweden and Switzerland. 414 4/27/Z5. If the meeting is simply a fortuitous "happenchance without publicity and without commitments, it might be possible to confine it to those three countries with the addition of, any, Germany. Once the field is enlarged beyond that, the meeting would be so large, indeed, as to unescepably attract public attention and lead to much wondering as to whet it is all about. Also it has been going through my mind that much of the object o be eccomplished could be even better done if I were able to stay long enough abroad to meet some of the gentlemen (outside of those in the countries above named) separately in London or at some convenient point on ,-e continent, provided always, of course, that you were able to be there. As you express it, this is only thinking aloud. If we do not have e meeting but just happen to meet, then there would be no difficulty in drawing the line. If we have a meeting and invitations are sent out, I can see some difficulties There is ample time for further thought and correspondence, and this is my offhand retction to your letter. But in any event, you may count upon seeing me, and the data largely depends upon you. My best to you as always. Very since3ely yours, Right Honorable Montagu C. Norman, Governor, Bank of England, London, England. BS. LS April 30, 1925. My dear Norman: Your note of April 20 has Just reached me. I have felt since rending the portion of the Chencellor's address relating to the re- establishment of a free gold market, that the matter had been dealt with so comprehensively and in terms of such definiteness that little, indeed, was left to be said. My inquiry about the currency notes was not merle in disregard of the difficulties generally presented by that subject, which are referred to in your letter; and I agree with what I recall to he your own feeling, and what others have expressed, thet an arbitrary treatment of the limit to the fiduciary issue at the present time might involve dangers which can better be appraised end escaped by waiting until experience indicates the wise course. But, of course, you and I both agree that the security of the British currency position for the long nuture (end under its present currency system) will ultimately be assured only when a definite limit has been fixed. The report of the Currency Committee ie reessuring on this point, and the Chancellor's etetament that the recommendations of that Committee have been adopted in toto and will be the policy of the Government, should be satisfying to you who are principally concerned, end therefore to us who are indirectly concerned, but nevertheless greatly interested. I cannot conclude thin letter without expressing my great admiration e2 Right Honorable Montagu C. Norman 4/30/25. for what I feel is a brilliant achievement, for which you pre yourself responsible, and which I hope gives you as great satisfaction pith evory good wish, Since:uly yours, Right honorable Montagu C. Norman, Governor, Bank of England, London, England. B6.1,3 h es it does ua. Vey 4, 1925. CONFIDENTIAL My dear Normans Your letter of April 24 see received too late to reply by Saturday's steamer. It happens, to be almost entirely answered by my letter of April 21, which crossed yours; dud in fact, eoth lettere, es evente Lave diecloued, provec to h,ve boon ouneceac6,1y bacauoe 01 the most admirable way in which the Chancell dealt with the subject of reeumption of gola payment in hid budget ecVrees, end the moat autieractory reception which the announcement received in this country. The reference in my cable No. 7b to the need for eothe further enlight enment e6 to tLe character of our titneaction, relatee particulaay to the doubt expressed by both the preaa 60US of cur banking Iiienae as to whether there will be an eCtuta shipment or eeliveiy o3 gclO to you or 4,Leti.er we propose to make 80.55 inveetAente in uterling bids,. niter the Act of F.iiament, to whi you refer, axe been peeeed, it wiL be poseiole :or us Lc quietly clear up cioub on this point, after which we believe toot this nine-day wonder will be succeed in public interest by other events, S6,] no further discussion of conee(,uence ui take place. I think we may congratulate ourselvee upon the ftvoreble reception o this important roma f.n this country. With kinclest regards, V _. ry sincerely yours, Right Honorable Montagu C. Norman, Governor, Br.nk of England, London, England. May 9, 1925. My dear Norm.Lu: lour note of the thirtieth duly ro:.1ched me, bud very opportunely, as Pr. Stewart hae been most anxious to have t, copy or the report rdlich you nor aunt ace. I have passed it 4i on to hila, !Ind you will h.ar from him in due course. I think he will probably eared you & very interehting comment on the report. Sincerely yours, Right Xontagu C. Dorman, Goveirioi, Sank of England, Luftc:on, England. May 11, 19k5. My deer ?torment Thank you for you's of the twenty-seventh, containing copies of the final Report of the Committee on the Currency Lnd &nk of England Note IFbueb, together with E. draft of the bill knoen te the Gold Standard Act, which I now understend has passed the House of COMMOIlb end ie before the House of Lords. Tours very sincerely, 'tight Honorable Montage C. hormEn, Governor, Bulk of England, LonCon, England. RECEIVr_": 'zit( ANSWER.ED: FEDERAL. RESERVE BANK OF NEW YORK Right Honorable Montagu C. Norman 5/15/25. letters, but I shall hope before very long to write you something of what has been occurring here, and hope that you also will find it possible to write me. Mr. Harrison will take you the lust word of our own affairs. With best regards, believe me, Sincerely yours, Right Honorable Montagu C. Norman, Governor, Bank of England, London, England. 0 Mly 18, 1925. My dear Norman: I have just read an article on the gold etanderd by J. M. Keynes in the May Zd issue of "The Nation find The Lthenaeum." It raises R question in regard to the obligation of '-he Bank of England to purchase gold at a fixed price (71s. 9d. per standard ounce, if former practices continue) and I am writing to ask you if you will be good enough to give me some information as to both te legal position of the bank and its policy, if you feel free to do so. Of course, the question et once arises *ith the new limitations in operation, *hether a free `old mbrket in London will be affected by eny change of policy on the buying side, just as it is somewhat effected by te changed condtione on the paying side. With beet regards, Very sincerely yours, Right Honorable Montagu C. Norman, Governor, Bank of England, London, England. ley 1S, 192.5. Dear Monty: This is to advise you something of ey plans for the summer. I shell remain in New York taking as ouch time as poatnie f'er golf. Ketterinu 1Ls heel here visiting me, ::'ellotiee, quite en extended trip with her husband who hes just been leid up as the result of two operetions and faund it ry to take long rest. She is well and happy and now proposes (if her father cee erreuos it) to elcompeny him wnon he ioee to Europe thie summer. She can go et any time. ike you know, Dr. Stewart is thinking of making a trip to &Arne, eed would lire to be theare iher I to. The party therefore sty consist of !Catherine, Dr. Stewart and myself, end I shell Probmbly teke Ernest with me; enz- eith the proe,ect of Tette t little correspondence end in order that Dr. Stewart and I may both !.:e free of the ourcen of letter-oriting, I may decide to take Mia& Bleocker. The important thing now is to decide when we shall go. I would like to go es early ea poseible and fat back .pretty early. This is partly because of the advantage of goof, weather for treveling; h130 pertly heee_uee there J3M3 of e politicl attack upon the System this fall, and if it does develop, I shell Nhrlt tO be hue/ for a couple of months, at leLet iu preparing for it. Concerning all of this Mr. Herrieon will make explanations. then you are therefore, won't you please write me in more detail of your plane. You mill be glad to know that Ben and his wife 'and my grandson are flourishing and well ad happy. My beet to you, bb always. Sincerely your., Night Honorable Montagu C. Norman, Bank of England, London, England. CONrILLNTIAL May 21, 1g25. My clear Aorman: Your letter of May 8 gives ma aome neede0. information ena furnishes an opportunity to adviae you aemething of our own developments. Publicity here has brought out three points: 1. Some confusion t rose ae to the exact nature of our transaction with you. 2. There waa some questioning of our powers foliowinc tho eppeerance of a etetement by Mr. Oscar T. Crosby, formerly Aaaiatant Lecrettry of the Treasury, e copy of phich I ex encloeing, end 6. e---feq.1-'4 one complaint ht6 made by e few bankers that our er,rungement with you deprived them of e. 'profitable piece or buaineee. Ab to the first, it illay oe neceeaery e little later for us to give the public xore dethd.as to tee we tne account will operate, if it is ever used. AS to the second, es are wholly satisfied, havinr,, ts you know, taken good advice beroro areangeiJeut Ott s concieded. to tee thIrd, ii Owe) why I 1L, one of the reasons (although poseibly a minor regretted that the bankers credit was reduced. sir. Eerrieon will explain to you, veen te arrives, more in r!etail then aciewe neceesary to write, es ne is fully conversant with all that has developed. het. you write 'about the transition is most reassuring. It might help 116 eomethat here if you found meant, to civert some part of your drain of gold, if it continued, how London to New York; but that, after ell, is purely a problem of exchange so long Lb you continue not to use your facilities here. Riaht Honorable Montagu C. Women #2 5/21/25. We are still living under the menece of a rather buoyant stock mtrket, 410-but at the same time there have been evidences here tnd there of t slackening of business. This ie true especially in the eteel business, whilb building construc- Thee is tion, autoiiobile production and other manuft cturinc ere still active. some small reduction in wholesale prices. Pig iron lb today b:Aling et ;:bout cost of production. I am anxious to see you as soon 5s our arrangemente can be concluded for te to take my trip abroad, concerning which I will trite you ,,eperately. One complication grows out of the fact that I have learned that DI. Schacht would like to come to this country r-,d is awaiting dOlj or from me about it. The rutumn will probably be the best time for hill, which :All rather laad me to advance the &tam of my trip is much se is possible without inoorou,ntencin;J you, Some word from you at an ,!t,rly date will be appreciated. I saw glad to h i s you aaG. your .rienCs feel thLt our attAtude towards resumction tte sympathetic and helpfulL the only rota fly is the ointment is the linsttisfention arsons. nose of cur cmn friends.in NcY York. Pith cpe. A.311, belic,re Yours moot Gince:.ely, Right Honorable Montagu C. Woman, Governor, Bank of England, London, England. Fnc. BS. L8 in Chief Cashier's Private Cafe. rodel-',11 IL::217%; 0 2 i;;;;1 _ay 25, 19.5. ' aF DeL,r 1:r.Covernor, I be to acknowleego the receipt of your favor o? :"ay 14, with which you enclosod, in original, a letter 17.6535 of the sumo date, signed by Ur Otto laemeyor, the Controller of Finance to His ::ajesty's Treaeury, and a certified copy of the Treasury Minute civing the guarantee of tho Lords Commissioners of His :section 2 (1) of the Cold Standard ajosty's Treasury undor 1925 to tho princiral aid interest of the credit of V200,0,000 gold cranted to the Rani: of ngland by the Federal neservo 3unk of ;low York. This is tho juarantee referred to in (2) of the conditions mcnresOod in your letter of April. 8 laot. Thanking you, I bac; to remain, Lly dear :.r.Covernor, Yours most faithfully, (yd.) OTRCI:i; Govornor. :sight Honorable .!:.ontag-,u Goverfior. Bank of England, London, England. FEDERAL RESERVE BANK OF N EW YORK lot May 26, 19 25. 10Lx Dear Norman: One of our directors, Mr. Samuel W. Reyburn, is sailing for England on the sixth of June, and, while you met him here earlier this year, I am takik; the liberty of giving him a note to you, of which the enclosed is a copy. Mr Rayburn is one of our Class B directors; that is, one appointed to our board as a representative of the business interests of the community. He is President of the Associated Dry Goods Company and the head of Lord and Taylor, one of our larger department stores. While Mr. Reyburn is one of our newer board members, he is an actively interested one. Anything that you may do for Mr. Reyburn will be very greatly appreciated, as I am sure you know. Faithfully yours, itv a 1 1, The Right Honorable 'Montagu C. Norman, Governor, The dank of England, LonIon, B. C. 2, England. Enc. /77 a, COPY FEDERAL RESERVE BANK 01, NEW yoRK OOP Rty 23, 1925. Dt-:r Govtraor Vorz;n: Thio cote .A11 be preonntcd to yeu by my friend and tf.e3uoibto, iir. 1.3mucl W. 1.yrourall ono Of tbo directore of our foubtlec,e you yin b:Lnk ;:ho in si.ortly eeilin5 for :241;1541d. bim ht.ro (it the time of your recent, viAt, vnd rec:111 hopc th:.t tbio rtnelloll of ac;uaintance on your rice ns?_y ,rove o. pletetnt nn 1;rofitble occasion. Any courte6iev which you may be sable to extend to very greAtly spprocitcd. Xr. Fcyburn '4th kind poreonLa re4;arde, I t.L.1 Sincerely .youro, The Eibt Fonorablo Llontogu G. Lomen, Governor, Brlig. of En,:land, London, Inland. June 1, 1925. ce:er Normen: It ecome e ehame thet I hove not bean eble to eUviee you wore definitely about vieiting Furore, but et lest I begin to see deyiight. The ?recant plun 13 for me to Jail on the Homeric on June 27, taking eith se, ae I ce.bled you, Katharine ea0 he.' maid, The first thing will bt to get Dr. eteAart end Miee Eleecker. some clothes in Paris; Bo I thought of going directly there This erne etee a week or id66, it poeeible, going right to Loncon. could cantle Dr. eitewtrt end rice Eleecker to go on to London and he eoul etert leyieg out e little pork in hit money meriet studies. It struck me ba better that I should go to England after short etay in Pe.rie, and not tmeeel until later, because that would lergely etwolli the crowd and eifficultio of laccommoestion aud also avoid the worst of tLe continental hest which, ae 1 recall, is bed in July ernJ early Auguet. I em in some doubt te to mhero we should step in London. Formerly T. always stopped at the but it hes chnnged chErecter since those duel, an I am not sure that I Should core for it 6b much se either Cleridges or possibly BerKler0. Your advice will be 'wet helpful end your help will to met tecepteble because I fear me we arrive when the hotels ere very crowded. I shall leave deteile of the trip to the continent until later. I nctice thet this dose not f.juite fit in with the edvice in your letter of Vey 16, end if you think better that I nhould go from Paris to Brueeele tcd ;..metereiem COr:' even Berne before going to London, I kill do so, end then decide Teter whether I should go into middle Ourope at 811. For some reasons it might be more convenient if we let eons of thoee gentlemen do a bit of the trrveling themeelvee anal save me come rather long journeys. eo th,. ie ee Per te I can develog plans not, it fits in with your own. With but regards to you, as elweys, Feithfully yours, Right Honorable Montagu C. Norma n, http://fraser.stlouisfed.org/ Bunk of Zbglead, London, 6nglend. Federal Reserve Bank of St. Louis P I io hope that a June 6, 1925. My dear Norman: Thank you for your two lettere of the 28th, one enclosing copies of the "Gold Stande.ro Act, 1925" and the other a copy of Keynes' letter to the Times. I am glad to have both of them, though for differing reasons! There is little to write because of and the prospect of an early visit, to which I recent c.1.'cles (An looking forward the more ket:;nly because our thermometer has reach a fairly hi 3h ,oint and remained there nor a number of days. Ath kindest regards, believe me Yours very sincerely, The right Honorable dontagu G. Norman, uovernor, Bank of England, London, E. C. 2, Enjland. June 12, 1925. My dear Borman: I h,ve your cable No. 33, tut htis not yet received the letter of June 5. Iz view of your ceble, wt shell ;cc directly to London E8 you auggeot, tnd then on to Berlin. In the; met.ntime, if you will be good enough to get acccmmodatione for Er. Etewtrt and Mies: Bleceker4 I 3111,11 to very greteful. It will be ao ©t helpful to 11.!:ve Dr. :tetrt with uc. He ie interawted in doing some work in connection with the London coney market, but. yin also relieve me cf =ome of the work which I otherwise might feel obliged to do, and enable me to have a little run 6ith I&tharine. Vi:ry sincerely yours, Bight honorable Montegu C. 'brain, Governor, Lenk of England, London, Englond. B-5I June 12, 1 g25. OWILLNTIAL My dear Aorman: Since the receipt of your letter of the 28th Uay, tie situation 'nab changed from day to day to eueh en extent tt:&1. I have hardly known what to write in reply. The account you give of the developments of the iset tea weexo is most enlightening, out uppareutly the gold you are ghtting is not 4outb African gold after all, but principally from the Continent. Since our cables in regard to American balances in kondon, we have seen e little evidence of ithdrawala of accounts which hove matured. Row extensive it has been it is im2oesible to say, but rumors reach ue that e number or inetitutions are not getting returns for extensions of their deposits which satiefy them, and are bringing the funds home and putting them out hare. Possibly that explains the weakening of sterling which yesterday and today has been below 4.36. you say, the test will come in the Fall, but I hope our faith in the outcome will not he put to too severe a test. All that I might add 1: this letter will be deferred until I see you. Since ely yours, Right Honorable Montagu C. Moment Governor, Sank of England, London, England. June i3, 1925. My dear Norman: On itay 29 I received a packet of 24 copies of the Report of the Goarnitter on the Liirrenoy and Bank of England Note Ibsues, which but an acknowledgwere forwarded with your compliments on May lbtn. ment or thm 4aa dele.yed Nonniu., rixei,)t of the other .locumeats :hics I had requested in connection with the return of gold st,:.nac.rd. lowing Great L-eitain to the I now ...aye your setter of Juue 4, advising me thLAt the foidocumeate are on their ray 1Z copies Gold 6tanaara Act. i2 copies Report of the Committee on the Currency ana Bank of England Note Issues. 18 copies Official Report Parliamentary 18th April Debates 12 copies ditto 4th May 11 copies ditto `5th May for all of Lhich I to thank you. I scarcely believe there will be need for more copies then those which you have so generously sent, but if occasion arises, I shall take advantage of your offer to procure additional ones. Each Federal Reserve Lank will be furnished with h. complete set. of the documents, insomuch as they will participate with us in credit arrangement between the bank of England and ourselves. with ,ind personal regards, I am Very sincerely yours, The Right Honorable tiontogu C. Norman, Governor, bank or Engler)°, London, E. C. 2, En6land. the fo June 13,. lia. My dear Norman: Yeur eenfidential note of the 5th June leachec no today after cabled you yesterday about going directly to London. I am nct taking Frneet. Ketharine's meld will perfoem the dual role of maid and velet, and as she is an old family attachment, I em sure Le will be more comforteble then if we were lumbered up with too many peolle and the coneequent addition of luggage. bnd then Phil will be at home alone, and I Pm klad to leave trnett to have an eye an him. Frankly, I e.& clweye e bit anxious about. dr. Harrison. He it. so 5M- titioue to be helpful, especially to Te personally, tr.et he disregards proper precautions about his health. One reason why I an glad that he returns home before I leave is so that I may give him a serious lecture on this subject and insure that he gets away for a long rest. I can tell you more about his history when I see you. Of course, now that Ps shell go directly to Thorpe Lodge (and I do hope that we are nct putting at greet burden on you) whenever it is desirable. a good time. I can arrange to go to the Continent i;erly in July, if you say so. I want to Five Katharine It is probably the oniy trip of the the ratter that we shall have to- gether, and it will do her good to have a fling at some of the milder dissipations of Europe. All of this we can elaborate when I see you, ant I will be glad of your advice as to what we &lull do. If we happen to meet any of those central bankers when we go to Berlin, there are meay reeeons why it will be helpful and desirable to have Etewert with me. He may dimply be known as a elember of our organization. Then Miss Bleecker will be Right Honorable MonteEu C. Nomn n2 03/25. long to do mail, etc., and Miss Bleecker being %ith lib sill make it easier for me IPto leave Katharine et tinee for business neetinge, etc. hilh beet regarde, Sincerely yours, Right Honorable Montagu C. Norsmn, Governor, Bank of intland, London, 648111au. FEDERAL RESERVE BANK OF NEW YO R K Jpno 16, 1925. F:ECEIVE_.:)0A, f,?!SW7i:F. : Dear Norman: Supplementing the Tenth Annual Report of this bank which we sent you some weeks ago, it gives us pleasure to send you at this time ,,, a copy of the Federal Reserve Board's full report reviewing operations of the Federal Reserve System in 1924 and giving complete statistics for the year. Data for the 2ederal Reserve sank of ,;ew York are shown on paces 323 to 333. Very truly yours, Benj. strong, Governor. The Right Honorable 1.Aontagu C. 1%orman, Governor, Bank of _-.nzland, Threadneedle Streot, London, E. C. 2, Pncland, L,/ i 1 , FEDERAL RESERVE BANK OF NEW YO R K FEDERAL RESERVE Mr.{ COPY GF NEW YUCK a Juno 10, 1X.5. Dear Ur. Governor: This note till be preoented to you by iionorable Robert L. Chian, who is vioiting London this aunmor end who advisee no thvt ho will be interested in discussing t%o principles of the Fodorel Reserve Act with some of my frionds in London. You till, I an cure, rceall that Owen wee for many years United States Senator from the Mate of Ohlahona and was Chairman of the Lent:to Committee on Banking and Currency which formulated the bill known t.6 the Federal Reoorve Act, under which the Fodoral Reserve Banks were established. em cure you will enjoy the opportunity of mooting Owon. Faithfully yours, Right Honorable t!ontagu C. 1;orman, Governor, Eunk of Eneland, London, Lagland. FEDERAL RESERVE BAN K OF NEW YORK cUpy VEDKRAT, R SERVE HANK 01' NJ AV 1.0111.1 June 18, 102.5 Dear Ur. Governor: This note be presented to you by 1r. George A Coulton, a member of the Fedoral Advisory Council from the Cleveland Fedarill Rooerve District, Who is commended to your kind considoration at the request of Ur. D. C. Chairman of the Recorve Bank of that district, and e valued friend of mine. I cairn be deeply grateful for Eny courtesies you may extend to Mr. Coulton, and beg to remain Sincerely yours, The Richt Honorable nntegu C. Lormtn, Governor, B3nk of England, London, Z. C. t, England. a44isvit- C ,c_iuftitek ILtk 6, Sit A-(74,-Itc, ot. otkky 4..01/44 jorc -(_e Az444,11. be, 4-I IL 704k 4Ltngi IttY14" "e/U2444 OA. 4m-sac' a444. kcek Hotel Majestic, Paris, France, August 19, 1925. Dear Nor _ 1: Your telegram in code, as below, arrived too late last night to send any reply, but this morning I have sent you a reply, which, together with my hand written note, will, I believe, enable you to go ahead with the arrangements. Whatever arrangements you make will be satisfactory to me, but I feel obliged to sail for home on September 9 unlo173 something very urgent prevents my doing so. The messages exchanged decode an follows: "Strong, Hotel Majestic, Paris: Before I can arrange date for the Pole and Schacht to come here you must tell me Visserings date and place of meeting. Shall expect you here on Aug. 27 or Aug. 28, but suggest Olympic on September 9 is too early Norman. for above three visitors." "Bank of England, London - For Governor: Just advised that Vice President Bank Polski sails from New York Saturday this week expecting to meet me in London. I shall arrive there Aug. 28 and leave arrangements for meetings with Vissering and German to you but suggest about September 3 which will enable me to sail on September 9, as I am anxious to do. Wrote Vissering fifteenth advising length of stay in London but hope you will communicate with both and fix dates. Till thin suit Ben. you." Very sincerely yours, The Right Honorable Montagu C. Norman, Bank of England, London. SOWIDENTIAL: Hotel Majestic, Faris, France, August 20, 1925. Dear horman, to Last night, after my wire had gone forward Vissering, which, with you, I roceived the enclosed from what I have done. my reply, will fully acquaint you with entirely to you, and I shall leave the final arrangements be held in London. nm very glad that the meeting can I sent you a wire this morning, but believe for your it is as well to forward the correspondence information. If the arrangements are concluded before I the plan is. reach London, I shall bo glad to know what 14 best to you always. Sincerely yours, The Right Honorable Montagu C. Noric,an, Bank of 3ngland, London. BErsiu. STRONG a Hotel Majestic, Paris, France, August 20, 1925. PRIVATE: My dear. Norman: Of course I remember Sir Edward Cook very woll. He was Hailey's right-hand man when I visited him in Simla in 1920, and not 1921. Cook's letter is exceedingly interesting. I cannot write him very hopefully just now, and shall await opportunity to discuss this matter with you in London. But I will certainly be glad to give Cook the best advice I can. Believe me, most sincerely yours, ; 111el\-1Y7 . VO The Right Honorable Montagu C. Norman, Bank of England, London. 4 Hotel Majestic, Paris, France. August 23, 1925. PERSONAL: My dear Norman: I' have your telegrams of the 20th and 22nd on returning And the arrangements all suit me very well indeed. from Switzerland. As our Polish friend reaches London Friday or Saturday of this week, we may be able to dispatch him at once. They have kept you advised from New York as to the arrangement with them. Apparently they are a bit pressed with their exchange, and we have agreed to assume our share of the yellow man's burden and make them a loan on gold, which we are bothering them to ship to ycu, and bothering you to receive. I an not sure of all of the particulars and leave it to Wrw York to advise you. There will be much for us to discuss, and I hope you will not become so involved in Caillaux's visit that you will be worn out with it all. I am troubled about the rate situation. It would be dif- ficult indeed for us to make any reduction, and if we do not reduce it may be difficul for us to take care of all the gold that we get. So there you are. Dwight Morrow is here this morning, and Gilbert reaches Paris this evening. I shall have a good talk with them before seeing you. My beat regards, as always lileura. 0 PRIVATE: September 26, 1925 My dear Norman: I am spending, Saturday afternoon at the bank to clean up some mail, and could well spend s number of them before I would free myself from the accumulation. It is most difficult to write you an account of affairs while we are cabling eo actively, and I shall ask you to read this letter as of its date of dictation rather taan the date of receipt. On my return consideraple change eion of business home I fount., as I cabled you, that there had been a very in our situation. throughout the entire country. in fact, rather the reverse. had long felt eoncern, seems result oi this year' b There is taking place a conaiderable expanI cannot, say that it ie unhealthy; The whole farming community, as to whose situation we LO have e been lifted out of the slough of despond gooa crop and good pricee, and, of course, this gives rise to optimism both with the farmers and with those who realize that the spending power of the farmers has teen greatly increased, and who see that as the foundation for increasine:, rneir °trainees and commitments. The railroads business, and the effect is shorn in their earnings. are doing almost a record This is also true of many of our industrial establishments, notably the motor com-anies, and all of the contributory trades. And it is nom being felt by the steel business, which, until rc:cently, had teen lagging behind the others. The best judgment that I can get convinces me that the development is not speculative; up. that traders are not over-extending; that inventories are not pilint, But in this country good business is always discounted by certain classes of speculators, ,..nd the reflection of this development is largely in the stock market, an active speculation Mere there has been t - a spotty speculation in real but in ?, smaller wr,y in with rising prices and a considerable Theonly other unsatisfactory development nlergement of the loan account. eee 9.28.25 Governor Norman 2 along estate, principally some other places. Building has the Atlantic seaboard, is still going on at a fever- ish rate. I found that Lome of my associates had increeee in the discount been seriously considering an neve theleee, under some tacit obligation rate to 4)b, but, not to make the chenge immediately after the Treasury operations of September 15, which meant awaiting the firet of October. I of e similar sentiment was also adviseu of the in t;ashiagton, and further that the Boston was contemplating Federal Reserve Eank of increeeing its rate. I did not feel willing to wait the Open Market Investment Committee meeting echedulen for eeetember 22 in taehington before eeudice, you icy the best I could do picture which I enli ecrd, and t' HZ. my cable No. 51, which releeted simply that part of :,he could see in New York. to you existence and a It as not intended to be more than bare indication of pos8ibilitieti. Your No. 18, paragraphs 2 end 3 lanceted to me that you felt, as La our position, that a reduction of your in ours. This is meteurin_; the rate eould be the equivalent of an increase situation solely from the standpoint without 7c1Z,arki to domestic matters, and my reply, No. 53, indicated ease in your market sug5ested that a reduction by tendency of money rates here in a domestic send word way it would until after Now it you might be that while the appropriate, the and this speculative dittidLiOrl might indicate that be appropriate for us to increase, discussion in but that I could not 4ashington. develops that my own point of view is really held by elmoet all of my associates, and I should explain briefly what this view is: feel that the Stock Exchange speculation may reach a need to be taken, but, on the other hand, that of the exchange must neceeeari-i be followed by at lees-re we all point where some action will a rate increase by this bank, .which similar increase in Boston, Philadelphia, 3 Governor Norman 9.25.25 ,411eveland and San Francisco, and possibly other increasea by those benka now having rate, would reeer-it in a general and censidereble revision of interest rates throughout the eouatry rand for all classes of loans. 11111'4% is net only in the foreign exchange. The danger of arch a result "Zile it might have the effect of checking speculeton to some extent, and would be regarded as directed at that if it 4ere not effective in eneewin6 iL, it 4oula likely be neceuee:e for ki: to make another increase. But the refl danger in this first etep, and in the conseeuences described, is that it might at least temporarily neve Eu ch an effect upon the negotieLion of foreign loans in Chia market as to 63riously intarfeee with the normal movement of the crops and create eifficultiee in eupplyint6 the exchange to enable them to t o e eic for. development migbt, indeed, have euite an unetttiefacLory reaction situation, which ie no LA:U. :if -.C1.0.17 1 il .70 Et respects. In Such a upon the business acid, I still feel that it is wiser to take some risk ae Lo the upeculative market and to reduce the risk as to this internAtional cite Alen to the very minimum, end that means postponing ,14n anve.nce in our discount rate for e0Ne 1: eriod longer. Alt this conclusion could not be arrived Lt ithout deLey and discussion with e lumber of eeople. This is a vary large counery and ee Lave a very conk liceted central tankine eyetem. I eoula not have cabled you is I clic in my No. 58 had I not had the beeefit of the viers: of meny others than myself, end, fortunately, of thobe most able to express eolend opinions. I Was ebarrapeed to find that you had concluded your plane for the ioeue of the conversion loan in the light of my earlier cables, and can only beg that when use are cabline in this fashion, you warn me of such a development 60 that I may have that especielly in mind and take steps to avoid embarn.saing you, which I certainly will endeavor to co. There can be no certainty as to the continence of our 3-1/2% rate more than from week to week, or fortnight to fortnight. poetpone an inereaso ,just as lone as possible. http://fraser.stlouisfed.org/ interest es wall Federal Reserve Bank of St. Louis It ie our earnest desire to -,e believe it is ml in the general interest, and I hall in our on endeavor to give you as Governor Norman 4 9. ?6. ?5 fly werning as possible 'of any indication of a change, but you will not take my ligables, sent o long in advance of a dwte of action, ts in this instance, he Ainore thin hn ender,vor to keep you posted until the time comes for me to z:ive you definite ford. May I hek you to keep in touch with Gilbert about his plans. He may be coming to :hi a country later and if you could r.rrmge your visit so as to be hare at the sine time, I think it would be adviinttgeous for all of us. Please write me suite fully, and relieve my mind of any feeling of reeponeibility 8d to the cunlersion le in, if you feel able to do so. My best regards to you as always. Sincerely, The Right donorable Montagu O. Norman, GovLtAcr, of Eiag17.nd, Threadneedle trcet, Loocon, E. C. 2. P. S. As all of the unconfirmed confidential cables relate to this mbtter, I am attaching copies hereto of: Your t 24 - September 25 and Our 25 11 27 it ,Y 54 56 58 5'.) II " " II 26 28 22 24 28 28 CONFIDENTIAL: October 2, un. My (tear horoan: Tour letter of S.ei:temaber .-nd the enclosuree reitched at litter I Lt.d elreeey r_earci from (Albert 1.nd Mc Carr h in regaro tai e3 nee develo-ment in the eff iro of tho Relohabank. :Albert emt ae suite k budget Of kaperb to rcqci, including copieu ot' Air leel,...es to you of :':".tf..-mber 10 ald 13. Ana I hove els° rand fA co,-.4 of bruins' letter to Addle of 5,Qtf:saber In view of ell of to ciro_leetlnoee, I heve replied to Gilbertte invitation by writint, biu .suite ft:11y, ft r) :er the enclosed copy. I hope yo, cio not think it too pedegogio. It would be dietueoin3 indeed if thie development resulted en le not iimpoesible, in the dpre.3.I of e feeling of dieeA1:4faction and distrust as to the Germqn eit,..4.ttion throughout our teulkina3 coramunity. The consequences reluire ao elehorstion. , I hive alreaoy eritten to Dr. Schacht, trout FttteikpLiai, to ex2reee .ny "roar views, but inc,uiring as to the C1 rcumNt rice.. u expreesire; the deer that it ge.y indinate ri development in connection with the policy or the heicuebcink which miiht impede or nefeet the progress of reconetr,ction. The 1 .1 St fe7 thlye have had t'eir full ae,-_eure of !loom, the failure of the French negotiatione ZZict the ciroumetencee eseeeiuted ith it., this development in the F.eichat..nk, %no some other things of lees COQ b it. etc e. It sometimes mekee re vancor whether the gene is ...orth the candle. But et ny rte our frit.Inds from Belgium seem to have the coura-e of Lteir oonvictione, ..nci I uwaltine cable advice from you 'se VI the not stop. In view of tne fact thet both .eearn. J. F. Morgan & and the Guaranty Trust Comperay are fieoal dents o' the liel.gian Uov,trnmeat rand the ma.tters have been diecuseed with them, I nave takcAi hbe liberty, very uon'identifily, of advising theit of the possibility of a visit from Ileutain !,nd poettibly L115 CLI Oct Mini eters .inc of amply eakik; them to let me keoe .,;romptly if they have any uo,6eetione to able which Mr. Norman 2 Ilkmake which eould have bearing upon lieht All of these abandon year. your plan for a their visit 10.2.25. to this country. matters make me more anxious thee. you do not visit here at the end of this year or early next Now e. very conilidential suggestion to you as to h poeeible the terms of the London protocol plan in case dispute arises. The papers are not before me, but, .s I certain questions are to be referred to the Reparation Commission and otters to areitretore, une the proceaa of &electing arbitrators is all provided is the protocol. Ly Dr. uchacht. Ae I recall, provide a method for interpreting the coei recall, personally, believe that the else course for Gilbert ,ould be to prepare the minds of those vith %born he is eesociated for action direotli in eccordance with the terme of the protocol. If be is satisfied that he rill en4oy the support of his colleeguee, eared if satisfied that the propose' of the kinistay of Finance violetee either the plan :end of the protocol, then, instead of erguing the matter with the officials of the iteich, he should Amply notify them that he has invoked the remedies provided in the protocol end will do so et once. Of course he must be sure of his ground. :huch a course would be in the line of procedure indicated by the ai,,,reements ano treatise, eud eould make the German Government conscious of the fact that the coueequancea of evasion or violation of the plain might be even more eerious than NOU10 be the unf'ortunate coneequencee of the propubal which they now advence. he is :urther or the spirit of the letter strictly I Lyme reason to believe that this arte:;ention will be conveyed to orii;inel idea of my on at all, ri ant to assume responsibility for it when I feel so little ecquaintea with the situation beyond the papers sent to me. Thda reserve ie pertly due teledram you received from Dr. Echacht. Of course you know without word from me that he his my entire :_yrepathy in any ;a:0gram seeks to the Dawes Plan and of the heichebank. Giloert. nor do I In fact I ers not advancing it es an to the maintain the integrity of Gincerely yours, The Right Honorable Liontegu C. Norman, Governor, Bank of England, London. Enc. October 2, 1925. Lear Norm .since the receipt of your letter of eeeptteaber 2.1 I have been ',zombie to cee Mr. Simmons, the President of our Stock Exchange, but I expect tc do 6C+ on Mondey end at--4 be p.b1Y to make some suggettione to him /Alia ..ill be useful to him in connection eith hie visit abroad. I think you doubtleas understand that in recent years the policy of the New York StOCIC Exchange has undergone a considerable change au the result of the introduction in the mums :event of its effeire of some of the younger element with more progressive ideas th.ae had prevailed formerly. Yr. .:eyelour Cromwell, who preceded Mr. :Ammons as President, reccetly killed in a regretteble &colt:lune, uneertook 5 series of reforms in the policy of management or the affairs of the Exchenge and eho which had met with public.: support and approval and ehich some of us believe hove very much improved the general standards and pr,ctivee of the Exchenge. This hes not only to do with the mechaniaa of tracing end settling, but had much to do 4th the general standards of ethics A determined wax has been waged against applying to ceclings in atocks. the so-called "bucket shop" traders. Anything savoring of sharp practice or violetion of the rules of the q.xchtinge had been investigated eno, in many instances, rather severe ciiedipline hf1.3 been administered to offenders. Generally speaking, I think for the lest five or six yeere improved the whole etmospherc of the Stock Exchang-e has developed under the newer management in h etrikinz; ens conmendable Something over e year Et-F;(3 Cromwell retired in favor of Simone, who is one of the younger members t-TICI a member of Rutter and Gross. I He is a man of integrity end, I believe, have knoen his a goo° m:etly years. of considerable ability, who enjoys the respect of the members of Lhe chile his house is not one of the lerger ones, it is in every Exche%e. way well regarded. Mr. Simmone is, I should imagine, a man not yet fifty, and 1...ossibly without the energy and imagination of his predecessor, but nevertheless I believe he has proved to be a eetief%ctory _nd progressive president. I shall have a talk with :Mr. Simmons on Monday, and possibly If you are able to promote the object of his visit in any eay, I shall appreciate it. ask him to call to see you while he is in Lonuon. http://fraser.stlouisfed.org/ The Right Federal Reserve Bank of St. Louis Very sincerely yours, Honorable Mont Age C. Norman, Is Ootob,Ir Z, My deer Norman: Supplementing my letter of October E, I h!ve ju =t haci a talk with Mr. .:iliumons, and he tells ma ',net. mattera .Aht.ch hve Lriu,n will necessitate d6ferling nib trip to London until next e; ring. I shell probably give him a not of introCucii.:n vc, you, and kou16 to glad if yo3 wuld give him a few :Ainutea to enlighten him about the general stock exchenge position in London. ::incerely yours, Right Honorable W.onLegu C. Aormen, Governor, Bank of Snglhnd, London, Engltnd. November 7, ain My deer Jona In: 1.-3t1,8" i' .,okno-::ledz,e your typeiiritten. Oa 11.L to -2. 0 1. we4. jut sencluGeti our 1,11 con,-rence %4'1.-h .The itu/f-.tien developli.t.lit h ot:ome up 33 o.41:iot4y uLii.. tii t:Lt tiTtJ tap:C.11-!_ti s Y1ia, in :Ale Pti0p16. is not going to be shtislico by turn its utt.nti on L'3 ThiL: isot un_ier winy it. ouin t:e ve,ry nifficult ie io2.t important ;s11.C:riC;9,0 -took cw.-kzt, sac 1.-.e in cY:ry for once 11r.v...oubGt'diy the iispt...iculettion or the pre..ent the belief the t.E.-wp....r o: of m1o, 3riin.t1y fms.aetin2,, posiiibly, from broxor:2 spred tbr3u,..1out, the e-::...tutry. Ootob if' 1g. iterf recent. e,(cspt, tr intoack trom ww.shintiton I ov.tr o 1: u. ,o ets.te L11 tt.,e improivement in that ther t ...ill ich 1.: ri.ri, :tan, i. r pt.>. LIbly .8 rituch as SZ.30,303,000 next yetr. A thirt.-, r.311 i th:it z.t2F.:re i..t feeline there is ample.. moo y ti.t. ou:. :u lonz; onenrecluc..c.:1 to 44 &ad No ...v the speculator ii. .:.)re I 1uened y of to h/Ippen t,h..h he it by the hap?nninLs, henos, .r our rsr.e to 4%, ht: iould be inclin:.A to ely, as he no oft-in (joist, Ca-t. th't racx!.$ our.; then, !. lul; ter Altrch en.i April, he ck et his o1 Lt-:1 ho iot ?i6.opted, hih dli commence on TuesOay (hoT. 1 thou...,tt -.then 1 etlt_d you) the r.tt at the Foet.on trine to Thiz ere,ite the ts.pprc.h;.,nrion th-...t se vfve,nce our 'Ate. i:hen F'rict,y moraine, it is discovered thnt 1:15,v not, the ' upicard me4e mrj oegin .in, ..h loia encoumer tt. rate ?..t.ivance oy, repetts.d (..1--Areland Ind S9.0 Fr,neisco. Damoolem All be PI/ :'end cki over their i.o.l.ty or TLve:i.:..y -ill Amr! the !...aste thin, ?gill Le In other '.orde, the riio?..1 for :.ms time. o Duria::; this perioc, with :foul m-rket open to f'orei;n loeas, you may be forced to vncc your rite, thA ..suld, indeed, (io much stop the margin trader. The Leer: for this particular type of tre.ttmen7, adses from the fPct that the Stock. Exchare to L.ccount wier 53,1 above the previous high tater mark in an advancing g stock mc.rt tsothirds of the money emplovd in this specul!ttion comin from outside of New York, - or certi..ialy from other thw New York City L,Anks. The feet th!-..t the pro,,r.m spread over erioc of tire:: nd 2 Governor Norman _progressive .itrJ cumultive in fect and be guided accordingly. for all of this rod effect, 11.7.25. ivee us opportunity to observe its attomp:. to winipul rt:ry :!;,,ch like 1.,:: the I confees tbat I h.Le it. It is repun..nt to ME in .s.7:-y poa1111111V eitle aLp,:.t. 1,, it the sort o!' thin tht could not Le nece:?Gary .1-, Il if t4enerl remunption of :,,old p4m:lit lad been effected throughout the ;;. ,.: and we h,:.d beet at1t7 to effect zone diAributioc of our eAce ,7;u:-. *.''',6.. v.f. it etock ref.rkeL. 0Q5Mi; a St.%2B7 tiut tbe h -3t sort of -,-,1,n3 cin 't's h.:nii.:, .1),)'.! ty a 00,c(il,Itive orgies snd yat the temperamat of the people of thii coun.: eitustiona o,!.nnot be le ilion that these .!..voided. In tot' iievelopav,at curftce. C.C7-71.-.e in ;:.ri cef- is partly reasonLble one to r - - corretpon-..ia,, iO more 16vol, chic..:, 13 .koother i :rice of fricf.-;;.3 t,he depreoi,,tt.d durr.-ency 1, no I:air:4 c,:.-frie.4 out into 01,- industries c tnoed which product nxid on.rry the cuirtrio4.1.1:,iet,. It i. " :-'or l b uorku..,1 y to ail of 4.11y. I your l't AU4:1; ...1A cotfortec, is thc jcU 117- f:.,:10! scf.x.c. to thou4:1 to eA71, 1,t 1 L 24. Lt4,1-: in ttc. Too:, :-rLgrs,ph o: i L'AC L3 you in July : TL. !d6ht Hoctle_ YeLt.,L.,u C. Covcrnor, Thee r Lonr.cn, P. S. i.noe the I must ask you co take into account Lhe 15pe.e of time in,lec,d make dictation of this :.Jor its re,.dir, d ifercnce. L,;4. s:,..414ement 01 vac:, MISC. 140 8 (MISC. 14013 1-IBM-7.661) November 10, 1925 My dear Norman: I hope you will pardon the delay in replying to yours of the 21st ultimo. I think you may have been misled by a correspondence of figures, which is a happenchance. Our advances on gold to foreign correspondents have increased in some cases and decreased in others, so that the net difference, ZI. 2,800,000 is really no more than a coincidence. The change in the figures of the Bank Folski which is significant is the increase in the item 'Liabilities in Foreign Exchange" between September 10 and October 10 [1:1112) from ZI. 24,643,000 to zi. 41,684,000. This just about offsets the total advances on gold of $3,400,000 which we made in that period. The increase in "Foreign balances, bills and money" and the increase in gold are doubtless due to other causes, except that the item "Foreign balances, bills and money" may reflect unused amounts of the credit which we have given them. I hope this explains the matter. Sincerely yours, "B.S." Right Honorable Montagu C. Norman Governor, B nk of England London, England 270 Park Avenue, New York, N. Y. November 20, 1925. Dear Monty: I am just pYepari ng to leave for Chicago, but felt I must answer yours of November 8 at once, for I h,ve been most dilatory in replyi ng to your Plodge letters. You don't mind, I -m sure, a few comments passing through Miss Bleecker. In some ways I like the arrangements for the future; in others I don't. In the first place, I have a great real of confidence in Trotter. If there is any reserve, it is what I once expressed to you, th t, after all, responsibility will have much to do with remedying what is probably more a deficiency of manner than of fact. The thing that is not as clear to me as I would like to have it, is First, whether this is anything less than a tempor&zing solution of the whole bank problem; and Second, whether it ever will be possible, after seven years as Governor, for you to occupy a rather anamolous position, where you are neither a-foot or a-horse back. But, of course, two years hence is two years hence, and the immediate future I believe is disposed of as well as it can be. And all of this I am looking forward to discussing with you when you come in December. Of course I am expecting you to sail on the sixteenth, and to stay with me at 270. Ns for Christmas. Phil and I will be alone, and we would like to have you stay here with us. So there is no question of going out of the way. ith my mother and sister absent, our Christmas will be a slender affair anyway. Now about your health: It troubles me that you should have these outbreaks of one or another sort, really indicating that something needs attention, thou(;h it may be obscure, but, nevertheless, lurking; in the background, ready to pounce whenever you get below par. I know all about those thinfs, and how necess.ry it is to get at them fundamentally nd not superficially. ever. Nbout my own plans: They are still as unformed as So lon;; as my health remains reasonably satisfactory, ft A great many th-nks to you for your help for my Mother. I have written to your Mother, prld to mine, and suggested direct communication between them. It will be fine to have those two ladies meet. I am not only obliged to dictate this letter, but to ask Miss Bleecker to sign it for me. Now take care of yourself, and accept my blessing. Faithfully yours, The Right Honorable Montagu C. Norman, Thorpe Loge, Campden Hill, London England. 'a &ovember E7, rokb. My dear Governor Norman: ro:r kind latter of Soveadhes bus: rescued me on my rsturn fron: an absence, and I t,a rettlly suite st 6 loss to adequately express the great pleasure ai eatisfaction rehicb this ect of courtesy by you snd your associates he..s ciien me. Of course, you, better anyone, E rts el te the sentiments of respect and affection which I feel for your great orgaLizstion, ct d the honor 1r ri I hold all of thove breve com- rades o yours trao croszert til3 dark atter to the further shore. I shell cherish tnie or our association end friendship Ea one of my most i)riceletio posts*abionei. eit dear 'tamest ELLitiumnce of my orstitude, I beg to remain, 60110 rno Tours (sincerely, Right Honorable Monte gu C. Norma n, Bank of Englraid, London, angland. December 3, 1925. My dear Monty: First, my apologies once more for typewritten letter, which is the best I can do with the time at my eiepoeal. This acknowledgee yours of November 23, Croke Harrogate. Since it *ea written we have agreed upon an arrangement for Belgium, and anything that I might write would be out of date anyway. You will have heard from me, by letter and oeble, in regard to and I am defin tely expecting you; have your room reserved; But I shall not attempt to meet you am free of any engagements whatever. down the bay, as the weather at that season is too bad ante the trip down on the boat and waiting arouna without decent shelter on the Revenue Cutter is So I shall see you on the dock. too great a haaard. your visit. If the This time you may, I fear, encounter .tome publicity. If you reporters don't catch you on the boat, they may do 80 on the dock. are caught on the boat, I think I would be inclined to tell the newspa7er is more a holiday than men that your trip has no special significance; anything; but thee, you are coming over to make us a vi sit as you plan to d that if you have any statement to make you will mete it do every year; after going to the Dank. Our bank rate position will, I It woulu be awkwara for hope, work out better than your us to advance to four on the eve cables suggest. of an issue of $400,000,000 of Treasury oblis,atione which ere being figured very close to the market, and which must be offered on the eighth, - the may It would necessitate a difference of following next week's meeting. one-quarter of one per cent at least to the Treasury, and I think with the exception of one or two people we are all generally ::greed that the really Speculation fundamental conditions here do not well require an advance. announcement of The has tempered doen a hit, but still needs watching. the market will your advance today hee had a little dampening effect, and now or early in the morning of a change by us. await word As we will not advance, they will still have the feeling that the sword of late this afternoon Demooles is suspended over their heath,. I am mighty glad You will that your rest did the business. boat, and, I hope, a more restful time here with have another week on the me that you did lest time. Possibly lie could get e.eay somewhere for a few day s . If the four per sent rate has helped, as you suggest, far be it 2 Mr. Norman 12.3.25