View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

STRONG PAPERS, Norman to Strong, 1926 (List redone 5/2004, to include all materials)

1926

January 21
[January 29 (from Anderson)]
February 2, w/ letters to Lepreux, Dec. 8;
Hautain's replies, Dec 15 & Jan 30
February 5, w/ Janssen's letter, Feb 3 (2 in Fr,
one translation)
February 11, Belgium General Summary
[February 11 (from Anderson)]
February 19, w/ memo on Belgian Loan
March 4

March 5
March 9, w/ memo on Belgium
March 9
March 11
March 18 (3 cables)
March 23, more on Belgium, with Mance letter
to Norman, March 16
March 24, w/ questions for American witnesses
[March 30 C (from Anderson)]
[April 1 C (from Anderson)]
[April 1 (from Anderson)] NOTE: attachment
(memo of Norman's and Addis' evidence) is in
Papers
[May 10 (from Harvey)] NOTE: attachments
(Ryti's letter, May 4; Norman to Hautain, May 8,
May 10, & May 12; Hautain's cable May 10) are
in Papers
[May 19 (from Harvey)]
[May 19 (from Harvey)]
(May 19)
May 20
(May 20)

[November 17, (Peacock to Mrs. Lundie)]
November 17
(November 23)
November 28
December 12
[December 15 (from Lubbock)]

Also: Hautain to Norman, Dec 15, w/
amendments
[October 8 (from Peacock)]
[October 25 (from Peacock)]
[November 1 (from Peacock)]

May 31

[May 31 (from Harvey)]
June 8

June 12, w/ A. Miller's letter, June 3
[July 3 (from Harvey)]
(July 15)
July 19
(July 19, w/ July 16 letter from Vissering)
August 19 C (to Harrison)
August 30, with letter to Harrison, Aug 23, [and
letter from Harvey to Ryti, July 27]
(September 18 C)
(September 21)
October 10
October 17, w/ note to Harrison, Oct 18
October 21, w/ clipping
(October 29)

Strong Papers Key:
[ ] = At earlier date, item was listed as present but no original or copy is now in Papers
06/01/04
( ) = At earlier date, item was not on list but original is in Papers and was copied if no copy existed



STRONG PAPERS,

Norman to Strong, 1925 - 1925

1925
Jan.15 (from Anderson)
.1/1.18

1926
Jan. 21
Jan.29 (from Anderson)
Feb.2
Feb.5, with letters to Lebreux
Dec.8 and Hautain's reply

Jan. 24
Feb. 10
Feb. 26
Mar.9
Apr.3 from Osborne, with clipping and Montlly
letteFyFebv3y1926-Review of Midland Bank
Feb.5, with Janssen's letter,Feb.3
Apr.3
Feb.l1, Belgium, General Summary
Apr.8
Feb. 11(from Anderson)
Apr.15
Feb. 19, with memo on Belgian Loan
Apr.15, with draft Report of Committee
Mar.4 (.aepy)
Feb. 5, 1925
Mar. 5
Apr.20
Mar.9, with memo on Belgium
Apr. 22
Mar.9
Apr. 24
Mar.11
Apr. 30
Mar.18 (3 cables)
May 5
Mar.23, more on Belgium, with Mance
May 3
letter to Norman,Mar.16
May 11, with memo on Cooperation between Central
Mar.24, with cuestions for Al,,erican
Banks
witnesses
May 13
ar.30 C(from Anderson)
May 15, Copies of Report with Norman's Compliments
Apr.l C(frou Anderson)
(Not in this file)
Apr.l(from Anderson)with memo f
May 19
Norman's and Addis' evidence
May 26, with clipping
May 10(from Harvey( with Ryti's
May 28, with 2 copies of Gold Standard Act,May 13,1 925
letter,May 4,Norman to
June 4
Reutain,May8,10 +12 and
June 5
Hautain's cable May 10
July 28
May 19 (from Harvey)
Aug. 15
May 19(from Harvey)
Aug.16
May 20
Aug. 17
May 31
Aug. 19 C
May 31(from Harvey)
Aug.20 C
June 8
Aug. 21
June 12,with A.Miller's letter
Aug.22 C
June 3
Sept.19, with German communique,Sept.8, and cable to July 3(from Harvey)
Schacht Sept.14 and latter's reply,Sept.l5 July 19
Sept. 21
Aug.19 C(to Harrison)
Sept.25 (from Anderson)
Aug.30,with letter to Harrison,
Oct.13
Aug.23 ,and Harvey to Byti,July
Oct.19
27

oadver
Oct.25
Nov. 1
Nov. 8
Nov. 12
Nov. 18
Nov. 23
Nov. 27
Dec.10
Dec.22 (from Anderson)
Dec.29(from Anderson)lwith 2 cables to Norman
Dec.19 C



Oct.10
Oct.l7,with note to Harrison,Oct.18
Oct.210with clipping
N
Nov.17
Nov.28
Dec.12

Dec.15(from Lubbo4

(ropy of handwritten letter)

g

21.Jen 1926

On board

My dear Ben
If I had come away E. couple of weeks earlier I should have an uneasy mind about
I dont complain about your health which
you: as it is I feel somewhat reassured.
is wonderful, all things considered, & which even with the wise care you give it,
may be somewhat beyond your control now & then. But I may rightly complain about
your preoccupation - if not worry- for weeks on end over political & to some extent
remote cluestions. It is a detail that to me your real self was then unapproachable:
but it is of first rate importance to all of us, & especially to your well - being,
that you were not then giving yourself a fair chance or making a good showing.

That is my protest, coming from affection & need for you. Before I came away you
had largely shaken off the preoccupation so that the real Ben was again on deck:
now you are wisely going west to the desert air & the past is just nistoly.
But the past shows you must work out a plan for the future. I shall try & do so
too, with the help of the letter you wrote fnders,on & sooner or later I will writs
you as to any development.
My time in N.Y. was always a pleasure the more so because had nothing to do but to
rub shoulders & aim at an increasingly good understanding among all of ourselves.
but your thought & care made it that pleasure & gave me a perfect atmosphere uptown
& downtown, with the Mellon & with the Strong family.
We are having as good a trip as could be desired & RCL is pleasant & comianioncble.
We have had much talk about Belgium & below the surface therr, 1e very little difference between you & him: less than I had expected to find. There remeth various points
about the whole situation which are either obscure or unsatisfactory & which we shall
not clean up in a few weeks. So my guess is that the best we can hope for is a
short Loan to stabilise the Bank & to give time during its currency for a proper
house-cleaning.
I hope you can do something to help the Bk of France along the lines of Monnetss talk.
It seems clear that for one reason & another I am no good about this but eaually clear
that you have an opportunity
As to general plans I suppose your Mother
& you will go to Rome about Apl 1st after
Vacation) which is not an easy matter.
the less advice I give you on the subject

will give up the ides of a visit to London
that you will need a real rest (as well as
I never manage to take much of a rest s o
the better!

Thats all I have to say. But we all need you hen & some of us love you: dont forget
You have my thanks for all you are to me & for all you did for me-es ecially
it.
this visit. And the same to Phil & your colleagues.
Is ever
MN




t2

.

--frfX"
ON BOARD

S.S." MAJESTIC:

A0.44

Ykat-A,

4-arcat4
u.4411.4.47

rea

C444111.0

Ce-0.44. 44.4.0dir

eta

set444

0 i4k yo ft ;

occ.4,4

3 lart.4.t
eSoate..4.4.4412 Ikt.d."4,(4.0.L.
41Z44.11/4.

at"sauc, soak 16.44-

etu? c...ti caked.

64. to&4464.411),
itTCA4

IOU

4.4

cajet.

it/ PfArstAted

SUP('

issmk.tio-a44

COW&De Uet,41,

yesketk, GinciftriaLik,



yba

10C/i

44.4` 0? OtAhgt,

akota yota

(Ktor.i., gac644. - 'It 4491 ahrfur - fyi%
0.1.44,44

a

6 4cui.

i44.10

&We p 444114.e,

eki

FAXILIAdt Ere44A ote.

h t:4 a. Ask 44 Altai- to tug, 1,,,ta
'11/44

am.

4

Gct.4 ',k

IA tia.

cwietrapaeacarGb:

I: At fek,it rate. 44.1hrpf,kw

ie ottl, et 4441 FL &s talig.a.e
4041, -tc.4:443

1444 y..t, cook, 14.44 luzik

ctipLitt tvra---zai.
itc.44.40#k

7i

,

ci

to y044.4*

cA

fasi

14,2,4 45ot:4

°Ca

corn (44 6)04'4

atefAixi. q- naas fftre yiN4




eactkAtAt ocw

.

Sigrotc.

41.9

--)41, 7 °Ow/cm

-irt4

frv.jerynim.",

"LT),

"-

cy--5vp-h,

qpivicpv77,11

tAanw/Av

4Thi.e) Graphe2r

"

16V%

VW, Vint' 41,irly0 4~105

gPlarlth0

g,0

dry

c

crimri

Wit

e-9

/149/. ogrK

2-r*

IVAQ

)-i erns

7 ^A/ twv1' 44407)1m

jvWq C7Y

raMIP

ilroi

Tom

rmic7c 00-.)/

1AraW

-AVVW

41)01)5

Win/

4evig

4/11!4 " 711r.

'):717

Itrir)

-ner

-raPIAT"°S

)/avr

7/191, room vagN

Id,r4r1004

))47

"VMS 177S4V vvIt "41( imrYr

/9-prvp

-fv.7°9




564twikutif

C1/4,aus: 44 444. t4A:exa.t4A.4.1git

cood. ca.&461,06AL491.;Ast,
a4.4Aous.,

mucectoe.

huutt

&44 lsekr iiextOt

.

itak

apticIpst

laacc4 tut&

ca,cei

c 9uk, utd

k 014.0,errtaw, aploto-c4.

L

cost t

flocotAkosolk
42,

cat 6f.

&allow

04-1

c(kik4V-CLAIZO2t1

tAtt OLAA) Xma,044L

ea.terCe)

4,4 lea. 4 (YL.1)

0614i,tg44

04.

kek

(KLA.44h,a-.4, ccmpct.A.ze.."..46,,

c;)
Arei

&Qat fvu.11/4_Atek

64444. k/(selok5

itvciate &AZ

tot

leart--44
6/uLdiga, to




4.41-ctxt4t,
:

(444 ik.a.4
fi4A.

witgiciz ivAka.:4L,

ON BOARD

(htfritowy

1L4,

MAJESTIC:'

4.6o t44-

ti(i2

Si.LLett;t&. Aret4C& co.c.
44t40 a/A:4 icteA-a%v

*et elaiut
'tAyr5(41,44 1,13

a"

Aret°62)

east4 c&twit,

,4,144-4,k4ut, Ads&

gto 40c9,44

La- 42 4,4

So

we_ ta44,

kem4vt tw 4. q<4.0.4-h044,
efalyaug,

tutA, it4o du*, t;st.

thou% "tli- e.0t)teukolvier a 11"Ant4
k"442.- chtd.."Zzs.
Motto 14$4,

loosaitcs

itte,p4a. 111C49f 30LAtA.tb atec4s



4 Aikkett.6 &cu.. 9C7

4 etZtAar
4 ed.4.44.4

elt..44

F ,...4440,40, a

ilLai- ire

ate. 6) SetC

4:4 4-4,4 evtmedi
LW,

Atk 4 IA*

Cep 44

yo*t

oplirbriu

4a.4^

a.0i,

4,444. re4144wv

J aarfhez

A.OLgai fir146444

YOU* AtfreGe 4,;(4. frat. Vat& aaut.

1. 4. t,C4t:V CRfrmAttssi, 4 %/&""

itta

SO 6. 441WZ., 4150 tL,46 apt

af64 t&ak 1444, t4A.
ft.:a veet(a. kw L. 4%4
Almee 4

C.;




ILIS4' Ct4

IT

luck g.
A,

VAteakt0;%, i

tgly-A,4,4;49,C

45141APt.e AdtaALAVI.

A. %Till'
eov

1,1134.

$

64442.)

AuLALL..-4

4 (a.ti

atz

gt.4;4z,

fizet

62.144.

Itzck

4A4,

tof

Aft, alt, tsttatt. y4c9(.
Ltd

&be. ya70%

449444 (v.e.gek

tc Lao., itlAamile4 (11P.
Att.&

60

otAkr




1064,

ft/46 4400.. lyat4 44Z(..

nub itztiatet AZ) LA4 Vt"

fiuudzA0 pka,

.

.

.1.444 cotuAsitzi

twervicr

11,4%




-

!AC




CONFlDENIIAl.

Benjamin Strong, Esq.

Page .3.

2nd February, 1926.

copy of a letter from Hautain will show you why the matter was
thus delayed, a delay in which our people here had concurred for
the reason that they did not consider the Central Bank Credit to
be effective or likely to be required for some time.

As to the general question of a Loan, there
is nothing to report, and all I can do is to send you a draft of
the Bank Law with its latest amendments on a separate typescript
sheet.

It seems to me, however, that Article 24 (which remains

unchanged) is contrary to that freedom from control which Hautain
had led you to expect and that no steps have been taken to provide
that the State debt to the Bank (whatever amount may remain) shall

be converted into a marketable Security (see your cable No.22 of
the 14th November).

4. You may care to see the enclosed copy of
"L'Information Financiere" of the 29th January, which gives the
fullest report we have seen of the account which Robineau gave at
a recent meeting of the Bank of France of his protests to his
Government.
Believe me,
Yours

sincerely,

Benjamin Strong, Esq.
P c'

Since writing the above about India, I have seen the

accompanying article in to-day's



Times.Weir




SPEC EIVE0
II

CONFIDEnIAL

COPY

4

J.

I

C..

8th December, 1925.

Dear Mr.Vice- ?resident,

I now write to suggest terms for the
credit which the Bank of England (in conjunction with the
Central Banks of New York, Holland and Switzerland) have
agreed to grant upon the security of three months' prime
Bankers' Bills - drawn in Belgian Francs - from the portfolio
of the National Bank of Belgium.
1.

The Bank of England to grant advances in sterling

upon the security of the said Bills up to a total not
exceeding the approximate ecuivalent of 02,000,000 outstanding at any one time.
2.

Such advances to bear interest at the rate of lfo

above the Bank of England rate varying with a minimum of
5;, and to be repayable in full in stern/43in London not

later than the 31st Larch 1926.
3.

The National Bank of Belgium to guarantee the repay-

ment at maturity of all Bills 21edged from time to time
and to undertake to repay to the Bank of England any sum
by which the value of the said Bills when converted into
Sterling may fall short of the sum advanced against the
Bills.

Having regard to the provision of Articles 8 and

9 of the Bank Law effective steps to be taken to render
these guarantees indisputable.
4.

The Belgian Government to agree not to prevent the

National Bank of Belgium from fulfilling its obligations
under the preceding; Clause even by the shipment of gold
should such be necessary.
5.

The said credit of 02,000,000 to form part of a

total credit for the approximate equivalent of 010,000,000
divided amongst the following participants in the proportions stated Federal

Federal Reserve Bank of New York

A5,000,000

Bank of England

A2,000,000

Nederlandsche Bank

A2,000,000

National Bank of Switzerland

A1,000,000

The National Bank of Belgium to undertake that all advances
taken under the credit shall be borrowed from the several
participants in shares proportionate to their respective
shares of the total credit and that every repayment shall
be divided amongst the participants in like proportions.
6.

Bills deposited as security for advances made by the

Bank of England to be lodged with the Bank of England, and

the National Bank of Belgium to undertake to defray such
charges (if any) as may be incurred for stamping the Bills.
I have informed the other participants that

will be made with them

all arrangements regarding this credit
direct by the National Bank of Belgium.

The terms will of

course be the same in all cases except in so far as variations
may be necessitated by the different forms in which the credit
is to be provided respectively by the Federal Reserve Bank of
New York and by the European Banks.

I have thought it well,

however, to send you my suggestions without waiting to hear
from you in the hope that by so doing I may possibly save you
some time and trouble.

I confirm and enclose a copy of the Bank's
cable of the 5th instant.
I am,

dear hr. Vice-President,
Yours most faithfully,
(Sd.)

1:onsieur 0. Lepreux.




M. NORMAN.

COPY
TRA,43LATION

brussels, 15th December 125.
The Governor,

Bank of .ngland,
London.

Dear

-Governor,
I beg to acknowledge the receipt of

your letters of the 4th and 8th December and the dulaicate of
the contract signed in London on the 2nd instant regarding the
new provisional credits granted to the National Bank.

I note that the original of this document is being
kept at the Bank of Englund in the interests of the various
contracting parties, who have received a duly certified copy.

As regards the discount credits totalling
V10,000,000 opened at the National -:;ank of Belgium by yourselves,
the Nederlandsche Bank, the Federal :..ieserve Bank and the National

Bank of Switzerland, I have to inform you that I have communicate
with these Institutions direct and that so f< r we are agreed
as to the Procedure to be adopted.

I have just stated in a letter to Dr. Vissering,

I do not anticipate any difficulty in bringing about these
operations by means of advances covered

securities in our

portfolio, in preference to a discount operation.
i_th reference to your letter of the 8th instant,

I am quite agreed on the following points:-

(1) Advances by your Institution are to be made in sterling

-d

may reach a maximum equivalent to approximatel; /2,000,000;
they are to be repaid in sterling by 31st :.:arch 1YL:': at tho
latest.

(2) The rate of interest shall be 1,L above that of the Bank of

England, but must not be less that
(3) Our Institution shall repay to the bank of Englund the




amount actually advanced in sterling;

Articles 8 and 9

of our Statutes shall be amended so as to make this
obligation binding.

 (4) The Belgian government will Freviousl:,

interfere with the engagements entered

undertake not to

into by the National

COPiE.

BRUXELLES,

Le 30 Janvier, 1926.

Cher Monsieur le Gouverneur,
Repondant a votre lettre du 26 janvier 1926,

it m'avait semble qu'il etait inutile de faire executer ces
formalites avant le vote de la loi prorogeant le privilege de
la Banque Nationale.

Mais puisque vous le desirez Dt que nous
sommes d'ailleurs comple-tement d'accord, je fais demander au

Ministre des Finances de m'adresser sans plus tarder la lettre en
question et je m'empresserai de vous la communiquer.
Veuillez agreer, cher Monsieur le Gouverneur,

l'assurance de mes sentiments Bien dvou'es.

(Sd.)

F.HAUTAIN.

Monsieur Montagu Norman,

Gouverneur de la Banque d'Angleterre,




LONDRES,

E.C. 2.

anh of angina,
EC. 2.

5th February, 1926.

My dear Strong,

I have now received from Monsieur Janssen an
assurance on behalf of the Belgian Government in the form of a
letter, of which I enclose you a copy.

It is clear that, while the required assurance
as regards the shipment of gold is now in order, there can be no
question of the credit being drawn upon until the amendment to

Article 8 of the Bank Law has been passed by the Belgian Parliament
and has received the Royal Assent.

I do not know how much longer

we shall have to wait for this, but the Belgians are some weeks
already behind the time-table they originally put forward.
With the exception of this amendment the papers
covering the Central Bank Credit to the National Bank of Belgium
are in order and copies are on the way to you.

I take it

therefore that the requirements of the Federal Reserve Bank will
be satisfied.

But as you are in California and I may have to
cable on this subject I shall have a set of these papers sent by
to-morrow's mail to be put among the files of your Bank.


http://fraser.stlouisfed.org/ Benjamin
Federal Reserve Bank of St. Louis

Believe me,

Yours

acerely,

,
Strong, Esq.

COPY

Bruxelles, le 3 Fevrier 1926.

Lonsieur le Gouverneur,

1"..HAUTAIN, Gouverneur de la Banque Nationale de

Belgique, m'a mis au courant, en temps voulu, des pourparlers
qu'il a menes avec les banques centrales d'emission des

principaux pays a etalon-or, en vue de conclure avec elles un
arrangement permettant \e. la Banque Nationale de leur

reescompter ou d'obtenir d'elles des avances en devises
etrangeres sur son portefeuille commercial beige.
/

La Banque Nationale s'est engagee a garantir le
/

remboursement, a l'echeance, des operations d'avances ou de
reescompte qui seraient effectuees conformement a cet arrangement.

Le Gouvernement beige a depose 1 l'article 8 de la
loi organique de la Banque Nationale, un amendment concu en
ces termes:

"Art.8.- 2° A reescompter a l'etranger les effets
"de son portefeuille;
a remettre ces effets en
"gage; ,a garantir la bonne fin de ces effets Cu
"des operations d'escompte et d'avances,y
"relatives;
a acquerir des avoirs a l'etranger
"en des monnaies
base d'or ou sur des places
"payant en or."

Cet amendement sanctionne d'une facon nette et
absolue la tradition en vertu de laquelle la Banque Nationale
s'etait toujours estimee fondee a effectuer des operrItions



de

4

de ce genre.

Cet amendement sera certainement vote.

En outre, le Gouvernement, pour repondre au desir
de la Banque Nationale, prendl'engagement de ne mettre aucune
entrave aux mesures que la Banque jujerait necessaire de
prendre a un moment donne, pour s'acquitter des obligations

qu'elle aurait contactees envers les banques centrales
d'emission interessees a ces operations, et en particulier a
ne pas s'oz:poser a ce qu'elle exporte de 1'or.

Veuillez agreer, Monsieur le Gouverneur, l'assurance
de ma haute consideration.
(Sd.) ,L.E.JANSSEN.

it Monsieur NORILN,

Gouverneur de la Banque d'Angleterre,
LONDRES.




CABINET DU MINI STRE

R.T.cElvE-0BRinCEMIES'
le 3 JANVIER 1926.
1 7 1926

DES FINANCES
No.515

Monsieur le Gouverneur,

M. Hautain, Gouverneur de la Banque Nationale
de Beigiqfll, m'a mis au courant, en temps voulu, des -o.rf,arlerc

qu'il a mends avec lee banques centrales d'emission dos
principaux pays A etalon-or, on vue de conciure avec elles un
arrangement uermetttmt a. la 13anque Nationale de lour reescompter

ou d'obtenir d'elles dec oiances en devises dtrangbres cur son
portefeuill© commercial beige.

La Banque Nationale s'est engage°

garantir

le remboursement, a. l'echeance, dee operations d'avanees ou de

reescompte qui seraient effectudea conformement h cot arrangement
Le Gouvernement beige a depose d. i article 8

de la loi organique de la Banque Nationale

un amendement concu

en ces termer:

Art.8.- 2 A reescompter a. l'etranger les effete de son
"portefeuille; h renettre cee effete et gage; h garantir
"la bonne fin de cos effets ou des operations d'occomiAc
"et d'avancee y relatives; a. aoqudrir dec avolre d l'atranger
"en des nonnaiec h base d' or ou sur des places ra:;ant en or."
Cot amender-lent sanctionne d'une facon nette et

abeolue la tradition en vertu de laquelle la 3anaue Nationale
s'etait toujours estinee fondee h effectuer des operations de cc
genre.

Cet amendeent sera certainement vote.

En outre, le Gouverneent, pour repondre
desir de la Banque Nationale, proud l'engagement de ne mettre



attune'

2

4

auoune entrave aux mesures que la Banque jugerait necessaire
de prendre

-in moment donne, pour s'acquitter ues obligations

:u' ells a gait contrctees envers les bang- _:es centrales

d'emission interessees

cec operations, et en particulier a

ne 1;as s'o.[.,.oser a ce qu'elle exporte de l'or.

Veuillez agreer, ,ionsieur le Gouverneur,

l'assurance de ma hate consideration.
A.E. JANJSEN

A Monsieur JOHLAii,
Gouverneur de la '1anque d'Angleterre,




LONDRES.

TRANSLATIONbrcat4.746-4-te.,-COPY

si515

4)17/9

LC-CO-/

Brussels, February 3, 1926.

Dear Governor Norman:

M. Hautain, Governor of the National Bank of Belgium, in due. course

informed me of the negotiations carried on by him with the central banks
of issue of the principal gold-etandard countries, with a view to making
an arrangement with them permitting the National Bank to rediscount to

them

or to obtain from them advances in foreign currencies against its Belgian
commercial portfolio.

The National Bank has undertaken to guarantee the repayment at maturity
of advance or rediscount operations which might be effected in accordance with
this arrangement.

The Belgian Government has added to Article 8 of the law organizing
the National Bank an amendment which reads as follows:
"Article 8 :- (2) To redi scount abroad the bills in its portto deliver these bills as security; to guarantee the
repayment of these bills or of the discount and advance operations
relative thereto; to acquire credits abroad in currencies on a
gold basis or in markets which pay in gold."
folio;

This amendment sanctions in a clear and absolute fashion the tradition
which the National Bank has always had, that it bad a right to effect operations
of this kind.

This amendment will surely be voted.

Furthermore, the Government, following the wishes of the National Bank,

undertakes to place no obstacles in the way of the Bank, whenever the latter
may take steps such as it may deem necessary, to carry out tie obligations
which it may have contracted toward the central banks of issue involved in
these transactions;

and in particular, not to oppose the Bank's exporting gold.
Respectfully yours,
(signed)

To Mr. Norman
the Bank of England,


Governor of
http://fraser.stlouisfed.org/
LONDON.
Federal Reserve Bank of St. Louis

A. E. JANSSEN

.

CONFiDEITTiio,L.

Ranh of 04ream1,

Sankt,

E.G. 2

11th February, 1926.

1,:y dear Strong,

There has not been much to say to you lately
about Belgium, chiefly because we have been waiting for final
Budget amendments and for information as to actual Treasury
receipts and payments, excluding borrowings, during the last two
or three years.

The latter figures they cannot give us, but we

have arrived at them in another way and I feel we have now gone
far enough to

reach a conclusion;

of this I gave a hint to

van Zeeland when he was in London a week ago.

.k.t the same time

I offered to go without delay to Brussels and explain the position
to Hautain, an offer which he has declined for a week or two on
the ground that it would be best to await the passing of the Bank
Law (in t:iis connection please refer to my llo.31, paragraph 3).

in order that you may be informed generally of the result of our
investigations, I enclose a memorandum on the Belgian position
which hr.Osborne has put together for the purpose.
So far, none of the Bankers has had any communi-

cation with the Belgians since I came here from .Limerica and, by
agreement,

I have been trying to act on their behalf.

I have

supplied them, and especially Leffingwell, with such figures as
Hautain sent to us, and they may have reached their own



conclusions:

4

Page 2.

Benjamin Strong, Esq.

conclusions:

these r know are not very different from what you

11th February, 1926.

will have read in my cable which I have mentioned in the previous
paragraph.

My own view on the three main points is this:

Considering the criticisms to which Janssen's

1.

Budget is open:

considering, too, the promises made by Theunis,

published in the Belgian prospectuses in New

and the statements
York, I do not think

that much confidence can be felt in an

equilibrium of receipts and payments during 1926.
It is doubtful how the

Belgians can deal with

their Floating Debt, including a heavy maturity next December.

For this they have the idea of a forced conversion if necessary in which case the fat would be in the fire!

The ratio of stabilisation is to be fixed by
decree after the passing of the Bank Law.

I understand that

confidence requires it should be fixed quite shortly after the
Stabilisation Law is passed.

The ratio is still undecided, but

like yourself I mistrust the 4 to 1 or even 107 to the £ (4.52
cents to Foil) as too favourable to Belgium.
Believe me,
Yours m set sincerely,

Benjamin Strong, Esq.
4"44..t_40l.t/L




Eank of &One
12th February, 1926.

Enclosure for letter of the
11th February, 1926.




001;FIDEIITIAL

4t

BELGIUM
GE.,;.z;RAL SUMMARY

Illebruary, 1926.

)ktnIc of England.




1.

Budget 1926

2.

Consolidated and Floating Debt

3.

Bill for extending the Bank's Charter, etc.

4.

3alance of Payments

5.

Prices

6.

Economic Position.







E L

Summary of Position

1,105

(e) There are certain credits granted by the State to
industry through the Banks in 1919, the balance of which,

a

41

.7cs.6C millions is to be received back during 1926. It

would seem safer to reduce this expectation by half,

25

the proportion of the estimate apparently realised in
1920.
(f)

Credit is taken in the extraordinary Budget for

the disposal of deliveries in kind made before the
introduction of the Dawes Plan and amounting to about
Fcs.206 millions.

It seems likely that the first item

composing this total, viz., Fcs.168 millions, must be
coal and coke.

the other two items are dye stuffs

Pos.12 millions and "tugs and barges" Fcs.26 millions.
As the Government have already taken credit for the

sale of about Fcs.600 millions coal, it is unlikely
that they will be able to sell any more in the
present state of the Market, and as none of these
items has been saleable during the last 18 months,
it seems not unreasonable to add to the deficit
the coal item of

168

and half the "tugs and barges" figure, say,
This brings the total deficit to

1,311

To meet this deficit the

Government are relying upon the collection
of Fcs.555 millions arrears of taxes for
all years up to and including 1924.Since
this figure includes Fcs.168 millions of
Excess Profits, and since nearly half of
all arrears has been outstanding since
1923 or earlier, it seems doubtful if
the whole can be gathered in in 1926.
If reduced by one-third it leaves
available

The sale of sequestered
alien property is expected to yield



13

370




a

______LUZA

Linistri of :inaneels accounts are not
to enable thous deficits to be

ieur van .eolar

at7rees that the following

, annual movement of the t;onsolidated and

mately re.)reuents the Treawiry defiolt

of the ,Icternal debt la the difference

ding at the end of each year converted

t the avernce rate of the franc for the

e currencies concerned.

of the -aerioan iebt has been eliminated
the net result for the three years is 48

oury deficit

19605.3 million francs

sury Surplus

tAlefi

do.

sury :eficit

Wok

do.




1

OV
wilimmowireoemollomo.s..w41......-

OP
(In millions of franc's)

Net 4ta1

.02ternak

veaent in 19E3

418.5

-loating ::ebt

419

+

.5

+

;onsolidated Debt + 353.5

+1,1b1

+ 1,54.6

64.7

+1,570

+ 1,505.3

-

A140,1Ammia

Orment in 1924
.=.1...YR.
- 1,950

Floating !ebt
Lonaolidated Debt

+ 499.2
-

2,518.0

+ 1,954

+ 2,4W.2

68.5

64.8

4

*mamma

asnowedi

6044

- 6,321.0

ovement in 192

5,713.0

Floating Debt

3onaolidated Debt +12,129.2

+ 1,305 + L'.4e54,2
+ 7,271.2.

+ 6,416.2
fOROMMOW

697

+

950.2
UamA*111

OMOM

xgmAal
lAmsolidated
1923

1,534.8

1924

L,453.2

1925

+11,229.2

Pleating

Dna
- 2,515.0

1924
1925

-41-1:631

- .6,636.0
L,39G.7
ManA.31all

Ale figure is made up as follows:(1)

246 million, the portion of the :Aborts= Debt not
previously shown in published etatements, at
Fr.2

per /

5,324

(2) 'mount of outstcMlag Mparation
limas which are setaally held 1.);i.
the Belgian ",:reasury

639

6,163
MIMM4,2111,

Liank of Enebind.



3UDGLT BUEL:14, 1926

(In milliona of francs)
2.ere u a sever

thu totul 2udiset urdun -

4,328

(1)

Taxation

(2)

Taxatiun lees inturnal debt
service iirjueted) 4,428 - 2,261 x .65
A 2,406

. 4,328 - 1,922
(3)

Total of all Btlets

(4)

9,078

Total of all Budgets loss internal

ar

7,156

debt service (adj'at)fl j,07J - 1,922
1926 Ludget Jurden compared with -

On basis of (1)

(4)

(3)

(2)

.rancs per head
'opulatiDn (7.7 11L1LJAci1

2r.364

.:r.412 Fr.1,178

per

V5.6

bl.

43,1

14,419

he

411.8

_9.3

Percenta098
National

ealth

1. .Pr280,7tr-; million

(10 times income)

1.4

C.9

r.120,000 million
(sir J.Stamp)

3,5

"."

2.3

2,1

2.

Circulation

O.

4

30

Ili

87

'r.2::,,r..27b million)

13

9

32

23

2orsign Tracts
million)
(cr.3,

14

C

29

23

(1r. 8,000

National Income

nrevious 211.aian ilaAgpte - total of all budeets. correirponding
to Column (3)

(Eigures supplied by Latinal
1923

.e r. u,216 million 10C) r Z10.6 i
.;iik mi1lion(Fro0

2108

"

. 6,897

.

t1.513 of outitaating

A.01

"

"

"

(ior.
96)

- .14.0

z13,0

hood

do.

68)

'Lelgium)

do.

(iigurou ta.con from 3tateeLian's Year book)

639 million

=»




426 million(1;TO 2b)

as

4,3,7 per hand

.




2.

Consolidated and Floatil.E Debt

This amounts to about 2cs.5,820 millions, which,

according to figures supplied by the National Bank, was divided on
the 23rd December as follows Small investors

3,680

Banks

1,200

Bills taken by Banks on special terms

740

Short-term Treasury Certificates

200

5,820

Different estimates have been given as to the amount of foreign
money invested in internal Treasury Bills and these vary between
Fcs.700 millions as a maximum down to Fcs.230 millions as a
minimum, but the National Bank say that such figures are pure
guesses.

A table is attached of short-term and long-term maturities

and it will be seen that in 1926 the chief difficulty is the
Treasury Bonds for 2cs.1,880 millions maturing on the 1st December.
It is understood that the Government will, if necessary, compel the
renewal or conversion of these Bonds.




BELGIUM: CONSOLIDATED DEBT
(In millions)

Date of

Rate c

Amounts now
outstanding

final
Retsvment

Description

15elvian

Francs

Currency
External
31 Dec.1937
1939
let '!eb.1941

1943

T1.39.9

356

5

Cost of internment of Belgian troops in Rolland

£7.33

784

3

'Aerling Loan of 1914

/22.8

502

8

/30 millions issued 1921

'.F.400

320

6j

Issued in '-rance in 1923

let June 1945

/40

880

7i

/50 million issued 1920

let Fept.1949

/2E.4

625

61

t30 million issued 1924

let Jan.1955

/48.2

1,060

6

00 million iesued 1925

1st June 1955

/49.7

1,093

7

$50 million issued 1925

let Jan.1956

£9

(/171.8

5 ,412

British "Reconstruction Credit"
U.S .War Debt

3,780

(046

1987

Various

963

U.S.Post-Armistioe 72Jebt

15,775

Internal
1958




599

5

30 Year Yomis issued 1925 for War Damaes

(2,204

6

Bovas et Association Net. des Industriels & Commercants
(r.839 million pre held by Bel Pan Treasury)

(

(

r69

The amonnt of outstanding "Titres nminatifs" for War Damages which
to b,
converted into one of the two classes of 30 Year Bonds 1-:hew

4 &

Bonds of the "Lloy7a.

oyal Beige-.

1966

96

1967

427

Annuities:
cavitaliseu
value shown

1967

611

do.

1995

2,445

5

Premium 7.oan of 1920

999

4

Devasted Regions Loan - issue

999

5

do,

999

5

do,

220

2i

480

3

2011

2012

2013

Perpetual




6

Issued for purchase of railways

SUMO paid to Credit Communal

1921

issued 1922

issued 1923

All these loans sre extinguishable

by Sinking Funds which operate by
"First Series"

drawings or purchases on the market:
2,712

3

"Second Series"

226

3

"Third Series"

1

3

"Military

1.686

5

"National Restoration" Lom

2.066

6

"Consolidation Debt"

the date of extinction depends on the
rate at which purAlases are effected.

33,014

Bank of England,
8th February, 1926.

A

ervicd Loan

BELGIf-N INTERNAL FLOATIN1 DEBT

Fostal Cheque Funds

Revolved in 3 months Bills

638,697,493
23,300,000

7Levolved in 6 months Bills

Banks

1,961,214,000

Public

3,669,559,000

5,630,773,000
6,292,770,493

Bank of England,
5th February, 1926.




Bank of England.

BELGIAN SHORT-TERa
Not yet funded

DEBT ULTURITIE S.

French Post-Armistice Debt
F.F. 241,024,890 at 80

192,819,912

1926

June/July

Bons ordinaires

1st December

51 5 year Treasury Bo ds

2,000,000

1,879,405,300

1,881,405,300

1928

December

10,000,000

Bons ordinaires

1929

lst January

Debt to Bank (or balance thereof)

12th ILEy

Bons du Tresor
£930,480 at 107

5,680,000

99,561,360

Chevaux Canadiene
105,241,360

1928-1930

From ist Dec.1928
to Sept.1930

5"1 5 year Bonds issued in exci-ange
for Interprovincial Debt

647,510,000

1930

31st December

Bonds issued to withdraw larks
in Euen-ilalrnedy

45,000,000

1932


http://fraser.stlouisfed.org/
let October
Federal Reserve Bank of St. Louis

10 year Treasury Bonds

7.0.739

.,651a71911-2Z;

3. Bill for extending the Bank's Charter, etc.



The points raised by Mr.Strong in his cable




5. Prices

-

some academic considerations.

dholesale prices in Belgium are about
times as high as they were before the war, prices in the United
States are about 1 3/5 times as high:

hence, Belgian prices are

about 3 3/5 times as high as American prices now are.

Lore

exactly, taking the latest figures available, viz., for :oveLoer,

1925, the Belgian price index is 569, the American 157.7, 7ihich

means that Belgian prices were then 3.61 times as high as
American.

Turning to the Belgian exchange, reckoned in
terms of dollars, it is found that in November last the rate was
42,g times as high as pre-war - more exactly 4.26.

It follows that the internal purchasing

power of the franc is greater than its external purchasing
power, by the difference between 361 and 426 expressed as a
percentage of 361;

the calculation for November last being 18.
therefore that if the Belgian

exchange were stabilised at 107 and devaluation took place on
that basis, prices in Belgium would rise about 18i.3.

But Belgian prices before the war were
probably always somewhat lower than American prices and will
continue to be so.

It is possible therefore that the actual

rise as calculated on the November figures would only be 12 or
or perhaps even less.

Now the exchange rate, except when pegged,
is chiefly influenced by purchasing power parity;

hence no

further increase in total purchasing media (chiefly Notes) should

be required to cover the probable rise in prices upon stabilisation.

On the other hand it is equally true that no further

deflation should take place after stabilisation.

Tables are attached showing, from 1923
onwards, the extent to which Belgian internal prices were below
gold prices.

There is also a table of the Cost of Living, on

a 1921 basis, which shows an upward tendency since May 1925,

but


a level in _December not much above the previous January.




73EIGIUL

A
410

1925 (cont.)
August

361
ptember

B

353

426
21

438

+ 21

365
October

426

+ 17

361
November

426

+ 18

This is an index Showing the increase of Belgian prices
over American orices.

The figure is ascertained by

dividing the Belgian ()rice index by the index number of
the United States Bureau of _labor Statistics and

multiplying the result by 100.

This is an index showing the cost of the dollar in Belgian
currency as a -ercentage of its cost at

This is the difference between columns B and A expressed
as a percentage of A.

The plus sign Shows the excess

of the internal purchasing power of the Belgian franc
over its external purchasing-: power.

denotes the exact reverse.




The minus sign

C




3.-L1GIUE




BELGIUM-

Cost of

Living

6. economic Position
The economic situation of Belgium is on the
whole fairly satisfactory, if allowance be made for strikes and
the unfavourable market for coal, two adverse factors which
have been in evidence for some months.
Coal.

The monthly production of coal for

the first ten months of 1925 is about the same as in 1924, but
The total production for

stocks were about twice as large.

1925 was about 1,900,000 tons which is only slightly less than
in 1913.

Iron and Steel.

Production was ahead of

1924 until May when the output was affected by a strike.

The

total for the year is, however, about 200,000 tons in each case,
which again is about the same as in 1913.
Transport.

The number of tons-kilometres

worked on the railway in 1924 was 7,000 millions, which
compared with 4,500 millions in 1920 and 5,725 millions in 1913.
Generally speaking, there seems to be a tendency for trains to
carry a greater number of trucks and weight,which should be
profitable.

Railway tariffs have not been increased in

proportion to the rise in prices, passenger rates being now
about

4 times pre-War and goods about 41' times, whereas

wholesale prices are 5i times pre-War.
Port of Antwerp.

In 1913 7,058 ships with

a tonnage of 14,059,845 tons entered the port;

in 1919 3,699

ships entered the port with a tonnage of 4,214,970 tons;

in

1925 9,971 ships with a displacement of 20,201,598 tons came
to anchor in Antwerp.
Engineering.

This industry has been

adversely affected by a strike which lasted from the 1st July
to the beginning of September.
Textiles.

improvement in the wool trade.

There has been a considerable

The application of the 8 Hours

Act passed in compliance with the Washington Convention has,



however,

however, produced some difficulties recently at Verviers.
Unemployment.

0

League of rations figures

are attached showing a steady reduction in the numbers during
1925.

The rational Income is estimated at £36 per
head,which is the same as in 1913.

Comparative figures for

1924 are - England £88, France £41, Germany :Z25.

The rational

1Jealth is estimated by Sir Josiah Stamp at 1156 for 1913 and
£157 for 1919.

In the latter figure he estimates that the

inaccuracy is not likely to be greater than 30;0.




BEIGILMI UNBMPLOYMIXT YIGURES TAKEN ":'ROM THE TEAGUE OF
4111

NATIODS MOUTELY BULLETIN

STATISTICS

FOR DEOEMICE 1925

Unorploynont Insurance Socletico
End Of nonth

,holly Unemployed

13ratinily Unenployod,

1922
XII
1923

11,743

14,312

III
V/
IC

4,708
5,605
3,008
11,017

12,010
11,653
6,922
12,750

4,060
6,659
4,597
9,344

9,700
15,269
14,940
23,410

9,414
6,483
6,701
5,634
4,758
4,705

33,509
29,106
24,490
17,434
11,174
10,916

XII
1924
ITT
VI
IX

XII
1925
III
VI
VII
VIII
IX
X

Dercentve of workoro unemployed amonr trade Unionists
1922
1.7

1923
III
VI
/K
N.rT

2.1

0.8
0.8
0.5
1.7

1.8
1.6

1.1
1.9

1924

III

VI
IX

XII
1925

III

VII
VIII
IX
y




0.6
1.0
0.7
1.5

1.4
2.3
2.3
3.6

1.5
1.1
1.1
0.9
0.8
0.7

5.5
4.8
'.0
2.9
1.9
1.8

Munber of workoro on whioh latoot porcontagoo aro brxed
598,350

CONFIDENTIAL.
apt

o

england,
Santion,E.C. 2.

19th February, 1926.

1.:y dear Strong,

I have just returned from Belgium where I
had interviews with Janssen, van de Vyvere and Hautain etc., and
I want to let you know by this mail something of the Belgian
position as I left it.

I told Janssen and Hautain I had come

quite unofficially and not as a representative of the Bankers,
but that knowing their views it had seemed to me best that they
and Janssen should not meet for the moment.

I had come to

Brussels in order to endeavour to find a compromise which might
be satisfactory to both parties.
difficulties were as follows
(1)

I told them that the chief

-

The suggested amount of the Loan, $15C million, is too
large.

(2)

A long term loan was not practicable.

(5)

The Bankers were not satisfied that the Budget for 1926
was in fact balanced.

(The opportunity was taken to 4-et

further information on various points and I will send
you a fresh memorandum shortly)
(4)




They were also not satisfied that the Floating Debt can be
cared for, as it must be, internally,

especially in view

of the December _Bond maturity.

(0)


http://fraser.stlouisfed.org/
Page 2.
Federal Reserve Bank of St. Louis

Benjamin Strong, Esq.

19th February, 1926.




CONFIDENTIAL.
!allit

of angland,

Sondini, E.C. 2.
19th February, 1926

My dear Strong,

I have just returned from Belgium where I
had interviews with Janssen, van de Vyvere and Hautain etc., and
I want to let you know by this mail something of the Belgian
position as I left it.

I told Janssen and Hautain I had come

quite unofficially and not as a representative of the Bankers,

but that knowing their views it had seemed to me best that they
and Janssen should not meet for the moment.

I had come to

Brussels in order to endeavour to find a compromise which might
be satisfactory to both parties.

difficulties were as follows
(1)

-

The suggested amount of the Loan, $150 million, is too
large.

(2)

A long term loan was not practicable.

(3)

The Bankers were not satisfied that the Budget for 1926
was in fact balanced.

(The oppor

further information on various points and I will send
you a fresh memorandum shortly)
(4)

They were also not satisfied that the Floating Debt can be
cared for, as it must be, internally,

especially in view

of the December Bond maturity.
(ö)

Page 2.

Benjamin Strong, Esq.

19th February, 1926.

A




(5)

That the rate chosen for stabilisation was not considered
satisfactory, because it had not stood the test of time
under normal conditions.

As regards a compromise, we had a great deal of
conversation, and I found they had no very helpful ideas.

I

finally myself suggested the basis outlined in the enclosed short
summary.

You will see that the $150 million long term loan is

reduced to 0100 million short term loan and the balance of $50

million

is provided by a Central Bank credit, in which I have

put you down for $15 million

and the Bank of England for the same

figure..

The whole programme is of course still in a very

fluid state and there will be a meeting of the Bankers here on
Tuesday next to discuss the scheme in detail.

I think, however,

that the Belgians would accept any arrangement on these general
lines.
ur
Your

Benjamin Strong, Esq.

sincerely,

BELGIAN LOAN%

1.

SUGGESTED BASES FOR PROVISIONAL CO/TROMISE.

Reduce amount of loan to $100 million:
U.S.

...

England
...
Holland
...
Switzerland...
Sweden
...

...
...
...
...
...

050
25
10
10
5

$100

million

The amount of 0100 million to be subject to agreement with
the Bankers.

All existing credits to be liquidated out of the $100 million.
If this amount is found insufficient the Central Banks will
grant credits (in the form of re-discounts or advances on
Bills, as in the case of the existing $10 million credit)
for a further p5o million, as follows:
U.S. 015

England5
1





http://fraser.stlouisfed.org/
conditions.
Federal Reserve Bank of St. Louis

Ranh of SIT OW,

CONFIDENTIAL.

Sondwi,EX.2.

4th March, 1926.

My dear Strong,
I had one or two talks with Volpi while the

Italians were here about their Debt settlement.

As a matter

of fact, they made an advantageous settlement looking at their

payments as a whole - probably a reduction of 30 per cent on
what they were prepared to pay - but not so advantageous a
settlement looking at their payments in the earlier years.
Some people of course think that all these inter-Allied Debts
will cease to be fully paid or will be cancelled within ten or
fifteen years.

But my talks with Volpi were unsatisfactory
and disappointing for two reasons.
attitude towards Germany!!

First, because of his

He complained that we were all

Germanophils - you and I and all our friends in Berlin,
including the Italian representative himself.

He said the

Germans must recognise, the sooner the better, that they are
not going to be treated leniently and must somehow pay up:
hence, as he foreshadowed, these fiery speeches which Mussolini
is making against the Germans.

Volpi declared that if full

Reparations payments to Italy were not made regularly in cash
or in kind he would require to be given Industrial or Railway

Bonds to make up any difference;



a requirement which upsets
the




COLFILEUTIAL.

Vera of 60420
COrFIDENTIAL.
ICATIODU,E.C. 2

5th March, 1926.

My dear Strong,
to
To aid you in your endeavours

witnesses before
obtain for us certain American
whilst it is
the Indian Currency Commission
herewith (in confidence)
sitting in London, I send you
has been supplied
a copy of the ,questionnaire which
to other witnesses.
to me,as well as, presumably,
Believe tie,

Yours

Benjamin Strong, Esq.




incerely,

CONFIDENTIAL.

13 ank of 6040
Veittritit, E.

C. 2

9th March, 1926.

14 dear Strong,
A.s promised in my cable No.60,

the latest memorandum
paragraph 4, I send herewith
on the

Laos, in fil
Belgian Budget position.
Believe me,
AtYours

Benjamin Strong, Esq.




ost sincerely,

CONFIDENTIAL

alit of
Sontion,E.C.

2.

9th March, 1926.

My dear Strong,
The cable which I sent :rou yesterday ought

perhaps to have been sent to you earlier in the form of a letter.
Apart from my usual reason for not writing, I felt that you knew
all there was to be known about the Indian Currency situation
from Blachett's letters and from our talks and from Kelly and Ryan
Quite briefly, to-day's difficulties, as I see
them, have arisen thus.

31ackett has recommended a gold currency;

which is exactly what the whole of India demands

in the hope

that the Commission cannot turn down the Finance Minister.

This

demand is supported by statements made to the Commission in India
and may become a strong weapon in the hands of the parlia:aentarians at Delhi.

The Commission consists, I think, of four Indians

pledged as it were to a gold currency: several members who have no
ver:: definite ideas (as I gather): and Hilton Young and Stra::0sch

who are as wise as they are sound, and therefore see the dangers

towards which the Commission may be drifting.
Neither the Indian members of the Commission
nor public opinion in India would believe it if they were told by
Englishmen in London that India cannot have the gold circulation
which the Finance Minister has advocated, not alone because it



would

CONFTEENTIAL
Benjamin Strong, Esq.

Page 2.

9th March, 1926.

would not be in the interests of England but also - and quite as
much - because it would not be in the interests of India and the
rest of the world.

This fact has to be impressed upon the

Commission and on public opinion in India, and if we are to be
saved from real trouble both the Commission and the Indian Public
must be convinced.

Who is to convince them?

Hilton Young thinks -

and I agree with him - that American evidence will do so and that
nothing else can.

Of course I don't know whether this is true,

but I am passing on to

ou what sounds so to me.

If it is true, how are we to proceed?

I must

appeal to Morgans and to you: and in one way or another you surely
can help us out of this quandary.

The reasons for your doing so

are riven in my cable - I need not repeat them: and from the angle
of silver C:c. we discussed them several times in New York.

The

only alternative to :our coming here would be that some of the
Commission should go to New York.

While theoretically possible,

practically I believe it would be dangerous and possibly disastrous:

what with the head-lines and the silver producers and the politicians and even the unfamiliarity of your public with native Indians
I should fear the results.

But your advice is badly needed.

With kindest regards,
Believe me,

Yours

'ncerely,
Cot

Benjamin Strong, Esq.




COPY
Eemorandum for ::r.L.C.E.orman


http://fraser.stlouisfed.org/
The
Federal Reserve Bank of St. Louis

tkiferrda to iA letter of

BE L G IU

19 I

(4,
) 4 .

four following questions were to be dealt with in

.d

-2-

cash margin for contingencies and that he had sought to remedy and
had remedied this condition in the 1926 Budget in the following way.

HSad had a law introduced and passed in September which had permitted
Ilkm to make payments due by the State on account of Reparations in the
form of "Titres des Dommages de Guerre 5r,1", these bonds, payable in 30

years, to serve also to take up "Titres nominatifs", then outstanding
to the extent of approximately ?cs.470,000,000.

These latter must be

surrendered within a certain period (said to be April 15th) or they
become invalid.

The Titres des Dommages de Guerre, in which reparations

are in future to be paid, are non-negotiable bearer bonds.
no market, not being listed on the 13ourse.

They have

They may however be

discounted in the following circumstances.

Those who receive the Titres in compensation for industrial damage
suffered may obtain cash against the security from the Association
Nationale des Industriels et des Comnercants if they are able to prove
to a Committee of the Association specially charged with the matter,
that if they are not able to discount their Titres they will suffer
actual money loss.

Communes and villages which are entitled to reparations may discount
their -_itres des Dommages at the Credit Communal.

Private individuals who are entitled to reparations may rediscount
their Titres with the Savings Bank.

Exact figures of recent discounts of Titres in the first two
instances are to be made available within two or three days.

The

figure of rediscounts by the Savings Banks to date is 7cs.30,000,000.
(Note. In connection with the Dinant Assize Court decision




-3-

:.-.Seulen offered the following explanation.

This decision has been

*appealed and the Dinant Court will be reversed within the next four
or five weeks.

Should by some unfortunate and unexpected chance

the reversal of this decision not be obtained the law will be altered
by Royal Decreee (consultation of Parliament is unnecessary) and the
Treasury will thus be saved any embarrassment in respect to the
collection of taxes.

The Dinant decision was rendered by the lowest

Court in the Belgian ranking, composed of local magistrates, all
friends of the litigant and all themselves sinistres.)
The sum which the Minister must pay on account of reparations

in 1926 totals to about Fcs.525,000,000.

This is on account of

claims which the War Damage Tribunals allowed in the last six months
of 1925 and which will be presented for payment in 1926.

He will

liquidate this indebtedness through the issue of Titres des Dommages
as outlined above.

As he anticipates receipts on account of reparations

of some Fcs.813,000,000 in 1926 of which between Fcs.450,000,000 and
Fcs.500,000,000 will be in cash he will have a contingency fund at
the Treasury equal to this latter amount.
Third.

In budgeting for the cost of his stabilisation loan the

Finance Minister Provided a sum sufficient to meet two interest and
sinking fund payments in 1926.

Actually he will have only one due

date in the course of the current year.

He therefore has a Treasury

margin here of approximately Fcs.100,000,000 available to meet such
increases in the rate on the T'loating Debt as may be deemed necessary.
Fourth.

The mortgages which the Minister receives on account of

arrears of taxation are fortems varying between 60 and 90 days.
He attributes



the fact that he has received so large a percentage of

- 4 -

his tax arrears in the form of such mortgages to the dear money

olicy maintained by the National Bank.

He has left the mortgagees

10 however no illusions as to his determination to proceed to the forced
sale of the properties mortgaged should the mortgage not be liquidated
at the end of its term.

He said that he had told one Industrial

who complained of the harshness Of these terms, that he was not in
the banking business and that the mortgagee must either borrow from
his own bankers or liquidate his indebtedness.
Fifth.

The proceeds of the first tranche of the Congo Loan are not

available to the Idinister but must be applied to the payment of

public works completed or already in course, in the Congo.

The

subscription lists to the first tranche of the loan (Fcs.200,000,000)
are not actually open but nevertheless subscriptions to the extent of

Fcs.325,000,000 are already in hand and are continuing to come in
at an exceedingly satisfactory rate.

In view of this fact the

Linister, who has the right to the first Fcs.150,0vu,000 subscribed
to the second tranche, expects to be actually in receipt of this sum
by the 15th June at the latest.
insistent on this point.

Both 1,-..Janssen and E.Senlen were very

The Congo, 1.1.Janssen said, actually owes

him about Fcs.400,000,000 and he intended, should the second tranche
of the loan (Fcs.500,000,000) be oversubscribed, to arrogate to himself
for his Contingency Fund the amount of the oversubscription.
Sixth.

The Antwerp Loan of Fcs.150,000,000 is actually being

offered to the public.

Subscriptions to this loan are coming in at a

fairly satisfactory rate and to date total about Fcs.107,000,000.
The i,: inister is not

operation.


so confident of the complete success of this

:Is the full amount of the loan however is underwritten

- 5 -

he is certain of obtaining before the end of the year 7cs.75,000,000
which the City of Antwerp owes him.

The Minister's Treasury position appears to be fairly satisfactory
alOthe moment.

Me has cash in hand for all normal needs and his position

he claims will become increasingly easy in the coming months.

He has

instituted a system whereby he receives a daily report of his Treasury
operations and is thus able to follow fairly closely the flow of funds to
and from the Treasury.

::.Seulen is at present organi

Finance Ministry which will be charged with the detailed compilation of
such reports for fortnightly publication.
(2) 1927 Budget

The Minister aduitted that he had as yet had time

to give but comparatively little thought to the details of this Budget.
In general his views at present are as follows:
existing scheme of taxation unchanged.

He proposes to leave the

He has created an Economy Commissim

of which he himself is Chairman, and of which he told me he proposed to be
"boss", composed of important men of affairs, Bankers, Industrailists and
commercial men.

This Commission, which will hold its first meeting next

week, has as its objective a reduction o
State by one milliard francs.

the ordinary expenditures of the

He thought that the actual reduction of

expenditures would be between Fcs.500,000,000 and Fcs.600,000,000.
1!.Seulen, who has spent twenty six years in various Departments of the
Finance ::inistry and who anpeared to me to be a thoroughly competent
Official, stated that the 7:inister under estimated the actual economies
which could be made.

Me said that there were at least 30,000 more State

employees than ;ere necessary and that there was no reason why 15,000
of these could not be discharged in 1927 and 15,000 in 1928.

E. Seulen

in a sense will act as Counsel for the Economy Comission and explained to



I

me in detail the nature of the economies which he proposed to have the

ommission enforce.

The Commission will hold all its hearings in

1, rublic and l'_. Seulen has made every arrangement to have the hearings

given very full publicity in the press.

He has further planned to

invite delegations of citizens from various parts of the country to
attend the hearings and has, with the aid of a few of the abler

Deputies, made arrangements to have these make a series of seeches
throughout the country in the course of the present year in respect to
the work of the Commission.

Both the lanister and 7. Seulen admitted that they would have

probably between 7cs.500,000,000 and Pcs.600,000,000 of extraordinary
expenditures to meet in 1927.

The Linister stated that he hoped to

apply some of the excess receipts which he was to receive from the
economies in the ordinary Budget to the part payment of this sum and to

oltain the balance through further sales of State property (the State
for instance owns 1,100 houses in the centre of the City of Brussels)

and from the cash that he is to receive on account of reparations.
did not propose to borrow to meet any deficit in 1927.

II.

He

Seulen

stated that a preliminary text of the Budget project would -,7,robably be

drawn up late in June.

prepared for the

This first draft of the Budget is usually

inister only but he stated that a copy .fould be made

available to us for examination as soon as it had been preared.
The :Sinister pointed out that he would be in receipt of cash

on account of reparations in 1927 to the extent of perhaps Fcs.400,000MO
and that as he would meet his reparation expenditures through the issuarre
of Titres des Doi.amages this sum would be available in case of need,

although he preferred to conserve the cash reparations



receipts which he would

receive

-

7

in the course of the next two or three years for the creation of a

d to meet short term maturities between 1928 and 1930.

M. Seulen

stated that it was the Minister's notion that if one of the smaller
short term debt maturities could be liquidated entirely in cash the
general oosition of the Treasury in respect to later refunding
operations would be greatly strengthened.
LI. Seulen offered to inform us from time to time between now and

the 1st June of the Treasury's plans in respect to the 1927 Budget.
(3)

General status of the Floating Debt.

LEL Janssen, Seulen and

Monceux were all agreed that the situation in resoect to the Floating
Debt had greatly improved in the last six weeks.

The renewal of those

Bills in the hands of the general public was most satisfactory.

Indeed

as there had been an excess of demands for Bills it had been possible
to pay off Pcs.200,000,000 of the debt held by the Bankers through sales
of the same extent to private individuals.

The Minister admitted that he had had some concern in respect to
the December maturity but that in view of events in the past week or so
this had now been removed.

He pointed out that the dear money policy

of the past few months had had no effect upon the renewal of Bills held

by the general public and that he did not anticipate, in spite of a
probable rise of 100 in prices, in the course of the next few months,
any change in this condition.
M.MOnceux.

He was confirmed in this statement by

He pointed out that in the past a rise in prices had

affected the holdings of Treasury Bills by Banks but had not caused any
fluctuation in the sums held by the public.

MOnceux stated that he had lately had enquiries for Treasury
Bills from abroad without exchange guarantee.



He showed me an order to

8

purchase from one American Bank amounting to Fcs.45,000,000 which he

rived on Friday, 26th February.

7e had received an enquiry from

Willa-Ad in respect to the purchase of Fcs.100,000,000 of the Belgian
perpetual Rente which was now selling on an 8:,; basis.

Monceux stated that in view of the improvement in the market
for Treasury Bills in the past two months, he felt quite confident of the
future.

M. Janssen said that the only time that he had noticed any
uneasiness among the public holders of Treasury Bills was last October
when holders along the Fre:Ich frontier had been scared 1:)- talk in France

of forced consolidation, believing that the same might happen in Belgium.
He had gone to Ypres and had there made a speech in which he had said
that in no circumstances, no matter how critical, would the Belgian
government refuse to pay Treasury Bills as they fell due, that this state-

ment had had the desired effect and that some of the recent heavy purchases of Bills had been due to increased demand from this neighbourhood.

M. Monceux is to furnish us, within the next few days, with complete details of the movement of the Floating Debt in the past fourteen
months.
(4)

Special status of the Floating Debt:

Treasury Bills and Rediscounts thereof.

(a)

The special issue of Treasury

Bills, i.e., those Bills issued at 6,72 interest plus l

totals about Fcs.700,000,000.

Special issue of

commission, now

M. Lbnceux said that the peak issue of

such Bills had been in the neighbourhood of Fcs.1,060,000,000.

He was

no longer renewing these Bills on the same terms as they fell due but was
issuing in their place the ordinary 6;; Treasur: Sill.

Exact information

concerning the rediscount of such Bills was not available but is to be


http://fraser.stlouisfed.org/
forwarded within
Federal Reserve Bank of St. Louis

the next few days together with other details regarding

e.

- 9

I

these Bills.

41
(b)

Treasury's forward commitments in exchange in respect

to the sale of Treasury Bills abroad.

Such commitments cover Bi]

to the extent of Fcs. 650,000,000 or Fcs.700,000,000.

Exact

details in respect to this transaction will be furnished by the
Treasury at the same time that it forwards information in respect
to

(a) above.

(SD. )

28.2.26.




DE SANCHEZ.

1.

-gal*

of 6140amN
:131001t, E. C . 2

11th March, 1926.

CL@,04.
14 dear Strong,

I assume you would not be happy

without a copy of our "Coal Report" which is published
to-day:

so I send one herewith.

Volumes 2 and ;5,

Minutes of Evidence and the

which will cover the

appendices, are not yet ready but will be sent later.
Believe me,
Yours s' ecerely,

trefaMAAANV,

Benjamin Strong, Esq.




POSTAL TELEGRAPH - COMMERCIAL CABLES
CLAAENCE H. MACKAY. Pai:SIDENT

CABLEGRAM

RECEIVED AT

1st

The Postdi leRe.aph-Cable Company (IncorporatedItransmits and delivers this cablegram subject to the terms and conditions printed on the back of this b
'DESIGN PATENT No. 405291

20 Dbl.-40462

3CBRA' 23 V I A

HX

LONDON

MAR 18 26

LCO BENJAMIN STRONG

270 DARK

AVENUE NE°YORK

ONE BEEN MISERABLE WITH GRIDflE LAST TEN DAY'
AS USUAL

BUT 'ROBABLY WORKING

i,EXT WEEK
7-)LOD'.;ER I TF

926A

No inquiry respecting this message can be attended to without the production of this paper. Repetitions of doubtful words should
Company's offices, and not by DIRECT application to the sender.


be obtained through the


POSTAL TELEGRAPH - COMMERCIAL CABLES

CABLEGRAM
The Postdrletraph-Cable Company (IncorporatedItransmits and delivers this cablegram subject to the terms and conditions printed on the hack of this
!DESIGN PATENT No. 405291

20 Dbl. -40362

4CBRA1 14

vu

' HX

LONDON MAR 18 26
LCO BENJAMIN FTROr 'G

270 PARK AVE
TwO HOPE COO') NEWS FROM

NEWYORK

ROME
rDLODGERITE

930A

No inquiry respecting this message can be attended to without the production of this paper. Repetitions of doubtful words shou
Company's offices, and not by DIRECT application to the sender.

 through the
be obtained


POSTAL TELEGRAPH - COMMERCIAL/CABLES
.7...A4ENCE

illeiMEIVE13,41

U I 1- CI I NI C-i
ii,

46 ST.

,-...,.

H. MACKAY. PpEsiorNT

CABLEGRAM

DILIVERY NO.

The Postal t.tcp,raph-CablP Compan, (Incorporated)transmits and delivers this cablegram subject to the terms and conditions

rinted on the hack of this hl

DESIGN PATENT No. 405291

20 Dbl.-40462

5CBRW 12 V I A HX
LONDCN

MAR 18 26

LCO BENJPM IN ?TRONG

270 r ARK AVE NEWYORK

THREE THANK° AND LOVE
°LODGER I TE

930A

No inquiry respecting this message can be attended to without the production of this paper. Repetitions of doubtful words should
Company's offices, and not by DIRECT application to the sender.

 through the
be obtained


CONFIDENTIAL

igank of (111191anA

Ion, E.c. 2
23rd March, 1926.

My dear Strong,

In order that when you leave for Europe on
the 3rd April you may be posted, as far as possible, with
the situation in Belgium, I am sending you herewith a
Loom in file
further memorandum by Mr.Osborne which corrects, amplifies
and brings up to date the one sent

11th February.

You ought also to see General :.lance's Report

(prepared at the request of the Finance Minister) on the
commercialisation of the Belgian Railways in connection with
the liquidation of the National Floating Debt and also the
letter which accompanied it: copies of both are therefore
enclosed.
Believe me,

Yoursa merely,
6110.-41.44

Benjamin Stronr-, Esq.




-

COPY

c/o Ottoman Bank,

26, Throgmorton Street,
LONDON,

E.C. 2.

16th March 1926.
Sir,

I beg to enclose herevith my report on the net
revenue which the Belgian ,state Railways, worked commercially,

might reasonably be expected to produce towards financing the
paying off of the Belgian Government's floating debt.

The

report has been worked out in close collaboration with ::onsieur

Jules Jadot, who has submitted an identical report to the
::inister of ''finances.

At the same time vie have agreed that

each of us should expand in a covering letter certain aspects
of the problem which lie beyond the immediate subject of the
report.

Monsieur Jadot's coverinc' letter deals more

particularly with the effect on the industry and travel of
Belgium of the proposed average increase of 25% in the rates and
fares.

Such an increase in an industrial country in the present

conditions is undoubtedly a serious matter.

For example the

Belgian coal industry, like our own, is in a difficult situation.

Nevertheless, the above increases must and can be faced as a
comparatively minor part of the sacrifices necessary to attain
stabilisation - though doubtless the part which will have to
bear most of the blame for future difficulties.

Monsieur Jadot

has emphasised the fact that Belgian industries are in urgent
need of reorganisation, more particularly as regards the
consolidation of the present small businesses into more efficient
economic units, and considers that this factor alone provides
the necessary margin for adapting industry to the new conditions.
In his covering letter Monsieur Jadot also mentioned some of the
;tees which will be necessary to bring about economies on the

railways, such as reduction of personnel, scrapping of the




present

41-

S

present surplus of obsolete plant and the rigid cutting down
of orders for further plant for some time to come.
The degree of priority to be offered to the
e an important factor in any financial

investor will evidently

scheme for capitalising the surplus railway revenue.

While

recognising the great importance of relieving the State budget
of any risk of bein: called on to meet some portion of the
service of the railway debt, there is evidently a point beyond
which such immunity can only be purchased at too great a price.
For example there would be little hope of success for any
railway financial scheme which leaves the new capital denendent
for its service on the surplus revenue after meeting all
previous charges;

under a regime involving considerable

political difficulty in its full application, and in the complete

success of which the Government is not directly interested
financially.

Among other points which :mould have to be safe-

guarded in any scheme for the proposed railway company i6 that
of the effecti-e representation of the new shareholders on the
board of the company.

It is assumed that the nationality

f

all the directors would be Belgian, but it is imrortant that
the board should not be constituted solely from sources interest-

ed in the lowering of tariffs, in the raising of wages and in
the placing of orders.

The proposals in the enclosed report are
based on the Belgian paper franc at 107.

Any alteration in

that rate of exchange will therefore involve consequential
amendments to the report.
Yours faithfully,

Sd .

The Governor,




Bank of England,
LONDON,

E.C.

)

H. 0 .' ANCE.




ade(errOd 14

in letter

of




=lions of
francs.




Millions of
francs.

ID




Millions of
(3)

Very

The Bel

cash on

some Fc

indebte

Fcs.200

negotia

will ha
(4)

Cong

A loan

first t
issued

Governm

the sec
in the
(5)

Antw

The sub

quite t

Fcs.106

require

expect

well to

to rece
(6)

Stab

The Fin

payment

he expe

in 1926

The dif

This wa

end of




GOVERNMENT'S RELATIONS 'dITH NATIO.NAL BANK

PRICES.



for the
domicile
of
question
is the
to be lodged
Bills
difficulty
for the
The next
possible
(2)
from several
seem hardly
Brussels
It would
back to
due
Bills.
to be sent
would be
having
amounts
Bank,
difficult
as different
with each
extremely
Moreover,
become
daily.
day
it would
centres
Banks,
any particular
rata on
to different
pro
But it
each day
credit
Bank.
at any
Bank its
no margin
repay each
to
or replacements
leaving
repayments
same time
the
it
for small
while at
seems that
tiresome
be
therefore
in any case
and it
would
daily,
the general
latitude
made almost
to be
with some
to have
interpret
to
at any Bank.
be held
necessary
should
might be
of Bills
margin
that no
idea




BRUSSELS EXCHANGE MARKET

Official date

A daily official Rate of exchange is required by the
Belgian commercial law, chiefly for the purpose of record.

This

rate is fixed at the Bourse at a meeting (from 1.30 to 2.30 p.m.)
of the representatives of the Clearing Banks and 3rokers.

A

"coteur" announces rates which in his opinion represent the
tendency of the Market.

The Brokers and Bankers, who sit at a

table round the coteur, then announce what deals they are
prepared to make, and the rate is not eventually fixed until the
purchases and sales balance.

The rate named by the coteur

therefore alters in accordance with the requirements of the
Market.

dhen sales and purchases balance the rate at which

deals are made is called the official rate of the day.

This

is published next day in the 'Cote de la Bourse'.

This system has been used for many years now, but it
is only since the 25th March 1924, that by a decree of the Brussels
Town Council, the responsibility of fixing the official rate was

Placed with the body of Bankers and Brokers meetin at the Bourse.
Previous to the above named date, the coteur alone was responsible
for fixing the official rate and, being a Broker himself, was

probably inclined to force the rate up or down to suit his own
needs.

This gave rise to public dissatisfaction, but the present

method is also criticised by the "Commission des Finances"
reporting to the Senate on the Stabilisation Law, who think that
the rates are still rather misleading.

It is interesting to note that Sills in foreign
currencies payable in Brussels which are presented for payment
after 2.30 p.m. and before 1.30 p.m. the next day are paid at
the previous official rate.
Market and Bourse.




The market is divided in two parts:
(1)


(1)


Marche officiel

(2)

Marche libre

COPY

15.3.26

10

NOTE ON THE NET REVENUE WHICH THE BELGIAN STATE RAILWAYS
WORD ED 001.11ERCIALLY MIGHT BE EXPECTED TO PRODUCE TOWARDS

FINANCING THE PAYING OFF OF THE BELGIAN GOVERNI.aNT FLOATING
DEBT.

General -particulars of Belgian State Railways
1926
(estimated)

1913

1924

1925

4,368

4,706

4,725

2,920

3,258

3,358

3,400

Passenger km.

5,242

6,194

6,155

-

Goods ton km.

5,729

7,041

7,075

-

342

390

407

442

1,626

1,695

1,839

348

379

389

1,450

1,578

1,619

42

28

53

176

117

220

Length:

kilometres

(in millions)

Gold capital
expenditure

Frs.

(Gold frs.

Revenue

(

(Paper frs.

-

Expenditure(Gold frs.
(as shown in
official (Paper frs.
accounts)

246

(Gold frs.
bet Revenue(
(Paper frs.

96

Percentage on Gold
capital

-

Personnel

1.29%

72%

89%

78.700

Operating ratio

3.29%

107.500

0.83

1.55

93%

88%

Paper francs converted in Gold at therate of 4.16 paper
gold.

Hitherto the policy of the ilelEian Government has been
to limit the net earnings of their railwa:, to such an extent that

they did not always earn the minimum necessary for paying the low
rate of interest and sinking fund on the canital account, new
construction being looked after b, fresh capital raised by the
-3elgian Government.

This )olicy has been due partly to the need

for enabling the Port of Antwerp to compete for transit traffic
with Dunkirk, Rotterdam and Hamburg, and ,,artly to political and



economic

0

S

economic pressure, which has led to exceedingly low passenger
fares being granted, one of the reasons being that the su.,)ply of

labour to the industrial districts materiall: depends on the
ability of the Belgian labourer to travel considerable distances
to his daily work.

Before the war 1st class, 3rd class and workmen's fares
were:r_is passenger kil.)

1st

3rd

9.4

(in Gold centimes

3.8

workmen
(1.05

Belgium 1913

10.8

6.2

7.6

Great Britain 1913

20 kil,
7 kilt

2.1

6i kn.

(CL 66

3.0

At -)resent they are:-

Belgium 1926

16.2

Great Britain 1926

(0.56
(1.08
9.3 4.7

20 kilt
7 kil.
62 kil,

The average length of single journey at workman's fares
is 20 kilometers in Belgium and 6i kilometers in Great Britain.
The Belgian passenger fares are now therefore 805 to

85% of pre-war fares expressed in gold, as compared with 1505 in
Great Britain.

The Railway Administration estimate that in 1924

the Belgian State Railways incurred a loss of 5.24 frs.paper (say
1.30 f.gold) for every )assenger train km. and 2.2.cts.paper (0.5
cent.gold) for every passenger km.

As regards goods, certain important tariffs, such as
coal, are considerably below the pre-war level in gold, and rates
have only increased on an average by approximately, 25 in gold, as

cm-pared with 50-555 in Great Britain, 455 including transport tax
in Germany.

In 1913 the official accounts as drawn up by the State

Railway Administration showed an operating ratio of 72.05 and a
net revenue of 7rs.96 million, or 3.29% on the outstanding
construction capital.

In 1924 the official accounts showed an

operating ratio of 89.2% and a net revenue of 176 millions paper

francs (42.4 million gold), being 1.295 on the outstanding capital
expressed on a gold basis.




The

S
- 3 -

The number of passenger kilometers and ton kilometers
has considerably increased since 1913, the increase in goods
traffic being chiefly local traffic as the transit and international traffic has remained approximately the same.
Railway expenses in Belgium have gone up in gold:
in 1925, 53%;

1924, 41%;

in 1926, 57%,

in

is compated with 119% in

Great .3ritain, above 1913.

3efore investigating the net revenue which the Railways
might reasonably be exaected to !)roduce on a strictly commercial

basis, it is desirable to analyse the )resent situation as regards
The present accounts of the Railway show no separate

net revenue.

provision for renewals, insurance, reserves, working capital, etc.,
such as is essential for an undertaking run on commercial lines.
For example, taking the year 1924, the operating accounts should
show the following result:

A sum of 80 million which appears to have been spent on renewals,
plus 10.5 million °aid for accidents and damages, has been deducted

from the expenditure as shown in the official accounts, bringing
it to 1,359.5 million.

Operating account 1924
1,359.5

Operating expenditure
Renewal Fund should be

200

Insurance - 1% of gross earnings
Reserve

2%

IT

ft

If

16

32

Gross Revenue

let revenue

1,607.5
1 626 5
19

Fixed charges
Service on consolidated Debt and annuities

168.5

Deficit

149.5

On the same basis, after deducting from the expenditure
shown in the estimates for 1926, a sum of 96 millions which is
-provided for renewals, plus 7.5 millions provided for accidents

and damages, bringing the expenditure to 1515.5 the operating
account based on the budget for 1926 would be as follows: 


Operating

1,515.5

Operating expenditure

S

200

Renewal Fund
Insurance Funds

18

Reserve

36

Total expenditure

1,769.5

Gross Revenue

1,839
69.5

Net Revenue

Service of the consolidated Debt and annuities

219

Deficit

149.5

The new German Railway Company under the Dawes scheme

has to assure (apart from the dividend reserve of 2P of the gross
revenue) annual net revenues as shown below.

These amounts

including tie transport tax, do not represent the whole of the
net revenues anticipated, and are less than the net revenue earned
by the German Railways before the war.
(in millions)
Rly. revenue

Transoort tax
Mks

Total Ilk
or

Paper frs.

200

250

450

2,407

595

250

845

4,520

3rd

595

250

845

4,520

4th and
subseauent
years

660

290

950

5,082

1st year
2nd

Vf

The length of the German railways is 52.395 km of
standard guage and 942 km. of narrow guage.




The length of the

S

-

5

Belgian State Railways is 4.725 km. standard guage or 8.9% of
411

the German Railways including narrow guage lines.
The ton km. on the German Railways from January to
December 1925 were 55.860 million.

The ton km. on the Belgian

Railways for the same period were 7.075 million, or 12.7%.
It is not unreasonable therefore to suppose that ti

Belgian Railways could commercially earn 1/10 of the net revenue
of the German Railways, or say:
1st year

240 million francs paper

2nd

Ti

450

3rd_

TI

450

4th

500

tt
Tt

TT

TI

It

TI

Tt

and subsequent
years

The comparatively small net revenue to be earned
in the first year takes account of the technical difficulties
of bringing revised tariffs into operation at short notice.
The provision of the net Revenue envisaged for the fourth and
succeeding years would involve an average increase on the
present passenger and goods tariffs of about 25 %, assuming that
by that time, the traffic would have recovered to its present
figure.

It is to be expected that this traffic recovery will

be facilitated by a similar increase in French tariffs
resulting from the stabilisation of the French franc.
It is of interest to note that under the Da:::es

scheme the German Railways have to earn a net revenue of 3.9 %
on their construction capital of 241 milliard marks.

In

Great Britain, the net revenue earned, before providing for
reserves, on the construction capital was 4.41 % in 1923 and
4.01

in 1924.

A net revenue of 500 million paper francs

(120 M Gold francs) would correspond to 3.50 % on the capital
of the Belgian State Railway on a gold basis (3.400 million
estimated end of 1926)




S
6

S

Important economies would undoubtedly result from the
operation of the :Railway on a commercial basis.

A certain economy

should also result from the completion of the works now in hand,
lost of the cost of which has already been provided for in the

An estimate of such economies could only be made

capital account.

after a lengthy examination of the question.

On the other hand,

there is no doubt that some additional expenditure will have to
be faced on account of the rise in wages and in the price
materials which will unavoidably result from stabilisation.

As the above factors operate in both directions, they are not taken
into consideration.

As indicated above, the present Belgian tariffs for
passengers ',ad goods as a whole average, say, 90 tc 95% of the

pre-war rates in gold.

In Great Britain tariffs have increased

to from 155 to 160%, and in Germany to about 145% including
transport tax.

An average increase in Belgian tariffs of 25%

above the present rates would bring them to about 17 or 18%
only above the pre -war level in Gold.

fhe index numbers of wholesale and retail prices in
Great Britain, Germany and Belgium are as follows:Wholesale

Great 3ritain

157

171

Germany

132

142

Belgium

137

128

(in gold)

It is evident therefore that even after the proposed
increase the tariffs would remain well below the level corresponding with the prices of other commodities.
A certain redaction of traffic is to be expected as
a consequence of the increase in the tariffs, as also as a result
of other economic difficulties usually connected with stabilisation
It may be expected however that the reorganisation which would, in




 case,
any


-

7 -

be necessary to adapt the industries of the country

gold francs) or nearly 2% on the gold capital of the Railway
It would seem

has been provided for in the budget of 1926.

essential to limit the capital expenditure on the Belgian State
Railways to a maximum of 150 million paper francs a year until
times are better.

After a few years, the new capital expenditure

should earn enough additional revenue to finance future capital
reLjuirements.

At present the Railways are able to draw on the
Treasury for the necessary working funds.

It will be essential

therefore to provide working capital for the new railway company
until it has accumulated sufficient funds on its own account.

Preawnably, however, part at least of the necessary funds for this
purpose could be obtained by means of short term credits through
the banks.

A further :uestion would be the provision for a

newly constituted Railway Company of sufficient cash to form a
nucleus for the reserve, Renewal and Insurance Funds.
If the Railways are vorked as a Commercial Concern
they should look after the service of the part of the State Debt
this service amounts in 1926 to

attributable to the railways;
219 million paper francs.

his amount must be aeducted from the

assumed net revenues to ._let7,x..[tne the

financing new works and paying of

sums available

for

part of the floating debt of

the State.

Assuming that the net revenues indicated above are
adopted as the basis of the .policy of the proposed Railway

Company, and that the Railways, as in the case of Germany, would
remain free from taxes, Table A

shows the annual amounts which

should be available from the net revenue for providing the

minimum of reserves and new capital requirements of the Railway
and for financing the paying off of the State




Floating Debt.




And of angland,

COITIDENTIAL.

SOIldalt, E.G.

2.

24th March, 1926.

1:y. dear Strong,

I learnt the other day that a special
questionnaire had been prepared for distribution to
American witnesses:

I have now obtained a copy and send

it herewith in time, I hope, for you to receive it before
your departure for Europe.

As you will see the questions are substantially the same, the wording having been altered to

make them apply more specifically to the United States.

The memorandum on the"Proposed scheme for a Gold Standard
for India" which is mentioned in the first paragraph of
the questionnaire is the same both for witnesses in America
and Great Britain:

I am not, therefore, sending you a

further copy.

Believe me,

Yours si cerely,

G46/1014,4A.44L4/11,..
.

Benjamin Strong, Esq.










r

aid (b) the rest of In how many years will the stoc'/ of gold for mon
the World?
100
purposes now held by the U.S. A. aril at present regarded a




red.:Inds:It, be absorbed in this manner?
B.

As to the proposals of the scheme relating to Sil
Can you aseist the Commission with any evidence
1.
the probable future relation between the World's demand f
silver anti its supply, assuming Indian conditions to remai
unchaeged?

Assuming the proposals referred to involve the s
over a period of ten years of an amount of silver equal to
three times the present annual World's production: (a) What would be their effect on the silv
20

market?

(b)

What effect would the proposals have o
markets in copper and other base me

(c)

What effect would a fall in the price
silver have on the volume of its
production?

(d)

If a fall has the effect of curtailing
production, would it be reasonable
suppose that a fall in the price of

silver to 24d0 would so contract
production as to stabilise the price
silver at about that level, and per
the absorption of say 20 crores of r
annually?

3.

In what respects would American interests be af

te7 the silver sales in question?
Having regard to the desirability of the co-ope
4o
of the United Ststes in the carrying through of the plan,
in your opinion, would it be viewed by the Goverment and

Financial Authorities o of the U.S. A.?
What difference would the imrosition of a duty
5.
the importation of silver into India make to the conseque
which you describe in reply to questions 19 2 and 3 above

The average annual importation of silver into I
for use in the arts, as ornaments, and all purposes other
coinage, for the last five years was 81 million fine ozs0
6,

Assu

Assuming that the effeot of the proposals under
010

Mt

cons ileration with or without the imposition of an import duty,

would be substantially to reduce the importation of silver into
India:for these purposes:

What difference would that circumstance make to the
consequences which you have described in reply to questions 1,
2 and 3 above?
7,

Can you express my opinion as to the desirability of

the proposals of the scheme relating to silver, in relation to

the interests of India, and in particular the circumstance that
silver is a favourite store of values amongst the poorer classes
there?
80

Assuming the Government of India requ#es to raise

credits in order to %ridge the period between the introduction
of a gold currency and the realisation Of the silver which it
would replace, which credits might amount to $150 million in
New York and £23 million in London: What considerations, arising either from the nature

of the scheme, or from external circumstances, would militate
for and against a proposal by the Government of India to obtain
such credits in New York?
9.

Would a proposal by the Government of lniia to obtain

such credits in New York for the purpose of carrying out the

scheme referred to (for putting gold into circulation in India
concurrently with the sale of silver) be likely to encounter
any such difficulties as would make it undesirable to
contemplate that step?
10.

Assuming that the credit of $150 million would not be

required for a longer period than 5 years, what would be the
cost to India of embarking on such a credit scheme:
(1)

(2)

11.

if the credit is not required to be actually
drawn on;
if the credit is only partially drawn on?

It has been suggested that the conversion of silver

hoards ilit;) gold and the introduction of a gold currency will
ultimately/







-

a

MiAORA:MUM

Mr.Norman and Sir Charles Addis appeared as witnesses,
jointly and severally, before the Royal Commission on Indian
Currency and Finance on 1:onday, March r9, 1926.

Their attention was directed to a plan for the establishment in India of the Gold Standard with a Gold currency,
the limitation of legal tender for the rupee, end the oonsequentiel sale of the Tilver coins displaoed from circulation.

It me stated that the plan would involve a demand for
e103,000,000 of gold, in addition to normal requirements for

Arts, Hoards, &c., say, £50,000,000, within a year and the
remainder within tea years.

The plan would also involve, it was estimated, the
sale of 600 million ounces of Silver.
GOLD.

The Witnesses did not question the political right of
the people of India to determine the kind of currency which they
were in a position effectively to demand.

It was, however,

their duty to point out the eoonomic oonsequencee to which a
demand for Gold, as currency, might be expected to give rise.
In their opinion the demand for an extensive issue of
ea:ad as a

circulating medium would be of no real benefit to the
It would

people of IndiR and had no economic justification.

appear to be based on the ill-founded belief that a Gold. Currency

is the hall mark of an advanced civilisation.
The Gold currency would not support foreiial exohangee
or

Experience shows that in any crisis/want of confidence,
the people of India, instead of bringing out gold to support
the exchanges, stiok to what they have and try to obtain more.
The Gold in circulation would be at the expense of the
cold

tandard and Japer Currenoy Reserves.

More would be less

rather than more gold available for exchange in the event of a
crisis or general lank of confidence.



There

arA




There would be a loss o

6,

of Sillier Rupee0 which would have

not taken their place.

There the circulation o

as on verious 000asions between 1
be at the expense of the Notes.

The remedr for Gold hoa

but an extension of education and

these are supplied the extended G

advantage in security or utility

involved in the substitution of a
of currency.

The noet suitable form

purposes in India is Rupees and No

?or the settlement of e

required is Gold in Reserve, by m

currency can be freely convertibl
7terling.

Gold is the basis of cre

the same the withdrawal of Gold fr

proportionate reduction in the sup
Europe.

The diminution in the su

a rise in its prices, i.e., in the

The initial demand for

lark et Where the IndiEu Reserves a

The Bank of -11eland
export of Gold.

ese

The currency wou

drawal of Notes from circulation.

Bank of tLgland and ...7reasury Not

delayed by the reduction of the Go
Notes issues.

The policy of the Benk of 7ngland would be deflected
by the necessity of ettraoting Gold from abroad to make good
the deficiency in its Recervee.

The position of the Central Banks in 'trope would be
weakened by the enhanced difficulty of mninteining the Gold
Exchange standard, where that has been attained, and in achieving
it where it had not, owing to the enhanced value of Gold arising
from the diminished supply.

In both oases the policy of the Central Banks would

have to be direoted to strengthening the position by raising the
rat e of interest, contracting credit at home find borrowing
abroad.

The only alternative to making the demand for the
diminished supply of Gold effective, namely, by a reduction in
commodity prices, would be by credit or currency inflation.

The general tendenoy would be to lower the relative cost
of living and money wages in :311,rope es compared with America,

where there is a surplus of Gold.

In India an increase in Gold

Imports would tend to raise the cost of living, and, in the long
run, money wages.

The financial effect in FUrope of a curtnilment of
credit would be a rise in the rate of interest.
The eoonoriio effect would be en increased cost of

production, a restriction of internal trade and an increase in
the burden of foreign indebtedness.

The reaction on India of a curtailment of the supply
of credit in Turope would probably be slight.

Her Imports would

cost her lore but against that she can set n large surplus of

Fx7orts, the demand fora large portion of which (Jute, Teat)
is inelastic.

It enjoys, in fact, a Tuasi-monopoly of certain

raw materials which do not generally respond to a fall in general
prices.




As regards the supply of Gold the outlook, apart from
new disooveries, or new methods of mining, is for a gradual
decline in world production.

As regards demand, there will certainly be increased
competition for Gold, as backing for the note issues of reoonstructed Europe.

On the other hand, it is probable that

oertain economies, such as ()henget* in monetary habits, or the

co-operation of Central Benks in the International use of Gold,
These mny be taken ns

may still be effected.

P

set-off against

the increased demand, with this qualification, however, that the
demand would appear to be oertain while the economies are pro-

blematical and quantitatively indefinite, since there is no
means of estimating the extent to which they will operate.

Failing the discovery of new mines of Silver, or
of Copper, Lead,

&a., of which Silver Is an important by-

product, the sup2ly of Silver in the future is likely to diminish
rather than to increase.

On the other hand, the growing rote issues, not only
of 7urope but of the Fer ::eat, and the increasing resort to
Niokel end other base rietels as Alloy for subsidiary coinage,
point to a diminishing demand for `silver.

The mere announcement that the sale of an amount of
Silver, aggregating a three years' world supply was in contem-

plation, would be followed by an immediate and probably
oatastroahio fall in price.

Only one-third of the world's production of silver is
obtained direct from Silver mines;

the remaining two-thirds are

a by-product of Copper, Lead, &a., ores.

The coot ofxoduction of
at 50 gold cents per ounce.




ilver was formerly estimated

It is now probably in the vicinity
of




P

6.
Credits would not be approved end that this might militate
against their issue.
Cr, this point there was t. slight divergence of opinion

between the witnesses.

l=r.rorman was o2 opinion that, unless

the eurpose of the loans were approved, they would riot be granted,

while :Ar Charles Addis was dieposed to think that the credit of
India was sufficiently good to over-ride any objections that
night be raised as to the purpose fcr which the Credit was
required.

The general conclusion of the witnesses was that unless
there was some insistent urgency for the immediate introduction
of a Gold eurrenoy in India of which no satisfaotory evidence
had been braught to their notice, it would be advisable to
continue the present system until farther progress had been wade
with the stabilisation of the currencies of Airope and the
relation of Indian internal to external prices had been determined by the oomparetive steadiness of the Sterling exchange for
a period of, say, one year.

here again, there was n slight divergence of opinion
between the witnesses.

nr.Normen was of opinion that the risk

might now be taken that the point of price equilibrium had been
reached, while Sir Charles Addis was disposed to advocate delay

until further experience of the maintenenue of an unfettered
Sterling exchange indicated that equilibriure bud been established

This did not, however, invalidate their general conclusion as to the expediency of postponing the introduction of
a Gold currency in India.

The Gold in the Indian eeserves was

already being added to year by year through the favourable balanc
of trade and this process, if allowed to go on, might end in the
aaeavaulation of an adequate stook of Gold, which would enable the
Government to under tame with comparative safety s currency reform

which could only be attempted now by incurring a degree of risk




for

for whioh there appeared to be no adequate justification.

!f the Gold were aedually withdrswn it might be
)onsible for the fkad :Aandard oountrisa to prevent the purohasing
The audden withdrawAiet

power of Gold being neriousl7 Oisturbed.

Itythin4 like e.100 millions of Gold, as propoeed, would render

this im?ossible.

The effect upon Silver would be no less grave.

Apart

from the indireot effect upon produoers of Silver, Copper, Lead,

&o., it mut be remetabered that Silver to still the aurrenoy of
China with a population nearly au large as that of ':rope. Any
sudden chenge in the value of ,lilver would be v. oelamity to a

2ountry where there is no credit machinery to prevent or mitigate
a fall in values.
The demand :or '7.ilver in India iu besed upon its

immemorial use as the prinoipal medium of exchange and store

The risk of undermining thin eeouler confidence in

of value.

Silver is very serious.

Its use ie based upon the poverty of

the people and the smallness of their pecuniary transaotions.
-:,ven if the legal tender of the A.lver. rupee were reduced to

I.s.50, this does not exclude the possibility of the two

aurrenoies, Silver and Cold, circulating side by side at differant imluee.
OS*

O..

01111

'POO

SOO

At a subeequent Meetirv; of the Commission the examine

tion of the witnesses is to be continued.

They will also be

era-aimed upon the iuestion es to wheat nocifieations, if tiny, ax

reluired in :ale constitution of the imperial Dank of India.

London.lst ;1pril 197'6.




001'Y

FINLANDS BANK,
HELSING"ORS.

May 4th 1926.

The Right Hon.Montagu Norman, D.S.O.,
Governor of the Bank of England,
E.C.
London,

Sir,

Very much obliged for your kindness to let me know
that ?"r. Strong the Governor of the Federal Reserve Bank of

New York is expected to arrive in England.

I bej to inform

you that it would be more convenient for me to come to London
later on, i.e. after his first stay of two or three weeks
there.

I suppose that :7r.Strong will come to London

several times before returning to the States and I should
greatly appreciate if you kindly, after knowing his subsequent
plans, would let me know convenient dates which would be
suitable for Mr.Strong to meet me in London, 9nd I shall have
great pleasure in coming at any time later on, suiting my
travel to his wishes.

With my best thanks for your kind attention to
the matter and kindest re;,ards I beg, to remain,




Dear l'rr.Governor,

Yours most respectfully,
(Sgd.) RISTO RYTI.

CONFIDENTIAL.
Cablegram sent in code to.7---

0

MONSIEUR HAUTAIN, NATIONAL BAN1( OF BELGIUM,
BRUSSELS.
Despatched :

(67,,P

Saturday, 8th May,1926iage)

(7496) 9/26-1600

N°.
Your letter 6th.
1.

Strong has been ill and is much engaged in London next week
but hopes to go to Paris on 15th.

2.

You could then see Strong in Paris but he goes to Italy few
days later for reasons of health and could only visit
Brussels in July if you desire his visit.

3.




Shall be glad to learn your wishes.

NORMAN.

10th May, 1923.

di

Dear Mr.Governor,

I received on Saturday your letter of the
6th instant and immediately telegraphed to you as per enclosed
copy.

Had circumstances been such as to permit of
your coming to London I should of course have been pleased to
see you and to hear your views as regards the present situation
in Belgium.

Unfortunately as you will doubtless have gleaned

from your own Press, conditions here though comparatively quiet
are so disorganised that it would certainly be unwise for you to
attempt to make the journey for the present.
If I hear from you that you would like to
meet :1r.Strong in Paris where he hopes to proceed towards the

end of this week, you will be informed of his movements as soon
as they are more definitely arranged.
Believe me to be,
Dear :Ir.Governor,

Yours most faithfully,
(Sd.)

Monsieur F.Hautain.




LI.NORLIAN

CONFIDENTIAL.

Cablegram sent in code to : -40

MONSIEUR HAUTAIN, BANQUE NATIONALE DE BELGIQUE,
BRUXELLE.
Despatc&W :

12.15 p.m.

Wed.12th May, 1926.

(dam)

(7498) 9/26-150

Referring to your cable 10th instant desired by Governor Strong
to say that he has yet no definite plans for Paris visit

but he will communicate with you as soon PS possible regarding
meeting.




NORMAN.

CONFIDENTIAL.

Decode of cablegram from
M. HAU TAIN,

NATIONAL BANK 07 BELGIUM, BRUS S

Despatched:
(time)

Received in C.C.O.:

:-

12.15 p.m.

Mon.10th May, 1926. (date)
:::on.10th May, 1926. (date)

(7489) 1/26--15110

N °.

URGENT RATE.

I would be glad to see Strong in Paris about 15th May.




Please ask him to let me know exactly where and
when we could meet.

HAUTAIN.

COPY.

FEDERAL RESERVE BOARD,
Washington.
June 3, 1926.
My dear Mr. Governor,

I am dropping you this line to tell you that
I am coming over to Europe for a couple of months this summer
and will spend about two weeks in London, principally for the
purpose of "going to school," so to speak, in the London money
I also want to inform myself upon the way in which the
market.
restoration of the gold standard in Europe is affecting the
credit and price situation and in general inform myself on
conditions and matters that are of concern, or at any rate that
ought to be of concern to us over here, and particularly to the
Federal Reserve System.

I hope that I shall find you in London and
that you will let me look to you as "guide, philosopher, and
friend" in finding my way about the City and learning something
of its ways.
The altogether too few occasions upon which I
had opportunity for some real talk with you on your Washington
visits on real things stand out strongly in my memory whenever
your name is mentioned, as it very frequently is.
I am sailing from New York on the Leviathan
June 12th and will be joined by Mrs.l.aller on the eighteenth at
the Berkely Hotel.
I shall endeavour to get in touch with you
Monday, June 21st.

Believe me, my dear Governor, with highest
esteem,

Very sincerely yours,
(Sd.)

A.C.MILLER.

E±.Montagu C.Norman,
Governor, Bank of England,
London, E.C.2,
England.



19th 1:ay, 1926.

71(-1:y dear Strong,

Colleagues and your friends on the Court

have directed me to write to the Professors and say how publicspirited they have been to come all this way to give evidence.
This I have done in all sincerity and the letters are being sent
to Cambridge and. Baltimore respectively.

I was also directed to

write similarly to you, but this direction I propose to ignore
simply because I do not know how to do it.

Old acquaintance and

great esteem and affection give you the right to ask help from us
and us to ask it from you.

It may be that you may never require to

come to us for help but the fact remains.

For the present we look

forard to the time when you will come back and live among us
again.

As you know, H. Feret vas here yesterday:
made a very poor showing and is, I thin::, a poor 'crittur'.

he
But

he has told me that he expects to see you this evening, so you can
form your o.n opinion.

I cannot imagine why he came.

If it was

to seek credits on the same lines as Farmentier, it was the journey
of a madman:

if it was to make changes in the principles of

Caillaux's settlement with this country, he mist be more of an
optimist than a realist:




if it was to settle details, he had

better

/

Page 2.

Benjamin Strong, Esq.

19th May, 1926.

better have left the work to experts, for as it is he has failed
to agree on three or four points of so-called detail and has gone
away - nominally to come back and complete the task.
With Perct came one or two people from the
Bank of France in order (so the newspapers said) to negotiate
about a variation in our credit arrangements.

T:ut

Aupetit -

who was one of the party - told me he aid not know why he had
been chosen to cone to London as he had nothing to discuss or to
request.

I gathered th',1t he rather expected over the next few

weeks of uncertainty to sec the franc gradually disappearing into
the heavens like a comet with an ever lengthening tail:
'Zith warmest regards,

Yours most sincerely,

tt. ACISN1F.D)

Benjamin Strong, Esq.




Alf. MO

4

alt

of

1Y

Ialti,

Sandpit, E.G. 2.
20th May, 1926.

My dear Strong,

On receiving your letter of the 15th instant
I got into touch with Mr.Campbell, Chairman of our Stock
Exchange (about whom you will remember I wrote to you last
September] and found he had already seen Mr.Ryan.

I do not

quite understand the connection between Mr.Ryan and Mr.Simmons
but anyway Mr.Campbell will make no arrangements for a dinner
or anything else until Mr.Simmons has arrived.

He will then

try to arrange whatever Mr.Simmons prefers and on whatever
lines as regards a speech he may choose.
I think this will be precisely as you wish.
Your :sincerely,

ifyttko44

Benjamin Strong, Esq.




20tL_KaY,'.1920

Ky. dear Strong,

T.W.L. came to see no last evening and told ma
of his conversation with Earies and yourself at 3 o'clock in the
afternoon.

You know that I have bean in pretty close touch with

him and before he went to see K. Perot on Tuesday I told him
generally how matters stood between the
selves.

Bank of France and our-

The information therefore which he gave you yesterday

over the telephone was quite correct, as indeed you will already
have gathered from the letter I wrote to you yesterday.
I have also been continuing to talk with
about Italy;

and the longer we do so, the more convinced do I

become on these three points.

Firstly, that the idea of waiting

to deal with Belgium, France and Italy on the same basis at the
same moment is a mistake;

secondly, that Italy must either

stabilise or be prepared to support the lira (and this sort of
support can only end in. ruin);

and thirdly, that therefore,

assuming her position to be economically and financially sound,
Italy should stabilise and devalue as soon as possible.
Italy would be entitled to get money for this
purpose in New York and London, but not much,
be needed.




I should think, would

P77:3'7.TAL.

Pofe 2.

Benjamin Strong, Esq.

20th !:ay, 1D2,

I believe T.W.L. has communicated with Rome
ou these lines and I trust some result will follow lest there
should be further trouble with the Exchange;

all of which I

mention merely that you may know how matters stand.

But so long

as the constitution of the Lank of Italy is on its present lines
and so long as the Finance Minister persists and glories in
dominating the Governor, I do not want to have much to do with
the Bank.

I guess this is your feeling too.
Yours most sincerely,

(RIGT41.117))

Benjamin Strong, Esq.




M

(1r):-.1

N

3 *4.0t44.i.',

0.

21,

Benjamin Strong, Esq.

20th Eay, 1.326.

I believe T.V!.L. has communicated with

Gm e

ou these lines and I trust some result will follow lest there
should be further trouble with the Exchange;

all of which I

mention merely that you may know how matters stand.

But so long

as the constitution of the Lank of Italy is on its present lines
and so long as the Finance Minister persists and glories in
dominatin;:: the Governor, I do not want to have rr.uch to do with

the Bank.

I guess this is your feeling too.
Yours most sincerely,

Cr(mto) M

Benjamin Strong, Esq.




I

Sin It

of

0,11.til

an

Krnbou, E.C. 2

31st May, 1926.

My dear Strong,

I have received your telegram giving
your movements as far as Cap d'Antibes.
I am therefore able. to let you know

that when Schacht was here last week he asked me,

when next I wrote, to tell you that his address from
the 4th to the 25th July will be the Hotel Rembrandt,
Nordwyck, Holland:

before and after those dates he

will be in Berlin.

He expressed his complete

willingness to meet you anywhere you might care to
name.

Believe me,
Yours

incerely,
r: Jam-

Benjamin Strong, Esq.




.







10-:; Juno,

1.7y dour 3 tron.

,

I thin:: ;Tor.
onolocod.
C;

3 ntoro4 to1/41

fro:3

'Tramoc"

;Jai:ley:hat non.ccTr.nittal c..;11.:1 on is iaaelo to

with

oa Lhilst you woro in Lonion.

most sincerol,

You

0.".1014ED) M. NC2S-1,','

Donjai.in 3t-^or,f-

T1:30

o ctoo
..-thich

.)

(Copy of handwritten letter)

S

8 June 1926

11.

Thorpe Lodge, Campdei hill,W.

My deer Ben
The mail was slow in bringing your letter from M. CLrlo, but I feceived it with all
the pleasure in the world yesterday: also your wire as to plans.
Of course you are tired & you need weeks & weekc, of rest.
me about Italy or other things.

Do not hurry to write to

The Belgians are likely to be early next week & that with good luck may be my last
engagement.
If so I could start about the 17th & join you at !ntibes the following day or so: would you like me to do so? or would you s ooner be let alone?
shall probably wire you about this tomorrow or next dry. My doubt is only rbout
the heat: I like to be warm but not grilled! On the other hand I much went to sit
down with you & ooze out whatever a laestions are in my heed.
So a
I Es-ume you -re
Ell alone I am disposed to join you for 3 or 4 weeks, You can think about this.
Lady Sybil (ViviEm smith) is also wishing to go somewhere for a couplc of weeks
& perhaps she might come too. She wd. not do more than live in the same hotel. How?
I should not be breve enough to go round Europe in July, so I should break from you
about the 15th.
I feEr you will fin= such places EL BudaPerth then desertd by thP
you would went to see: they all seem to go to the country or to BethE for A least
a. couple of months .

,

I mean to be in London in El_ugust

God bles you -




E:±. ever

MN

g
horpe Lodge, Campden hal, W

t",

At4p4ka_44-

(.d,c01 Pr;

itNAIAL pen.41

'et too ( 4,0
y.ecLt_zta

at.co-pvco C*41- .5

etyA, oat- 4sx itac4L-stolti

7cArt;410,,,i

JA:

:

ct/C-o iirta44.4

)04.vt

af COLOCti, yAWA.

(.41f

;'C-1

1LUZ.2 tk%tdia..-tc, itte-kd afrgEa4

itok- (.400t03
rt-e

tae

gc/5akai

4"-154
eLtiz

GAgie7740

24)tarlisi4c-i- caeas,




.

is,u) cLitoota.

Arvt-A--6

agetks4

°`. Yei°1-

kat




inAkdt lOc 60

Ag-ta

u,;01

e 4)

otega-A/

c, to4AA-

,(40%/L aka_ A.) nAAK ikeaLl.
ct4

J

4.4w woke_

fr, AAA_ alt. ctle-fuv

9v4 Ahaar-10 locA, ydUk

S-04

Ascrtis, -

`44,. c,44.

fre

CA4k

etto'er.
/,e4k, CUCAtt;t,A, S ptAlt)

cf-G
cri"

4;t4t4..i.t& 10 Sto

eAt.a44-et.tfrot,

Copt, etc

bp,a,
_

144. de

ak.euzAutA, eiAke%_J

4444.4.4.etct



.

4Ce-s-r-

gito hfC.'

laaitteN,

5 1(.4441k )1.64
art/ 0.w%

le cso **-tt4A1
c---k ck(ZA

4egc.k._

*La? io

lkoD41

ty45.4"V

3-feig,0

ot&itAA/4-

FriaAte_4_

6);(4)

kftit,
4,41_

5a,teuk_i
foe
,r,oz/

°.e.4/

rvec.tc,)

i cat

A,

ta_ cAttAA,titn &N

GertAftg._




tic

stiat.,/lko so

4

6cdtek4-

4.4

avidtv
tit;fr

alb

Ranh of eqlantl,
Sondon, E.C. 2.
12th June, 196.

My dear Strong,

In order that you may know his plans,

a copy of a letter just received from Dr.Miller.

I enclose

It looks as if

I should fail to see him for some time after his arrival in
Europe, but I took the precaution to speak to Schacht about

Miller's probable aims and intentions and I am writing to Vissering
a discreet letter of warning.

As you know from our exchange of telegrams,

I

am planning to leave here on Friday morning next, hoping to reach
Antibes on Saturday, the 19th, at 14.33.

I shall be very glad to

sit with you in the sunshine, and I am also glad to learn from your

telegram that even if we are warm we shall not be grilled.

If there are any folk we want to see, it might
be worth while to try and induce one or two of them to spend a
week at Antibes.

Please think this over.
With kindest regards,
Believe me,

Yours veryJsincerely,

Benjamin Strong, Esq.



ESOP Y
Hotel du Cap d'Antibes,
Antibes, July 15, 1926.

My dear Doctor Schacht,

I have not written to you for the last few weeks because Strong and I
have been holiday making here and therefore writing as little as possible.
But
I notice from your letter of the 13th that you are shortly returning to Berlin,
and thence again going to Holland at the beginning of next month.
This seems
to me to present an excellent opportunity of bringing about the meeting between
us three which was planned for this year when we were in Berlin a year ago.
Since Strong has to be in Switzerland for the first few days of August, I suggest
that from Switzerland he should go to such place in Holland as you may designate perhaps Noordwijk - that you should arrange to stay there for a few days, and that
I should come from London and join you both there, about August 5th.
You will be writing about this plan to Mr. Strong in Paris, and will you
please write to me in London.
I am returning to England on the 19th and shall be
at the Bank in London on Monday, the 26th, when I should hope to hear from you on
this subject.
You will remember that, had it not been for the strike in England, we
should have had just such a meeting in London during the month of May, and I think
you will agree that no better opportunity for this meeting will now occur during
the present Summer than if Strong and I come to Holland and meet you there.
I
hope very much indeed, thereforo, that you will see your way to agree to this plan,
which happens to suit Strong very well.
If you should think it wise to communicate
with Vissering on these lines, pray do so, and if you should think it wise, too, to
invite him to come and meet us at Noordwijk or elsewhere, both Strong and I will be
glad if you will do so.
As you will be in Holland just before the arrival of Strong and myself,
perhaps we may ask you to reserve accommodation for us at whatever place and hotel
you may select.
And owing to the activity of the newspaper reporters, perhaps you
would be wise not to use our names, at least not the name of Strong, who enjoys
particularly the affection of all the newspaper men in Europe:
Hoping to hear from you in London, and hoping, too, that you are greatly
the better for your holiday, believe me
Faithfully yours,
(signed)

M. C. Norman

Dr. Hjalmar Schacht,
President of the Reichsbank,
BERLIN, SW.11l, Germany

MCN:M




I am leaving a copy of this letter with Strong so he will
be fully informed.

PERSONAL.

19th July, 1:323.
,P\4-

ry dear Ben,

It was piping hot all the way to 7aris and
beyond, and as each hour passed I grievea more and more for the
loss of Antibes and you.

At Paris Warren was so very kind as to come and
see me, also Gilbert, and I had a talk with them for an hour or
more, for the latter came along a short distance round the
Ceinture.

On the way to Paris I was much perplexed about
Caillaux, never thinking that he would already have been thrown
out.

I had thought it just possible that he night have got

pleinsuvoirs, in which case his position would have been
pretty well assured and I should have stopped off in Paris.

I

had thought it almost certain that his proposals would still be
hanging in the balance, in which case I should have come on to
London.

As things were, there was clearly nothing left for no

to do, and! to-Eay I an just writing him a polite letter of
acknowledgment.

I am going away to-night until Tuesday, the
27th, and after that I can, if necessary, run over and pay a




call

117:2jOLLI.

Page 2.

Benjamin Strong, Esq.

19th July, 192(L.

call on Moreau in accordance with the conversation I had with
Varren.

Vie had a really delightful month together

which means a great deal, though for the moment I only send my
lc:ye and wish you the hest.

Zolieve me,
Yours most since:1'01y,

IZ'iTi?1.1.7D) M. NORMAN.

Benjamin Strong, Esq.





http://fraser.stlouisfed.org/
Extract
Federal Reserve Bank of St. Louis

from a letter dated the 16th July 1926 addressed

(Copy of handwritten letter)

19 July 1926
Thorpe Lodge,

Campden Hill, W.8.

My dear Ben

Since I wrote to you from the Bank today I have had a letter from Vissering who
I do so, by enclosing
asks me to send on to you his proposal for an Excursion.
a copy of it, as explained by him.
I have not answered Vissering, because we are waiting to hear from Schacht about
the visit to Holland.
But the dates seem to fit in quit4 well with the plan we discussed + if we are in
Holland I dont see how we can avoid the Excursion!
Anyhow, whatever suits you will suit me, as soon as you hear from Schacht.




Ever yours
M. Norman.

ilairerb
THORPE LODGE,
CAMPDEN HILL. W.8.

ct*ty 61( `t,
&plaktko2,4,




4C-4







London, England
August 19, 1926

FedeTbl heserve Dank of New York,
New York, N. Y.

No. 63

STRICTLY CONFIDENTIAL FOR DEPUTY GOVEENOF
Your #47

CNF

London Times today publishes dispatch to similar effect from

New York correspondents stating 00,000,000 ae total to date
exclusive of latest shipment of $4,900,000
TWO

Origin of publicity would appear to be note in London Financial
News of August 17 which was probably a ballon dessai

THREE

le are of course greatly embarrassed by this publicity
but shall make nc announcement

FOUh




Have you any suggestions
NOhMAN

0

PERSONAL.

*mh of

(gitgland,
Soirdon,E.C. 2.

30th August, 1926.

My dear Ben,

As I have already told you, I am sitting at
Plodge with open arms from now onwards.

I have no engagements

except next week-end with Peacock, which was arranged for your
benefit, and on Tuesday, the 7th.

The only possible visitor

is Mrs.Markoe who you know comes and goes without saying "boo"
to me.

I will be happy for you to go home with the

Morrows and am glad that you find yourself able to wait for
the "Mauretania" on the 18th.

: was afraid they might pull

you home earlier.

Please note the enclosed copy of my letter of
the 23rd August to Mr.Harrison.

Please also do not forget certain promises
which were made to E. Ryti of Helsingfors (see copy of enclosed
letter of the 27th July).
With kindest regards,
Yours mo

sincerely,
6r7w1-614,4

Benjamin Strong, Esq.



s.s."Homeric"

1111'

Copy

ID

Lost Confidential
23rd August, 1926.

Dear 11±.Deputy Governor,

Allow me to write you

few lines of thanks

for your private cables No.47 and others, and for the trouble you
have taken about the publicity regarding the current gold shipments
from Australia to San Francisco.
In the first place, as to the origin of these
reports,

I feel pretty sure that a gossipy little note in the

"Financial News" of the 17th of

his month started the whole

I doubt if the man who wrote that note knew anything, and_

he did not

really pretend to be writing facts, but it is a paper

that has been taking a good deal of interest in gold shipments,

in the Bank of England, and in your country, since Hilton Young
became connected with it on the editorial side.
I agree with your (your No.51, paragraph 5)

that informal discussions with reporters are usually the way to
deal with this sort of occurrence.

The trouble on this occasion

is that I do not wish to admit the truth, even confidentially, to
any reporter.

In other words,

I wish the renorters and everybody

everywhere (except yourselves and ourselves) to believe that the
Bank of England was merely a middleman in connection with these
shipments, either receiving the gold for account of someone else
or else passing on the Dollars within a short time of having




acquired




MOST CONFIDENTIAL




1103T CONTIDEN2IAL




21st September, 1926.

17y dear Ben,

I just wish to remind you that
J....Beaumont Pease is on the boat which carries this
letter:

he will be in rew York for a woe:: or two and

will certainly call upon you.

Please make him a nice

bow and give him a smile.
'laving told. you so much about these

banking folk, I need only remind you that Beaumont

Pease is the Chairman of Lloyds La:.

Perhaps he is

not a great Banker, but he is certainly a real white
man, maintaining a tradition in his Lank which excels
the tradition of any of our other Banks.
good friend of ours.
With kiLdest reGards,

Yours most sincerely,

Benjamin StronG, Esq.

And he is a

B or C

ICE TELEGI;

Charges to pay
s.

d.

TELEGRAMS
for INLAND addresses mas

This fo
should tu.

spec

RE

At

VED
...... M

1

be handed to the messenger
who delivers this form.

possib.e

enyui

688

No

Post Office accepts telerarris by telephone.
Time handed in .

-

From

12/30 LuN.iUAI 01 T

ZJ 7

By

BENJAMIN -STRONG

Office of Origin & Service Instructions .

S

S

MAURETANI A

Words.

SENT

At
To

Y

X

By

SOlON

11EIISP APER TODAY PUBLISHES BRUSSELS TELEGRAM

:ORECASTING THEurns OR
YOU ALL



z

MONTAGU

FRANCK AS GOVERNH- LOVE TO
:4"

COPY
10 Oct 1926

M -

Thorpe Lodge,
Campden Hill, W.8.
Dear Old Ben.

While I am glad you had a good voyage + reached home in
"fine" shape, I am distressed that you have since been so ill.
This is most disappointing - as it comes so soon after a long
vacation which had seemed to set you up - + I need to know
more than I do from Harrison's hopeful messages to Jay +
myself.
F.J. has behaved like an old Roman these days in giving
up his vacation + coming back to London + sitting in at meetings
morning, noon + night. We owe him a debt of gratitute, as you
may tell him.
I wished you could have met M. Franck - so very different
from Hautain. A gentleman, who speaks English beautifully +
opens his heart as well as his head + states his case firmly
without being dogmatic... and Flemish instead of Latin:
As to internal questions I have been guided by your advice
+ wishes - referring a; times to Peacock for help.
But the more
my friends have discussed the future the more have these difficulties come to dawn upon them, so that they are now as much
concerned with ultimate policy as with immediate solutions. I
have said over + over again that I am in their hands + there I
remain. But if I am to continue as at present I ask their goodwill - + not merely their grudging support because they have got
into a mess. Thats rather how it looks.
We had a wonderful summer, Ben + I am happier when you are
within 100 miles than 3000. Things are beginning to clear too the sky is brighter than it was + though there are black clouds
they will break in one way or another sooner than seemed likely
a few months ago.
Give my love to Ben + Phil + all the boys.but keep for
yourself the Lions share.
As ever
[signed] MN.




io Oct 12.6
VI. HOPPE LODGE,

CAMPDEN HILL. W.8.

10C

3 (4

°1-Iti LI

*CO% kaLlkt,

16t4eg 4ejake so at,

S 4LALOU

YlkA;

-ate' coluizt so Soo,` 464-

?Welt Alk:40 oysr

leacd,fic;tA. 64-44:ek

9tcatt.
A-414412,

%IA)"

icAut: s Kopf.,

kestiub

orptie, ruNre-

lo

6L44A

aek yam.. 4411

Co

gic

140/4.._ /Jict,014,at

Ytt-ouz.

AAr*-et-

Amt24240-ce_A

Pj i 4a.,AmA,

tA;

e

,o

(fLALes

i*:14:1(A4-7- Krka itcLe4tA0/... w. Ce*wwtir (ALAAii 16,s4e1.
.AX.,4,:y g,y; els Otoktft.i
ALIA-

644.v.,

SAN:4gal

etAA

oC 4teA4,3 1 NeAocit.

d std tt.0 kt.a cALiaz,

LCJ .


Federal Reserve Bank of St. Louis

yo, VIALty CIA144ia.
""

SO Velif

A gos,0,24%ftx.", &trete sitoicem

Ar_AAXast

1t4-41%
http://fraser.stlouisfed.org/

Setex,erAxAt

CeVaa---("Cklje 14.* nit
NdLAAek

ty#90

c9tAx

kee..14,

PLA5c9tot,

2-etn"

cAcrv-es

ti;Attua of

&pa(a..,

"14(k.o-vt* eft.t.+15
.(0,..fc,A,

/640 0.;.tefirmasE cktup.4.0-Z44/ thwm,

lowc eaNI 1,.<0,44

katp.

lAY&Scni2.4

Tt-ptle&44.9.

-

twAyc;)(A97

As4k

fatAAI,

AccAte,

914e-4"ate:.

7:4121

, _co

44:46

atit*t-l.rx& pe4:iey

Cer*Veg"ftkal
se,evikt.0-tAL4

aoa-

soa..4

1.0.4).97 at
10 C

.

itrild244

cLA(ki oCtAii

t4t44i, ctla

nef fkaPtify -MILL<

S 4 St/V(5,

AAMC

PV\114

CA/k1

ett-W.u(ea

Aiik5 Vlaukt54 k4,40, Z.A: 60044 .
cuaN, Acyaptg-t

oG

afnes.. yip vs

vb: 10 0 Iriata, ILOLAe 5 O o .

W

WU, '6.efg/11

10 de OJC/2.0e)

-

irrity
(-64,0k JAWS-,

It 64044 ikEkAlsG 41101.

4r;55h114

itay

AA* Z( I ct,44,v

gAtt-Ift* r.ectw,Atv texy

f.

4,1\41Wi

Leo iltoat

61,,su;.

(Pfe..A&

he. cioo_.oC ci.v.etto4 Se

..90.

414.a"kstat-6:Atey c4fitat
so&c:

keep/riot yekoze4. ikt



p(` 4a)M

vka,

cat_ 64

4.4)-kAs SAGfrt.V

ekorr. auf
a,o-J21,0eA'

Jea




to Oct

N.:-HORPE L
CAMPDEN

Lee

ke.a.4 O

3cAt44.0

Licd
freu_A,fic;rA,

911(24 io--(tA

kofrfixe

AtiN

Li

f

4 (A

r

.

Sh.

14/e,

dpi Vic

Szo t4,61.1
31;ftekg.L.A

5"26C`';(''' /
htZl. 440

isikt-ak LCJ

op,,tv rryuror,

sparnt Oro

rtheja?,07 -

rst7

-rkyry

errn,rj
qa

f)0,5,14

bvraar--

rWNPVIg

raAnnr-tniVVIE )4Dkx
d

'gay

4/p

r?".wiril oti

r

ifsYnr"I rINA

2ervy

NI"rg1

ttiA4s)
gotr.

"
Olg

4fv,rev-A41

Gra

vriv"

fwv..vrwa-A-c

44"AfeI5CalY
-1.0.0 4*. Props

-'r'*

'1A06'

4"Z9-NY

tiavvvvoe

of

Pi7 ArgVvVIO
tazipir.ww
-

rror

/ >73)9

go

01 0

"r"

4^44

iNd

2r.orpocri
.ra-4,1% (VrTYN5 /My

emS1"443'
-vinow
-"i54 ,N)rvi

411/

czyvewytofte

vi-0

%P"n

anew p7

°Ar-ahrr"

40.1Atwzr

"pry

'hiliv-vwv7c----Kgarvw?-04 -4--094

112P)r9----PWIrrr
?wog

Wri'y

p:7097r,Golk.6 jat44479czt

",4-1 vo'f_wipv
Avaocifi

`"14rrirs.

Cc"--70110

Aripry

4.9_145)..vva.

7-1,") 49

efirvIc

Larayx-wrz7 ( or
czYINvy-aN4-0

tow,

Virirto

s

^.9.-x,

WW

vc1/-le"P

wrcl

4v*AvY

C.

tideActy

0 1:7

171

itgiv)...4/

-grv, Jv Irvvrawro

-1,0,7y

<ray

sus Wow

evvwww

fif7x)-1°wag --7roN iv

-749p

1r9r

44N-9.

Bank of 64ane

116

18th October, 1926

The Governor would be obliged
if Er.Harrison would be so good as to
have the enclosed personal note
conveyed to Governor Strong.

COPY
17 Oct 1926
Thorpe Lodge,Campden Hill, W.

COPY
21.Oct 1926
Bank of England

*B.S.
I enclose a cutting from a newspaper. The words are
those of the "Standard" but the sentiments are those of
McKenna:
I do hope you are well again.
[signed] MN

Oct tet2(0
Thorpe Lodge,Campden hill
oc_44. B-e4t.

Yak nAc.

sk,a,

htx45,44)

4..tte

c

itc,C.:5 440a-

-Aee,

skai_ cf
Malkee'b
caAt

AlItt

tat'Az

?A-etc"'

a

0

_orti

4_

,64we.

L,A,Q, Ala rett_

0,AizAt4 ACcul .8-44,44,v

4.4

ii(ty

4"111

wel.de4
/X.ct4% ety

at

et.0

ZAL '6-e

itvoeltamt
Citithk;zio

ievAR.44,
fit ciZet.p (el .
a_ ik

lc

L

-

94,

t:/kelytb 2,

dettu.o

twit1A.

optt.i

tt,

494'

a.-{ Iv. o a-4N re

.c-4/60 fae

ck. Ast:41/4

.

to-A

cy,04,t

A.)-0-L(*.40 ook./-7.c, 0

opt dktk,tog aKCE456 /vv./

k

'14s:id
eC a.,LAI (vuf

c&(-{eifri4
a,*

kce)

/to t rliWiAnk)

4QcA'Actk AAA a 4A gisv. 0(4_4-

AAA.

/Kg-,

ClAYt

10 con.
az-4,4

t-? &"2:-

4g-1%

-

COQ

AA`

ik ant c'e

oct,,440k

ilCLA)42) a roact,

442, Jeptutti ci;d1

t,.;;

14.

Nt().t,

t,

fruu,

11,.
(44 IN 4tif

k 4e, Akik c& e N1TG e

n.e. )(A'

tirco6
A.Yea*,

oc,

(yoky 4.6 ev KA-

Lit

&J

i(

7444,4%

tot 4;t,o DIP d e
ear_ova,

"`xi

so ite,0
aqua d.9-t
141lAti

irt

AAAt

&
go_

Cl

'ettArf

(X
vio-(43

toac
IAA12)

94 tta.

Al 62;4 Kfial
itikctift44

(-6432-01
4CA,14,44 %Auk

°Z1

Ott 4%6,

Sets 2.6 a.m. (Mon.).

THE EVENING STANDARD.

Governor of the Bank-Mr. Norman's Long
Term-Liberal War Goes On.
A New Governor?

The election of the Governor of the Bank
of England will take place next March, and
there is some speculation afoot as to whether

there will or will not be a change in the

hylder of the office. At that date Mr. Montagu Norman will complete his seventh year
as Governor, having been chosen originally
in 1920.

Mr. Norman is a bachelor of 55 and an

interesting personality. He was at Eton
and King's College, Cambridge. But he was
a comparatively unknown man in the City
when he became Governor of the Bank. His
firm was Brown, Shipley and co.-a British
branch of the far more important American
business.

Since then he has become famousi-if onl %kr the persistency with which he. has forced
through his policy of deflation and the return
to the Gold Standard. The strongest opponent of this policy must recognise the consistence of its author.

A Term. Without Precedent.

None the less, a seven years' Governorship
of the Bank of England raises some question,

of national importance. The Bank as a
public institution is under private ownership
and control. Its Governor has immense power

and cannot be called to account by the
nation.

The system has survived its anomalies because it has worked in practice. But one of
the checks placed upon it by custom was that
no man should be Governor of the Bank for
more than two years in succession. This prevented private idiosyncrasies in finance becoming a public danger. The late Lord Cunliffe,

it is true, survived the allotted span

of two years during the war, but in the end
he

retired.

recedent.

A seven-years' term has no

Creation Parliament.

The public only tolerate the special and

privileged position of the Bank so long as it
conforms to their views. If the Bank got on

the wrong side of the nation it could be
called to account easily enough. It is the
creation of Parliament and a breath can unmake it as easily as a breath has made it.
The Deputy Governor is usually considered

as a probable successor.

When Sir Alan

Anderson was Deputy Governor it was under-

stood that he was prepared to accept the
succession. At least he retired from his own
business, and when promotion failed to eventuate, he returned to it. Mr. Lubbock,
another Deputy Governor, did not apparently
want the higher post.
The present Depu'y Governor is Mr. H. A.
Trotter. He is the obvious candidate for the
office of Governor should Mr. Montagu Norman retire. Mr. Trotter, who is a director
of the Alliance Assurance Company and of
many other concerns, was Deputy Governor
from 1920 to 1923. He would appear to have

given up the post in despair of promotion
and his return to a indicates that there is
at least some prospect of a change.
wv

1

I

S.:.."1:auretania".

CONFIDRITIAL.

29th October, 1926.

My dear Strong,

Has the time come when I should write to you
So far I have sent you nothing but handwritten letters on
Sundays since we parted at Waterloo on the 18th of last month.
It has been most distressing to hear they had fixed you up in
bed with doctors and nurses and other miseries.

Of course we have had a great hunt after
Belgium and are somewhat weary, but at least M. Franok and the
rest of them are riding in different waters and with better
eventual prospects than most of them had any right to expect.

P.J. and Harrison can tell you about this and if they choose
they may tell you about one or two snags during the period of
the hunt.

2. This is the third foreign loan since the

holidays -Hambug, Tokio, Belgium, to say nothing of Australia.-.
I do not want more of them yet awhile.

Schacht had already

sucked £6$ 1- millions in gold out of London and if we have any

more foreign loans we may be having to supply others as well as
him.

Your rates have softened during the last week or two to

such an extent as to make me hope that we can get through on a
51, rate.

At present I do not see the way clearly.

3. You know you ought to have signed that
anti-tariff

bn
IL/

COYFID-TITLA.L.

Page 2.

Benjamin Strong, Esq.

nth October, 1x26.

anti-tariff Y.anifesto, as I told you at Antibes::

It would have

been much more amusing to have watched you in hot water along
with J.P.:. and Schacht.

Those are the only /two who have had

any abuse, though there was, of course, a general apology from
the Latins to say that whatever they had done they did not mean
it

But it would all have been better if you het signed and

suffered.
4.

To co bscl, to Belgium for a moment.

C6ntral Bank Credit was a miracle.

The

Some people think the age

of miracles has passed, but it is quite clear that neither
reconstruction nor stabilisation
miracles.
France.

can be accomplished without

The outstanding point of the miracle was the Bank* of

It was remarkable, was

it not, that Belgian stabilisa-

tion should be supported on the one side by France and on the
other side by Germany to an ecual extent and under equal
conditions.

All the participants were "stabilised" except

France - an afterthought.

I mention this for the sake of an

incident which occurred last Saturday.

Look back at the letters

I wrote to you on the 4th Larch and 20th 1:ay.

On Saturday Franck

and I asked the Ileprosentative in London of the Bank of Italy

telegraph to Stringher as an act of courtesy about the arrangerents for this Central Bank Credit and with an offer, late
though it was, of a participation.

This was simply courtesy.
Later

Benjamin Strong, Esc.

age Z.

2(.)th October, 1'2C6.

Later in the day the neprecentative ca:ae bacl:. to me, having

concocted his communications to Stringier, to say that he would
give the information but that on second thoughts he could not
offer the participation.
was out.

Prance was in:

Gorma-m7 was in:

How coula such a sliEht be cast on Italy:

Italy

The offer

of a participation after the event, even tholighit yere accel)ted,
might m:he trouble, both for Strincher and himsolf,with Volpi:

Volpi dominctod the ran: of Italy Rna would regrd tlis not only
as a slight but as a means of bringing pressure on the Bandc of

Italy to coniorn to the ideas of the other Central Banks.

I

Seel lae giving 3tringher a wide berth when it comes to the
question of engagements, for as we r311 hnow a measure of

independenco in fact is essential for the conduct of any Central
Bank on financial (rather than political) lines.

;oustria,

Gen:lany, Hungary, and now Belgium have acquired it in one way;
Ir.oreau is aceuiring it in another.
5.

Don't lore t, please, that

you were to con-

sider the position of your Credit to the Bank of ':nglana - as to
its termination and vis-a-vic the 1:organ Credit - and to ,:rite
to me.

With warmest regards,
Yours most sincerely,

Benjamin Strong, Esq.

CC0FY]
AiliThorpe Lodge
Canpden Hill, w.3.

17. Nov. 1926

Dear old Ben
I think that you have been gone a couple of months from here - + what
do I know about you? Not for years have I seemed to know so little, although
the kindly Harrison from time to time has been sending snippetts of news - or
rather of the absence of news. Anyhow you have had a rough + disappointing
fall + coming after a long + hopeful summer it is to one the more distressing.
That's all I can say: earlier I have written you several letters on more
precise questions - which perhaps you have not been able to read - or will
not be able to answer. I long to grasp your old hand.
I think much + often of
you - you believe it.

Last week I was "selected" for another year from next April + with all
the show of unanimity. Indeed I guess this, + goodwill too, were genuine enough as
the only way out of a tangle. But our friends now have to consider the future +
as they are Quite alarmed, I think, they will start in + do so.
I went away from Loridon for a long week end (after last Thursday) which
is just over. Lady Sybil + I were together + tried to pretend it was Antibes but it was very different here in Novr.:: She sends all sorts of greetings. I
judge the coal strike ended last week + for months to come we shall have to pay
for it one way + another, slowly but surely. Your gradual easing of rates has
of course helped us enormously these last 6 weeks: otherwise it must have been
6% + it almost seemed so up to a couple of weeks ago: Now I rather hope we have
turned the corner. Tell some one to write me of your health + plans.
Of
course you need a time in Califa to build up.

As ever
[signed] MN

17, Afmr (92(9
tHORPE LODGE,
CAMPDEN HILL. W.8.

ehLt cr-ct
cL-

-45e4A,

9t,s,

ye,,. LLAre, exik.k,

4,,,,traKi

COttrida_

,c4cAt ysw,

?

UtuAygi

_

yilsou kguire.. J tecatkaree)

1:11

Sitt(u, ,Ltitent

Jcuzctfy/gooticiA,44, fittmk- "LA"k*- lc;

sx4ite.it

kit4 4432Ac,,oe,4k2(Acy-

tutab - 64. voi-An

4-v.4/4.0
cc

y4,1412/

4rLAffie-J kva

V644.. 0. Xi citiko;Ankti:5 f0,112., k Com c:4A1 cqt9r 0,,-Cost5
4. ickAnst.,

Vitals At

s
Pefaimp

riukAv-e, tovjcIAJ

:

g,g4

1.3524,14.

714.4A/L piact,ei qtA1_,zate4k

ycstA_ 4ckme. 4494 44212V1 Gthet/-7k, 4124L41

ava,

_

eTC.c;IN,

-

64' CkAR)

Vet&lit, yfIctAft V644 (}°
v ___ ye. eeZzAri.
okA.

cw,14.0.4.

VICAJL
oCk.a. (4.0,ks

t^f

tkrit4

seiaeteda

c( " dt9-1

WZfitis' 141(7)""

'text Ap,

,L44> ;At.

cut._

eq.

s

(N.

.10

t5i

kAigsa I itkvin/litc.;), o r&stto.a.(A-00, bocce,
A4.6tvev a.3

tit ovattAtaLy .2.14 44 0. Ga-t,.

f

xoto 4-cove e, (ocul;464

Ottiftit&al

J

(ILI

&Iv

.c, ctia 49.4, owL

(4' itt;%6". ever. C13-1171)YAL

(Atfele_AO StArtfl. e2I /10;4 64, AvOcs.t.a zitc.

Wyckgb

6.72t4 vcnAd,--KteARAA,,,A,;, Ara4vi-

C/KleZ (4/4. ioeRk

&JAI& koakeA.

(An:LAL

IftLeh.1.4

.10.ks

lu/fere&

fepe ovottt44

6,5

coma kre/

..A.04949, stole

oitg_

-0.44 Cc, 4

4.4.4 1,4 stuyvt...w.G., tige, (F G
AvtAvla kcwqz, ttery (9/ ec

so qt...

yA
416

'4 Kau,*
A4uc. st

we

.t.e44.t_erit-reemoi

cotqae. etc 454igiv ae,c, Aroo

ittp0A74. arrAcit.

g;0%

-

e.,,t_e

&..f- 5(04
6400[4i,

so.

ciL/00.14egAl

(44 CIA A*00520.1 tJaka..
NA* jr

°ILA'

strut, efetn-te.":eac.%

cl-Aveak Likftict.oco".4tv...2on

414-arra

dux.

.

-.rctiot

J j yh.
be c4!ive4.0

Car to fo-tA4St

tp

a4

1 Age

sa

17. Al eAi 9219

S

W.8.

eiVet ektkA3g4a,,
0- cokpfto..

Alievtt

44.0aL

yowl ? Ar#t

So--Catu,'

941..1.&

*u. 4ALAie,

jiemNAftAE,

'Lama lo ghato-4
t

escto%.

yosie.

vzsiuu ksLate, J tazickstr45 key,a,

,altdock Jcuzctet, iZeoati4044, ficw&AI;KAA-

Ak4 44taAL-42e...2

sx4ftelt 61 (Qua, -

1/01G1

te_ colAstace.a.

0. Licy.t.,;..%;:5 fode, v costiA:41 c49r

r.Lepe-fitiwww,i it io aimu
AtA. eat/ ,Gakt scuy : Luak4

Scocriatioto

rluikAm, advams

lt4.441- ptact.411 qtAL,date44..

4LAte., 4494 Seszvx akeRZ}.
ve.L.4

1(44 ge- a-e41, (40cwArtoet.

oca-

Vet400

La' tta, -.144.teja

aZty-

KAAAR,

AS-C4CA,

cd1R)

1.44 oe..3

weA"-Ittos4Ni

fax,* .14r4 .L4oal". (AL tit s Adau
W.62.3

co

ttiv1/4A4WisA;4

sr. ,o0-440.a/lbo,Ara
Aketti" were. ovaitAciLy 4.14
xow

Lue

44. te

eta4;464 ate I

J L.A.& AL.,

(f

Jiatak ANsoo0cottA44^.2ov%. fin

(4. tat

Muck's cky

0

tocic.A0
be4k

joso, A_ jeAks

VIcka, ctaeZ lcuta" bae.fik
240AL Ac04,16CA,

guk sw at?

cow._ 4.44
04(.04.

gqie
14, e.A%0Jd

lao 6. ityt

1,7a4

e

irteet,i7 ta_
iAse,

ft(4 aik_ovJA144 Fc

tetAi4Vre.sk 'one,

!Y

(4'14

cut---.Z ca4(04:

o 444

'tate.

IL4 sturtft...u.c

Aiwa- kowe., tocary (9/ gc 11- cce44
At. Co

itA4140,V74.

eaf toe4d cLe0! Atoo )44

Cam. J At, s

AU- di *IA /WAIL 440 11431A40
go,,

C04411.4X1

it042.J

up.

46060 sari 4c4.1 PJ
444., k- Wit -41t0C
PK

tux :

N oak

asat, yeal"_/46 4.014t.

YoL444.

natugt 'to at.L.

444. kma,
ii&ibint a.,

&d.ta, LI p'L

.4-ew

FoAt gee tecd
E4441% A k )

7

ts4 ar 1..e44 tk

/3404
o-C1/41,

ke_etel

a

akIct&%tpf

-5Pw;i1N9

jr's

oetr

r4t, 4),,t

sek iNroosett, mak.
Lot

.

kIN:a

4
ptiel*ic4a,

a

*Adxfiraa

go4/f

afki)

14. Atine>4

ilreApA

044.

(Oa

S14-66.A. goo,

4E1)

okg

S I /Lai, : 4(44;

ft4 OVV1. "0/4400 OA 0

./i0

6ity-

c&4

to...Avk Lat4

A.!

f.e

yog. fteglic, ekeuf 4E'

treny sop

Nei4

Jo

41-11tio

nut_ geNeb 4, y06%,

A-oup oc we-t

L-Ar.

ac

[C 0 P Y.]

20 Nov 1926.

Ilit Thorpe Lodge,
Camden Hill, W.B.
My dear Ben.

I had a good letter last week from the late Miss Bleecker which told
both what I wanted to know + what I didn't want ever to hear. But such is
Life'.
I cannot exactly answer the letter because it is in my drawer at the
Bank + I am at Chequers spending Sunday with the Prime Minister. I have told
him about your troubles + he sends his love + hopes better times are awaiting
you. You must now be near to journeying to Colorado - which makes me quite
unhappy, however wise it may be.
th

Gilbert writes me that he will be sailing about Dec. 15
+ I wish
indeed I were going too. He also says that P.J. has accepted the post in
Berlin + will begin work early in the New Year: I am glad of this + so will
you be, though I have no idea who will take his place. Last week the Govt. of
India accepted the Currency Report as a whole + will proceed with the necessary
legislation in the spring. I guess the worst of the Fall is now over + so
with the practical ending of the coal strike we ought to get through with our
5% rate: this is better than I dared expect a month or two ago. Mr. Jay[?[
of Buffalo came to zee me a few days ago which was very good of him: you recall
that he succeeded Nelson Perkins in Paris.

The best to you, Ben, now + ever +
I am [signed] MN

As 104 gab.
ORPE LODGE,
C

PDEN HILL. W.8.

44

ttitfts

6,

x.a.,2 .,

stiocN.

(41,{1 e~.4,

ituiu 6Gge.kg.r editA-et iektA, 40 4 or4Aufhow. tio_ Gke,
1 ak,A,t4 (o kk,,,,,

t/tA% Sit

4, rte,.
4/$441.044,

L4 5' eUieta V 63 a-14 uF
0C:f;- !

j eAustA&Aso EicaxiCeit,

4 4141 (Lik_AA44e z(-- a hsk

& geaAav

a

IL

*44 4 Prg4v4,
/Choc

P-141

A'ag44rOL4

it4iAl.; ass,

,4, 4 a.ouviketc,i Srim,a uu.sg SokA.Ab ay
&A.:4;4 btt

ki,c&Age, ii,eil Atuk, mAtr..4,

4,&t, 1.Ct.lt9a- Cl; ec*4-C

A,v.ia,Zioot .

(K- ki-it,A0

PV1 (114Aktealt dj

joit-rxxlv,4:0?

ac

oa
C4ee-roL3

1t dr14 (adfi4

iv.42.0.

0-

gA.e, a

AreoLkel& wske..4

ivuz- s,v,ai ttAa. ckpryt 4 LotAre.c ftr;ALc, it .."car64.-

q4,44. ovszt,

4kk_

alo«.44A- fee, Is ft

,

(4c4 eM, AN-it 4, slkjAAA-5
)-zot:A. aZoGt/4 Actie-re, ,r444-LV(ik5

4..6, sari

Pj, ket,a

..L1,,tir,z

0L-10.4

t4

04-ew At;V, &A-142,

AO :41

zvief (044.4 4. got/t

girett

ilreAd%

4,ktev

ityvv,

:

newt,

Ort

ct,c.ei.pc-

OLD 4 okrecD (Iv

140(zu
6kP4r

,,t

24-e-41.474txr

CAPOtirA

eAr4& 41-3

o

4

FaAt (0 AA/ GO 013CA% av Jo

so-av,4
11-111e-k c-4a

p/-4.tg,

t4

t4A-Zvt&-to rdit.

sek AN-O,gt.,

ccuiv

44, cD 20,/tai 61,24

.e

to.e.,

s/ ILL,42,

A stA. 0 VA

ctge
'6eiklos

:

d'etIO cL40 .
6tio-

8404 c44...1.4.0

h1/4.47

7-1 40

yen. vteka, it(c4-4

treny Sc

erge_e_te)a Ar-do o v.-4de tAte g",
nut_ 84.,rb

42J-

yet,

Po-Irt:a

eusk,

oc

zAr.

ae

[COP Y]

Sunday Dec. 12. 1926

Thorpe Lodge
Hill. W.8.
Dear old Ben.

Four days ago came your letter of Nov 23d. a day later came Harrison.
I an not
a good + delightful fellow who just loves you + we had much talk.
going to write of all the matters we discussed - for I told him + showed him
everything + he will repeat all to you. We talked for many hours on end for a
couple of days + there was no more to he said unless he was going to stay for
a real visit, so he sailed on Thursday.+ as he was in a hurry I guess he was wise.
I will try + arrange to pay you a visit next month: thats as much as
I can say at present. When the extent of your illness became etident, I gave
up the idea of visiting you + changed all plans here.
For instance Harvey is
just starting off for Australia: Nairne has taken on some new word; about
But what
Trotter you know: Siepmann is learning + in time will be a great help.
It is difficult to see just now.
to do for this winter?

A committee has been set up to study our internal affairs but I doubt
if they will reach any result for 6 months. - Lady Blackett came home from
India suddenly + secretly 3 weeks ago: she had all the signs of a serious
disease but after an operation the prospects are hopeful: perhaps she will even
be al]owed to return to India during this winter.
Blackett's appointment lasts
till the spring of 1928 .- The Gilberts are to sail on the 14th but will only
stay on your side for a couple of weeks. P.J. I hear is to leave the Bank about
Jan 1st + I wonder who will take his place. - The story of your illness is
harrowing, but now that its past, the less said or thought about it the better.
At least the immediate result seems almost encouraging - as I judge from your
letter - which is a deal more than I could have hoped.
Bless you - as ever [signed] MN

ilitud,ouic ()eke, -

)/fr.ORPE

-

z10

LODGE
rA
MPDEN HILL. W.8.

oot.#4

tortk,,e4,,,

got.",

F: a ctal

Ntpi 2

Acute ale

&mkt, fraANAA80.v.,

{IC '-e--44 itre, J.tP4- -CCA)4.41

yam.. -

441.

(4AlltX6 61' aia

im44-17

yvair &eg

e.444,w

a.

oc, c

#1.44

diLActaki

Ait.atimu toe,

ca.44,e

rh,,c4L k4,44) 14,t4(04A_kt_a-44,
eickout -44;Al mac, ekiat
744

yov,

rf` rKstAktf- -CoeurAi elf% eta 4

C6'ufta- 't; ttp4f

111(Gte 6111,1 -KO Ift-al./4) -b

"141 rtAA/
itatAL

K, as

aka tuf
h&eln-ettv

8-&:LA/
cAtAs (AZ

cat", 14, ef.s&A..tk

Pot,
Ag4T,

u4

aL u
.oLy

et44A c.k eva e)
iNf&44,.e

Awy 7K aua,

ltauft'ALL.,

alsta l`to ALL` Yom.

C94 4L t/C,

fr"- 4

frf 64 &la

itt

ac.

t;6

0/tAILkIe4 otit k

tfaLIJ:A-e, c(A64

tut,' ba.6AAI div, 1 &Ake, ktilt
Sc.A.tz544?

,kcsc

4kluit 4Ce41,44N1b &PC61 IAA

c9I cliz:tkAu

aAwt.Ake_e, iicoo.my

.ro

vALta 4f, aut.4

PC. cockAAAy

4.a4s etAi

:

Iftece kit .43

a

cfct'h

cu ev6C

is%

&ALL

f.

uP;04t

kw* 14,,;641 ?

246cAteit

ee"Avt4Wer

-44

Nkt

k,

&

LI ruaL,6 kat

et.eca$4

it.etAxet4

C

paa,$

att,

lift", 4.4 1ik60 efgay ,saNAlrout)
iruy AnY1 ufte,k,, away re4 maCay /14.41.44cAlt dA44.4) ,4,444t. -"Iv%
.1)

4AA44614,teix witeAdel6 3 CU kika ot(,)
cal (LA, 4

w

0.,

dr-rvaleing

boivt,*.

11.

9

L.$

C71k) 0

:

Ay/

1.1A

0144 (A:tf

(A4.

At

4' au ca

'recto

Lo cettoeAfte, 40u$4, .heuk

KAP* 4-CiO (Oat e42"41. 444 ifr(4d-ed

-/*

yAouftt atAtta ka. 14)expap4Ap -44 ,coif`
..46-,

aif (We kt

)'6.(5-e

- tt.0

63. A, AUX et4.41/41/

-644k alif ^,r.

gs c:144)41 awl'a .rate

d aAie gUY

P./ num..4.

ifavy

kAZ

R#6.4Ag.tl4 cif-fulaikmAAAit fa/rva ka°

11-' 444 ivA ervir
Amde,..

:s

edis4Ake-A, Fo y4e.geve-KAo Jul

airvi.m/ty 428

jcz4411

.643 tauter

ieet(.*V4

frecnite64 cute,

tApat -EARAA-Zei

,,to

624te ecug

Ito urleAk ak ma; ;k
re4 44101: Xtelgi4

Uitta--cea 10 IAA, *AA'

d totilA KatAPt, 4,0 kif-2
1444 yaft _
VAN-P-

AM

- kreua,

TRANSLATION.
eft

Brussels, 15th December, 196.

The Governor,

Bank of England,
London.

Dear Mr. Governor,

I beg to acknowledge the receipt of your

letters of the 4th and 8th December and the duplicate of the
contract signed in London on the 2nd instant regarding the new
provisional credits granted to the National Bank.
I note that the original of this document is

being kept at the Bank of England in the interests of the various

contracting Taties, who have received a duly certified copy.
As regards the discount credits totalling
$10,000,000 opened at the

National Bank of Belgium by yourselves,

the Nederlandsche Bank, the Federal Reserve Bank and the National
Bank of Switzerland, I have to

inform you that I have communi-

cated with these Institutions direct and that so far we are agreed
as to the procedure to be adopted.
As I have just stated in a letter to Dr.
Vissering,

I do not anticipate any difficulty in bringing about

these operations by means of advances covered by securities in
our rortfolio, in preference to a discount operation.
With

reference to your letter of the 8th

instant, I am quite agreed on the following points: (1)

Advances by your Institution are to be made in sterling
and may reach a maximum equivalent to approximately
02,000,000;

they are to be repaid in sterling by

1st March, 1925, at the latest.
(2)

The rate of interest shall be 1
England,

(o)

above that of the Bank of

but must not be less than

Our Institution shall repay to the Bank of England the
amount actually advanced in sterling;

Articles 8 and 9
of

of our Statutes shall be amended so as to make this
obligation binding.
(4)

The Belgian Government will previously undertake not to
interfere with the engagements entered into by the
National Bank as far as the ;-receding clause is

concerned even if the National Bank are obliged to
export gold.
(5)

The withdrawal of any amounts from this credit shall be
effected simultaneously at the four issuing institutions
in proportion to the share allotted to each;

repayments

shall be effected in the same proportion.
(6)

The securities delivered as cover shall be deposited at the
Bank of England: stamping expenses are to be borne by the
National Bank of Belgium.

I have pleasure in informing you that the

Sveriges Riksbank are prepared to combine with the four issuing
Institutions in bringing about the discounts described above.

I thank you for communicating with the other
parties concerned regarding the arrangements to be made for
effecting this operation and I am deeply grateful to you for your
personal assistance

in bringing these to a satisfactory

conclusion.

I am delighted at the co-operation which is

growing closer and closer between our two Institutions co-operation of twofold value to my country in the present
circumstances.

I enclose the text of the announcement
published by us in the Belgian newspapers.
Yours most faithfully,
(Sd.)

F.HAUTAIN.

I have this moment received your letter of the 14th
instant, which has my attention.

In a few days I intend to

send my collaborator r:r.van Zeeland to the Deputy Governor, in
order

order to gire the latter an account of our journey and any
information on the subject of stabilisation operations which
may be required.

UENDEMENTS PRESENTES PAR LE GOUTnrEMENT
(N0.132)

ARTICLE PREMIER

a) Modifier comme it suit is premier alinea

:

Les dispositions formant l'objet des articles 2, 3, 4, 6,
7, 8, 9, 12, 16, 17, 18, 20, 23 et 26 des lois oombineeo des
5 mai 1850, 20 mai 1872 et 26 mars 1900, sont remplacees par
les dispositions suivante.

b) Sub.Art. 4.

Remplacer is second alinea par le texte suivant

:

Cinquante mills actions seront souscrites par l'Etat. Ces
actions seront ensuite mises en souscription publique aux conditions a determiner par un arrete royal nris sur la nroposition
du Conseil des :anistres.

Des institutions d'utilite publique,

a designer par arrete royal, pourront participer a cette souscription, et autorisation est donnee

ces fins aux dites

institutions.

Un credit de soixante-quinze millions de francs (75,000,000
de francs) est ouvert a cette fin au Budget des Depenses
extraordinaires pour l'exercice 1926.

o) Sub Art. 6.

Ajouter a cet article la disposition suivante

:

A l'expiration du droit d'eMission de la Banque, les trois
1

cinquiemes de la reoerve seront acquis a l'Etat.

d) Sub Art. 7,

:

Remplacer les mote "trois quarts" et'un quart" par "troie
cinquiemes" et "deux cinquiemes".

e) Art. 7 bis.

Supprimer cette disposition.

f) Sub "rt. 8, 2.

Completer le texts du projet ainsi qu'il suit
2.

:

A reescompter a l'eftranger les effete de son portea rernettre cee effete en gage;

feuille;

a garantir la bonne

fin de oes effete ou des operations d'escompte et d'avances y
relatives;

a aoquerir des avoir a l'etranger en des rnonnaiee

a base d'or ou cur des places payant en or.

g) Sub Art. 8.

Completer le texte du projet comue it suit
7.

:

.nfin, a faire des avanoes en compte courant ou a court

terms sur deph d'effets publics nationaux ou d'autres valours
garanties par l'h'tat, atrial que cur lea valeure similaires du

grand Duohe de Luxembourg, dane lee limites et aux conditions
a fixer periodiquement par l'Adminiutration de la lianque, con-

jointement avec is Conseil des censeurs.

h) :=outer :

I1 est formellement interdit a la Banque de se

Art. 9. -

livrer a d'autres operations que cellos qui sont doiterminoes
par l'article 8.

Elle ne pout emprunter, sous reserve de ce qui est prevu
au

2 de l'article precedent;

elle ne peut faire des prets,

soit cur hypotheque, soit sur dep-ot d'actions industriellee.

Elle ne peut priter sur see propres actions, ni lea
ruoheter.

ne pout prendre aucune part, soit directe, soit

indirecte, duns des entreprises industrielles, ou se livrer
a auoun genre de comiaerce
mention an a;

:titre quo celui dont it est fait

2 de l'artiole precedent.

She ne pout acquerir d'autres proprietea immobilieres que
cellos qui sont strictement necessaires an service de
1

4ablissement.

generale des actiormeiros, 84r une liste double de candidate
presentee a chaque vacanoe
1.

:

Par les membres conseillers de groupe elus par lee
deligues de °less° du Conseil euperieur de l'Industrie
et du Commerce et par les membres du Conseil superieur
des LTetiers et Negoces, chaoun de ces Conseils preeentant
un oandidat;

2.

Par lee membres ouvriers et employee du Conseil superieur
du Travail;

3.

Par lee membres emus et cooptes du Conseil superieur de
l'Igriculture.

Ces administrateurs sont dispenses de constituer le
cautionnement statutaire.

DISPOSITION'S ADDITIO7NELLES

ARTICL3 3.

21odifier comme it suit is premier alines

:

La presents loi eortira see effete a partir d'une date qui
sera determine° par un arrete royal Iris de co:ar:Iun accord aveo
to Conseil d'administratiou do is nanque.

Completer Vartiale

ainsi qu'il suit

:

Le revenue du placement des valeurs sur l'etranger qui seront
remises hi is Banque par l'77.tat eat attribue au Tresor.

Au surplus, la Banque renonoe, au profit de 117,tat, au revenu

des valeurs sur l'etranger qui entroront on compte, conformement
a l'artiole 34 des statute, pour 1 etabliseement de la proportion
entre l'encaistie of lea engagements a vue.
riti Banque retiendra une commission de un pour mille par
sernestre sur le montant moyen des valeurs stir l'etranger tel
quill s'etublira d'upre:; le s situations liebdomadaires 2ubliges
au I.Lcuiteur beige.

Tout.

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