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lir. Benjamin Strong and the Restoration of the Cold Standard. t (A rough translation of an article by Eigo Fukai, Vice-Governor of the Bank of Japan, published in the Tokyo Nichi Nichi, October 23rd and 24th, 1928, and later incorporated in his book "Lifting of the Gold Embargo as a Currency Problem.") Mr. Benjamin Strong, Governor of the Federal. Reserve Bank of New York, passed away on the 16th October, 1928. The late Mr. Strong was called to the governorship of the Federal Reserve Bank upon the organization of that institution in 1914. As he played a prominent part in the field of international finance in the post-war period, there should be others more competent than I to recount his achievements. For my part, I have some personal recollections which I can scarcely repress. Between the Federal Reserve Bank of New York and the Bank of Japan there early developed a friendly relationship, thanks to the efforts of the late Baron Megata and of Yr. Hamaoka of the Bank of Japan, then stationed at New York. On the occasion of Governor Strong's visit to this country in 1920, I saw him nearly every day during his stay in Tokyo. I accompanied him to hakone and there we had the whole day to ourselves, chatting. Lr. Inouye and I also took him to Nikko, there talking endlessly on various topics for two whole days and evenings. During my visit in New York in 1922 on my way to the Economic Conference in Geneva, I saw Governor Strong often at his office in the Federal Reserve Bank. I passed an evening at his home and a day at one of his clubs, talking by ourselves. On these occasions our conversation became intimate enough that we ventured to talk about personal matters. From what I personally heard from Mr. Strong I wish to record here a few things which may serve to show what manner of man he was. At the time of my visit in New York, referred to above, Governor Strong was being accused in some quafters of being partial to foreign requirements to the neglect of the needs of agriculture and industry at home. Some went so far as to charge him with idly staying in office in his physical incapacity. demanded. In political circles even his resignation was Er. Strong told me then with heroic determination that as he had a mission to performhe would never resign, but would keep on striving as long as his health permitted. One of the tasks which Governor Strong set to himself was properly to work out the functioning of the Federal Reserve System. The laws were there, but the actual conduct of the System was largely left to the judgment and ability of the management of the Reserve Banks. In the United States, where attempts previously made to centralize and unify note issues had ended in failure, the new Federal Reserve System was, at its inception, far from gaining the confidence of the public. were pessimistic with regard to its future. Indeed, some Although the Federal Reserve Board at Washington is the controlling centre of the System, the actual operations are conducted by the twelve Reserve Banks, of which the one in New York is admittedly the most important. Upon the successful conduct of the Federal Reserve Bank of New York, therefore, largely rested the fate of the entire System. Yr. Strong relinquished the presidency of the Bankers' Trust Company to become the Governor of the Federal Reserve Bank. He accepted the call in his enthusiasm for the new duties, although the change meant to him no small sacrifice 111 in the way of remuneration. In order to give his critics no 10 occasion to question his integrity and impartiality in the conduct of the Bank's affairs, Yr. Strong parted with all his holdings in various stocks. Referring to this conscientious act of his, he once jokingly remarked to me that had he retained his holdings he would have easily gained a veritable fortune in the war-time boom. As in the early years of its existence the Federal Reserve System did not yet command the confidence of the public that it enjoys today and as Governor Strong himself was comparatively a junior among leaders of the financial circles, his work in those days was, so I am told, rendered particularly difficult. When the Federal Reserve Bank insisted that the parties to the bills presented for purchase or discount at the Bank should produce their balance-sheets, a well-known merchant vehemently resented this procedure, saying that his reputation was too well established for it and that he had never been asked by his bankers for balancesheets. To this Governor Strong said in reply that whether to produce a balance-sheet or not was entirely at the choice of his client, but that the Reserve Bank held itself perfectly free in deciding what papers were eligible for accommodation. A short time afterward the old merchant produced his balance-sheet. certain trust company got into difficulties, a strong combination of financial interests, which was to undertake the reorganization of the company, saw it safer first to have the position of the trust company examined by the Federal Reserve Bank. So by slow degrees the New York Federal Reserve Bank attained its place of importance. And while this was largely owing to the prominent part the Federal Reserve Bank played in the war-time finance, it was no doubt due also to the attitude, the judgment and the determination of the management of the Bank presided over by Ur. Strong. From what Mr. Strong told me on various occasions I gather that the keynote of his monetary policies was the maintenance of the soundness of the currency. Accordingly, he regarded liquid commercial credits as the water-main in the currency-supplying system, although during the war it was incumbent on the Federal Reserve Banks to take such measures as would facilitate the raising of national loans. In the post-war years Mr. Strong was concerned in checking the expansion of currency following upon the inflow of gold. For this purpose he adopted, on the whole, a policy of deflation. However, knowing, as he did, that it would serve no useful purpose to raise interest rates unduly in utter disregard of urgent needs for fands, he judiciously abode in the golden mean. Besides, he was mindful of the undesirable effects high money rates in the United States might have on the rehabilitation of the currencies of the world. This is perhaps why the policies followed by the Federal Reserve Bank appeared to some to be not thoroughgoing enough. Rigorous monetary theorists charged the Reserve Bank with being lax, while others eager for immediate conveniences complained of its being too strict. There existed, however, a fair accord between the Federal Reserve Board on one hand and Governor Strong and the management of the rest of the Reserve Banks on the other, and the monetary policies of the United States were put into execution through their concerted efforts. 5 IMO And Er. Strong was a dominating influence among his colleagues. When I met him in 1922, Er. Strong told me that he had very nearly succeeded in properly fixing the modes of functioning of the Federal Reserve System so far as its domestic operations were concerned, though latterly the concord has seemed at times to be jarred somewhat. Another task which Governor Strong felt himself called upon to carry out was the restoration of the gold standard in the world As a means of realizing this object, he aimed at bringing about the co-operation among the central banks. Mr. Strong believed that in view of her international position the United States should endeavour to help on the work of currency restoration and that eventually that was to her own good. In this influential persons in financial circles in New York shared Mr. Strong's views. Abroad, Governor Norman of the Bank of England, enthusiastic for the restoration of the gold standard and the co-operation among the central banks, acted in unison with Er. Strong. These ideals found expression in the resolutions on currency adopted at the Genoa Conference. Owing to a strong distaste shown by the United States for all financial policies savouring of internationalism, the collaboration among central bankers has not since made a headway as was desired by Mr. Strong and Er. Norman. But the work of the restoration of the gold standard has steadily progressed, and a number of countries have received assistance from the United States in the form of credits. In 1925, when Great Britai effected the removal of all restrictions in regard to gold shipments, Yr. Strong wrote to me telling me how glad he was to see a universal restoration of the gold standard so auspicious 7 S 8 bearing on the international finance aiming at the rehabilitation of the currencies of the world, lir. Strong did not engross himself in controversies on these problems to any great extent, believing that in the main they must be settled politically. Quite independently of the fate of these problems, therefore, he was solely concerned with the more practical measures and bent his energies to the task which he believed to be his mission. He made public almost no stirring views, but attracted the attention of the world simply because his action was vitally related to practical issues. Poorly blessed with health, and not unfamiliar with life's sorrows, Yr. Strong nevertheless left behind him brilliant achievements in the post-war economic reconstruction of the world. His success, however, was not easily won. On the contrary, he fought to the end for his convictions, against difficulties and paying dearly. a heroic life. It may not be too much to say that his was A 4, A .vc x___4-2-=<: Lam- r f, 4_,/n RECEIVED THE BANK OF JAPAN DEC 3 0 1926 T01.. YO G_ L. H. December 14, 1926. Dear Mr. Harrison, Remembering your kindly showing me over the new building of your Bank then in construction, when I visited your office in 1922, I appreciate warmly your letter of November 5th and thank you for paying your attention to my letter addressed to Mr. Strong and informing me of his illncL;s. I have written to him and expressed my sympathy. I can imagine how hard he worked in Europe at the expense of his health. It is some relief to learn that he is already on the road to recovery and I hope he will be able to resume his work before long. I take this opportunity to express the gratitude we of this bank always feel for the kindness you and your colleagues show to members of our staff who are in New York. With kind regards, Believe me Yours faithfully Yr. George L. Harrison, Federal Reserve Bank, New York. July 9, 19.P. My-dear' . In the dDsence of Governor Strong, I take pleasure in acknowledging receipt of your letter of June 2.2, in which you have briefly discussed prevailing business conditions in Japan. I also have for acknowledgment your letter of June 93, in which you have written Governor Strong regarding reaction in Japan to the resumption of gold payment in London. As Governor Strong will be away for some few weeks, .rid as I know that he is always interested in hearing from you, I am to-day forwarding to him copies of both letters for his information. Sinterely yours, L. F. SAILER, Deputy Governor. Mr. Eieo Fukai, The Bank of Japan, Tokyo, Japan. COPY June 23, 1925. 111116. 4IhDear Mr. Strong: Your letter of June 1 reached me after I mailed my note to you yesterday. am very grateful to you for disclosing to me your most interesting observations on the economic and financial situation of your country. rs you seem to be particularly anxious to hear from me what the reaction has been in Japan to the resumption of gold payment in London, I hasten to write you these following lines. When I discussed currency problems of the world with you and Mr. Norman in 1922, it appeared Japan would be in a position to take a concerted action with Great Britain if and when the latter should decide to resume gold payments. Our situation, however, underwent a great change becuase of the disaster of 1953, the balance of international payments turning heavily against us. The gold embargo has been a subject of bitter controversies in this country especially since the marked decline in our foreign exchanges began in the spring of 1924. The opinion has been rather widely held especially among politicians and publicists that the embargo should be raised at once as the only means of rectifying the exchanges. Of those who held this opinion, some did not go far enough into the ouestion of the balance of international payments. They seem simply to have thought it strange that our exchanges should be allowed to fall when we had a respectable amount of gold in stock. Others went deeper into the question and seem to have thought that the efflux of gold and the consequent shrinkage of our note-issue would lead to the recovery of the balance of international payments iz favour of us. The latter way of thinking is theoretically cogent, I think. But a policy based on it should involve a very severe deflation, and it was thought to be risky in practice. After a great deal of public debates and private investigations, the conclusion reached by the majority of the nation seemed to be that the embargo could not be safely raised until the balance of international payments so far improved as to bring the exchanges near par and that every effort should be made to effect the improvement as soon as possible. I think this conclusion was confirmed and strengthened by the British policy cautious in conception as well as in execution. There are among us a few inflationists who see a boon in v depreciating currency and falling exchanges as a stimulus to trade and industry. There are also nominalist doctrinaires who are impatient of the trammels of a metallic standard and dream of an ideal "managed currency". These tendencies of thought appealed with some effect to certain sections of the people, though not very large or influential. Their votaries either saw little need of hurrying the raising of the embargo or were out for a fundamental reconstruction of the monetary system. They found a support in the example of Great Britain as long as she maintained the embargo. In the sphere of practical considerations, they were dealt a blow by the announcement of the British policy. Now that the gold standard prevailed in America and the British Empire, it must be the goal of all self-respecting countries, whether it be ideal or not. The Japanese nation, as a whole, will henceforth strive with a single aim for the resumption of an effective gold standard. And I think I may say that there are signs of a steady improvement in our balance of international payments, although ebbs and flows may be inevitable yet for some time to come. Perhaps remembering what passed in his chat with me three years ago, Mr. Norman courteously caused an exchange of views between the Bank of England and the Bank of Japan. As a result, the former understood the changed situation of Japan. With kindest regards, Benjamin Strong, Esq., Governor, Federal Reserve Bank of New York, http://fraser.stlouisfed.org/ New York. N. Federal Reserve Bank of St. Louis Y. Yours sincerely, (Signed) Eigo Fukai 111 ['V( 1 Of those who held this opinion, some did not go far enough into the question of the balance of international payments. They seem simply to have thought it strange that our exchanges should be allowed to fall when we had a respectable amount of gold in stock. Others went deeper into the question and seem to have thought that the efflux of gold and the consequent shrinkage of our note-issue would lead to the recovery of the balance of international payments in favour of us. The latter way of thinking is theoretically cogent, I think. But a policy based on it should involve a very severe deflation, and it was thought to be risky in practice. After a great deal of public debates ana private investigations, the conclusion reached by the majority of the nation seemed to be that the embargo could not be safely raised until the balance of international payments so far improved as to bring the exchanges near par and that every effort should be made to effect the improvement as soon as possible. I think this conclusion was con/A-- firmed and strengthened by,British policy cautious in conception as well as in execution. There are among us a few inflationists who see a boon in a depreciating currency and falling exchanges as a stimulus to trade and industry. There are also nominalist doctrinaires who are impatient of the trammels of a metallic standard and dream of an ideal "managed currency". These tendencies of thought appealea with some effect to certain sectionjof the people, though not very large or influential. Their votaries either saw little neea of hurrying the raising or the embargo or were out for a fundamental reconstruction of the monetary system. They founa a support in the example of Great Britain as long as she maintained the embargo. In the sphere of practical considerations, they were dealt a blow by the announcement of the British policy. Now that the gold standard prevailed in America and the British Empire, it must be the goal of all self-respecting countries, whether it be ideal or not. The Japanese nation, as a whole, will henceforth strive with a single aim for the resumption of an effective gold standard. And I think I may say that there are signs of a steady improvement in our balance of international payments, although ebbs and flows may be inevitable yet for some time to come. Perhaps remembering what passed in his chat with me three years ago, Yr. Norman courteously caused an exchange of views between the Bank of England and the Bank of Japan. As a result, the former understood the changed situation of Japan. With kindest regards, Yours sincerely, &-7) Benjamin Strong, Esq., Governor, Federal Reserve Bank of New York, New York, N. Y. COPY THE BANK OF JAPAN Tokyo June 99, 199. Dear Mr. Strong: Your note of May 95 has just reached me. kindly forwarding my letter to Mr. Wadsworth. I thank you for I thank you also for your kind thought in sending me words of sympathy in regard to the Psychologically it was a recent earthquake in the San-in district. hard blow to come in such a short interval after the great catastrophe. But the recent earthquake affected only a small area, and its severity was not to be compared with that of 1993. Although the residents of the affected district suffered much, the material effect on the economic condition of the country is quite insignificant. Our foreign exchanges have shown a weak tendency in the last few weeks. The disturbances in China, together with the feeling of uneasiness produced by the earthquake, seem to have interfered a little with the optimism) which had prevailed for several months past. At the same time, the end of the import of cotton drawing near, the activity in dealings in belated cotton bills has been a feature of our exchange market. But the rates now remain steady, because we are already entering the sewn of the export of this year's silk. With kindest regards, I remain, Yours sincerely, (Signed) Figo Fukai Benjamin Strong, Esc. Governor, redeTel hestrve Bank of New York, New York, N. Y. di THE BANK OF JAPAN TOKYO (4, i 'v V June 22, 1925. Dear Mx. Strong, Your note of May 25 has just reachea me. I thank you for kindly forwarding my letter to Mr. Wadsworth. I thank you also for your kind thought in sending me words of sympathy in regard to the recent earthquake in the San-in district. Psychologically it was a hard blow to come in such a short interval after the great catastrophe. But the recent earthquake affected only a small area, ana its severity was not to be compared with that of 1923. Although the residents of the affected district suffered much, the material effect on the economic condition of the country is quite insignificant. Our foreign exchanges have shown a weak tendency in the last few weeks. The disturbances in China, together with the feeling of uneasiness produced by the earthquake, seem to have interfered a little with the optimism which had prevailed for several months past. At the same time, the end of the import of cotton drawing near, the activity in dealings in belated cotton bills has been a feature of our exchange market. But the rates now remain steady, because we are already entering the season of the export of this year's silk. With kindest regards, I remain, Yours sincerely, Benjamin Strong, Esq., Governor, Federal Reserve Bank of New York, New York, N. Y. 0 M/y 2b, Dear Mr. Fuksis Your card of May 8, together with the letter aadreesea to kr. Eliot Wadsworth, reached me today, and I am sending your letter to Mr. ladaeorth by courtesy of Leland Herriuon tcaay. !!r. adazorth in Washington, and I believe *ill be there for a. few weeks before bailing for Europe. I have been very much distreesed to learn of the revere earthquake and conflagration which you have recently experiencea in Jrpan. Surely Jzan has sufiereo almost beyuhd endurance, but now I hope that these great rorcee of nature have exhauster themeelvas ana that you will have before you many years of tranquillity and comfort without this menace bl,Gye at hand. With kindeet regards to you and to my other friends in the Bank, I beg to remain, Sincerely yours, Mr. Eigo Fukai, bank or Japan, Tokyo, Japan. crl Union CA THE BANK OF JAPAN TOKYO January 13th, 1925. Dear Mr. Strong, I must now thank you for your kind thought in sending me the New Year's greetings. The turn of the year revives in me all the pleasant recollections of my contact witn you and I tender you the very beat wishes on my part for your continuing and increasing happiness and prosperity. The last year was an eventful one for my country from the economic and financial point of view. dollar exchange The fall altogether remarkable. It was, indeed, the first experience we had since the establishment of the existing monetary system of the country. I may say, however, that the confidence in our currency is fundamentally unshaken and the fall in the exchange is merely the result of the adverse balance of international payments very largely caused by the seismic disaster. This observation is borne out, I think, by the fact that the decline in our dollar rate stopped in the early summer with the seasonal increase in our export of silk and began anew in the autumn with the resumption of forward negotiations for the import of cotton. These negotiations commenced earlier than usual; but the fact was certainly due to the proper caution on the part of cotton importers. There is another 2 fact worthy of note as throwing light on the currency situation, i. e. the rise in the level of internal prices is much smaller than the fall in the foreign exchange, the former being about 12% and the latter about 23% as compared with the pre-earthquake figures. Since the advent of the decline in the foreign exchange, there have been advocates for the raising of the embargo on gold as a measure of immediately recovering the exchange. Our stock of gold and foreign balances is no doubt adequate for the immediate purpose. But it is thought more cautious to wait and see the course of our international payments, of which there are many signs of improve- ment, the low exchange being a check on the import and a stimulus on the export. The internal depression and the policy of retrenchment of the Government will also subdue the import. The ephemeral activity, excited by huge proposals for the reconstruction, has already subsided, and the economic circles as well as the people in general seem now to be seriously confronted with the hard facts growing out of the post-war reaction and the earthquake. In the mean time, the Government and the Bank of Japan are prepared to release the holding of gold and foreign balances in due proportions, when there are pressing needs, with a view to steadying the immediate prospect and allowing time for gradual and sound recovery of our exchange situation. f$ January 12, 12b. My dear Mr. Fucii: It is some time since I have had one o: interestint; letters from you advising somthin4; of conditions in Japan and something of the outlook. I have w,tence luta a good deal or interest the iiures of the Bank of Japan and the figures as to your import end export trade and other revelant matters. But ali of these figures are colorless without some interpretation of views. expression 111,, I would value very much it you could give it Lc) me. As to our own conditions at home, we have been through h long period, e,y six or eiEnt months, ease coney rates, but have had the benefit or a goon crop on the whole (except ue to corn), which hue been solo at very Min pricea. me have htd eomethini, like a billion enc. a quarter of foreign loans placed in this market in the course of the past year, and these f:xtors of easy xontiy and liberal creaite to the reet of the world have facilitated the export of our varplus tam proauce, have resulted in some reaajustment or investment security values to tdic lower level of interest rates, and as well, we have tern some flow of fluid capital back to birope, and an increase in the values of forei6n currencies in terms of the dollar. In fact this process has gone to the point Where we are now exporting A Eoorl deal of gold. While the speeulstion in stocks is not altoi;ether a comfortable develop- ment, it ij one of those inevitable things accompanying an improvement in trade ana production awl a lowering of interest rates, and can hardly be regarded as an unnixel evil. Ths outlook fax this year's bueinesi:., on the Whole, is good. But 2 124 Mr. Fukai we must be careful that t e traditional spirit of over -optimism, ehich usually develops in this oountry, does not result in an unsound ex:.ansion of business and .,,rices; that, indeed, being a matter w'ic"i re are _atcAng vit.1., t..e gre_test care. Of course te lore conservative result of t'le elections abroad and Mr. apOlidge's sweeping victory in t'-is c-untry, rhio`l gives '-im a majority in both houses of 6oagress, has .d a prcfounJ influence upon business 1-eo;.le generally and 1-,as added to te general Peeling cf o:,timism. Aith the exception of some difficultiee in the State of Iowa, rkhere t-ey suffered almost a comlete loss of t'le corn lrop, whicl) is so essential to t'.8 farmers t',ere for fattening sto.3k, it looks as t'-.oug. tle :orst of our bankin treubles in t`.e agricultural Eecution were over. ere rather severe last year an,i gave rise to suite a little uneasineue. I hope you had oi:,.ortunity for a g cd visit :dth Mr. Greene. He is a :arm friend of mine, and I have a very high regard for him. ,on't you t.res, nt my reEyect to your asecciates, and pith kindest regards to you, I beg to remain, Sincerely yours, Mr. Ligo Fukai, Director, Bank of Japan, Tokyo, j&y:11. They ex 0 Estimated Amount of Expenditure for the Fe- construction of the Capital of Japan. 1. Administration expenses for the Re-construction Board 22,931,000. Yen 6,879,000 Yea Salary Sundry Administrative items 14,652,000 Investigation and Research 1,400,000. 2, Expenditure of Re-construction For 448,570,000. Yen 402,793,000.Yen City of Tokyo 1. Roads & Streets 2. Canals Parks 362,323,000. Yen 28,570,000. 11,900,000. 45,,77,000,Yen For the City of Yokohama 1. Roads & Streets 38,206,000. Yen 2. Caneis 5,612,000. 3. Parks 1,959,000. 3. Loans to Local Governments for Re-construction purposes To Tokyo Prefecture To Kanagawa Prefecture 15,325,402.Yen 12,749,698.Yen 2,575,704. 4.Subsidy to Re-construction Works 89 ,225,917.Yen 1.Subsidy to constructive works within the Fire defense zone 20,0J0,000.1en 2.Subsidy to Local Government for re-construction purposes 69,225,917. 5.Subsidy for interest on re-construction loans of local Governments 21.694.73011en 597,747,049.Yen Total a is Estimated Amount of National Revenue and Expenditure for the Fiscal Year of 1924 and thereafter. Fiscal Year 193 1929 1931 Yen Yen Yen Yen Yen Yen Yen Yen 1928 1927 1926 1925 1924 Revenue 1,293,114,411 1,305,571,084. 1,280,593,813. 1,298,879,883 1,315,125,376 1,316,582,275 1,213,429,079 1,311,526,839. Expenditure 1,276,415,182 1,269,805,022. 1,256,141,328. 1,215,484,853. 1,269,849,559. 1,171,387,973. 1,167,082,770. 1,161,050,278. 24,452,485. 83,395.030. 45,285,819. 147,194,302. 146,346,309. Excess of Revenue 14,699,228 15,766,061. Balance of Revenue Surplus for fiscal 82,742,82E 0 0 0 0 0 0 0 year 1922 Total Surplus of Revenue 97,442,054 15,766,061. 24,452,485. 83,395,030. 45,285,819. 147,194,302. 146,246,309. 150,476,561. 4;1 TRANSLATION OF INCWING CABLE 11111-1/1 Tokio, rec. 12, 194. Governor Strong ?ederal Res,:)rve Bank, New York, N. Y. Am delighted to welcome my old friend Greene and have advised your friends of his visit and your introduction. Fukai. Form 1256 Charge to the account of SERVICE DESIRED CLASS Full ' *late Deferred Cable Letter Week End Letter Petrone should mark an X opposite the Bass of service desired; OTHERWISE THE CABLEGRAM WILL BE TRANSMITTED AT FULL RATES. Benj. Strong, WEST CAB NEWCOMB CARLTON. PRESIDENT 33 Liberty Street, New York UNION RAM Number Number of Words Time Filed GEORGE W. E. ATKINS. FIRST VICE-PRESIDENT Send the following Cablegram, Subject to the terms on back hereof, which are hereby agreed to December 11, 19E4 Tukai Bank of Jbpan Tokyo Giving Jerome Greene of Lee Higginson and Company lettere to you Inouye Ichiki Sumitomo Will appreciate your advising them Nipress of Russia due January first Strong He sails March 11, 1924. Gear Mr. Fukait Your letter of February lk has been received and read with very greet interest. It is, of course, resssuring to me to have your very explicit ex- planation of policy aaa to feel the assurance which I sm sure we can that the influence of the bank sill be in the direction of avoiding inflation. ._ eesrse, when the last *ors is said on this subject, noWing but a belanced F.overnmental budget by adequate taxation on the one hand and economy on the other and a sound policy r.y the bank of issue can be relied upon to avoid inflation. In financing the cork of reconstruction growins out of your earthquake catastrophe the temptation of Finance Ministers will oe so strong to rely sore upon loans than upon taxes - just as was the case with many nations during the war in meeting war expenditures - than one cannot avoid burmibing just what policy 'ill be sdopted. In general, I think the impression in this country is altogether favorable es to the record of Jcpcneee fintsace through the war and poet -war period. That certainly is my impression. Lut you must realize boa your friends are watching cevelopnents, eepecially when the situation becsme so complicated by political developments. The Jspenese loin 0:bo I bslieve, very eacceesfully placed in this market. I hear men)/ reports of side distribution. The loan is selling et March 11, 1924. 2 Kr. Fukai *bout the issue price now or slightly above, and so far as terms go I can see 0 nothing vhich can fairly be criticized. Of coursetwe did hear of the criticism which developed in Japyn, but one muet realize that bankers do not fix the terms at which a large loan can be eold. That is fixed by the market. Once the time, rate of interest, and security is agreed upon, the prioe must depend upon public estimation of the obligation, y,nd there is little indeed the negotiator can do beyond agreeing upon commissions and methods of distribution which will make the These bonds were marketed very close to the basis on which sale successful. the existing issues could be purchased, end the commissions, in my opinion, were not excessive. (p if the distribution as as satisfactory as it ie reported to be with the market price as it is, I hardly see how eny criticism can be made. When I last rro-t Mr. Mori he told me exactly whst had been done follow- ing our first conversations, 7.1n771 I was cretified to feel that the Commission hed pursued almost exactly the lines thYA we hae indicated as desirable, i.nd I think no mall part of the success of the operation wee due to the skill with which he handled it und to the most favorable impression which he made upon the This I hove heard from a number of them and it in just as 1.611 that bankers. you should knot it. You may be sure that I am looking foreJard with the greatest pleteure to seeing Mr. Inouye, and I hope to have the opportunity to entertain him and make him ao4usinted with some of my friends here. Just now, as you hive read in the newspapers, we are hrvin7 some very unpleasant political developments. It seems to be s fact that there was some irregularity in connection with the letelm7 of oil lends owned by the '.7overnment, but growinE out of this there hes developed the usual me!F of er=gf,eration and rumor and suspicion vhich is harmfUl to the countr7 end involves eeriou? hardship and suffering upon a good many innocent people tho have not been ,Tuilty of eny Mr. Fakai dil wrongdoing whatever. March 11, 19%4. We have a very cool and level-headed President in Mr. 0 Coolidge, 4nd I believe the country as a shale looks TAth confidence to his dealing with mutters uncretioally Lad successfully. Our great economic problem is dealing with the continued adcition it) our as of gold. We cannot keep it out but must absorb it and put it away temporarily until the world comes to its 6enses _end readjusts its monetary systems. it is a menace to U9 in presenting the possibility of inflation. So taro the difficulty has been successfully dealt with and I have strong hopes that it can Cc in the. future. RUT one cannot overlork that it is a menace to our 3tability anc! in the lest analysis we must rely upon the wood sense of our tAakere d businees awn to avoid f. repetition of the mistakes of the %talc world in the yerirs 1919-S2C. Cur new bank building is approschim7 completion Find when you ne visit Us I hope to ,:how you a veil organiaed smooth ranninc bank all under one roof. ;ith warmest regards and every rood wisll to you and to your seeociates, believe me, Faithfully ycure, Mr. Eigo Takata Bank of Japes, Tokio, Japan. ACKN41VVI,EDGED THE BANK OF JAPAN LIAR1 1 1924 TOKYO February 12th, 1924. Dear Governor Strong, Your interesting letter of December 24th reached me some days ago. on our side. Since it was written, a great deal has happened The political and financial situation having become extremely complicated, I thought I had better observe and think a little before answering your inquiries and suggestions. In one respect, I feel sure that the policy contemplated by the late Cabinet portfolio of Finance letter. the one in which was along the line suggested in your After the seismic disaster, there was a pretty strong inclination, encouraged by the profound sympathy manifested in America and other foreign countries, to rashly importing foreign capital for big schemes of reconstruction and economic revival, which would certainly lead to inflation and ephemeral activity. The declared policy of the Government was, I think, intended rather to check this inclination. Borrowing abroad was to be limited to the amount required for covering materials purchased abroad, which in turn were to be restricted to really indispensable proportions in kind and quantity. meaning of the proposal to finance reconstruction work mainly by domestic loans and taxation, rather than by borrowing abroad. The policy of the Government did not preclude borrowing abroad for covering purchases made abroad, while domestic loans for 41 the purpose of paying for imported materials were out of the question. Whether the taxation will be adequate even to meet disbursements at home is really a question. Domestic loans are conceived as a means of attracting existing capital and savings to reconstruction work. We think they will be a preventive of inflation, if limited to a due extent. What you fear is, I surmise, that they may be pressed so far as to produce an inflational effect by forcing the expansion of bank credit. I agree with you, and am afraid we may be placed in the dilemma of somehow finding ways and means or cutting down the schemes for reconstruction and economic enterprise. I, for one, think all financial schemes should be adapted to the duly available capacity of the nation. On the other hand, there are votaries But downright inflationists of a forward financial policy. are very few in Japan. Theoretically almost every body admits, and even urges, the desirability of safeguarding against inflation. I believe the Government will certainly aim at taking precautionary measures in that direction. As an explanation of facts that have already come to pass, I may point out that the increases in our note circulation have been caused not by borrowing operations of the Government nor by any direct financing of reconstruction, but by accommodating those banks whose resources have become temporarily frozen on account of the catastrophe. Immediately after the disaster, we had to lend out liberally in order to prevent the break-down of the credit machinery. It seemed to us not well-advised to * make an abrupt change in our attitude, and we have still to fill up the gap caused by the contraction of general bank credit. We shall not fail to take every opportunity to accelerate the return to the normal condition, but we must proceed gradually and cautiously. We have heard about you from Mr. Tatsumi and Mr. Ichinomiya, and I am glad to learn the improvement of your health. The neprotiations for our Government issue in New York and London seem now to be near the conclusion. I hope the outcome will be satisfactory. I have shown your letter to my associates and Mr. Inouye. The latter has started on a tour to Europe and America. Having resigned office, he is now utilizing his recess to realize his long-cherished desire. I expect you will meet him before autumn in New York. With kind remembrances and every good wish, I remain, Yours sincerely, Benjamin Strong, Esq., Governor, Federal Reserve Bank of New York, New York, N. Y., U. S. A. I. t-iteihft. 2 r November 17, 19f3. Lear kr. isukai: It gives me pleasure to advise that a shipment of books on American Banking, as per the appondee list, is today being forwarded to your goon institution with our compliments. These books will re- place those destroyed in the recent earthquake, ana are practically a duplication of the books sent your library in 191;1. A number of the books you originally had are now out of print and unprocurable, so a substitution has been made by adding a fey: tercent publications which we believe are of particular interest as reference books. There will be some delay in forwarding our bank reports and bulletins as well as other miscellaneous material, as we are having the bulletins bound, but v.e hope to send them off within a couple of reeks. ,43 are glad to have been of some assistance in the restoration of your library, ant. if th, re is anything further that vs can do in this connection please call on us. ith very warm regaraL., believe me, Very sincerely yours, Encl. 1.1r. Eigo Fukal, c,io Bank of Ja2an, Tokyo, Japan. BANK OF JAPAN TOKYO Department of Nzonomic Research. October 8th, 1923. The violent earthquakes that visited Tokyo, Yokohama and the neighbouring districts about midday September 1 and the great fires that broke out immediately thereafter wrought such a havoc in those places that roughly one-half of the City of Tokyo, including the main business quarters, was ruined to desolation and the City of Yokohama and the adjacent popular health resorts demolished even more mercilessly, with immense losses of lives and property and a large number of homeless people. For a time, street car and local railway traffics, electric light and gas supplies were stopped; telegraph and telephone systems became unworkable and even mail services were interrupted. Many of the Government buildings, banks and leading business offices were destroyed. Our Bank building also was partly damaged by fire, the library and records of the Department of Economic Research having been completely reduced to ashes. But we have been fortunate enough to see that the more important parts of the building remain unimpaired. Not only has the business of the Bank been carried on without stopping, but it has since been doubling its activities in supplying the extra currency needs, in preventing disturbances in the financial market and in restoring oonfidence in general. again, while not belittling the country's losses sustained by the catastrophe, it was fortunate and we may feel some consolation in the fL=ot that the devastated areas were eoonomioally consumptive centres in the main, so that the effect on the nation's productive capacity as a whole may be said to have been relatively slight. The Government on their part lost no time in taking the necessary steps to meet the emergency. The whole affected regions were at once put under the military rule with a view to preserve peace and order against pillage or riot. portation of Government-owned rice from Osaka The trans- the requisition and distribution 2 1110' private debtors having residences or places of business within the desolated zone, Se with respect to certain debts incurred un or before September 1 which matured within the month of September, deferring the payments thereof one month forward. ds to bank deposits, the payment of Yaw per day for general purposes and the payment for the purpose of paying salaries and wages were not covered by the moratorium, with a view to providing the public with small sums of money for daily needs. AL)ng with this, utmost assistance was promised by our Bank in providing bankers with the necessary currency to cover the payment of deposits. Not only did our Bank take no advantLge of the moratorium, but our doors were opened even to those banks hitherto having no business connections with us and a very lenient attitude was taken in granting credit. All this proved reassuring, and within a weak from September 8 on all the leading banks in Tokyo were open again. kany of the banks did not fully avail themselves of the moratorium, paying their depositors over the limit prescribed by it. Withdrawals of deposits also did not amount to anything so big as had at first been anticipated, and there was nothing very disquieting about it. in oraer, however, to cope with the financial situation after the expiration of the moratorium (Sept. s0), the Government deolared its decision to make good the loss that might be incurred by the Bank of Japan up to and not exceeding Z100,000,000 as the result of the Bank's discounting bills payable within lated zone and other specified pre-moratorium bills. the deso- It was contemplated under the plan that traders and business men who had bills outstanding against them and who suffered big losses financially in consequence of the catastrophe might be given respite for two years at the outside in which to readjust their affairs, and banks that had discounted such bills might be relieved of their funds being tied up. Now that the way was open for credit to be extended on pre-moratorium bills and in conjunction with it more liberal terms were offered by our Bank with regard to the ills,- oounts in general, scepticism and apprehension concerning the outlook was allayed, although bankers' caution still continued. Beginning with October 1 the clearings 4 ow* at the Tokyo Clearing House were resumed, and in connexion with it business in call likp loans. In Osaka and other centres banks having their headquarters in Tokyo or Yokohama had their deposits withdrawn more or less. All communications between this market having been interrupted, they were temporarily out off the usual channel of getting supplies of funds. Banks in Osaka had in turn to look after the needs of other centres, Tokyo included, and big sums were borrowed from our Branch there. As time went on things were gradually settling down and extreme uneasiness was dispelled. But, bankers being more occupied in self-protection, there were very few offerings of long term loans, although day-to-days were rather in plentiful supply at low rates. Our Bank return shows how on the top of the end of month requirements previous to the earthquake banks had been seeking accommodations of our Bank. 250 and discounts inoreased Our loans yen in September. A large part ceeds of these advances having been left with the Bank in deposits, the increase in At the beginning of the note circulation was not very much more than 170 millions. this month, and because of the emergency advances, loans and discounts had seen a further increase of some 5) millions, but since then the tendency has been toward some contraction. With banks provided with sufficient funds to face any contingencies and with no new money in demand aside from the immediate daily needs, the situation it seems has been fully met with for the present. Sept. 15 ;1,361,000,000 Sept. 29 g1,460,000,000 Notre droulation Aug. 30 X1,287,000,000 Loans and discounts " 346,000,000 " 506,000,000 " 594,0(0 000 Government deposits " 386,000,000 " 353,000,000 " 331,000,000 Private deposits " " 158,000,000 " 125,000,000 38,000,000 Tokyo Stock Exchange remains closed since the earthquake, the Exchange building itself having been burnt down. In Osaka to pended for a week as uneasiness prevailed in the market. Exchange business was susBecause of the more or less FEDERAL RESERVE BANK OF NEW YORK MISC 4.1-120 M-1-20 CORRESPONDENCE _iovernor .Strol% OATE____aep_t-la,_1SP3 192SUBJECT: Yr. i3ever FROM I learned to-day from Mr. Hoshino, lkIew Yori: representative of the i.3ank of Japan, that Mr. Otohi }.o Tchiki, the former Minister of Finance, has been appointed Governo.r of the i3ank of Japan, and that Governor Inouye has been appointed Minister of Finance. So far Mr.Hoehino has been unable to get definite news concerning 'Viscount Shibusawa who is still reported is missing. I an attaching copies of the bank's cableA as well as your personal e to Governor Inouye, which went forward last Saturday. .7" a COPT OF CABLEGRAV L1COMING Osaka Dated Sept. 9, 1923. Reo'd Septa°, 1923. Urgent Federal Reserve Bank, New York, V. Y. Telegram reo.Aved will deliver our sympathetic mfesacm to our Governor by quickest means for Which wish to express hearty thanks from my part and advise all essential parts of Tokyo Office are entirely safe and business carrioc as usual but buildin,7 partly burtly burnt Hariaoka j ;Lei : -est a vie,--c., COPY -Jo A' YOhK AU-F.AGY, BANK OF JAPAN 120 Broadway New York City September 7, 1923. Mr.D. h. Barrows, Secretary, Federal heserve bank of New York, 15 Nassau Street, luew York. Dear Sir: tter of SeptembElv the deep sympathy as n expressing Erlt Also, I appreciate ad Office tc the above COPY September ', 1923. Mr. S. Hoehino," New York Reixesentative, Bank of Japan, 120 Broadway, New York. Dear Sir: The directors of this bank at their meeting yesterday unanimously adopted a resolution to the following effect; "R&SOLVED that the directors of the Federal Reserve bank of iiew York, greatly shocked at the news of the tragic disaster which Japan has sustained, nereoy direct tOe officers to send a cablegram to the Governor of the bank_ of Japan, expressing the deepest sympathy of the directors of the Federal Reserve Bank of New the Bank of Japan any assistance which it may Oe in tne power of the Federal Reserve Bank of New York to render." I am also quoting for your information the text of a cablegram dispatched yesterday afternoon: "ban, of Japan, Osaka, Japan. Leptember 5, 1923. (via Shanghai) Please deliver following message to Governor Bank of Japan: Greatly shocked over news of tragic disaster. We wish to express to you the deepest sympathy of our directors and officers and to offer your institution any assistance in our power. Federal Reserve bank of New York." Trusting; sincerely that you have received oy now reassuring news as to the safety of your family, i remain Yours very truly, D. h. mARKOWS, Secretary. DOPY THE B. OF Jr'. TOKYO Department of Statistics & Research. August 4, 1923. our business and financial situations remain essentially the same. General stagnancy was a: gain the feature in the commodity us well Ls in specu- lative mrkets in July, with perhaps ;the only exception of rice which shot up again on reports of damages to the growing crop in consequenoe of continued unseasonably low temperature and flooding rain -falls, only to recede later on the advent of more normal weather. In fact, trade has lately be In the usual midsummer lull, and course of prices on the whole downward. sales of summer apparels have been far behind expectations and the textile industries are reported to be hard hit, giving occasion for more conservatism as to the winter goods. This, together with but a poor demand for export and lower Amer:loan cotton more recently, affected cotton yarn badly. Small spinners had again boon suggesting 30% curtailment of production, but so far in vain. 'eak- ness prevailed in raw silk also, any new business passing having been at considerable price concessions on the part of the sellers. Hopes for some im- provement in iron and steel with the passing of rainy season have been contradicted, buyers being more dispose, to wait. Stock market has been dull, 4uo- tations fluctuating only within narrow range. Foreign trade keeps against us in spite of some increased export of silk and a general falling off in imports, though the adverse balance of 40 million yen for July compare favourably with 98 millions in the previous month. Tile our her: York exchange has remained unohange.A at 49, not an in- considerable amount of our Bank's holdings of funds abroad has been sold to serve the purpose of supplying in part the necessary foreign exchange to cover the adverse trade balances under the existing ban on the export of gold. In OOPT - this conneotion it may be mentioned that, since in last spring the Oriental Development Company raised $20,000,000 in New York, much talks of financing abroad have been given circulation to in view of the stiffening money rates and growing difficulty of bond issues here in contrast with the conditions in New York or London markets. But, they had amounted to no more than mere rumours until recently, when in succession to the Tokyo Electric Light's flo- tation of 0,000,000 in late June, the South Manchuria Railway concluded £4,000,000 loans in London. The remittance of the proceeds of these loans will be a factor in the exchange market, though they will be divided into installments extending to september or early October. We are not yet free from occasional banking troubles as an aftermath of the economic reaction. Banking circles at Ragoya and its vicinity were disturbed for a while, in the latter part of the month, because of apTirehensions aroused among nervous del:ositors '17. the disclosure of difficul- ties and suspensions of payments on the part of small local banks. large banks there have been affected. Even Big sums were borrowed from our Bank in meeting the situation, thus enabling them to successfully weather the storm. Aside from same outflow of funds, there rLs no noticeable influence felt on the money market here, although the event served to bring home more caution and there was an inclination with bankers to put out their funds on short term. cerned. Money was relatively easier so far as the short loans were con- A rapid return flow of funds that had set in since the turn of the half year more than enabled the market to psy off large amount that was due to the Bank, the day-to-days coming dorm to and ruling at below 6 1/2-7 and even as low as 5 1/2-5 3/4 having been quoted. 130,000,000 Government money was also disbursed in connection with the refunding of the Industrial COPT ... 3 - Bank debentures. The strong undertone of the discounts and long term loans remain unaltered. Our Bank return follows: Leto circulation June 30. 31,371,000,000 Loans and disco4nts " 363,000,000 " 167,000,000 " 291,000,000 Government deposits " 371,000,000 " 363,000,000 " 361,000,000 Private deposits II 49,000,000 49,000,000 July 14. 31,151,000,000 " July 31. 11.278,000,000 32,000,000 in connection with the maturing, on sept. 1 of 486,000, 000 Exchequer Bonds, the Government announced a refunding offering on .august 8 of 180,000,000 7 year b;,., 1.;xchequer Bonds at 6.8% basis, while holders of the original bonds will be given conversion privilege at 6.9%. 7.hat may perhaps be termed the biggest banking merger thus far here has been decided upon by 12 banks controlled by the Yasuda family comprising Yasuda Bank, The Third Bank, The Shinano Bank, The 130th Bank, and others. It will not be until some time in the fall that all the legal formllitios necessaryw ill be gone through and the new institution rith an authorized capital of g150,000,000 will be open to business. THE BANK OF JAPAN TOKYO August 20th, 1923. Dear Governor Strong, In writing to you, I have to tender you my heartfelt condolences upon the death of the late President Harding. It was a great loss to your country and to the world. He initiated and achieved a long step forward in the advancement of the good will among nations. The clouds in the pacific and Far Eastern sky were cleared, thanks largely to his lofty ideals and efficacious efforts. Although there is no doubt that the friendly relations between America and Japan will continue to grow under your new President, I think I may tell you that the Japanese people as a whole feel the passing away of Mr. Harding as a loss of their friend and share particularly in the sorrow of your countrymen. It is to be greatly regretted that he has not lived to see the ratification of the naval and Pacific treaties. Many thanks for your hand-written letter from Colorado Springs. I knew from your previous correspondence with Mr. Inouye that you had to refrain from dictating. It was, indeed, very kind of you to remember me amidst your difficulties. I am glad to hear from you that you are now much better, but I hope you will continue to be careful of your self. prepared to aid solvent banks. Paymentsfreely, which fact assured and were made rapidly of the banks concerned, and th The public seems to have learn between banks. Liss Addams had to und her arrival here and spend mos We wished to arrange a party f meet a few leading men and wome not materialize because of her 1:r. Inouye and other a and desire me to remember them With kindest Benjamin Strong, Esq., Federal Reserve Bank, Hew York City, N. Y., U. S. A. ...41114 July 79, 19??,. Dear 7r. Fukai: This note will be presented to you by my friend Mr. Frank E. Noyes of 4ashington, twho is makinf, a. trip around the iorld somewhat similar to the one which I made two years ago. I have assured both Mr. and Mrs. Noyes that they will receive a warm welcome from my friends in Japan, to whom I have given them letters of introduction. Anything that you are able to do to facilitate their trip, or add to its enjoyment, I shall esteem a ;ersonal favor, and you know hoN great rleasure it will be to reci-rocsto at any time. With cordial regards, believe me, Faithfully yours, Eigo Fukai, Esq., c/0 bank of Japan, Tokyo, Japan. June 22, 1912. Dear Yr. Fukai: it as a great pleasure to receive your kind letter of June 12 written from London, and I hasten to reciprocate net only the kind personal wishes that you send me but also your hopes - in fact I may say our mutual expectations - that the relations between the Bank. of Japan and the Federal f.ecerve System will beccac firmer and closer an mcra intimate. Personally, 1 would like to see the policy which we have now teen practicing extended in such ways as may to pssib]e with the banks of issue in ether important money centers, and I an indeed ,lad to note by what you write that I may have been somewhat useful in this direction through my correspondence with you and vith the Governor cf the Bank of England. You will have learned before this letter arrives of our rate reduction made yesterday. Conditions in our money market have developed such pronounced ease that we felt not only justified but required to make our rate conform - as we have heretofore - with the obvious situation in the money market generally. I am assuming that cur regular reports through your New York Agent keep you informed of developments in the general business situation with us. If the reports are not exactly of the character that you need, please do not hesitate to advise me. It is very good of you to send me such good advice in regard to my own health. I am obliged to to careful and am trying to be so, and the reward I am glad to say is obvious in my feeling much more vigorous and June 22, 1922 t i), much more able to do my share of the work of the bank than I have for some time. don't you please accept the same advice for yourself from me? I an hoping that by this letter you will convey to Governor Inouye and to your associates in the bank my warmest regards and good wishes, all cf mhich I cordially send to you as well. Believe me, my dear Mr. Fukai, Very sincerely yours, Eigo Fukai, Esq., c/o Bank of japan, Tokyo, Japan. ES. Mill 9, Bishopsgate, London. E. C. ?.JUN 2 2 1922 12th June, 192i Dear Governor Strong, I am going to leave here for home on I should like to attend the Conference of the 13th inst. Central and Reserve Banks in the Autumn; but it is too long to wait for, and in the meantime I am wanted in Tokio. Mr. Norman was very courteaus and kind to me, and discussed I am sure this very freely matters of mutual interest to us. is main17 due to your thoughtful introduction, for which I thank you most heartily. In Washington, I had very little But I would feel to do myself. Genoa wasA.., disappointment. gratified if the relations of the Bank of Japan with the Federal Reserve System of America and the Bank of England should prove to become firmer and closer, as I hope they will. Personally I value as my life-long asset the intimate contact I had with you in Japan and in New York as well as through your the I was able Mr. Nagaike is now in London and has told me all kindness. about you. Pray, do not overtax your energy. You will ultimately serve your country and the world better, by taking good care of yourself than by trying to do too much at a time. As I am going home by the Indian Ocean, I send you these lines with renewed thanks and best wishes. Believe me, Dear Governor, Yours faithfully, Governor Benjamin Strong, Federal Reserve Bank of New York, U. S. A. DELEGATION JAPONAISE AP GENES 2- /ra-7 L4- 1 46-4-4-) X R.ADIOGRAM WOR LD WIDE WIRELESS CONTINENT TO CONTINENT 4I.VIA SHIP SHORE SHIP RCA" TO /-*,,A1 SHIP TO --- RADIO CORFA)R9,RATLI,9,td OiFEAMERICA VIA RCA" POKY Mo. It RECEIVED AT 64 BROAD STREET, NEW YORK, AT HEA WITH 1XL_ N. DATE. A tiAul0 ULYMPlu vIA HtJA NY PIE6r-co JAY Aivu 01 HANK6 FUN Mkt EXGEEDIN ANu FUtc i HUU h r uL i rcUNu r tubtAL Ntoti1VE bANK IV Lu UrtK K I N uN too Ili uUNIVLu I 1..m uKtN uF I Or, GUUlf I ortEo Eluu FUKA I secure prompt action inquiries, this original RADIOGRAM should be presented at office Digitized 5100 ROADfor FRASER Tothe Radio Corporation. onIn telephone inquiries quote the number preceding the placethe origin of of Form 61 CABLEGRAM-"VIA COMMERCIAL" RECEIVED AT 20 BROAD STREET. IIELEPRONE RECTOR 0380 5NA LONDON X1196 Y. &OBJECT TO TERMS AND CONDIT:01a t BACK HEREOF. WHICH ARE RATIFIED AND AGREED TO ' AC!r-NOtiVLEDGED APR 1 1 1922 39 GOVERNOR STRONG FEDERAL RESERVE BANK NY ON EVE OF DEPARTURE FOR GENOA ON I S. TENDER YOU AND KINDEST REGARDS AND RENEWED THANKS AND I\U JAY MY BEG LEAVE TO SEND YOU MESSAGE THROUGH NAGAIKE ON MATTER OF OUR CONVERSATIONS FUKAI No inquiry respecting this inossage can ba attended to without the production of this paper. offices, and not by applying. directly to the sender. the Company's Repetitions of doubtful words should be obtained through CLASS OF SERVICE COPY OF Telegram alter Message WESTIEMN tURITION lidELEGRAN Night Letter elhass of service is desig1 the message will be trans, ;1.,,1ed as a full-rate telegr.ur . atit, rc,ci Adv.- E ct /641 PLeZtic.2 ./teAArd CeVitt>, gal Form 1201 CLASS OF SERVICE SYMBOL ram L attar Blue Ni Message Night Letter UNION WESTER Nile TEL ma of these three sym pears after the check <number of wards) this is a telegram. Otherwise Its character is indicated by the symbol appearing after the check. NEWCMAcARt-rON, PRESIDENT M GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT 1 ot4 RECEIVED AT AR A TLANT ICC I T Y NJ 920A FEB 8 1922 STRONG FEDERAL RESERVE BANK 340 W ILL CO NE:7 SYMBOL Telegram YOriK TODAY AND STAY TILL EIGHTEENTH FUKA I 92 5A Day Letter Blue Night Message WESTERN .UNION N CLASS OF SERVICE Nile Night Letter NL If none of these three symbols appears after the check number of words) this is a telegram. Otherwise its character is indicated by the symbol appearing after the check. POSTAL TELEGRAPH RECEIVED AT RN. 1 Al UTH TENNESSEE AVENUE I TIC CITY, N. J. -EPHONE 3660 CLARENCE H COMMERCIAL CABLES MA NAT, PUE 5,DE TELEGRAM DELIVERY NO. This Is a fast Telegram unlassotherwise Indicated bg slg nal af ter the number of words:- "Rlue'(Day Letter)"N.L."(NightLetter)or"Niter (Night Telegram ISON--62415 'POSTAL TELEGRAPH - COMMERCIAL CABLES CLARENCE H. MACKAY. PRES,DEtr. RECEIVED AT Nc.. IA AT JTH TENNESSEE AVENUE 'TIC CITY, N. J. EPHONE 3660 TELEGRAM nless otherwise indicated bg sig nal after the number of words :--"Riue"(Dag Letter)"N .L."(NightLettel)or"Nite (Night Telegram) STANDARD TIME INDICATED ON THIS MESSAGE. 8 ington D3 Jan 25 22 strong Marlborough Blenheim rive there thirsday evening to visit you Eigo Fukai DELIVERY NO. 1 8014-6 2 4 I &4- t Z cli /0----; 62----17 4i,te Jenuary 14, 1922. Dear Fukai: lhile I feel very sure that my asecciates et the office have kept you informed of the fact of my illness mnd absence from tee office, I still cannot refrain from sending you this eersore-11 ford of regret that the oppor- tunity which I had looked forward to for many enjoyable and profitable visits with you was spoiled by my illness. I am now at my home; expect to leave next Tednesday for Atlantic City, whoro I shall b3 for a seek or ten days at the Marlboro-Blenheim Hotel. from therm to And there is quite 4ashington or. the ?,8th or 29th of this month. Tould it be convenient far you to drop M9 a line at Atlantic City advising whether you expect still to be in Tashington at that time, or, if not, whether there will still be opportunity for us to hive R visit in ties York after my return? You may recall that some time ago I gave your representative in London a note to my fri'nd Montagu Norman, Governor of the Bank of England. Since then I have had some correspondence with him on the subject of the relations which exist er should be oultivated between other important banks o° issue. fheee suggestions naturally relate to the Bank of Japan and I have not felt willing to write frankly and fully to Governor Norean on the subject without first havieg a conversation with you. It is much in my mind that ye can accom-lish results of importance for the business welfare of our countries by bringing together in clocer associations the managements of th varieus banks of issue, and I hope that this January 14, 192?,. Alb suggestion, although most indefinite, may be received sym;:athetically by you and by Governor Inouye. I cannot conclude this letter without oxi-..ressing my i.,erscnal a:L.rec- iation of `.he statsmar':ike accomplielmilts either made ooscible, or which should have been made possible, ae the resu't of the attitude which your repro- sentativesreemed tc havo consistentl; assumed towards the representatives of our own Government. You kn:IN how much this subject is al rays in my mind, and I am looking forward to opportunity fr:r a chLt ::Ith you in 4ashington or New York et the very first op;ortunity on this and many matters. Ifith warTest regards, Sincerely your friend, Mr. Fi7o c/ The Shoreham, gashington, D. ES/11119 C. S JAPANESE DELEGATION -* -12- /L/.0 C 9 a,9 / C- . ) 1 A---44--1-"""- / 7 S-0 z- JAPANESE DELEGATION 04- Ogg I /4-, .,1 t c.7 11) c J "r7)" et_ 7 4-,) ..overaber 30, 1921. 71er.r Yr. Fukai: In sending you the enclosed letters of introduction to Mr. Crissin,1,7er and Senator Hitchw.ck, iesires Ae to convey hir thanks to you for your 1etLer of Illovenix:,r75, 1.nel to express his regrets in not teiag able to teknowledge it perecnaaly owing to indis- eueition, but that he will +trite you at the -.!irst opportunity on hie return t.) the of'ice. nurz very truly, Secrettri to Mr. Strong. Ir. Eigo Fukai, c/o Shoreham Hotel, Washington, D. C. GB1151 ,C-v---4-1 7 AC LOP ..) etre.: jAi JAN 1I twilyvk in torte Al .21 -lit c fc Dik7:i 7D 1 r;-4, 22 if (:-/e ,k\O \c,\° JAPANESE DELEGATION /1/ 410t c /ku-u. y//, /r 7 -,c,'"?._ st C .1`}-4- 41.4-- q_ j;i01? 11S(170741,...s.' 111.11;wtV),-thiVi of /i /(rtt1lI hinf.gotC) c_c-----7 .-,--- 7___-..--x_ _.--4,, C-7 t.-----7,-------e4-7 /019t.}--:-,___" 1.-4----1----7,..-, S,...,- 1 ,, , ._7-. k a.--1. 1-4-1,-----1-----4-_ ALLA c u , - -0 -, , 4- p .47 cykLy 4- 1.7 ---.C.--- A 1,11 4 a 404, <,11/144 //preel\(;r1hisjiaiIyieeill4 7 a 4 ty-ric,-r-}4.--1-47.--,1_-_-.17 pek_..."-L,cre..}9 5 t C4-a 2."-A-. &AA- rte... November 4, '9"i. Dear Mr. Fukui:_ This ie my first opportunity !o send you - note welcome to the United .'fates. 1 AM :surer you will L31/6 an interestiu6 and agreeable experience here, end my one hope Lhut this great me,Aio; will :levelop constructive resule and will be a euccess. At the momeat that i dictate this letter, word reaches me that Premier 'tiara bac bean assessimi.ted. ileve the no's. I can hardly be- if it should unfortunately prove iD be ourrect, will you not accept my sincere expressions of regret that this calamity coolC hove occurred, and convey the ea,ke to associates. y..)tir V., surely have hope that the world will be spared such acts of cruelty and faaticieT, and I sm deeply sorry thst your country hab been called upon to suffer such a misfortune. With oorciial regards, believe me, ifery eincoroly yours, Mr. Lig() Fuaai, c/o Shoreham Hotel, Wasningtou. D. C. October t,t1, 1921. Dear Mr. Fukai: It was a great pleasure to receive your letter of September !-9, con- veying the first news which I bad received of your proposed visit to this country. Your letter came while I was ill, having contracted a rather severe cold in Washington, and immediately upon my recovery I was obliged to return to Washington to attend a Conference, which detained me for another week; so that to-day being my first at the office is the earliest opportunity I have had to write you. I am sending the letters of introduction for your use in care of Mr. Nagaike, together with this letter, as 1 am not certain whether you will proceed directly to Washington, or whether I shall have the opportunity of seeing you in New York on your way through. It is time that, I should frankly confess to you that I have been obliged to be away from the office almost all summer; A considerable part of the time in Washington in connection with an investigation of the Federal Reserve System, which has given us a good deal of trouble. You are to be here so soon that I shall not attempt a discussion of what is transpiring here, as I confidently hope to have the pleasure of seeing you Shortly after your arrival, and will give you all the news in person. With you I am really hopeful that the Conference will be attended by satisfactory results. We must bend our energies toward getting matters right between your country and ours. It is due to no lack of right October 31, 1921. #2 disposition on the ?art of our respective governments but rather the result of an unintelligent and uninformed public sentiment that they are not so at the In every situation of this charoteter benefit results from ?recent moment. frank face to face discussion which we shall now have the opportunity of having. In addition to the various letters of introduction which I am Lending to you, others my apie.our to be of value and you have only to indicate what you would like to have end I will send them at, once. Further then that, er ycu knew, Yr. Milee and I are membere of a little group of men who live together in Waehingten and v.ho are principally in the verleuF vovernment services. During your stay in Kaehincton, I am anxious to entertain you end epee of your aaeocietee ae the house, and will advise you of perticulere befcre my ne74 trip to the Capitol. Pleeve be ceeured thot this letter if eepecially intendee to convey to you a very rum welcome to the United Staeee, and sesuee you of Any desire to assist cbject of your miEeion by every means in my power. Yours sincerely, Mr. 0/0 120 New Eigo Fukai, Bank of Japen, Broadway, York City. BS:MM Ebe tank of 3apan TOKYO. 1 41,e. _97( At-te d!) 6,r1de- AC" '2- January 21, 1D21 Deer Fukai: Your Lind letter of Decemter 14 was awaiting my return, and I received it the day of my arrival, the fifteenth of this moneh. Mr. Zeilin6a had already sassed through low York, and I mi ::sec him *nen in Europe, aE I found it iroesible in my limited time to et to Ami,tordam. I am glari to eay that my health seems to be completely restored, no small part of this desirable result being due to the delightful visit which I made to Japan, where new int.erests and environments really got my mind off of the werrie and anxieties of the cast few years. After leevinL Japan I seamed to have teen a bird of ill omen, for from one place to the next I heard nothing but tA168 of 10bisb and bueiness disaster. Literally my trip around the wori.d seemed to be uron wsve of depression, if such a thing exists, and I finally reeched flea York findine much the ease conditions here, except possibly some little recent encouragement from :core activity in limited lines of tuelnee:E. On the whole it Eeeme to me that the banking Hoeition in this country and of many others as well has been sho,n to be eironger than mk-;ht have been expected after four years of devaetating warfare, tecauee ee have really survived a tremendous shock of readjustment with co:operatively few ineuAriel and commercial disasters and almost no important bank failures. I am yet too recently at home to give sou any details of what has been taking place here, but shall do so later. It was nice tc see Mr. Imamura at our bankers dinner the other nights and I shall hope Lhortly to have the pleasure of a visit from Mr. Nagaike. he is much at home at the tank, and my colleagues Apparently antici.ate seeing him regulariy. 2 Mr. FUkai 1.21.21 Thank you vary sucL for the photograph, which has safely re,ched Awe, and I shall shortly semi you one oC mine. I as hoping also to have 4 p4oLo6raph of Ur. Inouye. Mr. Tilos I left behind me in India, as he was not obliged to return hots as soon ae I , and my on iv ncw in France, t,oing over the ground of his Icaapaignes there. With kindest wishes to you, Mr. Inouye, ind ay other friends in the Bank, and with man, th,-.nkE for the hosiitalitiee you extended to We while in J,kaia, I am, Very coraially Eigo Puked, Est,:., Tlie Bank of Japan, Tokyo, J,zrun. BS.MSb THE BANK OF JAPAN TOKYO December 14th, 1920. ATTFNDEDTO Dear Er. Strong, I believe you will have b e by the time this letter reaches there. k'in New York Er: Zeilinga of the Java Bank was on a visit here and it was from him that I got the latest news of you. I am glad to have heard that he had found you in excellent spirits. I hope your journey after Java has been a continuing success and you will resume your important duties with fresh energy. Since you left here, our economic condition has remained unsettled. So far there have been no further important fail- ures, though private liquidations have been and are going on. Business is stagnant, and money is easy for short transactions, while financial circles are still generally nervous. All these seem to indicate the advent of a period of depression following the acute stage of reaction. As to the foreign trade, both imports and exports have dwindled. The rise in our Ameri- can exchange and the consequent shipment of gold by exchange banks, both Japanese and American, are to be accounted for, I think, by the cancellation on our merchants' part of their contracts for imports, for which the exchange banks had made provisions; the realization of profits by some merchants made in their transactions in foreign markets, especially in respect of cotton and sugar; and the withdrawal of funds held abroad by shipping and other interests, to meet the need of money at home. These causes seem 4444441/ gib now nearly to have exhausted themselves. Besides, our silk ex- port has virtually stopped, so that the exchange has begun to show the opposite tendency, and the shipment of gold now seems to be out of the question. Mr. Nagaike, our resident officer in New York, has reported to us of the special facilities given him by your colleagues of the Federal Reserve Bank. I believe this is owing to your kind sug- gestion, and my colleagues and I feel very grateful to you. As promised, I am sending you under separate cover my photograph recently taken, and am looking forward to the pleasure of having yours. I hope your son and Mr. Miles are unchangingly very well. My wife and daughter are both well and we often talk of you. is kept as a treasure in our home. With kindest remembrances and best wishes for a happy New Year to you all, in which my wife joins me, I remain, Yours sincerely, off, Mr. Benjamin Strong, Federal Reserve Bank of New York. r 0 0 ;17 7,te- /W44/ 0104-e--1 ,747 etz,4.4"044- 1-0-v-e4 ar aLialeregoe ,d4a-.1-eed eL er034.410c. 144 delet:itek 7iefe r. 7 /ecez_er4.Je_ Vanh of 3apan TOKYO. (1/ Che thank of 3apan TOKYO. at - 11 V 4 / /' : 0--e--4--"L. , /_,.e 7 0,-..A__ 4-- J .4- 4,---.-(_,-6.- 4--&----.--. - .k........0.--1,../--at. ..1-4--L... 4__-c- X-4,)- G--- 5,..._...&--- c_.___e_i,_ ,_...-,...._.--. j (l--iL-4 44--1 d-.-4---(C tu_.-4y-- if. Vault of 3apan TOKYO. ef) -eY .v7 74'irzi /4)1 el'&42-7 f .20 mob March (3, 1920. My dear Mr. Nagaike: It is a personal ploaEure to convey to you and Mr. Hamaoka this expression of Mr. Strong's sincere thanks and ai,preciAion of your courtesy in the matter of nrrfinging for Mr. Mehl's servicer accommodtions in connection with Mr. Strong's trip to Japan. alco hotel I hft: written to Mr. Strong about the arrangements that tv..ive Leen made and I know he will feel greatly plepsed. Pith renewed. thanks, believe me, Very truly yours, Secretary Xr. A. Na.gaike, Lank of Japan, 120 Broadway, New York City. tr.:. the Governor. February 17, n20. N. Nhgaike, Esq., Superintendent, New York Agency, Bank of Japan, Equitable Building, New York, N. Y. Der 7:;r. Nhgrike: Governor Strong whc is awhy from the Bank ht present on a vc.tion, has written me from the rest thlt he plans taking t. trip through the Best Including(Java Japem in the early .-:art of April. India, ::eylon, etc. leaving San Fr!.ncieco The Governor will, of course, take the o- 7.,ortunity of visiting the Head Office of your institution during hie trij: and hne asked me to say to you that he will arvciate your sending word to ycur Head Office to the effect, th,J, he mill visit them erly in Mhy and also send him 2_ letter of introduction to them from you. his party mill include Mr. Br:sil Liles, formerly of our State Deirtmert, and his son, Benjhmin Strong, Jr., c.nd the Governer is anxious to hhve all letters of introduction include them. If you will send me your letter to the Bank of Jupam which the Governor desires to carry with him, I will see that it is forwarded to him alon=- with other letters of a similAs nature which me are procuring. Assuring you that your corn liance with this re,iuest will be gretly n: recited, I be,,, to remain Very truly yours, JEC/MK J. E. Case, Acting Governor. IMPERIAL GOVERNMENT TELEGRAPHS. r--! d Addreve Office No... NO y if Ae' te Date 45- -;-1 47 L-4 CF1EB.. (DeliverY Form) "if 19 (-) p 710° ar Original Office ->d WO Time 6/41 C E-0"--totiee t IMPERIAL GOVERNMENT TELEGRAPIIS. (Delivery Atidrc;,;s Office No. Received Time Date 19 liv. Original Office C-; Remark! Words ............... 19 Time la 74,9 e 0-.44 , / CA -1,--77, e"-) " / eP"ZJ2'' IMPERIAL GOVERNMENT TELEGRAPHS. Teti, F,,n) Address tion Office No. Received Time Date -.19 Remarks Original Cass Office Words No. Date 19 Time /4a 1:00-07./e /11;717, 711 id; 71/-414,-Fer /1".1A-77., http://fraser.stlouisfed.org/ Federalir4 fwv Reserve Bank of St. Louis "- IMPERIAL GOVERNMENT TELEGRAPHS. (Delivery OfficeAko- ef,WI Original Office Time Date a C-71 ' t 4-A Form) IMPER IA L GOVERNMENT TELEG WHO. .&Delix. Ebe Vank of 3apaii TOKYO. June 4, 1920. Benjamin Strong, Esq., :.:ateuzaka Eotel, Lake :akone. Dear Mr. Strong, Many thanks for your card. I am now nearly recovered, but not yet strong enough to be at the Bank every day I hope you are having good regularly. time over there in Hakone. Please give my best wishes to your son and Mr. Miles. Thanking you for your kindness, and trusting that you are in the best of health, Yours sincerely, THE BANK OF JAPAN TOKYO, May 26th, 1920. Benjamin Strong, Esq., Tokyo Station Hotel, City. Dear Sir:- All the party who were present at the official residence of the Minister of Finance last Saturday are desirous of having the Japanese version of your speech and ask me earnestly to let them have it. Tou will oblige me very much if you will be kind enough to lend me the note of your speech, or otherwise, if you can spare a quarter of an hour for Mr. Nakaniahi, to give orally the outline, including figures, etc., of your speech. Tours most sincerely, Economic Research Department, BANK OF JAPAN. March 23, 1920. Dear Mr. Fukai: I recall with a great deal of pleasure y:ur little Paris. visit here at the btik, last year, on your way to At of that time I understood we were to have the or.portunity that eeing yoU again, on your way home, and I sincerely regret another circumstances made it necesssry for you to return by route. since the Mr. Strong, who has been away from the bank Japan about the early part of January, contemplates sailing for opportunity to tenth of ATril, and I know he will be glad of the meet you there. It will give me pleasure to convey your cordial trip, which good wishes to him and his party for an enjoyable know be is looking forward to with keen interest. #ith kind remembrances, I NM, Cordially yours, J. H. CASE, Actin& Governor. Mr. Figo Fukai, The Bank of Japan, (Nippon GInko), Tokyo, Japan. JRC RAB 16-tg-taa /g2 /92,6. , I- 'AR 2,3 1920 the Vank of 3apan (NIPPON GINKO) TOKYO, .. Feb. 23rd., 19420, Dear Mr. Case, It gave me a great pleasure to meet you in New York last year on my way to Paris. I was then wishing to join you again on my way home; but the Peace Conference lasted longer than I expected, and I had to sail from Marseilles with our Chief Delegate because I could not secure my passage the other way in a convenient time. Now I learn from this Bank's superintendent of the New York Agency that Mr. Strong is coming out to our ccuntry. I did not meet him when I was in New York last year, as he was then in the country. This time I am keenly looking forward to the pleasure of meeting him here. My colleagues and I shall be very glad if we could do anything to make his visit here comfortable and interesting. hope these lines will reach you before 'fr. Strong's departure, and you will oblige me by conveying my best wishes to him and his party. With Lind remembrances, Yours sincerely, Mr. J. Herbert Case, Deputy-Governor, Federal Deserve Bank of New York.