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New York, January 22, 1921.
Dear Ben:

Thank you very much for your good letter of
January 21st.

I hesitated long before suggesting your name

to the President-elect.

Indeed, in the first instance I

did not intend to do so because I felt that both temperamentally and physically 'you would suffer more than most men
in such a position as that of Secretary of the Treasury.
Fond as I am of you, it was not because of our friendship,

but from a sense of public duty, that I suggested your name.
I think you are on the whole thb wisest man in economics and
finance I know and the best equipped for tne job.

About the matter of confirmation, you are mistaken.

Cabinet appointments are regarded as the President's

personal privilege.

His appointmfnteare always confirmed.

There are not I think more than a couple of exceptions to this
rule in the history of the United States.

The only possible

obstacle to your confirmation would be strenuous opposition
from the two Senators from your own State, and I assume that,
so far from meeting opposition from wadsworth and Calder,
you would have their hearty support.
All this, however, is beside the mark.


shot my bolt in presenting the gravity of the problem and my



own suggestion to the President-elect.

I am without politi-

cal influence, and in view of your feeling about the matter,
I should hesitate to use it if I had any.

I am just bank from Washington but did not see
any politicaliVoguls.

Indeed, I concluded on second thought

not to do so, at least until I should have had some further
private talk with you.

I saw Houston, Gilbert and Miller, however, and
I am a good deal frightened about the situation which has developed in the Federal Reserve Board and the Treasury.
As you know, three vacancies in the Board will
arise automatically on March 4th, and the fourth vacancy is,
it seems, to be created very shortly thereafter by the resignation of Governor Harding.

Of the remaining three members,

Platt, Miller and Hamlin, no one is a banker or business man.
It is not therefore exaggeration to say that the future of
our banking and currency system will depend upon the appointments which Senator Harding is to make at the outset of his

The situation in the Treasury is no less a cause
for anxiety.

On the 4th of March, not only the Secretary, but

every Assistant Secretary will go out of office automatically
except Moyle, who exercises a nominal supervision over public



buildings and miscellaneous activities which ought not to be
in the Treasury at all.

This peculiar situation arises from

the fact that Rathbone, Shouse and I did not feel free to resign until after Congress had adjourned last June and the
possibility of constructive or destructive legislation affecting our several offices had passed.

When we did resign in each

instance Secretary Houston, characteristically disregarding
every political canon, appointed to the places thus made vacant the men who were in fact our first assistants.


fore the three principal Assistant Secretaries all hold recess appointments, and go out 'of office by operation of law

upon the adjournment of the present Senate if it fails to confirm their appointments.

These are poor young men who have made great

sacrifices from a high sense of public duty to remain in
office as long as they have.

I shall not say much about

the affront to them in the failure to confirm them (although
It is apparent, however, that they

it makes my blood boil).

cannot be expected to remain in the Treasury without authority or compensation after the 4th of March if this affront
is administered.

I regard


as absolutely essential that the

Senate confirm Gilbert, Kelley and La Porte, the three Assistant Secretaries.

They can, of course, be counted on to


resign as soon as their resignations are wanted.

I think it

would be impossible in the case of Gilbert and Kelley to keep
them for more than a month or two in any event.

They simply

cannot afford to continue much longer for $5,000 a year.

The executive appropriation bill now pending before the Senate, not only fails to make permanent the Civil
Service organization which I built up in the fiscal offices
during the three years of my service, but imposes a new re.

strtction upon the use of the lump sum appropriations carried
in the Liberty Loan Acts,which would reduce the salaries of
Broughton and Hand from $6,000 'to $3,500 apiece, and, further-

more, destroy the structure of the organization itself.


you know, Broughton is the head of public debt operations and
Hand is the man who makes estimates of current income and
outgo and has charge of transfers and withdrawals from the
War Loan Deposit Account.

Both men are Civil Service employees

of 15 or 20 years standing and are as nearly indispensable as
it is possible for men to be.

I happen to know that both have opportunities in
private life at salaries largely in excess of their present

Neither can afford to delay long to accept some such

offer; in view of the attitude of Congress.
I hand you herewith a copy of a letter which I

wrote on this subject to Senator Smoot, because he happened to



be a member of the Finance Committee, which should deal with
the confirmation of the Assistant Secretaries, and of the Ap-

propriations Committee, which will have charge of the executive bill.
of March.

He asked me to revert to the subject after the 4th
That will be too late, I fear.

When you realize that on March 15th some hundreds

of millions of dollars of Treasury Certificates mature and an
installment of income and profits taxes is payable, the amount
of which is very dubious because of the slump in incomes and
profits due to the business depression, the gravity of the
problem which will present itSelf to the new Secretary, if
he is deprived by the present Congress of the principal
members of the his organization before he has had an opportunity to look around, is apparent.

Benjamin Strong, Esq.,
Governor, Federal Reserve Bank,
15 Nassau Street,
New York City.


ely yours,


January 24, 1921.

Dear Russell:

I am many times indebted to you for your letter of the
twenty-880one, but even more for what you write of the feelinde

which inspired you to make the suegeetion to kr. Harding.

It happens that 2 may be %tie, to be of some service in
preventing the chaos developing in the Treasury Department, which

iS 80 well described in your letter and which I have, myself, been

fearing, but I think I should say frankly to you that 1 hap:en to

knoll-that it is practicany out of the question for the ?resident
elect to appoint a Eecretary of the Treasury from New York.

he did do so, I would rather eee you aecept the Job than anyone

else that I know.
By tomorrow night, when I hope to sea you at dinner,

I may be able to tell you something a little more definite about

this situation.
Faithfully yours,

Russell C. Leff,iniinell, Esq.,
52 William Street, New York.



York, January 13, 1921.

My dear Senator:

I am afraid that serious embarrassment may come to
the Treasury from failure to realize the importance of retaining
the principal men now in the service, at least until the new
Secretary shall have been able to familiarize himself with his
jpb end to replace them with men of equal ability if that be

As you know, the personnel of the Treasury fiscal

offices has not for the pest three years at least been determined
on a partisan basis.

There are many splendid men in the organi-

Indeed, I could write a book about the loyalty,

devotion and efficiency of the Treasury organization.

I shall

not attempt now to do justice to all, but I went to tell you
that there are four men in the Treasury who
nigh indispensable.


think are well

These four are all men who, to my personal

knowledge, are remaining in the Treasury today from a sense of

duty and who will retire to much more lucrative positions in
private life the moment they are released from the Treasury.
They are Assistant Secretaries Gilbert and Kelley (salaries
5,00O) and Commissioners Broughton and Hand (salaries $6,000).

Gilbert and Jielley are New York lawyers, who came to


the Treasury


a matter of patriotic duty during the war.

have brilliant careers before them in the law or
may prefer.

Gilbert is a


banking, as



His father is or was a

Republican politician of some prominence in New Jersey.
is not a party man.



His father or grandfather WPS,

I believe,

Republican Congressman from Pennsylvania and member of the

Ways and Means Committee.

Both hold recess appointments and

will, I understand, automatically go out of office on the 4th.
of garch


these appointments shall not previously have been


Broughton and Hand are old Civil Service employees
who have been in the Treasury for 15 or 20 years.
backbone of the Treasury's permanent organization.

They are the
You will

find some description of the services rendered by these two men
before their appointment to their present positions in my
testimony on the Legislative, Executive, etc., Appropriation
Bill, November 26, 1918, 'pages 97 to 101.

Broughton was then

Chief of the Ijivision of Loans and Currency, and Rand principal

bookkeeper in the Treasurer's office.

The offices which they

now hold were created upon my recommendation in pursuance of m
plan outlined'in my testimony on the Legislative, Executive,
etc., Appropriation Bill, February 11,.1921, pages 2567 to 2573,

The offices were created on the bond roll and

should be made permanent.

I understand the House has struck

out specific provision for both and limited the use of the bond


roll so AS to exclude them.

Broughton is


Republican who

Was brought into the Treasury by Mr. Vanderlip when he was
Assistant Secretary.

I do not know Hand's politics, but as he

came from Mississippi, I think, 15 or 20 years ago, I suppose
he is or was a Democrat.

Both of these man are as nearly

Indispensable as it is possible for any man to be.


indeed, because of his peculiar knowledge of the Government's
archaic accounting, and his almost uncanny ability to estimate

current income and outgo, is unique and irreplaceable. Both
have been retained and promoted through successive Administrations, Republican and Democratic alike. Failure to.retsin them
now and confirm
appointed would

them in the positibrs to which I
greatly prejudice the successful

had them
operation of

the Treasury and would be s blow to the Civil Service principle
and to the morale of the Treasury service.
I am not writing this in the interest of the men,
because, so far As their selfish interests are concerned, no

greater good

fortune could

happen to them than to be released

from the public service nnd to have a good excuse for accepting
lucrative positions which await them both,

It is in the power of the present Congress, by

confirming Gilbert and Kelley, and biappropriating speclficslly
for Broughton and Hand or permitting their continuonce at their

present salaries on the bond roll, to save the orgnnization


ddeveloped, at least until

which I created

the new Secretary

of the Treasury shell have had en opportunity to


himself with the vary grave problems which will confront him at
the outset of his

ndministretion nnd to formulate his

own plans.

If this is not done, grave embarrassment will, I fear, result
to the


of the United States and to the new Adminis-


With great respect, I


Sincerely yours,
R. C. Leffingwell.

Hon. Reed Smoot,
United States Senate,
Washington, Q. 0

January 21, 1921-

Dear Rueseil:

Thiu note has twe purposes: One 5.6 to tuank you for stopping
I can't tell. you how much I
at the office to give me a welcome home.
appreciate it, and how much I v.Que the friendsbip which kh,e formoc during
the war.

hlso I am writin,:', to tell you how very deoply I apHrdiate the
letter yo 4 *rote which broug:ht forth the respone from Prosident-e2ect

There ure many reasons hhy it vould eeem to be imposable ror me
One reauon it tiVit 1.1y pereon of

to OtleoUtd,66 the idea you have in mina.

my charcterisLice, *ith eilioh you are so well aoquaintea, he thu un-

1 have b4Allt In euhinFfortunate faoulty of making a g(A)0 mary eneMiak;.
ton, as you know, anu even if other oircum *,ancee permitted, I am very L-uce

that tLere iu not the remotest possibility of the ,Senate oenfilming my
Every Democrat in the Senate would vote against it, and
proLatly a largo number of the Bepubtiouns aa well. fhey protab"ly think me
a lukewarm Republican anyway (and possi'ol§ they are not far wron), but
more than that,' all of tuose who know inc believe that I am etrong-headed
and opinionated - and maybe they are not far wrong. Thie le one of the
Another possibly more impertunt is tnat I Uun't
lea:A, of the argumente.
want any public offioe. It woulo make me exceedinly unhappy to get inte
a political atmosphere, and I beiieve twat I can be ef mo.e EurViee to the

community and country in my ,:reeent job.

I will space you the other.reasone, - too numerow, to recount -

but I won't spare you the satisfaction, if it ie any, of knowing that I

have a very deep and heartfelt apkreolation of your confidence and friendship.

Sincerely yours,

R. C. LeffinEweliA Esq.,
5Z tilliam L;treet, New York.


January 21, 1921.
Dear Russell:

Thie note has two purposes; On is to thank you for stoning
the office to give me a welcome home.
I can't tell you how much I
appreciate it, and how muoh I vklue the friondehip which we formed _turing
the war.

kis° I !Ira writing to tell you now very deoply I apo.eciate the
letter yeu wrote which brought forth tho rer,ponte frow Prosident-e:ect


There are many reason hy it would aoem to Le impossible for me
to encourage the idea you have in mina. One re.o i that any person of
my charcterlstice, i.ith which you are bo well aoquainted, hke the unfortunate faculty of making a good mary enemioa.
I hkve some in Ashingtea, as you know, anti even IT other circum ,-,ancoe permitted, I am very sure
that thsre ie aot the remotest possibility of the Senate confilming my
Every Democrat in the ,fenate would vote kgainet it, and
probatly a large number of the Republivans ag well. fney probably think we
a lukewarm Republican anyway (and poscibly they are not far wr-ont;), but
more than tha, all of tnose who know me believe that I am strong-headed
and opinionated - and maybe they are not far wrong. Thie le one of the
lea,:t of the arguments.
Another po!,Libly more impert&nt is that I don't
want any public office. It woulo make mo excoedingly unhappy to get into
a political atmosphere, an;.. I beJleve taut I can be cf moie service to the
community and country in my .creeent job.

I will aparo you the otheireasens, - too numerous to recount but I won't spare you the satisfaction, if it ia any, of knowing that

have a very deep and heartfelt appreciation of your confidence and friendSincerely yours,


C. Leffingwq,I4


t,tret, fiGt Yore.


M 19C.3.1.9014-1-20




Mr. Beyer


H. G. Bellah


Statement bq



Jarunry 24, 1921

United States December 31, 1920.




Certificates of Indebtedness
Pittman Act

Up to Dec. 15, 1921
Up to Aug. 16, 1921
Up to Dec. 31, 1921

War Savings Securities,
Victory Notes

Jan. 1, 1923-Jan.1,1925
1922 - 1923






Panama Canal Loan of 1956
Panama Canal Loan of 1938
Postal Savings Bonds (lst'to
19th Series)


After Aug.1, 1916
After Nov.1, 1918
1 year from date
of issue





Debt on which Interest has
(Payable or presentation)
Non-interest bearing Debt.
(Payable on presentation)









225 242.689


Grand Total



)1Alamcs. of Debt
Consols of 1930
After Apr. 1, 1930
Loan of 1925
After Feb. 1, 1925
Panama Canal Loan of 1961
June 1, 1961
Conversion Bonds
30 years from issue
Liberty Bonds
First Liberty Loan 01,952,368,450
1932 - 47
1927 - 42
Second Liberty Loan 3,323,137,800
Third Liberty Loan 3,646,868,400
1953 - 38
Fourth Liberty Loan 6,363,733,163


Total Gross Debt December 31, 1920
(Preliminary Figures)






New York, January 24, 1921.

Dear Ben:

Numerous changes, to which I have already called your
attention, about to take place in the Federal Reserve Board and
Treasury organization make me peculiarly apprehensive and are
now my excuse for writing you further.
I do

not know

whether you are aware of the political

pressure which was exerted during the fall on the Federal Reserve

Board to provide cheap money for thefarmers.

It was really

I am very much afraid °V the renewal of this pressure,

when both the Federal Reserve Board and the Treasury are made up
mostly of new men, and that the continuance of certain artificialities in the Reserve Panks

position will make it sew easy to try

the cheap money remedy for depression.
I do not think that cheap money will really exempt this

country from the present world movement of prices any more than
it has France or Germany.

On the contrary, I believe that the

principal obstacle to perTranent recovery is an Immense over-supply
of currency and credit.

Notwithstandinq the great reduction in

the volume of business and the reduction in prices and waaes, all
Federal Reserve Panks1 total earning assets on January 21, 1921,

were less by only $90,000,000 than the year before, and the


Reserve bank notes
aggregate of Federal Reserve notes and Federal
in circulation increased in the year by more than
volume of
I do not think you can healthfully float the present
subnormal, or even in
currency and credit either in the present
normal, times.

I think the Federal Reserve Board's policy should
It is

be such as to absorb the surplus as rapidly as possible.

hanging like a cloud of poison gas over our business life.
I have already written to Mr. Jay under date of January
15th about your Bank's rate on Treasury Certificates.

I understand

tes, gave
that the Treasury, before reducing its rate on Certific
principally on
the Reserve Banks an opportunity to elevate theirs,^

account of the position of your Bank,


was declined.

The Reserve Banks' holdings of legal tender notes, silver,
etc., amounted on January 21, 1921, to over $205,000,000 against

The occasion for holding legal

$61,000,000 the year before.

tender notes disarpeared when gold certificates were made legal
te der.

The silver Certificates were accumulated when last yearts

price of silver rose

abovA.37 and we were providing silver for

export in the effort to hold the price down so that our subsidiary
coin would not be melted.

In view of the present world price of

silver, the silver certificates make a sorry reserve.

The Reserve

Banks' present apparent reserve is an invitation to inflation.


not eliminate the padding from it by paying out your legal tender
notes and silver certificates?

It seems to me also that the time has came to restore to


circulation the gold, or some portion of it, which was withdrawn
during the war.

Benjamin btrongx Esq.,
Governor, PedF)ral Reserve Bank,
15 Nassau Street,N.Y.City


January ?5, 1921.
Dear Russell:
I was particularly glad to have your letter this morning, reenforcing,
it does, my on feelings in regard to the policy of the Treasury and of the Bank.
I have not yet been anis, to satisfy myeelf that we know all of the reafons for
the automatic accumulation of silver certificates and United States aotee which has been
taking place now for see: boeths. I doubt if this is weolly due to the business rrcession, beeause there ere other influences which might help to Increase our holdinos of
silver ce-tifleatce nod United Stetes notes ehech are eeneowhat 35 cure, but eoesibly have
more to do with the movement than tree.

I notice the last statement of the Treesury shows *265,000,000 of gold ia exIncreased accumulation of gold
ceus of the urount reeoired for the redemption funds.
by the Treasury would reduce our gold holdings, or at least arrest the increase in our
gold holdinec, enn, ercere. 1:,, to eomo extent develop the tendency to increase the smount of
But the more likely explanation i5 that
our silver certificates and legal tender notes.'
notice that the increese
it is due to the movement of the domestic exchanges.
of silver certificates and Uaited States notes ha e been almost wholly in the Federel ReTne domeetic ezehanges have been running adverse to Se* York
serve Bank of ra% Yo.
now nor a long period. Bank deposits in hew York City have been reduced by :t1,400,000,000
from the high water meek, and, as a consequence of that,. our reserves have moved to the
They are just now as low in total as they ever have been since
other reeerve bank.
These payments which we make to the
the gold was loecentrated in the reserve banks.


other reserve banks all go through the gold settlement fund, and as we are only able to
settle with gold, and not with oilver certificetes or legal tender notes, the tendency
is for us to oonstently lose gold and to accumulate the other forms of reserve money.
1 share your aperehension about the situation in the Treasury Building.
When the present Secretary retiree, and if his immediate associates in the Treeeury
retire, as you seem to feel is possible, the only members of the organization left
who are familier with the phase of the war period at all will be Messrs Hamlin and
Miller of the Federal. Reserve Boerd, in case, as I feer, Governor Harding retires.
Upon whom, therefere, may we rely for protection ageinet the pressure which is suite
possible to arise for cheap money as a cure-all for the difficulties with which the
country will be confronted during this coming period of readjustment, which cannot be
That troubles me very much!
If we continue to
There is another matter which is equally puzzling.
maintain our present rate level, or even go a step further and increeee the rates for
loans upon Treasury certificates, and the other reserve banks do likewise, we can, of

course expect a continued pressure upon bank credit and a continuance of the policy of

Looking at the problem as an international or world one, rather than

as a local, nationel problem, I am wondering hoe the war stricken natione oftEurope
are ever going to meet their debts at all if prices go down further or even remain
 a period

at their present level.

With prices reduced, wages reduced, profits

reduced, next the tax income of Governments will be reduced, in fact everything will


Mr. Leffing*ell


De reduced except the amount of interest and priocipal of var debts no ex;.ress:d in
various obligations. Ho* are they ever going to pay thew? As one man expresso:kit
to the in London, the proble before the British Government no is to main vim the
If the nations of Europe should have the
pound at the value of eight shillings.
courage, or even lacking the courage, be forced to perform a capital operation upon
their currencies, as has been suggested by some peopl, they would inevitably be
obliged to perform a similar operation upon their debts, and I am rather inclined to
think that much of the future in Europe, speaking narrob,ly of financial recovery, will
depend upon the policy of the Federal hestrve System and of the United FiAtes Tresury,
in liquidation and reducing prices, and second in
first, as to the pace whioh we
the treatment we accord our debtors.

The situation abroad is so complex and in some respects so serious, that

m, ow iD,43 to cry--tollize at all just yet, but, on
I feel migity reluctent to
the whole, I think the.safest present policy is to co evtrything we can to prevent too
sudden movements in rices or rates for oredit until we knoz A little more of the
policy of the new adminirtretion, and particularly until *e kno* a little more what is

to be done about the debts evi

to our Government by foreign loverrents.

Tou and I both sufer fron that fortunate, or unfortunate, habit of getting_
our minds cleared up a bit in these matters by talking about them, and I *ant very much
at an early opportunity to talk same of thee matters out with you and to gst your on

But the first thing to do is to get some reassurance as to the Treasury
organization, and I am doing what I cun in that maiAor lreadv.
A thousand thanks !n) you 7c.'or your letter.

Faithfully yours,

hussell C. Leffingweil, Esq.,
52 Tilliam Sta:;76T7-11ew York City.



New York, January 26, 1921.

Lear Fen:

Many thanks for your good letter of January 25th.
I am sorry though that you did not obey the injunction not to
You must make it easy for me to fire off my views

answer mine.

at you from time to time.

you will take


you will forget then.

I hope that if they prove suaaestive

of them, and if you think them worthless
1 shoulc feel very guilty now that I

bear no share of the responsibility if I added to your burdens

by as much as the writing of a letter.

I think you have fallen into a commcn error about the
gold in the Treasury.

I have before me the Treasury Daily

statement dated January 15th, which shows gold in the general
fund to the


amount of $284,000,000 as an asset and

as a

the 5% redemp-


the redemption funds for Federal Reserve Bank notes and National

Bank notes, which may be either in gold or other lawful money,
the net amount of free aold on

of $265,000,000.

I do

January 15th was $7,000,000, Innot know What statement you have

been locking at, but It is, of course, unthinkable that there
should have been any important increase in the amount of gold
in the Treasury since January 15th.

I think you are equally mistaken about the silver.



of the silver now in the Federal Reserve Banks was turned

over in a lump by the Treasury last spring.

Furthermore, until

very recently they have been accumulating silver by express
direction of the Federal Reserge Board afd. the Treasury.


present accumulations of silver by the Federal Reserve Banks are
not accidental but were made deliberately for the purpose mentioned in my previous letter.

The reason that the




in the hands of the Federal Reserve Bank of New York Is that we
sold it to the Federal Reserve Bank of New York last spring.
Other Federal Reserve Banks were excluded becaus
Bank needed tle rese

the New York

e at that time

I am interested in whae you say about the relation of
our credit policy to the needs of Europe.

It is mildly amusing

that you and I should have precisely reversed our positions on
this great question.

I shall look forward to the talk about

it which you suggest whenever you have time for it.

In the

meantime I shall not trouble you by adding anything to my letter
of January 24th to you and my letter of January 15th to Jay.

Benjamin Strong, Esq.,
Governor, Federal Reserve Bank,
15 Nassau St.,N.Y.City

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Uurch 8, '921.

Dear Russell:
Thank you for yours or the 7th, enclosing copy of

your letter of February 17, to 1.r. Cilbe t.

What you suggest

is exactly wht I had in mind, as 1 stated to you, and I hope
thut later on the new Secretary of the Treasury will sec the
..dou., of such a program.

Yours very truly,

.44:tia+644.1., EP1-e
52 Willi-IL '-treet,
New York,



a position upon a political question.


New York, March 30,1921.

lly yours,

Dear Ben:

I received your letter of March

I am strongly in favOr of such

Benjamin Strong, Esq.,
Governor, Federal Reserve Bank,
15 Nassau St.,N.Y.City

a constitutional amendment as was proVp

posed in my letter to Mr. Green

and I

think it would be very helpful

to write Mr. Mellon a letter on the sub»

my impression is that the line of

least resistance would be to support the
McFadden Resolution with such amendments
as are necessary.

I shall be very glad

to talk the matter over at Mr. Hart'sconvenience.

You will, I suppose, want

'43 avoid anything which might suggest that

the Federal Reserve Bank as such was taking


April 21, 1911.

Dear Russell:

Last week I war induced to r ke a rather informal talk to
the .4tembers of the Far College in Asehington.

Nhut I k,,ave them

W6.1.5 very hastily prephred and, I rear, on reading it over, not

it might have been v;ith more time
exactly aouurate in figures
for preparatin, particularly as fcir a good deal ,of the material
had to depend upon my memory.

Would yuu mine rea.ding or the enclosed csid lot me knDw

how it strikes you?

Also, will you he good swugh to return it

to me, aE it iE my only copy?
Yours sincerely,

R. C. lAdfinghell, Esc.,
52 Nilliam St.,
New Turk, A. Y.



New York, April 23, 1921.

Dear Ben:

Did you see the enclosed article on the front page
of this morning's Times?

I am afraid the poll4ticians will

For Heaven's sake standup to them.

make it hot for you.

Boston's action was bad enough, buy-the reason
given for it was worse: that they had gold

As though it were the legitimate f

Bank to manufacture currency and eredit
of the gold it could lay its hands on,

nough to afford
tion of a Reserve
the extent


!ecause Congress in

its wisdom had fixed 40% as the legal 4tinimum reserve!

In my opinion good times ar being delayed partly

by the failure or retail prices to ce down, and that is
partly due to the fact that the qua

ity of currency in cir-

culation shows only a trivial decre se, though the volume


turn-over business has been enormo sly reduced; and the failure to effect a reduction in curr

y is partly due to the

faildre of many of the Federal kie erve Banks to bring their
discount rate up to


7% rate

tablished by your Bank, so

that they c'eterttt continue to subOdize currency inflation.

If you pay out your silver and lawful money, thus



eliminating the padding from your reserve, and restore gold

it will be available as a secondary
reserve in the event of future exigency, you will, it seems

to circulatio5where

to me, go a long way to remove temptation from the politicians.

All importations of gold have, of course, an inflationary in-

the inflation by two and a half if you put the gold in circulation
instead of carrying it in your reserves.
There will be no temptation


Benjamin Strong, Esq.,
Federal ReserTe Bank,

15 Nassau 6trtet,
New York.


to multiply






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APR 2 5 1921

New York, April 23, 1921.

Dear Ben:

I received your letter of April 21st.

I have read,

ana, in accordance with your request, return herewith the copy
of your lecture on War Finance delivered at the General Staff
I think it is admirable;

Colle,lre in Washington on April 11th.

well-balanced, moderate and sugrrestive.

I hesitate to make any suggestions.

I like it so much that

But here goes:

Do you mean to advocete conscription of materiel and
labor as a war measure?

I do not believe that it offers a

feasible economic program if by conscription of mete2ia1 and
labor you mean anything more than fixing nrices and wages and
imposing taxes on war profits and incomes.

When we draft men

to fight, hope of glory on the one hand, fear of being called
cowards on the other, furnish the necessary sanctions.

doubt very much, however, whether it would be possible to
draft men to work in business and industry

even in wartime,

because such jobs lack glamour and some are so much more distasteful than others.

Nor do I think conscription of mater-

ials would be consistent with stimulation of production.

Your comments on Napoleonic

finance are very inter-

I know little about it but I imagine that the


analogy is a bit misleading, because he did
upon France for men and materials in


not have

to call

numbers and amounts

as to over-strain her economic life, and drew heavily upon
enemy resources.

That you say at the bottom of page 10 about economy
in interest rates being

false economy is

undoubtedly correct,

but I question.the implication from/the balance of the sentence
that higher interest rates during the war would have made it
possible to avoid bank loans and obtain investment
our borrowings.



Perhaps the rest of your lecture makes it

clear enough that you do not mean to go as
you do think rates should


as that, though

have been somewhat higher.

tion whether moderately higher rates would have
ant effect in preventing

inflation during


I ques-

had an import-


and, of

course, a really dear money policy is not feasible in wartime.

You cannot speed up production and distribution for war purposes
on tight money; you cannot go
brakes on.

full steam

'ahead with



When government expenditure for the wasteful pur-

is on such a scale as in the great war the governfix the price of money as of most everything else,

poses of war
ment must

for it has upset the balance of supply and demand.



for money should be fixed with reference, on the one hand, to
making the

and making

loans attractive to investors in the first instance
credit control easier after fighting stops, and, on

the other, to avoiding during the war abrupt depreciation or


panic in outstanding securities

andleaving a margin


further concessions on future borrowings, if the war is
protracted, without establishing panic


This, of

course, leaves a fairly wide -margin for difference of opinion as to what the



rate should be


under given circumstances.

down inflation in wartime must be

placed not upon rates but upon such

expedients as were


in England: price-fixing, war savings
loan eamoaigns, food control, fuel control, con-

during the war here and
and liberty

trol of capital issues and of money for speculation, etc.,

etc. -- and, of

course, first and foremost, taxes and then

again taxes and more taxes.

I rather think that what you say about short loans
and long loans ought to be somewhat qualified.

Of course,

when you are actually engaged inwar and do not
long it will last, the safe course is to borrow

know how

periods as possible.

from having too

Our trouble in

for as long

wartime did not come

much short paper, but from having too much

PaPer, long and short, in the banks.
If paper had to be in
the banks It was better short, and when the fighting is over
the sooner the debt matures the better, because the early
maturity furnishes

opportunity and


Benjamin Strong, Esq.,
Federal deserve Bank,
15 Nassau St.,N.Y.City


occasion for early repay-

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April 25, 1921.

Dear Ruecell:

Many thenio for the trouble you took in writing me about that lorese.
As a matter of fact, the printed memorandum sent you was but a skeleton or what

I said, and

can meke the following comments in regard to your suggestions:

The point about conscription of material was not fully covered in whet
was printed.

My thought is baeed upon the fact thet ievestigatione


the bank

disclose the flet that in these materials where price were fixed, price levele in
percentages *ere eetually scmewhat

highercin most casec than wlr:ere prices were not

fixed, and in some ceees production was not materially

i elaborated


this soeewbat In my talk, inteeding to bring out that it was duplicatien of plant
which was unwise, and that the successful procedure was illustrated by the "geslees
Eunday" better than an

other type of


Ce course, that is in the

nature of voluntary eonecription by pressure of public opirin.

As to labor, my

whole point was to take from industry only those men wno ceuld be eared without
impairmeet to the industrial

mrechine and. its organization for war purposes.


think the selective eervice act came as close to being a good working plan as any

has yet been devised that I know of, &ed my particular point - E to have the

conscription organization perfected, at least on paper, in time of peace as a war
preparation of far more importance than is the training of a huge army.

Most of

the army officers, I find, agree that the problem of getting men and training them

is one of much less difficulty than is the

organization of the means of getting

the right men, and the organization of industry and transportation.

April 25, 1921


My comments on Napoleon's recard were elaborated by references to the
very point you make:

He drew heavily upon enemy resources even in the early days

of his campaigns, levyieg tribute upon Italy, Switzerland and Prussia for pretty
heavy sums in cash, es well as in materiels.
We do not disagree fundamentally as to the borrowing policy, and all of

that was brought out in the ceuree of the talk.

Where I think te may have a little

difference of opinion is in the treateeat of interest rates.

I have felt for a

long time thet interest rates establish themselves, and thet it was a mistake to
assume that high rate bonds necessarily mould affect all other bonds disastrously.

The extent of the effect upon the level of investment interest rates IE determined
by the amount of bonds istued rather then the rate, because they soon find their

natural level in the market, and the competition of rates arises pretty promptly.
Certainly, this seems to have been the experience during the war.

The object of the talk was mainly to bring
which 1


out this important fact,


sure you agree; nweely, thet we are now discussing the size of an erey,

and Congress is struggling over legislation fixing the size of


.rmy, while at

the same time the army itself and those responsible for the development of a ear
program are aking no well studied effert to take advantage of the experience of

the last ear in the matter of organizing for selective service, organizing for
industrial production, organizing for

transportation, or organizing for finance.

Tou will be interested to know that this feature of the talk impreseed

gentlemen a greet deal, and

they are proposing, I believe, to do something

about it.
Sincerely yours,

e. e. Leftirigvell, Fee.,
52 Willeam Et.,

New Yort,




New York,

April 28,

Dear Ben:

April 25th.

Many thanks for your good letter of
You say that,


those materials of which prices

were fixed, Price levels in percentages were somewhat higher
Might that

than for those of which prices were not fixed.

not be in part explained by the fact that prices were fixed
only for those materiels which were believed to be the subject of the most inordinate war demands?

I do not quite get the analogy you have in mind
between the gasless Sunday and conscription.

the words, the gasless Sunday was a case of
than of conscription.

I am whole-hcartedly

As I understand

war saving

in favor

of or-

ganization for war saving of goods, services and credit, to
eliminate avoidable competition, on the part of business,

industry and the general public, with the Government's war

This strikes at the cause


inflation in wartime,

to wit, the excess of consumption over production.


tion, I think, goes at the problem the wrong way about, taking
labor and materials whether or no.
I think we do not disagree in
subject of interest rates.


about the

I do not know what you mean by


saying that interest rates establish themselves.

It is scarce-

ly possible that you mean they do so in wartime independently
of the rates fixed by the Treasury and the Reserve -tanks.


can I agree that such interest bases as were established last
April and May would have been otherwise than disastrous if established abruptly in wartime.

It is not the amount of bonds

issued, but the relation of that amount and the rate borne by
the bonds to the supply of credit and the rate at which it is
made available, which determines the price of the bonds.


ever, If the principle is once conceded that dependence in
wartime must be placed upon such collateral agencies as were
referred to in my letter, rather than upon a deer money policy,
and that the Government must fix the price of money, I shall
never quarrel with any one who differs with me about what the
exact interest rate fixed upon by the Government should have
been or should be.
I think your talk to the War College people was very
illuminating and very helpful.

Study by them of the problems

you discussed might help the Army; when another war comes
around, to avoid throwing unnecessary burdens on the economic

Very truly

Benjamin Strong', Esq.,
Federal Reserve Bank,
15 Nassau Street, Vp
Federal Reserve Bank of St. Louis

New York,



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advances with a view to coordinating

November 10, 1921

your rate for advances with the market
rate for line of credit loans, and to
eliminating or at least decreasing the

Dear Ben:

My impression is that you have

profit to borrowing member banks.

been making rather too liberal use of
the cheap money stimulant during the
past six months or so.

This is not in the way of criticism but of suggestion

I should feel

Ft thfully yours,

more comfortable if you had a little
more of this medicine in reserve against
the secondary crisis when it comes.

In particular, as long as you
have to make advances to member banks
and cannot confine yourself to rediscounts of bankers acceptances, as to
which your rate is not out of line
with the open market, my impression
is that it would be well to establish
a differential rate in respect to such

Benjamin Strong,Jr., Esq.,
Federal Reserve Bank,
15 Nassau Street,
New York City


5V:. I.


t, tr)




November 14, 1921.


Many thanks for your note of the 10th, which has remained unanswered

because of my absence for a few days' rest.
There ara many considerations

involved in

the rate situation just now,

and I am aniioue to discuss them with you at greater length

than would be poseible

in a dictated letter.

Of one thing I believe you are convinced without any word or argument
from me, and that is that no political consideration, no attack, and

nothing but

sound business judgment has led me to recommend the policy which our bank has

now adopted and which, I believe, is designed to further the reconstruction of
our own affairs at home and assist in similar developments abroad.
You will be glad to know, confidentially, that Mr. Glass has become
deeply concerned

at the attacks upon the Federal

is preparing to make a vigorous defense of the

Reserve System by Williams, and

System and its management in all

particulars, and to attack those who have been guilty of such gross misrepresentation.

I think he may

have softened in his attitude towards me, although I am

not certain of that.
Please read pages 500 ,kc. of the Hearing before the Joint Commission

of Agricultural Inquiry, and let me know if you think that the discussion of the
rate policy of

the System was fair, from the standpoint of the

Lenroot, I found,
His attitude


had a mostsearching and intelligent mind on these



was most fair and helpful in bringing out the facts, but I believe

November 14, 1921.


he was himself convinced that it

would have been better to take all the risks

involved in a high rate policy in the spring of 1919 than to have


invited the

hazards, which have now been so clearly disclosed.
Just now I am struggling to get my apartment at 470 Park Avenue in

habitable shape.

When it


that point,

have dinner with me some evening, when we

you and Mrs. Leffingwell


ca; l have a good old-fashioned chin.

A great many thanks ta,yeu, Russell, for writing me.

It is nice

and comforting and flattering to be kept in mind these days, when critics are

the ones heard from.
The argumentary part of your letter I am going to answer verbally.
Yours sincerely,

R. C. Leffingwell, Esq.,
52 William St.,
New York City.

November 14, 1921.


he was himself convinced that it would have been better to take all

the risks

involved in a high rate policy in the spring of 1919 than to have invited the
other hazards, which have now been so clearly disclosed.

Just now I am struggling to get my apartment at 470 Park Avenue in
habitable shape.

When it reaches that point,

have dinner with me some

you and Mrs. Leffingwell must

evening, when we ca; have a good old-fashioned chin.

A great many thanks to/you,

Russell, for writing me.

and comforting and flattering to be kept

It is nice

in mind these days, when

critics are

mostly the ones heard from.

The argumentary part

of your

letter I

m going to answer verbally.

Yours sincerely,

R. C. Leffingwell, Esq.,
52 William St.,
New York City.


New York, November 16, 1921

Dear Ben:

I receivcd your letter of November 14th.


talk at luncheon yesterday was so comprehensive that it
leaves nothing for me to say in reply except that I have
the greatest confidence in you and the greatest admiration
for the public service you have rendered and are rendering
as Governor of the Federal Reserve Bank.

I hope you will

let me feel free to offer suggestions from time to time,
and that you will realize that When I do so, I do it not

in the spirit of criticism, but with the hope of being

Now and then an outsider's comment throws light

on the subject though his suggestion may not at the moment
find acceptance.

However that may be, my affection for

you and my interest in the problem are such that it will,
I am afraid, be utterly impossible for me to restrain
myself from telling you what I think, from time to time,
about the way things are going.

It would be a great pleasure for Luchen and me
to come to see you some evening when you get gettled.
is nice to know that you are so near.


I hope you will let


us dine along with you when the time comes, because

are not going out this Winter.

Faithfuk y J.urs,

Benjamin Strong, Esq.,
15 Nassau Street,
New York, N.Y.



February 18,

Dear Russell:

You have so frequently heard me express regret and concern that

Senator Glass and I had unfortunately disagreed at one time, and more that

once have I feared that be might still feel some reservation as to my work in
the System, that I think I elv;uld ncv send you a copy of a letter Thiel) I have

just received fm him,

an d

which dispels the last doubt I have ad in my mind

\ at 'aCcaleither you nor Senator Glass could have realized that it is a fact/

OZ the subject.

that of all the men with Thr,m I have been associated in one Tay or another in
these matters,1 would regret a difference of.' a permanent character with him

more than any other because of the natural pride Thich one can not help feeling
about mor that was made possible by his on accnmplishment in securing the

passage cf the legislation.

Such work could not possibly give permanent

satisfaction if cno felt, as I did,


that in the main it vas doing

violence t. the very purpe,2es for which the legislation vas passed.

So that you may understand the relief and gratification that his

letter affords me, 1 ar


tr read a copy of it.
Yours sincerely,

Russell C. La flueeli, Esq.,
52 iilliam St.,
New York,





New York, February 24, 1922

Dear Ben:

Upon my return to the offi4le +roday I found your
letter of February 18th and the enclosed copy of Senator Glass's
letter of February 16th.

I had always tried to reassure you

concerning the Senator's feeling for you.

has at last set your mind at rest.

I am glad he himself


lass is too gener-

ous and too big a man to fail to recognize your great achieve,

lents and your wise leadership in the Federal Reserve System or

to allow his appreciation of your magnificent work to be obscured by ancient differences of sopir4on honestly entertained
on both sides.



Benjamin Strong, Esq.,
Federal Reserve Bank of New/York,
New York City.





April 21, 1922.

Dear Russell:

Thank you for yours of the 15th.

My reply has been delayed by absence

in Nashington.

If you have ever indulged in the pastime of sailing a boat you will

appreciate the following ilJustrationj the point that I want to make aith you.
Shen navigating in rath

sail is reduced too much you


ers with an increasing breeze, if

craft is liable to'lose steerage way and go on the

Your letter indic tee that you might, b

ause, I believe, of incomplete

information advocate that we should attempt to n4vigate our boat under bare poles
in narrow waters with a rising

ind and

On January 3 of this
of all open market operati



k lysing steerage way.


ding to our member banks, irrespective

Litt e over t200 million.

This amount declined

steadily, but with some fl

Pui the first of the year, uptil the present

time when our loans to me

e less than t50 millions

market purchases.

A cons derabl

of these loans are

our loans to the member Ne4 York City banks at the low

and to\day amount to

as I shall not take the time to give accurate f

exclusive of open
the country banks and

int on

Speaking from memory,

res, the loan account Of the

System as a whole, exclusive of open market purchases, has gotten down to the
neighborhood of teloo millions, and has been fluctuating below and above that figure
for sometime past.

Of that te00 millions, it will be found that a great many

hundreds of banks in the Sest and South are still borroaing in excess of their
basic lines, and that it is altogether likely that more than half, possibly two-thirds,

of the entire loan account could not possibly be repaid under any rate level which

R. C. Leffingsell, Esq.


we might establish.

April 21, 1922.

If that is the case, and I believe it is, the System is to-day

running along with loans to member banks of over $200 to t300 millions, which are

distinctly subject to influence by rate pressure.

In a country with t35 billions

of bank resources held by 30,000 banks, of which only 10,000 are directly subject
to the influence of our rate, were we to rely upon an effective influence upon the
credit situation, with only $200 millions, or even $300 millions of loans of that
character in the System, it could well be said that we had completely lest control
of the market.

Had we not, therefore, replaced loans paid off by our members by open

market purchases of bills or treasury certificates, we would have had no loan account
with which to exercise any influence or control upon the market.

Shen this condition

developed I became convinced that the security of the situation demanded that we
should acquire investments so that we could have an account of from $250 to t300
millions which could be liquidated whenever a time arrived when it Seemed desirable
to do so.

That policy we have pursued since, and will continue to pursue for

reasons which I do not think were in your mind when writing me.

For your confidential

information I am enclosing a copy of a letter which I wrote to Mr. Gilbert in lashington
before reading yours, and which I will ask you to return as it is a file copy..
Now commenting directly upon your letter.


the Federal Reserve Fanks have pursued this policy under a misguided notion of the
public interest or out of selfish regard for their own earnings.
seems to me to be indefensible."


Please observe that you co

letter to the following analysis of our policy.

It is either misgui

from the standpoint of earnings, and in either case is indefensible.
as that I am frank to say expose

you to this reply, which is


Such statements

that were we to

pursue such a policy as you advocate, under the conditions which now exist, we would
be inviting the same type of disaster which we encountered in 1920 and 1921, and
which I regarded in 1919, and regard to-day as directly the result of your7insistence

that rates

should not be earlier advanced.

Vere there any loop hole in your letter

R. C. Leffingwell, Esq.


April 21, 1922.

which might indicate that those who are responsible for the policy of this bank had
knowledge or views or experience which justified the policy that you are condemning,


I would not write you so frankly.
In my opinion the explanation of your letter lies in the stock market
developments of the last few months which has occupied your attention and given .rise

to your alarm, and that you are not aware of other developments in the country which

are apparent to us, and which are the subject of continuous study and discussion and
in regard to which there is not one word of comment in your letter.
AS to the other eleven reserve banks, it may well be that some of them are

investing their funds for the sole purpose of making earnings, and I would differentiate in my reply between the comment applicable to our policy and that applicable
to the policy of the other reserve banks were there a loop hole in your letter which

permitted me to do so; but you put us all in the same intellectual category, anI
have a notion that the vigorous language on the second page of your letter -would

indicate that you believe that some of us carrY about with us an intellectual junk
shop filled with a mass of curiosities which is neither arranged, tabulated, or indexed, and that when we wish to employ some of our stock of intellectual goods we
adopt that scientific process of selection which is employed by children in selecting
the contents of a grab bag.
Put this in your pipe and smoke it, old scout, and don't write any more letters

like the one I am replying to vithout at least asking a fellos first what it all means.

Put don't let this letter lead you to believe that I have any less desire to get your
views, or less respect for your own intellectual warehouse than I have always had,
because it is really very considerable.

R. C. Leffingwell, Esq.,
52 ailliam St.,
New York City.


April 24, 19??.


Dear Russell:
Our conversation of Sunday afternoon has answered yours of April 15
part, and I fear that in some
I do not

to policy.



respects our opinions must continue to disagree as

that 49 ara in disagreement

necesearily as to the

disagreement as to the time

principles involved, but se may be in considerable

when action is required of us, and possibly to some extent

as to the character of

our responsibilities.

That impressed me about your letter, and I am frank to say

shocked me

quite a bit, vas your willingness to express 'so definite and unee,uivocal

sith so small a ?art

of the facts before you.

So far as I

can gather Prom your

letter, and from ghat you stated to me Sunday, you were expressing an

and unqualified condemnation of

the policy

a table of figures shosing the amount of

investments, on



important considerations, which affect our policy



without even

Just nom I sant to
ment in mind and body


bout at this matter.

opportunity to

In any event,

Nem York



consider all of the facts.
and feeling more content'will have

I mant to thank you for your letter

and that is, the

Yours sincerely,

52 lilliam St.,

just nom, that I fear that your

when gearing crutches, and then we

and mhat I knos is really behind it,

R. C. Leffingmell,

the one hand, and

This leaves out so many

see you on too sound legs

than you can


of the Federal heserve Banks eased upon

a table of stock exchange prices, on the other


an opinion

real spirit of friendship.




APR 24- 19 22

April 1$, 1922

Dear Ben:

I was glad to see you back and looking so well yesterday.

As you know, I have been somewhat concerned about the cheap

money policy of the Federal Reserve System as reflected in the bank

When, however, we had our talk and correspondence in Novem-

ber I had no notion that the new policy of the Reserve Banks went
further than the mere reduction of their rates.

ever, that during the


Now it appears,how-

six months they have been actively en-

gaged in making money cheap by the purchase of Government obligations for their own account.

The following figures are taken from

the Reserve Banks' reports of yesterday, six months ago, and a year
ago (000 omitted):
April 15,

U.S.bonds and notes
Treasury Certificates






April 14,


Total earning assets


Federal Reserve Notes



In the period there has been an important reduction in the
amount of Federal Reserve Bank notes and Pittman ,,ct certificates securing them.

I have omitted these figures because this matter was

not within the Federal Reserve Banks' control, but in that of the


do not know whether the Federal Reserve Banks have pur-

sued this policy under a misguided

notion of the public inter est

or out of selfish regard for their own earnings.

In either c ase

it seems to me to be indefensible. )4//r

scarcely need to say to you that inflation occurs quite
as definitely and harmfully when currency and credit are prey ented

from contracting co-ordinately

with the contraction in busine ss

and prices as when currency End credit are expanded beyond th
pansion of business and prices.

Fait ful_y yours

Benjamin Strong, Esq.,
Federal Reserve Bank,
31 Pine Street,

New York City.





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01100 '011





April 26, ism

New York,

Dear 8en:

I received your letter.Ar74pril 24th.

I do not think

I was or am ignorant of any important consideretion affecting the
policy of the Reserve Banks criticized in my letter of April 15th.
I do not of course pretend to have the detailed information you
have, but I follow pretty closely such information as you and others
make public and am not without opportunity for keeping informed
concerning undercurrents.

From the view I take, however, any facts,

whether of a political or business nature, would only serve as an
excuse and not at all as a justification ofrthe creation of several

hundred millions of dollars of fiat credit by the Reserve Banks on
their own motion.

15th was

As to the state of my mind and body, my letter of April
written before the tennis accident which put me on crutches

and I have no sick excuse to offer for venturing to differ with you.

My friendship and admiration for you do, however, add a feeling of
personal grief to my condemnation of what seems V?, me to be a tragic



441"1-'lea-4/(1Benjamin Strong, Esq.,
Federal Reserve Bank,
15 Nassau Street,
New *York, N.Y.


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Octe.I0C. Luivssg.cL
.Y.4 t'.rqdY


April 28, 19Ta.

Dear Russell:
Of course, I do not believe from your first letter, nor do I gather

from yours of April


just received, that you realize what a vigorous, sweep-

ing, unqualified condemnation of our policy you have expressed, nor even had
in mind that there might be another point of vies*.

One cannot always be right; and that statement applies to you as well
as to me.

In our former differencasof view about some matters of policy, I

have always endeavored to keep myself in a frame of mind where I eould not be
asserting any infallibility of judgment in some of these matters.
fact taken that very point of vies in the matter which

I have in

you are no so


about, but really feel that the force of your opinion would be greater were your

expressions less definite and dogmatic and

the other man's

point of view.


attitude of mind less closed to

It is not the fact that me differ which

me because such differences of opinion

are inherent in such questions as

the one

we are discussing; but I am disturbed to feel that you approach the subject with
your mind absolutely closed to any consideration of any
that which you expressed in the first
I would not


point of view except


this so definitely

had I

not felt

it for a long

vhile; and evidence of that I think is contained in a letter which I wrote you




8, 1919, of which a copy is enclosed, which I wrote at a time when


my mind

as filled with serious concern lest a certain inflexibility of opinion

and vies on your part


lead to mistakes.

h. C. Leffingwell, Esq.


April 28, 1122.

Fvente Which develoeed eubeequent to my letter of October 3, 1919 (which

le ,ter wee the culmination of a long correseoudence on tee subject of our policy),
convinced me tht in jour judgment of thot period you eere wholly Nrong, just as
you eero wholly erene In your equally vieorous commente on our policy last sumeer,

and just RS I believe you tre no largely rone in your comments upon eur erenent

Your objection to the course which T ear urgine in 1919 eee bed upon

two definiee convictions; one eel/ ftat sn increftee in Intereet

,ou1,1 force

a refunding of the entire netionel debt; and the other wc's thet en immediate de-

cline in our export tree could be rel'ec Lion to brine door pricer.

the first belief e

At te whether

juetified can never be proved, but I did not believe it ayeelf

at the Mee endrever hove rince.

DC not overlool- the fpct the4 the areument

cbeui our retee .nd the market velue of .he governmentie debt would sppl


eeu:1 rorce t any eeoeequent tic, end if s'police of TE4ping retee eeF indefinite-

eoetpened it yeuid be certain to open the reseerees of the reeerve henee to a
continued, uncontrolled eepansicn until its lenjine eower became erhseleted. and that.

Ar exectle whet happenee as e reault of the Treasury's policy.
I cembatted it by every srgument yt. my commend.

thet your belief was unfoendee.

As tc the second,

Subsequent events eroved, I am sure,

Our export trade Otet production and waeteful con-

sumption continued to mount by iespe ord bounde, tnd the flinging of credit into the
market during part el 1219 and the sprinp ef 19e0 wae the undsrlyine cause for the
exeanEion Pnd subeequent ccllopse.

In other words, we anted tee late.

I think your two letters now justify sy saying tbst had the Treesury in
those days pursued a more orthoeox course, the country would have escaped some part

of the disester which it subseauently suffered, that the rendjustment of values
would heve been zoro gradeel ond less eisestroue, a.rid test this is practicsliy the
unsnimous opinion of etudente of the subject 043+91cie, of those In tha "Preaeurv 1)10

were concerned with the policies then adopted.

April 23, 1922.


My on feeling of loyalty to you sad to thoee whom I regarded As my

principals and uho carried the final reoponsibility for the policies adopted,
has restrtined me from ever taking this position either before the Joint

Commission of Agricultural Inquiry of the Congress, or in any other public way.

Therefore, / think that my letter of October 8 is applicoble to the
present sitcation, ,= ft V36 in 1g19 to the siturAion nt thht time.

I gm not

neVirp you to change Any conviction, but simply to leave your mind open to the

admission that yours is not the only point of view entitled to e7nminetion,
that you my be

it te wronp now as you were in 1919, erd nu you were lest year.

I certrinly share your grief srd would be quite willing to ehare some of
these resporsibilities with you.
but even now they


rested vholly upon your shoulders in 1P19,

ss, only prrtly renting upon mine.

And I still value end

appreciate your advice even though it does take the form of such a vigorou. condemnation 6z you have a/Tressed.

R. C. Leffinguall, Zsq.,
r2 TilliBm St.,
New York City.






MAY 1 5 19L2

New York, May 6, 1922.

Dear Ben:

I received your letter of April 28.


woule not have written !.t if I had not offended J311 by my way

of putting vbat I hsd to say abont your open market purchases
of government securities.

For that I am very sorry and I
You are carrying the burden and

apologize with my whole heart.

heat of the day and, however unhappy my words may have been, I

meant to

help, not to annoy.


I am all the more sorry to have

you because I thoroughly appreciate your considera-

tion in coming to see me at my house to talk the thing over when
I myself was unable to be about.

I feel sure that you will not allow my way of


it to obscure in your mind the importance of the point raised
in my letter of April 15.
is to be said

on your

I particularly want to know all there

side because I have to make a speech about

the Federal Reserve system early in June

and I do

not see how

the subject can be avoided altogether, although I would now give
a good deal to escape the subject or the speech, or both.


therefore, you think it worth while to attempt my further enlightenment I think that I can promise you to approach the
matter, if not with an open mind, at least with a friendly one.


In any event,

myself in

and however vigorously I may have expressed

private, I shall of course

be circumspect in my

public utterances.
As to 1919 I may perhaps some day find time and

disposition to reply to your letter
don't want to reopen old sores.

-- perhaps


Benjamin Strong, Esq.,
Federal Reserve Bank

of New York,

Aw York City.


not, for I

May 15, 1922.

Dear Ruesell:

I am on the shelf for a few days' rest and take the oprortunity to send you a few lines in reply to yours of May C.

Of course your letter is just what I should expect from
I appreciate it very muoh and em

a good friend and old assoniete.
replying whole

heortedly in the Raise epttit in which you have

written me.

Your letter contains the first intimation that you may
undertake some

public discussion of t',/le mettere we have been cor-

iesponding and talking shout.
ing that there

Please don't be offended by my say-

is really nothing thst can be gained by doing so

and very much possible berm that might result.

Of course it is

fine and really helpful for you to let me know how you feel. I
would expect you to do the same With Governor Herding or with Mr.

But there is still a good desl of which you are really in

ignorance about these matters;

not the least important

results of the recent conference.



There is much in the situation

which cennot be publicly discussed.

Please don't be unmindful that whatever you may say will
be regRrded

as an expre-sion from e

the system, and that in

former colleague and friend of

that capacity you can do much more to kild

a difficult situation on the inside than you possibly could do pub-.


Mr. Leffingwell



Further than that, and this personal point or view is very
much in my mind, don't overlook that I have, myself, refrained from

any public criticism and, so far as possible, from any private discussion of policies in the Treasury during your period of responsi-

bility) thmt my doing so bas resulted in my shouldering a much
larger share of responsibility for what transpired and for the consequences than juiftly rests upon my shoulders, when one considers the
vigor with which I from time to time exprw-sed disaerewitent vith you.

I think you are the only man to *hop I would i-itso this

sort of a ieLter, and it is just AA8 greatly dictited out of regsrd

to you as it is for any other reason.
If you write your speech out, I would like right well
to sec it anyway.

Faithfully yours,

R. C. Leffingwell, Fsq.
52 4i1liam St.,
New York City.

JtJU 1


New York, May 26, 1922
Dear Ben:

I received your letter of May 15th.

speech about the Federal Reserve System.

I have cancelled my

I am willing to wait and

see whether as you say I can do more on the inside than I could do

I do not, however, look at the matter as you do.


you are prevented from criticizing Treasury policies publicly, not
by your personal relation to me, but by your bank's relation as fiscal agent to the Treasury of the United States.

I dont think the

same rule governs my discussion of Federal Reserve policies initiated
a year or two after I ceased to have any official relation to the
Treasury or the System.

I dont think you are carrying any undue share of responsibility for Treasury policies; and, for my part, I am proud of them.
On the other hand, I think that you owe much to Secretary Glass and
something to me for supporting you whole-heartedly and withholding
criticism of the mistakes we think you made in 1919.

I have been

glad to attribute them to your illness and necessary prolonged absences and to remember only your great services and my admiration for
your fine achievements.
I am mighty sorry that you have had to lay up again.

hope that a few days rest will do the trick.

Benjamin Strong, Esq.
15 Nassau Street
New York City.




June 1, 1922.


Deer Russell:

I have just finished reading your

address before the Academy of Political

and Social Science, and it is hardly necessary for me to advise you how much I am in


with almost everything you said.

The so-called World War Debt Refunding bill I fear contains possibilities
of no end of trouble, simply because it has done much to create an expectation that
uncollected debts will be collected.
I have never favored in

outright declaration of forgiveness of the debts,

nor in fact of a policy of forgiveness
duties imposed upon this


consideration in return.

But the

commission are so imposaible of accomplishment as

to make

its efforts futile and render ultimate failure, I fens, a cause of criticism and

Also, I have your nice letter of
to cancel your speech about the



26, and am glad indeed that you decided

Reserve System.

You probably misunderstood my statement about criticising Treasury policies,
or I may have been guilty of careless dictation.

Surely any attempt by the Treasury

to misuse the Federal Reserve System would justify outright condemnation by a responsible official of the System.

The line of demarcation between the proper use of the

System and abuse of the System is a difficult one to determine.
Treasury had no more staunch servant than I was.

During the war


After the Armistice we disagreed.

Surely my own independence of views and my willingness to express them could never be
considered as other than the performance of

what was my actual duty, and I am using

the word "duty" to make sure that you distinguish between that word and


possib4 the

While the same rules would not govern your discussion of our


June 1, 1922.

R. C. Leffingwell, Esq.
present policies
encroachment, I

as would govern me

were I

nevertheless felt when I

obliged to

defend the System


wrote you, and feel now, that it would be a

mistake for one who had so recently left the Treasury to now undertake a criticism of

which had so

the System and of the men who run the System,

your own organization.


recently been a part of

just didn't seem to me to be what the English call

Just now, and in fact for two years past, I cannot claim any share of
responsibility for the Treasury's policies, because the Treasury is conducted upon a
basis which not even its most captious critic

could claim wPs in

upon the policies of the Federal Reserve Banks.

any eay encroaching

I was speaking entirely of such

share of the responsibility'es rested upon me in connection with the Federal Feserve
System itself, and at a time, I am frank to say, when our difficulties are almost as
great and the obstacles which we have
which arose in 1919 - 1920.


encounter very much more serious than those

I am referring not to the business that we transact,

but to the dangers with which we are confronted; and they are far greater then you
yourself appreciate.

You have never really understood my feelings in regard to Secretary Glass.
I only wish that the entire Senate - in fact the entire Congress of the United States could be composed of such men as he.

I count him our greatest asset in Congress, and

only wish he might be President of the United States some day.

He has behaved

In all

most generously to me, and I have always appreciated it.

7. Glass, however, I have been critical on
sheuld have stated tc

the man,

r men, wh


our discussion with

ne point enly, and that

as that he

had been se bitterly critical rf. me that

had he done his duty at the time he would have had me remeved ftem office.
then - and feel new - that it was a less genereus attitude than
ed frem a chief f-r shem I had

lurked as earnestly and el'

I felt

ne might have expect-

le-hoartedly as I.did

him, and f( r yu.

Neither #ou nor I are going to benefit in the slightest from reviewing


June 1, 1922.


and reiterating the differences of opinion which we developed in 1919.

rather forget them.

I 4ou/d

On the other hand, at the first opportunity - and feeling a

little freer now than I did when I last sw.,.w you to do so - I shall be glad to explain a. few things which have taken place in connection with the iederal Reserve

System recently, and while it may not change your opinion at all, it will at least
give you a better understanding than you can possibly now have of what has been
going on.

I am sure you gill understand the confidential character of what I have
written you.
Thanks again for,your good wishes.

I returned to the cq'fice yesterday

for the first time and am feeling very much better indeed, as I hope that you are.

R. C. Leffingwell, seq.,
52 Pallier Street,
New York City.








June 30, 1922
Dear Ben:

I received your letter of

I am glad you liked my



Philadelphia speech.

As to "cricket7 I consider myself free to criticize publicly
Federal Reserve policies initiated after I left the Treasury; and I think
it is a mistake for you to discourage public discussion and criticism of
Federal Reserve policies by your friends and


friends of the System.

The System needs, more than anything else, the support
intelligent and informed public opinion.


the King can do no


and guidance

It cannot long survive the theor,

My notion is

that, though the friends of

the System should resist to the utmost political interference
islative or executive power, they should encourage
criticism of Federal

Reserve policies,

of an

by the leg-

public discussion and

for the enlightenment of the public


and of the Federal Reserve authorities


not all intellectual or moral giants.

In this particular instance you per-

suaded me, on the score of friendship

and old association, not to make a

speech about the Federal Reserve System, which would

have been

an exposition and defense of the System, and, as such, I

helpful because

we must


all the mo: se

I should not have suppressed my view concerning its recent


However, as I wrote you in my-letter of May 26th, I am willing
to wait

awhile and


I was glad to read that you had reduced your discount rate.t0

4%, because I think, granting the cheap money policy, it is better to

reduce the

rate than hold up the rate

and provide

cheap money by open

rIrket purchases.

Within the last two weeks I have read (1) in the Econo-

mist (June 10, p.1199)and the New York Evening Post (June 17 in a dis-

sterling may be

patch from London) that the rise in

due to inflation here,

(2) a news item giving the official figures as to the recent rise in the

cost of living here, and (3) a fulmination by the exporters criticizing
the Reserve Bank for its deflation policy.

If as a matter of fact the Re-

serve Banks are making money cheap I think they might as well have what
credit there is to be gotten out of it.

I should a good deal rather have a 3 1/2% rate, effective, than
a 4 1/2% rate ineffective

because of the Reserve Banks' open-market pur-

Why dent you gradually


your holdings of Treasury Certificates

run off, without replacing them, and feel out the figure
rate will



which the bank

effective again?

I think the Reserve Banks should curtail expenses to the utmost

and charge their remaining deficit, if any, (1) to surplus, (2) to the
Treasury, (3) to member banks.

There is no sufficient reason why the

Treasury, or member banks either, should get something for nothing or a
valuable service for less than cost.

be under the necessity of creating


the Reserve Banks

credit to pay

should never

operating expenses,salar-

ies and dividends.

I think you should stop hoarding gold and restore the secondary
reserve, in the pockets of the people, which we drew down

for war purposes.

At present you are like the jeweler, if there is one, who carries all his
stock in the front window.
Benjamin Strong ,Esq.
Federal Reserve Bank
15 Nassau Street
New York City.

Faithfully rs







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July 7, 192?.
Dear Russell:

Your letter of June FO -*Quid reruire n very long enexer ver I to

attempt to cover all the ereuud.
There are time

en the cost enlightened end eeen 'riendly criticism

contains penzibilite.of real trn.U

heve youreelf at tines been

e victim

cf thet tort of thIng, end the intie- tien in your lat.. r as to di,,tinot that
you proposed criticism, I ould certainly regret f based upon inoomplete
informatien, that I felt jueti-t'led in eeking the


suggestion that I did.

reduction in cur rite eee jwtified by cenditiens, but I e.r


to say that judgment e,s to these conditions - or at least the infermation e use, comes from other sources than nevepseer articles - for instance, the influence

vhich hes led to the rise in sterling vas not inflsti:e. hero at all but certain
special. cauess with bieh I thini
were vholesome.

ore feni./.iar here, led which or the ebole

The Hee in the indee fieurec )jre been erincipally due to the

rebound frost ethereally lee prices in the cost of raw esteriele.

have risen slightly, but the index figure

for the erre

Li ving co rts

important item of ree

materiale enteriae inte menufacture has risen (uite eharnly, e..nd it Iras ineviteble

it ehculd.

itou explains a considerebie part of it,"rid the cause of

the rise in raw cotton has been the coincidence

4ith the proepect of a not very large yield this

of the abeoprtion of the surplus
year and much

fear of the invasion

of the boll weevil.
The fulminations by exporters and othere in regard to the deflation
policy of the Reserve System ehould be


exceptsele-one eishes to consider

the whole policy of the war and post-ear per iod, ehich Teens an examinatioif the

the tenstv



R. C. Leffingwell, Esq,

July 1, 19?2

At the first opportunity when ve can have a ouiet chat, I will tell
you something of the policy of the reserve banks in regard to their operations
under section 14.

I have not been at liberty to discuss this heretofore,

- especially as I could not, and I de not think that you would want me to
contribute the material for such criticism of the System as you have had in
mind to make publicly.

As to the expenses of the Reserve Benito; teere has never teen a time
when such care is being exercised and when expenses are being kept so effectively
at a minimum.

Only recently as an opinion of the Attorney General rendered

that the surplus could be drawn upon for deficiency cf earnings and to pay

There is no means of drawing upon the Treasury for deficient expenses

as you suggest, and at the present juncture eu assess the member banks for the

various services that le are performing for nothing 4ould be little short of

The suggestion that ee tibouid convert a primary reserve into a

secondary reserve has been discusuad for the last three or four years.


consensus of opinion has been against it, but netwethetaadiag thatevederete
payments of gold are being made by the reserve banks and have been for some tine,

and this batik in the ordinary course mares pretty large payments of that

Eut these are not matters that nave been subject to much public

discussion and at the present juncture are not subjects that can visaly be
You write me nom and then as though I ran the Federal Reserve System,

and I am afraid in the past there have been times Then you have been inclined

to feel that I wanted also to run the Treasury.

That is not the epee. JUst

as soon -s the feeling prevails that the Federal Reserve System is run from my

office, just so soon vill that little capacity I have to influence the affairs
of the System be completely destroyed.

As you say, this is not a case where

July 7, 19?.2


the King can do no wrong, and in my particular case I have no desire to be

It would be an exceedingly uncomfortable crown to wear, and it would not

fit rile anyway.

I do wish that you would look at these matters a

judicially than you do.

It troubles me to feel that you ooze to your conclusions

so definitely and finally and without an open mind to weigh the other side a

little bit.

At any rate, you must appropriate enough time some day, or some

evening, so that Ar e can talk these things over.
Yours sincerely,

h. C. Leffingwell, Esq.,
59, fiilliam St.,
New York City.






SepteMber 8, 1922

Dear Ben:

The American Economic Review for September has an article by Anna Youngman suggesting that the Federal Peserve Banks
ought to make more( andmore diversified,, open market purchases,, and

that their powers be enlarged to that end.

Dont you think you

should write Anna and tell her that on September 6tb. the System's

holdings of bills discounted amounted to less than 40% of its total

earning assets, and that(With the exception of Pittman Act certificates now reduced to a relatively negligible amount) the balance of
the total earning assets of the Reserve System, or about 60%, consist5of bills and long and short term public securities bought in
the open market.

I hate to see the Federal Reserve System unjtstly


Benjamin Strong, Esq.
Governor, Federal Peserve Bank of New York
15 Nassau Street,
New York City



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September 12, 1.922.

Dear Russell:

Thank you for your note of September 6.

I have only glanced through the erticle thet you mention
but will reGd it carefully. Vy impression is that the m,,teria,1

for the article is not drawn from original or firsthand sources,
and, consequently, sley be unreliable, so, were 1 addressing her as
you suggest, and 1P Ihsve once or t ire written to others, I

would like to send somathine like this:

"Young Van:

your facts before stating your conclusions:"

F. Co L, flfWil, Esq.,
52 ffriiam Streltr
New York Lity.


Check up




September 14, 1922

Dear Ben:

I have your letter of September 12th.
Dont take mine of September 8th seriously.


article is silly kojad deserves no attention.


letter was a well'meant attempt to poke fun at
your open market purchases.

Since I have not

been very succesoful in ge ting you to see my
more serious criticism of 401, I thought I would
try my hand at satire,

Evidently I missed fire.

Benjamin Strong, Esq.
Governor, Federal Reserve Bank of New York
15 Nassau Street
New York City


September 20, l922.

Mr. Russell Leffingwell,
52 Wil/iam.Street,
New York, N. Y.

Dear Russell:

Enclosed is a letter and enclosure from John Pratt,
ana a copy of my letter to him, all,of which explain themselves.
Very truly yours,


',-.eptember 21, 1922.

Dear Russell:

I was pleased and touched 14 what you said at luncheon yesterday
which makes me anxious for you to realize9 as I think I do very fully, how
impossible it would be for me to entertain the suggestion which reached

your ears, especially under circumstances which would have all the appearances of justifying that I had betrayed a friend.
and sincerely within the necessary


I have worked so earnestl-d

limitations imposed

in Governor Harding's situation ,44k there would be no other attitude

possible for me to assume even if this


notion were otherwise feasible.

But it is nice to have you feel as you do.
deeply and I want you to know it.
Sincerely yours,

Mr. Russell C. Leffingweil,
454k William Street,

New York, N. Y.

in such a matter to

I appreciate it




October 19, 1922

Dear Ben:

received your letter of October
I have not been correctly quoted.



do not thlnk the terms of the new Treasury
bonds were too liberal and never did think


think there Is much to criticize in

the way the issue has been handled, but that
Is one criticism I should regard as utterly

Benjamin Strong, Esq.
Federal Reserve Bank of New York
15 Nassau Street
New York City


Octo/Ar 18, 1922.

Dear Russel):
You have been quoted by two or three i-_,eople

having expressed dissatisfaction with the loan just offered
by the Treasury, and as I unOerstand it, upon t!le ;round

that the terms were too liberal.

Would you mind letting

Tne know the basis of your opinion if you have been correctly

Yours sincerely,

R. C. Leffingweli, Leg.,
52 Wiltiam St.,
riaw fork City.


september 23, 1922

Many thanks for your nice letter. I
too am for W. P. G. Harding, because there is a
principle involved.

If, however, he is not ap-

pointed or not confirmed then I am

for you, and I

dont think that in the grave emergency which would

then confront the System you

could or should re-


Benjamin Strong, Esq.
Governor, Federal Reserve Bank of New York
15 Nassau Street
New -York City


October 230 1922

Dear Ben:

I received your letter of October

There is not much use crying over spilt

mi1k,4owever, when I see you next, I shall be
glad to tell you what is in my mind, if you
are still interested.

y truly yours

Benjamin Strong, Esq.

Governor, Federal Reserve Bank
15 Nassau Street
hew York City


of New York


October 20, 122.

Dear Russeli:

Replying to your note of the 19th, I am glad
that you found the terms of the bondiP,to he right.


won't you tell me what Tae 7;rong with the vay the 13sue
was handled?

Yours sincerely,

R. G. Leffingwell, Esq.,
52 Eilliam Et.,

New York City.

January 17, 1923.

Dear Russell:

I spoke to you about a letter from Ben, in which he
gave some of his impressions of English business.

I know

it will interest you to read it, and enclose it with this.
Would you mind returning it as soon as convenient.
Yours sincerely,

Mr. R. C. Leffinclvell,
62 William St.,
York City.



January 18, 1923

Dear Ben:

I received your l

ter of January

17th with the enclosed let rer from your son,

which I return herewith.
great interest.

Your bo

pretty close to the roo
very leVel head on his





Benjamin Strong, Esti.
15 hassau Street

New York City

I have read it with
seems to have gotten
of things ;and has a


I congratu-

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March 9, 1923

Dear Ben:

I send you herewith a copy of a

letter which'I have written to John Pratt
in reply to his of .Larch 8th.

Benjamin Strong, Esq.
15 Nassau Street
New York City


Aereb 9, 1K3
Dear John;

I reofived your letter or

Toh 8th with they enoloaed

est net from a letter from Xr. Helm. In prinolPle
IatIrte with
Xr. tieln't view that the buftet 2;oorm1ttee oue,ht
not to be a
whitawashinii sgOnty. The trouble with the atria,
of the
troller ensral in that theresident removed Judge it.rwlak
-And substituted a politioal appointee. It the buoget ,;ommi
has the nerve to say thac, I am with it; tr, however, it tiari not
and lkionek merely to pie k on the _;ountroller OtLerai tor being
what he was appointed to be, I nalie very /Attie sympathy with

Its oouree.

The i'reeideht or the united Ntates haa eonti tently
degraded the Treasar7 **reit,* from tte moment he took ortioe
making unfit sOpointments and removals in dtereiiard of the
Jr his own 4earetery ot the Treksury. There i.e pot 44 single antivity housed in the Tresaury building whoae effleien5 has not
been undermined by this course.

I realize that there is

oxeye question whether you
40n afford to $ifiy thcP,e thin6s. I 44 inolinel to think, however,
that unless you do so, oomon huwikhlty reqUIrta that you abstain
rrom eritioising tr.* underling*, w,ho *re In the ahel**
doing rather bet
than aiy. one had * right to expeot vhen they
were appointed.

$y vote ou1t be in favor of Aotne the wole hog,

but if that were the deolston.

should feel that whatever ar.
ROA chooses to Arite should be vrry narefully vts4d by
several of us atfore oubitaation.
I am son41ng a copy W. tido letter to
Epp,. Dav$$c,
Lindsay, StropiA and "Arburg, to who you oent ftoplea of yourm.
Vary ouly yours

'John T.Pratt

bg ilroadway


New Xork 'aty


R. C. Leffingwell


March IL, 3.91).3.

gy dear Mr. LeffingA'ell:

This is to advise that you letter of March 9,
has this day been reforwardec to Mr. Strong at Colorado

Springs, Colorado, for his personal attention.
Yours very truly,

Hon. R. C. Leffingwell,
52 William Street,
New York City.


march 13, 1923

Dear Ben:

I just learned through a letter of your secretary,

acknowledging one I had sent to you at the bank, of your more
or less enforced holiday.

It is disgusting that I should have

been so near and inattentive a neighbor during your illness.


remember now that you had to stay away from a dinner party of
Luchen5 on account of a cold, but in the hurry and bustle of
life in this town thought of it only as one of the incidents
of a New York winter to which we are all subject.
In the first place let me say that you may wholly ignore my Budget Committee letter.

Having vented my spleen among

my friends, I shall probably subside and let the politicians
smash Up the Treasury organization without any Protest from me.

At any rate the matter is not important enough to disturb you
when you are ill.

I do hope that you will devote yourself with your
usual vigor and efficiency to the business of getting well.


are the one 'outstanding figure in the Federal Reserve System, and

your personality is simply indispensable in the situation which
has arisen, because of the gradual undermining of the Board in

Therefore, it is your first duty as a good citizen

and a patriot to take care of yourself lust now and get fit as


soon as you can.

I know of no one else who can rally the

governors of twelve banks together and through them develop


and maintain a policy for the system; and that is the thing
which must be done if

the system is to survive the concentrated

political attack which the kepublicans are making upon it.
The moral of which is, you will observe, that I don't
have to agree with all of your opinions or decisions to recognize the value'of your personality in a critical situation.
I should rather back you up even when you were wrong, than see

the Federal Reserve System abandoned to the politicians.
By all of which I mean to say that in spite of our

numerous differences I think you are a national asset,and I
want to send you with all my heart a message of admiration
and affection,and best wishes for yo.

Benjamin Strong, Eso.
Cragmore Sanatorium
Colorado Springs, Colo.

early recovery.

11 :yours

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