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F.D. 12A.3 9-

No

Federal Reserve Bank

6-Ro

District No. 2
Correspondence Files Division

7'ADE1Z5

SUBJECT




-76)476.

S

/

ONO

2.a

See" ALSO :

ce.s .

c Res 5

IA:WS

SC/t/OTE -

2.7




Estes Park, Col.,
August 26th, 1916.
Dear

Sir:
Among the proposed amendments to the,federal Reserve

jofe which author-

kat now before Congress for consideration, is

izes reserve banks to exchange
and

UpdØotan1

\
is respectfully submiitmdi\
doubt of favorable action b
a.

cing reasons why

at this

r

g that

received as
t.

e is some

the following statement

n 4,')v) hops that it conveys convin

d be paseed and, if possi

:

\ \

I

Bess

gress ,riecognized

n

adi s amend4mAt
/
n o f Con ,r se.

he p

the

otes for gold

permits them to include the amount of gold

a part of their reserves.

ble,

Federakaraserv

PlImmA op/of the Federal Reserve Acts Con-

that the financing of the foreign

Fl

d StateMAad

for meny

years been

commerce of

dependent upon bank

:___----1//
ing machrreery.---Which was under the control oq citizens of com-

peting nations,

particularly of Great

Britain, and

that this

dependence should be removed as promotly as possible.

Congrees

sought to accomplish thic, both by enlarging the powers of national banks so as to enable them to do a foreign business and
by conferring upon

rederal

reserve banks powers and

which would supplement the new activities of

the

The Federal Reserve Act, in feat, recognizes that
finance is
.

inseparable

from

functions

national banks.

international

international ccmmerce and aims to

establish our financial system upon

a basis where Nmeric n




-2Aug. ,26, 1916.

Hon. Carter qlaes.

credit can finnnes American trod°. The Fnglion system should
be examihed in tat! connection in order to understand why !7;nglien aNnks have no long boon able to control the largest pro-

portion of tne world's international bunking, end what we must
do to develop and extend our own !:,yetem upon an equally secure

basis.
The chief and fundamental reason for nj4ind's dueco,es whien is sulphusised by every English authortlywriting
her b7.rkon this subject, is the ability
gold.
ere at ell times to meet their fork.' bslizetiene
\
//
Since the Bank Int of 1l44, thk- e be jthe pride end foun-

Federal Fescrve Act perdation oy' nglisb banking. Doe
coktrel of gold, er Till
WIC
mit the rese-ve brink t
enable them to disc' a ge their ligations to their members, and

to the publAn-ibn th

new d

the same' Idiecoso as the t

ment of Amorio,n banking, with
h banks!

If our c u,try is to permanently t,,,ke over even ite
/,WUsiness, and is to finance its own foreign
own share
commerce, its banking system must first estaWlish in the minds

or bankers in every p rt of the world till,' it is abli, and willing to ox :art gold whenever the exchanges make it profitable

Our pt record
for its cre,ditors to ask for gold pay/ nt.
in ti,at reswect is bad. Since thin country ronumed specie payment, there hevc been at levet three occasion hen gold payments
were arbitrarily suspended by our bunkers, brining discredit to
our bar-ing aystom und seriously impairing the: confidence which




To

Hon. Carter Glass.

Aug. 26, 1916.

should be felt in our banks; such confidence, in fact, as is
now enjoyed by the Englieh system and which we must enjoy, if

the Fall of
1914, our banks arbitrarily declined to pay gold to their
creditors and in the latter case, to their foreign creditors.
we are to compete with England.

During a

In 1907 and in

to London, our action on these occasions
was frequently mentioned by prominent bankers afloreating an
recent visit

almost insuperable obstacle for us to
to compete

overcome

foratin_riarkle, nor did

with English bankers in

any banker with whom I discussed/th m

that this suspension of

\

intend/

onal

upon the bnnks of New York, par
,-------.

't4er eeem

understand

d payment was

forced

a situation that is now

in course of being rimardrired
feet's of our curreacfr system,

our efforts

ich

what by the inherited de.
we hope in time to correct.

k

Tha-ice,r'roapces of,
V,,..___,/

will illustrate the weakness

ition. WWSTRi ugust of that year, uterling exchange\piissed theld export point, the gold held in New York
of our

(
p4io

was soe4ke IL__4;165
d
\I\IK:W61

House institutions; no one of
them, as I recall, holding in excess of $50,000,000, (The National City Bank), the total of all banks in the city being
*-,

Clearing

----'

about 450,000,000. Of these 65 institutions, not over
eight
or ten had connections and facilities for supplying foreign
drafts to enable our merchants and dealers to make payments

abroad.

Had these few institutions, which alone

facilities, undertaken to

enjoyed the

create all the exchange needed by




-4To

Hon. Carter

°lase.

Aug. 26, 1916.

shipping gold to Darope, their gold would have been

exhausted

in a few days and they had no possible means of replacing it.
The drafts which they sold would be paid for by the aurchasers
by checke on other banks.

These checks would be collected

through the Clearing House and settlement made there, in silver

certificates and greenbacks ( and later in natio al bank noter).
Not only would that have reeulted from the dire transactions
e resulted
Of these exchange-drawing banks, but it would
i

had facil..
also from the operations of all pritiate bank
d h lAc withdra gold from
ities to draw exchange. They
these same large banks, with jch,j1kept their accounts,
\//aa
making payment therefor-v.44.0 the c ecks which they received
a
from the purchaser

ae- -ea 'as
f forei

\

dra

in

settlement of which,

the banks would aga n receiveis)ilver certificates and

green-

,

In other words, the shiphe Cietnaase.
r ii
d by
ment o11ol(aA the few institutions which had foreign connecth411Z
1-1
tions, uld have,/en entirely inadequate to meet the situa..
/'
a
backs

,

tion, eve7-04y had shipped he greater p rt or all of

their gold-reserves, and, to the extent shipped, it would have
promptly resulted in the conversion of their gold holdings into silver certificates and greenbacks.

Clearing Nouse loan certificatee were

During the period when

being

issued,

they

would

not even have received silver certificates and

greenbacks, but

would have received the promise to pay of the

various Clearing

House banks which had to meet debit balances caused by the pres-

entation of the checks deposited by the banks which had shipped




To

Hon. Carter Clues.

Aug. 26, 1916.

gold, which they in turn had received from the purchasers of the
exchange.

only

The

means presumably available for these banks to

restore their gold reserves was by presenting large amounts of

U. S. note 7 and silver

tion in gold.

certificates to the ':ubtreasury for redone-

The average amountof gold held by the 'Treasury

Department in the general fund available for et+ redemptions
during the past two years has been trifling in

the amount of money of this

character '

Tch---aikt be presented

for redemption, especially if we

the anoun

of national

and silver certificates, thaA

(inaluding Aldrich-Vreeland not
Of 1914.
ing

greenbacks
bank notes

the Fall

of the Treasury, includ-

Fund,

and during
/
sum ind1/to insure
the m

\ not then over $250,000,000,

time

the 5 % Redemp

currency\e,

outstanding during

The combp gial.:>esou

paper siotey,

mperison with

oh less than this - a very small

the

edemption of about $2,000,000,000 of

ntenance of a gold baeis for all of our

ilelAonduct

of the regular financial leusinese of

the Government.

Three tines in

recent years a situation has arisen

where the free payment or exportation of

gold would have deplet-

ed bank reeerves in this way and thrown the burden of furnishing
large amounts of gold

upon the Treasury Department, when it was

added to the
the gold reserve of $150,000,000 been

not in position to meet the demand.
alarm already created, had

It would have




-6To

Hon.

Carter Glass.

Aug. 26, 1916.

used for this purpose nor, in fact, was it so used, or its use
even suggetted in a crisis of unprecedented seriousness, in 1914.

The foreign

exchonges of the country are

moot entirely through the banks of New York City.

will in future

settled mlThey, in turn,

yeurp largely depend upon the Federal Reserve Bank

of New York for their gold

requirements to meet foreign obliga-

tions, when exchange is not otherwise available/1nd the volume

of these obligations will

the extent

increase in proportionl

to which our new banking system is succ***1-ul_lp inancing our

\

goldrlciy at times
arise under the new System tier* h the e couragement, if success.
\
full of the use of acceptance d
drawn on New York banks and

own foreign commerce.

Enlarged/44

for

---,

bankers.

Such draf%Sflt,wn

English acceptors are

re-

/

garded by bankers t4tioughout t e worl
upon arrival

be

conve4Ar., ,,,d

,t

Lon

into

credit which, in turn, can

into gold-rer-wIthdrawal, if the rate of exahange

makes ta course neesary
charmcte

ank

as convertible at once

wn

or profitable.

Bills of a like

mericen acceptors must enjoy this ammo qual-

ity and reputation if we are to develop successfully the use of
dollar drafts for financing our foreign commerce.

bankers will not, if they can avoid

foreign

it, buy large amounts of

New York bills, unless they are assured that they omn be certain of immediate discount, and rely upon liquidating the re-

sulting credit in gold, if

necessary.

It was, in fact, to bring

about exactly such a development of our banking
that various

provisions

were incor orated in the

business abroad
Federal Reserve




To

Hon. Carter Glass.

Aug. 26, 1916.

Act and Congress should now carefully consider whether adequate

means are afforded to the reserve banks to accumulate gold in
sufficient quantity to meet the demands which may and arc al..
most certain to be made upon

us in leter years if, as we hope,
Does the

our international banking assumes important Volume.
Federal

Reserve Att, in fact, accomplieh what it wan designed to

accomplish in this respect'

If Federal reserve notes cannot be issued in exchange
clumsy
for gold, or if the gold so accumulated b
P
the re eVes of
method of exchange does not count as par
g ,e/for the
reserve banks, then the only sore- supply
reserve banks is the

reserve(

/

/
"

posits

4oembirr-',Vinks, (and

the General Fund of th,.\rvei ent), th 'amount of which is
eet will be increased
liaited by law and whie \iIgf c4,n'et
ss
required to be carried. How
e\\
maierielly beyond the r

far will this gold
e statem'e

f4he 12 reserve banks as of June 30th

aa

shows a totiaIAaii:TOerve of 4377,000,000, which Was !About
I

of d popit and note liabilities, a percentage certainly
as low, ifi*ot lower than should be permitted for the entire
1

69

system under present conditions.

sets of all the reserve

The amount of earning as-

banks at that

date was 4165,000,000,

which earned, roughly, at the rate of 2 4 % for the Month of
This amount of earning assets at the present average
rate of about 24 has produced net earnings in the first six
June.

months of 1916 for the entire system of about 2.9 % on the
capital. Aseuming a moderate increase in expenses, it will




o

Hon. Carter Glass.

Aug. 26, 1916.

take a further investment of, say, $80,000,000 at present rates

to enable the 12 reserve hank e to earn their current dividends,
regardless of those accrued.

this additional investment will

cause the reser)", banks to pay

gold reserves so

out an equal mmount of

their

thet it is undoubtedly a fact that if the re-

serve banks were to-day earning their dividends, their reserves
would be so

low that

they could meet no demand(

f importune°

from their member banks for gold for export.
It is frequently stated
banks for discounts by member buyek

thate_diffitir
le be met

kon the reserve
a\
'the issue of

rederel reserve notes, thus ,4
reserve. That is not a fact:

the first place,

of the earning invectpeerts- 61\th

carve banka consist to-day

to conserve their gold
only 14

/

of the discounts 9finmember bls ancr-the demands for discounts
ter member be 's sd\ *scounti,ielhas no connection whatever with

e7

demand(t°r the issuiees-feeelleederal reserve notes - that is, for
eurre4c

.

tendeXR
e,

Membe /banks apply for discounte when they have exomodctte/n

ea_ ---e

ment of their

to tAir

reserven.

customers to the point of

they

impair-

take credit for the roceeds of

the discount in their reserve eccounts and draw checks on the
reserve banks as these belances are used for loans or other-

wise, which checks are ultimately presented through the exchanges, and must be settled by the payment of reserve money,
that is, gold.

The reserve banks Cannot moot these checks

by the Ilse of Federal

reserve notes any more than the Bank of

Bland can require its depositors to accept its notes in payment of deposits or redeem its notec by the issue of its own note:




-9To

Hon. Carter

Glass.

eug. 26, 1916.

The same statement applies to other investm'ente made

by the reserve banks, th t is, government bonds, municipal warrants and bankers acceptances, (the *latter comprising 42 1. of
all earning investments.)
and bankers and

These are

brokers

paid for by check, which checks likewise are

presented through the clearings in

be paid by

purchased from

the usuel course and must

the use of the bank's reserve money.

dsral reserve

The only available means of issuing PP

notes is by deliver.; or shipment to th

customers have use for
reserve banks

;

eb4rl banks whose

Nthess 0

currency,

are sometimes a,eto

I

ions the

a.rou1ate, or at any rate,

to protect their gold and it i

ailing of such demand that

the reserve banks h
put by a total of e162,000,000
of gold which is
held b
rerve agents, but which does
not count
art
their r chrves, and is not directly avail.-)

able tligiet the
During
cent

needeteesef_enlber banks.

Pe past 14 or 15 months, since

the establish

e Go_let;Setlement Fund, the Roperve Bank of New York

has, as I

ecall, received from the banks of New York City, either

in exchange for Federnl reserve notes or
actions with importers, in the

neighborhood of $200,000,000 of

gold, which it could not retain.

which we should hove had

the

through private trans-

power

This imported gold, however,
to

hold to meet possible fu-

ture demands, had to be distributed to the other 11 reserve
banks, through the Gold Settlement

Fund, in order to settle

for exchange sent to New York by the other reserve banks for

credit, and

through the other reserve banks has

been put into




-10
To

Hon. Carter Glees.

circulation.

Aug. 26, 1916.

This operation cimply distributes gold certifi-

cates, principally of t10 and t20 denominations throughout the
country in hand to

hand circulation, whereas it should be imheld against

pounded by the reserve banks and
cies.

future emergen-

Nor ::ill we be successful, of course, in accumulating

gold in a large way against issues of Federal
til the Congress is willing to meke Federal

reeerve

res&e

serve money for the banks and until the banks

ar

notes un-

notes re-

able to ac-

.

cept reserve notes in settlement of

e balances.

Objection is made that

4,1 of 14'eder

for that purpose is unsound, it1atiop
2\
undue expansion of our circulat
is true.

Under

the/4;07"A
7 ,/

and will result in an

dium.
t

reserve notes

,uite the reverse

Federal reeerve notes,

issued agninst disUotanted paps

solely, will be entirely a fi-

duciary issuee_And 154,

ge gold backing as would be the

tout as
/

case if/i.,4ervee coulelee-e1-ilumulated by the exchange of Federal

reserv

York be

totes for

Id.

Had the

Feeerel Reserve Bank of hew

pojetilon to effeet such exchanges and

gold receive j during the

retain the

pRet year, it would to-day hold in its

note and general reserves possibly between $450,000,000 and
$500,000,000 of gold instead of about t225,000,000 as at present.
4-ts percentage of reserves would have been much larger than at

present; possibly over 90

end it would be in position to meet

the demands of its member banks for gold for export when
mand arises without an alarming depletion of tie reserve.

that de-




To

Hon. Carter Glass.

Aug. 26, 1916.

Up to the present time, the lees of gold received by
the Federal Aseerve Bunk of N% York hae beon occeeioned first,
by the inveetment of it funds, payment for which investments

is mede in gold; seeond, by uettlements with other reeerve banks
through the Gold 'eettlement Fund of the balances created by de-

posit of hew York exchange, sent for credit, (which operation reeults in the eonveeeion of our gold reserve Lt silver certifi-.
oaten end greenbacks.)

When, however, a demanAlfor eold for

export arises, as it will inevitably_some-agri-4,i ose of gold
t very rap y impair
will be (mulled by trensactione 4..á
ike in hew 'fork will
the bhnk's reserve position.
firot withdraw whatevereasees b neee over their required re/Then these are ex-.
serve they may haVoyoft(cioposl 'witn\
haueted, they will 1 kely apel to us for the discount of cm.»
oceedv of weica they will withor nu b
th
merciel
Our note issue cannot be used to prodraw in old for export.
tect oLtgold, our eaeouets will inereeze and our reserve will
ount of gold paid out egeinut them. And, as
decreeee
stated above, were the Federal Reserve bank of New York wil-

ling to invest a sufficient amount of ite funds to earn its full
dividends, the &mount of its reserve would be so greatly reduced
that we weld be unable to moot any considerable demends from our
member benko for gold for export.

This country d!ffcro from other modern beeking couetries

in the vest number of its banking institutions.

or security's

sake this condition demands n lerger fund of assembled gold than
is required even fee- Ynglande Duritv the peek- twe years, we h' vs




120.
To

Hon. Carter Glass.

Aug. 26, 1916.

witnessed an exhibition o'

by England in the matter

of exports of gold, such as has never before been displayed in
the history of banking.

This country could never have met

situation such ac England is now meeting without changes in
our laws undertaken in time of emergenosv, and risking added
alarm.

Nor does England eare to risk the loss ef

prestige to

her foeeign banking syetem by suspending gold eelp.rte, even
in time of war.

I

It should be borne in mia*cri

United States is generally not,

to meet

tion of United States notes an'

have/tfle

of redemption

demands upon the reserve

prin

above,

he redemp-

certificates in times

of crises and that unpiter-

banks for gold

y of the

t the T

me:1441g them the first agency

effec
Ile

sorting process described

Clcaring Houses.

p1.

It is highly

not onlrto the reserve banks, their membere and

imeort;

the pub

but

tø1Ahe government as well, that this process of

N.

intermediat4/stireptionshould be fortified by es
of gold ae dan be assembled.
Many New York bankers heve inquired of

Federal

large a reeerve

me why the

Reserve Bank of New York was not able to accu mulete a

greater fli-roportion

of the gold now

being imported and a greater

porportion of the gold in current circulation in small denomination gold certifioatee.

There are a number of reasons in addi-

tion to those named above in

connection with the note issue:




-13To

Hon. Carter Glass.

Aug. 26, 1916.

resent, when gold is imported from Europe, it is
immediately deposited with the Assay Office and Assay Office
At

checks are issued to responsible depositors for 99 % of the assumed value of the gold on the day of deposit. These Assay
ring House or directly
Office checks are paid through the
at the New York Subtreeeury by the issue of gold certificates.
These gold certificates go into the bank aeserv4 and are grad'
ually shipped throughout the country and )ut in circuletion.

The English system is quit, different tidiffrr
England to stand between the impoy,

Office, or the mint.

the Bank of

gold arM 4he Assay

The n1h mip,ftakes gold from depos-

itors at the rate of 77 s. 10 4'ounco, issui*g in payment
t end of, say 12 days; to
the actual sovereignje-ne4
avoid the inconvenflelce of dela to ,old importers, the Bank of
England is

/

reouir4

make impl'edlate paymen

the eq

law ty gold bars at 77 e. 9 d. and
. per ounce of gold is less than

.lent of n &ys interest and resets in practically
,/

rehaptisibeing rids by the Bank of Englnd. some
all gal
such plan would be possible in this country, provided the note
provisions of the Federal Reserve Act were amended and it is

safe to say that practically ell the gold imported to the United
States in the past te) years would now b. in the vaults of the
Federal Reserve banks, if the Treasury Department discontinued

its practice of immediate payment, and if the reserve banks
could pay for the gold by the issue of a note which would be aoceoted in settlement of Clearing House balances.




-14.*

Aug. 25, 1916.

Hon. Carter Mass.

The Bank of England iv understood to 6o even further

than above described in order to ineure retaining control of
gold receipts; it ie currently reported that the benk elweys
hee enough gold hare at the mint for coinage, to indefinitely

postpone returns by the mint to private depositor*, so thet all
importere of gold are forced to the sank of England with their
gold bare.

note provieions and expect reeerve bank e to avai4ie4J eans of accupractice of
mulating u more adeeuate gold reeetjx the pr ee
issuing t10 and t,20 ;o/d cerettf cantos a ould be gr'Ielually dieconn the Fecretary of the
tinued, and greater diecretio
3hou1d Congrese determine to amend t

!

<

,e'ensury to deter:Uwe-Jew
,
e /

'

netiors of gold certificates
discontinuance or the is-

shell be toeued i future.
notoc would leed to the repleoesue of these 'need\ enomina
_.------,
, ____I
e
e
---- /
net amount 04-ees.14' circulation by the Federal Reeerve
ment o

ir/

notes 1f they h
drede

-111191

ndoeuate circulating quelitiee and some nungold certificates now ie circulation would

duellyriven into tee ressrves, not only of the reserve
ke, but of member banks au well, thcrebY

gradually increau-

ing the strength of the eold reserve of the whole coentry.
9f Fedwel recce-tie noteo, parUnfortunately,

ticularly of the quality now in use, arc exceedingly aspens:1re.
in fact, the coet, if entirely borne ey the rerve banks, is
prohibitive, unlese the reserve banks make use of teie very
nethod of accumulnting reserves to considerably expend tesir




-15To

hon. Carter Glove.

Aug. 26, 1916.

Investment account.

This, at the prement time, ie nighly und4..
eirable and 1 have reluctantly come to the conclusion th-t whenever Congrees is willing to autnorize tne expansion of note op..
erations by the reeerve banks to the degree requited, it Will be
juotified in heving the Treasury aeaume the cost of the note iseue, as tnere will be a great saving to the ao7nment in the
coot of the present iseues of gold certificate. '713(1 reserve
banks will indirectly recoup the Treasury when they pay a seiare
of their profits to the goveenmente
7

hive medo no refer()
,7

a:tar the conclusion of the een
mists believe will be adyeee
long period, and rev t in t

Ae course

excnange

any bankers and econo-

lis country, pooeibly for a
ef some portion of the
gold itch we her received from Furope during the
i

period non-lt:Ep exc
/

hazardI"lese n,f

to make

)1500,000,000

been in our fevor. without
a prophecy as to any such occurrence, it is noverthe"es

ri
iciently/a/poesibility to require the reserve banks

------Ofaration for extensiv( domande for gold.
1 hope hus Veen brought out by thie letter, means are not

As

available which will be adequtte for e.is purpose except through
amendment to the note provisions of the Federal hes rvo Act.
To summarize the above, the provisions of the eederal

Reverve Act an they are at pre:lent, do not permit the reserve
banks to eocumulrte oufficient gold to meet the domande. wnich
may be made upon them during a long period of adverse exchenges.

There is considerable poseibility of those conditions erising.




41116...

To

Hon. Carter Glasse

Aug. 26, 19t6.

It will take time to accumulate a sufficient fund of
such conditions'.

Unities

advqnce o: the c-nolueion

gold

to

Wlei

Congreoo amends the .(at sufficiently in
or the war, it moy be found that the

roli.(nce of the community generally, ae well au mies!Jer bunko, upon
',he he,/ baro:ing system will meet with diouppointment.
The

Ftelerel R000rve Act afford° a bnsi!.; for the reor-

gahisaiion of our banking systou, and ultinately of our currency
,ystems.on sound lines, but I do not think thal
means; for adequate dovolopuent of our foreign

whole subject of the note iocuo and
,renovoively dealt with

:(1

udices in regard to cur curra cy

servo nA.tra--

itn

at

indica

The

of major circulating med-

le gold, mill tne other to:ierel reold reerveo in the cuotody of the

Very truly yours,

Hon. Carter Glees,
Chairman, .;ommittee on Banking and Currency,
Mouse of hopresontatives,Washington, D. C.

Jr/vat

Old 'prej...

rough the agency of the re-

recor i banks.

Be

the

hax been cow...

uet be abandoned.

ve bqnke is to 414-bwi>t,
/

_um in the :411ted( tateo

Inkine, until

gia-dr4441ty

soseeva,*/

objet ultimately to be uttain

t will provide

THE SECRETARY OF THE TREASURY
WAS H I NGTO N

March 7, 1919.

My dear/96vernor Strong:
1(

Your 4cid latter of February
28
reached my office just
was taking train for
Virginia, and this is the
time since my return that
I have been able to give ant attention to my personal
correspondence.
I desire,Anow to express my vary warm
appreciation of your gen0-ous refsrence to my New York
visit, and you may be s 'e that I am glad that you think
it did good.
I certaily had 3very reason to be gratified at my cordial re eption there, and am especially
indebted to you for our many courtesies.

as'I

fist

Cordially yours,

.Benjamin Strong,

Federal Reserve Bank,
New York City.







00

THE SECRETARY OF THE TREASURY
WAS

March 7, 1919.

My dear 9-6Vernor Strong:

-

,,

Your kind latter of February
//
28
reached my office just as I was taking train for
Virginia, and this is the first time since my return that
I have been able to give any attention to my personal
correspondence.
I de:Are now to express my vary warm
appreciation of your gen ous reference to my New York
visit, and you may be s e that I am glad that you think
it did good.
I cartail.y had ,:very reason to be gratified at my corJial re lytion there and am especially
indebted to you for our many courtesies.

Cordially yours,
4=
likiterAtWsWAidfigt{Mpt.Are,AW,

Mr. Benjamin Strong,
Federal Reserve Bank,
New York City.

April 3, 1919.
Dear Ir. .3faoretary:
In connection

with the plan which I mentioned to you for obtaining

legislation from congress directed toward the establishment of a scientific budget
system for our Government, the committee of which I am a member is now proposing
to appoint a

ture

representative in each State

for the purpose of disseminating litera-

and information on this important matter in order to arouse some public

interest.

We are fortunate in being able to secure the cooperation of the Institute
for Government Research and the United States ihamber of Jommerce, but we wish to
make our own independent appointments in each State, and, through the State representatives, build up local

State Organizations of our own.

if you can suggest some one to act as State

I am now writing to ask

representative in Virginia.

-:Elhat is needed is a man who will undertake some work, not of

character, for patriotic
subject, for

reasons only. He should be willing

which literature is

being prepared and will be furnished.

the

State;

very

onerous

to make some study of the

if possible, be able to discuss budget legislation publicly;

and confidence of the people of

a

He should,

should enjoy the respect

and be free of possible Charge of

partisan-

ship, as, of course, the movement is distinctly nonpartisan.
. kie plan contemplates that each 3tate

ficient

representative shall raise a suf-

fund to finance the expense of the 'State Organization,

but

that will not be

a large sum, and probably one of the least difficulties.

-All it be possible for you to suggest some one for the 'state of Virginia?
I dislike very much to add anything to the work of your




busy days, and if no one

2

Honorable Carter Glass

occurs to you at once, please ao not give it further thought.

iaithfully yours,

Honorable Carter Glass,

Secretary of the Treasury,
Washington, J. J.

155/M3B




4/3/19.

LIBRARY
APR 1 2 1919

THE SECRETARY OF THE TREASURY
WASH

INGYDERAL

RESERVE ,PANK

April 7, 1919/:

Dear Governor Strong:

I received your letter of April 4th with

Liberty Loan,

the enclosed advertisement of the

which I have examined with a gresit deal of interest.

I think it is a good idea to make

use of

to civic pride as you are planning to do.

the

appeal

Many

thanks f or sending me the advertisement.
Sincere ly

yours,

Secretary.

Strong, Jr., Esq.,
Governor, Federal Reserve Bank,
New York City.
Benj.

44.1.ed.







LIBRARY
APR 1 2 1919

(")

0

THE SECRETARY OF THE TREASURY

0

WAS HINGT rtER

AL RESERVE

ANK

April 7, 1919.

Dear Governor Strong:

I received your letter of April 4th with

the enclosed advertisement of
which I have examined with a

the Liberty Loan,

gr,oit deal of

interest.

I think it is a good idea to make use of the appeal
to civic pride as you are planning

to do.

Many

thanks f or sending me the advertisement.

)iincerely yours,

Secretary.

Benj. Strong, Jr., Esq.,
Governor, Federal Reserve Bank,
New York City:

April 11,

Dear

r. Secretary;
idany thanks for your kind letter of April 8th in

regard to an appointment to represent the budget organization

in the State of Virginia.

I am transmitting this to the

committee, and am hopeful that they will act promptly.

sincerely yours,

Honorable Carter Glass,

Jacretary of the Treasury,
dashington, D. C.

113/45B




THE SECRETARY OF THE TREASURY

o

WAS H I NGTO N

May 31, 1919.

My dear Governor:
Now that the Victory Liberty Loan
Campaign has been brought to a successful
conclusion, I want to tell you how much the
Treasury Department appreciates the cordial
cooperation which it has received from you during
the past two years. In that period, the Treasury
has been confronted with financial problers
of a magnitude never before conceived, and to the
successful solution of these questions you have
contributed in very large measure.
You have relieved me personally of
a large part of the responsibility and burden
attached to this office, and have made an
almost impossible task possible. I wish to
assure you of my deepest appreciation and
heartiest good wishes for your health and
happiness.
I.Vith warm regard, I am,

Cordially yours,

Honorable Benjamin Strong,
Governor, Federal Reserve Bank,
Pew York City.







THE SECRETARY OF THE TREASURY
WAS HI NGTO N

May 31, 1919.

My dear Governor:
Now that the Victory Liberty Loan
Campaign has been brought to a successful
conclusion, I want to tell you how much the
Treasury Department appreciates the cordial
cooperation which it has received from you daring
the past two years. In that period, the Treasury
has been confronted with financial problems
of a magnitude never before conceived, and to the
successful solution of these questions you have
contributed in very large measure.

You have relieved me personally of
a large part of the responsibility and burden
attached to this office, and have made an
almost impossible task,possible. I wish to
assure you of my deepest alTreciation and
heartiest good wishes for your health and
happiness.
With warm regard, I am,

Cordially yours,

Honorable Benjamin Strong,
Governor, Federal Reserve Bank,
New York City,

Copy.

THE SECRETARY OF THE TREASURY
WAS

May 14, 1919.

Ey dear La-. Emerson:

I received your letter of the 9th of 104 and thank you for the
invitation to attend the dinner to be given to Goveinor Strong and the
other members of the Central Liberty Loan Committee of the Second Federal Reserve District on the 26th of Bay. I should be very hq?py to
accept_ and express in person my deep apureciation of the gplendid
service of Governor Strong and the members of his orgsmizetion in
the Liberty Loan dampaigns, but the exceedinsly great pressure of official duties in the Treasury will make it impossible for me to leave
Washington at that time.

While I am denied the pleasure of attending the farewell dinner
express my
of the New York organization,/II Shall be glad if you
sincere sense of gratitude for the efficient and effective sup-sort and
cooperation that was given the Treasury by the War Loan Organization
Its great achievements in
of the Second Federal Reserve District.
every Liberty Loan have been due to the fact that the efforts of its
leaders and its entire membership have been guided by the love of
America and a firm determination that her righteous cause in :a.r
should triumph. For such urselfish and pstrietic devotion to the
Government of their country the Liberty Loan Organizations of New
York and the other Federal Reserve Districts deserve the undying thanlis
In the years to come it sill be s. source of genuine satof the Nation.
isfaction always to the members of these unique vsluntary organizations
to realize that they served America, and served America well, in the
greatest crisis of her history. When I contemplate in the full light of
the greatness of
retrospection the magnitude of the loan operations
not v:ithin the power of the written or spoken
their achievements, it
feel for the work
word to express the fall measure of spprecistien

sill

is

ad

that I

of those who have served the Government so faithfully without thought aC.reccvroanse
I must ask the Loan Organization to believe that the
or personal reward.

inadequacy of language finds its compensation in the sincerity of the sentiment with which the Government at V:ashington regards their great contribution
It is my privilege sndplasure to transmit this
to the success of the war.
message of thaiks and I hope you will convey to Govsrnor Strong and all his
associates my heartiest good .ishes and warmest regLrd. 77
Cordially yours,
(signed) Carter G1 ss

Mr. Guy Emerson,
C/o Liberty Loan Committee,
120 BreadwaY,
New Y,..rk City.







TREASURY DEPARTMENT
WASH I NGTON

July 10, 1919

My dear Governor Strong:
On the 14th of Nay, the Sea-AAwAir sent a letter
to Mr. Emerson expressing his deep regret that it would
be Impossible for him to attend the dinner which the
Central Liberty Loan Committee of the Second Federal
Reserve District desired to give in your honor on the
Later, I believe, the date was
26th of that month.
changed and the invitation to the Secretary was removed. He thought that it would be possible for him
to accept, but, as you probably recall, at the last
moment developments in Washington rendered this out
of the question. He consequently sent a telegram givThe message
ing the reasons why he could not attend.
was very brief, and it was made so because his letter
of the 14th of May was intended for reading at the dinI assume
ner in case he was not able to be present.
that the latter was forgotten by reason of the lapse
of time, because I am told that only the Secretary's
It occurred to me
telegrLma was read at the dinner.
that in the circumstances ipossibly you had never seen
a copy of it, and for that reason I am sending it herewith.
rdially yours,

Assistant to the Secretary.

sq.,
Benjamin Strong, Jr.,
Governor, Federal Reserve Bank,
Nov: York, Y. Y.

July 1 7 , 4P*9.

My dear Mr. Cooksey:
kind letter of July 10th reachedmme on the steamer the day
sailed, and I am writing to express my appreciation of your
thoughtfulness in sending me a copy of SecrgIa4E-G144.zs' letter of
May 14th.
How it happened that the letter was never read nor in
It exhibits again
fact brought to my attention, I cannot explain.
the Secretary's thoughtfulnese and friendship, and I am taking the
liberty of writing him expressing my appreciation of the many kind
things that he writes about the work of lithedorganization.
With kindest regards and wishing you an enjoyable summer, I
am,

Sincerely yours,

Hon. G. R. Cooksey,




Tresury Department,
Washington, D. C.

July 17, 1919.

My dear Mr. Secretary:

Mr. Cooksey was good enough to send me a copy of your kind letter
of May 14th addressed to Mt. Emerson, and which reached me on the

.steamer the day I sailed.

What you say about the workoef the Liberty Loan organization

at

New York is but another evidence of your friendship and thoughtful-

ness, which I dee ily

that your letter

How it happened
appreciate.
did not reach me earlier, I am quite unable to explain.

taking this trii,

It makes me feel a bit guilty to be
when so
many of my friends and associate- are hard at work during the hot
summer, but I shall hope on my return to settle In the harness
again and make up for lost time.

With kindest
letter, I am,

regards and with many thanks for
Sincerely yours,

Hon. Carter Glass,




Treasafrnitment,
Washington, D. C.

your

kind




THE SECRETARY OF THE TREASURY
WAS

i

Decemb r 13, 1919,

DEC 1 6 1919

My dear Mr. Strong:-

Aware though I am of the heavy burden of work
and responsibility resting on you, I venture, in the
public interest, to overcome my reluctance to ask you to
I am most anxious to have
assume a further obligation.
you deliver an address at the Second Pan-American Financial Conference on Thursday afternoon, January 15, at
3:00 P.M. on "The Introduction of the Budget System and
the Improvement of Fiscal Methods in the United States".

j

I enclose an advance and confidential copy of
meetings and entertainment. I hope within a few days to
be able to send you a list of the gentlemen who have up
to this time signified their willingness to .serve on the
Group Committees. You will see from these papers the
character of your audience and the importance of the occasion. I feel that you will be rendering a great service in stating the situation upon a matter so directly
of interest to all the official delegations in attendance
at the Conference,
I trust that I may be favored with a copy of
your address as far in advance of the Conference as possible in order to permit of translation and printing.
If
I could have such a copy by the first of January, I would
feel greatly indebted to you.
I remain, my dear Mr. Strong,
Sincerely. yours,

_

Honorable

Benjamin Strong,
Governor of the Federal
Reserve Bank of New York,
New York City.

71rConficaati=
T&NTATIITE FROPAM 21 la

P3Cc tP buti,Azzisa

EjtjANRIAL

laireErum.

Saturday, January 10, 1920.
10:30 A.M.
12:00 A.M

Delegates received by the

Secretary of State.
Delegates received by the
Secretary of the Treasury.

1:00 P.M.

Luncheon tendered Delegates
by the Secretary of the
Treasury.

3:00 P.M.

Preliminary meeting of Delegates, Hall of the Americas,
Pan American Building,
Reading of Rules.

Sunday, January 11, 1920.




10:00 A.M.'

Trip to Mt. Vernon

Automobile.

Monday, January 12, 1920.




10:00 A.M.

Opening Session, Hall of the
Americas.

The Secretary of the Treasury
will be introduced as Presiding Officer by the 3ecretary

of State.

The Secretary of the Treasury
will present the Vice-President of the United States.
Address of the Vice-President.

1:00 P.M.
2:00 P.M.

Responses by Delegations.
Welcome on behalf of the Pan
American Union by the Honorable
John Barrett, Director General.
Luncheons of Official Delegates
and Group Committees, at Hotels
Shoreham, Washington and Allard.
Continuation of Opening Session.
Announcements.

4:00 P.M.
9:00 P.M.

Organization meetings of Group

Committees.

Reception tendered to the Of-

ficial Deleations and

members

of Group Committees by the
Jecretary of the Treasury at
the Pan American Building.

Tuesday, January 13, 1920.
10:00 A.M.
group Committee and other
Committee Meetings.




300 P.M.

8:30 P.M.

Group Committee
Meetings.
Second General Session.

General Topic:
Qi1.4=211
"
Addresses by (1) The
of the
Reserve Governor"The Federal
Board on
Problems
of the

United States as a
Creditor Dation."

2) The donorable W.G.
McAdoo:
'international Finance."
A member

of one
tions from Central of the deleor South
:,erica, to be designated hereafter.
A member
gations from of one of the deleCentral or Jouth
America, to be designated here-

after.

General Sessions will be
open
to ladies.

Wednesday, January 14, 1920.
Group Committee Meetings.
10:00 A.M.
Luncheon tendered by the
1:00 Pal.
Secretary of State to the Chairmen of Delegations.
Group Committee Meetings.
3:00 P.M.
Third General Session.
8:30 P.M.
General Topic: "C9Nmerol awl
r




,-;."2"""6"1

Addresses by cl) Honorable John Bassett .00re:

'The Work of the International
High Commission".

Dr. Mario Diaz Irizar,
Director of the International

Trade Mark Registration Bureau
at Havana:
"The International Trade Mark
Convention".

A member of one of the deletions from Central or South

erica, to be designated here-

after.

A member of one of the delegations from Lentra1 or South
America, to be designated here-

after.

Thursday, January 15, 1920.
10:00 A.L.




Fourth General 6ession.

jubmission of all Peports of

Group Committees and of the
Committee on Transportation.
Addresses by Honorable Huston Thompson of

3:00 P.M.

the Federal Trade Comission:
"International T egulation of
Unfair Competition".
Fifth General Session.
General Topic': "Iagaul 4ad,
'c

Addresses by

LIaL0as =Is=

ona:1 CTufa"

(1) A member of one of the
delegations from Central and
south America, to be designated

hereafter.

A member of one of the
delegations from Central and
South Aalerioa, to be designated

hereafter.

The Honorable Laul M. War-

burg: "Fiscal and Currency Standards as tde Yeasure of

the Credit of Nations".
The Honorable

Bffih

amin

.

Strong, Governor of the Federal
Eterve Bank of New York:
"The Introduction of the Budget
Jtem and the Improvement of
F soal Methods in the United

States".

8:.30 P.M.

Sixth General Session.
General Topic: "The I11X9YA.r,

a

, ALLIA,

'

Piddresses by

(1) A member of one of the
delegations from Central or
South America, to be designated hereafter.
A member of one of the

delegations from Central or
South America, to be designated hereafter.
A member of one of the
delegations from Central and
South America to be desig-

nated hereafter.

The Chairman of the United
States Shipping Board, Honorable
John Barton Payne:
"The Future Policy of the
United States Shipping Board".

Friday, January 16, 1920.




10:00 A.M.

Seventh and Closing General
Session.
Report of the Committee
on Form and Fesolutions.

heport of the secretary

General.
Unfinished Business.
Adjournment.

Saturday, January 17, 1920.
12:00 M.

Visit to Annapolis, under the
auspices of the 6ecretary of
the Navy.

7:30 P.M.

Official Banquet,
Hall of the Americas, Pan

American Building.

Addreeses by the Secretary of State and
by the Official Delegate
representing the delegations
from ()antral and South
America.

Ucnday, January 19, 1920.




Dinner at iNiew York tendered

to Official Delegations by
the Pan American Society of
the United States.

December 16, l91.
Dear Mr. Secretary:

It iE most kind of you to invite me to address the f,econd
Americr,n Financial Conference, and upon a subject in vticil

you

Pan

flow I am

ertieularly intereeted, - at the Game time one which ie eo ne-A- your own

hort.

This letter, which I am bonding to you through mr. Leffingwell for

deA.very by hand is my explanation of why I must deny myself this erivilege.

I have been having a thorough ovsrhaulinc. I teiy ty the doctorf-

Witnaut goin, ino detail, they tell me firGt that I mu:t go aw,:y for a few
mnth e (they would rather live me gu now, but are wliiJr,, to wait until the
firft, of the year,) Eeyond that, they Gay that if I want to 620/0 w1i5t health
I have 1 mu it give u

for two years entirely or run the risk of taing
either a comelete invalid the reet of my life, or, ;:eeeibly, suffer a *ore
penalty.
,r1k

war

It ha e become perfectly obvious to me that my duty, ho th to the

ad to myelf i to resign, but it isn't eisy to do it, and I am oo-

cr,-stinating in making a final decision until soma further ex-minitione and
reporte rech me.
It eeemed unwise to trodsie my good friend in Washington 'with this

Luetion until I had reached a decision and i had expected to say notnini;

about it until I could state definitely w.tI t'd decided to co, but your
letter SeOME to make it necessary to ebnd this explan%tion, which I ho.e you
hold in confidence.

It teems culte out of the queetion that I snuuld attend the con-ence at all, but thie, of course, I have only le,rned in the last few
days.




2

Honorable Cartgr Class

12.16.19

With my warmeet thnk:i for your letter and for asking me to take

a active part in thie im,orLnt meetinL, I am,
Sincerely yours,

ionorable Carter Clase,
SecretLry of the Tre,Isury,
rashington, D. C.







THE SECR ETARY OF THE TR EASU RY
WAS

DEC 2 2 1919

December 20, 1919.
My dear Mr. Strong:I enclose a soecial report on the financial conditions

of Mexico, which I would be glad to have you glance over in
preparation for your service as special representative on the

Group Comittee for Mexico, a responsibility which you were so
good as to accept at my request.

I would appreciate your courtesy

in returning this report to Room 182, Treasury, as soon as you
have completed its

reading

or in

arranging to

you to the Financial Conference.

Sincerely yours,

Secretary.

Hon. Benj. Strong, Jr.,
Governor, Federal Reserve Bank,
New York City.

bring it

December 2_, 191G.

Myr. ecretary:
Tide mcr.ing,,egi.iI brintome your letter of Doce4;ber

nth, encloeing a epecial reort tion financial cohditionu in
Mexico, which A6s probatly :reared before you receive6 iy recent

letter through Mr. Leffingwell avi1i

of my inability to attend

the conference.

It i.

grsst di eap ointx.eat to mieL the vee6ione of

the conference, 4.hicn will be IQ:A, intere,Ainz and I partiouhLrly

regret being away snd loinc& thit os4ortunity of being of
-J.vics to you in connection with the conference.

you Aiii dou-tlete A;. to a .olnt ,JMe one in iv
at an early da-te,

an7'..,

in order that he ma) have opportunity

biaw,elf with thisinterial, I am sendin it .uack
once.

kin expree in my sicere regret that I erai unable to eerve,
and thanking you nor tale evidence, of your confidence, 1 am,
Sincerely yours,

Honorable Cart.es_WAg,

Secretary of the Trw,sury,
Washington, D. C.




THE SECRETARY OF THE TREASURY
WAS

Personal
December 31, 1919.

14 dear Mr. Strong;
Leffingwell handed me your letter just before my departure
for Virginia and I placed it among others in my portmanteau in the hope
that I would get time to write you while at home. The expectation was
vain, because while there I was kept constantly occupied with other
Matters and was not left a moment for correspondence.

-I was very:genuinely distressed to learn of the state of your
health and I sincerely trust that it may not prove as had as the preliminary examinations appear to indicate.
It seems a great pity that
you have been compelled to fight for your life while serving your country
so patriotically and effectively as you did in the war finance period and
subsequently in the period of readjustment.
However, I am encouraged
to hope that you may win the fight and I think you are doing exactly
right to conform strictly to the program enjoined by your physicians.
You should quit work for a season and endeavor to dismiss all cares from
your mind.
I would like you to understand that I fully appraise the value
of the work you have done and that our differences upon questions of
policy have not arisen through any distrust of your absolute sincerity.
I have fundamentally disagreed with some of your conceptions of the
Federal Reserve System and could never be induced to yield my judgment
of such matters since I believe the very existence of the system as a
benificent institutior,I depends upon a strict adherence to the original
intent of the law; but this is a difference of conviction and involves
no sort of prejudice or dislike. Indeed, had I not liked you so much
personally and so keenly appreciated your fine service I would long
ago have made a sharp issue of our opposing views, for I put the Federal
Reserve System as I have dreamed of it and worked with it above any
other human interest.
Lnd I hold out to myself the expectation that
when you shall have entirely recovered your health 'andaare freed from
the distractions and provocatives which are inevitable in such a situation you may find yourself in full accord with my interpretations of
the provisions of the law and the purposes of those who contrived it.
Wishing you a speedy and full restoration, as well as happiness
in the meanwhile, believe me,
Eincerely yours,

Mr. Benjamin Strong, Jr.,
Federal Reserve Bank,
rew York,
Y.



r.




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CASTLE HOT SPRINGS HOTEL
Hot Springs, Arizona

January 14, 1920.

My dear Secretary Glass:

Your most kind letter of December 31 reached me just as I was taking
the train, and since reaching Arizona I have laid aside every thought of mail
But I left greatly relieved
in favor of complete rest, which I sorely needed.
by the receipt of your letter and freed of an anxiety which had weighed on my
mind ever since my return from abroad.
I hope you understand that I have always regarded my work in the Reserve
the greatest in fact that one could wish to enjoy,
Bank as a great privilege,
and though for the last five years I have, as you say, faced a rather grim fight
with tuberculosis, I cannot regard that as any different from what my own boy
It was worth it and I wouldn't have
was glad to do when he went to France.
As I have frequentlysaid to Leffingwell,
missed it for any consideration.
work to make
it would be a grievous disappointment to me if, after five years
the Reserve Bank of New York, and possibly to help make the System, an operating
But
success, I found myself out of accord with the author of the Reserve Act.
There is at present, and has
I am confident that such is not really the case.
been now for three years, such a difficult and distorted situation., due to the
war and to war finance, that we have none of us learned by the experience of more
normal conditions, just how the Reserve Bank and the money market in New York can
Although necessary, I have always regretted the
be made to function together.
It has
extent to which I had personally dominated the New York situation.
aroused jealousies and distrust of motives, and at times I cannot help but wonder
whether I or some successor at the head of the bank may not some day be guilty
On the other hand, anyof some blunder, or worse, which might discredit us all.
thing approaching the exercise of a control such as we have had, by a government
body in Washington, I fear would in time, and with the changes which time bring,
lead to a political control of the System with the ever present possibility of misuse.

What I most want to do, Mr. Secretary, is to bring our minds to meet on
the problems of the System for the long future, even more than on present conditions
Nothing
and policies which are too unusual to be the basis of permanent judgment.
is nearer my heart than to see this great reform established as the foundation of
And not least in importance to me
our country's future prosperity and security.
has been the privilege and pleasure of sharing with you for a time Some of these
duties and burdens which I have really enjoyed, and so largely because it has been
in association with you.
But I want to finish the work, and to have you feel that it was well done,
and more particularly that it was honestly done for the best welfare of the country.
I wish you
Again, many thanks for your letter and for your confidence.
the same success in the Senate which you have enjoyed in the House and the Treasury
and much happiness with it.
Sincerely yours,
(Signed) Benj. Strong.
Honorable Carter Glass,
Secretary of the Treasury,

Washington, D. C.


arch 5, 1925.
iiy dear .->eonator:

It was wy eope 6.no expectation, when in ttashington thi6 week, to make

en effort to

i..3ee you 4.1-1(1 than

you pereonally for the courtesy which you showed

to my son aed Mr. Hamilton; but unfortunately, the pressure of matters which

occupied all of my time prevented my getting to the Capitol.

This 18, therefore, to thank you by leeter arid to expreee my regret that
I could not vio co by koro of mouth.

Melly time& during the past year I nave been tempted to have a talk with

you about the pending banking legislation.

There i6 something about the k,cFatiden

bill which I do not like at all. Possibly :iihet I wet dielike is the fact that
it will prove to be no eolution in the long run of the matters which it undertakes
to deal with.
A8 you know, I have never voluntarily or in eny way undertaken to influ-

ence any legielation relating to the Reserve Sy :item, or even to the Netional eyetem.
Too meny times I have been charged, without juetification, with lobbying and en-

deevoring to do tne very thing that I have always most scrupulously avoidea, but I

do regret very rau c h seeing this opportunity for a real legislative treatment of the
difficult .roblem miss its main purpose beceuse of some few detects in the bill.
If you would care to have come com ento from me about it, I thick posribly
it might be proper for me to write you personally, giving you my own views for such

velue an you ro ay fine them, but beyond that I would not expect to display any inter-

est in the matter.




#2

Honorable Carter Glass

3/5/25.

Hoping that you keep well, and with many kind wishes, I beg to
remain,

3

Very sincerely yours,
5

ilorable Garter Glaes,
Cnited States Senate,
iiteshington , D. C.




FRANCIS E. WARREN. WYO., CHAIRMAN
LEE S. OVERMAN. N.C.
WILLIAM J. HARRIS. GA.
CARTER GLASS. VA.
ANDR IEUS A. JONES. N. MEX.
KENNETH D. MC K ELLA, TEN N.
EDWIN S. BROUSSARD. LA.
THOMAS F. BAYARD.DEL.
M. M. NEELY. W.VA.
HENRY W. KEYES. N. H.
REED SMOOT, UTAH
WESLEY L. JONES. WASH.
CHARLES CURT IS. KANS.
FREDERI,v HALE, ME.
SELCE.
,ENCER, MO.
LAWREN- C. P HIPPS. COLO.
WILLIAM B. MC K I NLEY. ILL.
IRVINE L. LENROOT, W IS.

Wrtifeb Ztalez Zenate
COMMITTEE ON APPROPRIATIONS

KENNEDY F. RCA. CLERK

irch

1925.

co s

Ccefic
My dear governor Strong:

LLI

Acknowledging yours giarch gth, it gave me
pleasure to show your son and his friend, MrOlflamiltori, the utmost courtesy.
I wish I might have been of greater service.

The McFadden bank bill was utterly bad as it came from the House.
It constituted the most shameless attempt by federal statute to control the
banking establishments of the States that was ever initiated in Congress.
The pretended purpose was to put national banks on a parity of competition
with State banks with respect to branch banking. Its concealed purpose was
to destroy branch banking of every description. The whole scheme was initiated
by Mr. Henry Dawes, of Chicago, who appears to have gone into the Comptroller's
office for no other purpose than to destroy branch banking. Assuming that he
had done this when he constructed the McFadden bill, he abandoned the Comptroller's office.
'When the McFadden bill came to the Banking and Currency Committee of
the Senate I took occasion to point out in some detail the obIectionable
features of the measure and, in this process, introduced in the record your
letter to the Federal Reserve Board, along with letters from John Perrin and
other Federal Reserve governors and agents. These are all printed in the
record of hearings; and, together with the analysis of the bill made by the
counsel of the Federal Reserve Board, they constituted such a conclusive
case as to induce the Senate committee radically to alter the bill, omitting
Section 9 altogether and revising other provisions.

I would be glad to have your views more in detail before the reassembling of Congress next December, because I have no doubt another effort
will be made in behalf of the so-called McFadden bill. I am thoroughly in
favor of giving national banks every possible privilege, based on sound banking, that is enloyed by State institutions.
I am also in favo
branch banking severely safeguarded; but I am not milling to vest the Federal
Reserve Board with legislative authority nor a',1 I willing to do anything that
will exclude desirable State banks from the Federal Reserve system and cause
those that are now members to abandon the system. This the McFadden bill
would have accomplished.
11th cordial regards,

Sincerely yours,

.enIamIL:. Strong, Esq.,




Federal Reserve Bank,
Mew York City.

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1925

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