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/ AllicAti:).teAttia,041.4.c., 1 Calls 5/28/14 - 2 .ever had only wished a general and rather brief talk with Sir Edgar Speyer, who Calls 5/ 28/14-3 Calls 5/28/14 - 4 instead of increasing their number, and that in proportion to the number of great joint stock banks they are not strong enough to take the strain of bad times and unsettled confidence. He believes that the Bank of England should adopt a olicy of enlarging its business and strengthening its resources. and that as an emergency measure it should be enpaTered to issue notes against the denosit of prime paper and gold in a certain proportion, only, however, when the discount rate is, say, and the notes issued under such emergency arrangement to be subject to a special tax. Had a brief talk with him about the subject of a London office. Sir Edward apparently did not want to develop this subject very fully until Mr. Kent's arrival, urging that we take a day, spending it in some I could go into the subject thoroughly. uiet place, There he. 1,11". Kent and He said he was quite sure that it would not do to think of opening an office in Paris without having one in London also, and I gathered that he is not very likely to be enthusiastic on the subject. Sir Award and the other bankers with whom I talked took a pretty gloomy view of the banking situation in Paris, and today would be about as follows: Societe Generale, I should say a composite view of my interviews The four big banks, that is, the Credit Lyonnais, Comptoir Lationale. and t e Banque de Paris, with their large number of branches throughout France, have developed an enormous investment business, a large part of the securities being sold to ignorant peasants, who buy these entirely upon the recommendation of the bank, ;:ithout knowing what they are other than that they are offered by a resronsible banking institution. The three banks mentioned (excepting the Credit Lyonnais) have found this business so profitable and automatic, so to speak, that they have not been as particular as they should be as to the class of securities they have handled, being governed tco largely by the opportunity to make large profits in the handling of second and third grade investments. Frisco was recited as one illustration, but the more frequent illustrations were Brazilian, South American and Colonial securities generally. Lyonnais seems to have escaned all criticism along these lines, The Credit the Comptoir Calls 5/26/14 - 6 Nprgan, Grenfoll & Co, Had a very pleasant chat with Grenfell and Vivian Smith, and later lunched with Grenfell. They tell me that the Union Oil Company transaction has aroused a gooc. deal of comment in this country. It seems that Tilden Smith and his associates have been mixed up in some project for handling oil in California which embarrassed them somewhat, and in order to straighten the matter out they 7ot busy making up a syndicate to buy the control of the Union Oil Company. It seems that Frank SO-rivZ Anderson, of the Bank of California, is here on 110" business just no;. to get particulars from him; and they asked but, quite contrary to the information I get from the Pacific coast, there seems to be a feeling here that the whole Union Oil Campany deal is a loose-jointed and rather uncertain affair and one to be scrupulously avoided, although they say that the best information they get is that the Company itself owns some fine properties an under good management should prosper. didn't speak very yell of Tilden Smith and his associates. They I am expecting to see Mr. Grenfell again on returning to London and discuss the London office matter; I had no opportunity to do so today. ttedatidEt4stiithe - S Calls 6/28/14 - 7 Bourke, Schiff 6; Co. Met all the partners at their office and explained to them in great detail 411 how we happened to be bro:,ght into the Southern Iron & Steel Company matter, and that we now felt that we were through with the situation and had no further responsibility in that connection, all of which they seemed to understand. They all stated very positively that any sale of the property for anything like 4,000,000. cash would be bitterly opposed on this side. They also seemed very keen to get reliable information in regard to the rersonnel of the new Board of Directors. I gave them what little information I could and told them that I rec_narded the Company's future as Lependent almost entirely upon the management and upon its being conservatively developed and not spread out too much. They were all very much encouraged by the state- ments coming forv;ard from Nev.- York showing the Company's operations, and particularly indicating an improved situation as to quirk assets. Platten and his control of the situation. They seem to have confidence in Calls 5/28/14 - 8 Calls 11/lion of London &' - 9 'Smith's Bank.- Called and left note of introduction an and 5/29/14 unable to see him. card. Sir Felix Shuster was busy Will do so later on returning from Paris. Lloyd's Bank. - Had a very pleasant chat rith Mr. Stevenson, forward to seeing Mr. Kent on his arrival. .110 expressed himself as looking Discussed no particular business, alid so far as I could gather he seemed fairly complacent about financial matters here in He seemed interested in the object of my visit and we had just a brief discus- London. sion of the question of London offices by New York institutions, and, he didn't express himself very nositively one way or the other, I would surmise, by his general attitude, that it didn't arlpeal particular17 to him. In view of the comparatively small business that %.e do with Lloyd's, it seemed to me better not to go into the matter with him in any detail until Mx. Kent's arrival or until our oyn iLeas were a little more matured. Credit Lyonnais.- Saw Mr. Buchanan aid had a very pleasant chat .1.th him. The only special matter that he mentioned was in regard to reimbursement of B. & 0. and other notes in London, concerning which he vas now corresponding with the New York office. He said he fully understood the advanta7es of sending th. in London, on a:count of the difference of nearly notes forward for collection 2d. in exchange, but the delay in e'fecting the arrangunent was due to the uncertainty of the stamps to be attached. The Revenue Office had made no final ruling as to whether they should be taxed simply as commercial notes, which would be ld., or as bonds, in which case the stamps would amount to 4 of 1;, or possibly as collection items, in which case they would be taxed one New York. mill. He was hoping to get a ruling at once and convey it by cable to I inquired a little as to the bank and security situation in Paris, and his whole attitude was rather to deprecate the gossip in regard to the French Calls 5/29/14 -10 http://fraser.stlouisfed.org/ Federal Reserve Bank Benson & Robert of St. Louis Galls Co.- 5/29/14 - 11 Calls 14 5/29/14 Calls ax. paying in over 5/29/14 - 15 100,000,000. of capital for the reserve banks, and later the withdrawal ilof funds from rew York by interior banks in readjustment of their reser7es; that the most natural immediate results would be higher interest rates in Few York and a lower rate of exchange, and that the very high rate now prevailingwas probably due to the purchase of American securities now held in Europe and, to some extent, to the payment of maturing notes held abroad which Tare being renewed in America instead of over here. I judge from 2r. Goes attitude and likewise from other bankers whom I have visited here, that they have a v ry high opinion of the Bankers Trust Company and v.ould be glad to have us increase our business with them. ance with so many of our directors impressed me in Their acquaint- many cases. and is one thing to be figured on in connection with possible dhanges in our Board to meet new Federal legislation. Calls, Paris, June 2, 1914. *Morgan, Harjes & Co. Yet fir. Harjes. I told him that there would be no point in our discussinp the details of our business with Morgan, Harjes Co., as Mr. Kent would be here later and go over that carefully. I did, how- ever, have a long general talk with him on various marters. Regarding Frisco: He seemed of the opinion that the French ,.` bankersEnd the Office Nationale would look a good deal to us to help in that matter and avoid a transaction that would result in later difficulties for the road; working it out. thought that great credit would be gained He said that unfortunately the 5,roup of bankers through whom they had been sold in Paris were not just now in very good odor nor were they the best people, and there didn't seem to be any distinct leadership among; the various banks that were interested. He spoke of Jarislowski as not being first-class, and said the same for the Banque Privee, excel t that the Societe Generale had been forced to acquire a laxv.e interest in that bank in the interest of the situation, and while they were ver:, sorry indeed that they probably be obliged to work it out. had it, yet they would He spoke very well indeed of 2ony Chauvin, 71e6)er of the Office Nationale Committee, and spoke well, also, of Guerin, the chairmLn of that committee representing the 5s. On the other hand, he said that the New Orleans, Texas (I Mexico 4-1/2s had been handled through an organization in which S-eyer had been interested, together with some of the more important and reTonsible French bankers, and it was rather a pity that we were not detling with that group, as, while Mr. Speyer was somewhat discredited in that circle, still the other members were important and influential and would be glad to deal with us. The Frisco failure, and particularly the sale of a block of bonds just before the failure, coupled with other important Calls (Paris) 6/2/14 3 - incidents,like the publicity in connection with the St. Paul's accounting, and the une7pected issue of Telephone stock just after the listing, had all combined to create much uneasiness about American securities, would be it long time before French bankers and the public recovered from their rrejudice. He spoke very strongly of the high reputation for good business judgment that the Bankers Trust Company enjoyed among the banks here, and felt that it would not be difficult at all for us to ensure t1.-_e influence and cooperation of all the French interests here in case we took an active part in reorganization measares. I explained to him that the matter was largely in Mr. Speyer's hands, and ours was an unprejudiced neutral position as trustee, and, so far as the reorganization was concerned, our financial interest in it wou16_ be determined largely by our judgment of the soundness of the plan. Mr. Harjes wrote a very strong letter to Mr. Tony Chauvin in reard to our Company. intimating that he could speak with the utmost frankness ai confidence to me and receive what I told hiW with equal confidence. Regarding the Government bank position over here, he was rzther of the iLpression that the Bank of France, in strengthening its reserves and increasing its gold holdings. was simply following the lead of the Imperial Bank of Germany; that the lolicy of the Imperial Bank really emanated from the Emperor, who was a conservative influence in all banking, industrial and military affairs in Germany, and that the Emperor himself was responsible for enlarginil- the military establishment and for giving great Governmental encouragement to industrial ventures in Germany, and, lastly, in strengthening the position of the Imperial Bank, the latter inspired by the lessons growing out of the Morocco incident. Mr. Harjes seemed to be of the opinion that the German industrial and financial situation was the strongest in Europe just now. Calls (Paris) S 6/2/14 - 3 and he said that,for the first time in the history of banking so far as he was aware, Russia had recently been able to negotiate loans in Germany at lower rates than could be obtained in France. He didn't think that the policy of the Government banks indicated political strain, although that interpretation might rea ily be put upon it. General Banking Situation.- Lr. Harjes is of the opinion that the Credit Lyonnais stands out foremost among all the European joint stock banks as having conducted an enormous business along conservative lines. co that today- they have an absolutely clean balance sheet and have the good fortune,-which is true of h4rdly any other French bank,of having avoided losses to their customers who had made investments throug:sh them. This was almost, if not quite, equally true of the The Banque de Paris, on the contrary, had made quite a Comptoir. at any rate, a good many of their clients number of bad investments; had lost large sums of money through investments which the bank had sold them. The Societe Generale was undoubtedly in the most vulnerable posi- tion of any of the big four. had sustained. serious losses, Through them many of the irench people but, on the other hand, their business this year had been abnormally profitable. In the first three months they made probably over 125: on their stock, and he thought that while that might be the weaT7est spot.there was no reason for a breakdown, as the banking situation here was so cohesive that such a thing was practically impossible. He said that some of the smaller banks, mentioning particularly the Credit Lobilier. had had some very hard cracks. They had not scrutinized their investments carefully enough and se7ere losses had been sustained. Prance was not as good as it should be. He thought that business in American travellers and others here were not producing the annual harvest of good times. He was some- what disturbed by the result of the recent election, which had returned Calls an ultra Socialistic Radical house, and (Paris) 6/2/14 4 thou ht there would li ely c some very drastic legislation and possibl some ventilation oT the financial difficulties. Discussed this ma Paris Office. er at some length with Er. Harjes and gathered -enerally the following impression as being his best opinion: An office for the convenience of travellers might afford them some little facilities that they co not now enjoy, but it probLbly would not pay. It was an inopportune time to open an office for the purpose of handling American securities, on account of the pressure on the French market for new loans from so many different quarters, and particularly because of the unfortunate experiences of the French banks with American securities. Mr. Harjes, however, is of the opinion that if an institution like the Bankers Trust Company should make it their business to become personally acquainted, through frequent visits by its officers to Paris, and establish personal relationShips with the iwortant French bankers, lunch with them, entertain they for dinner, and gain their confidence, after a period of careful cultivation of this character it would be quite possible to start a business that would grow to very great importance in good American securities. adjustment of the St. Louis This underttkinFf, however, should_ wait the San Francisco and other Am,:rican difficulties. He laid great emphasis upon the excellent position which we occupy in the . minds of Paris banks of having conducted a successful business conservatively and of the very high character of the individuals, principally bankers, who were associated with the Bankers Trust Company. Schiff, Lir. Speyer, an ,7 He said that Mr. Mortiwer one or two others of the American Hebrew bankers- had taj:en the trouble to come over here and spend a good det'l oir time Digitized for every year regularly FRASER in cultivating these relationships, and the very S Calls (Paris) 6/2/14 $ considerable business they hid been able to do here in Paris was undoubtedly the result of their taking the pains to esttblich personal relationship. He seemed to think that if these gentlemen, whose rersonality was probably not an unusually attractive one to the Parisian bankers, could be successful along this line, other Americans would certainly meet with very considerable success if they would take the trouble to cultivate the relationship. Calls (Paris) 4111 6/2/14 6 Comptoir rat. d'1:;scompte de Yaris. Ur. Lewandowski seemed to be particularly pleased ut my call and esrecially keen to puma me about American matters, our new banking law an( the railroad situation, and even more keen, if anything, to urge upon as an enlargement of our business abroad and giving them greater opportunities for transactions with us. He spbke in such very high terms of the Trust Company and the wav it was regarded over here that I could not help but be impressed. our organization. Seemed to know quite a little about Knew Mr. Kent veri favorably indeed. He brought out the statement of our transactions with them, which he said was most disappointing to them as a bank, ariC our size and importance; ;7enerally for an institution of that we should certainly be able to develop a business in Paris that would be equal or superior to that of Guaranty Trust Company. the Of course, I didn't tell him that much of the business we had been doinc with them was now being done with Liorgan. Harjes , Co. He was not at all encouraging as to any advantage to be gained by having an organization over here. I didn't suggest to him directly that we contemplated an office, but simply the apointing of a representative whose business it would be to look after our clients who were in Europe_ and at the same time a man of sufficient importance to cultivate closer relations with the banks. He said that it was a very poor time to undertake any security iasues, thtt an office such as we might open would be an expense and no profit, and pointed to the Farmers Loan and the Equitable as being quite negligible quantities in Paris so far as bunking was concerned. He was of the im-:ression that in order to have an office here it would be necessary to organize a separate corporation, on account of taxation, although I am not sure that he is correctly informed on that score. The Lloyd's Bank of Lon- don, in order to get a hold on business in Paris. purchased some other Calls (Paris) institution. 7 6/q14 He said that that was about the only way they could "succeed in getting an effective staff to handle the business, but he didn't think they were maloing any money and the business had caused them a good deal of trouble. As regards eneral business conditions in this country, he said that business originating in France was not necessarily bad, although there had been some setback. The business brou-t to Paris this year by tourists had been distinctly poor,- just about as ha, In thc jewellery trade there was a real crisis. as it could be. The dfessmakers were complaining, and tll of the dealers in luxuries. etc.. that are purchased by I:orth and South Americans wel-e comr1L.ininF7 o' 1z.c]- of business. As to our new bankinE system, he felt that it would be a distinctly important influence in our a'`'-rairs and would afford oppor- tunity for American bankers to become better known and more influential here and in London. Admitted without reservation that the bunking position in Paris was quite strained, but his whole conversation on this subject impressed me that he desired to gloss it over and would prefer to pump me rather than helve me pump him. His attitude was one of r ference to such difficulties as existed as being those of institutions of minor importance, although this is not exactly the information I get from other sources. He did admit that the Societe Generale had done some very bad business and that their clients had lost quite a lot of money. Calls (Paris, 6/3/14 8 Credit Lyonnais. In my first talk with IL.. Masson I did not discuss the Bankers Trust Company business in detail with him at all, as he wasn't the man to talk with any way, and he rather preferred, I think, to have a general discussion and let the detail be taken up by Ir. Kent with nr. Cunradi on Mr. Kent's arrival. In regard to our having an establishment of some sort in Paris. he really saw no point in it. Said it would be an expense to us and would likely develop no business in the present temper of the banking and investment community here, which was highly prejudiced against American investments, and Ehatever banking business we wanted to do in Paris could be done cheaper and more effectively by establishing closer and more profitable relationships with the big banks. He said that if it was simply an office for the convenience of travellers in handling trunks, railway tickets, mail, etc., that would be simply a question of policy as to how much of that sort of thing had to be done in order to hold and develop the travellers' business. He didn't seem to attach much importance to it, End thought that the Equitable and Farmers Loan were neither of them making any money or were ever heard of here except to the extent that they extended some little banking facilities and convenience to their clients who came to Paris. The question of taxes, income and otTlerwise, is being an important one in its effect upon foreign securities, but the present tendency is to direct the derosit of such securities, and even banking accounts. to Zurich and Brussels rather than to London and Now York. In regard to the local banking situation, I discussed this on two different occasions when I called to see Lir. !Aasson, and will consolidate the impressions of the two interviews into one memorandum. He says -s to the Credit Lyonnais, they have no securities to speLk of of their own, http://fraser.stlouisfed.org/ inasmuch Federal Reserve Bank of St. Louis as they effect a turnover as soon as a new issue it purchase Calls (Faris) or even before it is purchase . 9 They rarely carry an account for more 40 than a day or two. and it is a most unusual thing for the,Ito have a new issue on hand for as long as week. Their hands, however, have been tied recently on account of the attitude of the Government. He didn't say that they had been directly instructed by the Government, but inferred that the Government had in some way conveyed to the big banks here that they didn't want any commitments made by the banks thz.t would exhaust their investing power until the French Government loan had been placed. The loan would amount to 300,000,000. or thereto outs, and it was imperatively- necessary that it should be promptly placed when offered. Meantime, on account of the uncertainty and distrust in the thinds of all the bankers t,s to the new-Socialistic regime, there was developing a very serious distrust, End he felt that the Paris situation was approaching q crisis of real seriousness, if it were not already at hand. He reiterated what others have said. that the French peasant to the principal of hi: investment, does not seem to pay much at does not watch the securities or know anything whatever about the chart-.cter of the bond or stock. He relies entirely upon the bank, and exTeets remittance of the interest promptly on the minute. When a default occurs the peasant goes right up in the air, becomes excited, his prejudices are easily aroused, and undoubtedly Llasson and all the other bankers here are afraid of a possible default in any considerable number of issues, which would precipitate an outpouring of securities that would paralyze credit situations the world over. One cannot go through the vaults of the Credit Lyonnais without being terrified at the possibility of r. n-; such occurrence. There Ore literkUy ;Ines of corridors lined with vaults filled with securities. anywhere else in the world. occupied. I suppose no such The entire b4sement of the whole block the bank building is filled with securities, cove:ing five Calls (Paris) 10 Calls (Paris) 11 Calls (Paris) 12 Dupont & Furlaud. I had talk with 1:r. FurlEud in regard to the scheme that he 111 wrote me about of having an office in Brussels or Switzerland. He talked so extravagantly, however, and is so consumed with egotism and the desire to blow his own horn that I do not feel there is any advantage whatever to be F.t,ined in developing matters with them. and it would only be a waste of time to enlarge upon this memorandum. Calls (Paris) 13 Banque de Paris etiPays-Bas. Mr. 2urre 'Jini spoke very poor English and naturally we didn't *get along very well, except that, lacking a very considerable vocabulary. I think he may have been led to speak a little more frankly than he otherwise would have done. His attitude was to blame America, d.rid particularly President Wilson, for bringing about a world-wide crisis in finance and credit; thought his new policies and idealism were the cause of the Mexican troubles and the upset in the value of American railway investinents; but 'e amitted that matters of considerable seriousness had developed likewise in Brazil and elsewhere. and the large French interests in these foreign countries were causing they great uneasiness and that he feared we were approaching a crisis. He reiter- at.ed that the French banks were in the main in a position to staid considerable strain, as money was easy here and the Banl: of France was improving its position right along. stated that He was the only one who voluntarily 1-le rolitical relations between France and Germany were a distinct factor in the situation. He said there was a decided tension in the relations between the people of the two countries opinion was fomented by the newspapers. so ft.i. aE He used an expression, the equivalent, literally translated. that the newspapers accelerated fire. the Said that the sensible people of neither Germany nor France wanted war. but the news-papers were keeping the matter at boiling point right along and creating a sentiment that had led to a tremendous increase in expenditures for armament that would wreck any country. He s id thtt no losses had yet been incurred on account of the Balkan way; the loans were protected. and he thought they were all good; but much uncertainty existed in Paris on account of the tremendous accumulation of short-time borrowings by the French Government, and nobody was able to ascertain or prophesy when the new Government would be able to arrange financing. He said they were an ignorant lot, of a type that made trouble prior to Calls (Paris) 14 :lye some and that they would unprincipled, financial prejudiced and the Revolution, to handle important didn't know how and probably weak today, and *bad legislation Bourse was very he said that the In passing, It was also weak mat tars. situation there. about the gained a stronger seemed to be concerned of these people I with all In fact, talking afraid of what may yesterday. of them mucb are all regard to all along that they impression of the peasants in and excitement through the ignorance develop their investments. Calls (Paris) a 1 Paris Office. Mr. Aubert brought up the subject of American business in Paris when we were at Mr. Stillman's house. He seemed to think that while matters were in a very unsatisfactory condition now to do any business in Paris, yet the day would come when an American institution, as distinguished from international banking houses, might find it desirable to open such an office. American international bankers, he said, had cultivated business over here much more assiduously than the institutions had, and he felt that there had been fault on both sides in connection with the issue of second and third-grade bonds in Paris. None of the big New Yor',; institutions were associated with these matters in the minds of the French banks or investors, and he felt quite certain that a concern like the Bankers Trust Company would occupy a different position in the minds of the big institutions in Paris from that occupied by the bond houses. Said the Farmers Loan & Trust Company and the Equitable amounted to nothing in Paris; they probably weren't paying expenses, and were doing very little business. Mr. Stillman asked me if we were contemplating opening an office here, and I told him that the suggestion had been made, but particularly with reference to giving facilities to travellers who carried our credits rather than attempting to do a banking and investment business. He said there was absolutely nothing to be gained, in his opinion, by opening a Paris office unless it was for that limited purpose. The French people wouldn't entrust their business to such an office, and he didn't see how it could be profitable or amount to anything. The Farmers Loan & Trust Company, he explained, had during the war received large amounts of securities for account of rich Americans who emigrated to France to escape the difficulties of the war period. This business had grown somewhat and offered an excuse for their having an office in Paris. 411 Calls (Berlin) 7 Direction der Disconto Gesellschaft. Presented Mr. White's letter to Herr vonBerger, Dr. Salomonsohn OLeing so very much occupied in connection with the taking over of the Herr vonBerger expressed regret business of the Schauffenhaus that they had been unable as yet to finally adjust the potash matter with the International Agricultural Corporation, but hoped to be able to do so as the result of the efforts of their attorney, who had gone to New York for that purpose. Herr vonBerger was most anxious that the Bankers Trust Company do more business with the Direction der Disconto Gesellschaft. He brought in their foreign manager, whose name I do not recall, with whom I discussed relations in Germany and America for over an hour. It seems to be the universal feeling over here, as expressed by him and by others, that the most beneficial effect of our new banking system will be to create a discount market for bills or acceptances. The German bankers are also united in opinion that the Reserve bank system should have but one agency in each principal city, and should conduct their business with the more important joint stock banks, such as the Deutsche Bank, Disconto Gesellschaft, and pJssible Mendelssohn, as no object would be served by having direct relations with the Imperial Bank. They are all keen to make the connection, and have asked me quite particularly on this score what steps should be taken. They all agree that American securities have had a bad setback in this country, and it will require a good deal of careful work by bankers to effect a restoration of confidence in these issues. Suggest that Mr. Kent allow time to have as visit with Herr vonBerger and his associates. They all agree that no object would be served by the Bankers Trust Company having an office in Berlin, which would be an expense and without profit, as we could do our business much better through our present banking arrangements. Calls (Berlin) 8 Dresdner Bank. Presented Mr. White's letter to Dr. Schact, who asked their foreign manager to join us. This gentlemen seemed rather less informed about American business than the officers of the other two banks, but particularly keen that the Bankers Trust Company should establish closer relations with them and do more business through the Dresdner Bank. Somehow or ether, I got the impression that the officers of this bank were a bit cold and not very sympathetic, although they dropped one rather important bit of information, which was confirmed by the officers of the other two banks, namely,- that the big banks here in Germsay have got a distinct agreement among themselves as to the minimum rates to be charged for acceptances, credits, etc., which is 1/4% for the best bank acceptances, 3/8 to 1.1) for commercial acceptances, and 1/8% where the credit is confirmed, etc., and apparently they are very conscientious in sticking to the terms upon which they have all agreed. The German banker is quite unable to under- stand the policy of our country in discouraging bank consolidations and enlargements. They seem to think that if our Government would encourage consolidations, so that we would have but a fraction of the number of banks which we now have,-those, however, being very large and powerful, - our business would be better conducted, more profitable, and our bankers in position to do their share of the financiaig o the world's trade, which we are now not doing and consequently are losing the nrofit. One other thing that has developed in my conversation with all the bankers here is the feeling, apparently, that our new banking system invites inflation and that the present ease of money and exports of gold may to some extent be attributed to expansion in anticipation, by our bankers. and costly, They all agree that Wilson's policy in Mexico has been stupid that his policy in forcing trust legislation at the present time is unwise and that, while he is honest undoubtedly in his purpose, Calls (Berlin) 9 411 he is theorist and impractical. Dr. vonGwinner made the same statement that others have made to me, to the effect that our railroads should get 40 an increase of 20% or 25% in rates, and even that would do no more than enable them to carry out construction work that is absolutely essential to the safe conduct of the transportation business of the country. Calls (Berlin) 10 Calls (Berlin) 11 Calls (Berlin) S 12 its connection with the New York Central, which eventually would turn a large amount of traffic over their lines: but it would need careful management and .suite a little money spent for the physical betterment of the road to carry the enlarged traffic. These are the matters in which Herr Bergmann will be active in New York. He probably will have his office in 135 Broadway, although I tried to have him consider taking offices in our building. Am wriAmg Mr. Hugo Schmidt today, as per copy attached, asking him to keep the matter in mind. :Ir. Schmidt wants a good picture of our building to hang in his private office, as he already had pictures there of the Blair blinding, the Stock Exchange, and one or two others, and I promised to send him one on my return. Berlin 1/1 Deutsche Bank. Ily last interview with Herr Blinzig Saturday morning (June 16) simply added INfurther confirmation to the suggestions made in former interviews, both by him and by Herr VonGwinner, that they stood ready to co-operate with us, both financially and with moral support, in any plan we devised along the line we discussed for a conservative reorganization. He was particularly anxious that I should write fully from London, giving particulars regarding the situation in both Paris and few York, which I have agreed to do. Both Herr Blinzig and Herr VonGwinner will be glad to hear from us from time to time regarding security matters, although at the moment there is little prospect of doing much security business in Germany. There have been too many losses incurred and there is too much distrust of American political conditions. Call/ British & American ITortRare Co. London 1 to-do. father, loans wh American being in loans in American debonlrur exceed a the dema continuo very mod cover wh debentur seven or a share, paving a conditio London 2 11, S London right class of experienced bank men; 3 that they are contracting their branches *Instead of increasing their number; and that in proportion to the number of great joint stock banks they are not strong enough to take the strain of bad times and unsettled confidence. lie believes that the Bank of England should adopt a olicy of enlarging its business and strengthening its resources, and that as an emergency measure it should be empowered to issue notes against the deposit of prime pa er and gold in a certain proportion, only, however, when 4;1'10 discount rate is, say, and the notes issued under such emergency arrangement to be subject to a snecial tax. Had a brief talk with him about the subject of a :,ondon office. Sir Edward apparently did not want to develop this subject very fully until jr. Kent's arrival, urging that we take a day, spending it in some quiet place, where he, 'Ir. Kent and I could go into the subject thoroughly. He said he was quite sure that it would not tkiek do to think of opening an office in Paris without having one in London also, and I gathered that he is not very likely to be enthusiastic on the subject. Sir Edward and the other bankers with whom I talked took a pretty gloomy view of the banking situation in Paris, and I should say a composite view of my interviews today would be about as follows; The four big banks, that is, the Credit Lyonnais, Societe Generale, Comptoir National, and the Banque de Paris, with their large number of branches throughout France, have developed an enormous investment business, a large part of the securities being sold to ignorant peasants, who buy these entirely upon the reconmendation of the banks, without knowing what they are other than that they are offered by a responsible banking institution. The three bankn mentioned (excepting the Credit 14yonnais) have found this business so profitable and automatic, so to sneak, that they have not been as particular as they should be as to the class of securities they have handled, being governed too London 5 London 6 Bourke. Schiff & Co. 411 hot all the partners at their office and explained to them in great IP detail how we happened to be brought into the Southern Iron & Steel Company matter, and that we now felt that we were through with the situation and had no further res onsibility in that connection, all of which they seemed to understand. They all stated very positively that any sale of the property for any- thing like 2 3.J0J,000. cash would be bitterly opposed on this side. They also seemed very keen to get reliable information in regard to tho personnel of the new Board of Dfrectors. I gave them what little inform tion I could, and told them that I regarded the Company's future as dependent almost entirely upon the management and upon its being conservatively developed and not spread out too much. They were all very much encouraged by the statements coning forward from New York showing tho Company's operations, and particularly indicating an improved situation as to quick assets. control of the situation. The7 seem to have confidence in Platten and his London 7 Llo 411 London 8 look busi cial and ins the par with deta London 9 Credit Lyonnais. Saw :Ir. Buchanan, and had a very pleasant chat with him. 40 The only special matter that he mentioned was in regard to reimbursement of B. & 0. and other notes in London, concerning which he was now corresponding with the New York office. He said he fully anfterstood the advantages of sending the notes for. -yard for collection in London, on account of the difrerence of nearly 2d° In exchange, but the delay in effecting the arrannoment was due to the uncertainty of the stamps to be attached. The Revenue Office had made no final ruling as to whether they should be taxed simply as commercial notes, which would be ld., or as bonds, in which case the stamps would amount to of 1;0, or possibly as collection items, in which case they would be taxed one tier mill. hoping to get a ruling at once and convey it by cable to Now York. He was I inquired a little as to the bank and security situation in Paris. and his whole attitude was rather to deprecate the gossip in regard to the French banking position generally. He mentioned particalarly the unfavorable influence created by the fiasco in both Frisco and the American "later-7brks & Guarantee, as well as some other minor security issues from America, but didn't go into particulars. He was most anxious that we should make use of his services in any way possible in London and that I should see 7T,r. "Hasson at the head office in Paris. London 10 http://fraser.stlouisfed.org/ Federal Reserve Bank Joint Stock London of St. Louis tendon Bank. Ltd. 11 London 12 Mor:,: Paris 1 Paris Paris 3 Parisu 4 Paris 5 Paris 5 Paris 6 Paris 7 Paris 11:rjes 8 Co. http://fraser.stlouisfed.org/ I lunched Federal Reserve Bank of St. Louis with Mr. Harjes on Wednesday (June 3rd). We continued our Paris 111 12 Paris Office. Hr. Aubert brought up the subject of American business in Paris when we He seemed to think that while matters were in were at Hr. Stillman's house. a very unsatisfactory condition now to do any business in Paris, yet the day would come when an American institution, as distinguished from international banking houses, might find it desirable to open such an office. American international bankers, he said, had cultivated business over here more assiduously than the institutions had, and he felt that there had been fault on both sides in connection with the issue of second and third-grade bonds in Paris. None of the big New York institutions were associated with those matters in the minds of the French banks or investors, and he felt quite certain that a concern like the Bankers Trust Company would occupy a different position in the minds of the big institutions in Paris from that occupied by the bond houses. Said that the Farmers Loan & Trust Company and the Fauitable amounted to nothing in Paris; they probabla ure.ren't paying expenses, and were doing very little business. Mr. Stillman asked me if we were contemplating opening an office here, and I told him that the suggestion had been made, but particularly with reference to giving facilities to travellers who carried our credits, rather than attempting to do a banking and investment business. He said there was absolutely nothing to be gained, in his opinion, by opening a Paris office unless it was for that limited purpose. The French people wouldn't entrust their business to such an office, and he didn't see how it could be profitable or amount to anything. The Farmers Loan & Trust Company, he explained, had during the war received large amounts of securities for account of rich Americans who emigrated to France to escape the difficulties of the war period. This business had grown somewhat, and offered an excuse for their having an office in Paris. 40 galls (Berlin) June 9 Deutsche Bank. 1 I presented Mr. Kent's letter to Mr. Hugo Schmidt, who was most *gratified indeed to see me with their various officers. and urged that I allow ample time for visits At the outset he said that our business with them was of so satisfactory a character and was so carefully handled that it really required no discussion, and he hoped that the service which they were rendering us here was as satisfactory to us as ours was to them. We spent fully an hour. both with him and with Herr Hermann, the head of his department, in discussing general business conditions here, in France, and in America, and discussing our new banking bill. Herr Schmidt first asked me to convey a caution to Mr. Kent in regard to the Banco Espanol de la Cuba. He said that Mariana was here in Germany, and he had seen him, but that there was something radically wrong with the bank. He didn't care to give me particulars, and we should be exceedingly cautious in our dealings with them. He was lead to mention the matter because he had seen a transfer going through the bank with which we were in some way connected, and thought we might be doing business with them. I thanked him and said the word would be promptly conveyed to our office. While he gave no particulars, I rather felt that it referred not only to financial conditions, but also to questions of honesty and straight dealing. As to conditions in Germany, he says that they are vastly improved and that all the German banks, particularly the Imperial Bank, are now in very strong position. The one weak spot was the Scharfhausen Bank, which had been offered to the Deutsche Bank and after consideration had been declined. The Disconto Gesellschaft had taken them over, with all their branches, and he felt that it required a good deal of courage to do so, as the bank was badly tied up and would have to mark off +40,000,000. Marks out of their capital of 140,000,000. Mks., and it would take four or five years to put the business on a safe and profitable basis. The Deutsche Bank had also recently completed the purchase Calls (Berlin) 2 11, of a bank in which they had a large interest formerly, the name of which I do not recall. He said that in this case the purchase was a good one dbpd would be profitable. There had been some trade depression in Germany, but not as serious as in France, and he was very confident that the banking position in Germany is today stronger than any country in Europe. The policy of the Imperial Bank in accumulating gold has been one of general caution, on account of political reasons, but also largely because they felt that all the great Government banks required the protection of larger gold reserves, particularly in London, where the banking position had been weakened by the business of the country outgrowing the size and importance of the Bank of England. This is largely Sir Edward Holden's view. As to our new banking system, they seemed to agree that it was a long step ahead, but that the most careful management would be required to ensure its success and to avoid inflation. He thought, however, that such management would be given the bank and that the plan would prove a success. Herr Hermann commented strongly upon Mr. Vanderlip's plan and said that it was the ideal plan and should have been adopted. They recognized the difficulties of a central bank plan, however, in that we had such a vast territory to cover and so many different divergent business conditions. He thought that it would be most unwise for the Federal Reserve Banks to have more tne.n one agency in each principal ioreign city, and botn Messrs. Scnmidt and Hermann agreed tnat there would be no object to serve for an American institution, other than the Federal Reserve banks, to have an office in Berlin. As to conditions in France, he said they were exceedingly serious. The French banks had been guilty of reckless, extravagant promotion in the sale of foreign securities of doubtful value, and it looked as though the day of reckoning was at hand. This was further complicated by the difficult political condition of the country, which seemed unable to Calls (Berlin) 3 Calls (Berlin) 4 Calls (Berlin) 411 5 Deutsche Bank. June 10. Met Hugo Schmidt and Herr Hermann by appointment at *the bank, and they took me through the institution, showed me the vaults, etc. It is a vast place and undoubtedly well managed, and impressive in the volume and importance of its business. After going through the bank we had luncheon together, and at lunch they opened up pretty frankly in regard to American matters, discussing a wide range of subjects, including their relations with New York institutions and particularly the question of our new banking law. As to the former, they said that they regarded the business of the Guaranty Trust Company, as conducted by Max May, as being too speculative. They took very large lines, and they were particularly criticized over here for drawing long bills on their own London office. He thought Max May wanted to do all the business without regard to profit, and undoubtedly a large amount of of the business which they did paid them no profit,- possibly caused a loss, - and they were not compensated for the risk. Mr. Kent as by far the better man for that business, that he was considered a safer and more prudent banker on this side than was May. Thought Kent was the ideal man for the new Federal reserve bank in New York, and hoped May would not be appointed. As to the National City Bank, while it was a fine institution, they always wanted the lion's share of the profit and their relations with the Deutsche Bank were not as close as they had been on that account. The First National Bank had recently been charg- ing them too much for carrying their securities, 1/4 of lro, and as it not only took all the profit but also caused a loss on the business, they were obliged to make a change. I didn't feel inclined to go into the details of our business relations with them, preferring to let Mr. Kent take that up later, but I am satisfied that Mr. Kent, by conference with Messrs. Schmidt and Hermann, and possibly with Blinzig and vonGwinner, can very much enlarge the scope of our business with the Deutsche Bank Calls (Berlin) 6 Berlin June 9 Deutsche Bank. I presented Lir. Kent's letter to 2±. Hugo Schmidt, who was most gratified indeed to see me, and urged that I allow ample time for visits with thfr various officers. At the outset, he said thk.t our business with them was of so satisfmtory a chracter and was so carefully handled th:t it really required no discussion; and he hoped that the service which they were rendering us here was as satisfactory to us as ours was to them. We spent fully an hour, both with him and with Herr Hermann, the head of his department, in discussing general business conditions here, in France, and in America, and in discussing our new banking bill. Herr Schmidt first asked me to convey a caution to Lir. Kent in regard to the Banco Espanol de la Cuba. He said that Marianna was here in Germany, and he had seen him, but that there was something radically wrong with the Bank. He didn't care to give me particulars, and we should be exceedingly cautious in our dealings with them. He was led to mention the matter because he had seena transfer going through the bank with which we were in some way connected, and thought we might be doing business with them. word would be promptly conveyed to our office. I thanked him and said the While he gave no particulars, I rather felt that it referred not only to financial conditions, but also to questions of honesty and straight dealing. As to conditions in Germany, he says that they are vastly improved and that all the German banks, particularly the Imperial Bank, are how in a very strong position. The one weak spot was the Scharfhausen Bank, which had been offered to the Deutsche Bank, and after consideration had been declined. The Disconto Gesellschaft had taken them over, wita all their branches, and he felt that it required a good deal of courage to do so, as the bank was badly tied up and would have to mark off 40,000,000 :silks. out of their capital of 140,000,000, and it would take four or five years to put the business on a safe and profit able basis. http://fraser.stlouisfed.org/ The Federal Reserve Bank of St. Louis Deutsche Bank had also recently completed the purchase of a bank Berlin 2 in which they had a large interest formerly, the name of which I do not recall. He said that in this case the purchase was a good one and would be profitable. There had been some trade dearession in Germany, but not as serious as in France, and he was ver confident that the banking position in Germany is today stronger than in any country in Europe. The policy of the Imperial Bank in accumulating gold has been one of general caution, on account of political reasons, but also largely because they felt that all the great Government banks required the arotection of larger gold reserves, particularly in London, where the banking position had been weakened by the business of the country outgrowila; the size and Lkortance of the Bank of England. This is largely Sir Edward Holden's view. As to our new banking system, they seemed to agree that it was a long step ahead, but that the most careful management would be required to ensure its success and to avoid inflation. He thought, however, that such management would be given the bank and that the plan would prove a success. Herr Hermann comrented strongly upon Mr. Vanderlip's plan, and said that it was the ideal plan and should have been adopted. They recognized the difficulties of a central bank plan, however, in that we had such a vast territory to cover and so maw different divergent business conditions. He thought that it would be most unwise for the Federal reserve banks to have more than one agency in each principal foreign city, and both Messrs. Schmidt and Hermann agreed that there would be no object to serve for an American institution, other than the Federal reserve banks, to have an office in Berlin. As to conditions in France, he said they were exceedingly serious. The French banks had been guilty of reckless, extravagant promotion in the sale of foreign securities of doubtful value, and it looked as though the day of reckoning was at hand. This was further complicated by the difficult puttlam political condition of the country, which seemed unable to develop any strong financial la Berlin 3 policy and to crystallize sentiment in regard to the three-year term of service. Said the Societe Generale, while in perilous condition today, would probably be asslied over its difficulties by the other banks, unless the distrust became so widespread that they would need all their resources to help themselves. He didn't intimate that the German banks would help, but I rather imagine that their attitude would be one of assist-nce than the reverse. Schmidt said that conditions in the Argentine were today vastly worse than at the time of the Baring panic. The country was suffering a paralysis of trade and overexpansion, which had been promoted by the outpouring of French money. They not only got all the money they asked for on application to the French banks, but the bankers there wore urging them to take more, with the inevitable consequences. The same thing is true in Brazil. The Brazilian Government absolutely had to arrange a loan of about $100,000,000. to save a complete breakdown, which would affect the French banks seriously; that negotiations were now being conducted in London, the Deutsche Bank having a representative there, and, while they didn't want to do so, they probably would find it advisable to participate in the Brazilian loan, which he thought would be successfully concluded at an early date. I expect to lunch with these gentlemen tomorrow, and t the conclusion of the interview Herr Schmidt took me to Herr Blinzig's office, where I spent another hour with Herr Blinzig and Herr VonGwinner. see me in regard to the Frisco matter. that heading). These gentlemen wanted to (:demo. regarding the interview under Berlin 4 1;a1,ionalbank for Deutschland. Saw Mr. Hans Winterfelt, who has within the last few weeks taken charge )f this bank, the President of which recently died. 10 I was informed by the officers Deutsche Bank that the Nationalbsnk for Deutschland had been pret y badly tied up and their prestige considerably affected, and that it would take some time for thorn to work out of their present position. Winterfelt told me, however, that while he had found a great mass of underwritings and participations there from America, such as we wouldn't think of touching at home, he felt confident that the business of the bank could be put in good shape; and he himself, having consider- able knowledge of American affairs, was in a good position to do so. He hasn't had much experience in strictly banking matters, but is anxious to build up the banking business of the institution. He would like very much if the Bankers Trust Company could arrange to do some business with them in connection with banking matters, exchange, travellers credits, commercial credits, or the handling of securities. I told him that the details of these matters could be discussed with Kent, who would be here in July, and I would see that :Ir. Kent called to visit him. Berlin Deutsche Bank. 5 (June 10) Met Hugo Schmidt and Herr Hermann by appointment at the bank, and they took me through the institution, shored me the vaults, etc. It is a vast place anAlkndoubtedly well managed, and impressive in the volume and importance of its business. After going through the bank we had luncheon together, and at lunch they opened up pretty frankly in regard to American matters, discussing a wide range of subjects, including their relations with New York institutions, and particularly the liestion of our new banking law. As to the former, they said that they regarded the business of the Guaranty Trust Company, as conducted by Max May, as being too speculative. They took very large lines, and they were particularly criticized over here for drawing long bills on their own London office. He thought Max May wanted to do all the business without regard to profit, and undoubtedly a large amount of the business which they did paid them no profit, Said they possibly caused a loss,- and they were not compensated for the risk. regarded Mr. Kent as by far the better man for that business; that he was considered a safer and more prudent banker on this side than was May. Thought :Cent was the ideal man for the new Federal reserve bank in New York, and hoped May would not be appointed. As to the National City Bank, while it was a fine institution, they always wanted the lion's share of the profit and their relations w7th the Deutsche Bank were not as close as they had been on that account. The First National Bank had recently been charging them too much for carrying their securities,of 1;-,- and as it not only took all the profit but also caused a he business, they were obliged to make a change. I didn't fool inclined o the details of our business relations with them, preferring to let take that up later, but I acq satisfied t:iat Mr. Nent, by conference with chmidt and Hermann, and possibly with Blinzig and vonGwinner, can very rge the scope of our business with the Deutsche Bank and establish a much Berlin closer relationship. 6 I was most favorably impressed with the intelligence and the wide range of information displayed by all of these gentlemen in regard to American affairs. Schmidt is leaving for a vacation shortly and will not be in Berlin until about the 10th of July, so it will be better for :Ir. Kent to defer coming here until after Mr. Schmidt returns. I cannot help but feel that if the matter is put in just the right way to these gentlemen, they will be disposed to send us a considerable part of their security business. and very much increase their balances and transactions with us. The important thing is to find out what is a fair arrangement both ways, so that both the Deutsche Bank and ourselves can make money on the account. Would suggest that 7Ir. Kent give some thought as to arrange- ments for joint account business, and investigate while he is here just what kind of business of that character would appeal to them. Berlin 7 Direction der Disconto Gesellschaft. Presented :Ir. White's letter to Herr vonBerger, Dr. Salomonsohn being so very much occupied in connection with the taking over of the business of the Scharfhausen Bank. Herr vonBerger expressed regret that they had been unable as yet to finally adjust the potash matter with the International Agricultural Corporation , but hoped to be able to do so as the result of the efforts of th attorney who had gone to New York for that purpose. Herr vonBerger anxious that the Bankers Trust Company do more business with the Direction der Disconto Gesellschaft. He brought in their foreign manager, whose name I do not recall, with whom I discussed relations in Germany and America for over an hour. It seems to be the universal feeling over here, as expressed by him and by others, that the most beneficial effect of our new banking system will be to create a discount market for bills and acceptances. The German bankers are opinion that the Reserve bank system should have but one agency in each principal city, and should conduct their business with the more important joint stock banks, such as the Deutsche Bank, Disconto Gesellschaft, and possibly Mendelssohn, as no .,bject would be served by having direct relations with the Imperial Bank. They are all keen to make the connection. and have asked me quite particularly on this score what steps should be taken. They all agree that American securities have had a bad setback in this country, and it will require a good deal of careful work by bankers to effect a restoration of confidence in these issues. Suggest that Mr. Kent allow time to have a visit with Herr vonBerger and his associates. They all agree that no object would be served by the Bankers Trust Company having an office in Berlin, which would be an expense and without profit, as we could do our business much better through our present banking arrangements. Berlin 411 8 Dresdner Bank. Presented Mr. White's letter to Dr. Schact, who asked their foreign 4111 manager to join us. This gentleman seemed rather less informed about American business than the officers of the other two banks, but particularly keen that the Bankers Trust Company should establish closer relations with them and do more business through the Dresdner Bank. Somehow or other, I got the impression that the officers of this bank were a bit cold and not very sympathetic), although they dropped one rather important bit of information, which was confirmed by the officers of the other two banks, namely,- that the big banks here in Germany have got a distinct agreement among themselves as to the minimum rates to be charged for acceptances, credits, etc., which is for commercial acceptances, and for the best bank acceptances, m 3/8 to where the credit is confirmed, etc., and apparently they are very conscientious in sticking to the terms upon which they have all agreed. The German banker is quite unable to understand the policy of our country in discouraging bank consolidations and enlargements. They seem to think that if our Government would encourage consolidations, so that we would have but a fraction of the number of banks which we now have,- those, however, being very large and powerful,- our business would be better conducted, more profitable, and our bankers in position to do their share of the financing of the world's trade, which we are not now doing and consequently are losing the profit. One other thing that has developed in ray conversation with all the bankers here is the feeling, aenarently, that our new banking system invites inflation and that the present ease of money and exports of gold may to some extant be attributed to expansion in anticipation by our bankers. that Wilson's policy in Mexico has been stupid and costly, They all agree that his policy in forcing trust legislation at the present time is unwise, and that, while he is honest undoubtedly in his purpose, he is a theorist and impractioal. the same made statement that others have made to me, to the effect that our rail- Berlin 9 roads should get an increase of 20,, or 25;0 in rates, and even that would do no 46more than enable then to carry out construction work that is absolutely essential to the safe conduct of the transportation business of the country. Berlin 10 Trehhand Gesellschaft. It was unnecessary for me to call at this office, which is purely a al ministerial office, the management being in the hands of the various banks. It is the oldest and most responsible trust company in Berlin, and has for many years conducted a business as acting for bondholders when occasion arises. Mr.Blinzig tells me that where they are employed there is rarely a connittee appointed, the trust company itself acting as committee. In the Frisco case, they have about 113,000,000. bonds on deposit, of Which about $1,000,000. came in recently, after the offer to purchz:.se the coupons was made. He says that they are in such shape that the bonds could be shipped to New York at any time, if developments made it necessary, but it is (iiite important that notice by cable bo given, of at least a week if possible, of the intention to ask for their shipment, as a little time for negotiation may enable then to avoid the payment of another stamp on the issue o:r the new securities, which amounts, as I recall it, to -- of lciJ. Berlin 11 Deutsche Bank. Friday afternoon (June 12) Mr. Hugo Schmidt brought Mr. Bergmann of their office to the hotel for tea, in order that I might have good opportunity for a visit with him, as Herr Bergmann is going to New York in September, and will there officially represent the Deutsche Bank in place of Mr. Edward D. Adams. I doubt if Mr. Adams is yet apprised of this decision. The change, Herr Schmidt informs me, is one of the results of !Jr. Adams's mistake in Western 1!aryland, and to some extent due to the fact that Mr. Adams is not popular with New York bankers and does not succeed in making friends and suitably representing the bank in its many interests. Mr. Schmidt was verT frank in discussing the matter, and expressed the fear that Mr. Adams was going to be annoyed and hurt by the change, but it was inevitable. Herr Bergmann is most anyious to cultivate closer relations with our office. I think they feel that in these matters our advice will be valuable to them, as it is largely unprejudiced in the matters in which they are or will be interested. I told Herr Schmidt of our relations with the Western Maryland and our feeling that the Directors had been deceived, and in consequence of that fact we had been compelled to decline their application for a large loan, which had con,- siderably annoyed Mr. Adams and Mr. Rockefeller, as well as our good friends, Blair .1 Co. Explained that I had met 4r. Adams end told him the reason, and, on the whole, rhile I had some fear that the Deutsche Bank had been annoyed by our attitude, I now think that they believe we showed good business judgment and respect us for our independence. Herr Schmidt says that everybody in Germany, in the Berlin district, holds some Western Maryland stock, from fifty shares up, for which they paid about 65, and there is now great distress with the stock selling at 15 or 16. one of http://fraser.stlouisfed.org/ the matters Federal Reserve Bank of St. Louis This is that has injured American securities in Germany almost more Berlin 411 than any other. 12 I told him that, notwithstanding this distressing development, I couldn't help but feel that in the long run Western Maryland haul a future, on account of its connection with the New York Central, which eventually would turn a large amount of traffic over their lines; but it would need careful mandgement and quite a little money spent for the physical betterment of the road to osrry the enlarged traffic. These are the matters in which Herr Bergmann will be cctive in New York. He probably will have his office in 135 Broadway, although I tried to have him consider taking offices in our building. Am writing Mr. Hugo Schmidt today, as per copy attached, zzking him to keel) the matter in mind. Mr. Schmidt wants a good Picture of cur building to hang up in his private office. He already had pictures there of the Blair Building, the Stock Eichangeo and one or two others, and I promised to send him one on my return. Berlin ]L 2. v I do not bolloVo it is oither, a , no ow,rosnod moat'. and intoront rater ore unusually or at loast failing to at a tiro when money had piled up in NuV York The shan-o in our exports and imports has doubtless had nom influenza but I dol:bt if it has boon of sufficient influence to =Inn t 0 nharp rino of the last vook or to. Gompany, ac rued it vas a healthy sign for America. Guaranty Trust yne, of t1), mo as to tho latter theory. Lone of tum sowed to fool that I vcralu approolato it 17 you would drop no a lino,or oablo mu from time to time, just how thinge do look injiew York, for I rof no mem'inruiries that 1 would liku to havo t-ie last 7ord in the informtion. gY of If you and Dan and William could 7;et your heads tocuther every day or 1A-40, and Gamow a cable tollingmo just '..hat in doing, I wouWd arpreolato it. Another matt or that has improauod ono a good doal is the, probable difficulty that we sould oxporionce in opon.t tiler° which an offloo in London and developing a buoinono ould really be any factor at all for ntlny yearn to come. r:11 problem of getting the rigit kind of man-genont, art: then, 7hon ,o havo cot it, of letting the rirfit kind of buoiness, Is a v ry sorious ono. koop until you got over hero, a to it looks to ran an tho,li rica were probably taking back nooLxitioe in solo volume know abroad maturin- note in es . miantimo i an loin g to keep perring may no as over an much ground an pooniblo in anticipation. tomorrow for Paris, whoro All of thin, hoydror, will Ur. Lewis and I use 1,avinc ill spend a '...kak probably. Part of the Wino Jevoto to vinitinc: bankers and havIrc a' eneral dincrusaion-ith theca- a lc hope to pait of The time of -I)urno to the Frit= matter. I omittod to mention ebovo en incident that Andornon told mo, improoned ro a bit. blolk of stock. He in hero olosiw: a contract for tho sale of nuito a larr7e The contracts wore all proparod and ready for ninaturo*. on it wan fault; impouniblo to got all the nirmaturoe nocoonary until next 6edneaday., tam batty; Fricay. Ovin imported in the acx client to thin dolly, the hhgliah bankers muirod a clauso to be t.0 Cfoot of 'Al-1,h rAS that the ontract wan void in cane there Should bo a decline of one and a half points In 1ritiah connole, er9 - 3. in other words, In =so at* 29. break out souim a Dilly augepetion to make t:iat awl such devologaont could occur, oven in Ulster, in five or ails dap; If.t that as thoi requE.o:13nt, and it indloatou in a measure the foolin:; hore. 1;otv;ithetark..1111C a serious resolution to take tiiIrkp rathor easy i find that thoro 1:; a good deal of trotting around ',;o do and late ho re, if one a::;oepte , all the in:itationo tondored; but tin aZtontoon I havo things pretty Well cleaned up, and toraorrie Jearie. till devote to shopping and ti R,11 procoo. loieurely to 1 won't have so Lrac..'h to do in _'uric, on account of having fasior friends thoro, i.on't you tell tliz bola that I miss tiara all very =oh ant . ill be mi,-;hty u;ln..d to (et back to the Old town. Ploaoo givo than all my host rocp.rde Eu2d toll Dan and William that I will .,,rite thom soon. Faithfully yours, Paris, June 4, 1914. Mit D. E. Pomeroy, New York City. ' Dear Dan, I had a nice letter from William which I 'mild like to answer, only the amount of dictation is piling up on me pretty fast and I will have to postpone writing him until later. I am sure he will understand. After talking with Mr. Reid about Rock Island I cabled you as /er confirmation, and hope -you understood. I think Mr. Reid feels that there is a pretty slim chance of getting the underwriting; at any rate, I gather from what he says that he would not be ver:- yuch inter- ested in the underwriting personally and that Judge Moore is relying considerably upon a*. William A. Read being able to complete a syndicate without very large assistance from the inside group of stockholders. Of course, their opinions are liable to chtnge under circumstances, but I have explained to him that our ownership of the debentures and their future value seems to be a little speculative for us, inasmuch as their position will be affected very materially by the outcome of the reorganization negotiations, which are not yet certain by any means. Won't you please hold this quite confidential in your own mind and Harry's ? You night take op-nortunity to have a private talk with Harry and deter- mine whether we ought not to let go of an additional amount of our debentures. The would Rock Island situation is ,t present an unsound one and going to be most difficult to work out. I have been continuing my cells on the Paris bankers, getting really the frankest expressions of opinion from Mr. Masson, of the Credit Lyonnais, and today from Er. Turrottitti, of the Banque de Paris. The former is a very discreet, careful fellow, who doesn't make rash statements, nor hasty statements, and the latter, who is a Swiss D.E.P. I should suppose, much more outspoken and possibly a bit hasty-tempered. They say that the political situation in France is very bad indeed, praktically amounting to socialistic domination, and,ac the result of the recent electionothe prospect of a lot of drastic legislation by The position on the Bourse is incompetent and unreliable people. exceedingly sensitive and the Government is gre,tly overextended with short-time obligations, which must be refunded in order to avoid difficulty; but the new Government has not yet gotten T hold on the situation and are probably not in a position to negotiate for a new loan. ilasson's idea is that the new loan will be issued before the end of July and will amount to about seems to have stopped. 300,000,000. Meantime, financing here Both Masson and Tur-ettitti stated unequivocally that finances here were approaching a distinct crisis, which might be a serious ono, althoagh they say that the great banks are in very strong Position, there is lots of money, the Bank of France is getting stronger every day, and the crisis will be due to sentiment and unsettled confluence rather than to actual lack of resources. Masson's view is that the supply of fixed capital for investment the world over is pretty well exhausted, and that a long breathing spell will be necessary, when the stvings of the people will bring about a recovery. It is a fact, and quite observable by any casual traveller over here, that the shops in Paris are not doing any business. They sLy that the jewellery trade is in ve y bad condition and that the dressmakers are feeling it severely, and the universal opinion seems to be th.t there are no extravagant /rgentine buyers here and very few Americans compared with ,,:cmer years, and the latter all seem to be economizing. There is a great deal of criticism of Wilson's policy in _:exico, which they say is stupid, theoretical and ide,listic. tendency to blame Of course there is a natural America for the financial troubles of the world. D. E. P. - 5. I have taken care, however, to call their attention to the Tact that America is the only country today which seems to have a free supply of go004; their use over here, End we are so far not hesitating to let it go. On the whole, I should say that if there is goinr, to be any breakdown on this side of the water it will start in Paris, and if the French peasants once begin selling securities of them. there will be an avalanche One cannot go through the vaults of the Credit Lyonnais, as I did yesterday, and see that exhibition of wings without being appalled at the consequences of an outpouring of securities that h, ve been gathered together from every part of the world. They assure me that this is not likely to occur unless default takos place in the payment of interest, and I notice in discussing the Frisco situation that tho Office Nationale Committee that the one point in which they seem to be more interested than in anything else is how it may be arranged to pay some interest to the French holders. The French peasants almarently don't pay nuch zt ention to the principal, once they invest through what they regard as t responsible bank, and nothing will alarm them seriously until their interest remittances are discontinued, and then they get frightened to death. All of this, of course, is just by way of a little interesting light as to what is going on over here, and I would be glad if you would show this letter also, in confidence, to Fred Kent. over hero are looking forward to seeing him, that he has decided to make the trip. very best regards. His friends nd I um more than glad Please give all the boys my I wouldn't have missed this trip for a good deal, nor it has been educational in more ways than one. and affords a pretty good insight into what is going on over here and what their attitude is towards our securities. 2.S.-Please Don't work too hard. Faithfully yours, tell Giles that I got his cable an(' an very much 0)1i-ed. A June 7, 1 p14. Kent Banktrust Newyork Paris cuhydjygod very critical luryrfikna distrust hoTuvpinhe hobybkykze cudsaibnit pinhegnucu runs abjabjyost foxheparis huggofienu cunujefeol fotokcudsa fyvut in-newyork klula abfaokundu pilzoevieb hobybdynul foxheilink kisjolahug condition becodgefta fojapkokez kydmiolruk adlon Strong Paris banking situation very critical with growing distrust of conditions of various banks. particularly Societe Generale. ::any runs on Societe Generale in provinces and some in Paris. Good opinion here believe crisis take pl'ace this week, with other less important banks iiigiplvs4ronilljEle RttiistoiCredit Lyonnais excellent How are thins in New York. Telegraph fully Adlon until condition. June 11th. IL \ ow/ Berlin, Juno 9, 1914. Dear Dan, The last few days in ''aria were exceddingly busy ones, and r. 1,ewiu wa0 pretty well loaded up with work on account of monoranda to be written and a couple of long cables to code. it. offico to be put in I startod a le ter in longhand, but didn' have time to finish ?here is no particular need for mo giving you now an account of the various doings. all of which will koop until I get home, ex cep write :or about an evening 1 spen: with to Stillman on Saturday, which, actor a good deal of consideration, I cunt you a cable as =nor enclouod copy. :r.r,Vaillerlip had asked me to see Stillman, but I was too boy to get in touch with him until Saturday, when I called him on the to see if ho was in 7'r.ris and ic wat., Lood enough to wk roc out that night for dinner. r..o go Mon I arrived ho infor'iod me that ho had invited a Mr. Aifoert, as I undorstand it an editor and part owlior of the ?aria "Figaro;" so Stillman, :.114. and spent tlo evening until 10.30. Aubort and I ha, Of source, you know dinnoi. togc,h,r r. and how hard it is to draw him out, and-as to what little lo said, and what he said, I thln4. you should bold it in strict confidence, exec-ot that I would like to 'rave you convey it in confidonco to Fred 'on to 1:arr:. and Lir. Stillman and I 'fad a brief chat before dinner, in wIlch he said very littlo about conditions over lore, but was much intorocted in what was going on in Ilew York, 1.articularly rc,7arding the dovoloplIont of the now banking system. i am sure, fror what he said, that ho hasn't 1.-mcb confidence in the plan adninistored by except i a very stro;10 ca)able _oderal hoard at it would be hington. 2 Ho is looking forward to a period of grow not neoessarily a financial crisis, which he thinks is not at 'ousiltAss; -)resion difficulty in American indicated, but pocribly come serious industrial troubles; and fool certain that he is anticipating that the operation of the new ',an'Ang law will cian inflation in some form or °tier, anC. later on sorious trouble. He says that the most :rite eating subject to lim in America today is a study of the men who have am:wooded the older :oneration; thinks Choy have still to go through their trial; the panic of 1907 wac not a N11 test of their ability; tin:l that he is very certlin that the clay is coming when they arc going to havo it in a big After dinner ho set out, rather deliberately I thought, to draw out Aubort for my benofit in regard to political conditions over hero, throwing in comments now an fo then as Aubort won along. Ho talked over an hour and a half, and the substance was us follows: T?oincaro, the President of the Republic, is a woak 7,an and not capable of forming or conducting a strong adriniatration in qie face of the combination against him in the House .T1(1 Senate, which is led by the P,Elical Socialists. inability to face -. Furthermore, he is weakenod somewhat by his somo private scandal in his family used against him. which is being The Government is borrowing about A!50,0),),000. on short notes, and mobs a voy large sum boyond that for commitments alroad undertaken, ana a loan of h0J,J00,000. or thereabouts is needed simply to clean pr000nt accounts and leave a small balance. lie had entrusted the formation of a cabinet to Viviano, who had endeavored to form a conservative cabinet, but was unsuccossfrl in getting cood men, and finally, on Friday, hud soourod the plodgo of twelve -ion for the various cabinot offices, all of whom, howover, ;yore forcod upon him by the jooialistic element and none of them satis factory Vu http://fraser.stlouisfed.org/ tic Federal Reserve Bank of St. Louis busineas interests. At Lon o'clock Friday niEht he . 3 said that the President of the Bank of Prance had calla,. on Poiacare and infoiped him that if Viviano's cabinet, as suggested, should be named, it would precipitate a crash in the city, and as a result Viviano v'ithdrew and abandoned his e..!7forto to form a no Until a now Government. c::binet is formed the fiscal policy of the Governmo:lt is uncetaini also continue there is uncertainty as to whether the Government will xxxxxx he tiro of military service from two to 'hree years; whole and ap,2er,aaLi- country is in somet;ing of a tumuli on account oC the inability of the -'roam' ent and his svicers to handle the situation. on the financial situation, because tho big ban This has - bo ring have been ar'viced by the Govern rent that no large financial cammitments,or new loans or now security iBUTIOS, can be made until 1 () Government loan is financed, onti ihere are undoubtedly many important corporations which have always got ;r t1eir money in taris, w ich need money badly account of this situation. and atich are being held up on -centime, there has been a tremendous shrink- ace of values on the Boum), and of inveataent securities. °errs°, have occurred in some rather im;ortan issues, including Frisco, a_,ny °Aexican securities and some Brazilian securities. bran placed by -611'. Defaults, of Theo° aye laxa;ely principal ':'rench joint :,toe'k banks, which are the issuing and distributing houses. Aniarently all cecopt the Credit Lyonnais aro charged with seating their clients with bad investments for the sake of the huge commis: ions which they have charged, and the people, particu- larly the more ignorant poacant classes, are becoming seriously alarmed about the .soundness of of the banks. it investments ani. about the condition of somo Mr. Aubert stated that the market for many of those securities had become so narrow that the only way the people could realize at all was by the supporting orders of some of. the banks who had made the issues, a_ C. then at coneiaorable sacrifiees. a fact that th It is undoulAoOly people are withdrawing money from ban:s all over trance 4 . and looking it up. Even at the llotol IA.to, whore one would exoect freedom front' fooling of that oort, Lhey hesituto to ivo you more than one hundred francs in gold at ono time, and it is certainly becoming J matter or current ouoip among all the poople that some of tho banks are in shaky condition. Rumors in regard to the Sooiote Goneralo are stated to have originated in Germany. and been octivoly whispered about in Paris end whore by a group of Gornan speculators, who aro cooing to injure b-nOiro7 situation in ''arcs for speculative reasons. had really reached something of a crisis. L1, On Sat7,rday ma..oro Runs were in progrose, some of them ouite coven), on a good many of the branches of the Societe Gonorale in the provincos, anlf% Aubert described as %.,Olon- runs on Lleir Paris o floes wore also in progross. They had boon able to handle the matter so that no disturbance was apparent at any of the offices, but ho groetly feared that within the next wee': the panic would extend in proportions co that it would affect all the banks without exception and might loo: outoyuring of oocuritios. an Ho said that in all of his oxperionee ho had never known as serious a condition in Prance as existed at the present time. More vole lots of money in the banks for the moment, and the Bank o :? ranee was in a strong oosition, bu i the possibilities of a breakdown o credit here, brought about by the ignorance of the pooplo, wore beyond conception. ho wont so far as to say that if the crisis arose,- and ho expoctod it within the next woo or ton days,- he bolieved it was ,rite within the range of possibility that all the banks would have to suspend. I don't think that Sr. Stillman sharos this viow, but ho apparently is pretty well convinced that matters are growing very aoriouo and, wore it not for the great wealth of the nation, there might be a severe shakedown. There doesn't seem to be much doubt that tho Sociote Generale is protty well loadod up with socuritios, although the have A V. amount of short bills in their portfolio which can be discountod at the 11111116, %ow DmE,P. Bank of Franco. 11* I was unlaced at the frankness with which ;dr. Aubort otated the seriausn se of conditions hero, but it vine; most gratifying- to have him say, as everyone also does, that the Credit Lyonnais has a record trite unique in that it has handled 21.1y good securities with very few exceptions, that people have great confidence in it, and that its condition un6. management is beyond criticism. The banks in 7ariu seem to o }living meetings every night, such as we held in ::ow York in 1907, and the rolLtionship between them is so intimate that it is hard to conceive that they should not be able to pull out such a greet bunk as the Societe Generale. 3n the other hand, I was a good do:.1 z:.:17u.sed by tewandowski telling no that the Comptoir was in an unusually strong position to lend assistance in case tero was trouble. He said they had over /23,00),0 O. cash in their vaults. You ctn realize what a bagatelle that world orove for assistance when one Cerro° to consider tho enormous volume of deposits of tl,e four or five largest banks. Eid. The situation in France is certainly well worth watching I hope before leaving either Berlin or t.ondon to get some word as to how it is all going to turn ant. I will he here for a few days, probably until Friday, during which time I hope to have a visit with all of our banking friends )ere, and then spend a day or two in Amsterdam, t.en back to Wndon, whore I will neet rred. I tot nothin7 but good reports of the Bankers Trust Corn any over here, and am glad to feel that we have such an excellent rope Cation. On reaching the hotel I received your cable. stating that letters were coming for, ard from both you and Fred about na tore in low York, anC noticed by the palers that money is piling vo there, so presume that things are prtty comfortable and easy wit ;jou. Roberta Walter a brief account of the Frisco situation. the boys http://fraser.stlouisfed.org/ 7y best Federal Reserve Bank of St. Louis regards. I a writing 11!easo give all Anotordam, Juno 1914. Dear Dan, Your bully lotter of Juno 2nd reached me hero in Awsterdam today, an0 it made me feel littlo guilty for not havlip; written you more fully ere this regarding. trip. Lverythin4 you say in your letier is or much interest, but reouires no special co .rent to look Island. In t,lat mattor you rooall the terms o except ae the memorandum I left, to the eff et that we had kept our participation in the 47,500,000. loan as small a, possible in order to help take. care of the cituntion, which might readil3 develop during the month of Juno. I as not keen about the loan that has been suggoated, as some of the collateral not vely good and, off -hani, 46,000,000/ sema to me too much to lend. ground and can judge better than I can. s I recall the loAi, However, you are on the the plan of reorganization oropoued can be put through, it certainly inoanc a future for the road; but tho ability to a derwrito 132,0ii.;0,0010. of proferrod stook with the dictruet that nor: exists iv doubtful, to say the least. Once moro to review matter° tht havo boon somewhat covered. Cy oablo: Banco Lekauel411% Iola do Cuba. Lr. Hugo Schmidt mentionod this matter again the last tie I vow him, and intimated strongly that the outfit was ()rooked and that anything in the nature of a cre:i_it was dangerous. Marianna(tho manager of the bank) informed fit) on tho boat coming over that he vaa polling a good deal of sugar exchange to the Guaranty Traut Company. I wouldn't liken to be responsible for closing up his crodit there, but it might be just as well to slip a su,7goution to Charlio, lte confidentially, that it wouldn't hurt to investi4ato. D.E.P. -2 Frisco. Briefly, this situation is developing on this side tx better than at home. The most serious thing is the doubt which has *ached Germany and Prance as to the paymment of the refunding coupon July lot. They simply must be paid. Ur. Speyer is wrong in think- ing that a default will facilitate negotiations with Mr. Strauss. The last word from Krauthoff and my last talk with the Deutsche Bark con- vine's': me that we can make a good conservative plan for reorganization over here, and it will be up to Strauss and Speyer to say whether this plan will go through or not. I am intending to cable fully Tuosday,after meeting Mr. Krauthoff in London, the terms of our discussion in Paris, and of mine in Berlin, which will enable Volker, I hope, to make strong representations to Judge Sanborn in regard to the necessity for payin. the July interest. Paris situation. Some slight improvement has developed there as a result of the reports of the probable success of negotiations for a large .razilian limn, to be taken by London, Paris and Berlin barks. The minimum amount mentioned was considerably more is needed. 10O ,0 0,000.; they say Part of the proceeds will be applied to paying the railroad subsidies now in arrears, and removing dai ger of default on the securities of the roads, largely held in France. This, however, is but one of many situations, Herr Schmidt telling me that the situation in the Argentine is worse than in Brazil; in fact, mach worse today than it was at the ti,le of the Baring crisis. The situation as to the Societe Generale became so acute last week that the Bank of France oame out with a sta,erient that they had examined the bank' and found it in good condition, but, as ohero stated this morning and as is t e general and Aerlin, the examination must have been e Labou- impression in Paris -ery hasty one and probably a whitewashing affair anyway, in order to allay public fear. D.E.P. -3 The stook of the bank is still declining and they arc; a long way The other banks who have been from being pact the danger point. actively criticised are the Banquo de Perla and the Banque la Union de La 2arisionno, as cell as a number of smaller banks. The Credit Lyonnais, which shows only 9,000,000. Francs invostments, is apparently the Ito in to the situation. It has a magnificont credit, and probably a crisis would be ablo to render the greatest assistance outside of the Bank of France. 1 still think that there is danger of a breakdown in Paris, and if it comes it will be a bad ono. This morning I hear that Ribot's raw cabinet has also fallen, and of course that will make matters worse. things get proVty bad there after I reaoh London, I may decide to slip batik for a fow days and keep you fellows in touch by cable. Berlin. The Ger:lan baakeru all stote with great sati-faction that the banking position there has tremendously improved and is now Bound and stable. The Imperial Bank has accwiuilatod tremendous gold holdings, alid th big private banks have atrengthenod their position very largely. There is great rivalry between tho Deutsche Bank and the Dieconto Geuollsohaft, the latter having not: oututripped the former by the purchase of the acharfhausen Bank. Dp2ratt's friond, of the Disconto, impressed me very favorably indeed. voaerger, He is a young fellow, a nobleman, and appears to have a good deal of American onerr. Ho is anxious to aultivato oloaer relations with the Trust Company; the officers of the Deutsche Bank, but df whom I mot a good many, inoludist, Herr VonGwinnor, the head of the establiahment, impressed me as being the best informed and the most alive of them ail. In fact, there is no reason for us to change our opinion that our banking connections abroad are the best that possibly could be made, and I am glad to say that all of oar banks over hero seom to have the highout possible rer;ard for the D.S.P. - 4 management of the Trust Company and its conservatism and stability. Confidentially, the Deutsche Bank will relieve Lir. Edward D. A.daiAs o. office as Dew York representative in September, sending out Herr DergmaL: to take over their How York office. I had a long meeting with him before leaving Berlin, and we discussed various matters whore our relations can be improved and you will find, when I bring my voluminous memoranda home, that there is at present opportunity with the Deutsche Bank to cultivate a very close and satisfactory relationship. Both in Germany and hero in Amsterdam I have heard the report that Lr. Kent has been selected for en office in the Federal reserve bank system. Mr. Kent seems very vc,". known among all of our banks, and I am satisfied, from what they toll me, that he stands top knotch among the men who conduct foreign businest in Row York. Rook Island. On Monday I meet come of the people interest in Amsterdam, where, as you know, they have 1040,000 shares, and will bo interested in gathering their point of view. Tondo/ca.). I have written little in regard to our London busines14 as my visit there simply skimmed the surface and will be concluded more satisfactorily when Mr. Kent arrives. of our relations there. The came remark is true, howeve7c, Sir Edward Holden I believe is forging rigtt ahead as the leading and most progreseivo London banker, although ho has become rather unpopular by reason of his criticism of the policy of some of the banks and of the Bank of England, in the matter of gold reserves. Lomolga!aggiatE. It is a visionary project for us to consider opening an office that will be a real 1)aliking factor abroad. The more inquiries I make the more convinced I beoome that we must be very cautious in the matter, unless we aigply want to send money for advertising and for certain faoilities for travellers, which are probably unnecessary and would. prove expensive out of proportion to the advantaze gainoe., D.E.P. 5 I can form a better idea after going over the matter with 1.1r. Kent in London. You will be interested to learn that the imprecaion seems JIL vnoral among all the bankers over hero that the ease of money in Kew York and the exports of gold resulting therefrom are conearhat of a preliminary development of our new banking uystem; that we are already beginning to expand and inflate, and in consequence are losing gold. I am sure that there Jo nothing in it, but it shows how sensitive they are over hero to iA)ressiona of that character. In oonolusion, I have been delighted at the reception accorded me by everyone that I have met. hey have all boon most hospitable, anxious to give me lots of time, and all the information poacible regarding affairs over hare. at home. They are equally curious regarding affairs The chief oriticiam that I hear of our Administration is the lack of a sane policy in Lexie() and too much idealism in its attitude to practical affairs. Please give my beat regards to all the boys, and the came to your good self. I shall write you again fully from London, and, if time permits, may take another short flier to Paris an& have a little fun before sailing for home. Puithfully yours,