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C'  -· ·-'-'  ii.1  .'.i1C :l  ::on  '"""CE:..  g~ ~~ ~ -~~:.~~ ~~~- ~-: -~:, ·_ ~~~: i;~;_:~  • r,  ,J  --  rl .- -  ~_,}1.~1. : ~s .  -  -  -.lo-  ~  ~:(_;  -o --  ~~....  ~.\J;: :-:~:~; =-· ·_ . ~~ 1: ~  :t ~  ~  ,.  ·:1.n' ·n -.~ rl - --~ -- : - '~--- - - - '.30t  -•  !'.1 - -  , _• vJ..  --. -  8:  l  - _u _ .L  •  -·  ~C.-  _...,  r-, ......  1"'4  ft  • II'\  ~,  )~L,l.A i  p 'J  I':  fo Y  /)1,C  .  •  ct  J--1, D.  ~  •  qt'c~/~  nic-tlt' v..-r  ~  B ' I lfc., I  \/lct IV  ••  Tho follo•,;ing na.rr·1tive of  P..  short visit to  ~urope durir.g the Win er of 1916 is made simply to preserve n record of exp e riences of sufficient intereot to justify keeping them in connection wi ·. o her dat1:1. relating to war conditior.c. 1 n e narrative ia dictated some Months after returni ng from abroad, but is based upon elaborate r.oteo made during the trip.  •  lor oome mord h , he conviction had been growing upon me hat ne ime d arrived when conditions wore favorabl e for a preliminary discussion of b•nkins connecions abro d for 1ho Federal reserve banks and m decision to make the rip 1us p· rtly for ~his purpose, but even more to gi ve me an opportuni y to gather wh t information I could on the ground ir. regard to financial conditions, .'lnd particularly meH.ods ·1r1ic, ·,ere b inr ernplo ed, in Bngland nnd France to finance the huge war exp ndit~res. I arr n n g e d wi t h , r • H • D • Burro 11 , one of r old Banker~ ' rus Coe an oys, o accompany me an seer ary and s,or1,ly before sailir. nncertained rut r. John f. •arri:::, of Harri::;, ir.throp 1.1oopar,y, •as t.lso going over 'lna ie joined forces in engae;ing sui e or rooms on the " rotte r darn" to s il ehryary ls • " few days before sailing, J. P, ... organ us ed me o luncheon with nirn and informed me, nuch to my surprioa, tri t he, P..lso, oxp c ed ➔ o sail on t11e str.e boat accompuni ed b • ... rs. .'.o l' gnn.  S iling wP... elayed until 6 o'clock, r'chruar1 · n , bnd on reaching tnu dock 11 abou 5 o'clock, I found elabornt ar ra. n1,;ernon s r.n en r,aae for examining 11 pns engors anc tr, ir pnasport.s. " s eligh d to fi .d on arrivins a he dock h· t Gaptnin Symil'.g~ n, our ;•nval Attache in London wao lso re ,rriir by tne . nr. boo.1. ·rer havin g my passports vis,d b t e Americ n passpor  •  2  -.  au th or i t i e a , I ran i n o • ' r • St et t i r i u s o f J • P • . 'o r g an & Company, no in ro uced me to General Rllersha of +hA British Army, who wa re urnin wi n ,:r • . organ. Talking .ith tnem delayed me in go ine aboard so thut I got caught in the crush of passengers av•aitir,g final examination of their passports b the Englisn passpo rt officers and I had to spend over two hours in t ~ e cro d mi er. ~as a very ill-natured one. Ne finally left in a sleet and snow storm at about 8 o ' clock in tne evening. I found a great collection of gifts from friends and members of the f .,ily, as did ·.,r. Harris, tr1ere ~e ing .no 700 cigars ~ich Im naged to dispose of by turning the~ over to Symington win the requect that he present hem to ,.. r. eage, ii ,o is a t;rf t smoker, as being ne gift of Symington. Aft r agreeing to do so, ne broke he bargain and told Ambassador 'age t a I h d sent them to hirr.. ;he trip across was unev111tful,(tne ·eaihur nc~ rough, but :--o,·e or less,) ,ougn never for a moment uninteres ing on account of t;ood cornµar.y. Harri 0 , Synington an Capt · n Shivareck,f ·no was with Symit:g en), ."oined us at the s~rne dining table. Four passengers horn I ha not me Mere on board :ith le Jers of in roduction to me, or.ea frjend of ·.r. Daniel G. Reid ' s , now living in London, by tne nane of Jarsh and occup1ing Warwick Castle; '.r. Henry Rulrnon e, secretary to i r. Van de Vyvere, :·iniste r of Finance for !3eleium; Mr . A. J. Frnnsella, secretary to l.'.r . Weshrr,a.'n, Pr sident of the rlotterd<J.rnsche Bark of !1olland and r. Henri Wertheimvan Heukelom, formerly of ew York but no 1 living in Paris, who was introduced by ~r . Frede ick Strauss and w~o is a relative oi the Seligman ' s • .:y n rune not being on the passeneer li , I sa little of those l entle men b fore landin~ . Among otner pas sengers on the boat me .r. J. i. Curtis ' sister dtn a party of friends irom Boston, who ;ore on tr,1,ir way to Paris to take part in some .._.,ar relief ork; also , I iss Dev r·eaux i om I had known in Englewood and who i· s returning to !<'ranee to do Red Cross work.  •  'he "R otter a-," arrived r ... Falmouth la e in he after noon of .:<'ebruary 10 . in v r. bad ~ea he r and immedia ely on arrival a t end er p lled up alongs·de ne boat and •ook r. an rs. l~organ and Cener·.l :!llersha· ·•ii ➔ h his aide, ,lr. hussell of the American Embassy in erlin and one  3  -•  one or t .o otner passe g ars connected ~ith the British Govern~ent. All the rest of he pas sengers were notified to assemble in tne dining saloon at 5:30 t . e next morning with all ~ersonal papers, letters of introd~ction, passports, etc. Unaerstanding that the passeni:;ers would be exar,incd alphab etico.lly, I i gnorod tho notice and turned up 'lbout l alf past ei 6 nt a n was locked in tne dininu s a loon until nearly t ~ee o ' clock in the afternoon. _an passen·ers were subjected to the moet ri 6 id ~cru iny, at loast half a dozen and possibly more, 1ere t<tken to thoir cabins, strippe and searcned nnd had all of n, ir lu gg age eea.rched. Ar,on_: others, vas a Joung governess of Alsatian parentabe mo was tro.veli r g vi h ihe t ;o children of r. vo.n Heukelom and who ms not only searched but was finally no permitted to leave the boat. I learned afterwards hat she was released only after re?renenations h a' been rn de through toe Home Office to tne American,r. Durrelle in some 10.y aroused tho suspicion of he officer and was required to stay in a cornfr un il I had been examined. ''/hen my passpor s ·ere submitte d , ver y l i ttle atten i on as paid to hfl r.1 or my p pers, b· he, ·e re mo s+ p rt i c 1 :r t n at I should vouc h for Burr e 11. Ve bot on c. tender h t as to go s h ore about 4 o'clock and sat t ~ere it}out cover in a sleet storm for ne· rl t ·o tours. iinall Symington and I reached the dock, m· de a da sh for the custom house, succeeded in locatin g our hand-bags, gRve he vfficers a soverei gn to mark them at once an left the reot of our luggage 'or Burrell and arris ' valet to bring on by a later train. By manoeuv~r we managed to catch the fir t train for London wnich, howevbr, did not pull out until 1 a.t e at night and finally r eached London, where it was s i l l rainin g , at 2 o ' cl o ck in the mornin ~ . There were no cabs in the ntation but e finally locat ed a "growler" and drove to the Ritz hotel tnroug. a cit that o. almost absolu~ely black un found at the hotel that tnoy ha been good enou gh to sta up a aiting our arrival. 3urrel] and 1 arris' valet arrived about 5 in the morning wi hour trunks. S<tturd·•y, Februa.r  12, 1916.  I exJected +o sleep until time for luncheon but both ·r. Harris and I •ere u•1akened around 9 o ' c ock b· drums, e c., outoide he ho el :ind on lookinv, out 11e diocovered that in the courtyard of the Duke of Devonshire ' s house immedia1ely across Piccadilly, a squad of recrui s ,ere lined up for  -  - •.  Sund1y,  February 13th.  'ihe trouble wi h u.y an .. rum seemed to be getting rnree end as .r. J arris hBd n engage cnt i " i ids, I asked r. Chandler Anderson, formerl Counselor to the State Department, to make me a visit in my sit-+ir.e room. J,r • .nderson was in London repreacn ing fll of the meat packers but one who ere negotiating for some njjuat~ .nt of clairs of Arrrour and o ners ngRins1 the Bri .. ish Govbrnment arising out of cargoes of mrat havir.g been confiscated, en the u·ounds that tr,ey were intended for ultiir.nt enemy deetination. Anderson told me confidentiall the whole story of his negoti tions :nich ·:as most ir.t tini;. It th, t the Bri · sh Government ha ch vigilance in censoring nll m<i"l and c ble communications na h hi fcun1 it nee ssary to h·1ve 11 corr.municaticns i r, hi A clien1 s carrieo on througn th Embassy nd Stat Dep tme nd i wuo practicnlly im ossibl o use ho cables. rhe a~oun i volved a about .,10 ,000,000 D.l'd c1a · :us which he did not r prenon and nich were being ne~o1ia~ed by rr. Lloyd Griscorn, amoun ed to one or two millions more. '•he Commit ee d1h which he •as d ling exhi ited a ver-y e ong de«ire to ef"ec ➔ an adjuA men 4 of he cl ·ir.s bu I ga hered hat hey f .-lt un iillin,. to adjust · r. cl4ims ti hout · lso concludin~ n arrn.ngement witn . r. Gr iscom and ho lntier's clier. s ere susp cted of havin~ Ger~nn affiliatio r.s which made it difficult for th m to reach n conclusion. "he CoMmittee alee displo.· cd ei1ong desire to announce a favorable adjus ment of ~e cleiffie, which 1/r. An derson felt would ver ~1ortly be concluded i n sucn u way as to create favor abl sontir:ie nt in h United State • At a ln er interview ~ith .r. Anderson, af~e r he arrn.n emont had been concluded and approved all nround, e o id h·t effort had been m- de to induce him o per5u de h · s c_lier s to accept so:.. sort of governr:ien oblig tions . lie had dEclir.ed suer. an arrur~emcnt , bu was considerin · leaving ome part of tte funds on deposit in England so a to avoi disar r angement of xchan e by tne transfer of sue. t-\ le.rg sum. lie finally told me t:.e.t tne matter o d all been co clt:.deci und tr.a~ tne mo11e, was to be deposited ir. London an gradually rithdrawn by his clients in the uoual course of business so an not tc disturb xchun e r~teo. 0  _r . An erson undoubte ly &crieved no a le oucccss in a :ustir.g cl::>.ir:i ich (>.rtour.t, I believfi, is srconJ ir. im,ortnr.ce onl to n " Alabama " clai1:: , end mi~ht havo giv n rise to oeriouE dispu•e be reen r.e t,o co ntrics.  - •-  The rieather clearin g up, we ook o. ohort mlk through Hyde Park nich wao cro~dcd. ~any of the b nches ere occupied by convalescent aoldiets wi•h iheir friends or nurses. ~he all ors a hospital uniform consisting of loose khaki cont, blue tr ouser. und red cravat. It was noiic able ·hnt a great man' men paaoine; groups of nese sol 'iers ci her touched their nus or took them off and ladies fre uenily sopped to chat with ~em. Also, it was not uncom~or to sec one or more of t hese convalesc~nts drivini about the Park or through the streets of London in fine automobiles, gener~lly with n lady, and at tiwes l saw them driving througn the Park on improvised siretcners ~ttached to motorc1cles. Some of these men ·,ere all bandaged up and a_lparently badl · wounded. After lunche c n with An e r son, I tor trip d r some of the men from tr,e he condi ion of "Y face and spen he until time to keep an uppoin ment ith  declined to take a moEmb ssr on acc:oun of aftornoon in my room Dr. 7od<l.  (COPY)  Memorandum tor Mons. Pallain:  Secetion 14, of the Federal Reserve Act, a copy of which is attached, confers upon Federal Reserve banks the power to transact certain business in foreign countries.  Reference 1s made particularly to paragraph "E" on  page 16, :f'rom which it will be observed that with the consent ot the Federal Reserve Board the Federal Reserve banks are authorized to open and maintain banking accounts in foreign countries, appoint correspondents and establish agencies "tor the purpose of ~urchasing, selling and collecting Bills of Exchange, and to buy and sell, with or without its endorsement, through such correspondents or agencies, Bills of Exchange arising ~~  actual commercial transactions which have not more than ninety  days to run and which bear the signature of two or more responsible parties"•  •  It is felt that in anticipation of the conclusion of the war (and possibly prior thereto, if circumstances render it possible and necessary) Federal Reserve banks should perfect plans for putting this section of the law into effect.  This, it will be observed, would involve:  a ••••• Opening bank accounts in foreign countries; b ••••• Appointing foreign correspondents in foreign countries, and it necessary, c ••••• Establishing agencies in foreign countries. The law, however, does not provide for establishing branches of Federal  Reserve banks but rather indicates that this business shall be conducted in foreign countries principally through the medium of bank correspondents and that an "Agency" or "Agencies" establish in conformity with the  •  statute shall consist possibly of a personal representative with necessary staff of clerks and assistants.  Such an agency, however, would not con-  duct a general banking business such as opening credits or receiving deposits.  2  It is theretore important to emphasize the language of the  ct which uses  the word "Agency" instead of "Branch"• The motif for making the present investigation ot the feasibility  ot appointing correspondents and opening bank accounts is in orde~ to anticipate occurrences which may possibly arise after the war, and which might result in a derangement or the exchanges to the disadvantage of the financial position both in the United States and in those countries with which the United States has close commercial relations. The experiences of the last eighteen months demonstrate that abnormal exchange rates and violent flucuation of exchange are detrimental to the interest of both countries affected.  Greater stability to the exchanges  during the period of readjustment following the conclusion of the war (and it c1rcumstanoes permit, possibly prior thereto,} would be maintained  •  it some part of the resources of the Federal Reserve Banks were employed in the purchase of commercial bills in foreign markets as authorized by Section 14 of the statute above referredto. The steps necessary tor the accomplishment of this programme, according to the writer's view would be: l ••••• In the case of France, to establish a close relationship with the Banque de France tor the object of Illlltual exchange of information. 2 ••••• The arrangement ot terms for the establishment of depoal.t, or current account with the Banque de France. 3 ••••• The arrangement ot terms for the establishment of similar accounts with certain important French banks and bankers to be  •  selected • 4 ••••• The establishment of arrangements with banks or bankers to be selected, tor the purchase of bills such as Federal Reserve Banks are authorized to buy.  3  5 ••••• The establishment of arrangements for procuring information in respect of the credit and standing of the drawers, acceptors and endorsers of any bills purchased.  Anticipating the development of even closer commercial and banking relations between France and the United States than have heretofore existed, and of a larie commerce between these countries, and with the possibility of :ma.ny uncertain factors arising as a consequence of the war, it has seemed desirable that plans for the accomplishment of the purposes above sug ested should be perfected in the near future, and emphasis is laid upon the desirability of close cooperation with the Banqu  de France.  is suggested that the Federal Reserve Bank of New York may also be of  service to the Banque de France in American affairs as the relationship  •  •  developed •  It  -.  -  The memorandum was translated twice to • Pallain, I endeavoring to explain the technical meanin of the various phrases , and we then went over it paragraph by paragraph. • Pallain emphasized repeatedl y that our discussion was tentative and confidential o.nd entirely subject to such disposition as mi~t be made by the regents of the Bank of France, but the entire program seemed to meet his approval and that of his associates . He in41ired most particularly and more than once whether we would desire discounts, that possibility not, apparently, appealing to him as feasible . I explained to him, however, that under present conditions no such thought was in our minds, - the 'ederal Reserve Bank, being a reserve institution, held the reserves of the commercial banks of the country and, except under most unusual conditions such as war, etc . , or great financial crises, it would not contemplate endorsing and discounting bills . The general purposes of our plan were elaborated in great detail, I explaining also that the entire conversation was tentative, subject to the approval of the directors and officers of our bank and of the ~ederal eserve Board, upon my return to New York, and particularly emphasizing that ,mless unusual circumstances made it necessary, it was hit;hly improbable that any arrangements could be completed and put into operation until after the conclusion of the war, unless indeed the United States should become a belligerent. To this they all assented, but later on in our conversation • Pallain emphasized very stron ly his view that the sooner an arran~ement of the kind suggested could be brought about, the more advantageous it would be for the interests of both countries . He also explained that whatever information they might furnish us in regard to ban~s and banking conditions or bills or credits, would be ,rithout responsibility to the Banque de France, nor, on the other hand, would they hold us in an~, way financiall~ or in aey other way, responsible for such info tion as ,,e furnished to them. I stated that it was quite improbable that arrangements of similar character would be at the out~et, or for sometime, elsewhere than in London and Parie, although it was impossible just then to state positively how our future plans would develop. I -particularly emphasized that if satisfactory arrangements could be, they would be primari l y for the purpose of stabilizing exchange, controlling gold shinments, etc . • Pallain inquired whether this meant that any money we might employ in Paris would remain there indefinitely. I explained to him that deposits would be and purchases of bills affected in those ms..rkets whero exchange rates rendered it most desirable and profitable, and that there would accordingly be a certain al'IX)unt of arbitrage between the various markets where our business was conducted . I also stated to him very explicitly that while profit was some consideration, it was quite subordinate to safety and that our policy would confine us very definitely to the purchase only of bills of the very hi~hest grade and Which were undoubted . He desired to lmow the character of infon::iation we would find it necessary to accumulate . This I explained to him would include not only general conditions, but the character, management and responsibility of financial institutions and finns with which we conducted our business, as well as the character and res~onsibility of the drawers, acceptors und endorsers of  -.  -  bills which we mi 6ht buy. That the volume of our business would not develop more rapidly than was made possible by the extent and character of the information which we were able to accumulate and which be authentic and complete. This led to my explaining that the onerations and machinery of the London Bill market were not only well known to us, but were of a character that made it particularly easy for us to conduct the business we had in contemplation in London (referring to the operations of the acceptance and discow1t houses and the bill brokers); that the situation in Paris where no such market existed was so different that I felt our O\vn interests would require a careful study of' this matter before we could undertake any extensive business. ~. ?allain intimated once or twice that there was considerable jealousy between Paris and London and that they would welcome t e opportunity to do as much business as possible with us. This interview \vas more than interesting, in fact rather picturesque , and typically French . Kow and then considerable excitement and interest developing, when everybody talked at once and when there was a 6ood deal of jesticulating, but the eat cordiality and enthusiasm which was displa;yed towards my proposal convinced me that no difficulty would be experienced in rr.akin 6 very satisfactory bani<ing arrangeme11ts with the Ban,c of }'ranee when the time arrived . After my interview with these gentlemen , they showed me somewhat through the Bank of France , particularly that portion of the building where the bank notes are printed and •/here I signed the visitors' register . It was four o' cloc,c when 1 left the bank, too late to further calls, and I met Captain S~,nington and Captain Sayles by appointment and we dined to ether. s I kept only brief notes of so?lle of the conversations in Paris, not wishing to run the risk of having them examined or taken from me, 1 found it necessary to elaborate various conversations which I had in Paris after returning to London and this seems an aopropriate place in which to insert this memorandum of various detai la: PRICES: Some slibht indication of the degree to which the prices of nece sariea have advanced is given elsewhere in the diary. Food, coal, gasoline, etc., have shown tremendous advance in prices partly due to lack of domestic production, partl y to lac~ of shipping facilities , but to a very considerable extent due to laclc of transportation within li'rance itself. At the time I was in Paris the railroad were tmable to transport foodstuffs from the seaboard to Paris in sufficient quantities to relieve the urgent demand there. I gathered that this was due to some extent to the lack of adequate handling facilities at the ports and high ocean freights particularly. ' L ESTATE AND • iTS: Considerable distress has arisen by reason of the operation of the moratorium i n resnect of rent payments. ~enants under this law can a9pear befor~ a tribunal and show cause why they should be temporarily relieved of some of their obligations for paying rent and frequently  -.  this relief is granted, and the result is that real estate prices are absolutely ~aralyzed and real estate owners in considerable distres s. large part of the investments of insurance companies and other investment companies and corporations are in mortgages and real estate, and with rents not being, real estate ovmera are unable to pay interest . The whole scheme seems to have been badly handled, and while possibly designed originally for the relief of families where the men were at the front, advantage is now being taken of it by all classes of rent payers and the effect is thoroughly bad . TAXES : l was informed at the Banque de France that tax collections are about 60'~ of normal . BILLS: Foreign drawn bills are now practically a negligiblo quantity in the banks, and the volUIOO of inland bills has been greatly reduced bel~~ normal, although the discounts at the Banque de France show an increase of lOOj& over the amount twelve months ago, which is a very good indication of increase in domestic business, as bills are drawn for all varieties of conmerical transactions in France down to amounts of 10 , 25 and 50 francs .  -  -  RETAIL BUSINESS: lj_lhe retail stores in the :ue de la Paix, Avenue d' l ' Opera, etc . , m.ich may be regarded as dealing in specialties, are doing only a nominal business. While most of these stores are open, one sees very few customers. The stores that l visited, such as the rande · ison de Blanc, Doucet, ~oger & Gallet, Mappin" 1ebb, Ltd . , and a few others, were deserted; I believe l was the only customer in them at the tim . On the other hand, the large department stores li~e the ison de Lafayette, etc . , are so crowded that one can hardly pass throUc, the aisles . It all indicates economy as these big stores all do a very large bargain counter business and the better classes are now dealing with these establishments on account of their lower prices, in preference to the higher class stores . Fli CE: The officers of the Banque de ~ranee and Baron de Rothschild gave me a good deal of interesting information generall y in regard to the finances of the country . I was informed that the Banque de France bas an arrangement with the Government by which the Banque is promised payment of its advances to the Government prior to the payment of any other Government indebtedness and out of the first general loans placed by the Government for refunding and other purposes . Thia represents a prior claim running from 6, 000,000 , 000 to ·a,000 , 000 , 000 francs, that being the extent of the Government ' s borrowing from the Banque de France . It was estimated that of the 13 , 500 , 000,000 francs of the Banque•s note issue, about b, 000 , 000 , 000 frame have been hoarded or held in reserves of other banks . Baron de Rothschild thought that the Banque de France could easily support an issue of from 25 , 000 , 000 , 000 to 30 , 000 , 000 , 000 francs, being about double the present issue, or say a margin of 12, 000 , 000 , 000 to 15 , 000 , 000 , 000 francs for further use .  -.  -  onsieur ?allain said that the Banque bad already shipped 20,000,000 pounds sterlin5 of its 0old to the Bank of England, and under the existing arrangement had agreed to ship 12,000,000 pounds sterling in addition. The peasants had turned in about 250,000,000 pounds sterling in response to the appeal of last year, and Baron de Rothschild estimated that there was still hoarded fran 90 , 000 ,000 to 100,000,000 pounds sterling; this being the estimate of the Government and the Banque de France . Pallain and Robineau told me that when the crisis arose, the policy of the Banque de France was to rediacount without limit, and I gathered from what they told me of the scenes during the first few days, that it was Pallain, Robineau and the Secretaire Generale who really saved the day for the French banks generally, as they took in bills literally in bales. ~he Banque still has a large amount of "frozen" bills, figures for which appear in the annual reports. I asked Robineau, the head of the discount department, to describe how he would define or detect a finance bill -.vhich was ineligible for discount at the Banque. He picked up and fingered a piece of paper, as one would a bank note to detect whether it was a counterfeit or not, said that it was really a matter of instinct and experience. The Banque alTIB.ys requires three obligations, of which two must be French and one always the acceptor. ~ey do not necessarily discriminate against finance bills. The only bill which they absolutely decline to discount is a bill drawn by a foreigner on a foreigner and domiciled in France, even though the endorser is French. They consider that such bills are drawn for the benefit entirely of foreign business, and simply domiciled in France for the purpose of getting the lower rate of discount prevailing in that market. The Banque de France discounts a tremendous volume of domestic bills, largely to meet the convenience of French banks in collecting the bills . Robineau said that in one day his department had collected as many as 100,000 items in ?aria, involving the use of over 1,000 messengers. I believe his regular staff in the discount department, in addition to the messenger service, is 450 to 500 men. The officers of the Banque told me that they felt that the bi g banks imposed upon the Banque de !•'ranee in dumpin6 these collections upon them. The Banque de France is undoubtedly the hub of the whole financial system and both the other banks and the public generally have unlimited confidence in it. ~he agents of the banque, by reason of their position, have great influence and, as is the case with the Ban.c of' England, they are largely drawn from the banking houses which in London are considered to be merchant bankers. The so-called finance banks have recently had a very black eye, rlth the exception of the Credit Lyonnaia and the Comptoir ational d'~scompte. The so-called Hautbanque, or private bankers, have been driven  -.  -  into the background by the operations of the finance banks, but as a class they have managed their affairs more carefully and conservatively than such institutions as the Societe enerale, etc . ~he strongest of the so - called Hautbanques are de Rothschild, Hoetinger, allet-Freres, Heine & Co . , Verne & Co . , deNeuflize, and should say that organ , Harjes & co . in rating stand right alongside de Rothschild . A number of tho private banking houses are under some suspicion of German affiliations . I should say that this does not apply at all to de othschild . '2b.ese private bankers are men of very great caution, and, while they have occasionally handled some things that did not turn out very well such, for instance, as the Banque lo Union ?arisienne , etc . , they are on the whole regarded as bein 6 of very hi~h grade and in 5 ood condition . I had a lonb tal4 ~ith Baron de Rothschild regardin6 ~old payments by the Banque de France . He thou6ht there was no question in regard to their maintaining gold :payment as to any exterior obligation, no matter '.'/'hat the outcome of the war. !i1he Banque de France could, if necessary, give up over 300, 000 , 000 of it gold but, of course, they did not want to do so until preasin~ necessity arose . Baron de Rothschild said that when he and his associates were asked to draw the bills for the Creusot credit, ne and the other bankers were quite unwillin6 to do so unless they were protected by a pledge of g~ld . '.i1hey could not get it directly from t , e Banque de France, onsieur lain b i ~ unwilling to ma.Ke a conmitment that would appear in his statement, but that • Ribot gave them the Government's guarantee to furnish gold if exchange could not be had, and which they considered to be just as good as the pledge of the Banque de France . There are certainl y some serious situations to face in regard to the investments of the French people and, to sooo extent, French banks in foreign securities such as those of Brazil, ~urkey, nussia, Servia, Mexico, etc . There is a. lot of doubtful and possibly worthless stuff in the nation which will be or veriJ slow liquidation . The big banks like the Credit Lyonnais , Comptoir National d ' Eacompte, etc ., are carrying about 50fa cash reserves . The Government is now borrowi~ very lar e sums, the figures being given in a se-pa.rate memorandum, on bills running 3, 6 and 12 months, the rates being 4~ for 3 months and 5~ for 6 and 12 months . The amount of this short debt is much too large and they are hoping to quickl reduce it by a new loan which may embody tho srure lottery features as now prevail in many of the municipal loans. The French loans, however, seem to have been better handled than the English, as they are all selling at a premium. • Ribot seems to be broad minded eno h to pay the ~oing rate so as to keep a good narket for additional issues .  -.  OLI TI CAL HEELING : All discussion of the attitude of the United States toward the war must be carefully analyzed as one is liable to be deceived by the essential politeness of Frencbmen and their desire to avoid giving offense. 'i'hey will VTill great suavity assure you that they thoroughly understand the difficulty of our position, that probably it would be injurious to their own interests to have us becom involved in the war, that they were too dependent upon us for supplies, etc . This, however, is not their real underlying feeling they all believe that it would shorten the war to have us come in, that we are takinb altogether too many affronts from ermany and that if Germany should win this war we \VOUld face serious trouble with her later. The man who discussed this with the greatest frankness was onsieur Roselli of the Credit Lyonnais, who is an Italian by birth, educated in bankin~ in London, and does not labo r under the handicap of French politeness, etc. When he explained that the French had some underlying feeling against the United States, I asked him what he would do if he were President of the United States and had the situation to deal with . He intimated that he might follow the same course that the President had, but he did not think in sayin 6 that, that he expressed the views of the Frenchmen. That ea night at a dinner which Mr . Harjes gave me there were present about one dozen bankers, he (Roselli) went over the discussion we had had with those present, speaking entirely in French and which I could not follow . He wound up by asking the same question that I had as~ed him at lunch. ith one accord and vehemently they replied that they would declare war against Gennany . There seemed to be no doubt in the minds of any of them. I discovered that there is a very strong feelin of suspicion and uneasiness towards England and the English management of affairs. l judge it is based upon their belief that England is endeavoring to dominate the situation in financial matterst and a very strong feeling that France has little to gain by the war and much to lose; that England will turn the outcome of the war to her own advantage . There seems to be a considerable and very active cabal directed against Joffre by Cailloux, Clemenceau and their followers . This matter took the form of a Committee of Investi 6-ation by the Chamber of Deputies into Joffre's conduct of the war . I had opportunit~ to read their report ,hich was bitterly critical of Joffre•s whole pro e, and givin~ credit for what had been done principally to Gallieni and Castelnau. Among other thin6 s in the report was the statement that the total F'rench losses to the date of the report, some months ago, amounted to 3, 200, 000 men. In this figure were, of course, included the wounded who have since returned to the front. I have subsequently learned that during the battle of Verdun a serious blunder was made bu a French General in the early stage of the battle, who canpletely 0  -.  lost his head, became panic stricken and subsequently insane . The Germans got through the French lines, captured 180 French field guns, most of which had been nearly destroyed, and nearly 200 ma.chine guns . The disaster was so serious that the French Government again contemplated moving all records to Bordeaux. eneral Petaine at last succeeded in repairing the damage before it became a disaster. This has been completely surpressed from the French public, but it is more or less the subject of gos ip privately . ~he 6'Un8 lost included most of the bi 6 guns that had been removed from the fortress of Verdun and remounted, many of which, however, had been badly warn with use am destroyed by explodin~ the breeches before being abandoned . 1 was informed that when General Petain took charge at Verdun he found that that part of the French army, which is very large, which was north of the River euse :,ould have been absolutely destroyed had the Germans broken through, as there were only three bridges available for a retreat . The ~eneral in charge of that section was immediately removed and eneral Petain constructed no less than fifty bridges for use in case of an emergency . He is today the popular hero in France. ,,'hen the disaster above referred to occurred the Cail oux element thought they would be strong enough to launch the r attack on Joffre and a committee report was submitted to the Cabinet, with the demand that Joffre be removed and the conduct of the army be put under the direction of a committee of the Chamber . Much to their chagrin the Cabinet voted down unanimously the report \vith the exception of the one member who introduced it, and for the time being at least the Cailloux cabal is dead. 'l'here is no doubt that the war losses in men in France are far in excess of current estimates; that France has reached and passed the apex of her strength and that much more of the brunt of holding the \"/astern line will now rest upon England, which has recently added forty miles to its own line so as to release men of the French army for the Verdtm defense . CROPS: General ly speaking, the estimates of lt'rench crops are only from one- half to one - third of nonnal. They are tremendously dependent upon the rest of the world for food supplies, particularly meat and grain . The French peasant, however, is most successful in raising chickens and the sU!)ply of chickens seems to be inexhaustible, they having advanced leas in price than many other foods .  -  LABOR: mhere is much uncertainty and uneasiness as to what will ha!)pen to the industries of the country after the war . The French depend, to an unuaunl degree, upon skilled manual labor mich is developed by the apprentice system. Young men who have been taken two years or more out of the shops where they have been learnin5 the trades have lost an important period of their education and nay not be content to return to that emn loyment. Physically, they are being t remendously improved by  -•  the service; that is, kept in the open air, living upon simple food and away from the debilitatin0 cafe life. ==:.=:.:.....=;CRED=::.:I:..:T=S: All the bankers with whom I talked were most anxious to see the American banks extend credit more generously. This is treated with at more length in another part of my diary. There would be no jealousy or uneasiness if all commercial credits, for the present at any rate, could be transferred to American banks. They are willing to ma.Ke any sacrifice, to give adequate security and are really looking to American bankers for support and encouragement. They are na.turally suspicious and timid and negotiations are delayed and difficult on that account, but once their confidence is established, the American banks could get unlimited business in France and on their own terms.  J STILL : I have not dictated the substance of my conversations with Mr. Stillman for various reasons. Supplemental to conversation with of merican Embassy in Paris.  • Fraser, Secretary  r. Fraser told me that I fOUld be interested in a conversation he had with Howard Taylor who, a few months before, had stopped in Paris on his way back to America from Germany . Said that when Taylor was in Berlin some of the lea.ding Berlin bankers had a private meeting vnth him and told him that Germany was headed for fina.ncial destruction; that the rest of the world would 5o down vnth them financially, and urged him upon reachin.; Paris to see Baron de Neuflize and endeavor to persuade him to have a meeting of the French bankers so as to start a movement amon6 bankers to briue; about peace discussions. He ~ ve Fraser the impression that erman bankers were i n a great state of excitement and distress over the German financial situation. Baron de Neuflize was understood to have consulted sorr.e members of the French Government, and, upon their instructions, is said to have replied that if Germany wanted information as to what the French demanded before discussing peace, he might say that they demanded the return of the lives of 1,000,000 Frenchmen.  -.  The delay ir Dioppo ms so on,: th t our ruin did n~ re 1h P r'o un+il 7 o ' clock tn t evening. !r. Ellis, "'Una ....i~ of he Hitz Ho-'-el, tol u on arriving th·1t he on had a"v' t · dozer. ucsts '-'nd we cou lct have our cnoice o: room3, There ,,.e e only twelve p\'.,lople ir he r.-orn, includinb ur, · arris an ~yeelf ·nd five of these wee En";~ ,, o -i.,·c:-s. f r n sho t •alk, ,u re irod car : • Prris, Fr · a/, Februa.r· 18 h, val led a.t ,orgur., Ho· jos & Co pun, but mise d .r • , r j o o v h · a c; out of town. I m I e some purchase 6 n t 1 the - aioon de Blanc wi' e €> l as he only customer I could se in the ~tor • Al~o. purchnsed an w tr v ling bag t ~appin & ~ebb ' s to replace the one ruined on ~he boat, ar.d there I was the o ly cu:t~ner i the store. I hau the s•~e expGricrct, o:l Douce ' s irPr~ l ordered some cruva s. Later in the mornin5. I drov to tre Emb f:> , t:..f' arr·•nged ·:.ith'Sayl00, to meet Ambae!Jador Shrirpe, ·1i h v.horr I spent about an hour. He was most agreeable, r~counted the difficul ies of hi ,oai ion d ring the ,ur, ut much o wy surprise he hao his son join ~a in hiE o fice and ake notez of E.vP : thini; hat wac; s id.  :r. Sharpe ~ar par iculq l? biter h~t mericnr.s re iding in P~riu had een Mo outs,oken in the·r criticisns o" he Prc-:ni-:er. and s id i• : " oing ... uc .. h"rm. From one r o tr· fling rem·.1rks, I ga nered h •1-' h<> And .mhas,.ador rierrick ha hud sor jif iculties fore Herrick re urned ho~e and 1 er Capt~ir S ;les confirm d his and said that i er rick h9. not benave.d very ell o ·r. Sharpe. 0  Ca-o ain Su 1 lEs &nd I had lur.che n tog t' er o. the C~fe d Paris ur.d af• .~rd I prescnte r. arr ' s let•c o: ir.troi1~t·o o Ir. _hnckera, American Cons1....l 3en ral a· Paris, v:iio va~ rr.oc c rdiel and anxious to e• fl s hand ne s from home.. He ac, tur d me nai ,.e f orr::s :;hi h I ha filled out. d he r.o el ne previo' evrr:ir _:, givir.g a nta emc:nt o ,. 1e oh :ect of m• visi , ')e c;onal descriptior, and i ti nerar ;ere all hat I -. ould be re tti d o furnish th13 au horities un il it _ra• i e o leave Paris. He stam d 'll) pa spo to, ho ever, iith the r ~ 111"1 ctc.rrp of tis office as a matter o. protec ion.  -  Or re urning o the hotel, 'ound .ndrev. Graves of Llo• d ' s Earik, nYJ.d Elter, Char ie Phillipe came ov r for dir.ner. ,\f er din .. e.·, -.,raves. Priillip~, Harris and I wen to see " Olympia 11 • It s ere 'lded pri ci o.l : ·:,i h soldir s :•ho seer,,e o b o:.:' all colors c..nd na i"n li ies, but i1 ,'ls a verJ poor c, o·Ji.  4  drill. Ever. dny during our stay in London troops vere being drilled right outsi e of our windows, no mater what were the weather conditions, and frequently they started from nere ith neir troops :naking practice rn1.rches and currying full equipment. Shortly after breakfast, I rov s to the reasury to c all on .r. Basil P. Blackett, ho gave me aver iarm velcome 1.nd urged rne to call on him for anything inich would facilitate the object of my visit. ~he substance of my conversation with him "las as follovs: Blackett stated tnat the Bank of England had paid the Govern~ent for all guaranteed bills vhicn the Bank had purchased under the terms of the Government's offer and that at thai date nere was about £30,000,000 sterling unliqui ated. 7he account had, a one ti e, been somewhere from £100,000,000 to £120,000,000 sterling and those remaining unliquidated were largr~ly bills that had arisen out of enem transactions, thA acceptanceo of tne German bank agencies in London, etc. Later conversa ion with the Ban~ of England disclosed payments were being m·de only ver1 gradu1lly - I judged sor.1ewhere fro:n £50 1 000 o £150 1 000 every day or t1wo. The B~nk of Englt d m~nuees the ~ccount for the Government. Blackett also informed me tha H, Government was running ahead on it dollar exchange account, thr changes really havint been sligntly favorable and enablingsome accumulation of dollars. He stronJly favored snipping gold to Hollanu, or ear-m•u-~ing gold for Dutch acco nt b t confiscating all securities out of Holland whicn bore evidence of German ownersn1.p or origin. S1li that Lord Cunliffe wao opposed to shipping or ea -m rkin · gold for Dutch account. Blackett felt strorgly thu+ he matter should b corrected. He thought ·e o ght to establish close relations wi h the Bank of Engl nd, und that an arrangement for ear-~ar ing gold between the t 10 b nks should be concluded us soon as possible. her~ were, ho ever, many serious problema ahead in the mutter of tne London money ~rket. 'or one thing, no was sure that the relations between the Bank of England and tho London Joint Stock .Barks woulcl re uire thorou ·h readjustment. '!he joint stock banks iere getting too big for the Bani< of Engl~nd and their effort wao ra he to pull away from t~e 9ank's influence. le tnougnt possibly tne w ole joint s+ock bank situation would require overhauling, possibly by letisl tion. Said that Holden was dead in London - exceedirt~ly unpopular 1nd an obstructionist. He also felt thai. tho Federal Reserve Banks could perform gre·t service by holding sovereigns instead of having them melted do •n.  5  -•  -  ITe discussed the currency notes si uation at great len~th. He seer.1ed soun · · . his ideas, tha1 :ie • should be retired after the ar. f>aid hat tne currency notes had performed a great service in driving gold out of private circulation and in o the reserves of the joint stock ban'.<o. Ho estimated ttat £~0,000,000 sterling of the notes in circulation had taken the place of n like amount of gold no, held by the join stock banks. Figures later furnished oe by .!r. ':ritton of BHrcaly ~ Company in icate that ~28,000,000 ~o~lJ be a correc figure. Bl~ckett sta ed tha~ the adop io of tte Com u sory Service Act had given great courage to tne nation, partic lo.rly t e Governme~t. It hud solidified tho Cnbinet and in every way strengthened he Gove nment ' s hand. He depr cnted the agitation about the strikes particularly t~o strike of he ~elsh coal rniners. Said th t i t was due to the feeling of the coal minors that ti oir employers '/ere :no.king rent profits out of the ar and in vni~h h y uid not share, al ioug. UE a mat ➔ er of fact, labor ·ao no get ing a ve·y good share of he ar profits, .ha➔ tha diffic ilty ·ri h lnbor was its vo e to curtail the deve op~en of skilled labor nov so l arge ly required. he recent vot of the labor unio~R ac, in fact, a vote of confidence in the Govornment and h g ly encoura in, to every ody. Speaking of he progress of tho war, Bl ackett suid that he as convinced ~at the ~ar would be decided on the ~esern front, but that there vas a long nnd difficult task ahead of the Allies, one h t entailed grea ◄ sacrifice of men and money. It as arranged tnat I should returnin g from Fra.r.ce vhere ilarris and I once from London, 1- nrris having business us desiring to see ... r. Stillman iho 1ad Canne •  see :r. Blacke on had agreed to go at in Paris and ho h of ritten us he was at  Luncned d h Harris and Captain S mington a the ;;,avo nnd immedia ely aft luncneon .'!8 picked up l. r. Lo '!Irey, vho was attached to the American Embassy in charge of examination nnd supervision of erman prisontrs and in e·ne orman citizens. 'le mo ore to Al .. ersho1 wnere ve drove through the Englisn raining camp and tnc encnrnpment mere many Jormn.n prisoners nad been held, bu from hi r t: ey had been removed to dryer nd mo,e su·tnble quarters. Al ·ershot hn been exp an ed in" o a trer;;endous encampment miles in extent, cove ~ct in huge corru-ated iron barracks and notwiths ancting recent heavy movement of roopa to Fr~nce, it still seemed fil led with sol~iers. 7he roads  6  -.  in and nbo~t th~ c~mp wero indoscribably bud. he supply trucks constantly carrying pro vi si one to the encampr.ient in bad weather ha conv rted the roadc in o channels o. mud which h~ been driven over the sidewalks and hedges until the hedges vere literally bent under the weight of mud, ~nd even n tnis respect tne destructive effects of the ~ar could be seen right in orderly England. On the way back to London, e stopped alongside an enormous aeroplane plan which was surrounded by a corrugated fence about 15 feet high, but from a hill we were able to observe the immense extent of }e pl~nt and watch nalf a dozen men trying out new r.iuchincs~ ~hree or four, or more, were constantly in the air goii.g throu gh evolutions and in many cases it could be observed by mishaps iL ltnding that the machines were new and tilnt tie r.ien, ·d not used them before. ~hnt evening Harris, nd I dined with Lieutenant Shivareck nd Lieutenant uekemeyer, .ilitary Attach6 nt the Embassy. Lr • H" r r i a n n d I wt: n i t o a h eat r e arr d 1 n t er v: er e joined by Symington, Shivareck snd Quekemeyer t Ciro's for ouppcr.  •  ~he hea re was in eresting principally on account of he percentage of soldi ers in t·1e audience ·.tnd a-'- least t"o- of he men ere in uniform. On tho ot!ler hand, none of he men at Ciro ' s wore uni orms nnd I learned on in uiry 1.h· t the a.rmy regul·1 ions prohibited any office or "oldier appearing in uniform nt any of the ni~ht pl~cea of entertainment, tho matter being under he regula ion of the Provost ~•o.rahal of London, Lord Athlumne.,. An• o 'ficer 'lppearing in any niBnt restaurant in uniform is imr.1edia 1· arrested and court-mf'.r • i riled. ',he wet in , on the tender at Falmouth resulted in a cold which settled in my face and brou ht on a recurrence of inflammation vhich I had to have trea ed at once. ~hat afternoon, I looke· up a Dr. , unter Todd, who displ-yed the ign v rance ~nd i ncapacity of most English doctvrs. I h'ld o tell him 1hat to do an suffered for so!.1e da"s froin a sore face. 0  ontlRy, Februar  14th.  Galled fir st at tte office of ~organ, Grenfell & Co. e.nd had a short visit wi h Jack i organ and .r. Grenfell. ·.ve had uite a discussion ~bout possible banking arrangements in London for the reserve banks and I finally told ·r •., organ and ~r. Grenfell tnat wile my mind was otill entirel open to eug er- ions ns to both tne charact r of our arrangem nte ard tne chrracter of the inatituti o s which we should appoint as correspondents, I was graduall coming to the conviction tha~ it iould be unwise, and possibly unsafe, for us to deal with any but the Bank of England. The_1 bo h agreed tha this woul· prove to be the case, bu wee quite uncertair (par iculArly :.r. Grenfell), as to the rilliri;ness of the Bank of England to enter into the kind of arr~ngement wr.ich I s atod would p robabl l:>e necessary. After exploinin~ thot I had planned to go to Paris almost i~metliutely, tney under ook to find opportunity durirg my absence to sound Lord Cunliffe, Gov rnor of the Bank of r;n 6 land, as to his possible atti udo and to pr p e the way for some sort of nego il'.l.ti or • Foun a cable from the office indicatin g tt~t veryhing 'UH uiet and al received a let er from ,iillinm ackenzie, ~anagirg Dir ctor of tne Alliance .rust Compan of Dundee, rta+inl that he would br in London· arch 7th and hopod to see me. Called on -r. Camhie at the London Agency of the Canadian Bank of ~ommPrce and pr aented letiers to him nd to, is assiei ant m1:1nager from Ir . air.s of i.111'! Federal Reserve rlank of Si>n Frn.nciAco. Bo .h otnted hat whiJ e t:ne appreciated tha trJ re ,as notning tney could do for me officially in London, ar.y information I dosired from thom was entirely a my di epo sal. I spen ab ut an hour and o.: al· wiih Sir J::dwe.rd Holden the London City und 'idlnnd Ban!<. lie said he was far from well; that t e st ruin of the war as well as the many duties imposed upon hi and o1.he bank ro by tno gove,rnment had pi-oven olmo t tori mucr, for him. lie also toL, me tnat the London C eurin B n~~rs ' vomrnittee proposed to giv me a dinner at my convenience und I arranged it~ him to fix a da e after m return from rrance. He said i would be he first time in the history of tne organization ha thef had ever had dirrer toge her as a body. ut  C lled on -r. Bell, -anager of Lloyds o.nk and volonel llunsicker of Herb rt Stearn & Cor.i~ any, but he· wore boti: out of town.  /0  -.  I afterwards drove to the Arnericon Embassy taking a c hance of seeing Ambassador Page wno happened o be engaged, and then lu ncr1ed with Cn,i) !in Symington and Lieutenant ~uekemeyer at tho Carlton i otel. rlnving d cided to go to Paris on the 16th and having been ~arnea trnt there ould be a good deal of red tape about passports, I called at the office of tr.e Frencn Consul General and learne d it woulc.1 first be necessary to nave past>ports vis6d by the United States Consul General. From he re, culle on ~r. Skinner at tne Consulate, pzesented a let1er of introduction from .'.r. Carr, Head of the Coneula Bureau in :ashington, and had aver pleasant visit with hiffi. Ho told me of tne man difficulties he as ncoun erin in perfo r ~i ne his duties in connection wi ,1 our s ippin g bus.1.ness. 'he dive sion of cargoes, the confisc tion of American good s and ro tnous~n and one difficulti es arising d' a resul of the w&.r nad c ·amped his office 1i1r, work n d he as corstan 1 in 110 wa er 1ith the British authorities. ·r. S~inner impr seed me most favorably as being effic ien and knowin 6 his business. lie gave me a card to Captain Savy in charr,e of i.he French Passport ~ureau arid sut.; 5 estect hat it might facili n e having my passports visod if I gave the orderly 1:.1 the doo r a a illin,:Various delays in ma.king hese calls consu~ed he entire afternoon. ~hat evening I dined with Lieu Pnant Shivurock, Lio uten :int 'l!uek me1er, Captnin Symington, ..' r. Cur is' s st r, ' iss 9evereuux n the f urgis' o, ith on or t :vo o hers at the Carl ton Hotel. he ladi s were all prepa.1·in 6 to go o fr ance ihd hR · arr anged o associote tnetselveG with some institutio n ther mich was engaged i n adn 1 of babies l:!?ld 'Ol children \1,os motners :ere obli ·ed o oi·k 11 aay, o ing to t ne absence 01 neir nusb nd at tno fr cn . After dinner, ~e ent do :n to the ball room and mtcned the dancin 5 • It ms crowded and apparentl most of hem r, ·ere En 6 lish o 11.cers wno ·1ere on 1 ave, but none of t 1em •t,re in uniform, rnil( r os of tnose no were up stairs in ne main diniz,g room to the ext nt of poesibl t·,o - nird of all he men in the room, ·ere o f f i c or s i n uni f o rm •  -.  Thursday, February 24th. e arrived in Paris from Cannes at 8 A• • and all breakfasted together. r. Harris was at the hotel awaiting us. After breakfast · r. 100.ouard Vidoudez of the Banque Suisse et Francaise, 20, Rue La Fayette, called. I had met him in Chicago sane months before and he was anxious to continue a discussion of the Brown Bank of France credit arrangements, as well as the possibility of a further extension of these transactions. I called his attention to the increasing difficulty which would be experienced in New York because the number of institutions which vere drawin 5 and accepting bills of this character was so small as to place a limit on the volume, and strongly recommended endeavoring to promote the opening of banking credits by French banks, under which American exporters would draw bills on American banks which could be guaranteed by their French correspondents. He saw difficulties in this matter but thoueht it well worth pushing. After he left l called at llorgan, Harjes & Company for mail but found that r. Harjes was still at the front, engaged in movin~ his ambulance tmit to the region of Verdun. From there called on r. Lommdowski of the Comptoir, with whom I had a very interesting talk for about three quarters of an hour. He spoke very enthusiastically of the improvement which had taken place in banking conditions in Paris. .s a result of the protection of the oratorium said that they had all been able to liquid.ate a good deal of slow stuff and fortify their reserves most inroressively, showed me the figures of their comptroller, which disclosed a reserve percentage of cash and deposits with the Ba.?LC of France exceeding fifty per cent of the liabilities and he thoUt;ht most of the other good French banks ere in equally liquid condition. The situation seemed to prevail in Paris as in London i n respect to all bills. The enormous evolution of industry in the direction of munitions manufacturing and other army supplies, for which the overnment paid cash, bad denuded the market of commercial bills, in place of which the borrowings of the Government had been enormously expended on short notes. He said that not ithstanding the huge expansion of the note issue of the Bank of £ranee , the confidence of the people of France in its solidity ras greater than ever. He also explained the reasons for the suspension of the Paris Clearing house, details of which are ~iven later i n this diary. Stopped at the rande ison de Blanc to order band.kerchiefs for presents and then lunched with r. Phillips at the itz. Phillips confirmed the statement made by Lewandowski - that one of the most serious features of the situation in ~ranee was the operation of the oratorium o, rents. Almost everyone, even though able to pay rent, was taking advantage of it to be relieved of their rent obli tions, and it was paralyzing real estate values, imposing terrible distress on land owners and having a serious effect on institutions which held mortgages and on provate holders of mort ges because of inability to collect interest. It seems that all the specialty stores on the Rue de la Paix Avenue de l'Opera, etc., are really unable to  -•  meet rent obligations because business is practically dead, but many others who could pay did not. After lunch called at the .Bank of I•'rance, where I found that • Sergent was still confined to his home with a bad cold. They expected my arrival, however, and l was at once taken to • Pallain 's office, who received me with the greatest cordiality am immediately after shaking hands presented me with a magnificent silver medal, on which my name had been engraved. This he did with a speech of welcome in French , which was interpreted by his clerk and which indicated that the Bank of :&'ranee welcomed my visit to Paris as evidence of a cordial feelin~ towards France and towards the .dank of France by those ,'Ibo were managing the new Federal 4eserve System. He also indicated the satisfaction they felt at the splendid developmont in .American banking. The medal was one of those struck off some years ago to corrmemorate the 100th anniversary of the establishment of the Bank of France by the Emperor Napoleon. I had a very interesti~ taLc with • Pallian along general lines, entirely without specific reference to the business which took me to Paris, but an appointment to meet him a in on Saturday at 2 o'clock with a memorandum of my program. To the extent that we discussed bankin6 relations, he evidenced the keenest interest and appreciation and expressed his desire to do anything in his power to promote ~hat I had in mind. He offered to show me thro h the bank before I left Paris. From there I returned to ~organ, Harjes ~ Company, where I found r. Harjes, who expressed great satisfaction that I had come to Paris, asked me to make use of his services and advice in m.y way possible, and after a few minutes r. J:.rnest llallet of the banking firm of llet-Freres, who had served on the An o-French Commission, called and expressed his pleasure at seeing me in Paris. I arranged to see r. Harje before luncheon the f ollowing day and discuss my plans more in detail. From there I called at the Paris office of Lloyd's bank, 1here I had a visit with r. 1.:rra.ves and their Paris na.ger, r. Toulmin. r. Toulmin said that Lloyd's bank was making great progress in its Paris development, having opened two or three other branches in the City, and expected that in a few years they would occupy an influential position there. He said that a good deal of their business was with merican concerns. They found ~rofitab le employment of their funds in French Treasury notes, but the supply of comnercial bills was very limited. I returned to the hotel to keep an appointment with 11r. Stillman and that evening r. Stillman, • Christiansen, tr . Harrie and I had dinner and spent the evening together at the hotel •  •  -.  Friday, l"ebruary 25th. In accordance with an appointment previously made, called at the inietry of Finance at 10:30 A• • to see Monsieur Ribot. He greeted me most cordially and I was greatly impressed with his appearance and manner. He is a tall man, white hair, white side-whiskers, with much the appearance of the late John Biglow. What impressed me particularly was the absence of any appearance of hurry or bustle about his office. The part of the building which he occupied apparently had few if a~ clerKs in it and • Ribot when 1 ~ent in was alone in an inmense office, rlth two or three commissioners outside to carry messages, etc. he whole building seemed to be filled elsewhere with a crowd of clerks and people running in am out on business and most of the pages and attendants s eemed to be soldiers who had lost anns or been otherwise crippled. He was most anxious to discuss in general the Atmrican financial situation and the possibility of arranging various credits and borrowing money. we discussed at great length and I pointed out to him the various difficulties to be encountered in arra.ngin0 banking credits along syndicate lines, as in the case of the Brown and Bonbright arrangements, urgin 0 that steps be taken, if possible, to induce erican exporters to draw bills . He thorou.;hly a9proved of this plan and said that he ~ould discuss it mth his associates and with the bankers. Subsequently 1 learned from r. Stetitinus of J. organ~ Co. that he later told 'onsieur Ribot that as long as the English and French purchases in the United States were as urgent as at that time, it rould be impossible to arrange other than cash terms. • Ribot told me that it would be their policy to conserve the gold in the Bank of r'rance as much as possible, but in those matters he relied almost entirely upon onsieur Pallain, in whom he had the greatest confidence. I was with him bout an hour nd when I left he insisted that I should advise him a day or two before I left for London, vi:ng rticulars of the train I proposed to take, so that he could faoili tate m:,• trip, ihich he would be most glad to do.  •  Fro~ Ribot's office I called on ·r. Harjes, with whom I discussed in considerable detail a plan for drawing bills, which he said he would discuss with Pallain and Ribot . From there we went to the Hotel Crillon for lunch. _,eturned to the hotel to keep an appointment with r . Stillman and at three o'clock rent to the American bassy with Captain Symington and spent about an hour with r. Sharp, who gave me a good deal of interestin6 information in regard to the American international situation. I was a.mused to see him call in his son ilmlediately that I nt into his office, the latter taking notes of our conversation during the entire interview. • Sharo said that he had encountered many difficulties in connection with his duties, notwithstanding the extreme politeness of the ranch people and vernment officials. The embarrassment of friendship at the same time that it was necessary to preserve neutrality was his greatest difficulty, but he tho ~ht progress was being made in developing a better  •.  r  •  tmderatanding of the attitude of our administration. few remarks that he dropped indicated that he and his official family felt that r. Herriok, his predecessor, had not shown him as muah consideration as he should have done. He asked me to reserve one night for dinner at his house the followi week. From the Embassy I called on .Ur. Alfred Heidelbach, 19, Avenue d'Iena and arranged to lunch at his house the following Tuesday. r. Heidelbach spent about half an hour in rather insistent questioning about war matters, about the situation at home and particularly about the Reserve System, but was most agreeable. I had learned thro"Ut;h friends that his German name and affiliations had subj acted him to great suspicion. In the early days of the war he had been forced out of the Presidency of the American Chamber of Comnerce which is somewhat under Government supervision, an at one time it was thought he would have to leave Paris . He managed to straighten things out, however, particularly on account of having been engaged in the construction of a very handscme home, which was not quite finished when I called. From Mr. Heidelbach's I picked up Mr. Harjes at his office and went with him to call on Baron and Baroness de Rothschild. Baron Rothschild's house is an immense affair, filled with objects of great value, pictures, etc . , is just off the Rue du Rivoli • The greater part of it had been converted into a hospital and was filled with wounded soldiers. Baron Rothschild was not well, in fact impressed me as bein6 physically exceedingly frail, but he and his wife were both charming and most hospitable to us. He inquired most particularly in regard to our new banking system and I explained to him in genera outline only the object of my duties to establish relationships with the Ban.,c of France. This he thought should be done at once. Our conversation in detail on a later call will cover all of this ound. I arranged to lunch with Mr. Harjes and Baron othschild some day the following ~eek, but we were unable to keep the appointment on account of Baron Rothschild's illness . I returned to the hotel and said goodbye to r . Stillman, who seemed reluctant to leave Paris and l think he would have enjoyed a week there talkinb over old time and discussin the war situation. On the whole, r. Stillman impressed ma as a very gloomy outlook of the future, both as to European finance and possibly as to the outcome of the war. Afterwards Mr • .Phillips, r. raves and I dined together at the Cafe de Paris •  (COPY)  ... P.aris, France, Februaey 26, 1916.  J)ear Monsieur Pal.lain: With this letter I hand you a memorandum in  respect ot the matters we discussed, and which is not more in detail owing to the short time at my disposal to prepare it. It there are any points in this memorandum not entirely clear to you, I would be grateful tor an opportunity  •  •  to discuss them with you • Very truly yours,  ••  -  Saturday, February 26th. In the course of my conversation with onsieur Pallain it became impressed upon me that it would be quite inadvisable to proceed very far with interviews with other bankers in regard to our banking arrangements in Paris until after the Banque de France had conaidored our plans and indicated \7hat views '170uld be entertained by the bank and particularly whether they rnuld themselves desire to establish relationships with us. •• Pallain, while labori n~ under breat difficulties because we could not spea~ each other's language, impressed me as being very keen to find a way by ·lhich we could do business with his institution direct. I, therefore, deferred calling on other bal'li.{8rs, pendin further discussions with him. ema.ined at the hotel with <.:aptain Symill6tOn durin 6 the morning and immediately after lunch kept an appointment with • Pallain at the Banque de 1''rance at two o I clock. 'he Secretaire l}eneral, • Picard, and the head of the Discount Department, • Robineau, joined us i n the interview, conducted entirely throug.1 an interpretor, and we discussed at considerable length the tenns of the memorandum which I had prepared t~e day before at • Pallain 's reqwst, and which was intended to indicate in a general we.;; the kind of' an arrani;ement that we probably would need in Paris . ~he memorandum in detail was as follows:  I  -.  uesday, Februory 15th. Early this mornir.u, ,. r. Burrell e.nd I drove to ar ohscure little photographer recommen ed by tne men at he tmbaesy, to havG additiona] photographs taken for use in France. From ttero, went to tho Frencl Cons~l Genernl ' 8 and by tne use of kr. Skinner ' s card and a Bhil~int w.s able to get imme di at e at ten+ i o n. Afterwards, I drove to the Embassy to meet Ambassador Page by appoin ment. He se emed ve ry glad to see me e.nd kept me there about an hour nd a hnl f alk:ing abou+ he ;ar and his work. I as easy to appreciate, aft r hearing vhat he said, the endles~ difficul ies vhich confron ed him every day. He told me win g rett numor of a visit he had had from .r. Harrie, who nnd delivered himself of a scathing denuncin ion of the Adminis ration and told 'r. Pa re in his pictu resque langurge that if he wero President of he nited States, we would already have an an:,y in Europe na~isting tno Allieo in he defense of civiliza ion. ·r. Pa."'o said that e personal 1- felt that ci vili za,i on •as a s a1< e, bu t hn during his encu~hency nc act had occurred under the roof of the Embassy ~hich could be construed as unneutrnl, or cculd be in ne sligntest degree erbarrassing in ,o.Aning en . le said ... na on of his grea es difficul ies in performin nis du ies was nc endf ncy of +he British Govern•.ent to assume tho.~ we ..-,ere friendly.· In his conve sations wi"t Sir Edvard Gre he ·as constani.l· being reminaed tnat matters of dispute ere between the British Jovernment and its enemies, and the iT'vH.riable respo T'se ms to ask Sir Edward wnose enemies ho referred to. I told the Ambasaador at his r f:. uest of th object of my trip and hat I noped to accompli si • He tnat anytnin6 he could to ;iromote m vork he ;o ,ld ver gladly do and that ho r,,as in .ntir e s mpathy ~·i th the pro ram I nn.d out.lir.ed. I asked the Ambassador ~hat kind of a. talk I should , ak~ a tne inner o 5 iven by the Clearing llouee Bankers' Gol!lmi toe. lie said it would rt quire a good dnal o:· judgement nd tact not to give of fence. Kno ring, ho s id, what my s entimen s rnre about the mr, he cautioned me to rP-men:ber hat an Alk nbou neu rali y ~ul be off~nsive. On tne o her hand, · I said no h i rig abou th a', th , \"ould put me do ·,n n!' a co iar d and his reconnen do. ion •as, ~ fff 1 earning that there would be no rery~rters hare and hat it was o be quite unoUicie.l), hat I should ell hera exactly ho·1 I felt.  -.  Jr.Page said that the President as a friend of many standing an ne i ad tnc, hi 611e' t respect for his viev.o and pntriotiom, but unfortunately he was so con tituted that he could not be neutral in his mind Ind he fel tho President had made a mistak in his neutrality proclamation in sug 5 osiinb tho tne American people could be so inhu~ar. or devoid of sympaihy ns to be absolu ely neural in their thoughts. 'thile a , the Embaasy, I arranged with"' ptair Symin~ton to start a complete collection of enlistrr.ent posters vi h which rtll oi' London seemed to b ple.stere •  -  From tho Embassy, I wont to Lord ieadi~~ • s cha~ber in the Ho nl Law Couts, Strand, o ke ep an engagement for luncheon. Lord Reading woe still on the Bench ~hen I reached there, but s , ortly came to nis office and said tn~ he hnd ad journo his case for a couple of hours so that \ e co 1hl have a visit. ·y conversation rl h him was more tha n 1nterestine. He started by tl lin 6 :ne na vhen he and nis associates ·1ent ore York io arran~e for the Anglo-Fre~ch loan, tne1 had no irtir.:ation as o rnnt the attitude of our government mulct be toward a transaction of that chnracter. ""hey wer advised that tne report of varioun ~tatementa emanating from tr.e State Department wo lu make i ver difficult for them to arrnngb ne loan so lon as the ~ttitude of tnc administration rcoaineu uncnanged. i' e •,anted to take t i s opportunity of thanking rne for navinG gotten around the difficulty for them, as otl-,erwise the loan could not have be£:n rr.ade. A number of timen after this, wn n I met hi~ at ainner or elsewhere, her ferre to tLis and said trat after a good deal of discussion tne Commissi on had decided to take the risk and o anead witn the transaction after my alk wiih then at the l3il more tne da o heir arrival, :ii.nou u dert king through any o her channel to get official confirmation of the vies which I had personally expressed to them. Lord Reading did r.o1 as, mo r.e object of my visi abro· d, but DB very anxious to get oor.1e expression of opinion q_a to political condit i ons in the United States. J:e said that he and many of his government associa es ,ere convitced tha the Pr e sident as consciously or unsciously being influenced in his at i ude toward Great Britain by political considerations, lar g ly on uccount of he campaign for re loc ion. He tr.oug ht the a ate of a fairs in .urope wa. s not apprecie. ed citner by he Preciden or by mos Amt ri cans. If he l lies •ere beaten, a s he mig hi be, Europe and ultif'lately America, ould be overwnelmed b , Prussian influence. He admitted neir depender.ce upon uc durin tne earlJ stages of th ~ar for many supp ies ~nd expressed great appr ciation of he attit~de of a great body of Americane,a.nd purt cularly ban.-<~rs, toward t e necessities of their situation.  -.  I asked him how he felt about tre progress of the var,  (+re ha tlc of Ver uun not then h~vir 6 been started), und ho said that i as fille win the greatest uncertainty. ~nglar.d ~us ~o erleet at that time for lack of adequate supplie and trnined men, p ti cul rly officers. ':hey "ere concen rai.i g their energies hat 'inter to pArfocting he organization of 11 much larecr expeditionary force 'lnd to turning ou a stupendous supply of guns and am•,,uni tion. He propheci ed hat when the "u:n:n r CA Daie;n began, ha· 1.•ould ba F.O equipped as 'l res ul of the ,linter ' s ,ork, hat the rorld would he ppalled 11itn the slaugh er. 'hey figured ul irra ly a1 1 t.f'/ :ould h~ve cannon pructicnlly wheel to wheel al l he aJ from he S iss f rontier c the Cn~nnol.  I told Lord Readin hat in my opinion th ere :ere jusi as many difficulties in h way of ~n6lishmen forming a c rrec unders anding of mericnn affairs s there ·ere in tne way of •n eric ns forr.iing a correct opinion of tho war si~uuion; here vms a ver_ stron~ feeling among m ny imoortant men in 1 e ica, li.<e 1'1• • • aft , .r . Hoosevelt, r. Root and otrrrs of ineir t •pe , tha the ni~od Stu+e had boen ultor;etner too complnis nt in the f ce of violnti ... n of t · eir ri Jhte and tne killing oft cir citizens, ~nd I thou ht the sympathy of the country as a ·hole was stron~ly pro All • On the other hand, =r. ilson h· d su roun ed himself i i r men mo · he held he eamo convic .Lo.1s that ho di r ·ho ere ~i _ . ng to c cept his vie a, " at ever might be tneir own, 3.nd tnat unless Geruany real ; 1~an amuck e Administrati n, I b lieved, ias deterrined t ,at the country shoul i not be irvolve • He fina. l· admit ed after some argument inat .. re as no h · nc., in 1 irn •mr si ·.. ation wnich justi · ed he Uni e Sta es a,ing up armc ~i r. he Allies except as he reoult of some overt a.ct of err.10.n·. 'r English poir. of vie•:, ho ever, , s h·t Germ, ny h·td done more than enou,;h nlreudy in tho sinking of the "L ", o c., to jus if 1 least break ing off diplomatic rol~ ions , if noL declaring ar. His vhole at itudo searn d to imply hat England rccogniz d acer ain dependence upon us nnd J~l. veto subci o almos n yr~ uir ments ~e impose ~pon ~e ir gov~ rnment, hut ne res 1 ·o· ld be ne develo1men of a ood deal of hard fe eli g, no necessarily in GO Ve nment circles, bu n.cong peo ple gen er all , ·ind he con.·i c io 1 10.t e •::er e strai. ing a point in r e ~·ri1g neu r~l, ei her b ecause o: he political ambitions of he Presiden , or bee .use of mu. erial benefi s w icn e o ld g· in by m intaining neutrali y. ~ efforts to point ou o him that judgement of tho. matters by EnglishrH'n i n London was c cnstan ly being misled b unwi so newapa::ier articles and edi did not accomplien much . iio ndmi ➔ ted, ho ever, hat ne cri icism onl pplied to the official at•· ude of our gov n ,ent and not to the general atti ude of the peo le,  -.  Af, r spending nearly t~•o hours with Lord Rending, lJnchin~ nnd smoking, he invited me to go don o the court room ~here he ~as presiding in ne trial of a dacnge cnse. ass artled in the cnange in hie appearnn e when he put on his wi 6 and gown. It him look t en. ) t:nri- oljer and gave hin n severe exoression which one woJld ha c to face in the dock. I sat for 15 or 20 minutes listenin~ to the trial whicn was enlivened by a g reat m~ny hu~orous remarks fron Lord Reading ~ho se med to take pa ticular pleasure in poking fun at counsel for both sides. Later, an inquiry disclosed th t this v~s uite a habit ith him nd vas not a all for my benefit.  -  neturned to the hotel to take tea win Aiss De vereaux and discuss,. r pl ns for r eturning to hospital wor'.< in •' r ar.ce. She ·anted me to see rhat I couL.1 do w ,en I •:as in Paris. _ e history : her performances is ~orth recording~ I knew hr as a little ~irl eiuht or ten years old in Engel wood vnere he r father 1· for a few years. Afte r som~ hesitation she told me the story. t seems that she spent a fe years in a c nvent in ' ranee, af erwards ma' in 0 a walking trip t.rou 6 h trie country with friends and had become very much attache to a number of French people and to the countr • ,hen the war broke out, altnoubh she wa or>l' \'1enty-one years old, she told her fath e r sne must •o to France u.s a nurse. f er he posi ively declined o nllo hr s~e ran a ay from ome, crossed in ➔ e steerage i h only 40 or 50 and on arriving in London \"f'n directly to 11 Page ' , Katht ine P r;e hay_;_ ng boen a school friend. er a good deal of dispu ea ran ~ling by cable vi i. her f11·1ily, which r sulted in almost a comnlete break, she crossed o l''r nc.e ,._"l at first got some 1ork ir. Paris. Lo.tor she "ms transferred o one o:· the Red Cross Uni ts nd co:nbined a ing dis 1es, oinE; er.ores an scrubting floors, e c., i r, course in Red Cro"' .1rsinf,. ,fter aor.,e 'TlOnths, S'l was allo 1ed o do regular nursing work but ren it was discovPred nat she spoke French fluently, ahe wPs transferred as interpr ter to one of the mili arj police cour s. Urgent cables from home asking her o return for her sisters wedding led her to resi 0 n but wh n she reac hed London, she had not sufficien moneJ to re rn home nd was app ently too proud or ashamed o c ·~ll on ·.e P, ges, so he ot work or a ~r abo t ~O o i l s ou of London by pplying 0 to an emoloyement agenc • After some eeks on the farm, ~ !lO Pages located nor and very reluctantlf ho farmer, fter offering to increase nor pl from 15 snillings o ·5 snillin6S a week, lot her go . Sho con fi cted o me tilat her cni ef desire was to beco1,1e a tached to one of tne arn uni s ri 0 ht at tne front r. d fin lly agree to see •:nat I could do after reaching ?ari s.  J  -.  Af . . er ea, saw Dr. ,,.odd, had my no~ treated al"d at 7 o'clock Sir Edrard Holden came to he ho el for dinner ·nd remained until nearly midni ~ht. ':'he gi " of ihc>t Sir £dward s'1id after dinner, to r.ich I listened without attaching great importance was as follows : He spent moot of the evening in ratner a violent and ext r eme criticism of the ~ovornment, the Bank of En~lnnd and bankers generally. Sid that the Guaranty rust Company nad been detected in various transactions with Germany w1.ich msde ther.1 ver suspicious of their business genorall·•. ~he Park Ba~k also nad been found a ticipatinL in transactions between the Argentine r-,epublic and Swojen, tn effect of .vhich ias to li uidate Ge man bills hold by German b nks in he Argentine, ear-mar' in 6 gold in !cw York an releusine it in Sieden ana ernany. Speai<inJ of the bill mnrket, he said he volum~ o f prime bills had been tremendous! roduced on account of •he extent to :vhich the businOGG 01 he nation was no·, conduc ed on n cash basis, the gov rnment pving cash for overyt1 inb• He as dispose o think that tile <>overn.ncn afier the wa1· should ira~ se restrictions by legislation u on the London ngencieo of foreign banks. ~his, by tne way, is a solut lJ con rary to the vie s hold b, o iJGr bankers an bf the Ba ,k of En land. rhe, said ha tne b'l.nk ncies in London hnd been one of hP- cnief ins rumontali ioo in making London he hill ma.r~et and the 110n y center of tne world. Holden strong! favored correc ing he Dutch exchanges between l'e ·, York, London nnd mstordam · nd i.,ought. p_;old nhould be released for th t purpose. He also thought thH.t we would snip nhroad an immense ar.iount of gold when the ~ ar "'aS over. I asked him wh·1t he estimated to be the norrn•tl volume of bills carried in London prior to the war wnic, had been drawn sirrply for exchanJe )urposes. He oaid ht he ~.ought the total ·old be about £200,000,000 sterling, a considerable part of them being dram h Ame1·ican ban1<rrs on London banks. I discus ed .vitn him brief!· ihe poasibili yo: the Federq.l Reserve Bak huyin 6 bills in 1::ngland. lie said it ~as sornot iriz tint must bo considore· most caref!llly in London as it migit prove to e a di st rbing irifluence and tnat , · r t ever we did sno Ltld be conducted in conjunction vith the Bank of Enilund, to ~hich I m·.de no com□ ent. Holden ' s criticisms of he government, ... nd articul'J"lJ of Lord Cunli fe struc me as bein exceedin·l bnd taste nd in m y respects undi nified an uaj Jstifie·. 0  -.  In discussing porsonali ies, ha spoke ver, sliehtingl of several i.port~n people in London. Said th~t Kitchener ·us a complete fail re, had been entirely supplanted an would bo elimirated were it not thnt he wns so much the popular idol. Sai that nis (Holden ' principal competitor in London as Lloyds Bank, Li1.1ited, rich he thougi1t ha.d no h~ d. Bell was 1ot mucn of a banker, •ind Vassar Smi h hn arisen from a very small beginning. 1he latter said man tnin·s abou him (Holden), ~nd indulged in unfair competition. It is only f ·r to say tnat Dell, while he men ioned no names, inti wated that he felt tnut Holden wae ~uilty of exactly ne sum • ,ing. Holen also said that Bnrings hau los heir standing to ~ome extent in London on a.ccoun• of nc large extent of t~eir German busin s as well as on account of some Sou h Am rican bu iness rnich ha urned out badly. Lord Rev ,lotoke was Unflopul'lr, cold and vindictive .nd a much overrated r e.n. .. e also spoke ra 1.1;,r slight' ngly of Lord Rea.din.; ar. d tho arr.cunt of trouble he h~d had · ii him bou various mat ers, , nd sent a long time abusing Lord Cunlifie. 0  -  )  .,  -.  Wednesday, 1''ebruary 16 h.  After a ood eal of discussion, r. Harris ·nd I decidod to tok he regu ar rou o ior Paris, vi FolkestoneDiep e, al hough ·e could oubtleas have obt inea ermission to cross on one of ho milit~ry service boats via Folkes 1 oneRo·..:lougne. he third uva.ilable route to lla.vre bein ar, all night rip, we thoueht in· dvisable. After repen e efforts i'1 London, :ta oun it impossible o secure a reek cabin an were o liged o take our chances of bad w athcr o~ ~~ open deck, In tho middle of the night I was awakened in ny bedroom ut the Ritz by a grent clat ering na rc~a11zed thnt 1 severe storm \'/US raging witil evei y prospect of an unple• sant ex Jeri once on t 10 channel. 'ie deci dt, to risk i , o•·,ever, so 'r. i a.rri s nd 1 is valet and r. Durrell and I lef b tne >:~0 rain at Cha ing Cross, expecting the bo t o leave 'olkes+one at 11 A• . •  e.  On rea.chin Fol eotons, it was arran,ed that •.:r. Harris •1ou ld investigate tne ') aspects of tht 00< ➔ !ieing delllyed ,,il I endeavored o arrar t.i ubout our as por a, etc. There 1as a gr at cro d a1aitin exITTin ion and after ·,hat seer, e an i,iterrnina.ble ola· , I rto o t ined from one of the c s oms officers i.h· t tr ere as rac .. ic9.ll no prospe t of the boat sailing th1t d yon a.ccoun oi h storm, whicn was ho ·or-st I huve eve1 seen on he c., nnol. ,..he aves wer dashin• over he bre·k wo er and the o iicer i formed mo ha. 11ere as danger o!' mi nos bre· king from t11eir nnc,.orage nn flo ting into the channel from ihc rnine fields. nder such conditions, bo a iere ntt permitted o s il as n rule un il mine sweepers h d cleared he ch~nnel. I sen n look up accomodations a. ihe ho el, •1hich a r. " Pavilion" ,r1i1,;h adjoined ne doc n here he succeo ed i .;e ing four 'e abandoned n· ffort o h ve our papers examined t11nt a ernoon ands rted out to see he own. About eve1y en or fifteen r.iinutee roop trains ere arrivin~ and th re •ere a num er of -ra cporta tied up at the dock ready to take ◄ hem across th c, n1 1. onu of hem, no ever, ore perr.,i ted to sail so h·t in a fev houro I estim ed that from 6,000 to 10,000 roops had a. rived in o 1. u• el"!barkmont. As tney 0 off ne rain, he· ·,ere lined up on he pl form and were inspec-ea by heir on of:ic rs ·n hes aff officers ota ior.ed n.t iolkestone ir cnrrge of ransport. After insp•ction, toy ~arched to barracks loca ed on t~e beuch nnd wee then disc~a ged n sea erect t11rough he tom whi ·n as so cro --dad · i · mer. in uni for, nut one , as obliged to valk in he middle of th street. 0  -.  '!o spent all tho re t of the d'"'y wa.nforine t .. rough the village, looking into book snops, etc und the men. Ha.d luncheon t u largo ho el up on the cliff here the wind vas 60 strong hnt it was al~oo impossible to ,alk a or.g the edge vi hou the pro action of he ank. In the afternoon, :e ... nt to a movini; pil! ure sho and that night agnir. dined at the ho el on the cliffs. During the eni ire do.:,,, no wi hs andin; i h·1t he saloons wore open par of he time, we only saw t .o noldiers who showed the efiec of rinking. :hey Yee very orderl , ppnrentl" <,uite cci oaed nnd indifferen to tho fac thnt the~ were goir.g to the fron ; none of their families or friends .ere there to see them off. .. any of the carried packages indicati n h·t they had becn·~ell cuppliod with food and other things by friends or r"la iveo. 'lhAy :ere u disiinctl good na ured, carefree cro d, constantly joking ~nd romping and guve ev r evidence of relief tr.·t tney \'I r fi nall · ordered . o ucti ve service. 'rhat evenir., Cap ai"' Sa:lcs, lhval AttachP ir. Paris intro ( ced himself und introu·1ced his ·ife to i,arris o.n .nyself, she h:vin· jus ret~rned fro □ America.  -  A notice was posted in the ho ~l that evening that the boat .7o 11:.i snil a. 7 o ' clock t 11e nox ornin~ nd we e e obli 0 ed to get ) at half p~st fou so us o be in time to have our pass~orts examined at tho ock. This was done without greu formality, but imrrediately afterward we were rcqui ed to make a etatemont to one of the mili ar auhoritics, first, 9.s to vhethcr we •,ere carrying iny letters or o her communication to friends and, second, whoiber we had a :l !::nglish gold. I had about ~400 in English gold which they required me to give up o the m~n sta. ioned here for he ourpo e and from horn I received ank of •nglnnd notes. I asked hio about ?.er.c'l and Arncricar. gold unu he sfid I could re ain .le iere early en o ug to avoid tile crowd ana aft er conside int; Le direction of tile \·Jind Yilicn was still blo ,ing a gale, nnd tho possibilities of a dry rl ce on 1he boat, the six o us located chairs near he stern ir hat e houghi ~o.s a sheltere pl ce and ,larri ' valet put o:..r l:.iggRge under a com anion-wn; lea ing o he upper deck, hich · ppeared to be protected.  -  1o left promptly at 7 o ' clock and wore no soonLr free of tho s. el er of thl dock vnen t110 ooa.t - wi ic, was tho Sussex - literally stood on ond. People '11 o had been unable to have their chai s laoned t o t e bo•t found themselves slidin& over the deck and a most a once a er began to pile up for,vard so tha all ➔ he pas angers from he bo v of he bot ~•ere riven o ho stern. ':'he E" orm increused in  -.  intensity un il a ll one side and the for" d par o~ the boat was washed itn water un no one could 3ta there. This crovded the passengers alon· he other side and in the stern were trunks piled up on the deck and lashed to the hatches. Almost wit ou+ exception nearly e,,ery 01 e '13.B ·11, a pa:-ticularl distr r,~ing sigh being about a dozen young Canndio.n ru-r.1 nurses ·ho lined the r a il in a row regardless of appearnn s or the ca her, oo ill o seek shel r · nl they were soon drenched to the sdn. Our bags \ ere in an exposed place ·rnd were ooaked, ns vie could not gei: at t hern. S o111 e o h e p n s n g er s er e o li g e d t o st · n d i r. unsh l ered places on accoun of he crowd ~nd ut ti1es :1a. er ms literally pourin · over the:n. It ;vus raw and cold and rough enou 0 h o be decidedly dang rous. he runk ro~c loose rom he d ck und eg n to pile up on the r'lil wr1cr, the; caui:;, one nan who fortunately was not badly injurP.d. If the r·il hnd broken, evory runk would hav,. bone overboard. I stood the rncke for a cou. le 01 nours ·:ithou t bt:ir .t all seasick, no di rt all of our part except -rs. Sa;les. twas gett in so et, ho,evor , hat I took shelte in tne din'ng room an managed o et to sleep on some dinine room chairs before I Mas reall y drencned to tte skin. ':'he boa pitc,,ed so that it th rew ile c1 ina and g1 a s s ou t o f he r a c k s • S o rn e p a s s en g e r s g h o h n d 1 i <e wi s e a.ken shelter in the dini~g room were so ·11 th·t they s retched ou on tr.e floor e.nd rolled abou wi h he r:1otion of the bot reg~ctless of ~at huppenc to them. uring he ime t ut I ms in . e dir:ing saloon asleep, ' r. ,arris attemJted o c ,a, ge hi" sen and the bo~t L.1rched and threv. nir:i +o i1e deck \, ic r gave 'im a dangerous frll. He r:· ruck his hend on he •ret deck, smashed his g lasses a l t hi" n "8, he blow dazed him an eave him such n viole~neadach •hat he was desperately ill he rest of he tr_p. J nov.r saw a more de·ecte · nd sic or looking individu~l nn he ~hen he cf the boat. e ,as soa 1 ed to he skin, cold, 11i1n a violent sick r.eada c h e and I hnd to dose him up or1 he +ruin and M lee him comfor le un i l '.'8 got o Paris "here re wen o bed right a·ter dinr,er. During the trip, a youn 0 officer, stnr ed dow the compo.nionway, too nic · to see •mere he •~r, ~oing and i. he motion of the boa hre him he1 dlong do ·n the steps and here he l11y for t',a rest of he rip, too mi"e able to pick himself up. ~inally u trumeclous ave broke over the boat so that she shook from on'= en to the o r er an, t ose belo~ decks were alarmed, thinking e hati been torpeuoed. ""hey "lowed tho er.~ines down i~:rn:ediat~l:; and changed our course somewhat · fte· •hich we m,Ade a little better weather, but it ·us still trF rougnest I have ever exlC ienced on he oceun.  -.  Ve reached Dieppe aome i fte 12 o ' clock nd • ~en I wont up on deck o Join my par , learned hat Capt'lin SuJles, Durrell anrl Ir. Harris' valei, while standine a he rail had seen the periscope of a ubmarine, which appeared to be a.bout 150 feet from the boa and in a few minutes dioanpenred. 'one of he other passengers no iced it as they were all too ill an ro ably he o hers rould not hav don so wi hout ho exp~rienced e1e of a naval officer, It ,:us only vi sihle when in th rough of 1 he ~.aves but the glass could be seen distinctly turned in the direction of he Su"sex. Had ti1e passongei·s noticed it, tnore ould certainl· ave been ·1 panic. Captain Sayles assu cd h t i was an English submarine. Sub!38 uenily, I inou·red of Cnptail -all, Director of' --avo.l Intelli~ence of the Ari isr l,nvy ,., to nnt kind of boat he tho..igh i ·1aa. He said it wa un uestio nbl a. German submarine as none o he British subr wines 7e•e permitted in those waiers submerged, he ino rue ions o putrol boats being to shoot at an periscope they observed. On returnin g nor:ic 11i~' Stet iniu. in April he old r~e at he had repeated th' r story ·hi ch l h d old him o Ca•Jt in 1-i 11 zu½oequen l , and Cap in llall had said they had l unc, ed a orpe o at us, u. missed, .is o~ he inciden 1:as hat the submarine ou d he oo honvy o tr v on ho surface and as traveling ome dep h only comin, · p occasionally o make ob" rvaiio1is. 'he ··•ea :1or · . "O t hie k ney had not seen he Su sex until it camP. up nlon side, so clo<>o, ir. f c , ha Wf' Mi•ht have ramme i., uni en ion lly. '.. he of fi ce1· o th submarine ~roba ly ha no irne tA obte· informa ion or de ermine defini ely he ch~rac er of ur boat nnd in the thick weather +: e·· hn immediately ried . o or~edo i , b·J h co. ➔ her was so roug'1 hu.t i made heir aim bad. Had hey succeeded in such ;ea. her, no one could possibly h v been se.ved. loni:; del,. or. the bo t fo e n pas~en ers 1ere ,i o di embBrk, occusi ~ y .,he c"reful scrutiny of L· gg'l e, ss">oris and papers carried by ne oa~f: en g er s • ,1 e 11 c r o 1 e d t o h c f c r a. r d • ar o " h e bo t n n d partie., o · three or r · e e ta. en ofl" a irne. '.:'he iscomfort om· ny of passen e unendurable a" t · e y •,e e so· rn d , o h e s , in r w Cap nin S yles carr·ed an Emb to l u v n b on a once, · s in one purti a ta' en off an i"' looke for me her. uite un xpec e 1 , an Envlis h and l was hustled o f and p ver possible ou e_y. It oeeffi in e vie ed th in cnar and arr nle  -.  I •,a.e i'Tlpressed ·ith the fact +l .,t rhile ne street li hts i Paris "' e :;o mewh hi · -n " h e fore e r c ::id . h e i r· li 6 _t 'l 1 i t 1 e m::, e t h an t e Lo n d o n s t r e et l.'.!mps, not ne[lr y so m... ny v;ert. lighted and i h sill"i 1 "r ther condi i r.s, I be ieve Paris ould h ve been as durk, if no darker, ~hon London. \'e foun  it im oscible o g~t a taxicob af~ er o .. 'l o he hot 1. DLJrinc.· 1he rest cf o·.r z :.i.y i Pa is, evrn \hen a axi cob ·:ae 6 ed in advance, it rns <-,ener-.lly ilT'posc-· ble o roly upon ge ing one a f t e r 9 : 3 0 or 1 O o ' c 1 o · i n t hr e v en in g • Dur in r; my entire eta ir Paris, I did o~ see an automo ile bus, all of i.herr having been commandeerecl for he n my. It ·,a "lsc notice. le ~t th fhe~ ➔ re, DPide from En3lish, Rusei"n, frican end her foreign of ice ·s i"' uni for,, .::ir c: call, he er: ire cro • ;,ns compos j of l<'rench ;)eople. In tre r>Y soon as one ""o+ o~ of tne snoppin_:: dis1rict ar,d diate vicini ➔ of i-.e Op a i-iouee end ,. l:< a do··,n to :ards the -itz riot, ... , '.-\ue e Rivoli, e c., •;:ere ver: few peo'.)le on rL ntroc sun mos~. of ho.,e : r dre od in bl:i·k. ,~ dt...y, for -tile fist time, 'P. hoard rumor. battle co m= nci~ ~t V ,dur., ~hi h ccn•i ~ct cinvio ence d:.:r.:.n g m ·ho f' stay on he con+ inc,: h  shot  r~  r  1  d  Sa urda  .re rua ~•  1.  h d m iled uor:ting nppcintmen s an noi. huvin heard frorr m put in h time making 5omc parson 1 callc and doing ~orr.e shoppin·.  Conforming to •ne cu +om ir P  o. nu!7'bn· of letters of introduc ior.  Had a viaii ··i-t  r. 81 de, --ana-e of he P1ri.,. ho •3.s very much in in some infor~ t~on I ~ave him abut he Feder,.,l rtem nd exolnined he difficulties nich he in orkin· up muc rl us.:.n S" for his comp ny in my requ st, he o t iced and la er sent me he fo le · ng fig•tres as o th~. a::ount of o · lo ns outs ·ndin• a+ t tiffie, exclusiv of mor..y borrowed a+ the Bank of ~ranee, which ras then flue uatir.g bet~een six and eieh+ billion fran s : 0  ice of  5 r. o  h e F.qu1table 'TrJ.d Cor-,n.ny,  t nrm ,Jat i r. n.l J;e f e .- e nondc DGCf" her 31, 1914, II II 1915,  Is cued ir. ror£1.-n _;o ri P. r D C" be Jl, 1914 I ti II 1915,  en Year • :3.' i O ! l Defence Bon 4 s D~ceIT e1· ,) 1 , 19]5 ,  Frs. 1,288 , 000,000 II 'g 2,000,00'.J  "  "  102,000,000 1, 64,000,000  "  632,000,000  ti  15,300,000,001)  1  New 5  11/  PE!rpeiu 1 Lo· n I . 1, 1915, Dc-:en.b  -•  'Tot al 1 Dec emb r-r 31, 1914,  Frs. 1,390,000,000  Total, December 31, 1915,  irs.24,0SB,ooo,n~o  I left wi -th I,tr • S 1 l e abou llOO francs in Fr cnch gold for which he gave me B n~ of ~ranee no+ns a~d la er sen me certificate of merit such a::: the Ban' of France issu s to +irn H,asants hen they surn~ndc1· their ~old at the re uest of the zov.-:rnme1 t..  On c~lling la.1,er to see i .. r. Harjes, l learned that ho ~ould net e i~ Paris until ~onday, havinJ bee~ ordered by the government tc IJ'1ove t·-,e ambulance ·nit cf which he h- d charge from llontdidier to som&w, ere in the neighborhood of Verdun, a distance of about 150 miles. Jet 1,r. Phillips a~ the Cafe de Paris for luncheon and afterwar <> he drove me -to tr,€: Ame:-ica.n Hos;Jital at 'euilly Nhere I waE introduced to Dr. Du Bousset, who h~d succeeded Dr. Bla' e in cr.arge. "his ms one of the mos intereoiing expe iences of mJ trip. The hos,it~l is st~blisned in an imr.·ens school building :rici1 was only p· rtlJ complet~d v.hen he v·ar broke out and \'Jas hurriedly converted in o a hos,,ital. l1y direction of the militar_ authori i s, they had ju:ot r~moved all of the ounded wno '7" e coy,valescer.t in ordPr to make room for those expecte. fro~ •ne V dun b ttle. But there v,erc sti 1 ::.omethine li e ::oo o ·nded men _._ 11 e. As I went tnrough the en• ~r r rr'dor, a ?rench soldier, ao stort as to be almost a dvarf, came hobbling along :ith great difficulty on crutches, one le en irel gone and one arm prutly mi ing. rie looked o cheerful and uncon erned hat I asked the doctor about him and learned that he ha bee~ awardo he Cros8 for gallantr~ of an unusual character. \fter repente at empts by different parties, o cut a ection of Ge man entanglenents prepare. ory to at•ack, ttis little fellow vol nteered, claiming the advantage of being too small to make mucn of a arget. ie succeeded i~ cutting the opening but +hey s~o+ted him rii1 their rocket illumination and a. macnine gun v.nicn wa. turned on him pructicnlly amp u t at e d hi s a ·m an d 1 e g • I was sho il'n the ward v·he e • hey ar p r1rf orming arvellous operation in dent~l and plastic ~urgery, a joining which re the v.orkshops for manufacture of the ..ielica•e ir.strumer.ts, bandages, etc., used for ne purpose. ~ost of th oc opera ions on the fac were conducted i c,airs like a dentist chair, ana 1 gel; with local anaesthesi~. I sav men whose f ces had be n mutila ed, some of them ~iih their lower jaw shot away who were ~radually h· vin; so:e sfmblence 1  -.  of a ace rrs ored -nd he photographic record o cas s whicn I exami.ed xhibi ed ' he marvelous · r:d ~:c:. 1 ·i h "hich i.he iork was being don • on ~horn hey ha no ye s nrted ork, had ~e en ire jn~ mi sing, al nougn h~s ton: e ha~ not een i~jured. I us a sot ken into he bathroom r re men ~10 were able o be r;;ovod •;ere bathed ever' day. •~his "'S a ng room ··,ith eho,:ers on one side and porcel in uub on the other. ~ ose whosG oundc ere o~ a character ~o prEvent their t ak ing a sno er or get ing in o a tub . ere curried from tr,e wards into he b. t. room on wooden ·.hich restej on he op of he tub nnd where they ~ere scr bbed wi ho etting tne bandages. 'h re mus huve been a dozen or mor ounded chap there v1hen I •;ent in und ne chnruc er of he ca sual ies seemed to indica ca gr a pe cer.tage of shrapnel • o nds and very sm1ll percentage of rifl bulle wounds. Orie man ·.ho w·t::: nlmos ➔ •1ell hrHi been sot by a rifle bullet i n h o r i g h n .t p ; h e r e i 1 e f t · p er f e c 1y c 1 e nn h o 1 e t h e oize of u le'ld pencil but -.•here th bul le c· me out on the out.ilP- of his lef hip, it •ook greai pieces of flesh in strips running up nrl do m hie lt: • 0 hers •;horn I sn ·er sno ir h neck and Dr. Du 3'ous e said hey had n o.stonishin ·ly hi ·n p rcen ge o' •·:ounds in ire· r head s nd eg in he early st·ges of r1e •ar a •he rr.en ''ler so frequen~ ly ·oun Jed :i.ile lying on th ground, bu during he 1 te o ages, m st of the rnunds 'J re in r.e r.ead , n"ck, eh ulders 1nd ar s, sho ing ine pro ec ➔ ion of te tranches. One of iheir p ien s waA an inl'nn r ' colonel ... o ha.d h· d his righ arm, he rirh oi e of his face ·nd the ight side of hie body badly mangled by picking up n hand grenade ~ .. ich had cen dropped in ne ranch in order o protect nis men from ~he explosion. i eh d three broken ri sand ~we •yeight •;ounds in his che"' and abdomen. .'le 1.1ere a.t the hospit~l tne grea~ er part ct tno afiernoon. I gave Du Bousce 500 on leaving an re eived a mos ao 1 recia ive let•er from him 11ter. From there, Phillips drove me o the Bank of rr1ncc mere by appointmen I s w •• Sar gent , Depu y Goverrcr of the B<>nk, ,r . Phillips n.ctir,g s intbrpreter, a.lthoug'1 Sar 0 n snoke Enb'isn r .the h ingly . Arr n 0 ed to call irrmediate1 • upon returning from Cannes --:.ere .. r. narris nd I had arranged to go on the 19 n to v· cit wi h. r. Sillman for a fe"' ye • . e arranged t hat a t e ·no or. • o h v e c u r pa o a po r s vi~,d for tne rip to Cannes titho~ no necessity of ppeu rin~ ir person, r. Ellis ~r the Ritz Ho el having ffieans for co i ng so. Spent tee rest of , afternoon nnd e:ening p eking nd la rris and I th_n dined a h st~iion rectauran at th Gare d u L yon, ta,ing llP 8:15 P. • -trair:,  -.  It w• ca very slow trip, tho trair s oµping ever1wnere instead of runni~ g tnrough exJress ns in ordinary times, and did not reach Cannes until 12 : 30 the ncxt da. e were ourprised to see from the car ~indo~e, German prisoners workin in the fielde t different poi~ts. ·on d een tnem ·or king en the dock a Dieppe · nd un er od no. ➔ the ero scattered hrough tr nee, enera11·, a ::ork handll 3 freight, etc. r. Sti lmon and r. ~hristiansen were a the station o meet t;.B and had ai .ed our arrival for luncneon. r. Stillman I s really o •er jo ed to have us come do 11n and make him a visit. He felt tho exile from horn v ry 'e nly, havir_ reen dan erously ill in Switzerland t·.e rear before and unablP s et to r vel tc America. hat afternoon, .. r. tillrr:an took s for an automobile ride along the coast back of c~nner. He hnd between his knee i n the car a sack tha ust h ve held more r.·n a bushel of c· ndies wrapped u in pqper nn a,parcn-i-ly all he chil.:lren or miles around Cannes ne·: him and , dead sh for he car enever the· so• i coming i n tne di • ne e. Dy he timP ne re urned to he ho i el , here ~as very little candy left. He took ne ccnes1: enjoymer.t in "pe pperir'g, 11 r.em, alwo.yn r:ing o hit hem ntl m 1do his driver slo· do ·1r. o watch ➔ he zcramble. Sometimes older people joired in the party. h t evenir.g, ~r . S .illm~r., .. r. and .rs. Chris ians n and r. Peix o iho r he Ji table Life in Paris, and is President of th me1 icon Ch :r.' er of Corr.IT!e ce, tcgetr,er :i h Harris ad I, nll dined obe ner und spen h in tr.e smokin room. "r. S'!,illman tr.en did aver characteris ic hing - annour.cir~ that he IQS oing o turn in, he walked to the elevator n just before g etting i called 1:c me to join hirn for a minute. All he said ms, " Co o up to my si ting roon n li tle lat er. " lt m uite ..-"lrort hat .:.r. f.tilJmn.n ianted o have c.,n ·i 1 hout he o s being present r.d :nen I jcir.ud h.:.m fo'..ind he a read 1:o t lk a.11 111i.;. t. e sat up until nenrl 2 ,, , lock aiscunsing te iar si ua ·on and tr.e ob~ect of my trip. He L very strongl• pro Ally, I hav unders ood has given immense curno for Rad Cross an o'her r lief wor,, hui seemed pretty pessimis ic about he oi untion.  -.  Sun a~ , February· 0th. r. Stillman ~ot comi~E do;n as a rule un il time for luncheon, H rri~ ond I al~ed hrough the om which was almost deaertod except fo convalescen so iers and tr.air frienwc and r~milies. ost of he b'g ho le '.'ere either en irely closed or only partl; open, and the promenade alone he sea front •·;as literally deserted save for '.'ounded soldiers siting on the bencoes. 0  'l'he part:,· lune ed o e"!her nd ·.r . Stillm"n, i arris r.d I ook o. ·onderful u 4 omohile ride up .. one o he old La irian fortif:ie o nd castle si-1-ua'ed righ r,e top of , moun in mi es nort. o C nnes. e must h:ive climbed 2500 or 3000 feet on magni ice + r c• d 1hi ch en-1hrough coun+ less unnels nd over n r I er of bridg s, some of them of i~~ens high . r. Stillrn~n ngair. h d his sack of c nd · and finall · hen we renci'le t .. e c atle, the whole popul·tion, i ncludin~ ihe priest, turned out to welcome him. •·e seeme to have been a fre uent visitor. ',ese peep o nev r min led much i h hos livin • on the ore h ve dark nd blue oyes hicn seemed to be ui e idir.ct tJpe from n; I · seen in 'runce. r:-hey over~hel ed t r. Still ith a-1-te tions and inally he ot out a p ck of poc~etbooks, ne'.• coirs "nd verioue trin«e s nd fer an hour or 4 ·o onduc ed come improvised races for the· children in :hich ·irls ook an e ceedi gl' ac pari. 'lhe • ·,•·ere all ver mucn embo.rrassed b r. arris and m ~elf, bu -r , Stillman aeomad to be uite t home ·itn he~. Jr. Sillman fina ly persuaded some of tte b own girlA to tr a foot race wnich set the whol population off in o snrieke of 1 ug, er. 'lhe.t ··o.s a repetit.1.on of i1e previous ev nir.g, ·r. Stillm n as~ing m 30 r him in \_p room fter din ner nd we ., here ·ein until af er o:r,e o'clock. I ·as a o.zed o. ne· .frank nd in erei i.. 0 n in ··.nich h d i::cribed ni"' r la one ·liih r. B er, .!r. :organ, ne Roc~efellers, Kuhn, Loeb nd I os of ne o her inportan pr:o ple do"n own. ··os+ o· +nis I will r,ot be a libert o dice u it wa exceedingly in re +ir.g to hear him describe the polic uhich he ·ac really imposir.i u,on r. Vanderlip in r.e City o.nk in he rr:at er o ne b, nk ' s re1a+ions ••'i+b o her ins itu ions ani banking firms in ew York. He also gave me av ry in rertir.g accoun o n1s experiences vi+ a r.kerc prior .o -1-he Russian-Japan °e r • 0  •  ·e .  •  i onday, February 21st •  ..r. Stil mnn, .. r. 1 arris (lnd I drove to .onte Carlo, ntarti;; airl early in the morning after gettir.g the necessary ?Bosports, safe conduct, etc., wnich necessitated ~rnisnin photo raphs as usurrl. ~e drove immediately to ! r. Amos uc ' s residence and spen about an hour wi cl him. ..r. muc,,; nnd his ·vife hav a beautiful ap rtmont overlc kin tho editerranean where they a nd most of their ti fie when not in Paris. he conve sation .vas en ~l · bou the ·.-ar and I ga.ti1ered from all they said and vh• t I la er learned tnat botr. .,ir. and l rs. ·uck •rre d Pnl 1 interested in a great many relief enterprises. They r very hig~l regarded in France  Later •1e luncried a the Hotel de Paris ·nd paid a visi o tr.e Casino. '::"here , ere about sever: ables running but the; ~ere no v~ry cro•ded and ho stakes seemed o be sm 11. ."os of he players were old people, particularly old vomen nd all of them seemed to be habitu6s as moet of he~ h·d charts and ~ere la icg ~ystorns. e had driven o • on e Ca c hrough +he h C< coun ry n re"'u,ned along r,e s. ore a" the "'"s+ ea tiful ime o: he d yon the :edi erranean. ,ice seemed o be cro ;dod 11i h convalescent soldi s nnd I!erstood ~ hat ffiOS of he ho els here nad been converted into hospit ls. Off he snore be ween Jic and Cannes, e la ge GerrnPn cancer ra ion camp and prison nad een established on a isl·nd ',:hich they e id as cro ded with civilian Geri .s. ~he same p din d toge1ner a evenin and after dinner r. Still an, .r . . arris and I spen tne cvenine in hr. S illman ' s siting room alki~! principally of the ar, fr Harris in ulging i ,.is usua violent aterner.•s in r ~r J o ne Adminis ra ion and our attl u 'e o:ar Gerrra.r • 0  -.  /V t ~u sday, February 2'lth. , r. 111rris ,as oblieed to return to Paris on he rain but I bad learned from. r. Still~ n tha he was oing up he following day nn he was very anxious to visit Jack ~• organ ··ho was expected in Paris a that irr.e, and I decided to sta. over nnd o up wi h him. After seeing ·r. Harris off, r. S illmar., r, Christiansen and l m de a long automobile trip nor1h es of Cannes along the s.ore and nroug he town of • rei juse, ·nic, abou :COOO ears ago ,as one of the mos important Roman colonies on tne \editerranean und sup osod to have had a populR Lon of five or cix hundred nousand people. ~nere ere Gtlll ex ensive remains ther of old docks ·1hich re no· some miles frcrr. the pre!: n shore, also, an im me nse acqueduct here and &ere and u marble shaft. comMerr:ora in· some of nc hiotor: of he old ci y. 2:46  A er dinner a~ the ho el, Wr. Sillman and I spent oP to· the evening di~cussing he younger generation of ew York bani.: men for whom he seemo to h:i e a high regard.  ,r  I 2,.  •  I  )  •.  Sunday, Jt'ebruary 23rd .  f lo'-  I wrote letters during the morning and after luncheon r. Stillman, Mr. Christiansen and I left for Paris on the 2:46 train . Mr. Stillman had provided a most excellent supper which he carried in a very complete leather lunch case, which he said he had specially made and it was a much better meal th n we could have had in the dining car .  -  •  On the train r. Stillman confided to me the reason for his desire to see Jae~ Morgan. It seems he had been deeply impressed with the heavy responsibilities gradually devolving upon the younger generation of ew York Bankers, not only by reason of their succeedin~ during the past tan years to the responsibilities of an older generation which had largely retired but also because of the inmense responsibilities resting upon New York as a financial center as a result of tho war. s one of the old school, he is a strong believer in personal leadership and r. Pierpont organ ' s death bad so altered conditions in New York that he thought it wise to take this opportunity, notwithstandin~ that he was still pretty feeble, to have a very frank talk with Jac4 organ on this subject. Unfortunately, ~e discovered upon reaching Paris that r . organ bad already returned to London and r.'s visit was fruitless although it gave us opportunity for some very delightful times together in Paris •  - .•  Sunday, 1•'ebruary 27th. t 10:30 ., onsieur.Lewandoweki of the Comptoir National d'Eecompte, called and l went with him by tube to Montmartre, visiting the two Cathedrals on top of the hill. Both were filled with the poorer people of Paris, attendin~ the services and all gave the appearance of being in mourning, and, in fact, the services were rather impressive and affecting. fter walking about that -part of the city we returned by tube and walked out to the Cafe Ambassadeurs, on the Champs Elysees for luncheon. I was impressed with the fact that the underground railway was entirely operated by women, except for the motormen. The ticket sellers, ticket choppers arxl conductors on the trains anu the guards were all women in blacK uniforms with little vihite aprons . After lunch we walked to the Invalides Museum to see the various trophies captured from the Germans and to go through Napoleon's tomb. The Museum was crowded - there must have been 10,000 people there, notvri thetanding that there was snow on the ground and the walking muddy and bad. It was a very quiet French crowd. In ordinary times a large gathering of French people liAe that would be chattering and la~ing but there there was hardly a voice heard an practically everyone was in black. In the court of the useum were arrayed large numbers of 'erman aeroplanes, the remenants of the Zep,elin and a large number of canon of various caliber, all more or lees damaged by shell fire. I saw some 0'"Uns that had chunKs torn right out of the barrel, apparently by French explosive shells._ Inside of the building was a vast collection of rifles, helmets, flags and atarxlards, trench mortors and all of the various paraphernalia of war, including many mchine guns vihich had been taken from the Germans and in various cases iron crosses anu last letters, diaries. memoranduns, etc., that had been taken from captured and killed German soldiers. The buildin0 s were so crowded that one bad to move slowly from one end to the other in the crowd, which was very 6 oainatured but very quiet. 0 . #alking back to the hotel down tho Avenue de Champs ~lysee, the street was pacAed with people and lookin~ ahead a few blocks, one ained the im~ression that it was a blac~ stream, 9ractically every woman being in mourning, no one wearing colors • . t 3:30 ?. ~ I mot Captain Logan and Captain Symi11t;ton, but was interrupted by a call from Mr. 1illiam elaon who spent about an hour discussing various m tters, including the business which had taken me to Paris. He said that he was ther after some matters connected ith th razilian railways. That night I dined with r. Phillips and afterwards ~e 1ent to see a little show in the C pucines theatre.  -  --  onday, Pebruary 28th . I called in the morning at organ, Harjes & co . to get my mail and found that r. Harjes had again 50ne to the front in connection with the transfer of his ambulance unit. I stopped to see r . Slade, i, ana er of the Paris branch of the Equitable Trust Company of New York, and had an interesting chat with him about busi ness conditions in Paris and the business his Company was doing there . He said that vihile they were making gradual progress , there were endless difficulties to be encountered. He was finding the best anployment for his money in dealing in short bills, including those of the 'overnment . From there I went to La ues with . ?hilli~s and 'r . Jraves to ta~e luncheon with the members of the onday Lunch Club, a little American organization of about twenty men, including a Captain 'aeon, Mr. London, tr . Thackara, the .Americar Consul , Mr. ona.han, re~resentative of the .American Radiator Company, Captain Sales of the Embas sy and a number of other Americans doin6 business in Paris. It was a very interesting meeting. All of those present emphasized the difficulties with which they were now confronted in developing the credit end of comme r cial transactions between the United States and France . They said that something must be done to give larger credit to French purchasers of American goods or our business would stop . After luncheon Mr . Phillips and I did some shopping and we then called on Baron de Neuflize at his offico , whom I had previously met, some years ago . He was delighted to see me , we arranged a luncheon date and later, r. Phillips anu l went through two or three of the stores and markets to get a little idea of business and the prices of meat, butter, et;t:>s, etc . As an illustration of prices, I quote the following: Coal ,i,30 . 00 per ton; lamb and veal from 5 f .: 25¢ to 7 f.:50¢ ; butter per half pound l f .: 35¢; ham 80¢ per pound; eg 5 s 60¢ per dozen; chickens 10 f . for a ~ood, big roasting chicken down to so much per piece - they sell a part of n chicken at a time; fine cheese li~e oquefort 1 f .: 35¢ per half pound; fancy eating apple s 2 f . each . These prices were obtained in the best general market in Paris, viz . Poulin ' s. Ead dinner at the hotel and ,vrote mail in the evening.  -  -•  Tuesday, February 29th. Called on r . Harjes, received only one cable from New York . Found that he bad a in been called out of tho City by his ambulanoe work . Prom there I stopped at the Bank of France and found Monsieur Sargent still away ill. ~hen called on Monsieur Rosselli, llr. Stillman ' s friend, at the Credit Lyonnai s, had a very pleasant talk and we arranged to lunch together the following noon . Lunched with r. Heidelbach and his wife, also some relative of rs . Heidelbach's and ·r. Petrie, a Paris partner of Coudert Brothers. The latter impressed me as being exceedingly well posted and an interesting talker, exceedingly pro-French and yet very fair as to the attitude of our administration . After luncheon 1 r . Heidelbach and I had a long visit in his study, discussing generally conditions in France and the banking methods pursued there by the banks and private bankers. From there I went to the Comptoir and spent an hour and a half with • Lewandowski amd M. Paul Boyer, General Manager of the bank . • LewaDiowski called in the head of his Portfolio Department, together nth the attorney who conducts the American correspondence, and the clerk who has charge of the Clearing House settlements . They explained fully and very clearly the operation of the Discount Department, methods of collecting checks and the operation of the Clearing House, of which the following are the main points: CREDir:1 AND DISC T D.1:2.ARTMENT : Very limited discretion is given to the managers of branches within the City of Paris. They are given certain fixed lines of discount which they may not exceed ,rithout authority from the head office. he supervision of their authority is very close. Somewhat greater discretion is given to managers of the branches in the provinces. However, the supervision is very close and maximum lines of credits are fixed • .Most of the bills which they now discount are domestic, largely those drawn by manufacturers, jobbers and commission houses. ':i.'o some extent also, bills of jobbers drawn on retailers and even retailers on their private customers . Prior to the outbreak of the war it was not unconmo for the bank to hand.le 750,000 bills in a month . ~hey have in their ... ortfolio Department alone 450 clerks. These bills come to the head office from all the branches, nth certain exceptions, and are collected by the head office. The exceptions, of course, bein5 agencies in the provinces • .Lxcept in time of a great crisis, such as the war period, the Comptoir never melts its _ortfolio, but instead of collecting many of the bills itself throu.;h its own agencies, or by messengers throus'h.out the city, it finds it much cheaper to turn them over to the B nque de France three, four or five days prior to maturity, and obtain an immediate credit there . The Banque de France makes a minimum discount charge of five days  -•  at the bank rate, even though the bill bas matured. This oompensates the Banque for collectino the bills. Just now there is a dearth of bills, and such institutions as the Comptoir and Credit Lyonnais use a good deal of their funds in short 6 overnment obli~ations, which run for 3, 6 and 12 months - three months being at 4%, 6 & 12 months 5i~ discount . r.i1hey principally purchase the six months bills, which can be disposed of at better than s; after they have run three months, as the Banque de France is always ready to discount them. CREDIT D• TM.ENT: This department has been building up its information for thirty years and is managed by a large staff of exoorts who keep very precise information about their customers, even to the extent of visiting their establishments and inquiring into the character of their business operations . Any bill which comes back unpaid (or where a renewal bill is drawn) is apt to come to their attention and is noted as an indication of weakness against the dealer and acceptor . There is no bill market in Paris such as exists in London, as the brokers do not carry bills themselves . Transactions between the banks in bills are rather infonnal and arise simply when one of the smaller banks wish to realize on rome of its bills, and they can generally do so at the Comptoir or Credit Lyonnais at a slightly better rate than at the Banque de France . The broker runs around inquiring for opportunities to trade and received a small commission. Sometimes they deal between each other direct. These brokers dea l in a variety of transactions such as securities, foreign exchange, bills, etc . and I gathered were not particularly responsible . The business of the private banks is somewhat different in that they ma;ce advances on "pension". That is to say, they advance for considerable periods, 3 or 6 months, against bills as collateral, the obli tion of the borrower being in each instance 30 days up to 3 months, with a general understanding that there will be little difficulty about renewals . rhe large private bankers, known as "haute banque", are also considerable buyers of bill s . CLEARI.1.lG HOUSE: This is of comparativel y recent development and has only about twelve members, being the most important and responsible banks . Checks are so little used, compared to banA notes, that when the war broke out the operations of the Clearing House were entirely abandoned and 1ill not be resumed for another month . They have two clearings daily and the average turnover thro~ the Clearing House of such institutions as the Comptoir and Credit Lyonnais will run from 700 to 850 million francs per month - only a trifling amount of course compared with the American Clearing House operations . The custom is to send the checks to  -•  the Clearing House, much as we do, and settle the balance by an order on the Banque de France, which is debited and credited to the respective accounts of the institutions that are either credited or debited at the Clearing House . They have only admitted very strong institutions, as instances have arisen where some of the weaker ones have iven orders on the Banque de France which have not been honored. It is customary to send bacK checks which have been found to be N.G. early in the day prior to a certain hour, similar to the t8W York practice. lt is the general belief here that the laws are not sufficiently rigid to enable prompt prosecution of those who improperly use checks and that has deterred the use of the check system. t the present time all of the banks and bankers of ?aria are collecting checks by hand at considerable expense and inconvenience, particularly as their clerical force has been much depleted by the war and have been largely up by women clerks. COilllTRY CHECKS: The practice here is quite similar to that in London, wi th certain variations. 1 think it may be said that checks are handled by four methods:  •  l. iven immediate credit where the customer is undoubted, but charging the customer interest at bank rate plus 1 to 1-1/2%, for the period allowed for collecting, which would vary from 1 to 3 days. 2. Giving deferred credit, in which case the account is credited with the amount of the check and the customer charged with interest at bank rate plus some addition in case he draws sufficient to impinge upon the amount . 3. Credit upon "advice of payment" which means that the customer is not permitted to draw, and if he does, his chec;c will not be paid until "advice of payment" is received . 4. Giving immediate credit bJ red chec~ on the Banque de France for a checK which the customer does not expect \vill be paid until the following d.ay 9 in which case the checK deposited is a white check. This is simply another method of extending credit and the customer is charged ban~ rate plus a commission charb"8 for collecting the check. The first method described is rather a rare occurrence .  -  The operation of re-discounting bills with the Banque de France is apparently closely associated with the general system of eettloments between banks, only two or three of the larger banks anparently not availing of the facilities of the 3anque de Franca for convertin6 their portfolios when needed. It is quite apparent that French banAs rely upon the  -•  balance at the ilanque de France as reserve to a much greater extent than was even prevalent in the United States, under our old bankinb law, between country banks and reserve city banks . Subsequently 1 prepared a report for Mr . Jay in regard to collections, etc., which suumarizes various conversations in l'aris , copy of .lhich report is as follows: CHEC.i{. COLL.t!IJ~'l  -  S l.1. PAfUS.  Checks are so little used in France, while notes of the Ban ue de France nd ~ld are in normal times so largely used in effecting payments, that no such highly organized collection system is developed nor is as necessary as in the United States. It should be borne in mind that a vast amount of the domestic trade of France is settled by the use of bills running from thirty days to a mrud..mum of six months, the usual time bein~ three months . ~hese bills are not universally domiciled at t he Banque de France, ~hich would be the "e rman system, nor at the ban~s generally in Paris, which would be the English system, but are accepted payable at the office of the drawee; in rmny cases at the drawee's pers onal residence . The bill of excba.nge, therefore, takes the place of immediate cash settlements of accounts, and the pa~nt of the bill of' exchange at maturity is, in the vast tmjority of cases, made directly to the Banque de France, as it is customary for the banks and brokers that hold these bills to discount them with the Banque de France within five days of im turi ty, as the minimum discount of five days' charge by the Banque de France is fieured to be less expensive to the holder than collecting the bills direct . This places a great mass, for collection, of bills in the hands of the Banque de France, not only in Paris but throUc,hout the Provinces. Those payable in the Provinces are sent by the Banque de France to their own agencies, which are now established in everyone of the French provinces, and in some instances vhere they have no agency they employ special collection agencies, or oven the officers of other banks. r. Robineau, head of the iscount Department at the Banque de France informed me that he had collected in Paris alone as many as 100,000 bills in one day, requirin 6 the services of over 1, 000 messengers for the purpose. This custom, of course, has a tendency to reduce the use of checks. I was infonned by some of the bankers in Paris that the use of checks was so little understood, a man could not even induce his wifo to ta~e a check when she wanted money, did not understand about endorsin~ it and had doubts as to uhether she might be able to get the money for it. French women are accustomed to holding the household money. It is their prerogative and they are  -•  scrupulously careful to avoid in.forming their husbands and relatives as to how much of the money entrusted to their care ha.s been spent and how much they have saved . A check book and bank account would disclose the condition or their cash account, and this they seriously object to. \/hen the Banque de France its appeal for gold, one difficulty encomitered was the necessity which was then imposed upon the French families of disclosing how much gold they ha.d hoarded . Baron de euflize told me that near his village, Chantilly, a little hamlet of a few people and of vib.ich he is · yor, in order to get the gold he had to hold a public meetin · in the town, taiee bank notes personally with him and have the certificate of merit in blanie (which he was authorized to fill out and sign on the spot) filled out by himself personal l y as he had no clerks to assist . 'i'he village people were convinced that no one would know how much money they had given up and out of this little settlement in a very few days he collected 125, 000 francs in gold .  -  Under such circumstances it will bo seen that the check problem in France is not important . The 3anque de France has made efforts to induce a greater use of checks, believing that it would reduce their note issue as well as increase their gold percentage and e,'Old holdings . So far, these efforts have been without success . At a meeting of the officers of the bank, hov,ever, and which I attended, this natter was discussed . They all agreed that it would be a great achievement if they could bring about this practice at the present time, as they estimated that there were five bi lion francs of French bank notes now hoarded in Frnace, largely by people who had given up gold or who had always hoarded notes in preference to gold . Under the above circumstances, no cooperative effort in the mtter of check clearing and collection has been undertaken by •rench banks until in recent years, when a Clearing House was established in Paris, oomposed of about 12 to 15 members and consisting only of the most important and influential banks . The operatiomof this Clearing House were entirely abandoned ihen the war broke out and are not to be resumed until about the first of April . The Clearing House ma.i<:es two clearings daily, and the average turnover thrO't16h the institution by the two largest banks, i . e. the Credit Lyonnais and the Comptoir National D' Escompto de Paris, will run from 100 , 000 . 000 to 850 , 000 , 000 francs per month, a trifling amount compared with the volume going through the New York City Clearing House. 'l1he custom is much the same as ours. Checks are sent twice a day to the Clearing House and the balances are settled, not in cash but  by a special order on the B nque de Fr nee, which results in the debit or credit to the respective accounts o~ the institutions that were either debtor or creditor at the Clearing House . 'i'hey have onl~ admitted very strong insti tutions to clearin~ as instances bave arisen where some of the weateer banks have given orders on the Banque de France which have not been promptly honored . It is customary to send baruc checks found to be "N. } . ", prior to a fixed hour , alon 6 lines similar to the Now York practice . It is the general belief in France that the las of the state are inadequate and not sufficiently severe to enable prom~t prosecution of individuals who use checks improperly, ~nd that bas also been a deterrent in the development of the check system . At the present time all the banks and bankers of the City of Paris are collecting checks by hand, at considerable expense and inconvenience, particularly at a time when their clerical forces have been depleted by the war and temporary staffs of women employed . COONTRY CHECKS :  ---  The practice in handling country checks is somewhat similar to that in vogue in London, mth certain variations. llorin~ for various exceptions to fixed rules or customs , it may be said that country checks are handled by the banks in Paris by one of four different methods, and these four methods cover tho vast majority of chec~ transactions: First , by giving imnediate credit to a customer whose standing is tmdoubted, in which case the customer is charged interest at bank rate, plus sa; 1 to 1- 1/2~, for the estimat ed period required for collection, rhioh varies from one to three days. This applies to a very small proportion of the checKs handled . Second, by giving deferred credit, in which case the ac count is credited with the amount of the check, but if the customer draws any part of the credit, he is charged with int erest on the amount drawn at bank rate, plus a commission charge, or a little additional interest upon the amount drawn if it impinges upon the am:>unt of uncollected checks . This is similar to our system of "holdout" . Third , by givint:, credit only upon "advice of payment" which means that the customer is not permitted to draw, and if he does, his check will not be paid until "advice of payment" is received .  -  In none of these three cases does the customer receive interest on the amount of the balance until after collection time or transit time has elapsed, and only in the first instance is he expected to draw before the transit time has  ••  elapsed. In the second instance he is penalized for drawing, but his check would not necessarily be refused. Fourth, by giving imnediate credit, or by making immediate payment by "red checic" on the Banque de I•'rance for a check which the customer does not expect will be paid until the following day, in which case the cheoic deposited by the customer is a "white check". ned checks used by the Banks are drawn upon the Banque de France and are payable on the day drawn; white checks are not payable until the following day. These white checks, which are dravm in anticipation of the receipt of funds, are cashed by the big banks, at times, for their customers by the use of these red checks, and this is simply another method of extending credit, the customer bein invariably charged bank rate for one day plus a small commission for collection charge. The first method, as stated above, is very little used. The second and third methods cover the great volume of checks. The fourth method has reference solely to settlements in the City of Paris and suburbs.  •  •  The operation of red is counting bills with the Banque de France is apparently intimately associated with the general system of settlements between banKB, only a few of the larger banks apparently not availino of the facilities of the Banque de France for converting their portfolios when needed and even those institutions almost invariably discount bills vihen within five days of mturity in order to save the trouble of expense and collection. The bi 6 French banks rely upon their balances with the Banque de France as reserve to a much greater extent than I had realized, and the immediate convert bili ty of their portfolios gives them a feeli~ of assurance as to their cash position . I think it may be generally said that so far as checks are used in France, it is only in rare cases, and only for the wealthiest customers of French banks that inmediate credit is given on checks deposited, and in those cases not only is no interest all~aed on the balance during the transit time, but interest is charged at bank rate, and in most instances a small coc:miasion in addition •
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