Full text of Papers of Benjamin Strong, Jr. : Incoming and Outgoing Correspondence and Cables, 1915-1921

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MIBO 13.700-2-20

FEDERAL RESERVE BANK
OF NEW YORK

CROSS REFERENCE SHEET

FILE No.

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SUBJECT

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FEDERAL RESERVE BANK
OF NEW YORK

CROSS REFERENCE SHEET
FILE NO.

SUBJECT

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FILE NO.

LETTER OF

)21/4-

DATED /'

16115C.J.I-90M-1-20

FEDERAL RESERVE BANK
OF NEW YORK

October 3, 1921.

OralICE CORRESPONDENCE
To

FROM

Mk. Snyder

SUBJECT

Governor Strong

The attached is Welton's letter asking me to contribute an
article on Expansion and Contraction.

I wish I had time to write such an

article myself, as it is one of the few in which I might be ieiterested in
stating something.

How about recasting what was submitted to the Joint

Agricultural Commission, and adding to it two points:
(I) The point that additions to our gold reserve do not necessarily

involve inflation beyond the direct 100% inflation represented by the volume

of gold imported, un]ess we make the added sold available as the basis of
credit oy a rate policy, which induces borrowing; and
(2) Some discussion of a wise expansion of credit in order to
assist in world recovery of trade, &c.
I would not want to deal with this subject except very concisely
and fairly briefly, and will not do so until after I get some comments from
you.

BS:M[ti

Enc.

a
--1-4 I

June 24, 1921.

Dear Sir:

Replying to your letter of June

Mr. Strong

]id not i)repare an address to be delivered before the

New York State Bankers Convention, as he unfortunately contracted a revere cold rhich made it impossible for him to
carry out his original promise to be one of the speakers.
Yours very truly,

Secretary to Vr. Strong.

C. A. Luhnow, Erg.,
Yublisher, Trust Companies,
55 Liberty Street,
New York, N. Y.
GE:MM

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Federal Reserve Bank of St.
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CROSS REFERENCE SHEET

FILE NO.

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SUBJECT

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11 31 L-`631)4(eruo
FILE N o. 7 S) D
LETTER OF Ticit>

DATED

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CROSS REFERENCE SHEET

FILE No.

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FILE NO. 21C
LETTER OF .0
DATED

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711_714-(Ae

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wa.-.A.

Mum 34

FEDERAL RESERVE BANK
OF NEW YORK

(TO BE MAILED)

CONFIRMATION OF TELEGRAM

Tory sorry that I as unaUe to ,_000pt yLAAr iin6 invitNtioh to

Ars,_

the. fool6ty Ituliwuy FinanciLl Cffiosni. next Iednud y

We have today telegraphed you as follows:

as 014,Jiled in isicortaLnt a

ieotin

all that L:ornin

to,

Thnnke
Gotobor 6,

E. h. ALDEN,
somttry horrors and Wectern Ri_ils.Ay Com, Ity,
Commoroisi Trv,A
$ 15th

PHILA14,1Aili.* PA.

;want'

October 7, :19.

Dear Sams

I shall be deAghted to addreL,s the advanced

bnking class of the National City Bank Just Js soon as
it is ,o,;sible for me to free mycolf from .4-1 accumulation

of work and engagements which my absence _n Euro,e 1L..s

occasioned, which will keep me occuided for the next two
or three weeks.

In addressing in organization

and intelligence of those in your bank, I should want
iretty good line on what to say and what ground has
or has not been covered.

Any suggestion you

will be greatly ai.).,;recLAed.

Very tru4 your3,

Samuel McRoberts,
National City Bank,
55 Wall Street, New

ESAISB

Yoa5

send me

Septoraber 23, 1919.

dear Lir. Lk:Roberts:

Your letter of the .0th instant will be brought to
2.1r

jtrong's attention on his return to the office the latter part

'1471ivf

of 146 week.

Yours vory truly,

.3e ore tr.try.

Oarauel ileltoberte, Lag.,

'e National 0117 Bank,
street, New York.

//eAli)ii>inffiWe

CAPITAL FULLY PAID

SURPLUS A UNDIVIDED PROFITS

S 25.000.000.
5 52 000.000.

AlYr*,/

Sept. 20th, 1919.

CABLE ADDRESS "CITIBANK

IN REPLYING PLEASE QUOTE INITIALS

don. Benjanin Strong,
Governor, Federal Beserve Bank of Nevr York,
15 Nassau Street, hew YOtk.
lily dear Mr. Strong:-

I am request Ed by the Advanced Banking Class of the
National City Bank of New York to extend an invitation to you to talk to
them at their session on October 14th., from 5:00 to 5:45 2.1.19, on any
subject that you select, but preferably upon the operations of the Federal
Reserve Bank that is under your direction.

Trusting that we may have a favorable answer to this
invitation, I beg to remain,

Yours ver-,,- truly,

Executive Mil.rmger.

111147~743,1111/

J,etz

$ 25.000.000.
$ 52.000.000_

CAPITAL FULLY PAID

SURPLUS 8. UNDIVIDED PROFITS

Sept. 20th, 1919.

CABLE ADDRESS -CITIBANK

IN REPLYING PLEASE QUOTE INITIALS

Dear

Ben:.

For the last two or three years we have had here in the Bank
It is a co-operative effort
what we call the advanced Barking Class.
employees
of the Bank to widen their
on the part of about 200 officers and
It is composed.
point of view and to keep from falling into a banking rut.
the
heads
of divisions
of the junior officers, the heads of departments and.
of the Bank. They are all bright and wide-awake, and we are very much interested
Thar meet every
in the success of the class, and I an sure you are also.
These sessions
Tuesday afternoon at five o'clock, for a 45 minute session.
are devoted either to a discussion of particular topics previously selected
or to an address by sane distinguished person fran the outside who has accomplishThey want particularly to have you come in and talk
ed some important thing.
to than some time in October, preferably the 14th., and I am writing on their
behalf to ask you to do so.
I understand. that you are going to land in a few days, and. I will
be delighted if you will let le Imoar that you can do this, as soon as you can
conveniently decide on your engagements.

With warmest personal regards, I am,
Your s v

Hon. Benjamin Strong,
Governor, Federal 'Reserve Bank of New York,
15 Nassau. Street, New York.

truly,

BUFFALO BRANCH

'kkeEltIko

FEDERAL RESERVE BAN

AUG
1919

OF NEW YORK

BUFFALO.N.Y. August 11, 1919.

My dear Mr. Jay:

Your note of the 9th instant is just received, and I am
sorry to say that I have no recollection of ever having seen the
letter enclosed.

To my knowledge Mr. Strong never acknowledged the

letter to Dow, Jones & Company, and I am almost certain that no such
'article was ever prepared by him.

My only suggestion as to how it could possibly have
reached you so tardily is that Mr. Strong sometimes holds such

matters for attention during an absence from the'office, and it
may be possible that he was holding this in abeyance and then at
the last moment before leaving for Europe may have asked to have
it referred to you.

This, of course, is merely an assumption

on my part and may be entirely erroneous.

Mr. Beyer has charge

of the distribution of mail and I, personally, have not been in
the New York office since July 12th.
I should suppose the matter is too old now to require
attention.

Very truly yours,

)
Pierre Jay, Esq.,
Chairman, Federal 2eserve Bank of New York,
15 Nassau Street, i;ew York.

tr
A.;%

--A

sk;

.,*ust 11, 1919.

Y`'
My dear Mr. Jay:
d1,sc).

Your note of the 9th instant is just received, and Ian
sorry ye say that I have no recollection of over lavinf; seen the
letter enclosed.

io sr knowledge Mr. Stron); never ::J.cicnowledged the

letter to D017, (TOMS & Can}-any, and I are almost certain that no such

article was ever prepared by him.
1%r only suggestion as to haw it could possibly have

reached you so tardily is that Mr. Strong. sometimes hells such

matters for attention daring an absence from the office, and it
mz' be possible that he was holdinr this in abeyance and then at
the last *giant before leaving for Airope may have asked to have

it referred to you.

This, of course, is rarely an s,sstraption

on ry tart and racy be entirely erroneous.

1.tr. Boyer has charse

of the distribution of 'nail and I, personally, have not been in
the New York office since July 12th.

I should suppose the matter is too old now to require
attention.

Very truly 3rcure,

Pierre Jay,

Esq.,

Chairman, Pectoral liaserve Bank of New York,
15 Nassau Street, New York.

.7.1,--7.znt

11, 1919.

Iffy dear Sr. Jays

Your note of the 9th instant is just received, and I an

sorry to say that I hare no recollection of ever hivin:.; seen the
letter enclosed.

To rti knewlodf:e Mr.

never aokaawledged the

letter to Dow, Jones & Cara-,ayzr, and I arn almost certain that no such
article Was ever proparod Iv! him,

.7 only surcestion as to how it could possibly Now
reached you so tardily in that rx. Stron: sametiTres holds such

rsAters for attention during an absence frora the office, and it
Emv be possible that he was holdirr this in abeyance and then at
the last moment before le-Arin7, for grope nay have asked to have

it referred to yo'i.
on ray part ant

Mis, of course, is MS rely an assunntion
be entirely erroneeras.

Mr. Boyer has chr-4r

of the distritration of mil and I, nersonally, have not 1)0011 in
the New Yor1c office since July L?.th.

I should wappose the matter is too old Tura to rerai re

attention.
Very truly yours,

Pierre Jay, 3sq.,

Chairqin, Federal aeserve Bari: of Hest York,
15 Nassau Street, Nevi York.

FEDERAL RESERVE BANK

1111

OF NEW YORK

August 9, 1919.

Dear miss Bleecker:

The attached

le&r

from Dow; Jones & Company to

Governor Strong came to my desk quite recently.
hapi)en 10 knot: aov; it came to me?

Lk) you

It seems quite old and

I should be glad to have any light you can give me on its
oistory.

Very truly yours,

Pc.x.)2JU
Ghairman.

Miss ME,r3aret S. Bleecker,
C/o Federal Reserve Bank,
Bufialo, N. Y.

PJ/RAH

Mores. Lippincott, :sq.,

Yale Newsy
Jew Haven,

Conn.

Dear Sir:

(.-rrril 30, 1919.

ur letter of "nril POth, 7 have no

ng the article which appeared in the

of course, you first obtain -omission

pdblicntion.
Yonrs very truly,

Dow.-roisTEs
&co.
PUBLISHERS
THE WALL STREET JOURNAL
FINANCIAL NEWS BULLETINS

ELECTRIC PAGE NEWS TICKER

44 BROAD ST., NEW YORK, N.Y.

Benjamin Strong, Esq.,
Governor, New York Federal Reserve Bank,
Equitable Building,
New York.

My dear Governor Strong:
The writer is takin6 it upon himself to

ask if you will favor him with your valuable expressions
on the functioning of the Federal Reserve banking system
during the war period.

I believe an article along these linee

prepared by yourself would he mot timely, and at the same
time reflect food for thought to the critics erho of late

have been endeavoring to link the fluctuating money rates
in Wall Street to the central institution.
It would affoc'd me much pleasure to intsrview

you on thie subject at your convenience, or perhaps you
may not care to depart from your policy of "always in writing*,
and will favor me with a prepared article alon;-; these lines.

In the event of your compliance with this
request I should prefer to use it under your name, but would
use it anonymously should you so direct.

Yours
very truly,

CROSS REFERENCE SHEET

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FILE NO.
LETTER OF
DATED

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I
Lake George, N. Y.,
February 18, 1919.

Deer 'r. Colvin:

I found your letter of the fifteenth on my return last evening from
New York.
.711:,:t now, vs I explained, I am away from the office resting and am very

reluctant to make env engagements for moetin=s or to make r,n address, certrinly

until my holiday is nearly at en end.

Ton't you, therefore, be good enough to

excuse me from attending the m etin: to which you refer until possibly some time
next month when I may feel able to do so.
Thanking you for your letter and your thoughtfulness, I am,
Very truly yours,

Governor.

Addison a. Colvin, 'eq.,
President, Glens Fells Trust Company,
Glens Falls, Now York.

BS.YS73

41k

©JEMS CM_AS unusr COIARAIKV
GLENS FALLS,NEW YORK
ADDISON B.COLVIN, PRESIDENT
CABLE ADDRESS
-GLENTRUST"

A. EUGENE MASON, VICE-PRES.T & TREASURER

WINFIELD A. HUPPUCH, VICE-PRESIDENT

JAMES MCPHILLIPS, VICEPRESIDENT

ADAM L.SITTER LEY, ASST TREASURER

EDWARD M. ANGELL, ATTORNEY

Feb. 15th, 1919.

Hon. Benjamin Strong,
Governor,
Federal Reserve Bank,
Lake George, N. Y.
Dear Governor:-

You promised me in our telephone conversation
of some weeks since, if possible, to come to Glens Falls and
meet our hankers before returning to the city permanently.

thought of the pleasure such a visit would afford

have

us, and hopedthat I might hear from you.

Today my clergyman, Rev. Dr. John L. Caughey, called
on me and inquired if it were possible to induce you to come down
and make a short, informal address to our Presbyterian Men's
Class.

They meet every Monday evening and hear some speaker

who Presents a current topic informally and educationally.
Now this thought has come to me: If you would give

us a Monday evening, dining with the bankers either before or
after the Men's Class meets, that would most happily fill two
engagements and give you an acquaintance I wish you might have
with our people.

We had Hon. J. B. Reynolds, secretary of the Republican National Committee, a week ago.

http://fraser.stlouisfed.org/
ABC(C)
Federal Reserve Bank of St. Louis

Sincerely,

CROSS REFERENCE SHEET

FILE No.

SUBJECT

SEE

FILE No.
LETTER OF

DATED

Lz4.4.

,z _y

itA,terG

form 10

FEDERAL RESERVE BOARD
WASH I N GiTON

.-_ovexber 16,1918

McDougal

C icago

Your invitation just reached me hero and I greatly regret the necessity
of denying myself the pleasure of accepting as I shail be absent on
Novealber 30 and it will be quite imi_ossible for me to be in Chicago.
Please extend my warmest thanks to Mr. Re nolds and his associates.
Strung.

OFFICIAL BUSINESS
GOVERNMENT RATES

CHARGE FEDERAL RESERVE BOARD
http://fraser.stlouisfed.org/
2-7729
Federal Reserve Bank of St. Louis

TEL. D. 1

FEDERAL RESERVE BANK OF NEW YORK
PRIVATE

8 Washington DC

IRE-INCOMING

1155 A 16

Case NY

Thanks for message from McDougal have wired him declining
invitation.

Strong 1211

TELEGRAM
FEDERAL RESERVE SYSTEM
(LEASED WIRE SERVICE)

2-4716

RECEIVED AT WASHINGTON. D. C.,
Ezra.:7

NeWYork 1123L1. Dpv 16 1918
enjLmin Strong
'are Treasury .lashington DC
urgent
Follong telegram received this orning from McDougal of Chicago
Quote- Till it be possible for you to come to Chicago November Thirtieth and
make the address at an evening dinner given by the bankers Club of Chicago
I am requested by Mr .:1-thux Reynolds president of tae club to e:Ltend in his
behalf a most cordial invitation and I cLal personally assure you that Chicago
would feel honored. Moreover that your presence will insure a large attendance
representative not only of the bankers but the best business interests in
this comimaity. I earnestly urge you to come fld quote.
LcDouLa1 has just called you at the office here to urge you to accept
this invitation.

J H Case
113(1111

Misc. 34

FEDERAL RESERVE BANK
Sent by

OF NEW YORK

(SEND 10 FILES)

COPY OF TELEGRAM
N W.

Strong, Esq.,

.ovember 16

1918

Private Wire - Outgoing - 11:00 o'clock a. m.

41/0 Treasury Department

1.13B

Waehingten
Following telegram reoeived this morning from McDougal of Chicago quote
URGENT
Will it be possible for you to come to Chicago November thirtieth and make the
address at an evening dinner given by the Bankers Club of Chicago. 1 am requested
by Mr. Arthur Reynolds President of the Club to extend in his behalf a most cordial
Moreover
invitation and I can personally assure you that Chicago would feel honored
that your presence will insure a large attendance representative not only of the
I earnestly urge you to
bankers but the best butiiness interests in this community
McDougal has just called you at the office here to urgs you to
come end quote
accept this invitation.

J. H. CASE

TEL. D. I

FEDERAL RESERVE BANK OF NEW YORK
PRIVATE WIRE-INCOMING

66f pf Chicago Ills Nov 15-18 358pm 1
BENJ. STRONG,

F.R.B.NEWYORK

Will it be possible for you to come to Chicago November thirtieth and make the
address at an evening dinner given by the Bankers Club of Chicago. I am requested
by Mr. Arthur Reynolds ,Presi6ent of the Club to extend in his behalf a most
cordial invitation and I can personally assure you that Chicago would feel honored,

More-ever that your presence will insure a large attendance representative not only
of the Bankers but the best business interests in this community. I earnestly urge
you to come.

MCDOUGAL

5pm

(

W. U. Misc. 3

25M Sets

11-16-17

2694

BANK OF CHICAGO

CONFIRMATION OF TELEGRAM

(THIS COPY TO
k

BE MAILED

BELOW iS A FACSIMILE COPY OF TELEGRAM SENT YOU TODAY

Chicago, Illinois, 1Zovember 15, 1918.

Dm*, Otrong,
Federal Reserve Bank of New York
=r i11 it be possible for you to come to Chicago Noverbor thirtieth and make the
I am
address at an evening dinner ;1:71011 by the Bankers Club of Lhiczlip,
20yholds, 2recident of the clUC, to extend in his
requested by 'LA,
behalf a most cordial invitation and T cLsa ,dersonally assure you that Chicago
would feel honored, moreover that yarn. :.esence rill insure a large attendance
representative not only of the bankers but the best brsiness interests in this
comatinity.
I earnestly urge y-cm to core

McDOUGAL

October 16, 1918.

Ay dear ;.ir.

Chase:

It would give me very great pleasure to attend the

annual meeting of the Association of Credit Men to be held on
ivovember Zist, had I not already conditionally accepted a

similar invitation from Mr. Cooke to go to 1;uffalo later this
year to meet the bankers of that city.
fou will,

I am aul-73, realise that with the pressure

on mv time as great as it is, it would seem to be impossible
for me to make two trips to buffalo, much as I would line to
do so.

let me thanK you, however, most cordially for in-

viting me.

Very sincerely yours,

William F. Chase,
Citizens Commercial 2rust Company,
Buffalo, N. Y.

CAPITAL AND SURPLUS $2,500.000

JOSEPH SLOCK, CHAIRMAN OF THE BOARD

WIL'

H. CROSBY. PRESIDENT

WIL

H. ANDREWS, VICEPRESIDENT

NORMAN A. MACDONALD, VICE-PRESIDENT

WILLIAM STREET BRANCH

CITIZENS COMMERCIAL. TRUST COMPANY

WILLIAM STREET, CORNER SHERMAN
LEO B. SEITZ. MANAGER
HENRY WOLF,
JR .. ASST
MANAGER
BLACK
ROCK
BRANCH
NIAGARA AND TONAWANDA STREETS

ROY H. GRIFFIN. VICE -PRESIDENT

SIGNOR J. TUCKER. VICE-PRESIDENT

MAIN OFFICE-- ELLICOTT SQUARE

WILLIAM F. CHASE. TREASURER

WEST SIDE BRANCH
74 GRANT STREET, NEAR FERRY STREET
MILES E. FREEMAN. MANAGER

ROBERT W. MORRIS. SECRETARY

BUFFALO. N. Y.

BERNARD M. NORCROSS. ASST SECRETARY

IRA D. LOCKWOOD, ASST SECRETARY

HARRY G. HOFFMAN, MANAGER
R. W. H. CAMPBELL. ASST MANAGER
STANLEY J. PAWLOWSKI, ASST MANAGER

C&VEDIT DEFARI-MENT

October
15th
1918.

'OCT 1 6 1918
Mr. ..ienjamin Strong,

Governor, Federal Reserve Bank,
New York, N. Y.

My dear Mr. Strong May I as Vice President and a
member of the Speakers Committee of the Buffalo
.1.29140mcd..aratii-t-Lisxk._axtend to you an invita-

tion to speak at our annual Bankers'Meeting on
Thursday November 21st.
This meeting has been a fixture
for years and has been very well attended by the
Bankers' of Western rew York.
This year we expect
an attendance in the neighborhood of two hundred.

We feel that this would be an
excellent opportunity to enlighten Dankers',both
members and non-members regarding the activities of
the Federal Reserve Bank.
We would, therefore, appreciate
it very much if you can arrange to address this
Thanking you in anticipation for the
meeting.
courtesy of your response, permi
I.
to remain,
Yours for th

WPC
1131

*b.

Fourth Li

rty Loan,

Form 1204
CLASS OF SERVICE

WESTE

Z
OSAA

SYMBOL

Tel

et
NI

Message

Night Letter

Blue

UNION

WESTERN UNION

Nita

irr-c A M
TELvalmis

If none of these three symbols

words) this is a telegram. Otherwise its character is indicated by the

symbol appearing after the check.

Day Letter

Blue

Night Message

Nits

Night Letter

appears after the check number of

words) this is a telegram. Other-

GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT

NEWCOMB CARLTON. PRESIDENT

SYMBOL

If none of these three symbols

ze4

appears after the check I number of

CLASS OF SERVICE

wise its character is indicated by the

symbol appearing after the check.

RECEIVED AT

42FY FFN 2
RELAY

DPR

NE,,YORK iCT 13

BENJAMIN STRONG
0.1 I_

116 E 61- ST

THE aORLD

4OULD ORE

TELEGRAPH COLLECT

FROM THE STANDPOIN

LY APPRECIATE A

NALYZI-

EXPRESSION FROM YOU SENT

THE GERMAN REPLY
SIGNIFICANCE AND

TO PRESIDENT NILSON
SINCERITY

THE 407LD
1139PM

October 8, 1918.

My dear

Breed:

I am very sorry indeed about the announcement.
I really am unable to make an address, but if, at the

last minute, tnere seems to be some need for a few words
about the progress of the loan, I will be glad to let you
know at the time, but hope my name will be left off the
program.

Cordially yours,

William C. Breed, Esq.,
Chairman, Members' Council,
The Mernhents' Association of New York,
1oulworth Building, New York.

33 -,L3B

Jctober 5,

1V18.

.,)ear Ir. Breed:

I feel very mach disturbed that my name appears upon your
program, as it will be quite impossible for me to address the meet ins; on the 10th instant, and I

stated so very positively when I was

asked to attend the luncheon.
The demands on my time and strength during; these loan cam0:1

require the very limit of endurance, and I can not possibly

understand why my statement that I could not address the meeting
was not accepted as final.
Very truly yours,

Governor.
William C. Breed, _;sq.,
Chairman, Ifembers' Council,
The Aerchants' Aeseeiation of
Woolworth 3uildil4;,

October 4, 1918.

gy dear Jr. Mead:

I have just received the announcement of the lunchton
of the Members' ,;ouncil, in which I notice that my name appears
recall that I definitely declined

ake an address st the mooting, as it

or me to do so.

I really think that

should not take Clings for granted as

ent.

I certainly would not have declined

know that the metiting is an important

Very truly yours,

l,
f iiew Y9x6s,

3uvernor.

litsc. 34

FEDERAL RESERVE BANK
OF NEW YORK

(SEND,:r0 FJLES)

Sent by

COPY OF TELEGRAM
Business._
Government Rote,
Expense of ith Liberty Loan.

Sagtmsbdr 28

1918.

'alter P. Cooke, ":411.,

Puf'le Liberty Loan Committee.
1330 uarine '',Frik Building,

Suffido,

Your telegrA,n goat received on my return to the office this nerving

stop

I shell certainly 3olta my promise geed if you feel that it is necessary

Rut I have no riht to do it if my health 10 ony censideration

stop

.:Plould

you feel my presence necessary, will go monday but must ask ylu to let me
off Nith
http://fraser.stlouisfed.org/
BFederal Reserve Bank of St. Louis

a very short address.

stop

CROSS REFERENCE SHEET

FILE NO. 19-0 C3SUBJECT \lett.

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FILE NO,

A-

LETTER OF `(VIA

etr-iet

Pt- Vae-r-L-

DATED_ 9' 12-1
za-r-e-e-c-e

(3L-i

Tire
Tuntutacia

Sinancial

Thula&

WILLIAM B. DANA. COMPANY, PUBLISHERS
CHRONICLE BUILDING -FRONT, PINE AND DEPEYSTER STREETS

NEW YORK

138 FRONT STREET

September 26, 1918.

Mr. Benjamin Strong, Governor,
The Federal Reserve Bank,
New York City.
Dear Sir:-

Will you be good enough to let us have a copy of the remarks
made by you at Tuesday nightla mass meeting at Carnegie gall.

Very truly yours,

CROSS REFERENCE SHEET

FILE NO. r14b
SUBJECT

SEE
FILE N.
LETTER OF U. F
DATED 811146/

vwk

ev-tr-iascOAAA-11

;t-q
_

c2AW

-LQyao-19LL-.11LAA

Misc. 51

Office Correspondence
T

Mr. Mmereon

From

Berl!. Strong.

FEDERAL RESERVE
BANK OF NEW YORK

Date

August 2, 1918.

Subject:

Regarding that article about InvestmentN if you find
that there is an opening for me to dc so,

T -rill r4,-'4,e such en article

for Collier's or, possibly, the North American Review.

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UNION
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GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT

NEWCOMB CARLTON, PRESIDENT

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RECEIVED AT

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CROSS REFERENCE SHEET

FILE No. 7k/0
SUBJECT

SEE
FILE NO.

986-

LETTER OF 4.7
DATED 5ie .jig
16-4.44-4-4Li

v'er)

66-, 7

r&-

--/1"
73.
71-4-4-6Lc-1-4

WAR VMS VS. RUSI'ilS5 AS USUAL
Two grett Covornment war loans have now been issued, which have gathered
into the Tretsury f5,8O0,000,O10.

Our Govornoent also /Iva, outstanding iobruary 18th

over V!,100,000,,D00 of short notes, together representing 1,900,40,000

of WOW

borrowings oonelthtod in six months end, in addition, taxes have been ptad by our

AP
citizeiiu nmeurting to many hundreds of millions.

People are beginning to ask how

the loons and tax collactioor mey continue at eUC
war when the ertimoted nationol seving

a 'Once durino: a possible long

is but ocmowhers rhout $6,r)00,000,000 a

year.

In general it may be eoid thot nftor the :;000rnx.ort hos borrowed all the
loose :oust root upon bank expansion also borrow-

uninveatod fund of zavings,
ing Tuat

The clnclusion .ts obvious, tont incool.i'od sov:noos memns a correspond-

ing curtail:Tint or c:tpansion,

Blunder launing and fluunciel c)odition for the nation

and, even more important in tho 'one; futore, habits of indIviduol tSrift.

3ut what

is the relation bet,-.Teen thri.ft anti -car loano, and no- may theifi be practiced without

imposing great loorla uoon mIrchants and menufactursrs oho would both pay taxes and
buy 'oonJo if they were nrospering under the influence of the :_liasiva clogen "lousifleEl 2.3 Usual"?.

To answer thie, wo muso ocoept as molitios some vary obvious con-

clusiona 4s to s* nation's realth end ho-; it may be divertol from Voe urea of pesos

to thoso of war.

The wealth of N nation is not along its natural reeouces, for,

rtre it co, this oluntry

have enjoyed greater wAalt

before its discovery and

settlea4nt to at; presort, since o-s have coasuoted muoo of its naturel resources

in the last 4^O goers.

Nor is it population alono, for, in that cane, China, India

cr &Iasi!: would enjoy wealth far Froeter than ours.
it -7roducee fro-,,, its natural resources, by the

The lireelth of e nation is what

to them of the labor of

an ?oerretic norulation so that their pooducto may be used and onjlyod and made
servicesh2o

further nroductlon, leaving out of account the less important

wealth reprnsented by investments, or services rendered, in foreign countries.

time of peace, the ?roduction of a nation is roughly equal to its consumption, plus

what it

uses in its foreign trade.

Men war comes, production must be increased

.0 meet the appalling wastage of war, and, if the tar is extensive and long, the
mount of labor required for production or both peace time consumntion and ter consumption it innufflcient, and is coon reduced by withdrawal of men for ear making.
The demendd of those who eiani. consumption ae usual, meaning "burin ern as usual"

is the natural conflict of peace conditions with war conditions; in .ether words,

competition of tht individual consumer in the merkots for labor and material with

the Cevernment which nees laoor and material.
prove sufficient to most the demands o' both.

The "wealth' of tne nation will not
The time noon nrrivek; vi.en unnecessary

connumption nuot he reduced cno stopped, else this bidding of individuol age input Govern-

ment will advance prioes of labor and notoriols to prohibitive levels.
ban }r

Expenelon in

loans and deposits anti inflation of currency iLsues rill be a necessery accompany-

ment, cad the whole economic structure w..11 be undermined.

This in "economic oXhaus-

tion."
mel,;oe of minimising those evils are poseible, and we roust net ebout

'Juo reward till he certain in later years.

employi/n! theu.t.

The more imnortent

steps to be 'oaken tare:

virst:

Third:
reurth:
Fifth:

Ketiuce the concumption of luxuries
Avoid toalt in the cereu-intion of noceoaities
Develop more effective application of labor to production
Briog OMAM into r: eductive oecor.etians
3cononiee the. supply of credit

But some one will at once say that by this program his busin'sr, say that of manufacturing mueicel instruments, is ruined because he producee a luxury.

And the grocer

may ree venishinz prefiLe if his trade in luxuries 13 stonped and in staples curtailed;
and the laboring
ployed in addition,

Ewe loo:er wages if his work i

olds more productive and women em-

the banker s30 lose interest profits if he curtelle lotnt to

custemers of the "luxery" elaet.

This ie all true enough - in feet so '.rue that it

anpecro as though here murt be the rmA, or GOMO of the many roots, of the evil of
"busin.1,,e as '.:zu0)1."

TEE change.3 and Edjuetmcnto forced upon us by tar CkP not all be brought
about at once.

Just now, with general economy the theme of every lecture, we hear

many cries of protest, each indicating in turn "whose ox ie being gored."

If every

-3-

.henge ultiestely neceesery were instantly accomplished, no harm would result to anyone

poseibly some perronel discomfnrt due to self denial would be felt but labor would find
new kinds of employment, meeufacturers net' kindv of production, traders nue articles of
trade, and bunks new cultemert.

'ere only u fee' receljeeteee',8 made et once and others

silence. to wait, our plight wculd reeemble that of an excurcion boat whot6 pesteeEers

all rooted at once to ors roil.

It might capsize.

WOP4 -err reedjusteente cOlould proceed is rapidly at potoitle, etch et a
rats eo rdjuttod thet labor will be conetently vexploy:d, but W.U. no ehortege of labor,

so thil each moeufacturtr ern ad,:uot his affairm and af.ply his poem, hic machinery
and his orgonizatien

tome

introduce new eel ocesteiel cnea;

nued;

veoh effected tie/tab liquidate old linee and

.ech bank rbdaCS leaps 'or unnetoesery purposes as

=porde lour.:. t. Goveremoet and customere for ter pureeeee.

Of ceurto LD such ideal reeljuetment is poceible in its eeteeety and in
detail.

Zme itjurioe :111 occur, lots to eill be sesteined, the 'oelence o' emoloyment

and sunply of lolor will not bs meetly preoerved.

erly

,hen ee take a nptional,

rather than a eersonel vier cf the matter, do we see that our problem it both to win
a military eer, tleich, if lost, may moan our destruction, and 'Le conduct an ecenomic
war, which, if lost, right e!s11 cost us ns dearly us tits lo3a of the military war.

Per, to ptelerve our ecnomic :strength, which is fundamentally ths sbiii,. 7 to produce
goods end finance their nereleetion end distribution cheaply in tlie viol-late competitive
merkee'e:., Incledirz our 1-en, ei1.1 eivs us the comforts of a future fret of oo heavy a

war rorteese slab

can st oros co about our business eittoet the uruel post vex

prostrstier.

reilure to reedjust so RS to bripg about cortailmeet of unrectecary ooneumptiete
by iniividuele and thereby act fres goods and labor for vier consumption by the Government means that en rust ocieduct the *oar by the employment of pfoods

Rod lehor et con-

stantly increaoing peicer.Thrt makaa wPr more costly, makes the burden of taxation

heavier aed the total of the Government's brrowings greater.

All of the goods and

labor eiployed for rer eurpo-ren aro produced end employed curing the period of the war

41/

and not by future generetiene of produce: s.

conducted .s indefinitely advanced because
consumer

If the price level at which war is
of competition between

the individual

end tkx*xerf the Government, the Government's borrowing needs are just

eft much greeter.

loans to provide the
The/sinews of wer furnished by those who buy bonds become in

offein-mortgngo on the netion'c future inorme to be liquidated by future generations
of tax peters.

If the ccience of Goverrent were se nerfected that this ideal trensformaiiee cc;:ld be brought ehout, th

rind:

folloTing censequencee might be aseemed:

The ceneunptien of rev Tarterlals would be lieited
to the manufacture of personal necocsieiee
;;-ur -zutur-3.

Second:

The prodect

labor reoull nrovide in pert or

wholly the net incresed consumption of gooua
caumed by -er.
Third:

There eould be.11etle, if ere, shartees of labor,
for it would not only be more effective, but
eceel eould reelect, eer draftee into the army
and :levy.

17)urtb:

Advancing prices would by chocked, both for labor
and mnteriele.

Fifth:

Ceadit reealrod for proeectien and distribueion of
luxuries and to finance waste would be raved for
Goeerneent'e neede.

Fixth:

The ".neelth" of the netien, destroyed in per, could
ecre largely be furnished out of dconomito practiced.

Seventh: The Government would need to borrow love as Its suppliae would cost 1,w,, rq-p would pay lee:. interest
becalms the eupely of credit would not bu burdened
Kith the lead of "husinene are usual."

It is claimed, es nay be true enough, that even so visionary a program
would net enable the "eeelth" of the nation to meet the demands of war.

Then, in-

deed, le must accept a cerfully cefeguereed plan of expansioe to make up thn balance.

7.er ,csople east to that extert mertgape their future "wealth", the product

of their future labor applied to our resources, and do it cheerfully.

That

mortEuet oe sue lebore of the future will largely he eee loan=, both thane omits by

-5w

our Goverment and trots nede by irdividurls te annble them to pay taxer ere to byy
41/

bonds of the Goernment.

frith the morteare kept rt the smallest peeeihle smoent,

we may cenfidently expect thet greeter efficiency o' labor, n lever price level,
ane etre-ego: bank recr.res than otles- net!ore, rill elle^ us to amerce fror the

wer, warkered

he cure, but net eebeueterl, end etreneor then meet others.

There seem to be four ereceeduree immodietely neceesery, some or eohieh
are olroady underl-ay:
Eoee centre_ of rev materiel:. by the neeernment
necond:

eldueation of the public a.: to hoe they eh)el
extend their incomes.

Third:

Education of leborere as to where they should

Int

cheell be

rs to TOIst

gradually reduced or discontinued.

effect of the fourth item of the nroerem is the only ore to be coaoidered hero.
Usual."

It direetl.y relates to the contest of "War Finance ve. Business as

If the baseeero of the country wore able to curtail unnecoesary and weetew

ful borrewings by their customers, loans, the proceeds of vhich are used to build
or improve hemss, exteal elants and humieeleue eertainine solely to luxury, build
plates of amueeeont, and for many other nurpolee 'hick I purpesoly refrain from
enumeretieg, ell of there betWere would have surplus credit to see o_' in loene to

the GoverNrent or inAuetrize vital to its war needs.

Those from whom credit was

so rithheld woeld be refit reined free the employment of labor and materials, many

would liquidate some part of their inventories and not replace them, so also saving
labor and material, and, equally important, the lemsened use of credit would reduce

lone and deeesite, increase the ratio of bark rererves, reduce interest rates and
facilitete the Government's financial eregram.

A coutiout but deliberate snd voluntary policy along these lines would
be oefer, more equitable, and, probably, as effective as the only alternative, which
is higher rates of interest, along with higher prices for everything.

Ths natural

-6-

rock s.0 expsrsion in time of peace is the prohibitive interest rate, combined with

over eroduction induced by rising prices.

In war times, the oneration or this 1.aw

provss emborreeinA' becausa of the excessive rates which the Govermnent must ray for
loans, and the corroaponding shrinkage in security velum") sold in ac!'octiticn %:ith
Oevernnteot bonus.

terest mien.

3ther serious dangers accompany the elevation of prices anc: in-

In ft long ver it mr.y sea' to become Fr. erdleet reco .H.th the dog

chasing his tail in a. circle.

ThesL proldems must not orly be faced courageously, bu',, dsait with in-

Tho fathers of younc men wk.o ire servine their country LI
and navy Are proud of the sacrifices they z.eke.

urny

Too ofto-,i, however, mhon the

sacrifice ao.9earn nt the altar of busineoe, when, we have ea 14114 Tore-appeld

false

values, we shrink and protest.

unfarOinately, must sacrifice their sons, ethers some part o' their
bueinese prosperity, and still rIthere may face the ordeal of A doublA 15/1CrifiCe of
both.

it,

oi.e of the erful consequences of vtr.

Lot us cevcte ourrelves to

avoiding en unnessotery sacrifice of both boys and business by ordering our affairs
so that we ere not censterinft t i R':." Title at ;lams 4.hich oar armies need at t!..5

front.

CROSS REFERENCE SHEET

FILE No. 7 4c'
SUBJECT

/3 5

FILE No.
LETTER OF
DATED
7'

its

siZZ---ti

4-v

,e,&d.-t.4.42.,ez,

ROSWELL A. BENEDICT
II4ST NORWALK. CONN.
TELEPHONE 136-2

THE SUNNY CORNER

An Open Letter to nr. Strong,
Governor, Federal Reserve Bank ,_
N Y- No 11 OSBORNE AVENUE

March 28/18

Dear sir: -

Your article, "Finance Without Inflation", copied from
the North American Review into the New York Tribune of 7,arch 27,
1918, has attracted my attention. Therein, you say:
"In general it may be said that after the government has borrowed
all the uninvested fund of savings, further loans must rest upon
bank expansion, else borrowing must stop. The conclusion is
obvious that increased savings means a corresponding curtailment
of expansion, a sounder loaning and financial condition for the
nation and, even more important in the long future, habits of
individual thrift. x x x x x x x
"The demand of those who want consumption as Renal, meaning
"business as usual", is the natural conflict of peace conditions with ware conditions; in other words, competition of the
individual consumer in the markets for labor and material with
the government which needs labor and material.
"The "wealth" of the nation will not prove sufficient go meet
The time soon arrives when unnecessary
the demands of both.
consumption must be reduced or stopped, else this bidding of
individual against government will advance prices of labor and
materials to prohibitive levels. Expansion in bank loans and
deposits and inflation of currency issues will be a necessary
accompaniment and the whole economic structure will be undermined.
This is "economic exhaustion".
The foregoing paragraphs contain the pith of your able article.
It seems to me you are in error in your conclusions for the reason
that you 14,Te taken a wrong point of view. You treat the government as ii,,ivere merely an ordinary individual in business, pleading for oredit and depending on ordinary property conditions to
Thereas, the government is the people; its source of credit
get it.
is the whole wealth of the people, to which alone its "borrowing"
capacity is limited; and its power to "borrow" is as wide as the
people's power to liquidate raw materials into products.
But let us see what we mean by some of the expressions in the
above quotations upon which the whole matter depends ? An eminent
rhetorician once truly said that nearly all serious misunderstandings
arose from the different senses in which opposing parties used the
same terms.*
For example, what is meant by "the uninvested fund of savings"?
Is it simply the people's cash klaxsa balance, in currency or coin,
to their credit in the banks or nestling in their garret stockings ?
Or may it be other assets also ? For instance, if I have saved
money and locked it up in interest-paying real estate, is or is
not my mortgageable equity therein "an uninvested fund of savings"
as soon as the cash is again in my hands realized by mortgage ?
Is it a "bank expansion"merely to swap securities with me, the security of the public contract carried on the face of "currency':
for the security of my mortgage on sound real estate ? I good
give as
as I get.

ROSWELL A. BENEDICT
IAST NORWALK. CONN.
TELEPHONE 136-2

THE SUNNY CORNER
.

Strong -

2.
No 11 OSBORNE AVENUE

i:aroh 28/19

Then, what is meant by "inflation of currency issues" ? For
instance, was there inflation in the transaction just alluded to ?
Is it an "inflation of the currency" when I make "current" my equity
in real estate by merely swapping one seautity for another - giving
the bank my equity in exchange for its currency ? Is every condition of financial flux, whereunder property is liquidated and passes
thus from one form to another more agreeable to the owner, a condition of "expansion of credit" or "currency inflation" ? That is
"currency", after all, but a convenient instrument for running
property into changing molds, corresponding to the owner's desire ?
Is it not true that the expression, "inflation of the currency",
really was derived from dishnnest operations wherein the property
symbol, money or "currency", Nas a mere counterfeit of property,
representing nothing but spurious metal or paper ? Is it correct
to apply the expression to transactions whereunder currency is
nothing more than a form of contract between the people on the one
hand and the individual on the other under which the people agree
to accept in the market the symbol for the thing itself ? Is currency, after all, in its essence, anything but a promissory note,
tacked by the people and, instead of being secured by a mortgage or
deposit of stocks or bonds or other valuable,. secured, by their common consent, through their legislative agents, up to the face value
thereof, by products offered for sale in the markets ? It seems to
me that "currency" differs from a private note only in the fact that
it is more readily poured into a new mold than a mortgage and that
it is universally secured by market surpluses at current prices to
its full face value.
It is a ball and socket joint instead of one
It is the obligation_of the people,
working in a single direction.
secured by all their property offered in the market; and an examination or all cases of "depreciating currency" shows that the weak
point was that it was not formally backed by the whole people among
which it circulated; there was doubt as to just who and how good the
backer was.
This was true of the civil war greenbacks; true of the
continental notes; and true of every fiat money issue in the past,
pointed to by financiers who fear "inflation" and its ram rueful consequences.
here has been an enormous rise in prices since the war
began, as every housekeeper has observed; but the rise has been due
to no "inflation" but to the feverish and exciter. demand of the
people studiously pumped full by dealers of the idea of a war dearth;
and t
fever or uncertainty has been heightened and the effect
agora-eed by the constant hysterical appeals of government boards
for "saving" this or that.
But why should the government "borrow" theuninvested fund of
savings" or anything else ? It certainly does not neea to borrow.
The notion comes from the ancient fact that the people and governThe king had to cajole the people
ments were different entities.
to lend him money to keep his throne, sometimes when it would have
better served the people had the king lost his throne. But with us,
the government and the people are the same body.
It is folly to
regard the government as a separate and adverse interut against
which the people should be s'&ured by "bonds"collectibil-against
themselves

* crust lg

tut Companies

(tute,tniefi

4" Plonthlg Magazine Elenoteti to Trust Companies, tianking
anti ,?Ifinanrial Interests of the lartiteb States

.%:"71.

....11IWS

55 Pliertu Street, tieizi Vork City
C. A. LUHNOW, PUBLISHER

TELEPHONE CORTLANDT 1789

March 27, 1918.

Hon. Eenjamin Strong,
Governor Federal Reserve Bank,

New York City.
Dear Governor Strong:
TRUST 007,.T.PANI2S Pagazine, as you are probably award, has

a large following among trust companies and State banks.

We have

been exercising whatever influence we command to urge trust companies and State banks to enter the Federal Reserve system - tp

help strengthen our financial sinews for the prosecution of the big
war.

We naturally need the help of our foremost spokesmen on
federal Reserve and banking affairs.

The thought occurs to me that

it would be very helpful in advancing our propaganda among State
institutions to secure an expression or an article from you for our

April issue, emphasizing the facilities and actual benefits which
trust companies and banking institutions secure through membership
in enabling them to secure credits, rediscounts and other accomodation.

The advantages of membership are rendered especially

obvious in connection with our Liberty Loan campaign.
I appreciate that, just now, your time will not permit of
undertaking to write articles.

I would like to suggest, however,

that we could use the bulk of the address which you delivered at
the American Bankers Association convention, especially the successive stages of the functions of the Federal Reserve Bank of New York

Iron. Benjamin Strong--2

in connection with the Liberty Loan adjustments.
An article of this kind would not only stimulate sentiment
among trust companies in favor of "membership" but it would also

make clear the great importance of the Federal Reserve Banks in
sustaining reserve and credit conditions in the face of heavy war
requirements.

Very sincerely yours,

Publisher.

TREASURY DEPARTMENT
WASHINGTON

NATIONAL

WAR SAVINGS COMMITTEE

Mcrch
Seventh
1 9 1 0

Mr. V. C. McLaren,
FederLi 7,eserve Bank,

New York City.

My dear Mr. McLaren:-

I havo ynur letter of yesterday in which
you state Mr. Strong is to be out of torn for a few

days.
Could you not, in the meantime, prepare
t1e article from material Mr. Strong has already used
on his return?
and have it ready
If you could send it to me early in the

week of the 17th I could release it for the newspapers on March 71st.
Faithfully yours,
/41.4/NA -4h

National War-Javines Committee,
319 National i.:etropolitan Bank
Bldg.

KIP/CC.

TREASURY DEPARTMENT
WASHINGTON

NATIONAL
WAR SAVINGS COMMITTEE'

March

Fifth
1918

Lir. Benjamin Strong!,
Federal Reserve Bank,
Now York City.

My dear Mr. Strong:-

I enclose proof sheet of an article
by the Secretary of the Treasury that we are re-

leasing for the newspapers of this coming Sunday.

This is the first of a series of weekly

articles am. I should very much like to have one
from you, oft say, about fifteen hundred words,for
as early release as possible.

These articles will run in all large newspapers in the country and will reach a National audience.

The particular article that I wish you
could write for us is one that stegested itself to

me when I heard you speak scenetime ago before a
That evening you told a
Liberty Loan Committee.

very interesting and touching story of the wag the
French peasants were bringing out their hoarded savings and lend inn^ them to the Goverment.

Couldn't you let me have an article just
on that phase of the subject - the way the mass of
the French people put their savings at the service
of their country in a National emergency.
I think you will see the advantage of us-

ing this article at once, both for the

and the Liberty Loan.

Tar Savings

Faithfully yours,

c-tidftm

Nat ional War- Savings Ccnenit tee,

319 National Metropolitan Bank
FHF/CC.

Enc los.

Bldg.

CROSS REFERENCE SHEET

FILE No.
SUBJECT

FILE No.
LETTER OF
DATED
'7.2

JOSEPH VAN VLECK, JR.
HI FIFTH AVENUE
NEW YORK

February 19, 1918.

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

adA
FEB1 9 1918

My dear Mr. Strong:-

At my suggestion the W. S. S., Committee at Montclair
unanimously request you Trlaiorably consider an invitation
to speak for Fifteen or twenty minutes at a mass meeting which
afternoon at four o'clock, March
they have arranged for
third.

Montclair has done well in the Liberty loans and the war
This we have doze
funds of the Red Cross and the Y. M. C. A.
without the assistance of any widely known big men, in Which I
take the liberty of classing you.

You once lived in Montclair and the ton is proud of the fact
and I truly believe it will mean much, if your time will permit
you to participate at the proposed meeting.
I have talkel with Harry Meyer and he joins with me in the
reouest that you will come.
I promise, if you do, Montclair
will button its coat and throw cut its chest.

The time for the meeting is set, all other conditions will
be arranged absolutely according to your wish.
I personally hope
that you will come and spend the night with us.
You can rest
and take it absolutely quiet or we will arrange to have some of ycur
old friends at the house, if agreeable to you.
Very sincerely yours,

14-0
FOUNDED APRIL 5. 1768

PRESIDENT

EUGENIUS H. OUTERBRIDGE
VICE-PRESIDENTS

1,'_FRED E. MARLING
HTON A RAVEN
LIAM SKINNER
WVELAND H. DODGE

CHAMBER OF COMMERCE
OF THE STATE OF NEW YORK

HENRY HENTZ
EUGENE DELANO

PHILIP A S. FRANKLIN
JAMES A. FA RRELL

SIXTY-FIVE LIBERTY STREET

SAMUEL REA
FRANK K. STURGIS
HENRY P. DAVISON
T. DEWITT CUYLER
TREASURER

NEW YORK
SECRETARY

CHARLES T. °WYNNE

WILLIAM H. PORTER
CHAIRMAN, EXECUTIVE COMMITTEE
WELDING RING

evn. r

ASSISTANT SECRETARY

JERE D. TAMBLYN

ldP.(1
January 22, 1918.

Hon. Benjamin Strong,
Governor,
Ferderal Reserve Bank,
15 Nassau Street, City.

My dear Yr. Strong:

I am in receipt of your letter of January
18th and the
quested.

enclosure which you have filled in as re-

I am, however, putting you down as serving as

Chairman of the

Liberty Loan Committee, as that service

should of course be noted on our records.
Thanking you for your interest and cooperation,
I am,

Very truly yours
("SOCIeiary.

TREASURY DEPARTMENT
WASHINGTON

NATIONAL
WAR SAVINGS COMMITTEE

March

Seventh
.1 9 1 3

Mr. V. C. McLaren,
Federz.:.3. 'reserve Bank,
iTew York City.
clear Lir

McLaren:-

I have r-Tar letter of esterday in N.711.ichh_

you state Mr. 3trong is to be out of torn for a few
days.

Could you not, in the 1:e.?zitime, .prepare

Mr. strong has already used
and have it ready ibr his approval on his return?

If ;ou could send it to me early in the
week of the 17th I could release it for the newspapers on 1,1::,rch

7o.ithfully yours,
/414/NA -41-:

National War-Ca.vings Min ttee,
319 : :at tonal I.:etropolitaa Bonk
Cal

BI rig*.

TREASURY DEPARTMENT
WASHINGTON

NATIONAL
WAR SAVINGS COMMITTEE

Liar ch

Fifth
1918 .
Lir. . Benjamin Strong

Federal Reserve
llow York City.

L:y dear Lire Strong:-

I err lose proof sheet of an article
by the Secretary of the Treasury that we are re-

leasing for the newspapers of this coming Sunday.

This is the first of a series of weekly

articles and I should very much like to have one
from you, off ow/ about fifteen hundred words,for
as early release as possible.

These articles will run in all large news papers in the country and will reach a National audience.

The particular article that I wish you
could write for us is one that suggested itself to

me when I heard you speak s amettne ago before a
Liberty Loan Committee.
That evening you told a

very interesting end touching story of the wag the
French peasants were bringing out their hoarded savings and lend ing them to the Government.

Couldn't you let me have an article just
on that phase of the subject - the way the mos of
the French people put their savings at the service
of their country in a National emergency.
I think you will see the advantage of using this article at once, both for the War - Savings
and the Liberty Loan.

Faithfully yours,

/lam -k+
FLT/CC.

Eno los.

C.IJAV"r

National Warngs C crim it tee ,
319 National Metropolitan Bank
Bldg.

CROSS REFERENCE SHEET

FILE No.
SUBJECT

SEE

FILE No
LETTER OF
DATED

_...,

/,:

JOSEPH VAN VLECK, JR.
III

FIFTH AVENUE
NEW YORK

February 19, 191n.

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

FEE11 9 1918

My dear kr. Strong=-

At my suggestion the W. S. g. Qpxmittee at Montclair

unanimously request you trillitr.consider an invitation
or twenty minutes at a mass meeting which
Ito speak for
r they have arranged iortiaiii afternoon at four o'clock, March
third.
Montclair has done well in the Liberty loans and the war
funds of the Red Cross and the Y. M. C. A.
This we have done
without the assistance of any widely known big men, in Which I
take the liberty of classing you.
You once lived in Montclair and the to-n is proud of the fact
and I truly believe it will mean much, if your time will permit
you to participate at the proposed meeting.
I have talkei with Harry Meyer slid he joins with me in the
renuest that ycu -q11 come.
I promise, if you do, Yontclair
will buttAi its coat and throw cut its chest.

The time for the meeting is set, all other conditions will
be arranged absolutely according to your wish.
I personally hope
that you will come and spend the night with us.
You can rest
and take it absolutely quiet or we will arrange to have acme of your
old friends at the house, if agreeable to you.
Very sincerely yours,

FOUNDED APRIL 5. 1760

PRESIDENT
EUGENIUS H. OUTERSRIDGE
VICE -PRESIDENTS
..FREED E. MARLING

CHAMBER OF COMMERCE

,NToN A. RAVEN
ILIA M SKINNER

...EVEL-AND H. DODGE

OF THE STATE OF NEW YORK

PHILIP A. S. FRANKLIN
JAMES A. FARRELL
SAMUEL REA
FRANK K. STURGIS
HENRY P. DAVISON

SIXTY-FIVE LIBERTY STREET

HENRY HENTZ
EUGENIE DELANO

NEW YORK

T. DE WITT CUYLER
TREASURER

SEC R

CHARLE T. GWVN NE
ASSISTANT SECRETARY

WILLIAM H. PORTER

JERE D. TAMBLYN

CHAIRMAN, EXECUTIVE COMMITTEE
WELDING RING

January 22, 1918.

Hon. Benjamin Strong,
Governor,
Ferderal Reserve Bank,
15 Nassau Street, City.
My dear Nr. Strong:

I am in receipt of your letter of January
18th and the
quested.

enclosure which you have filled in as re-

I am, however, putting you down as serving as

Chairman of the

Liberty Loan Committee, as that service

should of course be noted on our records.
Thanking you for your interest and cooperation,

am,

VeryltUlY yours,
\-Secretary.

ALRICK H. MAN

C. G. M. THOMAS

A. CHALMERS CHARLES

President

Vice-President

EUGENE L. DELAFIRLD

Secretary

Comptroller

D11.FORS

Al)i1/4

Brooklyn
Woodruff Leeming
Howard F. Whitney
()liver E. Yale

Queens
Thomae

John E. Weier
Richmond
Stacy C. Richmond
Medad E. Stone
erbert J. Bickford

Incorporated by Special Charter May 18th,1917

Manhattan
Chalmers Charles
C. Ward Crampton

H MP ILL
ref

Federation of the Councils of the ,s11. 1)
st.%0
Bo Scouts of America oci
in the City of New Or

Bronx
Eugene L. Delafield
William E. Freeman
Thomas W. Whittle

EifJ.

JOHN ROY
reactive Secretary

Succeeding the Advisory Committee

C. ELMORE SMITH
Chief Campmaster

Victor F. Ridder

n Street

OCT 13

Telephone, Hanover 5215

OW"

tY071

10mIt

%At
ric

October 10th, 1917.

Benjamin_ Strong,

Federal Reserve Bank,
Pine and Nassau Streets, New York, N.Y.
My dear sir:

The Federation of the Councils of the Boy Scouts of America
in Greater New York has requested me to invite you to take part in the rrogram of a general meeting of the Boy Scouts of Greater New York to he held
at the Seventy-First Regiment Armory
Saturday Octo'-er 20th, at three

(

Park Avenue and 34th Street )

o'clock,

this meeting being held for the rur-

rose of lending enthusiasm to the work of the Boy Scouts in obtaining subscriptions for the Liberty Bon is during the last week of the camraign.

Mayor

iiitchel has agr ad to address the scouts on this occasion and we are particular-

ly anxious that you shoull present the War Service medals to the scouts who
earned them by

obtaining

the largest number of subscriptions during the ^re-

vious camraign.

I sincerely

hope that you will be able to accent t'lis in-

vitation and feel sure that the reward

the shape of subscriptions will be

gratifying.

Yours very sincerely,

AHH.M

"BE
PREPARED"

President.
"DO A GOOD TURN DAILY'

7
Cfeie

RECEIVED
OCT 5 1917
.,
.11

7$:-1(/7-11

Hon. Benjamin Strong,
Governor of the Federal Reserve Bank,
New York, N. Y.

October 4

MAIL 1 ELLER
FEDERAL RESERVE BANK

of New York

Dear Sir:-

In your instructive article in The New York Times
Magazine of September 30, 1917, entitled "Economy or Government
Confiscation", you explain how the Government might act to
procure, for example, a ten billion dollar loan, affirming that: "The Government would then proceed to collect
taxes enough during the period that these bonds are outstanding to enable it to pay the interest and to amortize
the principal; that is to say, to set aside a sufficient
amount every year for the retirement of the principal of
the bonds, so that the total would have been retired at
maturity."

Does the Liberty Loan Act of April 24, 1917, (authorizing the issue of bonds not to exceed $5,000,000,000 for the
national security and defense), make any provision "to amortize
the principal", by annual contributions, so that the total
would be "retired at maturity"?
Does the recent Second Liberty Loan Act have any such
provision?

Has the Secretary of the Treasury, merely ex officio,
the power to create a sinking fund or funds for such purposes,
sinking funds that would grow into billions of dollars and put
Has the initiation of
a premium on a huge financial travesty?
such sinking funds been commenced?
Furthermore, is the concealment or silence as to the
interest charges upon these Liberty Loans prudent?
A $_3,000,000,000 25-year 4°4 Liberty Loan means also
$3,000,000,000 of interest, or a total liability of $6,000,000,000.

As no provision appears in the Act, or is announced by
the Secretary of the Treasury, for the amortization of the principal of these Liberty Loans, it is the payment of the interest,
semi-annually, that affects the present generation, not the payment of the principal.

So if a total war debt has already been accrued by

Benjamin Strong.

-2-

Oct. 4, 1917.

the United States of about $20,000,000,000, principal, if that is
ultimately to be outstanding on an average of 25 years time at 4%,
the total obligation that the country is already committed to is
about $40 000 poo,000l

The general practice - both at home and abroad - of
omitting the practical effect of the interest element of these
war debts, appears to be as uncandid as unwise.
Maurice Trinquat, in his De L'Amortissement des Emprunts
D'Etats, published in Paris, in 1899, wherein is a bibliography of
the literature on Sinking Funds, including ninety-six works in
different languages, concludes that Finance should be so simpleas
to be easily understood by all classes, and that the easier it is
the nearer it is to perfection (p. 381).
He agrees with the
eminent political economist J. B. Say in that there are no two
ways of extinguishing debt; the only way is, for a State as for an
Every other
individual, to use the revenue above the expenses.
form of extinguishing a debt is a pure folly, wherefrom no
His opening chapters
advantage accrues to the State (p. 385).
aim to show that morally, politically and economically amortization (extinction rather than conversion) of public debts is a
necessity. He maintains that for the public to free itself from
the obligation of paying debts is to encourage itself to incur
infinitely new debts (p. 78); and he quotes Ricardo, that Sinking
Funds rather tend to encourage expenditure, than to diminish debt
(p. 209).

When Congress assembles at its next session the amortization of our Liberty Loans should receive prompt and most
serious attention.
As an English writer - Mr. Walter Jonas, in his brochure
on"National and Municipal Finance", p. 36,- says:"Financial stability and sound credit are more
essential to success in war than dreadnoughts,
guns, or anything else."
I know of no stronger blow to give the enemy of Central
Europe than to have them realize that the United States now adopts
Show that to the
the principle to "pay as it goes" for this War.
World, and our pre-eminence both in present warfare and in future
trade and fiscal leadership ought to be assured.
Assuming Sinking Funds to be impracticable for these
immense Liberty Loans, the precise mode of applying the Serial
method of payments to such Liberty Loans (keeping in mind, also,
the conversion of the first 31% Loan into 4% or 41% loans) is a
matter of careful study and computation, when contrasting it with
the four variations incident to Sinking Fund calculations.

Refunding at the end of 25 or 30 years, no matter what
foreign precedents exist therefor, should be proscribed.
Many

Benjamin Strong.

-3-

Oct. 4, 1917.

disasters and even revolutions in Latin America and elsewhere
have been due to refunding when such might have been avoidable
by amortization.
As our Liberty Loans now appear to be undertaken with
no provision but the Nation's credit for the ultimate payment of
the principal of such debts; and as the Serial Method of such
payment is beyond a doubt the safest and least expensive way to
pay such principal sums; it is impressive to note that the
difference in the interest account between the method now adopted
by the Secretary of the Treasury with these Liberty Loans and that
of the Serial Method, is $480,000,000, in favor of the Serial
Method, on each $1,000,000,000 of principal for 25 years at 4%, or
a difference of $2,400,000,000 on each $5,000,000,000 of principal
at the same time and rate.
Yourinfluence to secure the requisite Congressional
Legislation to meet this situation is earnestly expected.
Sincerely yours,

ADC-S.

.icing.

Boston Daily Advertiser, June 5, 1D17
States, Municipalities, Banks, Institutions.)

countants of Ontario, has pronounced
'the day of the sinking fund as past.
insisting that 'the sinking fund is a
municipality.'

SERIAL PAYMENT

curse to the average
(Macpherson. Municipal Accounting, pp.

FOR LIBERTY LOANS
Attorney Alfred D. Chandler
Says it Should Save
$2,500,000,000

26. 28).
"With the advent of the present war
this sinking fund issue was suddenly affected by international incidents, forcing
New York City on the closing of its
Stock Exchange following the war's
outbreak, Aug. 1, 1914, to recognize' in
part thereafter the serial method, simultaneously with the special banking arrangement made to meet that City's
$100,000,000 obligations presently due in
London and Paris. (Resolution of Board
of Estimate and Apportionment, City of
New York, Sept. 11. 1914).

"The agitation of that issue helped
also to impel' the New York Constitutional Convention, of 1915, unanimously
to recommend an abandonment of the
New York and English sinking fund
method and to follow Massachusetts'
hegemony in making serial loans comConstitution of N.
pulsory. (PrSecopt.
Art. IX.
Sends Open Letter to Sec. Y."Sinking
Funds for great national
loans are impracticable, and put a
McAdoo in Which He
premium on waste and worse. A $5,-

SINKING FUNDS ARE
IMPRACTICABLE, HE SAYS

5)osed

000,000,000 30-year 334 p.c. loan would
ultimately require a sinking fund of $2,-

Outlines Plan

864,330,000

( I) on a 334 p.c. basis, to

waste. He states that a $5,000.000.000

pay the principal of such a loan at maturity. The sinking fund pays no part
of the interest. The interest would be
$5,250,000,000 in addition!
"The investment (if possible) and
care of a $2,864,330,000 sinking fund
throughout its gradual accretions, and
by successive administrations at Washington would invite a huge financial
travesty, far out-matching the well
known state sinking fund blunders at
A'bany, or the conduct of the New York
City sinking funds (about $400,000,000 .
the theory of which is confessedly shattered every week in the published summaries of that City's financial operations, last week's published balance of
its sinking funds uninvested, as of May

000,000 in addition.

method of a little over

Alfred D. Chandler of 70 State st.,
a well known Boston lawyer, has sent
an open letter to Sec. of the Treasury
William G. McAdoo in which he points

out that the United States Gtr-ern-

ment would save over $2,500,000,000 on

each $5,000,000,000 by paying off the
Liberty Loan issues in serial form,

rather than by a straight loan.

Atty. Chandler declares that sinking
funds for great national loans are im-

practicable, and put a premium on

30-year 334 p.c. loan would ultimately 19, being $9,561,349.60! (N. Y. Times,
23. 1917).
require a sinking fund of $2,864.330.000 May
"Every $5,000,000,000 30-year 3 1/2 p.c.
to pay the principal of such a loan at straight
loan means also $5.250,000,000
maturity. The sinking fund, he says, of interest, a total cost of $10,250,000.000. But if in Serial form the total
pays no part of the interest. The in- cost
such a loan is only 87,712.600.terest, he points out, would be $5,250.- 000, of
a difference iq favor of the serial
"Every $5,000,000,000 30-year

334

$2,500.000.11..

for each $5,000.000,000 loan.

"If such a bond issue was at a 4 p.c.
p.c. straight loan means also $5,250,- rate, the difference in favor of the Serimethod would be $2,900,000,000; and
000,000 of interest, a total cost of $10,- a'
if at a 4% p.c. rate the difference would
250,000,000," he says. "But in the be $3,262,600,000 In favor of the serial

serial form the total cost of such a

method.

loan is only $7,712,500,000."

the 'instalment' serial method, or equal
annual instalments of the principal. Under the 'annuity' serial method, or equal
annual instalments of both principal
and interest, the difference above indicated would be somewhat less.
"The serial method secures also two
invaluable benefits in war periods: (1
It maintains and strengthens national credit ; and (2) it iustly divides
cost between present and future.
"Both future national issues of unknown billions, as well as the future

Mr. Chandler's letter is as follows: "70 State Street, Boston,
"June 1, 1917.
"Hon. William G. McAdoo,
Secretary of the Treasury
of the United States.
"Dear Sir:
"Accustomed for over 40 years to
meet concrete administrative issues, let
me by this open letter, emphasize some
facts that taxpayers are to face under
the Liberty Loan act of April 24, 1917.
"That act authorizes an issue of bonds
not to exceed $5,000,000,000 for the national security and defense. Subsequent
acts will authorize more.

The above computations are based on

conversion of the present 2.000.0nn A
2% p.c. issue into bonds of a higher

rate, thus present fiscal questions of a
magnitude and nature of the deepest
to taxpayers in the United
"The terms and conditions of such a concern
testing their sustained loyalty to
bond issue are not given in that act, States,
contend
for
coveted peace.
which was hastily passed, but are left
"Respectfully yours,
'as the Sec. of the Treas. may prescribe.'
"Alfred D. Chandler."
Such power is vast and far reaching.
From the Boston Daily Advertiser,
"No sinking fund to pay the princiJune 8, 1917
pal at maturity of the $5,000,000,000
bond issue is provided for in that act. McADOO REPLIES TO
Does the power to create a sinking fund
rest with the Sec. of the Treas.? Will
he initiate such a fund? We have no
CHANDLER'S LETTER
official information thereon as yet. Can
a real (not a pseudo) sinking fund be

States He Is Considering Serial
Form Plan for Loans
loan may be either a straight loan the
successfully maintained on such a scale?
No.
"But if not, then the $6,000,000,000

principal of which matures say at the Secretary of the Treasury William
end of 30 years, or it may be issued to G. McAdoo has forwarded a reply to
be paid serially, as Massachusetts and the open letter sent him by Alfred D.
some other states issue their loans, onethirtieth of the principal to be paid each Chandler of 70 State set., a Boston
year, thus liberating for new uses about lawyer, which pointed out that the
$167,000.000 each year. with a corresponding annual reduction of the in- United States Government might save

terest account, and an ultimate enormous saving in interest
"Why is a great national sinking fund
impracticable? During our Civil War
the Act of 1862 provided for a sinking
fund of 1 p.c. It became of no effect.
As John Sherman in his Autobiography
wrote (Vol. II. p. 877) :- 'There is no
actual fund of the kind in existence for

national purposes.'
In England the successive failure of
sinking funds, it is said, 'made the term
Sinking Fund almost one of reproach.'
(Sargant, Sinking Funds, London, 1868,
Again :- 'In 1816 a Sinking
p. 82).
Fund was commenced in France, on the
principle of Mr. Pitt's English one. It

over $2,500,000,000 on each $5,000,000,-

000 loan, by paying off the Liberty

Loan bond issues in serial form.
Secretary McAdoo in his letter states

that the serial form issue is having
his serious consideration. He states
he is in sympathy with the idea and
proposes to use it as far as practicable
in carrying on the financial operations
of the Government_

The reply of Secretary McAdoo is
as follows: "The Secretary of the Treasury,
has long ceased to produce any effect
"Washington. (En Route)
but that of creating confusion in the
"June 5, 1917.
accounts.' (Idem. p. 131) England, persisting in Sinking Funds, yet suspended "My Dear Mr. Chandler:
the Sinking Fund in 1886-7, after the "I have your letter in reference to
war in Egypt, and again more recently
on account of the Transvaal war, re- issues of serial bonds, sinking funds,
liance being placed on the Nation's cred- etc., and have read it with much init for the final liquidation of these terest. The questions you suggest
debts.
The late Professor Dunbar of Har- are having my very serious consideravard University. in his Economic Es- tion.
says (p. 84 et seq Ed. of 1904, refer"I do not hesitate to say that I
ring to Mr. Pitt's famous Sinking Fund
system which was swamped by the gi- have never regarded with favor the
gantic wars of the French Revolution. sinking fund idea with respect to pubaffirms that it rested 'upon a complete lic loans. The serial method I regard
Illusion as to the possibility of holding
Parliament permanently to the system- as far superior. Of course, the quesas to the possibility, that is, of binding tion of serial issues must depend upon
the debtor by a compact made with the situations that have to be met.
himself.'
"After our Civil War, the wonderful
"In the future financial operations
prosiliency of the Nation swept aside of the Government, issues of aerial
the Sinking Fund requirements of the bonds as far as it is practicable to
Congressional Act of 1862, reducing
them to a mere perfunctory bookkeep- adjust them to the necessities of the
ing entry.
"During this century Massachusetts case, and as far as it seems wise to
has led the world in its legislative dis- adopt them as a matter of policy, will
approval of public sinking funds. On be made.
the other side of the Atlantic, England
hes tried to retain this financial sink- "I cannot be more definite than
ing fund anachronism at nome, and to this; I must only express my sympainculcate its adoption over seas in mak- thy with the idea and my purpose to
ing foreign loans ; but on this side make use of it as far as practicable
Massachusetts rejects sinking funds as
in carrying on the financial operations
out of date, unreliable and too costly.
"Massachusetts is right ; and as the of the Government.
principles of sound finance are universal
"Very sincerely yours,
England may yet discontinue the sink"W. G. McAdoo.
ing fund method, both at home and
abroad.
"Alfred D. Chandler, Esq.,
"Many a revolution and receivership
"70 State Street,
is due to sinking funds. Mr. Macpherson of the Institute of Chartered Ac- "Boston, Massachusetts."

C.A.HAZE N, PRESIDENT.

HARLES L. WISE,TREAsuRER.
f

[

NiaLII

,RECEIVED
SEP 21 1917 740
12

AMERICAN EXCHANGE NATIONAL BANK BUILDING

128 BROADWAY
THE LEADING
BAN KING PUBLICATION

00,47. t;-3

NEwYoRK

OF AMERICA.

Lc:pt. 20th, 1917

--L-JIR

at h ©w York

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

rimProci rt

Dear Sir:

7e will be under obligations to you if you can
furnish us with an advance manuscript (confidential) of
your forthcoming address before the American Bankers'
Association at Atlantic City.

We expect to report the proceedings in full
in our extra edition to be i:lsued immediately after

adjournment, but it will be a convenience to have the
matter in type before the date of issue.
'7e have followed this plan in the past to the

satisfaction of everybody, and bespeak your co-operation
and consideration.

Respectfully yours,

PL B' ISHING

AND CALI F OR N IA BANKER

PACIFIC COASTS OWN BANKING PAPER.
CAIIANT BANKER Pit i LISIILWO

576-578 SACRAMENTO STREET

sAoNFIcv.cisco.
PRESIDENT.

OLIR HOME TERRITORY

-0epta4ber Igh, 1917.

GEO. P. EDWARDS.

LAIR

Hon. 3enjamin Strang, Jr., Governor,
Federal Reserve Bank,
New York, N. Y.
Dear lir. Strong:

M1 you kindly favor us with a copy of the
address you are to deliver before the Allerican Bankers Asso-

ciation at Atlantic City to be used in the A. 3. A. issue
of COAT 3AN1LZR, which will contain a complete report of the
proceedings of the convention?

An advance copy will be a :mat favor to us
and will, of course, be held in confidence until after it is
delivered.

Very truly yours,

GFE:1,11

_resident.

-sag

,
L

i.jP1 13P14br

8EP A 8 191,
r.;17",,a74s t'Ltr
Seetember 15, 1917.

Doar Sir:

Mr. Strong is curt no

so privied vith work that I

an obliged to ask you, in reply to your note of September
lrAh, to excuse him from corn lying with your request.
7:ers it not for the pressure of t'ork, 1 am sure that he would

he vary glad to do so.
Very truly yours,

Secretary to Mr. Strong.

J. T. Stanley, Esq.,

reneging Editor, ita_risadjamlasishis...,
1,0 rest 32nd Street, New 'fork.

}TAB

6171N---3-3-17-10M.

EDITORIAL DEPARTMENT

HE BROOKLYN D AU:S:
WM. HESTER, PRESID.T.
WM. V. HESTER, Sic. ARO TREAS.
H. F. GUNNISON, SusinSS3 MGR.

BROOKLYN, N. Y.,
iriokese~swwwrommowinnew

Dear Sir:

RECEIVES
SEP 15 1917

FoAcixILE

SeIt. 14y
MAIL

TEL Lr-R

The Brooklyn Daily Eagle would very much appreciate lin
advance copy of your aduress at the Forty-third Annual Convention
of the American Bankers Association to be held in Atlantic City,
September 24-L9.

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

I.:a naginc, Editor

PUBLICITY DEPARTMENT

LIBERTY LOAN COMMITTEE
MEMORANDUM
FROM

John Price Jones

DATE

Mrs. McLaren

SUBJECT Gover

September

3, 1917.

Strong's Ar-

tic2
"Financing Governme
Loans."

Here is the revised proof of governor Strong's
article.

I promised that I would

night, so if you could let me hay
I would be very much obliged.

JPJ/IWB.

in in the mail to-

it back this afternoon

CROSS REFERENCE SHEET

FILE No.
SUBJECT

FILE No.
DATED

0",tciA-(4.-t-1--1

.°°

re, /77

LETTER OF

4,A)

-*5

September 10, 1917.

The Ihicago Banker,
407 Monadnock Block,
Uhicago, 111.
Dear Sirs:

'I have your request of the 6th instant for a copy
of the address I will deliver at the American Bankers
Association Jonvention the latter part of this month and
shall be pleased to send you one when it is ready.

As yet

I have not prepared the address.
Very truly yours,

Governor.

BS/113B

September 10th, 1917.

Dear Mr. An

The article which appeared in the American Banker

to which Vr. Stone makes reference in the attached copy of

letter was . rather a garbled affair and I will appreciate it

if you will send him a correct statement of the intervier.
Very truly yours,

Chairman.
A. P. Anderson, Fag.,
Executigs Secretary,
Liberty Loan Committee,
120 Broadway, :ew York City.

'CV

BENNETT SERVICE

111 110

tatts 3nurgtor

Pfr°,

RALPH 111.311P4IC

EXECUTIVE COMMITTEE
ARTHUR H. BUHL

310NEV T. MILLER
vicE
JAMES C. DANAHER
VICE PRESICIENT

" c` '16MT;IP. .
3 P. SPICER

JAMES COUZENS

ev.

JAMES E. DANAHER
CHARLES A. DEAN
JOHN M. DWYER

so.wcsIDFFsecgmrAFty
R3ON SROWNINCI
VIOL PRESIDENT E nin0
CHARLES C. HILTON
AssIATANT SECRETARY
HARRY L. 3TANTOH
FREDERICK J. 1:10AVIN

JULIUS H HAA55
RICHARD P. JOY

ALEXANDER I. LEWIS

ALBERT .tfrksAN

SIDNEY T. MILLER

EDWARD D STAIR
THOMAS C. STARRET
RALPH STONE

JULIUS C. PETER
TwE
FRED WIXSON
MARCIER AV

DAVID T. LOF/IMER

MANAGER REAL ESTATE PE.... REMY

Emintarri Tinrwr Oriniativy
CAPITAL AND SURPLUS 52,000.000

1' ISIIICIliGAILAT
DErrIt11111'

Obroommec
September

MiNti
Honorable Benjamin Strong, Jr.,
Governor, Federal Reserve Bank,
New York City, N.Y.

7,1917SEP 10

.4-

:)*P 11

!!:17-nE BMW Mai agat

Maw Tura

My dear Mr. Strong,-

I have seen a reference to an article written
by you which appeared in the American Banker, on the general
subject of Governnent War bonds, methods of advertising
and selling them, reasons why the people should save out
of their earnings in adv.nce of issues, et cetera. I do
not know in what issue this appeared, but I am very anxious, indeed, to read it.
If you have an extra copy, mil ht I trouble
to send me one; or, if not, would you do me the favor
send this letter to the"American Banker; with request
forward me a marked copy, charges collect.
The favor
be very greatly appreciated.

you
to
to
will

I am treasurer of the central or executive committee here in Detroit, having the sales of Liberty bonds
in charge.
Yours respectful

11S.

toEi

President.

Founded in 1898

THE CHICAGO BANKER

HARRY WILKINSON
Editor- President

407 Monadnock Block
Telephone Add reap
CHICAGO September 6, 1917. Harrison 4499
otepC"''4163111

Sit

Benjamin Strong, Jr., Gov.,
Federal Reserve Bank,
New York City, N. Y.
Dear Mr. Strong:-

15 "*"

inirmswiwi
oswavol

Will you kindly send us
a. copy of your address to be delivered
before the American Bankers Association
Convention to be held at Atlantic City,
September 24 to 29. We would be pleased
to receive it by September 20, if pos ble.
The proceedings will be printed in the
September 29 issue of l'H7 r'AIr'Arlt) PANT71"P.

Thanking you in adva.nce

for this favor and appreciating: your very
prompt attention, we are
Yours very truly,
TPT! r1FTmA(70 PAr7r,P.

August 24, 1917.

Dear Mr. Forbes;

I should like to accommodate you in the matter
referred to in your letter of Lu,;ust 22nd, but I feel

that it would be a mistake for me to do 80 just now.
Reerettinc; that I cannot be of service to you,
I am,

Very truly yours,

governor.

B. C. Forbes, Esq.,
Equitable Building,
New York City.
BS/ BAH

,'ugust 13, 1917.

Dear Sir:

Will you be good enough to let me have the revised
pages of Mr. Strong's article "Waste and Economy."

These

whereas the
can be identified by being written in elite type,
original manuscript is ig piker.

These will be returned some-

time during the day.

Thanking you, I am,
Very truly yours,

Secretary to Mr. Strong.

Roland a. :%)Elvare, 2sq.,
:;ecretary to Mr. h1merson,
National Bank of Commerce,
New York City.

ti
128 GILPIN STREET
DENVER. COLO.

SUNG DEM
Aug
';

tai917

Mtn We

Denver, Colorado,
August 3, 1917.

Dear Mr. Jay:
I enclose copy of a letter I am just sendinE,

Emerson, with copies of the manuscripts referred to, and will
be glad to have you collaborate with him in any changes that
you find desirable.

I am looking forward to seein

you next week.

regards to all.
Sincerely yours,

Pierre Jay,
sq.,
Federal Reserve Bank,
New York City.

BS/CC

Enos.

Best

..)enver, Colorado,

Aucust 5, 1917.

--)on

s. r:merson:

iInclosed aro two manuscripts, - one on

ste and

r]conomy and tho other on Financing; Government loans - which

have

d in rosponso to your earlier letter about maga-

sine or newspaper
re

rticlos, and then hurried to completion in

.nso to a tole

an from I]±. Jay, followin

aro not

to suit yoursel
in case of"Fin

The

ortant and you can change them

atoria

ing Governrnon

filled in from t

also is very hastily prepared and
Ica

ooks at

ortain figures aro to be
- of the articles is

somowhat longer than
to cut it clown, if nocossa

their rather rough shape an

your talk with

it to you or Lr. Jay
Those

t17. apologies for

amplo authority

you an

hr. Jay

to change them if it Booms necessary to do so
I am much impressed with the nacos
publicity in the country newspapers and

of getting somo
titularly, in the

various farmers' journals, like the Farmers Hole Companion, Me
Farm and fireside, and others of like character.

It also strikos

me that wo might distributo material of the character of these
manuscripts to the other eleven l'ioserve Banks, with such instruc-

tions as may be noecosary in order to avoid duplication.

As a publicity proselyte you aro certainly a corkor,
for I find myself submitting wit. the boot grace possible to

-2-

August

To -

your direction.

Success to your offortsI
Very truly youro,

Cru

fiat onal 3aa 3 of Commerce,

i ow

Yor:C Cite

1917.

August 8th, 1917.

Dear Sir:

I have to thank you for your kind letter of July 23rd which
accompanied a copy of the current is:ale of the "Economic -orldft in

whidit you have been good enough to reproduce the article I wrote on

the subject of savings.
Needless to say, neither the writer nor, in fact, any of our
loan organization ex,-ect very much in the way of direct results from

that kind of publicity.

The only thing accomAished is that it stim-

ulates a certain amount of thought and discussion on the part

of a

comparatively few people who are reached by such articles and certainly
of that I have some evidence in the number of letters which have been
written me since the article was published.
On the other hand, stimulation

of interest and thought along

these lines is simply rreparatory, as you know, to the creation of machinery which will make it possible with the least effort for all classes of people to set aside savings.

The American environment has not

developed the habit of saving as a national characteristic, nor can it

be expected to do so except by some artificial stimulaton.

That must

be provided by propoganda and simnle machinery which is not available.
I am inclined to quote a favorite expression of my father's "That is worth having is worth working for" and say in re ly to your

-2-

rr. Yersh.

8/8/17.

comments on this subject that we must make the effort to cultivate the

habit

and our reward will n t bs simply sales of government obligations

but rather a permanent elration of standard in the matter of personal
expenditure necessity for which will be even more apparent after the
war is over than it is just now.
Once more, let me thank you for giving space to this article

and I hope that you will feel ineined to do so with other sir41-ir articles when I or those aennciated with me have the temerity to ~rite
them.
I beg to remain,

very truly yours,

Governor.
A. R. Marsh, Esq.,
Editor, "The Economic World,"

80 All Street, New York City.
BS/VCM

- 30

-2-

ing t

1 fear that we must reckon with the general principle

"average" in the
that the "average" of the will to save - using
insurance sense - in any population of any country is decidedly

low, and that to raise this average by even a small amount is
one of the most difficult of human undertakings.

Comparative

statistics of a considerable variety of countries seem to indicate clearly that under normal conditions only about fifteen

per cent of the population are really capable of saving, no
matter what their income may be.

Of course the introduction of a

powerful motive, as for example, the motive of the protection of
the family, in the case of life insurance, may appreciably affect the average of sating in an upward direction.

Similarly,

an appeal to patriotism should increase saving to a certain extent.

I greatly doubt, however, whether by an.possible device,

except the compulsion of taxation, or by any possible appeal
the actual savings of the American population can be increased
by as "inch as

1,000,000,000 a year.

The experience in Great

Britain with the war- savings associations would seem to indi-

cate that taking our population as against that of Great
Britain it might be possible to approach $1,000,000,000 of savings in this country.

We must remember, however, that for one

year at least the war will not be the dreadful reality to the
people of the United States, which it had become in 1916 to the
people of Great Britain.

I do not mean, of course, by what I

have said to imply that efforts to induce greater saving on the
part of our people are futile.

On the contrary, I regard this

as of the greatest irportance, but, frankly, this importance
seems to me in the main to lie quite as much in the psycholog

NATIONAL BANK OF COMMERCE
IN NEW YORK
ORGANIZED 1839
CAPITAL SURPLUS AND UNDIVIDED PROFITS OVER FORTY- FOUR MILLION DOLLARS

GUY EMERSON
VICE PRESIDENT

August 6, in?.

Mr. Pierre JAy,

,4e0/4a1 Reserve 3ank,
lr.

Eew York, N. Y.

ear Mr. Jay:

Today I received in Mr. Emerson's mail a
letter and two articles from Governor Ttrong. Governor
Strong desires a few figures which are in possession

of the Feeral Reserve _ank inserted in one article
and desires L. Emerson or yourself to see these
articles before they are publisheu.

As we particular-

ly desire to have these articles made available for
publicity purposes In connection with the coming Loan,
I would greatly appreciate it if you will look them
over and return them to me at your earliest convenience
with any remarks which you may care to make.

One of these articles will, doubtless, be
useu in the North American Review.

',mere the other

will be placed will doubtless be decided by Lir.

Jones

who Mr. Emerson has placed in charge of News, subject
to any desires that you may have.

Jith best wishes,
Very

ours,

Secre-ary to Mr. Em

I
CROSS REFERENCE SHEET

FILE No.
SUBJECT

FILE No.
---.4.Q.

L-ET-T-E-Ft 0 F

DATED

/ 44-6k7-

'7io - 0,5,

The Economic World
OLD SERIES, VOLUME ONE HUNDRED

SATURDAY, JULY, 21, 1917

NEW SERIES, VOL. XIV, No. 3

Things and actions are what they are, and the consequences of them will be what they will

be; why then should we desire to be deceivedf-Bishop Butler's Sermons at the Rolls.

he recent severe nd for most persons
Prfor call
rations
for the
ons of the rate
money-when

Next Issue of United

our Allies ust be obtainedStates
throughWar Bonds
investin: public of the bonds approHAT
arationsexfor the sale of another large instalrecisely s the funds
weprourselves
mentobtained
of ar bonds
d nav purposes are
from of the United States are already
ar ..nds. In viewunder
of thew.factsscarcely
just requires saying. There are
abundant
evidences
that
bli mind-not to speak of the govern- the Government is having the
same
with
repare itself
forexperience
the flotation
in the unexpected cost of the preliminary preparation
for outhat
own part in the war that the other
of of the $3,000,000,000
of bonds
belligerent
nations,
the $5,000p00,000
of war
bar.c.icwitho t exception, have had. Furtherit isand
apparent
that t call of our Allies upon us for
or our ownmore,
military
naval needs,
financial
assistance is provi
to be both more immediate
e $6,000,000,000
to $8,000,000,000
of
a much
larger
h those forand
our upon
own needs
and
thoseseal: than had been anticipated.
the rateItatiswhich
thesee
$3,000,. ,,000 allotted by Congress
nces to our At
Allies.
hard to
for bonds
advances
to the
Entente
mount of the
of both
kinds
in coun ies is being exhaustedsting publicsomewhat
by the end
of the
more
thanpresent
$5oo,000,000 er month-this approl much short
of $1o,000,000,000;
priation
will hardly lastatbeyond th end of October and
ar cannot have
mayprogressed
easily havefar
been
before
apportioned at a considerably earlier
seem to reflect
date. Press despatches from Washin
this obvious
necessity
is being
givenofficers of the overnment th
a general
opinion
among

n by the leaders
theend
Government,
beforeofthe
of September a second a ropriatio of
ve or congressional;
though
tangible
bonds for this
purpose,
amounting perhaps to , 000,. ,000,
selves
erminationswill
theybeare
reaching are
still
Estimates
of what we sh
necessary.
t has been reported
. t is toforspend
in the public
have
on ourpress
Army and Navy during
Treasury
rather has already contly
risin: McAdoo
such $3,000,000,000
eespublic
remaining
of thethe
ervic
ar
edloan
; for domestic use, towards the
nd at an interest rate of 4 per cent, in-

ent borne by the $2,000,000,000 already
n reported, however, that Mr. McAdoo

hat the time, the rate of interest or the

ssue has as yet been decided upon.

t the over-subscription of the Liberty

hat for a brief period after its issue

t demand for the bonds to lift the price

have convinced the Secretary of the

ministration as a whole that the forth-

adily be sold on the interest basis of
te allowed by the terms of the authorss. There has in fact been no authoriintention with regard to the next war

rt of Mr. McAdoo or any other officer
On the other hand, there has been this
of concrete evidence to the effect that
f. a further sale of war bonds are alWe efer to the conference held in New
day st, at which were present repreberty oan committees of the Federal
oston, ew York, Philadelphia, Richd Chicag together with Mr. Paul M.
ernor of th Federal Reserve Board, and
ves of the merican Bankers Associunced that th object of the conference
s and means of making still more effimachinery which, was devised for the

THE ECONOMIC WORLD

JULY 21,

But even in the fulfilling
of
the
most
sacred
patriotic
duty,
the requirements of
Clearly, a conference of this kind would have been qui
as between those who are spendthey
nnecessary, unless those participating in itjustice
knewand
thatequitableness,
ould shortly be called upon to resume theing
taskthemselves
which theyand their possessions in the cause, must not
e forgotten. This principle, as we think, applies to the
s admirably fulfilled a month ago.
L'berty Loan
bonds recently sold ; and we cannot better
The American people, therefore, has immediately
ahead
bri gStates
out why
we think so than by quoting a passage from
war
of t a subscription to a new issue of United
Pre
'dent
Wilson's
admirable message to the American
bon s, whose amount cannot possibly be less than $3,000,publi
on the subject
000,. . and ought, if sound principles of war
financing
are of war profiteering. Said the President :
Tomust, of course, be pai,d for everything the
"A 'ust price
folio d, to be from $5,000,00o,000 to $8,000,000,000.
Govern
By a just price I" mean a price which
of viewent
ofbuys.
the
be sur it may be advisable from the point
will sus'
the industries concerned in a high state of
smooth working of the machinery of banking
and in
credit,
rovide
spread over
a a living for t 'se who conduct them,
to divid the subscription into instalmentefficiency,
theit will
to pay good wage and make possible the
period of several months; yet the fact re' enable
ains that
expansions
o their enterprises w ich will from time to time
be hazard us and improvident for the Government
to plan
become
neces ary as the stup dous undertakings of this
than $6,000,or for the ublic to expect the raising less
war develop.
before the e could not isely or reasonably do less
°moo° at ast through the sale of w r bonds
than
payprospect
such p ces".
stern
- efiEloi the current year. In our opinio , this
Now,
mutatis
for the
sale utandis, ery word in this passage apmakes it imperative
1\
that before the ampaign
pliesisexactly
to t duty of the Government and of the
of any amoun , great or small, of the ew bonds
launched,
country
the matt of e terms of the war bonds which
moreinperfect
something more should be done tha to make
the general public,
This o al degrees of wealth, is called upon
and efficient e mere machinery of distribution.
to invest
capital i that the war may be successfully
of theits
bonds
something is to examine afresh th character
on. The
Loan bonds sinned against the
to subscribe
to Lib
themselves whic the public is to be askedcarried
principle enounced
in such vast qua tity. When w say "the character
of the b P sident Wilson, first, in that the
interest
rate of
3Y2 er ce borne by them is not "a just
economic
and
bonds themselves , we have ref ence to the
for investme
accuracy
of the t capita n the United States, not only
social justice of th terms of the bonds, theprice"
the present in
ti
but for y rs past, as is demonstrated
adjustment of thos terms to e financialatenvironment
which
ce bong'
the bonds,
t by the investor, large or by the average erest return at least
per cent-obmust inevita. y in t long run find their place, tained by life surance comp s ies, savings banks, and
g good or ill f t r the vestor himself in the process. similar trustees of the property an, rights of vast numbers
en the campai fo' the sale of the Liberty Loan of persons; an , second, in that th tax-exemption feature
e found to our extreme regret of the bonds ade the price paid for t e capital enormously
was in full swi
could not consc tiously and enthusiastically urge higher to cer ain classes of buyers of t bonds than to all
s and conditions o Americans to use whatever finan- the rest. H re are gross injustices that s uld be remedied
ources they mig ossess for the purchase of those in any furt er issue or issues of war bond Let the "just
even at a time o n ed for the country. We greatly price" of A per cent interest be paid on s h issues, and
ed the skill and nge uity with which the campaign let the pr ce paid to the very rich be made the me as that
nducted, the di ersit of the expedients devised and paid to hose of moderate or scanty means, t ough the
yed, the variet and e oquence of the appeals made imposit n of income and other Federal taxes on the
t should be t e deepe of all motives in citizens of revenu derived from them by their owners. Then e can
country, patri i tic duty. Yet we could in no wise and all w le-heartedly and with conviction urge the buyi of
method of r asoning di st ourselves of the convic- the by every class in our society.
at the terms of the bonds ere not just and equitable,
Arthur Richmond Marsh
rds the gr at mass of these who were particularly
o put the all in them. ortunately the issue was
THE PREVENTION OF CREDIT INFLATION
ely so sm. 1 that it was a f. egone conclusion that it
THROUGH WAR LOANS BY SAVINGS
n the en be taken by pers. s, enterprises and instiIN ADVANCE OF THE LOANS.
of meavis so large that the might well and justly
their c untry whatever the might suffer-though
By Benjamin Strong, Jr.
of them y reason of the progr ssive income tax must
nowLoan
in process
distribution of the $2,000,000p00 of the Liberty
bonus.of determination.

rily in-as a result of the onomic and financial
ces w rked by the terms of t' e bonds. Hence we
eliev d of all fear lest the co try fail to get the

it needed.

krjow very well that in saying what we have just

e 4f4
re exposing ourselves to the putation of coldwaNs the country itself and towa s its great cause.

ll not attempt to answer such an mputation, since
eve that those who have read us \long know well
eply we have felt the obligation of the United States
every one of its citizens to participate, at no matter
ost, in the great struggle for democratic civilization

Governor, Federal Reserve Bank of New York; Chairman,
Liberty Loan Committee.

WHILE this country, with its vast material and banking
resources, has made a notable record in the facility
with which large loan operations have been conducted
-the largest until recently being the placing of the Anglo-French

bonds-it has nevertheless been apparent during the past two
months that people have not fully grasped the significance of a
loan of, say, $2,000,000,000, the entire proceeds of which must be
paid over in a very short period,-i. e., as we say, "in cash". Government loans of this magnitude, necessitated by the war, require

a thorough examination and understanding of the principles of

LILY 21, 1917

THE ECONOMIC WORLD

credit, as otherwise unskilful management of operations of that Mr. U. S. A. No cash reserves shift, no loans would need to be
size are certain to put banking machinery out of order, and dis- called and no change would take place in the balance-sheet of the
bank in respect either of assets or of liabilities.
ordered banking machinery means disturbance of business.
The third class of possible bond buyers is that which has bank
No loan of $2,000,000,000 can be paid for, as we commonly express it, "in cash". The amount is too large and payment must accounts but has no surplus balances in bank to spare for investbe made by complicated bookkeeping operations which can be ment in Government bonds. Having credit at the bank, however,
roughly described as "transfers of credit". To do this success- persons of this class are induced to buy Government bonds and
fully, credit must be shifted from the account of one bank deposi- borrow from the bank temporarily in order to pay for them.
tor to the account of another bank depositor; from one bank to This is the least desirable kind of buyer of Government bonds,
another bank; from one part of the country to another part of the although a necessary one at the commencement of the war when
country;-and these shiftings of credit involve a temporary shift- the expected savings of the future must be advanced to the Goving of a certain proportion of bank cash or reserve money, and ernment. Such a bond buyer pays for his bonds out of a bank
deposit which is created by making a loan. The deposit so made
therein lies the danger.
If every purchaser of Government bonds could make payment is transferred to the credit of the United States of America and
at his own bank and the amount of the payment be transferred and the bonds are turned over to the bank by the buyer to secure
by that bank to the credit of the Government, then the credit the bank for its loan. By that operation, bank deposits and bank
could be disbursed by the Government in the community where loans are both expanded and the percentage of reserve money held
the bank is located and no disturbance of credit whatever would by the bank is correspondingly reduced. Loans of th,:t character
arise, because no bank reserves would need to be shifted. In a cannot be avoided, because the general rule is that earnings that
great loan of $2,000,000,000, subscribed and paid for in varying are converted into savings become capital and are usually inamounts in all parts of the country, it is inevitable that prelimi- vested very promptly in securities, or in property, or in improvenary withdrawals of bank balances from one part of the country ments to property, so becoming unavailable for Government loans.
to another will be made in anticipation of payment, and again In a general banking sense, it does the country no good to have its
after the funds are placed at the credit of the Government through- citizens sell one kind of investment in order to make another kind
out the country; they must then be gradually withdrawn to those of investment. Transactions of this kind produce no new money
points where the Government has various bills to pay. The ma- or credit. Their justification is that all buyers of the class who
chinery of the Reserve Banks proved to be adequate to meet the have engaged themselves to pay loans to their banks are forced
necessity of shifting credits from one part of the country to an- thereafter to economize in order to pay off the loans; and in that
other. Possibly a correct view of their function would be to say way savings out of future earnings are made available to the
that they were the chief bookkeepers of the transactions; and, Government in advance of the earnings being made.
The fourth class of bond buyers-and in some respects the most
the books being kept in twelve separate places, at each of the Reserve Banks, the only shifting of reserve money occasioned by important of all in time of war-is the great body of wage-earners
the movement of credit is that which takes place between the and salaried people who frequently have no bank account and
twelve Reserve Banks through the normal machinery created for spend about all that they earn. There are many millions of such
that very purpose.
in this country whose material welfare will be improved and whose
But let us look at the problem from the standpoint of the bond attitude toward their Government will be benefited if they can be
buyer. There are in this country, (exclusive of a negligible num- induced to buy bonds. But how can this be brought about? Only
ber of those who own securities of foreign origin which could be by showing them how to cultivate the habit of saving-and this
resold in foreign countries), only four classes of people who can kind of saving should be developed in advance of investment, so as
subscribe for Government bonds:
to avoid the necessity for borrowing also.
Take as an example, one industrial organization employing,
The first class of buyers comprises those who have hoarded
actual cash or currency in their houses or safe deposit vaults, who say, 20,000 laborers: If these men earn an average of $1,200
are induced to buy Government bonds and who produce that cash each per annum and can each afford to save $100 per annum, their
for the purpose. Purchases of Government bonds by such people employer could enter into agreements with them by which, say,
(of whom there are few in the United States), have the effect of $8 would be deducted from the payroll of each man every month
strengthening the banking position because they bring reserve and deposited in bank for future investment. The aggregate of
money,-that is, gold,-out of hiding and put it in bank reserves $50 apiece in six months is $1,000,000. During the process of
where it serves as the basis of credit. The change occasioned setting aside and earmarking these earnings or savings, they
in the Nation's general bank account as a result is not simply to could be temporarily invested in short obligations of the Governadd a given amount to the bank deposits, but also to add an equal ment, convertible at a later date into Government long-time bonds.
amount, dollar for dollar, of reserve cash. France, prior to the By this process no permanent bank expansion arises. As rapwar, held a vast store of gold tucked away in peasants' hiding idly as savings accumulate, they are turned over to the credit of the
places and the production of that gold in response to the Gov- Government, which issues its short notes therefor; and these
ernment's call has immensely strengthened its banking posi- short notes later are converted into long bonds. The bank balance which was originally the bank balance of the employer out
tion.
The second class of potential buyers of Government bonds is of which wages were paid, has through the savings process been
composed of the capitalists and corporations with balances in the transferred to the credit of the Government without disturbance
bank in excess of their needs. When bonds are purchased by a to bank credit.
Assuming that our Government finds it necessary, say, every
member of this class, the owner of the bank balance, Mr. X. Y. Z.,
sells or transfers that balance to the Government in exchange for six months, to borrow large sums for war purposes, how readily
a Government bond. If the Government leaves the deposit with might this be accomplished if all classes were induced to save in
the bank which holds Mr. X. Y. Z.'s account, the effect of the anticipation of such investment in the bonds of their Government?
transaction is simply a transfer of the balance of Mr. X. Y. Z. to The rich man appropriates so much of his income; the rich cor-

THE ECONOMIC WORLD

poration so much of its profits; the poor man so much of his salary
or wages. During the period between bond issues, these savings

are turned over to the Government in instalments in exchange
for short notes. When the bond issue comes along, the short notes
are converted into long bonds. The whole operation has been conducted without the use of cash or reserve money, but by simple
bookkeeping entries on the books of banks, which result in a grad-

ual but constant transfer of bank deposits representing the Nation's savings to the credit of the Government.
But the question will be asked: "Will not this enormous trans-

fer of bank credit from individuals and corporations to the
It will not do
so, for these credits are not created by bank borrowings but by
savings. The Government is spending money as fast as it receives it. The very credit so set aside for Government use must
be instantly paid out by the Government for supplies, wages of
soldiers and sailors and for the civil establishments. As soon as
credit of the Government itself cause expansion?"

the credit i-..scribed on the books of the bank for the use of the
Government, the Government checks against it and turns it back
to the very individuals, corporations and wage-earners who have
produced it. A new credit is not created, but existing credit moves

faster around this circle from the wage-earner and saver to the
Government and back to the producer and manufacturer, and
through them to the wage-earner. The speed with which credit
moves in these operations bears a direct relation to the "speeding
up" in the production of our farms and forests and mines and our
manufacturing establishments.
This country is confronted by a vast problem of finance, but,

fortunately, with vast resources in gold reserves and credit machinery by which these operations may be handled. In furnishing
the Government with the credits required, the primary necessity is

for people to save and save in advance of the Government's requirements, in order that bond buyers may not be required to make
loans at banks, to be repaid out of future savings.

ECONOMIC DIFFICULTIES IN THE WAY OF
SUCCESSFUL GOVERNMENTAL
PRICE-FIXING.*
discussion over the various proposals to regulate prices
is into difficulties when it reaches the details. What
fair prices and fair profits ? A percentage basis is
usually assu d to be the best determination, but that ignores
costs and efficiency amopg producers. General
all differences
have rejected that ba'sis of compensation for
Goethals is said
shipbuilders becaus it is unscientific and extravagant. Under
it, the higher the costs he larger the,-profits.
It is a recognized pr ciple arping economists that the price

time tends to be fixed at a level
of a commodity at any gi
where it will afford a worki profit upon that portion of the
market requirement which pro.. ed at the highest cost. There
may be, for instance, a wide range o hosts in producing and delivering wheat at a certain market, resu ng from differences in
distance from market, fertility of soil, effici cy of the producers,

The price is/the same for all wheat,

etc.

d must be high

the continued production of the h hest-cost por'equired supply, but as the supply is in ased from

enough to indu

tion of th
low-cos sources, production on the margin of the sup y is no
*Republished from the July circular of The National City Bank
York.

New

JULY 21,

19:

nger required, the price falls, and the high-cost producer is
eliminated.

The same thing occurs in all lines. There is a range of costs,
deiiending on the location of the producer, the character of his
equipment, efficiency of management, etc. One producer may be
up-toAate in methods and equipment, perhaps the last in the field,

or he .may have turned earnings back into improvements, while
another has chosen to distribute earnings in dividends with the
result that the former has lower operating costs than the latter
and correspondingly higher profits when they sell at the same
price. That is his reward for being progressive and constitutes
the inducement to progress. The constant tendency in industry
is toward improvement, lower costs, and the elimination of the
high-cost pioducers. The leaders make the best profits, but all
improvements soon become common property, and new leaders are
always making the pace.

In a time like this every possible source of supply is brought
into use. In the iron business, scores of old, abandoned furnaces
and mills have 'been refitted at much expense and put into opera-

tion upon a basis of costs which would have been prohibitory at
any other time in the last thirty years, and when the war is over
they will be abandpned again. For the time being, however, they
are needed, and pricps must be high enough to allow them to work.
The same is true in other lines. There are great differences

in the costs of mining coal, and corresponding differences in
profits. As a general rule in the manufacturing industries the
fact that aproducer enjoys unusual profits is proof, not that he
is extortionate in his selling policies, but that he is a leader in
low-cost production, and therefore rendering a greater public
service than a competitor whose profits are less.
If it is true that our industries are far below their possible
output, and that not only industrial but living conditions may be
revolutionized by bringing the average up to the level of the best,
the public cannot afford to discriminate against efficiency, in its
plans for taxation or regulat\on. Allowance, indeed, must be made
for war conditions and necessities; taxation cannot be scrutinized
as critically in all its bearingS as in time of peace; it is true that

in time of great national peil the government must look for
money where money is, and t lict t war-time profits are not to be
judged on just the same basis as peace-time profits. But it is
well to keep an understanding' of sound principles even when
they must be compromised, and t is is particularly true in view of
the certainty that the same kind of taxes will be advocated for
permanent adoption. A graded sc le of taxation, increasing with
the percentage of profit in indu4try, is unsound in principle,
because it puts a handicap instead o a premium upon leadership,
and penalizes the very methods which the public is interested in
having adopted. It is neither just noi, according to sound public
policy to deny to the efficient producSr the difference between
his costs and those of the less economical producers in the same
line, but a temporary system of even graduated taxation upon
profits is preferable for its simplicity to a complicated system
of government price-fixing.
High prices are never welcome to those who have to pay them,
but it is a great mistake to consider only their immediate and uncomfortable effects, without regard to the conditions which caused
them or the part which high prices play in correcting those conditions. High prices are a sign of scarcity, the only real remedy
for scarcity is increased production, and no othet agency is so .
directly effective in stimulating production as high prices. They
not only create an inducement but they supply the theans of enlarging the productive operations.
Efforts to increase production now, in every liner must be

TEL. 3859 BROAD

ENCYCLOPEDIA AMERICANA CORPORATION

27 WILLIAM STREET

NEW YORK CITY

EDITORIAL
DEPARTMENT

131111010

Vernctober 13, 1916.

Aftwollimmulr

Pierre Jay, Esq.,
Federal Reserve Bank,
New York City.
Dear Sir:

I understood from Mr. Youngman, who has charge of
the Banking section in the Americana, that you had already
agreed to prepare an article on the Federal. Reserve System,

and I have beer looking for the manuscript for some time.

However, as we were in no imrediate hurry, I did not wish to
press you ad to time.

I am very glad indeed to know that

you will prepare this article - about 3000 words, and if we
receive it ary time during November it will be in good season.
Thanking you for your co-operation, 1 remain,
Very t ply yours,

rlfrva4
Yana, ng Editor.

GER/N

1C,th, 1916.

Oear Sir:

Replying to the request contained in your
favor of the 9th inst., addressed to !Ar. :Aro% regarding your report of the aew Jersey Bankers Convention, I beg to advise that though :4.. Strong did con-

sent to address the Convention, he has since found
that he will be unable to do so and

Pierre Jay,

Federal Reserve Agent of the bank is taking his place
at the meeting in Atlantic City.
Very truly yours,

Secretary to L:r. Strong.

C. A. Luhnow, Eel.,

Publishort"Trust ConpaLi,e,
55 Liberty Sireot,
VC7!

ew York city.

!.!ay 10th, 1916.

Dear Sirs:

Replying to the request contai,Ied in your

favor of the 8th inst., addressed to
garding your re port of the i:ew

Strong re-

ersey bankers Conven-

tion, I beg to revise that though

Strong did con-

sent to address the Convention, he has since found
that he will be unable to do so and -r. Pierre Jay,
Federal Reserve Agent of the bank is taking his place
at the meeting in Atlantic City.
Very truly yours,

Secretary to

Steurer Publishing Company,
5 Beekman Street,
New York City.
VOA

'r.

Strong.

TELEPHONE. JOHN 5523

4 Orust 4

&tuit Tomvattles

(gontvattits

tiruateb to Trurit Tattaanies, Nanking
anb Niminciat 3fittrreato of

A illuttfillg iflagazitte

C. A. LUHNOW. PUBLISHER

546ACilwrtg it)trrrt, Nrtn jerk Titg

ed'p

May 9, 1916.

Om. 1110.

t>AS)

4C1

C°

Mr. Benjamin Strong, Jr., Governor,
Federal Reserve Bank,
New York City.
Dear Sir:

Can you possibly favor TRUST COMPANIES Magazine with

an advance copy of your address to be delivered before the
New Jersey Bankers Association?

We plan to have a report of the

convention in the May number of TRUST COMPANIIZ which will be
ready for distribution about May 18th.

The forms, however, close

about May 12th and we shall appreciate if you can oblige us with
a copy of your address prior to that date with the understanding
that it will not be released until after delivery.

Very truly yours,

Publisher.

CHARLES L WISE. TREASURER

C.A HAZEN PRESIOENT

THE FiNANCIER

411

7(/0

AMERICAN EXCHANGE NATIONAL BANK BUILDING

THE LEADING
BANKING PUBLICATION
OF AMERICA

NEW YORK

0931
q''

*%1/4'

Z6,:

128 BROADWAY

t'S

.'-

...*

May 8th, 1916

:-1?4
4/4),

,-.,

1Benjamin Strong, Jr., Governor,
Federal Peserve Bank,
Ho9.

10
1,',

:few York.

Dear Sir:

We would be pleased to have copy of the address

you aro to deliver before the New Jersey Bankers' Convention
on May 12th, at ^tlantic City.

Thanking you in advance for your courtesy, we remain,
Respectfully yours,

/*1

STEURER PUBLISHING COMPANY
INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK

AIMmerlcan Banker

ESTABLISHED 1836

Weekly-15.00 a year

CIRaily

Bond Dews
$7.00 a Month

Underwood's

goutiiAlt

RePorkey

Bi-Month

a Year

\1\

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Half Yearly -(Mar. and Sept.)
$7.00 a Year

sipPliblishers to the Banking fraternity

\CD

Desk Edition
American Bank Reporter
Half Yearly -)June and Dec.)

c,"-S1/.
sto

American Bank Reporter

Leather -$7.00 a year

Main Office: 149TH ST. and BERGEN AVE. Tel. 5000 Melrose
Branch: 5 BEEKMAN ST. Tel. 7823 Cortlandt

New York City,

May 8th,

Mr. Benjamin Strong, Jr., Governor,
Federal Reserve Board,
New York City.

Dear Sir:-

It is our intention to present as complete a
report as possible of the proceedings of the convention
of the New Jersey Bankers' Association.

Te note that you are to deliver an address before this convention, and would greatly appreciate your
sending us a copy for publication.
Very truly yours,
STEURER PUBLISHING CO..,

Per.

P. S.

If you have a recent photograph, we would also thank

you to send it for reproduction.

1916

"pril 28th, 1916.

-oar -ir:

strong wishes

behnlf for yo:r kin

to thank you in his

letter of the 26th inst., and

sny that the ncoumuletion -f work chriu7 his absence
in "':rope make it absolutely impossible for him to un,2,er-

take each an irticlo as yo.: desire :'or "Trust Companies."

Very truly yolrs,

7ooretgry to 7:.r.

C. A. Tnhnow, sn.,
'nblisher, "Trast Companies,"
1 7.iberty etroet, N w York City.

7troug.

TELEPHONE, JOHN 5523

ant t 011autpanits
A famttlIttt filagazittr Dettateb to Truat Toatpanirri, Nanking
att) Financial 3ntrrclito of Or Unita .tatra
C. A. LUHNOW, PUBLISHER

(Our Eihrrtu tstrrrt, Dirty liark
Mag. 1911

April 26, 1916.

ANN..

Mr. Benj. Strong, Governor,
Federal Reserve Bank,
New York City.

Dear Mr. Strong:

In view of your recent visit to Europe, may I have the
privilege of presenting in TRUST COMPArIES your views as to the
opportunities which are now offered to our banks and business men
to develop over -sea trade and credit relations?

This suggestion

is also prompted by a reading of your address delivered before

Williams College, which was reproduced in a recent issue of "The
Pyramid."

I realize that you have little time for engagements to

prepare articles or expressions of views, but I sincerely hope you
may be able to favor us.

I am thoroughly convinced that we can serve our banking
and trust company interests in these epoch-making days by impressing upon them such facts as presented by you in your address at
Williams College.

Very truly yours,

Publisher.

April 18th, 1916.

Dear Sir:

Mr. :strong was called out of the city almost

immediately upon his return from

7.urope and has, there-

fore, asked me to express his regret that he is unable
to give a favorable reply to your request of 11.arch 21st

for a contribution to the FlarIELarimsen.

Just at pres-

ent, however, the demands on his time make it impossilde
for him to send you such an article as much as he would
like to (lc) so.

Very truly yours,

Secretary to 7:r. Strong.

Karl F. Jackson,
29 Dana Chambers,
Cambridge, : :ass.
VC!.

March 22nd, 1916.

Dear Sir:
In 'Ir. ::trong's absence, I beg to acknowledge

receipt of :lour favor of the 21st inst., requesting a

contribution for publication in the Harvard Crimson.
'Ilan

:trong returns, Which will probably

be about three weeks from now, his

c-lled to your letter

.1Ltention will be

ad ciou will, no doubt, hear from

him regarding the article.
Ifelv truly yours,

Cedretary to Jr. Strong.

Karl F. Jacson, Tsq.,
29 Dana Chambers,
Cambridge, Cass,

TELEPHONES CAMBRIDGE 2811

DWIGHT HAROLD INGRAM. '16, PRESIDENT
EDWARD ALLEN WHITNEY. '17, MANAGING EDITOR
CLO

CAMBRIDGE 2812

LAPORTE, '1 6, EDITORIAL CHAIRMAN

EDITORIAL DEPARTMENT

THE HARVARD CRIMSON
CAMBRIDGE, MASS.

;.:9 Dana Chambers,

Cambridge, vrass.
?!larch .2f

1916.

Benjamin Strong,
7ederal Reserve Bank,
New York.

Dear Sir,

At the suggestion of 7r-T.P.Warburg, I am writing
to ask if you would be willing to contribute an article for
publication in the Crimson.

Thereis running a series of

articles on various kinds of business, a sample of which I
am enclosing.

The desired article would not be long, cer-

tainly not exceeding 1000 words.

We would like a discussion

of the possibilities of college men in banking and the
tualifications most essential to greatest success in that
field.

The Crimson would great12: appreciate such an article

from you, and I hope that you will find it possible.

Very truly yours,

rA5'1/4d
(7:f

1.1

)
January 24th, 1916.

Dear :71r:
In rely to your letter of ,Tu.nuarw 20th, I
have to state that it would be imponsiblu far us to
publish the annual statement of this institution in
any publication as a paid article.

Our annual report is now in process of preparation and if any of the material contained in it
will be of any service to you, I shall be vary glad
indeed to Alrnish it as soon as it is ready for distribution.

Very truly yours,

Governor.

F. :hea, 7s4
7.essrs. Dou#leday, Page & Comnany,
11 West 32nd Street,
Now York City.
7:31:

DOUBLEDAY PAGE & COMPANY PICO LIS EllS

January 14th, Li:LS.

Dear 31-ofessor Kemmerer:

I shall certainly lot you know a.out any

return from Europe, which will probably be about
the micidle of `,larch, and allowing aufricicnt time

to clear up accumulated work, I probably could ar-

range to go to Prioeton sometime early in April.
7incerely yours,

Profes:,or E. .. Kenricrer,

2rinceton University,
:1.inceton
Jr/VC:1

PRINCETON UNIVERSITY
PRINCETON, N. J.

DEPARTMENT OF

Jan. 13, 1916.

ECONOMICS AND SOCIAL INSTITUTIONS

Mr. Benjamin Strong, Jr.,
Federal Reserve Bank,
New York City.
Pear Governor Strong:

I was sorry to learn from your letter of
yesterday that you could not be with us February 11,
but my regrets are largely removed by the fact that

your lecture ham only been postponed and not given
up.

Ordinarily the announcements of these lectures

are given not earlier than ten days before the
lecture.

Accordingly if for any reason your Tlana

to go abroad should harp en to be changed before February

first, the date of February 11th would probably still be
available so far as we are concerned here.
I

Otherwise,

am sure that we can find some Friday in March or April

that will be satisfactory.

Will you kindly let me know

when you return from Europe?
Cordially yours,

January 12th, 1916.

Dear Professor Kemmerer:
Your letter of the 10th is received this morning, and

with very many regrets I a.n writing to toll you that my plen for

selling on February first apparently can be carried out unless
something unforseen arises and it will, therefore, be imponsible

for ne to keep my engagement for the 11th of Pebrury.
:oat of the discussion of the 7ederel reserve ::ystem

has been before the various groups of bankers in this ane other

s tee, and for some of us tho are not accustomed to tele sort
of work, it has been reTher difi icult and trying, particularly

with the country bankers who have not ell been friendly.

I have

not enjoyed opportunities to attend meetings of the character that
the conference at Princeton would be and am, them fore, very regretful that it must be postponed.

You will observe that I said

"postponed", because I am hoping that you will give no opportunity
Inter to meet the class.

I expect to be bacl: by the middle of :Ierch.

mhanking you very warmly for your courtesy and with
:dndest regards, I beg to remain,
Very tinily yours,

.rof. 7, W, Kemmerer,
?rinceton University,
.rinceten, ::. J.
D

Jr/7U

PRINCETON UNIVERSITY

the night you are in Princeton but recognize the
prior clailq of Ira. Spaulding.

If by any chance you

could atay over until Saturday afternoon we would like
very much to have you take luncheon with us and a few
membera of the economics department

Cordially yurs,

Saturday ncon.

January 7th, 1916.

Dear Professor Kemmerer:

Your favor of January 5th is just received and I am
grateful to you for the further particulars you were good enough
to give in regard to my

engagement to

dress some of the grad-

uate students on February llth,
It is most kind of you and :rs. Kemmerer to ask me to
e the

stay with you, but I have a long outstanding promise to

to spend the night with my cousin, Professor

first opportunity

Spaulding's wife, and fear tiv-it this will be my only chance for

doing so in the near future.
I hope the students realize that the officers of the

reserve binkm were selected for their duties with regard to
what was supposed to be their qualifications as bankers and not
as public speakers.

I have generally endeavored to escape the

preparation of careful addres:;es by making them exceedingly in-

formal, which I hope will meet with your views of what is required of me in this case.
So far as I have thought of the mrtter, I have the following in mind:
1st.

r2o say very little in rogard to the theory of the

Federal Reserve Act and practically nothing with regard to the history of Ameriorn banking and currency.

If the class has studied

Jan. 7, 1916.

Ii
To

Kemmerer.

?rof. E.

the Act itself and the causes which led to its

:cloption and is

familiar with Professor Dunbar's 71heory dnd Eistory of Bank-,
ing"and Mr. Horace White's"1:oney ant Banking,"there is little

that I could say that would be any contribution to their course
on these two general subjects.
2nd.

I hfld expected to point out the comdexities of

our present sysem which affect the development of the reserve
system and render the work of inauguration, so to speak, rather
difficult and one which is likely to occupy a period of many
years; for that purpose, contrasting conditions to be dealt with
in this country with those which existed in Lk)rman:;! and Japan in

the early '70s and '80s, when those two countries respectively
effected a consolidation of their banking system and their currency.
3rd.

sary work

Then I thought of briefly sketching Uhe prolim8-

organization, showing how it had been possible to

bring the twelve units together with the -Reserve Board into a har-

monious working organization.

Pith.

r2o give a little description of the way the dif-

ferent functions of the banks have been taken up in practical operation, which would include reference to
Deposits of member banks,
Open market operations, i. e., purchases of bills and
warrants,
Government bond purchases,
Foreign exchange, (why it has not so far been developed),
The Gold Settlement ?and.
note issue.

Jan. 7, 1916.

:<emmerer.

-'rof.

5th.

I had expected to conclude what I had to say

referring to the distinguishing feature between Lombard Street and
Wall Street as public institutions, calling attention to the fact
that LemiJard street, as the center of finance of the British nation

and the clearing house for the world's commerce, was one of the most
respected institutions in 7:ngland or in the world, whereas, Tall Street,

occupying a somewhat similar position in this country was, in the estimation of the country, held in little esteem, but this difference,
so unfavorable to

street by contrast, was due, not to the fact

that 7;all Street was in the hands of dishonest men, but that the coun-

try's banking system had led to conditions which periodically arose
that could not do otherwise than create distrust of

Street and

that one of the effects to be hoped for in the future was to eliminate
those unsound features of the old system and re-EL,tablish Tall ;:treet

as an institution in the co#fidence of the people of the country.
This sounds like a pretty long talk as I dictate this letter
and I would much anprociate suggestions from you as to what parts of
it, if any, can be omitted and as to whether any other phase of the
subject can be dealt with to better advantage.
I shall enjoy the evening discussion very much.

May I

ask if those who attend the evening discussion are in the habit of
dressing for it?

I should, also, warn you, and I do so with regret that

have tentatively engaged passage on the Rotterdam for February 1st.

Jan. 7, 1916.

-4-

'2o

2rof.

Yemmerer.

I may not go, but will know ,definitely in the course of the next
week.

This, you will recall, I mentioned when you were here and

should it be impossible for me to keep my engagement, I hope you

will understand the reason and permit me at some future time to
meet your class in economics and finance.
':ith kind regards and thanking you for yo-,,,r letter,

Sincerely yours,

°ref.

.
Kemmerer,
Princeton University,
Princeton, N. J.

BS Jr/VCM

I am,

PRINCETON UNIVERSITY

a few who have been doing special work on the subject, will
be only moderately. .1ell inforned concerning the System. They

will have studied it only for a few weeks.

The informal

evening conference at which there are usually about twenty

present has proven to be the most valuable part of these
di3cusaicr.,5, and in the selection of a subject

for the

afternoon's address I think the benefit of the doubt should be

given to a subject that would submit itself well to "a round
table discussion".

If you should happen to be considering several possible
subjects, and would care to have my opinion as to which one
would beat suit our conditions here, I would be very glad to
give you my judgement in the matter.

Again thanking you cordially for your kindness in
offering to cooperate with us here at Princeton,

I am,

Sincerely yours,

FILING DEPT.
Nov.,: o i:;16
FEDERAL RESERVE BANK

November 29, 1915.

The Newark Trews,

Newark, N. J.
Dear Sirs:

I see by the Commercial and Financial Chronicle

that you reported my talk at the meeting of the Essex
County Bankers Association about a fortnight ago.

As I

have not seen a copy of what you printed, I should appreciate it very much if you would send me a copy of your
paper containing a report of that meeting.
Yours very truly,

Chairman.

J/RAH

.fro

rkagankerstsociation

THE
PRESIDENT
WM .A.LAW,FirstVice-Pres.First National Ban k,Philadelphia,Pa.
/CE-PRESIDENT
JAMES K.LYNCH.Vice-Pres.FirstNational Ban k ,San Francisco, Ca I .
GENERAL SECRETARY
FREDERICK E.FARNSWORTH, Fi ve N a ssau StreetNewYork City
TREASURER
J.W.HOOPES,Vice-Pres&Cashier City National Bank,Galveston Texas
ASS/STANT SECRETARY
WILLIAM G.FITZ WILSON, Five Na ssau Street,NewYork City
GENERAL COUNSEL
THOMAS B.PATON, Five Nassau Street,NewYork City

FIVE NASSAU STREET

Itry/Yo

MANAGER PROTECTIVE DEPARTMENT

L.W.GAMMON,Five Nassau Street.NewYork City
MANAGER DEPARTMENT OF PUBLIC RELATIONS

June fIrd, 1915.

A.D.WELTON, Five Nassau Street, NewYork City

Miss V. C. McLaren,
Secretary to Mr. Strong,

Federal eserve Bank,
New 1or7- City.

My dear Miss McLaen:We appreciate your thoughtfulness in remembering to send us copies ofLEI_Atrong_s_mas re.ment addresses .
We have added them to the data regarding the New York Reserve
Bank which we attempt to keep As complete as possible for fu,

ture reference.

Very truly yours,

Librarian.

MRG/S

SURRORIPTION PRICE St 6.00 PER ANNUM

DEER 1,1 NED RDA i as
OE orla 0

Ex NOVI, V II OIFEDDEIS

U B. EXPRESS BUILDING

To THE DIROESSION
Of CURRENT. VINAT10.11.

FINANCIAL AGE

HECTOR STREET
NEW TORE

V. HOWARD HOOICE

AND OONObile
QUESTIONS

TELEPHONE 2359 RECTOR

EDITOR

NFAV YO1 I

May 19, 1913

Benjamin Strong, Jr. Governo;,
Federal Reserve Bank,
Yew York City.
Dear Mr. Strong:-

I am handing you herewith four gall6Vs of

your address which I will be very much pleased if you
will make such corrections as you feel are necessary, or

advisable and return same to me as early as your convenience will permit or sooner if your good nature
allows.

s ver,3f truly,

Editor.

Oee'v-11,1

::arch 18th, 1915.

Dear :Warn:

In accordance with our telephone conversation of the 17th, copies of addressee :Jade

r. Strong at the Merchants Association of liew York

UolleCe, are enclosed herewith, and

and

copies of future addressee nude by _a. L;trong

which are in a form available for filing purposes
will be forwarded you.

I have to advise -6na..;

neitner oz the above have been published in pamphlet form.

Your desire to have copies of these

speeches on file in the library of the American
Bankers Association is much appreciated.
Very truly yours,

':ecrotary to

P. Glenn, Abrarian,
Miss
The Americrn Bankers Association,
Five Nassau Street, Jew York- City.

Strong.

I
PRES/DENT
WM .A.LAW First Vice-Presfirst National Ban k,Philadelphia,Pa.
VICE-PRESIDENT
JAMES K.LYNCH.Vice-Pres.FirstNational Bank ,San Francisco, Cal.
GENERAL SECRETARY
FREDERICK E.FARNSWORTH, Five N assau Street,N ewYork City
TREASURER
J.WHOOPES,Vice-Pres.&CashierCity National Bank,Galveston Texas

cialteritida&
=113
VAtams

ASSISTANT SECRETARY
WILLIAM G.FITZWILSON, Five Nassau Street, NewYork City
GENERAL COUNSEL
THOMAS B.PATON, Five Nassau Street,NewYork City
MANAGER PROTECTIVE DEPARTMENT

March 2nd, 1915.

L.W.GAMMON,Five Nassau Street,N ewYork City
MANAGER DEPARTMENT OF PUBLIC RELATIONS

A.D.WELTON,Five Nassau Street, NewYork City

Mr. Benjamin Strong, Jr., Governor,
Federal Reserve Bank,
27 Pine Street,
New York City.

414R42,

;

Dear Sir:The brief newspaper and other accounts of your addresses
on subjects related to the Federal Reserve System suggest that
the addresses in complete form would be v-ry desirable additions
to the reference and loar files of the Library of the American
Bankers Association. if it is possible for you to send us two
copies of such addresses as may have been published in pamphlet
form, and place us on your mailing list for future speeches, we
should appreciate the courtesy.
Very truly yours,

Librarian.

MRG/S

II. K. TWITCHELL
TWO-SEVENTY BROADWAY

NEW YORK

February)26, 1515

Governor Benjamin Strong, Jr.,
Federal Reserve Bank,

New York.
Dear Mr. Strong:

Your letter of the 24th is received, and
I note that, while you do not feel warranted in accepting the invitation of the New York Credit ':.en's

Association so far in advance, there is a possibility that a little later you will see your way clear
to responding favorably to their invitation.
sincerely trust that you will be able to do so.

Thanking you for your letter, I am.
Yours very truly,

February 26th, 1915.

Dear Sir:
At

Strong'a direcion, I w writing

to thank you on his behalf for your very mind fa-

vor of the 25th, and to advise you that by the latter part of next or the first part of the week fol-

lowing, he hopes to be able to write you definitely
regarding the Annual Spring Banquet of the New York
::relit Iten's Association.

Very truly yours,

Secretary to V.r. Strong.
A. 11. Alexander, Esq.,
;:ecrotary, N. Y. Credit :,:en's

320 Broadway, new York Ci.4.

Telephone 657 Worth

Organized September io, 1895

Incorporated January 25, t896

6,--t)

(The Nei York Credit Men's Association
(AFFILIATED WITH NATIONAL ASSOCIATION OF CREDIT MEN)

Officers
President

Executive Committee

320 BROADWAY

EDWARD D. FLANNERY
A. Steinhardt & Bro.

Geo. H. Williams
W. M. Kennard

First Vice-President

W. F. H. KOELSCH

Jesse M. Smith

Bank of United States

.
H. A. Caesar Or Co.
Graupner. Love Or Lamprecht

Citizens Central National Bank

. W. Or J. Sloane
Moller & Schumann Co.
J. 0. Hobby. Jr.
American Locomotive Co.
G. E. Chapin
Westinghouse Electric 6- Mfg. Co.
Edwin B. Heyes
H. Uehlinger

Second Vice-President
E.
S.
BOTELER

G. K. Sheridan & Co.

Treasurer

OWEN SHEPHERD

Frank S. Flagg

International Paper Co.

Wm. T. Black
U. S. Kolby

Secretary

ARTHUR H. ALEXANDER

W. E. Thatcher
H. C. Bainbridge. Ir.

320 Broadway

Max L. Masius

Counsel

R. J. Wall

Julian A. Gregory

Morse Or Rogers

J. B. Greenhut Co.
American Ever Ready Co.
.
Standard Oil Cloth Co.
Chas. T. Bainbridge's Sons
.

Seeman Bros.

National Lead Co.

115 Broadway

NeW York,ebruary 25, 1915.

Banjamin Strong, Jr., Governor,
Federal aeserve Bank of New York,
New York City, N. Y.

01*
19/

by dear Sir:

aeplying to your letter of the 23rd instant, our
Business Mettings Committee, which has in charge the arrangements for the Annual Spring Banouet to be held at the Fotel
Astor on April 22nd, instructs me to advise you that we fully
appreciate that the many duties which demand your attention
make it impracticable for you to give definite decision at
this time, respecting the invitation extended to you tc address cur members on the occasion named.
In vier: cf the fact, however, that this meeting
will be a most important one and that we are desirous of completing arrangements as early as possible, the committee,
while pleased tc defer until a later date receipt of definite
reply, expresses the hope that you may reach a decision sufficiently in advance of the day of the meeting to enable us
to facilitate our arrangements in connection therewith.
Yours very truly,

am,
Secretary.

ir/ZzisiCf
.1)1qP7',
pea

1915

i'EDERAL
RESERVE

BANK

February 23k 1915.

r. Garrard Comly, Vice-President,
The Citizens Central National Bank,
320 Broadway, New York City, N. Y.
Dear Sir:

I am sorry not to be able to send an immediate
answer to the invitation extended to me by the New York
Credit ,,rents Association to make an address at their an-

nual spring banquet to be held on April 22nd.

I have

asked the :,ecretary to let me know at what date an answer

would he necessary in order not to inconvenience them in
making plans, and if it is possible for me to accent, I
shall certainly do so with great pleasure.
Very truly yours,

r:overnor.

BS,Jr/IK.8

February 23, 1915.

Mr. A. H. Alexander, secretary,
The New York Credit L;en's Association,
320 Broadway, New York City, N.Y.
Dear air:

Your favor of the 19th instant is received,
and were it possible, I would send an acceptance at
once to the kind invitation you have extended to me
to address the association at the time of its annual
banquet on April 22nd next.

It will be impossible to arrange so far in
advance to make this engagement, and i as writing to

inquire whether you can make a later date when my an-

can be sent without inconvenience to you.
Thanking you, I beg to remain,
Very truly yours,

Governor.

Organized Sept01 emiser tq, t8q5

Incorporated januar9 25, 1896

Telephone 657 Worth

W14 Officers

(i.e NeW York Credit Men's Association

President

EDWARD D. FLANNERY

(AFFILIATED WITH NATIONAL ASSOCIATION OF CREDIT MEN)

Executive Committee

320 BROADWAY

Geo. H. Williams
W. M. Kennard

A. Steinhardt & Bro.
First Vice-President

W. F. H. KOELSCH
Bank of United States
Second Vice-President

E.
S.
BOTELER,
G. K. Sheridan & Co
Treasurer

OWEN SHEPHERD
International Paper Co.

Jesse M. Smith

40,

Edwin B. Heyes
H. Uehlinger

H. A. Caesar & Co.

Graupner, Love 6- Lamprecht
Citizens Central National Bank

. W. & J. Sloane

Moller & Schumann Co.
J. 0. Hobby, Ir.
American Locomotive Co.
G. E. Chapin
Westinghouse Electric & Mfg. Co.
Frank S. Flagg
Morse & Rogers
Wm. T. Black
J. B. Greenhut Co.
American Ever Ready Co.
U. S. Kolby
Standard Oil Cloth Co.
W. E. Thatcher
Chas. T. Bainbridge's Sons
H. C. Bainbridge. 1r
Seeman Bros.
Max L. Masius
National Lead Co.
R. J. Wall
.

Secretary

ARTHUR. H. ALEXANDER

320 Broadway

Counsel

Julian A. Gregory

15 Broadway

Neal

York,

February 19, 1915.

Benjamin Strong, Jr.,
Governor Federal Reserve Bank,
New York City.
Dear Sir:

By direction of Ir. W. F. H. Koelsch, Chairman of t'rie Business
Meetings Colimitte o-.7. this i',.::Lociation, I write to confirm the verbal invitation extended to you by our President, :_dward 2. Flannery, to be a guest
of our A3.ociation and adclress our members on the occasion of our Annual
Spring Banouet at the 'iotel Astor on April 22, 1915.
Our committee expresses the sincere hope that you will give
th- matter your farmst any careful consideration, and that we nay be favored
with your acceptance.

Yours very truly,

Secretary.

CSI

t Catizetto Guira 1 Xational
OF NEW

Edwin S. Schenck
I.FtEtalnENT
Francis M.Bacon,Jr.
VICEPHE41111,N7

Garrard COMly
CE PRI.11".141.

316mo Vet*

Albion K.Chapman
7,41111,14

February 19, 1915.

Jesse M. Smith
ASS'T ewnelrle
James lrAllis
ter
A59.7 CA,4111.

William M.Ilaines
AtittiT cW14111141.

Hon. Benjamin Strong, Jr., Governor,
The Federal Reserve Bank of New York,
62 Cedar Street, City.
Dear Sir:

Mr. E

D. Flannery, President of the

Now York Credit ?den's Association, 11-..3 told us

of his personal call upon you today and the
desire of the Association to have you address
its members on the evening of April 22nd.
In
this connection the writer trusts you will permit
him to tell you how very much interested this
bank is in the Credit Men's Association, and as
the merchants as well as the bank men who compose
its membership aro particularly anxious to keep
in touch with the progress of the Federal Rese:-ve
Banks, we hope you may find it possible to accept
the invitation of the Association for the data
mentioned.
Very truly yours,

Alt114
Vice ?resident

Full text of Papers of Benjamin Strong, Jr. : Incoming and Outgoing Correspondence and Cables, 1915-1921

FRASER