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'
hington, D. C., October 24, l92.
Dear tre Roberts:
In Er. Lnydor's absence T am returning your memorandum of
SortertKlr- leth in order that it may be brought down to date should
you have further'replios to our questionnaire which would cause re-
vision of the figures. Also, were you able to draw up any conclusions further than those stated in the memorandum?.
May it not be a good plan to submit the figures to Professor illiams and ask him just that conclusions he draws from thew'
Very truly yours,
Vr. G. p. Roberts
Federal Resorve Bank,
;Ow York City.
.Enclosure
1-5011-1-2,1
FEDERAL RESERVE BANK
OF NEW YORK
0 FICE CORRESPONDENCE
Governor Strong
FROM
DATE
August 21,
SUBJECT:
Geo.B. Roberts
Before leaving on his vacation Dr. Burgess asked me to forward
to you a weekly resume' of any new developments in money and business
noted by myself or gathered in conversation with other officers of the
bank.
One interesting development of the past week or so has been an
apparent change in the sentiment regarding the money outlook.
Whereas
at the first of the month it seemed to be generally the opinion that
money would be distinctly firmer in the fall, lately this view seems to
have been considerably modified.
Mr. Case tells me that this change of
sentiment was commented upon at the last directors' meeting.
An in-
fluence has been the reduction in the Bank of England rate and the subsequent easy money there.
Also the inter-district eettlemente, which
were against us during the early part of the month, turned in our favor
during the week ended the 19th.
Time money has lately been easier, and
the System's earning assets have ranged from $1,068,000,000 to
$1,090,000,000, touching the latter figure on the 19th.
A sharp rise yesterday in government securities, notably the
Treasury 4, which gained approximately 3/4 of a point,
Vb413
also commented
upon as reflecting easier money prospect, though I note today that much
of this gain was cancelled.
Personally, if I may be permitted a guess - it seems to me that,
with business going at the present rate, seasonal requirements, on top of
the amount of money tied up in securities, are bound to cause firmer conditions.
Yesterday and today we again lost in the settlements, and
19251.
1SC. S. 1-50111-25
1_ RESERVE BANK
NEW YORK
ICE CORREL,
DATE
Governor Strong
7Rom
August 21,
SUBJECT:
Geo.B. Roberts
-
2 -
call loans today ran up from 4 to 41 per cent.
Stocks have again
touched new high ground and street loans on the 20th worked up to a new
high point about 100 millions above the levels in the latter part of
June.
While it is too early yet for member bank commercial loans to
show much increase, some slight gain has occurred since the low point at
the end of July.
More significant is the fact that commercial paper
apparently has not reflected the recent easing, dealers during the past
week reporting the necessity of marking up rates on much of their paper to
4* per cent.
In the field of business, railway traffic and bank debits continue
to indicate unusual activity.
slowly.
Steel operations appear to be expanding
The automobile industry is unusually active for this season, and
July building contracts were 55 per cent above July 1924.
Mr. Sailer tells me for your information that, regarding the settlement of the H.C. Meyer claim, the Committee has recommended to our
Board that he is entitled to $42,000 for extra work performed.
The Board
referred this to Mr. Sailer with power, and Mr. Sailer is taking it up
with him personally and believes it can be adjusted to the satisfaction of
both parties for probably $5,000 less.
5
192_
FEDERAL RESERVE BANK
MISC. 3. I-6014-4-14
OF NEW YORK
:FFICE CORRESPONDENCE
D
FROM
Mr. Roberts
DATE September 17, 1925.192
SUBJECT:
Governor Strong
Will Mr. Roberts kindly send me the following data as soon as possible.
It is all probably in our recorcls or reference books.
The amount of the prewar budget of France, using the
year 1914.
The amount of the prewar budget of England.
The amount of last year's Britisb budget.
The present index number of prices in France, using that
which covers the largest number of items.
The amount of loans which the Bank of France can still make
to the French Government under the recent increased authority.
The margin on the note issue which is'not yet exhausted.
The amount which the statement shows the Bank of France to
be now lending to the State.
The amount of its private loans divided, if possible, between
Lombard loans and discounts.
The amount shown in the statement of the Bank of France as
gold held abroad, giving the latest figure.
The amount 'to be paid by Germany in the seconc year of the
Dawes Plan, that is to say, of all kinds of payments,
whether by deliveries in kina or cash.
FEDERAL RESERVE BANK
MISC. 3. 1-5011-1-25
OF NEW YORK
-OFFICE CORRESPONDENCE
Strong
November
DATE
SUBJECT:
NGoir_e_mar_
FRON
Geo ,B. Roberta
at the request of kiir. Stewart I am forwarding to you the
results of an inquiry which we recently made of five large New York
City banks, to determine the extent to which their figures of
"Due From Foreign Banks (and branches)" are representative of the
total volume of funds employed abroad by these banks.
This in-
quiry indicates that the reported figures are not representative
for the following reasons:
The figures do not include funds invested abroad
in bills or other securities.
They do not in all cases include time deposits,
as one of the reporting banks included
these under ,-;oans and Discounts.
As to loans to correspondents, 3 banks included
these under "Due From Boreign Banks ( and
branches)," while 2 banks included them
under Loans and Investments.
The banks to which this inquiry was addressed were
The National City Bank
Chase National 13Fink
Bankers Trust Company
Guaranty Trust Company
National Bank of Commerce
let
1925.
et
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bebuloni elaad 311/110qtY1 91i.t
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(s)
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bebuloni sinad 6 tasnebnaieellob oI ansol at. aA
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1ano1l0V1
/7/
MISC. J. I
GO SI
12.25
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
Mr. Jay
FROM
H.V. Roelse
DATE
SUBJECT
August 10,
6
192 ._!
Developments in Credit and Busi-
4ess Conditio_na_aiace_Aug. 5.
Stock Market
The general tendency of stock prices continued upward until today,
and average prices of industrial stocks advanced to new high levels, while
railroad stocks reached the highest prices in recent years.
Toward the
end of last week the market appeared to be broadening, but a considerable degree
of concentration in trading appeared again yesterday and today there was a
substantial reaction in leading stocks.
Street loans have continued to increase gradually and are now about
$300 million above the lowest level of the year.
Total loans of reporting
member banks secured by stocks and bonds, on August 4, were the highest since
the beginning of February, with the exception of June 30 figures, They have
been exceeded only in a few weeks on our records.
Money Rates
Call money rates have ranged from 42.-, to 5 per cent compared with a
Time
flat rate of 4i per cent during the corresponding week last year.
money has continued to advance, 90-day loans being quoted today at 4 5/8 4 3/4 per cent, but there was a corresponding increase last year, when 90-day
The prevailing rate on
loans advanced 1/4 per cent to 4,4-4.1 per cent.
commercial paper remains 424- per cent, but there are some sales at 41 per cent,
as well as the 4 per cent rate on extra high grade names, and the tendency is
upward.
Volume of Credits
Discounts of all Reserve Banks averaged about $15 million higher
There
nine days of this month than for the month of July.
increase
at
this
time
last
year,
however,
so
that
the
increase
in
was a
the volume of Reserve Bank credit in use as compared with last year has not
changed greatly.
during .._,_the first
Forward Buying
Unfilled orders of the Steel Corporation increa,sed4124,000 tons
As a result of this
during July to 3,600,000 tone at the end of the month.
increase, unfilled orders are larger than in the corresponding period a
The current level of production is
year ago, for the first time this year.
substantially higher than at this time last year.
A substantial increase in cotton goods sales during recent weeks
has been attributed in reports we received from a leading commission merchant
to small stocks in the hands of wholesalers and retailers, and other consumers
of cotton goods, and also to the somewhat firmer prices for raw cotton.
MISC. 3. 1
60 M
12-25
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
Mr. Jay
FROM
DATE
SUBJECT-
R.V. Roelse
Sugu,st 10,
Developments in Credit And Bust-
, nese Co nditionsin_Qo Aug. 5.
-2Reports we receive bear out the statement that stocks of wholesalers
In view of the report on the
and retailers are smaller than a year ago.
cotton crop issued today, which continues to indicate a large crop, it appears
probable that buying for other than actual revirements for the next; few
months will subside, until the prospects for raw cotton prices are more definitely established.
MIS, 3. I 60M 7-26
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
Governor Strong
H V
FROM
DATE
isiL
Aug. 51,
SUBJECT-
Roelse
The statement regarding the bond market on the proposed
Bank of Englund cable was based on our record of prices of U.S.
Government securities and the News Bureau average of high grade corIt is true
poration bonds which is quoted in the Board Letter.
that there has been no evidence of a further advance during the
week, but prices seem to be holding close to the highest levels of
the year, which apparently are also the highest since 1913.
Prices of Government bonds are now practically the same as
present statue of
a week ago.
The following
It is true that the New York Times average
three bond averages.
indicates some decline during the week, but the other two dhow no
important Change.
data indicate the
Dow-Jones
--
40 bonds
1927 high
nug.30
Week ago
News Bureau
98.02
97.97
98.01
-- 30 bonds
1927 high
Week ago
100.15
100.02
100.05
New York Times -- 40 bonds
1927 high
Aug.30
Week ago
6
frm-T/i-
1_04;
Pne2e-
16167ttg
ly-)0
710-6.676-.La
Of 0-1±1
91.91
91.60
91.90
cr
1et6," ct.P
0/7.0;1-,
kta
69i
3
261, 9 ,c
/9`
REPARATIONS COMMISSION
(1) That is the amount of the German national debt, divided between
the debt to the Reichsbank,
The domestic aebt to the German people,
the debt owing by Germany abroad.
The national debt on December 31, 1921 is given as:
Funded
Floating
72,061,236,000 marks
246.921,000.000
(1g.m.2 43.79 p. m.)
318,982,236,000
(Annex 1307)
There is no information as to the proportion of the debt held by the
Reichsbank, by the German people and abroad.
The discounted Treasury Bills
held by the Reichsbank on that date amounted to 132,330,906,000 marks.
It has been recently reported that Germany has extinguished entirely the
debt of tne Imperial Government, including the pre-war debt and the war debt.
If that is so, how much was it, and how was it done?
There is no reference to the debt of the Imperial Governmenteither prewar or war debt.
The funded debt which is given as 93,719 million marks on
December 31, 1916, decreased during 1919, 1920 and 1921 as a result of (1) regu-
lar amortization of reimbursable loans and (2) acceptance of war loan bonds in
payment for extraordinary taxes and for the Reichsnotopfer, and for subscriptions
to the 1919 lottery loan.
(Annex 1307)
How much in paper marks has the German Government paid up to date in order
to make reparation payments?
I just want the total figure.
Estimates of reparation payments are given only in gold marks.
Total
aeliveries and payments from November 11, 1918 to January 31, 1922' are estimated
by the Commission at 6,647,000,000 gold marks, and ten-day cash payments during
February 1922 at 231,970,0000ft-co1d marks, making a total of 6,878,970,000
gold marks.
(Annex 538/13 bis)
/hat estimate does the Reparation Commission make of the amount of soualied exported capital of Germany!
Foreign currency abroad possessed by German citizens was estimated by
Dr. Bergmann at the time of the Brussels Conference at 5
milliaz4Dimuka;
by Dr. Fischer at an informal meeting of the Reparation Commission at Berlin
at 80 milliard paper marks (Annex 1267) and by Herr Havenstein at 2 milliard
gold marks exclusive of the considerable sums belonging to "small merchants
and employees."
(Boyden's Letter of November 26, 1921).
/hat has been the balance of German trade, as estimated by the Reparations
Commission?
This should include visible and invisible items, if possible.
There are no recent estimates of German trade.
Only a few figures for
1913 and 1920 are given and no division into visible and invisible items.
LER/GMH
IN 1,000 MILLIONS
LIABILITIES
ASSETS OF THE BALANCE OF PAYMENTS
OF
THE
Imports
At
GOLDMARKS.
OF
OF
BALANCE
Annuities
to
(contd)
PAYMENTS.
be
State of the indebtedforeign
paid to the Allies
end
additional
Gains
of
resulting
from
banking
the
year.
Exports
In a
sum
freights (columns
2 & 3)
etc.
1
2
3
4
1947
18
1
8
18
9
50
turally
urgent
inports
Passive
imports
caused by
the raising
Other
burdens
resulting
of the
exports
(confer 001.2)
from the
balance of Permanent
payments
bu rd.ens
8a(1)
5
6
7
19
6,5
6,5
1
19
6,5
18
1
19
18
1
19
(1)
26% of
the
actual
export
interest
on the passive
of the balance
of payments of
the preceding
year
ness to the
countries
rest
of the
In a
sum
(columns
5
9)
balance of
payments
(columns
10 less 4)
In
Goldmarks
the amounts
of column 12
in papermarks
(1 goldmark
15 papermarks)
8b
9
1
OMB
6,065
21,065
2,065
130,022
1,950,330
6,5
1
WOO
6,168
21,168
2,168
132,190
1,982,850
6,5
6,5
1
0111M
6,276
21,276
2,276
134,466
2,016,990
6,5
6,5
1
6,390
21,390
2,390'
136,856
2,052,840
Fixed annuities to be paid to the Allies of 2,000
10
millions of goldmarks less 1,000 millions of goldmarks for
11
12
13
delivery of commodities.
IN 1,000 MILLIOS OF GOLDMARK S.
LIABILITIES
ASSETS OF THE BALANCE OF PAYMENTE
OF
ALANCE
THE
innuities to be
aid to the Allies
Imports
At the
Gains
of
resulting
from
banking
freights
the
year.
Exportsi
1
2
etc.
In a
sum
(column
2 & 3)
turally
urgent
imports
additional
imports
caused by
the raising
of the
Other
burdens
from the
balance oDermanent actual
(confer collV payments burdens export
6
7
M.%
7,5
011.
1,5
5
I
1
5
0,2
5,2
7,5
2
6
0,3
6,3
7,5
3
7
0,4
7,4
4
8
0,5
5
9
0,55
6
10
0,6
7
11
8
of
21
the
resulting
5
1920
PAYMENTS
OF
88,(1)
Passive
rest
5% interest
of
the
on the passive
balance
of
of the balance In a
Vaynents
sum
of payments of
the preceding (columns lcolumns
0 less 4)
5 - 9)
year
9
8b
10
State of the indebtedness to the foreign
coUntries
the amounts
of column 12
in papermarks
goldmark
1
In
GoldmarkS
15 papermarts)
13
12
11
100
6,667
11,3
6,1
12,767
191,505
0,305
12,465
6,165
18,932
283,980
1,82
0,613
13,133
5,733
24,665
369,975
1
2,08
0,900
13,78
5,28
29,945
449,175
1
2,34
1,164
14,404
4,854
34,799
521,985
1
3,0
1
2,6
1,407
15,507
4,907'
39,706
595,590
1
6,5
3,0
1
2,86
1,652
16,012
4,362
44,068
661,020
1
6,5
3,5
1
1
3,12
1,87
16,99
4,29
48,358
725,370
12,7
0,75
13,7
6,5
4,0
1
1
3,38
2,085
17,965
4,265
52,623
789,345
14
0,8
14,8
6,5
4,5
1
1
3,64
2,298
18,938
4,138
56,761
851,415
1
15
0,85
15,85
6,5
5,0
1
1
3,90
2,505
19,905
4,055
60,816
2
15,5
0,9
16,4
6,5
5,25
1
2,707
25,457
fo, 943
59,873
898,095
3
16
0,95
16,95
6,5
5,5
1
2,660
15,660 4-1,290
58,533
878,745
4
16,5
1
17,5
6,5
5,75
1
2,596
25,846
654
56,929
853,935
5
17
1
18
6,5
6
1
2,513
26,013 +1,987
54,942
824,130
8
17,5
1
18,5
6,5
6,25
1
2,414
16,164 -F2,336
52,606
789,090
7
18
1
19
6,5
6,5
1
2,297
16,297 +2,703
49,903
748,545
8
18
1
19
6,5
6,5
1
2,162
16,162+2,838
47,065
715,975
9
18
1
19
6,5
6,5
1
2,020
26,020 1-2,980
44,085
661,275
40
18
1
19
6,5
6,5
1
1,871
25,871 173,129
40,956
614,340
1
18
1
19
6,5
6,5
1
1,724
15,714 1-3,286
37,670
565,050
2
18
1
19
6,5
6,5
1
1,550
15,550
34,220
513,300
30,598
458,970
18
1
19
6,5
6,5
1
1,378
15,378 1-3,622
3
18
6,5
6,5
1
15,197 1-3,803
401,925
19
1,197
26,795
1
1,5
1
1,3
0,6
1,5
1
1,56
7
1,2
1,5
1
8,5
7
1,8
1
9,55
6,5
2,4
10,6
6,5
0,65
11,65
12
0,7
9
13
30
4
4 55
V
$
4,68
=111
1
1
i
912,240
Otalicipg
year. Export
freights,
etc.
sum
(column
2 & 3)
naturally urgent
imports
1
vaymmnbo
WWM
Of partentS or
the
- from the
tcolumns
the
preceding
(colurns
balance orermanenV actual
exports
5 - 9) 0 less 4)
year
(confer col-r payments burdens ' export
of the
5
1920
5
1
5
7
6
8a(1)
6,667
1,5
5,2
7,5
6,3
7,5
1
7
1,5
1,5
1,5
1
1
1,3
1,56
1,82
2,08
6,5
1
1
1
3
7
4
8
0,5
7,4
8,5
5
9
0,55
9,55
6
10
0,6
10,6
7
11
0,65
11,65
6,5
6,5
12
0,7
12,7
6,5
9
13
0,75
13,7
6,5
30
14
14,8
6,5
1
15
15,95
2
15,5
0,8
0,85
0,9
16,4
6,5
6,5
3
18
0,95
16,95
16,5
1
17
7
0,6
1,2
1,8
2,4
3,0
3,0
3,5
4,0
4,5
5,0
(1 goldmark
15
papermarlis)
Goldmarks
In
13
12
9
8b
7,5
MIR
0,2
0,3
0,4
6
;
100
11,3
6,1
12,767
191,505
0,305
12,465
6,165
18,932
283,980
0,613
13,133 5,733
24,665
369,975
0,900
13,78
29,945
449,175
2,34
1,164
34,799
521,985
1
2,6
1,407
14,404 4,854
15,507 4,907
39,706
595,590
1
1
2,86
1,652
16,012 4,362
44,068
661,020
1
1
1,87
2,085
16,99
48,358
725,370
17,965 4,265
52,623
789,345
2,298
18,93
4,138
56,761
851,415
2,505
19,90
4,055
60,816
912,240
2,707
15,457 +0,943
59,873
898,095
2,660
15,660 1-1,290
58,583
878,745
1
1
1
1
3,12
3,38
3,64
1
1
3,90
1
750,6)
ON.
5,28
4,29
1
6,5
5,25
5,5
17,5
6,5
5,75
1
2,596
15,846 1-1,654
56,929
853,935
1
18
6
1
2,513
824,130
1
18,5
6,25
1
52,606
789,090
18
3.
19
6,5
6,5
3.
49,903
18
1
19
18
1
19
40
18
1
19
6,5
6,5
6,5
748,545
715,975
9
1
18
1
19
6,5
6,5
6,5
6,5
36,013+1,987
16,164+ 2,336
16,297+2,703
16,162 +2,838
16,020+2,980
15,871+3,129
54,942
17,5
6,5
6,5
2
18
1
19
3
18
1
19
4
18
1
5
18
6
18
4
1
1
!
5
!
7
8
1
I
4
A
2,297
1.
4,
2,162
1
4
2,020
1
4,
2,872
1
iI
6,5
6,5
6,5
19
6,5
6,5
6,5
6,5
1
19
6,5
1
19
6,5
6,5
6,5
1
47,065
44,085
40,956
661,275
63.4,340
1,724
1,550
15,714 -4---3,286
37,670
565,050
15,550 +3,450
34,220
513,300
1
2,373
15,378 -1-3,622
30,598
458,970
1
1,197
15,197 -t-3,803
26,795
401,925
1
1,006
15,006 ( 3,994
- 22,801
342,015
0,80?
0,597
0,377
14,807 +4,193
18,608
279,1.20
14,597 1-4,403
14,205
213,075
14,377 4-4,623
143,730
0,146
24,146 :f4,854
9,532
4,728
1
1
4,68
70,920
CENTRAL
BANKS
Belgium
Italy
Bulgaria
Japan
Denmark
Netherlands
Egypt
Norway
Finland
Portugal
France
Roumania
Germany
South Africa
Greece
Spain
India
Sweden
Switzerland
to
e( eC'
l
FOREIGN INFORMATION SERVICE
REPORTS DIVISION, STATISTICS DEPART;.fi.:.,:'
FEDERAL RESERVE BANK OF NEW YOR4
/
SUMMARY
-
r...?
Of the banks under consideration, only three - the Banks
of Sweden, Finland and Bulgaria - are owned by the State.
Government is a large shareholder in the Bank of Norway.
the other institutions are privately owned,
The
All of
subject, however, to
Government control to a greater or less extent.
None of the banks
have even that technical independence enjoyed by the Bank of England.
All except the Imperial Bank of India are banks of emission.
The Bank of Italy shares that privilege with the Banks of
Sicily and Naples and with the State itself.
In addition to Reichs-
bank notes, Germany has Darlehnskassenscheine, Reichskassenscheine
and the notes of four private banks - Baden, Bavaria, Saxony and
WUrtemburg.
In the Union of South Africa, since the Central Reserve
has only recently begun to exorcise its right of emission, the notes
of the former banks of issue are still outstanding.
Holland and
Norway each have a small circulation of State notes issued during
the war as an emergency and probably temporary measure to supply
the lack of fractional coinage.
Practically all' the banks are depositories of State funds,
and most of them are also disbursing agent.
are performed by
SORO
of the banks.
Other State services
The extent to which the State
resorts to the bank for aid in times of financial stress varies,
being as a rule greatest in those countries whose finances are badly
managed.
*********
BELGIUM
The National Bank of Belgium, established in 1850, is a privately
owned
joint-stock
company, operated under direct Government supervision.
"The Government has the right to control all operations."
The General Council comprises:
The Administrative Council
Governor, appointed by the King
Six Directors, elected by shareholders
Council of Censors,
In
addition
7 in
number, elected by shareholders.
to the Governor, the Governnant is represented by a
Government Commissioner, who exercises the functions of comptroller.
The Bank acts as State depository, makes disbursements for the
State, invests idle Government funds under its own guaranty, and in general
gives to the State more than ordinary
rvice.
The State imposes heavy
taxes, and if the net profits amount to more than 6% of the capital, the
State takes one-fourth of the surplus.
The Bank is the sole note-issuing institution, but the law does
not definitely give it the monopoly.
There is no
limit upon the amount
of notes which may be issued, and the reserve against notes is left to the
determination of the Governuent.
BULGARIA
The National Bank of Bulgaria is
a State institution, the entire capital having
been subscribed by the Government.
The Govern-
ment and four administrators are appointed by
the Goverment, which is also represented by two
supervisory delegates.
The Bank has the ex-
clusive right of no:be issue.
***
*****
D E N Ili A R K
The National Bank of Denmark, established in 1818,
is a joint-stock company operated under the supervision of a
Royal Commissioner.
Two of the 5 Directors are appointed by
the State.
The bank is granted the monopoly of note issue on
condition of the.payment of a fee of 750,000 kroner and 25% of
the annual surplus remaining after payment of 6% dividend.
There is no fixed limit to the amount of notes which may be issued,
but the Bank must keep a bullion reserve of 33 1/3% and liquid
assets amounting to 122% of the face of the notes outstanding..
EGYPT
The National Bank of Egypt is a private institution,
founded in 1898 with foreign capital.
It is governed by a Council
of twenty-two members, four of whom are located in London.
The
Governor and Deputy Governors are nominated by the Council, and ratified by the Government, which also appoints two Commissioners with
supervisory powers.
The Bank is the depository of Government funds and is the
sole note-issuing institution, the circulation and the cover therefor
on TDeceMber 31, 1921 being as follows:
Notes issued
(is E 000's
omitted)
35,282
In circulation
Held by Banking Dept.
Total
_4714
37,000
Cover for notes
3,341
Gold
Gold or legal equivalent 50%
15,180
British Treasury Bills
Egyptian Government or
guaranteed by that Govt.
427
Securities 50%
British Treasury Bills and
Notional War Bonds
*
18,073 1
* * * ** * * * *
FINLA,N D
The Bank of Finland was established in 1811,
but did not become the State bank until 1867.
There
are no shareholders, the Bank being the property of the
State, and the profits being allocated in accordance
with resolutions of the Diet.
to the
administration
.Exact
information as
of the bank since the independence
of Finland is not contained in any of the
sources
at
hand, but apparently the management is vested in officials
appointed by the Governrrent.
The Bank has the monopoly
of note issue, regulations as to maximum issue and reserve
being prescribed by the Diet.
********
FRANCE
The Bank of France established in 1880 is a joint-stock
company, privately owned, but controlled by the Government through the
Governor and two Deputy Governors, who are appointed by the Governor and
subject to removal by the Minister of Finance.
The General Council, which is the governing body, consists of
15 regents and 3 inspectors, elected by the 200 largest shareholders.
Three of the fifteen regents, however, must be Treasury disbursing agents.
The Bank performs without charge services for the Government,
such as receiving government revenues, making disbursements, discounting
government paper, floating government 'dans, paying government coupons,
managing the public debt and making advances to the government, including
a permanent loan of 200 million francs without interest as a condition of
charter renewal in 1897.
The Bank pays various taxes to the Government,
which does not otherwise participate in the profits.
In 1803 the Bank received the exclusive right of note issue.
The limit in note/circulation has been raised from time to time, and was
12 billion francs in August 1914, and 41 billions in 1921.
There is no
legal provision as to cover f or note circulation, but in normal times a
gold reserve of about 30% was held.
At the signing of the Armistice, advances to the State constituted
50% of the total assets of the Bank.
In December 1920, the limit was fixed
at 27,000 million francs until January 1, 1922, the Government promising to
repay 2,000 millions before that date, and ct like sum annually thereafter.
GERMANY
The Reichsbank is a privately owned joint-stock
company, created under the law of March 14, 1875, which pro-
vided that the bank should be operated "under the
supervision
and control of the Empire."
Prior to the enactment of the law of May 1922, the
Direktorium and the Kuratorium, whose members were appointed
by the Government, were subject to the direction of the Chancellor.
The shareholders enjoyed little more than the right
of audit by the Central Committee selected by them.
Under the new law demanded by the Reparations Commission to secure the autonomy of the Reichsbank, the administrative powers of the Chancellor are transferred to the Board
of Directors, but the
Government still retains a voice in the
selection of the directorate, the Chairman being appointed by
the President of the Commonwealth, subject to approval of the
Board of Directors and Central Committee, and the other Directors
by the President on the nomination of the Board of Directors,
approved by the Reichsrat and the Central Committee.
The Government participates in the profits, receiving
70% of the profits remaining after the payment of a dividend of
The Reichsbank is the principal note
Reichsbank notes constituting about
933/4
the
of the total note circu-
lation.
issuing bank,
********
GREECE
The National Bank of Greece, established
in 1841, is a joint-stock company, privately owned.
The administration is vested
in a
Governor, 2 Sub-
Governors and twelve Councillors chosen by the shareholders, and a Royal Commissioner.
The Bank acts
as
State depository, and has
also managed certain Government
loans.
It'is now the sole bank of issue, the Con-
vention of 1921 having extended that right to 1950.
*******
X.
*
INDIA
The Imperial Bank of India was established January 27, 1921,
by the union of the Presidency Banks of Bengal, Bombay and Madras.
It
is a stock company, privately owned.
Its management is intended to represent the Government, the
Local Boards of the Presidency Banks, the shareholders and the general
public.
The governing body, which is called the Central Board, is com-
posed as follows:
President and vice-president of Local Boards.
Controller of Currency, or other officer nominated by
Government.
Such persons, not exceeding 4, as may be nominated by
Government.
Secretaries of Local Boards.
One or two Managing Governors appointed by Government
after recommendation by Central Board.
Such representatives of the Local Boards as the Central
Board may prescribe.
The Central Board determines matters of policy, such as the
Bank rate, and exercises general control over the Local Boards, chiefly
through its Managing Committee, composed of the Managing Governors, the
Controller of the Currency and the representative of the Local Board at
the particular place of meeting.
The Imperial Bank is the sole banker for the Government, administers the public debt and transacts any government business entrusted
to it.
It is not a bank of issue.
ITALY
The
Bank of
Italy, which is the most important of the three
Italian banks of emission, was organized in 1893 by the fusion of several
note-issuing institutions.
It is a joint-stock company, privately awned.
The shareholders elect the comptrollers, the censors and the regents.
regents in turn elect the Superior
Council, which
The
appoints the Director-
General and the two Vice-Director-Generals, subject, however, to approval
by the Government.
The Banks of Naples and Sicily, which are also banks of issue,
are described as "autonomous public credit institutions under the supervision
of the Government, having their own property or free capital,." which is
derived from gifts, alms and accumulated profits, and legally belongs to
nobody.
These two banks have no shareholders, only creditors.
The
Director-General and two Councillors of Administration are appointed by
the King.
The General Council is composed of officers and delegates from
the provinces and various chambers of commerce.
All three banks are under the supervision of the Ministry of
Finance, and very heavily taxed, and are obligated, up to certain statutory
limits, to make advances to the State upon demand.
The Bank of Italy has
charge of the State Treasury Service, for which it receives no compensation,
and the three banks are tax depositories.
Now circulation is regulated as to amount and reserve.
JAPAN
The Bank of Japan established 1882 is a joint-stock company,
privately owned, but
Comptrollers acting
under
under
the Government control exercised through
the Minister of State for Finance.
The Govern-
ment does not participate in the profits of the bank.
Administrative Board
Governor, appointed by the Government with the Imperial
nomination.
Vice-Governor, appointed by the Government with the
Imperial approval.
Four Directors, appointed by the Minister of State for
Finance from a list of eight elected by the General
Meeting of Shareholders.
3enera1 Council
Administrative Board (as above).
Three to five Auditors elected by the General Meeting
of Shareholders.
The Bank of Japan manages State funds on request issues and redeems Government bonds, etc.
It is the sole bank of emission, although
apparently government and national bank notes issued prior to the establishment of the Bank of Japan are still outstanding, redeemable on demand at the
Bank from a reserve fund of 22 million yen loaned by the Bank to the Government without interest.
Reserve required against notes is 100% gold and
silver, but 120 million yen may' be issued against Government Loan Bonds and
Treasury Bills and an additional issue against securities may be made upon
permission from Minister of State for Finance and payment of 5% tax.
THE NETHERLANDS
The Netherlands Bank, established in 1814, is a joint-stock
company now privately owned, the Government no longer holding any of the
shares.
The operations of the Bank are supervised by a royal commissioner.
The Sovereign appoints the President and the Secretary, and the shareholders elect the Directors and a supervisory council of 15 commissaries.
The Bank is required to make advances to the State against Treasury
Bills without interest, up to 15 million florins.
It also acts as fiscal
agent for the Government.
The Bank is the sole bank of emission, but under the law other
banks of issue may be established by special legislation but in that event
the Government forfeits its share of the profits of the Netherlands Bank;
i. e., two-thirds of the net profits after payment of
and reserve requirements.
Decree.
dividend and bonus
The gold reserve against notes is fixed by Royal
At the outbreak of the war it was 40%, but was afterward reduced
to 20%.
ae
********
NORWAY
The Norges Bank, established under the Law of 1819,
is a joint-stock corporation in which the Governmnt is heavily
interested.
The Bank is governed by Acts of the Storthing, which
elects the directors, except the president and vice-president of
the head office, who are nominated by the King.
The accounts
are supervised by a Board of Auditors chosen by the Storthing.
The Bank has the monopoly of note issue.
Prior to
war, the maximum note issue, without permission from the Treasury
end thOayment of a special tax, was fixed at 40 million kroner in
excess of the gold and foreign balances held by the Bank but this
maximum seems to have been increased to about 300 million kroner
over the gold cover.
Actual note circulation is below the maximum.
PORTUGAL
The Bank of Portugal was founded in 1846 by the union of the Bank
of Lisbon and the National Surety Company.
in 1888,
With the renewal of its charter
it obtained the monopoly of note issue and in 1891 was authorized
to substitute its notes for the outstanding notes of the former banks of emission.
The bank is a joint-stock company, privately owned, operated under
the supervision of the State exercised through a Secretary-General.
The
Government also appoints the Governor and the Vice-Governor, the latter from
a list of three submitted by the General Council.
The General Assembly, which
is composed of 240 principal shareholders, elects ten Directors and a Censors'
Council of seven members.
The profits of the Bank, after reserve requirements are met and a
7% dividend paid, are divided equally between the shareholders and the State.
The Bank acts as depository and disbursing agent for the Government.
Although the banking law places limits upon note circulation and advances to
the State, both regulations have been frequently disregarded, and in general
the Bank has been the chief refuge of the Government in times of financial
stress.
It was reported by the Economic Review (May 5, 1922) that Portugal
is considering legislation for the establishment of a Central Bank, 54% of
the capital to be held by the State, and the remainder to be subscribed by
the banks of the country.
**
******
RUMANIA
The National Bank of Rumania was founded in 1880.
The
Government at first furnished one-third of the capital, but later
disposed of its holdings.
The Government, however, controls the
Bank, appointing a supervisory official known as the Government
Commissioner, two of the six Directors and three of the seven Censors.
The remaining Directors and Censors are elected by the General Assembly.
The By-laws were prescribed by the Government.
The Bank performs Treasury service free of charge.
The
Government participates in profits over and above the reserve rs...
quirements and the 6% dividends.
The Bank is the sole bank of issue, but during the war
Russian rubles, Austro-Hungarian banknotes and notes issued by the
Banque Generale during the German occupation were also in circulation.
In August 1920 the currency was unified.
**********
SOUTH AFRICA
The Central Reserve Bank of the Union of South Africa
was established December
le,
1920.
The stock is now held by banks
and by the public, the Government having sold the shares which it
took at the time of organization.
The Board of Directors consists of eleven members chosen
as follows:
Governor, Deputy Governor and three other Directors appointed
by the Governor General.
Three experienced bankers appointed by the Governor General
upon the nomination of the stockholding banks.
Three (one representative each for commerce, agriculture
and industry), elected by stockholders other than banks.
The Government shares in the profits of the Bank after
specified surplus and dividend requirements are met.
The Bank may
act as banker and financial agent for the Government.
The Bank was granted a monopoly of note issue, to become
effective after the lapse of at least one year from the date of
organization of the Reserve Bank.
The actual issue of notes by the
Reserve Bank apparently began about May, 1922.
Two years are allowed
for other banks to redeem their notes.
Notes must be covered by at least 40% gold and 60% bills.
*********
SPAIN
The Bank of Spain established in 1856 is a joint-stock company,
privately awned, but very closely related to the State.
The Administrative -Council is elected by the shareholders subject
to approval by the
by the
King,
the latter from names submitted by the Administrative Council.
When the charter was renewed last year, the bank was granted the
.
C)
King; the Governor and the two Sub-Governors are appointed
privilege of increasing its capital, and its monopoly of note issue was exWhile the regulations governing note circulation require
tended for 25 years.
a minimum gold cover of.
only into silver.
40%, the notes, even in normal times, are convertib3e
In addition to a permanent loan to the State of 150 million
pesetas without interest, the Bank is required to make advances to the State
from time to time which frequently exceed the legal borrowing powers of the
State.
In general the relations between the Bank and the State have been un-
fortunate for the bank.
********
SWEDEN
The State Bank of Sweden, established in 1668 as the
Rikets Stgnders Bank (the Bank of the Estates of the Realm), became known in 1867 as the Riksbank or National Bank.
The Riks-
bank is entirely owned by the State, a considerable portion of
the capital having been accumulated from profits.
The President
is appointed by the King; the other six Directors are elected by
the Parliament, which fixes the amount of capital and reserves
and in general regulates the conduct of the institution.
It is
the solo bank of issue, the maximum limit of circulation and the
reserves to be held against notes being prescribed in the banking
law.
The Riksbank is required to receive the public revenue and
to make payments on account of the State without charge.
SWITZERLAND
The Swiss National Bank was organized in 1907 as a
private corporation, only Swiss cantons, Swiss citizens and Swiss
corporations being permitted to become shareholders.
It is
operated under Federal supervision.
The Bank Council
consists
of 40 members, 15 being
elected by the shareholders and 25, including the president and
vice-president, by the Bundesrat.
The actual
managing and
executive power is vested in
the Directorium, consisting of three members elected by the
Bundesrat upon the non-binding proposal of the Bank Council.
The immediate supervision of bank operations is exercised by the Bank Committee, comprising the president and
vice-president of the Bank Council and 5 other members elected
by tne Bank Council.
The State participates in any profits remaining over
and above the requirements of the surplus account and the payment of a 4% dividend.'
The Bank is the sole bank of emission, and is required
to hold as cover the equivalent of the entire outstanding note
issue in the form of gold and bills, the gold reserve to be not
less than 40%.
Aside from acting as depositary and disbursing agent
for the State and receiving applications from the public for
Government loans, apparently performs few fiscal services.
********
1 Franc ..e.1930
NATIONAL BANK OF BELGIUM
December 31, 1921
Total Assets and Liabilities
37,051,303,980 francs
Assets
266,584,763
Gold
Loans, discounts and advances.
To Government . .
-J
o
Advances and discoun+s
208,007,023
563,019,064
Securities
6,093,051,760
Government
Other
31, 978,337
Liabilities
Capital
50,000, 000
Be serve
50,936,759
Deposits
Government
Private
Note Circulation
94,726,106
580,317,166
6,415,054,171
1 Lev r. t .1930
NATIONAL BANK CU BULGARIA
December 31
1921
Leva
Total Asset s and Liabilities
5,786,183,768
Assets
Gold
38,000, 000
L an s and _advances
To Government
3,667,507,571
Loans and discount s
824,524,567
Se curities
Goverment
58,520,331
Other
3,411,750
Liabilities
Capital
100, 000, 000
Re serve
71,771, 373
Deposit s
Government)
Other
1,293,956,109
Circulation
3,615,439,592
*********
1 Krono = $.2630
NATIONAL BANK OF DENMARK
December 31, 1921
Kronen
Total Asset s and Liabilities
713,063,604
Assets
228, 329,691
Gold
Loans and advance s
Gave mune nt
216,589,782
Advances and discounts
Securities
Government
24,876,584
Other
17, 322, 301
Liabilities
Capital
27, 000, 000
Re serve
39,456,540
,Deposits
7,840,459
Government
128,457,995
Other
Circulation
470, 693,765
********
1 E. is = $4.9431
NATIONAL BANK OF EGYPT
December 31
1921
h E (000 omitted)
55, 195
Total Assets and Liabilities
Assets
3,340
Gold
Loans and advances
509
To Government
8,605
Loans and discounts
Securities
Government
Egyptian Government 6,619
British Government 33,234
39,853
255
Other
Liabilities
Capital
.
.
2,925
2,145
Reserve
Deposits
2,313
Government
Other
11,773
Note Circulation
35,282
*********
1 Markka = $.1930
BANK OF FINLAND
December 31
1921
Million F. Mk.
2otal Assets and Liabilities
1,820.2
Assets
Gold
I
42.6
Loans and discounts
To State
303.9
Advances and discounts
665.5
Securities
Government - Finnish State Bonds *
525.5
Other - Bonds in foreign currency
9.2
Liabilities
Capital
100.0
Reserve Fund
50.0
Inla211a
Government**
128.6
Private
Note Circulation
70.5
1,356.1
*including government loan to the bank of 350 million.
**excludes Sinking Fund for State Loans, about 7.4 millions.
1 Franc
$.1930
BANK OF FRANCE
December 29
1921
Total Assets and Liabilities
.
.
.
. 42,561,543,400 francs
Assets
5,524,227,897
Gold Coin and Bullion
Loans and discounts
28,947,282,430
To State*
Advances and discounts
4,799,852,743
214,839,309
Government Securities**
Liabilities
Capital .
182,500,000
Profits added to capital
38,105,394
Reserve
30,513,194
Deposits,
Government Treasury Account
26,013,952
Government Amortization Account
(for repayment of advances to State)
1,829,021,813
Private
2,717,192,359
Note Circulation
36,487,456,505
*Including the 200,000,000 francs permanent non-interest bearing loan.
** Including 100,000,000 francs "Inconvertible Rentes" which have never
been made negotiablo and cannot be considered as available assets.
1 Reichsmark
REICHSBANK
December 31
1921
Marks
Total Assets and
Liabilities
168,895,635,816
Assets
1,007,004,349
Gold
Loans and advances
132,330,906,061
To State
1,557,782,829
Loans and discounts
Securities
Government
Other
......
41. ****
208,438,400
Liabilities
Capital
180,000,000
Reserve (1)
725,065,136
Deposits (2)
Government)
Other)
36,544,434,939
129,232,366,290
Circulation (3)
********
Including Reserve Fund against War Losses.
Weekly Return December 31, 1921 gives
7,591,343,000
Government Deposits
25,314,330,000
Private
Mks. 15,590,849,790 held in "Cash" reserve.
561,500,000 Mks.
w
$.2382
1 Drachma .1. $.1930
NATIONAL BANK OF GREECE
December 31
1921
Drachmae
Total Assets and Liabilities
5,107,005,324
Assets
Gold
55,805,493
Loans and discounts
To State
734,684,314
Discounts and advances
579,646,722
Securities
Government
2,020,302,895
10,493,443
Other
Liabilities
Capital
20,000,000
Reserve .
135,000,000
Deposits
Government .......
.
.....
Other
. .
470,319,712
1,510,037,467
Circulation
.
2,161,182,802
***********
1 Rupee = $.4066
IMPERIAL BANK OF INDIA
DeceMber 31
1921
Rupees
Total Assets and Liabilities
828,353,073
Assets
Cash ana Bullion (1)
136,032,379
Loans, Advances and Discounts (2)
539,775,609
Securities
111,742,849
Government
12,817,775
Other
Liabilities
Capital (paid-up)
56,224,250
Reserve
40,179,005
Deposits
Government
Private
Gold not given separately
Advances to Government not given separately
68,000,927
661,773,650
1 Lira = $.1930
BANK OF ITALY
Lire
55,129, 463,919
Total Asset s and Liabilities
Assets
850, 000, 000
Gold
Loans and advances
847,001, 900
To Government
4,816,633,830
Discount and advances
Se curitie s
6,046,081,901
Government
512, 433,456
Other
Liabilities
Capital
240,000,000
Reserve
138,675,646
21022iL2
1,140,410,739
Government
Other
848,811,323
'Circulation
14,847,409,975
********
1 Yen - $.4985
BANK OF JAPAN
De comber 31, 1921
Assets
Total Asset s and Liabilities
2,358,546, 925
Gold Coin and Bullion
1,246,896,310
yen
Loansand discounts
22, 000, 000
To Government*
Advances
and discount s
374, 277 , 358
Deposits
with banks and agencies
711,087,275
Se curities
102,056,764
Japanese Government
89,858,031
Other Government s
Liabilities
Capital Paid-in
37 , 500, 000
(authorized 60,000, 000)
Deposits
uovernment - General Accoue
Uovernment - Special Account ii
.
.
.
866,892,476
287,774,919
Private
35, 338,178
Reserve Fund
43,8 90., 000
Note Circulation
1,546,545,808
*A statutory, non-interest bearing loan for redemption of Government paper money outstanding when Bank of Japan was granted exclusive right of note issue.
1 Florin = $.4020
THE NETHERLANDS BANK
-December 31
1921
Total Assets and Liabilities .........
.
.
.
Florins (000,000
omitted)
. 1,037.6
Assets
Gold
.
621.2
.
Loans and advances
To
Government
Discounts and
72.7
advances
383.7
Securities
Government
8.9
Other
Liabilities
Capital
20.0
Reserve
5.4
peposits
Government
66.1
Other
Circulation
1,052.3
**********
Figures are from Memorandum on Central
Annual Report not yet available.
Banks, by League of Nations, and are based on weekly retura.
1 Krone = '0.2680
BANK u
Nuho
December 31, 1921
Kronen
Total Assets and Liabilities
692, 924, 386
Assets
Gold
147,292,187
Loans and advances
To Government
411.11
Advances and discounts
442,856,231
Securities
2,631,928
Government
Other
19,074,084
Liabilities
Capital
35,000, 000
Re se rve
58,993,470
Deposits
Government
Othe-
863,500
143,262,465
Circulation
Banks
Government. .
409,812,279
9,178,682
1 Escuda = $1.0805
BANK OF PORTUGAL
December 31
1921
Escudos (000,000's
omitted)
844.3
Total Assets and Liaoilities
Assets
9.7
Gold
Loans and discounts
Government
37 5
Other
156.8
Securities
Government
620.0
16.8
Private
Liabilities
Capital
13.5
Reserve
17.2
229DE_LL..ts
Government
4 8
103.0
Other
722.8
Circulation
*****
***
The Annual Report of the Bank of Portugal for 1924. is not avail:The above figures are,taken from the Memorandum on Central Banks,
It is probable that the actual
recently issued by the League of Nations.
The deposits given by the Economist
gold holdings are only 8.6 millions:
and the Statist, are only 59.866 millions, for December 28, 1921.
able.
1 Leu
NATIONAL BANK OF RUMANIA
De cembe r 31
1921
Lei (000,0001s
omitted)
20,116.4
Total Assets and Liabilities
Assets
494.5
Gold*
Loans and advances
16,614.5
To Government
2,638.3
Discounts and advances
Securities
Government
63.3
Other
3.8
Liabilities
12.0
Capital
Reserves
103.2
Deposits
Government)
Other
1,811.6
)
Circulation
13,722.2
*Gold in Rumania
1,704 million lei
11
11
"
" Russia
315.2
Reichsbank 80.5
"
England
"
98.1
495.504 million lei
Note slight discrepancy in total gold.
Both figures are from
League of Nations,
no data available for checking.
1 i3 = t4-8565
CENTRAL RESERVE BANK
UNION OF SOUTH AFRICA
March 31, 1922
Total Assets and
8,176,640
Liabilities
Assets
Cash (gold coin and gold
certificates)
5,166,551
iARLIA-Mi-S022.4.10s
2,200,000
To Government
Loans and
discounts (1)
Securities
Investments (not described)
800,000
L'abilities
1,000,000
Capital
-
Reserve("))
7,118,011
Deposits - Bankers
Circulation(3)
111111
20, 1922 - 25,000
(2)May 27, 1922 - 12 2,000
(3)May 6, 1922 - 12550,000'
(1)May
June 17, 1922 -
32,681,000
1 Peseta = $.1930
BANK OF SPAIN
2ehly
Statement - December 31, 1921
Pesetas
Total Assets and Liabilities
6,671,940,833
Assets
Gold
2,512,869,244
Loans and advances
4
*Government
*Loans and discoun's
2,830,404,645
Securities
Government
594,474,903
Other
11,654,625
Liabilities
Capital
Reserves
150,000,000
78,000,000
Deposits
Government
*Other
Circulation
*Annual RepOrt of Bank of Spain not yet available.
is incomplete on these items.
990,895,926
1,041,816,870
4,244,080,675
Weekly Statement
1 Krona =
BANK OF swqma_ilasaml
December 31, 1921
Kroner
Total Assets and Liabilities
1,054,2u0,304
Assets
Gold
.
. . .
274,742,992
Loans and Advances
To Government
640,296,883
Loans and discounts
Securities
5,182,600
Government
15,497,511
Other
Liabilities
Capital
50,000,000
Reserve
12,500,000
22222112
309,525,500
Gevernmen4
25,757,861
Other
627,698,726
Circulation
* * 4c.
****
.2680
1 Franc
NATIONAL SWISS BANK
December 31
1923.
Swiss Francs
Total Assets and Liabilities (1 ) .
1,224,708,500
Assets
Gold
549,521,217
Loans and advances
To Government
117,260,000
Advances and Discounts
320,893,744
Securities
Government
6,461,633
Liabilities
Capital (1)
50,000,000
Reserve
4,940,858
Deposit s
Government
7,714,577
Other
Circulation . .
120,919,755
. .
(1) Including Fr. 25 million uncalled capital.
**********
1,009,263,735
t.1930
FEDERAL RESERVE
MISC 3
BANK OF NEW YORK
Date April
OFFICE CORRESPONDENCE
To
10M
Subject Economic Agreements between
Mr .Snydar
M. E. Rose
Scandinavientrie-s.
An Inter-Scandinavian Foreign Exchange conference was held in
Uhristiania in February 1920 to discuss foreign exchange and general financial conditions.
The Conference held that the releasing of Scandinavian
gold for export at that time was too hazardous an experiment, and that the
stabilization of foreign exchanges could be brought about only by international cooperation.
In June 1921 it was reported that preparations were being made
for a similiar conference to discuss international trade problems common
to Norway, Sweden and Denmark, but I have been unable to find any record
of such a conference being held.
***********
The Library seems to contain no information on any agreements
between the various Scandinavian countries.
tr-de agreements between certain
Scandinavian
There are, however, various
countries with othelCountries,
such as, between Norway and Spain; Finland and Esthonia; Norway and Russia;
Finland and France.
These are trade agreements exclusively.
This information, scanty as it is, seems to be all that is available at present.
FEDERAL RESERVE
MISC 3
BANK OF NEW YORK
OFFICE CORRESPONDENCE
To
Governor Strong
April 13, 1922
Date
Subject German Reparation Situation
rt4-t
FiT
M. E.Rose
Letter from J, A. L., March 24, 1922
Exhibit A
GomAssion on March 21, 1922 fixed payments to be made
The Reparation
by Germany in 1922 as follows:
In cash
720 million gold marks
(including
281,948,920.49 gold marks
already paid in 1922).
Balance (438,051,079.51 gold marks) in the following payments:
18,051,079.51 April 15
50,000,000 - 15th of May, June, July, August, September and
October
60,000,000 - November 15, and December 15
In kind
1,450 million gold marks (950 millions to France, 500 millions
to other Allies).
Comment by J. A. L.
Germany can meet cash payments up until August 15 at the maximum.
Exhibit B
Reparation Commission makes the following conditions precedent to granting oi
concessions outlined in Exhibit A.
Germany's note of January 28, 1922 and program of January 26, 1922 to be
carried into effect.
New tax measures aggregating 60 milliard paper marks to be enacted
before May 31, 1922; 40 milliards to be actually collected during 1922.
Budget for 1922-23 to be revised, reducing expenditure.
Provision to be made for internal loans to cover budget deficit.
FEDERAL RESERVE
MISC 3
BANK OF NEW YORK
Datelpril 13, 1922
OFFICE CORRESPONDENCE
To Governor Strong
Fr
M. E. E
Rose
Subject
German Reparation Situation
_Letter_from X. A. L., March 24, 1922_
._
Stricter measures to prevent capital exportation to be enforced.
Autonomy of Reichsbank to be secured by law.
Accurate statistics to be collected and furnished upon request.
Comment bzJ. A. L.
Arrangement ideal but impossible. Permanent reform6f German finance must
begin with reduction of reparations.
French proposal for new "Committee of Gurarantees" with headquarters
at Berlin, is not accepted by Reparation Commission.
British plan for Committee
of Financiers to consider how Germany might obtain an external loan has not yet
been discussed.
June 2, 1922.
^
Miss FoEe:
Last evening I had the pleasure of attending the Commencement
111111111:Dear
exercises
of the New York Chapter of the American Institute of Banking, and there
/earned, Athout any surprise indeed, but with a great deal of pleasure, that
you received first honorable mention in the competition for the James G. Cannon
prize.
It may
gieetse
you to know that some of the judges, who had the iuesing
of judgment on the reward of this honor, found some
**ether
difficulty in
determining
you or the winner were entitled to the prize - in fact, it was a very
close thine indeed, I
was informed
so let me take this first
opportunity of
advising you how much pleasure and satisfaction it gave me to hear about all
With my best
congratulations,
and many good wishes, I am,
Sincerely yours,
Benj. Strong,
Governor.
Miss Mabel E. Rose,
c/o Pederal Reserve Bank,
15 Nassau St.,
New York City.
BS.MM
r
'67
1141A1121c
ZRA
June 10, 1922.
Op j4neeR 17;
W
Y(
My dear Governor Strong:
I cannot tell you how much I appreciate your letter of
congratulation, and particularly the kindly thought which prompted
you to take the time and trouble in your busy day to write me that
you were gratified with my success.
I wish of course that I had won the prize, but I am glad
to know that there was not much difference in the quality of the
essays, in the judgment of the judges.
With thanks and appreciation of your interest, I am
Sincerely yours,
Hon. Benjamin Strong,
Governor, Federal Reserve Bank,
15 Nassau Street,
New York City.
June 29, 1922.
Dear Mi33 Rose:
Congratul.stions on your honor record in the cl ss n Inter-
national exchage at the American Institute of Banking this year!
The
Institute is doing good work and I m glad you are ,:,vailing yourself of
the orivileve it affords.
The more our country progresees in world banking the more we
must realize the need for broad trhining in
.A.nt.nce
:.nd allied suujects.
I m delighted tla.t so many- members of our orgnizr.tion AM to realize
this.
You will, I hope, continue this good sork and if you do,
hm sure you ?All not only rind a suitable reward, but such nappinse,.. in
he work ituelf.
Sincerely yours,
Bt':njatitIn :Aron
Governor.
s Mabel Rose,
Peder',.1 Reserve Bank of Ne-t York,
York, N. Y.
wiJ/lem
mme,,,00,1-0,0
046
.,.-
114'
OF-ICE CORRESPONEDENC
TO
Governor Stron
FROM
M. E. 14,es
end) e r _21, 1922
SUBJE
The latex,. _F inancial
Eednomic Monthly, September, 1922
Review of t
,aotatea2_
w
The two outstanding features of the month were the change in the
money market and the fall in the index number of prices.
Rates in the call money market during August reached the highest
point so far this year, the volume of advances by the Bank of Japan was the
largest thus far recorded in 1922, and discount rates declined slightly.
The stringency of call money and the
inflation
of the Bank of
Japan's advances are ascribed to the diminution of specie reserves, (which
had declined by 220 million yen by July 1st).
The banks were thus led to
call, in their short-term loans, and to resort to the Bank of Japan for advances.
moreover, the expectation of a slackening money market diverted funds from
the call market to the discount market.
The result was the unusual con-
dition of a tight call money market and a slack discount market.
On August 31 the Government, as one of its currency measures against
inflation, prohibited the tate of gold held abroad as a reserve against note
issue.
Prices during August fell from the July index munher of 202.3 to 196.8,
which is 1.8 below the previous low point (May, 1922), and the editor predicts falling prices for sour time to come.
The apparently favorable foreign trade returns are due to a shrinkage of imports rather than an increase of exports.
In conclusion, the period of depression still continues, readjustment
of business i.e a
long
way off,
whole output is increasing.
and prices are expected to go lower, but on
the
MISC.3.1--00M-9-20
FEDERAL RESERVE BANK
OF NEW 'YORK
OFICE CORRESPONDENCE
TO
FRON
DATE- Novo zube
Governor -Strong
_The Japan __Financial *
E, Rose
Economic Monthly,_ September, 1 922
Establishment of
olic, for the regulation of nrices
The Government's policy for the reduction of prices, announced in
August, contains the following important features:
I. Exclusion of specie held abroad from restrrve against note issue.
This is a temporary expedient designed to reduce inflation.
Withdrawal of Government notes of small denominations.
These
notes were a temporary war expedient and the policy of withdrawing them, which
was begun last March, will be pushed so that the notes may be eliminated by
the end of 1923 and subsidiary coins substituted.
Reduction in the price of tobacco, which is a Government monopoly.
Increase in rate of interest on deferred postal savings.
Increased means of transportation of foodstuffs, reduced freight
rates thereon, organization of shipment and purchasing associations, and
establishment of central wholesale and local retail public markets.
Publication of prices of the necessaries of life.
7, Improvement in system of furnishing timber and fuel from State
forests.
Propaganda for the
encouragement
of economy of consumption, thrift
and saving.
Stricter control over speculation, and warning to bankers against
speculative loans.
The gold embarzo
Popular interest in the question of the advisability of immediate
removal of the gold embargo seems to be growing; with the advocates of such
removal in the majority.
The Government, however, has announced that it
FEDERAL RESERVE BANK"
OF NEW YORK-
OPICE CORRESPONDENCE
TO
1
FRO,
-
-
G o ve rnar=Strong
M. E. Rose
DATE
SU E. ECT
November 21, 1922
'The Japan-Financial &
Economic Monthly, September, 1922
considers the proper time for lifting the embargo has not yet arrived.
OF NEW YORK
3FFICE CORRESPONDENCE
M.
9i
SUBJECT:
Governor Strong
ROM
DATEmarch
Rosa
The Bank of England as you have probably noticed was last month
authorised to
increase its fiduciary circulation by
the first increase since 1903.
ET
1,300,000, this being
The increse rent into the Currency Note
nedemption Account, and not into public circulation, as is evidenced by the
returns quoted below:
February 21, 1923
February 14,
Issue Department
11,015,000
11,015,000
7,434,900
8,734,900
Government Securities
48,507,299
47,317,299
Other Securities
70,623,032
74,434,913
Government Debt
Other Securities
Banking Dspartment
Currency Note RedemPtion Account
Bank of England Notes
Coin and Bullion
Silver
Feb. 14
27,000,000
21450,000
7,000,000
Feb. 21
27,000,000
22,4500000
7,000,000
Bank of England Notes
Issued
In
Banking Dept.
in Currency
Note Account
ih Public
Circulation
Feb. 14
144,116,835
23,397,605
210150,000
99,569,230
Feb. 21
145,419,800
23,378,090
22,450,000
99,591,710
1924_
MISC. 3-1 60M-4-22
FEDERAL RESERVE BANK
OF NEW YORK
OFt:ICE CORRESPONDENCE
To
FROM
Governor Strong
M. R. Rose
DATE
SUBJECT
May 3,
1923
Jspen Tinannial and Rnonomic
Monthly, March, 1913_
.
Review of the Month of Febrile=
Since the beginning of the year imports have declined sharply, the
total for the two months being 72,000,000 yen less than for the corresponding
period of 1922.
The export trade has been only slightly more active during
January and February than during the same months of last year, and such ex..
pansion as has occurred is due almost entirely to the increased exports of raw
silk.
The depression of the export trade and the fact that only two articles -
silk and cotton - show any considerable improvement, are discouraging features
of the present economic situation.
Specie holdings continued to decrease, the loss amounting to 11 million
yen in January and 12 million yen in February.
The money market remained firm,
owing to the customary demand for funds for the settlement of accounts at the
close of the year and at the close of the Lunar Calendar year on February 15.
Prices rose 8.1 points during February, reaching 198.3 at the end of the month.
Progress_ frmarket as viewed from the
Bank of Japaes accounts
A reduction in the Bank of Japan rate was vigorously advocated during
the last quarter of the year, on the ground that the high rate made it impossible
for Japan to compete with other countries, such as Great Britain and the United
States,
which had lower rates.
As a result of the banking crisis toward the
end of the year, and the unexpected and continued stringency in the money market
since the beginning of 1923, discussion of the bank rate has ceased.
The
stringency in the money market is attributed to the abuse of credit in the past
and the extravagance of the Government.
Until there is retrenehment in Govern-
MISC. 3-I 60M-4-22
FEDERAL RESERVE BANK
OF NEW YORK
OF
Tc
.E CORRESPONDENCE
4
DATE
SUBJECT:
11
"ay 3,
1923..
Japan Fin ancial_and E c cum{ c
Monthly, March, 1923
FROM _31_2__Itase
ment expenditures, a real slackening of the money market and the consequential
fall in interest rates are hardly to be expected.
Bank of
suga
Address of Governor at General
Meeting of Stockholders, Feb. 17, 1923
The beginning of 1922 found the process of readjustment far from
complete.
High prices increased imports, which in turn created greater demands
for money and raised interest rates.
creased.
Trade depression and unemployment in-
In the early summer the Government announced a policy of general
These measures, together with the propaganda for
retrenchment and economy.
private economy and the reduced purchasing power of the farmer owing to the
fall in the price of rice, greatly restricted business transactions, and lessened
the demand for money.
The decrease in note issue during October and November
seemed to indicate that currency deflation was about to be realized.
Then cane the unexpected failure of the Nippon Sekizen Bank, with the
consequent disturbance of the financial world, which made it necessary for the
Bank of Japan to go to the assistance of a number of the banks.
The end of
the year demands followed closely upon the crisis, with the result that the
Bank of Japan's advances reached 580 million yen on December 30, and a new record
for the issue of bank notes
1,590 millions, was established.
Business enterprises made considerable progress toward readjustment
during the year.
The general tendency on the Stock Exchange was downward,
with a slump in April,
and
another in September.
Foreign trade was marked by an increase of exports, which cut the ad
verse balance
to 253 million yes.
FEDERAL RESERVE BANK
OF NEW YORK
Or- r-ICE CORRESPONDENCE
To
Governor Strong
FROM M. E. ROM
DATE
SUBJECT:
May 3,
Japan Yinancial_and_Er-onomic
Monthly, March, 1923
On April 1, 1922, the Treasury System was discontinued, and the
deposit system inaugurated, under which all public money received by the Bank
of Japan is held on deposit to the credit of the Goverrment, payuents therefrom being made by check.
1922_
1 x7EDERAL_ RESERVE BANK
OF NEW YORK
CORRESF'ONIDENCE
Governor Strong
DATE_June__ 7, 1923
suBJEcT
M. E. Rose
Japan Financial
and
Mont hly,___April
1923
Economic
Progre_s_s of_Soney ...Market and Interim Pros eriti
Professor Horiye, Keio University
The present growth of prosperity is regarded by some as indicative
of real recovery and by others (including Prof. Horiye) as temporary, on the
ground that there is nothing at this time observable to lead to real recovery.
By those who hold the latter view, the present activity is considered as a
consequence of the French occupation of the Ruhr valley, and in lesser degree
to the funds supplied by the Bank of Japan to meet the bank crisis last month.
Since the depression has now lasted for three years, some signs
of recovery should be observable.
That no such signs are apparent is as-
cribed by Professor Horiye to absence of the necessary factors conducive to
recovery; 1. e., such business readjustment and such reduction in
"the cost
of the life of the nation" as would result in accumulations of capital sufficient
to lead to easier money conditions and to stimulate economic activity.
The
continued tightness of the money market is due not only to the unsatisfactory
progress of business readjustment, owing to continued extravagance on the
part of the people, but also to tho policy of the Government, which by its
wasteful expenditures tends to raise prices and by its enormous loan issues
competes with private business for capital, thus keeping the interest rate
abnormally high for a period of depression.
The high rates at which it
is necessary to issue debentures attract funds which would otherwise be
deposited with the banks, and contribute to the stringency of the money
market by curtailing the resources of the banks.
The demand for the reduction of the Bank of Japan' s rate overlooks
MISIC.3.1-200M-9-20
1
.DEAL RESERVE BANK
OF NEW YORK
0E--1cr . CORRESPONDENCE
TO
Governor Strong
FRC,.
M. E. _Rose
OATEJUfl8 7
1923
JapanFinancial and Economic
SUBJ ECT
Monthly, April 1923
the fact that such reduction would widen the spread between the Bank rate
and the rates of the commercial banks and would lead the latter to apply
Reduction in the Bank
increasingly to the Bank of Japan for advances.
rate at this time would simply prolong the temporary prosperity and post.e
pone the readjustment which must precede real recovery.
In order to bring about real prosperity, both the Government
and the people
must reduce unnecessary expenditure, the Government must
refrain from recklessly issuing foreiton loans, the commercial banks must
endeavor to increase their cash resources by the
loans, industrialists must reduce
liquidation
production costs,
of frozen
and all those engaged
in business must practice economy.
Recovery
in
England and America is progressing step by step.
It cannot be expected to arrive all at once in Japan.
The _Question of the Removal of Gold Ex ort Emba
The Finance Minister still holds to the
opinion
0
that the adverse
trade balance and the economic condition of the country make it inadvisable
at this time to remove the embargo upon the export of gold.
The exchange banks incline to the
time for the
removal
opinion
that the most suitable
of the embargo will be June or July of the present
year, when the trade balance is favorable and economic conditions at home
and abroad have made fair progress toward recovery.
Whelesale Prices
The general average of index numbers of wholesale prices for
March stood at 259, as compared with 253 for the preceding month, 265 in
March 1922
and 125 in July 1914.
M.-
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
Governor Strong
FROM
DATE
SUBJECT
M. E, Rose
Juno
August 9,
192_3
Japan Financial & Economic Monthly,
1923,
BANKING FOR THE FORMER HALF OF THE YEAR
While almost all forms of industry have been depressed since the
Spring of 1920, banking has apparently enjoyed continued prosperity, good
dividends having been declared at the end of each business term. The cause
of
this prosperity is found in the high interest rates which in turn are due to
the fact that the money market has not yet been restored to normal conditions.
On the other hand, banks have been adversely affected by industrial failures,
and if they should make the necessary readjustments it would be found that
many of them have concealed losses and bad debts and that
losses are greater than their profits from high interest rates, ihus in many
instances prosperity has been apparent rather than real.
The course of money rates during 1923, as represented by the monthly
average of the highest and lowest quotations, is as follows:
in reality their
Day to Day Loans
Yen Per cent,
January
kebruary
March
1.66
2.61
April
2,23
2.57
May
1.84
Ordinary Commercial bills
Yen Per cent.
6.06
9.53
8.14
2.36
2.35
908
2.36
6.72
205
2. 45
8.61
8.58
8.58
8.61
8.95
The quotations are in general somewhat higher than for the latter
half of 1922, due to the continued adverse trade balance (which is seasonal),
issues of public loans and debentures, and increased time commercial demand
for funds to finance the apparent economic recovery.
The fall in the call
market seems to be due to the temporary expansion of funds resulting from
such causes as the low-interest loans by the Bank of Taiwan, conversion of
exchequer bonds, redemption of the amortization fund and the importation of
funds from abroad by the Oriental Development Company,
Banking profits resulting from the higher interest rates will be
somewhat reduced by the increase in the deposit rate, effective in April.
THE QUESTION OF THE REMOVAL OF GOLD EXPORT EMBARGO
The
TIV...cAsahi
the
by others.
rates, the
different,
adverse to
year,
lift
Government has decided to
statement is denied
So long as it was necessary to import goods at unfavorable exchange
Government's hesitation can be understood, but conditions are now
Exchange on America is more favorable, and
from an
a favorable trade balance usually occurs about the middle of the
reports that
the gold export embargo, although it is admitted that this
the transition
MC. /41 0M-4-22
FEDERAL RESERVE BANK
OF NEW YORK
CFFICE CORRESPONDENCE
To
Governor Strong
FROM
M. E. Rose
DATE
SUBJECT
Japan
August 9,
Financial & Economic Monthly,
June 1923.
-2
The principal reason for the removal of the Embargo, however,
is the desirability of restoring the
convertibility of the note issue.
economic influence in the Orient will be more strengthened by
the restoration ofconvIrsion than by the accumulation of gold. There
need bp no fear of an immediate outflow of gold.
Japan's
192_3.
FEDERAL RESERVE BANK
MISC. A.1.
OF NEW YORK
OF,-ICE CORRESPONDENCE
DATE
1 92__
SUBJECT:
FROM
CA"\.
0)
,
11
"
3
A /1/-,.:C,
1)
I/
t
z
0
cv-.
ot-
-4cu
M16C. 9.1 60M-4-22
FEDERAL RESERVE BANK
OF NEW YORK
01 10E CORRESPONDENCE
Mr. Roberts
FROM
DATE __SepteMbeT-111------19245.
SUBJECT:
M. E. Rose
The following data are in reply to Governor Strongls memo to you
dated September 17:.
1. French public accounts for the year 1914 are reported to have
been as follows:
Actual expenditures
10,065 million francs
Actual revenue
4,549
111
For the year 1913, both revenues and expenditures were slightly
in excess of 5,000,000,000 francs.
2. The British budget for 1913-4 resulted in revenues amounting to
h 198 millions and expenditures to h 197 millions.
3. British revenues in
1924..5 amounted to h-799 millions and
expenditures to h 796 millions.
Index number of prices in France:
Federal Reserve Board International Index for July 1925,
490
119
on paper basis
on gold basis
Maximum limit of loans which the Bank of France is authorized
to make to the Government
Loans to Government, Sept. 10, 1925
Margin still unused
Frs. 32,000 millions
28,650
3,350
Maximum limit of note issue Frs. 51,000 millions.
Notes Outstanding Sept. 10,
1925 (new high) 45,586 millions
Margin not yet exhausted
Loans
5,314
by Bank of France to the State September 3, 1925:
Statutory advance
Direct Advances
Treas. Bills discounted for advances
of State to foreign governments
Fre.
200 millions
28,800
5,115
"
9.1 60M-4-22
FEDERAL RESERVE BANK
OF NEW YORK
01 'c-ICE CORRESPONDENCE
DATESeptember 17,
lir. Roberts
192 5
SUSJECT
FROM __MAI__E_a_R011it
-
2
7. (continued)
On September 10, direct advances stood at 28,550 millidas.
No
figure for Treasury Bills on that date is as yet available.
B.
Private Loans of Bank of
France, September 3, 1925:
Discounts
Frs. 4,428
millions
aw
Advances
Total
0
7,243 millions
Gold held abroad, September 10, 1925
Frs. 1,864 millions.
This figure has been unchonged for about two years.
The Dawes plan calls for payments from Germany in 19254 amounting
to 1,220,000,000
gold marks.
shall be liable,
deliveries in kind to
The schedule includes
be paid for
90'
all sums
out of
balances in
"g,e"
VIO 4I re.
for which Germany
the
bank.
-77-4
Mm 37
C rice Correspondence
BANK OF NEW YORK
Date
DA
ss Scut t:
SubjectAT
To
I4(
C4191'-)
FEDERAL RESERVE
F
Julytt
0, 1919,
N4-si
TRIP
ituf
Beni. Strong
FT/9,_
I will need some special figures prepared to take abroad with me
on the following:
GOLD:
The amount of gold held by the Federal reserve banks and how it
is divided between the Federal reserve agent, the bank's reserve, the redemption fund, gold settlement fund, eta.
The total supposed gold in the country divided as nearly as can
be between reserve banks, other barkS,
general
circulation and Treasury.
An exact statement of the Government's debt, divided
GOVERNMENT DEBT:
between the old debt, the various issues of Liberty bonds, Treasury certificates and War Savings and Thrift stamps.
And separately stated, the amount
of subscriptions and the amount of allotments on the five Liberty Loans, and
a statement of the total amount borrowed on Treasury Certificates of Indebtedness, both in anticipation of bond issues and in anticipation of taxes.
These
latter figures can be lumped, except that I would like to have the total amount
taken by the Second Federal
TAXES:
The amount
separated as to
war
of
Reserve District
separately stated.
taxes collected during the war from all sources,
taxes and normal taxes
together with the estimated
revenue to be produced under the present income, excess profits and
tax law.
war profits
NEW..
P77
SUMMARY OF GERMAN PRESS COMLENTS ON THE
NOTO EXCHANGED BETWEEN S.PARKER GILBE
AND TIM GERMAN GOVERNMENT
November ,1927.
SUMMARY OF GERMAN RIESS COMMTS ON THE NOTES EXCHANGED BETWETI!
S.0 PARI R GILBERT AND THE GERMAN GOVERNMITT
November 1927.
A birdseye view of the comments shows a surprisingly large number that
agree With Parker Gilbert's strictures in essence and urge thorough-going reform.
Outspoken criticism and disagreement are relatively scanty. Under the main topics
opinions in general agreement with the Agent General's point of view or indicative of
a coopm-ative attitude are indicated by "For", and those dissenting or antagonistic by
'Against".
GWERAL
For
The Deutsche Tageszeitung says that in spite of inner opposition in every
good German the discussion may nevertheless be welcomed as an attempt to 31arify
financial and economic .3onditions which is entirely necessary. Another paper points
out that "All have ve sinned", and leaving hypocrisy aside what we must now do is listen
to the warning of the Agent.
FUNCTIONS OF AGENT GENERAL
For
Moat of the papers agree that the Agent General has not exceeded his funotion,
and that he has remained courteous and diplomatic throughout in his dealings. In fact
"he expresses views remarkably similar to those off the President of the Reichbank."
Another remarks that it helps Germans to get over the sharp tone of the note
to know they are dealing not with an enemy of the German people but with the Commissioner
of the aredi tor powers who sees as a cool calculator and pure financier.
Germans are reminded that he is the agent for their creditors, .those duty
it is to look out for the interests of his employers and to "tap the debtor warningly
on the shoulder."
Against
Two or tiree papers term the financial supervision of what are German internal
conditions, unjustified. The Agent has no rieAit to be a "task master" or intervene
in German internal political matters.
IDEAS ARE GERVAN IN ORIGIN
For
The Berliner Tagebiata says that many general and specific sta tements of
the Agent General run parallel with domestic criticism for a long time on German
financial Policy. He sq,s hardly anything that German critics themselves have not
already said.
One paper su ggest s that as Mr. Gilbert has daily conferences and luncheon
talks with many German leaders in business and industry probably they have expressed
themsblves too freely in criticism of existing conditions of which they disapprove
and have thus given him an exaggerated idea of the situation.
Against
The socialist paper "Vorwaerts" charges that Mr. Gilbert's views on the
German public economy- are due chiefly to "the materially unjustified attitude of the
Reiehbank, the large banks and the industrial leaders, Who want to use the Dawes
Commissioner in order to have stronger weapons against the hated competition of the
public econow."
GERMAN GOVIMEMEKT '3 REPLY
For
Most of the papers agree that the Government's reply was not at all equal
to Parker Gilbert's note in forcefulness and that it represented a synthetic product
of the various views of the Ministers which was not finally edited with a view to
refuting effectively Mr. G'ilbert's specific charges. It evades the issues.
The note scarcely touches on the grave question as to how the German
states and communes are going to raise the money f or their enlarged program.
the eontradictory statementt
The "clumsy attitude" of the Go vernment as well
as "grave
with
anxiety.
http://fraser.stlouisfed.org/
General
say
he
viewed
future
of Dr. Koehler made Agent
Federal Reserve Bank of St. Louis
Summary of German press ...
2
ADMINISTRATION
For
Governnent administration must be rationalized. There is a great waste
in administrative relations between the Reich, states and communes which threatens
to crush the nation. If the Germans do not put their own house in order, foreign
control threat ens.
So long as colossal malpractice in administration can be pointed to it
is useless to refer to the oppressive burden of the Dawes plan.
Apparently no attempt is being made to Provide for necessary budget expenditures by long-overdue administrative reform. The firm resolve of the Government
to take action is not clear in its reply and yet it is necessary to do sonething.
The"Berliner Boersen Zeitung" assumes that all political opposition will crumble in
the face of the seriousness of the situation.
Against
One protest is made against the la ole of information Mr. Gilbert displays
in his criticism of government administration. He seens to know nothing of the
Reich Audit Office.
LOANS
For
Many papers emphasize t he point that the loans to Germany have been for
productive purposes. But the "Deutsche Volkswirt"points out that "the Government
sticks to the primitive theory that use of a loan for electriaity, gas, etc. suffices'
to prove it is productive. 11th thiL: sort of economics the Government thinks it
can answer a document, which aside from a few incidental points, is forrElly and
theoretically impregnable."
Many of the loans in the interest of the whole people should not have
been flOkel.
German money. requirements are still large, so it is well to listen to
Gi lb ar t , whose judgement as to German conditions, the Aner Lean bus i nes r man
holds in high respect.
Additional loans, as in the case of large credits to an industrialist
will enable Germany to rehabilitate herself the faster and therefore be in a position
to pay over much greater sums than otherwise world be possible.
The borrowing is really proof of desire to -facilitate transfers.
It is feared that the discussions may affect ben possibilities, especially
in the Anerican market, and yet it would be to the advantage of the creditor nations
to continue the loans.
A,gainst
The loans to the communes have been for productive purposes and therefore
should not be criticized.
Even if the loans have somewhat inflated credit they have stimulated
business activity and reduced unemployment.
STATE AND COMMUNAL FINANCES
For
Reorganization of state finances is needed but it is a slow press.
Historical and political considerations are involved that apprently are not
comprehended by the Agent General.
One paper questions to what extent foreigl funds released other funds
of the communes, vhich were then invested in notorious luxury- enterprises instead
of being used for necessary purposes.
Berliner Boersen Zeitung believes it might have been better if the Government had not tried to justify communal loam policy. Matters '.vhitth were justified
in a time of great de-oression are no longer valid today.
BUDGETARY EQUILIBRIUM
For
No one except Dr. Koehler believes that the Reich will be able to finance
salary reform next year without tax increases. Among the doubters is Parker Gilbert.
Summary of German press ...
3
TRAITS L,±..,-)_S
Against
The press is unanimous itrilatthe opinion that the question of transfers is
not the Peich's business and that of the memorandum must be firmly rejected
.
They believe it suffieient if they adopt no measures deliberately to hinder transfers.
The reacti onary "Deutsche Zei tung" spea
of "the sneak attempt to extend
German responsibility, contrary to the clear sense of the Dawes plan, so as to include
the transfer problem.
The statements of the'task-master' on this point must be
rejected with all ene
"
TRADE BALANCE
Against
It is not the fault of Germany if her exports are diminishing. Experts
are hindered by trate policies and prohibitive tariffs of other countries.
It is
impossible to make payments to countries that will not receive German goods.
PRICES
Against
The Agent General is thought to have greatly exaggerated the effects of
the new bills on the development of prices.
POLITICAL AND CULTURAL FACTORS
Against
Pr. Gilbert has ignored and misunderstood tb.e political history of
He has also failed entirely to include cultural
considerations in his crit icism of expenditures.
The Reich government cannot be guided by financial and economic considerations
alone but must also act under state political considerations.
the mazy de c tio ns within Germany.
DANES PLkr!' REVISI
Against
A few guarded references appear as to the necessity for the revision of
the DaNes plan, mostly confined to the counselling of tact and amenability to
direction of the Agent Genera/ now in this crisis, so that he may be counted upon
to advise the revision later.
DEM:SCHER VOLKSWIRT
November 11, 1927.
Financial Control, by Gustav Stolper.
(Mr. Jay comments that
this is the best article.)
"We do not think it is admissible to load the political responsibility
for the conflict and for its political and economic consequences on the Finance
Minister alone. The whole Government is responsible, not only because it must
bear the responsibility for German financial and economic policy, but also because
the impossible_re-ALto,yarker ,Gilbert was brought before the Cabinet for its
approval...The Government knew that Gilbert's memorandum would be published. on
Sunday morning by all the great newspapers of the world. 7,,hat would have been
more obvious than for the Government to try to meet the unfavourable effects of
the document at the outset?...Nothing of the sort was done, and now we hear an
echo stronger, more unanimous and more hostile_ thew any _german sove rnmental
document has aroused.An.Qe 1924. Tlo_united ,front against Germany -Seems to be
re-e-Stabliiiied, not at the cry of Nationarisf-miniS7terS and generals, but in the
name of economic reason, or, if that is preferred, of economic self-interest."
"Me arguments of Gilbert are not all sound, but it would be the greatest
mistake which people in Germany could make to try to meet these arguments by agree-
ing with them in a few points and in return criticising all the more severdy some
other matters of formulation. In so far as it does not accept the authority of
the Reparation Agent and thus does not go into material questions at all, the rest
of the world will take the opposite course. It sees primarily the faults in the
German reply, which unfortunately talks_ around the Gilbert criticism in important
voints...The _s_ulaitct ofiii-sc-fitic3em_7
criticism - is the fact that not 'even the attenaisbeing,..made to provide the
for necessary ,expenditures _pring_tr iz_v_a_ long overdue administrative reform...
lAtek.Dret the German words as an explanation of the !no-ft-ties
rePTir-qiiite unnecessarily emphasises by
of our action but as a_threat,
fund
iiFgtrie
saying that upon the Eertlement of all these matters depends the will of the whole
people to pay...Foreign opinion does not understand that these expressions mean
nothing at all. Why weaken the impression of the repeated honest assuranoe that
GerlAAPYJP9n.4s. ,9,--g.,34111.1-,be,r-trev.t,V....a)411gatIonsi.joya
"In the report of June 10th, the Reparation Agent spoke very plainly,
but he observed the polite form which is customary. A Finance Minister somewhat
more familiar with the world would have understood what he meant. This report,
too, was not a strong enough push to lead Dr. :Koehler and the Government of the
Reich finally to begin an exhaustive discussion with the Reparation Agent. For
weeks and months no reaction whatever came from the Government.
The June Report
was ignored in exactly the same way as former signs of life from the Agent-TUitIl
ses again and
again that it is not his affair how Germany administers her budget. But unfortunate-
ly this country has creditors. In their relation to their debtors bankers do not
let themie-TireTTrilifWence4,,,by poltt,i7pW741140-1-4at-TOrirOr'''
"Tithe Reich will be able to finance the salary reform...nextyear_without
tax increases nobody 41,..QP1170,3w-Jaaileore_a_.exo.e_pt:Iii.Eckehler.
Among the &mote rs
1,13Plikka1beit.1...5urrtnarising, the Reparation Agent says that the Reich is en-
dangering the stability of its budget, and that there is a general lack of effective
control of public spending and public borrowing. These ideas a-e not strange to the
readers of this paper...The note of the Government unfortunately goes beyond the
line that can be defended with good reasoni. It sticks to the primitive theory
that the use of a loan for electricity,_Kas, etc..,, suffices to prOve it Iii7Toduct_iye ,
and says that the total 1.6 milliards of public -bor1b
increase the administrative expenditure of the public corporations.
snot served to
With this
an answer a, do cumen t which,,aside from
a few incidental_poilats_LAtio,rmally_end theoretically impregnable."
sort...PfAgAUVONCA.3119...GeYernment thinks It
Financial Control. by Gustav Stolper. Cont'd.
November 11. 1927.
"That the deficit in the trade balance is described, on the one hand, as
the natural consequence of foreign borrowing, and that immediaely following the
statement is made that the German economy is still far from able to net the deficit
out of its own resources - that is the deficit in the trade balance is described as
the cause of foreign credits - this is only a further example of the way in which
a few anonymous officials put together their economic wisdom with a view to 'contradicting' the criticism of the Reparation Agent...Whether Parker_Gilbert_is_called
a, bailiff_or_anything else for reasons of internal politics_does_not_Qhangp_anything.
ThdWOrtant fact is that the German economy, the German people and the Reich
faced with the choice of living less well and being_ free or of 11-Ving
ire--
payip.Efor it withiT
of
Inc191144ence.apdhe_constantdangers which any
A national financial policy is a financial
debt reallA10441111) b.riAMW,M,it.
The
policy of self-denial and sacrifice, not a financial policy of great words.
note of Parker Gilbert is no episode. It introduces, we hope, a new chapter of
German history, the chapter of the great political reform, at the end of which
stands German liberty."
AIFUIER ZF.I TING
Opposition.
Good paper - Represents old liberal spirit.)
(Democratic.
November 5, 1927.
(?)
"It is to be hoped this discussion will serve to make more clear to
foreign countries the di fference b etwe en. the functions of Ge rman,--commun.e_ ,a.nd
But, aside from tills, it cannot be denied.
thofor_Anstancein-Ainerica.
and that
that the financial criti ci sm of the Reparation _Agent J. s largely
the Government, particularly the contradictory statements
of Dr. Yoehler, has contributed towards making it possible for the Agent to say
We can only hope that no
that he looks into the future with grave anxiety.
further encouragement from outside will be necessary to make the Government carry
out the work of salary reform."
Justified,
thedrumadkule_of
November 7. 1927.
"The firm resolve to take yig,e rms ao.ti. on Isnot__ olea
oye rnpent! s_rekly , although all the dculties which, it is explained, stand in the
way of such a decision will not relieve us of the_necessi..ti_of doing_ something...
The problem is in effect thattEe -outgrown relation between the Reich, the '.§-faTes
and the communes and the great waste inJ:hi s
apparP,t
Here we must talc; measures on our own initiative in the direction of
crush us.
For one thing has been made clear by the memorandum of the
thirel'enting economy.
Reparation Agent, even to those who have up to now closed their eyes to it: we
s .21an with any prospect of success
shall never be able to object_ age. inst.
and maintain that t he _internal payment-o-f. the _charges placed upon us is impossible
so long as we have not ordered our own affairs."
"The foreioa borrowings of Germany are not a proof of a lack of will to
fulfil reparations, but, on the contrary, a proof of a stroja_g_desire to make the
reparations charges .beara,ble anri to facilitate transfers.
During the period of
transition
-have been making ourselves strong in order to fulfil, in order to
pay, in order to transfer.
It is a misfortune that the Agent, insufficiently
enlightened, did not see these facts... Practically speaking, we must now expectthat the inflow of foreign capital into Ge-many will be obstructed, and that, in
particular, the American capital market will be less inclined at _least to accept
.
atp
Ge rman_k_44
cans ;"
DEUISCIU TAGEqZEI TUNG
(Nationalist, Government Party.
Leading organ of German agrarian interests.)
November 6, 1927.
The Great Discussion, by Dr. Erich Wiens.
"In sulte_ef_ all _inner_opposition which the memorandum of the Reparation
Agent probably arouses in every good German and in spite of the feeling that
Germany's dependency on foreign 2owers is here brought home to us with a sharpness
which we have experienced comparatively seldom during the past few years, the great
discussion between the Reparation Agent and the Reich Government may in a certa
sense nevertheless be welcomed as an attempt to clarify our financial and economic
onlitionswh kg:4 _Is_v tirelyAlgeesegy ... The memorandum of the Repa rat i
has forced the Reich Government synthetically and fundamentally to treat the whole
problem, - a thing which has long since been necessary for the education of the
German people...What hells us Germeas_te_get.inter..,41,JP4P. ...,prt of _the_very sharp
tone of the pemo rand= is the fact that we arejlet dealing with an enemy _of 7!4e
Ge rman_eople , but with the commissioner of the creditor Powers who believes he is
only doing his duty in empháflcaflj Oa 1 11-n-gr-the-ienfrOn--Of- the-Re 1 dE D6i7e rnmen t
to he 'material pre-requisites for German reparation payments. The Reparation
Agent is an American, and only with American eyes, i.e., as a cool calculator and
pure f i4angi9s, _doe s_ he see and judge the Intricate question of German reconstruction
4110,119.Pari,9449,49,YA"
"While one-sided, Wr. Gilbert's concentrated attention to German financial
policy, has given him the possibility of being an impressive_cri,tic_who is undoubtedly_ competent in manythins...It may be said that the objections of the ReParafian
Agent- to the -b rr ow ing policy which a number of German communes have pursued during
the past few years run entirely parallel with the misgivings which Germans have also
advanced repeatedly...It may be true that on the books these foreign funds were used
primarily for electrical and water works and for other productive purposes. Nevertheless the question mmains openylhether and to what extent foreign funds released other
funds of the communes_wh 911 were_thenAmas 04_4,12notorApus luxury -ent eri;ri sea instead
Ql.alliag_Paa.....tor useful and necessary purposes thereby making borrowing abroad., super-
fluous."
"We regret that in its reply the !lovernment failed convincingly to refute
the misgivings of the Reparation Agent against the wage and price effects of the
salary reform...In warning against farther increases in German costs of production,
the Reparntion Agent appears primarily to fear the unfavourable influencing of our
trade balance. Naturally he must,.realize_that_the pro te cti ye cnstoms and trade
policy of _other countrtes is one of_the chief reasons for the_ unfavourable status
or-ne-Wilian trade_ balance, - a thing which our Government rightly emphasizes...
nie re. 1 appeals to the collaboration of the German Government for
overcoming transfer difficulties, our reply refers with good reason to the hindrances
not dependent on our will and influence..0e take cognizance of the statement that
the Reich Government is fortifying itself for a permanent equalization of the Reich
budget in the pursuit of which aim the furthering of our economy will not suffer in
If in the execution of this program we should realljy_arive_at_ an_ eponomic ,
and so cialpalley wilickk 4ra attariect.Io_one..,..another_aza-witupplement
each other, we may book the step of the Reparation 4.gent and-ita consespencee as
any way.
an asset.
Transfer and Tribute.
"Aside from the tribute payments, we receive foreign exchange for all
merchandise sold to foreign countries. At present we are receiving loans and
short-term credits. Such drafts on foreign credit naturally result in a greater
movement of merchandise from foreign countries to Germany. This is the explanation
November 10. 1927.
of our very unfavorable foreign trade balance...It is incorrect to assume that
through foreign. loans anzthing else_ is _imported into Germany_ than more me roland i se 0
lEilbstrunlintxtrxxtrricsxxxxxxmciationximsxmmxxxquilmmonIvulmmxImieizinikieximilm"
0
GERMAN IA
(Centre or Catholic Party, Government. Important paper, as its
editorial articles have considerable influence particularly on internal politics.)
Reparation Polemic or Reparation Business?
November 6, 1927.
"It is particularly to be welcomed that the reply of the Reich Government is entirely in a tone of calm objectivity, which perhaps was not easy to
This
maintain in view of the criticism which the Reparation Agent exercises.
criticism is all the more surprising because Parker Gilbert recognises that the
assurances of the Government:that it is doing everyth14g,in,its_otwer. to meet
its financial obligations are worthy of full confidence."
"The-Versailles Treaty itself prOvideS-That Germany shall indemnify her
citizens for their losses of property abroad; now when these indemnities are to
It should therefore not surprise
be paid the Reparation Agent raises objections.
people abroad if the suspicion is aroused here and there in Germany that the
RekarW,on_oxed4qra_w4nt..to,Rreyent_tneonstruqt,19/4_Pf_cOrman existences
abroad."
"ft is one of the principal merits of the Dawes Plan that it took the
It would be
reparation problem out of the stage of political discussion.
extremely regrettable in the interest of European peace if now a fruitless
polemic should take the place of the business-like liquidation of reparations.
In spite of all objective opposition
We hope there is no reason for this fear.
to the criticism of Parker Gilbert, wg_glIcAta deny that i4.Mahy_other_points
there is agreement between. h1.4. vi_OWs A114 those of the Government:','
DEUTSCHE ZEITUNG
(Extreme reactionary.)
November 10, 1927.
The Task Master, by Dr. Bang.
"The memorandum is noteworthy and fortunate because it lifts the veil
from a condition which up to the present was still concealed to big parts of our
nation in view of crafty propaganda...it gives us sincere pleasure that a description of the task master, which we created some time ago and for which we were
reproached by the Dawes enthusiasts, is now going through the press rthe bailiff
of the remains of a bankrupt Germany/. This hits the nail on the head...How
ITdriy and MerUlly-Were we once opposed when we proved that the-Dawes Plan
aimedat gaining control of the German economy and power in the German State!
At that time we also referred to the conauest methods of worshiped "AmerLca",
1.9_,A,ALWall_Street_capita1, this greatest robber' iMperialist of all times.
To-day we have the painful satisfaction of seeing this method of conquest uncovered with c:rnical open-heartedness in the book "Dollar Diplomacy" by Stearing
and 2reeman. Whoever wants to know that the Dawes Plan and the American loans
mean should read this education book of Shylock."
"Of those people who helped to prepare the Dawes Plan and who accepted
it, no one has the right to complain to-day and to shed crocodile tears. Parker
Gilbert is merely doing his duty, and this duty is based on the 'voluntariness'
of German policy of fulfilment. Is regards the contents, tbe_t4A1-mester is
irl'ortunete_lx,,rig.ht.JAL.Aome,pelgtss_ One does not have to be an American to
recognize the untenabilof a Social Democratic State and_econamicsystem which
sacrifices to_thejaarxistic,MoloCh_of:public,corporationsi one P:rivate-ilitintive
itfei:fheli-ther,W which suPk9,r-r9bbing taX-474411-1.2nbcund-K-10-41n
olicy to overfeed itself and to preserve the very dangerous conditiOfi-of Marxistic party mal-administration. But the Reparation Agent's attack on the
financial policy of the past year, i. e., on Koehler, is unjustified and male-
volent."
"The most_importan,t_and dangerous _t4ing In the memorandum is the
alleaXY-g/tezP""1"11134-GATA4D-res0P0-141itY, Contrary to the clear sense
of the Dawes Plan, so as to Include the Itransfprpro_blemt. The _statements of
the task-master on this point must be rejected wittLal_l_energy. Why does the
German Government not do this In its humble, obedient and lame reply?...The
Government's reply does not say that which is important, necessary and a matter
of course; that as a result of our bleeding we are at the end of our possibilities,
and that 'by fulfilling' we have long since proved the 'impossibility of fulfilment', for which reason we must demand a change of things."
VCRWAERTS
Bitter enemy of Yationalist and
eople's Party - also extremely hostile toward Communists.)
(Socialist.
November 6, 1927.
"The criticism of the Reparation Agent is slasp_ in its contents but
entirely_csnrIpous in its form...That the Reparation Agent continually speaks
of extravagances of the States and communes is due to the fact that in the United
States similar administrative forms with like tasks do not exist or exist only in
Mr. Gilbert's views on_lhe_g9rnINI_public economy are therea very small number.
fore due,441afILIR_ the materially unjustified_ attitude. of the Iiii-ChsliSnkj the
large banks _and he Industrial leaders, who want to use the Des''' Commiisioner
in order to have stronger Weapons against the hated competition of the public
economy...We hope that the strained relations as a result of the exchange of
But that such a condition could arise is the merit
documents will be overcome.
of a Government whiCh through its composition and the undisciplined behaviour of
the largest party in the coalition, has damaged the confidence of foreign countries
in Germany's honest will."
(Democratic.
HAMBURGER FREMDENBLA TT
Good paper of liberal views.)
Opposition.
November 5, 1927.
"The Government also says much that is right about salary increases,
but one reads Dr. Zelllex's_statalmant,s_witb-AJ9eling Qf Alssati sf action because
they scameltopch,,u4An_ths,grave question how the States and communes are
00_,,D.C...12_042,9_,the-1114ney_.- So far as the financial settlement is concerned,
The hollowiest, emptiest
the Government has almost nothing material to say.
part of the reply is that about the cost of the school law...We must in general
_Beparatipn JI,Eentlasaltic,ism
nevertheless recognise that a large part o4!
i s correct -
so_ti-LaCamsay,s_lvardly any thi4g that Ge 114411. critics
have not alreakr, Paid...If a di scussion is now re-awakened, i t will be of benefit
to Germany, for the more clearly the German intention to fulfil the Dawes Plan is
realised, the more favourable will be the judgment of foreign countries on Uermany
and her credit."
Yovember 7, 1927.
"The RePa'ation Agent has looked at many things with the eyes of a
foreigner for whom it is impossible to understand the complications of German
But just because Parker Gilbert is an American it ought to
financial policy.
have been the endeavour of the Finance minister to maintain close contact with
Mere is no doubt that in such case public criticism of German financial
him.
conduct would have been omitted."
HAASURGISCHER KORRESPONDM-T.
()
November 5. 1927.
(?1
"One cannot evade the impression that this memorandum was worked out
with the greatest care and thoroughness and that it will be of decisive importance
loreover, it gives much better
for our whole financial and reparation policy.
Information about the actual status of finance and business tan the very general
statements of the German Government. Parker Gilbert says very hard,wordsi. but
nevertheless we need not doubt that_
intention to warn-the-Germa,Govern--------Tent in time...If there is anything in the German reply that can be welcomed it
Is the part where the statement is made that Germany cannot adjust her whole
ale_Zarker_gAlbert memorandum
economic situftion to the execution of reparations.
is a work of emlaant_kolltical signiflpance; the German reply unfortunately is
less poiXtical than bureaucratic."
it is his
-
SC1E-WE TPHALI SC HE ZEI TUNG
RHE
November 6. 1927.
"Parker Gilbert does not think his duties are confined to collecting the
_payments, but he believes he can take measures to prevent any possible complications.
In other words, his right of interference:with_econamic_and Xinancial affairs is
against_this_control, which we ourselves accepted...
We_can_do_very
unlimited.
In the reply of the German Government the whole impotence of an oppressed people
is apparent."
little,
aNIGSBERGER ALLOMEINE ZEITUNG
November 5. 1927.
"Yuch,of what he says in undoubtedly true, and it is bitter that we
have to let a foreigner tell us these things only because we have not had the
with theAscessazy,resolution...We are glad the documents were
energy
now re*-V-e-r, but we expect that the German Governpublished because
ment will now take the bull by the horns and use all its influence to restrain
parliamentary bodies which show too much inclination to spend money. We_must
doemmthing to_anid_the impression of bad will, because then- we shall Alain
an earlier revision of the Dawes Plan."-
to act
distrust is
'
-
.
LEIPZIGM NEUZSTE NACHRICHTEN
Unimportant politically.)
(Nationalist.
November 5, 1927.
(?)
"The duty of the Agent General is to_p_rote,ct_the intexesta_o_fzthe
creditor states, and, if he thinks these interests are endangered, he _must tap
Those who forced upon us the yoke of
the debtor warningly on the shoulders
reparations Oighf fo 'be the last to regard this as interference in our internal
affairs.
his functions...
Parlmr_GilbertPareflalYW4-P-enPO4g
Aside from the schooImasterly tone of his memorandum, which was perhaps not
intentional, the Agent General expresses views remarkably similar to those of the
President of the Reichsbank."
November 9, 1927.
"The Dawes Plan has left the responsibility for its success or failure
The Reparation
That is its psychological weakness.
to the German people.
Agent says nothing about this in his memorandum, and the German reply intimates
Thus the Reparation Agent gets the upper hand even in tie
nothing of the kind.
eyes of the German nation because the Government does not attack the fundamental
idea of his memorandum."
B6RSEN COURIER
(Democratic;
November 8, 1927.
Good financial paper with little
political influence.)
Opposition.
"The Party Leaders on the Financial Dispute."
A leading Democrat says:
"Our well-known attitude and our criticism of the financial
policy are only strengthened by the statements of the Reparation
Agent. . . . If savings are to be eect9d,sVaa_zu.Q...Lbe_done in
connection with the necessary adminlstratl*e .re,form, wh1ch4st be
c6.7fiTe4763#1-111-Vie- quickestssible
way, preferably through the
creation of a unife'd-State -"Whi-Ch Wd-htre always-adideated--In our
Ofilion, savings may also be effected by reducing the expenditures
of the army and navy."
A leading member of the Center Party says:
"The note of the Reparation Agent shows that the fundamental
financial questions now penuing must be settled before the beginning
of the first reparation year. . . . If on the basis of Parker
Gilbert's memorandum foreign loans become impossible, this would, in
view of the necessary capital requirements of the economy for productive purposes, which cannot be raised within Germany, be fatal for
the reparation payments which must be paid on September 1, 1928. But
to be assumed_h4t-q-4Ybody in Germany_wanted_to_evade_col-
1.1.-1-n9.
laborating
in
rationsand in the"trabbfer.w
A leading economist of the People's Party says:
"The laws involved are the last step in the conclusion of the
new order of German domestic conditions introduced by Dr. Luther and
the necessary consequences of the currency reform and of the adjustment of German price conditions to the world index. . . . The result of the discussion on the possibility of fulfilling the Dawes
Plan will be that the experts have considerably over-estimated Germany's capacity to pay and that they have under-estimated her capital
requirements for the recovery of her economy. Germany's economic recovery would have to be broken off if she had to depend solel-y-On the
domes-fibMaTiIel-fiTrSalTsfaction-01-rar-taIiital i--"quireiiients. This
Co-tild-elidanzer ntrt-oflyreparations:bu, -a1PPI:sossibly-- the safetZ offorei;in ,qapital_slirohilas ben loaned to us thus far. Foreign countries, and particularly America, will, 'in-their own interests, therefore find it necessar further to collaborate in the German recon-
struction process until it $ ermina e
A leader of the Socialists says:
"It- is regrettable that the Reich Government did not simultaneously present a plan on administrative reform in the Reich, and, what
is still more important, that it did not reach a binding agreement
with the States by which their greatly inflated administrations must
be reduced. If the administrative reform had preceded the salary reform, it might have been possible to be more considerate of the justified wishes of officials. In my opinion there is no reason for uneasiness since the Reichstag is conscious of its duty and
ARSEN COURIER
,
II/8/27.
that the budget in the coming years_ia reallY b#1,a49ed and not
balanced artificially through the inclusion of loans which it is
impossible to float."
November 5, 1927.
(7)
2
"Reich Simplification and Reparations by Dr. Cremer,
Member of the Reichstag."
"When the total amount of the German reparation debt is fixed,
the abolition of the present financial control may be brought about
by supplanting the obligations of the Reich with a series of German
loans, the proceeds of which would go to the countries entitled to
s regards this goal, the intention of the Reparation
reparations.
Agent probably does not differ from the intention outlined here, and
the interests of the reparation creditors, would run entirely parallel
here with German interests. But for the practical solution of the
reparation question it will be of the greatest importance that at the
given time confidence is placed in Germany that she will later pay
the definitive sums which have been fixed in agreement with her.
This confidence will depend on the judgment made on Germany's capacity
and her good will."
(Democratic.
Ndvember 6, 1927.
VOSSISCHE ZEITING
Opposition. Writes a great deal on financial matters.)
"Made In Germany,t by Georg Bernhard.
"Some of the Nationalist papers have again referred to the 'Dawes
fetters' and have circulated a mean expression which characterizes the Reparation
Agent as the 'task-master' of the German people. Parker Gilbert is not a taskmaster. Germany_is not under financialsuperv_ision and the financial
for taking care of the rights of the reparation creditors has no right
agentappointed
to intervene in .internal_German_cenatlene But he has_the_right and duty to
look out for the interests of his_sitmaae_ra. For they are the creaTtors of
Mese creditors are not only reparation creditors. America, at least,
Germany.
is Germany's creditor as a result of her own free decision. Her banks and bankers
have furnished Germany with milliards in the form of public loans and private
credits. And even if Germansy_did not owe a pfennig of reparatibn_debta, she
would have to regOriaie ia-C.'aTeik-iC-tlie-taariEif-hiir-areaitCrs would carefully
watch the development of the public finances and of the German. private economy
and that they would exprist the
"Germany's money requirements have by no means been satisfied as yet.
On the contrary. We have always taken the view that without further large loans
from abroad the German economy will be_unable_to.develpp, From this there -follows
the perhaps not very agreeable, but possible consequence that the important thing
is not what conditions in Germany actually are but whatopinion,foreign,Countries
have of German conditions. For it will depend on the ji..,11022t_ef
theLffefidgiii-WhethWi-filey_wish to become_larger_creditors of Germany.
And the
extent to which Germares repareTtiOi burden will be reduced depends on this judgment also. This is the reason why the statements of 2arker Gilbert are so extraordinarily important...If kir. Gilbert, who enjoys American confidence, expresses
himself on German economic and financial conditions and if doubt as to Germany's
credit arises out of such utterances, American business people consider these
doubts in the same way as every business mn in every country does who lends out
money and whose experts express themselves in a doubtful manner on the creditstanding of the borrower."
"A possibility is that Germany, confiding in her economic, technical
and mental forces, should accept as much foreign capital as she can obtain. With
this cap1tal_sheya11 again,eammeney_and_resurrect_herself. And as a result
o'f a piospO-rOUa German economy it Will be easier to pay two milliards than one
milliard under the other condition...Every thing depends on whether Germany con-
siders herself a big industrialist or a small merchant."
"Ideas. which are entirely un-American have influenced Parker Gilbert in
His memorandum, which is adapted to cause distrust against German
finances, is therefore nothing other_than,the exlibrted_preduct_of_German_ideas.
And unfortunately a large part of his memorandum must be prefaced with the remark:
Germany.
"Made In Germany."
DEUTSCHE ALLGT-WPINE ZEITUNG
Editorially the
paper has little influence. Unimportant politically.)
(People ' s Party, Government.
November 6, 1927.
BY P. N.
"That the tone of the Reparation A.gent's memorandum is, in spite of the
unusual sharpness of the material, not_anfriendly goes without saying in view of
the correct relations, .between ParierGilbert_and the Reich authorities...As regards purely financial political problems, on the other hand, agreement ought to
be possible all the sooner since the majority of the German people is of the view
of the Agent General and the Government that very, ve_a_mucil.jmultjal sisaidied
We must only be given time to master the
and improvedip,_theJAWMAnaugs.
great difficulties which confront us."
November 7, 1927.
"It is questionable whether it would not have been puz1112.12.krupt
the Repantio4S0111from arriving at such an aksolutely_critical_attitude and
whether it would not have been possible for Germany to eliminate through her own
free decision a number of the misgivings raised by Mr. Gilbert."
Germany
"The Dawes Plan as such is not the subject of debate to-day.
is, as the aeich Government has declared anew with all seriousness, determined
3ut the most important prerequisite for fulfilment is that TETto fulfil.
The difficulties and
creased merchandise exports be made possible for Germany.
hindrances which other countries place in the way of German exports work in the
direction of the destruction of the Dawes Plan because they make its self-evident
pre-requisites questionable...It is not new that representatives of the German
economy have requested the decisive authorities to rationalize_the_administration
and the public corporations. In a very important interview at the end of Septa-kber,
seep, pointed to the danger if this most serious task is postponed until Germany
was in the midst of critical negotiations on the bearableness of the Dawes burden
Such a procrastinating policy
and the fixation of the total sum of reparations.
must, he continued, make our position very difficult...Unrestricted credits led
Such a psychological
Germany, to an extent, to over-estimate her own strength.
reaction must not remain unheeded, and...a chaie_of kncedure is in order."
November 10, 1927.
"There is complete agreement between the Government of the Reich and
the Reparation Agent that lopsmust be_placedanly_for productiye_laaoses.
In its reply the German Government recognised the necessity of an early definitive
volution
of the financial relations between the 'Reich, the States and the
communes...Tha disturbance caused in many quarters in regard to the financial
situation of the Reich lacks any foundation in fact.
The German Government
has already given the assurance that .budgetary equilibritp.yili_te maintained
for the ,fiscal _par uncr9O,Tr OLIC:tWatancis.Thare- can therefore be no suggestion
that the equilibrium of the budget is endangered."
BERLINER BOERSEN ZEITUNG
(Nationalist; Government Party.
Good financial paper
with little political importance.)
"Is Gilbert Right?"
Dr. K.
"If the Reparation Agent makes the public finances the central
point of his criticism, we must say, as the Reich Finance Minister actually does, that he is right in many points with regard to the ultimate
xpalA4x,Qa_zrom
aims. . . . It is re-rettable that a ati14414§_U
certain
financiaL,p,aitiwitaiLig_111 -cad=-ID-bX,I,Pg.g:4IATO,P2eqji of
cal connections into more rapid flux for it may be assumed that political °P130471714-WM7a*Indl-e in the_fikce. of,Vie_seYNaDt_ljpIcr-situation
which the memorandum of Yr. Gilbert illuminates.
._
mile should therefore like to assume that it might _have beep letter
fohe
Relch _Government not to try to ,.juatifymmunal_ loan_po,UcY
and that, it should have been pointed out that the large projects of
the communes during the first years after the currency stabilization
November 6, 1927.
succeeded in helping the economy and a number of unemployed through a
period of great distress. To be sure, matIegs_which_were_perhaps
justified in a time of very ,great d.eprese-ion, are, no longer-valid todayTanato Ihis-eitent -the criticism of the Raparation Agent on the
public expenditures is unfortunately justified. Accurate as the judgment of the Reparation Agent may be in general financial-political
matters, his criticism overlooks facts in important details. Entirely
incomprehensible is his reproach of the Reich Government in the transfer question.
'The Reparation Agent may not be vindicated from great exaggeraon the deve-rbjffeat
tiona with regard to the effeclig_pf_the_new
of prices."
(2)November 6, 1927.
ry.
.
Dr. J.
"As regards the form, the author of the memorandum uses the language and tone which is customary in diplomatic exchanges of opinion,
without going a step beyond these limits. Mr. Gilbert is chiefly a
warner, often something of a schoolmaster, unfortunately too much of
a dictator, and hardly an adviser. Perhaps the Reparation Agent
would not have used such sharp words if he had in the very beginning
counted on the publication of the memorandum. The shortcoming most
obvious in the train of thought of the Reparation Agent is a failure
to_consider those inner-State and internal political conneeflons_which
forM7the basis-of-the most severely criticized financial political
measures of the Reich Government.
"The financial laws must_becarried_out. This fact cannot be
changed in ABY-WdY-Wthe-MeMorandum. The Reich Government will, in
conjunction with the parties, have to seek a compromise between this
necessity and the objections of the Reparation Agent so far as they
are objective and justified."
KONIGSBERGER ALLGEMEINE ZEITUNG
November 7, 1927.
"We must say that even if the_GgigrAment_isrighl. that it was
necessary to _increase the budget 1,700 millions_in the past two
_PhQ1a41.be _reallY_Am_ecoromic
Ye_ffiff.§-,--30:141-4A .01-41245,711M011:It
depresqlpn when business can no longer pay taxes? If the Government's optimism isliistified; the misgiving-a-of the Agent will be
largely overcome. But in the opposite case will not our creditors
point to his warning and say that Germany has herself restricted her
capacity to pay reparations? Thg Ggrman reply leaves the_possibility
of such an economic reversal entirely out of consideration, and that
is the worst thing that can be said about it. IteVei-theless the Agent
must be told to keep within his proper limits in a number of points.
.
One statement of the Agent deserves the greatest consideration.
Many people in Germany think that our obligations end with the payments to the Agent. We are_now,told_ coolly and_ohjectively that we
are obliged to facilitate tianSters: There is no use denying the
gsaylly_of these maIters. The consolation that the d:citre-ifiEent itself caused the exchange of opinions helps but little. Unless it
takes into account the justified misgivings of the Agent, it will at
least open itself to the reproach of having given the Agent a cheap
opportunity to criticise things outside the limits of his office.
SCHLESISCHL VOLKSLEITUNG
November 7, 1927.
"If things were really as the Agent sees them, we should be in
that he dq,liberetely_paintedIhim_too
black. His criticism would have a disastrous effect on our foreign
credit if it should be entirely al5iiroved;-and if the-reply of the
nVernment does not convince the reader. We may expect that the
measures promised by Dr. Kohler will dispose of the most important
objections of Gilbert."
a bad way. We can only hop
EANNOVLRECHER KURILE
November 8, 1927.
"There is an old proverb that anybody-who contradicts somebody
stronger than himself acts rashly. The Finance Minister acted in
accordance with this proverb when he sent the Agent General a long
reply to his memorandum.
"Mr. Gilbert's statement that what is in the interest of the
German economy is likewise in the interest of the Plan is nonsense.
So far as lack of any control over public expenditures is concerned,
just the contrary is true. Gilbert seems to know nothing_about the
Reich Audit_Orgice.
he does not seem ..:41.-WWLUAIandlayItOdag_about
i-r1illaA9PLtheStates_and communes. We are sorry the democratic
press is exploitini-TRe Agent'S-remarkg: If we must dispute, let us
do it among ourselves and be unified against foreign influences."
BERLINER TAGEBLATT
November 7, 1927.
"The Tageblatt correspondent states further that it is remarkable that the Zederal hesgrvg_s4aDk of New York was able to give the
American -press the fig] text,..af. th,@, AOrg,orandum foraublication in
the Sunday ,newspapers. He thinks this makes it clear that the competent authorities want to bring the views of the Reparation Agent to
the knowledge of the widest possible public. Other despatches from
New York state that, whereas these papers publish the full text of
the Agent General's memorandum, the ru.ly of the German Qoyernment
is given but little space.
"In the course of his speech at Liegnitz on November bth the
leader of the Democratic Party, Herr Koch pointed out that
the person who must take the initiative in the revision was the
Agent General, who would have to prove in 1929 that the Dawes Plan
could not be fulfilled. Only then would the time come for the
great discussion with the Allies. Herr Koch went on to speak in
favour of administratiye reform, which, he said, could be accoinariffed onfY by establishing the unified state."
.
.
.
REICHS-LANDBUND
The Reich Agrarian League (Reichs-Landbund) held a convention
in Berlin, November 7, 1927.
Dr. Adametz, who spoke on administrative and constitutional reform, said:
"Frederick the Great once said that a clever person must not only
do the right thing, but he must also do it at the right time. The
responsible people in Germany missed the right time as regards a
ratlonalizaIioh_og_gur,_public administrations. If we do not ourselves
control by to
counties
soon lut
is threatening, which in practice has already - 'though at present
cautiously - begun with the last action of the ReparationlgeW, who
under the Dawes Agreement has no right to intervene in German internal political matters.
"A part of the press attributes our sad financial situation exclusively to the oppressive burdens of the Dawes agreement. But we
must be clear that we cannot refer to the oppressive burden of the
Dawes oblic,ations so long_ gs. - and ria-dhjUstlYSO---C6ib'Ssal
practices in our public administrations may be pointed to."
DEUTSCHE ALLGELEINE ZEITUNG
(People's Party;
Editorially the paper has little influence.)
November 10, 1927.
"There is complete agreement between the Government of the
Reich and the Reparation Agent that loans must be placed only_fpr
productive purposes. In its reply the German Toirernment recognised
the necessity of an early definitive solution of the financial relations between the Reich, the states and the communes.
The
disturbance caused in many quarters in regard to the financial situation of the Reich lacks any foundation in fact. The German Government has already given the assurance that budgetary equilibrium will
be maintained for the fiscal year under all circumstances.
There can
therefore be no suggestion that the equilibrium of the budget is endangered."
.
.
.
KULNISCHE VOLKSZEITUNG
(Centre Party;
November 9, 1927.
Represents conservative wing.
Important in
its views on domestic politics.)
"In America's Shadow."
"France stubbornly refuses to ratify the agreements with
England and the kellon-Berenger agreement, saying that she receives
no foreign exchange. For this the German deliveries in kind offer
no substitute. Therefore by making more frequent and larger cash
transfers to the reparation creditors, Gilbert places them in a
position to be better able tc) mee,t,Atmir-cielx.L.pgyp.p.,4-4._,Ao America
in cash.
This is the one side.
"What is to be done?
Nothing would be more incorrect than to
arm ourselves with patriotism and morals. We intend to_fulfil. But
a nation which earns nothing cannot make any payments.
Our economic
structure is, moreover, much different from the American. Gilbert
overlooked this."
November 5, 1927.
"It would have been politically, economically and financiaLtunwise to raise
a discussion on the practicability of the Danes ?Ian at the present moment, or
even to regard the exchange of memoranda as an occasion for doing so.
The Government has therefore expressly stated its intention of carrying out the Plan...The
1:ayment of the repnration charges has not been-enaiii ore' a Any: MO'And-Will not
be endangered if the future budgets of the Reich are balanced.
they will not be
endangered in the future because the ilinister of Economics and the President of the
Raichsbank are taking steps to maintain the stability of the business condition."
EMZZEITUNG
(Nationalist, Government Party.
Small monarchist paper.)
Read chiefly by Army and Navy officers.)
November 6. 1927.
"In spite of all attempts to make only economic and financial
objections, the sharp reference to and criticism_of ligich_Goyernmentbills
under discussions are very similar_to_intervention by Parker_Gilbert,ln,che
sovereignty of the Reich...In view of the strained and obscure conditions in
whi-ch-we still find ourselves, this optimistic belief in the constancy of good
businesr conditions is a very daring foundation for the Reich finances edifice.
The _Reich Government, however, cannot and will not let the present legislative
measures drop.
For it qmpolle,Ealdedly_SinanclAl_and ANAgratc considerations
alone but,must_also_act_under.Uote7polltical considerations if it is to °aril
out its polItical tasks."
November 9. 1927.
"The memorandum of the Reparation Agent now published keep_corlectly
within the linkifts_ofthe_powers,given_tohlm.- There is no reason_for attaaks
QA 4ADLPQrAenally. Mr. Parker Gilbert raised in the memorandum no.pr6f6-itdainst
the bills now pending, and he likewise refrained from mating any concrete_p_roposals. Nevertheless the gravity of the situation shOuld nOI-be nnder-estimated
in any way.
His warnings may have a great effect on credit conditions even now."
November 10. 1927. "What Does the Reparation Agent Want?"
"The question is why the Reparation Agent used such plain language.
77e have met our oblietions,te_the_limit, and our payments are fully secured, so
that there is no doubt that they will be made in so far as the debtor is capable
of paying at all...The important _thing in the memorandumj.ies in_the cocluding
remarks, in which he makes us responsible for transfers.
This must be rejected...
Vie
nothing more than not 'to Make any financial manoeuvres or to
adopt other measures deliberately intended to restrict transfers."
MtINCHE'NER NEUSTE NACHRICHTEN
November '7, 1927.
"The Reparation _...i4ent has carefully kept within the formal
limits of his office, but in fact he has told the Government that
16--iiroTolger responsible to the Reichstag but to the Dawes Plan.
But his memorandum fails to prove that our financial policy has not
been in the interest of the reparation obligations.
it
"We have long called attention to the impossibility of making
payments to countries that will not_ receive j1 F,cro-ds._ The Dawes
Pran will eventually fail because of this, but all 'Ellese matters
are beyond the control of the German Government. It would be a
mistake if Germany should try to hasten this development artificially.
But nobody can ask us to try artificially to slow it up."
B.Z.
(Democratic;
November 7, 1927.
Opposition.)
"The New York correspondent of the B.Z. adds that the memorandum
will have far-reaching consequences on the attitude of America towards
Germany, and that forthe_time_being_at_leas,t_no_German loans can be
,placed in New York. Even if investors were not disturbed through the
cdftroVerSYYthe State Department would undoubtedly approve no more
loans. The more serious consequence, however, he says, is that any
hope of an early revision of the Dawes Plan must be given up for at
least two years."
BERLINER TAGEBLATT
(Democratic;
Opposition. Probably best Berlin newspaper from
news point of view.)
November 6, 1927.
"Mr. Gilbert said that he hoped to render a service to the
German Government and to the German economy as well as to the international situation by expressing his impressions and misgivings.
For this good intention the German people must be grateful to him.
,statements of the _Reparation Agent
14.E99Zof the general and
run paralle1,10,th the domestic ,9riticism which has _for a long time
measures of the GerMan financial PolieY. Even the
Reich Finance Minister recognizes the justification of some of this
criticism.
.
.
.
Things are not going forward rapidly enough in
The
tendency
toward a unitarian State meets with political
Germany.
and certain economic hindrances for which the Reich Government has
up to the present shown too much consideration. There can be no
doubt that the idea of a unitarian State has of late gained ground.
The Reich Government must make good use of this psychological situation and to this end, it must be less considerate than in the past
of so-called insurmountable obstacles."
tiinM0-076e
lERKUR
(People's Party;
ovember 7, 1927.
Government.)
"What are the Consequences?"
"It must be said that the German reply_has one fault: it is
too long and lacks any spirits The efficient product of the officials of various Ministries was stuck together, but one can
still see the cracks; and, since the reply was intended to have
an effect abroad,
it ought to have been 7got.....ur more attractive_
"It would be a mistake to attack Parker Gilbert for taking
the step to which, strictly speaking, he was not entitled. It
would be a still greater mistake, however, to exploit the exchange for partisan purposes. Neither the Reich, the Litates,
nor the communes, nor any one political party has any reason to
feel like a Pharisee - all have sinned. Wt we must do now is
to listen to the warning of the Agent;
and, if the friendly
exchange of views eah have a fruitful effect, Germany owes Parker
Gilbert thanks!"
EAGAZIN DER WIRTSCHAFT
(Democratic;
November 10, 1927.
Opposition.
Fairly reasonable.)
"Reply to Parker Gilbert."
AS to the necessity of more liberal commercial policies
on the part of the creditor countries and the question of foreign
borrowings, the statements of the Government must be approved.
The Government rightly protests against the attempt of the Reparation Agent to ascribe to it an intolerable responsibility. But
in the fundamental questions of German financial policy and the
necessary constitutional reform the reply remains as unsatisfactory as the speech of Dr. Kohler."
LOKAL-ANZEIGER
(Nationalist;
Government Party.
Paper of
Reactionary.)
'Hearst type.
November 6, 1927.
"Even though it is right that many loans, especially of the
communes, shouldj.k,the interest_or_the_wtole people ncailave been
floated, loan requirements cannot be denied categorically. The
greatest misgivings must be provoIrThe memorandum attempts
to attribute to the Reich Government a responsibility, beyond the
provisions of the Dawes Plan, for the execution of the transfer.
.kag.r111-X.Ag.:._111__this respect Lamo.tjustified s.ince the Reich Govern-
ment has up to the present fulfilled all its obligations under the
Dawes Plan.
LOKAL -ANZEIGER
C>
2
11/6/27.
"The Agent General has made sharp criticism._ It runs parallel on some matters_with demands which have long sii-6-6beeh made
Gerniany.--Hi6 ciiticism, however, goes much too'far 6E7-these
points and fails to recognize political necessities. As the trustee
of the creditor Powers, the Agent General has done his duty."
Hussong writes:
"We should like to see the negro state in which there are
parties and people who would dare to defend an Experts' Plan on
the basis of which its government would have to tolerate receiving
such a letter as Li.. Parker Gilbert wrote to the Finance Minister
of the German Reich. Our republicans do not reproach Parker
Gilbert with a single word. He is not our trustee but the trustee
of our enemies, yes, our enemies, if we are still allowed to call
a cat a cat."
LE TEMPS.
(Paris.)
Noveriber 7, 1927.
"German Finances and The Dawes Plan."
"The Nationalist press in Germany committed a great error in reproaching Mr. Parker Gilbert with having exceeded his rights. It committed another
error in maintaining that, if Germany should be unable to fulfil the Dawes Plan,
the 7,e1cn would not have any responsibility. Mr. 2arker Gilbert clearly indicates
that it is the German _Government itself that must bear the responsibility for its
aclIons...If the memorandum of Mr.'Pakei. dtlbert had had no other result than to
make the Reich Cabinet declare categorically against the campaign in favour of
revision, it would not have been in vain."
@FedFRASER