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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,

19251.

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

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

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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(1)

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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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irtertI bebidoni ainsd S Ihiw",(eefionalci
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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

72,061,236,000 marks
(1g.m.2 43.79 p. m.)
246.921,000.000

Floating
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

etc.

In a

sum
(column
2 & 3)

turally
urgent
imports

2

PAYMENTS

OF

additional
imports
caused by
the raising
of the

Other

burdens

21 of
the

resulting

from the
balance oDermanent actual
(confer collV payments burdens export

5

6

7

M.%

7,5

011.

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

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

the amounts
of column 12
in papermarks
goldmark

1

In
GoldmarkS

15 papermarts)
13

12

11

1,5

1920

88,(1)

State of the indebtedness to the foreign
coUntries

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

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

=111

1,3

4

4 55

V

$

4,68

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
the preceding (colurns tcolumns
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

12

0,7

12,7

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

6,5
6,5

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
6,5
52,623

725,370

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

1

1

1

1

3,12
3,38
3,64

1

1

3,90

1

750,6)

ON.

5,28

4,29

17,965 4,265

1

6,5

5,25
5,5

17,5

6,5

5,75

1

2,596

15,846 1-1,654

56,929

1

18

6

1

2,513

1

18,5

6,25

1

18

3.

19

6,5

6,5

3.

18

1

19

9

18

1

19

40

18

1

19

6,5
6,5
6,5

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

789,345

4

1

1

853,935

!

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

52,606

49,903
47,065

44,085
40,956

748,545
715,975
661,275
63.4,340

1,724
1,550

15,714 -4---3,286

37,670

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

eeC'
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
"
England
"
98.1

80.5

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 =

.2680

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.

****

.

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

end) e r _21, 1922

M. E. 14,es

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 w

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

Other Securities

11,015,000

7,434,900

Government Debt

8,734,900

Banking Dspartment
47,317,299

Government Securities
Other Securities

74,434,913

70,623,032

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.

Feb. 14

144,116,835

23,397,605

Feb. 21

145,419,800

23,378,090




in Currency
Note Account
210150,000

ih Public
Circulation
99,569,230
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

DATE_June__ 7, 1923

Japan Financial

suBJEcT

M. E. Rose

and

Mont hly,___April

Governor Strong

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,.

OATEJUfl8 7

M. E. _Rose

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 anxiety.
http://fraser.stlouisfed.org/
General say he viewed future with
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
. If savings are to be eect9d,sVaa_zu.Q...Lbe_done in
.
Agent. .
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
to try to ,.juatifymmunal_
fohe Relch _Government notpointed out that the largeloan_po,UcY
and that, it should have been
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 c
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."





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