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February 10, 1913.

Dear Fred:

I read the memorandum of February 3rd about your Department with a good
deal of interest -- so mach Interest, in fact, that I hope yeu will write me now
and ther and tell me just what is doing. I guess you realize that letter-writing,
when on a vacation, comes a bit hard, but thanks to Jim Drake I an able to take a
day or two each week and clean up mail, and I rotate through the Vice-Presidents,

making one letter do the service of six.
I wish you would tell Dan and William that sentiment down here seems to
be rather uncertain in regard to the outcome of things in Mexico. This last episode,
if the newspaper reports are to be relied upon, indicates the possibility of a resNbration of the Diaz regime, possibly with policies modified to meet changed conditions'since the revolutionary element has had a Whack at governmental manageOn the whole, it mey be a good thing, but men in this district who
ment.
have an opportunity to observe things there at close range seem to think that some
form of intervention or negotiation on the pert of our Government is inevitable.
It might be well to bear this in mind In connection with such interests as we have
down there.

Also, please tell Den that Pop wrote me in regard to his American
He aught
to be able to turn some of those notes over at a handsome profit.

Bank Note Company deal, giving the terms, Which are certainly first-class.

The last maturity report
July maturities
August
September
October "

that Mr. Thorne sent me February 3rd shows:

2,000,000,

700,000,
550,000,
535,000.

I want to see these increased, even if we have to sell some of oar notes. The only
question is -- when to begin putting out money for that maturity -- and as to that,
of course, I will have to rely upon your discretion. I hope you will take the first
opportunity to submit a maturity statement to thn Executive Committee and get their
views.

Please give my best regards to all the boys.
Very truly yours,



1

February 17, 1913.

Dear Fred:

Thank you for your memorandum of the 11th, and.the enclosed account

of Judge Holt's decision In the bill-of-lading case. I felt a good deal of
doubt about t%-e autcleaa of that litigation, which is much increased by Judge
Holt's decision. As you know, I have always agreed with you in your theory
that a bill is purchased very largely -- and if not so purchased, it should
be purchased -7

upon the assurance of the standing and responsibility of the
maker.
Some time, ask Mr. Pay to send you the record of the case of the
Clinton National Bank vs. the National Park Bank of New York, in -dhich the

Court of Appeals unanimously upheld the decision of the Appoints Division
and in Which I believe the law was established in New York State as to the
method *blob prevails in making collateral loans. There may be something in
that ease which bears on this controversy.
I hope you have a chance to go
over thd record with Mr. Guthrie and give him your QWV TIOWS. ."

If I

Glad to learn that you made the turn on Iterling.
am not mistaken, there is going to be a mod deal of activity in foreigh exchange this
year, and I hone Dan so Arranges our money that you ca have all you can
safely use in your Department. I would much rather do that than buy notes,
as your funds are likely more available for use in the fall.
I am also
awaiting with a good deal of interest a telegram telling how last year's
business made out in your Department. 30n4 me a memorandum from time to time,
as I read them with much interest.
With best regards, and hoping that you are not working too hard,
Sincerely yours,

5/N







February 20, 1913.

Mr. Fred I. Rents
Barkers Trust 001pany
New York, N. Y.

Dear Fred:

have gust received yours of the
15th, and now hate the agreement and the rules

covering the Pension Fund matter, which I will

read over carefully tonight.

to you for sending it.

Much obliged

Arn looking forward to

receiving the letter you mentioned, next week,

and won't write you fully until I have it.
With kindest regards,

Sincerely yours,

SiB




February 26, 1913.

Dear Fred:

Your memorandum of the 19th is received, and

I have read it with a great deal of interest. Glad
to hear of the new Cuban business, all of which is
in the right direction.
I am particularly delighted with the showing
made by the Foreign Exchange Department this year, as
wired you. I share the feeling of the other members
Of our Executive Committee that this is all ground work

and thatethere is a great fetnre there for further expansion.

Sorry to hear About Closes cold, and hope by

this time he is around all right again.

There is nothing in the yellow journal accounts
Of the Pension Fund that disturbs me in the slightest.
We are simply giving some regard to our responsibility
toward the mon in. the officee and in the long run the
Company and the men will be benefited by our policy.

The last forty eight hours we have had a record

rain fall in this district, which has been received
with great rejoicing, because it vas much needed. We
all keep well and are still enjoying a restful and
quiet holiday.

With best regmr16 to the boys,
Sincerely yours,

March 3, 1913.

My dear Pred:

A few busy days have caused mail to accumulate, and I now have
yours of the 21st and 211th, with enclosures.
In regard to the,Foreigh Departeent, I am more than satisfied
with the results', and Pebruery is a good month to tern the profits into
the Comeany. This year will be better than the last, and so on, until
the business.
we have our full

shareef

Don't hesitate to urge moon Dan the necessity of making provision
In
for purehases of bilieenext fall. There arefittaeo reasons for this.
fall, some
the first place I believe that after the experience of last
chary about making anticipatory commitments
of our competitors
open market, which is what we went. In the
and we will have a
seoond place, I believe we will be able to purChase bills next fall at
profitable rates, if w4 have the money to use in that direction. in the
third place, I teuld like to see the Bankers Trust Company, by November
if possible, in position to import gold, if the exchange is in our favor.
There is no need of going over the ground with yon, when you are so familiar with it, but .I put great store upon the value of these foreigh
bills when money rates here are high.

wi4be
fairly

About the Pension Fend, I am delighted with the statements
enclosed with yours of the 24th. The investments are all right, of
course, but the practically unanimous adoption of the plan by the Company's
employes is t'en best endorsement of its wisdom. None of them will ever
regret it, nor will the Company regret permitting us to undertake the
plan. We all 00400inch thanks to you.
With best wishes to all of you,
Sincerely yours,

s/B




March 10, 1913.

My dear Prod:

x enjoyed your letter of the 20th very much indeed and have also
read eamont's letter with much interest, as you may imagine.
ft's the
best thing that has yet been published and I am glad to note by the papers that it is being given wide publicity. 1 have heard favorable comment about it out here already and thee is doubtless true in many other
parts of the country.

When this reaches you, won't you write me fully what you think of
the foreign situation. The newspapers here are giving rather pessimistic
accounts of the situation in Prance and Germany.
I would like to knew
what you hear to the subject.
I presume you are keeping tab on the
Acceptance Tioeses ageinst next fell's foreign bills. If any real Ciffi°tiny develops on the other side, we mey need to use caution.
At

Cenmenting on what you say about Sulzer, I haven't seen any of the
new bills inbendaded except the one inoreasieg the stamp tex an stock
transfers. If there is anything very important, would you mind letting
me know what the bills are. Possibly you will send them an.

Am glad you didn't take any interest in the German-Prussian loan.
There Is nothing in it at the rate named,- and we can use our money to
better advantage at home.
/ am still of the opinion that if the money
market is obliged to undergo a test this ever, Tt will be in the early
fall rather than this seriag, although I see in Mew York that rates are
hardening every dey. The
The comparative figeres for your Department for

last make an excellent showing.

this year and

For the amoent of money employed, it

is the most profitable in the office.

With best regards to all the bays, and the name to yourself,
Yours very truly,

5/3
To:




Mr. P. I. Kent,
Bankers Trust Company,
New York, N. Y.

March 18, 1913.
Dear Fred:

Thanks for your fine letter of the 10th. I can see no objection to the plan
regarding Mr. Bolles, so long as it does not alter the existing plan of having two ofthe Oommany always present when each interior safe is opened. As to Mr.
Bolles" selection in preference to some other man, I feel sure you have made thorough
fieers of

investigation and are satisfied that be is the best.

In regard to the Williamson matter, this it simply one of marry evidences of
the state of feeling throdgbout the country and is one of the things that has made me
feel anxious in regard to What may happen in the fall if the financial situation in
Europe does not ease up prior to that time. We don't want such a prejudice to crystallize at a time when there is a severe money stringency in New York. It is on that account that I feel just as well satisfied to see Congress go ahead with tariff legislation rather than undertake sone currency legislation whpathe pubne feeling is as We
now realize it to be.
I have watched the local. papers hare in regard to the German situation

with

great interest, but the accounts are meagre and!'unsatisfactary. If you have time,
write um fully,,,If it develops miph more seriously, don't hesitate to send me a night
letter. Bad news ionftias bad a0 none at all,

don't believe that the policy followed by the Pirst National of Omaha is
at all general throughout the country, but our banking system, as you know, is such
that a small minority of timid, selfish bankers can take a position that will immensely
weaken the whole fabric and handicap the efforts of the majority of more public-spirited

bankers Who want to use their money whenit is most in demand.
When you get a letter from Holden and Schmidt, send it mite, me.

I wadi like

to read it.

Am glad to hear that you are going to Washington with Warner, and particularly
that you foel easy enough about things to make the trip.

Your letter
send it to him.

to Williamson hit the nail on the bead and I was glad

to have you

Mr. Hellman, Vice-President of the Security Treat & Savings Zank, will be in
New York by the time this letter reaches you, probably making his beaderia,fters at the
Uhase. Please be sure RBA iffgBe t0 entertain him, also fix him up with'letters of
Introduotion to such baBrerfillati*blehgonvenient to histrip abroad. I am anxioup that
he should receive some attention from us while in New York.
With best regards to you and the

S*B



other boys,
Faithfully yours,

March 270 1913.
Dear Fred.:

I enjoyed your /otter of March 19th exoeedingly and await with interest

replies to your letters to Sir

Edward Holden and Rego Schmidt.

strongly.
Meeh that you say about the foreign situation appeals to es very much
for very
If pressure for money from the other side continues as at present
On the other

for all.
longer, I expect to see the Balkan dispute settled once andpeople, I am still
the efforts of the firanclal
band, if it is settled theme:
doubtfull,as you are, as to whether it will produce much money to the banks until

Suspicions of complications growing out of the final
adjustment of boundaries will last for a good while, are/ furthermore I don't see
hoe suck negotiations can be concluded very praeptly, even though Adrianople is now
some months have elapsed.

in the ;ends of the allies.

have by the first efforts of

You have doubtless been as Inch mused aø

the new administration in the matter of our forel Policy, and when you core to think
those already
it aver, It is hard to imageze a series of more aesinine blunders than telegram to
Brian's
made by the administration. They may be mat/4d up briefly in
Moon, our Mexican ambassadori Mr. Wilson's notification of our policy toward Mexico,
Chinese
conveyed throueh the Merle= pressi Wilson and Bryan's Pace-about on the and not
reactionaries'
loan, as a result of which they will go down in histOPY an
rule and
least of the blendere, Me. Bryan's typical speech in regard to Irish home has lived up
administration
the "effete louse of Lords." Se far, the new Democratic
.

to its prophegied inefficiency.
the
It has struck me that this Is a good time to We up some credits onletter
cheque payments, and I am glad to see by your
other side for our travelers'
As stated in a former letter, I am most
that you are working in that direction.
will be eufficient to enable you to have a
anxious that our maturities this fall

pretty free haid in buying exchange when the cotton and commodity bills come Into
the market.
You probably will not hear from me for about a week, as I am going to Sel
Francisco tomorrow and will not be back until next Thursday.

My hest regards to all the beye and yourself.
Sincerely yours,:
SiB

Me. F. I. Kent,

'Bankers Trust Co..
Nev York, N. Y.







April 15, 1913.

Drar Fred:

Just a line, aclam:ledging yours or the 4th.
am writing Dan fully today and have quite an

accumulation of mil, and am leaving tonight for

a trip to Stockton.
Sir Edward Holden's letter is certainly
very interesting, though rather pessimistic.
Matters have brighteAd up since he wrote

it.

I am returning the letter herein.
With best regards to yru all

Yours*
3/3

April 6, 1913.
My dear Fred:

I have read your /etters of the 24th and 29th elt.0 with groat interest.

My reply has been delayed by absence in San Prancisco.

It's a fact that some of the banks In the West have been
up, in Pact, diekeine on their reeerves. On the other hand, therepretty well loanedof
is
banks in the Weed that have been accumulating reserve that they den 't another class
need. I
that was true in a few instaneee in San Pram:lace. Business out here is still found
very
active but you hear a good deal of pessimistic talk about the effect of the tariff on
California's agricUltural products. It lets the bars down all along the line.
In regard to the physical examination of ap-olleante for
Trust Company, I believe we could even go further than segeeeted positions with the
in your letter, and
leave the decision as to physical fitness with the examining physician, without any
details being reported to us at all. It would be Just as
Trust
and would relieve us efeevery-responsibility. -Perthermoreesafe for the couldCompany
a standard
established, with the doctor which would give him little discretion in passingbe
unon
applicants. I will talk this over with the doctor on my return and
have an enderetanding.

eakennerehtheeewe

I am afraid later in the year we are going
the effects
by flood, fire and tornado. It won't be apparent at to feelbut whey the of the losses
demand for
eecomodations from that district develops, it is goingonce,
to take a lot of money, or at
least a lot or bank credits to see them through. I
I congratulate you on the figures for last year.
and yet no more than I expected. It will be that or betterThe growth is splendid,
this year.

arate letter I am writing Me. Converse, suggesting that we create
the office or'Poet Laureate in the Trust °Drapery and that you be appointed to fill
the office.
ey

That you write in yours of the 29th regerdine the handling
Trust Department is all noes to me. I am sure Mr. Close Is alive toof bonds in the
the
of changing he system. Thep at him if it is necessary, but I prophecy necessity
that it won't
be.
Your telegram to Sir Edward Holden was exactly right. The finest thing
Morg'n did in his later years ens to reorganize his office and take in our .'three
associates. The effect of it has already been shown.
Between now and the 26th, when I expect to be at the office,




it in plenty

Pe

--2.-

K.

Apr. 8, 1913.

of tille on your golf, You will need it, as I am this year going to have sane good
matchne with you, both on your course and my omn

W1th2best regards to all the boye and much for yourself,.
3incerely yours,
5/13

Mr. P. I. Rent,

Bankers Trust Co.,




Aew York,: N. Y.

Aurust 8, 1914.
Wy dear Fred,

It is Saturday afternoon, and this is the first opportunity I have had to

send you a line by mail. Our correspondence by cable, While unsatisfactory, has
been fairly complete.
In the first place, I cannot express my delight and relief that you and
North both escaped from the Continent and are in London on the job. The next
thine most in my mind is to tell you that the whole country over here has heaved
a sigh of relief in the feeling that good progress is being made in taking care of
American travelers abroad, and I think many of them realize that it i s due to your
untiring energy and ability. It would be futile to endeavor to express all that is
in My mind in a letter. I must save that for your return when we can talk it all
over: but I have about half an hour in Which to send you a personal account of
occurrences here, so that by the time this letter' reaches you: you may have some

satisfaction in knowing a little of the facts on this side.

The trouble here began to brew about the 27th or 28th of duly. Gold began
to go out in astonishing quantities, exchange soared to the skiega and the war
You were beyond reach of cables, and I was unable to make
arrangements in tine to dispose of those roubles, nor Gould we determine whether
news looked very bad.

to buy cable transfers at prohibitive figures to cover credits, or to take the risk
of its all blowing over. Nobody in this country really believed that war would
occur.
By Wednesday, the 26th, things looked so serious that re began to cable

London and Hamburg to try and reach you, and on the 27th it was necessary to decide
to close the Stock Exchange, which didn't open on Friday, the 28th. Saturday was
a day of comparative calm, but, as you know, we were still unable to get word
from you and I was a good deal at sea as to what we were to do about our credits,
and was beginning to feel very grave concern for American travelers abroad. Davison
and I talked it over seriously, and the Clearing House pe:ple were engaged in

conferences in regard to the local banking situation; so on Sunday the whole party
rounded up at the Metropolitan Club,that in to say, the Clearing House Committee
about a dozen other bankers. We decided to issue Clearing House certificates
Alay morning and arranged for the Secretary of the Treasury to come over and meet
as that evening. We were together until midnight at the Vanderbilt Hotel, slid at
that meeting I was asked to make a statement in regard to the situation of foreign
travelers abroad as to getting cash on their travelers' credits.
(You will recall,
the discussions we held in Washington and here on this oubject of these very credits
in the event of a great foreign war). The subject was mud' in my mind, so I gave it
to them pretty strong that the Government would have to intervene and arrange for

credits if the crisis arose, as it had in

would be stranded.



effect already arisen,

or our people

The matter was left that way, with the/understanding that I

Kent - 2
would renenuniaate with aaehington as developments arose.
Monday morning I received
your first cable from London, also a cable from Billy Porter, sent me by Moruan's
people, which confirmed me worst fears o so, as a preliminary to going to
Washington
that afternoon, I called up ten of the principal banks, trust oompanies and bankers,
of whom you have now been

advised, asking each to pledee as much as they could in
gold for me to use in arrangine credits. Nobody knew just how it would work out, but
they came forward handsomely, and before going to Washington
woula produces a6,00,000, 40,000,000, or even 40000,000 if I had aesurances that
it had ultimately been
needed.
In Waohington that n eht I met aecretary Bryan, Secretary :.eadoo,
Lansing, solleitor of the State Department, and Dr. Miller,
Board, takine with me ar. Harrison, attorney of the emerleanof the rederal Reserve
Eepress aompaay. In
the meantime, we had decided to dascontinue sales of travelers cheeues, and made
an sareeeent with the American Express Company, reduced to
US aepanst ',wine those checks ueed for foreien exchanee; writing, which protected
so we dlsoontinued sales
absolutely.
At the conference in Washington I told them that we
St. Leas, which I thoutalt could be released to your disposal,had 6704000 gold on the
and if
Ambassador needed a relief fund, I would endeavor to have it, or partthe American at
of it, placed
hi u eisposaa. This vas to have somethine to work with pending
more complete
arrangements. When I got back to New York auesdkee morning the crisis
was
us in both banking and foreien exchange. There was no market for foreign right on
exchange;
cable transfers were selling at 47. per pound, demand was hardly quoted, possibly
at e6.50 for very small amounts,
exchange the world over.

end it ViSA in fact a complete shutdown in foreign
At the Washington conference they had tentatively agreed

to send a warship over with gold, and they had also agreed to ask Coneress for an
additional appropriation of a3,000,000, 040,000. having been appropriated that day.
Of course, that was inadequate. The next day I. got word that Congress heel. approoriated/a2e500000, that the cruiser "Tennessee" Toed be prepared
trip,
and that we would be permitted to send men with her to help you andfor the the gold.
escort
From that time until Thursday night, when the eold wee shipped, pe had such a
scramble as I never have experienced. The details of getting the money in, with
nobody really understanding how it was to be held eacept ourselves,
details
the areaneamenta to be made with the Departments in eaohineton about the vessel, of
the
the ahipment, authorities, eto., and the difficulty of
insurance at
allaahach finally I Got arranged by asking ala Chubb arrenetng any underwriters
to eet all the
tegethea and make a patriotic appeal to them,- do not
need any enlargement in this
letter.e The chief thing is that the eold got off safely Thursday night, together
with eome men to handle it, and you will understand that ;;300,000 of that gold
is to
be applied to reimbursing you for a like advance to the American
Ambassadoiain
cane it was arranged, as I imagine it was. Your last cable, received today,eedvise
isle that everything is eatisfactore except that credit, which had not beam conaaamed
to the Ambausador, resulted in ny having a talk with aeoretary Bryan by telePhorres
and-he now tells me that the cable has been sent to Ambassador Page. I mayesay
thatiwhen this situation was pretty well developed and we owe whet we were up against,
Itsad the Telephone Company set aside a private wire, putting
an instrument
eapek and one in a ramn adjoining Secretary Bryan's room in Washington, and Ion ay
had
Jr.e Harrison.. together with er. elas of Walte a Came stay right there, with is
atenographer, and our correspondence with Washington hes been conducted over that
!,
wire.
/
The papere containing detallea/record of the proceedings of the coaeittee0
instructions to you,- in fact, the yihole layout- have not even yet been compietea.

4a

I would like to enolose them in th*s letters. but it is impossible to do so uatil.
next week. The chief thing is that the: eold Got off, after avercomine ehat Seem*

to be insurmountable diffioultiessa andi,now seems to be available in London,
I have been makine every effoet to complete similar arraneements at Other
points on the Continent, so far without mach =cams. The people at Washington



don't seem to appreciate the situation or to understand the transaction; so I am
not as confident of beina able to carry out the plan there as here.
I ought to explain that while this plan was under way here, Yr. Horan
was busily enaaged in trying to effect arrangements through his Paris office
for a credit at the Bank of France, atainst the deposit of aold here, and he tried
to make a similar arrangement with the Bank of England.
was concluded just before our gold was shipped, so, instead of shipping :4,117,000.

which was all ready to go, we reeuced the shipment to

;13,000,000, the

balance being

held here, with other geld since arranged, to cover the credit of3,000,000. in
Paris, which is now being disbursed by 21ortan, Harjes
Co. and the American

Express Company.
I feel very anxious about how things are in Germany and Austria particularly. All cables to Germany and Austria have ceased, and it may be by Monday
that I will take up with you by cable the same plan for aettine relief in there.
We have been terribly embarrassed by delay in the cables.
I must interrupt this dictation to tell you that I have just been talking

over my awn telephone with the Secretary of State, who has repeated the following

cables received froM our Ambassador in Switzerland:

"If National City Bank, New York, will cable credit of 40,000 gold
100,000 total, to Nationale lanque
tomorrovrand efa,000 gold Saturday,
Suisse, Zurich, immediate, I think relief American travelers in Switzerland will be effected,"
"Drafts will only be cashed when secured by deposit of gold coin tn
National City Bank, New York, for credit of Banque Nationale Suisse. This
information is from the Swiss Government. Think Denartment does not
appreciate seriousness of financial conditions here. Even drafts for
salaries of legation officers are absolutely refused."
Of course, this is confidential. It is too late to make any arranaement
with the National City Bank today, so I am trying to jump &other hurdle by
inducing Secretary Bryan to cable the Nationale Banque anisse, asking if they
will not cash these drafts against a deposit of gold made with us.
Have talked
State Department, but
at considerable length with another representative o:
find that nothing can be done today; so must let this lay over until Monday.

Here, Mr. Strong was obliged to drop the 'Phone and run to catch the
The second edition of this letter will therefore follow
5.14 for Greenwich.
next week. He begaladiatation ahortly after three, intending to give you a fall
account of affairs, and get home on the 4.22 train; but so much time was consumed with Washington that he waited over another train, anti then all but missed
I think I am finishing this up, just as he would wish, by sendina you
that.
the retards and love of the entire crowd here, and the hope that we nay see you

before a very great While.




Sincerely,

Cablegram received by State Department, Washington, from our
Ambassador in Switzerland.

If National City Bank, New York, will cable credit of 40,000
geld tomorrow and 00,000 geld Saturday, 0.00,000 total, to Nationale Banque

Suisse, Zuridh, immediate, I think relief American travelers in Switzerland

will be effected.
Drafts will only be cashed when secured by deposit of gold coin
in National City Bank, New Yolk, for credit of Banque Nationale Suisse. This
information is from the Swiss Government.

Think Department does not appreciate

seriousness of financial conditions here. Even drafts for salaries of legation

officers are absolutely refused.




(Above received by telephone from Secretary of State Bryan, Saturday afternoon, August 8, 4.30 p.m.)




Lt.;
Arr*t-*
1111*

e

CABLEGRAM 3 EIC HAN GM
BE TV/113N

BEN JAM IN STRONG, JR . AND 1110KD I

T

,1/17t.

August 2: Cablegram from Fred I. Kent.
Have called meeting Americans four o'clock Monday. Telephone
Washington to authorize Ambassador by cable co-operate with
me protect Americans here and on Continent far as possible.
Tell Washington American banker here who knows business can
operate most effectively with Ambassador; think plan very
important; have scheme developed that will meet this serious
situation as effectively as possible. Anxiety many here terrible, haste necessary.
August 3: Cablegram to Fred I. Kent.
Secretary McAdoo and State Department will co-operate, and
Ambassadors London, Paris, Berlin being advised you and
Duane abroad and requested to co-operate your efforts. Be116ve cari-arrange ship gold by American warship for benefit
travelers if arrangements for distribution against responsible American travelers' credits possible. Suggest cable me
explicit instructions regarding shipments gold, how much required, amount transport necessary to bring Americans home
and method reaching those marooned on continent without funds.
Cable with explicit suggestions on all points will enable me
hasten arrangements. State Department advises will endeavor
to arrange for acceptance our Travelers' Cheques by EMbassy.
Would such plan be feasible and could Embassy furnish funds
London, Paris, Berlin?
August 3: Cablegram to Fred I. Kent.
Conference State and Treasury departments. Arrangements under way for shipment gold by Government vessel at once, to
be placed at direction of special fiscal agents to be appointed and operate in connection with our EMbassies abroad.
Arrangements in process for ships to bring travelers home.
Vitally important to have following information at once.
How much gold required for travelers' credits and for any
without credits or money? To what places should money be
sent? How many travelers to bring home? Can London arrange
with Paris, Berlin and other points? Mat are your suggestions about Continental fiscal agents, particularly Berlin?
Can you take general charge from London? Should we send
Americans to assist? Cable particulars in fullest detail.
August 4: Cablegram from Fred I. Kent.
Held meeting to-day two thousand Americans; formed fine organization; battleships with gold and transports should start
immediately for England. Before arrival will be prepared
divert to Continent their requirements both money and transports. Unwise forward direct continent, conditions too dangerous and worse daily. Upon receipt definite instruction'
gold and transports started, can arrange English banks for
funds to cash credits traveler Continent and get them to
'
England where advisable. Haste imperative; many Americans
in frightful condition on continent. If Government will
give me authority and will forward ships and money, can begin
immediate work every country with organization I have back
of me while awaiting arrival. Have Congress appropriate
three hundred thousand dollars that I can use at once to get



Americans in distress while boats on way. Will act with
Ambassadors each country, but must have power. Transport for
twenty thousand people probably needed and five million gold.
Aside from appropriation, money furnished by Government would
only be used to take up credits. Elnbassys not proper places
handle money; can arrange with banks for space under American
flag and control. Rush.
August 4: Cablegram to Fred I. Kent.
Cable at once suggestion of institution or individual to be
appointed Government fiscal agent Berlin, Austria and other
countries affected. Awaiting word from Washington about special government fund. Hope to get five million gold off tonight.
August 4: Cablegram to Fred I. Rent.
Cruiser Tennessee sailing Brooklyn Navy Yard Wednesday night.
Will advise amount of gold shipped later, probably five millions. At Government's request, sending staff of men with
shipment. Cable name of consignee and port of delivery at
once. Arrange with Government for safe delivery and protection of shipment.
August 4: Cablegram to Fred I. Kent.
Plan contemplates using Morgan Grenfell, Brown Shipley,
Guaranty Trust Company, London, Morgan Harjes, American Express, Paris, as special redemption agents, it possible, by
Government appointment, otherwise in behalf of New York bankers. Absolutely necessary you cable at once that money will
be sparingly and impartially used for all American Letters
Credit and Travelers' Cheques and not for special reimbursement any interested institutions or firms, and those appointed to disburse will carefully scrutinize goodness of credits.
August 5: Cablegram from Fred I. Kent.
Cable received. Consign gold to Bankers Trust Company of New
York, care London City and Midland Bank, London. Will advise
port of delivery soon as British Admiralty opens in morning.
Arranging protection shipment. Have Government send three
hundred thousand dollars that I can also use immediately to
get Americans on Continent and care for special cases here.
Wish to charter vessel and send under American flag to take
Americans now stranded and suffering at many Continental ports.
This must be done at once by someone who can act with authority
in every country without awaiting telegraphic instructions from
any one. Am positively prepared to do work with proper credentials, which should be forwarded at once by cable through
the Ambassador and direct. All vessels should be coaled and
victualed forroundtrip.

August 5: Cablegram to Fred I. Kent.
Congress has appropriated two million five hundred thousand
Americans abroad. Am advised State Department cabling Ambassador Page to arrange for expenditure three
hundred thousand at once, ani authorizing co-operation with



dollars for relief

-3-

Confer with him, as he has detailed instructions. Arrangements for shipment five million dollars gold by New York
bankers nearing completion. Hope to send final advice of
shipment with five responsible bank men on Government vessel
to-morrow. Full instructions regarding delivery and use of
money will be cabled. Matter being handled by committee of
bankers, who are doing everything in their power. Cable me
to-night particulars of situation in London and what possibilities of reaching people on continent.
you.

0

August 5: Cablegram from Fred I. Kent.
Cablegram received. Scheme outlined wont work. We must anticipate arrival gold by honoring all good credits here against
its arrival, which banks will hold as collateral until gold
received. Cash payment fifty dollars being made Association
cheques. Would do same with all good credits with Government
or general bank shipments. Hotels here doing wonders in advancing credit, but reached limit. We must get committee
bankers here.to assure hotels that credits honored by them
will be paid according London methods when decided upon.
such credits only used for board. It is my idea that we
should have every London banker on whom credits are drawn make
out drafts in regular manner, but order of hotels desired for
settlement
That the banker should certify such cheques
and that the hotels would be assured they could deposit them.
This will divide work among banks properly, and prevent dietribution cash for hoarding, and at same time allow payment
cash in small amounts. Government gold would only be held
pending ultimate collection good credits, and government would
receive certified paper referred to as collateral from banks
in meantime.

bills.

0

August 7: Cablegram to Fred I. Kent.
Personally delivered three million dollars in gold in double
eagles to United States Assistant Treasurer on Tennessee tonight for relief American holders Travelers' Cheques and
credits, and she has sailed destination English port to be
advised to you later; all insured without war risk. Gold accompanied by John P. Grier, Henry W. Lewis, Arthur R. Jones,
Eaiot Tuckerman and Harvey I. Gibson, as accredited agents
of New York Committee, with written instructions for delivery
by them to London City and Midland Bank on delivery of gold
to them in England by United States Government. Committee
sending written instructions in duplicate London City and
Midland., London, to plate gold at disposal of your London committee, increased by adding representatives nominated by
Morgan Grenfell, Brown Shipley, Baring Brothers, Guaranty
Trust Company of New York, London, American Express,, also
Henry King Smith, representing Farmers Loan, and L. M. Jacobs,
representing National City, all in London, with yourself representing Bankers Trust. These appointments are official and
necessary. Reimbursement of drafts against traveleral credits
is to be in New York funds in New York at four ninty, plus
interest and all expenses when ascertained, and a clause to
that effect to be endorsed on draft. Reimbursement in New



-4-

York of Travelers' Cheques is to be made at their face. Payments to be made exclusively to holders Travelers' Cheques
and credits after verification in usual way. All cheques and
drafts are to be cashed in Sterling under directions London
committee. Cheques and drafts are to be forwarded Bankers
Trust Company for collection and reimbursement. Ehdeavor to
secure advance at once against gold in transit for such amount
as you will require before arrival. New York committee recommends moderate advance to each applicant. Committee's only
protection for repayment of advance is through collection of
New York drafts and cheques cashed in London. Committee is
advised Morgan is arranging to deposit three to six million
gold for credit Bank of France, to be immediately disbursed
Paris for similar purpose there. Particulars will be cabled
you shortly, so that London committee may co-operate with
Morgan Harjes. Necessity for depositing balance of gold here
to establish Paris credit reduced London shipment to three
million dollars from amount originally advised.
Government shipment on Tennessee one million five hundred
thousand, regarding which co-operate with Government officials
in charge. Have endeavored to conform near as possible to
suggestions your latest cable.
August 7: Cablegram to Fred I. Kent.
Government shipping million half gold on Tennessee; understand
will be disbursed in co-operation with your committee by officers in charge. This includes the three hundred thousand
made available to Ambassador Page by State Department. Wire
me if further instructions on that matter are required.
August 8: Cablegram from Fred I. Kent.
Cablegram received; understand instructions perfectly; greatly delighted. State Department has not yet replied Ambassador's
request authority to pledge Government credit to make three
hundred thousand immediately available. Al]. arrangements completed, only awaiting such reply. Both banks and hotels
greatly relieved because gold coming. Vessels needed transport twenty thousand people should start immediately. Calling
London committee together to-morrow.
August 8: Cablegram to Fred I. Kent.
Secretary of Treasury telephones me Ambassador Page is asked
for guarantee that three hundred thousand gold will be returned in thirty days before advances on that credit can be made.
Can you not arrange to meet this requirement by using three
hundred thousand our Saint Louis shipment, getting reimbursement from million and half shipped for Government's account
on Tennessee? Cable me fully, as I will have to arrange for
instructions to be cabled to those in charge Tennessee shipalent to make payment on arrival. Can you suggest any arrangement for opening credits in Germany, Austria and other countries by deposits gold here, using machinery of Government
for giving necessary assurances as to credit?




.-5 -

August 9: Cablegram from Fred I. Kent.
I was appointed Chairman Red Cross Committee to-day, and shall
try and send parties for Americans where necessary and possible, using appropriation Congress which Ambassador has authorized the American Consul General and myself to disburse as
special committee.
August 10: Cablegram from Fred I. Kent.
Can possibly deposit with Bank England, account Swiss National
Bank, twenty thousand pounds to protect American credits in
Switzerland; further amounts as needed.
London
definite instructions such use funds arriving is intended.
Some members committee think gold earmarked and unavailable
except special houses - instruct. Cablegram received, three
hundred thousand appropriation now in order. Impossible communicate with countries mentioned; am working with Red Cross
Committee trying to find way to get funds to Americans and Ehabassies.
August 10: Cablegram to Fred I. Kent.
Replying deferred message, you understand the three million
dollars gold shipped London City for your committee to be
used entirely cashing Travelers' Cheques and credits. The
fifteen hundred thousand dollars by Government to be used
first to reimburse three hundred thousand dollars advance arranged by you, second,for general relief work under instructions sent State Department to Ambassador. His instructions
specify form of receipt to take and that fund can be used for
travelers whose credits are exhausted, and obviate necessity
of cable transfer suggested.
Three million gold shipped by
Tennessee intended as fund to take up drafts drawn against
any responsible Travelers' Cheques and credits, and was not
earmarked for use of special houses.
Government
ing to-day fifty thousand dollars with National City Bank,
New York, for credit Banque Nationale Suisse, and American
Legation at Berne, Switzerland, notified to this effect and
instructed to use money for relief and protection American
citizens, taking signed receipts or securing reimbursement
of advances by assignment Letters of Credit and Travelers'
Cheques. You are best judge whether this will take care Swiss
situation.
August 11: Cablegram from Fred I. Kent.
London committee arranged through Rueff, of Swiss Bank, distribution twenty thousand pounds Switzerland take up American
credits. Committee arranged twenty thousand pounds for Italy,
five for Spain, more as required. Also investigating needs
Scandinavia. Every effort reach Americans other points blocked, but still trying.
August 12:




Cablegram to Fred I. Kent.

Refer our message

August seventh beginning with word personally, insert between the words destination and English the
following: Falmouth, England.
Confer with Ambassador Page,
and treat as strictly confidential. Please cable understood.

-6-

August 13: Cablegram from Fred 1. Kent.
Cablegram concerning steamer Tennessee received, fully noted
and matter has attention.
13: Cablegram from Fred I. Kent.
Only method dealing with Switzerland was to deposit here twenty
thousand pounds with swiss Bankverein, which was done yesterday. Do you authorize committee deposit ten thousand pounds
each with Credits Italiano and Bence, Commerciale Italiana,
London, for Americans in Italy? This is only method doing
this business, but of course in making such deposits under
present circumstances there is considerable risk, as it involves giving credit to these banks, besides the probability
of loss in transmission of the paid documents and details,
thus making the statement alone of these banks the basis of
debiting their payments. Please cable immediately that your
committee wishes to take all responsibility for these deposwhether the London committee are authorized to deal
with other countries, Scandinavia and Spain, by similar depos-

its, and
its.

August 15: Cablegram to Fred I. Rent.
State and Treasury Departments agree to facilitate opening
special credits in continental cities for paying Travelers'
Cheques and credits by authorizing Ambassadors or Consuls to
give Government guaranty to local banks for amounts needed.
This plan will simplify accounting, and enable dealing with
London agencies of foreign banks. Government requires that
against credits so arranged, an equivalent amount of gold out
of three million dollar Tennessee shipment shall be set aside
at once under control Ambassador Page, London. London committee to appoint disbursing agents in each city and give directions for method of handling, or in case Government agencies
employed, such directions to be given by Ambassador Page,
London. Accounts of disbursements with Travelers' Cheques and
drafts to be rendered Ambassador Page and London committee,
and paid out of gold reserved for that purpose. State Department will also authorize similar guarantees through embassies
and consuls for relief destitute cases, to be covered by gold
in London out of Government shipment in similar manner, of
which separate account should be rendered. Out of three million shipment, please arrange following credits, unless otherwise provided for. Ambassador Thomas Nelson Page, Rome, will
guarantee Bank of Italy for one million Lire to be advanced
to Ambassador for disbursement through American Express or
Cooks for Travelers' Cheques and credits only. Suggest you
cable him particulars of credits already arranged by you,
and information regarding methods and accounting; he has already negotiated fifteen thousand dollars draft with 'Banca
Commerciale Italiana for destitute cases only, and desires that
amount reimbursed through London branch out of Government consignment on Tennessee. White Star Line, Liverpool, cable situation serious Naples, and request Government undertake to
ship Banca Commerciale Italiana one hundred twenty-five thousand dollars gold for relief travelers. Steamship company's
York office cabling to Liverpool to get in touch with you



-7-

.

and. arrange immediate credit London, you to appoint disbursing agent Naples and give instructions also for Travelers'
Cheques and credits. If funds required in this case for relief of destitute, amount should be arranged direct from London
and covered out of Government shipment. State Department now
authorizing following credits opened to be guaranteed by Government and confirmed by State Department directly to Ambassadors or Consuls to points named, to be used for relief destitute only. American Embassy, kadrid, five thousand dollars;
American Legation, Stockholm, one thousand dollars; American
Legation, Copenhagen, one thousand dollars; American Consul
General, Lisbon, through Muller, Schell and Company, with reimbursement here, two thousand dollars. As these will be applied to destitute cases, suggest you communicate directly with
these officers and ascertain if further credits required for
cashing Travelers' Cheques, and will arrange for Government
guaranty at once under above plan for these and other cities.
State Department reports embassies and consulates can get money
In Russia, except Warsaw; can you handle that and other Russian
points by using our Roubles for reimbursement out of Tennessee
shipment? Above plan contemplates opening local credits under
Government guarantee through EMbassies for disbursement on
Travelers' Cheques and for destitute cases, the amount used
for Travelers' Cheques to be secured out of three million
bankers shipment, and the amount disbursed for destitute cases
and EMbassy expenses out of Government shipment, the accounting for all Travelers' Cheques and Letters of Credit made to
London committee and settlement effected there. This plan
approved by State and Treasury Departments. Please cable at
once whether you understand and can carry out plan, asking
Ambassador to facilitate prompt transmission. Refer your
cable beginning only method. Swiss deposit approved. Plan
above suggested avoids risking deposits and only care required
to safeguard paid. documents. Suggest these be handled through
EMbassies. Try arrange other credits same plan.

August 16: Cablegram from Fred I. Kent.
keeting cruiser Tennessee personally to-morrow. Have advisei
Gibson by telegram. If Cunard put on ships, will relieve congestion here, but thousands on continent will need transportation.

August 17: Cablegram to Fred I. Kent.
State Department communicating Ambassador Page large number
private payments to be made abroad, including many in
Switzerland, which Banque Nationale Suisse now agrees to make
in Switzerland only upon receipt direct cable instructions from
United States Treasury Department. This involves duplication
very expensive cable instructions, and State Department would
appreciate your conferring with Ambassador Page and endeavoring
to arrange other method, if possible. Please answer promptly.
August 18: Cablegram from Fred I. Kent.
Tennessee gold in Bank England. Cablegrams received; can arrange Swiss payments and some consular payments mentioned if
Breckenridge will release gold when he returns from France



-8-

He refused gold for English payments for moneys deposited with Washington Government. London committee feels
Government guarantee suggested wont help every situation, as
refusals of banks to pay due moratoriums and lack cash, not
doubt of credits. Committee suggests little wider authority
meet conditions each country as necessary, but mill act far
Lire to
as possible as outlined by you.
Transfer millio
Italy completed.
Sunday.

August 19: Cablegram to Fred I. Kent.
Your cablegram beginning word "Tennessee" received. We have
conferred with Washington, and hope necessary instructions will
be given. Cable specifically anything additional required.
August 20: Cablegram to Fred I. Kent.
Confer at once with Ambassador Page, London, in regard to appointing Travelers' Credits disbursing agents in Rome;
Washington authorities are cabling Ambassador also confer with
you.

August 26: Cablegram to Fred I. Kent.
Bankers committee desire report disbursements of gold fund,
and from what date disbursements were made. Think all items
should be sent forward promptly for collection.
August 26: Cablegram to Fred I. Kent.
Committee want full detailed information regarding manner and
procedure of disbursements made by London committee, and how
advances arranged prior arrival gold are being covered; also,
are vouchers surrendered to London committee against payments
from gold fund and sent here, or being held by London committee
to be forwarded later. Please mail for benefit committee
itemized statement of all disbursements and cable brief summary.
August 28: Cablegram from Fred I. Kent.
Total deposits and guarantees to date in respect of continental
Europe eighty-five thousand pounds. Original plan outlined by
you not considered practicable for London. Except on bank
holidays and the fact that in some institutions credits have
been cashed for limited amounts, bankers here have never
ceased paying travelers' drafts in usual way, leaving question
of reimbursement till later. To meet this situation and to
avoid gold lying idle, our suggestion now is to distribute on
account disbursements already made say two hundred thousand
pounds among London correspondents of American contributors,
distribution being pro rata to amounts subscribed your side.
If you approve, advise specific Sterling amount to be paid
each correspondent for account of each contributor. Expect unused balance of shipment certainly more than sufficient take
care remaining needs Continent. Will propose further distribution account London disbursements when position clearer.
Complete documents for continental disbursements cannot be received for some weeks. First batch from Switzerland just arrived. London bankers will not deliver documents or vouchers
to London committee, but will continue dispose of them according to usual practice.



-9August 29: Cablegram to Fred I. Kent.
Your message received. Having committee's attention, and will
cable early next week.




MEMORANDA
For
Mr. Forbes.
DEPARTMENT




4aW20, 1914.

Please get a copy of the
Federal Reserve Act and note on it,
in red ink, any changes that are made by this

look at.

pending bill for me to

B.S.,Jr.

October 6, 1914.
Dear Fred,

I am writing you in mu personal capacity, no lonror President of the
Bunkers Trust Company, for I resigned today and my nesinnation was aooppted.
L;settrd Prosser has been eloctod President. The plan is ono which I am sure will
meet with the hearty approval of every an in the organization. It meete
situation and difficulty which might arise, but which will not arise, and furnish
all of you with a captain who is full of enthusiasm and is really one of the family.
It isn't going to be possible for me in this letter to express to you the foelings
that I have about leaving. You can imagine them without en saying anything further.
ne assured that I appreoiated your cables and North's tremendously.
I have been on the jump lest week and this week, and it has been impossible
to do justice to a great nany important mattere: but I want to acknowledge, rather
hurriedly, your letters of the 17th, 21st, 23rd and 26th, and comment on a few
undermatters. Sebmid is hannling all items covered by these letters. 'nal fullyfiguring
stand about the lira. Things jumpet about so fast for 4 while, that we were
in many directions and tryino thinns (mt. Some of this work, of course, I am vary clumsy
at, but Schmid has kept me straight without much trouble whenever necessary. Schmid
is handling the question of doamments brought from Germany by Gibson. Our Exchanne
Committee considered that matter today, and It seemed to us that in is a proper
matter for the Gad ramn Comittee to take under advisement. ne may adopt a policy
in connectionwith our coomittee work which will result in tome representations
being made, either direct or through our Government, to the British government
to eot all of these matLers ()leaned up.
About the City warrants, you have hoard from no by mall. It was absolutely
impo)sible to nave warrants drawn in sterling, and, furthermore, I was in nashington
working with the toderal Reserve Board when the matter wan finally decided, and since
then have satisfied myself that the City authorities will not again put themselves
in that poeition, partinlularly with the future oentaining many unoertnnties,- so
will have to let the matter drop. All of Jour arguments on this subject were fully
anpreciated, and I talked it over with them at some length, but there wasn't anything

to do; in fact, it had already been done before 1 could take a hand in it.
Abott/the Spanish mnttor, it seems to me that it out to develop naturally
and poesibly if it could be handled by correetondence you will find it feasible to
work up satisfactory connections there. I certainly hope that WO will shortly ;Se
in a position to expand our forelen busineos handoomely. This is the Company's
great opnortunittAne we want to take advantage of it. ye are buying a few cotton
bills, but very cteepfully, and if we dot hung up I am sorry, but it will be not for
lack of discretion and care.
Lot me explain 4 you briefly what happened about the cable transfer that
Y.r. Anderson complained over. I had Schmid working with me practically all of the




-

2

day when that order wan to be filled over at the Clearing House, and in his absence
tho market got away from him a little; but with that one eroeption I think that our
rates have been as good if not better thee those made by other institutions, and
eertainly Sir Edward and Er. Anaerson should ooneider that our being on the job at the
Clearing House has not resulted to their disadvantage, when one realizes thet we
have now got the sterling situation pretty well in hand.
I have always liked List, and if you can ever do any buniness with him

I am sure that you will find it satisfactory.

About the City's position on the :80,000,000 gold account, it hoe given us
quite a little concern, because some of the institutions are paying their calls in
exchange rather than furnishing gold. It makes a competitor in the narkot for our
gold pool. We have got to watch that matter with the utmost care, as if there seems
to be a disposition to draw an us inairectle, so as to avoid shipping eold on the

City's commitment, we are going to shut down, and I feel sure that we can control
the matter. You .ill naturally understand, with the maximum rate to the City
fixed at 5.03i, and eemand now selling at 4.95 and cables 4.96, eons of the
institutions will prefer to buy exaemige at those rates and save thole gold, as oven
then it will represent some profit to them. re are watching it, however, and I am
sure that it won't get away from us.
In roeard to the gold fund meneioned on page 2 Imola of occurs oe the 21st,
we hive oabled you to take the matter up again with the Bank of nngland, but so far
have no reply. Meantime you may have a cell from Normaa,.of Brown, Shirley a Co.,
and / have not cabled you that that was in the wind booause I dianit want zo put

you in the position, or the committee in the poeition, of appearing to be soliciting

cooperation from the directors of the Bank of 7ngland. They should have agreed to
make aavances flat, without interoet, aeainst guarantee of shipment, as the Bank of
France has done for years, in order to facilitate the transaction and make cheap
exchaage.
I believe they also should give us a better price for she gold. At
present prices they are imposing upon us a penalty for ping our debts, and the
committee frankly doesn't like it. I am sending, thie to you personally, and confidentially, because 1 don't think we should encourage any diepute, but rather a
spirit of cooperation, and if we wait a day or two and let the meteer stew something
Is liable to develop that will help us. re don't want them insisting upon eayment of
thoee loans against stoke that have been sold in our market. The situation over k
here is a difficult one in that reseect. The stocks carried in London have been
sold on arbitrage here, the stock has been borrowed for delivery, and the hawses
from whom the stock was borrowed are not in a position to take delivery of the stock
without embarrassment. This of course is very confidential. If the London banks
sho id insist upon payment of those loans, the New York inatilaelemx corres'ondents
of the London stock houses would have Le insist upon return of the borrowed stook, and
the house that loaned the stock would have to go out end borrow the money, and eomo
of them haven't got the margin to put up so as to get the money.
The arguments
on sage 4 of your /otter are convincing, and I am delighted to have eou write me so
fully about ,t, for it clears up my own mind on some points where I have been
feeling my way.

I hope that travelers cheques taken up in Germany by Gibson will all be
straightened out. Is far as I can gather from your letters, I think that the German
banks have behaved with groat loyalty to their American correspondents. The Deueeche
Bank are now sending us a good deal of their business, and we naturally appreciate it
greatly and are keen to serve them in any way possible.
About the Bask of Anglana giving us assurances that it will roaease eel&
when the exchange turns, concereing whieh we have already corresponded, I think
myself that we must negotiate with them. To have only shipped l0,e00,000 of eold,
particulars of which you already have, and under the circametancos I think ee oen afford
to sit on the other a90,0 10,000, which is all raised, and see how keen they are to
get it. Personally I wouldn't ship any more unless the Bank would give us some
assurances, but we cannot start negotiations just yet, and out supply of exchange will
last us for some time, as to date we have only sold a50,000. outside of today's



a

3

I want to write you
separately about the flah situation in this o,untry, and will do so probably by
Saturday's (loll.
Yours of ths .eedd doesn't require aay particular answer exoept as to the
morn, liar:as oatterooliftere they seem to fool grieved at your making ineuiry about
cashine cheques. Herman leojeo has eono the limit to help us out and I hope oou
will keep him happy about it.
About Vandorlip and me going to London, I fully appreciate the volty you feel.
I didn't want to go, except for the opportunity to visit with you and get your advice
about a lot of matters, but the members of tee committee WO(b unanimous that neeotiations ohould be started, nod eanderlip said that he would eo if necessary provided
tilotments, and todk

I would.

Ste. 10

t8 will not exceed 5,30o,0000

There Boom d to be A sentiment that two mombern nhoula go, that we were

the two to go, and that it would be A more formal representation than if negotiations

were coneucted by prove.

The matter has boon temporarily dropped, no we are

informed, confidontially, in fact very conflaentiallee thot they are negotiatiug in
-ashington to havo a representative or the British golernmont come over here orivatele
for a general discussion of an of those Natters. If that is done, of course it will
lay tha basis for futther negotiations between bankers, but in the meantime we
naturally give way. to tho plan of our frienda in Tashington.
I won't rofer again to the mattor of City warrants, about ohioh you and
both agree.
In regard to tbe travoloro oheque matter, I am going to hevo a meeting
tomorrow and try to wind up evorything that can be ',round up at this end. eleantimo
Schmid has the matter thoroughly in hand and I am sure everybody will be sotisfied
with the outcome oven if we di aloe we all of the gold.

Copy of your letter of the 25th, about the gold pool, hat; boon sent to all
the members of our committee after I read It at tho committoo :looting. It really
was uncanny to rood the letter and roalize how our minds were working in the sane
channel; in fact, your language literally aorlears In some of our publioations.
I am onolosine with this a completo set of the documents, or else by next mail If

It is too late, tonight to eet tlem, and will =ewer more fully tomorrow, as it Is
too late for me to continue this latter tonight. eo are hard ling the fund with discretion and it is having its efoect. The committee is in harmony and the information
which we act from day to (ley in connection with credits maturing abroad io particelarly illuminating and a good guide to our work.
ehile I am no longer Prosident here I have got to be in the office off and
on ad close thine!? up. I am opine to resign from everything and make the Deleral
Reserve Dank my onle occupation. You don't know how I rie going to miss you, but
you will know when you get home for I am going to rely on your help and advice in
many diroctiono. This whole change is a grievous thine which I can hardly bear to

write about.

The 'oat port Of this letter is purely personal.

Mrs. Strong's brother-in-

loom, 3aron vOnRombere was killod in battle September ,neld, and his wife, who an you

She has a baby about three years
old. Confidentially, Mrs. Strong and I very ;meth fear that she has tuberculosis,
as he has lost weight from a maximue of 152 pounds down to 115, and a few months ate)
she was warned by her dootor that one lung was affected. The strain of tho war,
of her nusband's absence and dancer, at now of his death, I fear has been too much
for her. She is still at her home, Rarkstrosse, eelsbaden, and is cabling for. help
and askino to be brought home. She has a friend, a Mrs. Jessie Taylor; who Is
stopping at the Hotel des Indoe, at The Hague, who hen also cabled urging that t
someone come ovor and t;et her and brine her home. Mr. Converse is in °anode in the
woods 'whom we can't roach him, and Mrs. Strong has finally decided to sail, probably
on Saturday, taking with her Miss bores Hockin, o nurse oho has been with her for
some years, and it may be that before this letter roaches you you will receive cables
from me in rf aro to making preliminary arrangements for bringing Mrs. strong's
sister to London, or possible asking you to go with Mrs. etrone, taking Mare along
and Miss Hockin, to get her. It is a great deal to ask; in fact, I woulon't have

know io Era. etrong's sister, is not ot all well.




you not made the offer by cable. In order that you may be
In advance,' am going to give Mrs. Strong letters to all of our banking

fully posted
friends,
She will have with her a letter from Count Bernstorff, the German Ambassador, from
she will have her American passport (Miss Hookin will
Secretary of 3tate Bryan
have a British passport), and I will eive her a eersonal letter to Ambassador Page
I am also handing her a memorandum of instructions,-so
and to Ambassador Herrick.
far not quite complete,-but he first part enclosed herein. Mrs. Taylor cables that
the route to 17eisbaden, via Flushing and Cologne, is euite easy and feasible. Others
have advised me that the safest route would be via, Havre and Paris to nwitzerland.
Conditions will change before Mrs. Strong reaches London (she will probably sail on
the St. Louis), so this letter will give you time to make inquiry and advise her
receipt you have not already arranged to have the Baroness
in case prior to
In order to understand what could be done, I cabled to Mr. Converse's
come to London.
old secretary, Mr. Chaudon today, as per enclosed copy of mu cable. What from this
side Gems to be necessary is to get credentials from the embassies, have the passports
vised before) leaving London and inmediately on arrival in Holland or France and again
If it is possible, in case the trip must be made, advice of their
at the frontiers.
coming should be sent ahead through Govemment channels, so that they will be assured
of having pretection and a minimum of discomfort. Mrs. Strone should have with her,in fact, each member of the party should,- full instructions of just how cables should
be sent to me. All of these details are covered by the memo. enclosed.
I am uo concerned about letting Mrs. Strong do this,-in fact, have opposed
it to the point of making myself disagreeable,- that I just feel it necessary to impose

-done so had

its

upon you to help us out. I am sure there is no danger, if proper preoeutions are
taken. conditions, however, may change before Mrs. strong reaches London, and if
there is the slightest doubt in your mind I don't want you to make the trip and
naturally don't want her to; so don't hesitate to cable me fully,
after she reaches there should a change of plan be necessary.

Sc)

that we can decide

alse want to suggest the possibility of difficulty with Mare on account

It may be that he will be unable to Eet credentials that
of his being an Italian.
someone should aecompany the penty who
will protect
speaks French end German, depending of course upon the route taken, and who can be relied
That danger there may be in crossing the
translating.
Channel from mines, Zeppelins, etc., I am unable to estimate. If there is any such
It would be mot/ more satisfactory to Mrs, Strong
danger, don't take any risk.
and to all the family, to spend whatever money is necessary to hire people to co

him, but I certainly think that

tpon to ase discretion in

in to 7eicbaden and bring the Baroness and her baby out, rether than run the risk
ofnenthing more than discomfort. I feel satisfied that Baronees vonPomberg has
given practically all of her money for the relief of the German wounded soldiers,

so that Mrs. Strong must be prepared to finance the entire party. All of this you
can arrange, and I tell you, Fred, if you c n Get this job done for me safely and
w ithout taking j risk yourself, I will be more grateful than I can tell you.
I must close now, for it is half ast six and Mrs. Strong is waiting me
Will try and ;et another long letter off by Thureday's boat, and Saturdays
uptown.

as well. my verr beet regards, and Bally thanks in anticipation.
Sincerely,




October 10, 1914.

zr. ?roe 1. Keete

Waldorf hotel,
Alleych Street,
Lento'', &gland.

Dear 7rede-

the 17th, 2let,k3rd,
er lettere
oon with hr. Lewis as there
this a
were a for things. I ranted to dee on a
le more et length than in
my. last letter. Tours of the nth I have not answered yet et ell.
I am running throw

Path an neth of Septeriber at

Our correspondenee 0411

resigned from the Trut Germany.

in touch eith all office matt

heretofore and hope you will
will be no change la our ,eti
get beck.

_

d Atpeet
me regale
hnndlire

eerily atop because I have
ised 3owerd ;roes.? to keep
write you regularWly 411

!F just the sane as there
eien matters until you

ao corrosponeencel it
That: A '$t O! in
be very much botter for ma end easier for you if the /otters ere dieldJA
Into spb:ects and everething re MtInfr ta fele b3eet written under thet
4.-44-eel sake our eorrespondence
heading. 1 i111 try to do the

k

simpler.

r. Jeheild,
ing el 4 4ifriculty in kr:opine
APOU1111
his necemrte streight because of tee, se eve( 14 directions in reeerd
to various entriee. reurs of the Zet 7:Lies lot of informetion me
needMed
and if 71P2 ere releine
but there are *till a good men! entri

hink the softer tbo7 1,:ro
cleaned np the better f-Ir even eour phenomenal memory my become overoal distuebed by Lb.
charged eith ao much eoing on. I have been
045100 resulting Which ea
poesibility of our aceowte going astra
On !Mor lOOMOT7 far IOW Of these matte

Tartn.ere in the orrevel ?well;
would have diffloulty In reeover
'teeell efereur letters tomorrow
30
hence this evegestionf
or working met-everything that
and Londay. Ada is a holiday it t/
betel:Ants by ehich ho hopes
is contoine4 In the vae of seggestions ree
to pet our books In good shape. We have a b edjueteent amount on our
booing se
tens which heve not been reported on.

ogag: I have leen Intendine for a good while to write 'mu
&Object, eimesibly I cannot de better now than to enote from a letter
es tht
2 here jest dictated to gr. iliferbure et the IMMO Subject. lifestyle iede to




'CD

F. I. L.
engineering a ooheve to mike a syndloete loan of 4150,000,on secured
by cotton whieh, in my opinion,ie eolng to add. to ths tronblo. That we
need-in thie country to save the douth from a disaster end poosiblp
avoid a serious oituation ie *Nkyere of cotton 'r at the epee price even
talon:eh it moans A loos to oOno farmers. How people can view it in. any
other way ie absointoly beeon4 mo. Purl:hurt is writing nost intoreeting
end illuminating Utters on the subjoct. I have a report now that down
In Texas an orruniention to hold cotton has roached the point where they
have pot sight %Adore goinr around frightening femora who show a die-

pooition to eon. It is dovelopinr into a ripontic cotton evculation
involving greet danger to the whole
Thatwith a proposal liNa

Wade's end a proposal now being d
to Isom taloosoup,u2o of bends

volts for the Goverment
he purr°
f valorization of Cotton
meut, the t rst thing we know Cotton

and this "Soy a bolder cotton4
will be looked up ail over the
d. Antos
put a teeribl: strain on
credit*, merobants won't be able
Cleat
ir 4ccOnfle or my their
all n
debts, the Banks will have to Olt
ths line and last, but
by no Inane least, we won't export any cotton he we nnal to more than
ever before in the history of the cow
I am poing over to 4ashington
newt wet* and intend to take the
of putting it up to them in the
strongost way, that something mus
eat this development.
#10P.P01.000.need Ned,

Irst oeportueity I have
lie matter wtich Is not

had to erne you some of the in

confidontial nnd which should hay

end in a way still am, under a plo
he ovor, absolntely neoensary tor y
30 Iam writing you fully end urge that
but ntt divnleo it to anybody on
first weertaeon, I had repeated
he joinod our eonsittee in liCW root, a
that we stould nob ohip any- consider/A

eith the
roe rally or nith the British nove
had boon nommenoW ther

-A

a number of Mango. Without 11ete;e7

Important ones. Pt rst
Second.

Third
Fourth-




To pet a special 'micc f
To got advances Mau

hO7ore oecept that l ofis
ivulgo tho etory. It is,

dAnstend reeoftt dovelopments

uasfit for your own guidanco
Whon'this project eas
Vanderlip, inter then

in the stroniesst toms
of gold trill; reeotietiono

d or V.4th London Seniors
purpose of accomplishing
'Iii mention Boots) Of tho

o gold.
arest neon advice*

guarantee of
nom Now York.
TO insure the
V the gold when'Exchanged
turned in 061& ieuvat
e same price at which
it was sold to el:1 een:e oV land.
To terminate the eehargo on ,he purchase of
Aaton by englnek
end ifpoible
conclude a plan for open' both the LIvorpool
V

and Now York exchanpes.

r'12

Fifth

To have a general understanding regarding
the discount of Aeoricen bills in the London

market so that existing long bills might be
nixthe

freele extended and so ne inducement given to
draw finance bills and make the exchenee without shipping gold.
Possibly to establish a large credit elSich
ld use eseseepleeenting
certain Institet

the gold.
Seventh, Arrive at an
tent- of A4A

an bills d

_MAO, had br:

eaxA/Irod n

Eighth-

ports by the

erstandi,

tish

Arrive at an urstan

n reeard to the treatagainst careene

teen into neutral

g or, at any rate

determine A. policy in regard to loans secured
by Anerican seceri s in London which had been
sold in New Yo

letter.

Ninth - Determine a
securities Y

I referred in a former
tire sales of American

test be dealt withbut
thee() seemed important at the present
the first meeting of our
Committee, Ur. Vanderlip and I urged negoa a ions, Nt. Vanderlip particularly.
Undoubtedly

The Committee saierallright you two go over and negotiate" and we were really
on the point of going except that 4ec:oterv ecAdO had Already told me that
either through the British Ilenhaeey in 'etstineton r through or state Deportment some plan was being discussed fot a mepreaoi ative of the British.
Government or the Beek of england or bot to co. over here to this Country

to investigatse conditions and disarms soe of t e matters, in fact, the
to off set their trip to
euegestion that ee go to London wee, ir
a arance of a visitation to
this Coubtry which we tbought might have
collect debts. I talked the natter over with Washington and they didn't take
yore kindly to the suggestion that we go SIG it T7 dropped. I think earbures
opinion had a good deal to do with it, as he
11 along been reluctant for
' the ?ederal eeserve bank
me to permit anythine to delay the develo
as that would.
Within the last few days we -earn
Sir George Xaish,-and just yesterhim from the Bank or England,day I learned that a representative accomprn
or two.
ars on their way over here and will arrive in a
IOW, in the

strictest confidence, this natter has bonn taken p with two or three of the bankers in New York, including neself, with a view of insuring that negotiations

in sane way be brought to us as bankers rather than be handled by Government
representatives who are not strictly in touch with banking matters; and our
attitude has been that, as the plan was arranged by the Government, whatever
negotiations we have should be uftdertaken with the Government's assent. During
all this period of negotiation and exchange of views between eAshington and .New
York and the members of the committee, I have been in touch with James Brown,
whose partner, uentaeu Norman, of Breen, ehiploy & Co., is a director in the
It developed that imredlately following my first cable to you
Bank of england.
that we might not ship gold without better cooperation from the Beek, sorman



P.I.Z. 4.
cabled Brown, at his home in Oyster Bay, oxpresoing some concern, ro1lowin

the rocelpt

of advicos in London that the gold pool would eiscontinue its plan and disband. Brown

called no on the 'phone and I informed aim tnot he was wrone, but that he could tell
Ms partner in the Bank of ngland that we 1,1644 eslonfor advances rithout interest and
a bettor rice for the gold, and that tney had poeitively declined both segrestions,
and in view of that we thoueht we had better neeotiate fir3t and ship the gold
3Ince then erown has explained to me
afterwards when we had an understanding.
the contents of various cables he h,s received from ti-c to ti en Prom norman, all
indizating that the an-lish ba ker does not believe eou and rour representations,
or doeo not understand conditons here, or does not want to coo oreto, or, at any
race, won't cooperate for soeo roneon or other : ond tith all of this I lave been
ot the CM. It is undoubtedly the case that the
much puzzled until only yes:aerie-7
3ana or =gland meet hete neen aware of the Goveromout's neeotiatione and have felt
xtimid about dealing with rou so long as the Oovernreent was undortakinp: to deal with
our Government. 1 anticipate that n11 that coe be straleetened out when Iainn
aronvoo here, but in the meantime I was led to cable you not to pursue your neeotintions
with Lloyd-George and the Bank of :On lend an- further until I had cabled ap-,in, and
earrosoine confidontially the oeinior tlelt the coeeittee woeld not snip gold until
1.

the Berea did cooperate.

i have hoeitoted about cabling iota too freely, any way, fo- various reaoons
which I must explain when 1 see von, but i want you to understand that we are pine
everythin:- we can here to cerry out the policy which 1 know oou would be foremost in
advocating if you wer, here, viz., that we have oat to pay our debts or bust. It Is

silly to evoid the conclusion that they have pot to be paid in told if we are not able
to oay in produce or unable to extend. it is nisculointino not to meet with hearty
cooperation in this effort. Trq, -hole country has come forward in a maenificent way
to moot the situation, lz.%6 now we are checked ho the narrow policy of the Bank.

It has developed,- in what wee I cannot surmise,- that my election as
eserve Bank may make it necessary for me to take a
tote octivo part in the negotiations here than would havo been the case otherwise, arid
later on I can inrorr you more fully. Curiously enough, at our meetine the other
day a groat many suggestions wore made as to how ,ve could take care of the situation
without shipping the gold, how we could induce those 1,1, ing bills maturing to aeranre
I listened as patiently as I could for a while and then said
extenoione, etc., etc.
would offer a surpostion that would be at least a partial solution of the difficulty,
Governor of the New York Federal

which was an follows:

If the net, York Clearing Rouse Associe#Ion would set aside

410,000,300. of the gold fund in a special fune, uedor a contract with the Bankers
Trust Comiany agreeing to sell it to us at an agreed value an the maturity of Fills

In London drawn by the Bankers Trust Company, I would arrange for the Bankers Trust

Company to draw .10,000,000 of ninety-day bills, with options for extension if possible.
Vanderlip saw the point at once, and said the City Bank would do the sane thing, and

I will be willing Is right now to bet a little rod apple that before we rot throurh
with this transaction something of that aoet will bc one. The minds of bankers
In this country today are In such condition that they do not dare to draw long bills
Personally, I think that If
without gold cover possible, and I don't blame then.
the 3uplishmen will deal fairly with us we will do hotter by shipping the -old itself
than by drawing long bills, but if objection Is made In this country I do not sof) why
the suggestion that I made cannot be workeri all right.
I have been so absolutely discouraged and disappointed in all the transactions
you have had with nigham in London that 1 fool it necessary to say that I.would reefer
you didn't deal with him in connection with this gold fund. 1 have absolutely observed
your injunction to say nothing about the difficulty to our frion s on the coeeer, except

that one day Tom Lamont asked me how oou were getting along with him, and I said "rotten."

Don't lot them put it over on you: that in the groat thing.

Confidentially, our chief applicant for exchange has been Goldman, Jachs.




oo

r.I.X. 5.
have dealt with them pretty (amorously, but have boon holding our rates rather *love
the markot, that is, frem-:! to '!, believing that we can still Induce a certain anount
of ootennions and roll the London account along. de have only actually sold L375,000
out of the a2,000,000, and exchenoe 13 woraino up higher right along as tho result of
our policy. It has the appearance, of cooroo, of our follow-me the market instead of
Oolditg it down, but I have boon dotermined and insiated as much as I could upon followe
Ito that pulley from deo to day with we hie! made our first call of ,25,0o0,000, which
4111 probably be oade in a day or two. The 10,000,000, as you know, was a pro/loinary
advanco by the New York banks. Nhon we pot the 425,000,000 I think we will probably
take a hard crack at the market somo day, and put the fear or the Lord into the minds
of anybody who is accumulating exchange at hi aal pricos. Like as not it may strike sore
or our arn committecooperhaps ourselves, but of course I have in mind the main object,
that is, the oettine,X the premium an gold reflected In the price or sterling.
Our committal, to which `Or. Wallace of the entral Truot Company, has been
added, is tremendously interested in the work. ao meet In the ,;learing House every
mornine at 11.15 for about an hour; that is, the hhole committee. Then, the ?oroign
Oetchango committee, consiotine or Messrs. Alexander, 'aoodward, 'Menace, Vanderlip

anO myself, reet at 3.ZO, fix the rate for the day, peso an applications for chock
and Gable transfers, and by the time that meotinr Is over it is onorally 5.00 o'clock.

At yesterday's mooting jecretary McAdoo called me on the 'phone and nsked If
we could help out the Government on above 41,1;00,000 that the loostmaster General owes

in London, also a149,030 in Owitzorland, and about 45,000 In the Barbadoos. After
seine discussion we decide taat it was loadelsablo to have the 3overnoent In the market
paying a premium for oold when thoo could just as we 1 pay in gold, and should pay in
gold. On the other hand, we didn't want the Governrent to be a0vort1sed as shiopino
gold; so I telegraphed Jocretary McAdoo that we ouid sell him the exchange at cost,
to ho aold for in gold. All thio amonoto to IS givinro tOe Oovoonoent our aacilitIos
at cost and giving us 41,600,000 of gold, which we con either add to the fund or

distribute to the contributors.

I am in some doubt what we should do about O'ronch exchange, also awiss, hot
an hopeful that we can arraaoo to have a 'old orodit ootablished under aono sort of an
arrangement that will not nocessitate shipping gold. Havon't yet atudledLit out
but will probably cablo you in a few doos.
Revorting once more to yours of 4eptomber 25th, I have placed a copy or that
lottor in the bonds oC each oember of the Coemittoo andLthink that they knor more aboot
It now thsu they did before. I want to repeat once more tb.t it is amazing the way
we were werkino along. parallel lines without opportnoity of diacoezion.
I have read your account of the aroangeneot about the ,,10,000,000 transaction
with the greatest possible Intorost. The London Bankers that you are dealing with
ceotainly handlokthis mattor handsomely. I hope eir ZOwaret Holdon appreciates that I ar
endeavoring to do whet Is right in these things and the division among these Banks an

arranood was in accordance with the policy determinod by the Committee, with which
think you and 3tr 2; ward Till thorouohly agree. If Porther shipments aro mode, .the
Committee will drag Its own exchange ond make It Mil cable transfers inorder that no
poselbillay ofncritiolam mey arise ao to certain Banks getting advantages or onything
or that sort The form of London chock and all Ole papers ore being prepared, specimen
signatures have oono forward tooetbor with vorious authoritice ord I ao going to aak
you upon receipt of this latter to stop at the Banks and so If everything is in ardor
for the Coordttee to draw and send cable confirmation so that we can have our arrangements thoroughly uodorstood in case further shipments arc dotormlnod uoon.
As to the London County and aestminster Bank, I will boar thotoin mende
whon we dovolop the mattor further If we do. The banks ocro selected In Order of toe
portanco, taking into consideration, first - the knowlodge of emerioan buoineso am!

evtent of American business, second - strength, third - the Committeets abilito to
make oromot arrangements through existing channels.




1 oueot we made no mi!2tako ond

we will probably hereafter stick to the four banes only. What/you say about those
eo oeeuee have a better rate is most interesting and strencebenz
bankers Moline
my opiniona oonsieerably. You have not advisee me in anyef your letters what
eetere elle ,ereeeente, taeing/ento az.:ey,:.rit ell of the
would be a preenr rete
The Bank new pays ,as you say, 76s. 7 'Ad for eagles, deducting from
circumstance/1.
that ed. when tee gold IF ::}110p0e to ntt!,11YR. AR nearly/as we can figure, we ought

to get about 76s. 2d or possibly 2 I/2d. net for gold shipped. to Ottawa. 1 am
hoping to hear eroe eee ie eve oeereo thet tee arreneement nneer veich tee tenters
Trust eompany opened t -special acoountbeeth Foldon ene. Parr's Bank was preferable

to are other, 90 that the boys in the office may thoroughly understand the situation
in the future.
London Memel Market. - I am satisfied from what you write and what I bear

from other, i;ete. tho OinolTil:14, low rate for sort
ii he LonOol m.-7.e4t Is a
purely ertificial situation, liable to deraneement at any time with some necessary
have aleeys eot to fear the effect
chanee In the eolloy of the eank of ngland.
of a chance in that discount market and that is an additional reason for precaution
about lottlne eo oe oer own tole nitheet e eontraet ele7nr
ve can soee dee Lot
it back. I am most anxious that yon should not have felt concerned or taken offense
at the oueeeetlen that 77e.Veneerlip and T go to eondoe. If Vanderlet went I had to
go and ha said he couldn't go enlees I would; besides, at that time I ;Knew of my
prospective eleogioll as Governor of the vederal lesorve 73an and I watoe to talk
with you about a lot of matters, including this. I wanted, if possible, to take
Mrs.Strone with me to ee7. :1;0! sist;ar ene 11;311 rurtter, 7 wanted to Eat a better
understanding of the London situation than I could by correseoneonce, even with you,
with a view to the future operattonRof the Dank itself, all of NOaieh I hope you
will fully understand.
:'arlg
I /weren't so for had opportunity to write
you how this has develepoe, but T want to do so rlebt now. When we were first arranging for the it6,000,000. Me.Morean was in the nidet of negotiating a large French
credit. He aped that ie el would put up :5,000,000. of cele in e'er York with the
Bankers Trust eomeane he °GeV arrant" the cre6it; that eorcan, Harees Oompany
and. tho American exprese Company would cash all emeriean letters of oreeit and the
disposition of the gold could later be arranged In effecting reimbursements We
carried out that arreneeeent. The gold was faeXed in our vault ane the express Comelny got their directions and there the gold lay for seem weeks. I kept urging er.
nreen to have a more definite understanding but he said that it was Impossible as
conditions in Paris were so chaotic, that he coeldn't work anything out with his
earls office. Later he edvise me and wrote me a. letter that ee need no longer
retain the gold and that be would arrenee for reimbureenent through regular channels.

I told elm I dien't teink that was ealr; thet the deal undoubteele involved a lerge
profit - possibly 75,1010e; we had at up the gold and should got our eller& of the
profit. I sugcestee a joint aeoeunt. That, at first, he acceptee. Later he with-

drew and er.erown and I wore appointee a Committee to handle the mettor. We agreed to
accept a check for 15,000., in settlement of our share of the profit for furalehing

the cold. er.Brawn first accepted this and I was embarrassed at his doing so, because It dlawt strike me As fair, so I went to ermeorgan and told him I didn't think
It was quite right and that we should have one-halt of the profit on actment of the
joint nereenement. ee thee told ee he had no idea how much of the credit had been
used for trevelors cheques. Re didn't think ,I.,000,000. Reimbursement was being
princieally effected in eonden;to a moderate extent only in Nee7 York; their Paris
office was badly disorganizee, part of it was in Bordeaux; they got no account of




F.

.

_7_

the London collectiona. so d]dn't kalow the amounts tMt haA gone thron* and he
did not think we could expect over to have a settlement of the account as a whole.
or considerable debate, all of which report to a =patine of our New York
Oommittee on Wednesday, the Oommittee decided to accept the q5,000., and upon
roceit of a letter frol.a Korunn (;omoany, relievinE us of any liabilities for
reimbarsement or expenses, the ',a.nkers Trust Uompany is to distribute the
3,000,000. amone tho contributors.. 7e may have to pa7 &bout :7,5,000. Irterest,
but Lthin k we Oliitcharvatk them about 10,000. for the work and of course the
preiZ4o-on the account will bo sufficient to take care of it. I have no idea

how aaoh expense the Stmdon Uommittee has incurred. IVish you would write me

about that as soon as possible.

.aris en.e. )t the account was. most unsatlsfactorily handlsd. because we were alwiqs looking infammatIon. This has been

a lesson and In the future 14' a job of this sort is to be done T think yon
and the other boys at the Bankers had better undertake it yourselves without
partners.




.

Gorman Banks.- I have been trenendouely interested In all your remarks

about thet situation, mentioned first on eage 5 of yours of the 21st, ane h:ve
just had my first talk with Gibson yesterday. Expect to eve a lot more of

him.

german Bills.- schmia i orking dfligently on these. I cabled $1111
regardine th. amount of them, as our committee is ooneidering weether we may
not hav to have that figure in conneetion with ntgotiations, should we be
brought in t uch with Paiah.

Germea 7arcs- Gibson says he thinks the profit will be $17,000 or
$18,00a on the account, which le simply delloious.
I note all that you say in yours of September 28th on this subject.
I think from your letter thet :IN. Schmid will be able to maky3 the varous
entiqes that may be needed here. Once more lot re express my chagrin and dieappointment at the at
taken by Ar. Yigham, and it atems to me that the
time has now arrived for you to inform Ar.igham that the gold fund belones to
the Amerielan banxi5 end that the instructione we send to you must be carried out.
If you feel that the situation can be bettor handled by having the Bankers Trust
Company take over the ,whole aecount, do not hesitate to cable me and I am mire
that the los Yoric Committee will give la whatever authority is required. af
course the prefits would be divided jest ae though handled in committee, but
weuld naturally want to deal with the London City and Aidland Bank and have you
authorized to do everything without eaving any committee to deal with in London.
Your letter isn't very clear about the relation of th,- government transaction
to the travelers' fund account. I am amazed at the suggestion cablod by aecretary Bryan in regard to a 10% discount. It aeons as though this must eave been
suggested to him ba someone else. Just who I collect imagine. Tbp cheques refer-fed to in your letter,by the way, have all come through by the same nail from
the tscretary of the London Committee and 57ehmi8 is now at work on them. 7e are

going to have a lot of trouble maaine tie collection at a fair rate, as marks

are at a great discount now (I understand they were quoted yesterdey at 92e1/2)
but we will do the best 70 can. I have told 7,4ebnid to pat it up to We :omeittee.
I an sorry the collection Can't be made on the other side, for then the question

of rate would not be so difficult to deal with as here, but understane that there
is undoubtedly a good reason for the method followed.

Arbitrations.- Chose are very difficult in this market. E,chmld will
write you separately about It.
akigar ;Tills.- Cheque received and !.-3ohmid will fix it up.
rrY & 00,-12451W.- 7ehmid is wt tending to this.
2-nain.-

I have reed what you say about Ara4oney's letter, ,es eell as

the letter, with great interest. These aattere have all got to be considered

with regard to the future policy of tee axneign :epartment.
Your lettee to lden raise a question in my mind that as

exceedingly important. If re aece:pt credit s in London for account of 'the Bank of
Spain, and segregate gold at an agreed value in our vaults in New Yor4 we must

take the geld out of our gold reserve and as ,11 draw against the storing credit

we will get payment in New Yore in Clearing louse funds anu not in gold.




should have written you about that before but the following on the row York situation will explain the possible dancer of this arrangement.

There has been issued in this country a total of t350,000,000.
eldrich-Vreeland currency, which cannot be distinguished on its face from ordinary
national bank notes. The New York Clearing House has issued an unknown amount of
Clearing House certificates. The net amount between institutions is something over
$50,000,000. I imagine the gross amount may run up as high as ,l50,000,000., or
even more, but that, of course, Is known only to the Clearing House Committee
All Clearine House balances are being settled in Aldrich-Vreeland notes, where such
can be had and failing that in Clearing House certificates, Which, of course, bear
6% interest. Other cities have also issued Clearing House certificates in greater
or less amount and as a matter of fact 1 have no doubt that the country as a thole
today has inflated its oreeit instruments well over 500,000,0000 If we should accept London payments of the oharacter sugeested, against segregation of gold in our
oen vaults, we would simply be earmarking our reserves for the Bank of Spain and how
we would ultimately cote out would be a serious question. That operation carried toe

far would clean all of our gold out of our vaults. Of course, I realize that national
bank notes are permitted for a portion of our reserve.

Under the new State law, out of the 15% cash reserve required, one-half
must be gold. If the Bank' of Spain should call on the Trust Company to ship any part
of that gold and we had made an arrangement which oblieetee us to do so, the eccieloefreeee
of our Clearine House would be on our back in no time, so I am a little dubious, as
you can imagine, about the feasibility or the plan which you suggested to Holden,

Hugo Schmidt. - Schmidt's letter is rather pathetic, but of course, very
pleasing. I may say agein what our MreSchmid has doubtlese written you frequently,
tbet the Deutsch Bank seems disposed to give us a large amount of their dollar business. If you have occasion to write Hugo Schmidt I wish you would give him my cordiae
regerds end explain to him why I am quitting the Trust Company.
Federal Reserve Bank. - There is going to be tremendous pressure to get
the Federal Reserve Beek system organize at once and in some ways I think it most
desirable. Pierre Jay has been appointed Federal Reserve agent; Starrek, the bank
examiner, Deputy Reserve eeent, and the third. class "C" director is George Foster
Peabody, formerly of Spencer,Trask & Company. The class ee" directors are eoodward,
of the Hanover; Tremen of Ithaca and Locke of Buffalo. The class eB" directors are
William B. Thompson; Henry R. Tome and Leslie R. Palmer. On the whole, the Board
is a good one. We have temporary offices at 27 Pine Street end just as
I
pull out all the ga-roots I am going to get down to work with my coatloon as reoff. I
fer to the matter in this letter particularly because I eent your oeinion on one
subject, and on receipt of this letter would like a brief cable from you indicating
whether you do or do not agree with my views.
With sterling exchanee at 4.97, gold is really at a premiem of abent 1 1/2%.
It isn't reflected In this market directly because there is no currency famine, and
while gold has been hoarded to some extent there is no reel demand for gold for domestic payments. eefUsal to export gold, however, has put a premium on gold for
international payments and that raises this question which gives me a ewe deal-of
concern. How can the Federal Reserve Bank of New York start business; take payment
of its capital and deposits In gold; commence discount operations; Issue ponsibly
a large volume ef notes and expect to continue specie payments 5n the redemption

Its notes, while this premium on gold exists? i.e., Will not that bank be in exactly
the seek° or a worse position than all the banks in New eork, and simply have to refuse




P. I. K.

-10-

to pay gold and if it does that will it not be thoroughly discredited before it
starts? One may answer that the bank can pay in legal tender. So It can - if it
has the legal tender, but that simply will transfer the dem,nd to the sub-treasury
if it once starts. Of course, the bank ia in no worse position than any other bank
is ngr, nor is the treasury in any worse position than It is now in case these de-

mands are made, but there is this distinotion, that we are starting a now bank system with very great expectations of its success and is It going to be good policy
to have it in a position where it may have to susoend specie payments shortly after
it opens its doors? This matter has given so good deal of concern and I am going.
to take it up with ',;arburg, making that a basis of argument with others to have our
government take a different stand in handling the cotton situation. This is what
I want your opinion on just an promptly as possible.

This is a pretty long letter, and as I um hoping to send it to you by
Mrs. 3trong, it will give Ar.Lowis Tuesday to prepare it 1-:3 1:rs.3trong sails at
one o'cloCk Wednesday morning on the "Lusitania". Don't feel an account of my
resignation that you are not to oontinne writing me about these matters. Keep it
going as heretofore and I will be"on the job".
With my best, as ever,




Faithfully yours,

j

r-N

(3rr

,

SO D4

Ill"
December 16th, 19144

Deer Fred:

I am going to ask you to prepare for me to stetemehts in
zuch form that I on have them copied Out in large figures on a sheet
of paper for use as I described to you ycstordby.

2he first statement in a staple maculation of the cost of
-Ionverting Amorloan gold coin into oterlinv exthnga by :;hipping

emloo to Ottawa, istur the rata at vbich the 3rnk of "Ingland is no:7
buying wgles as

basis of onloulation.

In the aeoond statement, I=ant tO show jut how the value
of AmerAcan eurslf:,$ is converted into the vane of Elnglish sovereigns,

based upon the prioe of 77n. NI. per excle paid by lay by tho junk
of gtIC11141 for standard br gold.

This, you vAll understand, noadtJ

to be stated in a very simoie w, iu order to filuotrate jwit. mivIt
the proaess is with 74iioh wt) aro all familiar, of arr17toe 4t. the
value in eterling 0: Amorioan oaglm; -2,;:mon it is necesoary to pay or
foroiam indebtedness by that method rathor them by pure:awes of for-

eign bills.
Very truly youi-o,

Y'red I. Kant,
2rust Catnany,
Vow York City.

B$Jr/V03.4




,Asoember 13th, 1914.

Dear Fred:

v..m going to ask you to prepare for me two statements in

form that I can have them c4ded out in large figures on a sheet

of paper for tire asI escribed to yvu yestordy.
The first stiitement is

samplo ccaculation of the cost of

converting Americn !sold coin into sterling exchange by shipping

eagles to Otto;, using the rate at nhich the 3ank of England is now
buying eagles as a basis of calculation.
In the second statemont, I =ant to show just bon the value
of American eagles la converted into th3 valuo of :Aglish sovereians,
based upon tha price of 77s. 9d. per ounce paid by law by the Bank
of

gland for sta0;4ard bar 3o1d.

4is, you

understnd, needs

to be stated in a very sWle wv in order to illustr;,.te just nhat
the process is with vihich vm are all familiar, of arriving at the
value in sterling of American eagles nhon it is necessary to pay our
foreign indebtedness by that method rather than by purehse of for-

eign bills.
Very truly yours.,

-T. Fred I. Kent,
)ace rs Trust orn anar,

Jew York City.
156.1r/V014.4



a DEPT.
DE

1914

FEDEpiL RESR




13ENJ. STRONG, Jr.
P8RSOXAL.

BANK

December 21, 1914.

Can you by any T)ossibility handle the

Warburg is anxious to see it

ono/osed matter?

taken up at once, and if for any re.,-on you do

not feel able to t4te hold of it, won't you
please return the enclosed papors, to I cen
submit it elsewhere?

t

Very truly yours,

Governr.

Ur. Fred I. ent,

Bankers Trust Company,
New York Olty.
3.3Jr/VC14-2




101.e.v,p-V9'01;efr,
December 24th, 1914.

Your favor of December 21st enclosing

statements received.
for some.

Please accept my thanks

I hope to see you in the very near

future when there will be opportunity to 1-4.2k
this 2.7.sit t er over with you,.

L7incere1y yours,

Fred 1.
Bankers 'trust Corroan,Y.
New York City.
VOtri




Dear MT. 'Kent:

I am leaving this afternoon for
Washington, but early next mok I want you
and Hempel to take lunohoon with me to dis-

ouss the acooptanoo matter.

Very truly yours,

Fred I.

Bankers .i.ras ttinpany,
Now York Oity.
BOJr/VOM




January 19th, 19150

Dear Mr. Kent:

I am leaving this afternoon for Washing.ton,.but early next week I want you and. Hemphill to

take lundheon with me to discuss the acceptance mat-

ter.

How will :onday or Tuesday suit you?

Very truly yours,

Fred I. Kentajeq.,

Bankers Trust Company,
How York City.

Dictated by Mr. Strong

but signed in his absenee.
vo




April 6th
1 9 1 5.

Dear Fred:

There must be some mistake about the circular referred

to in yours of :larch 30th, as I never heard of such a circular
and doubt if the Federal Reserve Board would have occasion to
make a call for remittances of any kind from member banks Won't

you try and get a copy of the circular so that I can ';;rite them

a little more intelligently about it, if the surmise prove., to be
correct?
Let me thank you very Cordially for your assistance in
the acceptance matter.

This is my first opportunity to do so

as I loft taan shortly Pfter our last meeting,
Sincerely yours,

Fred I. ',Cent. ESQ.,
Bankers
s - mpany,
New York City.
BS Jr/VCM




May 3rd,

1915*

My dear Fred:

Thank you for yours of the 30th*

All that you say is understood and

fully appreciated, and in due tine I hope that
we may be able to deterndne upon a policy that

will be of value, but at the same time, will not

zive rise to friction*
Please let me know, if any further
gestians Oecur to you*

Sincerely yours,

jed If_Akent, Esq.,
Vice Pre:Men; Bankers Trust Company,
16 -all Street, New York City.
BS Jr/V0:4,10

July 10, 1915,

Dear Fred:

I am much indebted to you for your letter
like to answer it full if time permitted.

gether in the near frturP and discuss
ever, that I think

that your fears

these

of July 8th, which I would

Possibly we can have a

Let me say briefly, how-

matters.

are no loss

meeting to-

than mine, but in some respects

they may be greater.

The real crisis in exchange is likely to occur this fall unless measures are taken to improve the

situation.

This will

be due, unless I am mis-

taken, to the following factors:
1,

An earlier cotton movement than last year.

2..

A delayed

grain movement.

3.

Commencement of payments for actual deliveries of war munitions,
on which contracts cash payments have so far been made only,

4*

The absence of remittances for foreign travelers,

5.

Exhaustion of the Bank of England reserve held in Canada.

6,

Continued anti further reductions of our

imports.

It is generally assumed that these factors will be offset by Foreign Government borrowings in our

markets.

Re-sales to us of our securities.
Moderate shipments of gold.
Absence of foreign investments in our securities,
Direct cornercial and financial borrowings between banks, corporations and individuals.

All of these factors combined, as you state, will hardly furnish conk
plete offset to our export balances.



I do not anticipate huge sales of our

Fred. I. Kent, Esq.,

7/10/15

securities in this country, because I believe that foreigners are Showing a
disposition to hoard our securities upon the same basis and eor the same

reasons that they hoard gold when it is at a prealum;

in other words, the

existence of a premium on American securities due to the premium on dollar

exchange, will not necessarily induce sales of our securities by that class
of people who are sufficiently timid be board gold when it is at a high premium.

Now the question is: How can this rata:Alen be met?
1*

I think it will be partly mot by England relinguishing a considerable amount of her commercial credits to the banks of
this country, if we are smart enongh to develop the machinery
for handling the business.

2.

I think when the real crisis arises it may be felled necessary
for foreign governments to place a discriminating income tax
on American securities.

And this I say dolefully. It will be met by restrictions upon
our exports due to their increasing met as reflected in the

price of exchange; in other eords, the failures of the lastfive

factors to offset our trade balance will cause trade to lanquieh.

This is a gloomy outlook, but I do not expect to see the situation

arise until next year, and, of course, only in case the war continues.
To sum up the whole story, a break down in international exchange

will injure us more oemmercially than it will finencially.

These are in-

teresting and exciting days in which each problem must beemet as it arises.

Of our small part in affairs, the most encouraging feature of the situation is
that the Federal Reserve ''Iesteum has shoee its ability to accumulate .gold. Did

you know that all of the Reserve banks together hold about :360,000,000 of gold,

of Which nearly one half is held by our bank? Personally, I regard it as deposited with us in trust until the tide turns when we probably will have to let
some part of it go to Europe.




Fred. I. Kent, Esq.,

I bad not intended to write you such a long letter.

7/10/15

The balance will

continued verbally.

With best regards, ane wishing you a fine holiday, I no,
Sincerely yours,

Fred I, Kent, Esq.,

Hartsdale, New York,

BS Jr/RAN




October 26th, 1915.
MY dear Fred:

The enclosed comes to me as a very great surprise.

If the Navy

Department permits its officers to collect semey tor services of this sort,

I feel very sorry indeed for the service.

There really is nothing that I can do at this end of the line to
get this matter straightened out. It was an arrangement, brought about
as you know, by a serious emergency in Which the goverallent and the bank-

ers joined hands in an effort to relieve travellers abroad from great dis-

tress. My suggestion is, that you have the law investigated and send me
a brief indicating just what rights, if any Captain Decker has. If it Is
a matter of discretion resting with the Navy Department, I will be glad to

see Secretary Daniels about it.
There is no doubt that Captain Decker did perform a great service

for us, and although it has possibly been overlooked too long to do any-

thing now, it might be well to consider whether he is not entitled to some
evidence of our appreciation.

Of course, he was absent from this country

nearly a year while the Tennessee was in Eastern waters and it would have

been very difficult to arrange any suitable recognition of his services on
that account.

After you have secure( some statement in regard to the law, I will
be very glad to assist in any way posrible in Washington.

Fred I. Kent, Esq.,
Bankers Trust Company,
New York City.



Very truly yours,

-




November 23rd, 1915.

Dem. Fred:

mn returning herein the correspondence wIth Captain Decker, hevin made a verbal

rei,ort yeitordny on the ..71tter to ?tr. Roberts
Walker.

Very truly yours,

Tired J.

Bk.to-MP:any,
16
VCN

11 Street, No York City,

January 14th, 1916.

Dear Fred:

I an writing to ask if you will have rce.dy for
me on about January 26th, E200 in Umiak notes and English

gold with some French gold, if you can get it for use in

Also, a letter of credit
for £1,000 and :2,000 of !travelers checks.
I will sign

case I cannot get it in London.

the usual agreements so that drXts and travelers Checks
can be Charged to mw account as they come through.

Very truly yours,

Fr,A. I. Kent, Esq.,
Banker6 Trust Company,

16 Wall Street,
New York City.




BS Jr/VCM




January 16th, 1916.

Dear Fred;

Thank yon very much for :Tour o of the 17th

and for the st,itament in rognrd to the London account
and for the memorandum on French terms, pll of which

is exactly what Iwante.
Zincerely yours,

Prod I. sent,

Cre The Bankers Trust CowElay,

New York City.

35 Jr/Vatd




Ritz Hotel,
Piccadilly,
TELEGRAMOADDRESS

London,W.

W,OTEL-1.1.,LONDON

March 11th, 1916
Dear Prod:

I hate to trouble cali about bothersome little things, but as it happens, I am
exceedingly keen to get a complete collection,
if it is possible, of all Belgium war emergency
currency, one of each denomination, issued in
the various cities, towns, etc., under the
military government since the war broke out.
Of course, I realize that this will entail
considerable trouble, and I am wondering if
through your channels you could find it possible to employ somebody to make up this
collection, and have it forwarded to me along

with a bill for the cost.

If you can put me

in touch with the proper party I shall be

glad to correspond direct.
After I have oomyleted .this eollection
along with a number of other matters I am work-

ing on, I shall probably turn it' all o.hr to
the New York Public Library.

Thanking you in anticipation, I am,

Paithfully yours,




ay 31et, 1916.

Dear

The impression made by your note and your long
letter in regard to the gold matter is that you should take
better care of yourself.

You are working too hard and

somebody should see that you cut it out.

It seems to me your letter covers the ground
very fully and I am very grateful to you for your help.
Later on, I will undoubtedly want some more advise.
Again, please take care of yourself.
iaithfully yours,

Fred. I. Kent, Esq..,
Care The Bankers Trust Compan:,
16 Wall Street, New York City.

BS jr/VCM




Estes Park, Colo., July 20, 1916.

r. ?red I. Kent, V. P.,

Bankers Trust Co.,

16 .all St.,

!Jew York City,

Dear Prod:

Enclosed is a form of applicat Ii for 500
pounds
to remit the Certificate, for -wh eh I a going to ask you
purchase price
, 10 shillings,
together with the applicati
to Mr.
il P. Blackott,
Treasury Chambers, Whiteh
v., Lon
the equivalent in dolla$ o m. tcoount
Eng., charging
of the amount.
d advising me
war 6avings

You
is a little may °onside
matjet.-e se

an odd

investment, but it
ent in discharge of obligations for some/
hat
sending forw4'r4 the s cri14-ackett did me abroad. In
on would you mind giving
instructionsilo have t e cer ificate sent to
placed with 0' other squrities for safe
you and
keeping.
his
country and its beauty
sogiewhNi mitigatethe
hardship of banishment. and charm
youlabAt it when I am permitted
Jill write
more letter writing.
best to t boys.
ncerely yours,

Enc

November 28t0, 1916.

Dear Fred:

It was a treat to get your lett of the 22nd.
There is a great deal that I coult write you about the
matter you mentioned, and of course meny ot rs, but it is much
better that I should not. Let
, that you and
your associates rather disregarded -the policy vh
thought
was fairly *ell 'understood
to those foreign credits
in assuming that the res
uld or would not buy a
.giyeadencription of bills.
circular had not contained
those two paragraphs
you
id have found much less dif-

ficulty in handl'
You a

ane handlirw, these matters

ad up on their own bills. As
I's said ti
lac
you arrange one of these credits
should stipulate, first, that the bills should be marketed
second, that
drawer must take the risk of the market
rate
This is as
h as 1 feel at liberty to write you on this
sub jec
ca
tell you how disappointed I am to be in exile out here when matters of this sort should be freely discussed.
Barring an occasional setback, I am getting along pretty
well, better in fact, than T. had expected.
4armest regards and many thanks for your letter.
Faithfully yours,
should not perm

1.

Fred I. Kent

Bankers _rust Company,
New York City.




December 8th, 1916.
Dear :Fred;

Thank you very warmly for your lett

of December 4th.

It is just as well that we should re rve these various
think you know
international matters for personal
racter and et
h of my
and have had ample evidence of th
own personal visits without my

matter did not develop
haVe had it, but I am in-

I am disappointed

altogether as you would have l'

pass into history with
dined to prophecy th
out serious interf ence with buesa, hich must'be done so
long as present co
The war

ly held

mine in theaTrust Department.
ner se
I um delighted to hear of the success of your new home

which

pleases

e can be placed and permanent-

more than a

you person

What
eve the pleasumof visiting.
hing else, however, is the feeling that

regrets about coming to New York and that

both in association and in material ways it has paid.
Warmest regard L to you and the others at the office.
Sincerely yours,

Yred I. Kent, Esq.,
Bankers Trust Company,
16 Van Street,
New York City.
BS/VCM



Decembcr 12th, 1916.

Dear Fred:

I have just received a leti,er from young protegee
of mine who is a nurse in one of the
tale in Flanders, asking if 1 will send her some money for ih
ristmas
celebration in the hospital.
has been so delayed
in the mails that 1 cannot
to her unless you can
arrange to cable it and 1 am
ask if you will transfer Frs. 600 by cable
reaux, through !organ,
Harjes & Co., in p
r letter of credit and
gets her mail, et
11 known in their office,
fo your cable can
uesting them to pay her
6CIA
irs. 600
will know from whom it coes.
The cost of the rarcs and the cable can be charred
E-

to m

count and I wi

ask you to advise me of Lie amount.

Best regard

thfully yours,

Fred I. Kent, Esq.,
Care Banivrs Trust Company,
16 Wall Street,
New York City.
BSPNW




Denver, Colorado,

January 4, 1917.

Dear Fred;

I am writing separately to reply to yo t

of the 21st which

came during my absence in the mountains over tilt 'olidays.

and ar. Hulburt are facing = very se, .us and exceedingly

You

important situation Which if treated in a broad ml

out for the good of this country
Who bring about the adhesion
System.

Frankly, the diffic

institutions want altogether too

way can be worked

the everlastin:

ory of those

institutions to the Rescpme

the fact that many of the State
and that most of them are indif-

ferent.
You must

to look at this
not going in
special

'°se of inqu

to su

your views t

used.

.ything in my p

pave had the opportunity

es such as I have had.

etter, but am writing for the
her you and Mr. Hulburt would care

privately for comment before they are

r to promote your work will be gratefully

contrib

Very sincerely yours,

Fred I. Kent, Esq.,

Bankers Trust Co.
New York City.

BS/CC




I am

Denver, Colorado,
January 16, 1917.

Dear Fred:
Many thfirl,zs for your letter of January llt1

which I have read with care.

nd the enclosures

I anpreciate your co

in letting me examine them prior to the

pu.

esy and confidence

catio

Generally speaking, I thinkrt of the inq
to bring out specific points of

Should be

in such a way that con-

structive suggestions of value

ed of by your committee in

dealing with the Reserve Board.

standpoint, it seems

best of all

that the olestions are
too complicated and t

long, for aft

self into a few fun

ntal points of

of minor importance

be ignored a

The

& 8,

.

criticism

h I will

refer

Federalerve Balvzs now

the

to me

they are not

all t is question resolves itfference and most of the others
is time.

questions applies to numbers

o as though they were one question.

The

e nearly 4700,000,000 of deposits and they

have inve

ightly less than 4200,000,000.

vested is suf

all expenses and make

This sum in-

a beginning in cleaning

up accrued dividends, but the banks as a whole are not yet earning the
full 6;:, on,56,000,000

of paid-in capital.

should we, therefore, under-

take to pay 2% interest say on nearly $700,000,000 of

deposits, it would

require additional net earnings of between 0.3,000,000 and $14,000,000

per

annum and, incidentally, would involve a very large increase in expenses.
At the average rate of earnings on all invested money, i would estimate
that it would necessitate increasing the investment accounts of all the



2.

To - Mr.

Kent.

January 16, 1917.

Reserve 3anks a total of

between

500,000,000 and 4600,000,000 as the

earnings on all investments average very little, if anything, in
This makes no allowance for largely incre

of 370.

other words, it would necessitate investing more

ad expenses.

excess
In

all of our reserves,

Which could only be accomolished by an enormous e: .sion of the note issue for the purpose both of acenmulatin

and of extending

credits. It would be the destruction of the system, wo
expansion of tnerebedented magnit
tection which

form

the banks of the

destroy the
try ha

reserves of the Reserve
would

in immense a

but with the corres
quirements and

with

tion

wit

pro-

obtain through the

overlooked the fact that we
onal deposi

ing increase in

additional e

recognize

erest

Reserve .:e

reserve

eretofore enjoyed in the

reafter

of their own cash reserves a

cad to an

tate institutions join,

ur liabilities and reserve

re-

se involved, I think you must

osits is out of the question for

It bears directly upon the next question as co competiber banks.

deavored

avoid all co ".

necessary

invo

know with what scrupulous care we have en-

can pay our way.

ition with our members aside from the trifling
in making our moderate investments so

that we

The machinery of the system has been developed along

lines of latch I have advised you from time to tine, particularly designed
te

avoid reckless and extravagant

dangers end dissatisfaction.

competition in rates, aith all consequent

If we should be required to allow interest

on deposits, tie necessity for increased earnings would drive us

into

com-

netition with member banks to such an extent that the interest paid them




3.

To - Mr. Kent.

January 16, 1917.

would be a very small compensation for their general loss of earnings,
which would be reduced by our activities.

The suggestion of these two

points in the questions submitted I believe will cause more trouble,

misunderstanding and dissatisfaction than almost anything else that

could be

introduced into the subject.

I am writing you frankly and, of
if it is not too late, $ou and your ass

of an amendment to the circular
Should we be forced to
wise be forced into competi

ia

urse, confiden

tesmay consid

interes

n with our man

Very since

BS/CC




the wisdom

this respect.

we would like,

and the consequences

would be disastrous.

Fred I. Kent, Esq.,
Bankers Trust Co.,
New Yop City.

/y so that

yours,

Denver, Colorado,
J:inuary 16, 1917.
CaNFID=TIAL.

Dear 7red:

It has been a

at relief to be able to

alt you in the
legram just re-

matter of our foreign correspondent rel
ceived fro'n the office indicates that you have been ov
and made soma valuable suggesti

Ii

of them you will realize was a

he papers

as relieved to

ye, one

id never have been made

and for Which I was responsible.

an will, no doubt, show you

my letter explaining the

ach point covered by his

telegram.

Of course thtter is most
reason that i asked

scrupuously,epssuld

1 an writ

r it with you, knowing haw

rd the

dictate to

cy of the Whole arrangement.

this particularly to than::: you for your help, which has

been mot valuable, and t
to drop

idential and it was for that

you also if you would be able sane day

Mr. Treman's oj Ce ask for Mrs. aci,aren, my secretary, and
any s

tions or criticism in regard to the practical

operation of the arrangement Which occur to you and generally express

your views. of. the Whole scheme; it will help me a great deal.
With best regards and again many thanks, I am,
Sincerely -yours,

Fred 1. ,ent, Leg.,

Bankers Trust Co.,
16 Wall St., New York City.
BSt;C




Denver, Colorado,
Jenuary 16, 1917.

Dear 'red:

It has been a great relief to be able to

Suit you in the

matter of our foreign correspondent rdl

legram just re-

ceived froel the office indicates that you have been ov
and made some valuable saggeeti

of them you will realize was a
and for Which I was reseoneible.

my letter explaining'the

\Ire relieved to

he papers
ve

one

d never have been made

will, no doubt, show you

ach point covered by his

telegram.

Of course t

tter is most c.. idential and it was for that

reason that I aaezed

r it with you, knowing how

scrupuously

I am wri
been mo

y of the Whole arrangement.

this particularly to thane: you for your help, which has
valuable, and t
you else if you would be able soothe day

to drop

dictate to

Ice, as for Lis. 2cLaren, my secretary, and
tions or criticism in regard to the practical

operation of the arrangement Which occur to you and generally express
your views of the Whole scheme; it will help me a great deal.

With best regards and again many thanks, I

Sincerele yours,

Fred I. Zent,

Bankers Trust Co.,
16 ";;a11 St., New York City.
BS/CC



am,

Denver, Colorado,
January 27, 1917.

Dear Fred:

t the questionaire.

I am grateful to you for yours of th

intention to

he committe

It alters my oninion to learn that

these ren/i

make a digest and recommendation be
payment of interest on balances carrie

with the Reserv

, because the

Banks is not

stion, even for

only impossible, but I regard

discussion, so I hope that

who understand these mat-

ters will take a broad

that proposition very

positively.

is that you keen in close

My suggestion
touch with our office and

ar as the

ess sake abandon this rigid practice

cerned, if any are a

bills.

of having acceptors

alon

s present line,

discrimi

If that is

se bills or those institutious which are governed
Arrange

it so that the bills are really

fewer difficulties in yourIdealings with us.
encounter
Yours very truly,

Fred I. Kent, Esq.,
Bankers Trust Co.,
New York City.
13S/CC




allowed to develop

11 find that we must develop some means of

by this peru c ous arrangement.
sold and you

credits themselves are con-

Denver, Colorado,
Jamuary 27, 1917.

Dear Fred:

Thanks for yours of the 23d.

your opinion about the foreign ar

in asking

ta was to get

view

as to whether it is as I belie

tory start in an im,

portant relationship which

tage not only to our

system, but to the country.
experience, but that
kind and, as you

Fred I. Kent, Esq.*
Banks
Trust Co.,
New Yo
City.
3S/CC




perfection depends upon

developments of this

tooted.

ft
Denver, Colorado,
February 21, 1917.
'ERSONAL.
,11;.-11)

1

c
Dear Prod:

11*

Thank you for yours of the 5th and the enc.

I would a

little prefer not to appear as having approved or

sapproved of the

questions to be submitted, for I think that would

ually do harm.

On the other hand, you know my desire
fore, I wrote

frankly such

suggestions as occurred to

argumentative replies will do no

there-

e agree that

the committee is determined

to pursue the inquiry on the 1'

by the questions, I think

they are as well prepared as cou

er the circumstances to insure

a fair presentation.

t-to, as you know, is a dis-

It gives unreasonable

cussion of the paymen

opportunities

tter and,

sAltnalgri.

to mak

men

ants-thich may anneal to unreason-

able people.
to get the small State Banks

of less

425,000 capital into the System;

weakness

They can get su

larger S

e Banks

take

4

help as they
ship.

it

might

might prove a source of
need

indirectly, if the

What we need is the membership of

rust Companiat and you fellows
about if you go at
evidence of

the

reasonable in

it in

thii right way,

their requirements, so

Fred I. Kent, Esq.,
16 Wall St.,
New York City.




you have already had plenty of

desire of the Whole system, from top to bottom, to be

Sincerely

BS/CC

prd

can bring that

God-speed to your efforts.

yours,

Denver, Colorado,

April 4, 1917.

Dear Fred:

Cards announcing Warner's marriage have just arrived and I

am

writing to wish the boy and his bride every happiness and success.
Don't you want him to become a Federal Reserve Banker? I am sure

we have a job for him if he would care to take a try at it and his own

ability will be sure to land him at the ton.
Very sincerely yours,

Fred I. Kent, ,Aq.,

Bankers -Mist Co.,
New York City.




(

Denver, Colorado,
April 1G, 1917.

Dear Fred:

Many thanks for yours of the 12th.

I am

We CfmnOt have Warner at the Reserve Bank.

field and one of vastly

really disappointed

that

Of course it is a much larger

greater importance than the one he is now working

in, but naturally may not prove to be as profitable In

dollars and cents.

Just the same, I would like to have him and know, as you must realize,
that he would enjoy the work.

About a man for the Foreign Department, Deans has again been suggested, but I presume would again decline.

Arnold of the

First of Chicago

was also suggested but I judge is not the type of man we want.

Brady of the National City bank, who is your old man. but they seemed to
think at

the office

that he is unobtainable.

Someone also

suggested Hecht

of the Hibernia, apacerning whose qualifications I am doubtful.
know more

You may

than I do.

It is going to be hard to get just the right man and I alt. mighty

grateful to you for

suggestions. Please keep this in
Very sincerely yours,

Kent, Esq.,
Bankers Trust Co.,
New York City.
F. I

BS/CC




close confidence.

Denver, Colorado,

April 22, 1917.
Dear Fred:

Thank you for yours of the 17th. I shall read that address of

yours with crest interest.
;.nglish banks, of course, at times have purchased their own bills.
It iv not the custom, however, and is not generally regarded as good business, the acceptance transactions then becoming a loan of money instead of

a loan of credit.
Vy criticism of our own bill market is that the custom is almost

universal for acceeters to buy their awn bills, whereas it should be only
occasional. 7:hen snecla/ circumstances justified their doing so.

will rritc you further lion l'have studied the address.
I am gettin, a golf game g)ing again and hope to have a crack at you
tlhan I get back.

Best regards,'"
Faithfully yours,

Fred I Kent, Esq.,
Bankers Trust Co.,

Now York City.




Denver, Colorado,

July 17, 1917.
Dear Fred:

The enclosed letters are intended as an =suer to MOnsieur

Pallain's last letter, of vhish unfortunately I have no copy with ms, emd

this letter and the enclosures I will asIc you to discuss with the officers
of the bank at the first opportunity, before they are reeiled. They should
be sent in duplicate by separate steamers.
My letter to Monsieur 7a1 lain expiates itself and if you and the

others find it satisfactory, I suegest that the first page be

-copied

on Federal Reserve Bank paper.

The memeraeene endloeed is the one you prepared ani which Ihave

chaired soreWeet in pencil, bat have not had it re-copied hero as further
changes mgy seem desirable after youhave read it. I egegest that this be
put in the farm of a memorandum to be enclosed with my letter. under the
following headieg - ielemorandum to the eovernor of the Bank of France from
the Governor of the Felera1 Reserve Bank of New Yank, "dated. blamk.

am also enclosieg am earlier memormadum daich you prepared

which you yew wish to refer to in connection with this correepondence.

-maid also suegestgoieg- over this with Monsieur de Nettlize,
so that he may be conversant with the correspondence eel able binandf to
write Monsieur Pallaine

I have ee,gested the opening of the account in

dollars so that we might at once teen the amointment, which could be
published, and then leave us more time to correspond in regard to the. more
exteeded arrangements.




/ hope this can be sent off promptly as I feel most

14.
Bent.

July 17, 1917.

chargrinol at the unfortunate delay.
With best rsgards to you and nsny thanks,
Sincerely yours,

Fred I. Kent, Esq.,
--7mrs Trust Co.,
York City..

BS/CC




Denver, Colorado,

July 17, 1917.

Dear Prod:

J:hant you very much for your letter of the 13th.
The Bank of _Ling .nd matter and tho change you mnac in my

lotte7 are al

*

017 satisfactory. Thor° I , howover, one
,rd to the Fold. coin, . ,hion I think I mentioned
in my mono :ndum to you, that nay need clearing up.
there
a profit on the fference bctucen the riindmau
7O
oar-narked and the actura
pecfied igl
-7ho will i,:et the 73onefit
weiTht or the
en !'or the 8pr,cifiof it? I cauno-,
c4t the decinal,
cation cf mtnImun
but precune they have co nV .ean fezi toib1:- har4n to
Co win the -77.1u0 of the
Your repcl't cf conferenc;o,,

t. c Le

h the rolvosent

Lves

of the Italian bank is mut iyiterecti
the line that I had in mind ar bein&

and. :ollows e :ctly
wise ocurs
I do
cs with
not coo haw that bank can exDoct RS to do

then that would bc of any vUue to then or to RO under present
conditions; unlocs we sheuld undertake to do a commercial emdhange business which, as you know, we have no expectation of
doing. I am moct anxious, however, to cont those gentlemen
back home perioctly happy and satisfied vitI. the result of
their visit, and with a thorou.Th und.crstanding of our position.



:r. Kent.

July 17, 1917.

Veti, Counselor of the Italian 2,mbas3y in 'Uashingten, informed me, much to in surprise, that these gentlemen had come

to the 'United States solely for the puree of negotiating
with us, and I fear they will ho obliged to return home "without the bacon
wax re:L_tio

cohiBOMG moot unfortunate in view of our

an

I am wondering whether we cannot salve

fooling by euggesting to them that the Banco
d'italia. ,ht opz: dollar account with us', simply for the
This neuld enable us
purnoso
770 Board fe? authority to appoint
to apply to ,1
.4.

401211

them as our Ag

T.Erentige in that

understand that for the

they would get t7!-le

y should clearly
ono business with

them.

ol

I am doing a good don,
agoopt golf, and only wish you

p out here a little
ro here to eh 0 it with

7ehange
-.ave you been able to locate a
clerk who would 1ovi how to make bookkeeping entries, make calaulationslook after these gold. transactions, etc., etc. I
have bad. a brief talk with Deans of the rchants Loan & Trust
Co., Chicago, explaining the character of ou!, position, and he
seemed soinowlxt interested. I am awaltin7 sone word from
If you feel disposed. to *write bin personal letter, indicating your own vieus as to the hp,racter and im7)ortance of this



Is)

-3To - Lt. Kent.

July 17, 1917.

work and statinr; that I had oonualted you about the matter,
It might draw him ant a bit. I am favorably impressed with
him.

2a117',iy
114,722

, now engaged in drafting L lettor to Monsieur
I will send to yOu to read befoze nailing. A
'Inififs to you, grod, or your Cowl help, Alich is

invTluaTA,

.

Vrod

I Kant, 3q.,

Bankers F.!rust; Co.,
Row York Cit7,




Denver, Colorado,

July 31, 1917.
Liy dear Fred:

ijany thanks for years of July 27th, from which I observo

ran

,

letter to Lionmieur Pallain and tho revised IMMO-.
have gon

orward.

I have o n ovor the correspondence in regard to the
chs,ard

ear-narlzi ng gold in irow

York for ccourf of BanL. of 1, land strikes me as being all right
exce,yt that as e now have II 7 tw and a hall' millions of gold
Jett just as well use
with the Bank o 'np;1an4.

that gold ana role
upoos excange av?Ilable

-Gish Government mAkos

our

th y prefer to ha1 the gold in such
shapo that it can be physically movod to Ii ia without
Tt nay be horrovo

pf transportation thLau3h Vile war cone, i
Irobably prefer ALIerican gold and ask to

oy would

ear-nark it.

esentlin having the
-)ral Reserve Bank handle the Rupees; they doubtless could do it,
noecesary, but I an anxious not to burden the bank Jit3'i any




I see no particular objectiat

- that is not essontial to the fu1fi13u-t of its obligations
o members.

If we shoul undertake to release the gold held in
think wo should In that event charge a small commission
services, and if we should receive and hold the gold ear-

To -

July 31, .1917.

:Kent.

marked for account of the Bank of England, we would ti.on be

justifiee_ in charging the American importer, either directly ar
through the Bank of England, a somewhat larger commission. It
might b
:cable to make the charge directly against the
Lme
an import
to whom the roupoos were furnished, in order

th

we might koe

ar
som

ous if

:loco track on the transactions nd their

Tho char -c as we imposed it would operate, of course,

estraint
r.,r 01

ports by some

-s of ;:old, and it might become serit ias not fo d pwmiblo to offset these imnd of ozports ohor than gold.

7111

'orr1 of draft OD the

Bank of England
) t
in
policy to be
uarsuod with the Bank
land, and a the unnt I am adverse
to employing any of the gold in that market, ion we may have
such heavy demands thrust upon us at home.
The government seems to have war
out some arrangements for paying the soldiers in Prance ifl I guess It would be
just as well to let the matter rest. The only point is we have
ten :Innen dollnrs in French p:old.
OUT vault, for which final
settlomont has not been made with the British government. We

Also I agree with

should either find the moans to make final adjustment fdr that
gold without having it molted, so that our account with-hergan
Co. is settled, or else we should turn it in to the Assay Office

and take bars for it.



I am much interested in your account oi the travelers'

-3To -

July 31, 1917.

Kent.

Llustrating the necessity for it

check developments.

- when

Ben wont to Prance, ac a matter of prudence I supplied him with
a certain proportion of Bankers 2ruot Cols checks, but the rate
of exchange was

him takke all

'

1

that I aid not feel justified In letting

e money in that form. Had the rate of exchange
le market, I would certainly have done so.

glad you are off for a vacation. Please make

the best of t.
ings it see, '

V1-1

no vn.

Again '

*

Prod I. Kent, Dag.,
Bankers Trast'Oo.,
Hew York City.
B$ /00




you get
ODP

k to Ilew York, one or two meet-

U0 to clean nrn all the loose ends.
u for your help.

Denver, Colorado,

July 51, 1917.
Dear Pred:

:Lours of the 25th reached me Just as I was leaving for
stes Park and
unable to reply until today, when I have
, advising that you were leaving for a holidays
yours of the
telegraphing as per enclosed confirmation, which
hope is .c. are
Yo

atti de with th

me as be

you there to 1
the proposal submi.i..

gentlemen from Italy strikes
ac, greatly relieved to have had
- absence. So far as
.

GidQni is c

()mod, I would have

no hesitation in acce'l ing t, provided th clearly and definitely understood just what
d upon us
by law and by the necessities
xpeet us
either to open an account with them or
against
ear-marked gold. his it seems to iie
have made el 1' to them
but it should be emphasized,
am telegraphing the office that i
wired you
on this subject and to confer with you about it. I an writing
separately in reply to yours of the 27th. 1 am returning
Gidonits memorandum.

Best regards and many thanks.

Paithfully yours,
Prod I. Kent,Lso.,
Banhors 2rust Co.,
new York City.



AM!

Form 1206

VVESTE47iZaN.T. UNIOT

CLASS OF SERVICE DESIRED
Fast Day Message

Day Letter

WESTERN UNION

Night Message

TELlow,

Night Letter
Patrons should mark an X opposite the class of service desired;
OTHERWISE THE TELEGRAM
WILL BE TRANSMITTED AS A
FAST DAY MESSAGE.

ill

Receiver's No.

Che0c

AM

Time Filed

NEWCOMB CARLTON. PRESIDENT

Send the following telegram, subject to the terms
on back hereof, which are hereby agreed to

Colcratlet -7121c:' Q., 1017.

PV01.roi:Ontt '.kariizorn rrn:nt Co., 16 "Ii1.1 St., ITati Tor% Cit.

loi.!torJrytV7alt7 flfth reecilval atop. Coe no objeotione to
rarocranhor b, zn1.:,arceraitaio obaoll bo mile t nore olodff.c ao to vrlaeo
c.rocragl o. lo vorj 1711o:?!!mite otopa nwroo-t polrocretti 0* oithcr bo no10
of :TA
noro

OrI001 r10

01.191 laitoattr, tiut derimito vamp viii bc ootabliohod

later olzrti, Thoimxyzno7it 0. otrzoot !tonal bat: rficht pron000
Vfi,

ti

TT)

-"or

ptimoric or rridar, riartryto

'Th.lo

0otrt-k7

og CZOGIrlt

ml that ft./rItiar er.ohorzoo

lator ctioh
crilloation to -leoceve Doarfl 'or

be offootol re tor to OM' 01X121rg r005,IVOCal 00001-rt
000!-I aavloablo.

authorIV..

-o Tao ob:o0tiati

-03.73) aptlointiarmit I-re:neer:4

lozu1iioocr,r,c,,,otitoa If that 17111 !rot tivir

tho rolttlonohin to be lorrrzit for the nroot -anions Utz/ ,looiro tooarr-7
bc13:1oo -zith tr.
Cbc. 3ce.j. ",tralc, 1'10 7,11)1n



LIoNla),In Otranc.

ra.

11111M111
ALL -I'ELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLO

G TERMS:

To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office for -comparison. For
one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR AS SUCH,
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
I. The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, beyond the amount
received for sending the same; nor for mistakes or 'delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty times the sum received
for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lines; nor for errors in cipher or obscure
telegrams.
In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery, of this telegram, whether
caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued, unless a greater value is stated in
writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be paid based on such value equal to one-tenth of
one per cent. thereof.
The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necesSary to reach its
destination.
Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such office in other cities or
towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeavor to
contract for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sent to such office
by dne of the Company's messengers, he acts for that purpose as the agent of the send,.
The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the telegram is
filed with the Company for transmission.
Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in addition to all
the foregoing terms.
No employee of the Company is authorized to vary the foregoing.
THE WESTERN UN ION TE LEG RAPH COMPANY
INCORPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
EAST DAY MESSAGES
A full-rate expedited service.
HT MESSAGES
Accepted up to 2.00 A.M. at reduced rates to be sent during the night

and delivered not earlier than the morning of the ensuing business day.
DAY LETTERS

A deferred day service at rates lower than the standard day message rates as follows: One and one-half times the standard Night
Letter rate for the transmission of 50 words or less and one-fifth of
the initial rate for each additional 10 words or less.

SPECIAL TERMS APPLYING TO DAY LETTERS:

in further consideration of the reduced rate for this special "Day
Letter" service, the following special terms in addition to those enu-

merated above are hereby agreed to:
Day Letters may be forwarded by the Telegraph Company as a
deferred service and the transmission and delivery of such Day Letters
is, in all respects, subotdinate, to the priority of transmission and
delivery of regular telegrams.
Day Letters shall be written in plain English. Code language
is not permissible.

c. This Day Letter may be delivered by the Telegraph Company
by telephoning the same to the .4Idressee, and such delivery shall be a
complete discharge of the' obligation of the Telegraph Company to

deliver.

This Day Letter is received subject to the express understanding and agreement that the Company does not undertake that a Day
D.




ba delivered on the day of its date absolutely and at all
events; but that the Company's obligation in this respect is subject
to the condition that there shall remain sufficient time for the transmission and delivery of such Day Letter on the day of its date during

Letter shall

regulav office hours, subject to the priority of the transmission of regular telegrams under the conditions named above.
No employee of the Company is authorized to vary the foregoing.

NIGHT LETTERS
Accepted up to 2.00 A.M. for delivery on the mc rning of the ensuing
business day, at rates still lower than standard night message rates, _as
follows: The standard day rate for 10 words shall be charged for the transmission of 50 words or less, and one-fifth of such standard day rate for 10
words shall be charged for each additional 10 words or less.
SPECIAL TERMS APPLYING TO NIGHT LETTERS:

In further consideration of the reduced rate for this special "N'..ht
Letter" service, the following special terms in addition to those
enumerated above are hereby agreed to:

Night Letters may at the option of the Telegraph Company
be mailed at destination to the addressees, and the Company shall

be deemed to have discharged its obligation in such cases with respect

to delivery by mailing such Night Letters at destination, postage
prepaid.

Night Letters shall be written in plain English. Code language
is not permissible.
No employee of the Company is authorized to vary the foregoing.

August 31st, 1917.
PFRSONAL.

Dear Fred:

have taken the liberty of bringing about some
rearrangement in matters between the Liberty Loan Associa-

tion and the merican Bankers Association in this District,
one result being the appointment of ressrs. Anderson and
Sweezy for membership in the A. B. A. Liberty Loan Committee

and the appointment of Mr. Pierson to membership in the Dis-

tributing Organization of the Federal Reserve bank.
These changes await PI°. Goebel's final aprreval as

to the A. B.

A..

The object of this arrangement is to leave you as
free as possible for some exceedingly important work which

anticipate will develop in the near future, not so-much for
this bank as for the government, and I hope that my going ahead

along this line will meet with your own approval and cooperation.
Sincerely yours,

fOlkoltent, Esq.,

dnie barkers Trust Company,

16 '"all Street,

New York City.
BS/VCY




LIBRARY

Treasury Building, Waehington

JUN 18

1919

Jnoe 10, 1919.

FEDERAL RESERVE

Mt. Fred I. Ient,

Care 5a/titer3 1/..ast Cd4pany,

16 Wall Street, New York City.

Dear Fred'

I have decided to sail for Burope by the Baltic on July
1st, and am writing at once to inquire whether your own plans may
not be such for the Trut Company that you could sail at the same
time and possibly collaberato -Ath me in pone of the work I want
to do in London and Paris.
The gold embargo is now lifted and it sees as though
that obstacle in the Inv of your trip'had been removed. Could
ou telegralYh_me, care Pederal Reserve Board, on receipt of this
letter, giving no any indications you can of the possibility of
your going? I would want, if possible, to take the oryyortunity
of continuing discussions with both the Bank of England and Bank
of France, and you 7411 appreelate the increased importance of
these relationahlps now that we have raised the gold. embargo.




Very- eincerelw yours,

13,0 K

01300.0
-

JUN 1 8

1919

BANK
FEDERM, RESERVE

June 16, 1919.

Dear ired:

I have spoken to them in the State Department, and

have written. Mr. Polk, about ,our passport, but, in order to

avoid the delay incident to a climb to #2 Rector Street, I suggest that you take the timo to go to Nashington and arrange it
in person.

Of course you will need to use your photographs,

etc., and if your trip should cover the same ground as mine, it
will require vise's for England, irance, Belgium and Holland.

In the latter case, the arrangement is made by cable through the
Consul General, through New York, and takes quite a little time.
I hope you can connect with the Baltic!
Sincerely,

F. 1. gent,

Director, Division of foreignEcharkt,,-e,
federal Reserve Soard,
15 Wail Street, New York.

BS/M5B




Perin; August 18, 1919.

TELFDRAM

FRED I. KENT

Care Americen Embassy London

Have juat received following telegram ?roe Treocery quote It uay be

necessary or desiroble to ship gold to Spain in connection with final

oettlement of peeeta creditn e-emhed for the Treaeury neough No York
banke stop Treanury is making inquiry through Department of State an to
whether Bank of Spain would if requeeted be w1:Ang to except gold
earmarked in notria London or New York wl.th ropor allowance for ehipment
charges thence to Spain stop French goverment hes expressed Tillingneam

to furnish up to tan millioa dollars in napoleons in return for German
gold delivered in Paris acoelting Gormen gold on the besin of 999.4 of
fineness otop Can you ancertain and cable One Cost of shipping Cermon
gold from Belgium to Purie Ex Two

Sane ioquiry from .."..eci...erden to Paris

Three Goat of slipping naeoltons from 7eris to Vadrid Four Cost of

shipping void from London to Madrid MVO E4rliest date upon which nwooleon,
shie2ed from Perla to Madrid againet German gold ohipped fmi. Belgium or Amsterdam
to Parie cen be counted on to reach Madrid unquote nav eolied stating impossibl
arrange shipmenta in time for August twenty ninth end Sep'eember eozond muturities
stop Have auggested advizability alloying nhipmenta to London to proceed as
arranged and endeavor have Bank of Spaln acoeA Lola earearkea by Bank of
England stop As alternative aug;;ested earmareing Austeraam seop Having
abandoned trip Laot ehall obtain deta reque,Ited paragraphe one two three and
five stop Picauo o;ot de'oe four riring me Ritz and include nc0000ery inforraation
reg cling insurance




STRONG

Paris, August 18, 1919,

TELEGRAU

FRED I.KENT

Claridge's Hotel
London

Have abandoned ConstaatinoT;le trip stop

care Embassy tonight stop




Am sending important telegram

Please inform Norman and Grenfelland Embassy
STRONG

Hotel Ritz, Paris,
August 19, 1919.

CONFIDENTIAL:

Gentlemen:
It may be necessary for the Federal Reserve Bank of New York, an behalf
of the United States Treasury, to make a Shipment of German gold coin, either
from Brussels to Paris or from Amsterdam to Paris, and likewise A shipment
of napoleons from Paris to Madrid.

I um writing to inquire whether in Case of need the American Express Company can handle these Shipments and if you oan furnish inc promptly with the
following informationN
The cost of shipping the equivalent of $10,000,000 in German gold coin:
1.

From Brussels to Paris; or

2,

From Amsterdam to Paris; or

3. The cost of chipping the equivalent of 310,000,0CC in napoleons from
Paris to Madrid.
I should also like to know the exact time which should be allowed for
-ing

a delivery of napoleons from Paris to the Bank of Spain, Madrid.

Your prompt response to this inquiry will be much appreciated and should
be addressed to no at the Hotel Ritz.
Yours very truly,

American Express Company,
11 Rue Scribe, Paris.




TELEGRAM

Paris, August 21, 1919.

FRED I. KENT,

Olaridge's Hotel, London
Telegram received stop

I much appreciate your prompt assistance stop

Have telegraphed Bunk of England giving last advises regarding insurance stop

Nothing further can be done regarding rupees agnegotiations are under way in
Washington




STRONG

Paris, August 22, 1919.

TELEGRAM

FRED I. KENT,

Olaridge's Hotel, London
Yours August twentieth received stop

Suggest sending direct cable

to Leffingwell Treasury giving estimated cost of shipment London to Spain
including insurance freight and all other expense repeating message to me
Paris stop

Hare absent his office states no definite progress yet in Spain

justifying expectation of credit butprospect hopeful for ultimately making
sales




STRONG




Hotel Rit4, Paris,
August 25, 1919.

Dear Fred:

I just have your letter of August 21 and thank you for looking
up the Information about the shipment.
Please note the following:

have telegraphed asking that you replt direct to the
Treasury giving the estimated cost, which I presume you have done.
Arrangeeents were not to be made for the shipment, but I
was simply asked to ascertain what the cost of the shipment would
be in case it had to be made.
You say in your letter, "Subseeuent
programme not yet arranged but there are generally about two
steamers a month in this service."
I do not want to ship gold

from London if it can be avoided,s preferring to make the Shipment,
of course, from Brussels.

I do not quite make out how you figure 1/2 plus 1/20 per cent.
The calculation contained in your letter is as follows:
'Freight 3/8% (on not less than 13200,00))
(to port only),

121,125

Insurance 1/8;ti (to Madrid),
"acking charges, 6o boxes ) 4/- each,
Fees,

375
12
1

h1.513

Bey 1/2 * 1/20P
which I understand means that b1513 ivouLd be the cost of shipping
12200,000, which is to say that a little more than 3/4 of 1 per cent.
would cover the cost.

From this I would deduct that the cost of shipping 62,npo,000
would be a little over 1.15,C00, end this strikes ee es being
prettyc
high.
Also, I notice that you mention having advised the Federal Reserve
Bank by cable.
Should not that cable have gone to Leffingwell, as
the inquiry came from the Treasury?
I
m sorry to bother you with
all of theue detail, but the question was from the Treasury and was
purely hypothetical, I preeume to aecortein what the cest of gold
ahipuente wee as againot the cost of pesetas.




_.X.- 2

Of course one *portant thing to bear in mind is that insurance and
freight can be paid by check, which means that it will cost the rate
quoted, figuring the pound as worthn44.10 or 0.15, or thereabouts, as
of course we would not figure on paying the insurance in gold but by check.
Won't you write me clearing up these points, and, in case I receive
any further cables indicating the imminence of the movement of the gold,
will telegraph you more specific advice.
Thanks for the advices about the India Council matter.

do not agree with our people at home, but let it go at that.
you get over here pretty soon.

I still

I hope

Sincerely yours,

Fred I. Kent, Esq.,

Olaridge's Hotel, London

BS/V

PS. I am enclosing herewith copies of letters to Dr. Visserit,

Monsieur Van der next and the Governor of the Brik of England with reference
to a possible change in the amounts of gold shipments from Brussels and
Amsterdam respectively; also copy of Bank cable NO. 12 received in a bad-

ly mutilated condition after the writing of this .letter and reply thereto

my No. 18.

TELEGRAM

Paris, August 2,,

1919.

FRED I. KENT,

Claridgele Hotel, London
Can you obtain and telegraph me closest possible estimate
giving details of cost of shipment London to New York for purpose of i
informing Hoover as closely as possiblen*hat net return he can expect on

whole amount
us




Experience in shipping from Continent to

London will enable

to make fairly accurate estimate.
STRONG

TELEGRAM

Paris, August 25, 1919.

FRED I. KENT

Claridge's Hotel, London
Following cable just received from Federal Reserve sank quote
1

Replying ymmx paragraph two your number fifteen Chubb has placed

insurance in this market payable in dollars protecting shipment against

all ricks up to one hundred and ten million dollars at

seven and one half

cents per one hundred dollars but only five million dollars on any one
conveyance stop
2

Chubb hopes to advise of a

larger amount400 Monday

Protection attaches irrespective when declarations of

shipment

are made but it ia expected we will be advised by cable the amount of
/3,0 ehipment and the date stop

Value to be based on mint par of coin and

bars at dollars twenty point six seven one

eight three four six two per

ounce all plus one per cent to cover shipping costs unquote




Suggest you cable instructions to cover additional amount shipped
from Holland
STRONG

TELEGRAM

Paris,

August 26, 1919.

FRED I. KENT,

Claridge's Hotel, London
Your letter twenty second received stop

Am advised by Bank that

Treasury will pay off peseta bills maturing September second and renew bills
maturing September twenty ninth atop

Have telegraphed New York asking

whether we should make any provision for later maturities and if so how much
stop

In meantime suggest proceeding with shipments as stated my letter

August twenty

point

third to Cokayne

stop

I understand figure eight nine nine

four meant simply coin value of gold allowing for alloy rather than fine

value




STRONG

Hotel Ritz, Paris,
August 26, 1919.

Dear Fred:

T telegraphed you this morning in reply to your letter of the
22d instant, as per enclosed confirmation, which I hope is clear. By
now you have doubtless received the copy of the garbled cable in regard
to the peseta payment.

written asking that you arrange to work up everythtit
bearing on the Turkish-Armenian situation that you are able to reach in
Gen. McCoy hds

London and arrange to have the

Imperial Ottoman Bank people in Constantinople and any other reliable financial people like the English head of

the Bank of Turkey, give them sympathetic help and information.
you start something along this line periding my return to London.
I do not like to leave
the gold.

cleaned up about

Could

Paris until I am certain that everything is
Otherwise I feel that I am about through heee.
Sincerely yours,

Fred I. Kent, Esq.,
Claridgels Hotel,
London.

P. S.

BS/V




Enclosed herewith is copy translation of letter just received
from Governor Van der Rest.

Hotel Ritz, Paris,
Angust 26, 1919.

Dear Fred:

? I telegraphed you this morning in reply to your letter of the
id instant, as per enclosed confirmation, which I hope is clear.

now you have doubtless recoived the copy of th6 garbled cable in regard
to the peseta payment.
Gen. McCoy h4s written asking that you arrange to work up everything
bearing on the Turkish-Armenian situation that you are able to reach in
London and arrange to have the Imperial Ottoman Bank people in Constan-

tinople and any other reliable financial people like the English head of

the Bank of Turkey, give them sympathetic help and Information. Could
you start something along this line pending my return to London.

I do not like to leave Paris until I am certain that

cleaned up about the gold.

everything is

Otheraise I feel that I am about through here.
Sincerely yours,

Fred I. Kent, Eeq.,
Claridge's Hotel,
London.

P. S. Enclosed herewith is oopy translation of letter just received
frau Governor Van der Rest,

BS/V




Hotel Ritz, Faris,
August 27, 1919.

Dear Fred:

Thanks for your two notes of the 25t4 and your two telegrams about
shipping costs, insurance, etc.
One of them I think was somewhat
garbled and I am having it repeated.
As apparently no shipment must be made in order to pay the peseta
credits, it seems as though it would be possible for me to leave Paris
the last of this week, stopping for a couple of days in Amsterdam, and
then direct to London, and, as Stettinius tells me you will be there
until the 10th, I shall hope to join you there before that date.
Meantime Mr. Hare has been laid up with a slight attack of blood poisoning
and T have not been able to see him.
As soon as I get sufficient figures I want to give Mr. Hoover an
gold settlement with the Germans, and would greatly appreciate your sending me the figure, the best
you can make, as to just how much we shall INT to Mr. Hoover when we know
all the factors.
You understand it is proposed to deduct from the payment a sum sufficient to pay all the costs of moving
gold from
Amsterdam and Brussels to London and then from London to New York, including charges for melting up the coin and reducing it to fine barn of
known value.
If you could make some sort of an estimate, even though
rough, and send it to me at once, I would appreciate it.

estimate of how he will make out in his

all the

Sincerely yours,

Fred I. Kent, Esq.,
Claridge's Hotel,
London.

BS/V




Hotel Ritz, Paris,

August 2, 1919.

Dear Fred:

Thank you for,your letters of the 2,th and 26th and your telegramcf
the 26th.

I will try and make up some figures for Mr. Hoover based

upon these estimates, but still need something to indicate what the
cost will amount to from Amsterdam and Brussels to London.

I am glad

you feel able to take a little loaf.

My understanding now is that

no shipment will be required for Spain

at 2resent, and I do not see how we can delay proceQding with moving the
amounts as I have written you.

With best regards to Mrs. Kant and yourself,
Sincerely yours,

red I. Kent, Esq.,
Claridge's Hotel,
London.

BS/V

Enclosed herewith is copy of cablegram just received from
P.S.
Washington regarding the peseta situation.



-Hotel Ritz, Purls,
August 29; 1,,,12.

Dear ?red:

T. am ear:look:Kg copy r)f , oel)le jnet reed. from the Bank, cvpy
,f my ffnewer and of letters addrezned to Ncrman, Vz.r.cr Rent ..eld r:Lf0-

.sering, all of whieh elain themselwec,
T new nlan to le,,orl INtris Tuesday, stoppin one dayih Brussois,
twn days in Amsterdam, and reaohinj, Londpn thc

around te (;th.
I hope you had a good rest.
Yours nIncercly,

Fred I. Kent, Eq.,
l'Ilridge's Hotel,




f ile.zt week, a.:ty




London, September /,, 1919.

Dear Fred:

Thanks for helping figure out this gold matter and for many other
things which I greatly appreciate. Enclosed is a draft for 2,000
francs to square up the loan,which I entirely overlooked. I want you,
if you will to send me to New York a memorandum of expenses which should
he borned by the Bank in connection with your trip, on which so much of
your time has really been given to our affairs rather than your own.
Also, I an most anxious to have those pictures,- two prints for myself
and one for Mr. Vaeghan, making three altogether, and I hope you can have
them developed and sent to me at New York, as I know they will be useful
in discussing the trip. You can have them developed and printed very w411
at the Gaumont establishment, in A side street off the Plass de l'Opera.
I have a telegram from Warburg asking if you will not write him
0/0 Hope ' Company, Amsterdam, and stating that he expects to be in
Amsterdam October 9th, then in London from the loth to the 1,th of Oc-

tober.

He is most Anxious to see you and

that I would convey this word.

talk

mattme,

over, and I

wrote

In order that you may be up to date I shall probably effect an exsovereigns with the Bank of Eu6LAnd, delivering
sovereigns which we have in Amsterdam and accepting sovereigns or bars at
the Bank of England.
When the details are worked out I will sand you a
memorandum.
I Am enclosing copy of A statement handed me today by the
Bank of England, the mint weights and fine gold shown at the top being
the figures given in Tate's Cmabist, and the resulting figure being the
calculation of loss on 715,000,1' marks, allowing that the coin averages
as the first parcel of '8,000,000 marks averages, or a total of W122,248.
This I gather includes both remedy and abrasion and is apparently already
allowed for, at least by the Nederlandsche Bank, in the method of weighleg adopted.
chaege of 1100e,-e- in

401 feeling disappointed in being obliged to leave without
visit with you.

a

further
c

Won't you please write me at New York, letting me know how

going.

With warmest regards to Mrs. Kent and yourself,
Sincerely yours,

things are

London, September 17, 1919.

Dear Fred:

Yours of the 15th is just reeeived, and I see as yet no reason to

make any Change in the figures which you prepared, although I doubt if
the shrinkage allowance of 11123,C300 is realized as the result of act-

ually melting the coin, at any rate, so fur as the 44,s0s,00 marks
It is safer, however, to allow it
coming from Holland is concerned.
to stand for th present.

There seems to be considerable delay at the assay offices in getting returns add I fear it will be a long process having all the coin
melted and AS real f1neness ascertained.
I am planning to sail Friday on the Baltic unless T. am able to
switch over to the Maugetania sailing Saturday, but I shall leave
word at the Bank of England that in case anything arises necessitating
your presence in London not to hesitate to call on you, and I am certainly most grateful to you for yourgood help.
Won't you write me at New York from time to time, if you have opportunity, just how things are developing and how they look to you, pal"ticularly anything that you discover as to Germany. should you get in
contact with Warburg, do not hesitate to send

se a report and, if pos-

sible, deliver your letter to the Embassy to come forward in the pouch.
Also, as you know, I am relying on your submitting an account of your expenses which we should posy. T will not hesitate to communicate with
you if anytsing turns up after I get home.
With best regards,
Sincerely yours,

Fred I. Kent, Esq.,
5 Rue Scribe, Paris.
BS/V




Ritz Hotel, London,
September 17, 1919.

Dear Fred:

1 have just received two copies of the enclosed
memorandum from Doctor Vissering, who desires that I should
send one to you. So far, i have not had time to read it.

He expresses great regret that I was unable to
meet Warourg in Amsterdam, and it occurs to me that you .may

feel that it is worth while to mike another trip there, oy
I shall greatly value anyarrangement, to meet Warburg.
thing in the way of information that you are able to send me
if you do half,: such a meeting.
y friend lex. Montague Norman is back in London and

I find that he ili2U leveloped quite a liking for our "Lucky
Strike" cigarettes) whicb, it seems,quite imposaible to get
They have some at the Crillon hotel and 1 wonder
in London.
if you would be good enough to pet a carton of them aril aend
sthem to hirn. if possible, by Some one who is coming 'to London

or, if not, by post if it is safe to entrust tobacco' to that
i will reimburse you for the cost t the first oppor.agency.



tunity.

6111111111.1.11P2




Lr. F. i. Kent

17/9/19.

The gold movement is proceeding most satisfactorily

and I am sure will rive you no further trouble.
nce more, thanks for your splendid Aelp.
Kent,
ith warmest regards to yourself and
Sincerely yours,

Fred I.-Kent, Esq.,
5, Rue Scribe,
taris, France.

BS/PE

Enc.

London, SeAember 19, 1219.

.

Dear Fred:

It just occurs to me, bef-)re sailing tomorrow an the Mauretania,
to ask if you can possibly arrange to get up some really good material
for General Hurbord in connection with his Arlieftion-Turkish investigation. He will be coming back same time next month and will be mcet
anxious to get something an the financial and econ,mic situutaon, the
relations of the various banks of Europe to Turkish and Armenian affairs, the trade of the country, etc., etc. When I was in Paris I
met a very interesting man connected with one of the Ottemun banks, at
Mr. Simon's house at dinner. Possibly you dould be good enough to
call on Mr. Simon at the Societe Generale and tell him that I mentioned this gentleman to you as a possible source of information in regard to affairs in Turkey, and see if you cannot arrange a meeting.
This man, I think, is of,English descent, at any rate he speaks English
perfectly and seems to have a wide know1ed6eof nutters in the East.

I have transferred from the Baltic to the Mauretania and leave

early tomorrow morning.

Sincerely yours,

Fred I. Kent, Esq.,

5 RueStirK-1.6,4.ris.

BS/V







London, September 19, 1919.

Dear Fred:

It just occurs to me, before sailing tomorrow on the Mauretania,
to ask if you can possibly arrange to get up some really good material
for General.Harbord in connection with his Armenian-Turkish investigaHe will be coming back some time next month and will be most
tion.
anxious to get something on the financial and economic situatten, the
relations of the various banks of Europe to Turkish and Armenian afWhen I was in Paris I
fairs, the trade of the country, etc., etc.
met a very interesting man connected with one of the Ottoman bunks, at
Possibly you would be good enough to
Mr. Simons house at dinner.
Call on Mr. Simon at the Societe_Oenerale and tell him that I mentioned this gentleman to you as a possible source of information in regard to affairs in Turkey, and née if you cannot arrange a meeting.
This man, I think, is of English descent, at any rate he speaks English
perfectly and seems to have a wide knowledge of matters in the East.
I have transferred from the Baltic to
early tomorrow morning.

the Mauretania and leave

Sincerely yours,

Fred I. Kent, Esq.,
5 Rue Scribe, Paris.

13S/V
44

)

1 avit
Octnter 15, 191.
Dear Fred:

I am deliAted o have your letters of 8entember 22d, and 25th, and
October 3d, and to know that you will have some satisfactory data for General

Harbord on his return from the East.

The exchange oituation, whle a little better at the moment, I fear has

tot to go ',.Lrennh 4 period of agony before it is really righted, but that's just
nuess.

a

Our export' are today runninn at the rate of four billion dollars per annum

in excess of our imports, and wh n the remnant of our Government's credit is exhausted
I am franinto say I don't see how nayment can be made for any such movement of ,00ds.
About Dr. Vise. ringt

and every other plan that so far I have ex-.

amind, I fenr there is one fatal, fundnmentalerror and that is that they are nll
short-cuts to prosperity by way of inflation, and cc: inly the world ha, and
enough of that for the moment.

Things hare are very much mixed up at the moment because of the bitter

controversy in the Senate over the ratification of the treaty and the unfortunate

illnes,. of the President, levin ;lie propagandists of the tre-ty nnn league idea
without their natural leader, but I am horeful that :}l e day we will se s the treaty
ratified, even thou,h there may be some reservations wnich will be
for our friends abroad to accept with complacency.

a little difficult

Flese con..ider this .uite be-

tween ourselves.

I went over the Inn_ cnele in rerd to the ue Lion of the formule, for

7

bookkee,inn, etc., for the Reparations Commission, and, frnkly, I don't likd the
plan because it appears to measure the v%lue of the gold mark absolute...) 4 cue de-

preciation in mark exchnnge, and, an lyinn that formula to the value of ioode delivered by Germany for immediate credit on the Reparations' account would


'

no,

be-

Mr. Kent

2

10.15.19.

power of the ark in the domestic v,..rket.

lieve, be a true reflection of the ;urchin 6

However, it is a very com,licated situation faced by the commission, and I hoe that
di*cussion, after

Rathbone's arrival, will clear it up.

Don't worry too muc,-, about the

just

.trikes over here.

they are abroad, but they will be nothin

doubt if aa much disorder a

ha

accompanied

thoLe

and., in the end, most of the men will get more

that most of them are entitled
I :Aitruhod

We

re hvin, our epidemic,

more than the usu6,1 strike, and I'

of past years will be prevalent,

ay, and

I am rather inclind to think

to it.

jut now cateling u.

ith back work, but will

!1-°.y and write you

again, and a. little more fully and sati6factorhy, before ion .

Again a theueand thank:, for your ;slendid bwaen I was
Faithfully yours,

F. I. Kent, Esq.,
5 Rue scribe,
Paris, France.

BE.MSE




,aroA.

December 20, 1919.

Der Fred:

4,1

A thousand thanks for your bully letter of December 5th

about expenses, and.for your trouble in hunting out those cigarettes
for Norman.

There is no ioly in which I can estimate your outofpocket

ex anses on the trip.

I tried, myself, to pay all the tills so that

you would not be outofpocket, but I wilt find some way of dealing

with this mAter, and will ask 'hr. Crane to attend to it.
With no end of good wi:hes to you also for the Nev Year.

I hope your stay abroad will do you a lot of 600c4, as well as be

more interesting than ever.
dcerely,

F.

I. Kent.

--';L.

5 Rue E,oribe, Pnris, France.

BS.MSB




rERs.-;z4.L. AN

CONFIDE-101AL
December 22, 1919.

Deer Fred:

I am jut no- relying to your& of November 18th, which was not mailed

.

until December 2d end reached me only a fee days ago.

Jut as coon ae I eaw the corresponoence relating to your meeting in
AmAerdem, I felt certain that embarraeement would arise, ee I immedietely wrote
youy

It wee inevitable that developmente in the Internationel eituation, eith

which you ,ere noe at that time fully ace:ueinted, made euch a 1..ropoeal es the

Ameterdam meetine develoed suite out of the quetion fro e our Et ndpoint, Aid I

feered that Keine, eho has greet energy, and, I Peer, soeetimea unsound view , or
at least inprectical views, mij4t have etampeded the meeting into e course which
eid prove eereonally embarraesing to you.

At any rate, if m etinge of 'caw:ere are to be held, I hc,e they elli be
either for the eirpoee of ar1-auingbunking tueineee on the one hene, or, on the
other nend, if they reech into mattere havine to dO with the Governmente concerned,

that they &hall first eeuml their on reepective Government to eee what the

efficiel attitude may be.
Let m

to other courve ia aeund,eor diplomatic or safe.

iy that this agein ie one of thoe.. cases where 1 een uee the

exl2reesion frankly ueed with yeu,

not ac ee would like to deve them.

here we mutt deal eith things ae the

r.,

nd

In this perticuler matter, ell of the Cevern-

mente and our on adminietr Lion are suffering eome emberraeement beeaue of the

failure to ratify the treety, and eo long ae that conditioh exit, it is necessary
that oe be peculierly cee:.loue in goin ahead with :Lens.
i am going away for a rest ano te cut off from bueineee .A)r e time,

will be at Castle Hoteriage,CXrizone.

Put my- ,..ereonsi mei:L

foreareed,

and 1 me sure you hill not he itett to .rite it of anything of ieeertence.




.nd

F. I. Kent, Esq.

12.22.19

M.th best regards and wi,tin: you and Era Kent a very Merry ChriEtmLs
and Happy New Year, 1 am,

Sincerely yours,

i. Kent, Eq.,

5

ye Scribe,

France.







February 10, 19P0.

My dear Mr. Kent:

Mr. Strong left for the Wert the early part of Jsnuary,

and from his rast letter' to me is somewhere in Arizona on 1
in trip.

'797.

Since his departure your two letters of January 7th and
your letter of January 23rd with the pictures enclosed were received
some few days ago, for which please accept thanks.

I shall reforward

your letter and pictures as econ as I learn of Mr. Stronsoe preFent
mailing address.

Yours very truly,

Secretary to Mr. Strong.
MT. Fred i Kent,
5, Rue Scribe,

2arie, France.

5, RUE SCRIBE
TEL: CENT. 79-75

Paris, Feb. 26, 1920.

Mr. George Beyer,
Secretary to Mr. Strong,
Federal Reserve Bank, N. Y.
Dear Mr. Beyer:.147,74g

Your letter received, and I note that Mr. Strong is
away from the office for a time. Will greatly appreciate it if
you will forward the enclosed letter to him.
Thanking you for your courtesy in the matter, I am,
Very trply yours,

FIK/MKS
Enc.




Ari

cl! 30, 192',..

ed. I. Kent,
5 Rua Scril-,e,
Pario, Pranoe.

have pet reeolvea yOUT letters r4" 3t rL3ra,

Fabrwry 26th (2), but for nearly two wontho:Tr-w been
on t7-. denert without mny no or-evon the ma1)are
un!?-1310 to oend yau muct of a letl:er. W have hasi a
trip,doiRg about 4-50 riles in loivirely :a4ion by
aok and r4ecing trit_vot interesting oountry. The
t
remnd wis. delintod to have them, but the;
ewe you sent m4 waa about the improvement in you
ing
oh I hoe
tho! I know will Giontle
1 only
_so
sere common sense about resting.
to. hard,. even thougla t%cl matterc spo: el riLt-i 1




rt- ice.
Ilith boot rag,,rds,
Sincerely your,

January 25, 1921.

Dear Fred:
Thank you very much for sending me the two copies of

the Proposed International Credits Scheme of the League of NationE,
which came to my desk this morning.
Sincerely,

F. I. Kent, Esq.,
Bankers Trust Company,

16 Wall Street, New Irrk,

MSB







January 27, 1921.

Dear Fred:

It was indeed thoughtful of you to send
me those French posters, which I shall have included
with my Princeton Collection.

tith regards and many thanks,
Very sincerely,

Fred I. Kent, Esq.,
16 Viall-gfieet,
New York, N. Y.

July 19, 1921

Fred I. Kent, 2sq.,

--Irice President, Bankers Trust Company,
16 Wall Street, Yew York, N. Y.

Dear Fred:

Thank ycm for your letter of July 11 coacertiro our

project for securing information in regazd to the amount of, foign
credit balances. Ts shall, of course, RAPE 110k/ individuals In our
inquiry and we cannot expect a one hundred percFfot return.

We '.1re

sending the questiorire, however, to betwlen three and four thousand
beaks, export hcuser and manufacturervand 'note to secure Li large
enough return to make a reasonable esti:Late possible.

I appreciate your offer of assistance and we shell
doubtless call upon you before We are through.




Cordially yours,

BEZZAXIN STRONG

Governor

0.1
August 6, 1921.

WaShingtou,

Dear id:
Unfortunately, in the peessure of
work here, your letter of July 29 has not
sooner hap.' a reply.

The luncheon which you suggest,

to discuss the matter of credits wainst
gold derositea In foreign countries, particularly Argentina, will.ha7o to be postponed until
my return, Mhich at the moment is too uncertain
to fix a date. I shall, of course, be glad to
talk the matter over with you Just as soon as

-I gat back.
11

SinAorely,

F. I. Kent, 4q..

Bankers iiidt ,;ompary,

16 isll Street, New Yftk City.







Auk.,,ust 7, 1921.

Mr. Fred I. 1,fpnt_,.
16 Wall Street,
New York City.

Dear Mr. Kent:

Governor Strong asked me to reply to your letter of
the other clay.

At the moment he is going over a mass of material,

which I imagine will take some days to deliver to the Congressional
Comnittee.

Most of it has nothing to do with lir. Williams but,

on the contrary, it has a great deal to do with the Reserve System
ard the country's finances.

He

its me to tell you that he appreciates your thought

in having written him as you did.
tl.t.t he is in splendid shape and has not let Williams get under his
skin.

Very truly yours,

BLVD




ku3ust 19,

Dear Fred:

I am'obliged to return to Waehington on Sunday,

and regret that I must again postpone a aECUSelGli of the
tatter you wrote me about on July 29. I hall ask Nr.
Beyer to hold the letter and remind me of it on my return.
Yours sincerely,

Fred. I. Kent, F.:eq.,
0/0 Bankers Trust Company,

18 Wail St.,

Neu York, N. Y.
EIS:Mtdi

Septomixr ;1'3, 1921.
:Wear lered:

I tta dna mortified in the de/ay in giving you an answer to your noto
or July 29. My continued absence is the only explanation..

It Seelle to uo that gold credits could only be of servioo if extended
to those countries -which. have old to Ship, but whioh cannot borrow =new in the

United Otatee, or possibly are unwilling to borrow money upon such terms as our
benkove can. arrange.

If they are =willing to ship the gold no but ar

to borrow

money in this country against it, would they be any more willing to nblp the geld
uhon the loan maturedi

I have in nand the old adage that the borrower is the

servant of the lender. That relationohip only exists during& period when ale
borrower is in good standing. When hir loan inture and he is either unable or
unwilling to pay, tamale the lender becomee the servant of the borrower.

asia hit sOptioal about these gold loans, osiecially with the Jeuth
imerican countries, for fear that there ::cuid be unwillikeleas to ship the
at maturity awl that we would zut oureelves in an awkeard position. /Waver, If

you think that this uatter Seould be disouesed 1 should be delighted to take it
gp

and discuss it with you or with your aseociates on the liationel 2oreign Trade

Cowaoil cab-oommittoe at the very first opportunity.
Very truly yours,

l?red I. 4ant, Esq.,
do Bans Trust Company,

14 Wall 3treet, New York City.
IVR.A.411







September 21, 1922.

Mr. Frea I.Kent,
Vice 13resiaent, Bankers Trust Company,
New York, N. Y.

Dear Fred:

I have your note of the 15th in regard to membership
in the International Chamber of Commerce.
T am a member of the United States Chamber of Commeece
an

4

so many other boaies of like character that I hesitate

to consider increasing them. It seems as though every organization

of this sort in the country took a shot at me an it is just a
question of when to stop joining.
Very truly yours,

September 2, 1922.

Dear Fred:

fieplying to yours of the 22nd, we considered the matter of
membership in the International 6hamber of Commerce when they

originally

organized, and our directors decided that we would

be justified in taking membership.

not

I would rather not raise the

question again as it as very thoroughly canvassed a year or more ago.
This week I am going to
meetings, but some day next week

he rather badly tied up
17

woulld

like very m4ch to take lunch

with you some day when you are not engaged.
Ylurs sincerely,

,
Fred I
c/o Bankers Trust Company,
New York City.




*ith

BANKERS TRUST
SEWAR D PROSSER,

PRESIDENT

COMPANY

FLKEN,
F N. B. CLOSE.
H.J.COCH RAN.

VICE PRESIDENT
VICE PRESIDENT
VIDE PRESIDENT
VICE PRESIDENT

FOREIGN DEPARTM ENT

FIKEN,

MANAGINGCOMMIME

SCH MID.

NEW YORK

VICE PRESIDENT
VICE PRESIDENT

F A. <LI NGCMITH, AssT rpeasupER
GEORGE WEXLER.
Assr,ANAGER
W , KENNY.

AssTrn

16 WALL STREET

FIFTH AVENUE AT 42,STREET
MADISON AVENUE AT 57'3STREET

PARIS
3 SD PLACE VENDOME
CABLE ADDRESS- BANKTRUST -NEWYORK

10 'WALL S TR E E T

NEW YORK
January 11, 1925.
Mr. Montagu C. Norman,
British Embassy,
,Washington, D. C.
Dear Mr. Norman:

Much to my regret I find that I cannot attend the dinner
being given in Washington tomorrow by the President of the Chamber
of Commerce of the United States as it was my hope that I might be
able to see you there. As I am very anxious indeed to have a confidential chat with you before you return to England, thought I would
let you know so that if there is any way that it can be arranged to
suit your convenience any opportunity that may arise will not be lost.
In connection with my work as ,-hairman of the Commerce &
Marine Commission of the American Bankers Association, and on various
important Committees of other big national organizations in this
country, such as the Chamber of Commerce of the United States, the
National Foreign Trade Council, the Merchants Association of New York,
etc., I am working hard to lay the foundation for the development of
a proper public opinion in America in connection with European matters.
Enough headway has already been made so that I feel very hopeful that
as time goes on we are going to accomplish something very real. It is
my desire, however, to be sure of my ground as I go along, for I do
not wish to make any mistakes that might be difficult to correct. With
this thought in mind, in addition to the pleasure it would give me to
have an opportunity to see you, I should like to go over some of the
matters that we are working upon in our various Committees and ascerIf you expect to be in
tain whether you are in full accord with them.
New York at any time before you sail when it would be convenient for
you to take luncheon with me, that would suit me best of ail. If not,
and I could have the pleasure of your company at luncheon in Washington
on say some Wednesday, I could probably arrange to run over.

Thinking it might interest you, I am sending you, tinder another cover, a copy of the report of the Convention of the American




0

- 2 1/11/23

Bankers Association which was held in New York last October and
In this report you will find a copy
at which Mr. McKenna spoke.
of the address which I made on page 290. What I particularly wish
to call to your attention, however, is the statement in the Resolutions beginning with the last paragraph of the first column on
You will note the recommendation that the Debt Funding
page 322.
Commission be given increased power to negotiate and I am interested in having you see this because it will serve to show the
progress that we are making in this country. This portion of the
Resolutions I wrote myself after having the approval of the Commerce
& Marine Commission, and it was accepted and approved by the thousands
of bankers from all over the United States who attended the Convention.
Hoping this will find you well and enjoying your stay in
our country, and with sincere regards, I am
Cordially yours,

FIK-RG




January 24, 1923.

Dear Fred:

Just before leaving, my friend Norman handed me a letter from
you and charged me with explaining to you how impossible he had found

it to get in touch with you.

he Was terribly pushed for time and

on Friday, which was the only day that he spent in New York, he had So
many engagements that he found it impossible even to telephone you;

so I undertook to send this letter in his behalf and to express his
regret that he was unable to arrane a meetyig.
Yours sincerely,

Mr. Fred

Kt,.

c/o Bankers Trust Co.,
New York City.
as.MM,




December 24, 1923.

Dear Fred:

It wotild bu fine to have a chat. My plans are
always indefinite, owing to frequent absences in Washington:
so any time that your secretary and mine arrange a date,
I'll be yours to command.

Mr, Fred I. Kent,

Vice President', Tankers Trust Company,
16 Wall street, New York.




kw:oat 18, 1925.

PERSONAL

,Our Ur. Kent:

In the absence of Mr. Strong I have for acknowledgment
your lottor of August 12, regarding your application and that of
your

on for ilembership in the Down Town Aseooiation.

Mr. Strong in truvelinr abroad et the wesent time !int
will probably not return before another month. !to soon as he
geta beck to Rem York, I shAl bring your letter to hi:: Ateation.
11 to membership in the tesoci,ttion - I cu: sylopAhiee
uith you. lily nwme nk.s been up some few years, rid I understand
that it may t.:e mAter of three or four years more befbre uotibn

on be taken on it, due to the long w:Iiting list.

Wita kind ..,orsonal reg4rds I,
Sinceruly yours,

J. H. CkSE.

Mr. Fred I. sent,
C/o Bunkers Trust Comp:my,

16 Wall Street, New York, N. Y.




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September 18, 1925.

Dear Fred:

I 15t Just back from abroad and am sorry my
absence m4de.it impossible for me to commend both you
and your on to the Committee of the Down Town Association, e you reuested on Au&lat 12.

but I learn that it isno. too late, because

your names have already been acted on,

favorably.

am very ,lad, thou6h I should have been happy to file a

letter had it been possible.

Sincerely,

Mr. F. I. Kent,

Vice ?resident, Bankers Trust Company,
15 hall Street, New York.




1:4tpteiaber ZS, 19Lb.

'r Fred:
I heve written to the Committee on kdmiscdona

of tha Povn on sooletion in beh&lf of you' oon
We.rner, and ho2e he le elected.

I 64 glad to endorse him. It sts. only that I
underistood you hitd both been elected.

bincerAy,

Fred I. Kent, Eoc,..,
16 Tall Stmet,
Net York City.

DIRECTORS.

OFFICER S.
E.C.CONVERSE, President.

JAME

LEXAN 0 ER, PrestNatBankofCornmerce in N.Y.
STEPHEN BAKER, President Bank of the Manhattan Co.
SAMUEL G. BAYN E. President Seaboard Nat.Bank.
EDWIN
BULKLEY. Spencer Trask& Co.Bankers.
JAMES G. CANNON. President Fourth NatBank.
E. C. CONVERSE, President.

BE NJ, STRONG, J R.,Vice President.

BANKERS TRUST

COMPANY

THOMAS DEWITT CUYL ER, Prest.Comrnercial Trust Co.Phda.

HENRY P DAVISON, J. P Morgan & Co.,Bankers.
RU DU LPH EL L I 5, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY, Vice President Hanover NatBank,
WALTER E. FREW, President CornExchange Bank.
F RED'K T. HASKELL, V Prestlii.Trust&Savings Bank Chicago.
A BART ON HE PB URN. Chairman.Chase Nat Bank.

FRANCIS L. HI N E,President First Nat.Bank.
THOMAS W. LAMONT. J. P Morgan &Co. Bankers.
EDGAR L. MARSTON. Blair & Co Bankers.
JOSE PH B. MARTINDALE. President Chemical NatBank.

CAPITAL

$10,000.000

SU RPLUS

10, 00 0.000

CABLE ADDRESS: BANKTRUST, NEW YORK.

16 WALL STREET

DANIEL E. POMEROY, Vice President.

WILLIAM H. PORTER J. P Morgan &Co. Bankers.

GUY RICHARDS, Asst. Secretary.
H.W.DONOVAN, Asst.Treasurer.
BETH UN E W. JONES, Asst Secretary.
F WI LSO N. J R., Asst.Secretary.

R. H.G I LES, Asst.Treasurer
PERRY D. BOGU E, Asst.Treasurer
HARRY N. DUNHAM, Asst, Treasurer.

GATES W. MC GARRAH,Prest.Mechanics'&Netals NatBank.

CHARLES D. NORTON, Vice Prest.First NatBank,
WILLIAM D. POI L LO N. Vice President.

WILLIAM C. POI LLON, Vice President.
D. E. POM E ROY. Vice President.
W. N. D U AN E, Vice President.
F. I. KENT, Vice President.
HAROLD B. THORNE, Vice President.
F. N. B.CLOSE, Vice President.
GEO. G. TH OMSON, Secretary.
GEORGE W. BENTON, Treasurer,

MICHAELS, Trust Officer.

SEWARD FRCSS ER, Prest Liberty Nat.Elank
DANIEL G. REID. Vice President Liberty Nat Bank.
BENJ. STRONG JR.Vice President.
EDWARD F SWINNEY PrestFirSt Nat Bank,Kansas City.
GILBERT G. THORNE. Vice President.Nat.Park Bank.
EDWARD TOWNSEND, PrestImp& Traders' NatBank.
ALBERT H.WIGG IN. President Chase Nat.Bank,
SAMUEL WOOLVERTON, Vice President HanoverNat.Bank.

N

E

w YoRK,

February 15, 1913.

FOREIGN EXCHANGE DEPARTMENT

Jr.

Benjamin Strong, Jr.,
C/o Hotel Raymond,
Pasadena, Calif.

Dear Ben:-

Enclosed herewith please find copy of the rules
and agreement of subscription of the pension fund of the
Bankers Trust Company as approved by the Executive Committee
February 6th, under authority extended them by action of the
Board of Directors at its meeting January 7, 1913.
Counsel for the company feels that as a matter of
record the Board of Directors should formally approve the
now completed rules, and the matter will be placed before
the Board for this purpose at the meeting to be held February
18, 1913.
Sincerely yours,

c

"

f

axe




3
J-11 0

'422--.

F. 62

MEMORANDA
for
DEPARTMENT

Mr. Strong.

Febrtary 19, 1913.

Referring to my remarks concerning the Knight, Yancey case, would say that
He
I saw Mr. Sabin a few days since, and had quite a talk with him about it.
said that the apparent decision rendered was not really a decision, and will
The judge did not wish to
have absolutely no influence on the higher court.
reverse Judge Noyes, as he felt that the whole thing should be settled in
the Court of Appe .1s, without the interposition of conflicting or various
Mr. Sabin may be over-hopeful, but I am rather inclined to think
decisions.
that his view of the case is correct. In commenting on the case, one of the
newspapers stated that while the amount involved in the prosent emit is only
' 7,400, that 14,500,000 was involved. Naturally everyone reading the article
took it to mean that the Guaranty Trust was liable to suit for the whole of the
amount, instead of understanding it to mean the total of all New York bankers.
Guaranty Trust stook immediately dropped to 590, and I believe there were sales
of considerably over 100 shares at that rate.
Foreign Exchange is higher again, due to the uncertainty in the war
Our quotations resituation, which has been reflected in higher discounts.
ceived from London today for 60-day sight bills were 4 15/16 spot and 5% to
arrive. Disoounts from Berlin are quoted at 5 3/8 for both 60 and 90-day
Iven so, there are indications of better feeling abroad as far as
sight drafts,
the war itself is concerned. The-e is nothing, however, to show that any ease
in money will occur for some time, and it really looks as though foreign
bankers were pretty well tied up.
Recently I have been studying the Cuban situation somewhat, and made up my
mind to send Mr. 'Hurlbut to Havana,to see whether we could not obtain some
valuable business there. He was in the south at the time, so he did not have
to go far out of his way. He obtained the account of the Banco Espanol de la
He also made arrangements with
Isla de la Cuba, who deposited :50,000 with us.
a bank which will very likely be the Government depository if Menecal is elected
president of Cuba, under which they are to open with us, provided we come to
some satisfactory agreement. I have written to the manager of the bank and
made a proposition. Confidentially, it is expected that if Menecal is elected,
the whole monetary system of Cuba will be changed, and the banIcers in question
are to do the work, and have requested that I confer with tem when the proper
time comes' Have agreed to do so, and it may result in some g,od business for
The bankers do not wish the matter even whispered, for fear it might result
usin causing friction to them and possibly loss of the fiscal agency.
One of the Pombos has transferred his individual account from the National
He is one
City Bank to the Bankers Trust Company. It -ill run about 118,000,
of the brothers connected with the firm at Cartagena, whose account we obtained
They seem to be
a short time ago. The firm's balance is at present 1144,000.
well satisfied with the way we have handled their ocount, and have inCreased
it from 150,000 (which was their original deposit) largely, I think, because
we have been very fair with them in maliing rates on their foreign exchange business.

Your letter received Monday, and
Poillon, Mr. Pomeroy, and Mr. Duane in
had to do with their departments.
Frank Close is away today, as he
a day's rest might encourage him.
Yesterday the Directors formally
scription of the Pension Fund, so that




Showed it to la% 7
greatly a,preciated.
concert, and they noted your wishes, which
c

had quite a hard cold yesterday.

Thought

approved the rules and agreement of submatter is now thoroughly in order. Our

F. 62

MEMORANDA
for
DEPARTMENT

Mr. Strong.

tao bright yellow journals got hold of a copy of the plan in sone way or other,
and have been having a great deal of excitement over Rule 16, which pertains to
the question of marriage under !!100.00 a month, etc. They have interviewed a
number of bankers, detectives and others about the matter and successfully
succeeded in steering clear of the truth, as usual. However, nothing was said
that need give us any concern in any way, shape or manner.- It was merely the
usual lime-light conversation that was sure to follow, and it is better to have
it over with and out of the way. They did the same thing when the Continental,
of Chicago, put out their system.
It has always seemed to me that it is a good
thing that Hearst and the Pulitzers are not in jail, as we never could hope to
reform our criminals if they were associated with them. ,




.

F.171

DIRECTORS.

OFFICERS.
E.C.CONVERSE, President.

JAMES S.ALEXAN DE R, PrestNatBankofCommerce in N.Y.
STEPHE N BAKER. President Bank of the Manhattan Co.
SAMUEL G. BAYNE, President Seaboard Nat Bank.

EDWIN M. BULKLEY, Spencer Trask & Co.Bankers.
JAMES G. CANNON, President Fourth Nat Bank.

E. C. CONVERSE, President,
THOMAS DEWITT CUYL ER, Prest.CommercialTrustCoPhila.
HENRY P DAVISON, J. P Aorgan & Co.. Bankers.

RUDULPH E LL I S, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY, Vice PresidentHanover Nat.Bank.
WALTER E. FREW, President Corn Exchange Bank.
F RE DR T. HASKELL,V.Prest.III.Trust&SavingsBank Chicago.
A. BARTON HE PB U RN, Chairman.Chase Nat.Bank.

FRANCIS L. HI N [President First NatBank.

THOMAS W. LAMONT, J. P Morgan & Co. Bankers.
EDGAR L. MARSTON. Blair & Co Bankers.
JOSE PH B. MARTINDALE, President Chemical NatBank.

BANKERS TRUST

COMPANY
CAPITAL
SURPLUS

$10,000.000
10,000.000

CHARLES D. NORTON, Vice Prest.First NaLBank,
WILLIAM H. PORTER. J. P. Morgan &Co. Bankers.

D. E. POM [ROY, Vice President.
W. N DUAN E. Vice President.
F. I. KENT, Vice President.
HAROLD B. THORN E, Vice President.
F. N. B.CLOSE, Vice President
GEO. G. THOMSON, Secretary.
GEORGE W. BENTON, Treasurer.
GUY RICHARDS, Asst. Secretary.
H. W. DON OVAN, Asst.Treasurer.

BETH UNE W. JONES, AsstSecretary.

CABLE ADDRESS: BANKTRUST, NEW YORK.

GATES W. MC GARRAH, Prest.Mechanics'& Metals NatBank.

WILLIAM C..,P01 LLON, Vice President.
DANIEL E. POMEROY, Vice President,

B [NJ. STRONG, J R.,Vice President
WILLIAM C. POI LLON, Vice President.

IS WALL STREET

F WI LSON , J R., Asst.Secretary.

R. H.G I LES, Asst. Treasurer. -

PERRY D. BOGU E, Asst.Treasurer
HARRY N. DUNHAM, Asst, Treasurer
M IC HAE LS , Trust Officer.

SEWARD PROSS ER. Prest Liberty Nat.Bank

DAN IE L G. REID, Vice President Liberty Nat Bank.
BENJ. STRONG, JR.Vice President.
EDWARD F SWI N NEV. Prest First Not Bank,Kansas City
GILBERT G. THO R N E. Vice President.NatPark Bank.
EDWARD TOWNSEND, Prest.1,.& Traders' NatBank.
ALBERT H.WIGG IN. President Chase NatBank,
SAMUEL WOOLVERTON,Vice President Hanover NatBank.

NEW Yo R K, February 21, 1913.

FOREIGN EXCHANGE DEPARTMENT

Mr. Benjamin Strong, Jr.,
C/o Hotel Raymond,
Pasadena, Calif.
Dear Ben:-

Knowing that you are interested in the profits of
the Foreign Exchange Department, and as the figures were turned in to me after I wrote you Wednesday, will give you a
bird's eye view of the situation, as I do not wish to bother
you with too much detail.
We will turn in to the Banking Department in the
form of profits this month 4175,000. This will leave us
about ,i330,000 to pay for extraordinary Travelers' Cheque expenses this coming year. In February, 1912 we retained $12,000
That amount, together with the profits for
for this purpose.
1912, left us about 4205,000 to dispose of. Now that we pay
the full cost of Travelers' Cheques, for which the Bank Note
Company charge us 2 cents each, this portion of our expense
has doubled. On the other hand, our sales of Travelers'
Cheques increased last year, I think, about 45%, but cannot
state definitely, as the statistics for the year are not yet
in order, due to the fact that we have been working upon the
profits so that they could be turned over this month. They
are now checking back all of the work involved in figuring
the profits, in order to make certain that there is no error
before the tickets are actually put through.

Of course a large portion of the profit on the cotton bills which we bought last November and December will show,
up this year, as in figuring the profit for 1912 we dedubted
the proportion of the total amount on each bill that it has
to run in 1913. Such deductions cover periods from a fdw
days on 60 day bills purchased in October to almost the full
60 days on such bills purchased in December. The largest
amount of maturities fall in February.




B. S., Jr. 2.

As the general profits of the bank for February will
not equal the dividend, due to the short month, it works out
Very nicely to have the'Foreign EXchange profits go in at this
time.

Spent the morning with Dr. Andrew going over everything in the testimony and various speeches and writings of
Untermyer that would seem to imply that he might make a recommendation for legislation. Dr. Andrew took Untermyer's side
of the argument in every case and I took the bankers, in order
to bring out as strongly as possible every side of the quesIt made rather an interesting morning. Dr. Andrew took
tion.
down notes as we went along, and as I understand it, they are
to be used for purposes of direct education, so to speak, of
the members of the committee, but are not to be turned in to
the committee nor to the press.
Warner has a holiday to-morrow, and is coming home
from Harvard this evening, so that we will have Saturday and
It makes the two days look good to me.
Sunday together.




Sincerely yours,

F. 71

DIRECTORS.

,

JAMES S.ALEXAN DE R. PrestNat Bank ofCommerce in N.Y.
STEPHEN BAKER. President Bank of the Manhattan Co.
SAMUEL G. BAYNE, President Seaboard Nat Bank.
EDWIN M. BU LK LEY, Spencer Trask & Co.Bankers.
JAMES G. CANNON, President Fourth Nat Bank.
E. C. CONVERSE. President.
THOMAS DEWITT CUYL ER, Prest.ComrnercialTrustCo.Phils
HENRY P DAVISON. J. R Morgan & Co., Bankers.
RU DU LPH E LL I S, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY, Vice PresidentHanover Nat Bunk
WALTER E. FREW, President CornExchange Bank.
F RE OK T. HASH ELL.V Prest.HLTrust&Savings Bank Chicago.
A. BARTON HE PB U R N. Chairman.Chase Nat Bank.

FRANCIS L. H IN E,President First Nat.Bank.
THOMAS W. LAMONT, J. P Morgan & Co. Bankers.
EDGAR L. MARSTON. Blair & Co. Bankers.
JOSEPH B. MARTIN DALE. President Chemical NatBank.

OFFICERS.

BANKERS TRUST

COMPANY
CAPITAL
SURMWS

$10,000,000
10,000.000

WILLIAM H. PORTER. J. P Morgan &Co. Bankers.

H. W. DONOVAN, Asst.Treasurer.
F. WI LSO N, J R., Asst.Secretary.

R. H.G I LES, Asst. Tree surer. .

CHARLES D. NORTON, Vice Prest.First Nat.Bank,

DANIEL E,PO MEROY, Vice President.

GEORGE W. BENTON, Treasure
GUY RICHARDS, Asst. Secretary.
BETHUNE W. JONES, Asst.Secretary.

CABLE ADDRESS: BANKTRUST, NEW YORK.

GATES W. MS GARRAH. Prest.Mechanics'& Metals Nat Bank.

WILLIAM C.POILLON. Vice President.

E.C.CONVE RS E, President.
B [NJ. STRONG, J RVice President
WILLIAM C. POI LLON, Vice President.
D. E. POM [ROY. Vice President.
W. N. DUANE, Vice President.
F. I. KENT, Vice President.
HAROLD B. THORNE , Vice President.
F. N. B.CLOSE, Vice President.
GEO. G. THOMSON, Secretary.

16 WALL STREET

PERRY D. BOGU E. Asst.Treasurer.
HARRY N. DUNHAM, Asst,Treasurer
M IC HAE LS, Trust Officer.

SEWARD PROSS ER, Prest Liberty Nat.Bank
DANIEL G. REID. Vice President Liberty Nat Bank.
BENJ STRONG. JR.Vice President.
EDWARD F SWINNEY. Prest.FirSt Nat Bank.Hansas City.
GILBERT G.THO R NE, Vice President.NatPark Bank.
EDWARD TOWNSEND, Prest.Imp& Traders' Nat Bank
ALBERT H.WIGG IN. President Chase Nat Bank.
SAMUEL WOOLVERTON, Vice President Hanover Nat. Bank.

N E w Yo R K, February 24, 1913.

FOREIGN EXCHANGE DEPARTMENT

Mt. Benjamin Strbng, Jr.,
C/o Hotel Raymond,
Pasadena, Calif.
Dear Ben:,

Your letter of the 17th received this morning, also your telegram of the 21st. It was mighty nice of you to
wire me as you did, and I appreciate it more than I can tell
you.

Enclose herewith statement of pension fund matters
up to date, which will explain themselves. Mr. C. H.
Williams and Mr. W. S. Wilson will not retire at present, as
they are both thoroughly fitted for the nature of the work
which they have to do, but we are in position to ask them to
retire at any moment we desire, and they on their part are
in position to retire any time they may wish to. Mt. Geran
ranted to retire March 1st, but after thinking it over he decided to wait until August 1st, when he will be 65, which was
satisfactory to the officers of the company, due to his previous high-class work, even though at present he is not as dependable. The 23 young men who are under 18 wi31 automatically go into the fund as soon as they reach that age.
Will give you further particulars concerning 'foreign
exchange earnings in a few days. All of the work has been
proved, the tickets have been made out and will go through
to-morrow and next day.
Hoping that you are having the best possible kind
of a time, and with sincere regards, I am,




Cordially yours,

F. 71

DIRECTORS.

JAMES S. ALEXAN D E R,Prest.Nat.Bank of Commerce in N.Y.
STEPHEN BAKER, President Bank oFthe Manhattan Co.
SAMUEL G. BAYNE, President Seaboard Nat.Bank.

EDWIN Ni. BULKLEY, Spencer Trask & Co.Bankers

JAMES G. CANNON President Fourth Not Bank.
E. C. CONVERSE, President.
THOMAS DEWITT CUYLER, Prest.Commerciel Trust Co.Phils
HENRY P DAVISON, J. P Morgan & Co., Bankers.

RUDULPH ELL I S, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY, Vice President Hanover Nat.Bank.
WALTER E. FREW, President CornExchange Bank.
FRED'', T. HASKELL.V.Prest.M.Trust&Savings Bank Chicago.
A. BARTON HE PBURN.Chairman.Chase Nat.Bank.
FRANCIS L. H I N E,President First Nat.Bank.
THOMAS W. LAMONT, J. P Morgan & Co. Bankers.
EDGAR L. MARSTON. Blair & Co. Bankers.
JOSE PH B. MARTINDALE, President Chemical Nat.Bank.
GATES W. MCGARRAH. PrestMechanicsi&MetalsNatBank.
CHARLES D. NORTON, Vice Prest.First Nat.Bank,

WILLIAM C.POiLLO N. Vice President,

DANIEL E. PO MEROY, Vice President.
WILLIAM H. PORTER. J. P Morgan &Co. Bankers.
S EWARD P ROSS ER, Prest Liberty Nat.Bank

OFFICERS.
C.CONVE RS E, President.
BE NJ. STRONG,J R.,Vice President

BANKERS TRUST

COMPANY
CA PITA L
SU RPLUS

$ 10, 000,000

10,000.000

WILLIAM C. POI LLON, Vice President.
D. E. POM EROY, Vice President,
W. N. DUAN E, Vice President.

I. KENT, Vice President.
HAROLD B. THORNE, Vice President.
F. N. B.CLOSE, Vice President.
GEO. G. THOMSON. Secretary.
GEORGE W. BENTON, Treasure,.

GUY RICHARDS, Asst.Secretary.
H. W. DONOVAN, Asst.Treasurer.

BETHUNE W. JONES, Asst Secretary.

CABLE ADDRESS BANKTRUST, NEW YORK.

16 WALL STREET

DANIEL G. REID. Vice President Liberty Nat .Bank.
BENJ. STRONG, JR.Vice President.
EDWARD F SWIN N EY, Prest.First Nat.Bank,Kansas City.
GILBERT G. THORN E, Vice President.NatPark Bank.
EDWARD TOWNSEND, PresitImp& Traders NatBank.
ALBERT H.WIGG IN. President Chase NatBank,
SAMUEL WOOLVERTON, Vice President HanoyerNatBank.

F. WI LSO N,J R., ASSt.Secretary.

R. H.G I LES, Asst, Treasurer.
PERRY D. BOGU E, Asst.Treasurer.
HARRY N. DU N HAM, Asst, Treasurer

MICHAELS, Trust Officer

N E W Yo R K , February 28, 1913.

FOREIGN EXCHANGE DEPARTMENT

Mr. Benjamin Strong, Jr.,
C/o Hotel Raymond,
Pasadena, Calif.
Dear Ben:-

Presume you may have seen the comparative statement of the foreign exchange profits for 1911 and 1912 as
they appeared in the report to the Executive Committee made
yesterday, but in order to make sure, enclose a copy herewith, knowing it will interest you.
It seems that the Auditing Department made an error in figuring our rent, which they only discovered after
the figures had been entered in the Executive Committee reOn that account they were not changed, but allowed to
port.
Instead of charging us at the old rate for the porstand.
tion of the year that we were in the Bankers Trust building,
they charged us for the whole year at the rate in the new
building, the difference in our favor being a trifle over
0,000, which would have increased our interest earning about
Of course this does not matter partic1/8 of one per cent.
ularly, but one naturally likes to make as good a showing as
possible. Adding the amount earned that has been retained
by us to pay extraordinary expenses this comin6 year, the
net interest earning of the Foreign Department was a trifle
over 5 5/8%.
Will enclose copy of the statement made by J. P.
Morgan & Company to the Pujo Committee. As it was given out
by one of the committee yesterday to the newspapers, I suppose the Los Angeles paper may have copied parts of it,,a1though it is so long I presume you have really seen very little of it. It was written by Lamont after he had gone over
stacks of material which had been prepared for the purpose.
It seems to me that it is a most excellent statement, and I
guess it has appealed to others in the same manner, for after
it cane out it gave tone to the whole market, and stocks turned very strong.



B. S., Jr. 2.

We have had the funniest foreign exchange market
imaginable. Sterling has been jumping up and down over a
range of 30 or 40 points, and is now very strong. We have
bought a little on the breaks, and have a very good balance.
£150,000 that we loaned in London at 5% from February 15th
to March 15th will be available to draw against in a few
days, but if the market still continues to appear strong and
we can carry it forward another 30 days at 5%, we may do so.
Some more of our long Marks mature this coming week, and we
sold against them yesterday at 95 1/4 plus 1/64, which you
can see is a most excellent rate, as they were bought on a
demand basis of 94 3/4 and under.
The Travelers' Cheque balance is just about holding its own, although if it follows the action of previous
years, it will begin to fall off until about the middle of
April. This is because tourists are beginning to return from
West Indian trips and are cashing in cheques which they did
not use.

Sulzer, as you probably have noticed in the papers,
has gone crazy, or to stick a little closer to the truth, he
hasn't changed any from what he used to be. I really think
that business interests in New York are very seriously disturbed, because there is no question but that if the bills
now before the legislature pass, an immense amount of business will leave New York never to 'come back. Repealing some
of the worst bills would not result in the return of much of
the business that would leave. Boston, Philadelphia, Pittsburgh
and Chicago would be the ones to profit most. If real estate
values are affected, as they unquestionably would be should
the bills pass, it would result not alone in a great loss to
New York interests, but would as well reduce the power to
borrow of New York City. In fact the whole matter is so extremely serious that all interests are working together to
try and defeat the bills, and I cannot see how they can go
through, so we are not borrowing trouble.
While th
representatives are always ready to pass anything that is
against New York City, yet it does not seem possible that
they would be willing to favor legislation which would actually destroy the business of the city, and which would re-act
upon them. Of course it is necessary to get them to believe
that such would be the case, and I think that the committees
who are working on the matter are going to succeed in conIf the laws were passed, we would be affected
vincing them.
to a very great extent, along with other interests, for it
would result in transfer agencies being established in many
other cities.
A

However, we all hope for the best, and I am not saying this to you with any idea of making you anxious, but more
to familiarize you with the facts as they appear to me, to
better enable you to understand future developments as they
may appear in the newspapers.



B. S., Jr. 3.

We got notice to-day that an issue will be made on
Zarch 7th of a loan of harks 400,000,000, 4 years, 4% Prussian
Treasury notes at 99, also 150,000,000 German Prussian Consul
4s at 98.60. While on March 7th we will have a large number
of cash Idarks due to maturing bills, yet I do not consider it
of value to take an interest in either issue, and have refused
to participate to-day.

Hoping that the severe storm that was reported here
as having occurred in California may not have caught you out
golfing or motoring, or in any other pursuit for pleasure with
which it might have interfered, I am,




Sincerely yours,

MEMORANDA
for i:r. Strong.

liaroh 6, 1913.

DEPARTMENT

3verything has been very quiet in the foreign business during the last
few days. 7e purchased 3,000 bales of cotton that I think should net us very

well.
After flirting with the Bank of Athens for several months by mail, they
have finally opened an account with us. Their first remittance was received
this morning, and while only for ',3,000, it represents a beginning that I hope
may develop into a good aocotuit later.
Tuesday evening I made an address in Pittsburgh. Was able to call upon

most of the Pittsburgh 'banks during the day. Arranged withr. McEldovmey, of

the Union Trust Company, to offer him participations in any foreign loans in
which we might be interested. Thtplaineci the nature of the liability, both as

o rate and security.

-Tish to extend such arrangements as much as possible,

for it will give us an opportunity to deal on a broader basis, but do not like
to suggest such business to bankers except as I can talk it over with them and

rake certain that there is no misunderstanding.
The British Bank for 'Foreign Trade, Ltd., of London, with whom I have

corresponded concerning an account, cabled us yesterday to }mow at what rate
we would loan them :1, 250,000 for thirty days against government securities of

Russia, China and Brazil. Cabled them 61, subject to approval of collateral
by the London City & Midland, and have their cable reply this morning, saying,

"Reret. Best thanks."
London market is

Felt certain that they -could not pay 6, as the

about 51), but did not wish to encourage the 'ousinesr too

rapidly. Ara today writ ing them to advise us the particular issues that they

have in mind offering us as collateral.

Am certain that they Would -lint allow

the London City c.; MiCland to ',lass on the security, but would rather lose a
temporarily
deal/than leap in the dark. I think we can unquestionably do some profitable

business with this bank, after we become acquainted with the securities that

they have to offer.




F. 62

MEMORANDA
for
DEPARTMENT

MATURITIES




March 6, 1913,

Mr. Strong.
FOR

1913 WHICH WILL BE

OF

BALANCE

March

PAID.

S'3,200,000
.

.

.

5,300,000

.

.

.

6,600,000

.

7,300,000

July

.

2,300,000

August

.

4,000,000

September.

.

4,100,000

April

May

.

June

.

October

900,000

.

Novenber .

.

.

.

2,100,000

December .

.

.

.

3,400,000

H. B. T.

C 0 2 Y .

March 8, 1913.
Er. William J. Williamson,
Brighton Place,
De Land, Fla.
Dear

sir:-

Your letter of March 3 received, and its tone was
so alarming that at first we thought it was intended for a
joke, but even so I have decided to answer it seriously.
Without regard to whether conditions develop as
you suggest, it would be quite impossible for confiscation
to take place in large cities unless it also took place in
small ones, for it would have to be done under a general
plan, by riot or not at all. If done under a general plan,
all property would meet the same fate, without regard to its
If by riot, it could only result in the loss of
location.
such negotiable instruments and cash as happened to be stolen.
Riot would not necessarily occur in a large city any more than
in a small one, but the protection afforded by the vaults in
small towns and cities is not to be compared with that in
the larger banks in the large cities.
For instance take this company. We have the largThe door is about five feet thick
and consists of steel and cement put together in such a way
that it would take many days for even experts to get through
it working under full protection. We do not believe that it
would be possible to blow it open with dynamite or giant
powder, or in any other way that might be available to a mob
which might have temporary possession of the building.
est vault in the world,.

Ordinarily there is considerable warning before mob
rule becomes effective anywhere, but our vault system is such
that even sudden and unexpected mob control would not make
it possible for anyone to gain access to it. We not only
have a day gate to the vault that is closed while the main
doors are open, but the door itself (and access to the day
gate) is enclosed in a heavy, steel barred vestibule, entrance to which can only be obtained by officers of the company after communication with those inside. There is always a vault officer and assistant vault officer within the
vestibule who could be given warning from any part of the
office that the vault doors should be closed.

We feel, therefore, that we are protected in so
far as it is possible from anything in the nature of a 'riot
or sudden uprising, and that those who entrust their business to our care will be doing so under the safest conditions
that exist anywhere.




W. J. W. 2.

The next question, and really the only serious one,
because of the protection already referred to, lies in the
possibility of an era of socialism resulting in absolute
confiscation of' property. We do not believe that any such
condition is possible in this country, nor that it need be
feared by anyone. Socialism does not mean to-day what it
did yesterday. The teachings of Karl Marx do not constitute
the present beliefs of even the German socialists. In fact
the socialistic party in the German Reichstag to-day could
be classed as ultra-conservative, taken in connection with
the teachings of socialism as originally developed.
A very strong socialistic wave has unquestionably passed over this country, but there are comparatively
few who have voted the socialistic ticket who believe in confiscation or anything approaching it.
In Milwaukee, Wisconsin, a very strong socialistic
feeling developed, which resulted in turning over the city
government and the member of Congress from that district to
It only took one term, however, of those
the socialists.
elected to result in their overthrow, and Milwaukee is not
now under socialistic government, and the socialist Congressman retired March 4. This is only one instance of a number that have occurred in this country where some city or
other has gone socialistic temporarily. In practically every
case also the socialists have won,rnot because of their
propaganda but on account of corruption of those controlling
the other parties, which disgusted many voters.

At the moment this country is suffering from yellow
journalism as carried on in our newspapers and magazines, by
dishonest politicians and self seekers, together with the result of such propaganda as shown in the cries of ignorant reformers. It is human nature to allow any condition to become
very bad before it is regulated, because the ordinary individual will not put himself out to take part in furnishing
protection to the whole until he is sufficiently injured
himself to bring him to his senses. The result is that we
have not only allowed free speech in this country, but we have
allowed license, and both writers and speakers fill their
audiences with lies and misrepresentations, until the system
is becoming a real menace. There is no question but that it
is a very difficult problem to put any curb upon such dishonesty without checking free speech, and that is one reason why
it has been allowed to run as long as it has. Men, however,
are beginning to wake up to the fact that serious results are
apt to follow, unless something is done to check the output
of dishonest utterances that have been the principal educationt
of our people for the last several years, and the first real
signs of an attempt to meet the situation are being noticed.
Conditions are really not bad in this country, and the minds
of the majority of our people, while temporarily befuddled by
the noise and clamor of the muckraking portion of our popula


W. J. W. 3.

tion, are still conservative and sensible. This means that
it is inevitable that as conditions develop in the near future, our people will COTrie to themselves and find out that
they have been betrayed and act accordingly. Then a vast
change of sentiment will occur, and while the regulation
which is right, because of the closer inter-relationship of individuals made necessary by their increased number, will prevail, yet the cheap thinker will be discredited.

All of these cycles have their value, because they
succeed in jarring the ultra-conservative mind out of its
ordinary channel that custom draws narrower and narrower, and
we find after each period of frenzy that better conditions
prevail. We are only carrying out history in its regular development, the difference between to-day and yesterday lying
in a greater education of the multitude, which makes possible new developments without the destruction that was necessary
in former times. We, therefore, have no cause to feel at all
worried over the situation, but look forward to a brilliant
future that will certainly develop after the present era of
misrepresentation is past, and judging from many incidents
here and there, the turn is not far ahead.
Assuring you that if you consider it to your interest to entrust this company with your business, that it will
have our most careful attention arid that we have every confidence that we can serve and protect you to your entire satisfaction, we are,




Very truly yours,

-"S

DIRECTORS.

OFFICERS.
E.C.CONVE RS E, President.

JAME

.ALEXANDE R,Prest.Nat.Bank of Commerce in N.Y.
STEPHE N BAKE R. President Bank of the Manhattan Co.
SAMUEL G. BAYNE, President Seaboard Nat.Bank.

E DW I N M. BULKLEY, Spencer Trask& Co.Bankers.
JAMES G. CANNON. President Fourth Nat.Bank.
E. C. CONVERSE, President.
THOMAS DEWITT CUYL ER, Prest.ComrnercialTrustCo.Phile.
HENRY P. DAVISON, J. P. Morgan & Co., Bankers.

RUDULPH ELLIS, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY, Vice President Hanover Nat.Bank.
WALTER E. FREW, President Corn Exchange Bank.
FRED.K T. HASKELL.V.Prest.M.Trust&SavingsBank Chicago.
A. BARTON H E PB UR N. Chairman.Chase Nat.Bank.

FRANCIS L. H I N E.President First Nat.Bank.
THOMAS W. LAMONT. J. P Morgan &Co. Bankers.
EDGAR L. MARSTON. Blair & Co. Bankers.
JOSEPH B. MARTINDALE. President Chemical Nat.Bank.

B E NJ. STRONG, J R.Vice President,

BANKERS TRUST
C OMPA NY
CA PITA L
SURPLUS

$10,000,000
10,000.000

CABLE ADDRESS: BANKTRUST, NEW YORK.

CHARLES D. NORTON, Vice Prest.First NaLBank,
WILLIAM H. PORTER. J. P. Morgan &Co. Bankers.

F. I. KENT, Vice President.
HAROLD B. THORN E, Vice President.
F. N.6 C LOSE. Vice President.
GEO. G. THOMSO N, Secretary.
GEORGE W. BENTON, Treasurer.

GUY RICHARDS, Asst. Secretary.
H. W. DON OVAN, Asst.Treasurer.

BETHUNE W. JONES, Asst.Secretary.

GATES W. MC GARRAH, PrestMechanics& Metals NatBank.

WILLIAM C.POI LLON. Vice President.
DANIEL E. POMEROY, Vice President.

WILLIAM C. POI LLON, Vice President.
D. E. PO M EROY, Vice President.
W. N. DUAN E, Vice President,

16 WALL STREET

F. WI LSO N.J R., Asst.Secretary.

R. H.G I LES, Asst.Trea surer
PERRY D. BOGU E, Asst.Treasurer.
HARRY N. DUNHAM, Asst, Treasurer.

MICHAELS, Trust Officer.

S EWARD P ROSS E R, Prest Liberty Nat.Bank

OANIE L G. REID. Vice President Liberty Nat.Bank.
BENJ. STRONG, JR.Vice President.
EDWARD E SWI NNEY. Prest.First Nat Bank,Kansas City.
GILBERT G. THOR.NE. Vice President.Nat.Park Bank.
EDWARD TOWNSEND. Prestime& Traders' Nat.Bank.
ALBERT H.WIG G I N. President Chase NatBank.
SAMUEL WOOLVERTON. Vibe President Hanover Nat.Bank.

NEW YoRK, March 10, 1913.

GREIGN EXCHANGE DEPARTMENT

ildr. Benjamin Strong, Jr.,

C/o Hotel Raymond,
Pasadena, Calif.
Dear Ben:-

Last summer we had more or less friction during
the vacation and summer period, due to the fact that while
air. Dunham was away from the vault on his regular vacation,
for a day, on Saturday afternoons' and at luncheon time,
some other officer of the company was obliged to take his
place. As Chairman of the Vault Committee I was obliged a
number of times to request different junior officers to
spend certain time in the vault, when they were very reluctant to do so.
In order to prevent friction this coming season,
would suggest that Ur. Bolles be elected Assistant Vault
Officer, and be given all of the combinations which are now
held by Mr. Dunham. The only reason for going through the
form of making him Assistant Vault Officer is to keep the
control of one side of every double combination in the
hands of an officer. As a matter of actual fact, it will
not change the risk in any way. Under the present system
Mr. Dunham goes to the particular safe that some senior,
clerk of a department wishes to have opened, unlocks the
officer's combination and sees that the clerk unlocks the
second combination. He then leaves Yr. Bolles in charge of
the safe, together with the clerk. While kr. Bolles does
not have the combinations, you can readily see that he has
exactly the same power to defraud the company as if he were
possessed of them.

Presented the matter at the officers' meeting a
few days since, and they all felt that the arrangement was
most desirable.



B. S., Jr. 2.

Before writing you, however, for your decision, I
thought it best to have a talk with Mr. Porter about Mr.
Bolles. Mr. Porter states that he has known Mr. Bolles intimately for 33 years, that he would trust him to go around
the world with anything Mx. Porter might have. In other words,
he considers him thoroughly reliable, and feels that we would
be entirely justified in making the arrangement suggested.
Er. Porter agrees with us all that it is better to make him
an officer for this special purpose and thereby prevent any
exception being made to our general rule, than to give him
the combinations without such action. Our by-laws of course
authorize officials to sign, but we could unquestionably get
around this. Mr. Bolles' signature would not be sent to any
of our correspondents, so that his signature on any drafts
would be of no value, although unless we made a special matter of it the company might be liable in case he signed an
obligation directly upon us.
Considering Iiir Bolles' age and experience, in connection with what we know of his habits of life and character,
it seems to me that we are thoroughly justified in taking the
action suggested. Mr. Porter states that Mr. Bolles owns his
home on 52nd Street.

Assuring you that we shall all be pleased to accept
your decision in the matter, I am,,
Sincerely yours,

CZ--)

P. S. We had a letter from a Mr. Williamson, who is President of the Pilot Cotton Mills Company, and who is a personal friend of Mr. Martindale and Er. Porter, from which
quote as follows:

I am on
"Yours 27" forwarded me from Raleigh.
To be frank, I fear to leave a
my vacation now.
trust estate in New York. Some day you will have a
socialistic or anarchistic upheaval there, and they
will wipe you, your banks and trust companies off the
I believe a smaller city preferable on this
earth.
You are safe now, and it is all right no*,
account.
but unless things change it seems to me the tendency
is as above, and when a person leaves a trust, he
wants it safe until it has served its purpose.
Before the Money Trust investigation had become so noisy,
we had practically arranged with Mr. Williamson, at the re


B. S., Jr. 3.

quest of Mr. Martindale, to act as Trustee for him in the
managing and collecting of an income from estates of tii100,000
The letter quoted above is the first direct eviand over.
dence we have had of any Lind that the present uncertain conditions are affecting individuals so that they are really beginning to act instead of merely exhibiting more or less nervousness. The letter was passed around among the officers until finally it was given to me to answer. Thinking you might
be interested in the whole proposition, I enclose herewith
the reply which I made to Mr. Williamson's letter. Would add
that I signed it personally instead of as Vice-President.

Money in Germany is very, very high, and I would
not be surprised to see something of a squeeze there on the
31st of March, the end of the quarter. Rates for the carryover will not be definitely determined for ten days yet, but
7% seems probab.le at the moment.
From what I can gather, country banks are all trying to run with strong reserves. The First National Bank of
Omaha at present has 47% cash in its vaults. If this condition is general enough, it will mean that as soon as confidence begins to develop, there will be plenty of money to
carry on business, but that if the feeling of unrest spreads
and more bankers begin increasing their reserve beyond their
requirements that money will tighten up very materially.
Gold is still going out, as you are probably aware
from the newspaper reports, and exchange rates continue high.
Erarks are about 95 7/16 to-day, but this is probably in anticipation of a high carry-over rate at the end of the month.
The private rate of discount and the bank rate both are now
the same in England, viz., 5%.
Last week I wrote to Sir Edward Holden and asled
him for his opinion of money conditions for the near future
in England and on the continent. Have also written to Er.
Hugo Schmidt for his opinion.
Hope that you may be having all sorts of opportunI am elLpecting to spend a week
ities for pleasure and rest.
in Washington in April. Warner has his Easter vacation then,
and I am anxious to show him the capital of his country, although I will have to admit I am not so proud of what is in




F

71

DIRECTORS.
JAI. ES S.ALF.XAN 0 ER, Prest.Nat Bank of Commerce in N.Y.
STEPHEN BAKER. President Bank of the Manhattan Co.
SAMUEL G. BAYN E, President Seaboard Nat.Bank.

EDWIN NI. BU LKLEY, Spencer Trask& Co.Bankers.

JAMES G. CANNON, President Fourth Nat Bank.

E. C. CONVERSE, President.
THOMAS DEWITT CUYL ER, Prest.CornmercialTrustCo.Phila.
HENRY P DAVISON, J. P. Morgan & Co.. Bankers.

RU DU LPH E LL I S, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY, Vice President Hanover Nat Bank.
WALTER E. FREW, PresidentCorn Exchange Bank.
F RED 'K T. HASKELL,V.Prest.111.Trust&Savings Bank Chicago.
A. BARTON H E PB U R N. Chairman,Chase Nat Bank.

FRANCIS L. H IN E.President First Nat.Bank.
THOMAS W. LAMONT, J. P Morgan &Co. Bankers.
EDGAR L. MARSTON. Blair & Co Bankers.
JOSEPH B. MARTIN DALE. President Chemical Nat.Bank.
GATES W. Mc GARRAH. PrestMechanics'&MetalsNatBank.
CHARLES D. NORTON, Vice Prest.First NatBank,

WILLIAM C. POI LLON, Vice President.
DANIEL E. PO M ER OY, Vice President
WILLIAM H. PORTER., P Morgan &Co. Bankers.

OFFICERS.
E.C.CONVERSE, President.
B ENJ. STRONG, J R.,Vice President

BANKERSTRUST

COMPANY
CAPITAL
SU RPLUS

$ 10,000.000
10,000.000

WILLIAM C. POI LLON, Vice President.
D. E. POM E ROY, Vice President.
W. N. DUAN E, Vice President.
F. I. KENT, Vice President.
HAROLD B. THORNE, Vice President,
F. N. B.0 LOSE, Vice President.
GEO. G.THOMSON, Secretary.
GEORGE W. BENTON, Treasurer.

GUY RICHARDS, Asst.Secretary.
H. W.DONOVAN, Asst.Treasurer.

BETHUNE W. JONES, Asst Secretary.

CABLE ADDRESS BANKTRUST, NEW YORK

I 6 WALL STREET

F. WI LSO N, J R., Asst.Secretary.

R. H.G 1 LE S, Asst. Treasurer

PERRY D. BOGU E, Asst.Treasurer
HARRY N. DUNHAM, Asst. Treasurer
MICHAELS, Trust Officer.

SEWARD PROSS ER, Prest Liberty Nat.Bank

DAN I E L G. REID. Vice President Liberty Nat.Bank.
BENJ. STRONG, JR.Vice President.
EDWARD F SWINNEY, Prest.First NatBank,Kansas City
GILBERT G THORNE, Vice President Nal.Park Bank
EDWARD TOWNSEND, Prest Imp & Traders' Nat.Bank.
ALBERT H.WIGG IN. President Chase Nat Bask
SAMUEL WOOLVERTON, President Gallatin NatBank.

N E W Yo R K , March 19, 1913.

FOREIGN EXCHANGE DEPARTMENT

Mr. Benjamin Strong, Jr.,
C/o Hotel Raymond,
Pasadena, Calif.
Dear Ben:-

Your letter of the 10th instant received and read
with much pleasure.
*

Am almost afraid that I have been writing you too
voluminously, considering the fact that you are supposed to
be taking a rest. At the sane time I have felt that the
subjects covered were of real interest to yon, and as they
have required neither study nor decision on your part, I have
written rather fully.
You ask for my opinion of the foreign situation,
and I will give it without awaiting replies from the letters
that I sent to Sir Edward Holden and Hugo Schmidt. In reading what I have to say, you should bear in mind that it is
only my own opinion that I am giving, and therefore take it
for what it is worth.
In the first place, I do not believe that the apparent stringency in Germany is either as bad as it is made out
to be or that it is due to over-extension of industrial credits.
On the other hand, I am inclined to think that Germany
has been helping to finance Austria and some of the Balkan
countries, and that this added burden has resulted in dear
money. The moratorium in the Balkan countries has also work
ed hardship, and will continue to do so for some time. The
people in Germany, France and Austria have apparently been
hoarding money, that is not necessarily money which would
otherwise have been deposited by then in the banks, but money
that they might have invested and that would have reached the
banks through governments and corporations. I do not believe
that this money will come out upon the signing of the treaty
of peace between Turkey and the allies, unless at the same time\




B. S., Jr. 2.

all boundary questions are so definitely decided that the
people will be relieved from the fear of complications between the greater powers. To my mind Germany is rather fearful of the Slays, for the Balkan allies have shown considerable power, and together with the Russians will constitute a
real menace, should trouble develop between Germany or Austria
and any of the Slav nations. While at the moment the French
and German people undoubtedly fear war between their respective countries, yet I believe that they will soon see that
their interests lie together against the encroachment of the
Slav, and that Italy, Austria and England will be similarly
influenced. It would not be surprising to me to hear that the
governments of Germany and France were in full accord over the
Slav proposition, and that while the money that Germany is contemplating asking from its people who have an income of 22500
or over, in order to make up a $50,000,000 fund for extending
Its military system, is not desired because of fear of war with
England or France, yet that it is wanted to protect Germany
from the Slavic races. The action of France too in extending
its regulations for military service while based partly upon
the fact that it is felt necessary to keep up with Germany is
also more or less due to the changed conditions in the Balkans.

.

It seems to me that the real reason that the powers
have allowed Turkey to break agreements contained in the
treaty of Berlin has been the feeling that it was acting as a
buffer for the surplus energy of th'e Balkan races. The Turks
and the present allies have been so evenly matched that they
have offset each other, and if Italy had not defeated Turkey
in Tripoli, I question whether the allies would have started
their war for some time yet, although it was inevitable that
it would come sooner or later. With Turkey driven entirely
out of Europe, with the exception of Constantinople and its
immediate surroundings, the whole status quo will be disturbI rather expect that the powers will try and form a state
ed.
of Albania, thereby creating a semi-powerful country of a
people who are naturally the enemies of the allies, hoping
If they
that it may have a quieting effect on the latter.
succeed in the attempt, while it will undoubtedly be helpful
yet Austria and Germany will be placed in a very different poreal
sition than they ever have been since they have become
powers. It is possible that Germany fears that with the growing strength of the Slav races that either France or England
would join with Russia against them, should war develop, but
the French people
I question whether they would. At
might think it a good opportunity to strike at Germany and recover Alsace and Lorraine, but I believe that the new power of
the Balkan races will have a sobering influence as its potency
is realized.

first

The fall of the French VInistry is not necessarily
serious, as it had more to do with matters entirely local to
France, and I guess was more of a personal fight on the part



c

B. S., Jr. 3.

of M. Clemenceau, who wished to get even for some favors extended to him by the former premier, than for any other reason.

The assassination of the King of Greece should not
cause any special complications, as his son is apparently a
competent fellow and will step into power without opposition.
The condition of unrest that prevails in Etgland is
really serious, but should work out in time, although a certain degree of so-called socialism has unquestionably come to
stay.

On the whole I look for a better money condition
after the April settlement, but not for ease until some of
the fear of war that seems to be grounded in the peoples of
Germany and France is dissipated.
Yesterday we cabled the Deutsche Bank, Berlin, asking for a rate on money left on special deposit for one month
They cabled us to-day the rate of 7 3/8%, and
from March 31.
we have accepted it on Narks 750,000 which we bought last year
and that are maturing during the last few days of this month.
This rate, together with other conditions which may influence
exchange, make it look like a good deal, particularly as we
will need a good many Marks to cover Travelers' Cheques in May.
Last evening I made an addres6 before the boys of
the "Bankers" Club, and was very mach interested in seeing
their organization actually at work. The attendance was excellent and the men seemed really in earnest. They had a business meeting for half an hour preceding the address, and they
were all actively attentive.




Sincerely,

F. 71

DIRECTORS.
J k...4 ES S.ALEXAN DE R. Frest.NatBank ofCommerce in N.Y.
STEPHEN BAKER. President Bank oFthe Manhattan Co.
SAMUEL G. BAYNE, President Seaboard Nat Bank.

EDWIN M. BULKLEY, Spencer Trask & Co.Bankers.
JAMES G. CANNON. President Fourth Nat Bank.

E. C. CONVERSE, President.
THOMAS DEWITT CUTLER, Prest.CornmercialTrustCo.Phila.
HENRY P DAV I SON, J. P. Morgan & Co.. Bankers.

RUDULPH ELLI 5, President Fidelity Trust Co. Phila.

OFFICERS.
E.C.CONVE RS E, President.
B ENJ. STRONG, J R.,Vice President

BANKERS TRUST

COMPANY

E. HAYWARD FERRY, Vice President Hanover Nat.Bank.
WALTER E. FREW, President Corn Exchange Bank.
FRE D'E, T. HASKELL,V PrestIll.Trust&Savings Bank Chicago.
A. BARTON HE PBUR N. Chairman.Chase NatBank.

FRANCIS L. HI N E.President First NatBank,

THOMAS W. LAMONT, J. P Morgan & Co. Bankers.
EDGAR L. MARSTON. Blair & Co Bankers.

JOSEPH B. MARTI N DALE. President Chemical NatBank.
GATES W. MCGARRAH. PrestMechanicsAMetals NatBank.

CAPITAL
SURPLUS

$10,000,000
10,000.000

DANIEL E. PO MEROY, Vice President

WILLIAM H. PORTER. J. P Morgan &Co. Bankers.

GUY RICHARDS, Asst. Secretary.
H.W. DON OVAN, Asst.Treasurer.

BETHUNE W. JONES, Asst Secretary.

CABLE ADDRESS: BANKTRUST NEW YORK.

CHARLES D. NORTON, Vice PrestFirst NetBank,

WILLIAM C.POILLON. Vice President.

WILLIAM C. POI LLON, Vice President
D. E. POM E ROY, Vice President.
W. N. DUAN E, Vice President.
F. I K ENT, Vice President.
HAROLD B. THORNE , Vice President.
F. N. B.CLOSE, Vice President,
GEO. G. TH OMSON. Secretary.
GEORGE W. BENTON, Treasurer.

16 WALL STREET

F W I LSON,J R., Asst.Secretary

R. H.G I LES, Asst. Treasurer,
PERRY D. BOGUE. Asst.Secretary.
HARRY N. DUNHAM, Asst. Treasurer

MICHAELS, Trust Officer

SEWARD P ROSS ER. Prest Liberty Nat.Bank

DANIEL G. RE ID. Vice President Liberty Nat.Bank.
BENJ. STRONG. JP.Vice President.
EDWARD F SW1NNEY, Prest.first Nat Bank.Kansas City
GILBERT G. THOR NE. Vice PresidentNatPark Bank.
EDWARD TOWNSEND, Prest !ma& Traders NatBank.
ALBERT H.WIGG IN, PresidentChase NatBank.
SAMUEL WOOLVERTON, Vice President Hanover Nat Bank.

N EW

Yo R K, March 24, 1913.

FOREIGN EXCHANGE DEPARTMENT

Xr. Benjamin Strong, Jr.,
0/0 Hotel Raymond,
Pasadena, Calif.

Dear Ben:Your letter of the 19th was received to-day. Mr.
Booth was here last week, and mr. Pomeroy took him out to
luncheon. He stated that Mt. Hellman was expected soon,
but that he probably would not leave Los Angeles for some
days. Have notified all the boys to watch for him, and we
will see that he is looked after properly.
We were caught with a lot of exchange just before
the drop. Once in a while our friends "hand it to us", if
opportunity offers, and it sometimes seems best to take it,
even when we do not wish it. While we did not buy the exchange in question at the high point, yet it was taken in on
the way down at different rates. As we were getting 4% in
London and there was every reason to expect the market to
recover, we let it remain in balance, and have to-day sold
it out at a very nice profit. The market for cables has
gone up during the last few days from 487.85 to 488.45, and
our sales to-day were at 488.45 and 488.47 1/2, at which
rates we have disposed of everything we had to spare in the
/' 3/1/6
lino of Sterling cables. In a few days we will be in position to make further sales, and I hope the market will keep
Lf11111
up until we can get rid of what we have maturing on the
28th, but it does not look any too favorable at the moment.
We still have some Marks for sale, but cannot let them go
until Saturday's steamer, as they do not go into account until April 4. However, the whole market proposition is working out very nicely.
The St. Louis banks are many of them under their
reserve, and I understand that the Chicago banks are very
closely loaned up also. The Mechanics-American, St. Louis,
drew 4250,000 against their account last week, leaving their



B. S., Jr. 2.
present balance $250,000. Understand that we were the last
one of their correspondents to be drawn against, as they
drew their surplus balances from Chicago first and then from
their other New York accounts.

Berlin discounts dropped from 6 3/8 to 5 7/8 an
60 and 90 d/s bills to arrive, which shows quite a little
easing in that market. To-day is a holiday abroad, so there
is no news from the foreign financial world.
We will try and have Er. Bolles appointed at an
April meeting of the Board of Directors. I asked Me. Close
to look up the by-laws and see how we had best word the resolution, so that there will be no conflict with them and
at the same time give no authority to Mr. Bolles to sign.
Will forward the resolution to you for your approval, as
there will be plenty of time to do so, because the matter
need not be acted upon until the meeting of the Board on
April 22., There will be absolutely no change in the vault
system through Mr. Bolles' appointment as Assistant Vault
Officer, with the exception of the fact that he will have
the combinations of the interior safes that he watches over
at present after Mr. Dunham has unlocked them. Mr. Bolles'
chance to defraud the company would, therefore, not be
changed in the slightest degree, but the whole system would
work much more smoothly.
Last week I arranged with Mr. Giles, Mr. Page and
Mr. Thomson to go over our whole vault system with me, for
the purpose of finding out whether now that the system has
been in operation some time, it is satisfactory in every particular and that the company is reasonably protected. Will
advise you result later.
March 26, 1913.
There is another matter of importance that I have
acted upon decisively for the time being.
In carrying on
the pension fund, every applicant is examined by a physician.
The reports of such examinations as made to us should be
treated in a most confidential manner. Our duty in regard
to these examinations is, to my mind, identical with that of
the examining physician. In other words, I do not consider
that we have any right to handle the reports of the examinations in any manner which will allow them to become known
generally, or even among the officers themselves. We have had
one or two cases come up that have confirmed me in this opinion.
I have, therefore, given Mr. Giles positive instrtiotions not to give out the information contained in the rec
ports to anyone in the office, Mr. Trefcer, or any of the
other officers, but to pass upon them himself based on the
report of the physician, except in cases where he has some
doubt as to the advisability of accepting a clerk, because
of the physical report, but where the individual has shown sufficient ability to make him otherwise desirable.
In such cases I



B. S., Jr. 3.
have told him to refer the report to me personally. As I
had five years' experience as Secretary and Treasurer of one
of the largest charity hospitals in Chicago, I should be
competent to decide such doubtful cases to a certainty.
Told NIT. Giles that this arrangement would have to last until your return, unless in the meantime you prefer to give
some different instructions.
If any information of the confidential nature that
is contained in the physician's reports should happen to get
out, or even the fact that some such information had gone out
from this company, the yellow journals might make very great
trouble for us, and there is no question but that it would
be a serious breach of trust, without regard to whether it
led to friction. Where a report is of such a nature that a
boy has to be turned down, it is of no moment or value to
the Trust Company to have the officers conversant with the
facts, and it might be most unfair to the individual, for
some of the officers might be acquainted with his family
and it might lead to unpleasantness.

*

The very great value to the Trust Company of these
examinations has already been proved in one or two cases that
have come before us, where men might have been employed that
should not have been, as their ability was excellent.

As the instructions givqn cannot possibly do any
harm, and as the records would all be filed in a safe under
Mr. Giles' personal control and can be referred to in the
officers' meeting later should you differ with me, I took
it upon myself to make the instructions to Mr. Giles absolute and positive.
Yesterday I loaned 2100,000 to the Comptoir National
d'Escompte de Paris, London, from March 28 to April 11 at 5%.
This is really an extension of the loan previously advised
you that matures on the 28th. The conditions abroad eased
up very materially yesterday. 90 d/s bills to arrive in
Berlin after April 1 can be discounted at 5 3/4%, whereas
the rate to arrive before April 1 has been as high as 6 3/8%.
The ruin effected by the tornado and floods durthe last few days may have more or less influence on
foreign exchange rates, if it turns out that those having
met with losses were heavily insured. While in the country
there was apparently little insurance, yet in places like
Omaha, Nebraska - Terre Haute, Indiana - and Dayton and,
Columbus, Ohio, conditions may be very different. While I
question whether the amount involved will be sufficient to
affect the rate particularly, I am watching the matter carefully.

ing

Enclosed is a comparative statement of the business
of the Foreign Department for the years 1911 and 1912. These



_c)

B. S., Jr. 4.

figures will appear in the regular

report that
ceived by you later, so you need not save them.
though

will be re-

Everything is moving forward satisfactorily, alshows signs of coming dullness.

business

Sincerely yours,

-

<7v-




er

-7%

DIRECTORS.

OFFICERS.

JAI 1ES S.ALEXAN DE R, PrestNat Bank ofCommerce in N.Y.
STEPHEN BAKER. President Bank oFthe Manhattan Co.
SAMUEL a BAYN E, President Seaboard Nat Bank.

EDWIN M. BULKLEY, Spencer Trask & Co.Bankers.
JAMES G. CANNON. President Fourth Nat Bank.

E. C. CONVERSE, President.

E.C.CONVE RS E, President.
B E NJ. STRONG, J R.,Vice President

BANKERS TRUST

COMPANY

THOMAS DEWITT CUYLER, Prest.Commerciel Trust Co.Phile.

HENRY P DAVISON. J. P Morgan & Co., Bankers.

RUDULPH E LL I S, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY Vice President Hanover Nat Bank.
WALTER E. FR EW, President Corn Exchange Bank.
FRED.K T. HASKELL,V Prest.111.Trust&SavingsBank Chicago.

A. BARTON HE PBURN,Chairman.Chase Nat Bank.

FRANCIS L. HI N E.President First Nat.Bank.
THOMAS W. LA MONT. J. P Morgan & Co. Bankers.
EDGAR L. MARSTON. Blair & Ca Bankers.

CAPITAL
SURPLUS

$10,000,000
10,000.000

WILLIAM C. ROI LLON, Vice President.
D. E. POM E ROY, Vice President.
W. N. D UAN E, Vice President.

I. KENT, Vice President.
HAROLD B. THORNE, Vice President.
F. N. B.CLOSE, Vice President,
GEO. G. THOMSON, Secretary.
GEORGE W. BENTON, Treasurer-.
F.

GUY RICHARDS, Asst Secretary.
H.W. DON OVAN, Asst.Treasurer.

BETHUNE W. JONES, Asst.Secretary.

JOSE PH B. MARTINDALE, President Chemical Nat.Bank.
GATES W. Mt GARRAK Prest.Mechanics'&Metals NatBank.
CHARLES D. NORTON, Vice Prest.First NatBank,

CABLE ADDRESS: BANKTRUST, NEW YORK.

WILLIAM C .P01 L LO N. Vice President.
DANIEL E. PO M ER OY, Vice President.

16 WALL STREET

WILLIAM H. PORTER , J. P. Morgan &Co. Bankers.

F WI LSO N, J R., Asst.Secretary.
.
R. H. G 1 LES, Asst. Treasurer..

PERRY D. BOGUE, Asst.Treasurer
HARRY N. DUNHAM, Asst, Treasurer

MICHAELS, Trust Officer.

SEWARD PROSS ER. Prest Liberty Nat.Bank

DAN I E L G. REID. Vice President Liberty Nat Bank.
BENJ. STRONG. JR . Vice President.
EDWARD F SWINNEY, Prest First NatBank,Kansas City
GILBERT G. THORN E. Vice President NatPark Bank.
EDWARD TOWNSE ND, Prestimp & Traders' Nat Bank
ALBERT H.WIGG IN. President Chase Nat Bank.
SAMUEL WOOLVERTON,Vice PresidentHanover Nat Bank.




N E W YO R K

Messrs Amerman & Pstterson,
24 State Street,
New York City.

Gentlemen:We are writing to call your attention to the facilities offered by the
Bankers Trust Company, in the hope that
we may be of some service to you.
In the enclosed leaflet you will
find a copy of our last statement and
on the last page a brief description of
our various departments, which may serve
to suggest some business that we can
handle for you.
Interest is allowed on deposits,
either subject to check or for a fixed
period, and we should be glad of an opportunity of discussing possible relations with you, either as depositary or
in some fiduciary capacity.

Trusting that we may have this
pleasure, we are,
Yours very truly,

Vice-President.

March 26,1913.

DIRECTORS.

OFFICERS.

JA I tS S.ALEXAN DE R. Prest.NatBank ofCommerce in N.Y.
STEPHEN BAKE R. President Bank orthe Manhattan Co.
SAMUEL G. BAYN E, President Seaboard Nat Bank.

EDWIN M. BULKLEY, Spencer Trask& Co.Bankers.
JAMES G. CANNON, President Fourth Nat Bank.

E. C. CONVERSE, President.

E.C.CONVERSE. President.
BE NJ. STRONG, J R.,Vice President

COMPANY

THOMAS DEWITT CUYL ER, Prest.CommercialTrustCo.Phila.

HENRY R DAVISON, J. P Morgan & Co., Bankers.

RUDULPH E LLI 5, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY, Vice President Hanover Nat.Bank.
WALTER E. CREW, PresidentCorn Exchange Bank.
F RE DR T. HASKELL,V.Prest.III.Trust&Savings Bank Chicago.
A. BARTON HE PB U RN, Chairman.Chase NatBank,

FRANCIS L.H I N E.President First Nat.Bank
THOMAS W. LAMONT, J. P Morgan & Co. Bankers.
EDGAR L. MARSTON. Blair & Co. Bankers.
JOSEPH B. MARTINDALE, President Chemical NatBank.

WILLIAM C. POI LLON, Vice President.
D. E. POM E ROY, Vice President.
W . N. DUAN E, Vice President.

BANKERS TRUST
CAPITAL
SURPLUS

$10,000,000
10,000.000

CABLE ADDRESS: BANKTRUST, NEW YORK.

CHARLES D. NORTON, Vice Prest.First NatBank,
WILLIAM H. PORTER . J. P. Morgan &Co. Bankers.

GEORGE W. BENTON, Treasure,
GUY RICHARDS, Asst. Secretary.
H.W.DONOVAN, Asst.Treasurer.
BETH UNE W. JONES. Asst.Secretary.
F WI LSON, J R., Asst.Secretary.

R. HG! LES, Asst. Trees urer
PERRY D. BOGU E, Asst,Trea'surer.
HARRY N. DU N HAM, Asst. Treasurer
M IC HAELS, Trust Officer.

GATES W. MC GARRAH, PrestMechanics& Metals Nat Bank.

WILLIAM C.P01 LLON, Vice President.
DANIEL E. POMEROY, Vice President

F. I. KENT, Vice President.
HAROLD 8. THORN E, Vice President.
F. N. B.0 LOSE, Vice President.
GEO. G. THOMSON. Secretary.

16 WALL STREET

SEWARD PROSS ER. Prest Liberty Nat.Bank

DANIEL G. REID, Vice President Liberty Nat.Bank.
BENJ. STRONG. Jo Vice President.
EDWARD F SWINNEY. Prest First NatBank,Kansas City
GILBERT G. THOR NE, Vice PresidentNatPark Bank.
EDWARD TOWN SEND. Prest Imp& Traders Nat Bank,
ALBERT H.WIGG IN. President Chase NatBank.
SAMUEL WOOLVERTON, Vice Presioent HanoverNatBank.




N EW

Yo R K

Messrs. Amerman & Patterson,
24 State Street,
New York City.
Gentlemen:-

We are writing to call your attention,
To the facilities offered by us,
In the hope that we may be of service
And save you from trouble and fuss.
In the leaflet enclosed you will find
Of our statement a copy most true,
And a brief on our various duties,
If we handle some business for you.
On deposits much interest is paid,
zither subject to check or on time,
As fiscal agent or depositary
We'll show you our methods are prime.
Trusting that you may be interested,
We are,
Yours very truly,

Vice-President.

March 26, 1913.

F. 62A

MEMORANDA
March 26, 1913.

tOREIGN EXCHANGE
FOR

DEPARTMENT

MR. KENT:

NUMBER OF ISSUING BANKS:
3879

United States
Banks - - - 14
Branches - 648

Canada

Europo - - - -

---- Banks - - -

12

Branches & Correspondents -34
Other Parts of the World Banks Branches

- 21
- 24

Total number of Banks

3926

Total number of ialinches




662

706

4632

46
45
463E

1911

Bills of Exchange Purchased
Travelers' Cheques Sold

Commercial Credits Issued
Travelers' letters of Credit Issued




1912

$61,862,189.62

$82,596,137.86

11,847,740.00
1,379,647.57
593,459.37

2,035,135.73

F. 71

DIRECTORS.

OFFICERS,
E.C.CONVERSE, President.

JAN HS S.ALEXAN DE R. Prest.Nat Ban k ofCommerce in N.Y.
STEPHEN BAKER. President Bank oFthe Manhattan Co.
SAMUEL. G. BAYN E. President Seaboard Nat Bank.

BE NJ. STRONG, J ',Vice President
WILLIAM C. POI LLON , Vice President.
D. E. POM E ROY, Vice President.

BANKERS TRUST

EDWIN M. BULKLEY, Spencer Trask & Co.Bankers.
JAMES G. CANNON, President Fourth Nat Bank.

E. C. CONVERSE, President.

COMPANY

THOMAS DEWITT CUYLER, Prest.CommercialTrustCo.Phila.
HENRY R DAVISON. J. P Morgan & Co.. Bankers.

RUDULPH E LL I 5, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY, Vice President Hanover Nat Bank.
WALTER E. FREW, President CornExchange Bank.
F RED 'K T. HASKELL,V.PrestlItTrust&Savings Bank Chicago.
A. BARTON HEPBURN, Chairman.ChaseNatBank.

CAPITAL
SURPLUS

FRANCIS L. H IN E,President First Nat.Bank.
THOMAS W. LAMONT. J. P Morgan &Co. Bankers.
EDGAR L. MARSTON. Blair & Co Bankers.

$ 10,000,000
10,000.000

W. N, DUAN E, Vice President.
F. I. KENT, Vice President.
HAROLD B. THORN E , Vice President.
F. N. B.0 LOSE,Vice President.
GEO. G. THOMSON, Secretary.
GEORGE W. BENTON, Treasurer
GUY RICHARDS, Asst. Secretary.
H. W. DON OVAN, Asst.Treasurer,

BETH UNE W. JONES, Asst.Secretary.

CABLE ADDRESS BANKTRUST NEW YORK

JOSE PH B. MARTIN DALE, President Chemical Nat.Bank.
GATES W. MC GARRAH.PrestMechanics'& Metals NatBank.

F W I LSO N, J R., Asst.Secretary.

R. H. GI LE S, Asst. Treasurer.
PERRY D. B OG U E, Asst.Sec-retary.

CHARLES D. NORTON, Vice PrestFirst NatBank,

WILLIAM C.POILLON, Vice President.

HARRY N. DUNHAM, Asst. Treasurer

16 WALL STREET

DANIEL E. PO M ER OY, Vice President
WILLIAM H. PORTER. J. P Morgan &Co. Bankers.

MICHAELS, Trust Officer.

S EWARD P ROSS ER, Prest Liberty Nat.Bank

DAN I E L G. REID. Vice President Liberty Nat.Bank.
BENJ. STRONG. JR.Vice President.
EDWARD F'
N N EY, Prest.First Nat Bank,Kansas City
GILBERT G. THOR NE, Vice President NatPark Bank
EDWARD TOWNSEND, Prest Imp & Traders' Nat Bank.
ALBERT H.WIGG IN. President Chase Nat.Bank.
SAMUEL WOOLVERTON, Vice PresidentHanover Nat Bank

N EW

Yo

R K , March 29, 1913.

FOREIGN EXCHANGE DEPARTMENT

lar. Benjamin Strong, Jr.,
0/o Hotel Raymond,
Pasadena, Calif.
'

Dear Ben:-

Yesterday I spent something over an hour in the
vault going over the system, as I last wrote you. It seems
to me that it is very effective and that the company is protected in so far as it reasonably can be, and am satisfied
that the system is working smoothly and satisfactorily.

I found one matter that needs attention that I took
up with Mr. Close. He states that the Trust Department will
attend to it at the first opportunity, and that the only reason they have not done so before is due to the fact that they
have been very busy with other special matters. Bonds are
packed between bond boards for their protection, each bundle
containing sometimes several thousand dollars worth of bonds
of different kinds. When it is necessary to cut coupons from
the bonds in any bundle, the whole package has to be withdrawn from its safe. The particular bonds from which coupons
are to be cut are picked out, and it is necessary to spread
the various kinds of bonds around among several clerks, making it difficult for one man to watch them, as no bonds are
counted out or in when taken out of the safes for the purpose
of cutting coupons, because it is not practicable to do so.
This whole trouble can be obviated by having bonds of certain
maturities sorted and packed together. It will be quite a
little work, but when it is accomplished it will mean greater safety and also considerable saving of time. The Trust
Department started the sorting some time ago, but only worked at it for one day, because other matters began to require
their time. Should judge that it will take two or three
weeks to complete the work.
March 31, 1913.
Upon receipt of cablegram announcing Mr. 1organ's
death the stock exchange eased a trifle, but immediately recovered.



B. S., Jr. 2.

The foreign exchange market, however, was very much
disturbed, and all quotations were only nominal for the larger part of the day. This was undoubtedly due to doubt as to
how foreigners might look upon American stocks. If they sold
heavily exchange would go up, and if they bought, exchange
would go down, whereas if they ignored Mt. Morgan's death as
far as trading was concerned, there was no reason for the market to change. The result was that cables were quoted from
487.75 to 488.10, and it was almost impossible to trade at any
rate.
However, we were not in position to operate, as we sold
out everything available, as I wrote you in my last letter.
Sir Edward Holden cabled me this morning as follows:
"What will be effect do you expect Morgan's death to
have?"
To this I replied:

"Mt. Morgan builded too well for his death to cause destruction. His wonderful ability and integrity lives
on through the partners of his selection, and their
standing is everywhere too well known to cause the
slightest anxiety."

We loaned $1,000,000 for one week at 5 8/10% in
This transaction was not it loan to any London bankLondon.
er, but was a purchase of demand exchange for last Saturday's
steamer and the sale of cables on arrival a week from Monday,
or actually a 9 day transaction. The great difference between
demand and cables made the operation possible.
Sunday morning I had an interesting game of golf
with Mt. Wilson, Vice-President of the McGraw Publishing ComAs we stepped up to the tee to start the last nine, I
pany.
told him I would give him the exact score for the nine before
the first drive. He was of course very positive that I could
not do so. After a proper argument I gave him the figure 42,
and had a put on the last green of about three inches in order
to make it. You can imagine that I was inclined to rub it in
just a little after having taken such a long chance, but I
played every shot for all there was in it, which was necessary
because of the winter greens. Wish the game might have been
in California with you as the victim, but I have some shots
up my sleeve this year, from which I expect a great deal when
I next have the pleasure of following you off of the first tee
and leading you the rest of the way.
Your letter of the 27th just received.
policy has certainly degenerated to mere corner grocery politics, but both Wilson and Bryan knew so much to start with
that it is a little hard for them to learn, so that they should
be excused temporarily.



O

B. S., Jr. 3.
Note that you will be in San Francisco for a week,
and hope that it may prove a most pleasant trip. With sincere regards, I am,
Cordially yours,




F. 71

DIRECTORS.
JAN, S S.ALEXAN D ER, PrestNatBank ofCommerce in N.Y.
STEPHEN BAKER. President Bank of the Manhattan Co.
SAMUEL G. eAYNE, President Seaboard Not Bank.
EDWIN M. BULKLEY, Spencer Trask & Co.Bankers.
JAMES G. CANNON, President Fourth Nat Bank.
E. ,,, CONVERSE, President,
THOMAS DEWITT CUYL E R, Prest.Commercial TrustCo.Phila,

HENRY P DAVISON. J. P. Morgan & Co., Bankers.

RUDULPH ELLIS, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY, Vice PresidentHanover Nat.Bank.
WALTER E. FREW, PresidentCorn Exchange Bank.
F RED), T. HASH ELL,V.Prest.I11.Trust&SavingsBank Chicago.

A. BARTON HEPBURN Chairman Chase Nat Bank.

FRANCIS L. HI N E.President First Nat.Bank.
THOMAS W. LAMONT, J. P Morgan & Co. Bankers.
EDGAR L. MARSTON. Blair & Co Bankers
JOSEPH B. MART IN DALE, President Chemical Net Bank.
GATES W. MC GARRAH.Prest.Mechanics'& Metals Nat.Bank.
CHARLES D. NORTON, Vice Prest.First Nat.Bank,

WILLIAM C. POI LLON, Vice President.
DANIEL E. POMEROY, Vice President

WILLIAM H. PORTER. J. P Morgan &Co. Bankers.

OFFICERS.
C.CONVERS E. President.
B ENJ. STRONG, J R.,Vice President

WILLIAM C. POI LLON, Vice President,
D. E. POM EROY, Vice President.
W. N. DUAN E, Vice President.

BANKERS TRUST

COMPANY
CAPITAL
SURPLUS

$ 10,000.000
10,000.000

CABLE ADDRESS: BANKTRUST NEW YORK.

16 WALL STREET

I. KENT, Vice President.
HAROLD B. THORN E, Vice President,
F. N. B.CLOSE, Vice President.
GEO. G. THOMSON, Secretary.
GEORGE W. BENTON, Treasurer.

GUY RICHARDS, Asst.Secretary.
H.W. DON OVAN, Asst.Treasurer.
BETH UN E W. JONES. Asst Secretary.
E WI LSO N, J R., Asst.Secretary

R. H.G 1 L ES, Asst.Treasurer.
PERRY D. ROGUE, Asst.Secretary.
HARRY N. DUNHAM, Asst. Treasurer.

MICHAELS, Trust Officer.

SEWARD PROSS ER. Prest Liberty Nat.Bank

DANIEL G. REID. Vice President Liberty Nat.Bank,
BENJ. STRONG, J n.Vice President.
EDWARD F SWINNEY, Prest First Nat Bank.Kansas City.
GILBERT G THORNE. Vice President NatPark Bank.
EDWARD TOWNSE ND, Prest.Imp& Traders' Nat.Bank
ALBERT H.WIGG IN. President Chase Nat Bank
SAMUEL WOOLVERTON, Vice President Hanover Nat Bank

N EW

Yo R K , April 4, 1913

FOREIGN EXCHANGE DEPARTMENT

N/.. Benjamin Strong, Jr.,
C/o Hotel Raymond,
Pasadena, Calif.

Dear Ben:-

Enclose herewith Sir Edward Holden's letter, which
is not particularly interesting, but which you may desire to
see nevertheless. It is not the reply to the special letter
sent him, as it is not yet time to hear from that.
Intend to leave on the 5 o'clock train this afternoon for Philadelphia with Mrs. Kent. Will make an address
there this evening, and go on to Atlantic City for a few days
Saturday morning. Will then meet Warner and my sister in
Washington, and spend the week. Will be at the office again
April 21, but will be in touch with Mr. Schmid every day in
the meantime.

Have gone over our whole foreign situation with both
Mr. Pomeroy and Mr. Duane, as well as with Mr. Schmid, and as
everything is in good shape and almost able to take care of
itself until my return, there should not be the slightest friction.

We have about half a million dollars maturing in
London April 11, and I expect to withdraw it, as I do not imagine we will be able to obtain a proper rate for extension.
Mr. Schmid will 'phone me at the Marlborough-Blenheim on the
day of maturity. Z200,000 that is carrying 5% will be automatically returned by the 14th of April, and will not be renewed, because the conditions are impossible at the moment to
make an extension of the proposition at any sort of favorable
rate. We have $178,000 in Marks maturing with the Deutsche
Bank April 30, and $714,000 at the Direction der DiscontoGesellschaft. Have written to both banks asking then to cable
us rates for renewal for one, two and three months, but will
return in time to handle this matter. The rate made us, together with the exchange proposition and conditions here, will



7

B. 3., Jr. 2.

determine whether a renewal for any period is desirable. As
we are in position to take these amounts from our deposits
before figuring our reserve, the interest rate to the company
is increased very largely over money loaned here, and under
our arrangement that would enable us to withdraw the funds,
It' needed, it works to our advantage to have some money out in
this manner.

My write you while away if anything comes up that
I think would interest you. In the meantime you may Lnow that
I am in close touch with the office, and could get back in a
Zew hours, if necessary.
Would not go, but really think it advisable, as I
do need just a few moments' rest, and feel sure that the days
planned will result in giving me back my full aggressiveness.




With sincere regards, I am,
Cordially yours,

a

F. 71

DIRECTORS.

OFFICERS.

JAMES S.ALEXAN DE R, PrestNatBank ofCommerce in N.Y
STEPHEN BAKER. President Bank oFthe Manhattan Co.
SAMUEL G. BAYNE, President Seaboard Nat.Bank.
EDWIN M BULKLEY, Spencer Trask& Co.Bankers.
JAMES G. CANNON, President Fourth Nat Bank.

E. C. CONVERSE, President.

BANKERS TRUST

COMPANY

THOMAS DEWITT CUTLER, Prest.CommercialTruatCo.Phila.
HENRY P DAVISON, J. P Morgan & Co., Bankers.

RUDULPH ELLIS, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY Vice PresidentHanover Nat Bank.
WALTER E. FREW, President CornExchange Bank.
F RE D'K T. HASKELL,V.PrestIll.Trust&Savings Bank Chicago.
A. BARTON HE PB U RN. Chairman.Chase Nat.Bank.

FRANCIS L. HI N E,President First Nat Bank.
THOMAS W. LAMONT. J. P Morgan &Co. Bankers.
EDGAR L. MARSTON. Blair & Co Bankers.
JOSE PH 8 MARTIN DALE, President Chemical Nat.Bank.

CAPITAL

lo,000,000

SURPLUS

10,000.000

E.C.CONVE RS E, President.
B ENJ. STRONG, JR.,VicePresident
WILLIAM C. POI LLON, Vice President.
D. E. POM E ROY, Vice President.
W. N. DUAN E, Vice President.
F. I. KENT, Vice President.
HAROLD B. THORNE , Vice President.
F N. B.0 LOSE, Vice President,
GEO. G. TH OM SON, Secretary.

GEORGE W. BENTON, Treasurer
GUY RICHARDS, Asst. Secretary.
H.W. DON OVAN, Asst.Treasurer.

BETHUNE W. JONES, AsstSecretary.

CABLE ADDRESS: BANKTR UST, NEW YORK.

F WI LSO N, J R., Asst.Secretary.

R. H.G1 LES, Asst. Treasurer.

GATES W. MC GARRAH,PrestMechanicsAMetals NatBank.

CHARLES D. NORTON, Vice Prest.First Nat.Bank,

WILLIAM C.P01 LLON, Vice President.
DANIEL E. PO MEROY, Vice President

16 WALL STREET

WILLIAM H. PORTER. J. P Morgan &Co. Bankers.

PERRY D. BOGUE, AsstSecretary.
HARRY N. DU N HAM, Asst, Treasurer

MICHAELS, Trust Officer

SEWARD PRODS ER, Prest Liberty Nat.Bank

DANIEL G. REID. Vice President Liberty NatBank.
BENJ. STRONG. JR.Vice President,
EDWARD F SWINNEY. Prest First Not Bank,Kansas City
GILBERT G. THOR NE, Vice President NatPark Bank.
EDWARD TOWNSE ND. PrestImp.& Traders' NatBank.
ALBERT H.WIGG IN, President Chase NatBank,
SAMUEL WOOLVERTON, Vice PresidentHanover Nat Bank.

N

EW Yo R K , September 10, 1913.

FOREIGN EXCHANGE DEPARTMENT

Ir. Benjamin Strong, Jr.,
C/o :Plaza Hotel,

New York.
Dear Ben:-

Just finished our chat over the 'phone, which was the
moat pleasant experience I have had for some days, as everything is quite dead in the office.
Enclose copy of circular that I shall send to those
from whom we purchase cotton on Friday or Saturday of this
week, provided it meets with your approval. It is in line with
the letter being sent out by the National City Bank, although
of an entirely different wording. Sent a copy to Mr. Haight,
and he thoroughly approves of it, and says that it meets satisfactorily the request of the foreign bankers. If there is
anything in connection with the letter that you wish to speak
to me about, would suggest that you 'phone me Friday, as I expect to introduce one F. N. B. Close to the bunkers which surround the greens on the Englewood golf course to-morrow. He
has never played at Englewood and is very anxious to do so.
Last evening I had a very funny experience that might
Interest you for a moment. The latter part of August Warner
received a letter from Harvard College requesting him to stop
smoking, drinking, swearing, etc., etc. September 1, and in effect to replace the time spent in doing those things by running,
in order to get into as good physical condition as possible before returning to college September 22. He returned from Squam
Lake Monday, and last evening decided to start in his running.
As he did not care to run alone, he inveigled the old man into
c
acting as pacemaker, and we turned off a good mile and a half
On the return trip the moon was at my back,
for the first run.
and suddenly I saw the shadow of a man directly in front of mei
and it seemed to keep holding its exact position without any
apparent motion of the arms or body. I immediately thought
someone was running behind me, and put on the accelerator. Was



.

B. S., Jr. 2.

much surprised to see that the shadow held its position, and
still without the slightest apparent effort. That seemed rather
strange, but I thought I would give whoever it was at least a
run for his money, so I opened the throttle and let her go for
all I was worth. Imagine my surprise to see the man's shadow
in the same place, holding its own with the greatest of ease,
whereas I was nearly running my legs off, and I then turned
around and saw a policeman on a bicycle riding behind me, and
he was in a most awfully excited state of mind. Warner was about
100 feet ahead of me and going for all he was worth, so he did
not realize what was going on behind him. The policeman demanded
to know what I was trying to do, and having in mind my effort
to beat his shadow, I told him that I was a little uncertain
myself, but finally we explained the matter to his satisfaction,
and told him that if he were interested in that form of development, he might come out and see it any night between now and
September 22, the date that Warner returns to Harvard.

'

Running is the first thing that the youngster has ever
beaten his Dad in, although I suppose golf and tennis will follow in due time. In the hotfoot sport, however, I will have to
admit that after the first 3/4 of a mile keeping up with him
Is no cinch, and that is about the limit of my usefulness as
The balance of the mile and a half is only of inpacemaker.
terest to me because of the opportunity to watch his heels, although in the moonlight they seem to get a long way ahead.
The boy is really a beautiful runner; being graceful and very
light on his feet and running with the utmost ease. Will have
am extremely anxious about the effect
to admit, however, that
of his first few weeks of training, for they will probably determine whether he was injured last spring when they made him
run in the two mile race against Yale directly after he had won
the mile and lowered the record. He ended the mile in perfect
condition, but finished the two mile in bad shape, and afterward had to go to the hospital. It was a criminal thing for
them to do, and I took it up with President Lowell of Harvard,
and understand that they are going to try and apply a little
sense to such things in the future.




r

With sincere regards, I am,
Cordially yours,

C;%77:.3

Dear Sire:-

The European Bankers Conference on Cotton Bills of
Lading held a meeting in London on the 22nd of July, 1913,
which was attended by bankers from England and Continental
Europe. After careful consideration of the work accomplished
by the Lew York Central Bureau, a resolution was unanimously
passed approving the plan and requesting the co-operation of
American exchange buyers in carrying out the Central Bureau
system. We understand that in order to meet the wishes of
American shippers, and eliminate what seemed to be the principal objection that they had to the Central Bureau, viz.,
its control by an individual, that the European Cotton Exchanges, Spinners Associations and bankers have taken over the
Central Bureau, which in the future will be operated by them
and at their expense.
With this change in the management of the Central
Bureau, we believe that they are justified in asking the cooperation of American buyers of cotton exchange, and therefore
we ask that you authorize the railroads which you employ for
the shipment of cotton to send copies of your bills of lading
'tc-the Central Bureau, 51 Wall Street, New York City, and also
that you authorize such steamship companies as carry your cotton. to send copies of masters' receipts to the Central Bureau.
It is also desired that notification forms be attached to your cotton drafts.
The above does not apply to port bills, but only to
through bills of lading issued by railroads.




Very truly yours,

16 Wall

troot,

Now York, ratraiber 17, 1910.

Ir. E. 0. Bolloy,

0/0 00,710roiel Club,
IMehincton, D. 0.

Deer qr. Bailey,
Bncl000d ID a memorandum of Pertain additional edicootiono in cos.

---7
nootioa with tho Podoral raceme Act, thin Iam amloun to have you. and
Uri Cartio conoidor and two ao you no47 find nocoopary.

I an ocrldine "this

letter and oncloodremto the Commercial Club, and a corgi of the lottor

in care of the riccn Dank, opiiinat yr/u will be eertein to moan° it at ono
pine° or the other promitly tomorrou mernina.
memorndurn in three copien,

Iam aloe enclopir:utho

an to tio cure that them are aufficiont for

your requiramonto.

ITothirr hoe no vet reached me that nould indicate am' no:meaty
forme coming to
I am log tonorrownorninc for
il
WaiflinTtonci
Mryland.
To ma17..o our) that vta mill emetretond tho roforeleoe, 1 en

onclooinu a mart:0d copy of tho rational Donk Aot publiehod by the nattonal
City Bonk.
widhine you tho beet of iired fortune in Ta1dj*tm I am,

ii

øinoorQ23 yonro,

( 1-io)




Page 0. The heading for See. 4 ahead be "Appropriation for 2xpenses."
Page 4. At tho end pf Sec. 5 it theald provide that the ourpluo paid to

'ahe Mated States should be applied to the purchase of United States bonds.

Page 5, eth line, "eontun" obould be written in fall.
rade 6, bottom of pees. It is provided that the bank may lease gnd
acquire real °stet°, zlId it Should oimilarly be empowered to sub-lot and sell.
Page 11.

fbe Dent(n*, maize:with the words 4.memben of 7executive

Dome

mittoos° is not suffiolently definite, and could be improved by reeding as
follows: °Members of 7seeteetive Oommittese may be eummariii suspendod and eel-

sequently removed for oelee by the Board after dee hearing, and Shall be no

removed at the request of not loss then

per cent= of the depositors

of a district expresoed. by votes et the DeOrde of Directors of such depositors."
(la the next lino, between the woe* "annually" and "mdlos", add the

words "enamors freq2ont4 it reqeixed by the Board."
Page 13. The first two lines Would reed, "exercise all the duties,

services, or functions specified or implied in this Act."
Page 14; end of Soc. 12. If the smOcounts and transactions of all
deeesitors are confined to the branCh and sub brmichee of tho banking district

in *Joh they are located, foreign branehes of 1.1ettional banks or State balite
mould not be able to do bug-Ines° with the foreign branohes of the Federal
Deserve Bank and a fom words at the and of the sentence

will eorrect this

error.
Page 14. Sec. 14. The word "Omerestr in place of "eent.,f
...ego 16.

Part:greet (o); let line: "endorsement" min-spelled'.

Page 20. 4th line dhould read

"as described in partigrah (dot

Sect 15 of this Act."
The last word in Soc. 20 is "eurplus," and this should be "surplus fund."
pogo 21.



5rd Iine. The words "the ftoe° should be changed to "their

a:6hr one the last lino of that section dhould read 'of oval oadh value."

Page 22; let panagawilh; lset ilaeS the word "bank" should be
"bmiks."
Same page;

Page 24

7th line from the bottom, should read "gold and lawful

12th lino from top; the word "two shuuld be °banged to

"shell."
page 2fp 4th line; the word "circulations" should. be °circulation."
6th line; $91111.1102 should read "notes of each of ouch national

banks."

Page 28# first three lines; I think better arici novo accurate language
would be, "Circulating notes of .141 arount equal to one and. one-half per
centum per annum," etc.

In the first paragraph of Sec. 29# the letter "b" is omitted from
the word "board."
Page SO;

18th line; the /ast word "expense" should be 'expenses."

Next :)aragrwl)h, same page, 2nd line; the viord "eaLmination" should be

"examinations."

Please refer to

National Bank Act (National City Dank ed13on3,

page 16, paragraph 24. Wo have put nothing in the Bill In relation to jurisdiction

of the oourts over this institution. I am notable to suggest 'whether that is
necessary or not, but inamuch as special statutes have bosalmacted relating
to the Jurisdiction of 3tete eourts over National banks, it might be well to
put a clause of declaration in the Bill as to the jurisdiction of the courts.
Page 20; the language of paragraph 33 indicates the ?oszibility of pore

improve:mut in tho language descriptive of the general powers of the .Podera14teearv
Bark.

Page 23; parngraph 42. We have not provided that director shall hold



office until their ouccessore have been appointed and have qualified. This

can be corrected in a sentence at the foot of page 7 of the B111.
Paragraph 43.

Slamest that it might be vies to have the directors of

the. o lora.7ieserve Bank necessarily °Means of the United States.
Paragreek 44; same race. Suggest that the form of eath millt be

expreseed in the Act as that provided by See. 5147 of the Revises Atutes.
Page 261 paragraph 50, raises the question In me mind as to whether
we have properly dealt with deposits of the Peale:a Savings rund. They are

not neoesaarlly Involved in this plea of legislation, but, even upon that
theory, we want to make sure that the general laneeteee of the Act does not

require the officers of the Government to disturb existing arrangements.

It nicht be well to ascertain Just how these accomts ore kept, and Dee
* Ihether any ()lame would be required in the Bill to cover this situation.
Paraexaph 51, suggests that we have no provision in the Bill etating

that the Federal Relearn Mk shall net pc v interest up= any deposits, whish
should be there, and it Should be without qualification.
Page 30; paragraph 58, in. relation to the Panama Came bonds reisee

the question as to utetherwe have =mined with sufficient care Into the
*tatutes with relation to these bond issues and ascertained definitely whether
our refunding Operation would oxtail too far.

Pa ge 31; Sec. 60 dhauld be made to semi to the refunding bends to

be Issued to refUnd the 2r .
Page 35; puragrelib Si.

believe it would be wise that this section be

MMOMied so that it will not Interfere with the provision in the Bill in regard to
c

the retirement of one-half of the circulation of National bike. It say be that
our Bill and thin paragraOh are in conflict.
Page .39; paragraph 88.

In describing

paements for Whidh the notes

of the belt may be r000lved, we emitted paymente for public lands..




It isn't very

importhnt, but we sdfojlt no well meRo it conform to the terms of the Rationa
Bank Apt.

?ago 40. noose coneider the lent line of that ezwie paragraph.

have used the IOWA "National bank notes" throughout the 8111.

It might have been better to /um put in a definition of OiremUting attest in
our paragraph of dofinitions, and changed the words "National bank notes" to

"circulating notes' throughout the Bill.
Page 62.

In providing that If:rational banks say have branobee, we

should oubeequently provide for nn amendment to sec. 5190 of the Bovieed Statutes.
Page SZ.

Our reference to net depoeits as defined by the Oemptreller of

Currency should in Dome way refer to the Bootlegs of the National Balk lot

appearing in paragraphs 122 and 228, eo tbmt his definition of not deposits
sdght not imply something different from that already provided in the national
,j1c Act.

Pogo 54; top of page. We have omitted my reference to tho term at

treatment of the 55 Redemption rya CO part of the reserves of National bailee

The definite direction to ostablish a 12% reserve and how it shall beheld, 1$
contrary to the provisions of the National Bank Aot.
of

I suggest the addition

clans. Which will place it within the power of the Podoral noservo Nerd to

determine whether any of the 8';:!, Redemption Pund, and If so to what extant told

In what manner, may be counted as a part of the Mel reserve.

Personally, I

hew° no objection to this counting as part of tho roservo which is to be hold

at their option in their own vaults.
We have siege no consideration to the subject
If the Federal Reserve Bank disakints only for corperatione,

Page 661 paragraph 135.

of uuury.

National ad State banks, the usury statutee would not apply, but they would
place the entire burden of costs for dieemonto in excess of the Limit of unury



upon the National bank, Allah oould not in turn increase its rate to Its customer.

There is nothing WO on do about this in the Bill, but it suggests the entire
unoisdom Of our usury otatutes as they are in this country today.

Page 64 paragraph 143. Soo. 5209 of the Revises Statutes, or a

similar claws, should be embodied in the Bill, unless other statutes of the
United !Autos apply to fraud of the eh=racter described in this section.
Page 64; pa Noel* 184. We have no method_ of disposition of unclaimed

dividends provided in the Bill.
Page 69; poragraPh 165. I am not suro whether this sootion

et be mode

to conform_ to our awn provisions as to the retirement of oirculation.
Page 72.

73 should have a paragrark, wnloss it has already been made;

to apply,eimilar to See. 6232 of the Reviood Statutes.
Page el. The veztion Is raised again by paragraph 194, as to the

juriedietion o the oarts over this oorporopion.
mr. rent and I ho boon discussing some features of the Bill today.
I haven't time to complete this dictation, but he will do so, and them:rather
sketchy notes together with his supgestions following will, I am sure, cam-

plote all the sur;gostions that have occurred to us Since you left for rnsbineton

with the Bill.




B.S.Jr.

!r Eprit's

tatak3

Pug° 1, of too Bill.

a not the word

at" follow the words

"Sec. 2."
Page 5.

Should not the word "That" follow the wordo "Soo. 6.

Page 6. Should not tho word 'Mat" follow the wordo "Sec. T."

At the end of the 7th lino from the bottom, the word name" might
posoibly be better chongod to "insoance.o

PEce 7. 3rd line fromilottan top; the word "Bo.

polled first

with a capitol and then with a small lottor. In this eoglootion, would mention
that the word "BranOh" Ohl& appears in tho dofinitions in oapitalt, is not

capitalized anywhere in the Bill.
Page 13; Sea. 12.

2O there clear anthority for the Board to divert

orriingu to aurplus, ohould it so happen that after the sorplus roadhed the
tram of $8o,op0000,, it wore diminioNed. through loosen.
Pogo 14; Soc. 13. The word "depOsitary" is followed in the firtt

paagranh by th word "depositories."
Poop 25; Soo. 14. As National banke invosted in bonds of the United

States, tilich were denosit d as ooaority for ciroulation, with the underStanding that the 5: fund deoesited with the Govornment would oount as cosh

reserve, it sooma only /Oar thot they Should bo olio to oantinme so counting

it.

Ione the anount is small, oet it might =um oonsiderablo friction

among boakips if the regulation were ohanged.

Page 15; Sec. 15 (b). Should not the words "thct row not have boon oat
aside as oacurity for any other purpose" be odd:ad ' There is no doubt lioatever
c

bat that ma words are not needed, prootioally, ao o bankoro. would clearly

underotand it as it stands; but it might prevent criticism to have oome ouch

*rasa offinod.



7

16;

end of See (0). By adding the Ithrase "within the United States"

It would prevent the purchaee by the Bank of single name demund foreign exnhenge.

the section is worded it might be eenstrued to mem that single name demend
foreign exchenge oould be purohesed% If it Is intomied that the bank shall be in

a position to purchase web exchange, the parwranh ohould be left as it otands;
otherwise I think it should be ohanged.
Page 16 (e).

amid net the words "from or to the United States" follow

word "importation" in the middle of the third line; risking the line read,
the exportation or importation from or to the United States of goods,
Ilthout these words the bunk would not be authorized to operate,

wares," etc.

may, in London thrende discounting bills of exehange for exports and Laporte
between foreign countries offered in the London merket, because they would not bear
% the acceptance or endorsement of a 60P03itor.

Page 17. (f). The first line might totter read as follows; "To purchase

from depoeitors, for the purpose of carrying to maturity, or to sell," etc., etc.
This would prevent any posuibility of

construction being put upon the seetien

that would seem to malee it neeeenary for the bank to uell everything that it
purchased.

If such a consideration does not aeon to you possible, the pararpaph

should stan4 as it is.
Page 17. (g). The fifth word in the third line is "or." should not
this word be left out ?
Page 17. .00. In the second line "such aountries" should beCahngsd

to "foreign oountries," °thereto° it migtAt be construed to mean that doom=
branches could be established only in eountries'in whioh foreign bank aceounti
c

hsd been opened.

(h) In the third line, the word "discounting" should be added to "purchasing,

selling, collecting."

The eord4dealing,milit cover it, but It would as

that

the word "discounting" should be added, as it woad probably be a daily operation.



Page 17.

foreign."

(h). 5th line

The word "suoh" should be chanced to "ito

6th lino, the word "agency" bhould be followed by the word

NCO 10.

Sec. 17. The word "it" in line 5 ahould be Changed to "the."

In lino 6 the word 'Ito should also be changed to "than."
Page 25.

In the second paragralh, is the new issue of bonds clearly

authorised in the wards "ho ohrl/ acoomplieh suoh refunding by thT begone of
bonds."
4

.

See. 28 ststes timtsparthasos ha 1l be made Prot the tavern'

Nationaa batik:sup to anounto not axgRedinc tho sar vnlue," etc., " and tio)r,:upon
the boAks shall be responsible for the :mitt-mamma* redemption and retirement of

the totes of eaCh suell National bark to the amount of the purchase price of

the bonds, len, interest," etc. Sumove a condition arose under Which bonds were
offered to the GoVernmont at, we will say, 96, and were ourebaned at that price.
If 4400,000 of bonds were purchased at 90, the bank would assume, liability for

only 00,000 in Nationnl bank notes. It would unquestionably redeem $100,000
of such notes, but It would not be compelled to do so under the low.
Sec. 30, under "Bank 3xominations." intonds either to duplicate to a
eortain extant the examinations to be made by the Oomptroller, or to ulto out from
under his jurisdiction the examination of National banks.

If the forner is

intended the section is in order; if the latter, it is not.




2araoxaph 0
Page 35. 3eo. 20. The word "amount" is ris-spelled in the fourth line.

WAshinzton,

Sunday afternoon.
DAar Ben,

It is 3.0. And I have just returned from a long session
with SenA+or B. And am about to go out to luncheon.

-

Things are in

a most unsatisfactory state, as SenAter 0. seems disposed to take
every unfair advantage possible.

At a quarter to eleven the other

evening he attempted to bring up his Bill for a vote, hoping to
slide it through.

Senator B., rAAlizing his attitude, feels obliged

to be in the SenAtA practically all of the time up to eleven o'clock,
with the exception of such periods as he can secure the consent of
other Republican senators to take the floor.

They do not seem to

IDE, willing to do so in the evening, however, but are leaving the

brunt of the matter to Senator B.

He has been

getting the material that I am working upon.

very urgent about

The result is that I

have not had an opportunity to advise you before of just what we are
doing.

Have planned the work so as to give first a general
criticism of the Owen bill, bringing together its most glaring
defects in such a way as to show their power.

Then follows a

detailed criticism, based on the dictation which you left.

Have

added many new points that I ran across as I analyzed the bill, and
have developed of those dictated by you.

Have also cut out some

portions of your dictation, as I found,upon careful examination
of the bill, that the meaning was different than would appear%
upon a first reading.

On separate sheets, but following the

order of the criticism, have made UD questions.
fire all these questions at Senator O. And as



Senator B. is to
for answers.

Drpw up many of the

uestions in such form that it will require the

same kind of analysis as appears in the criticism before they can be
qnswert,d, In order to aid Senator B., have developed the criticism
quite extensively.

We have covered in this manner the first 32

paces of the Bill, and after I finish this letter I am going on with
it.

It has been very hard, steady work and, due to the pressure

on Senator B. to hurry his preparation and his conseluent anxiety
to have all of the matter as soon as possible, Mr. Lewis and I have
worked longer hours than I consider just right.

In fact, I am

getting so tired that it is difficult to work rapidly.

We have not,

either of us, been in bed before midnight since I arrived.

While

we have taken walks and broken the steady meetings with little
changes here and there, yet it has only been done for the purpose
of making us better able to go on with the work.

Expect to spend this evening With the Senator and go on
with arguments in explanftion of the notes.

He seems to understand

the points as we go along very clearly, so in that respect the work
is satisfactory.

In its relation to the attitude of the Democratic

senators, however, it is not as agreeable, for they lead you to
feel that, right or wrong, regardless of whether you are able to
successfully prove their bill harmful or valueless to the country,
they rropose to put it through.

Such an unreasonable, unpatriotic

attitude on the part of a body of men with such responsibility
is appalling.

It is beyond my comprehension.

If after going over the matter enclosed you have any
criticism or suggestions to make, will be glad to have you wrIte
me.

Would also appreciate it if you could find time to send me some

notes giving your opinion on the latter part of the bill.

If I find

as much to criticize from pages 32 to 59 as I have in the first 32



- 3 -

pages, it will be impossible for us to finish this matter before
Tuesday.

If, therefore, you can write me tomorrow I will receive it

Tuesday morning

in time to incorporate anything you may desire to

have added.

The matter that you dictated on "A CAntrAl BAnk vs. Regional
Bunks" is also before us.

As soon as I have finished with the bill

I am going to analyze this carefully, with the idea of enlarging upon
it if necessary.

TelAphoned Mr. Snhmidt yesterday, and have such figures from

my department as I need, and everything is running along exactly as

I wish.

007.000 will be turned back to the Banking DenArtment on

December 11th, which is a matured loan made to the Comptoir Uational
d'Escompte de ?kris, London, which has been placed forward two weeks
at a time for a considerable period.

TA will show a nice exchange

profit as well as interfst profit when

it

nothing in the department
or manner.

that

is turned back.

There is

needs your attention in any way, shape

I shall 'phone Mr. Schmidt again tomorrow, and, if

necessary, Tuesday.

Am very anxious to get back home, but do not

feel justified in leaving until I have finished the bill, as long as the
work is started.

I forgot to say that in addition to the matters enclosed,
am preparing different sets of figures for the Senator, all of which,
of course, takes time.

M7 only real pleasure

in this proposition,

considering the fact that the Democratic senators are apparently
in the mood to ignore anything that may be put before them, is that
you are being relieved.

That I consider the m6st important thing of

all, as matters stand, and I sincerely hope that you will not be
tempted to return,unless



something

should develop after the debate

has started that would make it appear as though some real good
(\

,--''oould be accomplished.




With sincere regards to all and yourself, I am,
Faithfully yours.
F.I.E.

WPshington, D.C.,
Denember 4, 1913.
Dear Ben,

Yesterday afternoon I did not attempt to dictate
anything, as Mr. LAwis had more than he could prepare for our

evening meeting and as I wished to spend the time in studying
Found a

the bill.

number of important matters in the bill

that I developed last night in conversation with the Senator
and that I shall dictate this morning.

Shall also change

some of the items in your original dictation, as a more
careful study shows that they need a little different consideration
*

or they can be too easily attacked.

efore I

start dictation shall take off my gloves, although I am not
sure that some of the things I have in mind will meet with the
Senator's approval.

Whether they do or not

I wish to get them

into his mind, for I consider them unanswerable.

The question

of their use will be a matter of politics that the Senator, of
course, knows best about.

We finished a little after eleven

last evening, as the Senator had another engagement.

Hoping that you will not alone have success in your
shooting, but that you will get the best sort of rest possible,

lam.
Sincerely yours,

Yr. Benj. Strong, Jr..
Perryman, Md.




Washington, D.C.,

December 4, 1913.
Dear Ben,

Dictated all morning to Mr. Lewis, and we now have something
like 19 solid pages of introductory metter to precede your dictation.

Am trying to draw some of the most glaring faults in the bill into the
form of a preliminary argument, so that those who may not be as
interested in following the tearing of the bill to pieces, part by
part, may have something that

might attract their attention.

Expect to go over this matter with the Senator this evening, but am
afraid that it willbe rather late as it is not 10.45 ard he has not
yet trhoned me. because of a meeting that came up which he was
obliged to attend.

You will be much interested to know that two of our friends
who recently came to Washington for the purpose of running

the

Treasury Department of the United States, were so exercised over

the article in the Tribune which applied directly to one of them
and rather implicated the other, because it would appear as though
he must have allowed the transaction to go through, seemingly lost
their heads and called in the ?resident of a bank well-known to

us and told him that the story had been given out by him or some
of his senior officers.

This having been denied, the other officers

were called over to the Treasury Department and interviewed.

It

seems that one of them, who is my most particular friend and
whose name begins with a big "A", was

so'bullyragged that he told'

the gentlemen more or less what he thought of them.

This dld not

seem to please them entirely, and the 7onorable tunnel man blew up
and used some unprintable language not usually considered dignified
on the part of a high public official.



The accused bankers,

c

2

however, did not give out the story, although they had been careless
enough to listen 4-o it as it went the rounds of Washington.

I am

ar,

afraid the incident has not served to dissipate any of the misunderstanding that has existed,- if misunderstanding it is,-

in the minds of the Treasury officials concerning the bank in
question and a certain other well-known bank in New York City.
It makes the screaming of the eagle very throaty, and the old bird
does not at the moment stir up my little insides the way it used
to when the band rlayed Yankee DnnAlo if the land of the brave
and the free.




Sinnerely,

iq

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Washington, D. C.,
December 13, 1913.
Dear Ben,

Arrived in Washington on time Friday morning, and Mr. Lezis
met me at the train.

Spent the whole day, from nine in the morning

until ten minutes to eight at night, correcting Senator Burton's
address.

There zere 329 pages of it, and it had to go into the

printer that evening.

It was a perfectly awful proposition, because

there were so many corrections necessary.

Just as an example, I had

Ir. Lewis make a copy of one page as it read originally and as
changed it.

There were many things in the address that could have

been bettered that I let go, particularly some matters that were
left before any visible reasoning be6ame apparent in the argument.
The Senator gave me "a blank cartridge" to shoot at the speech,
so to speak, and I went after it.

Ee changed a lot of pages

himself after I had let them go as being passable.

On that account

and as I have not read the address today, I don't Inow whether the
thing is in order now or not.

Am to go over it again before it is

placed in the permanent record, but would not do it today for a
thousand dollars a minute, for I was utterly exhausted when I
finished last night.

The Senator used all of the matter on the

Icentral bank vs. regional banks.

So many interruptions occurred

during its delivery that it is pretty well chopped up in the
address.

Taking everything into consideration, it seems to me

that he really made a mighty fine effort to present the matter.
In speaking to others last evening, 1 found that it had made a very



B.S. 2
el,cellent impression upon all of those Senators who heard it.

Un-

fortunately, however, the Democratic Senators were largely absent,
which was an outrage, as these long sessions are supposed to be held
for the purpose of discussing the Bill.

Rave been feeding the

Senator dynamite right along, and he is showing the effects of it
and is getting into quite a combatitive spirit.

He expects to make

another speech next week, and promises to present all of the questions
as the Bill is taken up section by section.

If he does so, and they

have a full Senate at that time, it may be that some impression can
be made,

but the consensus of opinion here seems to be that it is

not the intention of the Democratic Senators to consider anything
other than President Wilson's commands.

Last evening I spent two hours with Senator Root.
him your letter and presented the other matter.

Gave

Went over everything

fully with him and answred great nuinbers of questions that he had to
ask concerning banking principles as they might be applied to a
central and regional banks.

Re seemed very, very much interested,

but I am positive he feels that it is not possible to accomplish
anything.

I telephoned him immediately upon my arrival Friday

morning.

Told him the matter I had, and arranged to meet him at

two o'clock.

He was unable to keep the appointment, however, which

was the reason I could net give the papers to him until after eight
in the evening,.

Did not attempt to do anything with Senator Swanson's
speech, as I felt it my duty to stick to Senator Burton, particularly
c

as he was ouite anxious about the whole matter and did not wish to
have anything violently wrong left in his address.

Do not know

whether anyone will ever read it, but if they do it is certainly
fortunate that I was able to get after it,- which of course is



B.S.

3.

strictly confidential, as I feel that the Senator has left the middle
of the road and that tremendous credit is due him for the strength
with which he is going into the matter, considering his desire to straddle
Mr. Perrin of Los Angeles, formerly of Indianapolis, one
of the members of the Currency Commission of the American Bankers
Association, is also here, working with Senator Weeks.

He prepared

some matter bearing on Senator Swanson's speech, which was turned into
the Senate yesterday.

Everyone has apparently given up hope of sidetracking the
Democratic bill, arid what is being done now is more to place matter

in the record, with the hope that some few Senators might happen to be
won over, at least enough to prevent the passage of the bill.
main, however, judging from what

In the

Perrin says and from telegrams

that he has received from all over the country, bankers have given
up all hope.

They are therefore endeavoring to combine their

strength in an effort to have some of the worst objections in the
bill eliminated.

The first thing that they are to strive for is

to try and have the bill changed so that one regional bank may be
organized first, say in New York, without compelling anyone to join
It,

the members of the Federal Reserve Board to be appointed and to

be the organizing committee, and to be the directors of the first
regional bank until such time as they have shown that it can be run
properly and bankers come into it and its own directory 'is elected.

If this is done, the bill would also be changed so as to authorize

bankers to determine sixty days after the first regional bank was
organized whether they would go into the system:

This would enable

the details to be worl:ed out first, and give bankers an opportunity

to know who the men upon the board were and how they were going



B. S.

to handle the matter.

4

After the first regional bank was organized

and in running order, then the Federal Reserve Board would consider
the organizing of the next one, and so on until the provisions of

whatever law is enacted are carried out as to the number of regional
banks.

By so doing, the Federal Reserve Board could allow enough

time to elapse between the organization of each regional bank to meet
whatever conditions seemed necessary as to the transfer of funds
from member banks to regional banks.

Mr. Perrin and I talked this

matter over for something over an hour this morning, and it seems to
me that if we are obliged to have the regional system, this is the
proper way to handle it.

I have been asked to go before President

Wilsch, with Mr. Perrin, the two of us being supposed to cover the
East, middle West and far West,

as Mr. Perrin and I were both in the

banking business in the middle West, ad he,is now on the Pacific
coast and I am in Uew York.

Mr. Perrin was with Chairman Glass

last evening, and he seems to think that something can be accomplished.
Thete is just one element of doubt in my mind as to the advisability
of following any of these suggestions, and that is that it might seem
to be giving up the fight for a central bank before we were beaten,
because the carrying out of this suggestion would have to be dohe
before the bill is actually passed and such changes would have to be
made as would authorize such developments.

Everyone says, however,

that there is no possibility of having a central bank, and Senator
Root was very positive about it last evening.

Such being

t4e case,

is it better to do the next best thing and try to obtain some relief
in the present bill, or to let the matter drop ?

I have written you

fully in order that you may understand the conditions and so be in
a position to advise me what action you wish me to take.



The

B. S.

5

Commission of the American BanLers Association is also anxious to strike
out

the provision authorizing the Federal Reserve Board to suspend

reserve requirements, and instead have a provision requiring member

banks to pay to the Federal Reserve banks a graduated tax as their
reserves go under the required percentage.

This would seem to me

a much safer proposition, with a politically constituted Board.

Ead a copy of Senator Burton's speech forwarded to you
today from his office, and you should receive it with this letter.
Enclose a statement that I worked out today from the Comptroller's
report of December 3, 1907.

Instead of taking the actual percentage

figures as shown in the statement, which include bank reserves, I
thought it best to confine the consideration to cash in vault
,entirely; otherwise some smart Alec of a Senator might get up and say,
"of course they had to keep heavy reserves, as they couldn't get their
money out of New York," and so kill the whole thing.

The cash showing,

too, is very much better than the combined reserve requirements, as
you will see at once from the table.

First figured out the exact

cash reserve required, then the exact cash reserve held, then the
excess in actual dollars, and then figured the percentage of excess
held to the amount of cash reouired.

The figures speak for them-

selves, though I added one or two comments when bending them to
Senator Root.

For instance, if the country banks had been contented

to carry only 54% more cash in their vaults, on the average, than
reouired, they could have turned back the balance to Nev York, CIA,icago

and St. Louis, which would have brought the banks in these .citiestup
to their full reserve.

Country banks held

113,840,0J0. more than

they required, and the three central reserve cities 332,000,000. less,
,

,p25,0L,0,000. odd of which represented the deficit in New York City



B. S.

alone.

6

If this statement doesn't show who caused the panic of 1907

and throw the burden on the country banks who hoarded money, it

would seem as though nothing could be proved about anything, at least
by figures.

Preparing this table was no soft job;

Lewis and me the entire morning to do it;

it took Mr.

but as I understand that

Senator Root will read it into the Senate record, I hope that it may
be worth while.

Expect to spend all day tomorrow with Senator Burton,
endeavoring to work out a new line of talk for him to use next
week, in addition to the questions.
Sunday, 2.20 p.m.

Have just returned from a morning session with the Senator.
We have drawn up a few amendments to the Owen bill that the Senator
will introduce as the bill is considered section by section, after
it is found that the central bank proposition is sidetracked.

The

two points upon which I laid the most emphasis appear on page 50
of the bill, the first in lines 10 to 13, and the second in lines
13 to 16.

State banks that become members should certainly not be

prohibited from carrying such deposits with non-member banks as
they might choose to, that were in accordance with their State law.
If our Company did not see fit to go into the system, this clause

might result in;the withdrawal of some deposits we already hold and
in preventing us from obtaining similar deposits in the future.
is not a fair provision any way.
to State banks.

The second clause is als

-

It

unfair

These two features I laid particular stress upon,

as Senator Burton feels, from having talked with Senator Owen last

night, that there is a very great possibility that he might allow
these amendments to go through.



'

1 also requested the Senator to

B. S.

7

have Section 15, page 37, changed to read so that the power to
distribute Government deposits among the regional banks would lie

with the Federal Reserve Board and not with the Secretary of the
Treasury.

As it stands now, the Secretary could be outvoted six

to one on the question of where to put Government deposits, and yet
he could handle them to suit himself.

Every politician in the

country would know it, and tremendous pressure would unquestionably

be brought to bear upon him at different times, that might result in
transactions that would seriously handicap some regional bank that
was being managed capably and conservatively.

There would certainly

be greater safety in having a board of seven pass upon such a
proposition than one individual, who would be the only acknowledp:.ed

political member of the board.

Am going to suggest one or two

other amendments, but it seemed to me that,as long as the bill is
unquestionably going to be put through exactly as it stands, as far
as the general powers of the Federal Reserve Board and the organization of regional banks is concerned, and other matters relating to
refunding, etc.,

clipping the wings of the Secretary of the Treasury

was really the mthst important thing to strive for.

Goodness knows

there are plenty of other important ones, but it seems useless to
fight for those things that will not be considered.

If you have in

mind anything else that you would like to have me try and have
amended, bearing in mind the possibilities as outlined, will see
that such amendment is offered, if you will let me know by telephone tomorrow or by mail reaching here Tuesday morning just what. you
wish.

I asked the Senator today how long he expected to want me,
and he replied, "All of this follcwing week."

I told him that under

no consideration could I stay any such length of time, and he asked




B. S. 8

me to agree, then, to stay until Thursday night.

This I also

refused to do, but agreed to stay until the eleven o'clock train
Wednesday, and, if anything developed between now and Wednesday that
would make it seem possible to accomplish something of importance,
that I would stay until Wednesday night.

He then wanted to know if

you could not arrange to come down, arriving as I leave.

This I told

him would be absolutely impossible; that you had certain matters
that required more time than you had at your disposal rather than
less, and that you could not come.

He is entirely satisfied that we

have both done our best under the circumstances, and I shall stay,
therefore, until the eleven o'clock train Wednesday, unless something
develops that makes it possible for me to come earlier.
Senator Root made a very fine speech yesterday afternoon.
It made a great impression upon those,who heard it.

Senator Burton

says he considers it the best speech he has ever heard since he has
been in the Senate.

It may do some good, but very few Democratic

senators heard it.

However, it may produce some results, but no one

can tell yet as to that.

The Senator told me this morning that President Wilson's
condition has become a cause for serious worry.

Apparently he is

breaking down mentally under the strain and his doctors want to
get him away.

Perrin and I, therefore, will not see him, as outlined

in my letter of yesterday.

We certainly have a wonderful line to

draw from if anything does happen to him,

First comes that "tower of

strength" now acting as President of the Senate, who apparently has
no comprehension whatever of national Questions, the rights of
property, or the needs of the people.

Following Marshall, comes

Bryan, and then McAdoo; certainly a joyful combination for citizens



B. S. 9

of this country to contemplate.

Please say nothing whatever about

what I have stated concerning the President, for it is not being
talked about or generally known, even though it is beginning to cause

very great concern, judging from

what the Senator said.

While at the moment I cannot see anything that is going to
prevent financial disaster in this country, judging from the attitude
and intense ignorance of the majority in Congress, yet I am just
optimistic enough in make-up to hope that some statesman may develop
who can meet the emergency, or that the members of the regional

board will be men of such conservatism and ability that they can
control this huge political machine that is being foisted upon the
people for the purpose of bringing about an expansion of credit,
lpon uneconomic lines, that will be almost unparalleled in the history
of the world.

This whole proposition is nothing more or less than

the outcropping in a new form of the cry

for

more money, only that

now it is being applied to credit as well as money, because its
advocates have found out that the word "credit" is used frequently
in place of the word "money."

If Senator Burton had been contented

to keep his address within the bounds of reason as to length, the
same as Senator Root did, he might have made a profound impression,
and even though only a handful of Democratic senators heard him,
they might have been induced to look over some of the statements his
speech contained;

but the way Congress is being pushed.now, it

cannot be expected that any Senator will go through such a mass of
matter for the purpose of picking out a comparatively few ftems of
real importance.

It is only on this account that it seem 6 to me

worth while to endeavor to help the Senator out in making a couple
more speeches, both of which he has agreed to make short and to the
point.



By so doing he might add a little to the effect already

B. S.

10

produced by Senator Root, particularly as that speech may make the
,-Democrati

senators anxious to hear more.

Will appreciate it if you will write me tomorrow, so that I

will get it Tuesday morning, stating that it will be necessary for me to
return on the eleven o'clock train Tuesday.

Then, if I find that any

further time spent here is bound to be useless as far as obtaining any
real results are concerned, I will send it up to the Senator with a note,
stating that I have been obliged to leave, and will come right back.
On the other hand, if there apparently is anything apt to develop that

would make it possible for me to really accomplish something, I will
ignore the letter and come back Wednesday, as already arranged with
the Senator.

Such a letter would be entirely in accordance with the

facts, as I certainly should be back in New York at the first minute
possible, even though if anything can actually be accomplished here
it would unquestionably be better for me to stay.




With regards, I am,
Sincerely yours,




STENOGRAPHER'S MINUTES

THE RESRRVE RANK
ORGANIZATION COMMITTEE.

H7TMERAM RFSERVE DISTRICT DIVISIONS AND LOCATION
OF FEDERAL RESERVE BANKS AND HEAD OFFICES."

?'S.

At

Date

New York City, N. Y.

January 7, ,1914.

Testimony of Fred I. Kent.

Law Reporting Company, Official Stenographers
115 BROADWAY,-- NEW YORK
TELEPHONE. 2820 RECTOR




Fred I. Kent,

Aa

369

STATEMENT OF MR. FRED I. KENT,

The Secretary of Agriculture:

Yr. Kent,

i1l you state.

your banking connection,
Mr. Kent:

I am Vice President of the Bankers' Trust

Comrany.

The Secretary of Agriculture: You know that this Comit
tee is required to establish not less than eight nor rore
than t.Nelve of these Federal Reserve Banks?
Mr. Kent:

Yes.

The Secetary of Agriculture: And to divide the country
Mr. Kent:

Yes,

Tha Secretary of Agriaulture: Have you given any consid

ation to that problem?
Mr. Kent:

Yes,

I have to a certain extent. It seams to

me that the concenaus of opinion of men ho have not

studied the matter carefully and specially as to 'there

these districts should be divided, is not the prorer
base from which tofigure them. Instead, of that I think
7e ought to consider the facto that e7dot in this country
that cannot be changed.

For instance, we cannot gro-N cotton in Tall Street,

neither can ;;E) 'finance railroads in the cotton fields.




Fred I Kent.

A-b

370

And there are many things in this country that are based
on facts that man cannot change.

If 7.:e establish any

regional system -Mich goes contrary to the conditions -xhich

exist because of those facts, it is going to be an unecon-

omical system that is ming to cost the country more than
it should.,

FOr instance, New York City
world, not

because

is the largest port in the

any man or any set of mexi wish to make

it the largest port in the world, but because of its peculiar situation geographically, and the further fact that
this country was settled by the people from Europe, 7thich

means that our habits and customs are very similar to theirs.
Consequently

e import more and export more between the

United States and Europe than :lie do between the. western

country, for instance, and the Orient.

people

in

the Orient and of the

people

The clothing of
in this country

There is not the exchane there.

is very different.

And there are many things like-that 1Thich mean that New

York has grown to its present position because of these

7

things, and not because of any desire of man to make them so.
The same thin tk

.

.E3

true of Chicago.

It is situated at

the foot of Lake Michigan, and it is in a natural place to




A-c

Fred I.

Kuft

371

take business tonand from the east and the west, and it is
also in a good pcsition to work in the southwestern territory.

Those things have grown up;
large cities,

Chicago and

other cities are large cities because

of natural conalions largely;

and the east being settled

first, of cOurse its manufacturing interests are larger.
And then againwe have in the south a climate that
makes possible the growth of cotton, and in the ;addle
vest the gro,th of ;heat, and so forth.

Now New York City being
city of import;
th

in

the ;position it is, is the

and being the city of inport, it needs

foreign exchange in order to meet the demands

the importers.

That foreign exchange is made largely

through cotton which comes from the south.
market

of

There is no

the foreign exchange made by that cotton in the

south, that is comparatively speaking, Consequently that
oottonhas to be handled by New York,

not because New York

wishes to handle it particularly, nor because the southern
interests that gros the cotton wish to have New York pedple
handle it, but because New York needs the foreign- exchange

made by that cotton in order to pay for its imports.




372

Fred I. Ke...,1

And all of the lines that naturally trade through this
country seem to center into New York,

They go through

Chicago and into Minneapolis, and yet Minneapolis, even
has an immense trade with We

though it is nearer Chicago,

The same is true of San

York directly over Chicago.

Francisco, nhich deals with Chicago and to a certain extent
with St, Louis, but more largely with New York because of
these conditions that actually exist.

Nov in trying to divide this country into districts,
it seems to me we should take into consideration those
things, and not opinions.

It is quite a proposition,

because we are going to try to make a system of regional
banks as nearly efficient as a central bank *Aould be, as

possible/

.e do not bear in order to
And

these things in mind, we are going to make a very expensive
proposition of it.

I do not believe that New York should have a bank that
has a capital that is too large in proportion to the rest
of the country.

On the other hand, I do not think it would

be wise, at the moment anyway,

to establish any regional
c

bank on the eastern coast other thanin New York.
In the first place,

the regional banks are authorized




373

Fred I. Kent

to establish branches abroad, and if

e had a regional bank

in Boston, New fork and Philadelphia and they each eetab-

lished a branch in Europe, it might not be received with

much far by foreign institutions, whereas they might be
very glad to work in conjunction 'hith one branch of a

bank that would represent the whole country, that would
be

a

branch. say, of a large bank in New York.
1

The Secxetary of the Treasury.:

Kent, the

banks

Tell, on that point, Mr.

only resource for foreign business is

not to establish agencies of their own;

they may have

correspondents, exactly like your trust company,
Mr. Kant:

They could establish branches under the law,

could they not?
The Secretary of the Treasury:

So could the national

banks now under the law establish foreign branches, if
theywanted to.
resource,

But I mean to say that is not their only

They may, and probably

would, find

tageoue to establish correspondents;

it-more-advan-

and to that extent

it would not be any less advantageous to have the reserve

-

banks., say three reserve banks having correspondents in
Europe than to heo-e the number of banks and trusttoompanies
in N9W York having correspondents lInder the present systemd

O




3?3

Fred I. Kent

to establish branches abroad, and if we had a regional bank
in Bostoa, New fork and Philadelrhia and they each estab-

lished a branch in Eurore, it might not be received nith

much far by foreign institutions, whereas they might be
very glad to work in conjunction 'hith one branch of a

bank that would represent the whole country, that would
be

a

branch. say, of a large bank in New York.

The Secretary of the Treasury.:

Kent, these banks

Tell, on that point, kr.

only resource for foreign business is

not to establish agencies of their own;

they may have

corresrondents, exactly like your trust company,
Mr. Kant:

They could establish branches under the law,

could they not?
The Secretary of the Treasury:

So could the national

banks now under the law establish foreign branches, if
theywanted to.
resource.

But I mean to say that is not their only

They may, and probably would, find it-more-advan-

tageoua to establish correspondents;

and to that extent

it would not be any less advantageoUS to have the reserve

banks, say three reserve banks having correspondents in
Europe than to hai-e the number of banks and trustboompardes
in N9W York having correspondents under. the present system.

'




A

In other words, these banks are nut o:-.:clusive of the

existing facilities;

they are in addition to existing

facilities.
Yr. Kent:

Yes, except that one thing you wish to

accomplish in this regional system, as I understand it,
is the control of the shipment of gold.

Now we cannot

control gold beyond our prorer comtercial position, but

we often can delay shipments until the trade turns and
so prevent that entirely.

And that can only be done

with an institution that is large enough to do it.

If you

have a large number of insti4utions dealing in gold or
in foreign exchange with Eurore, you are going to have

the same condition that exists today, that is, that they
must base it on profit, and that is the only way gold is
shirred back and forth now, so far as this country is concerned, on a basis of profit.

Yor a public utility bank

is supposed to be in a position to ignore profit tempor-

arily,:when the needs of the country require it, and on
that account it would seem to me we should have a bank in
New York that is strong enough so that it could afford to
c

stand that expense, and that would have a sufficient power
to get enough bills together and enough credit together




A-

Fred I. Kent

375

abroad so it could handle the cold rrorosition as the
bocessity develors.
The Secretary of the Treasury:

You realize, of course,

that if you had three of these barks,they are co-ordinated

through the Reserve Board, and one of the rmtections
is the uniform interest rate that may be established.

New as it stands to-day, your rrotection against gold
exrcrta

tem,

is

very much

less than it will be under this sys-

even with three reserve banks on the Seaboard, Ia.

it not?
Mr. Kant:

You see the

Tell, that might be true and it

regional

and not in strength.

might

not

banksare bound together in -:veakness
In other words, it is impossible to

make the reserves of each regional bank serve as reserves

for all.

Instead, when a regional bank gets into trouble

or when it becomes extended, or when, in the natural Course

of business it must borrow from some other regional bank,
then when it is in that state of 7eakness, it takes strength
from some other regional bank.
The Secretaryof the Treasury:
Mr. Kent:

Not of necessity'.

Well, it would probably have to, in a way.

That is, you do not get mobility.

In other words, we have




Fred ',Kent.

Vt3

three central reserve cities now and that is considered two
too many.

Now if we increase it to eizht, we will have

seven too many.

The Secretary of the Treasury:

But there is no power of

coordinating the present reserve cities;

no power exists

anywhere to coordinate them.
Mr. Kent:

No, that is true.

The Secretary of the Treasury:

They are independent of

each other and do absolutely as they please;

but the

present system contemplates a very effective coordinatione..
of these unite through the Federal Reserve Board, and that
is a very decided element of strength
Mr. Kent:

in

this system.

It is necessary, I grant, in this system, in

order to give it any degree of efficiency whatever. But it
seems to me that it should be worked out and can be worked
out very nicely.If we have a proper Federal Reserve Board,
there-,Is no reason why this country should not grow as a

change in our banking system of this kind would make

possible.

But in figuring out the regional districts, it seems to me
if you are to have eight to start with, which I understand
you must have; if you have one in New York and the other
seven are

divided in here, as business goes on and develops

a
377

Fred I. Kent

you :can easily establish another in Boston or Philadelphia,
if it seems necessary;

whereas, if you divide your

strength at the moment, and later you find you do not
need one in Boston or in Philadelphia, you have gone to
unnecessary expense.

It is more difficult to bring a

condition back when you have spread it, than it is to let
it grow naturally
The Secretary of Agriculture:
*




way?

Is not Boston a reserve for New tx::

Mr. Kent:

England

England?

Thy, yes, but Gn the other hand it is a very

small part of the country.
New

Has it not grown that

For instance, I believe the

banks, that is the national banks, would.

have a carital of !9,900,000 if regional banks were formed
in New England, whereas in New York, if you took the
natural eastern states, as they are called, it would be
about 40,000,000, and the southern states would represent
about. 15,000,000, and the middle western states about
25,000,000;

you see that would include Chicago and St.

Louis, and then the western states would be about.6,0004.000,

and the Pacific states about seven and one half Million%

That is about the way tat divides up.
But we must consider again, it seems to me, the question




A

376

Fred I,,KaAt

of the currents of trade, the way trade works back and
forth.

For instance, we have, say, about two billion

in manufactures around New York City, I believe.

Now

those manufactures are spread out over the west, and the

-

west has to pay New York for them, and that is one thing
that makes New York exchanze necessary in the west, just
the same as the question of influence.

Now we must

differentiate in considering the trade of this country
between what you would call local trade and through trade,
and New York shows a very large proportion of through
trade.

The Secretary of the Treasury:

asa4mption

Are you proceeding on the

that these reserve banks are to be banks of

deposit and discount in a general sense?
Mr. Kent:

Only of their member banks.

The Secretary of the Treasury:
Mr, Kent:

Exactly.

Yes.

The Secretary of the Treasury:

Now the currents of

trade do not affect them to the same extent,

because

they

are

reservoirs of credit, and so long as they

are

accessible to the different districts and the reserve
which they hold is readily available for the assistance

0

380

Fred I. Kent

A

banks alone would make, but I mean just to consider it;
now how is a bank of that

size going

to take any

appreciable

part in handling the gold which Froes-back and forth between
this country and Europe?
:The Secietary of the Treasury:

It depends entirely upon

its resources, apart from capital.
Mr. Kent:

country, are

But European banks in dealing with this

not

patriotic.

Then they come to deal with

this country they look to. the profit, and to the risk which

Capital is one of the things they give a

is to be ran.

good deal of attention to
The Secretary of the

Treasury:. But

carital

and resources

combined is the thing which determines.
Mr. Kent:

But the resources must necessarily be

bound

by the resources of that individual bank, because the only
value that these

other

regional banks have to that bank is

for it to borrow from the




That is all they can give.

A

Fred T Kent.

G-a

The Secretary of the Treasury:

361

But you realize, 7,T. Kent,

that the reserves of a Federal Reserve Bank are of a very
different character from those of an ordinary bank of
discount and deposit.

These banks hold the

reserves of

the member banks, and they are of a liquid character, and
they are utilized, under the provisions of this bill, in.

such a manner.that they are kept liquid all the time, and

they are there available for use by the member banks, and
there .cannot be a run on a Federal Reserve Bank.
Mr. Kent :

But if there was a run in any district

there

would be a run on the member balcks.

The Secretary of the Treasury:

under those

The Federal Reserve Bank,

circumstances, is expeeted to be able to assist

the member banks.

The provisions of the law

seem to

be

quite adequate for that purpose, so that in considering the
power of any one of these banks, it must be considered as a
related institution to the system and as one of several
'-

strong coordinated units and inay, in case of necessity, have

resource to the combined power of the other banks through
the Federal Board.

In that aspect of the case, the

considerations you are

presenting here,

while important.,

are not of the supreme irraportavce that they would be if each




0




Fred T Kent.

G-b

382

of these banks was an ordinary bank of discount and deposit,.

as if they were expected to stand alone.
1\-. Kent :

Conversationally that might seem to be true,

but practically things do not always work out that way.
The Secretary of the Treasury:

not
T am/suggesting the

practice, I ,am trying to familiarize you with the structure
of this system.
Mr. Kent: T understand the struc ture very well, but
what has been in my mind is the question ao to how European

banks, with their great big capitals which run from
!!:%50,000,000 up, in many cases, are going to look at a small

institution in .!7 ew York that may be dealing back and forth

in the shipment of gold, and that may be 1Brticu1arT true
if we realize that the New York City bank is apt to be
called upon to make loans out in different .1)arts of the
country.

There are two sides to that question of being bound

to the other banks. On one side it gives strength, if it
needs to borrow; on the other is that it may make that bank

of less strength if it is forced to loan.
The Secretary of the Treasury: Assuming that these eitht
banks have a combined capitalization of more than one

hundred million dollars?

G-c

Fred. T -Kent.

42'106,000,n00,

333

T believe.

The Secretary of the Treasury:

And that they Erty hold

ultinntely something like six hundred to seven hundred or
eight hUndred millions of dollars of Government

.

deposits and, the reserves of the member banks, and. all of

those units thoroughly coordinated through the _Federal

Reserve 'Board; at any time, either domestic or abroa d, can

you cite any institution in the world that would have the
same strength, the same i:herent elements of strength that
this combined system would have.
Yr. Tent:

T cannot see how it is,

possible f or you to

figure the reserves of one regional bank as being a Tart
of the reserves of the other, when every regional bank is

organized by itself, on its own basis, and the only way it
is coordinated with the others is through the loaning power.
That is, it ray be ca lied upon to loan or it may ask for
loans.

T think it :cm kes a very different 'pr opos it ion of it

I can see how this iTay be developed into avery satisfactory

system but yet, in order to do so, it seems to me the districts should be divided with the greatest care and that
was one phase of it that appeared to me.

ow, T am-a western

man; I was born in Tllincis and brought up there, and T have







Fred T Kent.

G-d

384

always felt as though this was one great country, the United
States of America, a-,]d T notice that the western people and

the southern people and others seem to think possibly New

York is too powerful at home here, but we arc very proud
of it in Europe and we ought to be proud of it in this
country too.

We are just as much a part of the southls

wonderful cotton crop
all of us.

ik

and the men in the west should be,

Tt seems to me it is not a question of for

instance trying to divide up the cotton fields and have part
of the cotton grown in the north or

of trying

to divide up

the great financial power of . 1.ew York ad trying to put that

out in the desert or in the country, but a question of

trying

to work this thing out for the benefit of all,

The Secretary of

Agriculture:

Vo one is interested in

any other question.

Mr. Keit:

I realize that.

T did-.ot want you to mis-

urging

New York as against the

Agriculture:.

We can waive all that,

understand me, that T was
other ;art of the country,
The Secretary of

are all interested in working out a

system that will be

We

t

best for the nation.
The Secretary of the Treasury:

This is pur

Fred T Kent.

G-o

385

problem and it has to be dealt with in the broadest possible

spirit of patriotism and intelligence, and the purpose of
this committee in having these hearings is to get the benefit
of the best judgment of the business men and bankers of this
country to enable us to put this system into operation not
for the benefit of any locality but the country as a whole;
so we might dismiss any other coLlsideration.

I appreciate that.. The reason T mel.,tioned
what T did was because T wanted you to realize T had that
in mind also, and in speaking for 'New York in the ganner I
Mr. Kent:

have

done, it is not because T think 'New York should be

favored, because I don't think so; it was only for the
purpose of expediency.

The Secretary of the Treasury: You were suggesting the

districts that you had in your mind. What would you say
should be the reserve cities, if you have not less than eight.
Mr. Kent: That is a pretty difficult problem, without

sitting down and going into figures for a good "-Tiny hours.

The Secretary of the Treasury: You haven't done that?:Ir. Kent:

14o)

I admit T have not. T did do this., T took

the natural div is ions of the country as shown by the Ciomp-

troller and figured out the percentage of capital, to see



0




*Fred T *Kent.

C--f

385

how it would work, and those are thefig,ures T gave you a

few minutes ago, and that is as far as T have gone

The

channels of trade, it seems to me, should be considered.
It may be that you could work over those channels of trade
but it would seem as though it would be uneconomic.

Te are required to do that
by law, as viell as by the natural economic view of it.
The Secretary of Agriculture:

Mr. Kent :

The Secretary of Agriculture: Would you have time and

inclination to study over the matter further, and give us
your views in a little brief c!:n the subject, and lark a map
for us, giv ing your not ions as to the div is ion of the territory.
lfr, Kent :

T will he ve,^y :pleased to do so if you would

like to have me.
The Secretary of the Treasury:

Tf you will take that

let us have that eio with your suggestions for the division
of the country at as early a moment as you can, we shall be
,

very much obliged to you.
Mr. Kent:

How long would I have to prepare it? I would.

like to give it careful thought.
The Secretary of the Treasury: Would a week be sufficient'?

o




Fred I Kent..

G-g

387

:Tr. Kent : Yes.

The Secretary of the Treasury: -Till 'Jou kindly send it
to rTashifigton?
-rrr. Kent :

ves .

The Secretary of the Treasury: And we will attach it
to your testimony.
STATITIE T OJT STEPHEIg BAKER.

The Secretary of Agriculture: Will you state your banking

conection, 7.'rr. Baker, for the4 sake of the record.
Mr. Baker:

T am President of the Bank of 1Panhattan

Company.

The Secretary of Agriculture: You know the problem we

are wrestling with?

We would be very glad to have any

suggestions or expressions from you to help us.

Secretary, T feel that I would be in favor,
have been in favor under this bill of reducing!the

7:r. Baker:

71

re,glonal reserve banks down to as small a proportion as

possible, but recognize that the 'bill has 'oecome a law and.

that the bill provides for eight regional reserve banks as
So it seems to me that
a minimum and twelve as a ITEL X i MUD1
co-:sideratio-n should be given to locating those regional'

-

DI R ECTORS.
JAMES S.ALEXAN DE R, Prest.Nat Ban k ofCommerce in N.Y.
STEPHEN BAKER. President Bank oFthe Manhattan Co.
SAMUEL G. BAYNE, President Seaboard Nat Bank.

EDWIN M. BULKLEY, Spencer Trask& Co.Bankers.
JAMES G. CANNON, President Fourth Nat Bank.

E. C. CONVERSE, President.
THOMAS DEWITT CuYLER, Prest.CornrnercialTrustCo.Phila.
HENRY P DAVISON, a P. Morgan & Co., Bankers.

RUDULPH ELLIS, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY. Vice President Hanover Nat Bank.

WALTER E. FREW, President Corn Exchange Bank.
F RE OK T MASK ELL,VPrest.III.Trust&Savings Bank Chicago.
A. BARTON HE PB U Ft N. Chairman.Chase Nat.Bank.

FRANCIS L. HI N E.President First Nat.Bank,
THOMAS W. LAMONT, J. P Morgan & Co. Bankers
EDGAR L MARSTON. Blair & Co. Bankers

JOSE PH B. MARTIN DALE, President Chemical Nat Bank.
GATES W. MC GARRAH. PrestNechanics'&Metals Nat.Bank.
CHARLES D. NORTON, Vice Prest.First NatBank,

WILLIAM C.P01 LLON. Vice President.
DANIEL E. PO MEROY, Vice President.

WILLIAM H. PORTER. J. P Morgan &Cc. Bankers.

OFFICERS.
E.C.CONVE RS E, President.
BENJ.STRONG,J R.,Vice President
WILLIAM C. POILLON, Vice President

BANKERS TRUST
OMPA NY
CAPITAL
SU RPLUS

D. E. PO M E R OY, Vice President.

W. N. DUANE, Vice President.
F. I. KENT, Vice President.
HAROLD B. THORNE , Vice President.

$ 10,000.000
10,000.000

F. N. B.CLOSE, Vice President.
GEO. G.THOMSON, Secretary.

GEORGE W. BENTON, Treasurer.
GUY RICHARDS, Asst. Secretary.
H. W.DON OVAN, Asst.Treasurer.

BETHUNE W. JONES, Asst.Secretary.

CABLE ADDRESS: BANKTRUST NEW YORK.

16 WALL STREET

H. F. WILSON,J R.. Asst.Secretary.
R. H.G1 LEG. Asst. Treasurer.

PERRY D. BOGUE, Asst.Secretary.
HARRY N. DUNHAM, Asst. Treasurer

I.MICHAELS, Trust Officer.

SEWARD PROSS ER, Prest Liberty Nat.Bank

DANIEL G. RE ID, Vice President Liberty Nat Bank.
BENJ. STRONG. JR.Vice President.
EDWARD F. SWINNEY, Prest First NatBank.Kansas City
GILBERT G. THO R NE. Vice PresidentNatPark Bank.
EDWARD TOWNSEND. PrestImp.& Traders' Nat.Bank
ALBERT H.WIGG IN. President Chase Nat.Bank.
SAMUEL WOOLVERTON, Vice President Hanover Nat Bank

N EW

Yo R K , April 18, 1914.

FOREIGN EXCHANGE DEPARTMENT

kr. Benjamin Strong, Jr.
903 Park Avenue,
New York City.
Dear Ben:-

,

Thinking that possibly you might like to look over a
proposed itinerary before getting back into harness, enclose
herewith copy.
This gives you three full days in London on arrival, six full days in Paris, one full day in Zurich (all that
is necessary), five full days in Berlin (more than you would require in order to call upon all of our bankers, but not more
than you could use effectively), three full days in Amsterdam,
Saturday, Sunday and Monday (the Monday would be all you would
need for business), and twelve days in London before sailing.
With this itinerary as a base, think you can change to suit
yourself, either before you sail or as you go along. There is
no real necessity of your going to Zurich, if for any reason you
prefer not to, for I shall call upon our bankers there. If,
therefore, when in Paris you find that you prefer to cut out
Zurich, you could go straight across to Berlin.
If this itinerary suits you, I will write abroad to
some of those whom I wish you to meet, and find out whether they
expect to be at their offices upon your arrival. Have already
written Hugo Schmidt of the Deutsche Bank, Berlin, Mr. Simpson
and Sir Edward Holden.

.

The record of our foreign accounts will be ready for
you Monday, with the exception of any additional entries we
may desire to put in later after we have chatted the matter ovee.
If you are entirely recovered, which I sincerely hope
may be true, will be awfully glad to have you back at the office,
for we have really missed you more than I can say. With sincere
regards, I am,




Cordially yours







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279-4'1 6-447019

DIRECTORS.

"

OFFICERS.
BENJ. ST RON G,J R., President.

JAMES S. ALF XANDESt, Prest.Nat. Bank of Commerce in N.Y.
STEPHEN B AKE R, President Eank of the Manhattan Co.
SAMUEL G. BAYN E, President Seaboard Nat.Bank.

"

EDWIN M.8 L' LKLEY, Spencer Trash & Co.Bankers.
JAMES G.CANNON. President Fourth Nat.Bank.
E. C CONVERSE, President AstorTrust Co.
THOMAS DEWITT CUYLER,Prest.CommeVcialTrust Co.Phila.
HEM RY P. DAVISON. J.P. Morgan & Co. Bankers.
WM. NORTH DUANE. , Vice President.
,ThR UDULPH ELLIS, President Fidelity Trust Co. Phila.
C. HAYWAR D FERRY, Vice President Hanover Nat.Bank.
WALTER E. FREW, President Corn Exchange Bank.
FR ECK T. HASKELL ,V.Prest.Ill.Trust & Savings Bank Chicago.
A. BARTON H EF'13 UN N, Chairman Chase Nat.Bank.

FR AM C IS L. MIME, President First Nat. Bank.
EDGAR L. MAR SION, Blair & Co. Bankers.
JOSEPH B. MARTIN DALE, President Chemical Nat.Bank.
GATES W. McGAR RAH, Prest.Mechanice& Metals Nat.Bank.

cr171-,';`.1-J

I.

1"-Ali,1\1

CAPITAL
SURPLUS

$10,000,000
i 0,000,000

CABLE ADDRESS: BAN KTRUST, NEW YORK.

CHARLES D. NORTON, Vice Prest.FirstNat.Bank.
WILLIAM C. POI LLON, Vice President.
DAN] EL E. POME ROY,Vice President.
S E WAR D F ROSSER, Prest.Liberty Nat. Bank.
DANIEL G. REID, Vice President Liberty Nat.Bank.
BENJ. STR 0 NG,JR. President.

16 WALL STREET

WILLIAM C. POILLON, Vice President.
D. E. POMEROY, Vice Presicent.
W. N. DUANE,Vice President.
F. I.K ENT, Vice Pre4ident.
HAROLD B.THORNE , Vice President.
F. N. B.CLOSE,Vice President.
GEO. G.THOMSON, Secretary.

GEORGE W.BENTON, Treasurer.
GUY RICHARDS, Asst. Secretary.
H.W. DONOVAN, Asst.Treasurer,

BETHUNE W. JONES, Asst.Secretary.
H.F.WILSON,J a ,Asst Secretary.
R. H.GILES, Asst. Treasurer.
PERRY D. BOGUE, Asst.Secretary.
HARRY N. DUNHAM, Asst.Treasurer.
I. MICHAELS , Trust Officer.

EDWARD F. SWIN N EY, Prest.First Nat.Bank,Kansas City.

GILBERT G.THORNE,Vice President Nat.Park Bank.
EDWARD TOWNS EN D, Prest.Imp.&Traders Nat.Bank.
ALBERT H. WIGGI N, President Chase Nat.Bank.
SAMUEL WOOLVERTON.Vice President Hanover Nat.Bank.

N EW YO R K

atria 5, 1914.

FOREIGN EXCHANGE DEPARTMENT

Mr, Benjamin 3trong, Jr.,

C/o London City Midland Bank, Ltd.,
London, England.

Dear Ben:-

Your letter of May 29 just received, and will have
time to ansuer you and get it off by the "Imporator".
Your outline of the situation in London, 2aris and
Berlin accords fully with the iTaprossioLs I have received from
rading iondon financial papers in connection with novspater
ports. On the other hand I am fairly 7,7ell'oatisfied in my own
mind that the fear that is.extant isqndu.eed more because of worli
ride unrest among lal,orinTt' classes, that has been brought about
through muckraking and demagoguery. it seems to me that this
country has helped stir up the other countries to a larger extent
than is generally considered, and tht we are consequently largely, to blame. It is ouite natural that the fear of unrest in
Geroany and :Trance should .turn to!ardo a possible war between

those countries, particularly as there seems to be a large class
of politicians who entertain the ilea, and honorably too I thdnk,
that when there is internal strife in any ceuatry, the best 'way
to correct it is to have a var Lith a foreign country, or at
be such a liar, with
least to f.:Iv*-te it aear as thouT_fh there
enough force to attract the attention of all people.
The foreign trade of,T,: aroTen countries -1,0, as far as I:
and is actually ,making
can find out. holdin:r, up vonderfull.y
- rogress. In t.he United States each E,-nth seems to shop a greatof increase of imports in relation to experts.
er pereent
-;. retaryedfield has written a great deal along the line. of atto T:rove that because 17.'e war exportin,7 heavily i.nder a,
.

.

tp
ducts



'ff that we could unquestional do 20, 0:ra to better adhas
unacr a ioz tariff. Two particular reasns that
1:1.-T)

first, that ander a le.7 tariff other countries urn be
to

-

buy fw7m us,

alco2.-:1, that. throu:;h bein7; able

products at low rats, we can tarn ou.-t finished pI3.7ip,cioal, do
cost. Thes6 ar:,:ucLunts,

B. S., Jr. 2.
In the first place, while an occasional individual will alloy sentiment to interfere with business, yet such
not work out

0

persons are undoubtedly so few in number that their influence
would not be worthy of consideration in comparison with the busi-

ness of this country. In the second place, our ability to sell
goods abroad in spite of our tariff was due partly to our greater
efficiency (which is fast being equalled in other countries), and
partly to the fact that our foreign markets were used largely to
take care of overflow, which made cheater productien, because it
meant a continuous market and a possible multiplication of manufactured articles. Instead, therefore, of our manufacturers importing ray materials at lower rates, and so being in position to
supply the rest of the world at less cost, they have boon import-

ing manufactured goods, which have taken the place of those which
were made in this country, and which has consequently served to
raise the cost of manufacturing in this country, because of the
reduction in number of pieces put out here. The result has been
such a decrease in manufacturing in this country that we have not
supplied our own wents, and consequently have had nothing to spare

for sale abroad, that is of course in some lines. Instead, therefore, of our,e::ports increasing under our new tariff in proportion
to the increase in our imports, they have dropped off very materially. The result in our foreign exchange balance is not, of

course, immediate, because such a large proportion of imports are
brought in under 60 and 90 day sight commercial credits, but the
increased imnorts have now been coming in for a sufficient number
of months, so that we are having to meet the credits under which
they have been financed. A par-1 of the reason for our high rates,
therefore, does undoubtedly lie in tte changes that have taken

place in our foreign trade.
nil° travel is undoubtedly lighter in this country as
a whole than in previous years, yet as the time for the sailing
of European steamships has arrived, they have been pretty well
loaded. The money needed to take care of such travel, therefore,
is probably just as great at this time as in previous years, although domestic travel is probably very much lighter than usual.
..eleifing to those requirements for echange in this country the facts
mentioned by you having to do with securities, with which I fully
agree, and further the necessity of making e=change with gold coin
instead of gold bars, the whole foreign TI:change position is thoroughly accounted for.
Conditions in Washington are worse rather than better,

flue I think to.the feeling on the part of the administration that
freight rates may be raised, and that when this is done, business
will immediately become better. There seems to be a disposition
to carry out to the limit every so-calloa reform that has been
undertal_en. Severn' periods of hesitation have occurred during
the last year, all of 'which have been due to fear on the part of

the Domecrats that they might be injuring their chances off'reelectien, beeause business was being stopped. Each time, hooever,
as soon as a little optimicel has become notiCeeble in the country,
based on the apparent change of attitude in We.shinLf!;on, they have
immediately reverted beck to their former point of view. Consider


B. S., Jr. 3.
C)

in the calibre of the men, I am inclined to believe that if
freight rates are raised. and.it does cause a better feeling in
business circles,- that the program of business destruction will
go merrily on to the bitter end. Of course the nearer we approach the fall elections, the inclination to hold things over
will grow, but even so, unless the elections result in consider-

able of a turnover, nothing will really be accomplished. While
Wilson made .a tremendous howl about lobbying when business men
were being asked to give their View's on the tariff and other matters, yet he has not mentioned the subject during the last few
weeks while the labor agitators have been in Washington working
for exemption of labor from the Sherman lay. The galleries were
so full of laboring men that one Congressman addressed his remarks to them when opposing the attitude of Congress toward labor.
These things all say in so many words that we cannot expect any
relief from Washington, which if true means that we will have no
improvement i-r. business at least until fall, and then only if it
appears as though the November elections would turn out favorably.
The admirdstration is still endeavoring in every way
possible to discredit rew York. McAdoo is still holding up the
subway from going under the Post-Office, and the Comptroller has
asked retionea Banks all over the country to turn in a daily
statement during the month of Jane, giving the detail of every
transaction, oven of the smallest nature (undoubtedly aimed at
New York banks for the purpose of enabling the Comptroller to
4trace their business). There is every reason to believe that
friction has been stirred Up among the sTaller banks of rew York
State by the government in order to 'dry to make it appear as
though hew York City banks were endeavoring to control the directors of the row York regional bank, and the Treasury Department
has ruled that banas shiTpine currency to Washington for redemption must pay the express changes, instead of the banks whose
circulation is returned. As the Treasury Department and the
Comptroller know that a very large portion of rational Dank bills
returned to Washington go by way of rev York, it looks as though
they were aiming directiat the banks of this city. Not having
seen the evening paeer, I do not know whether they have concocted any new scheme against New York to-day or not. All of this
will re-act against the authors, but at the moment they are of
course in a position of power.
Anderson just stopped in on his way to Washington, having arrived on the Lcluitania this morning. He is coming back to
rsew York Thured.ay, and is to take luneheon with me Pridny, when
I will go into the acceptance matter with Mn. The ccnmittee
authorized acceptances up to ;;.5,000,000, after which the matter
is to be referred to theai again. Will talk over the detail with
you when I see you.
Have arranged for Prank. Close to go to the Cenveyition
of the rew-York State Bankers neZG Teursday ana 'ZrilEy. Am to exPlain the whole acceptance matter to him on Tuesday at luncheon,

and he is to sonnel bankers from a nnnber of different citieLe to
see how they feel about it. He was quite pleased to he able to




ciB.

S., Jr. 4.

attend_ the convention, as he has never been to one before.
Hurlbut will also be there, and can introduce him to those whom

I particularly want him to see.
We have about 400,000 running in Swift bills, which
came in from Argentina, c90,000 on a /.1'; basis and the balance at
5%. In addition we receive a commission of 1/8 of one per cont.,
which in effect adds 1 1/2 to the interest.

C)

Porwarded our Southern Pacific notes, which mature 'June
15, to the Credit Lyonnais', London, for redemption and deposit
of proceeds with the London City and ladland Bank. Exchange is

so hih that it will enable us to male a nice profit on the deal.

Do not mention this in the London City, as we found it difficult
to deal with them, for reasons which I can explain when I see you.
We may handle the Baltimore & Ohio notes, maturing July 1, in the

same manner.

*

Am cabling you to-night, but after reading Dan's letter, which was mailed on the "Carmania", and talking it over with
him, can think of nothing that could be said in a cable that would
really be of value to you. If anything develops, however, will
cable you fully, so that if you receive no wire, you will know
that nothing of importance has occurred.
Increased the revolving credit of the I. A. C. from
Marks 150,000 to Marks 200,000 a month to-day. Yesterday we received a letter from the Chase Natiohal Bank, guaranteeing the
old credit of Marks 2,100,000, which places this matter entirely
in order.
Was sorry to hear that you were working hard, but was
afraid that it would be unavoidable. Holing that this will find
you yell, ana with sincere regards, I am,




Cordially you
-

-t-LL

/70-Y

4 it
London, June 27, 1914.

Dear Ben,Last evening Mrs. Kent, Warner and myself took dinner with Sir Edward
at his home, after thidh Sir Edward and I spent the evening

together,talkins

the question of a branch office for the Bankers Trust Company in London.

Sir Edward point blank for his opinion in the matter, Which he gave
and in detail.

over

I asked

0 great length

He prefaced his remarks with the statement that Mr. Vanderlip had

recently asked him the same question, and While he had replied that it was questionable whether the National City Bank could actually make money through the estab-

yet that
lishment of an office in London,,f he himself were connected with that bank he thought

that he would probably open such an office, his reason being one of sentiment only,
that is, the National City Bank being the largest banking institution in the United
States, it would seem rather fitting that it should have a London office.

Sir Edward

does not feel that other banks have any such reason for an office here, and that
the expense on that account would be a foolish one for them to incur.
Coming to the Bankers Trust Company, he said that if we felt that, because

the Guaranty Trust Company had an office here, in order to maintain our prestige
we should have one also, that it might be of value to us to opensuch an office; but
that whether we would care to undertake the expense involved for any such reason
was a question entirely up to us.

He also said that from the point of view of

looking after the interests of tourists he thought we would find that we really
had nothing to gain.

Such an office would require a large force at certain times

of the year, the majority of whom would have nothing whatever to do during the
winter season, which means not alone an unnecessary and unusual expense, but as

well inefficiency in office manaAment, as months of doing nothing seem to have a



bad influence upon clerks.
These two matters aside, he then took up in detail the kind of business
hat a London office would undertake, and if he had seen my report to you he could
not have followed it very much more closely.

He boiled it all down to the security

business and seemed to think that if we could develop a satisfactory sectrity
business we might make a London office pay.

In order to do so, however, he stated

that it would be necessary for us to work with an English institution and that we

must have an English bbard of advisers, which would of course add to the expense
materially.
to

Such a board he felt necessary, not alone in order to help open the way

flglish business, but to act as a check on the manager of the London office, who

might otherwise be hard to control.

He felt that it would be ouite impossible to

get a man who would be at all satisfactory for less than £2,000. a year
that only a man of unusual ability could fill the position at all.

and stated

He recognized

the fact that,while a security business would be almost impossible in this market

at the moment, because of special conditions, times will unquestionably change and
that in a year or two this market may begin to again absorb American offerings.

Re states that practically all the men who have called upon him from the States
for the purpose of investigating this market with the idea of doing business here,

bave been bond men, and that while some of them have attempted to do a little
business, yet the large majority have found it impossible, or at least unwise, to
enter the market.

English banks having branches throughout England.are in better

position to distribute securities than anyone else.

After he had given me his views in detail, I asked him if he did not think
it would be possible for him to do a much more active business with the Bankers
Trust Company in the future, even if we did not open a branch.

He replied that he

felt that, without the branch, the opportunity to work together would be much



B.S. 3

greater than with it, for we would not be in a competitive position.

After re-

,eating more or less of the conversation I had had with Mr. Anderson and telling
him of the arrangement for increased business that I made with him, I asked him
whether he could not give us participations in syndicates, should we desire to
enter into any such arrangement with him.

He stated that he would be very pleased

indeed to do so, and I then asked for information as to just the kind of securities
that he was in the habit of placing.

Briefly, he stated that, first, there are no

offerings of railways here, so that that line was not open to them.

Second, that

occasionally they had opportunity to take part in a foreign Government loan, such as
the one to Argentine that we were interested in but that the Barings
%

obtaining.

succeeded in

In this connection would say that the reason the Barings obtained this

loan was not due to any better rates made by them; but to the fact that they bound
conditions
themselves to take other securities in the future, under,thich Sir Ldward did not

consider sound for him to undertake as a bank of deposit.

One syndicate having to

do with Scandinavian securities that they handled was only subscribed to the amount
of about 500, but even so the securities, which they have held for some little time
and are now disposing of, are netting them a profit of about £18,000. of a total
issue of £400,000., only half of which had to be taken up.

All the other syndi-

cates that they have handled have been oversubscribed from two to three times.

Two issues of stock for Gordon Selfridge's store were placed by them and were
oversubscribed more than twice.

The General Electric Company was another matter

handled by them, and in this country it is only securities of this kind that they
have an opportunity to market.

By using all of his branches for the placing dT such

securities he has a wonderful distributing ability;

but as they are a bank of

deposit and as they use their branches for the purpose of distributing securities,

they do not dare run any risk of putting out anything which they do not feel



B.S.

absolutely certain in their on minds will proUe to be a satisfactory investment
for their clients.

He said that if they should make an issue which resulted in a

loss to purchasers, it would react upon them so severely that they have to be most
particular.

Bearing in mind the nature of the issues which they place, and the

care with which they are obliged to handle them, he is willing to offer us participations in the future, provided we desire to have

him do so.

At present

the time is not ripe, of course, for matters of this kind. and even in good times
the London City does not handle many propositions of this sort because of being

obliged to pick only the best and those which they feel assured will represent a
proper investment to the buyer.
This will give you a general idea of the conversation, which I can
supplement when I return to New York.

Read the Frisco papers this morning, and it seems to me that you have
succeeded in establishing the position of the Bankers Trust Company in the minds of
sp
those on this side of the water in a most effective manner. I shall advise the
London City of the points at which they can reach the steamer, which, by the way,
will not be until we have begun to come down the coast of Norway,

for you to cable me, you ca* so.

and if necessary

Will advise you by cable immediately upon

reaching Hamburg, where we are due July 30th.

It was real fine to see you looking

so well, and I hope that after your return you may continue to improve until you
are yourself again.

Hoping that you may have a most pleasant return trip, and with

sincere regards, I am,




Cordially yours,

(5.744m

e

June 26, 1914.

Memo. London Calls
(ar. Kent)

Banca Commerciale Italiana.

Mr. Bieber established an office in London for the Banca Commercial
Italiana two years ago and, as he has had the experience of organizing and

building up a business for such a branch recently, went into the question with
him in considerable detail of the advisability of the Bankers Trust Company
As we would not compete with them, because of the nature

establishing a branch.

of his business, his opinions were undoubtedly given without prejudice.

He stated

that if he had not had certain very large interests back of him Which brought him
business immediately, he felt that he could not have made his branch office in
London pay.

His bank is closely connected with a large institution having many

branches in South America.

These branches, have large dealings with London

and at once supplied him with a considerable amount of English business. His
bank is also closely associated with the Italian State Railways.

His London

office has developed very nicely and is now doing an excellent business, but it
is almost entirely based upon the foundation of business obtained from such
connections as those mentioned.

He states that the arbitrage business has

deteriorated in London to almost nothing and that the competitieu

in the

foreign exchange business is so great as to make it most unsatisfactory.
feels that, except through English connections, it would be almost, If not quite,
impossible to distribute securities in this market.
office are rather large, because rents are high.
comparatively small.

The expenses of running the

The salaries of clerks are

\

The present office of the bank is in the banking distr4ct,

and he has found it necessary, in order to look after the tourist business from
Italy, to open a

branch

in the West End.

Arrangements have already been made to

do so, although this is confidential and not known at the moment.



Mr. Bieber

London (Kent)

2

was very much opposed to opening the West end branch, as he felt that it would
not pay, but has been obliged to do so.

It is his opinion that business in

England is improving, and that conditions in France have passed the crisis.

He

feels that the placing of the new Brazilian loan is certain to help French
interests very materially.

Business in the States looks very bad to him, and

he fears that it will be much worse before it is better.
It is his opinion that, while the British Bank for South America has a

most excellent foreign directorate, yet that the failure of Chaplin, Milne, Grenfell & Co. has hurt the institution's credit, as Mr. Grenfell was the English
manager.

He does not feel, however, that the bank itself has been hurt financially,

in so far as it is known at the time.
Regarding the British Bank fork Foreign Trade, he advised us to go
slow.

He states that it was organized to take over the shares of the Commercial

Bank of Russia, and while the business of the British Bank may be all right at the

moment, yet it is only as good as the Commercial Bank, and the standing of that
institution is not high.

I have made a note to look further into the Commercial

Bank upon arriving in Berlin.
Hr. Bieber states that before the Bance Commercial Italiana opened its

branch in London they were able to obtain from their London correspondents the
best rate of discount on portfolio bills not generally accepted in the market,
but that as soon as the branch was in operation such discount was refused, as
the branch was considered a competitor and consequently placed on t4e samtrbasis
as any other London bank.




London (Kent)

3

London Joint Stock Bank.

Mr. Gow feels that conditions are improving rapidly

in London and that

the crisis in Paris has now passed.

Regarding the establishment of offices in London by American banks, he
stated with great positiveness that he felt they would represent an expense
that could not possibly be met by the business obtainable.

He thought that

practically all business open to the branch would have to be created by the
American office and that such business can now be handled far cheaper through
London banlm'already established.

He said that possibly one or two banks might,

because of some special business that might be within their control, be able to

use a London office to advantage and that he thought possibly, because of the
travellers check system, the Bankers Trust Company might be one of such institutions;

but, even in this case, he could not see wherein any real benefit could

accrue unless we considered the ability to advertise that we had a London office
of some value.

He stated that competitiew

here was such that there was absoiute-

ly no money whatever in arbitration, although that business formerly carried with
it a fair profjt.

Further, that the foreign exchange business was now being done

on an unprofitable basis.

He felt that, regardless of the number of bills that

might be purchased by an institution in America, if the business consisted largely
of such-operations, a London branch would not only be unneeosc-ry but would 'increase

the cost of hamdling the items very materially.




London

4

61ent)

Guaranty Trust Company,
Went over the matter of a London office in detail with Er.

Yse.

He stated

that he did not feel that it would make any difference whatever to the Guaranty
Trust Company whether the Bankers Trust Company opened an office in London or not,
as he has worked up a business in short time notes, both American and Continental,
that he can hold with us in the market exactly as well as he can against

all

London. (Other bankers tell me that Mr. Wyse has the cream of this business in
this city.)

He also states that his ability to arrange for the disoontt of item:

sent here by. the Guaranty Trust Company of Vow York would not be affected in the

slightest particular by the establishment of a London office by the Bankers Trust
Company.

He mentioned these two matters, he said, as a proof of his disinterest-

edness in making the statements to me, Which he was pleased to do, concerning
his opinion of the value of a London offide to us.

that he

thought

we could not make it

then able to do so;

Then he stated emphatically

pay expenses for at least five years, if

that he felt it would be essential to have a Board of English

representatives, the same as the Guaranty Trust Compa4y, and that it would be
necessary to get a first-class man to handle the office.
thought that the

Such being the case, he

annual expense, including employees, would amount to fully

..:;50,000., if the office were opened in the only manner that the Bankers Trust

Company could afford.

He then covered considerable of the detail contained in

my report to Mr. Strong, without knowing anything about such report, and in a
manner almost identical with my conclusions.

He seemed quite anxious about the effect in the States of the Clafiin
failure.




Sir Edward Holden is also much disturbed about it.

London

(Kent)

5

de la Plata.

rifv+c.)

Talked over with Mr Burns the question of American acceptances, par-

ticularly the value that such bills migh t have in South America.

At first

Mr. Burns felt that London would always be preferable, but on calling his
attention to the imiler++50wwwv*Tafx

ski! nments

from
of meat Li Buenos Aures and

Montevideo, he admitted that should such shipments be maintained

American bills

might become useful. -Suggested to him that he give the matter some thought, as
it was a new facility that America had to offer, and asked that he take it up

by correspondence with his Buenos Ayres office and advise them to beer the
matter in mind and take it up direct with the Bankers Trust Company in New York
if there seemed to be any opportunity to do any business in such paper.

At

present the National City Bank of New York has the whole of the American business
of this bank.

Mr. Burns said that the Government of Argentine

was in good

financial condition, as opposed to that of Brazil, but that the industrial
situation in Argentine was very bad and that many firms were having difficulty.




London (Kent)

6

Bank of Athens.

The manager stated that he felt certain that there would be another

war between Turkey and Greece, and ge feared it might occur before Greece Could
get the warships which she had just purchased into Grecian territory.

Even so,

he felt that as a war was bound to occur, it was better to have it started as soon
as possible.

He considers the financial condition of Greece as so much better

than that of

Turkey that they will be able to more than hold their awn, and

upon arrival of the, two battleships referred to should be able to obtain a

satisfactorY agreement with Turkey concerning the treatment of Grecian residents
on Turkish soil and also in regard to the islands under dispute.

Until this

war is over he feels that there will be no business between Greece and the
United States to speak of, but it is quite certain that, immediately upon its
settlement, if conditions of peace seem to be assured for some time to come,
the new territory acquired by Greece during the Balkan war together with the old

kingdom will develop very rapidly and that business with the United States will
grow in leaps and bounds.

On that account he advised me strongly to go to

Athens and endeavor to make tentative arrangements with his Athens office for
business, should things develop as he anticipates.
letters of introduction, which he is mailing today.

He suggested that he give me
When in Vienna will take

up the matter, and if it then seems worth while and there is time willcall
upon the Athens bank.




WALDORF HOTEL ,
DWYCH,W.C.
Tele gr
s :-1VALDORFIUS': LONDON.
Telephone: - GERRARD

JUL

1st July,
-9 1914

1914

Benj. Strong, Junr.,
Esq.,
c/o The Bankers Trust Co.,.
New York City, U.S.A.
Dear
BenjaminHave been

extremely busy since,

saw you with the exception of Saturdand
Sunday.

We spent the whole of Sunday with
Sir Edward and his daughter. Motored to the
Club of the Duke of Richmond
Private
to 3 hbUr s by motor from
which is about
Had luncheon there, and played a
London.
little golf and Was back in town at 8 o'clock.
The day was beautiful and we had a most
interesting time.

Gar

Expect to leave for Liverpool this
afternoon and to take dinner with MI.Simipson
Expect to
at his home tomorrow afternoon.
be there all day Thursday and Friday, and longer, if necessary to get all the. factskconcern

ing the Cotton Buyerse.mR4aeseary.
Yesterday I met Mr. Crisp who handled
the Chinese Loan in opposition to the various
Governments some little time since. Mr. Crisp



(2)

feels that he can give us some most excellent
Russian business, but I am not certain yet
whether his operations are of a kind that
would interest us as there seems to be quite
a difference of opinion among London Bankers
as to his methods. Those who operate with
him seem to consider him wonderfully conservative and efficient, but those whom he has
opposed say that he is not conservative, all
Of which is quite natural.
Ail opinions
expressed concerning an office in London
have been along the same lines as those
already outlined All not repeat.

In order that you may see something
of What has been going on in the last few
days, however, I have asked Mr. Schmid to
shew you a letter which I am mailing him torday.

Hoping that you may be having a most
pleasant trip, and with sincere regards to
yourself and the boys,
I am, cordially yours,

_

06--&)
rt,

74-/t.




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25th dept. 1914.

Yr. Benjamin

etrong Junr,

Benkerst

Trust Company,
16, Tian 9troet.

NEW YORK.

Dear Ben,

Regarding the 100 million gold pool formed by Bankers of Imerica for
the purpose of making foreign exchange, would say that I Pally agree with tee
purpose

contents of your letter in which you stated that the
for trading purposes.

exchange should not be

used

It is of course going to be impossible to control eiankers

who buy (menage in the United states from

exporters And require them to use such

exchenge to meet current'obligations of the business Interests of the United elates
in :Ineland.

Banks purchasing exchange in the open market or from their

are therefore going to
conditions would

customers

be in position to carry such exchange, welch under present

be eqnivalent to hoarding it, and then endeavour to buy exchange

of the New York Committee that had been made by the gold fund in order to meet

With discounts and deposit rates in London ruling as

their legitimate demands.

they do today there is going to be

a natural desire on the part of many buyers of

exchange to discount their purchases of 60 day bills, for instance, at 3, and put
them

into their account

at 3

where they have such arrangements

correspondents, provided they can feel that the

with their London

rate of exchanee, should it drop

eonsiderably at the moment becluse of the gold pool, might recover later. At the
higher

rates prevailing now

there is of course no temptation to hoard exchange,

unless one has an actual forward use for it. I question

whether

the New York

Committee can handle the gold fund witnout too much friction unless they ignore
the question of exchange supplies that Banks may have when called upon for exebange
for certain specific

requirements that

are legitimate.

York Oommittee will undoubtedly be in position to

other nand the Nip.'
On the

demand that it

know the actualk

foreign balances of banks asking for exchange against the gold, should they see
fit to do so.




If the Banks did not choose to

show their

balances it would

2.

merely mean they did not care for the exchange with sufficient ureency to give

up their position in order to obtain it. It would therefore be entirely possible
to control the hoarding of exchange that might be purchased if it is considered
wise to do so, taking into account the natural objection of foreign exchange men
to show their position.

The first thing that will have to be decided by the
Comrittee, therefore, seems to me to be what policy t ley will pursue in this particular matter; that is, whether they will sell exchange to Banks esking for it upon
satisfactory proof that it is to be used for purposes that are considered legitimate,
or whether in addition they will demand knowledge of the amount of exchange that

the Bank has available as well as the amount that it requires.

After this question is

settled, what constitutes

legitimate requirements must

be determined.

In order to settle this matter, the object of the fund must be
borne in mind. It has been created for two purposes; primarily to settle the obligations of the people of the United States
exchange merket.

in Great Britain, and secondly to help the

The first is a matter of honour and integrity, but the second

merely one of profit.
first is satisfied.

The second, therefore, should only be considered after the
This being true, will first list

our obligations. These consist

at the msnent of 7 items:notes or bonds,
paper,
Demand dollar deposits of foreign banks,
Maturing short term
Maturing coeirercial

Anounts due for Securities sold in America, but not yet delivered,
Maturing acceptances of American Banks for comercial Letters of

Credit and finance paper.

Obligations of American Banks under Travellers, Letters
'where their accounts have not been covered by the
or otherwise.

(A' Credit
cold

fund

Contracts already made by American importers for goods in process
of manufacture or otherwise where the /later° of Les Contract's

is such that it should be kept.

It would seem as though you could obtain a fair idea of No. 1, after a little
careful enquiry in New York, and

that No. 2 could be

ascertained with considerable

certainty by getting figures from Hathaway, Naumberg & Co., Goldman Sachs & Co., and



3.

such others as these firms may advise you to call upon for information.
No. 3.-The total of such deposits can easily be obtained Ey asking for
information from Banks in New York and a few Banks outside of New York.

No Bank

seould object to giving such information, as they would not have to give any
names of institutions, and it would be confidential information for the Committee
as well

No. 4.-comes to about 10 million dollars and is represented by stocks

that

have been sold in New York by London Brokers where delivery has been made by

borrowing stock in America.

The actual stock at the moment is being carried for the

Aondon Brokers by the London Banks.

This stock when sent to America to replace

borrowed stock, will have to be paid for by American Houses.

Have good reason to

believe that the figures mentioned are correct, as they were compiled by responsible
People in this market.

No. 5.- The same Bankers who would furnish the figures for No. 3 and quite

a number of others, could furnish these figures if they wished to. 'tether you
would care to ask that the commercial credits be separated from the finance bills

is a further matter for consideration.
No. 6.- AB far as I can judge this amount is of negligible quantity.
large majority of

The

Americans have returhed to the United States and as very few are

coming to Europe at this time, no appreciable amount of money is going to be needed

to cover this requirement unless all reports from Embassies and others as to the
number of Americans still in Europe are absolutely incorrect.
No. 7.- This anount cannot be determined, but is undoubtedly so small

that it can be left out of the calculations, although it should be borne it mind.
\

The reason this may be small is because in great numbers Of cases the parties on

this side are unable to make delivery, which will naturally cancel the contracts.
All of these matters should represent obligations of the kind incurred

say before the date of the actual original deposit of gold, or October let. or such



4.

other date as the Committee may think proper.

All new obligations should be

incurred at the risk of those undertaking the transactions and they should not
be allowed to call upon the gold rune for cover.
atters which have to do with

profits are only five in number,New Letters of Credit which might be issued to importers.
New Letters of Credit which might be issued to travellers.
Ordinary foreign remittances from America.
The further purchase of securities from abroad.
The purchase of exchange for balances either for the purpose

of obtaining hither rates of interest or in anticipation
of exchange profits.

It might be valuable to the country to encourage importing from

Europe ',here such trade is possible, for it would increase the power of the
countries to buy from us and reale so help our exports. It need not be considered -s an amount of importance, as the natural exports under present
conditions will probably exceed the imports.
quite a number of business houses are oinee to find in the present

condition an opportunity to increase their trade because of their specialties
being required, and they will be obliged to send travelling men to obtain the
business.

It is of value to encourage such travelling, but the aeount in

credits issued woula seem to be negligible.
It would seen as though such remittances would have to stend

on

their own bottom and that the remittors ought to pay rates of exchange which

would cover the transactions without reference to the gold fund. In the case of
Americans abroad who are in the habit of receiving monthly remittanoes. the demand
has erobably been reduced because such persons have returned to eLmerica, Vo a

point where it need not be considered.

Ihile we are under obligations to take up securities which we have
purchased, yet should means be found for the making of further sales to Amerioam
from Europe it should be clearly understood that no payments can be made out of

the gold fund and that one of the risks of the sale lies in the question of



5.

ability to obtain exchange or cover.

The securities held here wore purchased

for the profit of those making the purchases and not for any aecomodation to
American interests.

c are under no ebligation whatever to buy further of our

securities although we are under obligation to pay for those which we have
bought.

5.- It would not be a legitimate use of the geld fund to allow
Banks or Bankers to purchase exchange against it for either interest or
exchange profit.
Have had no time to study the matter, having been obliged to sit

down and dictate without notescr references of any kind, and it is posaible
that I may have overlooked some transactions that should be considered, but if

so they will undoubtedly occur to you, and with this outline think you can see

about what idea I have in regard to the use of the fund. The question of what
is going to be necessary to satisfy the Committee of the legitimacy of each
demand for exchange as it is mace, is one that seems to me rather simple to

work out, for the rules can be published if desired, or put in such form that
every Banker wishing to make purchases will understand exactly what is required

of him and know that there is no discrimination or doubt as to integrity.

Such

being the ease documents can be required or not as the Committee thinks best.

Personally I think that as the exchange buyer is not obliged to purchase of the
gold fund Committee unless he wants to, the Committee will be justified in making

as stringent rules as it wishes.

Should a buyer find it impossible to purchase

exo'lange from any other source than the Committee, it would be just as 'valuable
c

to him to have rules that ,-oulderotect the exchange from misuse as o anyone else.

In order to have this catch the steamer must sop.
may give you some of the information which you desire, I am,



Sincerely yours,

Hoping that this

DIRECTORS.

OFFICERS.
BENJ. ST RON G,J R., President.

JAMES S. ALEXAND ER, Prest Nat. Bank of Commerce in N.Y.
STEPHEN BAKER , President Bank of the Manhattan Co.
SAMUEL G. BAYN E, President Seaboard Nat. Bank.
EDWIN M. BU LKLEY, Spencer Trash & Co. Bankers
JAMES G.CANNON, NewYork.
E. C. CONVERS E, President AstorTrust Co.
THOMAS DEWITT CUYLER,Prest.Commerciallrust Co.Phila.
HENRY P. DAVISON, J.P. Morgan & Co. Bankers.
WM. NORTH OUANE , Vice President

RUDULPH ELLIS, President Fidelity Trust Co. Phila.
E. HAYWAR D FERRY, Vice President Hanover Nat.Bank,
WALTER E. FR EW, President Corn Exchange Bank.

BANKERS TRUST

OMPAllY
CAPITAL

$10,000,000
10,000,000

A. BA RTO N HEPBURN, Chairman Chase Nat.Bank.

SURPLUS

FRANCIS L. HINE, President First Nat. Bank.
EDGAR L. MARSTON, Blair & Co. Bankers.
JOSEPH B. MARTI N DALE, President Chemical Nat.Bank.

CABLE ADDRESS: BANKTRUST, NEW YORK.

FR E D.K T. HAS KELL,V.Prest.111.Trust & Savings Bank Chicago.

WILLIAM C. POILLON, Vice President.
D. E. POM [ROY, Vice President.
W. N. DUANE,Vice President.
F. I. KENT, Vice President.
HAROLD B.THOR NE ,Vce President.
F. N. B.CLOSE,Vice President.
GEO.G.THOM SON, Secretary.
GEORGE W. BENTON, Treasurer.
GUY RICHARDS, Asst. Secretary.
H.W. DONOVAN, Asst.Treasurer.
BETHUNE W. JONES, Asst.Secretary.
F. WI LS ON, J R.,Asst.S ecretary.

GATES W. MeGAR RAH, PrestMechanicsi& Metals Nat.Bank.

CHARLES D.NORTON, Vice Prest First.Nat Bank.
WILLIAM C. POILLON, Vice President.
DANIEL E. POMER OY,Vice President.
S EWAR D PROSSER, Prest.Liberty Nat Bank.
DANIEL G. REID, Vice President Liberty Nat.Bank.
BENJ. STRONG,J, President.

MICHAELS, Trust Officer.

I 6 WALL STREET

EDWARD F. SWIN N EY, PrestFirst NatBank,Kansas City.
GILBERT G .TH ORNE, Vice President Nat.Park Bank.
EDWARD TOWNS EN D, Prest Imp.& Traders' NatBank.
ALBERT H. WIGGIN, President Chase Nat.Bank.
SAMUEL WOOLVE RTO N. Vice President Hanover Nat.Bank.

R.H.GILES, Asst. Treasurer.
PERRY D. BOGUE, Asst.Sacretary.
HARRY N. DUNHAM, Asst.Treasurer.

N -Eva -Yer R

LONDON.

6th October, 1914.

Mr. Benjamin Strong auir,
Bankers' Trust Company,
16, Wall Street. NEW YORK.
Dear Ben,

Your letter of September 24th received and read with the
greatest care and interest.

It really told me very little of

your thoughts which I had not fully anticipated, but it was nevertheless most valuable and pleasing to me to receive, and I shall
read it again with very great care.

There was one thing in it,

however, that fully explains a matter that puzzled me.

I could

not understand why Mr.Vanderlip and yourself were thinking of coming to London, as there was nothing to do here other than arrange
with the,Bank of England for a rate and for the opening of the
accounts.

Your letter, however, shows clearly what you had in mind

On the other hand, after having studied the situation for the past
two months, I am of the positive opinion that you would havetmade a
very great mistake had you attempted to work out any such proposition
as you had in mind.

In the first place the figures given by you
should be kept secret.
Your greatest protection lies in doing so



_

--




for I am quite convinced that you could make absolutely no deal
with any 4SxiiImit institutions here which would allow you to stand
-upon the first shipment under consideration.

There are a few

very broad Bankers here who would, I am sure, be glad to co-operate
in such a proposition, but it is too tremendous for them to handle
alone and I do not believe that a sufficient number could be brou4t
into harmony with the proposition to make it effective.

All that

you would succeed in doing would be to bring 4110 before the public

not alone here, but in America as well, because such things will
get out, the full extent of the figures, and as the public could

not see the sets-off represented b- our experts, I believe it would
have a very disturbing influence in both countries.

In the first

place we must take such action in New York City as will absolutely
prevent the sale of further American Securities held in foreign

.

markets to American buyers until the foreign exchange situation is
settled.

Our obliTation to pay for securities held abroad does 0

not begin until we have purchased.them.

After the purchase is

made our obligation is one tht should be lived up to.

ie should

therefore be extremely careful not to assume any such obligation,.

but should temporarily allow no machinery to be put in force that
will enable transfers of securities.

This is a fair and square

proposition, and one that is of just as much value to those here
as to American interests.

The next thing to do is to use ouch ex-

change as we can obtain to pay obligations already assumed, even
if we are obliged to cut down our imports from Groat Britain.

It

is here that we have the whip hand and we shall have to make use of

3.

this for the /)rotection of all concerned.

It was only because of this feature of the proposition that
we were able to hold the attention of the Governor of the Bank
of England to our proposition concerning rates for gold.

In

rather a supercilious way he suggested that we were obliged to
Ship this gold whether we wished to or not in order to pay our
debts, and asked how we would pay them otherwise.

I answered by

saying that instead of using our exchange to pay for imports from
Great Britain, we would use it to pay our debts and that we felt
that if we should stop all importing from Great Britain, that the
whole proposition would work out,as time went dln and maturities

arrived, in a manner favourablq to us.

He did not apparently see

how we could prevent large numbers of our importers from dealing
with British Houses.

I explained that to him by stating that the

importers could not pay for goods unless the Banks furnished them
with exchange, and if the Banks had no exchange to furnish because
they were obliged to use it to pay maturing obligations, that the
importers could not buy whether they wished to or not, unless the
British exporters wanted to take the chance of being paid at some
future time.

The Governor saw this proposition to a certain ex-

tent, and rather than turn us down flatly, he stated that the exchange matters were all handled by the Joint Stock Banks and suggest
ed that we try to work out something with them, and confer with
him later.

Of course he knew as well as I did that the Joint Stock

Banks could not make any use of Fold deposited in Ottawa except as




4.

they sold it to the Bank of England, and he knew that the only
deal that would better our rate that we could possibly make with
them would be to have them

pay the gold td the Bank of England

and give us more for it than they received, which is preposterous.
Think He mentioned it, however, more to give him an opportunity to
talk the matter over with some of his board, and that he took that
way of putting us off instead of coming. out in a manly way and tell
ing us that lie wanted ti consider it further.

As he had suggested that we try to find some other way out
I asked him if he thought it would be of value to us to go to the
Chancellor of the Exchequer, and possibly make an arrangement with
the British Government under Which gold could be deposited in
Ottawa that would act as reserve for their Treasury Notes which
are outstanding.

The British Government has something like four

million pounds on deposit with the Bank of England as a reserve
against these notes.

I told him that it seemed to me that the

British Government would be tremendously interested in the proposition because it is of value to the whole British Nation to have
their exports to,America go forward freely.

This proposition

rather jarred the Governor, I think, and he tried to turn it dff
saying, "well, if you go to the Chancellor, he will of course send
for me."

I then said, "you would not oppose our proposition,would

you, when it is for the interest of the British people?"

lie said,
c

"ell, I could not recommend that the British Government pay more
for the gold than the Bank of England is paying."




5.

The Governor stated during the conversation in different
ways that the whole ,)roposition with them is one of profit and

that they have no other viei point whatever.

In order to carry out the request of the Governor we started
out to call upon some of the Joint Stock Bankers, even though we
knew that it was absurd.

Sir Edward was not in.

We did see Lr.

Bell of Lloyds Bank, however, and pit up the whole proposition to
him.

He seem'ed to feel confidentially that we would be warranted

in going to the Chancellor of the Exchequer.

ae ex )ect to see

Sir Edward Holden and Sir Felix Schuster today, and if they agree
with Lr.Bell we shall undoubtedly go to the Chancellor.

2ersonally

I am almost inclined to advise the throwing over of the whole pro
nosition unless the Governor of the Bank of England will come to
terms, for Britain certainly needs the arrangement far more than
America, and if their representative bank will not play square,they
cannot expect us to do __lore than handle matters as rapidly as ex-

change is made.

The fact, as stated in your letter, that we need

the mount of exchange outlined, means that
any more of the 100 million pool, that it

if we do not put up

vill

only serve to carry

forward maturities from a little earlier date than might otherwise
be the case.

Under such circumstances I can see no reason why we

should accept any old thing that they are willing to give us. in the
line of rate.

Of course on the other hana the percentage tR not

really so very great.

The cold in the sovereign is equivalent to

the gold in 4.86656 American dollars.




This expressed in shillings




,

6.

per ounce represents for the English sovereign 77/101-d. against
76/51-d. for American eagles, the difference being due to the
fact that the sovereigns are 11/12ths fine and the eagles 9/10ths
fine. Under the law the Bank of England is obliged to pay 77/9
for bar gold. As soon as the Bank saw that America would have to
ship gold, they dropped the rate that they were paying for American
eagles from 77/5td. to 77/5 and then to 77/3. This was not because they aid not need the gold, which is the ordinary reason
why the rate is reduced, but because they thought that America
would have to furnish it, and they might just as well reduce their
rate as low as the law would allow. The equivalent of 77/9 for
,
6
American eagles is 76/41m. The Bank took off the extra Lid.
making it 76/31- because they figure that it costs that amount to
melt eagles down and re-coin them into sovereigns. lighen figuring
out the original transaction made in Ottawa, I am certain that the
rate of 76/5 for American eagles could have been obtained, if we
had negotiated for it and had refused to make the shipment on
any other basis, and if I hFid had any opportunity to take part in
that negotiation I should have demanded it. As the Bank of England at that time waL about to undertake the discounting of premoratorium bills which would reduce Its proportion of reserve
tremendously, it needed the gold as much as ever in lts life, and

it is only due to receiving the American gold that is reserve has
been maintained at any respectable figure. Then, therefore, was
the time when we should have demanded a fair rate. The fact that

7.

we did not do so when we had our opportunity, leads them to be-




lieve that our needs are such that we will take any old rate they
choose to give us.

The Governor stated that he could not have

two rates running at one time, and we therefore suggested that he
arrange to release the gold to us at a rate that would give us
the benefit of the fact that it lid not have to be shipped to
London, instead of changing the payment rate.

e would then be

taking the risk of the gold coming back to us, and the Bank of
England would still make the profit that was represented in the
reduced rate they were allowing.

This they would not consider.

The amount lost to us in 100 million dollars would be about
220,000 dollars in addition tot the 3d. charged us for the possible

cost of shipping the gold frolq Ottawa to London, which is 330,000
dollars more.

It is only fair of course that the Bank of England

be covered for the cost of shipment of gold from Ottawa to London.
On the other hand they certainly should be willing to forego such
cost in the case of all gold that is later released to us, and that
they are not obliged to ship.

If they shipped the gold they

would not make this profit but would still have the profit represented in the reduced rate that they are paying for the gold.
Conseouently under the circumstances there is no reason in the
world why they should not allow the American Banks putting-up the

gold to save the cost of shipment if the market should turn that
way.

We would be running all the risk of having it so turn and

would in the meantime be covering the Bank for the cost.

As I




8.

stated before, the percentage does not amount to so very much,

but the total on a transaction like 100 million dollars is large,
and where a principle is involved as well, it is certainly worth
while saving.

May be able to tell you the outcome of this matter

before closing this letter as we hope to arrive at some sort of
If necessary to see the Chancellor of the

proposition today.

Exchequer, however, it will probably be impossible to eettle the
rate before tomorrow.

Am in receipt of your cablegram stating that you wish me to
remain here for the present, and I have therefore _cancelled my
reservation.

Aside from a personal desire to got home, my only

reason for hurry was because I,felt that it might be to the interest of the Trust Company to have me return under the circumstances
covered in your message 45.

As I am certain that you would not

suggest my remaining even under such circumstances unless you felt
it would be of value to the trust Company, I have accepted your
judgment in the matter and arranged to stay.

There is no doubt

but that this gold pool matter should be watched carefully.

On

the other hand, not only a part but practically all of the work
must be done in America after a definite rate is established with
the Bank of England, that is until,such time as we seem to need
further exchange.

As our exports to Great Britain will undoubted-

ly grow because of their requirements here, which in many 4nes
are 0;oing to be rather large, I am very hopeful that enough exchange will be made in this manner to take care of obliD:ations as
they mature.

Again, the payment in this market of the amount of

9.

money mentioned in your letter would make a plethora of mOney here
that would have to seek investment some place outside of this market.

Such being the case there is no doubt but that American In-

vestments are still going to be in demand, particularly where
sterling bills of good American Railroad Companies can be uee,i.

There is lesE need, therefore, of worrying about this situation
except for the immediate present, than the amount involved might
seem to warrant.
6.30 p.m.




We saw Sir Edward this morning and he seemed to feel the same
as Mr. Bell, but that of course is confidential also.

We then went

back to the Governor of the Bank of England to see if he had anything to say to us.

We saw Sir Gordon llaire who suggested that

put our suggestion in writing.

As this meant further delay we

told Sir Gordon that before doing so we thought we had better see
the Chancellor of the Exchequer along the lines suggested to the
Governor, of the Bank the day before.

We then went to Ambassador

Page and got a letter of introduction to Lloyd George and arranged
an appointment with him, which was for 5 o'clock.

I had prepared

a little statement, which follows, in order that he might see our
point easily:-

"The actual grains of gold in an English sovereign equal
the actual grains of gold in A4.86656.

One ounce of American gold coin is worth A18.6046.
A18.6046 at the rate of A4.86656 . 762 5c1..

.*. the actual gold grains in one ounce of American gold are
worth 76s, 51d.




" Allowing a charge of 3d as being a fair rate to cover the
cost of shipment of gold from Ottawa to London and its coinage

I

into sovereigns, American gold coin deposited in Ottawa for account
of the Bank of England should cancel indebtedness of America to

England at the rate of 76s 2.
On all gold which is later released by the Bank of England
to America in Ottawa without shipment to London the Bank of EngJ
will make a full profit of 3d per oz. or 267.3_87

and.

if the whole

t100,000,000 were returned to America."
As I was the spokesman I then made a statement to him about
as follows.

Due to the sudden stoppage of trade caused by the

war, American institutions havp found it impossible to obtain
enough sterling exchange to enable them to both meet their abliE ations and pay for further exports from Great Britain.

As it is

only right that we pay our obligations before undertaking other:
such exchange as we can obtain must be used for that purpose until our indebtedness is settled.

As it is the desire of America

to foster its trade with Great Britain and not curtail it, we

ye

been endeavouring to ,ake more exchange through the formation oJ
a gold pool.

Banks throughout the United States haVe been asked

to contribute to this pool.

The majority of such banks are not

financially interested in the matter but are putting up their gc 1.d
for the general good and for the purpose of co-operating with
England.

This being true it is only right that America should,

receive full value for its gold; in fact if full value cannot be

11.

obtained it is questionable whether the formation of the pool
will not be stopped.

America has been backing up England in the

position which it has taken in this war, but if its efforts to
meet the situation which has arisen due to no fault of its own
but which are aimed to aid Great Britain as much as if not more

than America, are defeated merely because we cannot obtain full
value for our gold, it is apt to have a very serious sentimental
effect when it gets out in the American newspapers, as it certainly will.

This being an emergency requires emergency treat-

ment, and as we can see that the disruption of the pool will certainly be detrimental to British interests both from a business
and a sentimental standpoint, we did not feel justified in cabling
to America that our request for an equivalent rate had been refused
by the Bank of England without first calling it to the attention of
the Chancellor.

This is practically the substance of what I said

and in about the order.

Lloyd George then said that this whole

matter was under consideration, and that reports were being made
to him which he expected to have inabout two Teeks, when he could
give us an answer.

I told him that two weeks was too long to wait;

that the American Banks were hot on this proposition now and it was
the time to strike,and that if we allowed the matter to go over
it might make it much more difficult to accomplish anything in the
future.

He then said that he understood the proposition fufly and

that he would see the Governor of the Bank of England tomorrow and
call me up immediately after.




Then he turned. and said, "I am in-




12.

formed, however, that exchange is getting much better now and
that things are easing up."

I immediately replied "Yes, that

was true yesterday and the day before, and the reason it was
true was due to the fact that New York Bankers shipped 10 million Dollars of the gold pool of 100 millions to Ottawa in order
to help the situation even though the rate given them by the Bank
of England did not satisfy them, and it was because of exchange
sold against such shipment that the market had fallen off.

Furthe

that the rate had gone up again today because there was no further
movement in connection with the gold pool, and just as soon as
it came out that the balance of 90 million dollars of gold was not

coming forward because of disrt-tion of the pool, exchange might
be worse than it ever had been."

He then repeated that he would

see the Governor of the B nk of England in the morning and let me
know the result.

Thought you might wish to have this matter in some detail, so
am sending it forward on tomorrow's steamer even though there is
not time to go into it any further.
Sincerely yours,

Air

DIRECTORS.

JAMES S.ALEXANDER,Prest.Nat Bank of Commerce in NY.
STEPHEN BAKER , President Bank of the Manhattan Co.
SAMUEL G. BAYN E, President Seaboard Nat. Bank.
EDWIN M. B U LKLEY, Spencer Trash & Co.Bankers
JAMES G.CANNON, NewYork.
E. C. CONVERSE, President AstorTrust Co.
THOMAS DEWITT CUYLER,Prest.Commercial Trust Co.Phila.
HENRY P. DAVISON, J. P. Morgan & Co. Bankers.
Wm. NORTH DUANE , Vice President
RUDULPH ELLIS, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY. Vice President Hanover Nat.Bank.
WALTER E. FR EW, President Corn Exchange Bank.
FR E D'K T. HASH ELL,V.Prest.III.Trust F.. Savings Bank Chicago.
A. BARTON HEPBURN, Chairman Chase Natbank.
FRANCIS L. H I N E, President First Nat. Bank.

EDGAR L. MARSTON, Blair & Co.Bankers.
JOSEPH B. MARTIN DALE, President Chemical Nat. Bank.
GATES W. MeGAR RAH, Prest Mechanics'& Metals NatBank.
CHARLES D. NORTON, Vice Prest First. Nat. Bank.
WILLIAM C. POI LLON, Vice President.
DANIEL E. P OM E ROY,Vice President.
SE WAR D PROSS ER, Pres/. Liberty Nat.Bank.
DANIEL G. REID, Vice President Liberty Nat, Bank.
BENJ. STRONG,J a. President.
EDWARD F. SWIN N EY, Prest.First NatBank,Kansas City.
GILBERT G.THORNE,Vice President Nat.Park Bank.
EDWARD TOWNS EN D, Prest Imp.E.Traders' NatBank,
ALBERT H. WIGGIN, President Chase Nat.Bank.
SAMUEL WOOLVERTON, Vice President Hanover Nat.Bank.

OFFICERS.
BENJ. STRONG, J R., President.

WILLIAM C. POI LEON, Vice President.
D. E. POMEROY, Vice President.
W. N. DUANE,Vice President.
F. I. KENT, Vice President.
HAROLD B.THORNE ,Vice President.
F. N. B.0 LOSE, Vice President,
GEO.G.THOMSON, Secretary.
GEORGE W. B ENTON, Treasurer.

BANKERS TRUST

COMPANY
CAPITAL
SURPLUS

$10,000,000
10,000,000

GUY RICHAR DS, Asst. Secretary.
H.W. DONOVAN, Asst.Treasurer.
BETH U N E W. JONES, AsSt.Secretary.
F. WI LSON, J R.,Asst. Secretary.
R. H.GI LES , Asst. Treasurer.
PERRY D. BOGU E , Asst.Secretary.

CABLE ADDRESS; BAN KTRUST, NEW 'YORK.

HARRY N. DUNHAM, Asst.Treasurer.

MICHAELS, Trust Officer.

16 WALL STREET
NEW Y-O-R-K-

LONDON.

7th October, 1914.
7."

Benjamin Strong Junr,
Bankers' Trust Company,
16, Wall Street. New York.

Dear Ben,

North left this morning at 9 o'clock in his motor for Liverpool and will sail on the "OlympAc". presume you will see him about
the same time this letter reaches you. It is certainly ,,oing to be
lonesome here without him and Mrs Duane, as they have both been perfectly fine to me and have made everything as easy and as pleasant
as possible.
unnecessary for me to add anything to
what I have already ,:ritten you about North as to his judgment and
ability, SO will wait until I see you before saying more.

It is quite

Received a letter today from Ilr.Alexander asking me to call
upon the four Banks with whom we are dealing in the -,old pool, and
see that they understood his letter of September L9th. Called upon
them all and explained his letter carefully and received authority
from each one to cable Lr.Alexander, which I am doing through you,
that they agreed to his proposition, or in other words that they
would make cable payments against the cypher code arrangement outlined.

Although the Chancellor was to notify me today after he saw
the Governor of the Bank of England on the gold matter, yet I have
not heard anything up to the present moment, which is 5.30. Explained what had been done to Sir Edward Holden, Mr.BeJA. and7hr.
Whalley, and to put it mildly they were nearly tickled to death,
which is of course more than confidential.
Noted in this morning's paper that your election as Governor
of the Federal Reserve Bank had been made public.
Can just imagine
the consternation of those in the Bankers' Trust Company who were
not "in the know" when they read it.
Wish you would let me know






2.

0

expect to leave
in your next cable after receiving this, when you
interest of the Comthe Trust Company, for unless it is to the
much to be in New
pany for me to remain here, I should like very only for five
if
York while you are still our President, even
to the idea a little bit and like it
Am not reconciled
minutes.
However, as it cannot be
less and less the more I think of it.
best of it as with
helped, suppose we will all have to make the
everything else that is ultra vires.

Today when talking with Er. Bell of Lloyds Bank he asked me
connection with
to call your attention to their institution in
He stated that he felt
your *work with the Federal Reserve Bank.
his institution was broad minded enough and of sufficient imporbanks
tance to be able to Rive a perfect service to the regional
I told him that it
and he wished to be in the running first.
There
would give me great pleasure to write you as he requested.
that Mr.Bell is a captible and energetic
is no 'doubt whatever but
Banker andavery broad man as well, and since I have been thrown
matwith him as closely as has been necessary to work out some
respect for
ters durin7 the last few weeks, I have much greater
his institution than I ever had before, as it was only its size
that impressed me until I knew Er.Bell. Have of course always
known that it was a conservative, well managed institution, but
American and Colonial
my dealings have been with thel Manager of the not as broad a man
fellow, yet is
business, who while a very nice
Trust
as Mr.Bell by any manner of means. Of course if the Bankers'
and it proves to be perfectly
Company opens a Branch in London
legitimate and proper for the Federal Reserve Bank in New York to
else,
do its business through us, we are not going to boom anybody
obliged
which kindly note, but if it should so happen that you were
that Lloyds would
to deal with an English Bank, I have no doubt but
to me about the matSir Edward has not yet spoken
serve you well.
have to write
ter but I presume he will later, in which event I may
you about him also.
'as awfully sorry that the Bankers' Trust second account was
placed with rarr's Bank instead of Lloyds, as I should have liked
an opportunity to take up the matter of an accoutt again with
Lloyds, and that would have given me a fair chance.
Have been over all the correspondence relating to pwments in
Switzerland and am thoroughly convinced that the Express company
put one over on us, so to speak. As you know, one of the members
of our Committee is the Manager of the Express Company in London.
He acquiesed in and was familiar with the arrangement made with
the Swiss Bankverein, and in fact when he obtained the riRA to
make the deposit in Italy he had a copy of the Swiss Bankverein's
arrangement delivered to him, so that he could use it as a form
from which td wire to Italy. Knowing how other cheques were going
to be handled, and judging from some matters which were brought to
my attention direct from Switzerland, he arranged to have certain

other Swiss Banks: sendout a circular that American Express
cheques would be cashed in full. Of course there is no object in
saying anything about this, and I had rather you would not, as it
is too late to correct the wrong in any particular. It ha1. certainly been an eye-opener for me, however, and if I am ever tangled
up again in any such proposition with people of that sort, you can
just bet your last dollar I am going to have an agreement in
writing that they will Play square, and I will not take it for
granted that when they have accepted a position on a Committee or
other body, that they have mentally taken theoath of office.
However, we have thne piece of satisfaction in the whole deal and
that is that we have played absolutely square in every particular
and have never once taken advantage of our position in any way to
obtain favours.
As you said in one of your letters, it is all
history, but'I can assure you that it is not only ancient
history
but it, is going to have its effect on future history.

9th Oct.-

Bow about the gold pool negotiation.
Jrote you by Wednesday's steamer of our meeting with the Chancellor.
ing I received a letter of which the following is aYesterday morncopy:"Treasury Chambers,
'ihitehall, S.W.
7th October, 1914.

"Dear Sir,
The Chancellor of the Exchequer has discussed tith the Governor of the Bank of England the question of the price paid for
gold deposited at Ottawa about which you spoke to him
yesterday
and he suggests that you should see the Governor on the matter.
The 0.1estion is of course primarily one for the Bank of
England, who carry out the transaction.
The Chancellor of the Exchequer trusts that an arrangement will be arrived at which
will
be satisfactory to all the parties concerned without the necessity
for his intervention.
Yours faithfully,
(Signed)
H.P.H1/MILTON.
Fred.I.Kent, Esq,
Vice President,
Bankers' Trust Company,
1:11];/ YORK.

Immediately called for Mr.Jacobs and we went to the
Saw Sir Gordon Naire and he asked us to come back after aBatik.
of the Board of Governors, which we did. He then informed meeting
is
that the Governor of the Bank absolutely refused
to raise the rate
but that he might, if he saw fit at the
for gold that might later be released to time, make some allowance
the States without
ing to come to England.
I asked Sir Gordon if the Governor haVwas
willing to make any such agreement.
He said "no" that the Governor



4.

would make no agreement of any kind, but that what he meant in
effect was, to put it in other language, that he might take it
into his head when the time came, to give up some of his profit
if he had had a good breakfast and his mood was more than usually
pleasant, and if all the world looked bright and shining to him.
If you had met the Governor as we have, I am quite certain that
you would not pay any dividends on profit that might accrue from
any such statement, at least until you saw the money, and that
even then you would wish a doctor's certificate that you were in
your right mind and that your eyes were working properly, and
that the money before you was actually there.
I am firmly convinced, as I cabled you, that the Governor only put us off as
one more bluff to hold up his game, because he had a feeling that
we would not.return to the Chancellor; but that he knew from his
conversation with the Chancellor that he might be called upon to
change the rate if we ultimately went to him.
Our first negotiation was merely for an increase of Ld. in
the rate, which would leave the Bank the full profit on such
Told as might be released in Ottawa. The attitude of the Governor was so positive that it seemed as though it might be better
to go to the Chancellor with only such a request, even though
we did endeavour to obtain from the.Governor an agreement to deliver such gold back as was not shipped at a better rate.
Your
cablegram stating in effect that you should not only have a higher rate for the gold now, but that it should be released for
full value also pleases me very much, and there is no doubt whatever but that it is an absolutely correct and proper position for
the Committee to take. I note that you wish us to hold back on
the negotiation for a while, which may also be of value, but I
am thoroughly convinced in my 'own mind that if you will authorise
me to go to the Chancellor again and demand full value for our
gold and full value for such gold as is returned from Ottawa,
that he will intervene. He is wonderfully quick to see a point
and if he finds that America is being defeated in its attempts
to help out this situation, which is of just as much value to
Britain as to America, or more, because of the grasping nature
of the Governor of the Bank of England, he will put the screws
on.
I am simply crazy to go on with this negotiation, and do not
feel beaten in any particular at the moment.
In fact, the way
it has developed would seem to me to lead to a better opportunity
of obtaining more for the American Committee than if we had been
given a higher rate at the start.
It is my hope, hqwever,!. that
yaiwill not take it up with the United States Government, at
least without giving me another crack at it, for I sh.ould d1slike very much to have them step in and obtain the concession
that I am sure is about ready to be made, for our Bankers can co
things as well as the Government at times
.

4




5.

Later.

Have just gone over this whole matter -:ith Ambassador Page
as suggested in your second from last letter received.
He was
most pleased to get the information as Bloyd George had asked
him for an interview this afternoon and he did not ',Glow whether
it was about this matter or not, and he now feels well enough
posted on the proposition so that he can answer any questions
that Lloyd George may put to him. I told him that from your
cablea'ram of today I felt that the whole matter was off for the
present, and that I did not feel at liberty to approach Lloyd
George again -ithout special instructions from the Committee.
Did say to him, however, that if Lloyd George brought up the subject and personally asked to see me, that I should of course hold
myself ready to meet him, but that I had no power to negotiate
at present.

s

Also saw Robert Bacon and had a long talk with him. At
first he seemed to feel that we were wrong in asking a better
rate, but after I had explained the whole situation to him he
apparently agreed with me fully. He said, however, that the
Chancellor would not intervene with the Bank of England, which
leads me to believe that he has talked the matter over with 1:r.
Grenfell, although of course he did not say so. Mr.Grenfell, as
you 'mow, is a Director of thelBank.
I am not so positive, however, that the Chancellor will not intervene, judging from his
letter.

Ilr.Grenfell may not -,cnow what he would,or would not,do,

for hie opinion of the invulnerability of the Bank is naturally
as great as that of others connected with it.
Regardless of
what happens, however, I can say to you abbolutely from the
shoulder that I have handled this matter fairly and squarely open
and above board, and without once giving or receding from the
position that we were only asking what was right and justifiable.
Last night called up your brother Arch, and as he had an
engagement, arranged to meet him this morning.
Took him up to
the Embassy and fixed it up so that he goes to Paris as a special
envoy of ,ambassador Page to Ambassador, Herrick. Felt that this
would give him the best possible entre into France. He is to
leave with the other members of the party at 10 o'cleck tomorrow
morning and should be in Paris tomorrow night. The Embassy is
looking after all hLs baggage arrangements and everything else
exactly as they would in the case of any other personal messenger.
He is to carry a sealed pouch addressed to ambassador Herrick.
Your brother is a fine young fellow, and I was very please i indeed
to meet him, and would have been glad to have accommodated him
for himself. It was a real pleasure, however, to feel thatkI
was at the same time doing a little something for you, as such
opportunities are always most welcome to me. Am giving him..
further letters of introduction also.

e(11-:- 4a:.,,

/,.;A-


.01.4
 v e,......--- 1,-..-:-.7-

-9* 1....-

a.---(

Sincerely yours,

4....Z.---< 7.,--.---.-------7
eZ,-.74.-f._

If;

4,./..2.,_.4.

,-

--4_

DIRECTORS

OFFICERS.
BENJ. STRONG, J R., President.

JAMES S. ALE XAN DER, Prest.Nat. Bank of Commerce in N.Y.

STEPHEN BAKER President Bank of the Manhattan Co.
SAMUEL G. BAYN E, Presldent Seaboard Nat.Bank.
EDWIN M. B U LKLEY, Spencer Trash & Co. Bankers.
JAMES G.CANNON, NewYork.
E. C. CONVERSE, President AstorTrust Co.
THOMAS DEWITT CUYLER, Prest.Commercial Trust Co.Phila,
HENRY P. DAVISON, J.P. Morgan & Co. Bankers.
Wm. NORTH DUANE , Vice President.
RUDULPH ELLIS, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY, Vice President Hanover NatBank.
WALTER E. FR EW, President Corn Exchange Bank.
FR ED'IS T. HASKELL,V.Prest. III.Trust & Savings Bank Chicago.
A BARTON HEPBURN, Chairman Chase Hat.Bank.
FRANCIS L. H I N E, President First Nat. Bank.

EDGAR L. MAR STON, Blair& Co. Bankers.
JOSEPH B. MARTI N DALE, President Chemical Natbank.
GATES W. McGARRAH, PrestMechanics'& Metals NatBank,
CHARLES O. NORTON, Vice Prest. First.Nat. Bank.
WILLIAM C. POILLON, Vice President.
DANIEL E. P 0 M EROY,Vice President.

SE WAR 0 PROSSER, PrestLiberty Nat.Bank.
DANIEL G. REID, Vice President Liberty Nat.Bank.
BENJ. STRONG,Jrt. President.

BANKERS TRUST

COMPANY
CAPITAL
SURPLUS

$ 10,000,000
10,000,000

WILLIAM C. POILLON, Vice President.
D. E. POMEROY, Vice President.
W. N. DUANE,Vice President.
F. I.K ENT, Vice President.
HAROLD B.THORNE , Vice President.
F. N. B.CLOSE,Vice President.
GEO. G.THOMSON, Secretary.
GEORGE W. BENTON, Treasurer.
GUY RI CHAR DS, Asst. Secretary.
H.W. DONOVAN, Asst.Treasyrer.
BETH U N E W. JONES, AsstSecretary.
F. W I LS 0 N, J R.,Asst. Secretary.

CABLE ADDRESS: BANKTRUST, NEW YORK,

MICHAELS, Trust Officer.

16 WALL STREET

EDWARD F. SWIN N EY, Prest.First NatBanktiansas City.
GILBERT G .TH ORNE, Vice President Nat.Park Bank.
EDWARD TOWNS EN D,Prest.Imp.&Tradera Nat.Bank.
ALBERT H. WIGGIN, President Chase Nat.Bank.
SAMUEL WOOLVERTON. Vice President Hanover Nal.Bank.

R. H.GILES , Asst. Treasurer.
PERRY D. BOGUE, Asst.Secretary.
HARRY N. DUNHAM, Asst.Treasurer.

N-E.Y#<eR.s(

LONDON.

12th October, 1914.
Mr. Benjam2LStrong Junr,
Bankers' Trust Company,
16, Wall Street.

New York.

Dear Ben,

Am very sorry indeed that my cablegram No. 30 replying to
your No. 52 about Mrs Strong, was not delivered. Cannot imagine
why it should have been held up unless because I referred to
passports. I answered your cable immediately and wanted you to
understand that everything was in order.
Can do everything
necessary through the Embassy and Mare has been waiting for word
as to when Mrs Strong would arrive ever since. Also cabled you
at Greenwich immediately upon receipt of your wire a week ago
Sunday morning. Do not know whether this cable reached you or
not but sincerely hope it may have done so, and that you may not
have been anxious about the matter.
October 13th.Have just received your cablegram stating that Mrs Strong
is coming on the "Lusitania" and that you would cable particulars
later. Have notified Mare and he will go up to Liverpool with me
to meet Mrs Strong. You need have no anxiety whatever about her
insofar as everything is concerned that it is possible to control.
No-one can tell what a day will bring forth along the battle line
and I should have preferred to have gone to Switzerland for Mrs
Strong's sister rather than to have had her come here. Nevertheless, there is no real need to feel anxious if things remain as
they are at present.
Think I wrote you that Mare had made Wtrip
into France, Switzerland and Germany and brought out 25 trunks
for different people.
You can see, therefore, that heknowskhow
to get about even under present conditions. Of course he had
special letters which I obtained for him from the Embassy without
which he could hardly have made the journey. He still has those
letters and I shall also see that Mrs Strong is properly provided.
As I telegraphed, I will gladly go to Switzerland with Mrs Strong






2.

provided it seems necessary when she arrives, or anyway if I find
that you desire it or that she prefers to have me. Am therefore
whipping my work into shape as raidly as possible to enable me
to leave for Switzerland with her should it prove to be the thing
Should I do so will come back
to do for any reason whatsoever,
here iAmediately, but probably by way of Milan, Italy, and Germany, as I wish to make certain that the lire deal with the
German Banks is in order, for I cannot seem to get any satisfactory
Am also anxious to see Hugo Schmidt of the
word concerning it.
Deutsche Bank.
Will close, as I have an appointment with the British Foreigr
Office at 4 o'clock, and have just time to make it.
iith sincere regards, and hoping that you have not hesitated
in your full instructions which Mrs 2trong is carrying, to ask
anything and everything of me that you raally wish, I am,
Cordially yours,

C7!"---c
/a

DIRECTORS.
JAMES 5.ALE XAN DER, Prest.Nat. Bank of Commerce in NY.
STEPHEN BAKER, President Bank of the Manhattan Co.
SAMUEL G. BAYN E, Prestdent Seaboard Nat.Bank.
EDWIN M. B U LKLEY, Spencer Trask & Co. Bankers.
JAMES G.CANNON. NewYork.
E. C. CONYERS E, President AstorTrust Co.
THOMAS DEWITT CUYLER,Prest.Commercial Trust Co.Phila.
HENRY P. DAVISON, J. P. Morgan & Co. Bankers.
Wm. NORTH DUANE , Vice President.

RUDOLPH ELLIS, President Fidelity Trust Co. Phila.
E . HAYWAR D FERRY, Vice President Hanover Nat.Bank.
WALTER E. FR EW, President Corn Exchange Bank.
FR E
T. HAS KELL,V.Prest.III.Trust & Savings Bank Chicago.
A.BARTON HEPB UR N, Chairman Chase Nat.Bank.
FRANCIS L. H I N E, President First Nat. Bank.
EDGAR L. MAR STON, Blair& Co. Bankers.
JOSEPH B. MARTI N DALE, President Chemical Nat. Bank.
GATES W. McGARRAH, Prest.Mechanic&& Metals Nat.Bank.

OFFICERS.

TRUST

COMPANY
FABNKERS
CAPITAL
SURPLUS

$io,000,000
10,000,000

CABLE ADDRESS: BANKTRUST, NEW YORK.

CHARLES D. NORTON, Vice Prest.First.Nat. Bank.
WILLIAM C. POI LLO N, Vice President.
DAN! EL E. PO M ER OY,Vice President.
S EWAR D PROSSER, Pres, Liberty Nat. Bank.
DANIEL G. REID. Vice President Liberty Nat.Bank,
BENJ. STRONG,JN. President.
EDWARD F. SWINN EY, Prest.First NatElank&ansas City.
GILBERT 0TH OR NE,VIce President Nat.Park Bank.
EDWARD TOWNS EN Cr, Prest.Imp.& Traders' NatBank.
ALBERT H. WIGGIN, President Chase Nat.Bank.
SAMUEL WOOLVERTON, Vice President Hanover Nat.Bank.

BENJ. STRONG,J R., President.
WILLIAM C. PO ILLO N, Vice President.
D. E. POMEROY, Vice President.

W. N. DUANE,Vice President.
F. I. KENT, Vice President.
HAROLD B.THORNE ,Vice President.
F. N. B.0 LOSE,Vice President.
GEO. G.THOMSON, Secretary.
GEORGE W. BENTON, Treasurer.
GUY RICHARDS, Asst. Secretary.
H.W. DONOVAN, Asst.Treasurer,
BETHUNE W. JONES, AsstSecretary.
H.F. W I LSO J R.,Asst. Secretary.
R. H.G1LES , Asst. Treasurer.
PERRY D. BOGUE, Asst.Secretary.
HARRY N. DUNHAM, Asst.Treasurer.

I. MtCHAELS, Trust Officer.

16 WALL STREET
N LW YO R K

London, 13th October,1914.

Mr. Benjamin Strong,
0/0 Bankers Trust Co.,
New York.
Dear Ben,

Certain things are going oniin connection with the negotiations between the United States and Great Britain, which possibly
I am not supposed to know about but that I do, as a matter of
fact, and that which concern me. What I refer to particularly
hts to do with the Declaration of London.
That interesting
document has never been accepted by Great Britain nor any other
country, I believe, except the United States.
Since the war
started, Germany, however, has become very much interested in it
and as it has to do partly with the regulation of shipping in
case of war, and as Germany is thoroughly blockaded, you can
readily see that it is to her interest, and her interest only
among the 'belligerent, to wish to have the Declaration of
London accepted by all nations. Until the war, Germany was never
,interested
in the Declaration of London in any particular so
far as I can learn and apparently never gave it any real consideration. Now the United States Government is trying to
force the Declaration upon the British Government and it could
not do so With any success at all if Britain were not fighting
for her life.
This being true, it does not seem right for the
United States to assume the position that it is doing, and
it Seems to me that it is certain to react upon it in the future.
All we have to gain at the moment, if anything, is the opportunity to land a few more goods in Holland and possibly a very
few at that;
certainly the small number of shippers that will
be benefited will never pay the United States for having rather
forced Britain's hand at this particular time; and it seems
to me that every bit of pressure that can be brought to bear
upon Washington to get them to realise their mistake
ought to be



-4Of course one argument of the United States is that
exerted.
unless the Declaration of London is subscribed to they have no
means whatever of knowing what strict neutrality really means.
Aile this is true to a certain extent, yet as there is no
Court of Appeal from the Declaration of London in case it is not
lived up to the United States is just exactly as well off withInternational Law, as it has been developed
out it as with it.
in various countries, unquestionably has many points of difference, for each country has accepted only such conditions as
have seemed bf particular benefit to it, either because of its
and
geographical situation, trade and commerce, or armament;
It seems quite absurd to expect Governments who are at war
to give up certain points that they have stood out for for many
years in order to meet the Declaration of London. Such being the
case it would seem absurd to believe it possible to obtain a
general agreement at this time and without such agreement the
whole matter would be valueless.
I am firmly convinced,
therefore, that the United States has everything to lose and
nothing to gain through its present attitude and I certainly
hope that something can be done that will show our Adminittration, or those responsible for our present attitude, just how
things stand.
Great Britain hae arbitrated many subjects
with us and has made very few demands from which she has not
receded when America has refused to consider them.
If she wins in this war, as she certainly will have to do
unless as a powerful nation she becomes extinct, she is going to
be more powerful than ever and if saki we do not want to be in
the position of having her feel that we took unfair advantage
of her while she was in the midst of a devastating war. Not
of course that we have anything to fear, but that it would
make diplomacy much harder to carry out and might end in something serious; whereas by using good judgment now and not
assuming any false or unnecessary position we may draw closer
to Britain so that in future we could pull together more
effectively for both nations.
If Britain is defeated it will
not make any difference either way for she will inevitably
lose her prominent position among the nations of the world to
such an extent that whether she accepts or does not accept
the Declaration of London it will not make the slightest difference.

I cannot imagine either Secretary Hay or Secretary Roott
indulging in any such precarious negotiations and as an American
citizen I feel that it should be brought to our Government that
it is making a mistake and one from ,:hich we have nothing to
gain and everything to lose. I do not know of course whether
you have any means of properly bringing this to the attention
of
those who should know about it, but as
you have been so closely



t)

-3-

associated. with many of those prominent in the present Administration I thought that I would bring it to your attention.
Of course I realise how difficult it will be for you to apparently know nothing about the proposition because they would
wonder how you found out and I certainly am not supposed to
know, but that is a matter I can leave to your judgment without
question and I am certain that it will be handled, if you judge
it wise to take it up at all, in a way that will be entirely
proper and satisfactory to all concerned.
It will, of course,
be a very delicate piece or business but I am sure that you
are fitted to undertake it if anyone is.




With sincere regards,
I am, Cordially yours,

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Mr. Strong:The following

is

an extract from Mr. Kent's cablegram

received to-day:-

"Tel Strong fully agree opinions expressed his' letter
tenth, pages nine and ten, but believe adjustment likely
soon and am considering farther (believe this should be
'further')".




JPs.

10-27-14.

DIRECTORS

OFFICERS.
BENJ. STRON 0, J R.,President.
WILLIAM C. PO I LLO N, Vice President.

JAMES S. ALE XANDER, Prest Nat. Bank of Commerce in N.Y.

STEPHEN BAKER President Bank of the Manhattan Co.
SAMUEL G. BATN E, President Seaboard Nat. Bank.
EDWIN M.
ULKLEY, Spencer Trash & Co. Bankers.
JAMES G.CANNON, NewYork.
E. C. CONVERSE President AstorTrust Co.
THOMAS DEWITT CUTLER,Prest.Commercial Trust Co.Phila.
HENRY P. DAVISON, J. P. Morgan & Co. Bankers.
Wm. NORTH DUANE , Vice President.
R UDULPH ELLIS, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY, Vice President Nanover Nat.Bank.
WALTER E. FR EW, President Corn Exchange Bank.
FR E OK T. HAS K ELL,V.Prest.111.Trust &Savings Bank Chicago.
A. BARTON HEPBURN, Chairman Chase Nat.Bank.
FRANCIS L. H I N E, President First Nat. Bank.

EDGAR L. MARSTON, Blair& Co. Bankers.
JOSEPH B. MARTIN DALE, President Chemical Nat Bank.

BANKERS TRUST

COMPAI4Y

CAPITAL
SURPLUS

0,0 o
10,000,000

$ 1 co, coo

F. WI LSON, J a., Asst. Secretary.

CABLE ADDRESS: BANKTRUST, NEW YORK.

GATES W. MCGAR RAH, PrestMechanicsl& Metals Nat.Bank.

CHARLES D. NORTON, Vice Prest First. Nat. Bank.
WILLIAM C. POI LLON, Vice President.
DANIEL E. POM EROY,Vice President.

SEWAR D PROSSER, PrestLiberty Nat. Bank.
DANIEL G. REID, Vice President Liberty NatBank.
BENJ, STRONG,Jn. President.

D. E. POMEROY, Vice President.
W. N. DUANE Vice President.
F. I. K ENT, Vice President.
HAROLD B.THORNE , Vice President.
F. N. B.0 LOSE,Vice President.
GEO.G.THOMSON, Secretary.
GEORGE W. BENTON, Treasurer.
GUY RICHARDS, Asst. Secretary.
H.W. DONOVAN, Asst.Treasurer.
BETHUNE W. JONES, Asst.Secretary.

16 WALL STREET

R. H.GILES, Asst. Treasurer.
PERRY D. BOGUE, Asst.SeCretary.
HARRY N. DUNHAM, Asst.Treasurer.
MICHAELS , Trust Officer.

EDWARD F. SW1N N ET, Prest.First NatBank,Kansas City.

GILBERT 0TH ORN E, Vice President Nat.Park Bank.
EDWARD TOWNS END, Prestirrip.& Traders' NatBank.
ALBERT H. WIGGIN, President Chase Nat.Bank.
SAMUEL WOOLVERTON, Vice President Hanover NatBank.




NEW YORK
London, 28th October,1914.

Benjamin Strong. Esq., (Jnr.)
C/o Federal Reserve Bank of New York,
27, Pine Street,
New York, U.S.A.
Dear Ben,

Cabled you from both Switzerland and Zurich on my way
with Nettie and wrote you all along the line as well. Do not
know, however, whether the letters will reach you till after
the Federal Reserve Bank is making a name for itself in the
world under its able management. Did not cable you upon our
arrival in London as Mrs. Strong seemed to wish to do so and
I thought it hardly necessary to send two cablegrams.
To be
perfectly frank, it was a real relief to me to get the party
into London for while I had papers of all possible sorts and
kinds that might be of value yet the baby speaking only German
and the nurse not only speaking German but looking the part
most effectually, resulted in our being looked upon as
suspicious throughout the whole trip. This led to several
very unpleasant experiences, only two of which, however, became
known to Nettie - one when some French soldiers forced open the
door of our compartment in the middle of the night and began to
growl about "Allemande" and the other when "Yours truly" was
arrested.
The details of that pleasurable experience I do not
feel inclined to put down in black and white but will tell you
about it some time.
Before the incident was over
was mad
enough to eat tacks because they nearly made me miss the brain
and I was afraid that if I did Nettie might be made' very
nervous and she was already rather unstrung. She and the baby
and the nurse were in a compartment, however, with Mare, which
I had had marked "for the American Embassy", so that they would
really have been all right even if I had missed the train.
As




Benjamin Strong, Esq., (Jnr.)

2.

it was, however, I just stepped into the door as the train
started forward, so that everything after all was all right.
At the station I had Mare tell Mrs. Strong, whom I felt
certain must be in the crowd outside, that we had gone directly
to the hotel, Found a taxi where the train stopped and as
the baby was fast asleep and there was a chance that we might
get him right to the hotel without awakening him, it seemed to
me to be better to try and do so. Mrs. Strong reached the
hotel shortly after we did. The baby did not awaken once
during the trip and was upstairs and in his little bed without
knowing anything about the journey from the train to the hotel.
Last night the British Government notified the White Star
Line that it would have to take the "Celtic", consequently
the reservations were changed to the "Lapland". Am rather
inclined to believe, however, that they will be just as comfortably situated, if not more so, for they have the very
best rooms on the boat and it is a comparatively new ship,
being only five years old and although smaller than the
"Celtic" is still an 18,000 ton boat, which a few years ago
would have been considered a giant.
As I have so much to dos, the success of which may depend
upon prompt cabling, I did not think it would be right for me
to
to Liverpool as long as it is not really necessary.
Mare is going, however, and will see that they get off allright.
They have a compartment reserved for them upon the
boat train and their seats at table and positions for their
steamer chairs have also been arranged by me, so that I am
certain everything will work out to their satisfaction.

e

Now regarding your letter of the 10th inst.
I did not
cable you Sunday about it because I wished to see how the Foreign
Exchange market was acting under the various operations that
seem to have been taking place and I could not, of course, find
out anything about that until Monday.
Then the Bethlehem
Steel matter came up and that kept me on the dump all day long.
However, managed to find out enough about the markets to
confirm my opinion that the present strained condition is apt to
work itself out before very much longer.
The only phase of it
that I do not like is the fact that exchange is being
furnished for the New York City Warrants instead of gold,
because such exchange, even if not purchased directly frbm the
gold pool Committee, must of necessity work out exactly as
though it were so purchased because the exchange used fo/ the
City Warrants would otherwise go towards meeting the sterling
liabilities for which the Gold Committee might actually be
selling exchange.
It seems to me, therefore, that it is quite
important not to countenance such exchange deliveries to the
City until the rate goes under the cost of delivering gold,




Benjamin Strong, Esq., (Jnr.)

provided there is any way to prevent it.
If,
there is any way in which to require deposits
for the City Warrants, I believe it should be
from all market operations it would appear as
was working exactly as desired.

3.

therefore,
of gold in payment
done, otherwise
though exchange

If the Bethlehem Steel operation goes through it will
mean £750,000 immediately available and further large amounts
rapidly as time goes on. Many other operations are working
2o-day therefore I cabled you as follows:
the same way.
"Tell Strong fully agree opinions expressed his letter
tenth pages nine and ten but believe adjustment likely
. soon and am considering further."

While I can readily see that everythingpu outline in your
letter might easily and naturally occur, yet in the back of
my mind I sort of think that a way out can be found. Have not
had the opportunity, however, to sit down and go over it carefully because of this Bethlehem Steel matter.
is so huge and the British War Office is so crazy to have the
matter put through immediately, and the difficulties in doing
so are so great because of not knowing exactly what negotiations
are being carried on in New York, that it is extremely difficult
to work out, and between conference at the War Office, with the
Bethlehem Steel representative, and with the Midland Bank and
cables in between, it seems to take up more hours than there
are in a day. However, I have it in mind and hope Ao be able
to give it careful and consecutive thought in a day or so and
if I have reason to change my opinion materially, I will
cable you.
Regariing the expenses connected with getting Nettie and
the baby have no doubt in my mind whatever but that Mr.
Converse wishes to take care of them and, in fact, that he
would naturally insist on doing so.
Such being the case, I
did not let Nettie use any of the money which she had with
In order to save her loss in
her to pay any of them.
exchange I used all the franc bills which she took with her
from Germany but returned the amount in American money when
I reached London, otherwise she would have no money with her
for I made her deposit all of her marks with the Societede
Credit Suisse in Zurich for the credit of the Bankers' Trust
That seemed to be
Co., for credit of her account with them.
the only possible way to save her greater loss than she had
already incurred by carrying the bills inSwitzerland; and
again it did not seem wise to carry around so much money under
prevailing conditions.
Have had Mare keep track of all of the
expenses.
The amount up to date is £116.
18.
4.

,

c-.
44.

, .A 4
" 0

0

1-4




Benjamin Strong,

Esq.,

(Jnr.)

4

and includes everything except Mar's expenses from London
to Liverpool and return and the money he is obliged to spend
for luggage and other matters during the trip. Will give
you that later. You can pay the amount to the Bankers'
These exTrust Co. and Mr. Schmid will give you the rate.
penses include the work Mare has done since the return to
England as well. Have had him go out with the nurse and
baby every day rather than take any chance of having trouble
ensue because both the baby and the nurse talk German. Will
advise Mr. Schmid how to credit the cheque which you give
him.

Will not write more now as I wish to get this letter
into Mrs. Strong's hands this evening.
Sincerely yours,

DIRECTORS.

OFFICERS.
SEWARD PROSSER, President.

JAMES S.ALEXAN DER, Prest.Nat. Bank of Commerce in N.Y.
STEPHEN BAKER, President Bank of the Manhattan Co.
SAMUEL G. BAYNE, President Seaboard Nat.Bank.
EDWIN M. BU LKLEY, Spencer Trask & Co. Bankers.
E.C. CONVERSE, PresidentAstorTrust Co.
THOMAS DEWITT CUTLER, Prest.Cornmercial Trust Co.Phila.
HENRY P. DAVISON, J. P. Morgan & Co. Bankers.
)1RTH DUANE, Vice President.
WM
ELLIS, President Fidelity Trust Co. Phila.
UL
E HAYWAR D FERRY, Vice President Hanover Nat.Bank.
WALTER E. FREW, President Corn Exchange Bank.
T. HAS KELL ,V.Prest.III.Trust &Savings Bank Chicago.
FR E
A. BARTON HEPBURN, Chairman Chase Nal.Bank.
FRANCIS L. HINE, President First Nat. Bank.
EDGAR L. MAR STON, Blair& Co. Bankers.
JOSEPH B. MARTI N DALE, President Chemical Nat.Bank.
GATES W. McGAR R AH, PrestMechanicsl& Metals Nat.Bank.
CHARLES D. NORTON, Vice Prest. First.Nat. Bank,

WILLIAM C. POI LLON, Vice President.
DANIEL E. POM ER OY,Vice President.
SEWAR D PROSS ER, President.
DANIEL G. R El 0, Vice President Liberty Nat.Bank.

BANKERS TRUST

COMPANY
$10,000,000
CAPITAL
SURPLUS FUND 10,000,000
CABLE ADDRESS: BANKTRUST, NEW YORK.

16 WALL STREET

WILLIAM C. POI LLON, Vice President.
D. E. POMEROY, Vice President.
W. N. DUANE,Vice President.
F. I. K ENT, Vice President.
HAROLD B.THOR NE , Vice President.
F. N. B.0 LOSE,Vice President.
GEO. G.THOMSON, Secretary.
GEORGE W. BENTON, Treasurer.

GUY RICHARDS, Asst. Secretary.
H.W. DONOVAN, Asst.Treasurer,
BETH U N E W. JONES, Asst.Secretary.
H.F.WILS ON,J R.,Asst.Secretary.
R. H.GILES , Asst. Treasurer.

PERRY D. ROGUE, Asst.Secretary.
HARRY N. DUNHAM, Asst.Treasurer.
I. MICHAELS , Trust Officer.

EDWARD F. SWI N N EY, Prest.First Nat.Bank,Kansas City.

GILBERT G.TH OR NE, Vice President Nat.Park Bank.
EDWARD TOWNS END, Preen. Imp.&Traders' Nat Bank.
ALBERT H. WIGGIN, President Chase Nat.Bank.
SAMUEL WOOLVERTON, Vice President Hanover Nat.Bank.

NEW Yo R K , November 23, 1914.

FOREIGN EXCHANGE DEPARTMENT

Mr. Benjamin Strong, Jr.,
62 Cedar Street,
New York City.
Dear Ben:-

Your letter of the 20th instant just received. Was
out of town Saturday watching Uarvard show Yale how to play the
time-honored game of football.
f
a

It does not seem to me that there is any reason why
the Post-Office Department of the United States Government should
take over the Treasury Department' a loss in exchange. If the
Post-Office Department is required to buy exchange to meet its
money orders, it goes into the market and obtains offers from
The result is that
many banks, and then accepts the best rate.
the Postmaster obtains exchange 'at practically the market rate.
This being true, if the Postmaster General took over the Treasury
Department's exchange at the cost to the Treasury Department, it
would represent an actual loss in the Post Office Department
that properly belongs in the Treasury Department.
It seems to me the, best way for the Treasury Department
to handle the proposition is to telegraph to Ambassador Page and
to the Bank of England, requesting each to deposit the suMs which
they hold with the London City and Midland Bank, Ltd. for credit
of the Bankers Trust Company, with instructions to the London
City & Midland Bank, Ltd. to cable us advice of the deposit. We
will then refund the amount to the Treasury here at a proper rate.
This will be the most satisfactory and the cheapest way to handle
the proposition. Exchange is getting pretty strong, as you bavet
undoubtedly noticed.




Sincerely yours,

cZ

DIRECTORS.

OFFICERS.

JAMES S. ALEXAN D ER, Prest.Nat. Bank of Commerce in N.Y.
STEPHEN BAKER , President Bank of the Manhattan Co.
SAMUEL G. BAYN E, President Seaboard Nat. Bank.

BANKERS TRUST

EDWIN M. BULKLEY, Spencer Trask & Co. Bankers.
E. C. CONVERSE, President .AstorTrust Co.
THOMAS DEWITT CUYLER, Prest.Commercial Trust Co.Phila.
HENRY P. DAVISON, J.P. Morgan & Co. Bankers.
WM. NORTH D UAN E , Vice President.
RUDULPH ELLIS, President Fidelity Trust Co. Phila.
E. HAYWARD FERRY, Vice President Hanover Nat.Bank.
WALTER E. FR EW, President Corn Exchange Bank.

COMPANY
CAPITAL
$10,000,000
SURPLUS FUND 10,000,000

FR ED'K T. HASK ELL,V.Prest. III.Trust & Savings Bank Chicago.
A. BA RTON H EP BUR N, Chairman Chase Nat.Bank.

FRANCIS L. HINE, President First Nat. Ban k.
EDGAR L. MARSTON, Blair& Co. Bankers.
JOSEPH B. MARTIN DALE, President Chemical Nat.Bank.
GATES W. McGARR AH, Prest.Mechanic& Metals Nat.Bank,
CHARLES D. NO RTON, Vice Prest. First. Nat.Bank.
WILLIAM C. POI LLO N, Vice President.
DANIEL E. POM ER OY.Vice President,
S E WAR D PROSSER, President.
DANIEL G. REID, Vice President Liberty Nat. Bank.
EDWARD F. SWIN N EY, Prest.First Nat.Bank,Kansas City.
GILBERT G.TH OR N E, Vice President Nat.Park Bank.
EDWARD TOWNS EN 0, prest.Imp.& Traders' Nat.Bank.
ALBERT H. WIGGIN, President Chase Nat.Bank.
SAMUEL WOOLVERTON, Vice President Hanover Nat.Bank.

CAB LE ADDRESS. BANKTRUST, NEW YORK.

16 WALL STREET

SEWARD PROSSER, President,
WILLIAM C. POILLON, Vice President.
D. E. POMEROY, Vice President.
W. N. DUANE,Vice President.
F. I. K ENT, Vice President.
HAROLD B.THOR NE , Vice President.
F. N. B.0 LOSE,Vice President.
GEO. G.THOMSON, Secretary.
GEORGE W. BENTON, Treasurer.

GUY RICHARDS, Asst. Secretary.
H.W. DONOVAN, Asst.Treasurer.
BETHUN E W. JONES, Asst.Secretary.
F. W I LS 0 N, J R.,AsstSecretary.
R. H.GI LES , Asst. Treasurer.

PERRY D. BOGUE, Asst.Secretary.
HARRY N. DUNHAM, Asst.Treasurer.
MICHAELS , Trust Officer.

NEW YoRK, December 21, 1914.

FOREION EXCHANCE DEPARTM :NT

STIWINI
NI,.
PERSON

kr. Benjamin Strong, Jr.,
C/o Federal Reserve Bank,

62 Cedar StreetN. Y.
Dear Ben:Your letter of the 18th instant received, and I enclose herewith statements which I think will answer your purpose.
Have made them as simple as possible.




Sincerely yours,

*

6c?",4,

FORM 71

fr

DIRECTORS.

SEWARD PROSSER, President,

JAME'S S.ALEXANDER, Prest.Nat. Bank of Commerce in N.Y.

STEPHEN BAKER President Bank of the Manhattan Co.
SAMUEL G. BAYN E, President Seaboard Nat.Bank.
EDWIN M. BU LKLEY, Spencer Trask & Co.Bankers.
E. C. CONVERSE, President.AstorTrust Co.
THOMAS DEWITT CUYLER, Prest.CommercialTrust Co.Phila.
HENRY P. DAVISON, J. P. Morgan & Co. Bankers.

CAPITAL
$10,000,000
SURPLUS FUND 10,000,000

WILLIAM C. POILLON, Vice President.
D. E. POM [ROY, Vice President.
W, N. DUANE,Vice President.
F. I. K ENT, Vice President.
HAROLD B. THOR N E , Vice President.
F. N. B.0 LOSE,Vice President.
GEO. G.TH 0 MSON, Secretary.
GEORGE W. BENTON, Treasurer.
GUY R I CHAR DS, Asst. Secretary.
H.W. DONOVAN, Asst.Treasurer.
BETH U N E W. JONES, Asst.Secretary.

CABLE ADDRESS: BANKTRUST, NEW YORK.

R. H.GI LES , Asst. Treasurer.

BANKERS TRUST

COMPANY

W NORTH DUANE, Vice President.
ULPH ELLIS, President Fidelity Trust Co. Phila.

E. HAYWARD FERRY, Vice President Hanover Nat.Bank.
WALTER E. FR EW, President Corn Exchange Bank.
FR ED 'K T. HAS K ELL,V.Prest.III.Trust &Savings Bank Chicago.
A. BARTON H EPB UR N, Chairman Chase Nat.Bank.

FRANCIS L. HINE, President First Nat. Bank.
EDGAR L. MARSTON, Blair& Co. Bankers.
JOSEPH B. MARTI N DALE, President Chemical Nat.Bank.
GATES W. Mc GAR RAH, Prest.Mechanics'& Metals NatBank.

114/t(
OFFICERS.

F. W I LS 0 N, J R.,As st. Secretary.

CHARLES D. NO RTON, Vice 'rest. First.Nat. Bank.
WILLIAM C. F'OILLON, Vice President,
D AN I EL E.P OM ER OY,Vice President.

SEWAR D PROSSER, President.

DANIEL G. REID, Vice President Liberty Nat.Bank.

PERRY D. BOGUE, Asst.Secretary.
HARRY N. DUNHAM, Asst.Treasurer.
MICHAELS , Trust Officer.

16 WALL STREET

EDWARD F. SWI N N EY, Prest.First Nat.Bank,Kansas City.
GILBERT G.TH OR N E, Vice President Nat.Park Bank.

EDWARD TOWNS E N D,Prest.Imp.&Traders' Nat.Bank.
ALBERT H. WIGGIN, President Chase Nat.Bank.
SAMUEL WOOLVERTON, Vice President Hanover Nat.Bank.

N EW

Yo

RK

December 22, 1914.

FOREIGN EXCHANGE DEPARTMENT

IjUi, .J1
BENJ
PERSONAL.

. Benjamin Strong, Jr.,
62 Cedar Street,
New York City.

Dear Ben:-

Referring to your letter of December 21, would say
that the Bankers Trust Company is in position to handle the busi-

ness referred to, and we have to-day taken it up by mail with
the parties in New Orleans.
Thanking you for having given us an opportunity to obtain this business, I am,




Sincerely yours,

BANKERS TRUST
CO/YiPANY

OFFICERS
SEWARD PROSSER, PRESIDENT.
WILLIAM C.POILEON,VICE PRESIDENT.

OFFICERS

CAPITAL
$10,000,000
SURPLUS FUND 10,000,000

D. E.POIVIEROY,y1cE PRESIDENT,
W. N.DUAN E, VICE PRESIDENT.

GENT, VICE PRESIDENT.
HAROLD B.THORNE, VICE PRESIDENT,
F. N.B.CLOSE, VICE PRESIDENT.

GUY RICHARDS, ASST. SECRETARY.
H.W. DONOVAN , ASST. TREASURER.
BETHUNE W. J ONES,ASST. SECRETARY.
H.F. WI LSON,J R., ASST. SECRETARY.

R. H.GILES, Ass, TREASURER.
PERRY D. BOGUE , Ass, sEcRETAR,

CAB LE ADDRESS: BAN KTRUST, NEW YORK.

GEO.G.THOMSON,sEcRETARy.
GEORGE W. BENTON, TREASURER

HARRY N. DUNHAM, ASST. TREASURER.
I. MICHAELS, TRUST OFFICER.

16 WALL STREET
FOREIGN EXCHANGE DEPARTMENT

N EW

Yo R K March 30, 1915,

Dear Ben:.41V46'

The Federal Reserve Board has sent out circulars to
the National Banks throughout the country which contain the
following clause:"Remittance should be made by postal money order or
express order"
.

Many of the bankers are writing to me personally, objecting to
the position taken by the Federal Reserve Board in demanding
Rather than call the
payment in anything except bank drafts.
attention of anyone else to this matter thought it would be
proper to advise you for as Chairman of the Governors Committee
you could easily take it up with those responsible.

While I recognize the fact that it does not particularly
matter, yet as many bankers are pretty angry about it, it would
seem best for the good of all concerned to prevent a recurrence
of any such action for it is certainly a pretty strong slap at
the banks.
Had a pleasant visit with Mr. Jay and Mr. Curtis yesterday
and was very glad to hear that you are away and are having a rest.




With sincere regards,

I remain

Cordially yours,

FILING
BANKERS TRUST

D.1/1)T

9

COMPANY

OFFICERS
SEWARD PROSSER, PRESIDENT.
WILLIAM C.POILLON,vmE PRESIDENT.

$10,000,000FROM.
CAPITAL
SURPLUS FUND 10,000,000

D. E.POME ROY,vicE PRESIDENT.

W.N.DUANE,,cE PRESIDENT.
F. I.K ENT, VICE PRESIDENT.
HAROLD B.THORNE, VIDE PRESIDENT.
F.N.B.CLOSE, VICE PRESIDENT.
GEO.G.THOMSON,SECRETARY.
GEORGE W.BENTON, TREASURER .

CABLE ADDRESS: BAN KTRUST, NEW YORK.

RICHA POD FS F, sC SET. RS ESC RETARY.
H.W.DONOVAN,ASS,TREASDRER.
HE8f4P

BETHUNE W.J ONES, ASST. SECRETAR,
H.F.WILSON,J R., ASST. SECRETARY.

R.N.SILES, ASST, TREASURER.
PERRY D.BOGLIE, ASST. SECRETARY,
HARRY N. DUNHAM, ASST. TREASURER.

LMICHAELS, TRUST orFicER.

16 WALL STREET

4104111)440 IWO

FOREIGN EXCHANGE DEPARTMENT

NEW YORK, April 6, 1916.

Mr. Benjamin Strong, Jr.,
Governor, Federal Reserve Bank,
62 Cedar Street, N. Y.
Dear Ben:-

Referring to my letter of recent date, about which you
spoke to me yesterday, would say that the announcement in question was concerning the new digest of the Federal Reserve Act and
amendments.

If I can obtain a copy of the circular, will forward to
you, but think the above information will serve to locate it.




Sincerely yours,

( 11:r.ffwas MITT.
MAY

BANKERS TRUST

4 1915

OFFICERS
SEWARD PROSSER, PRESIDENT.'. vE

BANK

WILLIAM C. POILLON,AcE PRESIDEi
13E,PON/EROY,VICE PRSSIDENT.
W.14.DUANE, VICE PRESIDENT,
F. SENT, VICE PRESIDENT.
HAROLD B.THORNE, VICE PRESIDENT.
F.N.B.CLOSE, VICE PRESIDENT.
GEO.G.THOMSON,SECRETARY.
GEORGE W. BEN TON, TREASURER .

COMPANY
CAPITAL
$10,000,000
SURPLUS FUND 10,000,000
CABLE ADDRESS: BAN KTRUST, NEW YORK.

ti

.J.

frOFFiCERS
GUY RICHARDS,AssT. SECRETARY
H.W. DONOVAN,'AssT. TREASURER.
BETHUNE W.J ONES, ASST. SECRETARY.
H
ASsT. SECRETARY.

R. H.GILES, ASST, TREASURER.
PERRY D.BOGUE, ASST. SECRETARY.
HARRY N. DUNHAM, ASST. TREASURER .
I.MICHAELS, TRUST OFFICER,

16 WALL STREET
FOREIGN EXCHANGE DEPARTMENT

NEW YORK , April 30, 19 15.
Mr. Benjamin Strong, Jr.,
Governor, Federal Reserve Bank,
62 Cedar Street, N. Y.
liLy dear Ben:-

Your letter of the 29th instant, with enclosure, received and carefully noted.
There is no question but that it would be a real help in
placing the dollar acceptance if firm forward rates could be made,
and I should very much like to see it done. On the other hand, I
recognize certain difficulties that the officers of the Federal Reserve Bank should have in mind when undertaking such propositions.
Suppose, for instance, the Federal Reserve Bank makes the rate of
3% for delivery of $100,000 in 90 dal sight acceptances, deliverable in 30 days, with each of 10 banks - that such banks wire
these offers to Buenos Aires - that the Buenos Aires banks cable
back acceptance, and the New York banks advise the Federal Reserve
Bank that their rate has been accepted. Contracts would then have
been entered into, under which the Federal Reserve Bank would have
agreed to discount at 3% $1,000,000 worth of bills arriving inside
of 30 days. While the reserves of the Federal Banks are as great
as at present, a difference of 10 days or so in the arrival of the
bills might not be of moment. In times of great demand for money,
and after the business of the country has grown to a point where
it largely absorbs the surplus of the Federal Banks, the proposition might be a more difficult one. For instance, an examination
of receipt of letters from Buenos Aires shove that for a considerable period back the quickest delivery has been 22 days, and the
longest 39 days. While I believe that the Federal Reserve Bank
can successfully figure out how to meet such conditions, yet they
must bear in mind the fact that there might be 17 days difference,
for instance, between the time of delivery of bills purchased for
forward delivery from say Buenos Aires at different times.
Again, if bankers in Buenos Aires found that they met t
with a large tax in the form of higher rates of interest ae penalty, if the bills did not arrive until after 30 days had elapsed,
they might not care to take the chance, which would of course work
against the value of establishing forward rates.




B. S., Jr. 2.

The Federal Reserve Bank would, therefore, have to determine what its action would be in case of delayed delivery, that
is whether they would apply the then prevailing rate without regard to whether it was higher or lower than the rate agreed upon
for the 30 day delivery. If, for instance, the Federal Reserve
Bank figured upon receiving a million dollars at 3% interest, running 90 days, on 30 days' delivery, would it be willing to reduce
the rate to 2 1/2% on 35 days' delivery, provided the rate had gone
down, exactly as it might wish to raise the rate to 3 1/2% if the
rate had gone up? With a fairly regular steamship service, such
conditions would not require the consideration that they do at the
moment, and while I believe that it would be of value to have forward rates obtainable from the Federal Reserve Bank, yet I also
believe that they should, before making them, determine upon a well
understood policy that would eliminate any possible friction. While
our dollar acceptance is being established in foreign countries, we
should not move faster than can be done with certainty of giving
satisfaction, for if friction develops before the business becomes
customary and well established, it is certain to interfere with
such establishment. Elimination of the difficulty to a certain
extent could be had where certain steamers are nominated as the
ones to carry the bills. Records of the sailing time of such steamers could then be accumulated by the Federal Reserve Bank, so that
It would be in position to make a rate based upon their proper arThe same condition would hold true with many points in the
rival.
Far East, although the time of arrival from some of the principal
ports might be more clearly eatablishea, accidents excluded.
Assuring you that I shall be pleased to go over the matter further with you, should you desire to have me, I am,




Sincerely yours,

April 29,
1915
Personal.
ay dear Fred:

I enclose copy of a letter just received from a
New York banking house, which I am sending you in confidence

because I would like your best opinion and advise on the subject mentioned.

I am not sure under present conditions

whether you are giving rates to your correspondents for dol-

lar drafts or not, but, of course, a number of bPnks and bpnktag houses are doing so and the question of quotation of for-

ward rates for discount is a pretty important one just now,
when means of communication are so slow and inadequate.

Very truly yours,

Fred I. Kent Esq.,
Vice PrO11114tt, Bankers Trust Company,

16 Wall Street, New York city.
BS Jr/VaM




BANKERS TRUST

COMPANY

OFFICERS
SEWARD PROSSER, PRESIDENT.

.

WILLIAM C. POI LLON,VICE PRESIDENT.
D. E.POMEROY,ViC E PRESIDENT.
W.N.DUANE, VICE PRESIDENT.
F. I .K ENT, VICE PRESIDENT,
HAROLD B.THORNE, vICE PRESIDENT.
F. N.B.CLOSE, VICE PRESIDENT.

CAPITAL
$10,000,000
SURPLUS FUND 10,000,000

GEO. 0 .THOMS ON ,SECR E TA RT.
GEORGE W. B EN TON, 'PR EA SURER .

CABLE ADDRESS: BAN KTRUST, NEW YORK.

OFFICERS
Guy RicHARDs, ASST. SECRETARY.
H.W. DONOVAN , ASST. TREASURER.
BETHUNE W. J ONES, ASST. SECRETARY.

H.F.WILSON,J R., ASST. SECRETARY.
R.H.GILES, ASST. TREASURER
PERRY D. BOGU E, ASST. SECRETARY
HARRY N. DUNHAM, ASST. TREASURER .
I. MICH A ELS, TRUST OFFICER.

16 WALL STREET
FOREIGN EXCHANGE DEPARTMENT

NEW YORK,

June 23, 1915.

Mr. Benjamin Strong, Jr.,
Governor, Federal Reserve Bank,
62 Cedar St., N. Y.
Dear Ben:Your letter of the 18th has come before me every day since its receipt, but much to my disgust, I have not bad a moment in which to answer it,
as I wish to go into some detail, because I feel that you would wish me to do
so.
It is after 6 o'clock, and I have other matter that must go out tonight,
so will only send this forward to let you know that you will hear from me soon,




With sincere regards, I am,

Cordially yours

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BANKERS TRUST

COMPANY

OFFI CERS
SEWARD PROSSER, PRESi DENT.
WILLIAM C. POILLON,VicE PRESIDENT.

$10,000,000
CAPITAL
SURPLUS FUND 10,000,000

O. E.POMEROY,vmE PRESIDENT.
W.N.OUANE, VICE PRESIDENT.
F. RENT, VICE PRESIDENT.
HAROLD B.THORNE, VICE PRESIDENT.
F. N.B.CLOSE, VICE PRESIDENT.

CABLE ADDRESS: BANKTRUST, NEW YORK.

GEO.G.THOMSON,SECRETAR,
GEORGE W. BESTOW, TREASURER.

OFFICERS
GUY RICHARDS, AssT.sEcRETART.
H.W. DONOVAN, ASST. TREASURER.
BETHUNE W.J ONES, ASST. SECRETARY.
H.E.
LSON,J R., ASST. SECRETARy.

R.H.GILES, Ass, TREASURER,
PERRY D. BOGU E, ASST. SECRETARY.
HARRY N. DUNHAM, ASS-1-. TREASURER.

I.MICHAELS, TRUST OFFICER.

16 WALL STREET
FOREIGN EXCHANGE DEPARTMENT

rok

tiaEOL

NEW YORK, October 28, 1916.

Mr. Benjamin

Strong, Jr.,
Governor, Federal Reserve Bank,
62 Cedar Street, N. Y.

Dear

Ben:-

noted.

Your letter of the 26th instant receiVed and carefully
Am having the law looked up, and willj8ee you about it la-

ter.

It is quite beyond my comprehenslon why an officer of
the United States Navy, acting under the Instructions of the Navy
Department, should have any hold whateve* upon any interests that
the United States Navy felt, for the good of the nation, required
government assistance. Again, as the Individuals who were helped
by the whole situation came from all parts of the country, and
represent a very important part of oUr population in their own persons and friends, because of their character, it would seem as
though whatever compensation might be considered right under the
circumstances should be paid by ee government, as proportionate
collection was not made from eacko, beneficiary of the action of the
government at the time it was updertaten.




Sinberely yours,

s;

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December 7, 1915.

Captain Benton C. Decker,
Commanding U. S.
Navy De

essee",
Washington, D. C.

Sir:-

Your letter of Oc
dressed to Benjamin Strong,
Jr., Esq., the former President of this institution, has been referred to me for answer.
Without prejudice
position in respect thereto
we cannot entertain it with
Secretary of the Navy.
If
through that channel, we sha

m for commission or to our
do take the position that
ion and approval of the
g the matter before us
ed to give it our considers-

tion.

Truly yours,

FIK/DXS




Vice-Fresident.

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BANKERS TRUST
OFFICERS
SEWARD PROSSER, PRESIDENT.
WILLIAM C.ROIELON,VICE PRESIDENT.
D. E.POMEROY,OcE PRESIDENT.
W.N.DUANE,viCE PRESIDENT.
F. I.K ENT, VICE PRESIDENT.
HAROLD B.THORNE, VICE PRESIDENT.
F. N.B.CLOSE, VICE PRESIDENT,
GEO.G.THOMSON,S ECU ETARY.
GEORGE W. BENTON, TREASURER.

COMPANY
CAPITAL
SURPLUS FUND

$10,000,000

10, 000,000

OFFICERS
GUY RICHARDS, ASST. SECRETARY.
H.W. DONOVAN, ASST. TREASURER.

BETHUNE WJONES,ASST.SECRETARY.
LSON,J R., ASST. SECRETARY.
R.H.GILES, ASST. TREASURER.
PERRY D. BOGU E, ASST. SECRETARY.

CABLE ADDRESS: BANKTRUST, NEW YORK.

HARRY N. DUNHAM, Assr. TREASURER.
LMICHAELS, TRUST OFFICER.

16 WALL STREET
FOREIGN EXCHANGE DEPARTMENT

NEW YORK

December 13, 1915.

Mr. Benjamin Strong, Jr.,
Governor, Federal Reserve Bank,
62 Cedar Street, N. Y.
Dear Ben:-

9/

Referring to your letter of Dicember 9, addressed to Mr.
Walker, would say that he forwarded to/Me forms for two letters,
copies of which I enclose herewith, t196,,t I understood were in accordance with his conversation with you. I therefore signed the
letters and mailed them. I Have heard/nothing from either letter,
and hope that the whole matter may be in order.

Assuring you of my approbiation of the trouble you took
in the matter, I am,




Sincerely yours,

RN




13.

sor$1,4
Laaaavrtol

Alt ,itirxr

BANKERS TRUST
OFFICERS
SEWARD PROSSER, PRESIDENT.
NILLIAM C.POILLON,vicE PRESIDENT.
0. E.POMEROY,,cg PRESIDENT.
W.N.DUANE,v1cE PRESIDENT.
F. I.K ENT, VICE PRESIDENT.
HAROLD B.THORNE, VICE PRESIDENT.
F.N.B.CLOSE, VICE PRESIDENT.
GEO.G.THOMSON, SEER ETART.
GEORGE W. BENTON, TREASURER.

C °MANY

CAPITAL
$10,000,000
SURPLUS FUND 10,000,000
CAB LE ADDRESS: BAN KTRUST, NEW YORK.

OFFICERS
GUY RICHARDB, ASST. SECRETARY.
H.W. DONOVAN, ASST. TREASURER.
BETHUNE W.J ONES, ASST. SECRETARY.
H.F.WILSON,J R., ASST. SECRETARY.

R.H.GILES, ASST. TREASURER
PERRY D.BOGUE, ASST. SECRETARY.
HARRY N. DUNHAM,Assr. TREASURER .
I.MICHAELS, TRUST OFFICER.

16 WALL STREET
FOREIGN EXCHANGE DEPARTMENT

NEW Yo R K

January 17, 1916.

Mr. Benjamin Strong,
Governor, Federal Reserve Bank,
62 Cedar Street, N. Y.
Dear Ben:-

Your letter of the 14th instant received. Have already
given instructions to collect £200 in bank notes and British and
French gold during the next few days, as we can pick it up.
Will also have a Letter of Credit and Travelers' Cheques
ready.




Sincerely yours,

BANKERS TRUST
OFFICERS
SEWARD PROSSER, PRESIDENT.
D. E.POMEROY,vicE PRESIDENT.
W.N.OUANE, VICE PRESIDENT.
F. I.K ENT, VICE PRESIDENT.
F.N.B.CLOSE, VICE pREsioENT.
HAROLD B.THORNE, VICE PRESIDENT.
GEORGE W. BENTON, TREASURER.
BETHUNE W.JONES,SEcRETANy.
GUY RICHARDS, ASST SECRETARY.

COMPANY
$10,000,000
CAPITAL
SURPLUS FUND 10,000,000
CAB LE ADDRESS: BAN KTRUST, NEW YORK.

OFFICERS

H.F.WILSON,J R.. ASST SECRETARY.
R.H.GILES, ASST. TREASURER.
PERRY D.BOGUE, ASST SECRETARY.
HARRY N.DUNHAM, ASST. TREASURER.
LIN IEHAELS, TRUST OFFICER.
BEACH POLK, ASST. TREASURER
J. F. SCHMID, ASS, TREASURER.
R.G. PAGE, ASST. TRUST OFFICER.
W.A. HEN DERSON,AUDITOR.

16 WALL STREET
FOREIGN EXCHANGE DEPARTMENT

NEW Yo R K

January 24, 1916.

Mx. Benjamin Strong,
Governor, Federal Reserve Bank,
62 Cedar Street, N. Y.
Dear Ben:Just received a letter from Mx4.,Deansi_ in which he states

that he has seen Mr. Hulbert, and has defilinTrdecided to remain
with the Merchants' Loan and Trust Company. Am sorry, because I
really believe that he would have been an ideal man for the position.




Sincerely yours,

January 25th, 1916.

Dear Fred:

Thank you for your note of the 24th containing
the information about Mr. Deans.

Also, the letter of

introduction to Jr.; Bell which 1 greatly appreciate and
which I shall take much pleasure in presenting.
Sincerely yours,

Fred. .41,;,attta

The Bankers Trust* ompany,
New York City.
17C:I




BANKERS TRUST

COMPANY

OFFICERS
S., _ARC) PROSSER, PRESIDENT.
D.F.J.POMEROY,vIcE PRESIDENT.

$10,000,000
CAPITAL
SURPLUS FUND 10,000,000

W.N.DUANE,IcE PRESIDENT.
F. I.HENT, VICE PRESIDENT.
F.N.B.CLOSE, VICE PRESIDENT.

HAROLD B.THORNE,cE PRESIDENT
GEORGE W. BENTON,TREAsuPER

BETHUNE W.JONES,sEcPurARy.

CABLE ADDRESS: BAN KTRUST, NEW YORK.

GUY RICHARDS, ASS, SECRETARY.

OFFICERS

H.F. WILSON,J R.. ASST. SECRETARY.
R.H.GIEES, ASST. TREASURER,
PERRY D.BOGUE, ASST SECRETARY,
HARRY N. DUN HAM, ASST. TREASURER .
I.MICHAELS, TRUST OFFICER.
BEACH POLK, ASST. TREASURER.
J. F. SCHMID, ASST. TREASURER.
.G. PAGE, ASST. TRUST OFFICER.

W.A. HEN DERSON,Au orroa.

16 WALL STREET
FOREIGN EXCHANGE DEPARTMENT

NEW YoRK

May 24, 1916.

Mr. Benjamin Strong,
Governor, Federal Reserve Bank,
62 Cedar Street, N. Y.
Dear Mr. Strong:-

Referring to our recent correspondence in regard to rates
for gold, would say that the development of any plan would require
consideration of the matter from two points of view - one, that of
the Sterling business of the New York bank; the other, that of the
dollar business of the English bank.
Considering the Sterling account first, there are four
phases requiring definite agreement as to gold rate - first, the
second, the price for earprice for earmarking American gold;
third, the price for earmarking sovereigns;
marking gold bars;
fourth, the price for earmarking miscellaneous foreign coins. We
will discuss them in order.
In the interests of economy of operation to both governments, it would seem natural that the English bank would earmark
eagles for the New York bank, whenever it was in position to do so.
The English bank would have received such gold based on the actual
weight of the pure gold which it contained (see dollar account), consequently when earmarking eagles based on actual gold values, the
English bank would be delivering the metal at exactly the price paid
for it (transportation charges in the case of eagles, that might
have been received by the English bank through its dollar account
and imported, properly belong to the exchange account). Gold so earmarked for the New York bank would then become available either for
If imported, the costs
importation or resale to the English bank.
to the New York bank would represent a proper exchange charge, and
the profit which might accrue, because of the ability to use the
light weight eagles at face value, would properly belong to the New
York bank.
In this connection, and also with the thought of the
lar account in mind in its relation to shipments of sovereigns, it t
might be well to have an understanding that would prevent the importation by either bank of its own coins, in order to make what might
be called the seigniorage, but still leave entire freedom of such
Importation whenever it was a natural exchange operation.




The price at which gold bars should be earmarked.

There

B. S. 2.
A,

would seem to be no valid reason for earmarking gold bars upon any
other basis than that of the intrinsic value of the actual gold
which they contain, the same rate to apply when earmarked bars are
returned to the English bank for credit.
In fairness to the English
bank, however, it should be understood that only gold which had been
earmarked from the Sterling account of the New York bank could be
returned to the English bank at such rate
for otherwise the New
York bank might seriously interfere with operations of the English
bank, if it went into the market and purchased gold not intended for
immediate import.
The price for earmarking sovereigns could, in all fairness
to both the English bank and the New York bank, be based upon actual
gold value. With a Sterling and dollar account opened respectively
by the New York and English banks, it might be supposed that all
operations in sovereigns in New York would be for account of the
English bank, but it,is also conceivable that the American bank
might purchase sovereigns from our mint at their gold value, which
might be entirely agreeable to our government, as it would prevent
the necessity of minting sovereigns sold them.
The New York bank
could then ship such sovereigns to London, and obtain credit for
their face value with some other banking institution than the bank
with which it has undertaken the joint arrangement in question.
This would not, of course, injure the English bank in any particular, except that it would introduce a competitor for sovereigns in
this market that would hold an advantaqeous position. It might be
advisable to have some understanding between the New York and the
English bank in respect to the purchase of sovereigns in this country
by the New York bank, more especially because of the charge made by
our government for gold bars, namely, five cents per hundred dollars.
It is to be presumed that the English bank would never earmark any except full weight sovereigns, for if light weight coin
were set aside, it would represent an actual cost to the English bank,
except in the case of sovereigns, which it might have purchased of
other countries on an aotual gold weight basis.
The price for earmarking miscellaneous coins could also be
The English bank in the natural course
based upon actual gold value.
of business would probably never earmark foreign gold, and if it did
so, except upon request of the New York bank, it should be understood that it would guarantee the gold ratios in the coin so earmarked. At times it might be of value to the New York bank to request that certain specific coins of foreign gold be earmarked, provided the English bank had such coin and was willing to turn it over.
Of course the chances are that at the same time the New York bank
might desire say French coin that it contemplated shipping to Frande
for credit, the English bank might also desire the coin for the same
purpose.
In general it would seem as though it might be of value,
and entirely safe, to arrange for the earmarking of foreign gold,
even though actual operation in it might not take place except under
special conditions that would probably not develop once in several




B.

S. 3.

years.

We will consider the dollar account in the same order as
the Sterling account.
In justice to the English bank, only full weight eagles
should be earmarked for its account by the New York bank, unless gold
so earmarked should be set aside according to the intrinsic value of
the actual gold in each coin. The New York bank could, of course,
pass such American gold coin in and out of the account of the English
bank without loss either way in the case of either full weight or
light weight coin, but if the English bank desired to import eagles,
it would have a right to expect to receive full weight coin, or have
If this were done,
light weight coin made up with additional gold.
it might represent an expense to the New York bank, as light weight
coin would cost exactly as much as full weight coin. Such being the
case, it would seem preferable to have the arrangement for the earmarking of eagles in the dollar account call for full weight coin.
Gold bars should be earmarked at the exact cost to the New
York bank, which, under present regulations of the United States
Treasury Department, would be five cents per one hundred dollars.
Should this be done, the English bank would have to stand the loss
so made, whether it had the gold returned to its dollar account or
,imported it, unless some arrangement could be made between the New
York bank, and the United States Government, under which gold bars
could be earmarked in the United Statels mint upon request of the New
York bank for account of the London bank, no charge to be made except on delivery, or unless the government would agree to purchase
the bars at the same price it sold them when return was being made,
because of release of the gold for the dollar account of the English
bank. As the five cents per hundred dollar charge is claimed to be
the exact cost of manufacturing the bars, there would seem no reason why the government should not co-operate in this manner, unless
their bookkeeping is such that they could not charge the cost properly when taking back bars, in which case earmarking in the Treasury
would seem to be the better way to handle the matter.
The price for earmarking sovereigns should be based upon
their actual gold value. This would be fair to both institutions,
for the New York bank when receiving such sovereigns would have paid
for them at their actual gold value (exchange excluded). While the
London bank might be able to use the sovereigns at their face value,
and BO make a profit, it would be legitimate, and would not injure
the New York bank. With such operations in force, it is very probable that the New York bank would see fit to hold sovereigns that it
might have occasion to import in its vaults as gold bullion, rathtir
than to have them minted or melted into bars.
The price for earmarking miscellaneous coins should also
be based upon actual gold value. It would seem wise to have such an
arrangement included in the original agreement, for it is conceivable
that the future development of trade might easily result in foreign




B. S. 4.

r

coin coming to New York, even though it might not be common for some
years.
In such event there is every possibility that the English
bank might, when importing, desire such coin.
The New York bank
should, of course, guarantee gold ratios in the foreign coin that it
might earmark for the English bank.
In general it should be borne in mind that where exchange
conditions are the governing forces in the exportation and importation of gold that both the New York and English banks would be inclined to operate simultaneously, one exporting and the other importing.
Without proper understanding of the operation of the two accounts, it would be entirely possible that acting independently,a
large enough amount might be exported by one bank and imported by the
other to make necessary an immediate reversal of the operation.
This being true, and each bank having an opportunity to make an extra profit through the importing of the gold of its country, it would
seem well worth while to consider handling the whole matter on a
joint account basis,'when operations for exchange were the only ones
contemplated.
Each bank, however, should be free to import for its
own account, if conditions of policy required it, even though such
conditions would naturally be reflected in the exchange rate.
In this discussion only the principal points have been covered, as the intention has been more to lay out the situation and
make possible a more complete and systematic study of the matter.




Very truly *ours,

""'",

RAY

.'

Ig6 8

FEDEAj Ri

,




a

6-

"

,

ns Mit

CONFIDENTIAL.

Guaranty Trust Company of New York
Bankers Trust Company
William P. Bonbright & Co., Inc.
Syndicate Managers
October

,

1916.

FRENCH INDUSTRIAL CREDIT

A Secured Commercial Export Credit to French Industrial Concerns
Not to exceed

$100,000,000
GENTLEMEN:

A group of important French industrial concerns, through the French Government as intermediary,
have asked the above named Syndicate Managers to arrange for them a commercial export credit in New
York of not exceeding $100,000,000. The Guaranty Trust Company of New York and the Bankers Trust
Company will participate in this Credit, the net proceeds of which are to be expended in the United States
for merchandise to be exported from this country.
While this Credit resembles other credits recently effected, it will have some particularly advantageous
features.

The terms of the Credit will be substantially the following:
1.

The Credit will be availed of by drafts in dollars drawn by each French industrial concern on every
participating American banking institution ratably to their respective participations in this Credit.

The drafts will be the direct and several but not joint obligations of the French concerns, payable
at final maturity in United States gold dollars in New York.
3. The drafts will be drawn at three months sight, with five renewals of three months each, making
the life of the Credit, including renewals, eighteen months.
4. The drafts will be accepted by the participating American banking institutions in the amounts of
their several participations and purchased by them at par in New York funds, and they will be
compensated for each three months' period at the rate of five and one-half per cent. (53%) per
annum bank discount, payable upon the first acceptance and upon each renewal acceptance. The
American participants will also receive upon the first acceptance and upon each renewal accept2.

ance, an acceptance fee of one-quarter of one per cent. (X%), making the investment return

5.
6.

7.

including acceptance fees, at a rate in excess of six and one-half per cent. (6 %) per annum.
The net proceeds of the drafts will be expended only in the United States for merchandise to be
exported from this country.
In addition to their own responsibility for the liquidation of the Credit at its maturity, the French
concerns will pledge and deposit as further security:
in New York with Guaranty Trust Company of New York and Bankers Trust Company,
French Government Notes to the full amount of the Credit, which Notes will be payable
in United States gold dollars in New York, and will mature about fifteen days after the final
maturity of the Credit.
in Paris with the Bank of France, approved bonds issued by or in neutral countries. The
market value of these securities and approved substitutions, based on the then existing rate of
exchange, is always to be maintained at an amount equal in dollars to at least 20% of the
total amount of the Credit.
In lieu of payment in gold dollars in New York, the Managers may, at their option, require final
payment in whole or in part, in francs on the basis of 5.70 francs per dollar (5.181/8 being the par
of exchange). If at maturity exchange be at par, the payment in francs under this option would
provide a profit of approximately 10% on the amount paid in francs. If the Managers elect to
take payment in francs in whole or in part, they may charge a commission of Yt of 1% on the
amount so paid, to be deducted from the profits on exchange, for handling the exchange operation. The Managers will make no other charge to the American participants for their services,
as they will be compensated by the French concerns.




../

Under the present regulations of the Federal Reserve Board, these drafts when accepted by participating
banking institutions which are members of the Federal Reserve system, or by other banks and trust cornpanies which have qualified under the rulings of the Federal Reserve Board, are eligible for purchase by the
Federal Reserve Banks

Banking institutions which have not heretofore qualified for the purpose of selling their acceptances
to Federal Reserve Banks may do so by applying to their local Federal Reserve Bank and securing its
approval.

Any American banking institution participating in the Credit may dispose of its acceptances in the
open discount market. At the present time a substantial profit could be obtained by this operation. The
Managers tender their services in placing any acceptances which the American participants may not desire
to hold.

As the drafts will be the several but not joint obligations of the French concerns, existing limitations,
as to the amount of drafts which may be accepted or purchased by an American banking institution, should

apply to the amount of its acceptances for each French concern, and not to its total participation in the
Credit.

The Managers reserve the right to reject applications in whole or in part, or to allot an amount less
than that applied for, and to determine the final form and substance of the contracts, drafts and other
documents effecting the Credit.

No application for less than $50,000 participation will be accepted.

The Managers will be advised by cable when the drafts are to be mailed from Paris, and they will
promptly advise participants, thus giving participants about two weeks' notice before presentation of the
drafts.
We recommend a participation in this Credit as an attractive investment or remunerative acceptance
operation for American banking institutions.
We shall be pleased to have you telegraph us, at our expense, indicating what participation, if any, you
desire in the proposed Credit, confirming your request by filling in and signing the application on the enclosed
copy of this letter. This signed letter is to be retained for your files.
,

Very truly yours,
BANKERS TRUST COMPANY,

GUARANTY TRUST COMPANY OF NEW YORK,

By

By

Vice-President,

Vice-President.
WILLIAM P. BONBRIGHT & CO., INC.,

By

Vice-President.

SYNDICATE MANAGERS.

To THE ABOVE NAMED SYNDICATE MANAGERS:
'-

.
We hereby make application for;$
participation in the Credit above described, at the rates and on the terms and conditions outlined aboVe.

(Signed)

By

Dated October , 1916



Address




BANKERS TRUST
OFFICERS
SEWARD PROSSER, PRESIDENT,
D. E.POMEROY,vicE PRESIDENT.
W.N.OLIANE, VICE PRESIDENT.

F. I.K ENT-, VIC..c, PRES./,
EN
4.971CICCIOSE, VICE PRESIDENT.
A.H.MARCKWALD, VICE PRESIDENT.
A.A.TILN Ey, VICE PRESIDENT,
GEORGE W. BENTON, TREASURER.
BETHUNE W.JONES, SECRETARY.

COMPANY

OFFICERS
GUY RICHARDS, Ass, SECRETARY
H.F.WILSON,JR., ASST. SECRETARY,
R.H.GILES, ASST. TREASURER.
PERRY D.BOGUE, ASST. SECRETARY
HARRY N. DUNHAM, ASST. TREASURER.
I.MICHAELS, TRUST OFFICER.
B EACH POLK, ASST. TREASURER.
J. F. SCHMID, ASST. TREASURER.
RU. PAGE, ASST. TRUST OFFICER.
W.A. HENDERSON.Au orfoR.

$10,000,000
CAPITAL
SURPLUS FUND 10,000,000
CABLE ADDRESS: BAN KTRUST, NEW YORK.

16 WALL STREET
FOREIGN EXCHANGE DEPARTMENT

NEW Yo R K

,

August 24

1916.

Mr. Benjamin Strong, Jr.,
Estes Park, Colo.
Dear Ben:-

Your letter received, and I am mighty sorry to know that
you feel it may be necessary for you to remain away for such an extended period.
On the other hand there is no question but that it
will pass by before you know it, and will have been worth while after all.
IN

The big loans coming out now follow each other so rapidly that there is hardly time to breathe in between - first the
Russian, then the French and now the English.
The nature of the security, however, is such that there ye not the same difficulty in
placing them as was true in the earyier loans.
To-day I received a letVar from Charles A. King, Comptroller and Accountant General of the/General Post-Office, London, dated
August 9, enclosing a non-negotiOle War Savings Certificate, payable five years hence, for £500/ purchase price Z387-10-0, No.
D17260, made out in the name "Benjamin Strong, Care Bankers Trust Company, 16 Wall Street." I have /placed the certificate in our vault
awaiting your further instruct ons.
Had a very interesting chat with Mx. Treman, but we did
not discuss the question of proposals for arrangements abroad.
Hoping that this whl find you better than you anticipated possible, and with sincere regards, I am,




0ordially yours,

BANKERS TRUST

COMPANY

OFFICERS
SEWARD PROSSER, PRcS1DENT.
D. E.PONIE ROY,v.cE PRESIDENT.
W. N .DUAN E, VICE PRESIDENT

OFFICERS
R.H.GILES, ASST. TREASURER.
PERRY D.BOGUE, ASST. SECRETARY.
HARRY N. DUNHAM, Assr. TREASURER.

CAPITAL
$10,000,000
SURPLUS FUND 10,000,000

F. IA ENT, VICE PRESIDENT.
F.N.B.CLOSE, VICE PRESIDiNT
A.H.MAReKWALD, VICE PRESIDENT.
A.A.TILNEY, VICE PRESIDENT.

MICHAELS, TRUST OFFICER.
BEACH POLK, ASST. TREASURER.
F. scumio, ASST. TREASURER.
R.G. PAGE, ASST. TRUST OFFICER.
W.A. HENDERSON,AUDIToR.
H.H.M A RT I N ASST. SECRETARY
H.B.WATT, ASST. SEcRETARY

CABLE ADDRESS: BANKTRUST, NEW YORK.

GEORGE W. BENTON, TREASURER .
BETHUNE W. JONES, SECRETARY
GUY RICHARDS, AssT.SEERETARy.

16 WALL STREET

H.F.WILSON,J R., ASsT. SECRETARY:

FOREIGN EXCHANGE DEPARTMENT

NEW YoRK, November 22, 1916.

;",ogdg
Ur. Benjamin Strong,
4100 kontview Boulevard,

cezsze

Denver, Colo.

Dear Ben:-

Several weeks ago I wrote you at Estes Park, advising

that we were in receipt of the certificate from England, and asking for your instructions as to its disposition. Not having reoeived a reply, presume that my letter never reached you.
Rave had some interesting meetings at the Federal Reserve Bank, and in Washington with the Federal Reserve Board,dur-

ing the last little while, and am looking forward to an opportunity to chat the matter over with you some day.
There are many
things involved that I am certain never reached you in any reports
that might have been made, that will interest you very much. They
might make rather attractive reading for you on your extended hal..
iday, but I do not feel warranted in putting them in cold type,
even with the small chance that the letter might be lost in the
mails.

Understand that you

are getting along very nicely, and

hope that the truth may be far ahead of the rumor.




pith sincere regards, I am,
Cordially yours,

J

BANKERS TRUST
OFFICERS
SEWARD PROSSER, PRESIDENT.
D.E.POMEROY,vicE PRESIDENT.
W.N.DUANE, VICE PRESIDENT.
F. 1.KENT, VICE PRESIDENT.
F.N.B.CLOSE, VICE PRESIDENT
A.H.MARCKWALD, VICE PRESIDENT.
A.A.TILN EY, VICE PRESIDENT.
GEORGE W. BENTON, TREASURER .
BETHUNE W.JONES, SECRETARY.
GUY RICHARDS, ASST. SECRETARY
H.F. WI LSON,JR., ASST. SECRETARY.

COMPANY
CAPITAL
SURPLUS FUND

$10,000,000
10,
0,000

CABLE ADDRES,5: BANKTR

444

0!":04K.

16 WALL ST.1,-E ET

OFFICERS
R.H.GILES, ASST. TREASURER.
PERRY D.BOGUE, ASST SECRETARY.
HARRY N.DUNHAM, ASST TREASURER
LMICHAELS, TRUST OFFICER.
BEACH POLK, ASST. TREASURER.
.1. F. SCHMID, ASST. TREASURER.
R.G.PAGE, ASST. TRUST OFFICER.
W.A.HENDERSON,AUD1TOA.
RT I N , ASST. SECRETARY

H.B.WATT, ASST. SECRETARY

FOREIGN EXCHANGE DEPARTMENT

NEW YORK, December 4, 1916.
Mr. Benjamin Strong, Jr.,
4100 Montview Boulevard,
Denver, Colo.

Dear Ben:-

.

Your letter of November 28 received, and it was quite
what I should expect, knowing that you are a long way from having
all the facts.
This does not mean that I have any thought that
you may have been misinformed by those who have written you in
the matter, but because there are certain developments of which
they were not intimately aware, and certain others that were known
to them that they might naturally omit in writing to you, as they
had more bearing upon the cause thanthe effect, and the latter was
naturally the only thing to consider, as removal of the cause
would not have recalled the unfortunate publicity which had taken
place much against my will.
Even though you were not here I thought it advisable to
familiarize the officials of the Federal Reserve Bank with the
matter, and had lat. Jay and Mr. Curtiss take luncheon with me for
that purpose. Went over the whole matter in detail in conversation,
and expected later to do so in connection with all printed matter,
but a sneaking newspaper reporter got hold of a sufficient amount
of information to upset the whole plan. When I found out about
this, I made an agreement with him, under which he was not to publish the matter until I advised him that everything was in order.
Instead of keeping his agreement he wrote his story and put it out
the following morning.
This was only one phase of the matter that
developed beyond my control, but it was sufficient in itself to
start the trouble going.
However, enough of this for the moment, but when you are
in New York, which I hope may be soon, we will have a luncheon together over it, an invitation for which you may consider in your
possession upon receipt of this letter.
You overlooked advising me
of the War Savings Certificate which
that is at present being held by our
is no need of your writing specially
When you have the time, will be glad




what disposition you wish made
was received sometime since
Securities Department. There
about it, unless you prefer.
to receive your instructions.

B.

S., Jr.

2.

We are now in our new house in Scarsdale, and have been
most fortunate in having the music room turn out with most excellent acoustic properties. In fact I cannot imagine a room being
better in this particular. it has tempted us into making a regular Sunday night arrangement with a very fine pianist to play
trios, quartettes, etc. Warner graduated in June, and is living
at home now, and is taking up his violin again, and he certainly.
has the dash and musical understanding necessary to make him a
most interesting musician in our amateur way. Shall hope that you
may hear him some time. He is now in Bonbright's office, and is
getting a great deal of valuable experience. He is also taking
two courses with the Wall Street Branch of the New York University,
one in Accounting and the other in Public Utilities.
Hoping you will keep up the good work, I am, with sincere regards,




Cordially yours,

C=77_71J)

BANKERS TRUST

COMPANY

OFFICERS
SEWARD PROSSER, PRESIDENT.

OF

CAPITAL
$10,000,000
SURPLUS FUND 10,000,000

R. H.GILES, AssT, TREASURER.
PERRY D.BOGUE, ASST. SECRETARY.
HARRY N. DUNHAM, ASST TREASURER.
I.MICHA ELS, TRUST OFFICER.
BEACH POLK, ASST. TREASURER.
J. F. SCHMID, ASST. TREASURER.
R.G. PAGE, ASST. TRUST OFFICER.

CABLE ADDRESS: BANKTRUST, NEW YORK.

D. E.POMEROY,wcE PRESIDENT.
W.N.DUANE, VICE PRESIDENT
F. I.K ENT, VICE PRESIDENT.
F.N.B.CLOSE, VICE PRESIDENT
A.H.MARCKWALD, VICE PRESIDENT.
A.A.TILNEY, VICE PRESIDENT.
GEORGE W.BENTON, TREASURER .
BETHUNE W.JONES, SECRETARY.
GUY RICHARDS, ASST. SECRETARY
H.F.WI LSON,J R., ASST SECRETARY.

W.A. HENDERSON,Au orroR.

16 WALL STREET

FOREIGN EXCHANGE DEPARTMENT

a
JAN 3

dAIEW YORK

H.H.MA

N, ASST. SECRETARY.

H. B.WATT, ASST.SECRETARY.

December 21, 1916.

1917

Mr. Benjamin Strong,
4100 lontview Boulevard,
'Denver, Colo.
Dear Ben:-

Your letter of the 12th was received while I was in
Chicago attending a meeting of the Committee of the State Bankers
of the United States, which has in consideration the Federal ReThe State Banks are anxious, if possible, to work
serve System.
out a series of recommendations as to amendments to the Federal
Reserve Act that would seem to make the system more attractive to
This would not only cover special matters that might
State Banks.
apply specifically to State Banks, but to general matters as well
that would seem to need attention.
The Committee decided to send a letter to all the State
Banks suggesting certain things and asking for opinions, and also
for individual recommendations that might not be covered in the
By handling the matter in this way we hope that it will
letter.
be possible to educate the State Banks along a number of lines
Many State Bankers I am certain have
that should be of value.
very wrong ideas in connection with the whole matter, and if we
can at the same time that we are obtaining the criticisms of the
State Bankers teach them certain things that have apparently been
misunderstood by them, we may work out something of value.
10±. Hulbert of the Merchants' Loan and Trust Company and
I have been appointed a sub-committee to see the Federal Reserve
Board and obtain their approval of the questions that we send out,
as it is felt that co-operation will bring better results than individual action.

The cable transfer requested by you was made promptly, &s
per advices which went forward from the department direct.




With sincere regards, I am,
Cordially yours,

BANKERS TRUST
OFFICERS
SEWARD PROSSER, PRESIDENT.
D. E.POMEROY,vicE PRESIDENT.
W.N.DUANE, VICE PRESIDENT.
F. I.K ENT, VICE PRESIDENT.
F.N.B.CLOSE, VICE PRESIDENT,
A H.MARCKWALD, VICE PRESIDENT.

COMPANY
$10,000,000
CAPITAL
SURPLUS FUND 10,000,000

A.A.T IL N EY, VICE PRESIDENT.

H., WILSON,JR.. VICE PRESIDENT.
GEORGE W. BENTON, CASHIER.
BETHUNE W. JONES, SECRETARY.
R.H.GILES, TREASURER

CAB LE ADDRESS: BANKTRUST, NEW YORK.

16 WALL STREET

OFFICERS
GUY RICHARDS, ASST. SECRETARY.
PERRY D.BOGUE, ASST. SECRETARY
HARRY N. DUNHAM, ASST. TREASURER.

I.MICHAELS, TRUST OFFICER.
BEACH POLK, ASST. TREASURER.
F. ScHMID, ASSET TREASURER,
R.G. PAGE, ASST. SECRETARY
W.A. HENDERSON,AUDiToR.
H. H. M A RT I N , ASS, SECRETARY.

H.S.WATT, ASST.SECRETARY.

A.C. LIVINGSTON Ass, TRUST OFFICER.

FOREIGN EXCHANGE DEPARTMENT

N EW YO R K , January 11, 1917.

Mr. Benjamin Strong,
4100 Montview Boulevard,
Denver, Colo.
Dear Ben:-

Your letter of the 4th instant received, and I take
pleasure in enclosing herewith proof of matter thatis to be submitted for the purpose mentioned in my former letter.
In this connection would say that the preparation of
the matter was rather taken away from Ur. Hulbert and from me, as
the Executive Committee of the State Bankers Association Section
wished to have certain things considered that are possibly irrelevant, because the members of the Committee had the feeling
that State Bankers would be much more inclined to give consideration to the proposition if it were developed somewhat.
The enclosed proofs have just come in to me, and I have
not had time to look them over, but expect to do so this evening.
Rather than delay until I can read them, thought I would let them
go forward to you, as I have extra copies.
If you have any suggestions, shall appreciate it if you
will return them to me quickly, as we are very anxious to get the
matter in order and get it before the Board at the first possible
moment. Of course you must realize that the matter covered is
only intended to go to bankers for the purpose of bringing out all
their thoughts on the subject. When it comes to the actual question of presentation of amendments desired, our Committee will
have charge of it, although we will have to obtain the approval
of the Executive Committee before our final report goes to the
Federal Reserve Board.




Sincerely yours,




QUESTION 4.ARE THE RESERVE REQUIREMENTS OF' THEFEDERAL RESERVE SYSTEM S IAI3LE. FOR YOLTR',-COMMUNITY AND YOUR INSTITUTION? IF NOT, WHAT RESERVE REQUIREMENTS WOULD YOU ..,UGGEST?
The Federal Reserve Act provides that banks in central reserve cities from banks on demand. Reserves of
13% on demand deposits
shall mantain .a reserve of 18% on demand deposits. In reserve cities are required in Connecticut, Kansas in ties and towns of less than
the percentage is 15, and in cities and towns outside of reserve and 53,000 inhabitants, Kentucky, Minnesota in cities other than reserve
central reserve cities the percentage is 12. Until November 10, 1917, cities, New Mexico, Virginia and Wisconsin, Parts of such reserves
country banks may keep with approved reserve agents one-sixth of their may be kept with approved reserve agents.
e-fifth of their reserve.. Banks that are members of the, Federal ReThirty-two States require that their State Banks shall maintain re-

erve, find reserve state banks may keep with approved reserve agents
serve System are not now required to keep any specified percentage of

their reserves in their own, vaults, but may keep all or any part of

their reserve in the Federal Reserve Bank of their district.
In California, Georgia, Louisiana, Maine, Massachusetts, Michigan,
Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio,
Oregon and Texas, state banking laws provide that if a State Bank
becomes a stockholder in.a. Federal Reserve Bank it shall be subject
to the provisions of the Federal Reserve Act, and any amendments
thereto relative to bank reserves shall be in substitution for the requirements of respective State statutes. California and New York have
amended their laws pertaining to reserves so as to make State requirements similar to requirements under the Federal Reserve Act. In cities
of 100,009 population or over in California, and cities or boroughs of
over 2,0000,000 population in New York, the required reserve for State
Ranks. is 18%, 10 cities of from 59,000. to 99,999 population in California, and from r1,009,030 to 1,999,999 population in New York, the
eserve requirement is 15%. In cities elsewhere in New York and Califarnia the reserve requiremmt is 12%.
State laws requiring 'State Banks to hold 10% of reserve on demand
deposits are in force in -Delaware in cities of 50,000 population or less,
Iowa in cities under 30,000 population, and -in Tennessee. In Delaware

and Iowa a proportion of such reserves may be kept with approved

reserve agents, and in Tennessee reserves may consist of balances duo

serve of 15% on demand deposits: Such States are Arizona, Arkansas,
Idaho, Illinois, Indiana, Iowa in cities of 3,000 population or over,
Kansas in cities of over 50,0110 population, Kentucky in reserve eitiesa (5)
Maine, Massachusetts, Michigan in cities of 100,000 population or less,"
Minnesota in reserve cities, Mississippi in cities of less than 50,000
population, Missouri providing that in cities of 200,000 inhabitants or
over banks may not count Federal Reserve notes as reserves on hand,

Montana in all hanks except reserve agents approved as such by the

superintendent of banks, Nebraska in cities of less than 25,000, Nevada,
New Hampshire, New Jersey, North Carolina, Ohio, Oklahoma in cities
of 25,000 or less, Oregon, Pennsylvania, Rhode island, Texas for banks
with capital of $25,000 or more; Utah in cities of 50,000 or less, Vermont, Washington and West Virginia. In such States various parts
of required reserves may be kept With approved agents,
The laws of thirteen States provide for 20% reserves on demand deposits. Such States are Arkansas, Colorado, Delaware in cities of
50,000 or more, Florida, Michigan in cities of 100,000 or over, Nebraska
in cities of 25,009, North Dakota, Oklahoma, South Dakota, Texas in
banks with capital of $25,090 or less, Utah in cities of 50,000 or less,
Wisconsin and Wyoming. Cities where State laws provide for 25%

reserves are Colniado for banks that are reserve agents, Illinois for

banks in Chicago, Louisiana, Mississippi in cities of oven 50400, Nevada
and South Dakota. Varying percentages of b u h rescruns, MAW be kept
with reserve agents.

HERE ANSWER QUESTION NO. 4.

_




,

oon

QUESTION 5.ARE THE LOAN LIMITATIONS PRESCRIBED BY THE FEDE' L

RESER
YOUR COMMUNITY AND YOUR INSTITUTION? IF NOT, WHAT LOAN RESTRICTIO S WOULD YOUACT SUITABLE FOR
SUGGEST?
Isection 5200 of the National Dank Act refers to limitations of Dahill,
undivided pronto; Utah/ Fourteen XtateS provide a limitatioa of 20%
capital and surplus. They are
ties which may be incurred by any one person, company, corporation
or firm to a national hank, and provides that such liability shall not Kentucky; Louisiana, including Idaho; Iowa, on paid up capital only;
undivided
exceed ten per cent of the bank's capital stock and surplus unimpaired; Nebraska; New Mexico; Ohio; Oklahoma; profits; Maryland, Montana;
Oregon; South Dakota; West)
and.in no case shall it exceed 30 per cent of the capital stock. There Virginia, including undivided profits;
Wyoming. Five
are few states that follow the National Bank Act respecting the limit,
for a limitation of 26% of capital and surplus. They ttates Dravidaare Colorado:
tions onvommercial loans. In Michigan State Banks may loan to any
Mississippi; Nevada; Texas; Virginia. Arkansas and Wisconsin have
a3001% of fcattalpearindeensturopfludseploimsititsatilioin.exceVsesrnotofnl,olion01,10t9s0
one individual, firm or corporation 8 1/10 per cent of capital and perloans to
manent surplus. Eleven states have a tea per cent loan limit. Such
pates are AlaSaina, whit% also includes undivided profits; California,
over $50,000 except where capita/ and surplus exceed 650,000, when the
mless capital and surplus are not over $25,000, when it is 20%; Conlimit is 10% of capital and surplus. Missouri provides a 15% limitaneetient ; Georgia Maine, also including undivided profits; New RampDon when city population is
,a,,ire; New Jersey; New York, including acceptances, and except in
and 25% elsewhere. There are over 100,000; 20% from 7,000 to 100,000,
no specific loan limitations in the bankboroughs of over 2,000,1130 population; North Carolina, if paid up capilag laws of Arizona, Delaware, Florida, Indiana, Pennsylvania and
tat is over 8100,080; Khode Island, exactly similar to provision in
Washington. ILL SOMO states larger leans may be made by vote of
National Dank Act; South Carolina, 10% of capital only. Six states
directors. Exceptions are also math,- Irc some States In
ease of loans
have 15% limitation. They are Illinois, with 30% of capital as an extra
secured by collateral.
limitation; Kansas ; innesot a ; North Dakota; Tennessee, including

HERE ANSWER QUESTION NO-




QUESTION 6.--SHOULD BANKS OF LESS THAN $25,000 CAPITAL BE ELIGIBLE FOR MEMBERSHIP IN THE FEDERAL RESERVE SYSTEM?

QUESTION 7.WOULD IT BE RIGHT AND PROPER FOR FEDERAL RESERVE BANKS TO PAY INTEREST ON THE

BALANCES OF MEMBER BANKS?

QUESTION 8.WHAT, IF ANYTHING, CAN BE DONE TO AVOID COMPETITION BETWEEN FEDERAL RESERVE

BANKS AND OTHER BANKS?

Underneath write answers to questions 6, '7, 8 and 9, numbering answers accordingly.

When you have answered the questions asked in this communication, fill out the following form.

N Arne of Bank

State .......

'City or Town
Date

Name of Officer Signing.
And mail to Geo. E. Allen. Secretary, S Nassau Street, New York City.

.................. ......

,




QUESTION 3.WHAT, IF ANY, CHANGES SHOULD BE MADE IN THE PROVISIONS Olf THE FEDERAL
RESERVE.
;DYSTENI IN REGARD TO LOANS BY STATE BANK MEMBERS ON REAL ESTATE SECURITY/
In this connection the provisions of the Federal itteserve System an amount not la excess of one-third of its time deposits
pertaining to loans On farm Mu& and other real estate that may be of the making of the luau, and nut in excess of one-third ofat Lae time
its average
made by National banks are 0 interest. Section ;;4 of the Federal time deposits during the preceding calendar year: Provided, however,
Reserve Act provides in part that
Thbt, if ono-third of such time deposits as of the date of umaing the
Any national banking association pat situated in a central reserve Juan or ono-third of the average time deposits for the preceding ...Irkcity may make loans secured by improved and unencumbered farm
tiar a"ear, Is less than one-fourth of the capital and surplus of the
Laud situated within its Federal reserve district or Within a radius of
bunk as 0 the date of making the loan, the bank in such event sailit
one hundred miles of the place iii which seen bank is located, irrespective of district lines, and may also make loans secured by improved
have authority to make loans upon real estate under the terms ur the
and unencumbered real estate located within one hundred miles of the
Act to Um extent of one-fourth of the bank's capital and surptus a
place in which such bank is located, irrespective of district lines; but
of that data
made for
no loan made upon the security of such ittrm land shall be
a longer time than five years, and no loan made upon the security of
Farm land to US eligible as security for a loan by a national
such real estate as distinguished from farm land shall be made for a
bank must be situated within the Federal Reserve district in which
longer time than one year nor shall the amount of any such loan,
whether upon such farm land or upon such real estate, exceed fifty per
such bank Is located or within a radius of 100 miles of such bank irrecontain of the actual value of the property offered as security. Any spective of district lines.
such bank may make such loans, wnetner secured by such farm land
Real estate as distinguished from farm land to be eligible as
or' such real estate, in an aggregate sum equal to twenty-live per centum
of its capital and surPlus or to one-third of its time deposits and such security for a luau by a national bank must be located within a radius
banks may continue hereafter as heretofore to receive time deposits of 100 miles of such bank irrespective of district lines.
and to pay interest on the same.
The right oi a national bank to "make loans" under section 24
In Regulation G of the Series of 1916, the Federal Reserve Board
right to
supplements the foregoing section of the Federal Reserve Act by Includes the to makepurchase or discount loans already made as 'Welt
as the right
each
Provided,
the statement that national banks not located in central reserve cities ever, That no loan secured loans in the first instance:maturity of howby farm land shall
more
may, therefore, legally make loans secured by improved and uneneum- than five years from the date on which it washave a
purchased or made by
bered farm land or other real estate as provided by this section.
the national bank and that no loan secured by other real estate shah
Certain conditions and restrictions Must, however, be observed
a maturity of more
from such
There must be no prior lien on the land; that is, the lending haveorder that real estate than one year a bank maydate.
In
loans held by
be readily classibank must hold an absolute first mortgage or deed of trust.
fied, a statement signed by the officers making a loan and having
The amount of the loan must not exceed 56 per cent of the actual
knowledge of the facts upon which it is based must be attached to
value of the land by which it is secured.
each note secured by a first mortgage on the land by which the loan is
(e) The maximum amount of loans which a national bank may make sacured, certifying in detail as of the date of the loan that all of the
on real estate, whether on farm land Or on other real estate as disrequirements of law have been duly observed.
tinguished from farm land, is limited under the terms 0 the act to
IN STATES WHERE BANK EXAMINATIONS BY STATE AUTHORMES ARE ACCEPTED BY Tat: .FEDERAL RESERVE BOARD, THE
SA1D BOARD IS APPARENILY EMPOWERED '10 PERMIT STATE BANK MEMBERS OF THE fECA.RA.41. RESERVE SYSTEM, "1 0 MAKE
LOANS ON REAL ESTATE IN ALLC.fisDANCE WITH RESPECTIVE STATE LAWS AND REGULATIONS; AROVIDED, HOWEVER, THAT NO
SUCH LOAN TO ANY ONE EaSCIS, FIRM OR CORPORATION SHALL EXCEED TEN PER CENT 04.1' ,THE COMBINED CAPITAL AND
SURPLUS OR 'THIRTY ?FIR CENT OE '11-1E CAPITAL OF THE BANK MAKING THE LOAN.

HERE ANSWER QUESTION NO. 3




QUESTION 2.WHAT, IF ANY, CHANGES SHOULD BE MADE IN THE PROVISIONS OF Th. FEDERAL RESERVE
SUPIERVIsiON ANL/ EXAMINATION Of STATE BANK
SYSTEm. GOvNING
EXAMINATIONS OF STATE .BAN.11. MEMBERS.The Pedelitl Reserve board, in Regulation :A of the Series of lulu, declares that every
State bank or trust company, while a member of the Federal Reserve
System, shall be suoject to such examinations as may be prescribedtby
the is ederal Reserve board in pursuantce of the prot isions of the Federal
Reserve Act. In order to avoid tiepin:Litton the board will exercise

the broad discretion vested in it by the act in accepting examinattoOti of. State banks and trust companies made by State authorities
whCrever these are satisfactory to the Board and are found to be of

the same standard of thoroughness as national bank examinations and
where, in addition, satisfactory arrangements for cooperation in the
matter of examination between the designated examiners of the Board

and those of the States already exist or can be effected with State
authorities. Examiners from the staff of the Board or of the Federal

Reserve Banks will, whenever desirable, be designated by the Board to
act with the examination staff of the State in order that uniformity in
the standard of examination may be assured.
STATE BANES AND TILE COMPTROLLER OF THE CURRENCY,
In a joint letter signed by the Governor of the Federal Reserve Board
and the Comptroller of the Currency, announcement is made that the
Federal Reserve Board and the Comptroller of the Currency have agreed
upon and now promulgate the following rules in regard to the periodical

reports of condition which the State member banks of the Federal
Reserve System are required to render under the provisions of the
Federal Reserve Act:
(1) When the reports of condition math, to the State Banking Departments are rendered as of the same date as required by the Comptroller
of the Currency for national banks:

(a) lite Comptroller of the Currency will accept the reports 50 rentiered ux the State uaians, thu the same 10/155 used in reporting 10 tile state bunking oepartments.
(if) The publication of reports will be accepted by the Comptroller
of the Currency on the publication form rendered to .litate
banking Departments, provided, the office of Me Comptroller
of tile currency is furnished with proof of publication in the
/mothe required of National Banks.
(e) state member banks will be furthermore required to furnish
the office of the Comptroller of the Currency, for abstracting
purposes only, a statement of resources and liabilities on
the form prescribed by tile offiet, of the Comptroller of the
Currency for National banks. This statement must be signed
by the president or cashier of the reporting hank and
acknowledged before a notary public.
(2) When reports to State Banking Departments are not required to
be rendered on the some date as reports called for by the Comptroller
,

of the Currency from 1.4 atIonul banks:

State member banks will be required to execute their reports
on the same form prescribed by the Comptroller of the Currency for National banks, but omitting from their report
blank, if .they, so desire, all schedules except that relating to
coin and e0111 Certificates,

They will also be required to conform to the regulations governing National banks In the matter of publication of reports
and the furnishing of proof of such publication.
These rules may be revised ur revoked on 30 days' notice from the
Federal Reserve Board Or the Comptroller of the Currency.

HERE ANSWER QUESTION NO. 2

J. H. PUELICHER, Presid,at

E. D. iliJXF0110, Vie,-Presidnt.

C. B. HAIL.F.WOOD, Chairman E7ecncive Comm1tee

GEO. E. ALLEN, Secretary

State Bank Section American Bankers Association
Five Nassau Street

New York, January 1, 1917

STATE BANKS AND THE FEDERAL RESERVE SYSTEM
The Executive Committee of the State Bank Section of the American Bankers Association is desirous of obtaining from the State bankers of the country an expression of their opinion in regard to the advantages and disadvantages of membership in the Federal Reserve System. Several questions have accordingly been prepared with due care that no question shall be so constructed as to suggest any particular
answer. Full and free discussion is desired and personal identities will not be disclosed. In view of the
fact that the matter of clearing and collecting checks is being considered by the Committee of Twenty-five
appointed for such purpose by the American Bankers Association at its Kansas City Convention, no questions in regard to that subject are submitted by the State Bank Section in this connection. The questions
to which answers are desired at the present time are embodied in this communication.
QUESTION 1. (a) HOW WOULD FINANCIAL AND COMMERCIAL CONDITIONS IN THE UNITED STATES BE
AFFECTED BY INCREASED MEMBERSHIP OF STATE BANKS IN THE FEDERAL RESERVE SYSTEM? (b) HOW WOULD
MEMBERSHIP IN THE FEDERAL RESERVE SYSTEM AFFECT YOUR OWN INSTITUTION? (c) WHAT, IF ANY, CHANGES
IN THE FEDERAL RESERVE ACT, OR IN ITS ADMINISTRATION, ARE NEEDED TO INCLINE YOUR INSTITUTION TO
BECOME A MEMBER OF THE FEDERAL RESERVE SYSTEM?
Conditions governing the membership of State Banks and Trust
Companies in the Federal Reserve System are described by the Federal Reserve Board in Regulation il of the Series of 1916, as follows.:,
BANKS ELIGIBLE FOR 51E3IBERSIII.P.A State bank or a trust
company to be eligible for membership in a Federal Reserve Bank
Must comply with the following conditions:

(1) It must have been incorporated under a special
law of the State or district in which it is located,
(2) It must have a minimum paid-up unimpaired capital stock as

or general

follows:

in cities or towns not exceeding 3,000 inhabitants, $25,000;

In cities or towns exceeding 3,000 but not exceeding 6,090 inhabitants, $50,000;

In cities or towns exceeding 6,000 but not exceeding 50,000 inhabitants, $109,000;
In cities exceeding 50,000 inhabitants, $200,000.

proper compliance with the provisions of the Federal Reserve Act and
the regulations of the Federal Reserve Board in conformity therewith.
If, in the judgment of the Federal Reserve Board, an applying bank

or trust company conforms to all the requirements of the Federal

Reserve Act and these regulations, and is otherwise qualified for membership, the Board will issue a certificate -of approval. Whenever the
Board may deem it necessary, it will impose such conditions as will
insure compliance with the act and these regulations. When the
certificate of approval and any conditions contained therein have been
accepted by the applying bank or trust company, stock in the Federal
Reserve Bank of the district in which the applying bank or trust com-

pany is located shall be issued and paid for under the regulations of
the Federal Reserve Act provided for national banks which become
stockholders in the Federal Reserve Banks.
POWERS AND RESTRICTIONS.Every State bank or trust company while a member of the Federal Reserve System
(1) Shall retain its full charter and statutory rights as a State bank
or trust company, and may continue to exercise the same functions
as before admission, except as provided in the Federal Reserve Act
and the Regulations of the Federal Reserve Board, including. any con-

APPLICATION FOR MEMBERSHIP.Any eligible Mate bank or
trust company may make application on Form 83:made a part of this
regulation, to the Federal Reserve Agent of, its district for an amount
of capital stock in the Federal Reserve Bank of such district equal
to 6 per cent, of the paid-up capital stock and surplus of such State ditions embodied -in the certificate of approval.
bank or trust company. .(Three per cent. has already been called from
..(2) Shall invest only in loans on real estate or mortgages of a char-.
national and other member banks, but the remainder of the subscrip- avier and to an extent which, considering the nature of Its liabilities,'
tion or any part' of it shall be subject to call if deemed necessary by will not impair its ability to meet current or maturing obligations.
the Federal Reserve Board).. Upon receipt of such application the
(3) Shall adjust, to conform with the requirements of the Federal
Federal Reserve Agent shall submit the same to a committee composed Reserve Act and these regulations, within such reasonable time as may
of the Federal Reserve Agent, the Governor of the Federal Reserve be determined by the Board in each case, any loans it may have at
Bank, and at least one other member of the board of directors of such
the time of its admission to membership, which are secured by its
hank, to be appointed by such board, but no Class A director whose own stock, or any loans to one person, firm, or corporation aggregating
bank is in the same city or town as the applying bank or trust com- more than 10 per cent, of its capital and surplus or more than 33
pany shall be a member of such committee. This committee shall, per cent, of its capital, or any real estate loans which, in the judgafter receiving the report of such examination as may be required by
ment of the Federal Reserve Board, impair its ability to meet current
the Federal Reserve Bank in pursuance of directions from the Federal or maturing obligations.
Reserve Board, consider the application and transmit it to the Fed(4)- 1,3hall maintain such improvements and changes In its banking
eral Reserve Board with its report and recommendations..
practice as may have been specifically required of it by the Federal
APPROVAL OF APPLICATION.In passing upon an application the Reserve Board, as a condition of its admission and shall not lower the
Federal Reserve Board will consider especially
standard of banking then required of it; and
The financial condition of the applying bank or trust company
(5) Shall enjoy all the privileges and observe all those requirements
and the general character of its management.
of the Federal Reserve Act and of the regulations of the Federal
Whether the nature of the powers exercised by the said bank or Reserve Board made in conformity therewith which are applicable
trust company and its charter provisions are consistent with the proper to State banks and trust companies which have become member banks.
WITIIDRAWALS.Any State bank or trust company desiring to
conduct of the business of banking and with membership in the Fedwitbdraw from membership in a Federal Reserve Bank may do so 12
eral Reserve Bank.
Whether the laws of the State or district in which the applying
months after written notice of its intention to withdraw shall have
bank or trust company is located contain provisions likely to prevent
been filed with the Federal Reserve Board.:,
HERE ANSWER QUESTION NO.. 1._




0'

BANKERS TRUST

COMPANY

OFFICERS
SEWARD PRODDER, PRESIDENT.
D. E.POMEROY,vicE PRESIDENT.

OFFI CE RS

$10,000,000
CAPITAL
SURPLUS FUND 10,000,000

W. N. DUAN E, VICE PRESIDENT.

F. I.K ENT, VICE PRESIDENT.
F.N.B.CLOSE, VICE PRESIDENT,
A.H.MARCKYVALD, VICE PRESIDENT.
A.A.TiLN CV, VICE PRESIDENT.

CABLE ADDRESS: BANKTRUST, NEW YORK.

H.F.WILSON,JR.,,cE pRESIDENT
GEORGE W.BENTON, DANDIER.

16 WALL STREET

BETHUNE W. J ONES, SECRETARY.

R.H.GILES, TREASURER.

GUY RICHARDS, ASST. SECRETARY.
PERRY D.BOGUE, ASST. SECRETARY.
HARRY N. DUNHAM, ASST. TREASURER.

I.MICHAELS, TRuST OFFICER.
BEACH POLK, ASST. TREASURER.
J. F. SCHMID, ASST. TREASURER.
P.O. PAGE, ASST. SECRETARY.
W.A. HENDERSON, AUDITOR.
H.H.MA RT I N, ASST. SECRETARy.
H. GM ATT, ASST. SECRETARY.
A.C.LIVINGSTON, ANSI. TRUST OFFICER.

FOREIGN EXCHANGE DEPARTMENT

N EW

Yo R K , January 23, 1917.

JAN 2 7 1917

Ar. Benjamin Strong,
4100 Montview Boulevard,

Denver, Colo.

Dear Ben:-

the 16th ir relation to foreign

correYour letter of
spondent relations received. In general it seems to me that
after having made the arrangements agreed upon that it might be
better to consider their readjustment as business develops,
rather than to try to anticipate many of the unknown quantities.
If readjustment were not always possible it might seem more advisable to work out the development in considerable detail, for
the purpose of checking,. the arrangement, but as the proposition
is reciprocal in its nature and can be cancelled at will by
either party, I believe you are thoroughly protected.

If after thinking the matter over further 1 change my
mind on this, will be pleased to carry out your suggestion.
Sincerely yours,

PIZ/MO




BANKERS TRUST
OFFICERS
SEWARD PROSSER, PRESIDENT
D. E.ROMEROY,v1cE PRESIDENT.
W. N.DUAN E, VICE PRESIDENT.
F. I.K ENT, VICE PRESIDENT.
F. N.B.CLOSE, VICE PRESIDENT.
A H.MARCKWALD, VICE PRESIDENT.
A.A.T IL N EY, VICE PRESIDENT.

H.F.WILSON,JR.,wcE PRESIDENT.
GEORGE W.BENTON, CASHIER.
BETHUNE W. JONES, SECRETARY.
R. H.GILES, TREASURER .

itrc

COMPANY

$10,000,000
CAPITAL
syRPLUS FUND 10,000,000
ADDRESS: BANKTRUST, NEW YORK.

JAN2 7 131r WALL STREET

OFFICERS
GUY RICHARDS, ASST SECRETARY.
PERRY D.BOGUE, AsST SECRETARY.
HARRY N. DUNHAM, ASST. TREASURER .
I.MICHA ELS, TRUST OFFICER.
BEACH PoLK, ASST. TREASURER.
J. F. SCHMID, ASST. TREASURER.
R.G. PAGE, ASST. SECRETARY.
W.A. H EN DE R50 NA U PITO,
H.H.MA RT I N , ASST. SECRETARY.
H.B.W ATT, ASST. SECRETARY,

A.C.LIVINGSTON, ASST. TRUST OFFICER.

FOREIGN EXCHANGE DEPARTANT

NEW Yo R K, January 23, 1c17.
kr. Benjamin Strong,
4100 idontview Boulevard,
Denver, Colo.

Dear Ben:Your letter of the 16th instant received, and I am
very much pleased to know that in general you agreed with the
form of questions.
Regarding the payment of interest, would say that
there is no doubt in my mind but that the Federal Reserve banks
should not pay interest on reserve balances. In talking with
country bankers, however, we have found that they are generally
ignorant as to the reasons why the law did not authorize Federhis being true, and as it
al Reserve banks to pay interest.
seems extremely important that the reasons be made clear to country bankers and that they be given to understand in some satisfactory way that the question of interest is a closed one, I believe it will be of great value to let the questions bring out
what they will in this matter. When they realize once and for
all that no agitation is going to change the interest question
they will naturally accept it,for human nature is quite inclined
to accept whatever it considers inevitable, even though individuals here and there will always be found who will grumble more
or less about anything.
Bearing all of this in mind it seemed wise to take up
the question of payment of interest with the idea of ultimately
downing it with good and sufficient reasons. If this is not
done, now that we have the opportunity to reach thousands of
country bankers, the question of interest is apt to continually
arise. In other words, as we know that this is a much talked of
point in connection with the Federal Reserve System, it seems
best to bring it forward and settle it .rather than to let it linger in the minds of bankers as something that may possibly 'be
changed if they only hang out hard enough for it,
It seemed as though we might make a very great error
if we attempted to do more than state facto in the first letter
to bankers, for many of them might feel that if we gave arguments
of any sort we were not treatins their intelligence with the re


4.1 tt

B.

S.

2.

spect that they might feel is its due. After receiving answers
to the first circular, we can without any chance of injuring
anyone's feelings send a second letter giving decisions as to
Such reasons could then
recommendations, together with reasons.
be shown to represent final opinions based upon replies received
from the original letter, so that we would be in the position of
meking a report to bankers instead of apparently trying to tell
In dealing
them something that we thought they did not know.
with country bankers for many years I have some strong opinions
in my mind as to the best method to approach them, and I feel very
positive that they will absorb reasons given them that apparently emanate from themselves with much better results than if they
think they have been compiled by metropolitan representatives,
Confidentially, and just between us, I have been having some difficulty in preventing other members of the Committee
from having a system of questions prepared with arguments on
both sides as a preliminary presentation.
This is the form in
use in the Chamber of Commerce, as you well know, but the presentation is made in a manner similar to that which our second
letter would cover and not at all along the lines of our introduction of the subject to the state bankers. Under the Chamber
of Commerce system the various arguments for and against that
have been received by the Chamber are passed along, but in the
case of the Federal Reserve System it seems to me that no original arguments could be prepared that would not seemingly carry a
bias that might be ascribed by country bankers to the individual
views of members of the Committee.

Expect to leave Wednesday night for Pittsburgh for the
purpose of attending the Fourth Annual Convention of the National Foreign Trade Council, of which I have just been appointed a
member.

There is a possibility that Messrs. Schneider & Company may desire a new credit after the one maturing is paid, for
Before
the purpose of shipping further goods from this country.
agreeing to take up the matter I talked it over with ir. Treme.ne,
Mr. Jay and Mr. Curtiss, and will follow their suggestions in
Have not yet approached any of the New
handling the matter.
York bankers who might be interested in taking part in a new
credit, as I am not yet ready to do so. In some unaccountable way
not known to A±. Bonbright, Mr. Willcox nor myself some newspaper
reporter got an inkling of the fact that another credit might be
established, and instead of finding out he thought he could get
a scoop by taking a chance, and published a statement about the
credit, writing the matter apparently from the newspaper articles that had been written in connection with the French Industrial Credit.
Of course the whole thing is most exasperating, as
bankers like to be approached on busiftebe themselves before it
comes out in the newspapers, and consequently it is going to be
much more difficult for me to form a 4ndioate, proVided it devel


B. S. 3.

ops that the credit for the new shipments can be satisfactorily
arranged.
Again I realize that the Federal Reserve Board may be
more or less disturbed by the newspaper article, as they were in
the case of the French Industrial Credit. Advised 1Zr. Jay immediately after reading the article that neither Bonbright nor ourselves had anything to do with its preparation, and knew nothing
whatever about it, but it seems a pity that it is possible for
our newspapers to be run in such manner that reporters can abuse
the rights of any they choose in order to make an extra dollar
through taking up space. In the first Schneider credits I was
fortunate enough to be able to keep everything of the kind out of
the papers, as they had no story to go upon, but after the
Guaranty Trust Company gave out the story about the French Industrial Credit it was quite natural that reporters should take
such matter as a basis for writing articles in regard to any
other credit that'seems to be similar in its make-up.
The first
Schneider credit matures February 1, and arrangements have already been undertaken for its payment.
Realize that 1 have sort of rambled this letter off in
between telephones and personal calls, but will let it go in any
event, as 1 will not have time to look it over, and am sure you
will understand.
Sincerely yours,

FIX/ ivES




OFFICERS

OFFICERS
SEWARD PROSSER, PRESIDENT.
D. E.POMEROY,vicE PRESIDENT.
W.N.DUANE, VICE PRESIDENT,
F. I.KENT, VICE PRESIDENT.
F. N.B.CLOSE, VICE PRESIDENT.
A.H.MARCKWALD, VICE PRESIDENT.

$10,000,000
CAPITAL
SURPLUS FUND 10,000,000

GEORGE W.BENTON, CASH I ER.
BETHUNE W. JONES, SECRETARY.
R.H.GILES, TREASURER.

I.MICHAELS, TRUST OFFICER.
BEACH POLK, ASST. TREASURER.
J. F. SCHMID, VEST TREASURER.
R . G. PAGE, ASST. SECRETARY.

A.A.T ILN EY, VICE PRESIDENT.

H.F.WILSON,JR.,,cE PRESIDENT.

GUY RICHARDS, ASST SECRETARY.
PERRY D. BOGU E , ASST. SECRETARY
HARRY N. DUNHAM , ASST. TREASURER.

CABLE ADDRESS: BANKTRUST, NEW YORK.

16 WALL STREET

FOREIGN EXCHANGE DEPARTMENT

W.A. HENDERSON, AUDITOR.
H.H.IN A RT I N , ASST. SECRETA,
H. B.W ATT, ASST.SECRETARY
A.C.LIVINGSTON, ASST. TRUST OFFICER.

N E W Yo R K , February 5, 1917.

Mr. Benjamin Strong,
4100 Montview Boulevard,
Denver, Colo.
Dear Ben:-

Since forwarding to you the form of questions in connection with the Federal Reserve System another meeting has been
held in Chicago, and it was found necessary to make a comproSome of those on the Committee, as I wrote you, were very
mise.
anxious to argue every question from both sides in the first letter rather than in the second letter, which is to be in the form
of a report.
They agreed after hearing the arguments opposed to
such a scheme that it was better not to handle the matter in that
They insisted, however, that the questions should be so
manner.
worded that a "yes" or "no" answer could be given by all who might
have an opinion but who felt incapable of expressing it at any
length, and at the same time give an opportunity to others who
might wish to argue at length to do so. It seemed to me that this
plan might, as was hoped, bring out more opinions, and as the
original letter is only aimed to put the Committee in position
first to find out all it can as to the real opinions of state bankers, and second, to prepare recommendations for desirable changes
in the Federal Reserve System with proper arguments, it is more
important in the first letter to have something that will bring
forth answers and will get it thoroughly in the minds of bankers
that their Committee is anxious for their opinions for the purpose
of forming a base upon which to work.
If these forms meet with your approval, believe we are
In position to use them exactly as they are.
my own idea at the moment is that it is not really important to have state bankers in small towns, and with small capital, come into the System, if all such bankers in the important
centers of the country, including reserve and central reserve citThe nature of the
ies and possibly some others, should do so.
business of many of the small country state banks is such that it
Again,
would not harmonize well with the Federal Reserve System.
if all of the larger state banks join. the System, it would give
sufficient financial power to enable it to protect the country in
so far as such a system possibly can.



Sincerely yours

BANKERS TRUST

COMPANY

OFFICERS
SEWARD PROSSER, PRESIDENT.
E POMEROY,VICE PRESIDENT.
W.N.DUANE, VICE PRESIDENT.
F. I.K ENT, VICE PRESIDENT.
F.N.B.CLOSE, VICE PRESIDENT.
A H.MARCKWALD, vicE PRESIDENT.
A.A.TILNEy, VICE PRESIDENT.
H.F. Wi LSON,JR.. VICE PRESIDENT,

GEORGE W. BENTON, cAsH,ER.
BETHUNE W.JONES, SECRETARY
R.H.OILES, TREASuPER.

FOREIGN EXCHANGE DEPARTMENT

OFFICERS
GUY RICHARDS, AssT SECRETARY.
PERRY D.BOGUE, AssT. SECRETARY.
HARRY N. DUNHAM, Assi. TREASURER.

$10,000,000
CAPITAL
SURPLUS FUND 10,000,000

MICHAELS, TRusT OFFICER.
EACH POLK, ASST, TREASURER.
F. SCHMID, ASST. TREASURER.
RD. PAGE, ASST. SECRETARY.
W.A. HENDERSON,Au DiToR.

CABLE ADDRESS: BANKTRUST, NEW YORK.

ai

,

RT I N, ASST. SEERETARy.

H.B.WATT, ASST.SEcRETARy.
A .C. LIVINGSTON, Ass, TRUST OFFICER.

y ALL ST R E ET

APR 2 2 1917

N EW YOR K, April 17, 1917.

Mr. Benjamin Strong,
4100 MontView Boulevard,
Denver, Colo.

Dear Ben:-

Do not know whether it will interest you, but thought it
right be well to send you a copy of an address which I recently
'made in Scranton, Ia.
In connection with it, one 'foreign banker acknowledged
it in considerable detail, from which I quote a part, as it interested me very much:

"Thank you very much indeed for the copy of your address
It is a very comprehensive treatise
on American acceptances.
on the subject which I have read with much interest, and I
quite agree with your views.
Regarding the question of banks purchasing their own acceptances, I might say that I know from actual experience
that some English banks do this, as during the time I was
stationed in London, England, banks were willing in the ordinary course of business to purchase in the open market their
As a matter of fact, one or two of them
own acceptances.
were, when they were buying bills, always prepared to pay a
slightly better rate for their own bills."
Sincerely yours,

FIK/MKS
Enc.




0J-J

BANKERS TRUST
OFFICERS
SEWARD PROSSER, PRESIDENT.
D. E.POMEROY,vicE PRESIDENT.
W. N.DUAN E, VICE PRESIDENT.

F. I.K ENT, VICE PRESIDENT.
R.N.lettOSE, VICE PRESIDENT.
A H.MARCHWALD, VICE PRESIDENT.
A.A.TILNEY, VICE PRESIDENT.
H.F.WILSON,JR., VICE PRESIDENT.
GEORGE W.BENTON, CASHIER.
BETHUNE W. JONES, SECRETARY
R.H.GILES, TREASURER.

FOREIGN EXCHANGE DEPARTMENT

COMPANY
CAPITAL
$10,000,000
SURPLUS FUND 10,000,000
CABLE ADDRESS: BANKTRUST, NEW YORK.

OFFICERS
GUY RICHARDS, ASS, SECRETARY,
PERRY D.BOGUE, ASST. SECRETARY.
HARRY N. DUNHAM, ASST. TREASURER.
I.MICHAELS, TRUST OFFICER
BEACH POLK, ASST. TREASURER,
J. F. SCHMID, ASST. TREASURER.
R .G. PAGE, AS
SECRETARY.
W.A. HENDERSON,AUD1ToR.
H.H.M A RT I N , ASST. SECRETARY.

16

LL STREET

fri.
APR.' 7 1917

H.B.WATT, ASST SECRETARY.
AC LIVINGSTON, ASST. TRUST OFFICER.

NEW YoRK, April 12, 1917.

Mr. Benjamin Strong,
4100 Montview Boulevard,
Denver, Colo.
Dear Ben:-

Your letter of the 4th instant received. There is no
question in my mind but that it might be of real value to Warner
to grow up in the Federal Reserve System, and I am really rather
sorry that he has not had such actual experience in foreign operations as to make him available for working into the position
about which Mr. Treman was talking with me lately . He has been
tremendously interested in international exchange, and wrote a
thesis in Harvard on "The Bank of England and the War" that I understand is going to be used in their, future courses in some way.
Thought some of giving him a month or two in the Foreign
Department of the Guaranty Trust Company just to familiarize him
with foreign exchange practice, with the idea of rounding out the
It so happentheoretical knowledge that he has already obtained.
ed, however, that he worked into a position in Bonbright's office,
because of some rapid changes that took place soon after he entered their employ, that is giving him a very unusual opportunity to
acquire valuable knowledge and information.
actually preparing reports in answer to inquiries that go to
Bonbright or that are desired by members of the firm on all sorts
The vacancy that gave him this opporof firms and corporations.
tunity came long before I imagined he could fill the bill, but Mr.
Bonbright told me yesterday that they were tremendously pleased
with his work.
It seems to me that he could stay in this position
for a couple of years and continue to accumulate knowledge of a
His work in this respect seems to have intervery valuable kind.
ested others, because he has just been offered the Managership of
the Statistical Department of another large house without any effort or encouragement on his part, and after he had told them di7
rectly,when it was suggested to him,that he would not be interested.

As you were kind enough to mention the matter in your
letter, thought you would be interested in knowing what he was doing and why I feel satisfied that the nature of his work is giving
him as fine an opportunity to lay the foundation for a proper bus


Confi

B. S. 2.

iness career as would seem possible.

Am doing my best to find a man I would be willing to recommend in connection with your foreign business.
It is quite difficult, because I feel as though you should have someone familiar
with the technical end, informed as to theory in general and capable of analyzing new conditions without being too much tied down
by precedent.
This sort of a person is hard to get, and as I am
having difficulty in finding someone for three other banking institutions whose requirements are not as great, you can see why I
have not yet found anyone that I could conscientiously suggest to
Mr. Treman.
With sincere regards, I am,
Cordially yours,

FIK/MK2







J. H. PUELICHER, President

E. D. HUXFORD, Vice-President

C. B. HAZLEWOOD, Chairman Executive Committee

GEO. E. ALLEN, Secretary

State Bank Section American Bankers Association
New York, February 15, 1917

Five Nassau Street

STATE BANKS AND THE FEDERAL RESERVE SYSTEM
The Executive Committee of the State Bank Section of the American Bankers Association is desirous of obtaining from the State bankers of the country an expression of their opinion in regard to the advantages and disadvantages of membership in the Federal Reserve System. Several questions have accordingly been prepared with due care that no question shall be so constructed as to suggest any particular
answer. Full and free discussion is desired and personal identities will not be disclosed. In view of the
fact that the matter of clearing and collecting checks is being considered by the Committee of Twenty-five
appointed for such purpose by the American Bankers Association at its Kansas City Convention, no questions in regard to that subject are submitted by the State Bank Section in this connection. The questions
to which answers are desired at the present time are embodied in this communication.

MEMBERSHIP CONDITIONS

Conditions governing the membership of State Banks and Trust
Companies in the Federal Reserve System are described by the Federal Reserve Board in Regulation 11 of the Series of 1916, as follows:
BANKS ELIGIBLE FOR 111EMBERSHIP.A State bank or a trust
Reserve Bank
company to be eligible for membership in a Fed'
must comply with the following conditions:

It must have been incorporated under a special or general

law of the State or district in whieh it is located.
It must have a minimum paid-up unimpaired capital stock as
follows:

In cities or towns not exceeding 3,000 inhabitants, $23,000;

In cities or towns exceeding 3,000 but not exceeding 6,000 inhabitants, $50,000;

In cities or towns exceeding 6,000 but not exceeding 50,000 inhabitants, $100,000;
In cities exceeding 50,000 inhabitants, $200,000.

APPLICATION FOR MEMBERSHIP.Any eligible (State bank or
trust company may make application to the Federal Reserve Agent
of its district for an amount of capital stock in the Federal Reserve
Bank of such district equal to 6 per cent, of the paid-up capital stock
and surplus of such State bank or trust company. (Three per cent.
has already been called from National and other member banks, but
the remainder of the subscription or any part of it shall be subject to
call if deemed necessary by the Federal Reserve Board). Upon receipt
of such application the Federal Reserve Agent shall submit the same
to a committee composed of the Federal Reserve Agent, the Gpvernor

of the Federal Reserve Bank, and at least one other member of the
board of directors of such bank, to be appointed by such board, but
no Class A director whose bank is in the same city or town as the

proper compliance with the provisions of the Federal Reserve Act and
the regulations of the Federal Reserve Board in conformity therewith.
If, in the judgment of the Federal Reserve Board, an applying bank

or trust company conforms to all the requirements of the Federal

Reserve Act and these regulations, and is otherwise qualified for membership, the Board will issue a certificate of approval. Whenever the
Board may deem it necessary, it will impose such conditions as will
insure compliance with the Act and these regulations. When the
certificate of approval and any conditions contained therein have been
accepted by the applying bank or trust company, stock in the Federal
Reserve Bank of the district in which the applying bank or trust com-

pany is located shall be issued and paid for under the regulations of
the Federal Reserve Act provided for National banks which become
stockholders in the Federal Reserve Banks.
POWERS AND RESTRICTIONS.Every State bank or trust company while a member of the 'ederal Reserve System
Shall retain its full charter and statutory rights as a State bank
or trust company, and may continue to exercise the same functions
as before admission, except as provided in the Federal Reserve Act
and the Regulations of the Federal Reserve Board, including any conditions embodied in the certificate of approval.
Shall invest only in loans on real estate or mortgages of a character and to an extent which, considering the nature of its liabilities,
will not impair its ability to meet current or maturing obligations.
Shall adjust, to conform with the requirements of the Federal
Reserve Act and these regulations, within such reasonable time as may

be determined by the Board in each case, any loans it may have at
the time of its admission to membership, which are secured by its

own stock, or any loans to one person, firm, or corporation aggregating
more than 10 per cent, of its capital and surplus or more than 30
applying bank or trust company shall be a member of such committee. per cent, of its capital, or any real estate loans which, in the judgThis committee shall, after receiving the report of such examination as ment of the Federal Reserve Board, impair its ability to meet current
may be required by the Federal Reserve Bank in pursuance of directions or maturing obligations.
from the Federal Reserve Board, consider the application and transmit
IShall maintain such improvements and changes in its banking
it to the Federal Reserve Board with its report and recommendations. practice as may have been specifically required of it by the Federal
APPROVAL OF APPLICATION.In passing upon an application the Reserve Board, as a condition of its admission, and shall not lower the
standard of banking then required of it; and
Federal Reserve Board will consider especially
Shall enjoy all the privileges and observe all *hose requirements
The financial condition of the applying bank or trust company
of the Federal Reserve Act and of the regulations of the Federal
and the general character of its management.
Whether the nature of the powers exercised by the said bank or Reserve Board made in conformity therewith which are applicable
trust company and its charter provisions are consistent with the proper to State banks and trust companies which have become member banks.
WITHDRAWALS.Any State bank or trust company desiring to
conduct of the business of banking and with membership in the Fedwithdraw from membership in a Federal Reserve Bank may do so 12
eral Reserve Bank.
Whether the laws of the State or district in which the applying months after written notice of its intention to withdraw shall have
bank or trust company is located contain provisions likely to prevent been filed with the Federal Reserve Board.
QUESTION 1. ASSUMING THAT SOME CHANGES AGREED UPON BY STATE BANKERS ARE

MADE IN THE FEDERAL RESERVE LAW AND ITS ADMINISTRATION, SHOULD STATE BANKS
CONSIDER JOINING THE FEDERAL RESERVE SYSTEM FOR THE PURPOSE OF STRENGTHENING
BANKING AND COMMERCIAL CONDITIONS IN THE UNITED STATES? ANSWER "YES" OR "NO."
QUESTION 2. SHOULD BANKS OF LESS THAN $25,000 CAPITAL BE ELIGIBLE FOR MEMBERSHIP IN THE FEDERAL RESERVE SYSTEM? ANSWER "YES" OR "NO."
QUESTION 3. WOULD IT BE RIGHT AND PROPER FOR FEDERAL RESERVE BANKS TO PAY INTEREST ON THE
BALANCES OF MEMBER BANKS?




SUPERVISION AND EXAMINATION

EXAMINATIONS OF STATE BANK MEMBERS.The Federal Reserve Board, in Regulation II of the Series of 1916, declares that every
State bank or trust company, while a member of the Federal Reserve
System, shall be subject to such examinations as may be prescribed by
the Federal Reserve Board in pursuance of the provisions of the Federal
Reserve Act. In order to avoid duplication the Board will exercise

the broad discretion vested in it by the act in accepting examinations of State banks and trust companies made by State authorities
wherever these are satisfactory to the Board and are found to be of
the same standard of thoroughness as National bank examinations and
where, in addition, satisfactory arrangements for cooperation in the
matter of examination between the designated examiners of the Board

and those of the States already exist or can be effected with State
authorities. Examiners from the staff of the Board or of the Federal

Reserve Banks will, whenever desirable, be designated by the Board to
act with the examination staff of the State in order that uniformity in
the standard of examination may he assured.
STATE BANKS AND THE COMPTROLLER OF THE CURRENCY,
In a joint letter signed by the Governor of the Federal Reserve Board
and the Comptroller of the Currency, announcement is made that the
Federal Reserve Board and the Comptroller of the Currency have agreed
upon and now promulgate the following rules in regard to the periodical

reports of condition which the State member banks of the Federal
Reserve System are required to render under the provisions of the

(a) The Comptroller of the Currency will accept the reports so rendered by the State hanks, on the same forms used in reporting to the State Banking Departments.
(h) The publication of reports will be accepted by the Comptroller

of the Currency on the publication form rendered to State

Banking Departments, provided the office of the Comptroller
of the Currency is furnished with proof of publication in the
manner required of National banks.

State member banks will he furthermore required to furnish
the office of the Comptroller of the Currency, for abstracting
Purposes only, a statement of resources and liabilities on
the form prescribed by the office of the Comptroller of the
Currency for National banks. This statement must be signed
by the president or cashier of the reporting bank and

acknowledged before' a notary public.
(2) When reports to State Banking Departments are not required to
be rendered on the same date as reports called for by the Comptroller
of the Currency from National banks:
State member banks will he required to execute their reports
on the same form prescribed by the Comptroller of the Cur-

rency for National banks, but omitting from their report

blank, if they so desire, all schedules except that relating to
coin and 'coin certificates.

They will also be required to conform to the regulations governing National banks in the matter of publication of reports
Federal Reserve Act:
(1) When the reports of condition made to the State Banking Departand the furnishing of proof of such publication.
These rules may be revised or revoked on 30 days' notice from the
ments are rendered as of the same date as required by the Comptroller
Federal Reserve Board or the Comptroller of the Currency.
.f the Currency for National banks:
QUESTION 4. (A) DO YOU CONSIDER SATISFACTORY THE REGLUATIONS OF THE FEDERAL RESERVE SYSTEM GOVERNING THE SUPERVISION AND EXAMINATION OF STATE BANK

MEMBERS? ANSWER "YES" OR "NO."
(B) IF SUCH REGULATIONS ARE NOT SATISFACTORY, WHAT CHANGES WOULD YOU RECOMMEND?




REAL ESTATE LOANS

In this connection the provisions of the Federal Reserve System
pertaining to loans on farm land and other real estate that may be
made by National banks are of interest. Section 24 of the Federal
Reserve Act provides in part that
Any national banking association not situated In a central reserve
city may make loans secured by improved and unencumbered farm
land situated within its Federal reserve district or within a radius of
one hundred miles of the place in which such bank is located, irre-

spective of district lines, and may also make loans secured by improved
and unencumbered real estate located within one hundred miles of the
place in which such bank is located, irrespective of district lines; but

no loan made upon the security of such farm land shall be made for
a longer time than five years, and no loan made upon the security of
such real estate as distinguished from farm land shall be made for a
Longer time than one year nor shall the amount of any such loan,
whether upon such farm land or upon such real estate, exceed fifty per
centum of the actual value of the property offered as security. Any
such bank may make such loans, whether secured by such farm land
or such real estate, in an aggregate sum equal to twenty-five per centum
of its capital and surplus or to one-third of its time deposits and such
banks may continue hereafter as heretofore to receive time deposits
and to pay interest on the same.
THE FEDERAL RESERVE BOARD PERMITS STATE BANK
MEMBERS OF THE FEDERAL RESERVE SYSTEM TO MAKE LOANS
ON REAL ESTATE IN ACCORDANCE WITH RESPECTIVE STATE

LAWS AND REGULATIONS; PROVIDED, HOWEVER, THAT NO
SUCH LOAN TO ANY ONE PERSON, FIRM OR CORPORATION
SHALL EXCEED TEN FEB CENT. OF THE COMBINED CAPITAL
AND SURPLUS OR THIRTY PER CENT. OF THE CAPITAL OF
THE BANK MAKING THE LOAN.

The following extracts from a statement published by the Federal

Reserve Board (Federal Reserve Bulletin, Aug. 1, 1916, p. 393) set forth

As the extent of the Board's power to adopt any specific regulation
involves a question of law which must be determined by the facts in
each case, it is, of course, impracticable to outline definitely the scope
of all future regulations. The Board understands that it is not its
function to undertake to impose on the activities of member banks any
restrictions that are not contemplated by the Act, but only to prescribe
such regulations as are designed to carry out the purposes of the Act.
The Board does not feel that it is one of its functions to undertake
to restrict State banks or trust companies in the exercise of true banking or trust-company powers as defined by the laws of the State in
which they are created. In passing upon the applications of State
banks and trust companies, however, it believes it to be its duty to
admit only those institutions which are solvent and sound and whose
membership will not constitute an element of weakness in the system.
The Board does not consider that it is a prerequisite to the admission
of any State bank or trust company that it should possess any certain
amount of paper eligible for rediscount with a Federal Reserve Bank.
It is, of course, indispensable that any paper offered for rediscount to
a Federal Reserve Bank should conform to the provisions of the Act
and of the regulations of the Board. It is clear, however, that a Federal
Reserve Bank will have to look all the more carefully into the status
of a State member bank asking for rediscounts if such State bank or
trust company exercises banking functions that are likely to interfere
with the liquidity of such State member institution or may lead to
overextension.
In other words, the Board might consider that the exercise of extraordinary powers, such as might make an applying State bank or
trust company an undesirable member, a sufficient reason to refuse the
grant of the application. After such State bank or trust company,
however, has become a member bank the Board does not expect to
interfere with the exercise of those banking and trust company powers
authorized by its charter. If the exercise of such powers should tend
to interfere with the liquid and sound condition of a State bank or
trust company member, the Federal Reserve Bank would, of course,
be justified in taking due precaution in dealing with the applications
for rediscount of such State bank or trust company.

the Board's attitude toward State bank members:
QUESTION 5. (A) DO YOU CONSIDER SATISFACTORY THE CONDITIONS UNDER
WHICH STATE BANK MEMBERS OF THE FEDERAL RESERVE SYSTEM ARE PERMITTED TO MAKE
LOANS ON REAL ESTATE SECURITIY ? ANSWER "YES" OR "NO."
(B) IF SUCH CONDITIONS ARE NOT SATISFACTORY, WHAT CHANGES WOULD YOU RECOMMEND?

0




RESERVE REQUIREMENTS

The Federal Reserve Act provides that banks in central reserve cities
shall mantain a reserve of 18% on demand deposits. In reserve cities
the percentage is 15, and in cities and towns outside of reserve and
central reserve cities the percentage is 12. Until November 16, 1917,
country banks may keep with approved reserve agents one-sixth of their
reserve, and reserve state banks may keep with approved reserve agents
one-fifth of their reserve. Banks that are members of the Federal Reserve System are not now required to keep any specified percentage of

their reserves in their own vaults, but may keep all or any part of

from banks on demand. Reserves of 12% on demand deposits are
are required in Connecticut, Kansas in cities and towns of less than
50,000 inhabitants, Kentucky, Minnesota in cities other than reserve
cities, New Mexico, Virginia and Wisconsin, Parts of such reserves
may be kept with approved reserve agents.
Thirty-two States require that their State Banks shall maintain reserve of 15% on demand deposits. Such States are Arizona, Arkans,,,
Idaho, Illinois, Indiana, Iowa in cities of 3,000 population or over,
Kansas in cities of over 50,000 population, Kentucky in reserve cities,

Maine, Massachusetts, Michigan in cities of 100,000 population or less,
their reserve in the Federal Reserve Bank of their district.
In California, Georgia, Louisiana, Maine, Massachusetts, Michigan, Minnesota in reserve cities, Mississippi in cities of less than 50,000
Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, population, Missouri providing that in cities of 200,000 inhabitants or
Oregon and Texas, state banking laws provide that if a State Bank over banks may not count Federal Reserve notes as reserves on hand,
becomes a stockholder in a Federal Reserve Bank it shall be subject Montana In all banks except reserve agents approved as such by the
to the provisions of the Federal Reserve Act, and any amendments superintendent of banks, Nebraska in cities of less than 25,000, Nevada,
thereto relative to bank reserves shall be in substitution for the re- New Hampshire, New Jersey, North Carolina, Ohio, Oklahoma in cities
of 25,000 or less,
quirements of respective State statutes.
California and New York have Oregon, Pennsylvania, Rhode Island, Texas for banks
amended their laws pertaining to reserves so as to make State require- with ,capital of $25,000 or more, Utah in cities of 50,000 or less, Verments similar to requirements under the Federal Reserve Act. In cities mont, Washington and West Virginia. In such States various parts
of 100,000 population or over in California, and cities or boroughs of of required reserves may be kept with approved agents,
The laws of thirteen States provide for 20% reserves on demand deover 2,0000,000 population in New York, the required reserve for State
posits. in CaliBanks is 18%.
In cities of from 50,000 to 99,999 populationSuch States, are Arkansas, Colorado, Delaware in cities of
fornia, and from 1,000,000 to 1,999,999 population in New York, the 50,000 or more, Florida, Michigan in cities of 100,000 or over, Nebraska
reserve requirement is 15%. In cities elsewhere in New York and Cali- in cities of 25,000, North Dakota, Oklahoma, South Dakota, Texas in
banks with capital of $25,000 or less, Utah in cities of 50,000 or less,
fornia the reserve requiremnt is 12%.
State laws requiring State Banks to hold 10% of reserve on demand Wisconsin and Wyoming. Cities where State laws provide for 25%
reserves are Colorado for banks that are reserve agents, Illinois for
deposits are in force in Delaware in cities of 50,000 population or less,
Iowa in cities under 30,000 population, and in Tennessee. In Delaware banks in Chicago, Louisiana. Mississippi in cities of over 50,000, Nevada
and Iowa a proportion of such reserves may be kept with approved and South Dakota. Varying percentages of such reserves may be kept
reserve agents, and in Tennessee reserves may consist of balances due with reserve agents.

QUESTION 6. (A) ARE THE RESERVE REQUIREMENTS OF THE FEDERAL RESERVE
SYSTEM SUITABLE FOR YOUR COMMUNITY AND YOUR INSTITUTION? ANSWER "YES" OR
"NO."
(B)

IF SUCH REQUIREMENTS ARE NOT SATISFACTORY, WHAT CHANGES WOULD YOU RECOMMEND?




LOAN LIMITATIONS
Section 5200 of the National Bank Act refers to limitations of liabilities which may be incurred by any one person, company, corporation

or firm to a national bank, and provides that such liability shall not

exceed .ten per cent of the bank's capital stock and surplus unimpaired;
and in no case shall it exceed 30 per cent of the capital stock. There
are few states; that follow the National Bank Act respecting the limitations on commercial loans. In Michigan State Banks may loan to any
one individual, firm or corporation 8 1/10 per cent of capital and permanent surplus. Eleven States have a ten per cent loan limit. Such
States are Alabama, which also includes undivided profits; California,
unless capital and surplus are not over $25,000, when it is 20%; Connecticut; Georgia; Maine, also including undivided profits; New Hamp-

shire; New Jersey; New York, including acceptances, and except in

boroughs of over 2,000,000 population; North Carolina, if paid up capi-

tal is ever $100,000; Rhode Island, exactly similar to provision in

undivided profits; Utah. Fourteen States provide a limitation of 20%
capital and surplus. They are Idaho; Iowa, on paid up capital only;
Kentucky; Louisiana, including undivided profits; Maryland; Montana;
Nebraska; New Mexico; Ohio; Oklahoma; Oregon; South Dakota; West
Virginia, including undivided profits; Wyoming. Five States provide
for a limitation of 25% of capital and surplus. They are Colorado;
Mississippi; Nevada; Texas; Virginia.
Arkansas and Wisconsin have

a 30% of capital and surplus limitation.

Vermont limits loans to
$10,000 plus one per cent of deposits in excess of $1,000,000 and not

over $50,000 except where capital and surplus exceed $50,000, when the
limit is 10% of capital and surplus. Missouri provides a 15% limita-

tion when city population is over loomo; 20% from 7,000 to 100,000,

and 25% elsewhere. There are no specific loan limitations in the bank-

ing laws of Arizona, Delaware, Florida, Indiana, Pennsylvania and
Washington. In some States larger loans may be made by vote of
directors. Exceptions are also made in some States in case of loans

National Bank Act; South Carolina, 10% of capital only. Six States
have 15% limitation. They are Illinois, with 30% of capital as an extra secured by collateral.
limitation; Kansas; Minnesota; North Dakota; Tennessee, including
QUESTION 7. (A) ARE THE LOAN LIMITATIONS PRESCRIBED BY THE FEDERAL RE-

SERVE ACT SUITABLE FOR YOUR COMMUNITY AND YOUR INSTITUTION? ANSWER "YES" OR
NO."

(B)
GEST?

IF SUCH LOAN LIMITATIONS ARE NOT SATISFACTORY, WHAT LOAN LIMITATIONS WOULD YOU SUG-




GENERAL QUESTIONS
QUESTION 8.WHAT, IF ANYTHING, CAN BE DONE TO AVOID COMPETITION BETWEEN FEDERAL RESERVE
BANKS AND OTHER BANKS?

QUESTION 9.-WHAT, IF ANY, CHANGES IN THE FEDERAL RESERVE ACT, OR IN ITS ADMINISTRATION,
ARE NEEDED TO INCLINE YOUR INSTITUTION TO BECOME A MEMBER OF THE FEDERAL RESERVE SYSTEM?
Underneath write answers to questions 8 and 9, numbering answers accordingly.

When you have answered the question, asked in this communication, fill out the following form

Name of Bank
State

City or Town

Date

Name of Officer Signing
And mail to Geo. E. Allen, Secretary, 5 Nassau Street, New York City.

tiI
SURPLUS $11,250. 00

PITA IL $11,250,000

4

BANKERS TRUST
OFFICERS
SEWARD PROSSER, PRESIDENT.
D. E.POMEROY,vicE PRESIDENT.
W. N.DUANE, VICE PRESIDENT.
F. I.K ENT, VICE PRESIDENT.
F.N.B.CLOSE, VICE PRESIDENT.
A.H.MARCKWALD, VICE PRESIOENT.
A.A.TILN EY, VICE PRESIDENT.

COMPANY

J.R.TROVVBRIDGE, ASST.SECRETARY
H.N . DUNHAM, ASST. TREASURER.

6 WALL STREET

-AND-

5T1' AVENUE AND 42".2 STREET

N.J. COCH RAN, VICE PRESIDENT.

THOMAS H ILDT, vtcE PRESIDENT.
H.F.WILSON,JR., VICE PRESIDENT.
B.W. JONES, SECRETARY.
R. H.GILES, TREASURER.

OFFICERS
GUY RICHARDS, ASST. SECRETARY.
P.D. BOGUS, ASST, SECRETARY.

CABLE ADDRESS: BANKTRUST, NEW YORK.

BARKLEYWYCKOFF,A5HIER.

FOREIGN EXCHANGE DEPARTMENT

16 WALL STREET

NEW YoRK,

I.MICHAELS, TRUST OFFICER.
BEACH POLK, ASST. TREASURER.
J. F. SCHMID, A ssT. TREASuRER.
R .G. PAGE , ASST. SECRETARY

W.A. HEN DERSON,Au orroR.
H.H.MA RT I N, ASST. SECRETARY.
H.B.WATT, ASST. SECRETARY.
L.S STILLMAN, ASST, SECRETARY.
CLIFFORD WILMURT, ASST CASHIER.
A.C.LIVI NGSTON , ASST. TRUST OFFICER.

July 25, 1917.

Mr. Benjamin Strong,
128 Gilpin Street,
Denver, Colo.
Dear Ben:-

Since writing you, have been called to Washington, or I
It represents the genshould have sent you the enclosed before.
eral idea of the proposition that the gentlemen from the Bank of
Italy wish to present to the Federal Reserve Bank of New York, provided and only if it will probably be satisfactory to the Federal
Reserve Bank.
At the last conference it came out very clearly that
their principal desire was to earmark gold in Italy for the purpose
of obtaining dollars here.
The representative of the Italian Embassy joined the conference about this time, and I made the following statement:
"While I have no authority to say to you that the
Federal Reserve Bank of New York will not be willing to enter into
such an arrangement with you, even with the understanding that you
pay for the privilege, as you suggest, yet it is my firm personal
belief that they would not be justified in doing so.
The government of the United States is making vast loans to the Allies. In
Order to do so it is obliged to borrow tremendous sums in this counTo accomplish this the Federal Reserve Banks are obliged to
hold themselves in readiness to make such loans to member banks as
are necessary in order to make it possible for such banks to subscribe for their depositors and themselves in such amounts as are
necessary for the government to obtain its requirements. If the
Federal Reserve Banks do not keep their gold where it can flew freely from one Federal Reserve Bank to another as sectional demands
make necessary, and our government is consequently hampered in placing its loans, it will not be able to make the advances to Italy
and the other Allies that it desires to do. In my opinion the government is the proper party to make the loans, and the Federal Reserve System the proper instrument for the government to use to obtain the funds. If both the government and the Federal Reserve
Banks loan to foreign governments, it would seem to me not only to
be an unjustifiable operation, but one that might prove most harmful to the Allies, for if carried sufficiently far, it would unquestionably handicap our government very seriously by curtailing

try.




the ability of the Federal Reserve Banks to carry member banks until the public could absorb the securities."
The representative of the Italian bank agreed with me fully, and the representative of the Italian Embassy was very vehement
in his expression of opinion that the better way was for the government to make advances, and the Federal Reserve Banks keep sufficiently liquid to be able to do their part. The Italians then
gave it as their opinion that rather than go back without having
formed any sort of an arrangement, they would like to make a tentative one, not with the idea of undertaking any transactions at the
moment, but for sentimental reasons, and in order to put the two
banks in position to operate quickly and without delay in case it
I said to them then, 't will be enever proved to be advisable.
tirely agreeable to you to form such an arrangement wilithe Federal
Reserve Bank, with the specific agreement that it shall only become operative at such time as may be mutually agreeable and both
banks give their consent?" This they agreed to, and the enclosed
suggestions represent their idea of what should be covered by the
agreement, in addition to this statement as to when it should become operative.
They were very anxious to have me send it to you for the
If you agree, as
purpose of obtaining your opinion on the matter.
' I judge you will from your letter referring to the matter, that an
arrangement be entered into along these lines, to become operative
when mutually agreeable, they would then like to make a formal
presentation of the matter to the Board of Directors of the New
York Federal Reserve Bank. Have sent you the copy delivered to me
by Mr. Gidoni, which I take that he wrote himself, as it is very
It is really just
much in line with the English which he speaks.
his rough idea to try to accomplish something without meaning to
have it too specific until the time comes when. actual transactions
may take place.

Mr. Gidoni will appreciate it if you will telegraph your
opinion, provided you desire to do so, otherwise he will gladly
await your reply by mail, in which case he hopes that you will
send me a letter to deliver to him that will couch the agreement in
terms satisfactory to you.
Am arranging to have the Bank of France matter go forward
on the first steamer, and have an appointment to
over with

those in the office suggested by you.
With sincere regards, I am,

Cordially yours,

FIVMM
Enc.



talk it

SURPLUS $ 11, 250,000

.PITAL $ 11, 250,000

BANKERS TRUST
OFFICERS
SEWARD PROSSER, PRESIDENT.
D. E.POMEROY,wcE PRESIDENT.
w.N.DUANE, VICE PRESIDENT.
F. 1.5 ENT, VICE PRESIDENT.
F.N.B.CLOSE, VICE PRESIDENT
A.H.MARCKWALD, VICE PRESIDENT.
A.A.TILNEV, VICE PRESIDENT.

COMPANY
16 WALL STREET

-AND-

.5-r-V AVENUE AND 42^1-° STREET

H.J. COCH RAN, VICE PRESIDENT.

THOMAS HILDT, VICE PRESIDENT.
H.F.WILSON,JR., VICE PRESIDENT.
B.W.JONES, SECRETARY.
R. H.GILES, TREASURER.

CABLE ADDRESS: BANKTRUST, NEW YORK.

16 WALL STR E ET

BARKLEY WYCKOFF, CASHIER

NEW YORK ,

FOREIGN EXCHANGE DEPARTMENT

ALM
SIP 6 19V

I6

V

OFFICERS
GUY RICHARDS, ASST. SECRETARY.
P BROGUE, ASST. SECRETARY.
J.R.TROWBRI DBE, ASST SECRETARY
H.N. DUN HAM, ASST TREAsuRER.
LMICHAELS, TRUST OFFICER .
REACH POLK, ASST. TREASURER.
J. F. SCHMID, ASST. TREASURER.
R.G. PAGE, ASST. SECRETARY
W.A. HENDERSON,AUDIToR.
H.H.MART IN, ASST. SECRETARY.
H.B.WATT. ASST. SECRETARY.
L.S STILLMAN, ASST. SECRETARY.

CLIFFORD WILMURT, ASST.CASH ER
A.G. LIVINGSTON , ASST. TRUST OFFICER.
P E GOOF, ID GE, ASST TRUST OFFICER

September 4, 1917.

IRIEOCIVS:0
SEP 5

191/

-7.3fit

Mr. Benjamin Strong,
Governor, Federal Reserve Bank,
Nassau and Pine Streets, N. Y.
Dear Ben:-

Your letter of August 31 received and carefully noted.
The arrangement outlined is entirely acceptable to me, and I
will gladly endeavor to keep myself tree from outside entanglements, in order to have the time necessary for the work you have
in mind.

Now that I am relieved from the Liberty Loan work, I
have no work outside of the Trust Company of importance at the
Am Chairman of the
moment, other than the two following matters:
Cotton Committee of the Southern Commercial Congress, which is to
hold its annual meeting in New York, October 15, and have agreed
to prepare and deliver an address at Atlantic City at the War
Convention of American Business, Thursday, September 20. This
meeting, I understand, is to be attended by members of the Cabinet and members of the Council of Defense, and it is hoped that
important and beneficial results will develop.
Sincerely yours,

c=2-7
FIK/MKS




December 5, 1918.

2red:

had hoped to be able to nake LA engagement with you

for Saturda. unfortunately, however, I will be obliged to be
out of to and am writing to ask if you will be available for
either Monday or Tuesday of next week.

waat to discu9 with you.
Oinoerely,

t.

3ankert Tr $t omp9ny,
16 afl Ctret, New York.

is4a3r,




There are some matters

Claridge's Hotel, Brook Street, W. I.

Dear Ben:

Just returned from telegraphing you acknowledgment of your wire which was
Will do so first
received too late to notify any of the parties mentioned.
Cabled New York today through the Embassy as follows
thing in the morning.
after my checkword:
(TRANSLATION)

Bank of England is sending their representatives Wednesday to both Amsterdam
and Brussels to arrange for gold as follows:
From Brussels 200,000,000 gold marks.

From Amsterdam equivalent of 240,000,000 gold marks, part of which consists of other coin and bars.
In both cases no shipment exceeding 16,000,000 marks or$4,000,000 each
unless you can arrange insurance for shipment of larger lots.
In both cases no shipment can be made unless we receive advice° from
you that you have effected insurance against all risks covering total amount in
each case from door to door bank to bank together with final instructions gross
amount covered in each shipment anti to whom advices must be sent.
Bank of England will be ready to ship by next Monday and must have
prompt reply through American Embassy London.
Expected about two or three shipments weekly.

Was obliged to stop right there or the cable could not have gone tonight and
also had to let it go without referring to any of your cables of detail as I did
Even so I am positive that Chubb and Son
not know the number or dates sent.
can arrange all detail from the information they already have together with their
cable and we should have an answer before any shipments are ready to came forward.
The Bank of England people will arrive Friday and do not expect to be able to get
anything off before next week regardless of recei:y of reply.
Tomorrow I shall cable New York again and have them add one per cent. to the
Could not get it in today as the
insurance to cover incidentals as is usual.
cable would not have gone if I had done so and it is only Important in the final
negotiation.
Must mail this or you would not receive it in the morning.
Sincerely,

FRED

Aug. 19, '19.




hen

T

saw Sir Lionel Abrahams, I found

C

that he had received advice that the

4,

CLARIDGE'S HOTEL,

rederal Reserve =ank or our Treasury

BROOK STREET.W.1.

-',
.21st. August 1019.

Department or both had no objection tg)
their making an arrangement to handle the

matter throUgh someone else, but do not
136ar Ben,

wish to hay-) the rederal Reserve Bank act

I am telegraphing you to-day giving
for then, As a result the India Council
took
'ttakiHt it up with thc Dank of ilontreal

you the cost of shipping

,9,34o

Spain

which I confirm as follows:and made Wsq, arrangement with it tur which

they are to ofrer the rupees each week in
the New York rparket.

I told Bir Lionel
so

that I was very sorry that it *all happened

Ireight 3/C,'; (on not loss than :,200,00u)
(To port only)
fr,1,125
375
Insurance 1/£7, kTo I:adrid)

Packing Charges, 60 boxes 0
4/- each
Fees

12
'

1

that they had acted before I saw him as I
ay

should have been very glad to have handled
the nater through the Trust Company-,, if
a 'reeablo to our Government.

It seems

rather a pity to have the whoie rupee

--

The cost of conveying gold from the
Spanish Dort Do :Adrid is not known here.
17=1: STtA:7225 DU= :0 1,2AV: F071 ;?AI::.

sttuation in the United States thrown

R.M.S.F.Stoamer "Demerara" - Liverpool to

into the hands if a Canadian Bank, but the
matter in finished now, and there is

Vigo - 29th August.




:rnbseeuent programme not vet
arranged blit there are generally about two




steamers a month in this service.
(-)
is represents insurance in
poundq sterling and Aatdoilars.
Perhaps I can obain insurance in ()Mars
even so,'although the expenses would
undo btedly be greater as the risk of
exchange will be added to the carrying
_advise' you as soon as I
receive cables from the Federri. R-3erve

b on made and ===

Uvered is.

effective. fx,gr7ested.the, the Federal
Reserve rank arrange their insurance so

Othat cable notices of .-''hiptient
would not be necesba_ ttit'that all
,shipmehts rade would be covered as
and when shilpped with notices to follow.

I, also told them thatt while cable
advises could be seilt just the same, yet

Dank cover-12z insurance.

Yesterday I sent through tne

that the arrangement suggested would be

Embassy a second cablegram to the
rederal noserve an24. advising them
of the necessity of adding l to cover

far safer, as it would not cancel any
insurance in case of oversight on the
part of anyone in sending notices. Can

incidental expenses such as boxing,
packing shipping, and so forth, and after

see no reason why the insurance cannot be

covering certain other 'matters w12..ich I

,s,t2ch arrangements*yself in connection
with tas special ..thipment. It only

effected on this basis, as I have made

do not wish to write in open letter,
I advised the Dank that in the Insurance

involves list integrity of the banks with
whom
are dealing, which should not
a question in the case of the Yederal

, the riank of England
arrangement
thr- GLOM,not rocuirei(to declare each
shipment r.s made, but they say' a

statement in writing after shipment has

-

Reserve Tank.

The India situation is all settled.

CLARIDGE'S HOTEL,
BROOK STREET. WA.

nothing further to be clone.

:Ancerely yours,

Benjamin strong




Esq.,

Ritz Hotel,
PARIS.
-

%

-

7

61_4_4_

`4,




iffr4vA,

)

(":9

-4

tli:e

IV- 4. 461414,t
4tot.042.14

AL°'"'
"A'''t

-.4,416v

4

i,

,14,4-1.4-4,,

l''''
cott

4410644,-A,4,4*1-4

*-

ef-t-41
.0444..,

*0-1,40t-

4,0.%.404.04"..gal

616414.°14. 44/

-44:414.,,,vata;e

4j.4i.i4t"C.--

4aireed

let,144,Y At&ilteip,vi,fe-6

4t,444.4,-44

0(4,_

Claridges' Hotel,
Brook Street,
London,

1.

22r4 August 1019.
Dear Ben,

Your letter of the 21st instant received this morning,
together with the enclosures.

I

your telegram requesting me to
done, enclosing copy herewith.

Last night late I received

cable

-,6effingwe1l, which I have

Nothing has yet come from New

York chewing that insurance has been effected.

Consequently

.

the whole matter stands exactly as it was.
Mrs. Kent and I are'remaining.in London over the week-end'

as I did not feel warranted in

leaving with

the possibility of

cables coming in to-day that might have to be answered or advice
of which might have to go ,.#o emsterdam and Brussels.

If the

cable arrives on Monday it will not delay the Bank of England
.represettatives, however, as they do not expect to be able to
get off any shipments until

possibly

the Tuesday or wednesday

Steamers, whatever days they may sail.
Sincerely Your-,

777,

Govethor Benjamin Strong,




47,/,,

Py 7.4'

Hotel Ritz,
PARIS.

14

4c-

Claridge's Hotel,
Brook Street,
LONDON, W.,

England, 25th August 1919.
-tc)




Mr. Benjamin Strong,
Thl Ritz Hotel,
PARIS, France.

Dear Ben,
It seems to me that in figuring the cost of
shipping gold from London to New York it should be on
the basis of the ordinary market, and not on any special
rate that the Bank of England might be able to obtain
covering some particular transaction.
This being true,
I got the regular rates for shipping gold in the market
today, which I am telegraphing you to-night.
These rates
are I. of
for freight and 1 per Mille insurance.

4

The insurance companies state that their present
feeling is that without question they would be willing to
make the insurance read in Dollars, although the rate
might be fractionally higher if Exchange should go much
worse.
They also stated that the rate of 1 per Mille
might be shaded in case of an actual transaction, particularly if the amount was la;ge.
It seems to me, therefore,
fair to take these two rates as kmin a basis, particularly
in view of the fact that you contemplate making a return,
if shipment is not made, whereas you would have no means of
recovery should you be obliged to snip at a higher cost.
The incidental expenses would probably be about
one-twentieth per Mills.
A fair rate therefore might be
i of
for freight and one per Mills for insurance, and
incidental expenses.
Will telegraph you the Bank of England
rates as soon as received.

4

Sincerely yours,
o-1-tc....

Claridge's Hotel,
Brook Street,
LONDON, W.,

August 25th 1919.

Mr. Benjamin Strong,
Ritz Hotel,

PARIS, France.
r




Dear Ben,
Your letter of the 23rd instant with enclosure
My cablegram to the Federal Reserve Bank
is received.
of New York had only to do with the shipments of gold
At the time I
from Amsterdam and Brussels to London.
wrote you I had not received your telegram requesting
Imme to cable Leffingwell about the gold to Spain.
mediately upon receipt of your telegram concerning this matter
I cabled Leffingwell as requested, and wrote you to that
effect on Friday.
Regarding the cost of shipping gold from ',Edon to
Spain, would say that the figures given you were copied
exactly from a statement which was furnished to me by the
Bank of England, except that through an oversight the
stenographer left out the first line which stated that the
transaction upon which the figures were based covered a
This, as you can see, puts the
shipment of £300,000.
figures exactly in order so that the cablegram which I
sent to Leffingwell was correct, as I only gave him the
per centages.
Sincerely yours,

(4eceived August

23, 1919)
London 13907

44

212

7H15

=

Benjamin Strong

Ritz Hotel Paris France
Freight London to Spanish port three eighths one per cent from port
D Madrid unknown stop

Insurance to Madrid one eighth per cent and

incidental costs tentieth per mille stop

Next steamer Liverpool to Vigo

sails August twenty ninth




KENT

(Received Monday morning, August 25th)

London

40519

15 24

7118

HENJAMIN STRONG

Hotel Ritz

Paris

Telegram received Sunday morning will telegraph figures
required Monday




KENT

BLUE.

650.

Amembassy Paris,

Dated August 26th 1919.

Rec'd 4:45 p.m. Sept. 1st.
Ammission,

Paris.
August 26th 6 p.m.
For Benjamin Strong for Federal Reserve Bank, New
York, from Kent.
650

"Cablegram number 3 replying your cablegram August

(22690401?) insurance effected: Bank of England has been
instructed to proceed as follows: One, shipments are to be
made from both Amsterdam and Brussels as rapidly as packing
and available steamer make possible. Two, urtil otherwise
instructed no single shipment from either point will exceed
five million dollars. Three, representatives Bank of England
in both places will telegraph advice of each shipment giving
name of steamer to Bank of England, London. Four, upon
receipt such telegrams Bank of England will cable advice
of shipments to Federal Reserve Bank, New York. Five, Federal
Reserve Bank, New York, will advise insurance agent. Six,
should two or more shipments arrive at British port for same
train, only one shipment will be allowed to come forward at
a time. Seven, we are operating on this basis but would



appreciate

1 -REA

o

SECOND SBEET OF #650 FROM ALENBASSY, PARIS.
appreciate prompt confirmation.

For your infornation (1)

Different steamers tale freight from Amsterdam and Brussels.
(2)

It is expected that of the one hundred and ten million

covered by insurance, 7b million will come from Amsterdam
and 35 million from Brussels.

(3)

This will leave ten to

eleven million in Amsterdam, and twelve to thirteen million
in Brussels, still to be moved, awaiting decision about
shipment to Spain.

All of this amount excepting any

(4)

that may go to Spain will have to be insured anu come forward
as part of this.

(5)

Insurance should, therefore,

be

arranged under prompt advice to,cover such part as may be
shipped to London to prevent holding bank of England representative unduly in Amsterdam and Brussels.

(6)

Believe

this could be arranged by securing insurance same conditions
for any part of a further 25 million dollars which may be
shipped.

(7)

Referring to number six under procedure as

some steamers from Brussels and Amsterdam will probably enter
same port.great delay may ensue and added danger unless insurance limit arranged to cover steamer only so that if two
shipments should happen to come forward from a British port

to London on same train they wouldbe covered.
regular procedure here and should be allowed.
as to this immediately."




DAVIS

This is

Please,cablet




Claridge's Hotel,

Brook Street,
LONDON, W.,
England,. 26th August 1919.

Mr. Benjamin Strong,
HOTEL RITZ,
PARIS, France.

e#,..;***4

,

Dear Ben,

__,
As I wrote you this morning I arranged with Is
the Bank to telegraph release of shipments; arran d
with them to ma e one shipmentnot to excedd
orma
Dollars or',
Marks from each point:
stated that
would cover all they can handle for
two or three days, and in the meantime I am cabling
back to New York as per copy which I am having the
Embassy repeat to you.
If no r
Thursday morning I will have the Operation repeated as
outlined above, for there is no question whatever about
cover having been effected.
At the same time, in view
of certain possibilities which my cable covers, thought
it best to authorise the one shipment first.
On receipt of reply to my cablegram the Bank will have everything moveftforward in good order in accordance with

us

inslTructioffs.

The. method of advice will be as follows;
The representatives of the Bank of England
will cable to the Bank giving particulars of each
lot, and the bank Immediately upon receipt of such
cable will advise the Federal Reserve Bank in New,
York by cable, so that the latter will be in:-position to properly advise Chubb.
There will then be
nothing further for me to do unless something new
turns up.
On that account, as I feel very much the
need of a few days' rest
as I have been actively busy
here until away late at night, I shall try and leave
Friday afternoon for the Valley of Rocks Hotel, Lynton,
England.
Will leave my address with the Embassy,
Claridge's, The London Jotnt City & Midland bank, and

mr. B. Strong, PARIS.




Sheet 2.

26/8/1919.

the Bank of England.
I will have any and all cablegrams that may
Will also advise Mr. Norcome for me telegraphed on.
man that I will be ready at a moment's notice to return
to London in case of need.
Hope to stay there about
10 days.
The head man of the Imperial Ottoman Bank
is in Scotland, and as it is very Important that I see
him on account of General Harbord before I return to
Paris, I have made an engagement at his office to meet
him on September 9th in London.
In the meantime certain matter is being prepared
for me.

Shall then, unless something turns up in the
interim,to prevent, leave for Paris on September 10th
or 11th.
In any event, you need have no anxiety about
the situation here, as I will stick to it as long as is
necessary and be within constant call at all times.
Sincerely yours,




London

54331 50 25

7h2

BENJAMIN STRONG
Hotel Ritz Paris

Outside rates freight London New York three eighths per cent.
insurance one permille could be straded covering incidental stop
telegraph Bunk rates tomorrow stop

Will

Embassy delivered insurance cable

from New York six o'clock and will release shipments Bank tomorrow stop
Letters received everything in order writing
KENT




Claridges' Hotel,
Brook Street,
LONDON, W.,
England, 26th August 1919.

Yr. Benjamin Strong,
Hotel Ritz,
PARIS, France.

Dear Ben,

Confirming my telegram of today, would say that
the Bank of England found that they could obtain a specia3, rate London to New yOrk, freight from door to door,
of 02.00 per thousand payable in New York, and for insur0.00 payable in New
ance * of 1* payable in Dollars.
York would of course make the percentage charge greater
These rates,
than if you could pay in Sterling Exchange.
however, were special rates made to the Bank of England
The Bank stated that they
as an accommodation to them.
felt that the ordinary rate would be02tper thousand,
but this also would be payable in New Y rk; and they
further felt that the rate of * of 1* for insurance might
have to be fractionally increased if payment in Dollars
The rate which I telegraphed
should be inhisted upon.
you last night, i of 1*, wds a straight percentage on
the Sterling, and, as I wrote you, represented the open
per mule
After having made a rate of
market rate.
for insurance, with the statement that on an actual transaction it might be reduced, they came back later with the
statement that the rate would have to be increased to 1
Everything taken into consideration, I beper Mille.
lieve that it would be thoroughly fair and proper for you
tomake a flat charge of a half of 1* to cover all expenses.
If untoward conditions developed which would seemingly be
the only reason why you might desire to move the gold to
New York for some time, there is good reason to expect
that the cost of shipment might be materially increased;
in fact obtaining shipping space might be extremely difficult, and it might even be necessary for special guards
to be furnished
possibly from the United States.
you would have no means of recovery after having made a
settlement, in case the cost of shipping at the time of
actual transfer increased, you are certainly more than
justified in making a flat rate of 4 of 1*, and further
I question whether you could, out of fairness to the
Federal Reserve Bank, make a less rate all things consiT
dered.

-4s

I am about to leave for the Bank to have them
telegraph proper release in accordance with cablegram
received last night from the Federal Reserve Bank, which

I quote as follows;




Claridges' Hotel,
Brook Street,
LONDON, W.,
England, 26th August 1919.

Mr. Benjamin Strong,
Hotel Ritz,
PARIS, France.

Dear Ben, H

Confirming my telegram of today, would say that
the Bank of England found that they could obtain a special rate London to New YOrk, freight from door to door,
of p2.00 per thousand payable in New York, and for insur0.00 payable in New
ance * of 1% payable in Dollars.
York would of course make the percentage charge greater
These rates,
than if you could pay in Sterling Exchange.
however, were special rates made to the Bank of England
The Bark stated that they
as an accommodation to them.

felt that the ordinary rate would beliper thousand,
but this also would be payable in New Y rk; and they
further felt that the rate of * of 1% for insurance might
have to be fractionally increased if payment in Dollars
The rate which I telegraphed
should be iniisted upon.
you last night, * of 1%, was a straight percentage on
the Sterling, and, as I wrote you, represented the open
After having made a rate of 1 per mule
market rate.
for insurance, with the statement that on an actual transaction it might be reduced, they came back later with the
statement that the rate would have to be increased to 1
Everything taken into consideration, I beper Mille.
lieve that it would be thoroughly fair and proper for you
tomake a flat charge of a half of 1% to cover all expenses.
If untoward conditions developed which would seemingly be
the only reason why you might desire to move the gold to
New York for some time, there is good reason to expect
that the cost of shipment might be materially increased;
in fact obtaining shipping space might be extremely difficult, and it might even be necessary for special guards
possibly from the United States.
to be furnished
you would have no means of recovery after having made a
settlement, in case the cost of shipping at the time of
actual transfer increased, you are certai4ly more than
justified in making a flat rate of 4 of 1%; and further
I question whether you could, 'out of fairness to 'the
Federal Reserve Bank, make a less rate all things consiT
dered.

4s

I am about to leave for the Bank to have them
telegraph proper release in accordance with cablegram
received last night from the Federal Reserve Bank, which

I quote as follows;

Sheet 2.

(I) Mr. B. Strong, PARIS.




(1,

26/8/1919.

REPLYING YOUR NUMBERS ONE ANDiTWO CHUBB
HAS PLACED INSURANCE IN THIS MAR-UT PAYABLE
IN DOLLARS UP TO Ti CENTS FOR EACH 1O DOLARS.

ov040 PO

PROTECTION IS EFFECTED UP T
AGAINST ALL RISKS AND ATTACHES IRRESPECTIVE OF
WHEN DECLARATIONS ARE MADE BUT IT IS EXPECTED
DATE OF
CABLE WILL BE SENT
UNIVERSALLY STATING
SHIPMENT AND THE AMOUNT.
d
4,
alte/4:"-J U:**)*.

CHUBB COULD ONLYiARRANGE FOR ; .
DOLLARS
ON ANY ONE CONVEYANCE AT ONE TIME OR IN ANY ONE
PLACE, BUT HOPES TO ADVISE US BY MONDAY OF A
LARGER AMOUNT.
-.

TO AVOID DISPUTE IN CASEtOF LOSS; INSURANCE
IS ARRANGED FOR ON THE .BASIS F MINT PAR FOR THE
COINS AND THE BARS AT 020.6713462 pER OUNCE OR
PLUS Ilfo.

(4)

While there is nothing in the cablegram to

shew that the insurance covers both pointeof departure,
yet as the total is in ex6ess of the indua greatest possible amount that could be shipped from the point where
they had previously cabled you that insurance could be
arranged, I feel that there is not the slightest doubt
but that both points are included.
Even so, and while
I am allowing the matter to go forward on this basis,
yet I have today cabled the Federal Reserve Bank through
the Embassy confirming their cable on that basis.
In view of the change in amounts that may be
shipped, it may be necessary to have the insurance increased; but until this is fully determined will keep
strictly within the amount mentioned.
Sincerely yours,

-*

4:-

;11_,Y_
"

-

J
t7

_i_e_JeL.

-




London 60608

54

26

10h15

Benjamin Strong
Hotel Ritz

Paris

Bank figures two dollars and quarter per thousand for freight
normal times and one eighth per cent insurance or more payable dollars
stop

Believe outside rates telegraphed you safest
KENT




Claridge's Hotel,
Brook Street,
LONDON, W., England,
28th August 1919.

Mr. Benjamin Strong,
Ritz Hotel,
PARIS.

Dear Ben,
Your letter of the 26th instant with enclosures
You need give the
received this morning, August 28th.
Turkish-Armenian matter no thought whatever, as I have
done everything necessary and will be in position to make
a final report to General Harbord as arranged in a few
I am thoroughly convinced that nothing would have
days.
been gained by going to Constantinople, as I can get
more real light on the situation here than would be
Will sehd the report direct to General
possible there.
Harbord as requested, as I imagine that he desires to
have it in Constantinople to work into the balance of
The Imperial Ottoman Bank have been
his own report.
working upon the matter for several days, and I expect
to see them this afternoon.

As there is absolutely nothing further that I can
do at the Bank of England in connection with the Gold
at the moment, except to advise them of any changes that
it may be possible to make in regard to the amour*
covered under any one shipment, including the question
of train service covered in my cablegram to New York
copy of which I had repeated to you through the Embassy,
in Paris, I will leave for the Valley of Rocks Hotel,
Lynton, North Devon tomorrow morning.
Should any
telegrams or cables come for me while there they will
be forwarded without practical loss of time, and if
necessary I will come back to LOndon immediately.
Shall see Mr. Norman this afternoon the last thing
and make certain that I am correct in my judgment as to
the advisability of my being out of London for a few
days.
Of course, if I were not within easy call by
telegrabh I would not consider doing so, under anycircumstances.
The Federal Reserve Bank is cabling a short
repetition of the cables to me direct to the Bank of
England, so that the Bank would be advised promptly in any
event.
The instructions to the Bank of England stand

Mr. Benjamin Strong, PARIS.

0

SHEET 2.

positively and clear, and will only be changed as
proper authority is received from New York.
Sincerely yours,

-C>




28/8/1919.

Claridge's Hotel,
Brook Street,
LONDON, W.,

29th August 1919.
Mr. Benjamin Strong,
RITZ Hotel,
PARIS,
France.
Dear

Ben,

It
Your letter of the 27th received this morning, Friday.
is quite impossible yet to make any estimate that would be helpful
to Mt. Hoover for the reason that the experience of the Bank of
England in moving its awn Gold can hardly be used to estimate the
This is partly due to the
shipments for the Federal Reserve Bank.
fact that the amounts covered by insurance on one conveyance are
The
much smaller than those under which the Bank made shipments.
time involved will therefore be much longer and the incidental
expenses also, all of which will be covered in the bill which the
This
Bank will have to render after the operations are closed.
being true I believe that it would hardly be possible for the Bank
to make any estimate that would be a satisfactory one upon which
to base a settlement.

Upon my return to London September 9th I will take this matter
up, as sufficient movement will then have occurred to make it possible
to make a fair estimate.
We will also know before that time
whether the shipments can come forward more rapidly than under
present conditions.
Saw Mr. Norman yesterday afternoon and left 'aka copy of the
cablegram which
I
sent to the Federal Reserve Bank of New York
through the Embassy, and which I had repeated to you in Paris,
which, after reading, he said he would use as his bible for it
covered every phase of the situation.
Also left ti4letter with
him authorising him to act upon any telegram received by the bank
direct from the Federal Reserve Bank of New York, which might give
positive authority to make larger shipments.
Called Mr. Paice, the Cashier of the bank, on the telephone
and asked him if, as far as he could see, everything was in order;
and if it would be alright in his opinion for me to go on to Lynton
for a few days.
He stated that, with the copy of the cablegram whici
I had given him, they were in a position to move forward without
any delay or any further instructions, and therefore Igam goiz?.g
on to Lynton today.
Both Mr. Norman and Mr. Paice khow that
I will come back at a moment's notice if necessary.




Sincerely yours,

5, RUE SCRIBE
TEL: CENT. 79-75

Paris, Sept. 15, 1919.
Mr. Benjamin Strong,
Ritz Hotel,
London, England.
Dear Ben:-

Vias awfully sorry to leave London before your return,
but as I could see that the gold situation is all in order, with
the exception of a few unknown quantities that are at present
covered by estimates, did not believe that it would inconvenience
you in the 'slightest, particularly as I told Mr. Vaughan to forward copies of any new statements or figures to me here, so that
I could check them up.

Regarding the figures given by the Bank of England as
representing the melting cost, Ern inclined to believe after talking it over with three members of the office force who have such
matters in charge that it is based on the following:
The gold coin which was melted was practically full
weight, and therefore the shrinkage representing L123,000 represents both light weight and remedy, with the probability that the
coin itself was such a high average of weight that the loss was
due almost entirely to remedy. This being true, and as in figuring the value of the gold we have used the exact weight, thus
*having made allowance for light weight, the loss of gold in melting as determined by the Bank of England in their operations will
be found to run the same when applied to the figures which I prepared, which are based on actual weights of coin.

".

There is one thing, however, which should be borne in
mind, and that is that the remedy in Austrian coin is apt to run
much higher than in gold Marks, and as there were 18,300,000
Austrian Crowns, it might increase the percentage somewhat over
that shown by the Bank of England.
In talking with the Bank of England representatives
Friday afternoon, I told them that it was my understanding that7'
you wished the British banskept intact, but that you desired to
have the German bars melted and re-assayed. You of course will
give such instructions as you think best, but thought I would mention this, for if I gave any wrong impressions as to your wishes,
you might desire to correct them.




B. S. 2.

Expect to see Mr. Stettinius this afternoon, and if
anything develops that will be of interest to you, will advise
you.

Hoping you will not hesitate to continue to call upon
me exactly as if I were in London, I am,
Sincerely yours,

C=7
FIK/MKS

0




5, RUE SCRIBE
TEL CENT. 79-75

Paris, Sept. 18, 1919.
Mr. Benjamin Strong,
,'.Ritz Hotel,

London, England.
Dear Ben:IP4

Your letter of ths 15th, enclosing check to my order for
Francs 2,000, received. Did not care at all to have you send me
this check, but thought it could go against any settlement we had
to make later.
In connection with your suggestioc t t I make a statement of expense to you, feel that there is no Call whatever for my
doing so, and if from your point of view it is in order, I should
prefer to consider the whole matter settled./

r,

It was a real pleasure to me to 14ave the opportunity to
work with you, and I still wish to have yOu feel perfectly free to
call upon me. Can understand that if yqd really sail for New
York on the "Baltic" that there may be matters left over that you
would like to have the Bank of England/ refer to me. Should such be
the case, hope you will not hesitate Ao do so, for I would gladly
make a special trip to London shouldjit be advisable, and the same
thing is true RS far as Brussels an 'Amsterdmnare concerned.

Should this letter fail o reach'.7Ou before you sail, in
which case I presume it will be forwarded tO New York, you can reach
me by cable as follows:
"Kent
48anktrust
Paris". As you know,
I have a copy of Bentley's code, and also a set of check words, a

few of which I used with the Federal Reserve Bank.Youcould also
obtain a copy of the regular Bankers Trust code from our office,
should you prefer to use that, as I also have a copy of the Bankers
Trust code with me.

Hoping that you may have a most pleasant trip, and with
sincere regards, I am,
..4O$

FIK/MKS




Cordially yours,

(:7777=3

5, RUE SCRIBE
TEL: CENT. 7975

Paris, Sept. 22
Mr. Benjamin Strong,
Governor, Federal Reserve Bank,
15 Nassau St., N. Y.

1919.

OCT 1 5 1919

Dear Ben:-

Your letter of the 19th instant, dated at London just
before you,were to sail, received.
Am sorry .that you still have the Turkish matter on your
mind, as I thought that I wrote you fully and advised you that I
was preparing a report for Major GeneralHarbord. As a matter of
fact the Imperial Ottoman Bank were kind enough to give me copies
of the confidential reports which they had received from their
various branches in Turkey, with the understanding that I should
use great care, in taking from them, not to use any matter that
should properly be secret to the bank. All of the reports, except
two, are in French, and they are now being translated.
.

Lord Faringdo'n, whose organization controls the National
Bank of Turkey, is also having matter prepared for me, so that I
expect to be in position to give Major General Farbord a full report on his arrival in Paris.

Have already had a talk with the gentleman connected
with the Imperial Ottoman Bank in Paris mentioned in your letter,
but do not think I will get any additional information from him
that is not covered in the other matter coming forward.
There seems to be a little easier feeling existing in
Paris the last week over developing conditions.
The stopping of
the rise in the value of the dollar, even though it may be temporary, and its slight recovery (that is, from 9 down to 8.64 and
back to 8.90, and then to 8.82) has apparently been brought about
by the strenuous newspaper campaign concerning the exchanges
which has been 'carried on the last two weeks. This campaign,
while of course not affecting the actual amount of exchange in the
market, has had a tendency to make those having Francs to sell
hold off, hoping to obtain a better rate, and others having had to buydo11Kmdoing the same thing.
Just had a letter from Dr. Vissering this morning, enclosing another copy of his report. He said that he feared that
possibly his letter to you might not have reached London until after
you had sailed, and so thought it best to send a copy of the memorandum direct to me. When in Holland I realized fully that the
Dutch were tremendously interested in trying to take part in any



B. S. 2.

operation that might ultimately be developed. Both Dr. Vissering
and kr. ter Meulen asked me if I would not bear that phase of
the situation thoroughly in mind. In reality I had already been
giving it a good deal of thought, and talked over the situation
with Dr. Naon, of Argentine, when on the "Baltic".
Had luncheon with Mr. Simon last week, and expect to go
before the five principal French bankers for a quiz on the whole
situation sometime this week.
Am planning now to be in Amsterdam on October 9 to see
Mr. ,,arburg, as I think I can make that fit in aith my other engagements, so that it will work out most satisfactorily all
around. He seems to be tremendously anxious to see me for some
reason or other, as I had letters today from both Dr. Vissering
and Mr. ter Meulen trying to arrange a meeting.
Hoping that you may have had a most satisfactory return
trip, and with sincere regards, I am,
Cordially,

FIK/MKS




5, RUE SCRIBE
TEL CENT. 79-75

Paris, Sept. 25, 19.
Mr. Benjamin Strong,
Governor, Federal Reserve Bank,
15 Nassau St., N. Y.

IM
OCT 1 5.7919

Dear Ben:/\\--

As requested in your letter of the 17th instant, I
bought a carton of Lucky Strike cigarettes for Mr. Norman. It
was only Fr. 18, and you need not bother about it. As Mr.
Stettinius is going to London in a few days, will ask him to
take it with him,'as that will probably be the surest way of
getting it there.
It was very interesting to note in the London newspapers
the various articles about the gold shipments. It was very evident that the writers were extremely curious about the whole
operation, and could not get at the bottom of it. Some of them
even went so far as to watch the gold supply of the Bank of
England, and wondered why the importations did not increase it.
There is no doubt whatever but that the situation is
clearing a little in France. The increase in the price of the
French Franc, even though it has been small in comparison with
the discount, has given a better tone, and has seemed to encourage French interests very much. There seems to be a feeling in
the street that it is largely due to the newspaper campaign which
has been going on here, which, if true, can only be temporarily
effective.
At present I am planning to go to Amsterdam the end of
the first week in October, as Dr. Vissering is anxious to see
me, and Paul Warburg will be there at the same time, so that in
connection with other matters I can make the trip of considerable
count.

Had luncheon with Mr. Simon the other day, and de
Neuflize is to take luncheon with me today. Also saw Mr. Delano
yesterday, who is to take luncheon with me tomorrow, and by keeping after different ones I hope to gather in every angle of the
situation that is possible.
They have asked me to sit on one of the temporary Repgration Committees, which I have agreed to do for a few days at
least, in order to help them get started.
Whether I can keep it
up long, I doubt, as they waste too many hours. Yesterday, for
instance, the French and Italian delegates argued back and forth
for a whole hour over matters that could not possibly be settled



B. S. 2.

*

until a general plan of procedure had been developed.
Finally
I suggested that a gab-committee draw up a plan to be submitted
to the general committee, so that we could get down to brass
tacks and argue on matters that had some bearing on the subject,
This was agreed to, and then they started in on another long
harangue, which I interrupted with the suggestion that before
we approve or disapprove of any particular policies, we await
the report of the gab-committee, as otherwise we might embarrass
them very seriously in developing a plan. This was agreed to,
and then I suggested that we adjourn, which fortunately worked,
so that we finished the same day.
le have a meeting of the subcommittee this afternoon at 4 o'clock for one hour, and the
general committee is then to join us at 5 o'clock.
In the meantime after finishing this dictation I am going to tackle the
problem myself. There is no question but that it is a tremendously difficult situation. On the other hand, it is solvable, and
in fact a solution must be reached, and promptly.
The work is
preliminary to the meeting of the Reparation Committee after
its appointment, provided it ever is appointed. If anything
develops in connection with this work that I feel would be of
value to you, particularly in view of what may take place when
appointments begin to be made, I will advise you fully.

Colonel Logan is going to,send you a cablegram on Monday
of a memorandum which I expect to turn in to the Committee,
unless something develops in the meantime to make me change my
opinion as to its desirability. Thought it best for him to send
it to you, so that you can take it up with the Treasury, rather
than the other way round, in view of certain possibilities.
Have given the films to a shop here in Paris, and will
forward the pictures to you as soon as received.
Sincerely,

FIKALKS




5, RUE SCRIBE
TEL: CENT. 79-75

Paris, Oct. 3, 1919.
Mr. Benjamin Strong,
Governor, Federal Reserve Bank,
15 Nassau St., N. Y.
Dear Ben:-

OCT 1 5 1919

Am just in receipt of your cablegram advising me that
you have received cable from the Bank of England that gold
shipments had been stopped Sept. 27. Before receipt of your
wire, had a reply from Norman to my cablegram to him, thanking
me for having wired and advising me that he had cabled you that
2
shipments had been 'stopped.
In view of the fact that
promptly looked after the matter, I am greatly pleased that my
cablegram to him stated that my action was taken fearing that
possibly he might not be able to communicate with his representatives in Holland and Belgium promptly. His cablegram in reply
shows that he thoroughly appreciated the point of
We did not have sufficient information as to the development here so that I could tell whether telegraphic communication
was affected, as well as transportat/on, so that I felt it best
not to take any chances.
Am very Glad indeed to know that no shipments were in
transit, as Norman's cablegram to me states.
Have not yet sent the cigarettes over to him, as Mr.
Stettinius changed his plans and sailed on the La France instead
of going over to England. Am holding them here, and will get
them over as soon as the railroad strike is settled.
The pictures are not finished as yet, but I will forward
them as soon as received.
Sincerely yours,
1

FIK/MKS




5, RUE SCRIBE
TEL: CENT. 79-75

Paris, Oct. 22, 1919.
Mr. Benjamin Strong,
Governor, Federal Reserve Bank,
15 Nassau St., N. Y.
Dear Ben:-

Enclose herewith letter addressed to you from the Embassy,
and presume it may contain bills for cablegrams, as I received a
similar letter enclosing papers which I am sending with this letter, as the cablegrams referred to were all account Federal
Reserve Bank business. Have paid the Embassy for the cables account General Harbord Commission, which were rendered in a separate bill.
Have advised the Embassy that the bills have been forwarded to you, and that you will remit for them direct, so that
they will fully understand the cause for the delay.

Your cablegram advising me that you had cable advice from
the Bank of England stating that gold shipments could be resumed
was received, but several days before it arrived I had advice that
the Bank of England was ready to resume Shipments, and authorized
the Banque Nationale de Belgique and the Nederlandsche Bank that
unless they had instructions from you to the contrary, Shipments
could be resumed at the request of the Bank of England. This
placed the whole matter in order, and cancelled all restrictions
contained in the telegrams which I sent at the time of the strike.
Everything is moving forward satisfactorily, and Dr. Vissering
stated that he anticipated no friction of any sort.
Sincerely yours,

FIK/MKS
Enc.




5, RUE SCRIBE
TEL CENT. 79-75

Paris, Oct. 27, 1919.

Mr. Benjamin Strong,
C/o Federal R
Reserve Bank, //
15 Nassau St., N. Y.
Dear Ben:-

While I hold the photographer's receipt for the films
that I delivered for the purpose of having prints made, yet he
has been unable to find them, and while he feels certain that
they will turn up eventually, yet at the moment to my disgust I
am not in position to forw,rd you the pictures.
As soon as they come to light, if they ever do, I will
get them to you immediately.

FIK/mKs




5, RUE SCRIBE

Ks-4,5011,k

ANO

TEL: CENT. 79,75-

ParisAv.

18, 1919

Sav4 sr)c1.,

et

Mr. Benjamin Strong,
Governor, Federal Reserve Bank,
15 Nassau Street,
New York.

Dear Ben:You may not have realized it, but I have had a very delicate
situation to handle. Dr. Vissering as I wrote you called a meeting in
Amsterdam which I attended, after which It was determined to call a further conference which was to include representatives from the neutral
nations of Europe other than Spain. This was all constructive and had
the elements of a development that might result in much good. In fact
it has already done so.

At the second meeting it was proposed by Ur. Keynes that a
Memorandum be filed with the League of Nactions, which was to be signed
by representatives of all the countries concerned. This you know as I
forwarded a copy to you immediately upon my return to Paris. When doing
so I did not stop to think that it would of necessity reach you long
before I could give you all the further facts of the development and it
was really sent forward as preliminary information. As I wrote you, I
did not propose to allow anythihg to go forward that would have a tendency
to embarrass our Treasury Department, and on that account I arranged in
Amsterdam to have the whole matter held up until I could present it to
our Goverment for consideration. It seemed the best way to handle the
matter and I am convinced that it will in the end bring better results
than if I had caused the conference in Amsterdam to break up in a great
division of opinion that would have made everyone feel as though their
time had been wasted. As the matter stands to-day, all the members of
the conference, as far as I know, feel that something real was accamplished in ascertaining as we did the attitude of our Government which
has resulted in preventing the Memorandum going forward to the League of
Nations.
Before going to Amsterdam I told Rathbone that I would let him
know immediately upon my return just what was done and as soon as rcould
see him after I got back, I explained the whole situation and he cabled
the Memorandum to Washington. The reply received was quite to be eipected
as far as their attitude toward the Memorandum is concetned, excent that
their opinion as to the filing of a memorandum with the League of Nations
in any form was unknown to me. While personally I knew of no reason why
some such memorandum should not be filed with the League of Nations, yet as



B. S.

2.

I was not familiar with the negotiations which had resulted in its development
I did not know how the President expected to have it used and could not tell
whether it would be desirable or not. On this account, it seemed better to
ascertain the opinion of the Administration before the idea was turned down.
Their reply is positive as to their feeling that the League of Nations should
not be applied to in connection with any financial matters, and I have notified
Dr. Vissering for the benefit of all members of the Conference, as per copy of
letter enclosed herewith. As a result of this manner of handling the situation,
the members dt the conference are all ready to come to Paris whenever the time
seems ripe for the purpose of endeavoring to build up some cooperative scheme
among Bankers only, in the various countries to help the situation. Whether this
can be done I do not know.
The detail of accomplishing it is, to my mind, very
simple and I feel that I could draw up a plan that would be extremely effective.
On the other hand interests in the United States may not feel that it is the way
to operate and on that account I do not propose to go any further with the matter
until I know their feeling. Should it so happen that American bankers would
look upon the cooperation between the countries as of value, the meeting in Paris
could be quickly arranged. If on the other hand the Bankers in America believe it
unwise to attempt any cooperative scheme, I can present it in proper form at the
right time to Dr. Vissering for distribution to the members of the Conference.
In any event, I feel much has been gained, for the meetings brought out a large
amount of information which was of real value.
One thing in this connection that might interest you is the fact
that it developed in the last meeting that the neutral nations themselves are
more or less anxious about their own inddstries,fearing that possibly Germany
once she gets started can rapidly make it difficult for them to carry on their
industries. At first thought one might feel that the neutr4 nations were
principally aoncerned about the situation because of their fear that they might
lose the money which Germany owes them. While this is unquestionably true to
a certain extent, yet the other feeling expressed at the meeting seems to be
very strong and I am not certain but that they would rather take the chance of
losing on the loans which they have made than have their industries disrupted
through a too quick coming to life of German manufacture.
Sincerely yours,

1 Eric.-

P.8.- Was obliged to hold this letter from November 18 until
to-day December 2, as the statement from the Treasury was not avallablaefore.




dr; .tle,

Paris, Jeovieber 2, 101D40

ee I/lettering,

President, Nedorlandoehe Bank,
,moterdua, nollends

Bwor Jr, visseriags.
Repay to the *abler.* referred to In
former letter Suet received,
It Is most ferlenste that the proposed memorandamwas holdup, as it would not
be eseentable to our government to ?LAN, it pretentod to tin) Lowe of Nations,
ilher in Its present term or otherwise, AS the oontenenao oalied in Arrtordam
es0 solely for the purpose of endaavoring to find avow to be helpful to the
Situation, and,e4 I am ceavineed bayou* doUbt that no greater mistehe eould
Mode than to tile the preeeted menoraedin with the nea&me of Nations, I am certain
that the otAlr eerbers of the zonfatomWO 1411 be vary hapv to larn7 that'tnis
infeesation ha* been obtainod in tin to prevent tan harm being Ono, and furthar4
that th aantetronao has already resulted In eooesolishingmneh of value, In that
the attitude of our government has beea esoortained, as ,et forth in sn enthorl';

tatty° otntalent of the point of view of the soareterg of the Treesury of the
United Autos, eaelosed haveeith. I think-it will be tally reoomised by every
member of the oontorenoe that t40 letto7 ehnwe a ;vest omprahonaive underetanding
of tho earepeen situation, amid that it should)* our effort to work along linos
steedto eaeenerate with the ideos expressed in it,
410- reams for the delay In develeping a stinfeetory moans to fiok-Ace
ther It
Aorepeen foreign trade hae boon due to the diffrtroloo of opinion as 10
shoeld be. dertekon UV government in part or In dhotis, In the event that gm*,
wont had undertaken the rantter, the United Aoteo would undenbtedly hem boon
Galled ',von by the (neer nation' oonoerned to havo tai,xnx matt a principal part
that it meld re,me boon abserd to hero pr0000ded lj oy lime oinied to eoeneplish the muting or loans Urals* a wormlat pool unless the Treasury Depaehtent
of the United Jtatos wal fully In word with the ideas In view of the oonsteat
nonOtiatione tetweaa Goverweents that wore naeoseary diringtho lee., and that are
O4 w naoosokay la oonneotion with pewee, thich nave been and met centime to be
for SIXAO time of &moot nelicato nature, it vould be aztreeoly minim) for anu body
Of men, no matter how eavnest they aicirt be In perpoee, to undortake to 43volop
a combination between coverneentelelhoot governmeutel ontravnlo lio aramimit
intelligenDe applied without knowiedoe of the nature of negotiations uhichwere
beinnand Are being m.i.eried on masa be expected to bring about a eatiefaotery

resat, t this eruekial time in es merldb hietefp, It is ptvtioulavly ilvertent
lot to interfere in an:7 manner vim goverwantel negettations whore all of the!sots are not clearly mndarntoode
"Aging fral the *Weft attitude of ell of those ebo attendod the
enferenes4 1 me gelled" tqat Oath sei every one is in eem)rd with this pellet.ef.
.

vise,




Havingbotore us t4o statelont of the jearatary of the Treasury
of OW United atetos, with Tfitoso views I fully ogroo, has plod us in position to
oonsider sh.4 is boat to be 11)113 iloom the standpoint of bettor :,,nowledee of the

Sitalatiell al it aoplioo to isoveAssental attitude, that is, of tho wtioular

overrnontviiich other zoverryouts 17011ti 3.;7root to toga a prineipal part in am
largo estrorroontal 1411aning operation whioh ntie)tt b Sava:Teti We otui nowe there-

fore, move for;art with intelligonoe, wit bring tot:ether ell baradne Polar 1'03011)1e
to ad in the fingLnalne Of the et:V.0144,94-03 of commodities botmetv

2410 the situation as a, 1,50.010 is being oonsidered, the bailers
of the no:Aral oountrios of ?Wow owl help trade to financing barter itherovor
oonilitioas vtio,ent. hi SOWS a tleat impovtatt thing to undorta0, and ons that
will stimulate additional ;Activity in the exulusige of gooCos batmen splistries while
a more oompreheasivo sohesto of financing to WM104 MA* P:1:ovidO'd it PINS411 Cidri saw
blo and Z00051Larg to 41oveleplamptillog of the kind*

4poore2y hoping that sor position in the matter is In full aomrd

with that of *Very other ,:itscsber of the oonforence, and asking that you kindly

distiritato wpios of We letter to ottoli ono otmeurned, I a

Very trail years,
vixtaca.




k

(Copy)

Since the Armistice the United States Treasury has advanced
to the Governments of the flutes as of the close of business November 15th, 1919, the sum of t 2,Z29,P5$,1743.55, and there remeined
on November 15th, 1919, an unexpended balance of 093,64),111.45
from the total loans of $ 10.000.000.000 authorised under the Liberty.
Loan Acta The Treasury seese no need of an additional appropriation
for Government loans, though it mae later have occasion to ask the
Congress to make some further modification of the terms under which
the exieting appropriation is available The Treasury asked and obtained power for the Ter Finance Corporation to make advances pp to
the emount of 41.000.000.000 for non-war purposes, and the War Finance
Corporation is prepared to make such advances. The Seeretary of War

is authorized to sell his surplus otoree on credit

.

The power which at Hresent exists in the ilovernment or Governmene-

al agencies to assist in meeting Eurepe's financial needs is therefore
This power must, of course, be exeroiaed with extreme
caution and with the most careful regard for the urgent needs of our
own people for an ample supply of foodstuffs and other necessities of
coneideruble

life et reasonable prices.
The Treasury is prepared at the convenience of the Governments

of the Allies, to take up with their representatives the funding of the
demand oblegetions which the United States holds into long time oblige.
tions, and at the same time the funding during the reconstructinn pe-

riod or say for a. period of two or three years, of the intereston the
obligations of Foreign Governments acquired by the United Stetee under
the Liberty Loan tots .



2

The Treesury believes that the need of Europe for financial
assistance is very great and very real, though it has been very
much exaggerated here and abroad. Our hearts have been so touched

by the suffering which the war left in its ttain and our experience
is so recent of the financial condition which existed during the war

.

( when men were devoting themselves to the business of destruction)
thet we are prone to overlook the vest recuperative power inherent
in any country, which though devastated has not been depopulated and
the people of which ere not starved afterwards. e must ell feel deep
sympathy for the suffering in Europe to-day, but we must not permit
our sympathy to warp our judgment and by exageerating European financial needs make it more difficult to fill them. Men must go baok to
work in urope; must contribute to increase production. The induetyies
of Europe, of ()aurae, cannot be set to work without raw material,

machinery, etc., and to the eetent that these are to be seoured from
the United States the problem of financing the restoration of Europe
belongs primerily to our exporters . Governmental financial assistance
in the past and talk of plans for future government or banking kid
to finance exporters has apparently led our industrial concerns to the
erroneous expectation that their war profits based so largely on exports will continue indefinitely witlout effort or rision their part.
To them will fell the profits of the exports and upon them,will fall
the consequences of failure to make the exporte le coon es domettic
stocks, which were very low at the time of the Armistice, have been
replenished, those industries which have been developed to meet a demend for great exports paid for out of Covernment war loans will be



forced to close plants and forego dividends unless they maintain
and develop an outlet abroad The industries of the country must
be brought to a realization of the gravity of this problem ; must
-go out and seek marketa abroad

;

must reduce prices at home and

abroad to a reasonable level, and create or cooperate in creating

the means of financing export business .
Since Armistice ray the consistent policy of the Treasury

hes been, so far as possible, to restore private initiative and
remove governmental controls and interferences. It hes been the
view of the Treasury that only thus can the prompt restoration of
healthy economic life be gained The embargoes on gold and.silver and control of foreign exchange have been removed, as well au
the voluntary and informal control of call money and the stock
exchange loan account

The contrcl exercized by the Capital

Issues Committee over capital isetes hee been discontinued. Thus
the financial markets of the Unite:- -taltes have been opened to
the whole world and all restrictions removed that might have
hindered America's capital end

credit resources, as well es its

great gold reeerve, from being available in aid of the world's

commerce and Europe's need .

There are those who believe that the dollar should be kept
at

,,zr.16?

ore

Oless ts of foreign exchangee If effective action
markets

were taken to carTy out such a policy, it could only be. done 147
drewing gold out of the United , tetes when the dollar would
otllerwiee be at 8 discount and by inflating credit when the dollar
would otherwise be at a premium



4

The dollar is now at a premium almost everywhere in the world.

Its artificial reduction and maintenance at the gold par of exchange
in all currencies is quite unthinkable unless we propose to level

all differences in the relative credit of nations and to substitute
for our gold reserve a reserve consisting of the promises to pay
of any nation thet chooses to become our debtor Inequalities of
exchange reflect not only the trade and financial balance.' between
two countries, but particularly after a. great war such as that we
have been through the inequalities of domestic finance The United
states hes met a greeter portion of the cost of the neoessary war
measures from taxes and bond iesues then any other country . Larrely
as a consequence of this policy the buying power of the dollar at
home has been better sustained than has the buying power at home of
the currency of any European belligerent For the United States
to determine by governmental action to depress the dollar as measure.
ed in terms of foreign exchange, and to improve the position of
other currencies as measured in terms of dollars would be to shift
to the ,fmerican people the tax and loan burdens of foreign countries. United States Government action at this time to prevent in
respect to foreign exchange the ordinary operation of the law of
supply and demand which automatically sets in notion corrective
causes,and to mske en attempt to prevent the dollar from going to a
premium when its natural tendency is to do scr would a a ne4ral
boafilmeY consequence stimulate our exports and through the competition of export demand with domestic demand maintain or ilacv,:ase

domestiv prices. Had the tilled Governments, after they had relaxed
the War control of their imeorte, attempted to continue to hold the




5

exchange value of their currencies in the United Ftates at au
artificial level by further borrowings, the effect would necesearily have been to stimulate their imports and to discourage their
eeports, thus aggraveting their already unfavorable international
bele/aces.

,

It is essential to discriminate between plans on the one hand
to sup,ort exchange by direct Potion of the United 7tates Government sAd plans on the other hand to facilitate the extension of prtvete credit and the investment of private ceeital in Europe. To the
former the Treasury is utterly opposed . Of the latter the Treasurer
heartily approves. some progress has already been made in placing
in the United States through privRte channels the loans of Allied
and neutral Eurtpeen countries and municipalities. The Treasery
favors the making in our markets of such loans which contribute
to relieve the exchanges. I am sure that .American elrporters and
European importers will ley the basis of credit in sound business
transactions and I know that .Americen bankers will not fail to
d vise means of financing the needs of the situntion, nor fterican
investors to respond to Europe's demand for cenitel on a soend
Investment basis .
Meanwhile it is well to remember the silent fectors which
are always rt work towards a solution of the problem. ImMisgrents'
remittances to Europe are and will continue to be a ve7 large item
in rectifying the excherges. Foreign travel will be m ffirther item.
Another very important fector is the purchase of European securities
and repurchase of foreign held tenericen securities by American investors. But the principal factor in Europe's favor is the inevitable




6

ourtailment of her imnorts and e-pension of her exports These
processes, Of course, are stimulated by the very position of the
exchanges which they terd to correct .




5, RUE SCRIBE
T6. CENT. 79-75

Paris, Jan. 7, 1920.

Mr. Benjamin Strong,
15 Nassau St.,
New York City.
Dear Ben:-

My films were ultimately located, and I have had extra
prints made for you, which I am sending under another cover. I
am sorry for the delay. On the other hand, as the people in New
York who put the new lens in my camera did not set it properly,
so that it was not parallel 7ith the film, the pictures are not
in proper focus. I realized this, and endeavored to correct it
by pushing the top of the shutter away from the film when taking
the pictures, and succeeded in getting it about right in a number
of cases, but to my disgust the majority of the pictures are really spoiled. Even so, I am sending them on as a few of them may
be useful to you in connection with the trip.
On some of my other trips I endeavored to retake some
of the scenes that I thought might be most useful to you, but I
found it quite impossible to hold the lens with any degree of certainty as to focus.
Should have had the camera fixed before I
went out again, but no one seemed able to do it. Am much disappointed, as I have a really very fine lens that has given me some
wonderful pictures in the past.
Dr. Vissering was in Paris a few days ago, and spent several hours with me. He stated that they had become rather convinced in Holland that it would be better to wait n little before
making loans to Germany until the future developments could be
ascertained a little more clearly. This was an extremely interesting statement, in view of the fact that there is evidence to believe that Dutch interests are going into Germany in a very large
way, making investments wherever they find a good thing, while at
the same time, hoping to keep others away, the same interests are
shaking their heads about the German situation, and saying that
everyone must be careful what they do there. Of course I would not
accept Dr. Vissering's statement as being in line with on attempt
to play any such game, but it was extremely interesting in view pf
the other developments which have reached me through absolutely
authentic sources. This is, of course, strictly confidential, bIt
as it is so indicative of many of the things that are going
on in Europe, thoughtyou would be interested in hearing of it.
Am wondering what you will think. of Keynes' boo', which
was just published. Intended to get a copy and send it to you,
but they have none in Paris, and Brentano's say that the first edi


B. S. 2.

tion was all sold and none of the books are obtainable. The copy
I read was one which Rathbone let me take. The book is so right
in many particulars and so wrong in others that it is quite a
curiosity. Keynes feels the matter very earnestly, and before the
book was published, told me that he was going to put it out end
was fearful it might make more or less friction, but felt that it
was his duty to publish it even so.

4

The situation in Austria is frightful, but the Allies
are really doing what they can to help at the moment. The Russian
situation is, of course, a fright, and I guess has been about as
badly mishandled as human ingenuity could devise. Just what is
going to happen there, no one can foretell. There is a possibility,
however, that the British Government may ultimately join with
the 7rench and stop the thing, although the attitude of labor in
both countries is such that there may be difficulty in their doing
In fact the attitude of labor, which has been recognized by
so.
the opportunists as being something that they must keep in step with
for their own good, is at the bottom of the whole Russian development, otherwise the situation would have been controlled immediately
at the time when it could have been done without difficulty. However, we have to march from today, and cannot return to n former
state even though it is comparatively recent.
9,incer617,

C:7
FIK/MKS




5, RUE SCRIBE
TEL : CENT. 79-75

Paris, Jan, 23, 1920.

Hon. Benjamin Strong,
Governor, Federal Reserve Bank,
15 Nassau St., N. Y.
Dear Ben:-

Note in the London Times that a great number of prominent Americans have signed the memorandum prepared in Amsterdam
after the elimination of a certain part of it, and am very curious
to know how it is being received in government quarters.
In view of the attitude of the Treasury, I of course
dropped out of the situation after accomplishing two things which
they particularly desired, one, to prevent the memorandum from going to the League of Nations, and the other, to eliminate the
question of marking off loans.
Thinking it might interest,you, would call your attention
to the fact that Rathbone is making a most favorable Impression
here, and is handling himself very well. He is certainly a man
of very great ability in his line, and is a hard worker.
With sincere regards, I am,
Cordially,

FIK/MKS




5, RUE SCRIBE
TEL: CENT. 79-75

Paris, Feb. 26, 1920.

Mr. Benjamin Strong,
15 Nassau St.,
New York City.
Dear Ben:-

Your letter of Jan. 27 just received, and I am so glad
that you are having another opportunity to "patch up", as I
firmly believe that if for a time you take periods away from business that you will finally overcome all of your troubles and get
back much of your old time strength. You must remember it is
pretty hard on a poor human body to have to carry around such an
active mind, and you must give it every chance you can. With the
Liberty Loans finished it would seem to me that if you once got
well rested now that nothing should develop that should in any way
be taxing. While you will have many problems to solve that are
most difficult, yet they will not require the same sort of concentrated energy that was true during the war. If you have this well
in mind, I think it will not be long before things will work out
much better for you.
When we were traveling together here I felt tremendously
encouraged about your condition, and really believe that you have
a wonderful chance to beat it for good and all if you are just a
little over-careful, so to speak, for a time.
Possibly this may seem peculiar advice coming from me, because I do not seem to be able to do the same thing myself. On
the other hand, having had experience my point of view should be
all the more valuable.
After you left my ears did get worse and worse for a time,
due to the awful weather conditions existing here in Paris, together with the fact that there was not enough coal to keep things
warm.
ie worked in this office with a thermometer of from 58 to 62
for days. However, I was fortunate enough to be sent to a French
specialist, to whom I go every day. He is an old man, and is wonderfully careful, as well as knowing what he is about every moment.
He has brought my ears back to where they were before I came to
Europe, and promises to carry them still farther forward before
return.
In fact he says that if I could get rested, he feels that
even now they would be much better.
Opportunities to rest at the
moment, however, do not seem to exist in this part of the world, at
least as far as I am concerned. After accomplishing a few more
very difficult stunts, however, I am rather inclined to believe
that things will let up, and I think I can see my way clear to
solve some of the problems already before me.



I
Cr
/613.

S. 2 .

Am sure it would interest you to know that ou4 government and the British Government after going into the situation
carefully determined that it would be advisable for the British
Government to approach the neutral nations in order to see whether
they would join with the United States and Great Britain in looking after Austria and some of the other countries of Central Europe,
that is of course provided that the 050,000,000 loan which is now
before Congress is passed. The British Government requested me to
sound the neutral nations and ascertain whether it would be agreeable to them to be approached. I immediately took up the matter,
and have succeeded in arranging with Holland, and Norway, Denmark
and Switzerland, and hope to have a favorable answer from Sweden
in the course of a few days. This afternoon we are to have a
meeting between the representatives of the British Government,
the Austrian Government and the Swiss Government to get the matter
lined up. Then the British representatives will take it up in
The Hague and Copenhagen. Of course if our government does not
pass the $50,000,000 credit the whole situation is lost.
It is on
that account that I sent a cablegram to McHugh, Chairman of the
Committee on Commerce & Finance of the American Bankers Association, of which I am a member of the Executive Committee, that may
have come before you long before this letter reaches you. This
whole matter of course is confidential, but I thought you would
be very much interested in it. Austria is really in a bad way,
and the whole of Europe might be sets onfire if the situation is
not taken care of. The British have done wonders in helping Central
Europe, but of course the cheap politicians in our country are all
the time twisting the lion's tail, and every time Britain makes
a move, they say it is because she wants to beat us at something
or other. You would be tremendously interested in knowing all of
the detail of this situation, and sometime I hope to be able to
tell you about it. At present, however, cannot write more, as I
have an appointment that prevents.
Hoping this will find you improving so rapidly that you
will hardly know yourself, and with sincere regards, I am,
Cordially yours

FIK/MKS




CAPITAL $20,000,000

SURPLUS $ ri,zso,000
MEMBER FEDERAL RESERVE SYSTEM

OFFICERS

OFFICERS

SEWARD PROSSER. PRESIDENT.
D.E.POMEROY, VICE PRESIDENT

BEACH POLK, ASST, TREASURER.
WA. MEND ERSON, ASST. TREASURER.
H.H. MARTIN. ASST. SECRETARY
H. BANAT, ASST. SECRETARY.

BANNERS TRUST

F IN ENT, VICE PRESIDENT.
F. N.B.CLOSE, VICE PRESIDENT.
A.A.TI LN EY. VICE PRESIDENT.
H.J. COCH RAN. VICE PRESIDENT.

COMPANY

THOMAS H/LDT, VICE PRESIDEHT.
H.F. WILSON,J R., VICE PRESIDENT.
W. P. BELKNAP. VICE PRESIDENT.

CLIFFORD WILMURT, ASST CASHIER.
L. S. STILLMAN, ASST. SECRETARY.

E.G ODRIDGE, ASS, TRUST OFFICER.
F. TR EPC E R, AS ST. TREASURER.
L.C. 0 UTCAU LT, ASST TREASURER.
J. H. LEWIS, ASST.SECRETARY.
C. BOCK , ASST. TREASURER.
C.W. CAM PBELL, ASST. SECRETARY.

16 WALL STREET

-AND --

B. W. JONES, VICE PRESIDENT.

S. MORE ER, VICE PRESIDENT.

Sa" AVENUE AND 42t4_. STREET

R. L. HI ORR I S, VICE PRESIDENT.

R.H.GILES. vior PRESIDENT 6 TREASURER.
J.F. SCHMID. VICE PRESIDENT
B. A.TO M PKINS, VICE PRESIDENT.

W D. Li THGOW, *SST TRUST OFFICER.
C. C. PRICE, ASST. TRUST OFFICER.
H. E. WHITNEY. ASST. TREASURER.
F. A. KLING SM ITH, ASST. TREASURER.
L. H. PLUMB, ASST. SECRETARY.
HUGH H. M PGEE. ASST. TREASURER.

CABLE ADDRESS BANKTRUST, NEW YORK.

BENJAMIN JOY, VICE PRESIDENT.
R. G. PAGE. SECRETARY.

BARKLEY WYCKOF, CASHIER
M.N. 0 UN HAM, ASST TREASURER,
LMICHAE LS, TRUST OFFICER

W. W. AYR E S. ASST. TREASURER.

O.W. ROOSEVELT, ASST. TREASURER

16 WALL STREET

NEWYORK,

FOREIGN EXCHANGE DEPARTMENT

Hon,

Jan. 24, 1921.

?
d./-1

Benjamin Strong,
Governor, Federal Reserve Bank,

15 Nassau St., N. Y.

JAN 25 1921

Dear Ben:-

two copies of The Proposed International
Scheme of The League of Nations, as promised you this noon.
Sincerely,
Enclose

Credits

FIVIES
Enc.




herewith

Issued Monthly
BY THE

Publicity Committee
OF THE

American
Acceptance Council

ACCEPTANCE BULLETIN
OF THE

AMERICAN ACCEPTANCE COUNCIL
III BROADWAY, NEW YORK

Vol. 2

November, 1920

No. 11

for the information of members

and local associations of the
Council and, through them,
the business and banking public generally.

The membership of the Coun-

cil embraces three classesactive, associate and supporting.
These include representatives
of business and financial organi-

zations of state, interstate, national and international scope,
representatives of local associations of the Council, and individuals, firms, partnerships, banks,
bankers and corporations.

Genera: information concern-

ing the Council will be supplied upon request. Address
ROBERT H. BEAN,
Executive Secretary,
111 Broadway,

New York.

The Council was organized "for

the purpose of conducting and
directing a nationwide educational campaign designed to inform the business people and
bankers as to the merits of trade

and bankers acceptances, the
method of their use in foreign
and domestic merchandising,
and for the further purpose of
aiding in the establishment of
a comprehensive open discount

market, and to assist in other
matters that will improve the
credit system and strengthen the
financial position of America."
Publicity Committee
FRED I. KENT, Chairman
JOHN E. ROVENSKY
E. R. KENZEL
GEORGE E. ROBERTS
M. L. FARRELL
KIRTLAND A. WILSON,
Mgr., Publicity Dept.




Bankers' Liability Under Commercial
Letters of Credit
BY FREDIKENT
Vice-President, Bankers Trust Co., New York
The tremendous foreign trade of the United States during the
last five years could not have been carried on had it not been for
the Federal Reserve Act through its authorization of the bankers
acceptance and the regulations of the Federal Reserve Board covering such financial obligations.
Previous to 1914, our foreign trade had largely been financed
by Commercial Letters of Credit issued in Pounds Sterling and
drawn upon British banks. The Dollar Acceptance was unknown
throughout the United States in regular practice. As a market
has been built up in the United States for the Dollar Acceptance
as authorized under the Federal Reserve Act and the regulations
of the Federal Reserve Board, a constantly growing number of
American banks have been engaging in the acceptance business.
This has been undertaken in part through the issuance of Commercial Letters of Credit for the importation of goods into the
United States. Under the terms of such Letters of Credit, American bankers have agreed to accept upon presentation drafts drawn
upon them at sight, 30, 60 or 90 days after sight, or other periods,
when accompanied by certain documents described in the Letter
of Credit showing that the goods covered by the Credit had been
shipped according to the terms of the Letter of Credit, such as
bills of lading, insurance certificates, etc., etc.
During a period of stable or rising prices, operations under
such Commercial Letters of Credit are carried out with little or
no friction, as there is generally a market for goods covered by the
credit upon their arrival in the country of import. When, however, prices are falling and importations lose a large per'centage

of their value while in transit, serious difficulties may arise.

Throughout the entire period that American banks have been able
to accept in dollars against Letters of Credit issued by them, there

has been steady increase in prices, with occasional periods of
partial steadiness, until the recent severe drop in the prices of

many staple commodities took place. It was not unnatural; therefore, that the acceptance business of American banks should have

run on smoothly during the time of rising prices, even though it
was a new business to most of them, and that friction should have
developed since the fall in prices started in, because it is a new
business to them. Irrevocable Letters of Credit worked so easily

ACCEPTANCE BULLETIN

2

and profitably during the first period that many
bankers engaging in such transactions did not
realize-that they were assuming obligations just
as binding when issuing such Letters of Credit
as when signing checks or receiving deposits. As
a result, since prices of commodities began to
fall some American bankers have had the idea

that where their client, the importer, had had
goods shipped to him by foreign exporters that
were not according to contract, the banker could

protect the importer from such fraud by refusing to accept drafts drawn upon the banker under
outstanding Letters of Credit, whereas the bank-

such Credits. Of course, if foreign negotiators

of such drafts find that certain American banks
attempt to dishonor them, they will in the future
refuse to buy bills drawn on such banks.
It is so vital to the foreign trade of the United
States, however, that the credit of the Dollar Acceptance be maintained throughout the world that
it is conceivable that the Federal Reserve Board
may well find it advisable to recommend to the
Federal Reserve Banks that they stop buying the
acceptances of any American banker who has so
little regard for his credit, or that of the United
States, that he will refuse acceptance of a draft

er has no such right if all of the terms of the drawn under his irrevocable Letter of Credit

Letter of Credit issued by him have been lived when all the terms of the credit have been comup to, and he must honor drafts which are pre- plied with, even though the law later forces him
sented to him in regular order, regardless of any to honor such draft and to make good any loss
breach of contract that may exist between the that may have been caused by his breach of
exporter and the importer concerning quality of faith. While the foreign or domestic buyer of
goods, or similar questions, if the Letter of Credit American bankers acceptances and bills of exdid not contain any stipulations in this regard that change drawn in conformity with the terms of
had been violated. Again, certain importers have

been led to believe that they could protect themselves against fraudulent shipments by an exporter made against an irrevocable Letter of Credit
by obtaining an injunction restraining the banker
from honoring drafts drawn under such credits,
whereas if the terms of the Letter of Credit have

Dollar Letters of Credit will find himself

fully protected under the law, the banking and

business community ought not to leave any doubt
that it unreservedly condemns any wilful at-

tempt to disregard sacred pledges, and that it
will not permit mistaken or misguided actions

of a few to jeopardize or damage the good

been lived up to he has absolutely no right of name of a class that is jealous to keep its
injunction against a bona fide negotiator or en- business reputation beyond reproach.
dorser of such a draft. It is necessary, therefore, that every banker issuing an irrevocable
Letter of Credit, and every importer who author-

NEW SERVICE MEMBERS

izes a banker to issue such a Letter of Credit,
The following have been added to the service
realize that if negotiators of drafts under the membership of the American Acceptance Council
Letter of Credit see that all of the terms of the since the publication of the last issue of the
contract of the Letter of Credit are carried out ACCEPTANCE BULLETIN:
that such drafts must be accepted upon presenCalbro Mills, New York City,
tation if in regular order, regardless of any conH. L. Doherty & Co., New York City,
tract that may exist between the importer and
Edson Adams Co., San Francisco, Cal.
exporter, and that failure to so accept will subEagle Paper Co., New York City,
ject the banker to penalties that may involve a
serious money loss if his refusal injures innocent
third parties.

The acceptance under a Commercial Letter

of Credit is not any more familiar to some of our
courts than to many of our bankers, and until it is
better understood it is natural to expect the issuance of a few irregular injunctions, even though
they must be removed upon appeal. The foreign

negotiator of drafts against American irrevocable Letters of Credit should understand, even
as should the issuing banker and the importer,
that in spite of untenable temporary injunctions
he is fully protected under our law just the same
as he would be under the law of Great Britain
if he negotiated drafts drawn under irrevocable
Credits in exact accordance with the terms of




ACCEPTANCES IN SOUTH DAKOTA

The South Dakota Bankers Association is
conducting a special educational campaign in
behalf of trade acceptances. Immediately in
charge of the effort is the Association's Trade
Acceptance Committee, composed of R. A.
Goodwin, Wakonda State Bank, Wakonda ;
R. E. Cone, James Valley Bank, Huron ; J. D.
Fleckenstein, Sioux Falls National Bank, and
Frank A. Fosdick, Sioux Falls Savings Bank.
Literature published by the American Acceptance Council is being used in this campaign,
which was undertaken in cooperation with the
Council, the American Bankers Association and

the Federal Reserve Bank of Chicago.

ACCEPTANCE BULLETIN

3

The Future of Interest Rates
By GEORGE E. ROBERTS

Vice-President, National City Bank of New York
General trade and industry is in a state of
Reports indicate a light fall trade all over the
pronounced reaction, which unquestionably points country; consumers are holding back for lower
toward easier money, but the credit situation as prices and merchants are doing the same. Liquia whole has not yet been affected. Liquidation dation cannot begin until stocks move actively

is under way in some quarters but increased

demands elsewhere have maintained the aggregate demand. The farmers have suffered a
great mental shock in the rapid decline of their
products, and are withholding them from market. While this is the case, and until buying revives in general trade, money will remain tight.
It is apparent, that a fundamental change in
.

conditions is going on. Trade is slackening
and prices are falling all Oyer the world and

there is no gainsaying that this means a lessened
demand for credit. While a boom is on and
prices are rising all influences work together to

increase the amount of credit in use. People
anticipate their wants, they overbuy, dealers

carry more goods than usual and manufacturers
carry more materials than usual. The railroads
have been congested with traffic, deliveries have
been slow, and this has been another reason for
carrying heavier stocks. Speculation on the
part of intermediaries also has been a factor in
magnifying the demand for goods and increasing

the use of credit.

Working capital was ab-

sorbed by the higher inventories and the temptation was strong to enlarge business operations,
frequently by fixed investments. Such times are

all along the line. When that occurs money

will pass down the line, paying debts as it goes,
and used almost exclusively for that purpose.
Production is going to be light until the surplus
stocks are worked off.

No Speedy Working-Off of Loans
It must be considered, however, that it will

take many more goods to liquidate a given

amount of indebtedness at the new prices than
it would have taken at the old prices; hence, it
must not be expected that the enormous accre-

tion of bank loans since 1917 is going to be

speedily worked off.
On the 1st of April, 1917, six days before the

declaration of war, the writer of this statement
described the financial situation in a written
review as follows :
There is nothing in prevailing monetary conditions

to indicate that the country is on the verge of war.
Money is as easy as the proverbial old shoe. Credit
is granted with customary freedom for the usual commercial requirements, and there is not much demand
for other purposes.

The total earning assets of the twelve Federal
Reserve Banks Were $170,125,000: the redisfavorable also to all kinds of new proposals.
There is an appearance of scarcity in everything; count rate on commercial paper was 4%; the
all of the old facilities and services appear to net cash reserve against aggregate deposit and
note liabilities was 81.5%.
have been outgrown.
And yet even at that time the industries were
Struggle Against Downward Tendencies
working under the stimulus of war conditions
But when the crest is passed, and the public in Europe and practically at capacity. The
is convinced that the course of prices will be enormous expansion of credit since that time
downward, it is surprising how many goods are has accomplished but little in the way of in-

found to be in stock and how ample all the creased production.
facilities and services appear to be. Nobody
The increase in loans and discounts of all

wants to borrow to buy anything or build anything. Nobody wants to go into a new scheme.
There is, for a time,.a demand for credit from
the people who are caught with commodities on
hand and who struggle against the downward
tendencies. They are not convinced that lower
prices have come to stay, they hope for recovery
and refuse to sell. For a time there is the appearance of a deadlock ; we have been seeing
something of the kind; but the economic law
will have its way and prices and wages, production and consumption, must find a new equilibrium.




banks and trust companies in this country, be-

tween the beginning of the war, a date soon
after our entrance, and at the close of the last

government fiscal year, are shown by the reports

of the Comptroller of the Currency, as given below :
LOANS OF ALL BANKS AND TRUST COMPANIES

$15,288,400,000
June 30, 1914
20,641,427,000
June 30, 1917
30,891,693,000
June 30, 1920
This inflation would have been impossible un-

der the rules governing bank reserves which

V.

4

ACCEPTANCE BULLETIN

ACCEPTANCE BULLETIN

were in force before the establishment of the
Federal Reserve system and the adoption of the

amendments in 1917, and the effect of these duly low.
legal enactments is something to be considered
A collapse of interest rates which would enin forecasting the course of deflation and of
interest rates.
Deflating the Reserve Banks
The policy of the Federal Reserve authorities

courage the permanent maintenance of the great
body of bank loans now outstanding is certainly
undesirable for many reasons.

may be expected to adhere persistently to the
Discount Market Rates.
purpose of deflating the Reserve banks, and
bringing their condition down to what it should Prime eligible bank acceptances
be in view of their responsibilities as the cus90 days
1919
1920
todians of the final reserves of the country.
That would mean with reserves fluctuating norm-

ally around 75%. The rates probably will be

Nov. 19
Nov. 12
Nov. 5

678-671.

6h-61/2

678-6 1/2.
reduced before that position is reached, but the Oct. 29
63/8-6%
reserve banks are likely to follow the member Oct. 22
6A-61/2
banks in reductions rather than lead them. They
60 days
will want the member banks to get on their own Nov. 19
61/2-6%

footing.

As liquidation proceeds the banks which are
not rediscounting, of whom there are many, will
be first to compete for open market business,
and as rates decline the houses which have been
accustomed to find supplies in the general market will resort to it and pay down their borrowings with their own banks, which will stimulate
the latter to get out of the Reserve banks, thus
lowering the whole volume of bank loans.
Lower Reserve Requirements
At this point we shall see the final effects of
the policy of lowering the legal reserve requirements. Undoubtedly we are going to run with
lower reserves than in the years before the war.
The law has been changed to permit it, and we
have become accustomed to rely upon the Reserve banks. But the effect is going to be to
give us low interest rates long before complete

deflation, by the standard of former normal
conditions, is reached. Of a total increase in
loans of $10,250,265,747 in the individual banks
from June 30, 1917, to June 30, 1920, only

$2,777,083,000 was passed on to the Reserve
banks, and if they were all paid off the major
portion of the inflation would remain, unless
the necessity of applying to the Reserve banks
for currency would bring the local banks under
the influence of its rate-making authority. An
inflation of credit, carrying with it an inflation
of prices and wages, is bound to create a demand for more currency, and currency can be
had only from the Reserve banks. That seems

Nov. 12
Nov. 5

6 1/2.

6 'A

61/2-6%
61/2-6%
61/2-6%

Oct. 29
Oct. 22

1918

47%-43/8
4176-478
41%-41/2

4Y8-41%
43/8-41%
43/8-41%

41'ff 4/4

4A-4-i%

41%-474.

43/5-41/4

4 -176-41%

478-41/4

4Z,--4-i%

4 78-4 i/4

472-4 ii

4,3/8-41/2

471.-41%
41/2-41%

474-474

43/8-41/2.

41/2-4/8

43-47:,.

30 days6lA-6

Nov. 19
Nov. 12
Nov.

61/8-6

6%-6

5

Oct. 29
Oct. 22

6%--6

43A-4i/4
411l 41/2.

42-4

41%-4
61/8-6
Commercial paper, New York
51/2-6
Nov. 19
8-81/2
Nov. 12
8-81/2.
51/2-6

41/2-473

4-nr 4

4A-4

51/2

6
6
6
6
6

Nov. 19 60 days

6

3l

90 days

6

8-81/2
8-81/2

Nov. 5
Oct. 29
Oct. 22

8-84

51/2-51/2

57,-5%

London discount rates
Nov. 12 60 days 6M.-6H-

55A

6-6.11t

55/8
53/4
45/8
43/4
45/8
41/2

90 days 674-61I

Nov.
Oct.
Oct.

5 60 days
90 days
29 60 days
90 days
22 60 days
90 days

65/8-6+1

61/2-6
65/8-61i
61i-63/4
6th-63/4

5g.

3ii
31
3ii




Your Acceptance Committee entered upon its
duties fully convinced that the acceptance method

honest and proper application.

The St. Louis convention charged the Committee with the responsibility of bringing before

the bankers the facts as to what acceptances

After a careful survey of the situation, the service and made considerable progress with
Committee determined that its work could be its work, it has not submitted a complete report.
most successfully accomplished through cooperation with the American Acceptance Council. It
accordingly got in touch with the officials of the
Council with the view of securing the publication

of the necessary material. The Council has
since published and distributed to banks, business concerns and others throughout the country
more than 300,000 pamphlets, including the following:

Report Made by the Acceptance Committee of the

American Bankers Association to the Annual
Deputy Governor of the Federal Reserve Bank
of New York.

3

the establishment of a uniform schedule of service exchange and collection charges for handling
acceptances. It is believed that where banks
determine to make any charge for this character
of service, they may be depended upon individ-

are, how they may be used, why they should be ually to make satisfactory arrangements with
used, and the dangers to be avoided in their their respective customers.
use ; also the arranging for two committees :
Arrangements were also made for the appointOne to give its attention to the working out ment of a Committee to devise the most efficient
of a satisfactory schedule of service exchange and economical method of handling trade acand collection charges for handling acceptances ; ceptances. This committee includes four bankers,
The other to devise the most efficient and two Federal Reserve Bank representatives, and
economical method for handling trade accep- four business men trade acceptance users.
While this committee has rendered valuable
tances within banks and business houses.
41/2.-4/8

378
31/2

Arrangements were made for the appointment
of a Committee on Service Exchange and Collec-

tion Charges, consisting of five bankers, two
Federal Reserve bank representatives, and
of financing is sound and efficient,is here to business mentrade acceptance users. three
This
stay, is giving powerful aid to American foreign special committee devoted over eight months'
and domestic commerce, deserves the careful time to an educational effort which resulted
study and thoughtful consideration of every
clearer understanding of the problem
banker, and that its continued success and in a for the present relieved the necessityand
for
further helpfulness are dependent entirely upon has

Convention at St. Louis.
Trade AcceptancesWhat They Are and How They

NEW EDGE LAW BANKING COMPANY

New Orleans.

(:) To the Forty-Sixth Convention:

31/2
35/8
31/2

Leading bankers of the South are represented
in the Federal International Banking Co., which
is now in process of organization under the Edge
Export Finance Act. The institution will concern itself chiefly with the financing of cotton expovts, but has in mind also, of course, the needs
of exporters of Southern products generally who
to be the one grip which the Reserve authorities are not in a position to accept the long terms of
have on the general credit situation. It is the payment desired by prospective purchasers. The
one influence that will tend to maintain the pres- company will start business as soon as $6,000,000
sure for deflation and in that manner prevent a has been subscribed. Its home office will be at

rapid collapse of interest rates, for it may be

Report of Acceptance Committee of A. B. A.

assumed that the authorities will endeavor to
stabilize rates, rather than have them fall un-

Are Used, by Robert R. Treman, formerly

It is believed, however, that the Committee Will
develop and place at the disposal of the banks

and trade acceptance users a method that will
enable a great saving of labor and expense.

The number of trade acceptance users

is

increasing rapidly and includes practically every

line of business that makes sales on the time
basis. There are more than 20,000 known users,

and where the trade acceptance has been legitimately used, the results have been very satis-

factory. It has enabled an equal amount of
capital to do a greater amount of service, it
has shortened the credit period, it has made

collections more certain, it has reduced the expense of operation, both for the buyer and for

Bankers AcceptancesPrinciples and Practices, the seller, it has stabilized the businesses involved ;
Chapters 1 and 2, written by a Committee of and has produced a character of strictly liquid
Federal Reserve Agents in co-operation with a paper. The trade acceptance brings transactions
Committee of the American Acceptance Council.
The Case of the Trade Acceptance, a pamphlet prepared by the American Acceptance Council.

out into the open where they can be treated

upon their merits and it eliminates many claims
and disputes.
Acceptances in Our International and Domestic
There has been some complaint because of
Commerce, by Paul M. Warburg.
trade acceptances not being purchased freely in
Term Settlements, by Samuel F. Streit.
Practical Problems in the Development of Bankers the open market. It seems certain that trade
Acceptances, prepared by the Executive Com- acceptances originating outside of the leading
mittee of the American Acceptance Council in financial centers will necessarily find lodgment in
reply to a questionnaire emanating from the local banks where the names are known. The
Federal Reserve Board.

expense of credit investigations on the small
address by Jerome Thralls before the Clearing amounts where the names are not known pre-

Problems and Progress with Dollar Acceptances, an

House Section of the American Bankers Association.

clude their coming into the open market.
There is, however, a steadily growing demand

ACCEPTANCE BULLETIN

6

in the open market for bank-indorsed trade acceptances, and where- such paper is offered it
moves more readily than the best single-name
commercial paper, even though the latter yields
from 3/4. to 1% higher return.
Every banker should remember that, although
trade acceptances are better than single-name
paper, there should never be any lessening in

ing August 31, 1919, $14,922,634, and for the
year ending August 31, 1920, $211,682,038.

The increase in the total purchased by the
Federal Reserve banks in their open market
operations is not due so much to the increase in
the volume of acceptances outstanding at any

one time as it is to the Federal Reserve banks

the matter of analyzing the condition of the

having restricted their purchases to bills of very
short maturities. The Federal Reserve banks
held on June 30, 1919, bankers acceptances purchased in the open market aggregating $233,-

risk should be applied with equal severity to

519,000;

trade acceptances.

conclusively the growing ability of the open
market to absorb bankers acceptances. Such
acceptances are now regarded by investors, in-

acceptors, drawers, and indorsers on such paper.
The same acid test that is applied to any credit
BANKERS ACCEPTANCES are becoming more

and more valuable as an aid in the financing of
our export and import business. In March, 1919,
there were about 350 accepting banks in America.
Their accepting power was $1,027,275,000. They
had accepted in the aggregate $451,265,000. We

$405,339,000;
December 31,
June 30, 1920, $255,564,000. These figures show

dividuals, firms, corporatons, bankers and others,

not only as a safe and sound investment, but
a real reserve that can be converted into cash
within 48 hours. The New York and New

now have approximately 500 accepting banks, England savings banks alone now have available
249 members of the Federal Reserve System, funds invested in acceptances to the extent of
having applied for and acquired the privilege over $65,000,000. The discount houses and

of accepting up to 100% of their combined dealers in the acceptance market now carry
capital and surplus. These 249 banks alone portfolios
in the averaging about
aggregate
have the power of accepting to the extent of $100,000,000. From these holdings investors are
$1,275,860,000. They had acceptances outstand- able to make selections satisfactory as to maing on June 30th of approximately 40.8% of turities, denominations and names.
this amount. The total of American bankers
As an evidence of the progress that is being

acceptances outstanding at that time, including made in the development of the market it might
those of non-member banks, private banks and be said that one concern whose resources and
acceptance houses, was approximately $975,- energies are being applied to the development
000,000.

The maximum acceptance power of the members of the Federal Reserve System is $3,197,470,000. Private banks, non-member banks and

of the open discount market has discounted
and resold to investors, firms, individuals, corporations and banks throughout the United States

since January 1, 1920, an aggregate of over
acceptance houses have an acceptance power $1,380,000,000 of acceptances.
approximating $650,000,000, making the whole
The Federal Reserve banks have been giving
acceptance power of American banks approxi- splendid support to the development of the open
mately $3,847,470,000. This power might con- discount market. This support is being availed
servatively be used to the extent of $2,148,- of to a less and less degree as the market
were our open discount market
thoroughly developed and the business methods
and practices in this country changed to enable
the system to function in the most satisfactory
735,000,

way.
'There

develops.

The idea of lending money on call against
acceptances as collateral and at a preferential
rate is growing in favor and as this feature develops the market will be strengthened.

now outstanding about $1,150,-

America now has the opportunity of establish-

000,000 in American bankers acceptances. The

ing herself as a leading commercial and finan-

is

holdings of the Federal Reserve banks of this
character of paper bought in the open market
and discounted increased during the year about
33%, while the volume of acceptances issued
and outstanding have almost trebled since
March, 1919. The Federal Reserve banks purchased in their own market operations for the
year ending August 31, 1919, $2,292,456,374;
for the year ending August 31, 1920, $3,389,615,984. They discounted during the year end-




cial power among the nations of the world.
With a trade balance of $4,000,000,000, and

which may exceed $6,000,000,000 before the
close of the current year, there is urgent need
for the development of the acceptance system
to a degree where it will afford the maximum
of facilities. The proper use of acceptances,
coupled with a comprehensive and well-developed open discount market, is essential to our
future progress as a commercial and financial

1919,

ACCEPTANCE BULLETIN

7

In view of the growing importance of
Questions and Anwers
this subject to the commercial, financial and
Many of the inquiries
the Ameriindustrial interests of this country, your Com- can Acceptance Council received by general inare of such
mittee would recommend the appointment of a
as to justify their publication, together
committee of three or more to carry on the terestanswers and opinions, in these columns.
with
work during the ensuing year.
Inquiries are invited and should be addressed
Respectfully submitted,
to the Executive Secretary, American AccepE. R. ROONEY,
tance Council, 111 Broadway, New York. In
JOHN W. STALEY,
power.

JEROME THRALLS, Chairman,

Washington, D. C.
October 22, 1920.
NATIONAL COFFEE ROASTERS' ASSOCIATION

At the request of the National Coffee Roasters' Association the Council obtained as a
speaker on trade acceptances for the annual con-

such inquiries as are published, the names of the
principals will be withheld.
QUERY 129. Is a trade acceptance which

bears the date of July 1, which has been accepted July 10 and which reads "thirty days
after date," due August 1 or August 10? It

is our understanding that, although the date on
a negotiable instrument is of importance, the
instrument takes effect upon delivery, which we
should think would be the date of acceptance.
ANSWER. The Negotiable Instruments Act
provides that "the acceptance of a bill is the
signification by the drawee of his assent to the
order of the drawer." The order of the drawer
in this case is dated July 1 and calls for pay-

vention of that organization Ramond F. McNally, Vice-President and Cashier of the National Bank of Commerce in St. Louis. The
convention was held in St. Louis in the second
week of November. Mr. McNally spoke at a
general session on November 11th, when there
were present not only members of the Coffee ment thirty days after date of July 31. The
Roasters' Association but numerous representa- fact that the acceptor dates his acceptance
tives of other branches of the coffee business. July 10, when made, does not change the order
of the drawer or the terms of the bill. The
FORUM DISCUSSES ACCEPTANCES
acceptor on July 10 agrees to pay the bill ac"Bankers Acceptances and Trade Acceptances cording to the order of the drawer, namely, on
Their Proper Use and Advantage in Com- July 31. The acceptance, it is true, takes effect
merce and Finance Based on Experience" was as against the acceptor upon its delivery by
the subject of addresses and discussion at the him on July 10, but it takes effect according
Forum meeting of the New York Credit Men's to the terms of the bill and becomes a promise
Association on November 10th. John E. Ro- by the acceptor, completed by delivery, to pay
vensky, Vice-President of the National Bank of the bill according to its terms, namely, on
Commerce in New York, spoke on bankers ac- July 31. The acceptor might, in his acceptance,
ceptances. Paul E. Hunter, Credit Manager, fix another date for payment of the bill; but if
L. Erstein & Bro., and Edwin B. Heyes, Credit he did so this would be a qualified acceptance,
Manager, W. & J. Sloane, spoke on trade ac- varying the effect of the bill as drawn, and if
ceptances. The address of Mr. Rovensky was the holder took the acceptance thus qualified it
published in the New York Tribune of No- would operate to discharge the drawer and prior
vember 14th.

The Providence Chapter of the American Institute of Banking held its fall meeting on November 10th. The speaker was Jerome Thralls,
Secretary-Treasurer of the Discount Corporation

indorsers from liability, unless they had express-

ly or impliedly authorized the holder to take
such qualified acceptance or subsequently assented thereto. But the mere signing and dating an acceptance July 10 upon a thirty-day bill,

dated July 1, is a general and not a qualified
of New York, who delivered an address on acceptance ; it is an assent, without qualification
bankers and trade acceptances.
to the order of the drawer and to the terms of

Annual Meeting of the Council

the bill as drawn and the acceptance is payable
according to the date of maturity fixed by the

The annual meeting of the American
Acceptance Council for the presentation of
reports and election of officers will be held
at 3 P. M., Thursday, December 2nd, in the

bill.

sociation, Woolworth Building, New York.

the new Forum of the Buffalo Chapter of the

Assembly Room of the Merchants' As-




E. R. Kenzel, Deputy Governor of the Federal
Reserve Bank of New York, spoke on bankers acceptances on October 28th at the first meeting of
American Institute of Banking.

ACCEPTANCE BULLETI.N

8

-k

New Trade Acceptance Literature
(Reviewed by William J. Boies)

Copies of the Council's latest pamphlet publi-

.

cation"Elements of Trade Acceptance Practice," by Robert H. Beanwere distributed to
members earlier in the current month and are
J.-low ready for general distribution. At a time
of credit strain, when it is of all things needful
for banks and business men to have their assets

in liquid shape, a clear statement of the trade
acceptance question will be of great benefit to

open book accounts. In all cases where a trade

acceptance is given, however, the buyer must
possess title and the goods must have been actually sold.
Unless an actual sale has taken place a trade

acceptance cannot properly be used. Also it
would be contrary to the principles of sound
banking to use a trade acceptance in settlement
of an over-due account. There has never been
justification for viewing the trade acceptance as

a vehicle for the collection of long standing

be well received by a public that is eager for

accounts, although some firms apparently have
had that idea of it. Mr. Bean points out that
"to use the trade acceptance merely as a means
of collecting an otherwise slow account would
tend to subordinate the trade acceptance to the

It stands to reason also that the instru-

published by the Council as "Why Accept?",
"The Better WayA Banker's Opinion," etc.

the American people. Mr. Bean's pamphlet will

authoritative information available in language
that the ordinary layman can understand.
The author has succeeded in his effort to re- open account by suggesting it as a last resort
state basic governing principles and recognizes for bad debts." This view will be concurred in
the limitations of the system and speaks frankly by the real friends of the trade acceptance, for
concerning various abuses. He is well within instead of representing slow debts, this credit
the truth, however, in saying that "when cor- instrument ought to represent the highest credit,
rectly drawn and used in strict accordance with being used with the best class of current acthe terms of the Federal Reserve Act and good counts.
In the hope and belief that this new publibusiness practice, the trade acceptance represents the best form of liquid merchant's paper cation will fill a real need, the Council has in
and enjoys the highest per cent. of payments at mind, as already indicated, an insistent demand
maturity." Notwithstanding this, however, the from business men and bankers for a very brief
advantages of the system are not generally un- presentation of trade acceptance procedure in
derstood, and in a country which has long trans- language that the layman can readily underacted business on the basis of open book ac- stand--a presentation which will serve as a
business
counts, any movement to substitute the trade guide and means of reference and at the same
acceptance is sure to encounter opposition. All time will be especially useful for distribution by
buyers are "from Missouri" in the sense that business houses to their sales forces and to their
they have to be shown why they should give trade. The Council's experience has been that
a bill having a fixed maturity when for years many business concerns, and banks as well, 'dethey have purchased what they needed on the sire copies of its literature in quantity for just
30, 60 or 90 days basis, frequently taking a such direct distribution; and while it has been
longer time to pay what they owed. It means, able to supply trade acceptance literature for
therefore, a remarkable transformation to change this purpose, there have been frequent appeals
the buying methods of many years and shift for a pamphlet which would cover just the subcommercial indebtedness from the open account ject matter treated in "Elements of Trade Acbasis and to liquify it with the aid of the ceptance Practice," which traces the course of
trade acceptance procedure through the several
trade acceptance.
This does not mean, however, that the trade steps from the creation of the instrument to its
acceptance could be substituted for the entire collection at maturity.
The pamphlet contains a cut of the form of
mass of open accounts, or that it is available
for every commercial operation. It is apparent, trade acceptance recommended for general use
as the author says, that the trade acceptance is by the Council. The whole matter is embraced
not available in cases where goods are leased and in 16 pages, bound in size to fit into the ordithe title remains with the seller until payment nary small-size business envelope. The size and
is completed, nor where collateral security is appearance are uniform with such other titles
.

used.

ment does not apply to purchases made for cash,
nor to transactions which could better be closed
through offer of a cash discount. On the contrary the trade acceptance in essence represents
a time credit and could easily be made available

for virtually all of the business now carried in




Single copies are available to other than Council

members at the nominal price of five cents,

which merely covers cost of printing and handling.

Prices for quantity lots will be quoted

upon request.

SURPLUS $11,250,000

CAPITAL $20,000,000
MEMBER FEDERAL RESERVE SYSTEM

OFFICERS
SF

0.1

OFFICERS

RD PROSSER, PRESIDENT.
MEPOV.VICE PRESIDENT

BANKERS TRUST

F. I. KENT. VICE PRESIDENT
F. N.B.CLOSE, VICE PRESIDENT.
A.A.TI LN EY. VICE PRESIDENT,
H. J. COCH RAN. VICE PRESIDENT.

COMPANY

THOMAS HiLor, VICE PRESIDENT.
H.F. WILSON, R., VICE PRESIDENT.
W. P. BELKNAP. VICE PRESIDENT.
B. W. JONES. VICE PRESIDENT.
S. M.GREER, VICE PRESIDENT.
R. L. M ORRIS, VICE PRESIDENT

16 WALL STREET
A N D ---

5'2" AVENUE AND 42.1° STREET

R. H.GILES. VICE PRESIDENT S TREASURER

CABLE ADDRESS. BAN KTRU ST, NEW YORK.

J.F. SCHMID. VICE PRESIDENT
B. A.TO M PKI N S, VICE PRESIDENT

BENJAMIN JOY, VICE PRESIDENT.
R. G. PAGE. SECRETARY.

BEACH POLK, ASST. TREASURER.
WA. HEN DERSON, ASST. TREASURER.
H.H. MARTIN, ASST. SECRETARY.
H. BANAT T. A SST.SECRETARY.

CLIFFORD WILMURT, ASST. CASHIER.
L.S. STILLMAN, Assr. SECRETARY.
P E. GO DRID GE, ASST. TRUST OFFICER.
F. TR EEC ER, ASST.TREASURER.
L.C.OUTCAULT, ASST. TREASURER .
J. H. LEWIS, AS ST.SECRETARY
H.C. BOCK , ASST. TREASURER,

C. WCAM PBELL, ANSI' SECRETARY
W. 0. LITHGOW, ASST. TRUST OFFICER.
C. O. P IR ICE, ASST. TRUST OFFICER.
E.WH ITN EY, ASST. TREASURER.
F A. K LIN G SM ITH, ASST TREASURER.

BARKLEY WYCKOFF, CASHIER,

L. H. PLUMB, Assr. SECRETARY.
HUGH H M G EE. ASST. TREASURER.

H. N. DUNHAM, ASST TREASURER.
IMICHAELS, TRUST OFFICER_

W. W. AYR E S, ASST TREASURER
0.W. ROOS EVELT, ASST. TREASURER

16 WALL STREET
FORE GIN

E,X41 HANGE DEPARTMENT

NEWYORK ,

Jan. 26, 121.

i)

Hon. Benjamin Strong,
Governor, Federal Reserve Bank,
15 Nassau St., N. Y.
Dear Ben:-

Hope the enclosed will be of use to you.

Brought them

back with me from Paris, and have held them for your return.
Sincerely yours,

FIK/MKS




;

17.31

Nye

..
V.



BANKERS TRUST

COMPANY

SEWARDPROSSE,
MANAGING COMMITTEE
DEPOMEROY,
VICE PRESIDENT

FI.KENT,
F.N .1.37rttrE.
A.A.TILNEY.

NEW YORK
16 WALL STREET

VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT

THOMAS 1-41 101.
H. J. COCK RAN

FOREIGN DEPARTMENT

FLKENT
J.FSCHMIa

VICE PRESIDENT
VICE PRESIDENT

VICE PRESIDENT
VICE PRESIDENT

F. A.KLI NGSM ITH. ASS-I...MEASURER
C. F BOCK.
ASST MANAGER
GEORGE WEXLER,
ASST MANAGER
W J. KEN NY,
AssimAHAGEF

FIFTH AVENUE AT 42,6,STR EET

MADISON AVENUE AT 57.,STREET

PARIS
9 RUE ST FLORENTIN
16 PLACE V EN DOM E

CABLE ADDRESS - PANKTRusT -NEW YORK

13WALLSTREET

NEW YORK

July 11, 1921.

Hon. Benjamin Strong,

Governor, Federal Reserve Bank of New York,
15 Nassau Street, New York City.
Dear Ben:

Referring to your form letter of the 1st instant,
would say that I have forwarded to your Statistical Department the information requested, and hope that everyone asked
may do likewise. Whether the figures resulting will be of
much value, depends largely on how successful your Department
was in making its selection of those to whom the letters
were sent,
granted that they will all reply.

taking it for

For instance, the other day one individual who
called upon me in connection with exchanges, admitted after
we had been taking awhile that he had over nine million
dollars in European countries. Your investigations will,
of course, miss this individual and many like him, but even
so it may give you a sufficient groundwork of information to
enable some fair estimate of the situation not now possible.
Assuring you that I should be most pleased to help
Mr. Snyder in working this matter out if it seems desirable,
and with sincere regards, I am

Cordially yours,
C:77
FIK-RG







46410
44.

BANKERS TRUST
SEWARD PROSSER.

PRESIDENT

COMPANY

FOREIGN DEPARTMENT
I. KENT,

MANAGINGCOMMI,EE

acpomERov,
FI.KENT.
FN.B.CLOS6
A A TI LN EY,

THOMAS HI LOT,
H J COCH RAN.

VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT

J.FSCHMIa

NEW YORK
16 WALL STREET

VICE PRESIDENT
VICE PRESIDENT

F. A.KLI NGSM ITH, ASST TREASURER
C. F BOCK.
ASST MANAGER
GEORGEWEXLER,
AssTMANAGEF

W,KENNV/

FIFTH AVENUE AT 4,211STREET

ASST MANAGER

MADISON AVENUE AT 57VSTREET

PARIS
9 RUE ST FLORENTIN
16 PLACE VENDOME
CABLE ADDRESS- BANKTRUST -NEW YORK

16 WALL STREET

NEW YORK
July 29, 1921.

Hon. Benjamin Strong,
Governor, Federal Reserve Bank,
15 Nassau St., N. Y.
Dear Ben:-

In the general floundering around that is now being
done by various interests with the hope of ameliorating some
of our present difficulties, it has been suggested to one of
the Committees of the National Foreign Trade Council that they
start out on a campaign aimed to force the Federal Reserve
banks to issue credits here against gold deposited in foreign
countries.
At the moment they particularly have Argentine in
view.

-

The Committee in question asked me to sit in with
them, and I succeeded in holding up the whole proposition until
I can have a chance to talk it over with you, after which I
feel certain that I can guide the matter as you may prefer.
Would like to have you take luncheon with me any day
next week that suits your convenience at say 12:45, unless you
prefer some other time, as that is ordinarily the best time to
go up to the Bankers Club.
Will call for you on such day as you may name, and we
can go up together.
Sincerely yours,

(77
FIK/MKS







0
FRED I.KENT
SIXTEEN WALL STREET
NEW YORK CITY

August 4, 1921.

Hon. Benjamin Strong,
C/o Federal Reserve Board,
Washington, D. C.
Dear Ben:-

The news in the papers this morning gives me
some concern, not as to the outcome of the controversy but
as to its possible effect upon your health if you allow
the matter to stir up your anger or resentment in any way.
It is really not worth while letting any feeling

develop, and a cold, impartial, impersonal attitude will
carry you through with flying colors, and without doing

you the slightest harm physically. Knowing this from my
own experience of many years, thought I would just drop you
might be helpful to you in
this warning, hoping that
case the strain of the situation should lead you away from
any thought of protecting yourself.

it

Sincerely your

FIK/MKS




BANKERS TRUST
SEWARD PROSSER.

PRESIDENT

COMPANY

FOREIGN DEPARTM ENT
I. KENT.

MANAGING COMMITTEE
D. E. PO M EROY,

VICE PRESIDENT

I. KENT.
F. N. B. CLOSE.
A.A.TILN EY.

VICE PRESIDENT
VICE PRES/DENT
VICE PRES/DENT
VICE PRESIDENT
VICE PRESIDENT

THOMAS HI LOT
H.J.COCH RAN.




J. F SCHMID.

NEW YORK

VICE PRESIDENT
VICE PRESIDENT

F. A.K LI NGSM ITH. ASST TREASURER
C.F. BOCK,
AsATRANAOEF

16 WALL STREET

GEORGE WEXLER,
W J KEN NY,

FIFTH AVENUE AT 4241,STR EET

ASST MANAGER
ASS/. MANAGER

MADISON AVENUE AT 57,2STREET

PARIS
9 RUE ST. FLORENTIN
16 PLACE VEN DOME
CABLEADDREss-6AniKTRusT-NEwYORK

1031VALLSTREET

SEP 27 1921

NEW YORK

Sept. 26, 1921.

Secretary to Governor Strong,
Federal Reserve Bank,
15 Nassau St., N.

Y.

Dear Sir:-

As advised you over the telephone, Mr. Kent
is on his way to the Coast, and is not expected to return
to the office until about the middle of November.

it, therefore, if you will

Will appreciate
ask Governor Strong if it would meet with his approval
if I quoted his letter, addressed to Mr. Kent, dated Sept.
23, to the National Foreign Trade Council.

Thanking you for your attention in the matter, I am,

Very truly yours,

Secretary to Mr. Kent.

BANKERS TRUST
SEWARD PROSSER.

COMPANY

PRESIDENT

IFOREIGNDEPARTMENT

A.A Tf LN CC

WIEN,

F N. B CLOSE.
H J. COCK RAN.




VICE PRENI CENT

F

MANAGING COMMITTEE

vice PRESIDENT

F SCR MID.
1'-OCENT.
FA KL1 N,CNS.M I T.H. ASST TREASURER

NEW YORK

VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT

7,1)C\

16 WALL STREET

G E0

4f,,,',W.EX LE R.

ASSTMANAGER

ASST,ANAGER

FIFTH AVENUE AT 4 213STREET

MADISON AVENUE AT 573STREET

PARIS
365 PLACE VENDOM E
CABLE ADDRESS- BANKTRUIST -NEW YORK

16 WALL STREET

NEW YORK
September 15, 1922.

hon. Benjamin Strong,
Uovernor, Federal heserve Bank of New York,
15 Nassau Street, New York City.
Dear ben:
The Executive Com..ittee of the Internati40441

Cnamber

C0444.0ax,e,.4.j34&requested me to caMI-The attention

ort'feW-bankers who might be,interested, to the existence
of the Chamber, in order that they might be in a position
to determine whether they consider it to their interest
to become members.

There is no question but that the Chamber is
doing some excellent work that is proving to be very helpful in connection with developing European conditions.
The International Chamber of Commerce works in
'conjunction with the Chamber of Commerce of the United States.
The American Committee, of which Mr. A. C. Bedford, President of the Standard Oil Com.,any, is Chairman, is mace up.
of representatives from all parts of the United States.,
Whether you will consider it to your interest to
join the Association i do not of course know, and in taking
the libexty of enclosing the application for membership
I am doing so merely to give you an opportunity to associate
yourself with the organization, provided you desire to (10
SO.
With kind regards, I am
Yours very truly,
FIK-AB.




Ilt

10\,:

BANKERS TRUST
SEWARD PROSSER.

COMPANY

PRESIDENT

FOREIGN DEPARTMENT
VICEF,EsIDEKNJ;

El KENT.

MANAGING COMMITTEE

F N. B. CLOSE.

A A TILNEY.

H.J.CGCHRAM
BENJAMIN JOY

26 1922
JESCHMID

NEW YORK
16 WALL STREET

VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT
V,CE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT

VICE PRESIDENT

F A K LI NGSM ITH. ASST TREASURER

GEORGE WEXLER.
W J. KENNY.

AssTMANAGER
ASST. MANAGER

Fl FTH AVENUE AT 42,STREET
MADISON AVENUE AT 57T3STREET

PARIS
3 5 5 PLACE VEN DOME
CABLE ADDRESS- BANKTRuST -NEW YORK

16 WALL STREET

NEW YORK
September 22, 1922.
Hon. Benj. Strong,
Governor, Federal Reserve bank of New York,
New York City.
Dear Ben:

V

inst.

Your letter of the 21st
received, and I note
that you have also been disguised as a target for those who
are striving to build up memberships in various organizations.
It certainly is a fright, and there is no question about it,
and I have had to refuse a few almost every day.
In writing you ccincerning the International Chamber
of Commerce I did not have it in mind that you personally
would wish to join, but thought possibly the Federal Reserve
Bank might desire to do so.
As the meetings of the International Chamber bring together men of high standing from many
countries for the discussion of important financial matters,
there would seem every reason to believe that this contact
haS had some very excellent results already, even though the
organization is only two years old.
Of course, it cannot continue unless it is supported, and whether it is going to develop into a continuing worth while organization depends
largely upon its membership.
However, this is not intended
to argue you into a change of decision, but merely to let you
know I was not shooting at you personally.

I wonder if you could not take luncheon with me
some day this week, and if so, would appreciate it if you will
have your secretary advise me of the day and hour and I will
call for you.

With sincere regards, I am
Cordially yours,
FIK -AB.







13ANKERS TRUST
SEWARD PROSSER,

PRESIDENT

COMPANY

D. E POMEROY,
1. KENT.

R N. B CLOSE,
A.A.TI LN EY,

H J. COCHRAN,

VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT




FOREIGN DEPARTMENT
I. KENT,
J. F. OCH MID.

MANAGING COMMITTEE

NEW YORK

VICE PRESIDENT
VICE PRESIDENT

F A.KLINGSMITH. Assr TREASURER
GEORGE WEXLER,
W J, KENNY

16 WALL STREET

ASST MANAGER
ASST MANAGER

FIFTH AVENUE AT 42,PSTREET
MADISON AVENUE AT 57,STREET

PARIS
3

5 PLACE VENDOME

CABLE ADDRESS- BANKTRUST -NEW YORK

16 WALL STREET

NEW YORK
September 27, 1922.

Hon. Benj. Strong,
Uovernor,. Federal Reserve Bank,
New York City.
Dear Ben:

Your letter of the 264 inst. just received.
As next week is that of the Arierican Bankers association
Convention I will not have ally time, but I have asked
my Secretary to arrange with! your Secretary for some
day the following week, which L hope may prove satisfactory.
inoerely yours,

FIK




Q49
41P44,4

friLINC41314.4
403 19 1,23

fraiSAL MEW
SEWARDPROSSER

BANKERS TRUST

COMPANY

FOREIGN DEPARTMENT

FFKEN,

VICE PRESIDENT
VICE PRESIDENT
F. A,K L1NGSM ITH. ASST.TREASURER

MANAGING COMMITTEE
A A TI LET Et,

F I. KENT.
F N. B CLOSE,
H. J. COSH RAN,

JP SCH MID
NEW YORK

VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT
VICE PRESIDENT

GEORGE WEXLER,

16 WALL STREET

W J. KEN NY.

ASST.MANAGER

AsstmANAGEF

FIFTH AVENUE AT 42.6`STREET

MADISON AVENUE AT 5,ISTREET

PARIS
3 55 PLACE VEN DOM E
CABLE ADDRESS- BAN KTRUST -NEW YORK

1163WALLSTREET

NEW YoRK
January

26, 1923.

Hon. Benjamin Strong,
Governor, Federal Reserve Bank o New York,
15 Nassau Street, New ork City.
Dear Ben:

Your letter of the 24th ins ant received and it was
real fine of you to take the tro ble to advise me concerning
Norman.
It was a disappointment o me not to see him, for I am
working very hard with half a dozen very important Committees
trying to develop the foundOiion for the later formation of
a proper public opinion, and/I was very anxious to have a talk
with Norman.
1

/

You might be interes/ted to know that I expect to attend
the International Chamber/of Commerce meeting in March as
hairman of the Committed representing the American bankers
association.
.

/Sincerely

FIK-RG




you s,




i

RESERVES S15.000.000

SOCIETE ANONYME

CAPITAL DE $ 20-000.000
ENTIEREMENT VERSE)

SIEGE SOCIAL
16 WALL STREET

NEW YORK

TELEPMONES

MEMBER OF FEDERAL RESERVE SYSTEM

OF UNITED STATES

-1

BANKERS TRUST

COMPANY

ADRESSE
TELEGRAPH IQU E

BANKTRUST

3 & 5. PLACE VENDOME

CENTRAL- 41.77 CENTRAL 81.12 CENTRAL 94.04

94.05
8143
51.58
98.14
81.44
79.75
LOUVRE 47.17 ourENBEFto 4518

N-rept . &Picts"- 11.56 ET 11.57

PARIS May 19, 1923.

Mr. Benjamin E. Strong, Governor,
Federal Reserve Bank of New York,
New York.
Dear Ben:

*

It gave me a very unhappy time wizen I heard that you were
ill again and had gone to Colorado, but now I find that you have found
something that is helping you very much and that will undoubtedly
return you to health soon, which pleases me very much.

Knowing that taat active braiA of yours can never be quiet
regardless of anything else that might happen I thought it might interest
you to know something about what is going on here, even though it is
strictly confidential and is being sent to you personally.
In the first place would say that a Committee was appointed
at the Meeting of the International Chamber of Commerce in Rome with
instructions, in effect, to make a study of the European situation and
suggest a means of correcting it. In the Resolution under which the
Committee was appointed, however, it was specifically stated tnat the
present moment was not opportune to undertake the work as it was realized
that while France and Germany are still too far apart to enter into
effective negotiations that nothing real could be accomplished. This
being true, it meant that I, as Chairman of tne Committee, could not,
from that standpoint, enter into the controversy between the two nations
referred to. On the other hand, as Chairman of the Commerce and Marine
Commission of the American Bankers Association, and having in
charge all questions relating to the pre-War Mark balances of American
banks I was in position to go to Germany to negotiate
in connection with
this matter.

Naturally the question of the payment of such balances was
certain to arise, whtch would quite properly lead me into a consideration
of the reparation payments. This being true, after the meeting in Rome
I had many hours of conferences with men such as Stinnes, von Simson
who used to be with the Foreign Office in Berlin under Rathenau, Urbig of
the Disconto Gesellschaft, and some of the industrial leaders in tae Ruhr.
After these conferences I came to Paris and finally got in position to be
able to go to Berlin with a proper understanding of what was necessary to



Mr. Benjamin Strong

- 2 -

May 19, 1923.

develop a contact between the two countries.

Upon my arrival in Berlin I first spent several hours with
Ambassador Houghton to get such facts as he had that mignt be of value
to me. Then I spent an hour and a half alone with the Chancellor, after
which I had conferences of from one to three hours, individually in every
case and collectively as well in some cases, with the following:
Helfferich, formerly of the Reichsbank;
Bergmann, whom you know;
Von Simson, and some of the others already mentioned whom
I had seen in Rome,
Wirth, the former Chancellor,
Baron Malzahn, the Foreign Minister,
Hermes, the Finance Minister,
Urbig of the Disconto, and
Von Gwinner, Wassermann and Blinzig of the Deutsche Bank;
Melchior of M. M. Warburg & Company.

There were also a number of others whose names might not interest you
so much.

After working very hard for a number of days and nights the
whole arrangement that I was trying to develop was agreed upon and the
Saturday niglit before the German Note of May 2nd was sent out everything
was working perfectly. Sunday, reports in the papers led the members of
the Garman Cabinet to believe that Poincare had demanded that Germany
surrender before a Note would be received. While this proved to be merely
a rumor, yet the Germans were so shocked by it that they never stopped to
check it up but simply went up in tAe air.
Their feeling then wa
the offer which we were working upon would not be received.
E
succeeded in getting them to work upon a form of answer to the supposed
statement of Poincare that would carry in it a form of Note and that
would not arouse resentment.
After a meeting of the Cabinet on Monday night this was taken
up. Tuesday afternoon or Wednesday morning, however, at the last minute
the Bavarians came in and upset the whole thing and demanded the "sassy"
stupid Note which was finally determined upon. Wirth, Malzahn and another
gentleman were having luncheon with me that day when I received a telephone
from Curio asking me to call and see him at four o'clock. This I did and.
when I found the nature of the Note which had gone forward I was certainly
disgusted. It took comparatively little explanation of the way that such
a Note would be received in my opinion by all countries concerned-to
satisfy the Chancellor that they had made a very bad mistake and it seemed
necessary for me to come right on to Paris with the hope that a way might
be found to leave the situation still open so that the Germans could have
another try.




While there were no sleeping carsto be had and our passports were

Mr. Benjamin Strong

-

3

May 19, 1923.

not in order, yet the Chancellor made such arrangements as were possible,
which meant that my secretary and I had a compartment together and he was
able to lie upon one side and I upon theother, although we could not, of
It was so frightfully cold taat I could not sleep either.
course, undress.
Fortunately they put a diner on at 5:30 in the morning and as tne Germans
eat all day and all night we were able to get some breakfast at taat hour.
It was no European breakfast, however, that we indulged in, for it was
necessary to get something inside of us that would keep us warm.
Just twenty four hours after we left Berlin we were in Paris as
It was not safe to
we were fortunate in making connections in Amsterdam.
come through Cologne because we might have been subject to very serious
delays.

Well, as matters developed here a way was left open in tae French
and Belgian Note for Germany to come back and while, because of the stupidity
of the German Note, the doors were closed somewhat tighter, yet even so the
contact has been established. The Germans are now at work on a new Note and
I received a telegram asking me in effect to come back to Berlin, which I
understand to mean in view of our conversations in Berlin that I am wanted
back to help work on the new German Note which is to be along the lines of
the plan which I developed, provided tne German Government finds that it
can do so without endangering its position with its people.
In the meantime I have prepared a complete Note which is under
consideration and that is aimed merely to bring about a situation where
final negotiations can be undertaken. It would be quite impossible, in
my opinion, for Germany to offer in a Note the most that it could do as
the various political forces in Germany would not stand for it as they
all feel that whatever they may offer will be accepted by the French as
the minimum instead of the maximum of what they can do.
On that account,
even in connection with the evacuation of the Ruhr and peace agreements.
as well as reparations, I have drawn up the Note on a basis that will allow
some elasticity to Germany in the negotiations that it may develop,
provided it does. Even at that it is a little stiff for Germany to swallow
right at the moment, by which I mean that while the pressure on the German
people outside of the Ruhr because of the occupation is getting extremely
difficult to bear, yet it nas not reached the point where the pressure on
the German Government on the part of the people has become sufficiently
strong to warrant the Government in going as far as it will have to go
before this thing is settled.

The difficulty is that the German Government, having so successfully organized the German people for resistance, is finding it extremely
difficult now to reorganize them for settlement. However, the German people
have reached the turning point and almost any week now may see the development
of the sort of pressure on tile Government by the people that will enable the



Mr. Benjamin Strong

4 -

May /9, /923.

Government to do what it must do before peace can be brought about.
One thing that I particularly recommended to the German Government
was that they try to bring all German business together in such manner as to
satisfy the world that it would be back of the German Government in any
agreemont that it might undertake. In order to show them just what I meant
I prepared a proposed memorandum that I felt the German business men could
deliver to the German Government and that the German Government could quote
in a Note if it was found advisable as matters developed. This is now being
considered and German business men have been called into consultation with
the Government for the purpose of working out something along the lines
which I proposed.
A very interesting side light on tile whole situation lies in the
development of one of the bogies which the Germans hoped might be effectively
used on the Americans as well as on Europeans to try and break the French
determination. Just how far the German Government took part in this, if at
all, I do not pretend to know.
Some interests in Germany, however, began to
stage a lot of beautiful scenery almost immediately upon the occupation of the
Ruhr aimed to scare the world into thinking that Communism was apt to develop
In Germany at any moment with the complete overthrow of the Government and a
strong combination with the Russian Bolshevists. Americans who had been in
Germany with whom I talked before going there myself came back frightened to
death about this situation and almost every German with whom I had previously
talked gave me the impression that he was also frightened.
From what I
could gather while in Berlin, however, I came to the conclusion that the
whole thing was a "set up" as too many photographs had been taken of various
occasions where well-known Communists were apparently taking principal parts
and red flags were so placed as to allow the breezes to blow them around
crucifixes, etc. Then the attention of the superstitious was called to this
latter situation and as they naturally would not stop to think that the
crucifixes could not blow even though the red flags could and so were not
able to get out of the way it developed quite a little feeling that there
was an omen in the occurrence.

Personally, my only fear of this situation lies in the possibility
that those in Germany who are allowing the Communists such leeway at the
moment may awakensome day and find,that exactly asinthe case of
the German currency, that it has gotten beyond their control. At the moment
I do not believe that it is beyond their control in the least particular,
but I can conceive of such a thing happening if they let it go too far.
To my mind the next Note which Germany delivers, that may be put
out the latter part of next week or the following week, is apt to be the
crucial act in this situation. If the Bavarians can be brought into line and




Mr. Benjamin Strong

5 -

May 19, 1923.

be made to see that arousing further resentment on the part of France is
going to accomplish nothing for them but instead is going to make it harder,
it should be possible to develop a Note that will open up the way for negotiations around a table, when I am certain that everything can be worked out.
The problem in itself, of course, is not such a difficult one except from the
Tne difficulty there,
standpoint of political forces that are elements of it.
is very real, but even that does not mean that the solution is not
theugh ,
possible.
One of the 'unfortunate developments in Germany lies in the fact that
the members of the cabinet and seemingly most other prominent Germans have been
so overwhelmed mentally by the difficulties involved that instead of trying to
find a way around them they have stood before them helplessly and have actually
been obsessed by them.

After Helfferich had consumed nearly an hour telling me the things
"We won't do" and during wnich he had not offered one constructive idea I said
to him "In Chicago, where I was born, tne motto is 'I will' and not 'I won't'
and it has seemed to me that it brings better results".
he asked m
I meant by it and I told him that I felt that the duty of the German Government
to its people lay in finding a way out of their diffioulties and not in giving
up under them. He actually saw the point and agreed with me and from then on
we had a very constructive talk.

The same thing in different ways came up with any number of those
with whom I talked and I found that what was seeming obstinacy in some cases,
while undoubtedly partly that was largely a form of mental inertia tnat was
brought about through constant circular thinking about the things that would
not be done, accepting them as immovable obstacles that could not be overcome
or gotten around.
Of course it would be much nicer to be able to give you the end of
this story, but it seemed to me better to send along something with the hope
that it might prove to carry with it a little interest that would help you
while you were ill. It is also on that account that I have been willing to
take the chance of putting in black and white some of the statements made,
for, as you can readily see, they cannot ever become public.
,Hoping that this will find you greatly improved, and with sincere
regards, I am

Cordially yours
411101:771

FIK-TJS



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ATLANTIC CITY, N.J

ow..

DANIEL S WH I T-E, PR
JOSEPH W. MOTT,GENL. MANAGER.

=d'eptember 27, 1923.

Mr. Benjamin Strong,
Federal Reserve Bank,
New York, N. Y.
Dear Ben:

Yesterday I had a talk with Pierre Jay and he tells me
that youare absolutely cured and that you will probably be back
It is quite impossible for me
in a comparatively short time.
to tell you how happy I am over the news, and while I am in the
*
midst of this Convention, which is really very strenuous, yet I
It
cannot delay writing you and telling wou how pleased I am.
will certainly be wonderful to have you back thoroughly cured and
I am looking forward to seeing you with more enthusiasm than I can
display in a mere letter.
Thinking it might while away a little of your time an0"-*-possibly put you to sleep if you are restless, I am enclosing copy
of a report which I made to the Chamber of Commerce in Paris.
Later I will send you a copy of the address which I made here at
the Convention that resulted in the passage of a resolution, copy
of which I will also send you, that carries the recommendations
It is my firm belief, after
which I wish to see carried out.
five months in Europe, during which, as you know, I spent hours
and days with the representatives of the different Governments
concerned, that if we can take the part outlined in my address
that the whole situation can be settled very quickly, which, in
view of the fact that more or less evolution is involved, does not
mean either to you or to me in a few minutes, a few days, or a
few weeks.
Congratulating you upon the wonderful fight you have
made to get back your health, and with sincere regards, I ail,
Cordially yours,

Enc.
FIK-R



BANKERS TRUST
0/Y1PANY

NEW YORK
16 WALL STREET

SEWARD PROSSER

FIFTH AVENUE AT 42,,TREET
PRESIDENT

MADISON AVENUE AT 57,KSTR CET

PAR IS

3 65 PLACE VENDOME
CABLE ADDRESS - BANKTRUST-NEW YORK
F. I.K ENT.

VICE PRESIDENT

16 WALL STREET

NEW YORK

October 10, 1923.
Mr. Benjamin Strong,
Federal Reserve Bank,
New York, N. Y.
Dear Ben:

It was really fine to hear from you and your
letter did me a lot of good.
IN FILE

gave
Amer

As tbs--Trewspaper artiqes which you read only
the address which I made before the
Bankers Association, I am enclosing a complete
excepptg-of

copetogether with the resolution that was passed afterward.
It will interest you as well, I am sure, to
know that of the other nine organizations to which I
have presented the matter since the Convention, two have
already agreed to cooperate and the others are actively
interested in presenting the matter to their membership.

Your friends here in the Bankers Trust Company
were all tremendously pleased to hear from you and you
are certainly going to have a warm welcome when you come
back again.
With sincere regards, I am,
Cordially yours,

FIK-R
Enc.




ALBERTA,LNEY,

SEWARD PROSSER,

PRESIDENT

CHAIRMAN OFTHE BOARD

I3ANKERS TRUST

COMPANY

NEW YORK
16 WALL STREET

FIFTH AVENUE AT 42,STREE

CABLE Ac,DREss NEW '(0 50 a PARI,BANKTRusT

cAeLE ADoFtessLormpuscom

MADISON AVENUE AT 57,,STREET

PARIS
3 85 PLACE VENDORS

rLIKENM PRESIDENT
VICE

NCI(

NOW I

_vow

DEC 2 /1, 1923

16 WALL STREET

NEW YoRK

VA EA.

December 12, 1923.
Mr. Benjamin Strong, Jr.,
Federal ,Reserve Bank,
New York, N. Y.

Dear Ben:

Since you returned to New York, I have purposely refrained from bothering you, as I feared that I
might be taking some of your time which you needed to
get into your work again withoyt too much of a strain.
I do want to see you, however, and have a chance for a
little visit.
Knowing that you should protect your
throat,- I will bring an instrument with me that will
make it possible for you to talk with me in a very low
voice.

In addition to my great desire to see you
personally, I am also anxious, when opportunity offers,
to tell you some of the things which have been going on
in connection with the European situation, with which I
am certain you cannot be familiar, as they have not been
given out.
I am obliged to be in Chicago the balance of
this week and in Washington on the 19th, after which date
I will call up your secretary and ascertain when it may be
convenient, and I cannot tell you how much I am looking
forward to seeing you.

With sincere regards, Lam,
Cordially

ours,

FIK-H

Mr. Kent dictated the above
but was obliged to leave before it
was written.




F




ALBERT A,LNEY.

SE',KARD PROSSER.

PRESIDENT

jBAIRMAN BOARD OF DIRECTORS

BANKERS TIEJST

C OMANI

NEW YORK
16 WALL STREET
FIFTH AVENUE AT 4211...STREET
MADISON AVENUE AT 5731STREET
PA RI S

CABLE ADDRESSNEW YORK a PARIS-BANKTRUST
CABLE ADDRESSLONDON- BANTRUSCOM

395 PLACE VEN DOM E

!ELK.,

LONDON

26.0L0 BROAD STR EET.E.C.2.

VICE PRESIDENT

AUGRcyo
8
JSN

I,

11::

16 WALL STREET

NEW YOR K

August 12, 1925.

Mr. Benjamin Strong, Jr.,
c/o Federal Beserve Bank,
New York, N. Y.
'

ar Ben:

As I note that you are a member of the DownTown Association and the names of my son, Warner W. Kent
and myself are slowly approaching, the time when they will4K
be considered by the members of the Committee of the Club,
I will greatly appreciate it if you will write to the Club
such letter as you may feel justified concerning each of
us, but in separate letters so that they may be filed in the
proper envlopes.
As you undoubtedly know enough about me to cover
anything that it might be necessary to say, I will only
give you a few facts concerning Warner that might be useful.
He is a graduate of Harvard College, is a member of the Union
League and the Harvard Clubs of New York and is connected
with the firm of Ingalls & Snyder, 100 Broadway, dealers in
He owns his own home in Scarsdale, New York, where
bonds.
If there is anyhe lives with his wife and four children.
thing further that you desire concerning either of us, I will be
very glad to answer any questions you may have.
Assuring you of my appreciation of such consideration
as you may care to give this suggestion and with kind regards,

lam,
Cordially yours,

F1K-Rx







/Y1,-.7`
FRED I. KENT
SIXTEEN WALL STREET
NEW YORK

Sept. 21, 1925.

Dear Ben:

Your letter received and it was real
fine of you to express your willingness to write
to the Down Town Association.
It so happens that
my name came up last Thursday, and I was accepted.

Warner's application was not presented
until a little later, and I believe will not come
forward until the next meeting.
If, therefore,
it is agreeable to you to write the Association
concerning him (Warner W. Kent), we will both
greatly appreciate your doing so.

Sincerelyn,ts

Mr. Benjamin Strong, Governor,
Federal heserve Bank,
33 Liberty Street,
New York City.




30VERNOWS OFFICE

RECEVED

SA

V2925 IS 48
/925

30VERNOR'S OFFICE

RECEIVED

19E5

EP

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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102