View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Denver, Colorado,

January 2, 1917.

Dear Mr. Trenan:

We all went to the mountains on Christ

did not return until Sunday and yesterday was a

Day, and, as we
liday, this is my

first opportunity to give attention t

which, as you realize, is both
I have your letters as f
ton, hand-written (which mus

interesting and impo
amber 14th fro 7:ashinglayed in transit), December

20, 21, 22, 24 (hand-written),

answer

ulation of mail

28 and two of the 29th. I will

them in dhronol

rence to the matter of

amendments.

The

rburg wore sent personally and

in confidence and

m with a separate

each of t

all b
howev

memorandum on

d understanding now that they have
atbmitted to you,

please held i

send you copies of these comments, Which

fidence and consider only as an expression

of myrsonal views.
writ

of the

is memorandum ,arburg has sent me a revision

plan for retiring greenbacks, ahich I have net yet had time to

study, but when

I do and reply, I will send you a copy.

mind pointing out any

Would you

particular statements in my memoranda with which

you do not agree?
Yours of the 20th.

I note your remarks about Mr. Jay's re-

appointment, also about the statement by Lazard Freres.

understood that they were rich.

I have always

They have very close affiliations with




2.
Mr. Treman.

January 2, 1917.

the Bank of Franee, but, as you doubtless know, they have at times

been regarded as indulging in

stock market operations of rather ex-

character. This is only

tensive

jhat it is worth, but
Reserve Board when I

street gossip and I give it

the same reference was

discussed the names,

made by a

member of the

henc

Also bear in mind that Mr. Blumen
terested and doubtless will
tions.

inquire as to

h in-

r Bank of Franc

I do not think they should be disclosed to him in
About Mrs. McLaren, I had

position and

be considered wit

matters.

el under a

obligation to her, Whic

wa y.

Her stay

very

iy

deep

tion of the bank's.

You may be sure, if neces

to send for her again.

I have written Mr. St

f the Bank of Mentclair, expressing

ti on for membership.

personally a

The memorandum yo
issued

°gotta -

her regular

here was of such tremenduous

my pleasure

to you for

nig volume and maturities of bills

renewal credit

thoroughly s

vinces me that our policy has been
riticism by the Reserve Board has been

warranted at any
Yours of
finished.

It wil

21st.

I am glad to hear that that vault is about

o much facilitate our work and give us such greater

assurance as to our cash and securities that it will prove a
lief to my mind.

Please don't

attempt

great

to send inc any combinations

during my absence.

You doubtless have observed
year are about equal to ours.

that Chicago's earnings for the

This indicates the inequality of the

re-




3.

January 2, 1917.

To - Ur. Treman.

present basis of distribution.

I had hoped that our earnings

justify a larger distribution so as to clean up accumulated
to July 1, 1915, but submit to your better unde

Hot receiving your letter of the 21st un

rate letter.

returning from the
ject of salary

mountains, I am unable to get word to
Of course Mr. Sailer

dividends

tending of conditions.

Will refer to foreign banking connections in a

changes.

would

should be increased t

e

figure origin-

ally discussed.

n opinion about the other

It is difficult for

cord of their salaries in their

officers, without having befor

made since coming with us.

previous positions an

clined to fec s and Gann Should be

On the whole, I am
increased equally
Ir. Higgins shoul

that Mr. Kenzeolo)ould receive about $6,000, that

eceive a small

Term

advance

loss than

dolla

-Ur. Kenzel.

it make more defi

increase on account of his recent
d receive possibly a few hundred

This is a very general statement which

is as you will nnaerstand.

inc these men are exceptional in ability and
ility; they are really conducting the business
satisfactorily of an institutions with 4300,J00,000 of assets,
must

not

Prd we

be niggardly in our appreciation of their loyalty and ability.

About the bonus or emergency salary, I should say that the
should be limited

to

distribution

those who are receiving not over a maximum salary

and should be graded from a minimum of say 10-,; to a maximum of 15% or
20%, the larger percentage applying to those receiving the

Salary.

smllest




4.

To - Mt. Treman.

January 2, 1917.

Yours of the 22nd.

Thank you for the copy of special instruc-

tions No. 2, which I have read with interest.

This and other matters

indicate an intention by the Reserve Board to t
control of the management of the Reserve Banks.

ten up their direct

hope they don't over-

do it for it is sure to give rise to a clash.
The dinner given by Mr. Woodwa
ductive of good results.

ing House charges

Mr. Hendr

knows nri view

z.nd I hope 7

t the Clear-

use them with him and keep

the pressure on to eliminat

omalous situation.

Clearing house can afford to coo

The

with us and should do so.

George Allen

y body and I hope he does

not make trouble f

estionairre.

about associate

My own views

the enclosed memorandum.

It was all

directly

hear was pro-

letter to Larburg.

400te rem

I wrote him

rte in this matter seem to have sue-

n some respects and been defeated tn others; it has taught me
ceede. .:.
a les.

e of
Which I

the

.1
.

This relates almost entirely to salary

ha
above.
\411114.1i6a44.1°111"
Yours of the 26th.

This

is entirely about

foreign arrangements

concerning which I write separately.
Yoers of the 27th.

only refers to the

?Acent for the foreign arrangements, this

letter you are writing to Monsieur

Lewandowski.

I

notice that your reply fails to refer to one important matter and that
is the possible liability for taxes in New York state.

Would you mind

having that subject investigated and Bend him the necessary infornation?




5.

Yours of the 28th. This

principally refers to the foreign

arrangements which I answer separately.

About free telegraphic trans-

fers, will you please ask Mr. Hendricks to communicate at once with Mr.

Caulkins of the Federal Reserve Bank at San Francisco so that he may

feel free to carry out his desire of making telegraphic
York without charge to his member banks?

us of loss of geld in the

gold settlement

heavy, and we ought to take

at being able to

this opuortun

He z-

e as the vol
of

.440

dealt

with

t about

Ref

in a senara

tte

here.

out

atly interested in the

he is literally foaming at the

mouth

MU

I agree

patience is justif

rates

wrote me a splendid letter about

the foreign matter, and,

non-member banks

forever.

scounts for member banks.

Yours of the 29th.

I

if it

ign banking relations

reports of purchases of bill

but no

pleasure

'right

matters drag

It is impossible for

are

s

I am much gratified to learnprogress

serve them.

the 28t

relieve

will be

expressing

jam5 otherwise thos

Yours of

greatly

.

in the Clearing House arrangement
is followed

transfers at New

e program about
still hold out.

collections of items on

Lets be eationt with them as long as

d and then put on the screws.

It will take e a few days to prepare that memorandum about drafts
on Federal

Reserve 3anks being available anywhere at

par. I have some

notes worked up on the subject and a copy of Jay's letter to you, and will
hope to get something off the

As stated above,
closed herewith.

last of this week

or early next week.

my confidential memorandums to Warburg are en-




6.

January 2, 1917.

Treman.

Roberts will probably be here this week or next.

We are )4,ing

to discuss this subject of silver certificates, greenhac,cs and national

bank notes and I want some special information from him about our Bank
of England arrangements, which I think he alone can give us completely
and satisfactorily.
Seay has sent me his memoranda, whi,

1

will be referr

to in my

o. on paring Federal Reserve bank chec
The bank of Montreal suggestion
on its merits.

hould be conside

it

Personally, I d

e present time,

-

as we doubtless would not buy

any relations established

there would be of more value

ut it might be well to
ous

ask Mr. Meredith to s

that we cannot allow interest;

as terms for accounts both
I am telegraphing you the s

e may have, as well

f this today as follows;

eal for statement of terms and
conduct in our behalf. Se no
as we would not buy bills in Canada
vantage in re
onsidered antagonistic to present reangpments migh
our own member banks."

"Suggest asking
what lyusiress they woul

present
and ou.

lations

What is

e of the large discount for the alerchants

National Bank?

the change of management cost them deposits anti are

they liable to me

with difficulties?

Mr. Jay ought to be thoroughly

posted on this situation.

Thank you for the copy of letter from Pallain, also for the memorandum respecting reserves, which i.e most interesting.

Your second letter of the 29th.

you to keep reasonable

I hope that

desk

clock loads

hours, which are just as necessary for you as for




7.

To - Mr.

January 2, 1917.

Treman.

any of the rest of us.
I am replying respecting

the

report on foreign arrangements by

separate lettlik,
ipci
Now please don't worry about my behavio
very good care of myself, although I did succeed

sut here.

picking up a little
settling in my

cold last week Which followed its cu
antrum, but I am having it treats
I will be all right in a day o
scie along except some of

Thank you many times for
deeply appre

BS /CC

I am taking

very good spec

t Who says

e meantime I am letting mail
ant letters.

ou say in your letters, all of

Denver, Colorado,
January 2, 1917.

Dear Mr. Treman:

This

letter is in regard to the Bank o

gland and Bank of

France matters and 1 shall not send confirmati
grams, as it will take me some time to

'brai

of our various teletet out the longhand

copies of those sent from EStes Park, but I will f

firmations in a few days for th

on of

we first emplaini general

101w.

110010
I

a fa

In the first place
_Out sAy definite p

,

Bank of England 0
even mentioned it

count of h

Er. Gr

ems:

went

in

on, as you will recall, with-

na

Ting

..yone else on
io Er. -Morgan,

nano

n with our

ell, being a al

your rec

ir letters on this subject

Before replying speci

,.440t

h you with con-

communicated with the

s subject, nor,

in

fact, had I

h would have been natural on acand on account of his partner,

of the Bank of England.

My trip, to

use t

language vihich

recall using at one of our directors' meetings,

was a

couting expedlt

for the purpose, first of sizing up conditions

abroad

second,

fling

information as to the character

of the foreign

arrangements w should have and when it would be advisable to attempt to
establish them.

be with the

It had always been in my mind that these relations should

great central banks of Europe, if that was feasible, but I

had always doubted the possibility of direct business relations because
both the Bank of England

and

Ban

of France are governed by so many hide-

bound traditions that we could not in all
agency the required service.




In

probability

obtain

through

their

a general way, it had been in my mind

2.

To - MX. Treman.

January 2, 191V.

that we might be obliged to open an office over there, either in London
or Paris, or both, and remain absolutely independent of any single connection.

in

From the very outset, however, of my

ries ahomad it became

apparent that we would not only be able to make
of these institutions of immense adva.

-;

-

angements

a..

prevailed.

ad every

in favor of a close relatio
Bane of France, the result bel
Bank of rrance and

the

mp

plans

success with the Bank

of England.

etened necessary to go further toward

them

when I

dly in

left aew York, all of Which

my letters free London, addressed

ay.
Let mc say furtl

ally

t of other

r were so far more advantageous

you will
to Mr

thole,

know a good deal of progress with

I had though

concluding

and under con-

T

the Bank of England end the

The arrangements c
than

both

'ut probably on terms

such as never would have been possible except in wa
ditiens such as then

with

cussed edth

'

that two years ago this subject had been gonerurg, who at that time had expressed the view that

Reserve Banks in some way with the great central banks.
of Europe.

in

He may have forgotten

this, but it was

certainly in his mind

the early days of our organization, and further, let

Beare in

Washington is not justified in suggesting

that

me say that the
they did not expect

me to go so far as I did go in

these negotiations, because the matter was

discussed very confidentially,

but quite fully, at

ference in Washington before I sailed, a




the last governors' con-

committee was appointed to consider

3.

To - Mr. Treman.

January 2, 1916.

the matter, the Board was advised of the appointment of this committee
and Mr. Kains was charged with the duty of preparing the report on the
subject to be submitted to the Reserve Board.

f

know on the subject and all that I knew, becat

;.

necessarily was not definite and could not be o
investigations to be made on

y knew al/ there was to
the object of mu trip
ined L, advance of

the er

Nay, as to the Board's auth

restricted

one as I understand it, but th

desire, as has been intimated

to ne,privately, to be ad
Operations.

of the probable scope of our

I thirW in a gene

the Board should be fully advised

of what we intend t

t iA any way that would tie our

hands, risk our

act

fact, cond

keep th

or t

on by the

armed,

for u

ording to our best

judgment

business conducted with a string,

or put us in a p
or

a

Reserve Board. We should

be in a position -where it is

necessary

o continually ask their permission as to our specific transactions
r amounts.

o the Boa

you in th

exzw,j,

announcement, I think I am justified in writing
y possible just the way I feel about it.

They knew

and fully recognized that I was bound by a written undertaking not to have
any announcement
it was

a

made without Cunliffe's prior

willful violation of

agreement.

In

other words,

sacred undertaking, dhich they were obligated

to respect just as fully as I was.

Their failure to do so would have re-

sulted in my instantly resigning had I been in New York, or even in Denver.

The fact that I was up in the mountains away frma mail communications and




4.

To - Mr. Treman.

January 2, 1917.

trying to have a good time with the children I suppose had a good deal
to do with mg taking a more

sober

second thought, but in all honesty

I must say that a repetition of this business means that I am through
with the Federal Reserve sank forever.

The r

s for this are not

so much my own personal relations with Cunliffe

allain and the others

because they will not suffer, as I shall at the

opor time maze it per-

fectly clear to them that I was in n
The real reason is as follows:

for the break.

and I had agr

that the ma-

chinery of our Reserve System

boated that it would be mad-

visable

tors the tentative terms pro-

for him to submit t

posed, which involved the Bank o
of

a century,until

'al progress toward getting all

the authorities n

ey consisted first of an amend-

ment to the Fade

ngress; second consent of the Federal

Reserve Board; thi

own directors; fourth, an arrange-

ment wi
and,

and setting aside the traditions

e Banks and their boards of directors;
ined confidentially to Cunliffe, some sort of

th, Which I

an an

al or disc/ai

anno uent by the

f interest by our State Department.
may,

in

The

fact, have been the first notice to all

the directors of the Bank of England that any such

but three

plan was contemplated, and I am sure that Cunliffees friendly message
which you quote to me was inspired as much by his personal friendship
for me as by anything else and doubtless covered a world of chagrin and
mortification which he was unwilling to express.

The other reason for

my considering resigning so seriously was the effect upon the Bank of
France.




They are peculiar people in Paris and have to be handled with

5.
January 2, 1917.

To - Mr. Treman.

no end of delicacy to avoid bad blood.

The situation was in perfect

with Pallain because Lord Cunliffe and I had agreed that a

shape

similar

arrangement ought to be perfected with the Bank of France, and, as you

My idea had been to

will find in the memoranda, that was so expres

oint of actual conclusion

bring the Bank of England arrangements up to th
and

then so

arrange matters that we co

d

lt ously, if possible, offer
oth at the same time.

a similar arrangement to Pallain, possibly announc

The result, as you will

s friendly co-

observe
The Whole

operation and arouse the dis

unexplainable

and

Your letters and Curtis' tele-

to my mind

lanations only:

phone message give me the

ity; 2

assumed all respons
confidence had no

ight with them
a garbled st

that there

er reason

1st

t

that

the Board

should be disregarded; 3rd, that
which he threatened to publish; 4th,

o sacred for

them even to repeat to the

their nnwarrans is.ouncement.
This is all too

possi

1st,.

blic body, mg obligation of

,

some newspaper

victim

thing is absolutely

diculous for sensible men

to entertain.

The

explanations' their actions are, as I view it, as follows:
to offset the ill effects of their previous unforhey dosi

tunate announcement about treasury bills and violated my undertaking for
their own benefit; 2nd, that it was inspired by some international political
motive in connection with Mr. Wilson's peace proposals; 3rd, that it was
intended as an

intimation to

Germany of some sort which I cannot fully

comprehend; 4th, which to me is incredible, that it was a method of de-

feating the operation of a plan Which they had just authorised, by malcing
the




other party to the

bargain unwilling to go ahead with the arrangement;

6.

To - Mr. Treman.

'

5th, that it was a means taken by the Board to

January 2, 1917.

exhibit the

strong arm

in the general direction of the affairs of the Federal Reserve

and sunpress somewhat the
Bank of New York

System

the Federal Reserve

independent activities of

and particularly myself.

inclined to suggest

On this phase of the whole subject I

that care be exercised that negotiations of thi haracter be submiuted
hereafter to

the Board in such shape

ANWIFTMNW

;

"yes" and "no" answer

is required, and all arrangements b made for govern

.

.ur

own actions
In other words,

in advance of submitting any a

f this character.

I think

y our own rights as set out in

we should be govern

e that the Board can be trusted with

the statute until we get ample

.nft;

knowledge of negotiat

ial character.

i feel justified

So far as

in

writing

him frankly, exp

this occurrence and telling him just

hem it happened;

early mail and send you a copy. In

Washington on this subject and until

the me

'a
the

r from them direct you may be sure that I am not doing to mention
ter.

be a

r that I could send with any self respect would

The only

:ve decided not to

ignation and.

do that, at least for the present.

e course to be pursued - after time for a good deal
of consideration I think the following is the best:

As to the Bank

of England -

in a few days I will prepare and send

you a letter outlining a method by which I

think we can start operations

at an early date, and in that letter I will try to cover all
details.

necessary

This will be official and I will send a signed letter, but if

you and the others think it should be modified, please don't hesitate to
do so and sign it yourself.



At the same time I will draft a letter Which

January 2, 1917.

To - Mr. Treman.

it would seem to me desirable to noa send to the other eleven Reserve
Banks, preliminary to a more formal treatment of the matter.

Just as

soon as we hear from Lord Cunliffe, if his respo.-e is favorable, I think
the

Federal

Reserve Bank of New York should its

4, 04,

r"

sides of the conclusion

k

England in making identical announcements oil bo

of the arrangement, using care that th

join with the Bank of

oursw, are not known,

which the Federal

but making it perfectly clear that it is an arran
lieserve Bank of New York has ne

th the Bank o

good many months of discussi

ondence.

In that announcement

t already made by the Board, as

I think we should ignore the
otherwise it would appe

and after a

we

taken the matter up with the Bank
the Board, Which of course

of England only

would not be the
vs received a

As to the

personal cable from

?al lain

St

"Ai repondu par
Mille bons so

er courrier a votre

derniere

lettre.

h I am replying
or your good wishes which are heartily reI await your letter with interest and will
cipro
h regard to our negotiations and respecting
reply p
announcement of possible arrangements in London."
"Many thank

The situation in Paris is quite different from that in London
and the sensibilities of the officers and regents of the Beni: of France

are such that I feel we would be guilty of a serious blunder if we did
not proceed at once to conclude an arrangement with the Bkin, of France,
even though we did

bus.



MD

business at the present time, or only a nominal

8.
To - Mr. Treman.

January 2, 1912.

The Bank of France, as you will find I advised the Board and Mr.

Jay in writing, held a special meeting of the regents While I was in

Paris, authorizing Pallain to conduct negotiations with a view to establishing some sort of relations, 'which were \ then defined.

we should proceed at once and conclude them, p

I think

are willing

ded they

to accord terms at least as favorable as those _ zited by the Bank of
England.

As for de Neuflize, he has

from the Bank

time

with

egotiation of commercial

Pallian having advi

ha

Chamber of Commere

t Paris and t

relations
I had

that

two institut

he matter with

of cone'lug arrange
France were

Bank f France

in that matter.
subject of

was simply by reason of one talk
suggested that something of

about. I told him that I had already dislain and pointed out to

him the impossibility

ts for any such relationship, except the Bank of

to give us guarantee in gold and that I

point in any discussions with them where I felt they

their

credits,

represent the

ti write Pallain on tie

ize himself

in will

should be bro

cuss

this country to

uf/ize happened

between

You

ilea in Which we were requested

will find all the correspon

The way de

uthority

in these negotiations.

of Prance to rep

to assist him in connection

produced

willingness to go that far.

had

not reached

had disclosed

He undertook to write Pallain on the

subject, entirely on his own responsibility, although with my knowledge,

and he later advised me that he had heard from Pallain, but he did not diselude what ?villain had written, and suggested in place of a gold guarantee

simply a guarantee of rates of exchange. The matter

so far



never went any further

as de Neuflize was concerned, because Pallain later wrote me direct,

9.

To - Mr. Tremens

January 2, 1917.

copy of Which letter you have and in which, as I recall it, he made no
reference to the possibility of our

negotiating through de Neuflize.

de Neuflize fails to distinguish betue
informal discussion of his own unofficial and

and the official

uthori zed

negotiations Which we are condu

ing direct with the

Bank of France, and WIlith which I ha

His father, Baron

to his

de Neuflize,

s rather dangerous to

t

e that he

the matter and was

relim nary statement, my

would be to write

the un
that

an arrangement it would be

3'J

explai

;ly the Bank of

this plan could
to go to Fr

should ope

t be

the suggestion

concluded without a personal visit, I was

sometime this

year, but in

the meantime that we

accounts with each other and await more elaborate

arrangements until I was able to do

abroad.

This long letter so far is intended simply

views about the

necessary

gland situation and

ected announcer nt in regard thereto, and containing

expecti

proposal

tter, Which I will draft upon re-

outl
,

had heard something about

of France wanted to establish

close relations wi

for us

undertake

lize until we have authority.

I did hear from Masson when he

ceipt of his

familiarity.

nt of the Bank

of course, fully informed. It

any negotiations with or

suggestion

to express my

personal

\
announcement and what we should now do.,,Let-ie now comment

on some of war references to the matter in your last

letters.

SP!--1,nd notice to Mr. Jay of the action of the Board in an envelope
marked "confidential' was a strange performance when the Board had already
determined to 


ea an announcement to the press.

I am glad you and the

10.

To - Mr. Treman.

others

feel

January 2, 1917.

as strongly about it as I do.

I doubt if negotiations

wit n the Bank of England are jeopardized so far as 1 am concerned per-

sonally, but I think it will make them more cautious in their relations
with us, feeling that we have a leaky and unre

our affairs and

1 am sure that the situation wi

complicated because

these

ble Board supervising
Pallain will be greatly

7rench bankers are exc

ingly suspicious and

liable to take fright at any evidence
and the others insist upon our gett

all matters effecting the

y.

direct advices

bank

I hope that you
the Board on

The governors' conferences have

developed that this indiree

unication by private letters to

the Reserve Agents is repeatedl,

use of mistakes, misunderstanding

and sometimes hard f

One sent enc

ng's

tter

strikes ma as most un-

usual and indicat

tude by the Reserve Board.

that as the Board

ody, its acts are of a public charac-

ter.

He says

o inspect its Minutes and that it must

repo

Congress even matters Which are of a confidential nature and un-

finis

If the Board ta,_es the

attitude that all of

ations, etc., must at once be published notaithy be of the most confidential character, the minute

our

they are submitted to the Board, and that the Board alone is to be the
judge of the character and extent of the publicity, then it becomes essential

for the protection of

the management of the Reserve Banks that the

Board should not be advised of confidential transactions.

To illustrate

-.1.1 feelings on this -subject, sunless the Board should demand the

confiden-

,

ial s4.




. Iu

hi private bankers.

What protection of

11.

January 2, 1917.

To . Mr. Treman.

confidence can we afford to these men who are relying upon our pledges?
I cannot accept any such doctrine so long as I am an officer of the bank

and if the Board insists
dentially

that matters shtch sh

be dealt

to be published whene r the Board sees fit,

are nevertheless

I certainly cannot continue my connection with t

Wont you let me

i have read over the Cl
^

This

institution.

doubt if that time

should be conveyed to them at the pro
has yet arrived.

with confi-

how you feel a

it?

oposed report and your letter
mid admirably, with the possible

to the Board, Which seems t
exception of one or two points

d in my telegram sent yesterday,

of which confirmation

to mention

There are
place.

may have been

One is th

worded

announce-

on where a good deal of jealousy exists

engotia

joint stock banks as to the operations of the Bank of England.

among

Duri

causedLord Cumliffe

areful and cautiously

because of the nee

ment of

in their proper

the course of

I

.v,

.

iscussions he stated to me once or twice that the

banks wereAp;r7

big lo
that in so

jealous of the Bank of England, and it developed

_e_viefelt
.:1-;firly

invaded their own fields of activity.

He

thought they

might feel so in this matter and I assume that his reference to it indicated

I

a desire to so handle the matter that it would minimize criticiam of the

management of the

Bank of

England; this was rendered impossible by the pre-

mature announcement.
Another unfortunate feature of this matter seems

to be the feeling

intimated by Warburg in one of his letters that I had forced the Board
in pressing this application for immediate consideration.
,




Such a feeling

12.

To - Ur. Treman.

January 2, 1917.

is entirely unwarranted.

If you will

examine carefully the official

memoranda, you will observe that it is based upon the hypothesis that
transactions would not necessarily be undert

before the oonclusion

of the war, but if it became possible, or nece ;ry, notice to that

effect would be

given.

Board that this was a

I have all al ng taken

matter which simply

of dissent by the Board, altho

e at
sent or notice

requir

ongly

recomme

Immediate

assent. It has all along b

ir power to say that they

would not approve the arran

the war continued and they

cannot possibly have read the me

da without realizing that no conunderstanding in existence

mitment was made

the Reserve 3oard in any way to

which committed
cause any embar
at the pre

ined to authorize the appointment

it t

a long letter but it seems necessary

sorry to wr

er the whole gr

d as

some sort of a etter
belie

re it is

In cone

see

it, and now I will get busy pre-

to Lord Cunliffe for

I wish 3urtis was here

to

submission to the
help me.

on, let me say that this episode has very much

altered mg feelings toward the whole Reserve System ara1, generally,
the work that they are doing.

Difference of opinion on our policy,

etc., does not influence me in the slightest degree in my loyalty to

the work, but this deliberate disregard of

what I considered to be a

very sacred undertaking is really a little more than 1 can stomach.




13.

To - Mr. 1reman.

January 2, 1917.

am delighted, however, at the attitude the bank and particularly of you and the officers who were on the job and realize
the situation.

/47 best to you all.

_-

Faithfully yours,

R. H. Treman, Esq.,
Federal Aeserve Bank
New Yon:. City.







Form 1201

WESTEOAEM UNION
TEL s.ttew- AM
WESTERN UNION

WNW,' 24T

use three
sYmo.is
the check
(number of
ac
E'ssage. Otheractor is indicated by the

,,aring after the check.

NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS, VICE-PRESIDENT

S, MBOL

Day Message

Day Letter

Blue

Night Message

Mite

Night Letter
NL
If none of these three symbols
appears after the check (number of
words) this is a day message. Otherwise its character is indicated by the

symbol appearing after the check.

Amer, Colorado, January 2, l9170

I) AT
R. H. Treman, Federal Reserve Bank,
New York City.

,

CLASS OF SERVICE

DAY LETTER.

Replying yours twenty-ninth ma,:e following suggestions regarding
resolution. Stop. Selection of London Agent was entirely open question before
I reached London and nocessit:, of making that connection developed after my
arrival. Stop. Would modify top of page two LI that respect. Stop.
Resolution and letter should point out absurdity of confidential communication
of Boards action aLdressed to Jay when it had already decided to make public
announcement at once. Stop. Further emphasis could be given to embarrassment
caused Cunliffe Who was awaiting sufficient progress here before submitting
matter to his own directors. Stop. Copy cable to Cunliffe not enclosed with
Curtis letter. Stop. More by mail.
Benjamin. Strong.

Chg. Benj. Strong,
41)0 Montview Blv.,
Denver, Colorado.

DAY

li

Form 12.',5
IRED

WESTE7,2SEINT

UNION

WESTERN UNION
TELAO

an X oppovice desired;
TELEGRAM
ITTED AS A
SSAGE.

Check

AM

"Cr 4IP.,

Receiver's No.

Time Filed

NEWCOMB CARLTON, PRESIDENT
BELVIDERE BROOKS. VICE-PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT

ng telegram, subject to the terms
f, which are hereby agreed to

Denver, Colorado, January 2, 1917.

R. H. TreE4n, Care Federal Reserve Bank,
Now York City.

Suggest asking Bank of Montreal for statement of terms and
at business they would exnect to conduct in our behalf. See no present
advantage in relationship as we would not buy bills in Canada and our
arrangements might be considered antagonistic to present relations with

our own member banks.

Benjamin Strong.

Chg. Benjamin Strong,
4100 IJontview Blvd.,

Denver, Colorado.




lip
TELEGRAMS
ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FO.

,VING

office for con
To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the °rig,
one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED ,.,EUhAM AND PAI
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram
received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, bey,m, fifty tire
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
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 thi
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 great
writing hereon at the time the telegram is offered to the Company for tra,namission, and an additional sum paid or agreed to be paid based on such value
ono Der cent. there°,
S. The Company is hereby made the agent of the sender, without liability. to forward this telegram over the lines of any other Company when nc
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 off,
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
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
by one of the Company's messengers, he acts for that purpose as the agent of the sender.
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 a
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 elm
the foregoing terms.
No emplcryee of the Company is authorized to vary the foregoing.
THE WESTERN UN ION TELEG RA
INCORPORATED

NEWCOMB CARLTON. PRE.

CLASSES OF SERVICE
FAST DAY MESSAGES
A full-rate expedited service.

NIGHT 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 defened 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-

Letter shall be delivered on the day of its date abso
events; but that the Company's obligation in this
to the condition that there shall remain sufficient to
mission and delivery of such Day Letter on the day
regular office hours, subject to the priority of the tra
ular telegrams under the conditions named above.

No employee of the Company is authorized to vary the f

NIGHT LETTERS

Accepted up to midnight for delivery on the mor
ensuing business day, at rates still lower than standa
rates, as follows: The standard day rate for 10 words
for the transmission of 50 words or less, and one-fifth.
day rate for 10 words shall be charged for each additl
less.

merated above are hereby agreed to:

SPECIAL TERMS APPLYING TO NIGHT LE'

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, subordinate to the priority of transmission and

In further consideration of the reduced rate for th
Letter" service, the folloWing special terms in at

Day Letters shall be written in plain English. Code. language

Night Letters may at the option of the Tel(
be mailed at destination to the addressees, and the

delivery of regular telegrams.
is not permissible.

c. This Day Letter may be delivered by the Telegraph Company
by telephoning the same to the addressee, and such delivery shall be a
lomplete discharge of the obligation of the Telegraph Company to
diver.
D. This Day Letter is received subject to the express understand; and agreement that the Company does not undertake that a Day



enumerated above are hereby agreed to:

be deemed to have discharged its obligation in such cc

to delivery by mailing such Night Letters at dest
prepaid.

Night Letters shall be written in plain English.

is not permissible.
No employee of the Company is authorized 10 vary the fo

Denver, Colorado,
January 5, 1917.

Dear Mr. Treman:

I have been meaning for sometime to wri

you this letter by
t dictate it instead.

hand, but my correspondence is so heavy that I

After some months of very diffic it work

o

you, i realize

that the skies seem to have opened and let down a

ble deluge of

a good deal.

difficulties and troubles; it op

certain want

of consideration which has be

in some matters recently is

utterly unexplainable to me a

lize, tired as you are, that
P beyond expression.

it has been dispiriting and disco

ve been in harness now for

t thos

?lease realiz

over two years hay

chafe and a new

at the job,

spots where the collar and breeching

eve loped eallo

bad

to develop
this.

managed to

some

or in the situa

do th

ame and do not

is.

li1e

Jay a

yourself, will at first be certain

Curtis and I have been all through

ertain amount of self-respect and find

on, and I a writing to you now to urge that you
y about these unfortunate developments.

handicapped by a certain lack of familiarity

with past de

7enta and it seems to me that no one could have possibly

dealt with the situation with greater skill and judgment than you have,
and I hope that you are not getting discouraged or feel that tqe work is
not worth while.

To the extent that it is for mc; benefit, I deeply ap-

preciate it, and the work for the whole system will bring its own reward

in




the great satisfaction you will feel When you look back an it.

2.
To

January 5, 1917.

Mr. Treman.

This, therefore, is to urge you to cheer up and not ,set
anxious over these unfortunate recent develo
With many good wishes, I am,

AB'
Faithfully yol

Al11111111Milli

R. H. Treman, Esq.,
Federal Reserve Bank,
New Yori. City.




r

Denver, Colorado,

January 5, 1917.

Dear Treman:

Warburg has sent me another memo rand

on greenbacks . Olt

enclosing copy of my letter to him, togethe with memo. in

,!

the plan, which please hold in confidence until you hear f r,ell

direct, as he has sent it to we f

R. H. '41E2.

,

Federal Reserve Bank,
New York City, 1. Y.

BS /CC

En c .




,400,

Denver, Colorado,

January 8, 1917.
Dear 1r.r2reman:

I have been reading Governor Seay's ar

drafts on the Federal Reserve 3anks imediate/
Reserve Banks.

It would involve to

ticular of his plan and argument a
this comment to certain parti

ciples underlyiag the plan

overlooked or has failed to re

nt a-id plan for making

vailable at all other
analyze every par-

am, therefore

ing to confine

relating to the general printo me Governor Seay has either

of controllin, importance.

THE CENTRAL BAIL: ID

The plan is
with branches,

one office, are
where t
Such

nciplo of a central bank,
thiich the eusto

s, while having their accounts at
all the breeches of the system

yable at the election of the payee.
plan is only possible with a central bank, where the physical

an of its reserv is a minor consideration and where the expense
of m
, reserves fr one office to another is not a material considerat
hey all belong to one institution, and where, in
lee

fact, the amount held at any office need be only such amouat as is

required for till money. Governor Seay Is led to maKe this mistake
because of the facilities which we arc noa enjoyin6 through the Treasury
Department; instead of our gold reserve being one reserve owned by one

institution, we are able to deposit a large part of it with the Treasury
in a common fund and have gold certificates issued aiAinst it at any
Sub-treasury, and by that device secure scree of the medhanical and physical



2.
To

Mr. Treeen.

January 6, 1917.

advantages ehich would be enjoyed by a central bank with branches.

This is a ficticious situation however, eeod so long as it lasts, but
ehicl will disappear if our sub-treasury system is materially modified,
as nee seems likely.

!hen that hagpens, all the advantages of a central

bare_ now enjoyed through the sub-treasury

we will be obliged either to constantly

ities wi
isapeear and
ft the physical Istody of
s

our sold reserves at great expense to our lves, or else
other with ear-marked gold funds,

each of the Reserve Banks fro
To summarize this po

Banks.

transfers of balances caused
Reserve Banks would b

without the facilities of t

tine the net

I

st each

ces due by

the other eeserve

ignores the fact that
tion of checks on Yederal
conduct for no compensation

41d. sooinent fund and the treasury.

MILLION:a CLUTLRS.

GovernorZeay are',

an will obviate the necessity for

banks carryin

at reserve centers for exchange pur-

the memb

poses.

essary corollary of the argument being that if member

banks no longer

as the exchange
breach. This ar

quire su

accounts, the eeservo Banks nevertheless eill,

I be required just the same and we must stand in the
nt overlooks many important facts, the principal one

being that surplus funds always eo to the money centers and alwaes will,
in order to find temporary anployment during periods of slap local demand.
One of the greatest causes of demand for exchange on New York at certain

times of the year is the flow of money there for the purpose of tempoaary
employment in stock exchange or other loans and has no direct relation to
commercial transactions; that is to the commercial demand for exchange as






January 8, 1917.

To - Mr. Treman.

distinguished fro ,n what

,;ovornor Seay would consider the illegitimate

machinery by Which the enormous flow of funds

k

and forth between

and money centers for inveat*nt, loaning and other

country districts

purposes :mild be facilitated and conducted wi

ut expense to the banks
from Hew York at some

But instead of dra

of the country.

establishing

The Reserve Banks b, his plan would be

financial demand.

for to New York.

seasons of the year, it might even facilitate its

d logical m

Furthermore, each movements

country and the countries of the

always shift between the se
world according to sunply an

and credit will.

and no argument

in

support of this

ited States should be chopped up

plan, based upon the t

for business and banking

into twelve indep

purposes appeals
b1LITZ POUT& OF

At

he d ff.
may
on w

twelve

with a bank account pays a bill,

ese

a cheek and sends it to his creditor, no matter where hii creditor
s only one place of payment, which is at the bank

and that check
h it is drawn.
es nf

.

overnor Sony proposes that the

4nt;

check

shall have

an unsound proposition from every point of view,

and particularly When these twelve points of payment are not offices of
the same institution but of twelve different institutions.
There is a very simple principle underlying this matter.
a man in Birmingham draws a check on the First :ational

sank

awn today

of Birmingham

and sends it to Detroit to pay for an automobile, the payee in Detroit takes.
the cheek to his bank and deposits it

in

order to get his money.

The

question of di-edit instantly arises between the Detroit Ban.: and the de-

Jaauar; 8, 1917.

To - Ur. Treman.

positor of the cheek.

If the Detroit Bank considers its customer suf-

ficiently responsible to insure that

MD

loss will fall upovl it if the

check is not paid as its depositor endorsing i

then the

good for the amount,

diate credit; in

Bank of Detroit may give its customer

other words, advance the money on the check for t e period of collecss of its customer,

If the Detroit bank is doubtf

tion.

it will

take the check for collection and turn over

roceeds to its

depositor only when received.

any difference arise

case of a Reserve Bank ha

Other

a check on the

a and sends

National Bank of

If

it to the First

125,000 capital) and that bank de-

posits the check

must determine whether the endorsement

Aationa

If ins Corners is :,'ood enough to justify

OUT

the

se National

might be willing to do so in the case of

Jag immediate credit.

the case o

f New York, but will we be invariably willing to

ry °heck of this character, no :wetter for what
o us from any bank of our district,

amount,

weak it may be.

Jewry() Banks and the

abama, with 25,000 capital, draws

the First National

do so

the

iple there is no difference.

transaction above described?

of the

in

Presumably not,

no matter how

and the only way in Which we would be

satisfied to do so would be upon receipt of obligations from the other
aeserve Banks on Which those
they are good or not.

checks are drawn agreeing to pay them Whethe,

jovernor Seay clearly appreciates the weakness r

his plan at this point 1372 preposing that a limit be placed upon tie
of these checks, for 4hich immediate credit would be given, the 17




5.

To - Mr. Treman.

January 8, 1917.

being a percentage of the capital o

the drawing bank.

That is a

plan for extending credit!

Credits cannot be extended by any such4.t-rule method.

the strong banks, a

would be an tnjustice to

bans an

dangerous for

the Reserve nanks.

s

co of danger to the weak

Los

ng at the other side of

this picture, I would never willing
serve Bank of liew York enter into

It

ving the iederal Re-

obligation with

.ther eleven

Reserve Banks, undertaking to

ble for the payment of any check

drawn on us by our member

jat be deposited with them even

though the 107 limitation appl
whether

this 10,g /

a series of check

o is to tell and how

can we tell

Suppose a n25,000 ban,: floats

a number in

of its capita/ -

o is going to a

loss fall when ch

s came in rep

district, each one for 10,,

c: up the amount and where would the

enting the excess and upon jhich checks

would i
THE D

AT.

Hendricks

11 tell you, during

the days when

Treasury

one of the Malted States depositaries, banks
which rob

checks on deposit were

in

the habit of sorting

them and shipping them for collection to those points where they happened
to have need of exchange.

The unrestricted use of checks

serve banks for exchange purposes would have

on Federal

like result.

Tne-

Sanks through-

out the country would seearate checks on Federal Reserve banks and ship

them all over the country, according as they mint have need of exchange
at different points, and we would immediately see a new kind of float develop -

not only of dangerous proportions but dangerous in




character.

The

irst

To -

Treman.

January 8 1917.

National Bank of Birmingham might draw a cheek on the FederalReserve

Bank of Atlanta and send it to Detroit at a time when Detroit automobile
manufacturers had made large purchases of mac
needed Boston exchange.

The Detroit bank inst

or in Hartford and

of depositing the

chece with its own Federal Reserve Bank eould s p this chece to the Shaw-

mut National i Boston; at that tim

some demand for ?hila-

delbhia exChange in Boston and t

out all Federal

Reserve bane checks, no matte

drawn, and ship this check

payable in Richmond to the

Philadelphia might be in need

n Philadelphia. In the same nay,
ork exchange and the Girard bank,

instead of denositil

Philadelphia Reserve Bank, eould

send it to New Yo

aper

result in the or

n shipping currency and might

chain of checks on !ederal Deserve

banks in constant
SERVIC

all hazards the Reserve banks should desire to avoid getting in-

to t

positiOn with t

sorts

services fo

penso of

r members where they are expected to perform all

othing; this is one of those eases. While the exr reserves is now trifline, it may not always be so,

and a nroper plan for transfers by Reserve Banks for the benefit of member
banks should recognize that expense is involved and a suitable charge should

be made to cover the cost and a alight profit.
EXCHANGE ACCOUNTS OF RESeRVE BANS.

The Federal Reserve Act contemplates that the Reserve Banks shall

carry exchange accounts with each other, undoubtedly for the purpose of

handling transfers of the character contemplat ed by Governor Saay's plan.



7
To -

. Treman.

January 8, 1317.

If his plan is put into operation and there is a daily settlement
through the gold settlement Pend, there will be no occasion for exchange
accounts between the °serve Sank°, the credit in the gold settlement

fund being in fact that very account.

It et

s me that the use of the

gold settlement fund for this purpose is a he o sion of the real purpose of the organization of the Reso
r as domestic exchange
Is concerned, and in the exercise of this function
bank out of the system through

established for the purpose

Ind a central

of a fund alit h was primarily
alences which arose through the

collection departments of the
LEGAL ASPECTS OP TILE?

once aria

The gnostic)

her a Reserve Bank Which

gives imasdiate

dit is making a

it is paying the

eck as agent of he bank on Which it is drawn. 1 am

ohly pre,.

plan.
med

Whic

who en

vance to its depositor, or whether

d view as to the legal points of the
strikes me that we have got to ch,ose between having the in-

e credit take th form of an advance on an uncollected check, in
e the advents

s the

bank must rely upon the goodness'of its depositor

or accept the principal that each of the Reserve

Banks pays these checks in behalf of the Reserve Bank on Whice drawn. The

Reserve Bank in New York In the first case would accept all the risk of
loss where credit was extended to weae banks which were net entitled to

credit of this character, and in the second alternative it would be obliged
to assume undertakings to the other eleven eeserve banes, to be responsible for the Daynent of any checks which might be deposited with them, drawn
upon its member banks. I would net be willing to see our bank assume



8.
January 8, 1917.

Treman.

unlimited responsibility of this character on either theory of the
transaction.
On the whole, I think the best answer ti his sueeestion for
narrine Federal Reserve Bank checks is to comb

the present telegraphic

transfer service which we have recently put intperation with the plan
suggested in Mr. Jay's letter to you
th; the latter with a
slight modification. 1.1r. Jay pr
able only at a nominated Resev

and not to so ne other diet

that suitable advices be excha
eayment.

He apparen

Reserve Bank on lo

that special
Bsnc,

s be used, pay-

ich must eo direct to destination
no in which it is payable, and

as to insure the regularity of the
upon the advice to be sent by tho
do not think that would meet

the situation an

t by taking the Texas district. If

a member bank in

on the Federal Reserve bank of Dallas

and ser

ean

ne it payable at the Reserve Bank of San

Fran

co the advice would take one day at least from El Paso to Dallas

and

o and a half day'rem Dallas to San ,'rancisco, makine three and a

half

draft;

s at the lea

'efore Sari Francisco would be authorized to pay the

t might be presented in San Francisco in tee days.

It seems to me that the drawing member bank is the one to send advice, both

to the bank on which it draws and to the bank where the payment is to be
made.

aght it not be nossible as a modification of Mr. Jay's plan to

provide that ane member bank might have a drawing credit arrange d betaeen

its own Reserve Bank and the Reserve Bane of any other district up to a

snecified limit? In each instance Reserve Banks to be responsible for the




9.

To - Mr. Tremans

Januar', 8, 1917.

drawings of its awn .

in

s up to the limit named, and,

insure correctness, signatures, etc., to be furnished

in

order to

each case.

common by which interior

This would be similar to arrengements now nu

oorrespondents of NewYork banks and bankers d

foreign exchange on

London and continental banks, under drawing or

s Which are guaranteed
kers Trust Company

by their New York corresnondents.

might enter into an arrangement

le Cleveland T

ampany, by Which

the Cleveland Trust Company

d draw ci efts or issue travelers credits

up to a certain amount wi

gives

being responsible for the payment of

land Bank, the Banears Trust C

and protecting itself by what-

idl

the drafts at the
ever form of obi

cried on the London City and Lid-

tiot or socuri

that

t thought necessary from the

credits,

Cleveland Trust

the signatures, etc., of the

nany are furnished to the London City

officers of the C

paid are charged to the account of the

Bank

s Trust Co.

In reading Goya

f

A

r Seay's memorandum, I am very much struck with

it, to take a correct view of certain fundemental
Cm the first page in stating the purpose of the plan

he emphasizes that it avoids imposing upon member banns the necessity of
maintaining accounts with correspondents for exchange purposes

and gen-

erally lessons the accumulation of bank balances in centers outside of a
given district.

This exhibits a good deal of confusion of thought as to

our present banking system. The Federal Reserve Act aimed to decentralize

the unnatural and forced accumulation of balances at the Reserve centers



10;

To - Mr.

January 8, 1917.

Treman.

which had been denignated as "Reserve and Central Reserve Cities",

thereby necessitating banks in the interior to carry balances there
for reserve purposes. Certainly this was a de rable object, but I
cannot understand any experienced banker claim

that there Ls any-

thing improper, uneconomical or unsound in bank

arrying accounts for

ks are for.

.exchange pureoses with each other interchange of commerce the world over necessitates

tions of this character.

rise to tee sane necessity

for loaning and investment

m that accounts of that character
.o overlook the very first prin.-

should be avoided,

ctples of banking

e is the unnatu

purposes and the

.r is the une

nate
pose

avoi

actionable features in our

There have b.:.

banking system.

sate a

bushing rela-

ds from one ma ket to another

The

and to base aim argument upon

The

col

accumulations of balances for reserve
ral accumulation of balances to compenThese two developments we want to elimi-

om eer banking system, but to eliminate accounts for exchange pur-

would be just ab.t as sensible as elimincting railroads so as to
e expense of

ipments of goods.

at the foot of page 2 and the top of page 3 that

aosk,;

o! the National banks keep balances in New York for exchange purposes, al-

though many of these banks have very limited direct relations with these

cities. This I cannot understand - no bank keeps an account for exchange
purposes that has no demand for exchange. They keen accounts for all sorts
of purposes, some of which we want to eliminate and some of which we cannot

possibly eliminate and one of the latter is exchange purposes'.
take issue with him absolutely with the statements in the first



11.

January 8, 1917.

To - 71r. Treman.

two paragraphs of page 4. The cause or the breakdown in domestic ex-.

obauges in past years has been due to unreasonable impulse, due to four,

of the interior banks to yank their balances

of New York correspond-

eats in order to have currency in their own va its, and formerly the only
- kind of currency they could get came out of the °serves of their corres-

and the breaking up,

pondents. The power to issue redere

wo ultimately must, of the sys

payable at distant points wil

f giving immed

milt for Checks

r banking system against similar

breakdowns in the future.
On page 8 Governor Seay

that the amount of checks cashed

about offset. His personal ax-

by the Reserve Benk-

days of the Reserve System and since

perience in this

Richmond checks should convince

we started givin

him that this is

be seasons of the year When immense

Reserve Byrks to others, and doing this
s without char

busi

At the foot of
advantages

sune

enjoyed

which will make it difficult to control it.
11 he states that the Reserve System has
making transfers. It has no advantage not now

ks9 except through the courtesy of the Treasury

Department:

in conclusion, I believe this plan does violence to the principles
for Whioh we have contended for two years ie devising a collection system

Which will be sound; that it violates sound banking principles which it
war; the object of the Reserve Act to develop and foster; and that the same
objects sought by this plan can be perfectly well accomplished without



To

Mr. Troman.

Oanuary 0. 1917.

ignoring the principlee Which we have now established, by employing

a system of telegraphic transfers and a system of Oleo,: transfers such
as suggestod by Mr. Jay.

Very sincerely yours,
R. H. Trecan,
Federal Reserve Bank,

Now York City.

BS/CC




Denver, Colorado,
January 9, 1917.

Dear Mr. Treman:

I have yours of January

ot tell you how

2nd and 3rd and

greatly I regret the difficulties that seem to
with our Washington relations.

ve arisen in connection

It certainly Be

unfair that you should
difficulties

be burdened with these Which are real
you have inherited and for Which you were not in any

responsible.

to them unofficially, or

Possibly it is just as
least

that

Bank of France, but I

informally, about no

or authority

the wisdom of any formal apPlic

to negotiate.

at

doubt

Nego-

seem like aiimission of a false

tiations are already

simply required to give

move to make appli

its

otiations are necessarily subject to

consent to an app
their ultimate con

. ,

,..

/111111'
c we need

vol .

e acceptance rates.

worry about a domestic market for acceptances when the

of.:141usimdm:410001 as 1 have frequently written.

will ..

o cultivate v

whenever

Personally 1 do

The difficulty

ume and there will be plenty of buyers for bills

ance a little.

Governor Harding's letter is to me unexplainable and unpardonable.
It is difficult for me to subgest a course in such a matter without being
in intimate contact with everything that has transpired, but personally I
have made it a rule never to permit anyone to address we in that

without demanding

fashion

justification and getting it, but I shall, of course, do

nothing at all about the matter, which would only complicate things
them -werse.




and make

2.

To - Mr. Treman.

January 9, 1917.

No letters will be sent to France or England, nor in fact have
any been sent which have not been sent through the bang and copies furCopies were omitted of the letter to the Bank of England and

nished.

are enclosed with this.

Lr. Locke's comment I think is

justified

d sound.

am wondering to what extent these matt rs that

e recently developed

may result in some criticism of my own direction o

Please do not fail to advise me

and fully of

character that develops so t

in

comments

detail.

The co

ing side because it

and possibly othe

Your
about 0

in th

ourth.

advises
I h

and yet it has an amus-

ur good directors (yourself)

ter understanding of the difficulties

Bank than woul

otherwise be possible.

vance in the acceptance rate of
ve in mind that the advance is being made

ace of increasi g bank reserves and reducing interest rates.

am delighted
and t

h

the salary changes reported, whicn are fine

in my opinion.

directors

present

se serious

through you a

of th

hing of that

ure will I hope straighten every-

s at 1

of running a Rose

fairs at the bank.

ish you with information or

The whole thing is o

thing out.

Of course I

r11

pnreciation

Also will you not convey to the

of their action in re-electing me to my

office and my regret that I am not there to say this personally

and to take up my duties.
You again refer to application for negotiations with the Bank of
France.

I

do not think I would make that application formally

cuss it informally as a matter of




information.

but dis-

3.

To - 2Jr. Treman.

January 9, 1917.

Confidentially, Mr. Roberts of the National City Bank is here at a most opportune time on account of his familiarity with our coinage
system, mint practice, assay office practice, etc., and I have taken
the liberty of consulting him in regard to th,

4

he as you know having been consulted once befor

n these matters.

would be just as well, however, to consider that

of England letter,
It

was acting in a con-

fidential capacity in advising us.
I am enclosing a letter f

Foreign Trade

.t,

il Which

was really intended for the b
Don't worry about my
the doctor is keeping a very clos

Warmest rega

getting along all right and
on me.

e bank.

things come out at
cerely yours,

R. H. Tr
Fedora
New Yo




Let me know how

Denver, Colorado,
January 10, 1917.

Dear Mr. Treman:

Thank you for yours of the 5th.
comment is in regard to the acceptance
Board has made a mistake in advancin

t requiring

The

lame
tes at this ti

need the
Let

me repeat that the first thing to acco lish is to dev
volume of bills. The way to
it, so much below the Loud

make our

p a large
,

and keep

rate that in t-tutions the world over

are forced even against t ir will to open Lw York credits. If
the Board desires m to d

o, I will pre

a memorandum Which

hope will be convi

Yours very truly,

R.

Fede

4eman, Zsq.,

Row York

BS/CC




erve Bank,

Denver, Colorado,
January 10, 1917,

Dear Mr. Treman:

Yours of the 4th is just received.
My suggestion that no formal appli
for

consent

to negotiate with the Ba.

been elaborated.

...be fl,-; to the Board

,f France possi

The statute contempill
i.tes no such proc

certainly arrangements of that

character should be

the initiative of the

in

alien upon

f the Beak of France,

negotiations have in fact
of course to

ure and

of the Reserve

Furthermore,

Board.

should have

nearly a year, subject

the

ard.

unusual procedure for

It would be a most

to negotiate and would es-

tablish a precedent t

arrass us in the future.

tions of this champ

always originate with

must

be in positi

this c

Negotia-

us and we

e are obliged to reply to advances of

ter made by foreign institutions, but we must seek per-

uerelations.

mission bef.

My best
If Monsiemr

ews of the deNeuflize situation are as follows:
1

n desires us to negotiate with him, or if deNeuflize

desires to acta intermediary, he should be the one to take the initiative

in

securing authorities; we should not make the suggestion.

Again, it is highly important
exist

in

that no material difference of terms should

the arrangement with the Bank of England

and the arrangement

with the Bank of France, so that the arrangements with the Bank of England

should be first concluded and



form the basis of negotiations with the

2.

To - Mr. Treman.

Bank of France.
Pallain *t

January 10, 1917.

If, on the other hand, it will be satisfactory with

have a temporary account between the two institutions, I can

see no objection to going that

far

at once, but difficulty is bound to

arise as to the terms of our account with them.

deposit rands with the Bank of France
about the gold basis.

4e cannot afford to

but a de

I aan assure y

e understanding

as i think yo

after reading my draft of the letter

the Governors

England, that this is a very tee

precise matt

11 realize

with accurately and withoussibility

the Bank of
to be dealt

d relations could

the broad

net possibly be °stabile

with the Bank

France along

lines of those contemplat

with the Bank

England without a very care-

ful study of the

very dif

So my suggestion as to

or the

t understanding in writing.
present

es is on the

of Pallaints letter
cable from'Cunliffe

to await the receipt

way, and Slhe receipt of a

our letter, then we will know where

ot think.you recall advices contained in my former letters
both with the Bank of France and the Bank of

about my co
England.

I

e written no letters to either

received any
the bank and

institution, nor have I

either, of Which copies have not been furnished to
1 of my correspondence has gone throngh the bank.

would be quite improper to conduct it otherwise.

It

The correspondence i

with Pallain consisted first of a letter from him introducing deNeuflize
and my reply written while I was

Pallain
in



suggesting

in New York; later a long letter from

relations and our purchasing bills and then my letter

reply, pointing out the difficulties of that course, which went through

3.
To - Mr. Treman.

January 10, 1917.

the bank. At the same time I wrote him about our Clearing 11011B0

arrangements, also through the bank, and

asked to

in reply to which he recently wrote us a

letter or Which you sent

send certain date,

me a copy; this copy by the way has been miel
) send me another on receipt of this.

was the cable received and my reply,
the above answers

the

matter prom

cables to France eve

Bank of F

when Pella

a le

esrlier action

advocate the course

above suggest.
to g

e 1

ies.

I think

and I am sure

I will go
r comes and, of

11 write at once, but

lease do not forget that

4,'ugh British censor channels

of any of the

and we cannot risk the di

parties to this nego-

any slips.

Your questions
an

re wita 2allain

Which you have

to pursue

course, if the Board pref

tiation by

last exc

tie questions contain d in your lette

is the correct course
ahead with

I will ask you

f England negotiations is fully

n the 8th and on that

by my letter

a Dsrsona

tter from Mr Jay

tely and

replying Sep
Recent

ment and die

now have

he will show you, to which I am

I am asking him to show you that letter.

ters from you
t

*Itch

subject I

indicate a

faction which

certain amount of discourage-

effect me very much

indeed.

At no time

have I felt the slightest uneasiness regarding affairs at the bank
long as you were there and these unfortunate occurrences in

so

Washington

really should not be permitted to disturb you as they do for we always

get past them some way or

another successfully and we will in this case.

I don't believe you are tempermentally fitted for scrapping the way I
am and don't get




the enjoyment out of

it.

A period of rest at hone

will

4.
January 10, 1917.

To - Mr. Treman.

clear your mind a good deal about these difficulties.
The last word from Dr. Sewall indicated that he would probably

be willing to have me ;o to Europe in June.

1 thins it is of the

utmost importance that 1 shoula do so, and if it can be arranged,
take Governor Aiken with me.

Then whe

I can take a short rest and afterwa
permanently.

it is necessary

get back,
resume paw work

With that program, even f my health sho

ficulty in my successor

returning perfectly well
I would appr

me how the different
the Bank of Bugland
With warmest

R. H. Trer
Federal Res
New York Cit

BS/CC




Esq.,
a Bank,

prevent ren which I have

maining permanently, these pa
been dealing would be put

the bank

would be no dif-

of course, counting an
than ever.

soon as possible, advising

of the Board lined up on this question of

Denver, Colorado,
January 11, 1917.

Dear mr. Treman:

The enclosed copy of a letter to '
ments supplements the wemorandum alread

others will dive this consideration an
strongly to the Board.

R. H. Treman, Esq.,
Federal Reserve 3ank,
New Yorc City.

BS/00

lune.




ing amend-

ent you. Iho
o known your o

yOu and the
views

Denver, Colorado,
January 11, 1917.

Dear :Jr. Treman:

I am returning herewith the statements of Acceptances Purchased,
Liabilities of Drawers, Endorsers, etc., which
They are very interesting, particularly i

ve just been over.

ibiting

growth of the

business and the variety of names oftutions and fi
ing.

There seems to be no particular co

ents required

now acceptto the names

as I have written so recently on
I wrote you rather ha

out

or two matters

and upon reading over the I

elt that they might have

read a little short; it is

ying to economize my

working time a bit.
The principal quest

f internal policy is the one about rates

for bills, and I am gett

anxious at the policy of the bank

in advancing its rates

in the face of an inevitable decline

tee in New Yo
Lond

Your le
ole considera

velop a wider

he certainty, I believe, of an artificial
in

7
,

annection with the new war loan.

Pdn

r, as we 1 as others from the office, indicate that the
n actuating the Board in making this advance is to det for bills anong our banking institutions; this strikes

me as the last consideration to influence the Board at the present time.

At the risk of reiteration, let me described just what the situation
is as I view it in the development of American credits.

of bills in

The normal volume

linglanA prior to the war was 500,000,000 sterling, of all varietiesi

the volume of bills in this country today is probably between 4200,000,000 and

:;250,000,000, certainly not over 10; of London's normal volume.



Our first

2.
To

Mx. Truman.

January 11, 1917.

problem is to develop volume of bills

,

and you may be sure that the

market tor good bills will take care of itself.

It

will develop almost

-.op*

ett

_

over night with astonishing rapidity whenever rates for that class of

The only means at our command now to

paper are permitted to advance.

develop volume of bills is to make our ra
rates

in

London that the pressure on dr

it is practically our

only leverage and

re
rs of bills be

ne that we shoul

long as we are in position to use the resources of the

es

irresistable;

ot forego so

ral Reserve

strength

keeiioeptance rate

rican banks ar

epeesented in foreign

System without impairment of

At the present time

damn.

vorably with

countries by about one-half .esen branches iiy,ondon, Paris and Berlin,

of three or four IewA.

£

Companies,

City Bank in South Ameri

the

Balking Corporation thro
Llercantile Bank of Ame
system.

the branches of the National
branches of

the international

Last and, in a very limited way, by the
ns in S

Banks of other

America; this is our foreigm banking
re

represented in

New York by the agencies

an banks, the two English chartered banke, the Yokahima Specialties

of the

Bank,
Bank one

ca.

Ite-beel;;;;;?ng business in South America, and that is about all.

As against thl
agencies, and t

the Englisfi system has the world covered with branches and

great banks of the world are to a Large extent represented

by their awn age cies in London, so that, in fact, outside of the 76 joint
stook banks doing a purely domestic business, there are no less than 150
agencies of foreign banks with offices in London, net to apeag: of the great

number of foreign trade banks of

English ownership

authorized to do business

in all parts of the world.




Furthermore, biglish trade has given them direct mail routes to the

Z.

January 11, 1917.

To - Mr. Treman.

remotest parts of the

world and we have practically none. Just consider

the variety of haadicaps which our system encounters, offset solely by the
advantages of lower rates and possibly more certainty of gold payment.
Foreign bankers who buy bills don't know the names of American

banks even, they don't have the benefit of pr
New York, they don't understand the cred
don't get quotations regularly of New Y
reliable and dependable forward rates

how to convert foreign currenci

il communication with

of American

ding houses, they

- discount rate, they don't get
ted to them, th y don't even know
Jars, there

very few conversion

tables printed adaetable to

cur encies, there are few

local newspapers printing

on finance and trade, whereover and foreign bankers and

as newspapers are printed

ne or more English papers.

merchants almost un v

ealand and South Africa the Lnglish banks

so.° parts of the world l'

orted to actually discriminate against

have arranged cartons,
American bills.

verte

In

In I

ed that bills drawn in dollars are con//

g and sterling into rupees, giving us all

om dollars int

ish rate at a discount, as contrasted with ours

the disadv

s of the

at a premium

figured correct.

These

not all the obstacles to be overcome in establishing

dollar exchange I. the different parts of the world, and if the difference
between the New York and London rates is not kept attractive, so attractive
indeed that it will advertise itself and establish itself, the absence of

banking machinery, of ownership and knowledge of American banking

affairs

may make it impossible for us to develop a sufficient volume of business
during the short period of the war to make it of permanent value to us after
the War is aver.




4.

To - Mr. Treman.

January 11, 1917.

It is undoubtedly a fact that unless American rates are maintained below foreign rates for the use of liquid banking capital, there

will be no inducemeat for our institutions to open branches abroad, and
it is for these reasons that 1 so strong/y urge the directors to continue

/

6-

with courage and independence the policy

s for bills low

and steady.

Midst all of the perplexities o

he past few wee

:

I hone you

get time for rest and some change, that you don't getdi,..uraged and
that you will always remember
in Denver Who is longin
you run out and see me?

RH. Treman, Esq.,
Federal Reserve Bank,

New Yoe,: City.

BS /CC




to

natheti

ociato out here

y with you.

Why don't

Denver, Colorado,
January 15, 1917.

Dear Mr. Treman:

I have your two letters of the 10th.ents during the
past two weeks have necessitated a franK

hange of v

by mail on

various matters Which ordinarily would t. discussed in ti
of course I am most anxious that my lett rs should not b
and particularly that they shoul
office.

May 1, therefore, a

where in your judgment it

s necessary to

Of course Mrs. McLaren is

ughly acquain

connection.

to reli

?Mile I marks

I

sunderstood

ly to the
et that the

and I have no doubt w

office and

o int

your oersonal files

feguard their contents.

with all of these matters
or. of any bother in that

t long letter regarding Bank of England

relations "confidential"

course, intended to be used by you

and your associates in.

this matter and 1 made it as full as

possib

so that you.wo

conveyed

"dated in every particular.

I am glad you

aatents to Mr. Peabody and non I am awaiting with a good

deal of intere

and ay the.result of the Committee's Washington

visit.
Mr. Lock'

it did me good to

etter, with characteristic brevity and forcefulness,
ead.

I judge from the last sentence that difficulty

has arisen regarding Mr. Curtis' salary; that is most unfortunato.

I think

the Reserve Board should be broad minded enough to accept the judgment of
our directors in these matters.



2.

January 25, 1917.

To - Mr. Treman.

The work of framing Up the Bane_ of Lngland and Bank of France
letters is, of course, exacting.

'70 cannot afford to ma u mistakes but

the real work of putting the plan into operation must be condueged personally in London and Paris, and I hooe our Board will see the wisdom of
1 1

another trip there for that purpose.

have been more than good in keeping me

to get

well posted.

is the fate of the letter to the Bank 0

England as soon

the preparation of the letter to

will necessa

know what
possible, as
depend upon the

outcome of the London eorre
am glad to hear t

r has been successfully

completed.

With warmest

R. S. Tremor, Esq.,
Federal ileserve Bank.
City.

New

oi4

BB/CO




"MD

1/W1 r111Ut
INJIAO

OF SERVICE DESIRED

K/QP

my Message

Day Letter

Receiver's No.

WESTERN UNION

Night Message

Night Letter
°irons should mark an X °poem the class of service desired;
THERWISE THE TELEGRAM
/ILL BE TRANSPAITTED AS A
FAST

Ks/ 47/i

IESSAGE.

TEL

11\7V!

AM

Time Filed

NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS. VICE-PRESIDENT

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

0n

R. H

Check

Denver, Colorado, Januar] 15, 1917.

ix..van,

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

Believe Board should only be informally advised of French negotiations
latch will be conducted subject to their ultimate consent stop.

Formal

application and consequent publicity might BOOM to COMMit US to concluding
an arrangement of some kind whereas it would be more prudent to ascertain
first what

kind of

committed stop.

an arrangement

Paris

and firvrcially stop.

oan be

effected

before appenring to be

situation much more uncertain

than London both personally

Am writing fully.
Benjamin Strong.

Chg. Benj. Strong,
4100 Montview Blvd.




1

111=1111F

pivow

ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO

.

Ti FOLLOWING TERIL.-;

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 f
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 SLIC
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
1. 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 an
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 rem?
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 otec
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, whet
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 great,,, vklue is state,
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 e, one-tentl
onr; 7er 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 ma,'
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
towns. Beyond these limits the Company does not undertake to ihake delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeavo,
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 o;
by one of the Company's messengers, he acts for that purpose as the agent of the sender.
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 telegrE r
filed with the Company for transmission.
messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in addition 0
Special terms governing the transmission
of
the foregoing terms.
No employee of the Company is authorized to vary the foregoing.
THE WESTERN UN 1014 TELEGRAPH CONI PA
INCORPORATED

NEWCOMB CARLTON. PRESIDENT

CLASSES OF SERVICE
FAST DAY MESSAGES
A full-rate expedited service.
NIGHT 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-

Letter shall be delivered on the day of its date absolutely and a
events; but that the Company's obligation in this respect is sul
to the condition that there shall remain sufficient time for the ti
mission and delivery of such Day Letter on the day of its date dt
regular office hours, subject to the priority of the transmission of
ular telegrams under the conditicas named above.

No employee of the Company is authorized to vary the foregoing.

NIGHT LETTERS

Accepted up to midnight for delivery on the morning of the
ensuing business day, at rates still lower than standard night me
rates, as follows: The standard day rate for 10 words shall be cht
for the transmission of 50 worcls or less, and one-fifth of such star
day rate for 10 words shall be charged for each additional 10 wor,
less.

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

in all respects, subordinate to the priority of transmission and
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 addressee, and such delivery shall be a
complete discharge of the obligation of the Telegraph Company to
is,

delivery of regular telegrams.

deliver.

This Day Letter is received subject to the express understandand agreement that the Company does not undertake that a Day

D.

http://fraser.stlouisfed.org/
iin
Federal Reserve Bank of St. Louis

SPECIAL TERMS APPLYING TO NIGHT LETTERS:

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

Night Letters may at the option of the Telegraph Coin
be mailed at destination to the addressees, and the Company
be deemed to have discharged its obligation in such cases with rt

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

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

Denver, Colorado,
January 16, 1917.

Dear Ur. Truman:

Your night letter regarding the

3ank of England letter is just

received and for the sake of accuracy I quote it as follows:

"Kent makes following
letter stop.
arding
seven section B if we should
suggiistioParagraph
der gold e
rked at seventy
seven three quarters When our corresp0 out was oblig
o pay say
seventy eight for gold in times of ak4 ve bidding, it uht occasion
him loss star.. Kent has no suggestio that will meet s nation but
thought possibility should be understood on both sides 'stop. Page
four section A line two he .luerieswhether word "less 4liould not read
"plus" stop. Same section he
hqther if
ondent required
us to earmark large quant it'
rs Whic
lat
ased to us we
might not under agreement
e to absorb
y of ce charge stop.
Paragraph fifteen he sugg s adding at on ()flowing words "and
should it be possible to
so" stop. Thi
otherwise we indicate
willingness to do somethi
which may be i
ssible stop. Please
instruct dhich if ap of
ese points you
dealt with either in
original letter or
supp
eatery lett

/s

In reply I have j
firmation.

ent'Iton

These tele

e the desirability in a matter of this

sort of repeated ohe

a litt

The tm

n t. ,

rtant mistake

glad tha

letter as per enclosed con-

slip may involve serious

e of the word "less" and I am now so

cautious in having everything checked over.

Refe

estions

Cokayne's lett

of June 15th in

in

order, first please read copy of

Which he states

suggested the rt of 77 s. 9 d. and the
the basis of

consequences.

at

that Lord Cunliffe had

establishment of the account on

ard" gold rather than "fine" gold, so my letter was

prepared accordingly and I hardly see the necessity for makin, an
tion to him in this regard.

the Ban. of Zngland

Possibly you don't realize the

carries gold in

standard bars.

sugges-

extent to which

If it an not mistaken

the great bulk of its gold stock is always in bars and the great bulk of
its dealings in gold is




in bars

rather than coin, so that the suggestion of

3.

2.

January 16, 1917.

Traman.

any possible loss when the Bank of England is paying a premium for gold
doubtless never occurred to them.
The transactions of the Benz of England in normal times very inory price of 77 s.

frequently involve paying any premium over th
9 d.

If war conditions no

policy in

Furth°

as to any modification of price.

ment should

to be settled between the t
the principle of a s

uto

jhich accounts are

e for gold-

is 77 s. 9 d. rather than

ted

uations above that minimum.

On, I am of course mortified at the error
Roberts and me.

To illustrate the

old for the BanA of England and receive
bar from the assay office of

US -

exactly 1000

$18,604.651 plus

the assay offi

charge of 54 per 2000 in value -

that the total
would be - -

at of the 1000 ounces of gold

the amount that

recognition of

Whole plan is based upon

point, if we should be

ounces wet

our arrange-

institutions.

WIttCh seemed to have e

States standa

de by them

I don't t

rate a

effecting t

a minimum price for go

As to the second a

ore,

should be

contemplate

in fairness to our w

a premium on gold in Eagland

one

stion

that regard, naturally the s

of the barios

se to a c

or later gtv

9.302

so

to us
018,613.97, jhiCh is

ould be charged to the account of the Bank of England in

order that we might sustain no loss.

On the other hand, when we came to re-

credit this same bar of 1000 ounces under the terms of the arrangement, we

would be expected to credit their account with 418,623.97, and I understand
that Mr. Kent raises the queery as to whether

we might not be called upon

pay a further charge to the assay office for melting and assaying this bar

to




3.

January 16, 1917.

ase we surrendered it for exchange into gold certificates.

That may be the case

ana of course it is desirable

that the at-

titude of the assay office or of the treasury department be ascertained.

charges if

There seems to me no reason Why we should pay further

an undertaking

willing to enter into

to

with

we are

re-deliver

to them in our transactions in this etc

t only United

tee standard

mint bars Which We have received direct

from the assay

rice and Which

have never left our possession;

ight in that ea

ssaying.

tag charge but we would avoi

not be so

Of course an accoun
that all of these

necessa

rate of exchange. (See my

letter in reply to Cokayn
the 4t1.1 sugestion,

g t

adl

paragra

une

ette

5, I t

Ur. Roberts i
to go cave

vice and assie

15th on this point). Js to

rds "and should it be possible to do so"
it is wise and prudent.

amiliar with this matter, it would be wise

e proposed changes with him,

and I am

hopeful that with his ad-

11 be able to effect some arrangement with the

assay office t
the assa7! offic

conducted

the other side of the ae-

count for some of t

at the end of

e a small melt-

sbviate superfluous charges on bars Atich we rec
nd later re-deliver to

them.

If necessary, I

think

the

matter should be taken up with the Secretary of the Treasury.

In this connection you

doubtless now

realize the Importance of the

suggestion made sometime ago about dealing with the Whole subject of gold
bars.

groat




If we can carry

a large stock on hand at all times, it will be of

advantage in dealing

with this account, and the

present time when

the

Saauary 16, 1917.

To - Mr. Treman.

assay offices are so crowded is a most desirable one to neectiate an arrangewant, as we could doubt/ess hold a stock of fifty or a hundred millions
without inconvenience, if we could avoid the charges.

In this connection I thine we should consider the terms of a
concluded end

possible announcement to be made when the

i am enclosing a tentative suggestion

you and the ot

and if it meets with your approval, thiS it might be We
letter to the Governors of the Bank of Eaeland, asking

of their view on the subject

to consider

to address a
to advise us
aneous release

of the announcement on both

des at a date .o4 hour to be fixed by cable.

?lease don't hesitate to W,

any changes tee- 800M wise in my enclosure.

Another sugge

to this arraneenent be v
in a. confidential eempart

at all of t

einal papers relating

Mbled in one file and located

vault, as they should not be subject

to examination in the
elm anxious to

this mat

ersion of the views of our Board as to

as well as any views that Ur. Kent expressed and hope that

you will writ
Also I

the other Res

d like 'to be advised of that steps are being taken with
Beaus, who should be particularly cautioned as to the

confidential na re of the plan and scene expression from the office as to
the extent of our operations when the agreement is concluded. Me idea is

to do a very limited business at the outset and only under exchange conditions Which have been very carefully studied .2.1d then later, If I am able
to go to London this summer, elaborate and extend the operations While on




5.
January 16, 1917.

To - Mr. Treman.

the ground personally, and do the sae thing in Paris if we make suf-

ficient progress to justify doing so.
While on this subject will you and the others please consider
whether we might not advance some similar su

Netherlands just as soon as we get an an

o the an of the

r from Lord

iffe.

I am hopeful now that this.matte will be promptly oncludod and

will prove to be the beginning of a grea advance in our
Many thanks for your tel

R. H. Treman,
Federal Reserve Bank4
New York( City.

BS/CC




ggostions

stem.

Denver, Colorado,
January 16, 1917.

Negotiations for establishing relations between the
England and the Federal Reserve

an

Bank of

of New York, which were commenced

by the Governors of the respective institutions

ondon in ilardh 1916,

The arrangement providea\bat the Bank of

have now been concluded.

England will act as the correspondent an,tinndon of the Federal
Reserve

an

of New York

will act in a similar capacity in N

or the Bank

f

gland.

It

titutions engage in commer-

is not the purpose of the plan
cial foreign exchange transactio

y will maintain with each

other mutual accounts of d

sent each other in the purchase

of bills and the conduet f transa

Provision

Of New York

and that the Federal Reserve

and gold coin.

is

e for part icipa

on by other Federal Reserve

Banks of the United

tee desiring to

oin in the transactions contem-

plated.
Ph
greater

lationship is

bility to rates of exchange in normal




times and in order to

ensive and unnecessary international Which
inery by shin-

create
manta of

y for the purpose of affording

may be r

ed or avoided.




Form 1200
LA

SERVICE DESIRED
Fast Day Message

WESTE

me F.,

4712:SE'N

Day Letter

WESTERN UNION

Night Mc-sage

Night Lei.
atrons should mark an X oppote the class of service desired;
l'HERWISE THE TELEGRAM
VILL BE TRANSMITTED AS A
FAST DAY MESSAGE.

TEL

UNION

Receiver's No.

Check

AM

Time Filed

NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS, VICE-PRESIDENT

nd the following telegram, subject to the terms
m back hereof, which are hereby agreed to

Guyer, Colorado, JAimary 16, 1917.

H. H. Troman, redoral ',Geary° aamt, 4em Yor4 City, 3. Y.

Night letter received sten.

letter stmply accents Cunliffes suggestion of

seventy semen and throe quarters rnte for earmariting oold thtoh -Jam contained in

Cokaynes letter of June fifteenth of *itch you have copy therefore doubt wind=

of any other sugostion sten.
sten.

Word "nlus" should be substituted for 17ord "less"

Su,geet yo,1 have conference 7ith assay office

authorities ,nd kieorge 4.

rte to ascertain possibility of further assay office
cares provided 'ee
surrender only mint bars I

su ,Astion about policy of

miss of recrodits sten.

holdind

have yo, follo4od up mg

W rs whichpas su,gosted for this reason stop.

Agree t) wisdom of suggested addi6ion paragraPh
fifte°,1 stop.

The changes should
be mado in original -letter instead of bv
sunplement If possible and first nag°
Opted on bank letterhead sto.

If further °hang° desirable folio 4n w_slay office

4




11IIIIIIIIIIIII

41

ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING 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 comp
Foi
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 S
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram
md the am
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 re,
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 oh
telegrams.
In any event the Company shall not be liable for damages f or any mistakes or delays in the transmission or delivery, or for the non-delivery, of this telegram, wf ,
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 sta, I
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-ten
onc per cent. thereon
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 reac
dastination.
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 citi
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, endeal
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
by one of the Company's messengers. he acts for that purpose as the agent of the sender.
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 telegra
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

:

the foregoing terms.
No employee of the Company is authorized to vary the foregoing.

THE WESTERN UN ION TEL EG RAPH COM P,
INCORPORATED

NEWCOMB CARLTON. PRESIDENT

CLASSES OF SERVICE
FAST DAY MESSAGES
A full-rate expedited service.
NIGHT M ESSAGES
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 roesrates as follows: One and one-half times the standard Night
Letter rate for the transmission of 50 words or less and one-fifth of
-Wsage
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:
A. 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, subordinate to the priority of transmission and
delivery of regular telegrams.
B. 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 addressee, and such delivery shall be a
complete discharge of the obligation of the Telegraph Company to

deliver.
D.

ing

This Day Letter is received subject to the express understandand agreement that the Company does not undertake that a Day

Letter shall be delivered on the day of its date absolutely and at
events; but that the Company's obligation in this respect is sub
to the condition that there shall remain sufficient time for the tr,
mission and delivery of such Day Letter on the day of its date du
regular office hours, subject to the priority of the transmission of
ular telegrams under the conditions named above.

No employee of the Company is authorized to vary the foregoing.

NIGHT LETTERS
Accepted up to midnight for delivery on the morning of the
ensuing business day, at rates still lower than standard night me,
rates, as follows: The standard day rate for 10 words shall be clu
for the transmission of 50 words or less, and one-fifth of such star
day rate for 10 words shall be charged for each additional 10 won
less.

SPECIAL TERMS APPLYING TO NIGHT LETTERS:

In further consideration of the reduced rate for this special "l
Letter" service, the following special terms in addition to
-

enumerated above are hereby agreed to:

Night Letters may at the option of the Telegraph Corn
be mailed at destination to the addressees, and the Company
be deemed, to have discharged its obligationi n such cases with re

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

Night Letters shall be written in plain English.

is not permissible.

Code lanv

No employee of the Company is authorized to vary the foregoing.

A

MI

I I MJI III II I I I I I MI 111111111111 II I I I III I I 1111 I I II I 1111 IT

WNW"
Form 1206

c'

ERVICE DESIRED
y Message

Day Letter

WESTE
WESTERN UNION

Night Meesane

Night Lett
tons should mark an X oppothe class of service desired;
HERWISE THE TELEGRAM
LL BE TRANSMITTED AS A
FAST DAY MESSAGE.

UNION

Receiver's No.

,

TEL

11.

41!

44.7r-v

Check

AM

Time Filed

NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS, VICE-PRESIDENT

2,

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

conforonce please to1e6raph

.A9

particulars stop. Aow proposed chanoas to

Roborts for final choch ston.

'leaso aire we h.. our Board and ilent view
proposod lottor and send mo copy as finally mailod.




5onjamin StrOnd.

3

ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TER.:
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. Fo
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
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram,
ond the a,
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
the sum re
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 ob
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, wl
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 stat,
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-ten
per cent. there°,
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 rev c
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 ell i
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, endeav
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 suby one of the Company's messengers, he acts for that purpose as the agent of the sender.
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 te,
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 additio
the foregoing terms.
No employee of the Company is authorized to vary the foregoing.
THE WESTERN UNION TELEGRAPH COL
INCORPORATED

NEWCOMB CARLTON. PRESIDENT

CLASSES OF SERVICE
FAST DAY MESSAGES
A full-rate expedited service.
NIGHT 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-

Letter shall be delivered on the day of its date absolutely and E
events; but that the Company's obligation in this respect is su
to the condition that there shall remain sufficient time for the t
mission and delivery of such Day Letter on the day of its date d
regular office hours, subject to the priority of the transmission of
ular telegrams under the conditions named above.
No employee of the Company is authorized to vary the foregoing.

NIGHT LETTERS
Accepted up to midnight for delivery on the morning of the
ensuing business day, at rates still lower than standard nigl
rates, as follows: The standard day rate for 10 words shall b.
for the transmission of 50 words or less, and one-fifth of such st
day rate for 10 words shall be charged for each additional 10 woi
less.

merated above are hereby agreed to:

A. 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, subordinate to the priority of transmission and

delivery of regular telegrams.
D.

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 addressee, 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 FRASER
Digitized forand agreement that the Company does not undertake that a Day
D.



SPECIAL TERMS APPLYING TO NIGHT LETtERS:

I

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

Night Letters may at the option of the Telegraph Cm
be mailed at destination to the addressees, and the Compan3
be deemed to have discharged its obligationi n such cases with
to delivery by mailing such Night Letters at destination,
prepaid.

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

Denver, Colorado,
January 16, 1917.

Dear Mr. Treman:

Realizing the value of tent's advice in such
taking the liberty of writing him
s per enclosed

he will doubtless stop at the
Urs. McLaren to take some dicta

satisfactory to you.

R. H. Tr4112.4n,

Federal Res
New York

BS/CC




py, and

nse to this and ask
1 hope will be entirely

Denver, Colorado,
January 16, 1917.

Pear Kr. Treman:
Yours of the 11th is just received.

e much interested

I

in getting a detailed account of the Washington ex
mittee and it is

tenses of the corn,-

rather important that I

em so as to keep

straight on future procedure. As recipe

you to-

day in response to your inquiry

the

plication to the_Federal Reserv

oard fo

banking relations with the Ban,;.

nor does t

li.
in negotiating to c vd. ikt our negotia

theliNtv,

. In each

Bank of

ns subject

It is a great advantage

to ratification and

instance those institutions require similar

later into rel

meaning a go

e made.

d alai.. should be the case with the

ratificaMi. s from their B
mission t

embarrassment, as

template that any pre-

this kind shal

liminary application

aoproval, wh

lead to

1 I

4110111

rmission to enter into
Confirmation is enclosed.

This course, if fo

I have previously wr

om of making formal ap-

announcing now

so that

that we

had per-

ons might be construed by these Frenchmen as

an it really does. Rad you dealt with these

Paris Bankers as I have on a number of occasions, you would realize that
.hey jump at conclusions with much greater freedom than the Englishan does
and an asmouncement similar to
than

the last

one would imply much more to them

it does to us.
Another reason for deliberation is

conditions betwoen Paris and London.

making the ;or




the difference in methods and

London is a free gold market and

)u means no more to the Bank of England than

January 16, 1917.

ar. Treman.

entering into any other obligation.

That is not the case in Paris

Where the Bank of France secures certain
pay

in

protection from

its right to

silver, which it sometimes exercises, the effect being to throw
There will

the burden of the foreign exchanges at times upon London.
be much more difficulty in arranging matters
than in

London and it is important that

pression that we are ready to conclude

torily in Paris
t the imshould no

y arrangement on

y terms but

our awn.

Still another

conditions

point is

nearly as stable as in Loud

se, much more liable

to invasion than is Englan

safeguards in our ar

ranee are not

able to introduce some
id not consider necessary

em

ln London.

In general, you wil

and cautious so far as
theless proceed promp
timat

ent, and tha

her that I think we should be deliberate

Reserve Board is concerned, but nevergotiations, subject to the Boards ul*large I exnect to do as soon as Pallain's

I hardly see how it is possible to do any-

et that I may ask Pallain to make clear de Neuflize'
position.

I h

ate to make any such suggestion.

Which Pal/ain should take the initiative?

Is not it a matter in

Inquiry as to

de Neuflize status

might be construed that he is assuming authorities to deal with us and
of course we don't want to get him in trouble, so on the Whole mu incli-

nation is to go right to him with direct negotiations unless Pallain
voluntarily desires us to deal with deNeuflize.



January 16, 1917.

To - Mr. Treman.

There is one feature of the question of foreign banking ar-

rangements Which ought

to be carefully considered at once and taken up

with the Board in Viashington, but I think directly by the bank rather
. The Board takes

than by me; I am sorry to have overlooked it be
the position that the authorization for

o appoint

Bank of England

is a matter which the Board must report

o Congress and

e public and

that their making the announcement was n violation of m

-.,:ent rather

which applied to the terms of th
the anpointment.

plat

It was nev

the Reserve Board %I

by Lord

Cunliffe or

Can it be possible that

two instituti

known to annne outside of

to the fact of

r be published or made

elations would

by me that the terms of ou

onfidence,

osition -dOr the terms of this

pa

ment when ratified must a

shed?

. .rrange-

It may materially modify the

attetude of the Bank of

certainly we would not be justified in

concluding an arrang

in the expectations that it would be

y informed of this feature in

without having

advance.

goat that inquiry be made of the Board as to whether we may

The

rely upon the
confidential

tever arrangement we

rms of

not made public.

enter into bola.; guarded as

Can this be done at once and advice sent

to me?

tope our Board will continue without abandonment to pursue

policy of marketing government
converted and that efforts

long bonds just as rapidly as purchased and

will be made to induce

Treasury to convert additional amounts of
also can be marketed.

the Secretary of the

the one year notes so that they

A year or two from UON we will be mighty glad to

have pursued this policy.



the

To - Mr. Treman.

January 16, 1917.

It does not seem as though our Board and the Denver office was
in agreement as to the policy for open market rates on bills.

We must be

very careful to avoid creating the impression that our rates ramble ararmr1

in an aimless fashion, following the vagaries of the call money market.

The effervescence of December was bound to
my own feelings about the rate were pret
developments.

A letter mailed a few da

and it seems that

well justifi
a googives this

Please always bear in mind one thing about my correepon

nothing

is

in the

nature of offi

sent to you for eYaminat

4

y subsequent
more detail.

e out here here excelt it

and approval,

you may be sure that no

slips will occur by our get ng at oross-purp es, for i send all the mail
about this foreign b

Please write me fn
,11 best regards

R. H. 141,St.

Federal Re
New York City

BS/CC




abo

Denver, Colorado,
January 18, 1917.

Dear Mr. 31:gman4

I am hurrying to get off the B

ter so will

simply call attention to the fact

be re-

written an our letterhead, a cop

should

be attached Pnd there Should

forms to enable the Bank of Eng

itable instructions and

en a deposit account with

1115s

I sincerely t

satisfactory to the
Best regards

4Prn

C
eJEeq.,

R. H.
Federal

Nw York C

no.




rvo Bank,

form absolutely
ors of the bank.

Denver, Colorado,
January 18, 1917.

Dear Mx. Treman:
Yours of the 13th is

received and

tite for a more

detailed account of the Washington meeti
that there may have been considerable

had been

I fear fro

th, ema if thee

alert to their rights, they would have

gentlemen

insisted

copy of the stenographer's rep
in attendance.

our letter

having a
no more be

Later on I

full particulars and

write me all Mr. Curtis wi

hen he comes.

1 am

looking forward ice

About the lette

of the Bank of Montreal.

ut in replying that the Federal Reserve
Act contemplates the etblis
pendants to a very con
bills

and regulati

and for the
character, e

relations with foreign correstent for the

purpose of purchasing

the

international changes

o BOMB extent

t our purpose to make appointments of that
we anticipate active relationships;

therefore, we

feel obliged t, '.old his su6gestion in abeyance until developments

would make clea

the necessity of our undertaking transactions in Cenada,

but that he need

not

understand by this that tne subject is finally dis-

missed.

My thought is that we would be very unlikely to buy bills in
Montreal, consequently any funds sent to Canada would simply lie idle



2.

To - Mr. Treman.

January 18, 1917.

on deposit without advantage to us or anybody.

If we opened an

account of that character simply for the purpose of dealing ia Canadian
exchange, we would accomplish nothing of advantage to our member banks
e business.

and might appear to be interfering with th
am open to conviotion on this
knows that situation well, can throw a
business relations.
With best regards,

H. H. Treman, &sq.,

FederarrGerve B
New York City.

BS/CC




possibly

ar.

,n, who

ibilities of

WESTE
WESTERN UNION

G.

-E W. E. ATKINS, VICE-PRESIDENT

1.--RECEIVER'S No

UNION

TEL "CiFf4 AM
NEWCOMB CARLTON, PRESIDENT

TIME FILED

BELVIDERE DROOKS, VICE-PRESIDENT

CHECK

SEND the following Telegram, subject to the terms
on back hereof, which are hereby agreed to

Denver, 'Colorado,
January 18, 1917.

R. H. '1.2sgmala

Vedcral Reserve Bank,
New York City.

Am vomiting and will mail EaglIsh letter today, with all
changes suggested. Stop. Think they are all iosirable and hope
'lent and Roberts approve.
Benjamin Strong,



Chg. Benj. Strong, 4110 Montview Blv.

Form 260

ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TEI-

S:

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 this, 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:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, be
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 fi 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 lin
or for
errors in cipher or obscure telegrams.

tele-.
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, unless
gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby vol
a greater value is stated in writing hereon at the time the telegram is offered to the Company for transmission, and an additional suns 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 one of the Company's messengers, he acts for that purpose as the agent of the sender.
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.

THE WESTERN UNION TELEGRAPH COMPANY

No employee of the Company tie authorized to vary the foregoing.

INCORPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
TELEGRAMS
A full-rate expedited service.
NIGHT TELEGRAMS
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 next ensuing
bus'ness day.

ETTERS
'94 day service at rates lower than the standard telegram
,ws: One and one-half times the standard night letter
-ansmission of 50 words or less and one-fifth of the

each additional 10 words or less. Subordinate

44k

.ransmission and delivery of regular telegrams.
lain English. Code language not permissible.




Telephonic delivery permissible. Day Letters received subject to
express understanding that the Company only undertakes delivery of
the same on the day of their date subject to condition that sufficient
time remains for such transmission and delivery during regular office
hours, subject to priority of the transmission of regular telegrams.

NIGHT LETTERS
Accepted up to midnight for delivery on the morning of the next
ensuing business day, at rates still lower than standard night telegram
rates, as follows: The standard day rate for 10 words shell 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.

Must be written in plain English. Code language not perMail delivery, postage prepaid, permissible.

missible.

0!




Denver, Colorado,
January 17, 1917.

Dear Mr. Treman.

nd, in some

Warburg and I have had some rather

and I sometimes wonder whether he is

Inclined to deal

matters too much from the standpoint of the theorist
ten
as a practical banker. I ha

expression of views about t

with this carbon copy of

ence,

truly,

vi
BS/CC

Eno.

th various
tudent than

rfectly frank

points of cont versy and am enclosing
alone, Which i will ask
etter for your

ar it in c

you to return to me.

two matters

about one

respects, rather heated correspondents

Denver, Colorado,
January 19, 1917.

Dear hr. Treman:

Thank you for yours of the 15th.

hat Mr. Roberts

1 am 81

gave you a good account of me for I sometimes thi
not taking as good care of myself as I

you imagine I am

ould.

ty Governor,

It is just as well to discuss the matter of a

that par-

but of course I am always wonderin

arrangements

ticular are exactly in accordan

own plans and wishese

not be allowed to disturb

These recent developments in
you in connection with your own wor
in this important matt
If you really
arrangements, might

come to New Yo k he

the

Bank, or hasten a

decision

terest to all of us.

ich is

el that it is

e to make a move for permanent

not be well to lisider Whether if Aiken can

-4.uld

not def

doing so until I am able to gat

and then let hi a go with me so as to

important mat-

fami1ia4 et himself thero

ly with the details of that

ter, be

the principles on the other side and be in

tep

position
Dr. Se

tire.

into

oes in case i were ultimately obliged to re-

s confident of my being able to o by June and I

suppose I could make a short visit to New York before that almost any
time after the weather improves.

I cannot make any very defini

until I learn what progress you make at the office in these matters.
I do not agree with the attitude of the Board about Mr. Curtis,
salary.

The salaries of the executive officers of the bank are not un-

duly large when one considers that we are one of the largest banks in




2.

January 19, 1917.

To - Mr. Tremens

New York, that we have immense responsibilities, that our work is
without

peculiarly difficult because so new and that almost

exception

they are hardly more than half in amount those

h are paid to officers

holding corresponding positions in the big banks

d trust companies.

Besides that Mr. Curtis has peculiar qualificatio s which make him of

unusual value to us and to the other R
should be adequately paid.

r all of Which he

hould be in-

Besides that Mx. Jay's sa

if that is not promptly done.

creased and 1 will be very much

sly ill, but 1 hear from

Mr. Rains has, as you

him still quite regularly and he

improving wonderfully well.

lication to negotiate with

No comment is nee

the Bank of France,

een

17 covered by my former

letters and the act
About Mr. Ken

Calkins, I am sorry

not to agree

s upon the desirability of developlug a br

burg

er market for bills.
of which I sent

emphasizes c
-

and starve the

This is fully covered in my letter to

a copy confidentially.

ly the inconsistency

of our position and the

00111L us to assume to hold rates

Whole system.

We will be obliged to

pretty promptly now, or the Whole system will suffer
of earnings and one consequently




above

the market

reduce our rates
a serious reduction

will be the renewal of the charge by

member banke that we are competing with them.

power to make an

This San Francisco

Is not it also beyond our

exception of San Francisco by executing special orders

3.
To - Mr. Treman.

January 19, 1917.

acting under an agreement
at rates below our own rates when we are
I am afraid we may be criticized.
to which all Reserve Banks are a party?
t rial credit with inabout the French i

I have road the letter

terest and am wondering what sort of responses

it 111 1 bring in view of

the telegram of the Federal Reserve Board
'Llany thanks to you for keeping me so fully post

to det a letter today diving furth

R. H. Tremem4 Esq.,
Federal Reserve Bank,
New York City.




s of the '.ashi

am hoping




Denver, Colorado,
January 25, 1917.

Dear Mr. Troman:

My absence in Colorado Springs, where I
Robert Masson, has delayed mc reply to yours of t

16th, 17th (2),

and 19th (3).

The sample report of renewal bil

y your

otter.

ut the Washington meeting

Mr. Peabody has not yet irr

and I await a letter from him

rest.

me quite fully of what transpired

formal

ment helps to give me a
sugge

at last been made

his state-

ion.for reductions has

et more nearly in line with the

market and build up

h we can well afford to do.

j and b

ter regarding the Buenos Ayres

day or tomorrow and i am constrained to depart rather

radical

to me as

meeting and

of the situation.

About rates,

business

Mx. Towne has written

burg's sw;gestions, which do not appeal
cticable.

You

been able to ship our Bank of Englnrd letter

by the Finland, following our exchange of telegrams.

Let me suggest

sending a duplicate by separate steamer and that both should go by registered mail.

I return the questionaire of the
dentially, Mr. Kent

had already

sent me.

State Bank Section which, confiOn the whole, I do not believe

these questions will do any particular good,

nor do I think they will do




2,

January 25, 1917.

To - Kr. Treman.

any particular harm, excent as to questions 7 and 8. Concerning those
let me say that Mr. Kent wrote me very

confidentially, asking my opinion

of these questions, Which did not include #9 in

his

draft and I

enclose

Jith this copy of my reply for your confidential use, explaining how I
felt about those two questions.

Please

letter.

Mr.

Thank you for the further expl si ion of :hoesiodoi)ulty about
ort:

the announcement.
Now about

the

permanent o

you with the

tion, I must wr
c'

to do I know.

utmost frankness because tha

1','

For a long time I have bee

eed at the bane: of a larger

permanent organization an

you the burden of filling
upon the assumption that I

the gap during my a

e year and then be able to carry

would be able to return
the

Frankly, this is not going to be

same head of steam

possible. I do not
work o

every member o

under

only as to my own work,
ization.

They have all worked too hard,

t pressure for the good of the bank.

n can live

organization

but as to the

We need a large enough

civilized lives and the ban4

need, whether

return or not, at least one additional Senior executive

()Meer, so 1

t that taking that matter up now and not waiting until

the last minute was justified in the interests

of the bank, in

your per-

sonal intereat and in mine as well.

I do not want to impress my own viees too strongly upon those who
are on the ground, but I

think the following program is the wisest one,

if it is for the convenience of everyone:

First, we dnould, if possible,




3.

To - ,r. Tremen.

January 25, 1917.

secure the appointment of Governor Aiken as Deputy Governor of the Bank.

econd, it would probably be a good plan for him to remain in Boston until

I am able to go to Europe, say in June, when he

id accompany me, not

as an officer of our Bank but as one of the Commit

e of Governors to con-

clude the foreign arrangements. Third, 1' 'ou coals remain until he re-

turns to take office; then about August 1st the shift
d be made.
I realize that this imposes
one or two mon
' sacrifice
beyond that was originally plena

11 see the importance of

carrying out the Committee sche

hand and the necessity for

avoiding the absence of two active o

pe, if

Aiken and I both go t

rs of the Reserve Bernc, should

your place.

discussing

is trip abroad

hope that you and the others

realize that the arr

ement, particu

ly in Paris, involves the dis-

details,

hich one must be on the ground in

Ie

cusaion of man
order to

having

various objec
en

of the

echrn.

there gives

acquainted

furthermo

which I regard as

the advantage of having at least two officers

1'

ersonall

great

or suggestions that are raised, and
the Whole subject from the ground up, and,

quainted with the men with whom we are to deal,
importance.

I would have been very anxious about the bank's affairs had you

been unable, or unwilling, to make the sacrifice that you have so generously made for us all and, as you know, anxiety retards progress in cases

like mine more than anything

else.

My

anxiety to

effect permanent arrange-

ments at the bank is as much on your account as any other, for you have
had a strenuous time, it has been a gratuitous gift, so to sneak, and I




4.

- Mr. Treman.

January 25, 1917.

think if something is not done pretty soon, we will be imposing upon

your good nature. I shall always be deeply grateful to you.
Regarding our policy and Governor Harding' s suggestion that

We keep liquid -- no bank could be more li

amm
are
4.144441 and the sug,,,...

realize.

gestion is a belated one, as you doubt
Department desires us to ta,-,a 3 moth

.

A

notes, we are

le Treasury
.

.

so without interfering with our rate po icy as to pure
My letter regarding th

overs th

as to the question of guar

ng bills.

und, excepting

your letter.

if we

are

up to .A00, it is not a
ciple of this plan is wrong

only expected to guarante
serious obligation t

position to do

uncle

in having it modified or

as laid out by Seay,
suppressed.

; we will talk that over when he

I am sorry abo
arrives.

am

My best reg

all.

Don't worry about my condition --

ng along fine.
Very sincerely yours,

R. F.

Treman,
Federal Reserv
New York City.

BS/CC

Enc.

q.,

Denver, Colorado,
January 26, 1917.

Dear Mr. Treman:

Just a sutzestion that caution be exercised
oenalties for deficient reserves.

Once the impost \on of penalties

is dealt with on the basis of favor,

matte basis just rs

n rebating

lb was be

eeibut an autod money, we are

ain to

be criticised for relaxing our

cases and enforcing them

in others.

directors pass a resolu-

might it not be w

tion jhich would protect the offic
cent after fortrol actio

414




,

R. H. Tre,

Federal R
New York

e Bank,

t.

declinin_ readjustments exis just a sugcestion.




57,,t

,.4do

Cr'

"

CP

Denver, Colorado,
January 26, 1917.

Dear Mr. Traman:
enclosing Mr.

Since receiving your favor of the 17th ins

Warburg-0 letter regarding the development

of baisg

relations in the

good deal of seri-

Argentine Republic and in Spain, I have been givin
ous thought to what such a development

10kEmpaii-e0

e Federal Reserve
to be enter-

System and particularly as to whether the view Which a
tained by Mr. Warburg are

in

those -which I understand

acco

r own bank

are held by the officers and d

in

this regard.

ortance and I suggest that

The matter is one of fun

our directors, or at any rate

this letter be brought t

tion, as I feel unable to

of our executive co

to Mr. 4arburg's views without

prepare letters desi

first knowing Whethe

ggests will be approved by our

directors.

ion 14 of the Federal Reserve Act, sub-section (e) provides

S

Federal Rose

that

* * * to Open
appoint eor

Bank shall have power
maintain accounts in foreign countries,

and establish agencies in such countries Whereso-

ever it may deem best for the purpose of purchasing, selling and collecting bills of exchange, and to buy and sell,

with

or without its endorse-

ment, through such correspondents or agencies bills of exchange arising
out of

actual commercial

transactions which have not more than 90 days to

run, exclusive of days of grace, and shall bear the signature of two or
more responsible parties, and with the consent of the Federal Reserve Board




2.

To - Mr. Treman.

January 26, 1917.

such foreign

to open and maintain banking accounts for

correspondents

or agencies."

These are all of the powers exoressly conf red upon the Reserve
Banks for the conduct of business in foreign coin
ally referred to in sub-sections

(a) and (b) of

power is conferred to deal in gold

coin

es except

Se

gener-

on 14, under which

on

i

those

to buy and sell United States and municipal bonds and n

home or abroad and
at home or

abroad.

Without desiring to pl

oo na

meaning of sub-sections (a) and (

a construction upon the

nevertheless generally of the

opinion that the Federal

Reserve Banks

contemplate that Federal

shall

d

the

the purpose of condub tug

upon American accept

,

thereby

ante

ial

competition
ducted

busines

establisil accounts for

n bills drawn in foreign countries

directly and aggresively into
g business Which is normally con-

°reign countries by National and

State banks

and private bankers.

Warburg will
purpose

elf, I believe, confirm my recollection of the

these two sec

s of the Act when the bill was in course of

preparation
the

Reserve Banks

rily and possibly exclusively designed to enable
to

establish

offices, or to appoint correspondents, in

foreign countries, through the agency

of cvhich Federal Reserve Banws could

buy bills payable in those foreign countries, thereby establishing a fund
which could be drawn upon at times when the exchanges were adverse to this

threatened.
This matter was considered most

country and gold exports

carefully

while I was in

London as,

of course, the opportunity exists there just as well as in the Argentine,




o.

To - Mr. Treman.

to buy bills

January 26, 1917.

of English origin

drawn on American acceptors, but I re-

jected any thought of enterint, into arrangements of

that ch,racter with

the Bank of England, or even with the Union Disc .t Company, through
whose hands occasionally bills of that character

s, solely upon the

theory that that kind of business was a legitimate

ction of the member

banks and not expedient for us to attam

Ten

the power, because it would bring us

reet conmetitti

0 the

Ur. earburg's suggestion

though we had
h our members.

de la Eacion Argentina is

briefly as follows:

e/.6kT That we shall undert

chase long bills from that

bank quoting discount

ive

that purpose, so that acting

as our agent in tha

ills will be made in our

behalf in competit

with the busin

National City Bank,

now endeave

sk, wi

advantages Whic
conduct

r this

busine

s

which New York banks, such as the
to develop at great expense and

substantial

profit

for some years to

e enjoy over even the National City Bank in

are

in my opinion so great that they could not

possibly co-.us and our entrance into that field would be a
factor

of such discouragement as

to greatly retard, if not absolutely

block, the development of a foreign banking system by American banks
generally.

The principal advantages are:

The enormous prestige enjoyed by a so-called central or

government bank over any private bank, no

may be.

matter how strong the latter

Our ability to avoid all expense of a local organization by
reason of our emlmloying correspondents as distinguished from the




January 26, 1917.

To - Mr. Treman.

branches which American banks are seeking to establish abroad.
3. The enormous resources of the Federal Reserve System
for Which they pay no interest and for which the interest charge
in the case of member banks is very heavy.
4. The cooperation of the various

depart
such for instance as the State Dep
be considered to enjoy for the furtheran

ernmentt

might
and which naturally are not at the disposal of

ate of the govnt, which we
of our business
mbar banks quite so

effectively.

One of the most profitable, if not

at profitable,

department of the business of a branch of an Amerie

in a foreign country will be
American acceptors.

For

the

established

of bills drawn

dollars an

ustration, the National City

the

Bank has but one or two branch()

tine., consequently they must

rely to some extent upon

ished with

in that country to
success.

These

°to:

e e

ire the vo

bill buyers d

ter, with t3

Nacion
a correspondent,

agenei

now in operatio

busine

to

National

ue

instead

other bill

buyers

ess necessary to their

tless havin6 a net-work of branches

If we should stablish relations of this charac-

throu6hout the Nat

service

let

ntina, we would at once secure

which has no less

the

than 153 branches and

and which conceivably would direct el of this
dealing with the branch office of say the

Bank.

I an not aware of the relations which mow exist between the Banco

de la Nacian Argentina and other banks and the agencies of forei n banks
in that countryl probably all of the banks, maintain accounts of some
character with the Banco de Ia Nacion Argentina.

If that is the ease, it

is not impossible that rates Allah we quote to our correspondent would

-esult in divortin; the large stream of bills dram in dollars Which are
now coming to various New York banks throuJa the various Argentine benks




5.

January 26, 1917.

To - Mr. Treman.

and agencies to us instead of to their present correspondents, thereby
azain inflicting an injury upon American institutions which are now cultivating South American banking. connections.

There is just one possibility which I

can imagine that sill make
de la Nacion Ar-

this argument ineffective and that is
r by reason

gentina, either as a matter of polio

legal restrictions,

in this

tions with any

has not 3nd will not establish co

country

except a Pederal Reserve Bank, for the purpose of c. ,. cting their busi-

ness in bills.

already have close

I am under

relations with the Natio1i City Bank

ossibly other New York banks,
ness and this could be con-,

for the purpose of cond ting this very

firmed by inquiry
Witdout, the

er int

disposed to recommend t

ion on

this subject, I am not

directors at the present time that we seek
ing bills for the Banco de la Nacion

to make any arran

Argentina, unless

d be an emergency arrangement only

our member banks

to loa employed at a

are unequal to dealing

tuation and, consequently, When the market for bills drawn

with t

l.

in dollars

Buenos Ayres becomes impalmi.

7ia b g's second suggestion relates simply to the establishkMr.

ment of reoik1Q,ca1 accounts, nnder which one of our functions would be

to take the custody of gold when exchanges were adverse to
as at present.
able.

and gold

this country,

shipments were either too expensive or undesir-

There is certainly no objection Whatever to the establishment of

relations of this character and I

would favor doing so as

promptly as

possible, provided certain points were thoroughly understood and safe-




6.

To - Mr. Treman.

January 26, 1917.

guarded, to which Mr. Warburg seems to make no reference whatever
in his letter.

I shall not enumerate these in detail now as they would be the
subject of our correspondence with the

whenever that is formulated, but in
understanding

Bepur

act= Argentina

eflta1 they won'

that the mutual accoun

must be conduct

basis, with an agreement in every particular as to Whitt

I refer of course to the nee
should understand just as

he Banc()

early as the

understand all the van.
of our coinage, th

limit

'.

gold shipments, or t

institution for the ac

As we certainly
gold settlement with
essary to bea

it

ards, tha
de la Nazi

upon a bold
at means.

Nacion Argentina

of England will be made to

in re1

tolerance

elate to an

ion to the intrinsic value

the conditions under which
, would be dealt with by each

,

the other.

rd to offer them an arrangement for
similar mutual understanding from them,

.ind that

the

Argentine nation has dual stand-

y of account as well as gold, and that the Banco

;:entina, Which has liabilities of approximately 4600,000,000

currency, ho
It is es

a general gold reserve of

only about 28,500,000.

tial that the distinction should be borne in mind between

the arrangement contemplated with the Bang of England, which I believe conforms to the real purposes of the Federal Reserve Act, and the arrangement
suggested by hr. Arburg for relations with the Banco de la Nacion Argentin:.
With the Bang of

gland we propose to accumulate balances which will




7.

To - Mr. Treman.

January 26, 1917.

be invested in sterling bills, our purchases of sterling being made

at such times as they can be purchased below the point at which gold

can be nrofitably imported to this country.

The e investments we would

exnect to liquidate and we would exnect to wit

w the balances re-

sulting whenever sterling advanced to a point wh
profitably exported from this country.

gold could be
nt does not con-

template that we shall compete with our member ba>1i

his country by

We should comp te with our

buying long bills drawn on Londo
member banks in London by blKer

drawn on this country in

dollars.

for Argentina contemplates

The arrangement

quite the reverse o

that through the principal

buy bills drawn

would pass through

hands of our

re on this

bank in Argentina

gestion fo

that we
drawn

tionshi

ould compete with

country Which

otherwise

mber banks and conversely his sugturally Implies, without so stating,

our member banks in this country by buying bills

e upon Argentin

cceptors.

onviction is v

strong that the whole theory of this arrangetions at any rate for normal times Should be con-

fined to those suggested for the Bank of England, and before undertaking
to make such arrangements we should consider carefully
any present need for our purchasing bills in

Buenos Ayres and, if so,

whether it is a business which we can afford to
risk, except under the

whether there is

undertake without undue

most careful understandings as to gold settlements.

We must never overlook the fact (and I say this with all respect to

the

pressing need for closer banking relations

with South America) that




8.

Juauary 26, 1917.

To - Mr. Treman.

these South American countries are most inflamable

liable to ODMO ex-

themselves, and any

tent to political upheavles, as well as wars, betaeen

arrangement which might contemplate our carrying considerable balaaces,

or considerable

bill investments, in those countries, should be safe-

guarded in the case of the Reserve Banks

,'with very clear

and definite understandings.

No one desires more than I do t

ee the Federal R erve Banks

exercising these functions as to foreign banking conne

thinA we mould go very slow

ons, but I
ies

in the rather

generous way conIemplated

that we should be very sure,

particularly in these S

tee, that every detail is

understood on both

y amply safe-guarded.

des

Will you, there

o send me as promptly as pos-

sible an expression of
general policy, and i

consideration at the

le\los of our Board, as the matter is one of

Boa
floe,

sires / will prepare a letter for
ing to carrying out the policy of the

Boa
Whil

let me briefly re?eat that I believe if

similar nego

tions

should be ini

ated by having some of the interested parties suggest to

the Spanish

are to be undertaken with the Bank of Spain, they

ssador that the Federal Reserve Bank of New York would

be glad to entertain any suggestions which they might desire to offer for

the purpose of relieving the exchange situation and the establishment of
relations Which would enable us to deal with the subject
and export

of the import

of gold.

Again, it must be borne in mind that Spain

many years ago abandoned




9.

January 26, 1917.

To - Mr. Treman.

an absolutely gold standard, that there has for many years been a

premium on gold in Madrid and that a special study of conditions in that
country Should be made before we undertake any comprehensive bankin,; arrangements.

As to the Netherlands, as we have Weady eat

hed a limited

relationship with the Bank of the Net rlands, i belie

to him that

good policy to send a letter to Dr. V Bering, suizest
estions which

we would be glad to consider an
posed to advance for the e

be forwarded preferably in

Correspondence with him

available,

the American Embassy Pou

through the

undesirable to needlessly

Dutch Minister at

acting this correspondence to the

complicate matters in

scrutiny of the Briti
t I very much fear a

La conclusion
of

d possibly with some of his associates who

nion with Mr.

versant

are 1

with this
ther

have outlin
ferences on

preliminary i
contained

in

serious difference

subject that he is, as to the policy which I

than risk the consequences of

is matter, you may decide that

it would be wise to

tries, somewhat less comprehensive in
. Warburg's letter, Which would result

views but no decision

prior to my

in an exchange of

return to the office, when I could take

Yours very truly,

New Yom City.

inaugurate

their scope than thos4

the matter up personally with the Federal Reserve Board.

R. H. Treman, Esq.,
Wederal Reserve Bank,

serious dif-




Denver, Colorado,
January 27, 1917.

Dear AI'. Treman:

Enclosed is a translation, which still req
of the letter just received from Monsieur Pallai

es some polishing,

I will retain the

original until Mr. Curtis arrives, w

d improve this

.1,nal and the r

work somewhat and send you both t

d transla-

tion.

practically no qualification

Please observe that he

the real basic principles of the
In view of this, wil

D'ement with the Bank of England.

your associates and advise

thei

!act as promptly as

iews are as to the form of

our reply.
What I have

to one memorandum, changed so as

to appl

he original Bank of England memorandum

and m

est letter and submit it to him in the form of a memorandum to be

acted

on by the Bank

coura

is su6gestio

beyond wha

France officially.
to the amount of our

I would,
transactions, which is far

e should contemplate at present.

It would also be necessary to at least make inquiry as to whether
there is any governmental regulation or law as to gold exports which would

mae it necessary for us to get governmental approval or consent to the
gold obligation

to be undertaken by

the Bank of France.

hope you write me promptly about this so that I can have a letter
ready to be dispatched by the time we hear by cable from the Bank of




2.
To

Mx. Treman.

January 27, 1917.

England.

Curtis arrives tomorrow night and i will probably do some work

with him on this matter.

R. H. Treman, Esq.,
Federal Reserve Bank,
New York City.

BS/CC




Denver, Colorado,
January 27, 1917.

Dear Mr. Treman:

With this I am returning Mr.

Argentine matter, retaining,

for use in preparing a sugg
Yours

R. H. Treman, Esq.
Federal Reserve
New York Cit , N.

BS/CC

Enc.

ts letter abo
raft which he prepared

to send.
ruly,

CLAS,

r

Form 1206

*ESTE

ERVICE DESIRED
say Message

Day Letter

UNION

WESTERN UNION

Night kile,,ge

TEL

Night L.
Patrons should ina.!< an X oppos site the class of service desired;
OTHERWISE THE TELEGRAM
WILL BE TRANSMITTED AS A
FAST DAY MESSAGE.

Receiver's No.

Check

AM

Time Filed

NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS, VICE-PRESIDENT

Sc nd

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

CO2Y.

Colorado Springs, Jan. 30, 1917.

R. H.Trer, D3puty Governor,

isdelal Reserve Bank, New York City.

Sugest substantially following' reply to Boards request quote - At Strongs
reouest we sent informal message and inquiry through mutual friends eisi received

through same channel satisfactory reply stop. He greatly prefers not to as

friends for permission to furnish copies of their cables for transmission to
Board stop. Enclosed herewith is copy of only cable sent by the bank. End quote.




(Sc) Benj. Strong.

ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERN..,;
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 SU
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
1. The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram,
amour
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 tim
le sum recefvt
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 err., ua cipher or atm,'
telegrams.
2. In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for thenon-delivery, of thin telegrs.ta, whethe
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 gret, value is statq i
writing hereon at the time the telegram is offered to the Company for transmison, and an additional sum paid or agreed to be paid based on such valuotilual to one-tenth
enc :ler 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 i
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
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 hisaloe in other cities
ii,apense, endeavor
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 offi
by one of the Company's messengers, he acts for that purpose as the agent of the sender.
The Company will not be liable for damages or statutory penalties in any case where the claim is 4itt presented in writing within sixty days after the telegram
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
the foregoing terms.
No employee of the Company is authorized to vary the foregoing.
THE WESTERN UNION TELEG RAPH COMPAr
INCORPORATED

NEWCOMB CARLTON. PRESIDENT

CLASSES OF SERVICE
FAST DAY MESSAGES
A full-rate expedited service.
NIGHT M ESSAGES
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

Letter shall be delivered on the day of its date absolutely and
events; but that the Company's obligation in this respect is su
to the condition that there shall remain sufficient time for the tr
mission and delivery of such Day Letter on the day of its date dt
regular office hours, subject to the priority of the transmission of

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

NIGHT LETTERS

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-

ular telegrams under the conditions named above.

No employee of the Company is authorized to vary the foregoing.

Accepted up to midnight for delivery on the morning of the
ensuing business day, at rates still lower than standard night me
rates, as follows: The tstandard day rate for 10 words shall be chi,
for the transmission of 50 words or less, arid one-fifth of such stai
day rate for 10 words shall be charged for each additional 10 w
less.

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, subordinate to the priority of transmission and
delivery of regular telegrams.

Day Letters shall be written in plain English. Code language
c. This Day Letter may be delivered by the Telegraph Company
by telephoning the same to the addressee, and such delivery shall be a
complete discharge of the obligation of the Telegraph Company to
is not permissible.

deliver.

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

D.



4.-

SPECIAL TERMS APPLYING TO NIGHT LETTI:

In further consideration of the reduced rate for this specia

Letter" service, the following special terms in addition t
enumerated above are hereby agreed to:
Night Letters may at the option of the Telegraph C
be mailed at destination to the addressees, and the Comp
be deemed to have discharged its obligationi n such case, with
to delivery by mailing such Night Letters at destination
prepaid.

Night Letters shall be written in plain English.

C

is not permissible.
No employee of the Company is authorized to vary the foreg,

Form 1206
SERVICE DESIRED
ast Day Message

Day Letter

WESTE

Wow Message

Jter

TELw

./Zir

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

MD

Check

AM

Time Filed

NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS. VICE-PRESIDENT

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




UNION

WESTERN UNION

Receiver's No.

Denver, Colorado, February 1, 191741

R. H. 2.emaN
'odoral Reserve Bank,
New Yorlc City.

Telegram received. Do not think our bank ohould =coot pla adopted at
lAlshington conference without our full Boards approval and if that plan aporeved
wish my objoction noted in Liinuteo eton. 2rincipal objections as follows. 1.1rst
our interest in plan is different from other Tleeerve banks as we would make bulk
of advances involving our extonding unlimited credit without protection of any
obligation from othor Rosary() banks. Second if volume of business largo and we
were required to give immediatocrodit irrespective of volume liability of any one
member bank to us as endorsor of those uncollected chocs
It be for immenso sum.
Third tho ten thousand dollar limitation is too largo to afford protection against
dishonosty and applies equally to smallost and largest banim which is unsound.
Fourth if immediate °malt is not based upon instructions from other flederal 7:esorve
Bank to pay and chargo account the plan forcos us to make involuntary unlimitod
extension of credit Athout regard to goodness of endorser.
Pifth the bankers you
cononitod naturally doeire payment rather than credit as otherwise they are in
position of making similar advances thommolves
colrespondonts or else
withholding proceeds for their own protection. Their mggestions Jhile sound are
prompted b7 their own interests stop. ,;srtis and I believe plan can be mac safe
only
based upon advice from other Federal ilesorve Bank.

to their

ir

Benjamin Strong.




ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING 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 this,
one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN TJNREPEATED TELEGRAM AND PAID FOR AS SUCH,
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
amount
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any ITNREPEATED telegram, beyo'
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 a 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 ius cipher or obscureN,
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
.2er 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
dcstination.
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 one of the Company's messengers, he acts for that purpose as the agent of the sender.
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
Sled 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 TELEG RAPH COMPANY
INCORPORATED

NEWCOMB CARLTON. PREsniEra

CLASSES OF SERVICE
FAST DAY MESSAGES
A full-rate expedited service.
NIGHT 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, subordinate 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 addressee, 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
1)..

Letter shall be 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 Lotter on the day of its date during
regular 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 midnight for delivery on the morning of the next

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 "Night
special terms in addition to those
Letter" service,
the following

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, postagc
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.

Denver, Colorado,
Uabruary 1, 1917.

Dear Mr. Treman-

sit with Judge

Just a line to say that I have had a bully

now tomorrow we

Curtis, spending a few days in Colorado Springs,

are leaving for Phoenix, Arizona, on an

.

'

without knowing exactly where we will land.

rt of a trip,

I will

by wire of our movements and Miss

along to keep in touch with co
Best regards to you and al

1:11

nd telegrams.
bank.

ly yours,

R. H. TEINan4 Esq.,
Federaf-Rese e B
Sew York Ci




ou advised
se right

Denver, Colorado,
February 1, 1917.

.,1,

Pear Mr. Treman:
This

is to confirm the receipt of your tel

.en regarding

the

plan for immediate credit of checks on Federal Re rve banks and my reply,
composed with the

its me to say that

assistance of Judge

he thoroughly endorses the views expressed therein.

this matter so frequently that

o repeat what seems to me to

be the cardinal objection to

the present time we have the

rightjto say how much credit we

end to any one of our member

If this plan i

banks.

that there is imposed upon us the

obligation or exten

unlimited c

y of our members without re-

gard to their respi.. ibility, the o
this character whic

ve been over

hey may happe

limit being the

total of checks of

o receive from their

correspondents

and deposi

plan violates every principle of sound banking
emythi
porton°

sf all Eurob

r of handling checks, is

about in the ma

familiarit

that I know

contrary to the ex-

ountries with whose banking systems 1 have any
,

I have therefore taken the liberty of asking that

you get permission from our directors to have my objection officially noted
on the Minutes of the bank.

Don't you think that the Board has overlooked the fact that we are

the bank that will make the bulk of advances while the

other Reserve banks

will simply pay the checks which we send them when they

are good

them back to us when they are not good.




and send

They undoubtedly have a legitimate




To - Mr. Treman.

February 1, 1917.

demand from their members for New York exchange and in their desire to

meet this demand from their member banks, they are no doubt all of them
quite willing to adopt a plan Which would impose

real responsibility

and risk upon us rather than upon themselves.

In a former letter you referred to a limitat
of course, I was influenced by that in
Nevertheless, the principle is WTO

on reading over the vote of the
.

of the committee are so diffe
pondence that I am led to recomme

the plan.

R. H. Trug , Esq.,
Federal 74411111111.11-serve3ank,
New Yo

BS/CC

Enc.

City.

of i'500.00, and,

o sane extent.

ount, and,
find that the recommendations

se contemplated in our corres-

t our directors decline to accept

2enver, Colorado,
February 1, 1917.

Dear Mr.

On returning this morning from Colorado Springs with Mr. Curtis

I find

telegram in regard to

your two letters of January 26th, also y

Federal Reserve bank checks, which I answer by s

rate letter.

-which is being pursued

ally, I feel very much dissatisfied wit:, the oli
by the New York bank, and which of course is adonte

Reserve bank

in

to inconsistent that the one

It does

running along with say 80.,

the System Whi

re-

-old accumulated in the note fund

serve, Which has over $10

smallest percentage of

and which is shold
earnings of any of
on

of deqerence to

tter of ournvestment and

the wishes of the Reserve Board,
purchases of bills.

Person-

,

should now withdraw from the market

making special perdhases of bills

bills at the

please, buying warrants with longer

for other
a for our own an

matur

ur bank carries e largest reserve and is
ditio

f any bank In-

which ha

nee

System.

in

the most liquid con-

In contrast with Chicago, for instance,

s of government bonds and Which earned as much last

ear as we did, the position appears nothing less than ridiculous.

I have read Governor Harding's letter, which strikes me as moderate
and possibly in sane respects justified as to some of the banks, but it certainly is not justified as to our bank, Which reported over 82; reserve last

week and which has only about 35,000,000 of investments and nearly




2.

To - R. H. Treman.

February 1, 1917.

300,000,000 of gold.

If there is any situation known

to the Reserve Board ghich

flea their requestinisus as a matter of policy

N

bills, it certainly would even more justify that

Banks to sell more of

rates should I believe carry

not

present

tter before

purpose of securing a formal

vestments in

our Board for

that we would

tha, their letter r

'cation

unnerstand

to those bans in the System

0th as to amount of reserve and

Pich were not as

e are.

of

of gold is concerned, it seems
that t

-

bank as

ong as it shoul.

on all of these ma

.

.

frank expression of views which I know you want

tem
Yours very truly,

R. H. Treman, Esq.,
Federal Reserve Bank,
New York City.




to me

bU:i:: :hfet7e policy has been monopolized by our
that nse of

1:1;,:: pardon t..

BS/CC

the

the Federal Reserve Board that

that is the best jud

-

and at present

its views as to the amount which

we should keen invested, and then

liquid char:ea

equesting other Reserve

.50,000,000 0

bills, and if I were you 1 wo

%

educe our holdings of

their government b nds.

As a matter of policy, our bank at the

.

justi-

Form 1206
SERVICE DESIRED
...ay Message

,Letter

WESTE

TEL

Check

AM

Time Filed

NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS, VICE-PRESIDENT

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




UNION

WESTERN UNION

'"iht Message
..ght Letter
atrons should mark an X opposite the class of service desired;
OTHERWISE THE TELEGRAM
WILL BE TRANSMITTED AS A
FAST DAY MESSAGE.

5.

Receiver's No.

R. H. Tr,an,

CO2Y.

Denver, Colorado,
February 2, 1917.

Federal ReserVe Bank,

New York City.

Prefer to have drafts receivable and not payable but either method
is safe if prior advice is required, neither is safe if it is not required stop.
If principle of advice is adopted my main objection is removed and I would
certainly stand on that stop.

See no objection to five hundred dollar limit

if confined to that.
Benjamin Strong,
Collect.




4

ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERh

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.
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
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram ',,yond the
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
the sum
f or 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 ohs
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, wheth
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
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
one :ner cent. thereor.
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 i
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
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
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
by one of the Company's messengers, he acts for that purpose as the agent of the sender.
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
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
the foregoing terms.
No employee of the Company is authorized to vary the foregoing.
THE WESTERN UN ION TELEG RAPH COM PA
INCORPORATED

NEWCOMB CARLTON. PRESIDENT

CLASSES OF SERVICE
Letter shall be delivered on the day of its date absolutely and at
events; but that the Company's obligation in this respect is suL
to the condition that there shall remain sufficient time for the trt
mission and delivery of such Day Letter on the day of its date dui

FAST DAY MESSAGES
A full-rate expedited service.
NIGHT MESSAGES
Accepted up to 2.00 A.111. 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-

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

NIGHT LETTERS
Accepted up to midnight for delivery on the morning of the neensuing business day, at rates still lower than standard night messa
rates, as follows: The standard day rate for 10 words shall be charg
for the transmission of 50 words or less, and one-fifth of such standa
day rate for 10 words shall be charged for each additional 10 words u
less.

merated above are hereby agreed to:

A. 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, subordinate to the priority of transmission and

delivery of regular telegrams.
D.

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 addressee, 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 undergtanding and agreement that the Company does not undertake that a Day
D.

SPECIAL TERMS APPLYING TO NIGHT LETTERS:

In further consideration of the reduced rate for this special "Nigh
Letter" service, the following special terms in addition to thos
enumerated above are hereby agreed to:

Night Letters may at the option of the Telegraph Compan
be mailed at destination to the addressees, and the Company shal
be deemed to have discharged its obligalion in such cases with respec

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

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

3rm 1206
aRVICE DESIRED
ay Message

Day Letter

Receiver's No

WESTERN UNION

ght Message

Night Leth
atrons should a

WESTELe7AA UNION
tr
TELIWW,V, AM

an X oppo-

fte the class of ,,Vice desired;

)THERWISE THE TELEGRAM
NILL BE TRANSMITTED AS A
FAST DAY MESSAGE.

!NI

Check

Time Filed

NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS, VICE-PRESIDENT

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

COPY.

Denver, Colorado,
February 2, 1917.

R. H. Treman, Federal Reserve Bank,
New York City.

Have written fully today suggesting course to follow in making formal
application to appoint French correspondent stop.

Would make confidential

inquiry of James Brown as to his investigation of French law before consulting
Coudert which may be unnecessary.

Better await my letter.
Benj. Strong.

Collect.




417*

ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERI'vh...
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. lb
one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR P
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, ',..'ond die ass
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 tin the sum rect
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 oh,
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, whetl
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
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
on ner cent. thereor.
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 it
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
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
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 o
by one of the Company's messengers, he acts for that purpose as the agent of the sender.
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
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
the foregoing terms.
No employee of the Company is authorized to vary the foregoing.
THE WESTERN UN ION TELEGRAPH COM PM
INCORPORATED

NEWCOMB CARLTON. PRESIDENT

CLASSES OF SERVICE
FAST DAY MESSAGES
A full-rate expedited service.

NIGHT 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 enumerated 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, subordinate to the priority of transmission and
Day Letters shall be written in plain English. Code language

delivery of regular telegrams.
is not permissible.

c. This Day Letter may be delivered by the Telegraph Company
by telephoning the same to the addressee, and such delivery shall be a

complete discharge of the obligation of the Telegraph Company to
deliver.

This Day Letter 18 received subject to the express understand
ing and agreement that the Company does not undertake that a Day
D.



IMP

Letter shall be delivered on the day of its date absolutely and at
events; but that the Company's obligation in this respect is subj
to the condition that there shall remain sufficient time for the tra
mission and delivery of such Day Letter on the day of its date duri]
regular office hours, subject to the priority of the transmission of re
ular telegrams under the conditions named above.

No employee of the Company is authorized to vary the foregoing.

NIGHT LETTERS

Accepted up to midnight for delivery on the morning of the ne>
ensuing business day, at rates still lower than standard night messag
rates, as follows: The standard day rate for 10 words shall be charge.
for the transmission of 50 words or less, and one-fifth of such standa,i_
day rate for 10 words shall be charged for each additional 10 words or
less.

SPECIAL TERMS APPLYING TO NIGHT LETTERS:
11110
In further consideration of the reduced rate for this special "Night
special terms in addition toil those
Letter" service,
the following

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.

LA

Form 1206
FRVICE DESIRED

WESTE
TELEL

UNION

Receiver's No.

WESTERN UNION

trans shou:. ',lark an X oppoe the class of service desired;
fHERWISE THE TELEGRAM
ILL BE TRANSMITTED AS A
FAST DAY MESSAGE.

Check

AM

Time Filed

NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS. VICE-PRESIDENT

ad the following telegram, subject to the terms
m hack hereof, which are hereby agreed to

Denver, Colorado, February

, 1)17

R. H. Treman, 7ederal Reserve Bank,
----- New York City.

Curtis and I are deferring leaving for Arizona until further news
of developments roaches us.

Do not hesitate to telegrajh for his return

if thought nooeosary f:.nd there is not tho sli8htest reason vOhy I should
not come back for a short period If any emergency mq,ces it desirable.

'lease wire at once.
Benjamin Strong.
Ch..

Benj. Strong,
4100 Liontvielr Blv.




ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWIN(
To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office
ne-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM Al,
consideration whereof it is agreed between the sender of the telegram and this Company as follows:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telem
SUM rtuiceived for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty
,r 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 (...pner or ob.,
legrams.
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, whet
iused 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 state.
citing 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-tent
ic Der cent. there°,
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 react
:stination.
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 citie
'ions. 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, endeavo
intract 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 o
y one of the Company's messengers, he acts for that purpose as the agent of the sender.
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 telegraz
:ed 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 It
.e foregoing terms.
No employee of the Company is authorized to vary the foregoing.
THE WESTERN UNION TELEGRAPH COMPA
INCORPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
'AST DAY MESSAGES
A full-rate expedited service.
IIGHT MESSAGES
Accepted up to 2.00 A.M. at reduced rates to be sent during the night
nd delivered not earlier than the morning of the ensuing business day.
)AY LETTERS

A deferred day service at rates lower than the standard day mesage rates as follows: One and one-half times the standard Night
,etter rate for the transmission of 50 words or less and one-fifth of
he 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
,etter" service, the following special terms in addition to those enu-

Letter shall be delivered on the day of its date absolutely and at
events; but that the Company's obligation in this respect is sub
to the condition that there shall remain sufficient time for the trt
mission and delivery of such Day Letter on the day of its date du;
regular office hours, subject to the priority of the transmission of
ular telegrams under the conditions named above.

No employee of the Company is authorized to vary the foregoing.

NIGHT LETTERS

Accepted up to midnight for delivery on the morning of the
ensuing business day, at rates still lower than standard night me&
rates, as follows: The standard day rate for 10 words shall be cha,
for the transmission of 50 words or less, and one-fifth of sucli, stam
day rate for 10 words shall be charged for each'additional 10 word
less.

nerated above are hereby agreed to:

Day Letters may be forwarded by the Telegraph Company as a
eferred service and the transmission and delivery of such Day Letters

3,

in all respects, subordinate to the priority of transmission and
Day Letters shall be written in plain English. Code language

elivery of regular telegrams.
3 not permissible.

c. This Day Letter may be delivered by the Telegraph Company
y telephoning the same to the addressee, and such delivery shall be a
omplete discharge of the obligation of the Telegraph Company to
diver.
D. This Day Letter is received subject to the express understand-.
Digitizedagreement that the Company does not undertake that a Day
rig and for FRASER


SPECIAL TERMS APPLYING TO NIGHT LETTERS:

In further consideration of the reduced rats for this special "N
Letter" service, the following special terms in addition to t
enumerated above are hereby agreed to:

Night Letters may at the option of the Telegraph Com:
be mailed at destination to the addressees, and the Company
be deemed to have discharged its obligation in such cases with re,

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

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




Denver, Colorado,
February 2, 1917.

Dear Ur. Treman:

Can I trouble you to show my telegram and

in

regard to parring Federal Reserve Bank checks

he telegraphed me on this matter and
with you and would send him a cop
Yours v

R. H. TriNap, Esq.,
Federal Reserve Ba
New York City.

BS/CC

yesterday
Mr. Woodward, as

was communicatine




Denver, Colorado,
February 2, 1917.

Dear Mr. Treman:

Mr. Curtis and I discussed the propriety 0
cables addressed to Lord Cunliffe by the Federal

finally sent you telegraph from Colo

iling copies of
serve Board and

er enclosed con-

firmation.

It would be quite proper t

Board that the cable was

sent in mg behalf personally

avoid the appearance
I had wilfully violat

be glad to

Which othe

personal friend in order to

uld be certain to develop

out consulting them. You will

know t

from Deputy Gave

that

oat cordial personal letter
nk of TIngland, in which

he ex-

presses great sati

good progreas is being made towards

concludi

sure that

feelin
Yours sincerely,

R. H. TramonT-Esq.,
Federal Reserve Bank,
New York City.

BS/CC

they bear us no hard

Denver, Colorado,
February 2, 1917.

Dear Mr. Treman:

a, I am writing you

As Ex. Curtis and I may be away for a few

bsenoe.

on these foreign matters to avoid the delay of our
desirable now to address a letter to Mr.

isserin,

the Bank of the
ing sure, with-

Netherlands, as suggested in my letter of January 26
er in the

out fail, that such letter is fo
or through the Dutch

cc.

of tA Net e lands Which might result in applica-

(tress a letter to th

eserve Bank of

w York for authority to appoint the
correspondent in Holland, and that be-

1

o we would like

ve informal advice from the Board as to their

skappointment and an understanding as to the method

attitud

especting such

of anno

ement at the pr,fer time.

ir

40f clear
e

ernor

I thin a I would communicate

that we are proposing to ad-

informally with Cove

fore doi

ibassy pouch

ld again be desirable to pursue

the course suggested as to tha_Bank

Bank of the N

nie

Minister a

Before dispatching this

tion from the Federa

It seems to me

In communicating informally with Gov-

to him the

proposed

extent of the sugges-

tien to be made to Dr. Vissering, so that they may not jump at the conclusion
that we are offering an arrangement as extensive as the one proposed in
London.

The enclosed draft of a letter to be addressed to Dr. Vissering

outlines Mott that I have in mind and as there is no particular hurry
about this matter. you may wish to return it to me with suggestions for
changes before it is

http://fraser.stlouisfed.org/
BS/CC
Federal Reserve Bank of St. LouisA
1TAT

dispatched.
Yours very sincerely,

Denver, Colorado,
February 2, 1917.

ear Ur. Treman:
4

ranslation of

By now you have had opportunity to study

Governor ?anoints letter of December 27, 1916.
You will observe that the princi
negotiations

Pallain in

his letter, so I am wond

may n

ow be justified

the authority which I

understand

ors, I thin,: the following

has already been grant

and, if an

course should witho

consultation with

rgested cannot be followed, I be-

the Federal Reserve

present withheld.

-tion

y to make this appointment should be

ouncement of
cables have be
effect:

VD

correspondent in France.

If this application is made

lieve the app

ether

Governor

eserve Board for consent to

to

the appointment of the Bank o

followia

cepted by

with the Bank of England are in princip

in making formal application

made un

olved in our

points

"Your

Prelimi

dispatc

intend making

D

exchanged with Pallain, substantially to the
tter December twenty-seventh received stop.
our official reply outlining final proposal we

cation to Federal Reserve Board for consent to annoint-

ment Ban,: of France as our agent stop.

If consent is granted we propose

making announcement in newspapers similar to the Bank of England announcement
stop.

Will it be agreeable to you to have such announcement made prior to

our arriving at a definite understanding of actual terms stop.
Federal Reserve Bank New York."




Please reply

This cable can be sent over my name and 1

2.

To - Mr. Tremens

February 2, 1917.

ip

think

be dispatched prior to the formal application to the Board,

but cnly after they had been sounded unofficially so as to avoid any misundt,rstanding either as to the appointment being ,ithorized or as to the

method of announcement, in view of the doctrine SA il unced by Secretary Mc-

Adoo that all official actions of the Reserve Boar
If Pallain's reply is favorable,

.

.

:

.

t be made public.
.... d be made formally

1144401..
ado after agr

at once and, if possible, an announ

with the

Federal Reserve Board upon its t
The object of sanding t

able is to avoid creating the

-

)ression in iallaints mind that h

'tale

at letter is in all respects ac-

c
..qd that we aoposin,

and do business on the terms

he

suggests.

I have

ready written

ly explaining the character-

;

,stics of the French

necessity for
his believ
ahead

s

ution
that everyt

r and, part

avoiding or

rly, of Monsieur Pallain and the

ing an impression Which would justify

ncluded and that we were ready to go

do business.
sincerely yours,

R. H. 2mata4P,

Federal Reserve Bank,
New Yor4 City.

BS/CC




0

Phoenix, Arizona, February 10,

a

1917,

Dear Mr. Treman:

IreTerring to your letter of January 31st, in which

you suggest my returning to you the original drafts of a
letter prepared by Mr. Warburg for transmission to the National
Ban1r of the Argentine, I have to oay that I would have

the original to you but for pressure of work at Denver.

returned
Aa

soon as I return there I will have copy and send you the original

together with sore sucestions of my own.
Yours very sincrrely,

Yr. R. F. Treman, Govrrnor,




Federal Reserve Rank of New York,
New York City.

1917._

Phoenix, Arizona, February 10,

'eear Mr. Treman:

I would like to acknowledge receipt of your

letters of Janury

30th, 31st,

February 1st, 2nd, and

th, and I am ver7 glad to be kept to fully advised of
affairs at the Bank.

various matters

Curtis and I have been over

discussed in

your letters

the

and I have

venous comments and suggestions to rake as follows:
1st.

Purchase of bills.

tion that pnesibly the federal

I note your sugges-

reserve board had more

knowledge of international affairs than we aA4L,1 believe
however, that a careful

scrutiny of

their letters and

memoranda will show that tl,is was not the case.

Their

original letter urging all the reserve banks to withdraw
from the market so

far as

acceptances were

concerned, was

dated Januery 19th, and contained noreference to possible
International complications.

And a long Tremerandue

from

later also containe arguments
In favor of their plans, none of which were based upon the

Yr. rarburg prepared some days

International situation, or

the possibilities of any chan.le

therein.
this

Powever, the chief criticism I have to make of
matter is not so much one of a question of judgment or

of a foreknowledge of

establishment ef the



ending events but concerns the
principle

that the banks policy 40.

0
"2"

shoul(i not be dictated from Washington or adopted only after

telephonic approval had been received from there.

Fven

assuming that the board knew of the intended move of Germany,
still they ought not to ex ect that our Board of Directors
or our Officers would alter a policy upon a blind suggestion
from them giving no suggestions or facts upon wITich our
board or off1cer:3 could exercise an intelligent judgment.

I am not consoled by the thought that no harm has resulted
in this particular instance because I fear that the board
now has received the impression that the purchase of bills
by the New York Rank and possibly other matters can be

controled by them on a mere suggestion
adequate reasons being given.

with

or without

The whole question of the

independent and autonimous character of the reserve banks
is being decided by o'r day to day-

action

in these matters,

and I fear that we are slipping backward from the position
originally taken at the opening of the system.
2nd:

Federal Reserve Bank Drafts.

I note that

you arr proposing to send to each of the Federal Reserve
Banks a copy of the plan proposed b

the flvernors' com-

mittee, with a suggestion that the plan be laid before each
Board of Directors for

suggestions and

criticisms with the

idea of having the whole matter presented to another conference of governors, before the plan is put into final
peratio




.

This seems to me to be a good idea as I do not

0
n3r

believe that a

majority of govr,rnors would agree that the

plan was sound as now proposed. Of course, however, you
must rralize as I wrote you before, that our

position is

any other reserve bank as

entirely different from that of

they are all anxious to provide some form of New York Fxchange, with a knowledge that the weakness of the plan will
expose New York to danger while keeping the other banks
*Or_

comparatively

free from tket.e.

I

till think that

notplan

is safe which requiresV New

York Bank or any other

to make an advance upon such

drafts

bank

without having received

adviOe from the drawee bank. Mr. Fancher has sent Yr.
Curtis some blank forms for drafts and letters of advice,
which we have not yet had an opportunity of considering in
detail.

In a day or two

we will

send them on to

you with

our comments and suggestions.
3rd.

Remett charges at assay office.

Yr. Jay is to take the matter up with Yr.

he will be able to arrange this

matter

I note that

Boyle and hope that

promptly.

I have a

letter from Yr. Harding under date of February 3rd stating
that he will bring my letter on this matter to the attention
of the Secretary of the Treasury but that in view of the
v-ry critical state of our
useleso for a few days to
attention.

international
ask

affairs, it will be

him to give this

matter any

In view of this situation I think it most important

that the matter be pressed to a conclusion from your end,
both through




Yr. Boyle and with the

Treasury Department direct.

"I;."

4th.

Reserve Board.

Confidential Relations with Federal

T note that Messrs. Woodward and Peabody

received an Imder3tanding from diffPrent members of the
board that they had guerdecg. and would continue to hold in

confidence all detalle of cur arranTements rade with foreign
banks, and that they had not broken confidenceinthis. respect and that they had and would respect the arrangements

which the 7ew York Part entered into in
The above language is taken from your
It seems to indicate that

these matters.

letter of February 2nd.

the position of the board is that

what they did in the Bank of Fngland matter was a complete
and perfe t keeping of confidence and they propose
the same perfect confidence about our

If this is a correot analysis of the
have

keep

future arrange.ente.
situation it ie a very

dangerous one from our point of view, and I do not

is safe for us to attempt to

to

thin'

it

confidential relations

with the board in the absence of specific assurances that
the matter will be hanc7led on a different basis from our
recrnt experience, especia'ly

dictum oonoerning




VcAdoo's

the necessity of publicity remaihs un-

contradicted and-unmodified
between the board

so long as Secretar7

and our

in the records of the meetina.

committee.

"5

IT

"Te do not want to have the same sort of main-

tenance of confidence in the future inthese matters as
we have had inthe past.
5th.

Report of Amounts of Renewal. Credits.

Answrring your question as to continuing to send. these, I

would be vcr- happy to receive these reports once
to

Referring further

u week.

the matter of purchasing

gold bars, I think it would be advisable for us to accumu-

late a

considerable quattity of the bars as soon as possible,

Irrespective of our

negotiations with the Treasury Depart-

ment conc-rning the waiving of the remelt charges.

I would

suggest ten or twenty millions as a p:ood amount to start. ,ith.
It ought to be possiblo to make satisfactory arran ements to
obtain these through the co-operation of Worgan and Company
and possibly the assay office.
7ith reaf.sct to the purchase of bills during this

period of

pncertaintY, I approve heartily of the course of

the bank in
bills that

holding

the rate firm and taking all the

are offered.

The

reat

desideAtum is a known

eteainess of rate, which will give the banking public confidence in the ability of the bank to keep control of the situation.

Am returning to Denver this week, and will write
further from there.




With best regards
Faithfully yours,

Phenix, Arizona.

February 11, 1917.

R.

H.

Treman,

Federal Reserve Bank,
New York City.

Dear Mr. Treman:

Inclosed with this is a first draft of a proposed
letter to be addressed to the Bank of France and a draft of
a proposed memorandum to accompany the same, which Mr. Curtis

and I have prepared as n sugzestion for the consideration
the officers and dirsotors of our bank.
The following points require special comment:I an not as well informed of some details of
the law and customs in France as in England, and the inclosuree should therefore be carefully discussed with say,
Mr. Roberts and Mr. Kent, who wi21 no doubt be glad to give
U3 advise.
Blanks have been left in the memorandum where
reference i3 made to the values in French currency of gold
bullion and gold coins which aro dealt with in France by
kilogram and not by ounces. There is no statutory price for
gold purchased by the Bank of France as in the case of the
Bank of England, and therefore, it will probably be necessary
to take the value at which gold is coOputed for coinage pur


Pc se e.

Please notice the provisions of paragraph S.
respecting withdrawal of balances when rates of exohange
will not allow withd0awals without loss to the creditor
This feature of the memorandum should be
carefully considered as we must be certain that the understanding is not only fair but absolutely safe for both

institution.

parties.
I am not aware of the provisions of the
French law as to the limit of tolerance and this should be
investigated.
We should also investigate, as suggested in
my last letter,on this subject, the condition of French
law as to gold exports.
We should confirm my understanding that French

gold coins are ninety (94) per cent fine gold and ten (10%)
per cent copper alloy.
If the suggested cable was sent to Pallain
a confirmation should be inclosed, or the letter changed.
I understand that application for the consent
of the Federal Reserve Board to the appointment of the Bank
of Franue will be made aa soon as we hear by cable from

Pallain that we are justified in doing so.
If, on the other hand, no cable is sent to
Pallain, it would be just as well to defer making application until his reply to our letter justifies doing so.



It will, however, be safer to arrange this preliminary by
cable.

I suggest your sending a revision of the
enclosures to me at Denver for further study after you have
had opportunity to confer with our own people and those
10.

suggested above.




Vith best regards,
Faithfully yours,

Denver, Colorado,
February 16, 1917.

'ear Mr. Treman:

The enclosed cable has just been received from Monsieur Pallain.

His letter of December 27th was delayed, a
sent by registered mail it did not

get

ecause having been

with my regula delivery here

a

correspondence was necessary appar

by with New Yor

be released. I have cabled him as per enclosed

Jand

copy a

papers at once, together with

of December 27th,

Ilii

original

of Vhich I am retaining a c

Should be in

ith my correspondence,

'I am endeavoring
at once in regard to that
Best regards t

, but am writing you separately

tter from

Harding.

floe.

sincerely yours,

ireman
Bank,
New York City, 1 . Y.

BS/CC

Baas.




correspondence

the files of

It will take

Federal Rose

end you these

Denver, Colorado,
February 15, 1917.

Dear Mr. Tremanfollowing reply to your
It seems desirable to send you at once the

closed cony of Gov-

confidential letter of February 7th, with tin'
ernor Harding's letter of

In the

February 6th.

first place, your

ssad to

'Tebruar7 2nd

letter

fear was not

Governor Harding, transmitting copies of the cablegrams
;

so worded as to give the Fedora
of just what tranaoired.

was justified in the first




tion of December 26t

Grenfe4

in

of

I

oard an ac

e understanding

.,e been sati.-..zd all along that the Bank

tance In acting
an informal

4 .*

my behalf,

on my telephone sugges.squiry throne" Morgan and

the ground with the Federal

_

Reserve Bo4r_ that the In
and in order to clear

se sent was made at my personal request
e of bad faith in my engagement with

the Bank of Agland.
refore, it see

been more

nersonally,no

that your letter to Harding would have

tated that the inquiry was made on my behalf
f the Bank of ngland directly, but of one of the directors

of the Bank of

cable was
land throujildr. Morgan, and that so far as that

concerned, it

could either
a personal affair of mine and that the Board

accept your assurance that
direct an inquiry to me On the subject or possibly
it was a personal inquiry

and let it go at that.

Ur. Morgan's cable was

partner,1.1.r. Grenfe14, who
not directed to the Bank of England, but to his

undoubtedly exercised judicious discretion in the matter.

2.

Mt. Treman,

February 15, 1917.

Now as to Governor Harding's remarks, my first temptation was to
write him fran here, telling him exactly how I felt about the whole performance, but that might prove embarrassing to you and further complicate
the situation, so I suggest that you submit the following suggestion to
our Board:
Inn3 conversations between Lord C

iffe

and mysol

cter Lnd neces

of a somewhat personal and informal c

such without I had full authority from the Bank and the
negotiate a relationship, Whi

s no

reduce our discussion to t

4

sedarate pc:ragraph No
garding the contents o
institutions".

These

o the Reserve

injune

was discusse

Board was ua

f a good many

The first

"Seer

e'
points confidentially a

ily must have been
serve Board to
s thought best to

um, whicn of coulee a memo
form of gave the

barest outline of the resu
started with the we

cas

were, of course,

nta

stings.

This bare outline

ragraph read "The following
upon, etc." and concluded with

ment directly or indirectly to be mode reum without the explicit consent of both
ressions as to secrecy were fortified by
oard, repeated i believe every tine the matter
ore convinced that the announcement made by the

ted, was a violation of my confidence and that no such

letters as tho

Which have beea written to you by Governor Harding and no

such statements

s those made to the Committee of our Board aro justified or

should be permitted to pass unchallenged.
The Board assumed either to deliberately violate a confidence or at '
any rate to judge of their own account in making an announcement without

:11

consulting me, the only one who could really pass upon the Question as to




6,

3.

February 15, 1917.

Ur. Treman.

whether this was a

violation of confidence, and the result of their an-

nouncement therefore in ray opinion juatified me in pursuing any course

that I thought fit to make clear my position with the Bank of England.
Federal Reserve

I shall never assent to the propos

hall be in a

Board has any right to determine whatersonal actiol
matter of this kind.

Having failed to

suit me about

announcement

a

uthoritative

and as I was the only one who could really give them

o send any explana-

t..atement on the subject,

tions that i see fit to th

This I should not hesitate to

sa:1 to Governor Harding we

d our directors are dealing
to farther complicate matters.

with this matter an

If an: one is sub

n this matter, it is those who

violated my confidence i
matter drop, I am sati
not he

tate to

1 will

1-,7

can assure y

ton.

ed to d.

If you and the others wish to let the

., but if you decade not to, pleaso do

put thility for that inquiry on my shoulders, and
glad to continue the correspondence

' 4giii=iWbe

with

Governor Harding.

as mild as your most courteaus and temperate

letters have

Much of

e

rancor displayed by

is based upon t e incorrect

Ildig

tly to the Bank of

Governor Harding's letter I think

supposition that Mr. Norgan's

cable went direc-

mgland.

His suggestion that Lora Cunliffeis reply discloses r: delicate ap
preciation of the impropriety of the actd)on of

quite at variance 'iht the facts.




the bank is i

am satisfied

Lord Cunliffe undoubtedly meant just

I

4.

February 15, 1917.

To - Mr. Treman.

what has been stated in the English Press so frequently -- that this was
an effort on the paxt of the Reserve Board to correct the unfortunate im-

oressions resulting from their earlier announcement on the subject of
Treasury bills.

er after consulting

I await your further suggestions a
the others and, of course, will do not

P. that is net

the directors of the bank.
Faithfully yours,

R. H. "roman, Esq.,
Federal Reserve Bank
New York City.

BS/CC




irely agreeable

Denver, Colorado,
February 19, 1917.

Dear Mr. Tremont-,

Replying to yours of the 16th, I think it

d be unaise

at present to accumulate any German coin.

let.

The German exchanges

are 1

our favor for

quite a long period and no advantage would be gained

coin, at any rate nothing like th
standard mint bars, so I would

coin melted and

Iding German

we would gain n holding
tainly

ange to have the German

take standard ba

place of them, if the charge

of 50ç a 1000 can be avoid
2nd.

French go

ght at a

e of some value, but,

confidentially, the

is a possibilit

before the end of th

war undertake
uus for

but it 1
coin as
3

me to believe t
th German, at

hat the French Government will

t

emonetize

their old gold coins.

or the sources of ray information,

same policy should be pursued with French

rate for the present.

It is impossi, e to answer regarding bars received from

lief is

Prance.

t French standard

bars are identical with ours,

900 fine, the alloy consisting of copper, and if such bars are to be

retained, it could only be after arrangements are effected with the Assay
Office which would determine their value

likewise relieve us of

future

beyond peradventure and would

assay office charges in case we had to

tarn them in.
4th.

You make no reference to English gold coin, and as to that I

would be rather inclined to hold sovereigns, if we can do so after dotermin-




2.

To - Br. Treman.

February 19, 1917.

ing absolutely their bullion value, so that we might later
ship them in
conformity with the arrangement suggested with the Bank of
5th.

ngland.

The most important thing is to get gold bars, if we can do

so without paying

the assay charge of 54

a 1000 and without

rendering

ourselves liable to later remelting char

All of the detail of this
1)ank.

must,

I hope the above answers your

course, be we g. out at the
1

uiry.

Yours very sincerely,

R. H. Treman, Esq.,
Federal Reserve Bank,
New York City.

BS/CC




Denver, Colorado,
February 21, 1917.

Dear Mr. Treman:

I have just been over the

last reports of

various lines

of bills Which we are carrying and they strike me
cellent shape indeed. It is a delight to think of

dition the

bank is In and you may well

being in very ext

eve a gre

al warrants

I would not bother much about buyI

splendid con-

to me.

mfort

g as we

can get bills.
these credit matters

Do you have the occasi

4ow well they are keeping up-

Mr. Kenzel and Mr. Cann jointly and

to-date on

their info

various credits?

Th

but when times ehaa
tell

the

sheep

ted they are as to the
peace in money matters

pretty well posted so as to

nt s notice.
rely yours,

R. H. Pre
Federal Res
New York City.

133/CC




with

LI

Denver, Colorado,
February 19, 1917.

Dear Mr. Treman:

I have been laid up in bed for a few days
doctor's excessive precautions, so I am in shocki

a co:

and by

the

arrears in answering

letters; will hope to clean up this we

ime would you

a

mind advising me if I am expected t
or will that be done in New Yon

letter to

Buenos Aires

ing Mr. Warburg's draft,

retaining a copy.

I am deeply disappointed abe

en's decision and am writing again

personally, but, of co

Now the

question is

It is a tern.
need.

that he will change his mind.

If anything o

man with just the

experience we

of the committee, I hope they

write you of any suggestions that occur

Sincerely yours,

R. H. Treman, Esq.,
Federal Reserve Bank,
New York City.
BS;CC.
P.S.

During the process of catching up with mail my letters are liable

to be rather brief, but will not indicate any lack of interest in What
is going on.



Denver, Colorado,
February 21, 1917.

F2DLT4L FISERVE BOK DRAFTS.

Dear Mr. Tremaa:

I harea7humber of letters from you on thi
with a copy of the committee report and

ubject, together

other coi from lir. Jay, mile-

What different from the one you send ma. His, though

dated, seems

to be the latest revision.
The decision of the Ease

to have another Governors'

Conference is serious indeed.
this decision.

eve that they will adhere to

Most of the real work Qdeveloping these various questions

and elucidating them

vernore' Conferences, and

it would be a real d
Now, as to th report,
or two points,

be delay

ss1bly I

report slur

5 I think
the Fede

here

Reserve Bank
and I fear that

the workir ef the plan
1177 reluctant
bank.

discontinued.

it str

es me as admirable except in one

am t. stupid to get the meaning.

On page

tion of delay in recei7t of advice by
ich is to pay
ey

the draft. There will certainly

will be of sufficient consequence to rake

many cases awkward and unsatisfactory.

e to hold over drafts

at the request

You know

of the paying

They assume a liability for delay of protest Which it is impossible

as a legal matter to avoid, without the consent of other endorsers.

.1].so

the provision for telegraphing means a lot of trouble and expense which
should, if possible, be avoided, and these telegraph charges will be very
difficult of readjustment, because they really shou)d be paid by the bank

that draws the draft in



every ease in another district than the Reserve Bank

2.
February 21, 1917.

To - alex. Treman.

Which pays the draft.

Another point is in

regard to the signature cards.

I do not see how the paying bank can pay any draft without assuming heavy
risks, unless it has a full set of signature cards and instructions as to
the poWers of- the offiegrs of the member banks to draw; otherwise, how is
it a payment.

The

Federal Reserve

Bank

on Which the draft is drawn would

naturally not be liable fotethe payment of a draft which *was Wholly fabri-

cated and fraudulent, although that draft might correspond exactly with

\.\

the advice sent

so far as amount, name of drawer and name of payee was con-

earned; I thin 4

the plan is

weak at this point.

I do not agree with the report that advice between Federal Re-

serve Banks would not prove cumbersemSe(butkdo agree that either that

\\

e

.

plan of advices from one Reserve bank to the other must be adopted, or

else the whole subject dealt with on

a credit basis, each member bank

being given a certain line of credit for

exchange purposes, for Which

its own Reserve bank would assume responsibility to any Reserve bank
that acted as a paying agent.

I agree that the responsibility assumed under paragraph b., page
5, is possibly a reasonable banking risk for the
if, and only if

the paying bane has -

drawee bank and - b. full particulars

paying bank to assume,

a. advice and instructions from the

ae

to the signatures and authorities

of the member bank drawing the draft.
The principle underlying this proposed arrangement is after all
simple enough.

If the bank

which pays the draft does so on instructions

from the bank on which it is drawn, then the only responsibility of the

paying bank is to be sure that the draft paid is the one which it is in


February 21, 1917.

To - Mr. Treman.

Those instructions can be specific as to each draft,

structed to pay.

in which case the draft must be identified beyond peradventure, or the
instructions may be general as to any draft drawn by the memther bank, in
which. case there must be a limit as to the amoun

equal care must be exercised to make sure that t

1 think you will find that Judge Curtis not only a

ft is a valid one.
es with this view,

not even enjoy

but possibly will go a bit further and
the protection of the endorser's liabi

f the drawing and

ty under certain

umstances.

I have been a good deal im

Van Zendt's remarks about

this plan, as well as McKay'srandum.

t is all right for the Reserve

Banks to go ahead

ir

honey. abunnnnt reserves and free

these days o

move of exehanges in tmd4Ø.do
to the member banks.

will find.

orts of things without charge
some of these things will prove

a tremenduous burden

t danger When another turn of the

Wheel brings close m

rves and uncertainty zexi distrust.

only had a lot of experience but thinks about these matters with

who has n
an eye or

zed wager that my friend Will Woodward,

e a p

am willin

he future, will

have written

believe will

-

about the situation

ee with

every word of

ore, i do not like the Gidney plan, which I

:' -ncy to lure us into a sense of false security
as to silver certificates and greenbacks.

this difficult matter, Which

Faithfully yours,
R. H. Treman,
Federal Reserve Bank,




So much on

I sincerely hope will be worked out to peer

entire satisfaction.

New York City.

this statement.

Denver, Colorado,
February 21, 1917.
BANK OF FRANCE.

Dear Mr. Treman:

Referring to yours of the 10, 14

el

17th

On 0.1s

suggestion of asking James Brown about the French
he had dealt

with this

subject in connec

at $

t.

I have a c mplete set

h to my regret.

Pending the reeei

. Brown's inquiry, it might

be well to get an opi

ert, but, as you realize,

employiby the French

ernment in this country and

'

might not feel free

1 would also suggest that

Mr. Curtis

d Bloch, the French Commissionere,
ave a talk with Mr. Robert Liasson on the subject, as 1 exoect

orthi

to see

as Mr. B

s, would not

thought it

week.

the last
Of course, an informal inquiry, such

a sufficient basis for our agreement, but I
de

in

developing the subject.

The memorandum for the Ban,: of Franca

point which Hr.
possible

France, or

away somewhere among ng

books, but I think they are in st

and I wi

was made because

are to be

of the statutes covering these

he is already

Lay

first export

credit. It seems to me that if inquiries
of Mr. Coudert, the bank shOUld do

subject.

Curtis

effect of a

failed to deal with one

and i discussed, and that is the question of the

Moratorium upon the settlement of our accounts, or

the payment of bills which we might bey.

i suggest your getting

out

the

file containing the Brown export agreement, as well as the Bonbright, and
see hew the matter was dealt with in those agreements.



Er. Curtis knows

2.
To - Ur. Treman.

February 21, 1917.

mw views, as far as I have any; it is a legal rather than a business
:uestion. I hone this matter can be pushed along pretty promptly for

the mail de/ay is terrible just now and I don't
that we are stalling.
Sincerely yours,
R. H. Treman, Esq.,
Federal Reserve Sank,
New York City.

13S/CO




t Pallain to think

Denver, Colorado,
Pebruary VD, 1917.

Dear !Ir. Tremar:

letters on different

I have been trying lately to write separa,

, of the accumulation

subjects, but cannot very well do so today on acc
of mall.

This letter will relate to matters of mi

s

importance.

makes the mis-

McDougal's letter is distinctly
take of taking the position that the

1 Reserve B

rictions and provisions of

Reserve Bank's are entirely free

the Federal Reserve Act as to

.

seem to get it into his head that

the :Federal

He will not and cannot

ot make the law and that all we

can do is to comply with
your

I am hoping to

w director, particularly

as I would like to
e 14th that we are beginning to

I am glad to 1

1,s

accumulate
fully han

d aro, for,the

but stan.

_mint bars, un

in. good cs

ition,

r. Jay, this matter needs to be care-

I

in whi

resent I doubt the wisdom of

holding

ything

s we should have a shipment of sovereigns

case we might be justified in holding them

at bullion v
About rates. it strikes me now that the rates are about right.

As nearly as can be judged from here, reviewing the past two months, I
believe had we stuck to a lower rate until the early part of February,

developments at that time would have justified an advance and our earnings

possibly would have been a little

better, but after all it is a small

matter and it looks as though we were certainly on the right track now.



2.

February 21, 1917.

To - 114r. Treman.

I am sorry that my letter

from Phoenix appeared to you to be

unjustified as to our policy in dealing with the Board and with our
investment matters.

The last thing I would want to do is to give you

any imnression that 1
awn opinion

does not

am dissatisfied or critical, even if sometimes my

coincide with yours,

fortunate job, with its many disagreeab
so largely

for my benefit. Possibly y

I do the change which has
Washington in managing

when your un-

episodes, was

rust on you

may not realize

lat strongly as

Board in

taken place in the policy of

the sy

and, on the

other hand, the necessity

bank ourselves, so far as

its policy and transaction

ny of these matters.

have talked this ma

I

urtis, who knows my views

in detail, and I am sur

ass them to you better than I

can by letter.

It is a great

and

are being reduced

recomm

lye
7_- e

reduction pro ;d
tinkering with

Don't y

requirements

down to say greater extent than was

by the Reserve

period of sp

right.

ear that the reserve

ard. *Vie are in the midst of the greatest

sion the country has over witnessed and this

will make it all the

worse.

That is what comes of

e law, necessary though it is if we are ever to get it
thinx that this matter justifies some

representation

being made to the Reserve Board as to the serious danger Which may result.

So much has been

said about loss of earnings to banks that take

membership in the Reserve System that I should think it would pay for the
Reserve

Banks



Board to

get a precise statement on this subject from those State

Which have taken membership and Which have had long enough experience

3.
To -

February 21, 117.

r. Treman.

to determine what the advantage has been. This might be quite a convinc-

ing argument to some of our critics.

1 cra thinking of you and your troubles and labors all the time,
particularly now that Aikon seems to have tun

sibility of relief is not in sight.

nting on

I

must have been, and am grievously disa

down and that Dos-

'ted.

3est regards to you and to the ot rs.
yours,

R. H. Tremnn, Esq.,
Federal Reserve Be.
New York City.

BS/GC




as I know:Ica




,

co.

0-15

Denver, Colorado,
February 23, 1917.

Dear Mr. Treman:

BANK OF

GLAND C

ES.

Replying to yours of the 19th,
the correspondence and talking with C

understood than it was when

sure that aft

tie, this situa
of yours w

reading over
on is better
o 7;ashington.

You may be sure that 1 di

stion, first about the

inquiry through Morgan

ding that particular cable

of which by the way 1 ha

ver reeeived

copy up tr, the time my let-

.

ter was sent to you,
points.

B.

reman, LEK.,
Feder
serve Bank,
New York

BS/CC

f thought on all of these




Denver, Colorado,
February 23, 1917.

Dear Jr. Treman:

BANK OP ?RANCE.

Thanks for yours of the 19th.

I hope the

randum is given a

very careful overhauling and then shi

ther consideration,

after all suggestions have been embodied.

Hope LIT. Jay makes a sa

ngement about the Bank of

pe that the views I expressed

about the announcemont

cabling and giving
to make the appoin
important and dhoul

R. H.
omen, Esq.,
Federal esorve Bank,

New York

BS/CC

'ty.

e it up with

11 have some thoughts.

Mr. 700dward as he is much into

7rance appointment and I partiou

Be sure a

ed.

e tha

The suggestion about

he announcement of authority

that the whole job is done is




Denver, Colorado,
February 23, 1917.

Dear Mr. Treman:
PREPARADNESS.

/burs of the 20th is just received

1111 re

satisfaction than any letter I have r

ived from the

floe in a long

time. That report sounds real snapp

nd surely indic

that the

suggestions sent by the Special Committee were large].

nevertheless the report

Et

At the risk of repetition

1. NOTE SUPPLY.

see me tremenduusly.

a:

no or two headings:

dred millions seems a

Al

little bit large

not be needed but because

While say the first

ons were bein,; issued large ad-

ditions to the stock co

de.

hundred millions, pc,
Reserve

ecessary, but

Liy further suggestion is that one

e carried as a minimum reserve by the

Agent in our

under

special Wei;uard.

require no comment.
4.

f having the orodit department right up-to-

date and cam

e, with all information about member banks and about

acceptors jho

bills we buy cannot be exaggerated.

LsdI would keep the

pressure on in .his department just as stiff as nossible.

ez 7 require no comment as everything seems to be

5, 6

done or

under way.

6.
need

POIREIGN MATTEES.

I agree absolutely

with NI% Forgan, but that

not mean that we should not employ promptly a first-rate man who

understands the

detail

of figuring exchange, keeping exchange accounts,




2.
To - Mr. Treman.

February 23, 1917.

conducting exchange correspondence with foreign banks, keeping suitable
records, running

foreign bank accounts,

Mr. Gann can doubtless supervise all- b
this

or

experience to take charge of the office work

business.

This does not mean that we A111 compe

we ought to have a man
wing out of our forei6n
with our meebers in

any senee of the word.
GOLD. I have answered the I.

AoAluilli:71:714:111:!!!1101

I believe

quite fully.

tether the lone' distance

EMPLENT. I do no
telephone connections mean prlva

wita the heavy expense in-

cy connections. For the

volved, or simply arr.

a switch could be

present I should th
private lines on

short nctice.

made to

e same applies to the 'Astern

Union.

is and

i discussed this subject in

great d

"1 and he can tell you my own view better than I can express

them i

letter. -One o
g of work by

over-la-.

ordination

he greatest difficulties in our office is
le officers themselves and some lack of co-

so as to make it effective without waste of

time. He will elaborate.
No. comment required.
I believe that the matter

of amendment to the Clayton Act

and the member State Banks and Trust Companies should be followed up.
The above covers all I have in mind and now success to your efforts.
Very sincerely yours,
R. H. Treman, Lag.,
Federal Reserve Bank,
New York City.




Denver, Colorado,
February 26, 1917.

Dear Mr. Treman:

Yours of

the 21st, enclosing Mr, Peple's memorandum in regard

to Federal Reserve exchange, is just roe

It is a clearer and more concis

tatement of th

we have seen, but really contains not
with theexception of one

new ca11in6

e marked.

the present collec-

was adopted tha

could not be

accurately laid

was planned to make readjust-

out without experience,

bat where the time established
Where

ments from time to

uce transit time by

was too short and at th
the schedule wherever e

showed that

tion to

Richmond now

with

an:' comment,

statement on page 5 which 1

We all admitted and t

tion plan

lan than others

the

to be possible.

fact that

cases, and I think we

em is too db.°

shortening

the time schedule

should at once look

nd see that readjustments are made. The analysis of our transit

into

account she
in addition
less arises i

carrying
the normal

roughly two and a

New York Clearing House

he Richmond District and here

half millions of

float.

float

Some of it doubt-

is a good opportunity to

correct it.

I realize the objection which Mr. Hendricks will
these

schedules can

I agree

that

be so accurate as to eliminate

that is true. but

a

certain

that is no reason at all

with the schedule as at first prepared.

The effort

raise,

that

none of

amount of float.

for resting satisfied

Should be to make

it




To - Mr.

Treman.

February 26, 1917.

accurate and this will require continuous study.
This part of Mr. Peple's argument seems to be an effort to
demonstrate that two wrongs mace a right.

In other words, if we are

willing to admit some weaknesses, or unso

,

collection plan, we should therefore b
tablishing this plan for Federal exc
unsound.

R. H.

Twgn,

Esq.,

Federal Reserve Ba
New York City.

lling to acc
, which of co

in the present

them in esis

thoroughly




Denver, Colorado,
February 26, 1917.

Dear ;Jr. Treman:

I am just advised that arrangements have been made for the

bank to reimburse Miss Canton's salary. It seems to me that this is
hardly necessary and I am wondering whether the matter has received.

full consideration bTJ all the officers, or possibly was inspired by
sentiment, which is not cold business.
I hope that you keep well and are not depressed by the various
combinations of depressing circumstances.

Very sincerely yours,
H. Treman, Esq.,
Federal Reserve Bank,

New York City.

BS/CC




Denver, Colorado,
February 26, 1917.

Dear Mr. Treman:

Thanks for yours of the 21st, one

010

Pallain. I an awaiting with much int eat further de
matter.
Very sincerely yours,

R. H. Treman, Esq..
Federal Reserve
New York city.

BS/CC

ble to
opments in this




Denver, Colorado,
February 27, 1917.

Dear Mr: Truman;
Today's mail brings a copy of the statement of the bank as of
last Friday

in

papers, and I am

the form regularly furnished

wondering whether progress is being ma
form Which will be More accurate than

wards the .. '3tion of a new

one now in use

This statement, some way or other, offends my s

q74 000 of last

accurate and in a way truthful

375,000 of earnings

year's net earnings, earni
Items of the current year

Might it not

well

sect of the current year.

committee of the Junior

officers to make roe
sincerely yours,

Tr.v=
Feder
New Y

BS/CC

Esq.,
Bank,

Reserve
ity.

of What is




FEDERAL RESERVE BANK
OF NEW YORK

January 2, 1917.

JAN10 M/

dear Governor:
At the request of Govern()

you a memorandum in re a new rat
kept in Federal reserve banks
vault reserves for the membe

Seay, I am sending
of reserves to be

h no requirement as to
banks, as he was not clear

as to your present address

With kind reglds, I remain,

/

Sincerely yours,

7ff.A-4:4g""---

q.,
Benjamin Strong,
4100 nontview Boulevard,
Denver, Colo.

RPT/CEP
7nc.

f

11'1.144'

-*y

C 0U, (

et,

1-1LL.'"

e

0

FEDERAL RESERVE BANK
OF NEW YORK
January 2, 1917.

.JAN 9

1917

My dear Governor:

We have just had a telephone from 7!r. Jay, who is at Tashington on

his way up from Aiken and I hope he will be home in time for the meeting of
our directors to-morrow.

We received a communication from Mr. Locke, stating that he thought
we ought to take even a stronger position than had been indicated in the
proposed letter to the Board at Washington in regard to the method of communications between the Board and the bank and in regard to the publishing of
the Bank of England matter.

--re will take um to-morrow probably the ques-

tion of milting apnlication for authority to negotiate with the Bank of France,

and it would seen as though permission granted just now might help the entire
situation.

Mr. Curtis had a long talk with Mr. Delano, who was at Piping Rock
yesterday and he will Undoubtedly write you in detail, but he stated that
cur,/

there was more or less irritation in Tashington concerning matters there and

also advised that he took the position that it would be better for us to send
a committee than to send a. communication to 7ashington.

I have no doubt but

as a result of this stirring up all around, we shall have more cooperation on
the part of the Board at Thshington with this bank, or at least I hope so.

Having made quite a canvass of the acceptance market, I am inclined
to think that the directors to-morrow might well authorize a somewhat higher

acceptance rate; that is, making 3% our minimum rate, because, while indications point to an easy money market for a while now, I am inclined to think
that the rate mentioned would be justified and might have the effect of our
not securing as many acceptances temporarily, but if rates are from 3



to 3 q/2%,

,

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

2

1/2/17.

there will be many more banks in the country purchasing acceptances and thus
helping to develop the open market.

7e will probably have a very busy meeting to-morrow, at which probably
. Locke will not be present, to my regret.
The question of the advances in salaries and the report of the committee on an emergency salary due to the high cost of living will come up in

the

form of a recommendation, I assume, from the committee of Messrs. Peabody

and Thompson.

Mrs. 7cLaren expects to begin work to-morrow, I believe, resuming
her old position.

I hope that we shall have no further disturbances from Washington
to straighten out, as a large part of our work last week was caused by the
unexpected announcement of the Board, and I understand that Governor Farding
took exception to ny stating that a considerable portion of my time was spent
in defending the acts of the Federal

eserve Board.

I have no excuses to offer, because that is a statement of fact and
I only used it in justifying my contention that as I had since my occupancy
of this position been defending the acts of the Board, if I were to continue,

I must have information as to some of the reasons for the actions taken by
the Board or otherwise I could not explain same to others who might be disposed to be very critical, as had been the case in the past.

Oh, this

"

position is certainly a real love feast when one has to deal, as we do, with
the Federal Reserve Board.

If we caM be left alone, I hope, after Mr. Jay

returns, that we can do a few things of a constructive character in developing the operation of this particular banking institution, which is really our
principal function, as I interpret it.
I trust that your stay in Estes Park did you good and that you will

just continue the good work which you have been doing of building up your
physical strength and energy and restraining the impulse to overdo, which seems




FEDERAL RESERVE BANK OF NEW YORK

3.

Benjamin Strong, Esq.

1/2/17.

-`

C:r

to be an inherited and quite a natural impulse which you possess.

7y very best regards to you and my appreciation of the New Year's
greeting.

Sincerely yours,

Benjamin Strong, Esq.,
4100 7ontview Boulevard,
Denver, Colo.

RHT/CEP

Later --- Since dictating the above, I have received a letter from Governor
Harding in answer to my letter of last Friday, December,29th,(a copy of which

I sent you for your information.

I have no comment to make on Governor

Farding's letter to me but when I receive information from you as to what
stens you are taking in the matter of the Bank of England, I shall attempt
to inform him in a dignified way of the progress being made.




R. H. T.

FEDERAL RESERVE BANKali

k

OF NEW YORK
JAN 9

1917

January 3rd, 19177.

Dear Mr. Strong:

I assume tat you will keep me posted as to whnt correspondence you h-ve in re the Bank of France matters.
This morning soon after reachIng the bank, Mr. Curtis tele'lloned me that in running for a street car, he twisted his ankle and

was flat on his back waiting for a doctor to take an 7 ray to determine whether any bones were broken or merely an ankle sprained.

It

looks as if he wo-ld not be able to be around for some 7ittle time
and May have to go on crutches for a while.
We had a. very interesting meeting of directors this morning,

all being present except Yr. Locke who wrote as follows:
"I have thought over the London matter ever since I
heard from Mr. Curtis on Saturday and the more I think of it
I hop. and pray that you will not
the more angry I become.
you change your proposed communilet dowa a particle and
It is percation you will simply make it more vigorous.
fectly evident that w'aoever issued that announcement to the
It
without justification.
press did it knowing that it
You remember how vigorous
was no mere oversight of a clerk.
Strong was in emphasizing that particular clause of the mem-*
I, for one, have never dared to open my mouth on
orandum.
the subject to any human being and I presume the same obtains
My only fear is that you will
with every member of our board.
temporize."

if

.

After a full discussion of the Washington e7isode and after

Peabody had reported that he had received a telegram from M. McAdoo
asking that he come to Washington in re New York Reserve Bank matters,
and a telephone message from Governor Harding suggesting that no resolutions be passed by our Board, as well as a further report as to



FEDERAL RESERVE BANK OF NEW YORK

-2-

To

Mr. Strong.

Mr. Curtis' conversation with Mr. Delano on Sunday when Mr. Delano was
visiting Mr. Charles Norton, it was decided to appoint a committee composed of Messrs. Towne, Peabody and Woodward who are to go to Washington
next week on Wednesday for a conference with the Reserve Board as to the

of England matter and the relations between the Board and the New
York Bank so as to induce greater cooperation if possible.

IBank

The matter

of resolutions was held in abeyance until after thnt committee hod reported as to their visit.

Evidently, Curtis, Jay end I are not in very

good repute just at the mament in Washington but, seriously, I believe
that more will be accomplished by personal frank discussion of the various
matters than by any written communications.
The rates of discount were continued and it was thought advisable to raise the acceptance rates about * %.

Mr. Peabody reported on the committee on salaries and the committee recommended the following advances to be made:
Mr. Curtis:
L. F. Sailer:
L. H. Hendricks.
E. R. Kenzel:
H. M. Jefferson:

$3,000
2,000
1,200
1,200
800

They also advanced 59 employees listed as "Class A" who had been
recommended by Mr. Sailer and the other junior officers jointly as being
specially worthy of small advances.

They also mode a supplementary list

"Class B" and another "Class C" of other employees whom they recommended
should be advanced provided funds were available.

I*

Recognizing that the salaries for 1916 were determined at a time
when the cost of living was much less, there having been an advance of about
20 % in food and clothing during the year, the committee recommended that
a temporary emergency salary compensation be made to meet these abnormal

conditions and to all employees o' the bank receiving ;1200 or less they




To

FEDERAL RESERVE BANK OF NEW YORK .................

Mr. Strong.

recommended 10 % of the amount of salary actually received by them during
1916.

It was further recommended that 7

I-%

of salaries be paid to those

receiving between $1200 and $3000 inclusive and a further payment of 5

be paid on salaries of

'3000 and upward app'ying to all the officers ex-

cept the Governor and Deputy Governor.

The recommendations of the com-

mittee after a few questions were asked was passed unanimously.
The Board reelected the same officers, Governor, Benjamin Strong;

Deputy Governor, R. H. Treman; Counsel, J. F. Curtis and also a new 7xecitive
Committee, electing Messrs. 7oodward and Peabody as permanent members for a
year, the others to be rotating.
At Mr. Jay's suggestion, the ouestion of electing a member of the

Advisory Council was laid over until the next meeting owing to the late hour
at which we adjourned.
I asked the Board at their

meeting to visit and inspect the

new vaults.

I was authorized to make a formal application in behalf of the

bank to the Federal Reserve Board for permission to take up negotiations
with the Bank of France, but Mr. Peabody siggested later to me that we
should not make this application until after the visit of the committee
to 7ashington next week.
The matters connected with the Philippine Bank and the Bank of
Montreal were referred to the Executive Committee to report.
7e did not adjournuntil about one o'clock.

Am very glad that the Board was so generous in its action in
raising salaries, etc, and hope that it will be appreciated as I feel that

we have a fine organization here in the bank and things seem to be moving




FEDERAL RESERVE BANK OF NEW YORK

-4-

very smoothly internally.

To

Mr. Strong.

Where our greatest difficulties seem to arise

is with the Federal Reserve Board and I hope that our Committee will be
able to establish closer and more friendly relations betwe-n the Board and
this bank as I believe we could work more satisfactorily and successfully.

Bear in mind some of the advice Dr. Treman has given you because
you have now reached a point where if you do not behave we aught to summon
the high sheriff of Colorado to call upon you and read several chapters of
the riot act.

7ith kind personal regards, I remain,
Sincerely yours,

ft
Benjamin Strong, Esa.,
4100 Montview Boulevard,
Denver, Colo.

RHT/VCM

P. S.

7hle the directors accepted the recommendations for

the "A" list, they did not feel justified in doing the same with Classes
"B" and "C".




R. H. T.




TRANSIT DEPARTMENT

siNe'

FEIK1L RESERVE BANK OF NEW YORK
Close of business

is MS

Number of Items handled
Totaling

//45-.9 1/41/f

Short
Difference
Over

Time out:
A-E

F-N

J-M-Z
./-4

0 - Z 4/-0
J-A-L

Federals - City

Federals - Country
Mail out
5,/-

$7,17

j

itij#

At a meeting of the Board of Directors of the Federal

aff.,e1,1i*-64444
en..14;.

Reserve Beek

of New. !Ore on January 3, 19160 all of the directors being present
eece ting

lhairman Jay an0 Mr. Locke of Buffalo, the Acting .;overnor, hr. Treman, submitted a report and statements concerning the announcement in the public
press of authorization by the Federal Reserve Board to thie bank to appoint
the Bane of england as our agent and correspondent with the privilege to the
other Reserve banks to share in the relatioeshin.

efter full discussion of

the embarrassment occasioned to the officers and directors and the bank itself
by this manifest evidence of the leek of confidence and cooperation on the

Reserve Board with the executive officers, it was voted
to reread u,on the minutes of this meeting these statements res;ceting the
art of the Federal

situation develoied including clippings from the newspapers proporting to be
statements giv n out at ashington. It wee also voted to epe .ove the folloeing

statement of the sentiment of this Board respecting this ledication of the

lei* of effective cooperation with this Lank 1r0 the Secretary was directed to

forward the same to the

Federal Reserve Board.
STATZLeOT

The directors of

the Federal Reserve Ban. of Now York deem it eseen-

tial to their own self respect as entrust,d with the obligation to properly
conduct the affairs of this bank to make this formal record 'or transmission
to the Federal Reserve Board of the history of the negotiations undertaken on
their direction by Governor Strong with the Bane of i; neland, and further, of
their view of the unfortunate lack of interest

shown by the Federal Reserve

Board in the oblieation of secrecy assumed by Governor Strong and the directors
and later by Deputy Governor Trenan in dealing with this neeotiation.
early in the year 1916 Governor etrong, in order to promote the -eneral purtotes of the Federal Reserve System, particularly as to the operations
of this bawc, undertook a trip to .Ourope to investigate the possibility ol



- 2-

establishing desirable connections there, and especially the possibility of
such a connection with the Bank of Zngland.

-;;,a were then advised that the

purpose of this trip was made known to the Federal eserve Board and had its
approval.

In this endeavor Governor strong was Attuaately successful, par-

ticularly in estatlishing cordial porsonai relations with the Govornor of the
Bank of

land,

PI

Pk.t.44-s.

with the result that a tentative under-

standing for reciprocal relations between this ban?: and the Bank of ;Lngland
was agreed upon for submission,at a time to be fixed,to the governing bodyi. of
each bank and to the Federal Reserve Board.

The last paragraph of that agree-

ment reads as follows:

"No announcement directly or indirectly (is) to be made re6urd1ng the contents of this memorandum without the ex-

plicit consent of both institutions."
It was farther stated by Governor Ounliffe that he hai carefully rofrained
from advising his Owd diroctore of the ne,otiation.




Soon after his return Governor Strong reported these facts to the

Federal Reserve ioard, advining that the negotiations thus commenced should
be continued, and especially emphasizing the contidentian feature of the undersubsequently and

standing.

during Governor Strong's absence, by letter

dated

August 28, 1916, signed by the deputy governor under the authority of this
board, this bank requested authority from your board to enter into the relations oontemplated in the memorandum agreed upon with Governor Jetrong.

This

communication of August 28th was considered by Deputy Governor Traman of such a

confidential

character that it was not entrusted to the mails but carried to

Washington by the secretary of this bank and presented in person
or of

the Federal

to the Govern-

Reeerve Board, with the request then renewed that all mattere

pertaining to the subject be kept in strictest confidence.
now informed, no action on this request was

taker. until

So far as

ee

are

December 19th, on which

date, we now understand, the Federal Reserve 'Board authorized this bank to ap.

point the Bank of England ao one of its foreign correspondents and agents.
The information of this action on the part of the Federal Reserve Board first
reached as on December 26th through the public press.
received a letter from

Although the

Tarburg an December

Deputy Governor Tremazi

in which he stated

matter at issue end been brought to the attention of

the Federal Reserve Board by our letter of August 28th, signed by the deputy
governor of this bank, that board, in making reply, ignored the responsible
executive head of this bank by addressing their reply to the Federal reserve
agent and markiag it "Confidential."

it was known to the Federal Reserve

Board that e:r. Jay was then absent on account of illness and of course this

communication marked "Confidential" was forwarded to him unopened, and its



contents only beeame known to the deputy governor of this bank
when it was received by him from ese Jay.

on December

27th

In the meantime, on December 26th,

the daily press of the country published a statement, purporting

to be furnish-

ed by the Governor of the eederal Reserve Board, announcing the action of the
Federal Reserve Board above referred to, and as shown in the attached, making

further remarks relating to this arrangement.
It thus results that the agreement made by Governor Strong in behalf

of this bank with eir

has been violated by the Federal

Reserve Board and that Governor Strong and

this bank are thus placed bDfore the

Governor of the Bank of england in the position of having apparently been responsible for an extraordinary breach of confidence.
With all due respect for the Federal Reserve Board, with full recoge.

nition of its right of control over the regional banks in matters of policy,
but also with a keen sense of our own responsibilities in the conduct of the
business of this bank, and of the absolute need of coordination and of reciprocal recognition of duties and responsibilities between the Federal Reserve
Board and this bank, the directors of the Federal Reserve Bank of eve York
submit that we were entitled: first, to a direct response to o'er letter of

second, to prompt information to the executive of the board concerning decision on the matter in advance of its being given to the public

August 28th;

press; and third, above all, to your protection of our good faith and good

repute in regard to fulfilling the explicit obligation entered into by Governor
Strong with ell-

A4

that no publicity should be given to

the negotiations save with the previeus knowledge and consent of bothmarties,
of which fact you had been so fully and 30 carefully advised by Governor etrong

and other officers of this bank.
In letter of December 27th to Deputy Governor Treman, Governor Harding

argues that the transactions of the Federal Reaervo Board constitute public
fully

business, and, as sueh, are subjeot to the call of Jongress. While/reeogniziag


this fact and its obligation, we respectfully call attention to the coincident
fact that in MO3t, if not all, departments of the Government, notably in the

state Department, many confidential

matters are constantly dealt with under every

possible precaution against publicity until conditions permit of their release,
and that the negotiation of many matters of the utmost importance would become
impossible if a rule of unlimited publicity were enforced.

eb submit that the

proposed foreign relations of this bank come as a matter of course in this class.

rn:)

venture to point out that the necessary confidential relations between your

board and the acting executive of this bank would have readily

provided oppor-

tunity for our securing the permission of the Governor of the Bank of England to

any desired publicity an

thus fully protected Governor Strong's aereement, and

as well given assurance to the Bank of England that the Federal Reseeve Board
appreciated the character of such confidential agreements.

This board respect-

fully submits that such understanding respecting the appreciation by your board

of confidences of the greatest importance to the future initiation and completion

by this and other banks of delicate and

highly valuable negotiations to

further

the broad policy of the Federal eserve Act.
In view of the continued absence of Governor etrong and the conduct

of the bank's affairs by the deputy governor, this board deems it necessary to
assure the proper management af the bank's affairs to now report formally the
request which we
cations

understand was frequently made by Governor strong that communi-

from the Federal Reserve Board affecting the operations of this bank be

addressed to its executeve officers, rather than to the Federal reeerve agent,

who is as regards these matters net the responsible executive but an active and
most helpful director and member of the executive comeittoe.

ee

fear that,

unless such practice is at once established, unfortunate occurrences similar to
the one now under discussion will take place and in active excited markets it is
readily to be seen that costly and far-reaching damage might result.



FEDERAL RESERVE BANK
OF NEW YORK

JAN1 01917
January 4th, 1917.

My dear Governor:

We received your telegram in connection with the suggested report or letter to the Reserve Board in re foreign
bank matter and noted your suggestions.

Probably no letter

will be sent, however, the work being done by the Committee
in person, as they visit Washington next Wednesday.
Mr. deNeuflize called again to-day and told us that
he had been in communication with Monsieur Pallain, that he
was authorized to discuss informally matters pertaining to reciprocal relations between this bank and the Bank of France,
that he greatly desired us to suggest informally some of the
principal transactions which would be mutually beneficial,
(that is, what operations could be carried on between the banks,
that he, Mr. deNeullize, contemplated returning to' France in

about two or three weeks and would be glad to ta141 up the matter now by cable and then more in detail after he reached Paris.
He said further that he could furnish us with amiitle, official
.4authority direct from Paris as to his beihg authorized to represent tne Bank of France in these informal negotiations.
This summarizes his statement to us, I think.




FEDERAL RESERVE BANK OF NEW YORK

-2-

To

Mr. Strong.

1/4/17.

Mr. Jay and I told Mr. de Neuflize that there had been
an informal exchange of views between you and Monsieur Pallain
continuing at intervals your conversations when you were in Paris,
that all negotiations were being carried on through you and that
we would ascertain by writing you just the present status of the
correspondence.

I informed you yesterday that I was authorized to make
formal application to the Reserve Board for permission to proceed with these negotiations, but Mr. Peabody suggested waiting
until after the Committee had been to Washington.

Will you

kindly advise me whether you are in direct correspondence with
Monsieur Pallain now

and are expecting a letter from him; if

not whether it would be advisable for you to write him that our
Board had made application to the Reserve Board to enter into
formal negotiations for reciprocal relations:

Will you not also

secure from Monsieur Pallain specific instructions as to the
status of Mr. de Neuflize since should he remain here one or two

months longer or return shortly to France, we at the bank should
know just what standing he has.

He has been informed emphati-

cally that you have been carrying on and will continue to carry
on in behalf of this bank all correspondence and negotiations
with the Bank of France, but as he will undoubtedly continue to
call on us you will, we assume, keep us informed in order that
we may know how to handle such particulars as we are obliged to
handle at this end.

Mr. Jay and I both feel that you should

ascertain, as stated above, direct from Monsieur Pallain the
status of Mr. de Neuflize and advise us of same.




r FEDERAL RESERVE BANK OF NEW YORK

3

To

Mr. Strong.

1/4/17.

Will you, therefore, write me just the present condition
of the negotiations and will you be prepared to continue them as
soon as the Board at Washington grants our request?

Meanwhile,

will you continue the informal correspondence:,

Have you done anything about the Bank of England matter,
as we have done nothing since sending the cable to Lord Cunliffe

expressing your wishes in the matter and advising that negotiations
would be continued by you.

Curtis is better today but thinks that it will be next
week or the week after before be can get around.

Mr. Jay expects to spend tomorrow at his home writing
his annual report, material for which has been gathered by Mr. Cann
and others.

I hope to go home tomorrow, Friday night, and remain
there Tuesday for our annual bank meeting.
It has been arranged that the Committee composed of

Messrs. Peabody, Towne and Woodward will go to Washington for a
meeting next Wednesday with the Reserve Board.
Nothing new has developed in reference to filling my
position as Deputy Governor beyond what I have already written
except that Messrs. Peabody and Woodward have discussed the same
a little and are making some inquiries in certain directions.
Mr. Jay had an offer of a bank position here in New York
but I assume he will write you the details.
In view of my correspondence with Governor Harding, it
is difficult for me to know my status at Washington, but I am
still on the job at New York and hope to continue for a while
longer until matters are shaped up here to permit me to leave. I




4

_FEDERAL RESERVE BANK OF NEW YORK

-4-

To

Mr. Strong.

am frank to say the treatment from Washington with which you are
familiar does not encourage me in my desire to remain.
As I wrote you yesterday, the old officers were reelected
and I think among the directors it is understood that you will not
return before next Summer to take up active work, but that they
are expecting you to do so as soon as you and your doctor deem it

wise and that an arrangement somewhat along the line I wrote you
should be consummated- having some one to carry the detail and
you handle the bigger problems.
of your gaining give

I want to assure you that reports

a great deal of pleasure to all of our direc-

tors and that they are most agreeable to your staying until you are
thoroughly restored.

I wish I could drop in occasionally and read

the Riot Act to you in a forceful way because I feel that it must
be a temptation to you as you grow stronger and more vigorous to
feel that you can put the globe and all of its troubles on top of
your shoulders and carry it, but we want you to assume only the

most necessary ones and not worry about matters here which will
work out all right I am sure.

My very best wishes to you and in this the officers and
directors would join if they knew I was writing.
Sincerely yours,

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colo.

RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK

JAni

January 5th, 1917.

o 191/

My dear Governor:

Mr. Curtis is improving and hopes to be around early
next week.

The Reserve Board approved of the application of Mr.
Charles M. Schwab to permit him to become a director in the
Chase i4tional Bank and the Empire Trust Company.

I wrote you I think that the Board on Wednesday raised
the acceptance rate to 3 i

for member bank acceptances at 90

days, subject to the usual

%

for additional bank endorsement.

I have notified Rhoads, Aiken and Fancher and they will adopt
the same.

Mr. Woodward told me yesterday that banks were buying
acceptances very freely and Bernard, Scholle & Company offered
us 3 1/8 for one million of our bank acceptances if we cared to
sell.

While we may ,not get as many just now, those we do buy

will pay us a better rate and later we may think it wise to drop
our rate, but I feel

that we have made some headway recently in

the development of an open market.

Mr. Kent told me that he had

sold all the bills they had in their portfolio yesterday (about
one million), at rates somewhat lower than ours.
you approve of our action.




I hope that

To

EDERAL RESERVE BANK OF NEW YORK

kr. Strong.

Jan. 5, 1917.

Probably six of the Governors will meet in Washington
January 22nd and 23rd on work assigned to the various committees.
I hope by that time we shall have as a result of the New York bank
committee going to Washington next week, a better working basis
between the Board and.this bank.

Money seems to be working much easier in New York and
the general irpression seems to be that we shall have easy rates
for the next few months.
I

hope to go to Ithaca tonight to remain until Tuesday

night when I hope to bring Mrs. Treman back with me for a few
days.

I shall try to arrange some of my private affairs which

have been somewhat neglected of late and two or three days will
enable me to clean them up in nice shape I trust.
Sincerely yours,

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colo.

RHT/V0M




FEDERAL RESERVE BANK
OF NEW YORK

January 10th, 1917.

My dear Governor:

I beg to acknowledge receipt of your favor of Jan-

uary 5th, enclosing confidentially your letter to Mr. Warburg
in re memorandum on greenbacks which I am to hold in confidence
until I hear from him direct, and the same will be so treated.
6incerely yours,

C&FV,14-1-twee,t_
Deputy Governor.
3enjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colo.

RHT/VCM







FEDERAL RESERVE BANK
OF NEW YORK
JAN1 5 1911
January 10th, 1917.

My dear Governor:

I returned from Ithaca this morning and brought Yrs. Treman with me for a week or two of change for her as she has been
living too strenuous a life recently and if she comes down to
the quiet of New York City, it should help her.

I went up to Ithaca Friday night and stayed over yesterday so as to clean up some of my personal affairs which have
been sadly neglected and incidentally to attend some meetings of
the banks which were held yesterday and especially our own, it
being the annual meeting of our stockholders.

They re-elected

me President and I explained to them that, whereas, I thought
the limit of my stay in New York would be January let, it looked
now as though I might have to stay for a somewhat longer indefinite period until matters could be adjusted satisfactorily here.
Apparently they wire entirely satisfied to have the arrangement
go on so long as there was to be a termination later and it relieved somewhat my anxiety as to the situation at home to find
that they were so willing to cooperate with me in working matters
011t

I assume that matters here will develop gradually but
surely.

In any event I feel that there is no need for you to

feel at all anxious about taking all the time necessary to

To

FEDERAL RESERVE BANK OF NEW YORK




Mr. Strong.

1/10/17.

build up your strength so as to resume the work which they are
all so anxious to have you do, not only here, but I fully beSo grit your teeth and stick to

lieve in Washington, also.

the regime, though monotonous and arduous it may seem, and the
results will be most gratifying to all, I believe.
I find your mighty nice letter of January 5th in regard to the "difficulties and troubles" which have developed to
an unusual degree recently.

Our Committee of Lessrs. Towne, Peabody and Woodward
are in Washington to-day and I hope they will be able to straighten out the situation so as to bring into closer relations the
Board and this bank.

Mr. Delano advised me that he would be

here on the 15th and Mr. Jay telephoned me this morning that he
had asked Governor Harding to come over with Mr. Delano and
spend a day at the bank and I am in hopes that they may come as
think that such visits cannot but be helpful and bring us into
a more harmonious relationship.

So far as I am concerned personally, I confess that
Governor Harding's letter did disturb me and while I laughed
when I first read j.t (as I did see the humor of the situation

and felt more sincerely sorry for him than for myself), yet it
hurt somewhat.

However,

so far as I am personally concerned,

I have had sufficient hard knocks myself to try and take them
standing up and remain so, and believe that all this misunderstanding grew out of an unusually unfortunate combination of
circumstances and I have faith that to-day's meeting in Washington will clear the atmosphere and result in better feeling all

FEDERAL RESERVE BANK OF NEW YORK




Mr. Strong.

around; so dismiss this from your mind.

1/10/17.

As for my being dis-

couraged or feeling that the work is not worth while - if that
comes, it is temporary only and passes away, and the antidote
is the great pleasure I have enjoyed in my association with my
colleagues and others in this bank who have treated me with the
greatest courtesy and have always upheld my hands.
do thank you for your cheering words and hope that
there will be nofurther occasion arising for your feeling that
I need any encouragement of this kind.

Since writing the above, I have read Mr. Locke'snexplosion" and thinking that you would enjoy it as much as I am
sending you a copy herein.

Dr. Treman is impressed with the fact that you are
overwhelmed with mail and that you should not be interfered
with in your careful and mature thought which you nust necessarily give to the framing up of our relations with the Bank
of England and the Bank of France.

So as far as any an-

swers to my letters are concerned, I want you to cut them out
entirely or postpone the answers indefinitely or forget them
altogether.

We will probably send you more or less unimport-

ant gossip to throw a little lighter coloring on the picture,
but please don't fell under any necessity of following it up
in your answers.

If it is necessary for Dr. Treman to associate himself with Dr. Sewall, and if he needs any real expert assistance in reading the medical riot act, tell him not to hesitate
to call upon me and I will do my part, as the patient is worth
our very best skill and ability.

,-DERAL RESERVE BANK OF NEW YORK

-4-

To

1/10/17.

Mr. Strong.

With kind personal regards and my very best wishes that
every week will add something to your surplus strength and that
you are having more and more peace of mind.

It certainly has

been a great joy to me to have been brought into such close relations with you, my dear Governor, and this association has developed in me a very sincere affection for you.
Sincerely yours,

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM







C 0 P Y.

January 5th, 1917.

Hon. R. H. Treman,
Federaf-77serve Bank,
Corner Pine et Nassau Streets,
New York City.
dear Mr. Treman:

I have your letter of yesterday.
that any committee was appointed.

I regret very much

After Harding's letter to you

of December 30th, of which you enclose a copy, and which 1 should
regard as a direct personal affront to the whole Board, I would
have refused to colgply with any suggestion that the members of the

Board might make touching the committee or anything else.
very sorry for Curtis.
Yours very truly,'

(Signed) Franklin D. Locke.

I am

FEDERAL RESERVE BANK
OF NEW YORK
JAN1 1 1917
January 10th, 1917.

My dear Governor:

I reached the bank late this morning because of a
delayed train and found your document in re Bank of England
and Bank of France matters.

Glancing hurriedly over it, I

saw that it pertained to the situation as it had developed and
contained recommendations as to future action, and as it was
then 10:20 and our Committee was expected to have its session
with the Board in Washington at 10:30, I 'phoned the Committee,
talking with Mr. Peabody, reading him the essential extracts
from your letter which had a bearing on their mission and having him take a copy of same at that end so he could transmit
it to the other two members of the Committee.

I impressed

upon him that this was marked "Confidential" and that in transmitting it to him I assumed that he would treat it as such in
every way, but use -Che information contained therein because

of its very great bearing on the matters which they were discussing with the Board.

He told me that he would see that it was

treated in accordance with my request, and I hope you will approve of my taking the liberty of conveying the knowledge to him.
I felt that without question they should have this information if
they were to properly represent this bank and its position and
especially your own position as you were the one most concerned
in the violation of the agreement.




..:SERVE BANK OF NM YORK

To

................

Mr. Strong.

1/10/17.

Mr. Curtis is still at home with his ankle but hopes to
be around some time this week and Mr. Jay is home to-day writing
his annual report so that it was a matter necessitating immediate
action and I used your letter as stated above.
Hoping that you will feel that I was justified in taking this liberty under the circumstances,

I remain,

Very sincerely yours,

Psq.,
Benjamin Strong,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK

g4,P

January llth, 1917.

JAN16 1317
My dear Governor:

Messrs. Towne and Woodward returned from Washington
this morning and

Towne telephoned

Jay and myself giving

some details of their experience making the summary that the
trip was well worth while, that he felt they had accomplished
practically all that they had set out to do and that much of
the trouble was -due to Governor 1-larding's illness.

Secretary McAdoo presided at the conference which
lasted nearly two hours, then they lunched with the Board.

Mr.

Woodward is coming in later today to give us more detail and
Mr. Peabody remained in Washington to go into the matter more
fully with individuals in order to clean up the situation, if
possible.

The Directors at their meeting last Wednesday authorized me to make application to the Federal Reserve Board at Wash-

ington for permission to enter into reciprocal bankng relaticns
with the Bank of France and I contemplated making the same formal
application that I had made 1,st August in re the Bank of England
matter.

Mr. Peabody asked that the matter be held up until the

Committee had been in Washington and I assume that he personally
will talk over the matter with Mr. Warburg, Governor Harding and
the others, although Mr. rlowne stated that the Committee did not




1/11/17.

To Mr. Strong.

.AL RESERVE BANK OF NEW YORK -2.-

touch upon that subject yesterday.

We do not wish to do anything.,

however, in this matter without your knowledge and approval unless

we have to act quickly, as you are expected to carry on the negotiations with the Bank of France and I am writing to ask you to wire

me on receipt of this letter whether you approve of our making formal and immediate application to the Reserve Board for permission
to complete negotiations with the Bank of France.

We assume that there is the possibility that if we make
such formal application and they approve of it and authorize it,

they will immediately make announcement of this action and this you
Personally, I feel that as the news-

will, of course, consider.

papers published within a day or two after the Bank of England matA,

ter came out, a cable apparently originating in Paris that the
Bank of France would enter into the same relations with the New
York Bank presumably as the Bank of England, since Benjamin Strong,
Governor of

the Federal reserve bank, was in Paris last spring

making preliminary arrangements looking toward such reciprocal relations-

the announcement by our Reserve Board that they had author-

ized this would have no effect other than a favorable one at the
present time.

-

We shall await your telegram, however,

before mak-

ing this formal application.

Governor Rhoads care over to-day and lunched with Curtis,

Kenzel and myself, at which time we discussed the sale of the 3 per
cent foreign bonds.

About', ..6,000,000. will be offered by the re-

serve banks and I enclose copy of a letter which we are proposing to
send to possible purchasers, it being understood that each reserve




FEDERAL RESERVE BANK OF NEW YORK

-3-

Mr, Strong.

To

1/11/17.

bank will be advised of this action and will be requested to send
a similar letter to any parties in their district who they thrink

would be interesled in such purchase.

In view of the announce-

ment made in the newspapers that a government bond issue was to
be expected soon, we may not have very strenuous bidding.
So far as we can learn unofficially, it is thought
that the government may put out some 3

one year notes tempora-

rily to tide them over the first of duly, after which they will
be in better position to determine the need of a bond issue.
Our new vault is practically completed, just a few
finishing touches being put on this week and on Saturday we hope
to move into it.

This will be a great saving of time, especial-

ly for the officers.

Call money is 1 3/4 % to-day and there are indications
We arc not securing any ac-

of very easy money for a period.

ceptances of any amount as the open market has absorbed practically all that are being offered.

I assume that it would be well for

us to maintain our rates at least for two or three weeks longer
until we can see more clearly the trend of things, and meanwhile
aid in the open market development.

M. do Neuflize called to-day and we informed him that we
had received a letter from you stating that you had received a cable
from M. Pallain to the effect that he had answered your letter and
same was coming forward by the next mail, that such letter had not
arrived, but we understood that negotiations looking toward reciprocal relations were thus being carried on and that from the cable grams exchanged we though there was complete understanding between




FEDERAL RESERVE BANK OF NEW YORK

-4-

To

Mr. Strong.

1/11/17.

M. Pallain and Governor Strong and that we anticipated a favorable
result of such negotiations.
M. de Neuflize stated that he would prObably sail soon
but did not give a definite date and we told him that if he called
before sailing, we might be able to give him further information,
but we could assure him that it would be our sincere hope and belief that arrangements entirely satisfactory to both insitutions

cwould

be concluded.

I assume that you will ascertain from M. Pal-

lain the proper status of :.. de Neuflize.

With kind personal regards and best wishes, 1 remain,
Very sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM




-

FEDERAL RESERVE BANK
OF NEW YORK

'U.
JAN1 9 1917

January 13th, 1917.

My dear Governor:

Enclosed, I hand you copy of a letter received from
Mr. Meredith, President of the Bank of Montreal.

I shall be

glad to have yolk' comment upon it and advice as to our action.

Messrs. Woodward, Jay, Curtis and myself are inviting Messrs. Vanderlip, McCarrah, Wiggin, Baker and Alexander
to a luncheon on next Wednesday to meet Messrs. Harding and
Delano.

Mr. Woodward gave us an account of the meeting of
our Committee with the Federal Reserve Board at which Secretary McAdoo presided.

As soon as Mr. Towne began speaking,

the presiding officer suggeste_d that it would be necessary

to have an official stenographer at the conference and he
then proceeded to set forth his views as to the Federal Reserve Board being .a public body and thcre were no individual

rights; that the Board was subject to investigation and
bound to make public their actions for the benefit of the
great American public; that the actions of the Board were not
subject to review or criticism, etc. etc.
uneasy and restless.

Audience seemed

Mr. Towne proceeded with the statement

of the position of this bank and Mr. Woodward during the discussion injected the inquiry as to

whether

this was a meeting

looking toward cooperation or one of investigation.




Mr. Strong.

To

FEDERAL RESERVE BANK OF NEW YORK

1/13/17.

Mr. Towne pointed out that the Directors of the bank
were acting at considerable sacrifice to themselves and it was
necessaryto have harmony
Federal Reserve Board.

in the relations between them and the
r. Woodward wanted to know, whether

in future it would be advisable in view of the attitude of the
presiding officer, for the Federal Reserve Bank of New York to
consider in matters requiring secrecy and confidence that they
could be transmitted to the Federal Reserve Board before it was
time to announce them publicly, or whether they would be able
to feel that matters submitted to the Board would be treated in
confidence.

No answer advanced.

It was the general impres-

sion of the Uommittee that Mr. Towne presented the subject very
well and five members at least of the Board were in favor of
developing proper relations with the New York Bank and assurance
was given to that end.

Apparently, it was a very interesting conference and
lasted for two hours, probably resulting in a betterment of conditions, whatever the stenographer's record may show.
I hope that matters are moving along smoothly with you

and shall hope to write you more fully tomorrow.
With kind regards, I am,
Very sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK
JAN 19:

January 15th, 1917.

My dear Governor:

We were all very much delighted to receive a call from
Mr. George Roberts who came in this morning to report his visit
with you, especially since he was able to report that you were
apparently in such good health and vigor.

Had he not been inform-

ed that you had been ill, he would not have known it from your
actions and appearance, all of which is most encouraging.
I anticipate having a talk with Messrs. Woodward and
Peabody this week as to permanently filling the position I am occupying temporarily and

I shall be glad to have you advise me

your own views as to what date you think we should work to.

Per-

sonally, I should be glad to be relieved not later than around the
first of May, provided satisfactory arrangements can be made for
filling my place by that time.

be able to return

to

I have

thought

possibly you would

New York for a visit in May and could then

discuss with the new occupant of the position plans, etc. before
you go abroad should

it

be 'thought advisable for you to do so.

You must have enjoyed having Mr. Roberts with you and
giving you opportunity to discuss many matters.

I gave Mr. Kent the copy of your letter and he reported
Saturday afternoon that being unexpectedly absorbed with another
matter, he would not be able to report on the letter until to-day,
Monday, and I assume that it will be returned to-day.




FEDERAL RESERVE BANK OF NEW YORK

To

...

Mr. Strong.

1/15/17.

We had a call on Saturday from ex-Senator Burton who has
just been elected President of the Merchants National Bank, the
specific motive for his visit being to pay off a note rediscounted
with us a few days for a little less than four millions.
We received a letter this morning from the Reserve Board
approving payment of the emergency salaries except they exenwted
the Federal Reserve Agent from participation in this payment. They
approved of all the salary advances recommended including that of
Mr. Curtis, but the approval in Mr. Curtis' case was based on the
condition that he no longer receive a salary as Secretary of the
Governors Conferences.

They state further in this connection that

should a charge against the other reserve banks be justified by
reason of the time given by an official of the New York Bank to
their work, the bank itself and not the individual should receive
the payment.

Mr. Curtis is in Washington to-day attending a meeting
of the Bureau of Research but will return to-morrow morning.
I am enclosing copy of a letter which we are sending
Mr. Calkins, Deputy Governor at San Francisco, which I would be
glad to have you look over and if you think our position not
please advise us.

sound

I conveyed to Mr. Kenzel before he wrote the

letter my own views that insofar as we could we should accomodate
the Federal Reserve Bank of San Francisco because conditions there
are somewhat different from those in our district.
By the way, I heard through a friend of mine in New York
who is close to Governor Kains, that he has had quite a .serious

time with ulcers of the stomach and that while he has not had an
operation he has been very seriously ill, but is now reported improving rapidly.



"RAL RESERVE BANK OF NEW YORK

- 3-

To

Mr. Strong.

1/15/17.

I learn from Mr. Curtis that inadvertently I told you
the officers were authorized by the Directors to make application
to negotiate with the Bank of France; what I should have said was
that they were authorized to make formal application to appoint
the Bank of France as our agent and correspondent in France. This
we have not done yet and will hold it in abeyance until I am advised by you whether we shall make this application now while negotiations are pending or wait until we have concluded everything
and then file our formal application and advise them at that time
as to details.

Very sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK

134.k

j42 5 1917
January 16th, 1917.

My dear Governor:
These arff exceedingly busy days for us but if we are
all permitted to 'keep at work we can handle things very nicely.

We had our Directors meeting to-day and elected Mr.
Morgan a member of the Advisory Council for 1917 and wr. Jay
and I have just returned from his office, having notified him
of his appointment and election and he seemed very glad to
serve.
etc.

Said he was deeply interested in the Reserve System,

I told him that our new vaults were now completed and

that they were at his service in case he should desire to store
some gold es they have done before.

I will try and write you more fully about the acceptance rates to-morrow but this week the $50,000,000 French Industrial Credit acceptances will he on the market and we are inclined to hold a little, above the market for a few days longer when
we shall undoubtedly Place our rates more in accord with the mar..,

ket andpIrchase more acceptances.

I am enclosing a sample report which Washington sends
us now each day giving the renewal credits held in the System.
With kind regards, I remain,
Sincerely yours,

Deputy Governo

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.







POSTAL

-r IEL.em Ft .45,

COMPANN,

H

NIGHT LETTERGRAM

THE POSTAL TELEGRAWBABIE64PAPCII.PICORFkiBATZ17.4 TRANSMITS AND DELIVERS THIS NIGHT LETTERGRAM SUBJECT TO THE
TERMS AND CONDITIO
CPRiT.N EcJ OF THIS B K.
CLARENCE H. MACKAY, PRESIDENT.

liECEIVED AT

DELIVERY 1,19.

1LEPHCIaE MA114 404:04.

- INDEPENDENT
4--P!

PROGRESSIVE

COMPETITIVE

165 NI

TT,

y"

2244M Tan 16
cb

York NY Jan 15 17

Denjamin Fltong
4100 7ontview 7ouievard -flenver Colo

7ent makes

following suggestions

seven, section B .If we should
seven three quarters when our
say seventy eight

or gold

occasion him loss.Stop, kent

regarding

your letter stop, paragraph

order gold earmarked at seventy

correspondent was obliged to pay

bidding,it might
has no suggestion that will

in times of active

meet situation but thought possibility should be
sides.gtop,Page four,section
4, line, TO,
'---ether word "Less" shoul.d

not read "Plus".

understood on both

Stop

queries
.

a

.

S.

OPERATOR'S NOTATK*41,,

TIME SENT, ETC.
ENGLAND
N WROVHOLAND

Id
ti\ ?

PACIFIC

1110'..I°A.PAN

VANCouvE

OCEAN

SAN FRAN SCO

_..8YOKOHAMA

1111%0

AIM all a TAW*
irOMPV.

MIDWAY

to,
THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD.

EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH.

THE POSTAL TELEGRAPH-CABLE COMPANY (INCORPORATED)
TRANSMITS AND DELIVERS THE WITHIN NIGHT LETTERGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:
The Company will receive, not later than Midnight, NIGHT LETTERGRAMS, written in plain English, to be transmitted only for delivery on the morning
of the next ensuing business day, at rates still lower than its standard night message rate, as follows:
The standard day rate for a ten-word day message shall be charged for the transmission of a ,NIGHT LETTERGRAM, containing fifty words or less, and
one-fifth of the standard day rate for a ten-word day message shall be charged for each additional ten words or less in such NIGHT LETTERGRAM.
To guard against mistakes or delays, the sender of a message should order it REPEATED: that is, telegraphed back to the originating office for
comparison. For this one-half the unrepeated message rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED
MESSAGE AND PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the message and this Company as follows:
1.
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED message, 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 message, 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 MESSAGES.
I. 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
message, whether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED message rate, at which amount this message, if
sent as a R
REPEATED message, is hereby valued, unle a greater value is stated n writing hereon at the time the message is offered to the Company for
unless
i
transmission, and an additional sum paid or agreed to be paid based on such value equal to one-tenth of one per cent. thereof.
8. The Company is hereby made the agent of the sender, without liability, to forward this message over the lines of any other Company when necessary
to reach its destination.
4.
Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be
made to cover the cost of such delivery.
I. No responsibility regarding messages attaches to this Company until the same are presented and accepted at one of its transmitting odic.: and if any
message is sent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the message and any notice or
instructions regarding It to the Company's agent in its said office.
e. This Company shall not be liable for damages or statutory penalties in any case where the claim is not presented in writing within thirty days after the
message is filed with the Company for transmission.
In further consideration of the reduced rate for this special "NIGHT LETTERGRAM" service, the following special terms are hereby agreed to:
NIGHT LETTERGRAMS 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 LETTERGRAMS at destination, postage prepaid.
NI5iT LETTERGRAMS shall be written in plain English. Code language is not permitted.
T1
ve terms and conditions shall be binding upon the receiver as well as the sender of this NIGHT LETTERGRAM.
NO rMPLOYE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING.
CHARLES. fii.A.DF
ADAMS.

CLARENCE H. MACKAY, PRESIDENT.
EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER.

CHARLES P. BRUCH,

VICE-PRESIDENT.

TH... 'FASTEST TELEGRAPH SERVICE IN THE WORLD






Ros-rAL TELEGRAPH CABLE COMPANY

NIGHT LETTERGRAM

THE POSTAL TELEGRAPH-CABLE COMPANY (INCORPORATED) TRANSMITS AND DELIVERS THIS NIGHT LETTERGRAM SUBJECT TO THE
CLARENCE H. MACKAY, PRESIDENT.
.R.IWtfi..A.t4 K.
TERMS AND CONDITIONS P019,14ttib 6-NFrFd VA'dK

920 -17 ill

LREF'StER M.Inaner

DELIVERY NO.

1314,

"TELEPHONE MAIN .4500

-

COMPETITIVE

IN
4-622

23 Try

PROGRESSIVE

7? en ctrong

Denver Colo

he'..yt 2-

Same section he queries whether

if correspondent required us to

earmark large quantity bars which
we might not under agreement

ston;Paragraph
And should it

it later released to us

have to absorb asssay office charge.

fifteen he suggests adding at end following words
be possible

to do so.,,

Stop. 7hinks otherwise

we indicate willingness to do something which may be impossible.Stop.
'Please instruct which if any of these points 7,rou wish dealt with either

in original letter Or in

supplementary letter
R H Treinan

POSTAL TELEGRAPH-COMMERCIAL CABLES
a

-

EWPOUNDLAND

J
11111112E41rieli.APAN
10,-.4:0KOHAm.

PACIFIC

OCEAN

VANCOL/VE

SAN FRAN ISCO

WA

BERMuow

ATLANTIC
OCEAN

Ft

eT. VINCENT

THE GREATEST TELEGRAPH AND GABLE SYSTEM IN THE WORLD.

EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH.

THE POSTAL TELEGRAPH-CABLE COMPANY (INCORPORATED)
TRANSMITS AND DELIVERS THE WITHIN NIGHT LETTERGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:
The Company will receive, not later than midnight, NIGHT LETTERGRAMS, written in plain English, to be transmitted only for delivery on the morning
of the next ensuing business day, at rates still lower than its standard night message rate, as follows;
The standard day rate for a ten-word day message shall be charged for the transmission of a NIGHT LETTERGRAM, containing fifty words or less, and
one-fifth of the standard day rate for a ten-word day Message shall be charged for each additional ten words or less in such NIGHT LETTERGRAM.
To guard against mistakes or delays, the sender of a message should order it REPEATED; that is, telegraphed back to the originating office for
comparison. For this one-half the unrepeated message rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED
MESSAGE AND PAID FOR AS sum, in consideration whereof it is agreed between the sender of the message 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 message, beyond the
amount received for sending the same; nor for mistakes or delay's in the transmission or delivery, or for non-delivery, of any REPEATED message, beyond
fifty tunes 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 MESSAGES.
2. 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
message, whether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED message rate, at which amount this message, if
sent as a REPEATED message, is hereby valued, unless a greater value is stated in writing hereon at the time the message 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.
S.
The destination.
to reach itsCompany is hereby made the agent of the sender, without liability, to forward this message over the lines of any other Company when necessary
Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be
made to cover the coat of such delivery.
No responsibility regarding messages attaches to this Company until the same are presented and accepted at one of its transmitting offices; and if any
message is sent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the message and any notice or
Instructions regarding it to the Company's agent in its said office.
ft. This Company shall not be liable for damages or statutory penalties in any case where the claim is not presented in writing within thirty days after the
message is filed with the Company for transmission.
In further consideration of the reduced rate for this special "NIGHT LETTERGRAM" service, the following special terms are hereby agreed to:
NIGHT LETTERGRAMS 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 LETTERGRAMS at destination, postage prepaid.
NTf'LETTERGRAMS shall be written in plain English. Code language is not permitted.
TL
T

/ove terms and conditions shall be binding upon the receiver as well as the sender of this NIGHT LETTERGRAML
N EMPLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING.
.
.
.
CLARENCE H. MACKAY,. PRESIDENT.
CHARLES C. ADAMS,
EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER.
CHARLES P. BRUCH,

.........

VICE-PRESIDENT.
t-,

VICE-PRESIDENT.

THC-,)FASTEST TELEGRAPH SERVICE IN THE WORLD



OPERATOR'S

SENT, ETO.
NOTATIONTIME




:CABLE. CDNIP

PD 91ALE 1.-EGR,A10

NIGHT LETTERGRAMI

.1,
.

THE POSTAL TELEGRAPH-CABLE COMPANY (INCORPORATED) TRANSMITS AND DELIVERS THIS NIGHT LETTERGRAM SUBJECT TO THE
CLARENCE H. MACKAY, PRESIDENT.
TERMS AND CONDITIONS PRINTED ON THE BACK OF THIS BLANK.
CHECK
TIME FILED
COUNTER NUMBER

.

U.

DEPENDENT

COMPETITIVE

PROGRESSIVE

BEND the following NIGHT LETTERGRAH. subject to
the tarots on back hereof, which are hereby agreed to.

Lc,

January 15th, 1917.
Benjamin Strong,
4100 Montview Boulevard,
Denver, Colo.

Kent makes following suggestions regarding your letter. Stop. Paragraph seven, Section B.
If we aaould order gol e-rm,Irked at seventy
seven three quarters wh,n our correspondent was obliged to pny say
seventy eight for gold in times of aeive bidding, it might occasion
him loss. Stop. Kent has no suggestion that will meet situation but

thought possibility should b understood on bot.,-, sides. FA-op. Page
four, section A, line two, he queries whether word"less" sh,uld not
read "nlus". Stop. Same section, he queries whether if correspondent
required us to elrmark large quantity bars which it later released to
us we might not under agreement havc to absorb Assay office charge.
Stop. Paragra7lh fifteen, he sugge:As adding at end following words,
"and should it be possible to do so." Stop. Thinks otherwise we indicate willingness to do something which may be impossible. Stop. Please
instruct which if ny of these points you wish dealt with either in
original letter or in sup'lementary letter.
PJ/VCM
Charge

R. H. Treman.

Fe:Aral Reserve Bank,
120 Broadway,
New Yor' City.




'AL TELEGRAPH-CABLE COMPANY CONNECTION THE COMMERCIAL CABLE COMPANY

Es AND 4]

THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD.

EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH.

THE POSTAL TELEGRAPH-CABLE COMPANY (INCORPORATED)
TRANSMITS AND DELIVERS THE WITHIN NIGHT LETTERGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:

The Company will receive, not later than midnight, NIGHT LETTERGRAMS, written in plain English, to be transmitted only for delivery on the morning of the
nest ensuing business day, at rates still lower than its standard night message rate, as follows
The standard day rate for a ten-word day message shall be charged for the transmission of a NIGHT LETTERGRAM, containing fifty words or less, and onefifth of the standard day rate for a ten-word day message shall be charged for each additional ten words or less in such NIGHT LETTERGRAM.
To guard against mistakes or delays, the sender of a message should order it REPEATED, that is, telegraphed back to the originating office for comparison. For
this, one-half the unrepeated message rate is charged in addition.
Unless otherwise indicated on its face. THIS IS AN UNREPEATED MESSAGE AND PAID
AS SUCH, in consideration whereof it is agreed between the sender of the message and this Company as follows
The Company shall not be liable for mistakes or delays in the transmission or deliver, or for non-delivery, of any UNREPEATED message, 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 message, 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 MESSAGES.
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 message,
whether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED message rate, at which amount this message, if sent as a REPEATED
message, is hereby valued, unless a greater value is stated in writing hereon at the time the message 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 message over the lines of any other Company when necessary
to reach its destination.
Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be made

to cover the cost of such delivery.

No responsibility regarding messages attaches to this Company until the same are presented and accepted at one of its transmitting offices; and, if any message is
sent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the messageand any notice or instructions
regarding it to the Company's agent in its said office.
This Company shall not be liable for damages or statutory penalties in any case where the claim is not presented in writing within thirty days after the
message is filed with the Company for transmission.
In further consideration of the reduced rate
epee' '!NIGHT LETTERGRAM" service, the following special terms are hereby agreed to
(a) NIGHT LETTERGRAMS may at the opticni.
Company be mailed at destination to the addressees and the Company shall be deemed to have
discharged its obligation in such cases wI1 respe
'y by mailing such NIGHT LETTERGRAMS at destination, postage prepaid.
(6) NIGHT LETTERGRAMS shall be written hi plain Englis Code language is not permitted.
The above terms and conditions shall be binding upon the receiver as well as the sender of this NIGHT LETTERGRAM.
NO EMPLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING,
CHARLES C. ADAMS, VICE-PRESIDENT.

CLARENCE H. MACKAY, PRESIDENT.

EDWARD REYNOLDS. VICE-PREST. AND GENERAL MANAGER.

CHARLES P. BRUCH, VICE-PRESIDENT.

FEDERAL RESERVE BANK
OF NEW YORK
JAN2 5 1)1/
January 17th, 1917.

My dear Governor:

At our Board meeting yesterday, the special committee
appointed to visit Washington reported the result of their visit
and I asked Mr. Peabody if he would not write you in detail so
that you might have his impressions at first hand, since he remained two days longer than the other members of the committee
and had some personal interviews.

The discount rates remain unchanged.

In discussingac-

ceptance rates with Mr. Woodward and afterward with Governor Aiken
by telephone, they agreed that it would be wise to continue for a
few days longer rates which are, as you state, higher than the
outside market.

This week, however, the new French Industrial

Credit acceptances will be on the market and as they are renewal
credits, it seemed wise to wait a few days and then we will undoubtedly bring our rates down nearer where they should be, probably 1/8 or 1/4 less, as ruling rates now seem to be about 2 1/2
to 2 3/4 instead of 3 to 3 1/4.

The matter of negotiations with foreign banks was referred to the Governor of the bank and the Executive Committee
and we will try to keep in touch with you.

We had a suggestion

as to making an arrangement with the Banco de la Nacion, Buenos
Ayres.




Mr. Jay and I felt it would be wise to ask Lr. Warburg

Mr. Strong.

To

FEDERAL RESERVE BANK OF NEW YORK

Jan. 17, 1917.

to suggest the individual whom it would be best to address and

make any suggestions as to our correspondence to this particular
bank, he having visited it.

We will submit the matter to you,

of course, before sending anything forward.
We have your telegram as to suggestions made by Mr.
Kent and I expect 1ir. Curtis to go over the detail matters with

the Assay Office and you can be sure that we will lose no time
unnecessarily in the Bank of England matter.
Regarding the collection of checks on non member banks,
it was thought wise to hold the matter of collecting on non member banks through express companies for a short time until the
fate of the amendments in Congress might be determined.
I invited the Directors to inspect the new vaults which
they did and apparently seemed highly pleased.

I wish you could

see them yourself as, of course, you will later.

Today, we are to have Governor Harding and Mr. Delano
with us and expect to give up practically the whole day to them,
having them for luncheon at the Bankers Club with Messrs. Hepburn,
Martindale, Alexander, McGarrah, Thorne, Clarke and possibly one
or two others.

Mr'. Wiggin was away and Mr. Vanderlip accepted

but last night was subpoenaed to go to Washington with Mr. Morgan
and others in the "leak" matter.

I will take up the other matters as soon as I can reach
them.

With kind regards, I remain,
Very sincerely yours,

---11±1.177-77)
Deputy Gdvernor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colo.




FEDERAL RESERVE BANK
OF NEW YORK

January 17th, 1917.

My dear Governor:

With further reference to negotiations with the Banco
de la Nacion, Buenos Ayres, I enclose copy of letter I wrote to
Mr. Warburg together with his reply outlining a letter.

It

seems to me,and Yr. Curtis and Mr. Jay concur, that all this
correspondence should be sent in your name and with your knowledge.

I should frame the letter I think somewhat differently

from Mr. Warburg's which I assume is in the nature of a suggestion only.

I suppose you will write a letter, sending it to us

to forward and keeping a copy for your own files.

I assume

then that we should send a copy of this letter to Mr. Warburg
as he suggests for translation and his additional personal letter.

I expect to write you to-morrow the result of the
luncheon to-day but ,cannot reach such letter now.

Kindly return Mr. Warburg's letter for our files.
With kind regards, I remain,
Very sincerely yours,

ATV'7:'":1-1744444n

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM




7T

prir/AL RESERVE

BANK

JPC/CPP

New York, January 18,17.
nub

BE MAIM))

JF NEW YORK

_ienjamin Stronp,

4100 7entview Poulevard,

CONFrOKATIcON OF TELEGR AM

Suggest following chanaes in your letter to England
chan7e Pritish to English Paragraph E change it was to they were

Last
WehavIANWASIdgraNdUmilinWu ltfiatgl3Pm9t:the Bank of rngland quote to quote the

Panic of England and char e it ac
z agrapa clance L1erLCAI laint to jniteo Jto.tes Paragraph
D change it was to they were At end of sentence odd the following quote
excluding Assay Office charge above mentioned which will be borne by the
If gold bars are returned they may be subject to a
amountin to one dollar
The Fode2a1 Reserve r.ank of
thousand ounces wich is the existing charge
New York hoaever will endeavor to have this &large abrogated by the Assay
Office and if successful will immediately notify the Bank of 'England quote
Pace six
Paragraph tine next to last line change dealt with to undertaken
line seven after the word bills insert quote bearing the names of English
Add at end of paragraph the following quote
drawers or indorsers quote
should it be possible to do so quote Paragraph seventeen omit whole para-

lank of Ragland stop

further Assa7 Office charge for remelting

graph stop

Suwrest you rewrite letter making such changes as you
R. H. TREMAN

red.

Res. Bk.,
Equitable Pldg.
Chge.

B-2



desire.

Form

M .,
Blue

_

Night Me ege
NT,

If no

CLASS OF SERVICE

WESTERNUNIOA

Day Letter

words)th is is a day message. Otherwise its character is indicated by the

.ox. BRANCH °MGR, 2301 E. COLFAT
TELEPHON1 TUX 2645.
29DRH 214 BLUE

RECEIVED AT

NIte

Night Letter

NL

'If none of these three symbols
appears after the check (number of
words) this Is a day message. Otherwise Its character is indicated by the

N EWCOM R. CARLTON DRESIDENT

symbol appearing after the check.

Blue

Night Message

TELIL. 1, AM

'.etter
NL
these three symbols

appears after the check number of

symbol appearing after the check.

Fe/fr Cc*ir

Q NEWYORK 415P JAN 18 1917
BENJAMIN STRONG

4100 MONTVIEW BLVD DENVER COLO
SUGGEST FOLLOWING CHANGES IN YOUR

LINE FIVE

LETTER TO ENGLAND PAGE THREE

CHANGE BRITISH TO ENGLISHt PARAGRAPH E CHANGE IT

WAS TO THEY WEREILAST

OF THE BANK OF ENGLAND

LINE CHANGE QUOTE FOR ACCOUNT

QUOTE TO QUOTE THE BANK

OF ENGLAND AND CHARGE ITS

ACCOUNTIQUOTE PAGE FOUR LINE

TWO CHANGE LESS TO PLUSI PARAGRAPH B CHANCE AMERICAN MINT
TO

UNITED-STATES/PARAGRAPH

WERE AT END OF SENTENCE
 OFFICE CHARGE
ASSAY


D

CHANGE IT WAS TO THEY

ADD THE FOLLOWING !QUOTE EXCLUDING

ABOVE MENTIONED

SYI'BOL

Day Message

me&C.A

Nile

112 4 1

WHICH WILL BE BORNE BY




Form 1204

D

Blue

Night Message

Nite

Night I after
NL
If none
'se three symbol
appears arter..ie check (number of
words)th is is a day message. Otherwise its character is indicated by the

WESTE

,r.vo

U ION

.

Day Message

TEL

AM

NEWCOMR CARLTO. .RESIDENT

Day Letter

Blue

Night Message

,WESTERN UNION

symbol appearing after the check.

CLASS OF SERVICE SYMBOL

Nite

NL
Night Leiter
If none of these three symbols
appears after the check number of
words)this is a day message. Otherwise Its character Is indicated by the

symbol appearing after the check.

is

L

RECEIVED AT

TELEPSONS YORK 2510.
29D RH 214 BLUE --.2ND PAGE---

A

FURTHER ASSAY OFFICE CHARGE

DOLLAR PER THOUSAND OUNCES WHICH

FOR REMELTING AMOUNTING TO ONE

I::.

1 4k--

IF GOLD BARS ARE RETURNED

THE BANK OF ENGLAND STOP
THEY MAY BE SUBJECT TO

''''

IS THE EXISTING CHARGE.THE FEDERAL RESERVE BANK OF NEWYORK

THIS CHARGE ABROGATED BY THE

HOWEVER WILL ENDEAVOR TO HAVE

WILL IMMEDIATELY NOTIFY THE BANK

ASSAY OFFICE AND IF SUCCESSFUL

NEXT TO LAST LINE CHANGE

OF ENGLANDIQUOTE PARAGRAPH NINE
DEALT WITH TO UNDERTAKEN/PAGE

SIX LINE SEVEN AFTER THE

i

WORD BILLS INSERT QUOTE BEARING
OR INDORSERS QUOTE ADD AT
QUOTE SHOULD IT BE POSSIBLE

THE NAMES OF ENGLISH DRAWERS

END OF PARAGRAPH THE FOLLOWING
TO DO SOIQUOTE PARAGRAPH

SEVENTEEN OMIT WHOLE PARAGRAPH STOP

SUGGEST YOU REWRITE LETTER MAKING




Form 1204
VICE

SYMITOL

iessage

Uay Letter

Wee

Night Messrge

WESTE

Nite

111,, Letter

NL
If run
,base three symbols
appears after the check number of
words)th is is a day message. Otherwise its character Is indicated by the

symbol appearing after the check.

UNION

Le,, 4

AM

NEWCom m CAR LTO. n RESIDENT

PRA NCH OFFICE, 230/ E. 0OLP Ai ,
-2, I e7,;k:-prgtrUZ
29D R H 21 4 - Batir.TatAt

MEWED AT

Day Message

X

SUCH CHANGES AS YOU DESIRE
R H TPEMAN
417PM

Day Letter

Blue

Night Message

WESTERN UM

TEL

CLASS OF SERVICE SYMBOL

Nita

NL
Night Letter
tif none of these three symbols
appears after the check number of
words)this is a day message. Otherwise Its character is indicated by the

symbol appearing after the check.

FEDERAL RESERVE BANK
OF NEW YORK

Janu:: 19th, 1917.
Dear Governor Strong:

"N25

1;;7

Answering yours of January 9th, plense do not worry
about the difficulties that arose in connection with our Washington relations.

When Governor Hamlin was here on Wednesday

he went into detail as to this matter, the pressure that was
brought to bear upon him when he was in bed with the grippe.
requiring him to get up and go to the office, that he had left
certain matters to Dr. Willis for attention and they had not
been taken care of as they should have been and thst his illness
and his condition because of his illness were really the contributing causes of the unpleasant situation which developed.

He

was very nice about the whole matter and I think his visit here
taken with

the

visit of our Committee to Washington have very

greatly improved the situation.

Governor'Harding assured me that hereafter so long as
he was Governor, all matters pertairing to the operation of the
bank and its administration along those lines would be sent direct to the Governor and such matters as belonged peculiarly to
the Federal Reserve Agent would be sent to him and where there
was a question between the two, they would forward it to the
bank so that it would re=ich.the proper one or would send a copy

to one of the two officers and a carbon to the other, which would
seem to be a good working basis.




FEDERAL RESERVE BANK OF NEW YORK

-2-

To

Mr. Strong.

1/1V17.

Personally, I did feel hurt at the letter he wrote in
answer to mine, as it did not seem to me that arything in my letter could be interpreted as requiring the reply which I received.
I, of course, have felt the responsibilities of this position,
and the administration of its duties was

made more difficult be-

cause of the absence of Mr. Jay for practically three months be-

tween his vacation and his illness and his complete absorption
in the Clayton Act matters for most of the remaining time up to
January 1st.

However, matters seem to be running along smoothly

and my greatest embarrassment is the feeling of my limitations.
I understand that Mr. Woodward has been writing you
about the permanent organization, that is, some one to act as
Deputy Governor to supplement your work and to take my place.

I

merely want to reiterate my position that I am willing to step
out whenever the directors and you feel that it is advisable for
me to do so.

If it should be your desire to have my successor

accompany you to Europe in May or June in case that should be decided upon and you should think it advisable for me to stay here
until immediately after his return, or on the other hand, should
it seem best to you to have my successor come earlier to be here
for a time before going to Europe,to familiarize himself with the
details of this work, I am willing to stay for a while with him
to help him get hold of things or I will withdraw before he comes,
as may seem best.

My only desire is that I shall not be expected

to remain all Summer.

Now, my dear Governor, be perfectly frank and tell me
when the time arrives for a decision on these matters just what




FEDERAL RESERVE BANK OF NEW YORK

-3-

To

Mr. Strong.

1/19/17.

you want and feel sure that I will do my best to carry out your
Most important of all is to have you arrange these

desires.

matters so that they will best serve the purpose of bringing
you back to this bank in the best shape possible to continue
the great work you have done and are to do.

In your letter of

January 10th. you state "at no time have I felt the slightest un-

easiness regarding the affairs of the bank so long as you were
there" and this did me, I assure you, a vast amount of good because I have personally been uneasy many times about my inability
to contribute more to the successful operation of the bank.

So

long as I stay, I shall do my best and shall be very glad if the
bank does not suffer by my connection with it.
Mr. Palmer and Mr. Starek were evidently quite surprised
.at the suggestion in regard to the reorganization, but Mr. Palmer
called at the bank yesterday and I had quite a long talk with him
and I think he now understands the matter and things will be all
right as far as he is concerned.
Regarding acceptances, Mr. Kenzel is writing you fully
to-day I think, but there seems to be general agreement that it
would be wise to try for awhile having our rates above the market
and results have shown I think that there is a market for acceptances when the rates are satisfactory.
ed that

in

Governor Harding suggest-

view of the proposed British loan of $250,000,000, the

French Industrial Credit of $50,000,000 coming out now and in addition the

l00,00O,000 of 3 per cent United States notes which the

Secretary of the Treasury will probably bring out
run quite liquid.




soon, we should

It is possible that the Board may have in mind

FEDERAL RESERVE BANK OF NEW YORK

0

...

To

7! .....

Mr. Strong.

1/19/17.

that the Federal reserve banks should absorb a good proportion
of the 3

notes, but he did not so indicate.
Regarding the Bank of France negOtiations, as I wrote

you, we have made no move officially to take up the matter with
the Board and our disposition is to await your advice in regard
to this matter.

I was sorry that I gave you the wrong impres-

sion in regard to our making application to "negotiate".

That

was not the intention, but it was to ask for authorization to
appoint the Bank of France our agent and enter into reciprocal
banking relations with them.

Speaking of Mr. Locke's comment, you wondered if these
matters had resulted in some criticism of your affairs at the
bank, but it has not, at least, I have not heard the slightest
intimation of that.

The Board seemed to be unanimous as to the

position they should take and they certainly supported me to the
limit so I think you need give no further thought but that this
"stir-up" will result beneficially.

You ask in your letter of January 10th how the different members of the Board lined up on the Bank of England question.
If you mean the New York Board of Directors, they have all approved of the general proposition and have left to the Executive Committee the detail.

As soon as we receive your letter I shall

probably call the Board together for final approval, or the Executive Committee can take the responsibility I think of going
ahead.




JERAL RESERVE BANK OF NEW YORK

0

.......

To

Mr. Strong.

1/19/17.

If you mean the Board in Washington, Mr. eeabody told
me that he would write you in detail and after reading his letter if there are any questions unanswered,, advise me and I will

endeavor to see that you have more definite information.
Your last two letters of January 11th and 15th indicate

some apprehension in regard to our position on acceptance rates.
Please understand that before making any change we endeavor to
secure the judgement of some of the best posted men and if the
opinions seem to be quite unanimous, we have moved along these
lines.

It is somewhat difficult to always know what is the best

course to pursue as with the suggestions which emanate from Washington as to being cautious and conservative especially as to renewal credits and the other view that we should do all we can to
develop the market, there seems to be a little conflict occasionally, but taken as a whole, I am inclined to think we have moved
along without serious criticism.

We shall probably enter the

market next week at lower rates again and hope that our proceedure will meet with your approval.

I hope to go home to-night as I have some important
matters there to-morrow to look after, then leave to-morrow night
for Philadelphia to spend a few hours with my son at Pottstown,
going on with Messrs. Aiken and Rhoads Sunday night to Washington.
We had a long meeting to-day, Messrs. Jay, Curtis, Sailer, Hendricks and myself, both before and at luncheon, discussing
Governor Seay's plan as to drafts on Federal reserve banks being
made available at par and have framed up the matter I think quite
definitely.




We will probably telegraph you on one or two points

...IERAL RESERVE BANK OF NEW YORK

-6

To

Mr. Strong.

1/19/17.

because from your letter on Seay's argument, it seems that you
would not approve of our guaranteeing to other Federal reserve
banks the payment of drafts of our member banks up to $500 each
in case the other reserve banks should gdarantee us in the payment of their member bank drafts in like amounts.

We, of course,

do not know just how things will shape up but want to be prepared
to commit the New York bank only along lines of sound banking
practices.

With warmest regards, I remain,
Very Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Nontview Boulevard,
Denver, Colorado.

RHT/VCM
Dictated by
rlIAdtan but
signed in his absence.







FEDERAL'RESERVE BANK
OF NEW YORK

apary 19th, 1917.
g

Dear Governor Strong:

JAN2 5 19 )

I beg to advise you that the steamer "Finland"
sails Thursday next for England and we shall hope that
your letter reaches us in time to get it off on that steamer.

Yesterday, I spoke before the National Wholesale Dry Goods Association members at their convention
at the Waldorf on Trade Acceptances.

An informal dis-

cussion developed showing that while a number of firms
represented were giving this consideration, there is, of
course, reluctance about changing an old established custom even if it is not quite as economical and sound.

If

we can do the missionary work now it seems as though the
results might show later when a tighter credit situation
develops.

Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM

FEDERAL RESERVE BANK
,OF NEW YORK
16(15. /IC

JAN2519)1

January 19th, 1917.

Dear Governor Strong:

I have been a very poor correspondent for you for the
last week or ten days, but L:rs. Treman has been with me and we

have had engagements for practically every evening and the days

crl

have been very full with our Directors meeting, the visit of
Governor Harding and ir. Delano, but I shall hope to be more
faithful hereafter.

I have received your communications enclosing copies
of your memoranda in re proposed amendments, etc., and also copy
of your memorandum to Mr. Warburg.

I note that you will not hesitate to send for LT's. McLaren if you find that you need her.

In judging of the work

you are doing by the amount of your correspondence to me, all
of which has been necessary and greatly appreciated by us, it
must have been a burden upon you and I want to again urge upon
you the necessity of your conserving all of your surplus strength
and hold yourself strictly to a regular regime, all of which must
be within the limits of weariness.

Remember that it is not your

own interests and those close to you but the great responsibility
you have to fit yourself for continued service to the country in
the matter of the development of the Federal Reserve System, the
problems of which seem to be constantly arising and of about as
much importance as those in the earlier stages.




FEDERAL RESERVE BANK
OF NEW YORK

AT4iy,

bil

JAN25

January 19th, 1917.

Dear Governor Strong:

I have been a very poor correspondent for you for the
last week or ten days, but Lirs. Treman has been with me and we

have had engagements for practically every evening and the days
have been very

full

Governor Harding and

with oUr Directors meeting, the visit of
-

.

Delano, but I shall hope to be more

faithful hereafter.

I have received your communications enclosing copies
of your memoranda in re proposed amendments, etc., and also copy
of your memorandum to Mr. Warburg.
I note that you will not hesitate to send for ::re.

Laren if you find that you need her.

17,c-

In judging of the work

you are doing by the amount of your correspondence to me, all
of which has been necessary and greatly appreciated by us, it
must have been a burden upon you and I want to again urge upon
you the necessity of your conserving all of your surplus strength
and hold yourself strictly to a regular regime, all of which must
be within the limits of weariness.

Remember that it is not your

own interests and those close to you but the great responsibility
you have to fit yourself for continued service to the country in
the matter of the development of the Federal Reserve System, the
problems of which seem to be constantly arising and of about as
much importance as those In the earlier stages.




---7 FEDERAL RESERVE SANK OF NEW YORK

0

To

Mr. Strong.

1/19/17.

We will not send you any combination to the vaults.
Governor Harding and Ur. Delano were impressed most favorably
I think not only by our vault, but by the work we were doing
in our Transit Department.

As to the inequality of the present basis of distribution based on the earnings of the Chicago bank, would state,
first, that I learned confidentially that the Board is fully
cognizant of the way the Chicago bank is operated in re these
matters and, further, that Governor Seay's uommittee is now at
work on a new apportionment based on the net deficits or earnings of the reserve banks up to January 1, 1917, and 1 personally.believe that they desire to treat the New York bark equitably.
You have been advised of the salary changes and the
reasons for conditions as to Mr. Curtis' salary.

The officers

seem to be very appreciative of what was done for them and I
think in one or two cases they were genuinely and most pleasantly surprised.

George Allen, of the American Bankers Association

brought over copies of his questionnaire which he gaveto Governor Hamlin and Mr. Delano while here, and I will endeavor to secure one to enclose with this letter, but if not will send you
a list of the questions as i understand he has them framed up.
I have your telegram this morning approving suggestions
which were raised in the Assay Office and Mr. Woodward has made
one or two suggestions which we are telegraphing you to-day so
that you may incorporate them in your letter which you will send
to us with copies for our files for immediate forwarding to the
Bank of England.




_AL RESERVE BANK OF NEW YORK

3

To

Mr. Strong.

1/19/17.

Mr. Jay has written you in regard to the luncheon so
I will not repeat.

I have your favor in regard to Governor Seay's memoranda on making Federal reserve bank drafts available at par at all
banks.

We are to have a meeting this morning of LAessrs. Sailer,

Hendricks, Curtis,Jay and myself to agree upon the position we
will stand for on this matter, and I think I shall take Curtis
and Hendricks down to the meeting on Monday at Washington, when
we expect to consider this matter in session with the Board aftor
a preliminary meeting of the Governors Committee.
Mr. Hendricks telegraphed Calkins at San Francisco in
regard to our telegraphic transfers to his bank.
With kind regards,
Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM
Encs.
P. S.

After consultation with Mr. Curtis and after

talking with Mr. Aiken over the telephone, it was decided that
only Mr. Hendricks would go to Washington on Monday.




POSTAL TELEGRAPH
RECEIVED AT MAIN OFFICE
Cr

T & CRAMMER BUILDING

424 17TH STREET

DENVER. COLO.

TELEPHONE: MAIN 4800
The Po

POMMERCIA CABLES

TELEGRAM

3

DELIVERY NO.

I Telegraph-Cable Company( Incorporated)transmits and deliNpf s thip message subject to the terms and conditions printed on the back of this blank.

/01414,14-14.

160-29018

Mg2111

JAN25

62c1m 26 1010a

ti

OD Newyork Tan 24 1917

pnjal-ain Strong esq
4100 Montview Boulevard

Denver Col.

Am forwarding English letter today All think it advisable to
omit sending signature cards and other data until after their
reply is received Please telegraph if you agree




R H Treman

POSTAL TELEGRAPH-COMMERCIAL CABLES

OPERATOR'S NOTATIONS,
TIME SENT, ETC.

ENGLAND

NEW/C./NOLA.

PACIFIC

VANCOLIVE

OCEAN

JAPAN

BAN FRAN

YOKOHAMA

MIDWAY

WICArg-UNITED DSS:-PrWs.

',WOWS**
"AV:.

ORK
BERNII.P0A

ATLANTIC
OCEAN

AFRICA
T. VINC11117

PANAMA

THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD.

EXTENDS OVER TWO-THIRDS OF THE WAY AIVUND THE EARTH.

THE POSTAL TELEGRAPH-CABLE COMPANY (

,INCORPORATED)

TRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS;
To guard against mistakes or delays, the sender of a telegram should order it REPEATED; that is, telegraphed back to the originating office for
eomparison. For this one-half the unrepe,ated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN TJNREPEATED
TELEGRAM AND PAID FOR AS SUCH, in considpation whereof it is agreed between the sender of the telegram and this Company as follows
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
fffty 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 fifty times the REPEATED telegram rate, at which amount this telegram, if
seal as a REPEATED 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.

5. 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.
Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be
made to cover the cost of such delivery.

No responsibility regarding messages attaches to this Company mitt the same are presented and accepted at one of its transmitting offices; and if any

message is sent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the message and any notice or
instructions r-vifding it to the Company's agent in its said office.
..
The Cl. Any shall not be liable for damages or statutory penalties in any Caie where the claim is not presented in writing within sixty days after the
ielegram is filed with the Company for transmission.
The above terms and conditions shall be binding upon the receiver as well as the sender of this telegram.
S.
NO EMPLOYEE OP THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING.
CLARENCE H. MACKAY, PRESIDENT.

CHARLES

ADAMS,
Ve.,E-PRESIDENT.

EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER.

CHARLES P. BRUCH,
VICE-PRESIDENT.

THE FASTEST TELEGRAPH SERVPCE IN THE WORLD




FEDERAL RESERVE BANK
OF NEW YORK

FEB

January 25th, 1917.
.;; ]ji

Dear Governor Strong:

We had a meeting of our Committee on Purchase and Sale
of Bonds yesterday at which were present Messrs. Rhoads,McDougal
and myself of the uommittee, and Uovernors Aiken and Fancher by
invitation.

We had asked for sealed bids on U. S. conversion 3s in
amounts of from five to seven millions, the exact amount being indefinite because some of the reserve banks attached conditions to
their offerings, based on the price at which they could be sold.
We received quite a number of bids and sold all the bonds.

The

bids were as follows:
$5,000,000 First National Bank of Chicago,

$1,000,000 Lerchants Loan

et

Trust Co., "

$4,000,000 National City Investment Co.
and Harvey Fisk & Sons,
.

101.665
101.55

101.1876

The Committee thought it not advisable to give out the
names of the buyers or the prices paid,bUt to announce simply that
they had sold the bonds.

After receiving the bids and agreeing

that they would not accept any bids under 101-1 and interest, they

accepted the bid of the First National Bank and Merchants Loan
& Trust Company, etc. bids, leaving nearly $2,000,000 of bonds
still unsold.




We offered them to the First National at their

(:)

2

,..AL RESERVE BANK OF NEW YORK

To

Mr. Strong.

1/25/17.

price and they declined them so then we fixed a price to be sold
to any broker, at 101 3/4 and within an hour or two Harvey Fisk

Sc

Sons agreed to take the entire bqlance at 101 3/4, thus giving us
an average of about 101 2/3 and interest for our bonds.

We felt

quite satisfied with the result of the sale which indicated, first,
a demand, and second, good prices in this present market.
It might be advisable to have some of our one year notes
converted into bonds and sell these also if the Secretary of the
Treasury should be willing.

In Washington, we heard that the Secretary of the Treasury now contemplates issuing between $100,000,000 and t250,000,000
of 3

one year notes, issuing them at different periods between

now !,nd next July to keep the U. S. Treasury in funds as needed.

I should be glad to have your views as to what extent you would
think it advisable for us to take these notes.

It would seem that

the plan to market the Panama bonds or other bonds at the present
time has been abandoned in favor of the one year notes, thus carrying over the bond issue until after the income returns of next July
and into the Government year of 1917-18.
With kind regards, I remain,
Very sincerelyyours,

Deputy uovernor.
Benjamin Strong,

Esc.,

4100 .Wiontview Boulevard,

Denver, Colorado.

RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK

January 25th, 1917.

Dear Governor Strong:

I returned from Washington Tuesday night and will write
you more fully as to the action taken there under separate cover.
We have received yours of January 16th enclosing copy
of your letter to Mr. Kent and I am so advising him.
Your second letter of January 16th enclosing copy of
our night letter for comparison is also received.

I would state

that Mr. Curtis has handled this matter and has had the details
checked up by Cann and others.

Yesterday we sent forward by

mail the letter to the Governors of the Bank of England, marked
"For attention of Lord Cunliffel

We had Mr. Rob

matter over as you suggested and he approved.
Yesterday, Governors Aiken, McDougal, Fancher and Rhoads
stopped at the New York bank on their return from Washington and
we showed them (except Mr. McDougal who was obliged to lenve at
2:30), the copy of your letter in. re this foreign matter and they

approved of same and will treat it confidentially.

We thought

it would be advisable not to send any further communications to
the other reserve banks until we have received a reply from abroad
after which we can take such steps as may seem best in advising
the different reserve banks.

As relations with other banks depend somewhat upon our
arrangements with the Bank of England, I assume that we should




?....-"EDERAL RESERVE BANK OF NEW YORK

-2--

To

Mr. Strong.

1/25/17.

64
A"
defer taking up the matter with the Bank of the Netherlands, the
Bank of Spain and others, at least to any further extent than
mere generel negotiations until the English matter is settled.
I omitted to add above that the Executive Committee of
the New York Bank approved of the form of your letter and having
same checked up as to details felt justified in forwarding it
yesterday.

If you have, not heard from Mr. Peabody as to the details

of the Washington meeting with our Committee, kindly advise me and
I will follow it up.

Mr. Curtis will certainly give you the par-

ticulars when he sees you as he expects to do early next week.
Regarding our purchasing bills for San Francisco at lower rates than those we were holding, will state that

Lr. Calkins

understood that this was an exceptional crise and done as a matter

of accomodation, that we could not continue this practice and that
we must either work together or work separately.

If we work to-

gether, there will be hardships at different times, but taking a
year at a time, I believe that the cooperative plan is better than
having each individual bank coming into the market and making its
own bids.

Of course, under the latter plan, the Federal Reserve

Bank of New York would-be able to hold its own, but I firmly believe it is contrary to the spirit of cooperation which should exist in the operations of the twelve banks.
Regarding the French Industrial Credit, would state that
Chicago at a meeting of their Executive Committee on Monday, decided to stand by their original position not to buy any acceptances under.this credit, but Governor McDougal was not present at
the meeting and I think, judging from his expressions here yesterday, he would be inclined to buy same with the further light he



To

.RAL RESERVE BANK OF NEW YORK

now has.

Mr. Strong.

1/25/17.

Atlanta does not wish us to buy any, nor Richmond, but

the other banks so far as heard from seem desirous that we should
purchase French Industrial Credit acceptances under the same allotment as before.

Governor Seay told me in Washington that his Committee
on Apportionments were receiving from each bank new statements of
their deficits from the opening of the banks up to January 1, 1917.
I have your favor in reference to our making application
to the Federal Reserve Board for permission to appoint the sank
of France as our agent or correspondent but would state that the
matter is now slumbering and will continue to sleep until we hear
from you with suggestions as to our making another move.
I am having prepared for you an exact copy of the letter as sent to Lord Cunliffe for your files.
With kind regards, as ever, I remain,
Sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK
FEB

11917
January 26th

1917.

Dear Governor Strong:

I went to Washington Sunday night, meeting Governors
Aiken and Rhoads in Philadelphia and we all traveled together
discussing more or less the making available of Federal reserve
drafts at par and other reserve matters en route.

We were

joined Monday morning by Governors Fancher, Seay and McDougal,

also, Hendricks and McKay were present at all of our conferences.
We were in session from 10:30 Monday morning until
6 P. L., taking Governor Seay's brief for making drafts on the
Federal reserve bank immediately available at all other Federal
reserve banks.

We discussed the matter thoroughly, Governor Seay

being the only one in favor of making them immediately available
at all other banks, but there seemed to be general agreement that
we must provide some machinery in connection with the Reserve System to take the place of drafts on I' ew York which had circulated

at par in all parts of the country.

I am enclosing herewith a sta+ement which we prepared
And submitted as a report of the Committee of five Governors, to
the Reserve Board.

They asked some questions end there seemed to

be quite a sentiment in the Reserve Board towards making drafts immediately available at all reserve banks but we urged that in this




FEDERAL RESERVE BANK OF NEW YORK

TO

Mr. Strong.

1/26/17.

sensitive financial period and in view of the uncertainty as to ac-

tual results of the transferring of remaining bank balances now
with correspondents into reserve banks to count as reserve, we
should only begin this in a limited way and for that reason we had

imposed a limitation of 00,000 for the amount drawn by each bank
and we recommended that at first it only apply to country banks.
We discussed at length a plan to have each member bank

in drawing these drafts on its reserve bank to advise its or reserve bank and also the reserve bank of the district at which it
was made payable.

Mr. Jay favoreda plan having the Federal re-

serve bank on receiving advice from the member bank of drawing
of draft immediately

advise the reserve bank at which the draft

7

was made payable, such advice being mailed or wired, according to
the amount, but the concensus of opinion seemed to be that it was
too cumbersome and that the mail advice would not reach the banks
until after the draft had been presented, etc.
The Board stated that they would take the matter unO..er

advisement and would decide this week.

At one time in the dis-

cussion I had a chill because so much sentiment seemed to be expressed in favor of making the drafts available at all banks.

I

took the position with the Governors that we favored the New York
sank being advised by either the member or rererve bank when such
drafts were drawn, but if we were to receive such drafts at par
without advice the same as we had checks, then we ought to have
some limitation as to the amount we would receive at par.daily for
each member bank, and to begin with, the amount of 0.0,000 was decided upon.




,,,FEDERAL RESERVE BANK OF NEW YORK

0

3

To

Lr. Strong.

1/26/17.

We received this morning from Governor Harding notice of
the action of the Board taken yesterday, Thursday.
letter I enclose herewith for your information.

Copy of his

Mr. Jay, in con-

junction with Mr. Fancher, will work up a proposed form of draft and
other forms necessary for further consideration and Mr. Jay and I
are to discuss with Mr. Woodward to-day this whole plan for his criticism and suggestions.

One interesting incident in connection with this was that,
whereas, at the meeting on Tuesday with the Reserve Board it was stated that the Board would not decide the matter that day but would take
it under consideration on Wednesday morning, the New York papers had
articles stating that the Board had inaugurated this plan and gave
an explanation of what was intended and the way in which it would ope'ate.

This surprised the Governors who were in conference in New

York in connection with the bond sale, and I telephoned Governor
Harding stating that I had seen these notices in the morning paper
and asked him if the Board had approved of the Governors' report after we left Tuesday afternoon.

He said "no and added that they hnd

not discussed it since and he did not know from what source this report had been sent out, all of which demonstrates that there should
be some method inaugurated by the Reserve Board to prevent leaks, or
some one connected with the Board sending notices of this kind prematurely.

Regarding the daily settlements, the Board seemed to feel
that it was desirable to inqugurate daily settlements soon and Hendricks and I stated that the New York bank had no objection to their
doing so.




FEDERAL RESERVE BANK OF NEW YORK

4

To

Mr. Strong.

1/26/17.

I think we disposed of the Gedney plan for the present
and it will probably be left dormant.

If you have any suggestions in connection with this matter
after discussion with Mr. Curtis, I shall be glad to hear from you as
it will probably be at least a week or two before we have these forms
and the proposed circular formulated.
Mr. Tappan of the National City having noticed the newspaper article, called at the bank to know what it meant as he apparently was somewhat disturbed over it.
With kind regards, I remain,
Very sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM
Encs.




FEDERAL RESERVE BANK
OF NEW YORK

FEB 1

1917

January 26th, 1917.

Dear Governor Strong:

Mr. Curtis is leaving this afternoon and will probably
be able to give you much of the current news.
Messrs. Fancher and Woodward lunched with Jay and me
to-day and we discussed the report of the Governors in re making available at par Federal reserve bank drafts and Mr. Woodward felt that we should have same considered by our Directors
at their next meeting on Wednesday, so if you have any suggestions, kindly wire us.

I am sending copy of Governor Harding's letter to the
various Governors for their consideration.
In the matter of acceptances, we are buying for San
Francisco and will buy for Chicago, or any of the other banks
upon their specific instructions as to amounts and rate, leaving it to the Reserve Board to settle with the reserve banks
so purchasing whether it

ie

in accordance with their letter of

instruction as to general policy.

Copy of the letter from

the Reserve Board under date of june 19th is enclosed herewith.
Here in this bank we are following the policy of keeping out of
the market temporarilyibecoming more liquid.




FEDERAL RESERVE BANK OF NEW YORK

To

...2"

Mr. Strong.

1 /26/17.

To-day we purchased q51,500,000 New York City warrants

at 2 5/8, early June maturities, about which time we expect to
have higher rates prevailing in connectien with the income
tax payments.

We sold to-day t250,000 1 year, 3 % U. S. notes,

April let maturity on a 2t basis and $750,000 October 1st maturity, on a 2.45 basis.

I had a very nice letter from Mr. L. Ward Bannister of
Denver stating that he had seen you and found you "looking very
well indeed",

all

of which is good news.

We have secured now statements from Goldman, Sachs & Co.
and E. Naumberg i Company, both of which show very substantial
and satisfactory gains for the past year.

Answering yours of January 19th in re Deputy Governor,
our letters have crossed so that you understand by now that if
you should deSire me to remain until you go to Europe and return not later than July let, I would,. of course, try and arrange accordingly, but I do not want to stay throughout the en-

tire Summer because I ought to have a good vacation at that time.
I assume that Mr. Woodward is keeping in touch with you on this
matter.

I hope that you are continuing to feel well and with
kindest regards, I remain,
Very sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colo.
IIHT/VCM

Enc.


FEDERAL RESERVE BANK
OF NEW YORK

January 30th, 1917.

Dear Governor Strong:

Greetings to you this morning, and I am very glad to
note in yours of January 25th the statement "do not worry about
my condition.

I am getting along fine."

Yesterday we had a meeting of the Executive Committee
of the National Bank Section of the New York State Bankers Association of whiCh Mr. S. G. H. Turner of Elmira is the chairman
and those present were Mr. herzog of ALbany, Ir. Irish of Brooklyn, Mr. Alley of Cortland, Mr. Ward of the New York Bank of Commerce, Mr. Smythe of Bronxville, Mr. Weldon of Olean and
Bridges of Liberty.

Mr.

Jay and i attended their morning ses-

sion and took luncheon with them at the Bankers Club; we showed
them our Transit Department work and the vault, both of which
seemed to impress them most favorably.

The general impression

with them seemed to be-that if the amendment as to reserves, that
is, relieving the banks of any requirement as to vault reserves,
and simply requiring them to keep

CA or 7

%. with the Federal Re-

serve Bank, should go through the Congress and become law, it
would solve a great many of the troubles of the country banker.
I note that you have visited Robert Masson and also th,A
you have just received a letter from Monsieur Paltain, a copy of
which you will send us after it is transleted.




FEDERAL RESERVE BANK OF NEW YORK

-2-

o

Mr. Strong.

Ian. 30, 1917.

Your letter in regard to the Buenos Ayres business came
in this morning and I will have it presented to either the Executive Uommittee or to our Directors at their meeting to-morrow.
We will send a duplicate letter to Lord Cunliffe of the
Bank of England as you suggested, by registered mail.
I note your comments as to the State Bank Section questionnaire and am returning the copy of your letter to Mr. Kent.
Regarding the permanent organization, I noted your comments and suggestions and will present them to Mr. Woodward and
Mr. Peabody, leaving it to them to report to the Board if they see
fit.

Governor Fancher, when he was here last Wednesday stated
that he felt that it would be most advisable for some one of the
Governors to accompany you to France should you go, because it
would be desirable that two in the System should have more or less
personal acquaintance and be familiar with the detail.

This only

indicates that others would share in your viewpoint probably. .

So far as your suggestion as to my staying longer is concerned, it seems to me that the decision as to this can be held in
abeyance until you know definitely about the one chosen to be the
permanent Deputy Governor and you approach more nearly the time
when you expect to go abroad.

Now that you have indicated your

views I can discuss same with the members of our Committee
Woodward and Peabody - and it will give me a better line on what
the Board may desire as to my staying longer in this position.
Evidently I, can plan to remain two or three months longer and will
date

act on this basis, leaving the exactAto be taken up later.




,ER AL RESERVE BANK OF NEW YORK

,o

To

...

Mr. Strong.

Jan. 30, 1917.

Regarding your going abroad, Dr. Treman is not quite
clear that it is a wise move for you personally to take upon
yourself the strain incident to such a triy and the carrying
out of your purpose in making it and I hope that before you make
your final decision you will seriously consider whether you can
not arrange for a working relation between the Bank of France and
this bank, leaving the question of details to be worked out later,
but not feel that it is absolutely necessary that you should make
this trip now.

Of course, no one interested in the development

of our foreign banking relations would feel but whet you are best
fitted to do this particular work, but I am approaching the thought
of its effect upon you, which I hope you will consider and be perfectly sure about before making your final decision.
The impression here seems to be that call money will
rule low for some time to come but that time money will gradually
harden.
ties,

2-4-

Acceptance rates yesterday were 2 % for February maturito 2 3/8 % for March and 2-4-. to

21 % for April and May.

We have purchased about $1,000,000 of acceptances for
the Chicago bank around 21 % but I have a lurking suspicion that
the Board will call d'own the Chicago and San Francisco banks for

making these investments, which suspicion will be verified by the
facts sooner or later.

With kindest personal regards, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM







FEDERAL RESERVE BANK
OF NEW YORK
January 31st, 1917.

Dear Governor Strong:
I am in receipt of your favor returning

Yr. Warburg's letter of January 15th and note
that
you did not return the draft or suggestion which

Mr. Warburg enclosed with his letter.

Would it

not be best to have the original draft sent on to

us for our files, you retaining a copy for your own
use!

Very sincerely yours,

e;i7k.3)1
Deputy Governor.
Benjamin Strong, Esq.,
4100 Wontview boulevard,
Denver, Colo.

RHT/VCM

FEDERAL RESERVE BANK
OF NEW YORK

January 31st, 1917.

Dear Governor Strong:

We have received Your letter of January 27th containing a translation of the letter of Y.onsieur Pallain,

and also received your telegram containing suggestion as
to an answer to the Board's request for copy of cables, etc.
I will lay these matters before the Board of Directors of
the Bank at their meeting to-day and will advise you later
conceltning same.

As I understand, you will frame up your reply and
discuss same with Mr. Curtis and I will advise you as to
any suggestions which our Board may be disposed to make.
I assume that you run over to Colorado Springs
for a change of scene and hope that it proves beneficial.
With kind, regards, I remain,
Ver

sincerely yours,

CrtsWCluitif4A_Th
Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VC7




FEDERAL RESERVE BANK
OF NEW YORK

January 31st, 1917.

Dear Governor Strong:

In your letter of January 26th, you suggest caution in
rebating penalties for deficient reserves.

You understand prob-

ably that in the earlier months in which our Collection Department was in operation, we were often delayed in our mail going
out until late in the evening, re ulting very often in the mail
not reaching member banks until th

second.day.

There are other

reasons also which led us to feel t at we were not justified in
imposing penalties on apparent defic ent reserves, but in December we 'began to be more particular an

about January let we sent

another circular letter to all our merger banks advising of the
law and that we were obliged to penaliz

for deficient reserves

without any fear or favor.
So far as the rebate of the Octo er charge of the Marine

Bank of Buffalo is concerned, the matter w s thoroughly considered by the officers at their meeting and it

as felt as a matter

of equity that this particular rebate should be allowed.

I trust this explanation is satisfactory.
"fiery sincerely yours,

Ytvrg)fsttA4-1/4.,
Deputy Governor.
Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM



FEDERAL RESERVE BANK
OF NEW YORK

February 1st, 1917.

Dear Governor Strong:

We had a Directors meeting yesterday, all being present
except 1r. Starek, who was summoned to Washington but as to any
information concerning his resignation we have no knowledge.
After the usual routine business, Ur. Jay read

a let-

ter from Governor Harding which had been issued to all reserve
banks in re our investment policy and after discussing the present'low rates, from 2 to 2.1 %, the fact that our total investments

were now below 125,000,000 and that we have some other investments
running off very rapidly, the question of any change in policy
was referred to the Executive Committee.
Ts-day's news as to the proposed German submarine blockade created a flurry in Wall Street,at the beginning stocks dropping from 5 to 15 points.
money

The market is more stable now, call

2 %; but in the first hour or twc of the morning,

we pur-

chased 12,500,000 of bills at 3 to 3-4;% and stood ready to purchase

more at theserates, but doubt if many will be offered.
naturally expec, the outside rate to advance to about 2 3/4
sibly.

Would

T. pos-

Rates closing about 3 %.

Mr. Sailer submitted a recommendation as to vault control
and it was referred to the Executive Committee as was also the
question of compensation suggested for employees of the Clearing




FEDERAL RESERVE BANK OF NEW YORK

-2--

To

Mr. Strong.

Feb. 1, 1917.

House and Subtreasury who had contributed their time and services
during our occupancy of their vaults.
I made a report tis to the Governors Committee meeting

at Washington, stating that Governor Seay's plan had been discussed, that we had been in session nearly all day, most of it on this
question and that the report seemed to be the best plan to which
unanimous consent could be secured; that we judged from the action
of the Reserve Board when we presented the report that were the
plan to originate in the Reserve Board it might be more radical.
The plan proposed was then discussed at length in a very long meeting resulting in the appointment of the Class A Directors with
Messrs. Palmer and Jay added, to consider a report on this matter.
In the afternoon, the Committee invited Messrs. Alexander,
Frew, McGarrah and Townsend for an informal conference at the Reserve Bank on this matter, Mr. Locke being present with other members of our Committee.

They discussed if for an hour and it seem-

ed to be the quite unanimous opinian of those present that the
plans should be changed or modified 80 that the member bank drawing the draft should send immediately two coupon advices to the reaerve bank of its district on receipt of which, this reserve bank
would charge the draft against the member bank's account and would
forward the extra coupon duly countersigned to the reserve bank where
payable; that no draft should be paid until advice is received; that
in drawing up the form of draft instead of using the words "Receivable at

Reserve Bank", it should be made "Payable at
Reserve Bank, it evidently not being satisfactory to

the bankers present to have the draft received at par, but requiring




-3-

FEDERAL RESERVE BANK OF NEW YORK ........

To

Mr. Strong.

Feb. 1, 1917.

that it onl:i be payable when it re9ched the reserve bank of the
member bank's district.

Mr. Woodward stated that you had telegraphed that a
letter to me was en route, so we are awaiting its receipt before
proceeding further, but assuming that the next steps after receiving your letter will be to take up with the members of the Governors Committee the points at issue and see if we can get concurrence
in these changes, after which we will take it up with the Reserve
Board.

I trust that you will discuss with Mr. Curtis a form of
draft which would be desirable to use and such other detail matters so that we can have the benefit of same on his return.
Regarding the copies of cables already sent in re foreign bank matter, I reported the

contents of your telegram and

it was left for me to write a letter to Governor Harding along
these lines, but unless I hear from Governor Harding again I think
I will hold the matter in abeyance until we have a further request
for the cables.

When we were discussing the rates for acceptances, I
read your letter of January 11th oir this subject to the directors
for their consideration.

By this time, it was half past one and the Board decided
to adjourn, so we did not reach a discussion of M. Pallain's letter, the amendments and one or two other matters, but we hope to
have a meeting of the Executive Committee to-morrow or Monday for
consideration of several matters referred to them.




c:RAL RESERVE BANK OF NEW YORK

-4-

To

Lr. Strong.

Feb. 1, 1917.

I am sending you a copy of the House bill of January 22
thinking that possibly you may not have received same.
While dictating this, a telegram came in from Governor
Harding that tenure of office of Charles Starek as Class C director has been terminated as of this date, but no intimation as to
his successor.

My very best to you and Curtis.
Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHTPCM
Eric.







Misc. 34

TAT/lial

P'

4,AL RESERVE BANK
ix! NEW YORK

Postal
2/1/17

(TO BE MAILED)

1415 a.M.

CONFIRMATION OF TELEGRAM
We have today telegraphed you as follows :

February 14 1917.
Colorado Springs, Col.
(Try leading hotels)

Directors yesterday appointed special committee oodward Locke Palmer to consider
Federal reserve draft plan of governors committee. Stop. Committee discussed
matter yesterday with Alexander Frew lo G arrah Townsend who sugest unanimously
that to make plan effective draft:: should be not receivable but payable alai, on
advice at Federal reserve banks.
Stop.
This necessitates advice between Federal
reserve banks which bankers consider practicable. Stop.
Otherwise bankers say
such drafts would be merely acoepted like any other check payable ,t the home
Federal reserve bank and would therefore not be e:iicient instrument
of transfer.
Stop.
Our committee favorable to endeavoring to secure such
amendment of plan
but wish first to have views of yourself and Curtis.
Pleaae wive as time is
limited.

R. H. Treman.
charge Federal Reserve 6ank
5e2120Broadway




-

Rr
-.I

POSTAL TELEGRAPH

NEST

COMMERCIAL CABLE

CLARENCE H MACKAY, PRESIDENT

TELEGRAM

ED AT MAIN OFFICE
CHARMER BUILDING

920 17/14 STREET

DENVER. COLO.

TELEPHONE: MAIN 4000

DELIVERY NO.

I Telegraph-Cable Company(Incorporated)transmits and delivers this message subject to the terms and conditions printed on the back of this blank.
DESIGN PATENT 114, 11010

CB NEWYORK FEB

I

17

355 BENJ STRONG ESQ 4100 MONTV1EW BLVD DENVER COL
DIRECTORS YESTERDAY APPOINTED SPECIAL COMMITTEE WOODWARD LOCKE PALMER
TO CONSIDER FEDERAL RESERVE DRAFT PLAN OF GOVERNORS COMMITTEE STOP
COMMITTEE DISCUSSED MATTER YESTERDAY WITH ALEXANDER FREW MCGARRAH
TOWNSEND WHO SUGGEST UNANIMOUSLY THAT TO MAKE PLAN EFFECTIVE DRAFTS
SHOULD BE NOT RECEIVABLE BUT PAYABLE ON ADVICEAT FEDERAL RESERVE
BANKS STOP THIS NECESSITATES ADVICE BETWEEN FEDERAL RESERVE BANKS

WHICH BANKERS CONSIDER PRACTICABLE STOP OTHERWISE BANKERS SAY SUCH
DRAFTS WOULD BE MERELY ACCEPTED LIKE ANY OTHER CHECK PAYABLE AT

THE

HOME FEDERAL RESERVE BANK AND WOULD THEREFORE
NOT BE EFFICIENT INsTR-

Mal AOL ECE

Er

NOTATIOKEt

rdb*TIM ETA.
"WEggENT0

ASKA

WtflID E EVEIA VC QE,Ja,l,
PACIFIC

r.44,c1,6

OCEAN

JAPAN

voilVAIKE 2

ANI DE El

rrEtixiaalr

K2

beb
1-4

ViNC.IT

VI

THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD.

1 0 M 2 F_ VI D

j4k 219,Egi..}4

A

EXTENDS OVER TWO THIRDS OF THE WAY AROUND THE EARTH.

Wile LE

CO

feugulatllottlin4trilTylvi,L-1.E..,J3.RAr. .Mtfp X°

VE12

ANY (INCORPORATED)

1140E4 ribiete4teV V

-mis
s
de a s, t
en e o a temgram should order
REPEATED; that is, telegraphed back to the originating office for
maparisen. For this, one-half the anrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNIZEPEATED2

arismission,
ELEGRAM AND PAID FOR AS SUCH in ponsideggivt, ittratrazIrar biteetterpigEggOganv000144c
+44 rivbe ibgeaeliatcs oKh,

HffilafPLVIVX1ouRf

0b

ereQiQe/nor sWndIng the same; nor for mistakes or delays in thetrainsmissiot' or deliver;, or for non-delivery, of any 11. EVEATED telegram, her=
.fty times the sum received for sending the same, UNLESS SPECIALLY VALUED; not in any case for delays arising from unavoidable interruption in the

working of its lines; 1.1OR FOp. Aitiop.Rts, kcivHwaztgrLF-o

2pidoeeitwdmpi,ar_,....,ii.b. foNd

'poi...4=W), E thPORLI 4-,,Edve#,!9,0S?
ilflott,tiPtdit:iisrrtegCografKmtEici

tel .r ma; whether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED telegram rate, at wh ch am
ether
amount h

el

sent as a REPEATED telegram, is hereby valued, unless a greater value is stated in writing hereon at the time the telegram Is offered
e Company
and an additional stun paid or agreed to ' - paid based on sueh value eimal to one-tenth of enie percent. thereof.
S.
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
. KI.,41 its gpstuka

41.., blessiga 4.43higerek.&flevithin thi Aablished free delivery limits of the terminal office. For delivery at a greater distance a special charge will be

made to cover the cost of such delivery.
6.

..

al

no
.

6.

No responsibility regarding messages attaches to this Company until the same are presented kid accepted at one of its transmitting offices; and if any
sett It gehVcole of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the message and any notice .or
s might-MN; if t
ompany's agent in its said office.
T....*:,,,mpany shall not be liable for damages or statutory penalties in any cure where the claim Is not presented in writing within Sixty days after the

aSlegiam ie-tded with the Company for transmission.
1,. The above terms and conditions shall be binding upon the receiver as well as the sender of this telegram.
°N.NO EMPLOYEE OF tIII5 COMPANY IS AUTHORIZED TO VARY THE FOREGOING.

itCAC. ADAMS,

CLARENCE H. MACKAY, PRESIDENT.
EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER.

CHARLES P. EPOCH,
VICE-PRESIDENT,

tA. t'STEST TELEGRAPH SERVICE IN THE WORLD




ci tA :vs




POSTAL TELEGRAPH - COMMERCIAL CABLES
7CEIVED AT MAIN OFFICE
:FINEST & CRAMMER BUILDING

920 1773./ STREET

DENVER, COLO.

TELEPHONE: MAIN 4500
Th
130-1,01$1

TELEGRAM

DELIVERY NO.

l Telegraph-Cable Company(Incorporated)transmits and delivers this message subject to the terms and conditions printed an the back of this blank.
DESIGN PATENT N. 4063*

UMENT OF TRANSFER STOP OUR COMMITTEE FAVORABLE TO ENDEAVORING 70
SECURE SUCH AMENDMENT OF PLAN BUT WISH FIRST TO HAVE VIEWS OF YOURSELF AND CURTIS PLEASE WIRE AS TIME IS LIMITED
R H TRENIN

'POSTAL TELEGRAPHCOMMERCIAL CABLErS
LASKA

OPERATOR'S NOTATIONti
TIME SENT, ENI,

ENGLAND
NEW,
FOUNDLAND

o

VANCOUVER

PACIFIC

OCEAN

JAPAN

SAN FRAN

YOKOHAMA

'wgrotrgn.
AVAPalga051744 "41t.4.11Kr

MIDWAY

FIERMWM

ATLANTIC
OCEAN

HONOLULU

GUAM

PANAMA

VINCENT

SOUTH

AMERICA

THEAZATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD.

EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH.

THE POSTAL TELEGRAPH-CABLE COMPANY (

,INCORPORATED)

rRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECV

LI

TWI4i.g8INING TERMS AND CONDITIONSI

To gnard against mistakes or delays, the Bender of a telegram should order it REPEATED; that is, telegraphed back to the originating office for

's,esutiattli ttio,ff

F48. pre baraeek in sdsliapn, 1.4.eejs otiterrias incliusdpfl on its face, THIS IS AN UNREPEATED
-404,441. 'son. jipi
Lelba and this Company as follows:
,111.114111tA.MTSRIWPAUCI areJLAISOldnUoCratirdeatiblititlirrof itifsOgreal letitilgen thifindet 01

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
111,,n, received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond
I.

f,'21 =kr pun 233Mr Vett= 01)M1PaTLEISVI.SPEWIEltriyi variEp; Rprlielar ette ITEellys rieg T.fat yveolciAbt EiedeptiLot theA 0 nu2..
R ERRORS' 1.M CFMER OW 11./BSCWRE.TELEWRAtiS.

,

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

...1.6,6libliansedlhy4igge4 °cite:Fits
.
vadd,
t
L.

fitprwisidgindi,,ty

,eLs t.sr111.7,04Fn,Olpgm rote., at w,h4iiiiziatiageiieiviad, ifi

for
he tkWrant
it tidInberittn hwvio
ter
on such value equalo One- ent o one per cent. thereo
be pal ha
S'S
ad tional sum paid or agr
I. 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
h.
Rs n. and
K-

t eSr

sa

.

reaoh its destination.
Xesaages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be
At.t., to cover the cost of such delivery.
6; W.:, responsibility regarding messages attaches to this Company until the sameare presented .and accepted at one of its transmitting offices; and if any
LI;',..44 is sent to such office by one of this Company's messengers, he acts as the agent of the sender for thepurpose of_ delivering the message and any notice or
nitnitiatons regarding it to the Company's agent in Its said office.
Company shall not be liable for damages or statutory penalties in any case where the claim is not presented in writing, within sixty days after the
-5tegrai......, pled with the Company for transmission.
The above terms and Conditions shall be binding upon the receiver as well as the sender of this telegram.
:_MPLOTEE OF TSB COMPANY IS AUTHORIZED TO VARY THE FOREGOING.

C. ADAMS;
VICE-PRESIDENT.




CLARENCE H. MACKAY, PRESIDENT.
EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER.

CHARLES P. BRUCH,
VICE-PRESIDENT.

--VASTEST TELEGRAPH SERVICE IN THE WORLD

0




Misc. 34
PtT/

ppr

Postal

RESERVE BANK

OF NEW YORK

1050 a.m.

(TO BE MAILED)

CONFIRMATION OF TELEGRAM
We have today telegraphed you as follows :
Febru-r,. 1, :1917.

Benjamin _tronL,
4100 :ontview Boulevard
Denver Colorado

Telegram received but your position not quite clear. Our committee reconriends
that drafts be made actually payable instead of merely receivable at a Federal
reserve bank. This entails our receiving advice froi home
Federal reserve bank
before we would pay. Stop. Shoull we stand on this basis or should we urge
the advice butalagsly receive the drafis. Stop. If drafts are made payable
we could wherever,pay small drafts say under five hundred dollars even if advice
not received. Please wire promptly as committee meets this afternoon.
R. H. Treman.
Harp;e Federal Reserve Bank,
Broadway.

B-2




Misc. 34

PJ/Rai
Postal
1:15 p.m.

13,ESENVE BANK

OF NEW YORK

(TO BE MAILED)

CONFIRMATION OF TELEGRAM
We have today telegraphed you as follow pt

s H

February 2, 1917.

Benjamin strong, Esq.,
4100 Yontview 'ioulevard
Denver, Colorado.
x.ecutive committee today approved of your plan regarding Pallain letter. Stop
Reconrended immediate formal application to Reserve Board for permission to
appoint Bank of France correspondent subject to your approval. Stop. Should
we consult Codert about French law as to gold exports as per youl letter January
twenty seventh

. Treman,
Charge Fed. Reserve Bank
120 Broadway

B-2

POSTAL TELEGRAPH
cREC-.IVED AT MAIN OFFICE
.

COM

CLARENCE Ii. MACKAY, PEtzsmENT.

DELIVER

GRANMER BUILDING

-20 17TH STREET

DENVER, COLO.

TELEPHONE: MAIN 4300
The Po al Telegraph-Cable Company(Incorporated)transmits and delivers this message subject to the terms and conditions prit ter

1°-5219CHM 90 I0574

DESIGN PATENT NA

ca k -r

cp

ni

blank.

aws

CB NEWYORK FEB 2 17
BENJ STRONG 4100 MONTV1EW BLVD DENVER COL
Time
TELEGRAM RECEIVED BUT YOUR POSITION NOT QUIET CLEAR.OUR UUT.

/

RECOMMENDS THAT DRAFTS BE MADE ACTUALLY PAYABLE INSTEAD OF MERELY REC...
EIVABLE AT A FEDERAL RESERVE BANK .THIS ENTAILS OUR RECEIVING ADVICE

FROM SOME FEDERAL RESERVE BANK BEFORE WE WOULD PAY STOP SHOULD WE STAND
ON THIS BASIS OR SHOULD WE URGE THE ADVICE BUT STILL ONLY RECEIVE THE
DRAFTS STOP IF CRAFTS ARE MADE PAYABLE WE COULD WHEREEVER DES IREABLE
PAY SMALL DRAFTS SAY UNDER FIVE HUNDRED DOLLARS EVEN IF ADVICE NOT

RECEIVED PLEASE WIRE PROMPTLY AS COMMITTEE MEETS THIS AFTERNOON
R Y TREMAN






POSTAL TELEGRAPH-COMMERCIAL CABLES
OR,

ENGLAND

11%, ma

.

PACIFIC

JAPAN

NEVVP0t/NDLANO

VANCOUVER

CiCEAN

SAN FRAN

YOKOHAMA

UNITED

movoranlie

MI DWAV

VORK
HERM1v0A

ATLANTIC
OCEAN

AFRICA
$1. VINCENT

PANAMA

THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD.

EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH.

THE POSTAL TELEGRAPH-CABLE COMPANY (IN CORPORATE D)
TRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:
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 this, 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 8UM 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
2. In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for tile non-delivery of this
telegram, whether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED telegram rate, at which amount this telegram, if
sent as a REPEATED 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 8UM 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 seEder, without liability, to forWard this telegram over the lines of any other Company when necessary
to reach its destination.
4. Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be
made to cover the cost of such delivery.
6. No responsibility regarding messages attaches to this Company until the; same are presented itritt accepted at one of its transmitting offices; and if any
Message is sent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of _delivering the message and any notice M
tostracciptis regarding it to the Company's agent in its said office.
Ilrillrinpany shall not be liable for damages 02 Statutory penalties in any case where the claim is not presented in writing within sixty days after ths
telegram U flied with the Company for transmission.
The above terms and conditions shall be binding upon the receinv as well as the sender of this telegram.
S. NO EMPLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING.
CLARENCE H. MACKAY. PRESIDENT.

ADAMS,
VICE-PRESIDENT.

EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER.

CHARLES P. BRUCH.
VICE-PRESIDENT.

THE FASTEST TELEGRAPH SERVICE IN THE WORLD

W-C111/1 I VIVO raLpIstatt.t,

TIME SENT, lEv.,




POSTAL TELEGRAPH - COMMERCIAL CABLES
CLARENCE H. MACKAY, PRESIDENT.

R

-slySTED.ARTA.M.EARIPJ.DZICEG

920 ITTU STREET

DENVER. COLO.

TELEPHONE: MAIN 4800

TELEGRAM

r

D EL IVERY 140.

,b1 Telegraph-Cable Company(Incorporated)transmits and delivers this message subject to the terms and conditions printed
on the back of this blank.

160-20018

435CHM 49 1230P

DESIGN PATENT Its. 405111

C3 NEWYORK FRB 2 17

To

BENJ STRONG

By

4100 MONTVEDE BLVD
DENVER

EXECUTIVE COMMITTEE TODAY APPROVED OF YOUR PLAN REGARDING PALLAIN
LETTER STOP RECOMMENDED IMMEDIATE FORMAL APPLICATION TO RESERVE BOARD
FOR

PERMISSION TO APPOINT BANK OF FRANCE CORRESPONDENT SUBJECT TO

YOUR APPROVAL STOP,SHOULD WE. CONSULT CODERT ABOUT FRENCH LAW AS TO GOLD

EXPORTS AS PER YOUR LETTER JAN TWENTY SEVENTH
R

1 TREMAN

POSTAL TELEGRAPH-COMMERCIAL CABLES
ENGLAND
EWPOUNDLAND

EFIMUDA

ATLANTIC
OCEAN
OT. VOMICNT

PANAMA

SOUTH

AMERICA

THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD.

EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH.

THE POSTAL TELEGRAPH-CABLE COMPANY

(INCORPORATED)

:RANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:
To guard against mistakes or delays, the sender of a telegram should order it REPEATED; that is, telegraphed back to the originating office for
omparison. For this, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED
ELEGRAM 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
mount received for sending the same; nor for mistakes or delays in the transtalssion Or delivery, or for non-delivery, of any REPEATED telegram, beyond
fty times the sum received for sending the same, UNLESS SPECIALLY VALUED; nor in any case for delays arising from unavoidable interruption in the
.orking of its lines; NOR FOR ERRORS IN CIPHER OR OBSCURE TELEGRAMS
2. 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
.legratn; whether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED telegram rate, at which amount this telegram, if
-et as a REPEATED telegram, is hereby valued, unless a greater value is stated in writing hereon at the time the telegram is offered to the Company for
ansmission, and an additional sum paid or agreed to be paid based on Such value equal to one-tenth of one per cent. thereof.
I. The Company is hereby made the agent of the sender, without liability, to forward this telegram
over the tinge of any other Company when necessary

reach its destination.
Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be
made to cover the cost of such delivery.
No responsibility regarding messages attaches to this Company until the sw.Ase presented-vmd Accepted at one of its transmitting offices; and if any
melliage isSent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the message and any notice Or
isislcsetthans DegsretrigIESD tatte (leisrgearril agent In be Said office.
Tp----,-;pmpisny shall not be liable for damages or statutory penalties In any case ;where the claim is not presented In writing within sixty days after
dfiled with the Company for -transmission.
The a'bO4Pe terms and conditions shall be binding upon the receiver as well SS The sender of this telegram.
S. I.;R) EMPLOYEE OF THIS COMPANY IS ALTILORIZED TO vAity THE FOREGOING,

trn t ( viT. Assistfra,

ADEPRESIDENT.

CLARENCE 14.. WACKAy, PRESIDES,.
cvstrATES IlItCYND4AZ , cs-rs-Expr. AND GENE1AL MANAGER.

CHARLES P. SRUCH,
!ME-PRESIDENT.

THE FASTEST TELEGRAPH SERVICE IN THE WORLD




OPERATOR'S MONIANIVaq%

TIME SENT° WO!.

FEDERAL RESERVE BANK
OF NEW YORK

February 2nd, 1917.

Dear Governor Strong:

Answering yours of January 27th, I understand that
you will send us
Pal lain.

11.

revised translation of the letter from M.

Meanwhile, I submitted the letter to our Executive

Committee to-day, reading only one or two extracts from it
and they approved of your proposed way of treating this matter
and of the continuance of our negotiations;.they also passed
a formal resolution authorizing us to make a formal application
to the Federal Reserve Board in re Bank of 7rance as correspondent, subject to tour approval and we have wired you to-day as
per enclosed copy.

We will await your advice before making

application.

They also desired to know whether you thought it advisable to consult Uoudert Brothers about French law about gold export, as per your letter of January 27th.
I also read to the Committee extracts from your letter

of January 16th, page 3, in which you suggekthat inquiry"be made
of the Reserve Board as to whether we may rely upon the terms of
arrangement we enter into being regarded as confidential
and not made public."

Both Lessrs. Woodward and Peabody were

present and they agreed that when the Committee from the Federal
Reserve Bank of lew York was in Washington this matter was die-

\whatever
'

cussed and the understanding from different members of the Board




-2-

FEDERAL RESERVE BANK OF NEW YORK

To

Lr. Strong.

Feb. 2, 1917.

that they had guarded, would continue to hold in confidence alLl

details of arrangements made with foreign banks, that they had not

broken confidence in this respect and that it was the understanding

iwas
1

that they had and would respect the arrangements which the
Bank entered into in these matters.

.ew York

After a discussion, the Exec-

utive Committee felt that it was not advisable to take up the matter with Washington at the present time unless you feel otherwise.
On the matter of gold bars, the Executive Committee was
that you had written to Governor Harding and Mr. Jay will
call at the Assay Office in New York and discuss same with the head
of it so
Iinformed

that he will also be informed of our desire.
I hope that you will have a very pleasant time at Phoenix.

Both you and Mr. Curtis deserve it.
I shall try and run up to Ithaca to-night for Saturday

but hope to be back Monday morning as I like to be on the job during
these strenuous days.

I am sending you herewith some information as to the new
reserve notes we have furnished, and other information which I thought
might be of inbrest.

As to that portion of your letter of January 25th pertaining to our permanent organization, I have submitted same to -r. Woodward and Mr. Peabody.

I understand that Governor Aiken expects to

be over her on next Tuesday to meet Mr. Woodward and at that time I
think perhaps we will have Governor Rhoads over so that we can have
an exchange of views again on Federal reserve draft matters.
With kind regards, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
4100 Y,ontview Boulevard,
Denver, Colo.







eEDERAL RESERVE NOTES PAID OUT BY THIS BANK TO OTHER BANES

Burin Janu

1917

as re orted b

Teller

the Pa''

11E400-1----3AEK3

20,000.
280,000.
910,000.
1,925,000.
10,000.
110,000.
500,000.
360,000.
110,000.
330,000.

Bank of New York, N. B. A.
Merchants National Bank
Mechanics & Metals National Bank
National City Bank
Chemical National Bank
Atlantic National Bank
American Excharge National Bank
National Bank of Commerce
Chatham& Phenix National Bank
Hanover National Bank
Citizens Central National Bank
Market & Fulton National Bank
Importers & Traders National Bank
Second National Bank
Irving National Bank
New York County National Bank
Chase National Bank
Lincoln National Bank
Garfield National Bank
Seaboard National Bank
Liberty National Bank
Coal & Iran National Bank
Union Exchange National Bank
Nassau National Bank, Brooklyn
First National Bnnk, Brooklyn
Gotham National Bank
Harriman National Bank
Farmers National Bank, Adams, N. Y.
First National Bank, Albany, N. Y.
First National Bank, Amsterdam, N. Y.
Burrows National Bank, Andover, N. Y.

Cayuga County National Bank, Auburn, N.

100,000.
73,000.
60,000.
240,000.
200,000.
20,000.

1,000,000.
560,000.
320,000.
255,000.
660,000.
110,000.
50,000.
74,000.
85,000.
70,000.
115,000.
6,000.
5,000.
11,000.
2,000.

Y.

First National Bank, Binghamton, N. Y.
First National Bank, Blairstawn, N. J.
Boonton National Bank, Boonton, N. J.
First Bridgeport Nat'l Bk., Bridgeport, Conn.
Marine National Bank, Buffalo, N. Y.
First National Bank, Camden, N. Y.
Canajoharie National Bank, Canajoharie, N. Y.
Florida National Bank, Florida, N. Y.
Fort Edwards National Bank, Fort Edwards, N. Y.
National Bank of Glens Falls, Diens Falls, N. Y.
Hackettstown Nat'l Bk., Hackettstown, N. 3.
National Hamilton Bank, Hamilton, N. Y.
First National Bank, Hoboken, N. J.
First National Bark, Ithaca, N. Y.

15,000.
17,000.
1,500.
3,000.
313,000.
20,000.
6,000.
19,000.
3,000.
8,000.
5,000.
6,000.
3,000.
15,000.
6,500.




MEMBER BARKS
Irvington National Bank, Irvington, N. Y.
First National Bank, Jersey City, N. J.
First National Bank of Rondout, Kingston, N. Y.
Farmers National Bank, Malone, N. Y.
First National Bank, Mineola, N. Y.
Manufacturers National Bank, Newark, N. J.
Union National Bank, Newark, N. J.
Exchange National Bank, Olean, N. Y.
First National Bank, Paterson, N. J.
Paterson National Bank, Paterson, N. J.
City National Bank, Plainfield, N. J.
National Bank of Commerce, Rochester, N. Y.
Farmers National Bank, Rome, N. Y.
National Bank of Skaneateles, Skaneateles
Union National Bank, Schenectady, N. Y.
United National Bank, Troy, N. Y.
Farmers National Bank, Union, N. Y.
First National Bank, Utica, N. Y.
Jefferson County Nat'l Bk., Watertown, N. Y.
First NationP1 Bank, White Plains, N. Y.
First National Bank, Morristown, N. J.

3,000.
5,000.
5,000.
9,000.
9,000.
6,000.
5,000.
5,000.
1,000.
6,000.
10,000.
5,000.
5,000.
10,000.
25,000.
5,000.
5,000.
10,000.
2,000.
16,000.
5.000.

Q9,164,000.

NONMEMBER BANKS
60,000.
Greenwich Bank
Bank of the Metropolis
80,000.
New York Produce Exchange Bank
50,000.
Guaranty Trust Company
70,000.
Empire Trust Company
70,000.
Equitable Trust Company.
40,000.
Lincoln Trust Company
285,000.
Lawyers Title & Trust Company
10,000.
N. J. Title Guaranty & Trust Co., Jersey City,N.J. 5.000.
4.?9,834,000.




TO ITELTeAR BANKS

Received 2%vment

New Bills

6,927,000

Checks

3,562,500

Sorted Bills

2.237.000

Gold

5 601 500

9,164,000

9,164,000

TO NONMEMBER BANKS

New Bills

395,000

Sorted Bills

670,000

275.000
670,000

Gold

670,000

FEDERAL RESERVE NOTES RECEIVED BY THIS RANK
Daring Janaary, 1917, as reported

by

the Receiving Teller.

OUR NOTES

NOTES

OF

From
U. S. Treas.,

Fit for
Circulation

From
Out of
Town Banks

From
City Banks

Other
Federal Reserve
Banks

1

2
3

4

450,165
362,385
310,915
315,980
9,000

136,700
120,800
103,600
91,900
4,000

66,000
192,000
161,000
14,000

616,665
376,550
370,130
579,015
588,570
75,000

192,100
112,100
123,300
175,600
182,800
25,000

29,500
38,000
103,000
81,000
14,000
80,000

487,525
422,535
502,220
527,320
432,245
28,500

146,200.

127,400
180,700
162,400
125,300
9,500

217,900

9,500
114,000
100,000
77,500
96,900
48,000

601,325
576,255
586,175
450,340
511,880
106,695

120,200
127,200
129,200
93,600
102,400
69,300

129,800

31,000
52,500
96,000

496,510
400,670
531,395

97,300
80,100

115,550

5
6
7
8
9

10

17,790
217,200

11
12

13
14
15
16

17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

48,000
27,000
20,700

175,400

855,850

1,517,390

855,850
10,715,965
Total of our Notes
Other F. R. Bank Notes

13,089,205
2,944,900

grand Total

16,034,105




-.-

10.A.tigg

10,715,965

2,944,900

FEDERAL RESERVE BANK
OF NEW YORK

February 2, 1917.

My dear Governor:

I am glad to note that Mr. Curtis is now with you.
your telephone to-day

'

Mr. Jay

I was in a meeting with the execu-

whi17

tive committee.

)received

/

At the moment the mar

t is normal while active and things are

simply marking time awaiting thi next development.

The general impression

1 be drawn into war but personally I am in-

in the "street" is that we sh
/

clined to doubt it although we may sever diplomatic relations.

Should

we be drawn into war, I imaIgine that we shall then have some test for the

reserve bank system and w 'shall have some more problems in the New York
bank.

I hope that

on will not defer your trip to Arizona but will

keep us posted and if/We deem it desirable we shall not hesitate to Wire
you for Mr. Curtist,treturn.

With ki4d regards as always, I remain,
Very truly yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/ELS



FEDERAL RESERVE BANK
OF NEW YORK

February 2nd, 1917.

Dear Governor Strong
We had quite an active day in New York yesterday
because of the new German propaganda.

It is rumored in

the city to-day that Wilson has sent another "note" to the

German, Government, but owing to present disturbed conditions
has not made it public.

I enclose report of the Federal Reserve Board as to
renewal credits as of February 1st.

Shall I continue to send

you these two or three times a week?
Yesterday, we bought about ;4,000,000 of acceptances at from 3 to 3* %, buying nothing less than 3

and to-

day are having quite a fair volume of bills offered.

The

market at the moment is quite active, but prices about the
same as ln.st night.

2ij2-454y

A.114

3-4774

74-4-e5t67

a

'7

I understand from the copy of your letter to Governor Harding in re accumulation of gold bars that you will have
G....IL 1-14.4_,

ef-ce-1-51,7", 6,-,.

the opinion of the Federal Reserve Board through him, after
receiving which you will advise us as to the course to pursue
here and the amount to be accumulated, if any.
We have your telegram this morning in reference to
the Federal Reserve draft plan adopted at Washington, with




LAC .5-

077-24--0.

To

EDERAL RESERVE BANK OF NEW YORK

your criticism thereon.

Mr. Strong.

Feb. 2, 1916.

We have called a meeting of our Executive

Committee to consider this.

In view of the unanimous report of

the Governors present at Washington and the fact that the plan is
published in the Federal Reserve Bulletin of February 1st, I assume
that our method of proceedure here after our Committee has agreed
on the position which should be taken by the New York Reserve Bank
in this matter would be as follows:

We would advise the other six

Governors who were not present at Washington of the action of the
Conference, give them a report of the proceedings and accompany it
with a letter setting forth the position of the Federal Reserve
Bank.

Then that we should proceed as originally planned in Wash-

ington with the preparation of the proposed form of draft and other
machinery necessary, sending same after it is prepared. to each of

the reserve banks for consideration and then have a Governors Conference, probably about the 1st of z.arch and if such Conference

should think some modification of the plan advisable, we could then
properly go before the Reserve Board again, stating that the Governors Conference had after full consideration of the report of the
Committee, decided to recommend such and such modifications of the
plan, provided the Governors did agree upon the modifications.

In

this connection, we must. bear in mind that some educational work

will probably be necessary to bring about the changes desired.
I understand that Governor Aiken is coming over to New
York next Tuesday for a conference.

I assume from your letters that you are continuing to gain
in health and strength,
keep it up.




all of

which is fine and we just want you to

You are such a human dynamo that I have the feeling

ERAL RESERVE BANK OF NEW YORK

-3

To

Mr. Strong.

Feb. 2, 1917.

7....0",/
C)

constantly that you should have a governor or regulator of your
work attached to you every day lest you break loose.
Our very best wishes to you and M

.

Curtis.

As ever,

Sincerely yours,
7/44-4

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM
Enc.




420

APPRCKIMATE AMCUNTS OP ACCEPTANCES BASED U2ON CREDITS WITH

RENEWAL PRIVILEGE imp BY EACH PEDERAI RESERVE BANK AS
PER SCHEDULES CM PILE WITH THE FEDERAL RESERVE
BCARD, FEBRUARY 1, 1917.

(In thousands of dollars)
Amounts

held
January

Bank

Bought

Matured

29,1917

Amounts

held
Rebruary

1, 1917.

Date of last

schedule received

Boston

1,390

647

743

New York

6,503

(a)1,773

4,730

"

30,

?hiladelphia

2,371

139

2,232

A

31,

A

Cleveland

1,575

254

1,321

ty

30,

A

299

It

3D ,

Of

"

29,

tr
A

Richmond

299

Atlanta

January 26, 191.7

Chic ago

2,709

549

2,160

A

17,

St. Louis

1,247

367

980

A

27,

Anneapolis

615

145

470

?I

13,

Kansas City

,45

76

269

,,

13,

Dallas

641

391

250

n

13,

1,198

124

1,074

A

25,

18,893

4 465

14 428

San Fran el s co
Tot al

,
A

PT

"

(a) Comprises p277,000 of ordiaary accept armee previously included in
total ofvpaper held by the iOAr York Bank.
renewal credit
DIVISION Cilf RTPCRTS AND STATISTICS,

?EDE1 PRVE BCARD,
February 1, 1917.




......

FEDERAL RESERVE BANK
OF NEW YORK

Febii-uary 6th, 1917.

Dear Governor Strong:

Your letter of February 2nd in re making formal application for permission to appoin

the Bank of France as our

came in this morning and i

e pect to present it at the Directors

meeting tomorrow.
Sinc rely yours,

Deputy Governor.

Benjamin Strong, E
'he Adams Hotel,/
Phoenix, Arizona.

RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK

February 5th, 1917.

Dear Governor Strong:

y,

I am glad to know that you are having such a "bully"
visit with Judge Curtis and I hope you will find the weather
very pleasant and the environment an interesting one in Phoenix, Arizona.

We are wiring you to-day that conditions are quiet
here, the stock market having opened strong and higher; we

are having acceptances offered to us in moderate amounts and
are buying at from 3 to 3i % but no less.
-

I note that you are very much dissatisfied with the

policy being pursued by the New York bank in the matter of purchase of bills, etc.

I confess it has been somewhat difficult

to steer a course amid so many conflicting opinions of wht the
New York bank should.do, but evidently the Reserve Board had more
knowledge of probable war clouds arising than we appreciated and
I think that probably led Governor narding to sending out his
letter on investments.

At the directors meeting last week we

discussed the question quite at length, reporting that we were

now down below the $25,000,000 of investments which we felt was
necessary to pay our expenses, but at the time it seemed wise
to continue for a little while longer, but as usual, the "Lord

helps out those who are in trouble" and the war news changed the




FEDERAL RESERVE BANK OF NEW YORK

-2-

To

IdIr. Strong.

2/5/17.

situation so that we have purchased in the last few days nearly
,10,000,000 of acceptances and warrants at rates mostly from 3
to 3i %.

I hope this change will relieve your anxiety because

I do not like the feeling that you are not in accord with our
policy.

I think Warburg and the others in Washington have en-

tirely approved of the position we have taken during the month
of January and have recognized that it operated against our own
interests.

Perhaps, however, in the next few months, we shall

be able to make up enough so that it will not seem ill-advised
that we pursued this policy for a while.
I suggest that you transmit to "Judge" Curtis your
criticisms and suggestions so as to get them out of your own sys-

tem and let him bring them on to us when he returns and we will
give them the same careful consideration we always do anything
which emanates from your fertile and active, as well as sound,
mind.

Regarding the Federal reserve bank drafts, we expect
Governors Aiken and Rhoads here to-morrow and will go over the
matter with them.

Also talked with Fancher over the 'phone be-

fore he left for a mo-nth's vacation in Florida where he is stop-

at the Hotel Ormond, Ormond Beach.
We have sent out a report to the Governors, together

iping
with a copy of the proposed plan as outlined by the Governors Committee and asked them to go over the matter with their directors
and make such suggestions and criticisms as may occur to them,
our thought being that between the 1st and 15th of ::.arch we might

have another Governors Conference and thrash the whole thing over
before the final plan is put into operatidn.




FEDERAL RESERVE BANK OF NEW YORK

0

To

-3-

Mr. strong.

2/5/17.

We are having a fierce blizzard and snowstorm to-day
while I hope you are basking in the sunshine of Arizona.
My kindest regards to you and Curtis.
7e,

Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
Adams Hotel,
Phoenix, Arizona.
RhT/VCM




7,44-it,.#44-0/a
/ry, ci4
.712-

47. 7,17-11sea=
11441 ptA-1-4'

FEDERAL RESERVE BANK
OF NEW YORK

February 6th, 1917.

Dear Governor Strong:

I showed the telegram and
reserve bank checks to

,T.

in regard to parring
Woodwa d and it was done beletter/

fore your letter reached me.

IFederal

/

Mr. Locke sent on a suggestio

port but will not be present to-morrow

for the committee's re-

Lr. Woodward has been

working on a report and :r. Jay also, for presentation and action at the Directors meeting to-morrow.

Governors Aiken and Rhoads were in to-day and after an
exchange of views as to the war sit ation and its effect upon the
financial position, we discussed fir about an hour the parring of
Federal reserve bank drafts, and I

Mr. Jay joined in the discussion.

.

',Xoodward dropping in, he and

The views are somewhat diver-

gent as yet, but I believe we art working towards a clear view
i
point and hope we may frame up ur position in a way to have a
beneficial effect on the views of the other Governors and the
Reserve Board.

We did very little

o day in bills, buying only about

t50,000 for delivery to-day.

We had an offer from the Bankers

Trust Company but were about 1/8 of a point apart and they said
the open market would take ithem, so we passed them up.




ERAL RESERVE BANK OF NEW YORK

-.2"

To

Mr. Strong.

2/6/17.

We did a little rediscounting today, but not much.

-a

The city and the market seem quiet with no evidences
of excitement, but there is always the feeling that almost any
day something may develop.

I am enclosing a report of acceptances based on renewal
credits which, of course, will now begin to show additions because
of our recent large purchases.
I hope that you arehaving a most satisfactory jaunt
with Curtis and that it will do both of you good.
Sincerely yours,

Deputy Uovernor.

Benjamin Strong, Esq.,
The Adams Hotel,
Phoenix, Arizona.
RHT/VCM.
Enc.




AP PROXIMATE AMC LINTS OF ACC 74:Pr 1,11 C!4.:3 BASF:D tVO II CREDIT 8 W/TH

RENEWAL PRI VI LEGE HELD BY EACH REDF..RAL RES FR V.F. :BANK AS

PEE SCHEDULE'S ON PILE WITH Ta FEDEF.AL RERVF
5CARD, PEB3.; ARY 5, 1917.

( In thousands of do 11 ars
Amount

hold

Bank

February

AmcRlnte

bought Matured

held
Februory

1917.

1, 1 91 7.
743

Bost on

)

743

Date of last

ache Aul e r ee iv ed.

January 26, 1 917

New York

4,730

1,009

979

4,761

Pebtuary 3,

Philadelphia

2,232

331

662

1,901

3,

Cleveland

1,321

74

1,247

January 31,
Feb= ary 1,

299

Richmond

299

It

2,

At

2,160

CM wag°

135

134

2,159

1, "
January 31,
13, "

St. toui

880

25

855

Yinne a po Li 3

470

EO

420

911 S SS City

269

25

244

"

13,

250

25

225

te

13,

1074

99

975

"

25

2,073

1,829

Dal las

San Fra.no sco

Total

14 428

14474

DIITISICNOFR FP CRT

AN) 3 T AT TS T ICS ,
FALiL R F, SFR V '41 B OA2.1)




?ebruary 5, 1917.

AT




()A6.1742-7t(?

FEDERAL RESERVE BANK
OF NEW YORK

February-6th, 1917.

Dear Governor Strong:

Answering yours of Fe ruary 2nd about the
propriety of filing copies with t e Federal Reserve Board
of the cables addressed to the B nk of England, will state
that upon further investigation it developed that when our
Committee was in Washington th

Board asked them to furnish

copies of cables which had pa sed, and Mr. Towne promised
that the bank would do so an

this was acquiesced in by

both Mr. Peabody and Mr. Wo dward, so after presenting your
telegram to the Executive Committee it

Ws

decided there

was no other course to pursue and I am enclosihg herewith
copy of the letter I se t in connection therewith for your
files.

Am .pleas d to note that you had a cordial let,

ter from Deputy Gove nor Cokayne of the Bank of England.
incerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
Care The Adams Hotel,
Phoenix, Arizona.

RHTP/CM

FEDERAL RESERVE BANK
OF NEW YORK

February 7th, 1917.

Dear Governor Strong:

In re Foreign Banking Relations.

I presented your letter of February 2nd in re letter
to Dr. Vissering of the Bank of the Netherlands to the Board
meeting this morning and after an exchange of views it was
felt that it was advisable to defer sending this proposed letter for a While until war conditions cleared up somewhat, and
I hope that in this view you will concur but being free to advise us whenever in your judgement we should forward the letter.

After hearing your letter of February 2nd, the directors approved it and authorized the officersto proceed along
the lines suggested by you in this letter.
The Board received with pleasure the report from Yr.
Curtis that you were looking unusually well.

My very best re-

"gards to you and Curtis and I hope that you are enjoying every
day of each other's society.
Sincerely yours,

Deputy uovernor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK
February 7th, 1917.

Dear Governor Strong:
In re Acceptances.

I am enclosing herewith copies of report made to our
Directors this morning as to acceptances held, by whom and the
amounts.

Kindly destroy same after reading and not bother to

return.

If I am imposing too much upon your time and good nature by sending you this voluminous correspondence, do not hesitate to advise me as I do not wish to overtask one particle of
your surplus strength.

You can know the joy I feel in the news

I am receiving constantly as to your improvement.

I confess

that I have a little fear that you will become so frisky that
you will overdo, but hope for the best.
Do not answer all

of these letters as some of them are

merely sent for your information.
I am asking Mr. McKay

of Chicago, to send you a copy

of the brief he has prepared on free telegraphic transfers.
Sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM
Enc.



FEDERAL RESERVE BANK
OF NEW YORK

February 7th, 1917.

Dear Governor Strong:

At our Directors Meeting this morning, it was decided
thnt no change in discount rates would be made and as you know
we are not purchasing acceptances now, at any rate, under 3
but are securing quite a number of bills at from 3 to 3* %,

today picking up from $4,000,000 to $5,000,000 at these rates,
a large proportion of thembeing renewal credits or French Industrial credits.

I read to the Directors your two letters as to the
policy of cur investments and especially as to our being prepared
to handle any situation with courage and ,speed, but always on a
sound basis.

The question of vault control was also presented and
approved of.
Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Yontview Boulevard,
Denver, Colorado.
RHT/VCM




FEDERAL RESERVE

rrespondenc

Office

BANK OF NEW YORK

DatVe

4-17:

Subjectdoippliqt-

To
From

AO relocated, the nedification of the plan, to a.Lko Federal reserve

tank drafts lanediately available t one other baW4 ao sumestod by the ow).
matte° of our beard has bean givrn verw crlreful oenWoratien and we prolent
below the conditions-surrounding both piano.

If Close drafto are nnde payable

t a resElrve badt It will entail
0

If these drafts are wide receivable

CalaaJarL4C1EXEMLLL*

.

t it I riag

,:edera1 reserve Wan
(l) it will be unnnouss47 to maim any
to be prepared to
speoLal arrangements,
00I2t any drLift dra7a by'over
MX) banks..
( 2 ) 2he preeent'method of dolic basimoo would coatlaue, but the de..

44 2o pay three aiods of drafts -

forrod time vaml

-

one without advice, thin- second

Oil recolTA of Alvieeby lull,

and tae third on rim advice.

(3

(a) To have on ftle oilmatares of

thoso twZ,to_ane Reap all ohaoGon
corrected ur to date. This

Will -low) about 00,qr øInc-

be reeneved.

'Zho rresoot oastol is to r000lvo on
dopoolt for,Lmlediato credit or
Oah all "77m1 Yorh esehonco

Zheco-Pe&ml relervo bcvlh drafts
would be receivnd on the cam
bards.

tare cards;

or
Zo have an advice of oaoh and every
-

draft 2n, and the number of

thoso cool& molly ran Into thou..
sands. 2m0 advices munt be nude
by the.drumlaa bank, both forward..
od to the hone rescrvo bank, one
.o be cortifiod by We's and fornar'ed to the 1a7i7r reserve bank,

ither to pay the drsft vithout advice
or attosrt to secure advice by vire
to prevent Zo protostinc of a drnft
advice of which had failcd.to arrive.
It Is evident that wben tte reserves of the cou..itrY Waal have been

!many tranilferrod to the reserve trunks of their -respective :4.,;triatn a

-rof aountry banks will, of necessity, be oblied to disooAintic their
uith oorrosrendents la the-oenLra roserve oities eS thew c..-.iot
Word LO split their .4eoanto one olirry haLunces in t:-.eoc ocatres-for ex


immimp-wes,oki.cdRK
espon s ence

Date

Febro4r1517.

Subject

4.410.

moles only and earn 2 interest en such balanocs. axis v111 hx11In not 110n1. able to sell or supply excharce on t-ene centres whea

led upoa by their austoners.

20 avoirom this difficulty, the federal rt-

banks aro arrwaginc, for anew form of prilie osohnnce to be kaornias

llrel ftniVP exchaare to take the plow of -low Yort ems/4nm, vellah in the

t has been :Averted at per for immeilinto oredit th al7 past of the !:nitod
Lf these drafts (Federal reserve esehanrm) are mnde pcqable -t in toad

t;e11.

pp

reoeiva10 at 6 reserve ban, the only pcisty interested or many benefitod
in the derosltinc bank. :bo merchant or bank at Dromsville and the reserve
balik.at 41las are not interested Mallhat haprenn in 7ovi York.

Lord.

.

2aylor

ill be satisfied if their bank nivns them iusall-to °relit or ca-0, for the draft,
krAch is the nresent practice).-

7auld .a Isiu York bank consider 7erm4ttiaa all to ban:z depwitors of a

'Albany to dr= on them nnd pay the drafto on receipt with or without ad'2here is a practioo at the present timr of country banks drar1nr7 "r:Xts

vtoe

ilte.4w, for instance, and markinc thon "payable if desired" at a ow York
:hose banks ,Lre selected and it is a speoial arrnacement, whioh is more

itlioult to lake over 114, aad the lewYork bank insists upon an advice, slims.
J cards awl a limit of the amount to be paid la any one ay.-

Thu naafi!.

len prorosed by the solmittee of the direotors contemplates givinr this
Alegi, to over 74,00 bcmks and with the (Melee of any One of twelve places

-sest
.

in view of the fore-lolec, we reosAasnd, as 6n esperinental first

Mkap, that the rlan as acrood nron by the :7over.oro.aad the ibderal reserve



be adopted for them reaeoact
(1). :he simplicity of operatiOn.

RESERVE

--BANK OF NEW YORK

C orresponden ce
9

Date

Subject:
Nrorn

It mOles no abaire in pr000nt prootioes.
It v412 corivenleatlyiroplace the prewnt draPlAg

of 'c

orPcmohanm.

if the roo4Irleation a

roposod by. the oolrdtteo obenld be accepted

by the Aderal :oserve Board and the other Federal reserve,banito, e lhould ti..

dist upon the foillwing:




draftl to be Nyable only after rossirt of
advide.

77Ou1d obviate the necessity

Of 1121,tag siwAure oars.

451..4 tire In no peed of placlic.0 limit on the
amolLit of the drafts.

N.01

%.A.n IebpJ11,641CAiCe

.1%.

)

/ur total purchases from 17(*ibrea1y- let to 9th Inclusive for ourselves and

for-Ilistribution amounted to about

01,000,000

re were drawn under renewal credits almost

14,000, 00)
-

r amount there are indorsed by member bank.

2,0'0,000.

Durirk, the same period there have matured and

paid througb this bank, for account of ourselves and
441ftother ?ederal reserve banks, bills amounting to

11,191, Ocr

ing the same periou the renewal bills paid amounted to

5i117oon

This gives net increase On pur operations of all bills-

20,000,000

ich renewal bills total

9,000,000

This larce increase of renewal bills is accounted for by our purchase of
izoximately Q6,51/000 of bills drawn under the INnic.111 Industrial Credit of no-

-r 11, 1916.

The names that we have bought under that Credit include the
Chase National 3ank,
American n.xehange Uational dank,
. National 3ani: of Commerce,

:Abort!' National 3i1c,,

-

Bankers TruA ompanY,
S.

.,:organ

CorrranY,

Cuarant7 Trust Company,.

..

Guaramy Trust Company bills amount .to about ,5M010 alp are indorsed by the
;cers Trust Company, also by the American nichax4,e :ational Bank.

All of these bills have been bought at rates varying from 3r, to 3
-

high rate ;:enerally obtained for the nonner-.ber bills of the loncer maturities.
The maturities of aIl.purchases are well distributed over,:lareh and
several millions af very short ?ebraary and early naFch.




th.

The Aeneh Industrial

Only a moderate =Mit of the valume run into .:4y

.

re

...In

C11

cc

Subject

--a4r. Jay-

° From F

Date PO firriia1.7 9, 19 7

IboarM,FAAViNroAilioN,r

14.%.

=1

'!V

13RUA-3Y 1917.

Len 2u1.

Our pafticipation in the more rscent purchases will be larger than

as*ton does riot participate at present and Philadelphia, on account
their district where some meTlber banks in the mining region
heavy withirawals, also will not participate for a few days

trancisco Is limiting the amount of their :I.rticipationi
to the fact thatChicago and ,jinneapolis do not take billi drawn under the

ch Industrial Credit.
Other buyers in theArmd. market to-day show little dispositioa to take
any bills under 3 l/4;_, although'there are exceptions to this, as, for instance,
one member bank told me that they had sold_ their 90-day renewals tzlci.er the ion-

bright Credit to-day at 3

1



3/16%.

FEDERAL RESERVE BANK
OF NEW YORK

0.0f.
veo 09A

February 9th, 1917.
1

My dear Governor Strong:
Federal Reserve Bank Drafts.

The committee on Federal reserve bank drafts has been
?utting in a good deal of work and thought on the subject. I en-

close memorandum from Messrs. Sailer and Hendrickson this matter
and shall endeavor to send you later in the day copy of the report
as framed up to date, but same has not been submitted to Mr. Locke
and will not be sent out until properly approved.
The discussions seem, to be largely over whether the

drafts should be made "Payable at" or "Receivable at" and while I
have been in favor of making them "Receivable at" on the theory
that this plan is proposed to take the place of the present circulation of New York bank drafts and as they have been for years received at par in every important point in the country and credited
or cashed upon presentation', after which they have been forwarded

to New York for payment, I personally see no reason why they should
not be made "Receivable at".

However, as W,essrs. Woodw-rd and Jay,

also the New York bankers, feel strongly that they should be made
"Payable at", I shall not object to the report of our bank committee
recommending this to the Governors conference later.

In any event,

I hope that a workable and sound scheme will be finally adopted.
Sincerely yours,

Deputy 6977-rnor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

http://fraser.stlouisfed.org/
RHT/VC::
Federal Reserve Bank of St. Louis

,f

tti""7

r

1;,*

te

1 114

7770 understand that in sone of the Federal reserve districts the

transfer plan adepted by the Federal Reserve ,:ystern is not considered satis- /Ray-eseeeeesessmsseseesses.sesee

factoxy by the menber ban.

They wish to be able to draw their own checks

to transfer funds instead Of ordering the transfers made through their Fed-

eral reserve banks.

Various plans for making drafts dram by nnmber banks

on their Federal reserve baWe more acceptable and available than at present
have been snggested and a committee of the governors has been appointed to

confer with the clearing committee of the Federal Reserve Board to see if a
plan can be worked out.
The officers of the Federal Reserve Bank of New York have considered

the various sugeestions Which have been made and are of the opinion that a
satisfactory plan can be worked out seeking drafts drawn on Federal reserve

banks imeediately available at Federal reserve tanks provided the principles
of the .resent transfer system which have been tested and pVoved satisfactory
and sound for the past eighteen months are followed.

The enggeetiou of the

Federal Reserve Bank of New York, therefore, is as follows
The member bank draws,on a specially prepared form of draft,on its
ouusksiseeJtc

Ce-e-s.NA'

Federal reserve bank, marking the draft pereA4e a1 the Federal reserve bank of

the district to which the draft is to be sent.
The menber bade advises its Federal reserve bank the particulars of

the draft Pelt requests it to write or wire to the Federal reserve bank at which
A-12-t-tev-e-0,-4-4)

PLg-e-e-ee.,c

the draft has been made fort-411e, directing it to tete, the draft on presentation

and furnishing sufficient pertiaulars to identify it.
The Federal reserve ban% charges the amount of the draft to the ac-

count of its member bank on receipt of tile advice from tYe latter.



The Federal reserve bank which "wyr-e the draft should 'oe rere44

by

(A)

-2the Federal reserve bank on which the draft is drawn on

day of paywant.

The member bank may maim the draft riRreiria--only at the Federal reserve

bank of the district to which it is to be sent; and such Federal reserve bank
will receive the draft only for deferred credit if its first indorsement is not
that of a person, firm or corporation situated within its district.
As this service is undertaken for the convenience of the member banks

and without cost to the Federal reserve bmks except for telegrams, which presumbly the member bank will ray, the Federal reserve bank /lakes no charge for

but the member bank should be at liberty to charge excharce to their customers when practicable .







FEDERAL RESERVE BANK
OF NEW YORK

February 9th, 1917.

My dear Governor Strong:
I beg to enclose

rewith copy of a

letter received yesterday from the Comptoir

National D'Escompte de/aris.
We assume thhre is nothing further
for us to do althouzh I did have further in-

/

formation secured/as to taxes and forwarded
it under letter mail.
Sincerely yours,

6/4-7)14.44,44A_Th
Deputy Governor.

ienjamin.Strong, Esq.,
4100 Montview Boulevard,
Denver, Golorado.

RHT/VCM

FEDERAL RESERVE BANK
OF NEW YORK
February 7th, 1917.

Dear Governor Strong:

Federal Reserve Bank Drafts.

Mr. Woodward presented a report from our Committee on
Federal Reserve Bank drafts at the Directors meeting this morning, stating that he had given a great deal of thought to the
subject and that while the report was not finished, he read the
the draft prepared which was approved of by the Directors in
principle and referred i* Ir=ck to the Committee with power to

modify and send it to the other reserve banks and to the Reserve
Board at the proper time.
We are having a conference this afternoon of Messrs.
Sailer, Hendricks, Jay and myself to go over the report again.
There seems to be general unanimity of the view that there should
be advice from the member bank to the reserve bank of its district
and by that reserve bank to the reserve bank where payable and
that no drafts in amount above,

say, t250 to 000 should be paid

without advice, but no advice necessary for amounts less than t250
or *300.

ZULAtoe. YkAAAr.7
It was further thought that drafts of this amount and

less will constitute the large majority of those presented by the
country banks who will want to use this system when inaugurated.




9

- RESERVE BANK OF NEW YORK

To

Mr. Strong.

The difference between us now apparently is
the drafts shall be "Receivable at" or "Payable at"
designated.

2/7/17.

whether
the bank

I think we can frame it up satisfactorily and it

is possible that Mr. Woodward may have Messrs. Hardfng and Delano, also Mr. Jay, down at his Maryland home for a little holiday on Monday next, February 12th, at which time - if it is
carried out - the matter can be thoroughly discussed.
Everything is quiet here to-day and if we can only keep
out of war, we shall be very happy.

I shall be glad to hear from you as to mr. Curtis's
plans and his probable return.
Governor Aiken was here yesterday and lunched with Lessrs.

Peabody and Woodward and you will probably hear from him or them
soon.

Governor Rhoads was over also but went back early in
the afternoon to meet President Taft.
My very hest wishes to you.
Sincerely yours,

Deputy uovernor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM







FEDERAL RESERVE BANK
OF NEW YORK

\February 9th, 1917.

My dear Governor Strong:
It is fortunate fo,t Curtis and you that you are

in the sunshine and dry clim te as we are having samples
of all kind of weather, var,ing from day to day according
to Nature's whims.

I enclose repo t of acceptances held and would
state that we have been

veragirg about from $2,000,C00 to

t4,000,000 of purchases of bills each day since diplomatic
relations were broken.

Rates 3 to 3i%

Received a cablegram last night from Lord Cunliffe reading "Your

otter January 18th received and will

have attention but nclosures mentioned bottom page five
are missing."

Th

section referred to is as follows:

Letter January 181h, Section 13.

"It is further suggested

that the 'Bank of "ngland furnish the Federal Reserve Bank
of New York with! the necessary documents and papers to ena-

ble the opening of an account with the Bank of England and
accompanying t is letter are directions and forms applying
to the opening of an account by the Bank of England with the
Federal Reserve Bank of New York."
You will recall that after discussion here we
thought it advisable not to send the signature cards, etc.,

0

To

FEDERAL RESERVE BANK OF NEW YORK .........

Mr. Strong.

2/9/17.

until we heard from them as to their acceptance in general
of your proposition.

Unfortunately, we omitted to strike

out that section end will cable to-day.
With kind regards, i remain,
Sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM




P. S.

We have cabled Lord Cunliffe in answer

to his cable as follows:

"Cable received.

We withheld send-

ing papers and signature cards pending your decision on our
proposals.

from letter."

Regret we overlooked omitting paragraph thirteen

APPROXIMATE AMOUNTS OP ACCEPTANCITS BASED UPON CREDITS WITH
RENEWAL PRIVILEGE HELD BY EACH FEDERAL RESERVE BANK AS

.1).R SCHEDULES ON FILE WITH THE FEDERAL RESER 17

BOARD, FEBRUARY 8, 1917.

(In thousands of do llars .
Amount s

held
Fe br miry
7, 1917.

Bank

Bought

matured

h al d

February

8, 1917.

743

Boston.

Amo u. nt s

743

Date of last
eche dui e received.

February 6, 1917

New fork

6,029

150

6,179

ft

7

ft

Philad el phi a

2,058

75

2,133

It

7

It

Cleveland

1,656

1,656

9

5

9

299

299

n

7

ri

9

6

9,

Richmond

Atlanta
Chic ago

2,159

2,159

"

5,

St. Loui s

1,161

1,161

9

5,

IT

"

"

Minneapolis

420

211

631

Kansas City

287

18

305

..

6,
6,

Dallas
San franc' sco

225

39

234

"

5,

975

n

Tot al

DIV IS ID DI

975

16 012

.

493

Cr R3RS Ablii ST al STI CS ,

FEDERAL RES:ERVE BCARD,




30

February 8, 1917.

30

16A75

9

tit

1.1

FEDERAL RESERVE BANK
OF NEW YORK

February 10th, 1917.

Dear Governor Strong:

I asked Mr. James Brown to come in yesterday which
he did and I explained what you wanted to know in regard
to the laws, if any, affecting exports of gold from France.
He gave his opinion but afterwards said that he would write
either you or us direct, but meanwhile, before writing would
talk with the French Commissioner and also would secure information from his own counsel in France.

I told him that we

had not intended to make him any trouble, but he seemed very
glad to do this and you will see, therefore, that it is under way.

Kindly let us know when you are back in Denver and
whether we shall continue to advise you daily by wire as to
the situation unless it changes.
With my very best wishes,I remain,
Sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCIA

Dictated by Mr. Treman but
signed in his absence.



FEDERAL RESERVE BANK
NEW YORK

FEB211ji/

February 13th, 1917.

Dear Governor Strong:

Mr. Sailer has gone to Elmira for to-day and tomorrow to interview from that point various state banks
hoping to induce them to come into the Collection System.
Mr. McDougal is out with a letter, copy of which I secured
from my brother-in-low in Ithaca yesterday and for your information am enclosing.

I think we should go to the limit

in trying to bring the state banks into the System of their
own option and hope that the coercive method will be postponed until the very last moment.
I enclose also list of acceptances held February
12th.

Sincerely yours,

Deputy Governor.

Benjamin Strong, Esc.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM
ENC.




FEDERAL RESERVE BANK
OF NEW YORK

February 13th, 1917.
Dear Governor Strong:
I spent Sunday and Monday in Ithpica where the weather was

very cold and clear and bracing so it did ine much good and I feel

very much better than I have for the past two weeks.
I note that mail has been de ayed so it has been wise probably that during the latter part of 14st week, we sent your mail to
Denver.

Am very glad to learn that/you and Curtis are having such

a good rest with fine air and weatilbr.

We certainly shall not hes-

itate to keep you posted and plea,Se do not think that we are ir any
way deceiving you in oUt telegrains as to actual conditions.

It may

be that we are having a calm Wore the storm, people are serious
minded and thoughtful but ap arently without excitement.

Evidently,

we will not be plunged into.' war without very good reason for our go-

/

ing in.

Meanwhile, we are living in a period of suspense, not know/

ing what the day will sing forth but constantly trying to strengthen
/

the breast works of finance so as to be in readiness, and this is being done by the ban

/

generally.

I am se ding you copy of a memorandum prepared by Mr. Kenfor mr. Jay

n Saturday.

Possibly, he sent you one, but if not,

/zel

1

this will be in eresting.
Wit!i kind regards, I am,

Sincerely yours,

Benjamin Strong, Esq.,
4100 Yontiew Boulevard,
Denver, Uolorado.




FEDERAL RESERVE BANK
OF NEW YORK

February 14th, 1917.

FEB21191/
Dear Governor Strong:

Yesterday Mr. Morgan telephoned that they
were receiving $25,000,000 of gold and stated that part of it had already
been delivered to the Assay Office, but asked if we cared to
purchase it and as we had a meeting of our Directors this
morning,
we thought it a good time to take up the subject of
the entire
gold accumulation matter.
I reported your suggestion that we should
accumulate

gold bars now without further delay and as rapidly as we could.

The Board authorized me to take the matter up with
Mr. iorgan,
so Mr. J5y and I called on him this afternoon and told him
we
would take such portion of the
present shipment as he cared to
send over to us, but we did not wish to purchase it
and leave

it stored in the hall or other place in the Assay Office
under
guard for a week or so pending melting.

We further told him

that we would bewilling, if conditions did not
change, to take

more from him next week if it was coming in, simply asking
that
he give us gold bars instead of gold coin whenever
he could conveniently.

In the present lot, there is considerable German
coin

and they propose to weigh one of the boxes to secure its
value and
hen estimate the total amount in the boxes turned
over to us, they




FEDERAL RESERVE BANK OF NEW YORK

0

-2-

To

Mr. Strong.

2/14/17.

guaranteeing the account, etc., and we paying them 99 %, balances
to be adjusted after assaying.

-hey seemed to appreciate our willingness to assist in
this matter and I hope it will result in our accumulating an
amount satisfactory.

We told them we would be willing to take

from t25,000,000 to t30,000,000 and they said they felt that this
would be all they would want to let us have probably.
Mr. Jay is writing to the Federal Reserve Board to-day
asking that the question of re-melting charge be taken up and settled and he had the assurance, as a result of an interview with
Mr. Bovee yesterday at the Subtreasury, that he would approve it,
all of which is submitted for your information.
Sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK
February 14th, 1917.

Dear Governor Strong:

Your instructions signed by
of the bank have been duly received,

ontents noted and most of

them have already been attended to,
or next day to give

you an

itemize

he uovernor and the"Judge"

ut I shall hope tomorrow
answer to your instructions

so that you will know the present status of them.
As we understand, Curt s will be here on Monday next.
Things are moving aloqg very quietly and we have a govvernment flag hung

up in

the N ssau Street window as the building/

organization will not permit Ls to put out a flag staff as they
have one or two flags

floa ing from the top of the building.

I understand tha
Monday to confer with Mr

Governor Aiken was in Washington on
Warburg.

With kind reg rds, I remain,
Sin erely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK
February 14th, 1917.

FEB2 1 1917
Dear Governor Strong:
Bank of France.

Mr. James grown advises us that he has written to
France making inquiry as to any and all laws affecting the export of gold and has asked them to cable an answer, provided
a satisfactory answer can be given by cable; otherwise, the
answer will be mailed.

I assume that this will be in sufficient

time but if not and you think it advisable for us to consult
Coudert Brothers, kindly advise us.
Sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM







FEDERAL RESERVE BANK
OF NEW YORK

February 15th, 1917.

Dear Governor Strong:

I wrote you about a w ek or ten days ago
asking you to return the draf
burg of a proposed letter

prepared by Mr. War-

tJbe sent to the Banco de

la Nacion of Argentina but have not received it as
yet.

Will you be good e ough to have it forwarded

as it is needed to compl te our files here.

Thanking you iadvance, I am,
Sine rely yours,

'Deputy Uovernor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK

February 15th, 1917.

Dear Governor Strong:

I met Comptroller Jo

at the Waldorf last night and
with him.

Skelton Williams
ad a little talk

He asked in an in erested way about

how you were progressing and seemed pleased that
you were improving.

His appointee, M/. Malburn, is being received with evident satis action by the banks in
this district.

With kind reprds, I am,
Sin erely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM

FEDERAL RESERVE BANK
OF NEW YORK

11.4.fr

February 15th, 1917.

FEB21 1917
Dear Governor Strong:

We had another Directors meeting yesterday and the
new Class C Director, Mr. Saunders, appeared, was sworn in

and attended part of the meting, all the other members being present.

No change was madl in the rates for discounts or
acceptances.

Boston has

1/8 to 1/4 per cent, but

to 3-

aised its rate on acceptances

t seems to me that our rates -

- and we have bou ht some acceptances at

5 (pri-

vate bankers), is high enugh unless conditions change.
The Committee o

am sending you a copy of it for

sented their report and
your consideration.

Federal reserve bank drafts pre-

ad thought that we might have a

I

March to take up this question, but

Governor's Conference i

e that he talked with Governor narding

Governor Aiken informs

Washington and found him distinctly

concerning this while i

non-enthusiastic about Jolding these conferences.

In that

ask the various banks to submit their

case, we shall probabl

views to our uommittee and call another meeting of the Committee
before the first of Ap
We adjourned

or two weeks subject to earlier call

if conditions changed.
Sincerely yours,

Benjamin Strong, Esq.,

4100 Montview Boulevard,
http://fraser.stlouisfed.org/
Denver, Colorado.
Federal Reserve Bank of St. Louis

Deputy Governor.

New York, February 13, 1917.

To the Board of Directors
of the Federal Reserve Bank of

NOW

York.

Your special committee, to which tvas referred the report of the

com,-

mittee of governors recommending a plan whereby a draft drawn by a member bank
upon its Federal reserve bank could be made receivable at par by another designated Federal reserve bank, has given the matter much consideration, and respectfully presents the following report:

At oresent the great majority of the member banks keep accounts with
correspondents in one or more of the large centres, drafts on which they and
their depositors use in settlement of accounts due in various parts of the
country.

As balances with such correspondents will soon cease to count as re-

serve, some of these members may deem it advisable not to carry such atcounts

and it is planned to provide country banks and their customers with a method of
transferring funds to points where payments are to be made which will be as
satisfactory as drafts on corresoondents hitherto have been.

This may, by

elimination of accounts of country banks now kept in the large centres, prove
detrimental to the interests of member banks in such centres, but the committee

has endeavored to consider the paan with the sole objects of
making it a practical and effective method of
transferring funds for the country banks,
and of
assuring thorough protection to all concerned
in its use.

THE PRESENT METHOD OF SETTLING ACCOUNTS.

The method of settling accounts throughout the country may be illustrated as follows:

The merchant at Brownsville, Texas, who buys a bill of goods from




Marshall

Field & Company in Chicago on

credit, unless it is expressly otherwise

stipulated, undertakes to pay Marshall Field & Company in currency, or in a
sight draft which they can at once convert into currency on presentation

merchant's

in

check upon his local bank is not such a

Chicago.

Deliveryof the

payment.

At best, it is a postponement of the

payment until the Cheek can be

sent to Brownsville and collected and the proceeds transmitted to Chicago.
To avoid the

delay

consequent upon

the

merchant is accustomed to procure from

collection of a Brownsville chock, the

his local

bank a

draft

upon

its corres-

pondent in Chicago which, when remitted to Marshall Field & Company, can be
converted into cash at once by them,

THE FEDERAL RESERVE TRANSFER SYSTEM.
Some eighteen months ago the Federal reserve

fer

banks

undertook to trane-

funds for their members from one district to another, either by mail or tele-

graph.

But the member banks and their customers are so much more accustomed to

drawing checks than to ordering transfers in settlement of accounts that the

present facilities of the transfer system have not been generally availed of.
Your committee understands that the plan under discussion is designed to complots the transfer system by. enabling a member bank to transfer money to distant

points by drawing a draft on its own Federal reserve bank which

will

effect

pay-

ment through the Federal reserve bank of the district in which such point is
situated.

It is in the interest of good business that payments

promptly, effectively,

and by a

should be made

method which will be generally acceptable, and

to all efforts in that direction the committee wishes to give every assistance.

THE PLAN OF THE GOVERNORS' COMMITTEE.
The plan of the governors' committee is to make the draft of a member bank upon its own Federal reserve bank "receivable" at par when presented
 any other
at


designated

Federal reserve

bank, allowing such receiving Federal

-3-

reserve bank to

e
ne ege

the draft to the hone Federal reserve bank and collect

the amount thrangh the Gold Settlement Fund.
The member bank issuing the draft protects itself by charging the
amount to its customer.

The reserve bank upon which the draft is

drawn pro-

tects itself by Charging the amount, when advised, against the account of the
member bank.

The reserve bank at which the draft is receivable at par, al-

thou gh required to allow immediate credit for the amount, protects itself by

making this credit tentative until the draft has been collected.

Your committee does not approve the plan without modification because




The proposed draft would not be an instrument effecting prompt payment, but an instrument postponing payment.
Therefore, your committee
believes the proposed plan will prove ineffective and cannot be made satisfactory to the
country bank unless it is an instrument of
actual rather than tentative payment at the
Federal reserve bank of the district in Which
the payment is to be made.
The receiving Federal reserve bank will have to decide in each case how much credit it will extend
to the member bank depositing such drafts.
If
it curtails this credit, the immediate availability of the draft disappears; if it is compelled by
regulations to extend such credit regardless of
the strength of the member bank, an element of
weakness would be introduced into the system.
Under section 16 of the Act, each Federal reserve
bank has undertaken to perform two services for
its members:
To assist them in collecting funds
(represented by checks) due from
distant points:

To assist them in transferring
funds due to distant points.
The purpose of the plan is essentially a transfer
of money under No. 2.
Yet the operation of the
plan brings it under No. 1, since the draft has to
be sent for collection and final payment to the
distant point.
Your committee considers it an
unsound principle for a debtor, in order to make
payment, to send his creditor a paper instructing
the creditor to send to the debtor's locality and
collect the debt.

(d)

The proposal to limit a member bank to not exceeding .10,000 of such drafts in any one day seems
impracticable, since an effective limit can
only be placed at the paying end; and it does
not seem proper to limit a member bank in drawing on its own lands available for that purpose,
Or to limit "availability," if the system is to
be satisfactory.

SUGGESTED MODIFICATION OF THE PLAN
The plan, to realize its purpose, should be operated under the recognized banking methods of transferring funds.

Your committee therefore recom-

mends that it be modified so as to make such drafts payable on advice at any
designated Federal reserve bank.

This modification would entail two changes:

That the home Federal reserve bank should advise
the paying Federal reserve bank, usually by
mail, but by telegraph if necessary, to pay
the draft.
That the -paying Federal reserve bank should be
ready to assume the responsibility of actually paying the draft on advice.

nis modification, every party to the transaction would be protected - the member

bank by charging its customer's account, the home Federal

reserve bank by charging the member bank's account, and the paying Federal reserve bank, upon advice from the home Federal reserve bank, by charging the
amount to the account of the latter;

while the merchant in the district of the

paying Federal reserve bank would receive an instrument which would effect for
him prompt and actual payment of his account.

Against the modification suggested by your committee the following
suggestions are advanced:




The draft might reach its destination before the
advice;
It is cumbersome;

(0)

It adds to the responsibility and labor of the
paying Federal reserve bank.

With regard to (a) your committee believes that the advice would pro-

-5ceed promptly by the most direct route, whereas probably the great majority of
drafts would first go to parties in places other than the location of such bank,

would be by them deposited in local banks, and in turn would be forwarded to the
paying Federal reserve bahk.

Were the drafts to be used in the paying Federal re-

serve bank's city, a day would usually be required for the deposit of the draft and
its passage through the clearing house.

Should a draft arrive before the advice,

either it could be held awaiting the arrival of advice, or instructions could be
requested by wire.

A member

bank,

fearing in specific cases,

such as direct

remittances, that the draft would arrive before the advice, could stamp the ad-

vice to its home Federal reserve bank "Please wire."
With regard to (b) your committee believes that advice
reserve banks would not prove cumbersome.
slips.

between Federal

The member bank would advise on double

One of these advices the home Federal reserve bank would sign and for-

ward to the paying Federal reserve bank.

This is a simple transaction frequent-

ly used to-day by country banks in instances far more complicated; i. e., in
making foreign remittances.
,ith regard to

(0)

your committee believes that the responsibility is

no more than a reasonable banking risk which must be assumed by Federal reserve banks

if the system is to introduce a draft which will satisfactorily take the place of
those hitherto used.

In the case of the foreign remittances referred to in the

preceding paragraph, it is certain that the foreign drafts would not give

satis-

faction if they were made only tentatively payable at foreign places and had to
be returned to some point in the United States for final payment.

Probably

more drafts would be drawn on the Federal Reserve Bank of New York than on any
other Federal reserve bank, and its officers believe

that

the machinery necessary

to pay such drafts on advice would be entirely practicable.




RECOUMNDkTION OF COAMITTEE
Your committee recommends that the directors of the Federal Reserve

Bank of New York, desiring to cooperate in

every way with the Federal Reserve

Board in its effort to provide country berate with a practical and effective

method of transferring funds through

the medium of their

own checks, urge that

the plan presented by the governors to the Federal Reserve Board be modified as
above

recomended so as to make

able for

immediate

availability"

drafts "payable upon advice" instead of

at the Federal reserve bank of the district in

which the payment is to be made.




"receiv-

(Signed)

William Woodward
Franklin D. Locke

Pierre Jay
Leslie R. Palmer




Jffice Correspondence
To

Mr. Tremsn

From

FEDERAL RESERVE

BANKOFNEWYORK

Date February 16, 19',

J. D. Higgins

STATE BANES AND
TRUST COMPANIES

Subject:

Par list
District No. 2

BANES
CHECKS
COLLECTED
TOTAL

BANES

AT PAR

COLLECTED

NOT

New York

304

190

114

New Jersey

106

105

1

Connecticut

15

15

0

425

310

115

NOTE:

This is the correct total but it does not agree with the Federal

Reserve Bulletin because the Corn Exchange Bank and branches were not
deducted when admitted to membership. The correction will be shown

in the March Bulletin.

FEDERAL RESERVE BANK
OF NEW YORK

Ye.bruary 16th, 1917.
Dear Governor Strong:
Accumulation of Gold.

In accordance with our arrangement with
srs. J. P. Morgan & Company this bank secured
about 150 boxes of German coin Wednesday afternoon,

valued at about $6,000,000 and yesterday took in
about 300 boxes of French coin and bars, valued
at about $11,000,000.
I assume that we will se-

cure more gold next week as there seems to be a
probability of a considerable amount coming in soon.

Would you think it advisable for us to
have our coin and bars melted and then for us to
take American bars in return to hold?
Sincerely yours,

ce,Kgyti.
Deputy Govot7ror.

Benjamin Strong, Esq.,

4100 Montview Boulevard,

Denver, Colorado.

RHVVCM




Later:

lAessrs. Morgan & Company

win

let us have $12,000,000 more
next Tuesday.

FEDERAL RESERVE BANK
OF NEW YORK

February

6th, 1917.

Dear Governor Strong:

I have received your/aver of February 10th
from Phoenix, Arizona enclosin
Governor Aiken.

Also, note

copy of a letter to

hat you will send me

copy of the letter prepared by Mr. Warburg in re Banco
de la Nacion de Argentina.
You may have

ought me a very poor corres-

pondent lately, but wit

Mr. Curtis away, Mr. Jay and

I have had our time qu

e fully occupied so that there

has been but little t'

available to do more than the

necessary work which

evelops from day to day.

With kind regards, I remain,
Sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
.

RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK

February 17th, 1917.

FEB21911
Dear Mr. Strong:

Mr. J. B. Forgan was in again Friday morning going over
matters which are to be discussed next Monday at the meeting of
the Federal Advisory Council.

He took a copy of our Directors

report on Federal reserve bank drafts and apparently seemed to
be satisfied with the position outlined..

He reported that money was stiffening in Chicago and
the West and he looked for

higher

rates.

Mr. Morgan expects to be present at the meeting in Washington I believe and Mr. Jay has been down at his office going
over some of the subjects which will be up for discussion.

I

hope they may accomplish some good but I learn that the House
Committee on Banking and Currency last night laid aside again
branch banks and decided to recommend that 6 % instead of 7 %
be carried in the Federal Reserve Bank and 4 % instead of 5 %
as till money, making a total reserve of 10 instead of 12 %.
I assume that now the Senate and House Committees will consider
these amendments in joint session.
I hope you have had no ill effects from your Arizona
trip.

Sincerely yours,

2V
Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.




treau..

FEDERAL RESERVE BANK
OF NEW YORK

February 17th, 1917.

FEB21131/
Dear Governor Strong:

I have yours of February 10th from Phoenix and replying to same beg to say that I hardly think your criticism
is entirely just as to the policy of our investments being
dictated from Washington.

it is true that either by letter

or by telephone in talking to Governor Harding or Mr. Warburg
(generally the latter), we have stated the policy under which
we were working, or have discussed with them our viewpoint
which I consider proportionately valuable to me and to the
Reserve Board; they thus secure information as to conditions
at the financial center and there has been a reciprocal benefit, but frankly, I do not think our proceedure has been based

upon suggestions from Washington, although we have always taken
any suggestions from them into full consideration.
With kind regards, I remain,
Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/V0d

Dictated b y Mr. Treman
but signed in his absence.



FEDERAL RESERVE BANK
OF NEW YORK

February 17th, 1917.

FEB211917

Dear Governor Strong:

This matter I have left with Mr. Jay who has consulted with Mr. Bovee and has also written Governor harding.
It may be of interest to know that we shall have a
total of $30,000,000 of gold in the bank probably next week,
this being an assortment of German and French and possibly
other coin, together with gold bars.

I assume we will have

these remelted when convenient to the Assay Office and then
unless you think it advisable not to, our plan is to take
back, say, $25,000,000 in American bars to hold so long as
it may seem advisable.
Sincerely yours,

/rv
Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM
Dictated by Mr. Treman
but signed in his absence.







FEDERAL RESERVE BANK
ukOF NEW YORK
FEB211917
February 17th, 1917.

Dear Governor Strong:
Purchase of Bills.

We are holding to our rate of from 3 %
to 3i %, sometimes 3,4 % on private bankers' ac-

ceptances and unless conditions change will probably continue to purchase in moderate amounts as
offered, but not reach for them.
Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
Dictat,d by Mr. Treman but
signed in his absence.

RHT/VCM

FEDERAL RESERVE BANK
OF NEW YORK

February 17th, 1917.

D.Of
Dytepte

r Strong:

We are today sending to each of the Governors a
copy of the report of our Directors asking that their Directors give same consideration and send to me as Chairman
of the Committee their approval or criticisms and any suggestions so that we may have a meeting of the Committee of
Governors with Mr.Aiken some time early in March, as we
understand Governor Harding does not approve of another
Governors Conference just now.

When Mr. Curtis returns, we will go into the matter
of a form of bank draft and other matters for more definite
action.

Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM
Dictated by Mr. Treman but
signed in his absence.




FEDERAL RESERVE BANK
OF NEW YORK

February 19th, 1917.

FE132 3 1917
Dear

Governor

Strong:

Bank of France.

In re Bank of France matter, I received your letter
and sent it

over to Mr. Kent on Friday and he has been in to-

day discussing the proposals outlined, with Mr.

Curtis

and me.

Later, Mr. George Roberts came in at my requeat and I have
given him the proposed letter and he will return it to us with
his comments on Wednesday.

Meanwhile, Mr. Jay left this afternoon

for

Washington

to go over with the Reserve Board the question of our formal application to appoint the Bank of France as our correspondent and
informally to arrange with them as to the announcement - when to
be made, etc.

He hopes to return to-morrow night so that on Wed-

nesday I trust we can begin to frame up the situation definitely.
With kind regards, I remain,
Sincerely

yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Montvicw Boulevard,
Denver, Colorado.

RHT/VCM







FEDERAL RESERVE BANK
OF NEW YORK

February 17th, 1917.

FEB211911
'Dear Governor Strong:

Bank of France.

We have letters in re Bank of France and
the proposed arrangement.

Mr. Roberts being out of the city temporarily, I am sending to Mr. Kent the proposals for
consideration and

his

have arranged that he will look

them over so we can have them Monday, at which time
I hope Curtis will have returned and we can then go
over them in detail.
Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM
Dictated by Mr. Treman
but signed in his absence.

FEDERAL RESERVE BANK
OF NEW YORK

February 17th, 1917.

Dear Governor Strong:FEB21191/

The Collection System.

Mr. Sailer was in Elmira and Olean on Tuesday and Wednesday and from these points telephoned to a number of state
banks, making some headway with some of them and none with
others.

Hendricks was in Albany Thursday with about the

same result.

Mr. McDougal came out in an article on the Federal Reserve Bank trying to coerce the state banks, but his letter
has apparently not had much influence, at least, here in the
city, but I assume it has with some of the smaller banks.
I am enclosing a memorandum containing some information concerning banks in the System in tnis district by which
you will note that there are 115 still outside.
Next Saturday, February 24th, Group III is to have its
meeting in Elmira and I learn from Mr. Turner that the Committee has invited Mr. McDougal and Mr. Skinner of the State Bank
Department and possibly Representative Fowler.

I shall try

to be present but do not know what I shall be up against but
rather expect there will be some radical opinions expressed




,DERAL RESERVE BANK OF NEW YORK

-2-

To

Mr. Strong.

2/17/17.

.11X'

in re our collection system.

Personally, I am convinced how-

ever of the great advantages of our system and that if we have
time to work it out its results will be most satisfactory.
Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM
Dictated by Mr. Treman
but signed in his absence.




FEDERAL RESERVE BANK
OF NEW YORK

FEB2 3 1917

February 19th, 1917.

Dear Governor Strong:
Re Bank of En',1and Cables.

Mr. Curtis returned this morning to the bank and we were
all very much pleased to have him make so good a report as to your
condition and feeling.

I am sorry to learn from him how strongly you disapproved
of our sending copies of the cables to Washington.

Neither Yr. Jay

or I realized from the letter you sent how strongly you apparently
felt.

I submitted this letter to the Executive Committee at the

time it was considered and as Mr. Towne stated that he had agreed

to furnish these cables and this being acquiesced in by -

.

Peabody

and Mr. Woodward, I felt as did the others that the only thing to
do was to submit the copies.

So far as I was concerned, I did not know the detail nor
the exact manner in which Mr. Curtis had discussed the Matter with
Mr. Morgan.

I knew, of course, that he had had the interview with

him and Curtis showed me the copy of the cablegram which he proposed sending and this matter was all discussed with Mr. Woodward
before action was taken, but I think that neither of us realized
that it was your great desire and intention to conduct through
Mr. Morgan as a personal matter to the extent that Mr. Curtis indicated to-day.




-2 -

FEDERAL RESERVE BANK OF NEW YORK

To

Mr. Strong.

2/19/17.

I assume the responsibility and the criticism which I
feel is just,

when I stated in my letter to Washington that the

cable was sent to the Bank of England which was, of course, an
error.

We have suggested to Curtis to make an exact statement

of the different steps which led to the preparation of the cable
and the sending of it

and also to prepare the kind of letter

which he thinks we should send to the Federal Reserve Board in
order to keep our records correct, which he will do.
The letter I wrote to Governor Harding acknowledging
receipt of his letter of criticism will in no way preclude our
sending another communication as I simply acknowledged receipt
and stated that the letter had been read to our Board of Directors at their meeting, and I made no further comment or statement
concerning it.

I assume that the matter will come to our Direc-

tors at their next meeting next week and receive their consideration.

You, of course appreciate how sensitive the Reserve Board
seems to be over this whole Bank of England matter, and on the other
hand, most of our Directors at least feel very strongly as to the
treatment afforded the Bank of New York and some of its officers
by their action.

This is one of the cases where I personally, of course,
feel chagrined that matters are not better handled in your absence
and regret sincerely that your appreciation of this fact must cause
you more anxiety than I wish it to while you are convalescing.
The fact that Mr. Curtis was theonly one familiar with
the details of the conduct of this Bank of England matter and his




_OERAL RESERVE BANK OF NEW YORK

3

To

Mr. Strong.

2/19/17.

being away at the time the letter from the Reserve Board was received,

of course, made it still more unfortunate.

However, aside from

this matter, I hope that you are not unduly anxious or worried over

the situation here as things seem to be going fairly well in most

ways and it will not be long now I trust before you will be able
to come back and go over important matters yourself.
Once more, let me assure you of the great pleasure we

have in hearing such good news of your condition.
Things here are somewhat in suspense but there seems to
be a somewhat better feeling in the stock market at the present
time and the hope that grows that we may be kept out of war.
My very best wishes to you.
Sincerely yours,

Deputy Governor.

Benjamin Stromg, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM




I




FEDERAL RESERVE BANK

a05 VW YORK
11101. Yr'
FEB2 :1 191/

February 20th, 1917.

Dear Governor Strong:

The officers of the Federal Reserve Bank who are
now resident here beg to acknowledge receipt of the report
of the Special Committee consisting of Governor Strong and
"Judge" Curtis, appointed by themselves to "consider ways
and means for preparing the Federal Reserve sank of New York
to render the maximum amount of service to the government
and to its member banks."

In considering these suggestions in detail we
find that many of them have previously had consideration
and provision made for carrying on the work as outlined.
In order that Governor Strong and "Judge" Curtis
may be fully informed as to each of the suggestions contained in the memorandum, I beg to enclose herewith a report
in detail and hope that same will give some evidence that we
are not"asleep on the job" and although we have at times done
things which have had to be "condoned" by Washington, we are
endeavoring to keep the Reserve Bank of New York in operation
as well as it can be done during the absence of the real head.
Be assured that suggestions from you are always
welcome and it is our intention to give same full and careful
consideration and we have constantly before us, not only the

AFEDERAL

RESERVE BANK OF NEW YORK

-2-

To

Mr. Strong.

2/20/17.

1IP

responsibility but the necessity for making careful preparation
in anticipation of any sudden and great demands which might be
made upon this bank at any time when an. emergency arises.

Respectfully submitted,

at./C7)414-1-0C4,ft/v-,
Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorndo.
RHT/VCM
Eric.




REPORT ON EMERGENCY PREPARATION.

NOTE SUPPLY:

The Federal Reserve Bank hns about $15,000,000

of Federal reserve notes in their own vault, $55,000,000 in the
hands of the Federal Reserve Agent in New York; about $175,000,000
are all prepared in Washington and instructions had previously been
sent to Washington to have printed up to $600,000,000.

DISCOUNT DEPARTMENT:

We now have a permanent force of five

men; have also trained five extra men for emergencies and contemplate training an additional five men more during the coming month.

DISCOUNT DEPARTMENT:

We have at present a supply of blanks

and forms sufficient for six months normal business, are taking an
inventory of all supplies needed in this department and other departments and will provide for an extra supply of forms used most
frequently.

CREDIT DEPARTME:T:

Arrangements had alreedy been made with

Mr. :jalburn and we have his agreement to supply us with information,
particularly as to doubtful banks.

MONEY DEPARTMENT:
in this department.

There are eight expert money counters (men)
In December and January when we had some extra

heavy work, we called upon six other trained money counters in other

pats of the bank and with this force were able to handle 200,000
bills in one day.

Mr. Sailer reports that none of the banks in New York
City have a department that can handle half as much money as can
this bank.




-2-

TRANSIT DEPAR: EMT:

There are 56 persons employed in this de-

partment, 46 girls and 10 men.

During December and January, they

handled an average of 40,000 items a day, a margin in this sufficient
to handle one-third more and one day this week we handled practically
63,000 items, closing with a net difference for that day of 30 cents.
PHYSICAL SECURITY:

(a)Window guards have been promised us for

the last three months; we have prodded them from time to time and are
now advised that they will be installed within the next ten days, i.e.
about :.:arch let.
(b)

We have a night force of five men

on duty every

night, five men on duty on Saturdays and Sundsys and holiday nights.
These are distributed as follows:

One man in the vault lobby, anoth-

er on the main floor guarding the rear and front entrances, one on
the fifth floor acts as watchman and night porter, one is a night
porter giving signals to the Holmes Protective Agency periodically.

We have extra men patrolling outside the bank on Pine and Nassau
Streets night and day.

In addition to our own force, there is an

extra special force guarding the United States Treasury across the
street.

As to day patrol, two men are constantly on duty and we

have an extra Holmes man who assists these two.

There is also a

watchman between 8 A.M. and 5 P. M. at the rear entrance all the time,
beirgrelieved at night by the night watchmen.
We have installed a

special iron grill and gate at the

head of the stairs leading to the basement and vault room, guarded
by one man.

Another man is assigned to the desk in the vault lob-

by controlling access into the new vaults, so there is a total of




-3-

six men on guard, not including outside patrol.

We have ordered

uniforms for one man each night and day patrol.
We had been in touch with Police Commissioner Woods'
office for extra guards and yesterday Mr. Curtis

took up this matter

again with Mr. Woods.

Since June 15th, no employees have been taker on
unless their antecedents were Americans as far back as grandfathers

and have been very careful to select only those who are thoroughly
in sympathy with our government and institution.
The rear entrance door is always locked and addition-

al bolts have recently been put on the heavy door.
tained only when the guard unlocks and unbolts the door.

E
The matter

of our rear entrance has been under consideration of a committee of
our Directors and has been under discussion and consideration by our
officers.

We had the matter of transit people using fifth floor entrance under discussion yesterday and opinion seemed to be about evenly divided so far as the officers are concerned, but we are to take
it up again at an officers meeting soon.
(f)Watchmen,have been carefully instructed as to their actions in case of emergency.
B.

FOREIGN MATTERS:

on foreign exchange.

(a)

We have not secured an expert

Mr. Forgan when here seemed quite emphatic that

the reserve banks should not undertake to deal in foreign exchange in
competition with member banks.
(b)

You are kept informed as to our proceedure as to ne-

gotiations with the Bank of England and Bank of France.




_4_.

GOLD:

(a)

As we have advised, we

have accumulated about

$18,000,000 of gold coin and bars and expect
about t12,000,000

to-day, making a total of 00,000,000.
to whether we should

sell

I await your advice as

the coin, both German and French, if

we have the opportunity or if we deliver same to the
Assay Office shall we take and hold American bars, at
least, for the
present?
(b)

this

Note Issue:

We understand the Senate has put

note issue amendment back into their bill and there
will

be a joint conference of the committees this
week.

Mr. Jay

is in Washington to-day and will probably
secure details.
EQUIPMENT:

We have already arranged with the telephone

company to connect our switchboard with a long distance loop
which will give us prompt connection with
Washington, Boston,

Philadelphia, Chicago and Cleveland.

The manager of the tele-

phone company is endeavoring to work out a scheme
whereby we
will receive still moreefficient service.
We have also taken up with the Western Union
Telegraph
Company similar arrangements.
ORGANIZATIC: :

We have asked your colleague, "Judge" Cur-

tis, to consider a report upon this matter in
detail.
DOMESTIC EXCHANGES:

We have already taken up with the

Clearing House Committee the matter of member banks
settling

through the Federal Reserve Bank and also as to
their removing
their charge of 1/40 of 1 %, both of which are under
considera-

tion by the Clearing House Committee.

The Chairman has assured

me that the 1/40 would be removed if we would be
patient.

After

March 4th, when we know more about the amendments,
it is our purpose to take up actively the settling of balances through
the
Reserve Bank.



Daily settlements through the Gold Fund are already contemplated and we are prepared to begin them any time this may
be decided upon.

If the Federal reserve bank draft matter is

settled, it will necessitate daily settlements.

13.

GENERAL INSTRUCTIONS:

We have already consulted with

Mr. Morgan as to state banks and trust companies joining the
system and he was of the opinion that it was not yet just the
time to attempt this actively.

After Congress adjourns and

we know what amendments are decided upon and the collection
system is a little more clearly worked out, we can then take
up this matter more satisfactorily.

(Mr.Morgan did not think

the Clayton Act was the chief difficulty in the way of their
joining.)

This covers'the points contained in the report of the
Special Committee, but we are glad to have any suggestions at
any time.

RHT/VCM




ApTROXIMATE AMOUNTS OF ACCEPTANCES BASED UPON CREDIT S WITH
RENEWAL PRIVILEGE -OLD BY EACH FEDERAL RESERVE BANK AS
SCIIELULES ON PILE WITH fflEFEDAL RE MRVE

BOARD, FEBRUARY 16, 1917.
( In thousand s of dollars )
Amount s

Bank

held.

Amount s

Bought

Matured.

Fob= ery
15, 1917.

ce iv ed

New Yo

10,271

300

443

50

10,506

VI

15,

100

2,739

TI

15,

3,538

12,

300

743

11,

285

2,839

Cleveland

Richmond

Date of last
schedule

100

Bos t cn

Philadelphia

held.

February
16, 1917.

300

February 14, 1917

11

Atl ant a

If

TT

TI

TT

It

14,
IT

Chi c ago

2,064

469

150

2,383

St. Louis

1 ,808

200

100

1,908

11

13,

Minneapolis

672

235

907

11

13,

TV

Zan sac City

846

846

IT

13,

TI

Dallas

301.

301

VI

9,

11

San Francisco

911

911

TT

9,

Total

24,393

,189

800

DIVISION OF REPORTS AND STATISTICS,
FEDERAL RESERVE BOARD,
February 16, 1917.




24,782

13,

It




FEDERAL RESERVE BANK
OF NEW YORK

February 21st, 1917.

FEB2 6 1917
Dear Governor Strong:

I am enclosing a brief which came in today
from Governor Seay, it being the work of Charles A.
Peple, Deputy Governor of the Richmond Bank.
I hope now to have a meeting of the Uommittee
of Governors between the 1st and 15th of L-arch, depend-

ing somewhat upon Governor Fancher's return from Florida.
Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4100 Eontview Boulevard,
Denver, Colorado.

RHT/VCM
Enc.




FEDERAL RESERVE BANK
OF NEW YORK

February 21st, 1917.

fo32(.19\i
Dear Governor Strong:

Bank of France.

Mr. George Roberts Was in today and we shall
.hope to send you tomorrow or Friday our suggestions
on the proposed draft of letter for Monsieur Pallain.

We are sending a cable to him today,a copy of
which is enclosed herein.

I assume Mr. Jay will write you as to what
transpired on his visit to Washington and I will speak
to him concerning it.
With kind regards,
Sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/V0M
Enc.




FEDERAL RESERVE BANK
OF NEW YORK

February 27th, 1917.

Dear Governor Strong:
Bank of France.

I have yours of February23rd and Mr. Jay has
advised you of the Board's action.

Today, we are sending a c

le

to Monsieur

Pallain and are taking up with the Board the question
of the form of announcement, the details of which I
think Mr. Curtis will write
With kind regards,

remain,

Sincere y yours,

Deputy Governor.

Benjamin Strong, E-q.,
4100 Montvidw Boulevar
Denver, Colorado.

RHT/VCM
P. S.
Copj of cable sent Monsieur Pallain is
being forw,,rded you by Mr. Curtis.

FEDERAL RESERVE BANK
OF NEW YORK

February 28th, 1917.
MAR

1913

Dear Governor Strong:

I hand you herewith report of the amount of acceptances
based upon renewal credits.

I acknowledge receipt of return of draft of letter prepared by Mr. Warburg for our consideration in taking up, if we decide to do so, the establishment of relations with the Banco de la
Nacion Argentina.

In this connection, while our Executive Commit-

tee yesterday decided to defer entering into such relations until
after we hnd established relations with the Bank of England and the
Bank of France because of the uncertain condition of matters now
prevailing, I still believe that it would be well for you at your
leisure to draw up a brief of suggestion as to the extent to which
we should enter into relations with this bank and on wh:A basis, so
that if later it should seem advisable for us to do so, we could
take the matter up without delay.
Sincerely yours,

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM




APPROXIMATE AMOUNTS OF ACCEPTANCES 13,,

D UPON

Tii

RENEWAL PRIVILEGE HELD BY T.ACti FE
L RESERVE BANK AS
PIM SCHEDULES ON FILE WITH TW: FEDERAL RESERVE

BOARD, FEBRUARY 26, 1917.

( In thousands of dollars)
Amounts

held

Bank

Febr-uary
24, 1 917

Bought

Mat ured

493

Bost on

Amounts

held

February
26, 1917
493

Date of last

schedule r e ceived.
Februaly 17,1911

10,858

200

10,658

9

23, 9

Phila del phis.

2,739

75

2,664

9

19,

Cleveland

3,588

la)

3,488

9

750

9

17, 9
23, 9
16, 9

New York

Ric'h.frond

750

Atl ant a

It

17,

9

9

17,

it

882

9

17, 9
17, 9
16, 9

Chicago

2,503

75

2,428

St. Louis

2,568

75

2,493

PT

Mirneaoolis

907

Kansas City

846

846

"

Dallas

480

480

9
9

an Fra ncisco

Total

25

1,825

75

1,750

27,557

625

26,932

.)IVI3IOi OF FE 2C RTS LID 3 TAT ISTI CS ,
F E D EFL\ L RSERVe,




AR D ,

February 26, 1917.

16,

9

FEDERAL RESERVE BANK
OF NEW YORK

MAR3

1917

February 28th, 1917.

Dear Governor Strong:

Yesterday we had a meeting of the Executive Committee,

Messrs. Peabody, Woodward, Jay, Curtis and I being present; Palmer and Towne absent.

We considered suggestions voiced by Mr. Curtis of your
combined feeling that our records were incomplete in connection
with the Bank of England cables.

After a long discussion, it was

thought advisable that I should bring the matter up informally
this morning before the Board of Directors, stating that I found
I had made some mis-statement in regard to the events which led up

to sending these cables through Mr. J. P. Morgan, and ask that I
might submit at the next meeting a letter correcting this misstatement, at which time it was thought we could then have the Directors discuss the matter fully.
There seemed'to be unanimous agreement, aside from Mr.
Curtis, that at the present time it was very unwise to enter into
a further correspondence just now in this connection because of the
irritation which had developed partly, in my judgement, through
their not understanding all the influences which had led to our
action in New York and also, in my opinion, because at the present
time we should in all fairness, recognize that the members of the
Board are not only now, but have been for some months past, under




EDERAL. RESERVE BANK OF NEW YORK

-1.1°19

-2-

Mr. Strong.

very great tension and pressure.

2/28/17.

They have had very strong op-

position develop in the Congress against the amendments, part of
which I think (from what I hear), may be ,,due to strong opposi-

tion of some of the small bankers, based on their feeling that
the Kitchin Bill would not go through and if so, they felt probably that they would be justified in opposing any and all legislation suggested by the Reserve Board.
Sincerely yours,

/

Deputy Governor.

Benjamin Strong, Esq.,
4100 Yontview Boulevard,
Denver, Colorado.

RHT/VCM
Enc.







FEDERAL RESERVE BANK
OF NEW YORK

IMee.
MAR3

February 28th, 1917.

1917

Dear Governor Strong:

I enclose herewith a letter from E. C. McDougal
of Buffalo to the state banks of New York State.

He is

President of the Association of State Banks and you will
note his Executive Committee.

Confidentially, I learn that part of his Committee is not in sympathy with his movement and especially
with the formation of a central bank or exchange through
which New York state banks can clear.
I thought this might be of interest to you.
Sincerely yours,

/16/177-1"f
Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/VCM
3 Enos.

FEDERAL RESERVE BANK
OF NEW YORK

afrr.
MA115

February 28th, 1917.

1917

Dear Governor Strong:

I am enclosing copy of a letter which Governor Wold
wrote in regard to your health and it is only an added argument
to mine of this morning concerning the responsibility resting
on you to make good in your recovery.
I have to report that Mr. Cann has resigned, he having

accepted a position with the Bank of Ottawa as Assistant Manager
at a very satisfactory salary, his resignation to take place on
March 12th, and we will have to look for a new credit man.

have

you any suggestions?

I have yours of February 19th and note your disappointment in the Aiken matter.

He and

Rhoads are coming over to New

York on Saturday and I shall try and have a talk with Aiken at
that time.

I have been giving some consideration to your thought of
going abroad in June and am led to suggest that you carefully consider whether it would not be more advisable for you to postpone
the going abroad even at the risk of having delayed or held up for
a time the detail matters of adjustment in the banking relations
with Prance and England until the Fall or Winter, or even late Sumfirst,

mer,Abecause it would seem to me wiser for you to become acclimated
to the change incident to your living in the high altitude of Colorado and then the lower altitude and also, because there are many




r'EDERAL RESERVE BANK OF NEW YORK

-2-

To

Mr. Strong.

2/28/17.

things which would need your consideration in regard to the reorganization of the bank here.

It seems to me most important that

you should be in New Ynrk for a while in the Spring or early Summer to assist the bank in a reorganization which will permit you
to be free to give consideration to the most important things,
among which, is to straighten out our relations with the Federal

Reserve Board at Washington and to assist the other Governors in
maintaining for the individual banks their proper independence
while still contributing in a cooperative way to the development
of the System.

You ask my views as to what can be done in case the Aiken
matter does not develop satisfactorily, and as I feel at present I
should think it advisable to secure some comparatively young man,
say 35 to 45, who has had good banking experience, has demonstrated
his ability to assume responsibility and to develop so as to take
more, have him take my place, testing him out, and if he develops,
co-operating with you in the management of the bank.

Should he

not develop, substitute some one else for him until you find one
who has the ability, but if you should desire to be relieved after
a few years of the burden, you then could consider being made Chair,

man and would have available Aiken or Jay or some one of that kind
who has had the experience, to be made Governor.
I am inclined to feel that by coming back here to New York
in May or early June, remaining perhaps a month or so, it would give
you an opportunity to study the situation in New York and Washington
and take such steps to straighten out matters which need to be and
to develop a permanent organization under the new plan which you




.:-.RAL RESERVE BANK OF NEW YORK

......

-3

To

Mr. Strong.

2/28/17.

should develop for yourself in a way that would be satisfactory to
you, and then go away again for a month or two of rest, after which
you could go abroad or stay in New York as seemed best.
Please understand that this is merely an expression of
my own personal views and consider them on that basis.
I am giving some thought to a name that might be worth
considering in case it becomes necessary to discuss them which we
can tell better after a few days.
My very best wishes to you.
Sincerely yours,

Deputy Governor.
Benjamin Strong, Esq.,
4160 Montview Boulevard,
Denver, Colorado.

RHT/VCM




FEDERAL RESERVE BANK
OF NEW YORK

MAR3

1917

February 27th, 1917.

Dear Governor Strong:

I returned to the bank yesterday (Monday) morning after having spent Washington's Birthday and Friday in Ithaca and
attended the meeting of Group III at Elmira on Saturday afternoon, where I met a number of your friends who inquired with
much interest as to your progress.
Mr. McDougal of Buffalo gave an address on state banks,
making allusion to the better treatment the state banking department gave to state banks in bank examinations and other advantages over those afforded to member banks under the present administration.

He further commented on the Federal reserve collec-

tion system, stating that he believed every bank had a right to
exact a charge for payment of checks on itself presented by mail,
etc.

I did not think he made as strong an address as I had ex-

pected, nor did I thilak he make a very great impression so far as
I could judge.

After dinner, Honorable Charles M. Fowler of New Jersey,
held forth for about an hour or so during which he pronounced the
enactment of the Federal Reserve Act a stupendous blunder, stated
that the Reserve Act was based upon false

financial

theories, that

the only reserve should be gold, that the proper system was a combination of the clearing houses of the country, etc.
failed in my judgement to make any deep
on the majority of those present.



He, also,

and lasting impression

r'EDERAL RESERVE BANK OF NEW YORK

.............

To

Mr. Strong.

2/27/17.

Mr. Gregory of Rochester, who will undoubtedly be President of the New York State Bankers Association next year, called

on me yesterday and spent about an hour discussing various banking questions, but especially urging that no undue pressure be
brought to bear upon the 106 state banks that are not willing to
remit at par for their own checks, saying that he believed if we
would allow a period of, say, six months to elapse after 911 reserves were transferred from correspondent banks to reserve banks,
that he felt that the majority of those state institutions would
be brought over.

As against this, of course, is the feeling on the part
of the Reserve Board that we should without much further delay be
in a position to afford our member banks a system which will receive and collect items on any bank in our district, at least.
I assume that after adjournment of the Congress and provided that there be no extra session, we shall be in a position to
determine the wisest move to make in order to induce the state banks
to join the collection system, and also ways and means for inducing
trust companies and state banks to come into the System.
In this conneotion, I saw among others last night at the
banquet of the Trust Companies of America, George Allen who is now
acting as secretary of the State Bank Section of the American Bankers Association.

He has on previous occasions assured me that

many of the state banks, especially the larger ones in different
parts of the country,were prepared to come into the System after
they have secured all they think they can from the Reserve Board.
Last




night,

he told me they were planning to have a large meeting

Mr. Strong.

To

-0ERAL RESERVE BANK OF NEW YORK

2/27/17.

of the state banks at the next convention of the A. B. A. at Atlantic
City next Fall and that he was trying to prepare a program that would
present the reasons for state bank membership and be believed that it
would result after that meeting in many banks making the move.

He

seemed sincere in his belief that it was only a question of time when
the leading banks will join.

I sat next to Mr. George Fuller of Milwaukee, who nsked
about you and spoke of you most pleasantly, as did a number of others,
James Speyer and Lir. Alexander among them.

It is pleasant to, me to

see with what satisfaction the favorable reports are received by
your many friends.
With kind regards, I am,
Sincerely yours,

)4.44.14,4"

Deputy Governor.

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.
RHT/VCM





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102