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January 11, 1.94.
PETSONAL

Dear Pierre:

To my astpniehment this morning I learned that notification of the
approval of the Federal fAeserve Board of increases of the salaries of certain
of our officers and amployees here ,Aid in Buffalo, which was expressed in

Mr. Eddy's letter of Lecember 26, never reached Mr. Sailer and the other

fficers, and consequently they have all understood that the salary recommendations are still under consideration by the Board in Washington.

You

showed me the letter when it as received and it was - as I recall - referred

to at the eirectors meeting following its receipt.

How has the clip

occurred, so that this has not gotten into the routine in eome way and the
necessary advice has not been given in our on office?
Yours sincerely,

Mr. PiErre
Federal Reserve Bank.
DS.M"




CLASS OF SERVICE SYIVLICL

SYMBOL

Telegram

as

Blue

Message

Ater

Day Letter

Blue

Nlte

Ater

Night Message

Rite

NL

If none

TEL',

NL
Night Letter
If none of these three symbols

these three symbols

appears after the check

number of

words) this is a telegram. Other
wiseits character is indicated by thi
symbol appearing after the check.

NEWCOOR 5.3/ILTON, PREC311AMT

appears after the check (number of

words) this is a telegram. Otherwiseits character is indicated by the

GEORGE W. E. ATKINS. mum Inca-mast DENT

symbol appealing after the check.

21,

REVED AT

44

FILES DN.
42 11

JAN v1924.
BR PA LIVIBEACTI PLO i51.

fsi; liae,

JAY

_avE BANK
.011,64 YORE

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441
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FEDERAL RESERVE BANK NEW YORK NY
7-1,AD COMFORTABLE TRIP HOPE YOU WILL ADVISE ME RESULTS COMMIT TIIIE ME141T ING
STRONG.




ito

44

FEDERAL RESERVE BANK

OF NEW YORK

OF iCE CORRESPONDENCE
Mr. Jay

To

j'66111(')''l
DATE

Jan. 31, 1924

_In_

SUBJECT.

Governor Strong

A

The attached letter from Professor Bullock explains itself.

ago he was a little critical of the statements in our monthly review of the early
part of last year, thinking that we had overemphasized the word of caution about
expansion.

I disputed the point with him, and this letter is the result.

Possibly Dr. Burgess will like to go over the copies referred to and see whether
there is not ground for getting back at him.

BS.MM


att.


FEDERAL RESERVE BANK

MISC. 4. I-100M-9-23

OF NEW YORK
i

OFFICE
To

dRR

Messrs. JaJ Sny

r'iztor.1

P

N

& Bur

es

NCE

DATE

May 16, 1924

SUBJECT

Governor Strong

Please read and return for my file.




--)2/11

,/,/92

192_

misc.4.1,00,4-9-23

FEDERAL RESERVE 4ANK

OF NEW YORK

OFFICE CORRESPONDENCE
To

Mr. Jay

DATE_June
SUBJECT,

This arrived after the child was borne!
around trying to find me at 490 Park Avenue.
the bank have forgotten where I live!




26, 1924

717:)

But first it wandered

I wonder if the folks at

_192_

July 14, 1924
Dear Pierre:

One thing I overlooked before you left.

You reported to me verbally

that you had taken up the matter of my changing some investments shich would involve the borrowing of some money, with our direotors, and 9.18 I recall it Waki at

the meeting of either July 2 or June 2b. No record was ever made in the directors'
minutes, but I think it would be a good plan for my own protection and for my own

recorde and for y urs, if you would write me a letter advising juet what was done
juet as T wrote you at the time sben you wcre rearranging your ineurance.

I

would like to have such a letter on file.
There is nothing new at the bank except cooler weatherwhioh Di,a blessing

to all of us and especially to the writer.

Please give greetings to my frienae

in London and on the Continent when you see them.

hope you have a fine trip and come home thoroighlv rested and refreehed.
Don't fuse eoo much over business,. matters while you are abroad.

With best regards to you and Mrs. Jay, I am,
Yours sincerely,

Mr. Pierre Jay,

C/o Messrs. Morgan, Grenfell & Co.,
22 Old Broad St.,

London, England.
ES JOU




July o., 19P4.
Dear ?Jerre:

1 have just received yours of the 19th on reeurning from e short
Your letter reads really as thou ga you had absorbed
the good advice I gave you and are really eaking a res. That iv the
most important thing for you to do. I shall await your neAC letter with
word from Woman and Young, if you see then, with a gaud deal of interest.
trip to Washington.

Mattere seem to be i,rogreamiai; very clewing end the continued dispute over
the ).awes plan is really discoerazing.

Sri) Morgan's letter is enclosed with this, together with a copy
of a letter which I am sending to Mr. Hautain. You will observe that Morgan

we very indefinite in his letter, ad I didn't want to send anything in
the nature of an offer, because the fact is there is no proposal to us.

Pounde and I spent h.. couple, of days in Waehington, and very such
to our surprise found that Mr. Jemee had been already pondering our correspondence on the subject of the work of his committee, and he accepted in tote in fact without chanwe - the program whih Mr. Rounds and I bad laid out, the
drafts of which are enclosed herewith.
You will see that the matter is now
in pretty good ehape. I think Rounds, in view of the committee's attitude,
should do whatever he can to p. moos the program.

I saw Harrison last Sunday. He we looking splendidly and appeared

to be in fine spirits. The doctors will permit him to leave the hospital

in a few days but they don't want him to return to the office until a month
after be is discharged from the hospital. The wound is all healed and
apparently there have been no after effects.
The investment account is now at $450 million. Money continues as
easy as ever. Other than this there is practically no news from the bank.
Things are very quiet here, and we have been having eome prb4y stiff hot
weather.

Won't you give my best regards to Norman and al other friends
Also to Mrs. Jay, and ry@EY beet to you.

of mine when you see them.

Yours sincerely,

Mr, Pierre Jay,

c/o Messrs. Morgan, Harjes & Co.,

Paris, France.
BS.MM

woe.



Mr. Pierre Jay

P. S.

I

July 31, 1924.

learn most oonfidentially from Mr. Anderson of J. P. Morgan & Company,

that they were in fact negotiating for a Belgian loan, that differences of
views developed,

principally, I

think, in

regard to the form

which the loan

should take, but finally the matter has been laid over pending some definite

developments in connection with the Dawes plan and the reparatione subject

generally.

I fully agree with what you wire in regard to the inadvisability

of attempting any large transaction until that matter is out




of the way.

ugust 5, 1924_

Dear Pierre;
You may like to have some of the office news, none of which, however,
importance just now.

is of particular

Harrison is in New York to-day on his way through to Nonquit, where
he will epene a few weeks with the Glovers. I saw him or a fey minutes and
found him looking fine, happy to be out of the hospital, and none the worse for
The doctor at first said it would
the trip up from Baltimore.
for him to return to the tank the first of September, so hie leave was extended
until then, and the Federal Reserve Board gave
approval; but I now have a
letter from one of the doctors saying that an additional two weeks would make
It safer; and while he is keen to get back, I 9M urging him not to do so until

be all ri5ht

its

September 15.

We have delayed a rate reduction ar, you probably realize because of
the fear that it might be misunderstood abroad at a time when ipparantly our
money market rates here ere of much significence in the adjustment of the

Dawes elen.

Yesterday I cabled to both Yount, Inc Norman asking for anything

that they cared to give us on th,t subject, euggeetin3 that we would probably
act on Thursday. Unfortunately, five of our directors are in Europe, twc

more are absent on vacations, leavin6 but two eembers of the

board here to
function with me as the third member of the executive cemaitee to tske this
action, Of course, as I am not a director it does give a rather thin basis

for ofi_eial action by the hank, but we have four or five of the other lirectors
committed either at previous meetings or in writing to approve a change to 3

?er csnt., and I feel that any possible legal defect in ths formality of the

action will be cured by the approval of the Federal Reserve Board;
make the change t'lis Thursday.
.

so we may

Our investment account is now at p485 mileion, but we have stopped
buying for the moment as New York has been over-flooded with money. Commercial
paper iF sellin:g from 3 1/4 to 3 :,V4 per cent; stenesrl etock esehaege leeees

from 2 1/2 to 3 1/4 per cent. up to six months;

and good bills have been

selling at 2 per cent., and in some instances, I believe, at 1 7/8 per cent.

Our loans to members are running around $30 million.

We have about 1,300 clerks now in the new building, and by the end

of th,s week the scaffolding will be out of the first floor and it is really

beginning to look shipshape.
Final decision as to further moving has not
been made, but I doubt if any important MOV8S are made before the one of this
month.

here and 1 am planning to take him through the Wilding
Hie program is changed on short notice and he must leave to-morrow
Pacific Coast and sail at once for home.
Mr. Inouye is

to-day.
for the

Enclosed is a co-,,y of a letter which we are sending to the Bankovni
urau
If this reaches you before you go to
 Ministerstva Financi.


August 5, 1924.

No. 2

call at the National Bank of Brussels, I hope you will make inquiry as to the
status of the gold, its condition, etc., and advise us by cable of just what
you learn.
Lubbock writes me that Norman has been no preoccupied by the conference

that he was uneble to reply pereonally to the recent letter I uent him in
regard to the Houblon tankerd.

Norman will doubtlece chew you the correspondence

if you have a visit with him, and I ju' t want eo urge that he should write
Woodward some sort of a letter which will be the baste of corrying out the
program I suggested.
The Clearing House, I am eure, would like to aa it, but
all that they now have, as you realize, is a verbal euggestion from me.

The program for handling our protest work has teen approved by the
Federal Reserve Board and wiLL showtay ue put into effect. The present plan
is to have Weeors. Hamilton, Beyer and Ray take over the work. The laet named
being a resident of Nez Jersey would qualify as a New Jersey notary.
Mr. Caee seems well.
There teems to be no bad news of any kind to
send you from hoe, co don't have Us on vur mind.

With best rogardeto you and Mrs. J4,
Youra Ancerely,

Mr. Pierre Jay,

c/o Maseru. Morgan, Harjee & Co.,

Paris, France.
BS.WM

en Ca




August 8, A24.
Dear Mr. Jay:

There is not very much to std to my recent letter beyond acknowledging
your two ictosrs cf the 113th of JIly, because everything of importance that has
occurred here will te fully exploited in the foreign newspal.ers. Thtnx you for
writing me co fully.

Yeeterday we reduced our rate to 3 per cent. This action Will delayed
a gGek or two, ae pocsibly Young may have explained to you, on account or our
desire not iu any hay to odmplicat',, matters abroad during the pendency of the
negotiations of the Dawee program. On the *hole, I think the reretion to our
rate reduction has oeeu entirely satisfactory so far P,.E the newsps:per accounts go,

but we still have to hear from the tankers.

Yesterday a very good report came out of the wheat crop showing poesihly
seventy odd milliou bushels in exceeo of 1. 1at year's estimates, the crop in excellent condition ae to quality, and everything apparently combining thie year
to heii out tho wheat grower.

There ia no marked change in our discounts or investment account.
gost of the Federal Reserve Board are away, and we .r.e in atosi d:e came position
as to our directors, five of Ooom are broad and two of the remainder are out of

the city right along.

Thank you for your letter about my loan. I will have It cleared up
before lone, but I did -want a reeord in rt.y fil_es in case any suestion ever arose.
As you know, it is a necessary preparation for eventualitiee, ,J.ad I could hardly
escape handling the matter the way thot I have.

we are all 5ell here and not very busy.
With Lest regards to you and to Mrs. Jay,
Yours eincerely,

Mr. Pierre Jay
c/o Messre. Morgan, Harjes i Go.
Paris, France.
13,5.MM




COPY OF OUTGOING CABLEGRAM

August 19, 1924

Jay
Care

Harjes

Paris
ble received
All well here




Trip Brussels not necessary

Regards

Strong

September 4, 1924.

Dear Pierre:

Yours of August 23 has just come and I have read it with a good deal of
There is nothing new in the Czecho-Slovakia matter, and it may be that
they will never want the money, anyway. I am glad you had an opportunity for a
visit with Logan. He is a most interesting fellow and I think has unusual skill

interest.

in handling 4 rather difficult job.

The situation when your cable came about remaining over with Young wt-s
complicated by the fact that the Federal Reserve Board was badly scattered and
Governor Criseinser did not want to express the views of the Potrc *rites:se consulting some of the members. Jiller and James are both eet, Hamlin was at Mattapoisett,
and a storm had torn gown all the telephone wires so we could not reach him by telephone.

Cunningham happened to be beyond reach, and the only members available were

the Governor and Mr. Platt, both of whom were in our office on another matter.
Young's wire to Mellon ft-ion it all right and final word came from Governor Criesinger
while I was off for the week-end, so Mr. Case cabled you.

We have also cabled asking for an indication of the protable date of your
return. I was asked this and 411 unable to give any indication, and thought it just
as well to see that our friends in Waehington were advised. Also a matter has
arisen which gives us a little concern in connection with which we might later on
want to have the benefit of your judgment, and although it seems to have been

worked out co far as it is possible to just now, it Nay be that later it *ili be
of advantage if you can do eome work on it.

Claibourne's National W. State Bankers Protective Association, acting in
this instance through the Pascagoula National Bank of Missiseippi, has brote;ht
a suit in equity in the Southern District or Georgia against the Federal Reserve
Bank of Atlanta, McCord as Agent of the Federal Reserve Board, -Lad the Federal
Reserve Board itself, which contains a great variety of allegations and prayers,
but the real purpose of it is (1) to enjoin the Federal Reserve Bank from collecting checks on the Pascagoula National Bank without providing for the payment of
exchange; (2) to enjoin be Federal Reserve Bank of Atlanta from collecting any
checks payable outside of the Sixth Federal Reserve District; and (3) to enjoin
the Federal Reserve Bank from deferring credit on all checks deposited by the
Pascagoula National Bank which are payable within the Sixth Federal Reserve District.

This suit for the first time strikes right at the heart of the Federal

Reserve par oollection system.
I am not so much afraid of the first two points
but the question of immediate credit on intra-district checks is one which may
give us some difficulty because as you know Willis hen a theory that the Federal
Reserve Banks acting as clearing houses would be able to effect an immediate debit
and credit system on their own books of all checks deposited, and I have every
reason to suspect the language used in the Act was all based upon that theory.

That is, the theory of deposit and immediate debit or credit rather than the
theory of a presentation and collection.



September 4, 1924.

2

Mr. Davis now being unavailable, we encountered some difficulty in
selecting counsel.
We had quite a number of meetings and
much debate and
deliberation finally decided to retain Mr. Newton 0. Baker of Cleveland, and he
is now in our office at work on the case.
Unfortunately, the answer must be
filed on the 20th of September; the hearing on application for an interlocutory
injunction is to be held in Atlanta on October 2, and counsel muet be prepared
at least by October 2 to make an enlightened argument before the United States
Judge adequate to convince him that any such interlocutory injunction would be a
calamity to the System and to the country, and should not be granted until the
case
on its merits, especially as no harm would come to the plaintiffs
by the continuance of the present system nor money damage be sustained for which
the defendants are not amply responsible.

after

is tried

Mr. Harrison

is much better and in fact expects to spend this afternoon
with Mr. Baker.
The latter then goes to
Washington to see about the preparation of the papers and the handling of the case.

ee

he bank going over this matter

There is not much news at the bank, and on the whole we have had a
dull and uneventful summer.
I am hoping to get away about the 18th of
September and spend a month in Colorado Springs.
I have been all right and there
is no particular reason for my going, except that the summer has been rather hot
and tiring and I thought it would be a reasonable precaution
All the other officers will be at the bank.
month's rest.

rather

to take at least a

McGarrah and I had a long talk about his new job and I have urged him
for the present not to resign from our board end have pointed out to Mr. Mellon
that it might be highly advantageous to us - at least for a time - to have Mr.
MoGarrah maintain his connection with the bank.
We never can tell when we may in
some way become a party to this reconstruction program and would be glad to have
one of our own people in such position to give us reliable information and advice.

I am sure you
glad it was possible to

will have an interesting time with Mr. Young, and I am
arrange for you to make the trip with him.

All join in sending bet

regards.
Yours sincerely,

Mr. Pierre Jay,
c/o Messrs. Morgan, Harjes & Co.,
Paris, France.

BS.MM




WK.4.1,001-1-23

FEDERAL RESERVE BANK

OF NEW YORK

OFFICE CORRESPONDENCE
To

Mr. Jay

DATE_ November_29, 1924_192_
SUBJECT

Benj. Strong

FROM

Will you look over the attached papers just received from Mr.
Snyder and give me your impressions.

It might be a good plan to try and

get a reaction from Dr. Stewart and see whether he is still as skeptical as
ever about Snyder's volume of trade index.

BS.MSB




MIS

FEDERAL RESERVE BANK

M-9-23

OF NEW YORK

OFFICE CORRESPONDENCE

DATE_

Sr. Jay
FROM

December 27, 12.4_19,

SUBJECT:

Es. Stoeeker
Attached is Coast Guard Cutter Permit #1621 for your use. Ir. Strong
has a separate pass. I have agreed to return whichever is not used.
The cutter leaves the Barge Office, opposite South Ferry Station and
m. to meet steamers arriving up to aperoximately 10:00 a. m.
'1." at 7:50

Special trips are made to meet vessels arriving later in the day. The Boarding
Officer, Broad 1642, will furnish definite advice.
The Ounard Line (Piers 56-t4e-b6 orth River) advises definitely that
the Oaronia will dock in Boston on Monday morning, and will not reach New Tort
It i6 too early to get
until luesday, poeeibly even as late as Wednesday.
Cunard Line is koL...dea...5..1_,..00.
New York arrival time.
Mr. Strong 1ms sent a message to the party to aecertain iihetner they
plan to disembark in Boston or lies York. What reply is received, and what
arrangemlents are made I




fll let you

no

later.

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270 Park Avenue,

Jsnuary 11, 192.5.

My dear Pierre:

It seems shocking not to have written you long

before this to thank you for Boosevelt's letters to Mrs. Coles.
The fact is I have jur.t been suamped since Ihristmas, as you

know, with so many things to do, and with. visitors 'ere, that
I have let my sersonal correspondence get a bit out of hand.
I am delighted to have the book, and hope to read
it at Palm Beach and enjoy it very much.

And I thank you

most -srmly for this Christmas remembrance.
Moot sincerely yours,

Mr. Pierre Jay,
49 East 84th Street,
Ne York City.




/AO F,VLK

W. T. 11. 1 20 M 12-24
FEDERAL RESERVE BANK

OF NEW jORK

Ole

\TELEGRAM
COMMERCIAL WIRE-INCOMING

ATTENTION

WIRE TRANSFER
DIVISION

TRANSLATION COPY

DECODED

CHECKED

COMPANY

72WU D 28 COLLECT BR PALMBEACH FLO 1141A JAN 27
FRB.PIERRE JAY. CHAIRMAN.
THREE FADAC RETURNING PAYJP TODAY WITH MINOR SUGGEST-

IONS THINK FINE AND IT WYBFO SUGGESTIONS WEAKEN

OR

EMASCULATE URGE SUBMISSION YACSA NEVKO AND CONSIDERATION
WHETHER ROSDA ECOSZ ABZWA




1245PM BENJ STRONG
)),

L RESERVE BANK
OP- NEW YORK

1.4 14.014-21

RRE

OFFIC

NCE

Palm Beach, Fla.,
bAiE

FFli 5 i9z.)

SUBJECT

FROM




Benj. Strong

I want to explain why I telegraphed Harrison
after getting your letter, suggesting that I thought it
unwise to make the trip to Atlanta.

They have had tremendous rains throughout
Georgia and the trains are running into Palm Beach from
thirty-six to forty-eight hours late.

With the train

service as it is, and considering that Atlanta is very
much out of the way for his return trip, I thought it
was a great mistake for him to attempt it with all the
discomforts of travel over the southern routes.

Besides

that, Wellborn was down here and not at Atlanta himself
just at the time that Harrison was returning.

You can see by the enclosed map what a round
about trip it would have been.

Inc.




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4

W.T.1L 1 20M 12-24
FEDERAL PESERVE BANK
OF NEW YORK

WIRE TRANSFER
DIVISION

TELEGRAM

DECODED

COMMERCIAL WIRE-INCOMING

CHECKED

TRANSLATION COPY

ATTENTION

COMPANY

35WUMQ 22 COLLECT BR PALMBEACH
PIERRE JAY
SEVEN

ESQ

FLU

1028A

FEB 10

CHAIRMAN FRB

FEGDY MEMORANDUM SIXTH UBBOC BUOGH WYBFO

AHAZD EMPYK ODPIZ YALGO WISAZ YAENG STOP

THIRD YAADT TO YAEPH ORYUN




ENZDE

BENJ STRONG

1110A

LETTER

W. T. 11. 1 20 Di

12-24

TELEGRAM

FEDERAL RESERVE BANK
OF NEW YORK

WIRE TRANSFER
DIVISION

DECODED

COMMERCIAL WIRE-INCOMING

CHECKED

TRANSLATION COPY

COMPANY

ATTENTION

63WUX16 COLLECT BR
PIERRE JAY

PALMBEACH FLO 1219P FEB 11

1925

ESQ

CHAIRMAN FRB

EIGHT FEHDO YEFHY SIX IJKNE
ROPBE GUYFO YAEPH.-UWT-1.1J VOIBT

YALGO,IAVE-F4U1

I
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\\

FEDERAL- RESERVE BANK

424

OF NEW YORK

J FFICE CORRESPONDENCE
To

June 18, 1925.

192_

SUBJECT: - ,

Mr. Jay

FROM

DAY

.

GovernorStrong

At the meeting of the Legislative Committee in Washington last week
the following resolution was adopted:

"The amendment to Section 24 of the Federal Reserve
Act to authorize any National banking association to engage
in the business of purchasing and selling investment securities.
'After discussion, Mr. Talley moved
that Governor Strong and Mr. Wills be appointed
a subcommittee to make an investigation of this
matter, embracing comparisons of the provisions
of the amendment with good state bank laws on
the subject, the subcommittee to collaborate
with Professor Sprague in the study.'
Mr. Talley's motion, duly seconded, was unanimously
carried."

Obviously, it would be impossible for me to do more than to have one
discussion of this matter with Professor Sprague next Monday when he is in the
bank.

I am accordirgly writing Mr. Wills, as per attached copy of my letter,

which will be mailed if you approve it.

While Mr. harrison will do some work on this matter, I fear that he
is not very well just now and that he will need to be away for ten days.

Your

own experience in this matter will, I believe, enable you to make a better study
of it with Mr. Wills than Mr. harrison could do.

Would you feel willing to under-

take it and to lay out some sort of program with Professor Sprague on Monday?
My thought is that we should get the best posted men in such organizations as the First National Bank, the National City Bank, the Guaranty Trust Company,
the Bankers Trust Company, and possibly other state and national banks which operate
securities departments, and have a very full discussion with them of all the various
provisions of the national and state banking lams, and develop some definite theory





_

FEDERAL RESERVE BANK

OF NEW YORK

JFFICE CORRESPONDENCE
To

DATE_

Mr. Jay

June 18, 1925.

A 92_

SUBJECT:

Governor Strong

FROM

-2upon which the subject of further legislation should be approached.

Professor

Sprague's ideas have not been elaborated to such an extent that I feel competent
to discuss them as yet.

Of course, it is important to take account of the ex-

istence of the various security organizations of the First, City and Chase.
In those banks a different problem is presented than appears in the case of
national banks which are doing security business but which have no collateral
organizations.

I am sorry to be obliged to dump this on to your lap.

For your general information, I am attaching the minutes of the Washington
meeting and will ask you to pass it on to Mr. harrison after reading it, together
with this correspondence.

BSA'S
Att.




-

'

'

FILES
AUG




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15

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WORLD WIDE WIRELESS

0._
(...--)04.0......,

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SHIP

SHIP

CONTIoNENT

SHIP

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TO

ENT

RADIO CORPORATION OFAMERICA_,

,_"1a111--TA"

FORM No 112

RECEIVED -AT 64 BROAD STREET, NEW YORK, AT
CW140

M. DATE

PZ RDO

SS HOMER IC GDLJ RCNEWYORK 13
JAY FEDRESERVE
NEWYORK.

THANKS TO YOU AND GANG ALL WELL PAX VOBISCUM
STRONG




TELEPHONE: BROAD 5100

To secure prompt action on inquires.thsoriginal RADIOGRAM should be presented at the office
of the Radio Corporation. In telephone inauiries quote the number preceding the place of origin

INCOMING CABLEGRAM

London, England

July 8, 1926
Federal Reserve Bank,
New York, N. Y.
in STRICTLY CONFIDENTIAL FOR JAY.

Your letter of June 29th and cable i2O.
Stewart and I convinced that
ONE

Separation of recharter and amendments excellent from
systems standpoint but

TVO

Political critics will attempt to condition recharter

upon

adoption of pet amendments any tliy and
THREE

the plan assumes that recharter action is now inevitable of
which we are far from convinced

HOURTH

Therefore feel that .he report at September meeting should
avoid pressing the recharter issue
recommend that no amendment(s) be attempted at present
and

that recharter be considered at the proper time as a
separate act from any other changes in the lawls) and
(B) by that course business uncertainty would be avoided
VIVE

If we must assume that recharter question has become =escap-

able then our position should be fully discussed with



ISCOMING CABLiillBAM

-2Coubittee and submitted to Federal eserve
Legislative
to elieve
Board before leading bankers association(s)
maintain
that we speak frr the system which should
orga.nization
entire freedom from commitments to any




Strong

London,

July 7, 1925.
Dear Pierre:

While we have had only one day It the Bank, I gather
from Dr. Stewart that he is being stuffed so full of information
that he will SDOM have an attaclaof financial indigestion. At
any rate I see his notes piling up pretty fast, and various of
the staff of the Bank having long sessions with him; and I can
already see the advantage to him, and indirectly to us, in his
having made the trip with me.
I hate to burden you fellows with any more work on

top of the immense layout in preparation for a possible inquiry,
but there is one little bit of work that I am very anxious to
have done and ready for me on my return. But if the figures can
be prepared before my return, in time for me to see them in
London, it will be helpful.

Briefly it is this:
A reasonably accurate figure of the payments

which have been made to our Government by foreign Governments on

account of war debts, - payments for war materials sold, relief
loans, and various adjustments growing out of the war.

The Treasury statement shows a figure which I
believe will enable this information to be gathered very easilSr.
The amount of payments now under contract or

in pending, which would include, of course, the payments by the
British and other nations which have funded, and, in general, all
of those payments enumerated above, plus payments arising out of
the Paris adjustment of distribution under the Dawes Plan.
The amount of interest and principal to be paid
to us on foreign loans which we have made over the past two years
or thereabouts, all of which we already have on ()record at the
bank.

This figure does not need to be worked out very
accurately, nor do we need to make any canvass of loans beyond
the record which we already have. The payments, of course, would
include interest and amortization of principal.

If possible, I wauld like to have this divided
industrial and other private establishments.
In order to explain the figures I am asking for, I
-nt to get at, as nearly as possible, a statement of the /mount


up between loans to foreign Governments, and loans to commercial,



Mr. Ja

London 7.7.25

of payments to be made to the United States by the rest of the
world in the service of all loans, Government and private, which
can be considered unproductive; that is to say, payments made on
the war loans and payments made on loans to Government which
primarily were for the object of balancing budgets rather than for
the creation of industrial establishments or the conduct of trade,
imerovement of transportation or the improvement of the facilities

of trade.

A record of import movements and export move-

ments of gold erior to the war.
I think it will be found that there were three
reajor gold movements: one aas our great export movement in the
90s, when resulued in the purchase of gold under the Cleveland

Administration; the eecond aae the big import movement during the
panic of 1907; and the third the big export movement immediately

before the outbreak of tee war.
The object of these figures is to indicate
lt the burden of payments of the world to the United States
amounts to, of an unproductive character, which places a load
upon the exchanges in excess of the normal debts, which are
ordinarily settled by normal gold movements; ana then to show
what normal gold movements have been prior to the war.

Then I would like to have the total of British
imports, and the total of British exports for the past three
years, set up in a table lust as now reported at the present price
And those same figures converted to the pee-war basis,
by dividing them by the present price index number.
level.

Of course I realize that this is very rough

indeed and will produce a result which is somewhat misleading.
But it will e:ive some indication of the position of British trade
as contrasted with pre-war conditions.
would also like to see the same thing done
with our own figures for imports and exports over the same three
years.
The object of this is to get a contrast of
British visible trade figures with the rest of the world, ageinst

our visible trade figures with the rest of the world, reduced very
roughly to a pre-war basis.
And then I would like to see a chart of the
principal exchange rates, prepared in contrast with the dollar,
over the period when Germany first made reparation payments on
a dollar basis.
You will recall that the first scheme was for
Germany to pay reparations entirely in dollars, and that I made a
strong protest against the plan because of its likely effect upon
dollar exchange.



This chart should cover a period of at least six

3

Jay

London 7.7.25

I aurmise that it
months prior to the first payments being made.
will show a sharp advance in dollars and a depreciation of other
exchanges due to the German accumulation of dollars when they converted other currencies tnroughaut the world 30 as to make the first
payments.

Finally, I would like to have any suggestions which
(7)
occur to 4ou, or Burgess, or Snyder, in regard, generally, to the
capacity of the world to make payments to us on old debts without
breaking down gold payment.

As I wrote you yesterday, we are leaving tomorrow night
for Berlin. I have had a long talk this morning with 71t. Hou3.hton
and some of the Embassy staff about affairs here in ngland, and
found that pretty nearly a whole morning WAS not sufficient. 3o
Yr. Houghton wants me to go to his house this afternoon for tea and
finish it up. He is proposing to tell me what he can about affairs
in Germany.

And I will write you somethire: of it all later.

best regards to all at the office.
Sincerely,

Pierre Jay,

Chairman, Federal Reserve Bank of Ilew York,
33 Liberty 7etreet, New York.

8.11B




FEDERAL RESERVE BAN K
OF NEW Yo R K
Berlin, Germany,
July 16, 1925.
Dear Mr. Jay:

This is to acknowledge the receipt of the cable, signed jointly
by you and Mr. Sailer, unnumbered, but bearing the test word "bacaz", which
I received yesterday via London:
"ONE

At Executive Committee meeting yesterday Owen
D. Young raised question whether the high volume
of street loans, now about 150,000,000 above
total at (time of ?) February rate action, and
50,000,000 higher than June 26th, should not
lead us now to raise our rate, or sell more
and suggested we prepare
securities, cr both;
studies of situation for further discussion on
This we are doing.
Thursday.

TWO

Facts are that call money has continued firm
at 4 - 5, commercial rates slightly firmer with
better demand and with many sales at 4, signs
of slightly better immediate business activity,
and some optimism for the autumn owing to exAlso country is withcellent crop prospects.
drawing deposits moderately.

THREE

Owen D. Young's thought was that if higher money
in autumn, due to various causes, precipitates
substantial declines in security prices, the
results might be more discouraging to business
progress than if security price reactions came
now, before autumn activity gets under way.

FOUR

Would appreciate your views for presentation
Thursday, although presume that in any event
no action would be taken for another week at least."

and to confirm the reply which I dispatched last night, as follows:




"2 Saaxo

Your bacaz

ONE

Information is not complete without knowing recent
changes New York discounts especially and earning
assets.
Believe

TWO

Increase to four almost certain to cause increase
by other Federal Reserve Banks

THREE

Making later reduction difficult even if then necessary and

RAL RESERVE BANK OF NEW YORK

2

Mr. Jay

Berlin, 7.16.25.

FOUR

FIVE

Feel that stock exchange loan account is
factor in our affairs but not our immediate
responsibility and if we maintain our present
rate no high rate will develop in fall, but

SIX

See no objection moderate sales from portfolio
as discussed with Open Market Investment Committee

SEVEN

General increases at home certain to have
unfavorable reaction on sterling and mark exchange just before season when strain occurs

EIGHT

Ic

Even our increase alone likely to be be
misunderstood as aimed at business expansion

From this distance question occurs whether we
might not risk too much both at home and
abroad in order to admonish only the stock
speculator

NINE

Stewart has read and is in general agreement."

Except for cables which pass through the Bank of England, and
which would bear the regular numbering, I think it would be well if all
cables were numbered with the 1, 2, 3, series, as well as tested, since
this makes reference somewhat easier.
I shall arrange to do so and
hope cables from the bank will be similarly numbered.

As I wrote Mr. Case yesterday, we leave on Friday night for
Spa, where I hope to be able to continue the work on my notes.
Please give my best to all at the bank.
Sincerely,

Pierre Jay, Esq.,
Chairman, Federal Reserve Bank of New York,
33 Liberty Street, New York.







FEDERAL RESERVE BANK

OF NEW YoRK
Spa, Belgium,
July 21, 1925.
Dear Mr. Jay:

Yours of July 10 reached me last night. As I have been
obliged to let mail accumulate, you will get this with sundry other letters
and wonder whether I have not gone into a frenzy of dictation.
But it represents quite a few days' work.
Yourletter throws much light on the recharter question.
well understand Mr. Young's views.

I can

The doubts in my mind possibly are not justified, and yet I cannot
help feeling that we may be overestimating the complexion and attitude of
the next Congress, especially the Senate, and possibly the President's influence with it.
Also that what may appear to be a more favorable trend of
public opinion is the natural reaction we get from the successful results of
some of our own efforts, as well as the fortuitous occurrence asto McFadden,
which may have cut his comb a bit.
What I mean is that the discussions with Traylor, the A. B. A.
and others, have indicated a satisfactory attitude in these special quarters,
but do not necessarily exhibit any general state of public feeling, such as
that which Gregory has attempted to describe, and which may, or may not, have
substantial foundation.
You and I have often felt that there were some Federal Reserve
Districts where either circumstances, such as bad crop and credit conditions,
or where maladroit management, have resulted in a distinctly hostile attitude
by the public generally.

We must, of course, be very careful not to get into the position
where charges can be made that we are organizing a propaganda.
If we avoid
that, then when the matter does come up in Congress, I would favor going
direct to the Committees of the House and Senate, and urging the program of
recharter without amendments, and consenting, if not welcoming, proposals
for a study of the Act for the purpose of improving and perfecting it.
The way the crop situation has developed is of the greatest possible aid, and is the one thing which will help us more than any other if the
recharter issue comes up.
Sincerely yours,

Pierre Jay, Esq.,
Chairman, Federal Reserve Bank,
33 Liberty Street New York.




IA

11 ,-"T"N

COPY

'.1

,

A

N

\/'

FEDERAL

RESERVE

BANK

-0-P

NEW

YORK

CONFIDENTIAL:

Brussels, Belgium
July 29, 19'i

L ar Mr. Jay:

'

This will serve to acknowledge the receipt of your cable, received yesterday morning,
reading as follows:

"Private and Confidential.
No. 4 (test)
Your cable No. 3 V'
ONE
Officers see no immediate likelihood of serious disturbance through stock
exchange account.
Speculation is widely diffused, margins large, many
large operators out of market, and most houses conservative.
Volume of
loans decreased slightly in last week.
You have now probably received
memorandum presented to Board of Directors July 16th.
TWO
Agricultural prospects excellent and general expectation throughout the
entire country of Substantially better business volume but no boom.
THREE Offerings of commercial paper light but practically none being purchased
under 4.
Three months time money 4 11.
Yield on Governments working
slightly higher.
Borrowings here and in system practically unchanged.
FOUR
General anticipation of somewhat higher rate in early autumn.
Some think
commercial paper may reach
FIVE
Officers think money conditions not ripe for rate increase at present and
are satisfied that it would not be understood.
SIX
Therefore we recommend no action at present nor until it is clearly indicated by situation, but cannot now predict whether or when that time will arrive.
SEVEN Have discussed business and speculative situation fully with Alexander and
foregoing includes his views which coincide with ours although anything he said
regardirg rates was volunteered by him.
EIGHT Alexander says present differential between London and New York private rate
is not now sufficient to induce bankers here to retain money in London in view
of prospect for firmer money here this autumn.
He is
as they mature and today declined London bid for three to six months deposit
at 4 5/8% yielding 4%.
NINE
If we take no action in the near future and London should now reduce, and if
we should then later increase would it not seem appropriate for London if it
so desired to increase again on the strength of our action at that time.
This
seems to us more logical end less disturbing here than for us to increase now
TEN
Saunders and Runkle only directors available till
Case returns August 3.
about the middle of August.
ELEVEN Referring o your paragraph 7 should appreciate your communicating with McGarrah

01.

.

and cabli g his viers'."
and to confirm the re 'fly which I 91iSpatched last evening, as follows:
"No. 1_/test) Your telegrEi to me No. 4 Strictly confidential for Jay
ONE
My telegram to you No. 3 reflected belief that (a) you feared danger in stock
exchange loan account as suggested your telegram to me ibaca,z' and (b) London

would reduce if we did not advance, whereas
Your telegram to me No. 4 indicates (a) is unfounded and coal strike for present
defers (b)
THREE Suggest that you keep me advised by cable, always giving position earning assets.
FOUR
Leave for Paris tomorrow Hotel Majestic. Shall see McGarrah and cable results.
FIVE Sending important letter to Case reporting result our talks here, copy for Winston
SIX
All well.
Regards."
It was only after my cable had gone forward that I received, via London, the batch of
Concerning all
mail which contained the memorandum submitted to the Directors on July 16.
We are leaving for Paris today and
of this I will write further just as soon as possible.
it is not possible to do so before then.
For your information I am enclosing a copy of the message I received yesterday from
Dr. Stewart in London, who has been kept in close touch with all of this informatio .At.
Sincerely yours,
W
/L,/
(Signed) B. S.
erre Jay, Eso.,

airman r
http://fraser.stlouisfed.org/ Federal Reserve Bank of New York.
TWO

Federal Reserve Bank of St. Louis

eas-e-C4//'A
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01' 9-

44Y ,P6--ei

Biarritz, France
8.1 25.

FEDERAL RESERVE BANK OF NEW YORK

CONFIRMATION OF CABLEGRAM

Paris, July 30, 1925.

Federal Reserve Bank,
New York.

No. 5 (test) STRICTLY CONFIDENTIAL FOR JAY
McGarrah believes that he should retire.
arrives at Frew as we did.

Suggests selections from Stephen Baker,

Potter and Reynolds for committee.
another term.




By elimination

Considers Young essential for

In general fully agrees with our views.
STRONG.

Biarritz, France,
August 1, 1925.

Dear Mr. Jay:
This is my first opportunity to al,ower yours of July 17.

It could not be avoided in
I am sorry about the publicity.
I am writing Dr. Burgess about it and he may be able to socthe the
Berlin.
ruffled feelings of the press.
T am still unconvinced that the subject of re-charter ie imminent,
but that we will not know until Congress meets, and, of course, we musi be
prepared to dal with the sUuation. The only way in which we can deal with
it without appearing to be responsible for any propaganda is to go before the
Committees of Congress in the Fall, tell them our story, and leave the matter
The agitation just now, of course, increases the likelihood
with Col:gress.
The resolution which
of the re-charter question being taken up in Congress.
you enclose is admirable, but, of course, is calculated to keep the subject
alive and increases the likelihood of Cmgressional action.
If we have to act on this subject, lets do it thoroughly and
escape, if we can, the disadvantage of being involved in any propaganda whatever.

Please give my best to all at home.

Sincerely yours,

Pierre Jay, Fee.,
Chairman, Federal Reserve Bank,

33 Liberty Street, New York.




4-

FEDERAL RESERVE BANK
OF NEW YORK
Biarritz, France,
August 3, 1925.

CONFIDENTIAL:

Dear Mr. Jay:

As I cabled you on July 30, from Paris (confirmation of which has
already gone forward), I was able to see Mr. McGarrah and discussed with him
the matter of the directorship.
It seems that he had been somewhat uncertain about continuing upon
the Board of the Reichsbank, but Gilbert and some of the others urged him so
very strongly to continue that he has decided to do so.
And this means
frequent absences, which would interfere with his service on our Board. He
feels that he might be criticized if he continued a director and was absent
so frequently, and if his continuance is a direct violation of the general
understanding about rotation.
I think that he would have liked to remain a member of our Board
if it were not that these matters make it unwise for him to dc so.
And I
simply accepted the situation as he explained it.
I then discussed a possible candidate.
Of course you will understand
that the following is very confidential.
Taking up the names in order:
Stephen Baker::
Not especially well qualified, and liable to
present some danger to the bank on account of the freedom with which he talks.

George F. Baker, Jr:

Would be unable to give the necessary time.

V(
George Davison:
Not a member of the Clearing House;
very intimately
associated with Wiggin;
probably not acceptable to the other bankers.
Mitchell:
Too much a critic of the System.
McGarrah knew that
he was antagonistic in the extreme, and that he would simply endeavor to effect
changes in policy and management which would cause trouble.
Potter:

Not desirable on account of the recent record. (.7G)

Prosser:
Not as strong a man intellectually as the others; very
bad about keeping engagements for meetings (coming late and leaving early) and
not able to contribute very much.
Reynolds:
Probably one of the best men, but not technically well
informed on account of lack of experience, and liable to create the impression
that we were paying an obligation on account of war finance, and that the bank
might be used.




Biarritz, France
8.3.25

Mr. Jay

FEDERAL RESERVE BANK OF NEW YORK

(2)

Wiggin: Very busy.
In ability probably the best of any suggested,
but the recent experience and the unpopularity of the whole organization would
make it less desirable at the present time.
thought it would be impossible.

He

Frew:
None of the various objections to any of the others applied
with any force to Frew;
he is independent;
free of associations which would
be embarrassing;
would meet the demand or the feeling in some quarters that it
is time a state bank was represented.
The objection was a tendency to speak
On. the
first and think afterwards;
and possibly to talk too freely outside
whole, we both agreed that this was the best choice.
In fact, objections tc the
others were so considerable that he felt that an order of choice could hardly be
arranged; that Frew was the only one;
and if there were any" choice it would be
possibly Wiggin.

As to the committee:
Inasmuch as there were three in 1922, he
thought three might be considered this year. And we agreed to suggest Reynolds,
Potter and Stephen Baker.
This would be a national bank ma
and a trust company man.
Reynolds is not sympathetic with Wiggin, but he is
with the Reserve Bank;
and so isPotter.
By putting Stephen Baker on the committee, it might deal with a little propaganda, of which we have heard, to have
him elected a director.

I think this covers the whole story, and I hope that my cable was
sufficient to enable you to go ahead:
I could not cable yo
length,
as we were in a great hurry, and I did not have time to have the
message fully coded.
Sincerely yours,

Pierre Jay, Esq.,
Chairman, Federal Reserve ,Bank of New York,
33 Liberty Street, New York City.




Hotel du Palais,
Biarritz, France,
August 11, 1925.

CCNFID "NTIAL:

Dear Mr. Jay:

Dr. Stewart will probably start back home on the 25th, and
will see you before I have an opportunity to talk with you about the
reporting service.

This letter is rather confidential, but, of course, you may
discuss it fully with him.
He has decided to abandon the use of the present agencies,
and the Department of State, for assembing the data which now goes
directly to 77ashington, and to turn it all ovsr to the Bank of England.
They have agreed to obtain the information and make the necessary reports regularly by cable and mail.

The question at once arises as to whether the circumstances
directly to the Research Department
My impression is that if we raised any
of the Federal Reserve Board.
objection to it, the Bank would decline, and insist upon seeding the inI have not wanted to take that position,
formation directly to Us.
although there ls some gr und for doing so.

justify the Bank of England reporting

The establishment of these contacts might, in course of
time, result in an intrusion by the Board into operating matters having
to do with the system's relations with foreign banks of issue in a way
which might prove dangerous.
Technically the Bank of England only knows
the Federal Reserve Bank of New York.
I have told Dr. Stewart that it seemed to me the best plan
was to try it out; and we distinctly uneerstced in London that no matters relating to operation or policy, etc., come within the scope of the corThis I shall also explain to Governor Norman, and I think Dr.
respondence.
Stewart has done so already.

The arrangement is that copies of everything going to Washington
will be sent to us, as well as of everything sent out by Washington.
I am writing you at mace after discussing the matter with Dr.
to have a talk with him immediately
upon his return

Stewart, and you will doubtless want

Sincerely yours,
Pierre Jay, Esq.,
Chairman, Federal Reserve Bank of New York,
B3 Liberty Street, New York.




Hotel Majestic,
Paris, France,
August 24, 1925.

Dear Mr. Jay:

Thank you for yours of July 31 and the "enclosures," some of
which, however, have not reached me.
I do not believe I can make any suggestions as to the first
Most of the folks whom I meet over here are
not of the character to make such statements, except those who are so
intimately associated with us that they could not do it.

paragraph of your letter.

Are you quite satisfied that the activity we are displaying in
From your letter, and Burgess's reports,
discussions about recharter is wise!
if I were a detached observer I would rather conclude that the whole matter is
being run from our office.
Now the question is whether the Federal Reserve System, as a
I
system, has come to any decision, or adopted any policy in this matter.
believe we should be very careful not to assume responsibility in the absence
of any such decision. The
thing to consider is whether the present
administration is willing to commit itself to an attempt to secure a renewal
of the charter, an
don't see how we can afford to go ahead taking part in
the preparation of resolutions and discussions by various organizations, especially before President Coolidge and Secretary Mellon have had a chance to
pass on the question, and to definitely decide whether they want to have the
idea advanced or would like to have it discouraged.
The last word when I
left New York was that there would be some consultation in Washington. Then
I had your cable, to which I replied that neither Stewart nor I were satisfied that recharter was necessarily before us.
In one of your letters or
cables I gathered that Governor Crissinger and some members of the Board are
opposed to agitating the question, but that Professor Sprague and Owen Young
andthat some of our officers and directors may also.
favored it;

first

Unless that matter is really brought up and discussed and
formally decided, I think we cannot be too careful in taking all the
responsibility on our shoulders of conducting a nation-wide discussion which
centers about recharter.
Somewhere in New York there is a very elaborate collection
of the substitute money used in 1907.
I cannot for the life of me recall
where it is.
T think if you inquire of some
It may be the Clearing Meuse.
of the older officers of the Clearing House, who were active in 1907, you can
get a trace of it.
It may have been Cannon of the Fourth National Bank who
Also I suggest making inquiry of Piatt Andrew.
made one.
I am sorry that
my memory is so indefinite.



Don't think thatI am throwing cold water on enthusiasm

3.1/.25r. Jay

Paris, !'rince

about publicity.

I arn simply expressing a word cf caution lect we go

fter and further than our on colleagues will be willing to support

us.

I hope your vacation gives you a neee.ed rest and holiday.
Sincerely yours,

Pierre Jay, Esq.,

Chvirraan, Federal Reserve Bank of Now York,

33 Liberty Street, New York City.




(2)

MISC. 4. 1-240M-1-24

ro

FEDERAL- RESERVE SANK

OF NEW YORK

FICE CORRESPONDENCE
Mr. Jay

=ROM

SUBJECT

Benj- Strong_

Unfortunately I am obliged to go to Washington on a morning
train on Friday, October 23, the
This means that I

Schacht.

invitation.

I

day of

shall not

be

able to

luncheon

to Dr.

accept Mr. Warburg's

understand you will.

May I ask you to arrange




Mr. Warburg's

to escort

Dr. Schacht to the luncheon?

MISC. 3. I-75M9-23

FEDERAL RESERVE BANK

OF NEW YORK

.IFFICE CORRESPONDENCE
To
FRom_

Mr. Jay

DATE_

March 29, 1926

192___

SUBJECT.

Benj. Strong

Replying to your memorandum of March 25, attached, I shall be unable to
give any further attention to the questions raised by our talks with Mr- Alexander

on account of lack of tire; but I submit the following suggestions for discussion
with him:
1.

As to the year-end management of the money market in New York,

I agree with Mr. Alexander that the method of "direct action" then employed
did not work out well.

It would have worked out better had we been able to buy

more securities and leave much less to the discretion of the member banks.

What

some of the New York City banks do not realize is that when they go into the stock
exchange money market with large sums of money, even with the best possible intentions, without having a word with us about it in advance, they are simply drawing checks on their accounts with us when they haven't the funds there to meet
them, in the expectation that they can come over the next day and borrow the money
to make good.

This is not the way for a big bank in New York to run its business.

The market got into a little jam at the end of 1925 and when that situation developed -It required some little management.

It should be dealt with by an under-

standing between the New York member banks and our bank that we will exchange
views and handle the matter in a more orderly fashion than we have done.

The

fault was not wholly ours, any more than it was wholly that of the member banks.
I think we are quite justified in saying to Mr. Alexander that if we criticized
the member banks for the way they run their affairs, either publicly or private-

ly, with the same freedom that they criticize us, they would not relish it a
particle.



For some reason the notion prevails that anybody can shoot at the

MSC.3.1.45.-9-23

FEDERAL RESERVE BANK

OF NEW YORK

OFFICE CORRESPONDENCE
To 4

FROM

ir,

Jay_

DATE_

March 29, 1926

_192_

SUBJECT.

2

Benj. StIpAg

Reserve Bank, but that we must never, publicly certainly, or even privately,
in the minds of many, criticize the member banks.
2.

The relations between the Federal Reserve Bank of New York

and the Federal Reserve Board may appear to be all right on the surface, but
underneath they have become almost intolerable.

The attitude of suspicion in the

minds of some members of the Board in Washington is getting to be so pronounced

that a selfrespecting person should no longer tolerate it.

I have talked it over

with Mr. Mellon, and it so happens that he has been at some Board meetings recently
where this attitude was so strikingly exhibited that it is very clear to him.
think he is very out of patience with the whole matter.
when it should be ventilated.

I

And the time has come

Every time I suggest it, some of our own officers,
QNs.,

and I think some of our directors, assume tip attitude which implies that they think
I am a rather contentious person and may be responsible for it myself.

If I have

displayed any such feeling, it is simply the outgrowth of years of submission to a
situation that is abhorrent anctridiculous;

and, frankly, I am not going to submit

If the directors and the advisory council care to take the matter

to it any more.

up in my absence, I will be glad to have them do it;

if they don't, and it remains

unsettled until my return, then I am going to do it myself and either have an understanding or quit.
3.

The Board's management of the routine business, aside from

important questions of policy, has become so slovenly and inefficient that we are
all of us inconvenienced and embarrassed.

The record of the treatment of the action

taken by the Conference of Governors last year is a good illustration.



The record

T

J:1.5014.8.25

FEDERAL RESERVE BANK

OF NEW YORK

OFFICE CORRESPONDENCE
To

Mr.. Jay

FROM

J. Strong

DATE

3

March 29, 1926

192_

SUBJ ECT

of their action in regard to the Belgian Credit is another.

Their resolution

in regard to the meetings of the Open Market Investment Committee is a third.

In

fact, there is an unbroken record of bad management of these matters, and someone
must get at it.
4.

Just how the question of personnel in the Board will be dealt

with by the President is another question.

Time and again various of the

Secretaries of the Treasury have discussed with us the question of appointments to
the Board.

have declined.

A great many good people have been approached to accept office and

Unless the Reserve Bank managements themselves, who are so

vitally interested, are able to make some suggestions as to an improvement in the
personnel, it would seem as though our mouths are closed hereafter as to complaint.
Why can't the Advisory Council have a frank talk with Mr. Mellon?

BS.MSB




[)44

tLtr,l
,,,f7.1

OA 1 3 '1926

FEDERAL RESERVE BANK

OF NEW YORK

Ajwipir"qa)
Apf? i 4
Washington, D. C.,

April 9, 1926.

.1926

pa. et

Dear Mr. Jay:

Further thought about. the program ncw being discussed by our

..._,.rectors with Mr. Alexander, makes it desirable for me to refresh your.
memory on one point.

No one would deplore a purely personal ccntroversy more than
I would.

But it may be that nothing shcrt of that will accomplish what

is necessary.

The directors must not cr;erlook the fact that at the meeting
of the Board held on March 25, when Secretary Mellon was present, stat.ements

were made to the Board by Dr. Miller which, if correctly reported to me by
Governor Crissinger (which repot was substantially confirmed by Secretary
Mellon) are tantamount to accusing me of a crime.

My attitude, as explained to you verbally, is, after all, simple
enough.

I shall be unwilling to continue to have any relations with the

Board where such statements are permitted, or even possible.

So the

directors must understand that there are only two ways out of the si tuati on:

One is for Dr. Miller to resign, end the other is to bring about such a

reorganization in the Board as to insure that that sort of thing is going
to stop.
I an writing you this so that there may be no possible misunderstanding
of my attitude.



Sincerely yours,

AG

1

The Board ie disorganised. The Governor jr not in control either through

influence or votes.

The result is that the Board is made up of factions with a good deal of
bitterness of attitude among its members. They talk freely about ono
another;

and internal politics sad mansuvering are aeid frequently to
play a large element
such action as the Board takes.

Another result is that It is very difficult to obtain a "Board view" on
policies and questions arising for decision.
In dealings between the Reserve banks and the Board, psrticularly on contro-

versial questions, there
example

(6-; '.!
are many cistsil, often very lons ones.

For

the governors of the tselve hsnke most twice t year end the

chairmen meet once a year.

At theeo

confersncce

taken subject to the approval of the Board.

csrtain actions ere

Frequently from two to four

months pass after the closing of a conference before the Board takes action upon conference recommendations.

The Board is a supervising, not an operating. body, but instead of busying

itself with the broad pantiles of the Systsm the Board busies itself
largely with smell unimportant

dstills end is showing an increasing

desire to pass upon operatine msttos, and to reach into the crsdit
policies of the member banks.

There le no one on the Board or on its staff with real experience and understanding of bank operations, nevertheless many questions involving bank

operations come before the Board and, due to this lack of ezporionce,
imp/sztioable Vit5TOS sometimes crystallize ihich are difficult to straighten
out.
Only ono' mnsb(!r of the Board, not its Governor, has any undorstAnding or grasp

of the economic problems involved in the opsraticn of the System.

During the qest ter eere thero!, have been no authoritative speeches made by
the Board members discussing Fedsrel reserve policy.



t7)

1()

,

'

L

Sr,-

,

.,- ;

i

i

if

r!

,,

;
1
;




c5 0

'

,

f,L)--8.....,/

a

r't

4




(-

(

;

./

(Copy of faint handwritten memorandum),-..-

a.t.
2

0

.

nisorganizati-n
Relation with N.Y.
bickering.,
Politics

1. Non cash collections.

2. Regulation J

+ reversal

',. Congressional Investigation, gold.

Branch banks
4a Salary matter

Employment of Attorney
O day absences
Interfering with Directors
Behavoir during Conference
6a, Open Market committee meeting
Irresponsible Discussion by individuals of system matters.
Speeches
qtewart

1. Bk of Rngland Credit
Cloake to make loan to British Govt
strong had not explained properly.
Talked with Oscar Crosby
loan to British Govt, 4-

4

not a transaction;

4-

that

inspired his article about illegality
throwing doubt on whether the Bd had approved.

Tater said Strong had suggested idea of purchasing bills with part of
our balance so as to prepare the way + make precedent for the Bank
of Eng. credit.




Wanted us to ask B of E. to relieve us from obligation
for 2 yrs.

not to withdraw

Mrsc. 3. 1-30M.8-23

FEDERAL RESERVE BANK

OF NEW YORK

-,FFICE CORRESPONDENCE
To

Mr. Jay

April 15, 1926

SUBJECT:

Benj1

FROM

DATE

ANS-NV-FRED
APR 1 9192G

This memorandum is written to ask your advice concerni

'the question

of expense involved in my proposed trip abroad, - whether, in fact, it would
not be well for me, personally, to stand a certain part of the expense which
otherwise would be rather more than that usually incurred by me when I have
heretofore been abroad on bank business.

My absence in Washington at the hearings before the House Committee
on Banking and Currency last week, and part of this week, have given me too
little time to really become familiar with the studies made, and the material

gotten together in connection with the questionnaire submitted by the
Indian Currency Commission.

It therefore means that I shall need to do

considerable work on it on the way over.

And that, in turn, means having

a place to work undisturbed.
As Professors Hollander and Sprague, as well as Mr. Crane and a
secretary will accompany me, there seems only one solution, to engage a suite
with a private sitting room to be used by the entire party.
suite will cost a little over $2,000.
part of the expense?




Such a

How do you feel about my absorbing

192

On Board s/s. °Majestic%

Lpril 29, 1926.

Dear Ur, Jay:

Floase armuse this typewritten letter. I have been rather
miserable on the boat and have been sticking pretty closely to bed until

the last couple of days, so don't feel much like hand-written letters.
The cigars came safely and are very much appreciated indeed.

I am going to save them until we got ashore, and probably go joint account
with Norman.

wc settle down in London and I fool more like letter

writing, I will send you some more account of our trip.
Sincerely yours,

Ur. .lerre Jay,

Federal Reserve Bank of New York,

32, Liberty Street,
New York.




133:14

On Poard

sic

"Vajestic",

tpril 29, 1926.
per

Please wmuse this typewritten letter.

I have been rather

miserable on the boat and have been sticking pretty closely to bed until

the last couple of days, so don't feel much like hand-written letters.
The cigars came safely and are very much appreciated indeed.

I am going to save them until we get ashore, and probably go joint account
with Norman.

Then we settle down in London and I feel more like letter-

writing, 1 will send you some more account of our trip.
Sincerely yours,

Ur. 7ierre :ay,

Federal Reserve Dank of

33 Liberty Street,

New York.




York,

Hotel du Cap d'Antibas,
Antibes, June 6, 1926.
PERSONAL

Dear 'Ir. Jay:
You can understand how occupied I have been When I confess that
only yesterday did I commence to read the

mail, statements, etc. from the

office that had arrived since I left, but I am gradually

40eShing up.

This is to thank you for your two letters of May 21st.

I am indeed

feeling better and more rested, but just now suffer from a tramendoue disincli-

nation to do any work at all, which will doubtleii last for a few weeks yet.
I am convinced, therefore, of the need for a rest and will take it right here
at Antibes.

I am of course
letter and

what Mr.

anxious about the

Harrison

where the issue will lie over

writes

Mc Fadden bill situation.

Your

indicates that there yet may be a deadlock

the Hull

amendment.

I only wish Wingo were avail-

able for a little talk, as I believe he not only is intelligent but is open to
conviction, and

that he

views than any of us

is more partisan

have

was necessarily rather non-commital.
in my own

letter about Mr. Case.

What I wrote him

It could not be otherwise, because of

outlook, concerning all of

Harrison and he doubtless has shown you my letter.
a long leave of absence;

Reserve System and its

heretofore realised.

I was so glad to have your

the uncertainty

to the Federal

which I have written Mr.
I am certainly opposed to

it would work badly both ways.

If Mr. Case decides

to go to Berlin, I hope you will make no permanent rearrangement of work or
positions until either my return or I

propose.

practice




have had a chance to examine what you

This question of assignment of duties is especially my job, both in
and under the by-laws.

Az to the Federal Reserve Board situation, I am without any advices

June 6, 1926.

Mr. Jay.

2.

as to how it affects my commitment at

270 Park Avenue, and there is just an

intimstion in your letter and in Harrison's that you have not taken what I
said on this subject quite as seriously as I intended.

mistake as to what my intentions are.

Please do not make any

The matter was put in your hands, where

it belongs an Chairman of the Board, and personally I think it is the most
important thing requiring attention.

No word reaches me as to whether Br. Hiller is in Europe or not.

If

he is and I happen to see him, there will be no escape from a pretty plain talk,
so it may be just as well that we don't meet.

the fact that Ur. Mellon is sailing for
you

will

You have probably not overlooked

trope very shortly, and in his absence

be very much handicapped in accomplishing

anything.

Most of my letters have been addressed to Mr. Harrison, as they relate

/

to our foreign business, and I am writing him again today on some aspects of the
Italian situation, but I think you will be interested

to knew

that I regard the

trip this year as more illuminating in some respects than any I have had,and
notwithstanding the gleamy reports which doubtless reach you, I regard the situation over hare as the most encouraging for some years past.
I begin to sense that responsible people

in an

are facing

atmosphere of unwarranted and false optimism.

beginning to

For the first time.

the realities and not living

I really think they

are

comprehend the need for helping themselves in preference to relying

upon ineffectivo outside aid.
certainly become

This has always been the case in England, has

true of Italy, and what I hear

about both Belgium and France

indicates a nearer approach to a sound philosophy about their troubles than hae
been true since the wee' ended.

In both France and Belgium they need leaders,

and probably more authority in the Government and freedom from parliamentary




Mr. Jay.

3.

June 6, 1926.

interference than is at present the case.
I am rather dismayed at the prospect of being away as long as it
seems necessary, namely, on account of the need for a rest.

As nearly as I

can look ahead 4017, it would seem that 1 will leave for Vienna around the 10th

of July and can hardly count upon reaching Berlin bofcre the 1st of August.

In addition to seeing the bankers in those citiao, I want to have a talk with
Vissering of Amsterdam, Bachmann of the Swiss National Bank, Hautain and Dr.
Moll, winding up in London. The newspaper notoriety is so unnecapable in Paris

that I am doubtful of the wisdom of stopping there again.

Being awry as long

as this seems most unfair to you fellows at the office, and I would appreciate
a letter, or better a cable, letting me know just how you feel about it.
Such a program as I have laid out will keep me away until around the first
of September.

As things are quiet, I am counting on my absence interfering

in no way with vacations.

My best to you all.
Sincerely yours,

Mr. Pierre Jay,

c/o Federal Reserve Bank of New York,

New York.







Rotel du Cap d'Antibes,
Antibes, June 7, 1926.
Lear Mr. Jay;

I was delighteel to have your nice letter of 'ay 23th, with all the
news of the Council meeting.

Of course, it leaves everything up in the air

and, I fear, has also somewhat cenrused the views of the Federal Reserve Board

as to the year-end situetion in Ne'a York.

If the members of the Nerd would

only understand that the stock 1Txchange loon account cannot be reduced by

calling loans; that the only way to reduce it is to reduce the price of stocks
then we would Let zomewhere.

As T have said a hundred times, the only effect

of calling loans from one bank is to drive the borrower to =mother bank, and

while we liko to see the loan account well distributed, so that our borrowing
account

13 well diotributed

among the iember banks, it is absolutely impossible

to accomplish anything in the way of a reduction by direct action.

The ignor-

ance of the Board of the technique of this matter is roeponsible for nuch of

the bad feeling that exists, and I regret to say that it is only increased wher
those within the ileserve System themselves advocate a policy or direct action.

-- own attitude, as 'I think you will agree, has been to endeavor tc reduce
excessive bcrreeings or too persistent

borrowings by any

particular

member ben!'

not so much because the borrowing is large or persietent, but because our ef-

forts towerto reducing that type of borrowing has the effect of dhurning ur the
loan account, keepinE the brokers jumping from one bank to another, and that

itself is a reotraining influence upon over-speculation.

Mr. Alexander's dit

cuseion of the matter strikes me as being excellent in every way, but when he
report that he had criticized us for what we had done, he could not possibly

.

Mr. Jay.

June 7, 1926.

have reported the whole story, and possibly it is just as well that he didn't.
Your letter suggests, however, that the Council Meeting may have di-

verted you and the others at the Bank from one matter which is of particular interest to me, and that is the attitude of the Board, or some members of the Board,
towards the Federal Reserve Bank of New York.

That I have said to you and

written to you may not have been sufficiently convincing, so I can simply repeat

that if the matter is not dealt with in some way, I am unable to continue in the
unsatisfactory relationship which now exists.

This view is suggested by the

fact that Mr. Harrison, Miss Bleecker and Phil agreed that it was necessary to
renew the lease of my apartment, which I had hoped would not be done unless this
matter was disposed of in a way which would make it desirable for me to renew a

heavy obligation and one which I would not want to assume if I resigned.

Besides

that, Mr. Mellon will be leaving, probably by the time this letter reaches you,
and than nothing can be done until his return.

I hope you will write or cable

me on receipt of this letter, advising exactly what is proposed.

The Directors

may be quite out of sympathy with my attitude, and if so, I should be advised, but
I should not have been led into a position where, nothing having been done, my

hands are tied by having the obligation of an apartment.

Won't you write me

fully.
Of course I realize how difficult the situation is, and you must not
think I am complaining.

Recent developments convinced me, however, that the

patience which I have exercised in this matter has been misinterpreted in Washing..

ton as being either timidity or exhibiting a supine attitude, which will tend to
make matters worse.

I much appreciate the help you and the others are attempt-

ing and hope it will be effective.




Mr. Jay.

3.

I am having a good rest and enjoying it.

thanks for your letter.
Sincerely yours,

Mr. Pierre Jay,

cio Federal Reserve Bank of New York,

New York.

WIN




June 7 1926.

Best regards, and

Hotel du Cap d'Antibes,
Antibes, June 20, 1926.

PERSONAL AND CONFIDENTIAL

Dear Mr. Jay:

Thank you for your handwritten note of June 4th.

I am expecting a good deal to develop as a result of Miller's
visit, concerning width I will write you separately.

you realize, the
sorry to

situation is just as

Meantime of course, as

unsatisfactory as it can be.

r am

have left you such an unpleasant legscy.to deal with in my absence,

which possibly was not fair to you nor to the Directors, but I will take a

hand

at it when

need for my

I get back and have no doubt that you will all appreciate the

doing so.

Best regards to all at the Bank.
Sincerely yours,

Mr. Pierre Jay,

c/o Federal Reserve Bank of New York,
New York.
BS:M




Hotel du Cap d'Antibes,
Antibes, July 1, 1926.

PERSONAL AND CONFIDNNTIAL

Dear Mr. Jay:
Your letter of June 18th came last night, and this morning I have

your cable No. 26.

I am sure that you and

orov)
heA -

in fact, everyone concerned -

realizes that my decision has been just as much prompted by coneiderations of

If I were personally fit, nothing

health, in fact more than by anything else.

would please me better than to have a fight to the finish on some of these

matters, but I have not felt in

condition to

stand the racket, nor in the frame

of mind to feel confidence in the success of the outcome.

grateful to you for all that you
so much of the worry.

I am indeed deeply

have done and sorry to have inflicted you with

My reply to your cable, going today, will I hope be en-

tirely satisfactory.
About the Professors'

remuneration, I am

delighted with the decision;

it is based upon facte. That gives a good argument in defense of what we are
doing, in cane it Iv over quastiosed, sad of course

it was exactly for that

reason and in order that others might give the matter thought and study that I

referred it to you in just the way that I did.
both of the Professors will be satisfied.

You may be perfectly sure that

My suggestion that different amounts

be paid was the result of my asking Sprague whether this would be satisfactory,
and he said "Yes".

I asked the question because it is a fact that he made a

much more important contribution

did a

splendid job.

than Hollander was able to make, although both

: think Hollander was just as conscious of this as Sprague

and I were, but I am delighted with what you have done, and




know they will be.

Mr. Jay.

2.

July 1, 1926.

am frank to admit that, in order to avoid the expense account plus fees
appearing to be too large a sum, 1 paid a good many of the expenses myself, as
opportunity occurred.

We can decide hether they should be separated when

return, or leave them as a part of my expense.
Sincerely yours,

Mr. Pierre Jay,

c/o Federal Reserve Bank of New York,

New York.




Ilctel du Cap d'Antibee,
Antibes, July 5, 1926.

PERSONAL

Dear Mr. Jay:

Your letter of the 22nd of June has just come.

I should think it would be possible to have a talk with Garrett

about these Cerroll articles, for they are most harmful.

Of course neither

Governor Norman nor I had the remotest connection with the change in the Bank

I admit that a change seemed more than likely and has for some time,

of France.

but to associate the change in any way with him or with me was quite unwarranted,

and the coincidence would seem to five some color of truth to what was a complete

fabrication.
'hat I wrote you about the meeting of the Council and the Federal Reserve Board is largely based upon whet you reported of Alexander's talk to the
Board.

Alexander was very critical of our attitude in the only talk that I had

with him about it, but I am satisfied that he entirely

misunderstood

the money

market situation and he misunderstood our attitude towards the Bank of Commerce
when we suggested tha-t'there was a limit beyond which I felt the Bank of Commerce

should not go in putting money into the street end then turning around and borrowing from us.

I gathered that this was a discussion -which took place with the

Board and not with Crissinger alone, as you now advise, which does give it a little

different character.

at my dissatisfaction with the situation as it had been handled as to
my own affairs was based upon the statement contained in numerous letters from

the office that nothing would be said to Mr. Mellon about my personal attitude.
There wac no reason




for withholding the information from him, no possible embar-

2.

Mr. Jay.

July 5, 1926.

easement could have been caused by it, the facts were so eimple and the reason

for my attitude so sound - 1 simply

have not been well enough to continue a

situation which was harassing and conning a rtrain that I did not feel capable

of supporting.

Vow that gr. Mellon has had the

explanation from Mr. Alexander,

apparently made on his own responsibility and without consultation with the Bank,
I am eble to determine more definitely upon a course of action than
been able had Alexander not spoken to him.
and we can talk it over.

to Harrison

Of course I ehell see him over here

But all of this was quite

and when I cabled you.

I would have

unknown to me when I wrote

The trouble has arisen partly from your own

feeling, quite unjustified, that I have handed an ultimatum to the Bank.

If it

is considered on ultinetue, it is not one that I made, but one which arose from
,uses beyond our control, and that is my own health.
vented

The suggestion that I

it attacked in 'hammer and tongs* fashion is not justified.

Thatever

action oar Directors undertook was for them to decide, only it could not be
undertakorandanythinn expected in the way of results When interpreted as an ultimatum.

The best thing is to tell Mr. Mellon the whole story and put it up to

him.
Al tc the re:ortod conversation in

which Miller took part.

I have

kncwn him and had intisiate dealings with him now for a dozen yearn and am not

likely again to be fooled by any

such procedure on his part.

year prior to the expiration of his first

For six months or

term, he laid himself out to cultivate

the friendship and gain the support for his reappointment of all the Governore.
It was the subject of a good deal of comment, and at times a good deal of joking
and even ridicule.
taken in by it.

I have always regretted that I was gullible enough to be
My interpretation of this discussion is that he is beginning to

realize that the situation is going to be

F.

difficult one for him.

coward at heart end he is beginning to hedge.




He is a

I don't know whether your educe-

July 5, 1926.

Mr. Jay.

3.

ticn included a careful reading of The Prince" or not, but you will find a
good deal bearing on his attitude in that admirable little voluirle.
Now 1 have got this out of my system, and I wish you would forget it.

There is not a thing to be done until I get back, and by that time it way all
be settled as a result of my talk with Ir. Mellon.

like this

in

I hated to leave a situation

the shape It was in when I left, and I hate to delegate to anyone

the job of negotiating such a thing for me.
unsatisfactory.

It is always unpleasant and always

T have had no feeling about it except to the extent that I

feared the folks at home did not realize that I meant business and was going to
stick to my determination.
My best to you as always and a reat many thanks.

Sincerely yours,

r. Pierre Jay,

oio Federal Reserve Bank of New York,
New Yoe:.
PS:M







OF INCOMING abBLIORAA

Juan Lespins.
Sent July 17th 1j26.
Ree'd July 19th 1926.
Federal Reserve Bank,
New York, TT .Y«

Testword

OK

I 38

Pierre Jay
Referring to your letter of let Inst.ausered by (Referring to)
my letter of 3 Inst. to a. R. Burgess (Asst. F. R. Agent)
=35ZONO

Hotel Trianon Palace,
Versailles, July 29, 1326.

PERSONAL
Dear Mr. Jay:

After some exchange of messages, Mr. Gilbert and 1
Dinard on Sunday, where we found Secretary Mellon, and

after

motored down to
spending a day with

him there, we motored back Tuesday as far as Tours and Tednesday Mr. Gilbert and
I motored back to Paris.

Mr. Mellon was of course just off the steamer, and RS the week of his
crossing covered the most critical period here, he was not informed of developments and we were able to give him a pretty full picture of whet had been going
I shall write separately as to that part of our talk.

on.

This letter relates

to my own situation.

're

went over it all very fully.

It will be just as well not to quote

the Secretary, but it resulted in an understanding that nothing could be done

while he and I were both in

Turope, that for the moment we would forget the sub-

ject, but when we are both bock home it is understood that it

will be dealt with

in one way or another.

Neither he nor I feel certain that anything effective can be done about
the

situation in

the Board,

It will also likely prove to be the case that the

oituation in Europe will so develop that we are for the time being, and possibly
for n considerable time, eliminated at a factor, as events may make it impossible
for us to be of any real ossist:nce.

This will make it much easier to effect

ar-angements which would allow mo to retire as soon RS the necessary provision
can be made in the Bank.

Thichever way matters develop, T shall do nothing that

will embarrass the nirectorr,




s you of course understand, and shall of course be

2.

Mr. Jay.

July 29, 1926.

much influenced by the report I get from Dr. Miller.
There is not much more that I can write just now, and I am sorry

that it is so indefinite.

Many thanks to you for your being so patient with

all the trouble I have given you.
Sincerely yours,

Hr. Pierre Jay,

c/o Federal Reserve Dank of New York,
New York.




Hotel de l'Europe,
Amsterdam, August 3, 1926.

PERSONAL

Dear Mr. Jay:

T was glad to get your nice letter of July 8th, but all 'attire received since then have been carried about awaiting opportunity to reply, as I
have been exceedingly busy, principally listening to long tales of a eleh in
Paris. There are a few matters in your letter that call for comment.
T. am glad of the settlement with Sprague and Hollander,a n sorry the
Board questioned the expense account, but after all, Mr. Mellon arraneed all of

that and it Is hardly within their province to question it
I am glad Mr. Baker is proposed for the address, and he will make a. good
wholesome ono.

About Mr. Lins, of course we cannot expect to keep him.

too good, and I expect he is too good a man for us.

The crew is

'Mile T am glad to see him

get along and sorry to lose him, we have got to expect that and I am zetting to be
a bit complacent about it. On the other hand, I have hesitated to say "Amen" to
the suggestion that Mr. Downs take his place. Do you think he has had the exper-

ience in credit matters to make it a wise change? It is the kind of an adjustment
in the Bank which is most difficult to judge of at this distance, and I would not
feel competent to have an opinion about Mr. Downs without knowing more than I do
of his experience and past record. As soon as Mr. Line has decided to leave, I

hope you will advise me, as I would like to write him a nice letter.
Of course I approve the salary recommendations, especially Dr. Burgess,



2.

Mr. Jay.

August 3, 1926.

d you have my cable.

am writing Harrison a line of congratulations about the Clearing
House negotiations.

I had already dictated a note to Mr. Sailer about the

salary classification matter, where it seems to me the Board's action is quite
unsatisfactory.
am glad to hear from you with all the news, and in fact thirst for

it.

Many thanks and best regards.

Sincerely yours,

P. S. - On going over ;ours of July 23rd and enclosures, I find that

it calls Zor no reply, but the news was all most interesting.

Mr. Pierre Jay,

c/o Federal Reserve Dank of New York,

New York.
BS:11




Hotel Grand a Wier,
August 17, 1926.
Dear Mr. Jay:

I was glad to have your letter of August 5th, giving a lot of the background in regard to our rate situation and the money market.

As hinted in one of my letters, T was beginning to feel a little uneasy
about our rate come time ago, but when so far from home, it is hardly fair to make

very definite suggestions on that subject.

Infornation is too incomplete.

Now,

my cable maggesting that we Increase to 40 wae inspired by a number of considera-

tions, principally those named in the cable, but also the fact that I had opportunity to talk with Norman, Schacht and Vissering at the same time about rate policy,

what effect it would have on the Continent, and generally their experience tn deal-

ing with a similar situation.

be better to go to 4l at once.

They all agreed that, from our standpeint, it would
This is a second outbreak of speculation, and the

control we obtained last tine, you will recall, was by using a nuelber of Reserve
Bark rates in succession, which we wore not proposing to do this Ueda.

Both

Schacht and Vlosering would, on the whole, have felt benefitted by a 4}% rate.

Forman might have felt a little embarrassment, but his position is still pretty
strong, and I think he felt that their morket, with a spread of nearly 1% between
London and New York on bills, could stand a q% New York rate, certainly long enough

to feel reasonably certain thet the coal strike would be settled before they would
have to make a change.

Without the coal strike, it had been his hope to reduce

his rate. Ihenever the coal strike is settled, he would like to avoid increasing
the rate and, if possible, reduce it; so if we had a 4% rate it might embarrass
him later on, after the conclusion of the strike, if our 4% rate was not effective




Mr. Jay.

2.

and we then had to go to 4%.

August 17, 1926.

Had we gone immediately to 4%, it night be pos-

sible later on for us to reduce to 4% at approximately the time when he would like
to reduce from 5% to

4N.

It seamed wiser, all things considered, not to permit this to appear in
There has been altogether too

your discussions as any considerable influence.

much talk about our policy being subordinated to the needs of Great Britain, and
I was glad of the opportunity for the Directors to come to a decision without any
particular consideration being given to the foreign effect.
One other influence was in my mind, which I merely suggested in the cable.
I have resented very definitely the unprovoked attack by Tincton Churchill upon our
His statement in

policy in regard to the debts.

the Mouee of Commons, which was

made in tepaeoction with the diecuesion of the French settlement, was made after the

Peabody

letter was published,

but before Mr. Mellon's reply to it.

He could have

had no eacuse that the statement he made was provoked by anything coming from Mr.

Mellon or from the Administration, end certainly the Chancellor of the Txdhequer
cannot justify such statements as ho did make because of the publication of such a
letter as Mr. Peabodyer, written by a private citizen.

I feel, as no doubt our

Directors have felt, judging from your cables, that the British cannot look to us
for support in their stabilization program at the Dt=0 time that their Chancellor
of the Eadhequer is abusing us.

T have pointed this all out to Governor Norman

and think he understands.

Now my fear is that the 4% rate will not be effective, and this is rather
confirmed by yhet the newspapers state in regard to our stock market and business

generally, and oven further by the fact that I notice that the First National Bank
is now borrowing substantially one-half, according to recent reports, of the
eunt we are lending to the banks downtown.




entire

As long as that condition ie allowed,

3.

Mr. Jay.

August 17, 1926.

our bank rate will be less effective than it should be. I suggest that
you read
the draft of a letter which T cent to Hr. Case, and further that the time hasi
come
to make perfectly clear to the First National Bank that their bormeings
must be
limited.
Won't you please show this to Mr. Harrison,

to a short letter from him about our rate.
Sincerely yours,

Mr. Pierre Jay,
c/o Federal reserve Bank of New York,
New York.

DSOS




as it will be also a reply

Princess Hotel,
Paris, August 26, 1926.
PERSONAL AND CONFIDENTIAL

Dear Mr. Jay:

I have your two letters of the 10th.
During my visit at Tvian, I had opportunity for a further talk with
Mr. Mellon, and this time he brought the subject up himself.

He was quite anxious

about finding a suitable person to fill any vacancy that occurs in the Board.
The only suggestion I have been able to make so far is Sydney Anderson, and of
course we have no knowiedgo as to his

to take it.

financial situation and whether he can afford

Mr. Mellon has urged me to kosp the matter in mind and let him know

if I have any further suggestions.

won't you quietly be thinking the matter over

and find out how some of our associates feel.

We cannot complain about appoint-

ments if we ourselves are unable to make suggestions when invited to do so.
About the rate situation

mentioned in your other letter, I

written that an informal discussion of the matter with

have already

Borman, Vissering and Schacht

disclosed the unanimous belief that, under the conditions as I described them, it
was better to advance the rate 1% than
a little timid in using our

rate.

on his exchange position and the

on the other hand, if it ends.

of 1%, and I think they felt that we were

Norman, of course, has to figure very closely

possible effects if the coal strike continues or,
I think he felt that for about six weeks after an

increase to 4l.% he would likely encounter

no difficulties, but after that he

feel the pressure considerably, and of course he is anxious to avoid going to

might

514,

or even 6% if they follow their tradition, at a time when business is depressed and




Mr. Jay.

2.

-.;mployment is so great.
perfectly to have us go to

August 26, 1926.

Dr. Schacht seemed to think that it would suit him

40.

France, so to sum it all up,

Of course, our rate would have no influence in

while I hope that we may get

through the Fall without

a further increase, I can see the possibility of its being necessary, and if it is
necessary, then it might have been better to advance to

40

rather

than go up in

two bites.

I have written Harrison about

the Indian Currency

report, which I think

has been misunderstood at home, as will be disclosed when the document arrives.
Best regards to all of you at the Bank.
Sincerely yours,

Mr. Pierre Jay,
c/o Federal Reserve Bank of Wm York,
New York.

BS:U




Done

work too hard:

Princess Hotel,
Paris, September 6, 1926.

c\1/4'

My dear Pierre:

Your letter of August 27th reaches ma just

an

I am packing up to

leave Paris, and I can only sand you a brief letter from here, which I may be
able to supplement in London.

By all means, see M. Moreau and Dr. Rist at the Bank of France.

I

lunched with them today, explained your arrival and tho nature of our associa-

tion, and asked them to talk with you as frankly as they have with me.

Please,

of course, bear in mind that our conversations have baen most confidential and
practically no one knows about them.

/ am enclosing a not, of introduction to H. Moreau and one to #r. Rist
as well as to Stringher, Volpi, and my friend Giovanni Fummi.

Morgan's representative in Rom and a fine fellow.

The last named is

He is vary close to the Ital-

ian Coverament.

Ihile hare, I hope you have a chance for a visit with Dean :ay, and if
possible to do so, he will, / am sure, be glad to have you meet my friend Jean
Monnet, who has been most helpful and is a very wise fellow.

:ionnet is the on]

Frenchman that I know of who knows anything at all of my conversations with the

Bank of France, and he is a man very close to then, but I am not sure how much 1
knows, as most of his information he got from them.
Best regards.

Mr. Pierre Jay,
c/o Morgan Harjea & Company,
14, Place Vendome,
PARIS.
BS:M




Sincerely yours,

Bank of England,
London, September 14, 1926.

Dear Pierre:

Many thanks for your bully

letter of the 7th.

that matters are incapable of arrangement.

I cannot bear

In fact, they must bo.

to think

On the

other hand, I think you and I both realize that when I left New York, the combination of a certain amount of wearing responsibility about the Bank and its management, together with the most unsatisfactory situation in Washington, was proving to be too much for ma.

I can always tell, not only by the way I feel but by

thethermometer", that it is impossible for me to

continue in good

a temperature of from one to two degrees at the same time.

And

and

health

when that

run

contin-

ues for a couple of months or more, it is sufficient warning that I must either
quit or be able to de what I am called on to do in the Bank under circumstances
that involve less strain, less anxiety,

constant annoyances
I hope you

more comfort.

and probably more than both, less of the

that we have suffered for

realize

some years past.

that this is not simply a notion of mine to

If it were simply a matter of comfort, I

gain

would probably enjoy a

row more than I enjoy complete peace, but it is a really definite matter of health
as well as peace of mind.

My talks with the Secretary convinced me that he is sufficiently interested

to

take a definite position, and it is just a question of when and how it

If the outcome is catisfactory, I shall not insist on any
If it is not satisfactory, then I must.

should be done.
change.

I hope you have a bully trip, and that

you have opportunity directly

to get in touch with some of the problems that I have been discussing over here,



Mr. Pierre Jay.

2.

Septenber 14, 1926.

because the more we know about the situation, the easier it will be to deal
with it when the time comes.

Best regards to you and Mrs. Jay.
Sincerely yours,

Mr. Pierre Tay,
c/o Morgan, Harjes & Company,
14, Place Vendome,
PARIS.
BS:11




270 Park Avenue,
York City,
I:ovelm'cer 23, 1026

Dear 11r. Jay:

11,-ve just been over a 66.2.ary list submitted by

writing him as per the enclosed copy.

You

r. Cse nd a=

need the list before you, or

a copy of it, to ._:.;Lther the girt of c-,y suggestions herein, Khich nre briefly
EIs folio's:




a. I am strongly opT. osed to the Director&
submittinz to the Federal Reserve Eoard u.ny outside
for i.-..poointment to your position i you go to Germany.

\ It is, disheartening, and there is no n.n outside of the

bsn4r4. o could t:-.ka your :.:oeition ho could possibly be

4.S veil ,:jualifien to fill it as some of the on in the
bank:

I admit now,

I have to you orLdly,

e'here

are difficulties in giving ne position the .iutdity of

.

-Inich it 7-.;hould hie, :hich of itself mcons
difficulty in settirk-; an outside man. S-ald no one could
,00me into th.:1 bank md
Lhe in.ia,tc und psculiar
relations which you ic I have enjoyed, .,'hsro all the
t.encii.0o of onk orgazin..tion
ed. In
other 'Lords, if, .perchancc, I shoule cc reLiningcs
Governor of tho bat, I uuiaprefer to :lave a i.-.1a2,-tnir
(in the sense that you have been a partner) cho4:.en from

one of the existin,g officers of the hl, rthor than

hazard a nu a one selected by such a body as the Federal
for Eeavenis ouhe, try to persuade

the Directors to stay inside the bsisc.

Plo,..se consider the follo:-..ing suggestions:
(a)
If
'Harrison should be aol,:ou to take it,
ui' so. :.ast it pormancatly, and it ;:ould be neces:FLry to agree to his a. 3oint,-;.cat as Governor in case of
ny reed7rweion in advance of his taking the pl/.;cio'. This
is bad procealure, and ibnores the Fe,.-,n.1 Reserve
be

:hen the promotion LOC.:41 tele pi ,co.

Board.poroal

1i.25.28

Er. Jay (Confidential)

2

I

ii

the

satisfied that Er. Ca Se t.`011.1.c c1cc1in

poet, if offered to him, even thooghtit could be' arr,n4_,ce

to make a suitable transfer of hie exieting euties, at the
risk of dicorganizinl, the whole c,--cheme o3 orgtLniz.e.tion.

po.sition

I am satisfied that Dr. irjur;ele coulkt, fill the

it dignity and to the satisfL.otion of the tank..

the objections to his promotion, L ....ippirks him over
the 'ho.ede of a good many 2c0p1e, etc., etc., will not hold
water when the Subject, i8 carefull.y milyzcd. If anyone
might have ground fo r objection it might be me. It. ie really
promoting a man who has come up from the ranks over the head
Gov,:rner, in a sen8e. I have never ob:Jected to
chnin y Vi 6718 henBuress appeared to be r161-.,t and 1
wrong in i.tter1 havind
do ,iti: the -Lank ,?.Iten he ;:as in
tine

a i2uboruinate position, and I should object less if he acre
Faderal Rsz:-.erve Agant

Ohairm:;n of thc 13ord.

recommend%tion, therefore, ic t.'hat ic hhould
to the Feders1 Reserve Board i:41th a definite, recomneadation
or
rr,
to ra:::...e.
25,003 a ye-t,r; to increaae Enyder' 831 cry; and. to
con:rider ho in t1-.e
to ti.e.Burgez...4e1 ar3hi8tant.

pro.:Doted

;.;:ou1:i.

Of that 1 uuit.c uncretain.

If ;Jo iierc to go outoido for a nu, my recoomeuda.tion
to endeavor to got Dr. Etoart; olacini:; the rebponeibulLy upon the Federal lie8ervo Boe.rd. It oUla be rather a

irt
ordeal for Eurge,...;:.,, isind
rai1i hia worior in the p,ht *'zid
hi ..;

ot Dr. ft,.;-.L.,.r-t,
acz,,T, into

t-ank

ocre

cot feel the ncei. for
1 hope the Director6
(2)
coind;:lead iith organiiw-ition chai-4;os until I ;:ta able to
givi3 the fitibieet more
htuoy.

/inw! it ne.ede

great deal of

lisioe. from the suz,;6etion in this 4tter, and those in the one

to Er. Cuee, I hole no other ce--,unts in mind at tiio moment.

later,Lfter oppc,rtunity for y

,Ath oy aseoci4tes, I

ili

But a :Little
ant to make

name iJuLgetion about Rounes and G1ibrt, an one Or to others, which would

not b put into of fee until after the first of the yer if i,tdootFld, and
:7. oulci involve no imodiate conCieeration of sbiL-,ric.




Oincerta'y your5,

777,g)

\

f41P°

.r.

1(2,rk city,
Doc,:mber 6, 1:25

PER LO:

1.)er Pierre:
For the

next three or l'our months, I thing for

the Ea:1 s history, you

Lind

I will

boLF,

be abeont at trit

the

firet time in

Vot.rTic tic.

It

happens in 6. period when possibly soule im2ortiant decisions must be made, as
to limtters 4.broad;

as to possible relations in

:, asbi.a6ton;

ano as to action

on the discount rats.
Snat I am

rit,in6 is for you tend any of the directors intere:-ted

to consider privately, sad should not be understood to imply any lack of confidence in any of our s,ssocietes in the PeLek, but rather to ineicf.r.te the
method by ie.;.hich the oirectors r t.,71

feel perf,ectly content with the situtiou

now arlei:
hr. C:,se, has heretofore ...ctoei in my place durin

my

t.,serioc.

I shall be a;!,ay three or four months, and if it is neco,.eary to soint any
one formally to act during my sbeence, it secms to me he should be so appointed.

I do

flOt

like the title of oActinz ,Governeru.

4h1ch miht cause misunderstencin;

with his present

It, has

and if his portfolio could be handed him

title, I thin it

bet.

It has not r.,..1ways been my practice in the past to discuss
possible

the 01'ficerz, Council

ten done.
ch,!riL;ee




You

remember th...L,

c, times
Lhe recozimendations as to rate

tesn tr.de by me as a personal rocomli,eadtion, Uthout

2

0

indicati
ot

I gather that some of

What has preceedco the rocomendtion.

%nu by the forther

the directors have been eisturbed by so&-6eations of

suggestion that there are ao many people discu6sin,.,.; rate action in the 2ank

th5etthe possibilities of Ictke are consioerabie.

I

not

1.

ree with

this view entirely, I think it may be; also to hLve an understanding as to how
rc,to discuesion should be aiL:.neci during this period.

It -,.ill be bst not to

have it Owalt with by 6 epecial co,-itLee of the directors, because the Executive
Committee aireciy has z:uthority under the by-laws co make r,to chrlica, and any
such discussion should naturally be idth the Executive Committee.

But ao that

committee meets on Monday, it is too far ahead of the directors' meetir,. to

justify such a diccussion.

Y.y preference ouici be to i. ve

Harrison talce up rate -.;estions eith Mr. :3,i1er

nn

C.5Q and

r. Konel on the (1:::y of

the directors' mvetik and., if possible, consult one or t,:o of the members of
the board 1,ino aerve on the Executive Committee prior to the board metinz.

I

the idea of reco=tnda.tions beinh m&de to the directors z,o coming

do hot

from the Officers Council, indicatin formal discussions and records of action
en.
Z.

The ouestion of re16A.ions with Cho 2ederal Reserve Boro is

hound to become active with both of us 6..y.

In the p,.,.et certain actions have

,oen ten .hich ar to esta.blish a precedent P.s to the Board's: authority
;
in certain oirootions, -4hich I believe 11-.Are been 'anfortunate. If the directora

\

:eel 'Ailing to have a small com7:1ttee of, s,y, three members of our board con-

fer on these maters durinL; the next six months, or even loner, my elli;e:stion
woulb be th.

c.

a comittee consistin3 of the Federal Reserve igent. (when appoiateo)

toether with ::.osers Reyburn

Narrisnn the officers.




nu

oolley represent the born, end r. Cse and

Any import :,nt :lueotion

with the Loard could then

\
\

0
0

12.6.a;
be coneluered i.ry this com.rittee,
-,,ould b

1nclin34 to Iv

lieyburn

recom-:enc"!:.t.i3414

m4.,cie to our direotorc.

I

vicbchai

FeUerv.i. Ree3rve

L!r.

rat.,y live ;i0171.1.; imoortz-nt mf...Lttore inconnection.

.toreicv, buzinez3to
&i6tin of,

io.,1

ith, nu i

y, Mr. Youn

tri:/..eo 123 210..

Lr. H,Thynoide,

our

coee con-

co bet, with the unUcretraci-

oui

in6 the.t thoy viould consider mc,tters eubinittoc:. by :Lr. Jrricoa, or else meet
?..itb the deputy 6avernore, so a6 to give goner.--1 eup.;ryision to theee mtters
clurin; cxur
4;41 to Dr. iriurzese'
Beyburn,

tine toc-lk :with

4.-,..21..'ainLmor.it,

juc'e that the present unctorzt!,,nclini; le thnt you :,"-1.11

t1z ith Dr. aurgeLia on your return, e.fter
here t3 Lif:*.t me, anci then teak

ich you 7.may 4ieit to hove him' &top

icybarn.

.

Then if you 1ra throuih

.Governor Crisiner that it ie. 3eeir45.b.le for him to do to .:,.,4;h141on, he will
kno17,11,..t. it, is

Thee s,re just

first by you,

4.:.ne.

then 14 the directors.
Sluceroly yours,

r. Pieire
Fecier:,.1 Roserve .E;4tak of 4.eu




'N.

----

---/
GLUE

CY--;

-IGH.
.2...,,R

//

TELF.GRAhl

DAY LETTER

/

NITE

NIGHT ..

CLASS OF F.ERVIGE

7:GSAGE

NL

NIGHT LETTER

NL

If none of these three

'

If none of thtse three s7rabu',
appears after the check (0 usher of

wards) this is a telegram./Other.

wise its character is indicate by the
symbol appearing after t check.

NEWCOMI3

V/C,.-PRESIDENT

.

appears al ter the chock (no,'
word.$) this is a telegram.
wise its character is indicate,i
symbol appearing after the check.

The filing time as shown in the date line on full rate telegrams and day letters, and the time of receipt at destination as shown on all messages, is STANDARD TIME.

Received at 62 Patton Avenue, Asheville, N. C.

_

,.

3 US'C..,

TO

I 11"..7-,

La ,

73 TO 1.711
'

P

[In handwriting]
failure to get that would justify
consulted again. Ben




this as Oecond choice.

Has Secretary been

9.

A

/ `)
/[1n handwriting on back of teiegramof Jay to Strong,Dec. 27, 1926]
lacks technical experience and
assuming you mean Gates my reaction; is
training in economic work, second cannot Ike extemporaneous addresses or expound
problems, third have understood health has ,not always been good, fourth
deplore abandoning promotion and resulting discouragement stop. Against these
I put one is regarded as,a trained banker, twolnows our board and organization,
three enjoys excellent reputation, foilr *xilild &operate fully Stop. Am surprised
with which you are familiar not been
that certain confidential exam1aera4
considered.
Stop. Am still firmly ConinCed our recommendation is much the best
Stop. Only absoluta(over to fr

fret

ear




at*

ji

FEDERAL RESERVE BANK
OF NEW YORK

IN REPLY PLEASE REFER

January 12, 1.924.

TO

PERSORAL

Dear Ben:

Replying to your personal letter of January 11 regarding
the Board's approval of salary increases of officers and employees,
I find that on December 27 you and I both received letters on the
subject.

After receiving yours you referred it to me and I referred

mine to you, not knowing that you had received a letter on the subject.
I cannot recollect exactly what went through my mind that
day, hut inasmuch as you have been the officer who always deals with
the Board in salary matters when you are here, I presume that my
assumption must have been that you would give the proper advice to
Mr. Sailer.

I agree with you that inasmuch as advices to and from

the Board go in my name, such letters as this from the Board to me
should go automatically to Mr. Sailer and I will see that this course
is followed in future.




Yours truly,

OMS-2 150M-9-20

INTEROFFICE

FEDERAL RESERVE BANK
OF NEW YORK
1

ROUTE SLIP
A. M.

AE

DATF

P.M.

TO

A.,

OFFICE SERVICE
MESSENGER SECTION

,

DEPARTMENT
DIVISION
SECTION

REMARKS in reg,iri to tha open market
operation statement

FROM

P. Jay

DEPARTMENT
DIVISION
SECTION

 INSTEAD or OFFICE ENVELOPE WHEN POSSIBLE.
N. B. USE THIS FORM
http://fraser.stlouisfed.org/ ACCURATE DELIVERY ALL COMMUNICATIONS SHOULD BE DISTINCTLY LABELED
TO INSUREPROMPT AND
Federal Reserve Bank of St. Louis

kic),v4,tii4,
ciTe

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ctio Cti440 rat17( wac4)

APootkeW
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r.71)

ticyc)-t-(erring-




aCCetfa

145.

Sag
-1 /04_

4/z




The country's attention seems to have been fixed exclusively upon the discount rates of Federal Reserve Banks as an
index to the policy and views of the System.

The public overlooked that section 14 of the Federal
Reserve Act was designed in part to give a Reserve bank power to
exercise through their purchases and sales in the open market
some sort of a moderating effect upon the money rates and credit

condition in addition to the power to be exercised in the fixing
of discount rates.

Here describe the influence of buying securities in
the market and the conversion of a discount account into an industrial account, thereby relieving member banks of the burden
of discount cost and of showing borrowed money and how the reserve
operation - selling securities,force

them to borrow at the dis-

count rate and puts them in position of showing borrowed money.
Show the relation between market rates and discount

rates as to the cost to the bank of the discount rate contrasted
with the cost of deposits, for instance.
Discuss how purchases and sales of securities in 1922
and 1923 worked.

Explain how the liquidation of securities assists in
offsetting gold imports.

Describe the need for a system of policy in these
matters.




-2Describe how policies have been discussed and arrived at.

Explain the need for avoiding conflict with the
Treasury borrowing program or in the execution of orders for
the Treasury.

Describe how committees of the officers of the
Reserve banks are called upon from time to time to discuss
technical natters and execute the policies which have been discussed and adopted by the System.

Describe how a committee of the governors by the

use of the wire system and the interchange of orders is able
to carry out such a policy, distributing orders throughout the

various Federal Reserve Districts in such a way so that they
do not all concentrate in New York City.




Form 1204
CLASS OF SERVICE SYMBOL
Telegram

Day I ^.

Blue

Night (vi,,,age

Nile

NL
If none of these three symbols
Night Letter

ancears after the check (number of
1) this is a telegram.
s,. is character is indicated by the
symbol appearing after the check.

REiMkp

FAj

WESTE4147NA UNION
TELSTAi AM
WESTERN UNION

Other-

NEVI/COMB CARLTON, PRESIDENT

GEORGE W. E. ATKINS, FIRST vie.pREenainer

CLASS OF SERVICE SYMBOL
Telegram

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Nite

NL
If none of these three symbols
Night Letter

appears after the check number of
words) this is a telegram. Otherwise its character is indicated by the
symbol appearing after the check.

48

NEWYORK NY 505P JAN 18 1924
BENJAMIN STRONG
CARE THE BREAKERS PALMBEACH FLO

Aist,

PEACH-CA LED TODAY STATED HE HAS MADE ARRANGEMENTS WITH PECAN TO
.

1

PLACE CHEESE WITH STRAWBERRY CITY AND FIRST AS JOINT PRINCIPALS
bi

STOP PEC N WILL SEE APP E SO THE R

YOU TO DO ANYTHING AT PRESENT
MOVEMENT AM WRITING

9L*'12

QUAIL

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WILL PROBABLY BE NO NEED FOR

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OATMEAL

FORTY SIX TODAY NATURAL

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Jan. 18 11924]
16,

Dear Ben

Peach[Mori] with Spaghetti[Ichinomiya] and another called at 3 today and
talked with Case and me. It appears that he called on Strawberry [K.L.T-Ls consent
and went to Pecan[Morgan] and invited him to become leader which was accepted. The
managers will be Pecan[Morgan] Strawberry [K.L.] City and first. All are in sympathy
with the nationwide idea.
The present plan is to have a composite cheese[loan] of about $180
millions which will include both refunding and new money.
In addition about
$40 millions will be placed locally largely in the purchase of land. The cheese
[loan] will be half here and half abroad.
Pecan[Morgan] is to see Apple[Hughes] so you need not have that on your
mind.

The Oatmeallyen] has been moving up steadily with no artificial assistance.

Peach[Mori] says he wants our moral support, of which we assured him. He
also wants you to be told, which I'm doing by letter + wide, in great confidence.
Case + I were rather aghast when he told us he had gone ahead directly,
out all's well that ends well + you can apparently enjoy yr. vacation in peace.
Case has written you about other things. We seem to be busy here.
you are hitting the ball well. Finished Olney yesterday, + liked it greatly.




Yrs.[signed] P.J.

Hope




Pear
Peach
Apple
Almond
Hickory
Walnut
Pecan
Strawberry
Artichoke

President
Mori
Hughes
Mellon
State Department
Treasury Department
Morgan
K. L.
Inouye

New Japanese
Finance Minister
Washington

-

Potato
Macaroni
Marmalade
Spaghetti
Butter
Cheese
Eggs
Milk

-

Pork
Beef
oatmeal
Sugar
Wheat

Tokio
Ichinomiya
Case.

Bank of Japan
Stabilizing yen
Purchase bills
amounting to
Guarantee
Yen

Yen bills
Sale of dollars
Open market purchases Crissinger

Corn
Cotton

Investment corn.

partridge

Jay
Fed. Res. Board
Bankers

quail

pheasant
duck




Form 1204
CLASS OF SERVICE SYMBOL
1%-legram

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WESTE

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appears after the check (number of

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Other-

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TEL

NEWCOMB CARLTON, pstsusionprr

11:-Y

CLASS OF SERVICE SYMBOL
Telegram

AM

Day Letter

Blue

Night Message

WESTERN ONION

NL
Night Letter
If none of these three symbols

1

UNION

Rite

NL
If none of these three symbols
Night Letter

GEORGE W. E. ATKINS, FIRST VICR-PREESDRFFr

appears after the check number of
words) this is a telegram. Otherwise its character is indicated by the
symbol appearing after the cheek.

RECEIVED AT

47JN D

71

NEWYORK NY 208P JAN 25 1925`I

BENJAMIN STRONG
CARE THE BREAKERS PALMBEACH FLU
PLODGERITE WIRES RUMOR OF MATTER YOU AND

I

DISCUSSED REGARDING

CERTAIN PARTY UNDERTAKING IMPORTANT RECONSTRUCTION WORK THINKS
HIS NAME MAY HAVE BEEN SUGGESTED BY YOUR MILITARY FRIEND ON THE
OTHER SIDE PLODGERITE MAKES NO REMARK REGARDING PARTY BUT WISHES
YOU TO KNOW THAT SPECIFIC CONDITIONS OF LOANS

EMPLATED UNDER

PLAN ARE UNSATISFACTORY AND GENERAL CONDITI

CAT PR

MAKE ANY SUCH LOAN IMPOSSIBLE COPY OF WI

15

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LAST

FEDERAL RESERVE BANK
OF N EW YO R K

IN REPLY PLEASE REFER
TO

April 22, 1924.

Dear Governor Strong:

Your two letters of April 4 and 11 came in a few days apart the latter

part of last week, and made me feel guilty for not having written you since you
left.

But the fact is there has not

been a

great deal to write about outside of

the general question of discount policy concerning which Case and I have cabled
you two or three times.

With regard to this subject se have had many discussions in board meetings and out.

I think we all felt that we should not attempt to reach any con-

clusion while the end of March markets were in their disturbed condition, and
during the first two meetings in April we had only four present;
Whitmarah and myself.

Treman, Smith,

Early in April Mr. Gase endeavored to arrange a meeting

of the open market committee to discuss open market policy, and particularly our
buying rates, but for various reasons it did not prove practicable to get a meet=
ing of this committee before to-day, and such discussions as we had over the
telephone with various meabers of the committee seemed to indicate quite a divergence of opinion as to the desirability of reducing our buying rate.

Last week, April 16, we had everybody present but Young and Whitmarsh,
and had a thorough discussion of the whole situation.

At that time the easier

tendency in money had become more apparent and the slackening off in busineso as
the March figures came in became more evident also.

I think that at least four

out of the seven directors present regarded a rate change as "imminent," to quote
your phrase, although they did not feel that it should be made at that meeting.




RESERVE BANK OF NEW YORK

#2.

Benj. Strong, Esq.

4/22/24.

They also voted favorably to the further acquisition of securities in the market,
in spite of the fact that this might reduce market rates still further.

To-morrow Mr. Case will be back from Washington, having discussed the
whole question of credit and discount policy with the committee and with the Board,

and we shall be able to plan our course more clearly.
Your report of the present investment policy of the Bank of England is
most interesting in view of our discussions here.
This is nothing but a resumb of what we have already cabled you. As to

other things that have been happening since you vent away, one is a new regulation
with regard to state bank membership which, after a heated and acrid discussion of
two weeks the Board, by a divided vote, promulgated, without submit'ing it to any
of the Federal reserve banks.
eideration.

Indeed 4e hud not even heard that it was under con-

Several of us protested, and the result was en emended regulation with

Some objectionable things taken out - the result of a four days' visit to Washington
on my part, assisted for one day by Heath and Martin.

But it has all stirred up

a good deal of feeling on the part of state banks as well as bet veen individual

members of the Board.

The final vote on the regulation was five to three, the

minority consisting of Crissinger, Miller and Platt.

For a fortnigh

stood four to four, the question being whether the Board would go back on its

resolution of last November declining to permit members of the Federal Reserve
System to have any more branches outside of the city in which their head offices
were located. Finally Hamlin produced a compromise which he said he would vote for,
to the effect that the resolution of last November would stand unless the Superintendent of Banks in the state affected would certify, and the Board should agree,
that the public convenience and necessity made branches outside of the city necessary or desirable.




Work on the building has gone forward excellently.

They are setting tie

Benj. Strong, Esq.

ERVE BANK OF NEW YORK

cage work on one of the typical floors.

4/22/24.

They are building the entrance lobby.

They have practically finished the west banking room and are beginning the ceiling
in the east banking room.

With the scaffolding down, the west banking room seems

a brilliant success.

The Congressional insuiry about the building seems not to be coming forward.

At least nothing has been said by the Banking and Currency Committee since

the Board sent in the figures to them about three weeks ago, and Eddy thinks that
the submission of those figures will end the matter.
With regard to officers' salaries.

I talked the situation over with Mr.

Miller in Washington and found that he was not inclined to do anything further
himself on the matter, preferring to let the initiative come from Mr. James.

As

far as I know Mr. James has taken no steps in regard to it, and yesterday was
married to his stenographer, and according to the newspapers, has gone off for a
month's wedding trip in the South.
I am enclosing a cut of our building which appeared in a real estate
magazine recently, illustrating an article taken from my annual reports.

You might

like to show it to some of your friends.
We have

noted all you said about the German bills, and I think that we

made it perfectly clear to Mt. Warburg that our position on them simply was that
they were technically eligible and that we would be disposed to buy them, along
with other bills, whenever we were in the market.

I think he has made our position

entirely clear to the members of his syndicate which, by the way, was a great success.

He has about twenty of the best banks here and in other cities, all of

whose applications he cut down to 40 per cent. of the amount they asked for, in
reducing the total amount to $5,000,000.
made on the subject.
papers.




I hope no misrepresentations will be

As yet I have not seen anything at all about it in the

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4/22/24.

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I note what you say about gold.

Nevertheless it continues to flow in

steadily.Up to April 19, $26,000,000 had come in through New York and $8,000,000
was reported en route from London.
I think that this about ends our news here.
With best regards,.

Sincerely yours,

Benj. Strong, Esq.,
C/o James A. Logan, Jr., Esq.,
7 Rue Monsieur,
Paris, France.

P. S.

Mr. Case has just called me up and said that the committee has

finished its deliberations, has voted to increase the amount to $250,000,000 and
to reduce the buying rate to meet the market

with

a view to gradual accumulstion

up to the maximum amount agreed upon, the understanding being that when this amount
is reached the committee may meet again and
$300,000,000.

consider a further increase up to, say,

He said thatil. Winston was at the meeting as well as Governor

Crissinger and Mr. Miller, and that Mr. Winston, after consulting
tary, reported that he had no ebjection.

he hoped, after making this decision

with

the secre-

He also says that Mr. Miller said that

to accumulate up to $250,000,000, that there

would be no suggestion of a revision of the rate, to which Mr. Case replied that
he could make no statement whatever on this subject, and Governor Crissinger said
that he personally felt that a revision in the rate was now in order.

Mr. Kenzel is feeling much better of late and has greatly broadened his
diet.

But his doctor has told him that it is essential for him to get a rest

and a complete change of scene, suggesting a sea trip as the beat thing for him.

He has, therefore, determined upon taking his month's vacation in the form of a



AL RESERVE BANK OF NEW YORK

#5

Benj. Strong, Esq.,

4/22/24_

month's trip to London and Paris, sailing on the Celtic about May 1 and return!Ala either May 31 or June 1 on the Belgenland.

This, of course, is a purely

vacation trip, and he does not expect to talk with business people upon it.







May 22, 124.

'I'd Governor Strong
Zorn

iii. Jay

Here is Dr. Burgess's analysis of the
points made in Professor Bullock's letter to you
of January 10.

.1011

,kk/J;/47d,

41.

FEDERAL RESERVE BANK
OF NEW YORK

IN REPLY PLEASE REFER
TO

May 28, 1924.

Dear Governor Strong:

I am sorry to say that after racking my brains I have not been
able to think of anybody to suggest to you as a possible adviser for the
Austrian or Hungarian banks of issue.

Such men as Blackett and Strakosch,

who would be ideal and of whom there are probably quite a number in England,
do not seem to me to exist in this country.
them.

At least, I cannot think of

Among the economists Kemmerer has had the best practical experience,

dealing with banks of issue and currency systems.

I do not know how strong

I would want to go on his advice except on theoretical questions.
The fact is, I don't really know just what the duties of the adviser would be;
ical man.

that is, whether he should be a practical man or a theoret-

Case told me yesterday he was going to suggest Aiken, and he seems

to me an excellent man who combines good practical experience with at least
some contact with the theoretical side, and who is at present free.
Sincerely yours,

Benj. Strong, Esq.,
C/o Federal Reserve Board,
Washington, D. C.
BJ 'RAH







TELEGRAM
FEDERAL RESERVE SYSTEM

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(LEASED WIRE SERVICE)

RECEIVED AT WASHINGTON, D. C.,

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YowYork 10A May 29

.. z ... 5

MAY 29 1924

Strong

RECEIVED
care Board Washington
offer , namely, ins e i on cf words
Letter excellent. Have only one swEestion
egraph following paragraph number five.
"laid other" after word "Political" in

capacity you inquired about
Possibly torman. Davis miOrt serve n. advisory
909A

LANIIENT PAINMIO 0111.

2-14901

FEDERAL RESERVE BANK
OF NEWYORK

IN REPLY PLEASE REFER

June 21, 1924.

TO

Dear Mr. Strong:

In connectior with the letter which Mr. Harrison is writing
for you on the subject of the Comptroller's charge for national bank
reports, he asked me this morning to find out at what date we began
regularly to receive them.

Owing to the fact that all of the records

of this department are on the moving vans this morning I have only just

now received word that we apparently began to receive them regularly
about January 1, 1917.

As Mr. Harrison left about half an hour ago I

am sending you this information in case it may be needed by you to
supplement anything he may have been preparing for you on the subject.
Faithfully yours,

BtAi. Strong, Esq.,
490 Park Avenue, New York City.







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[Copy of handwritten letter to B. Strong from P.Jay, July

19, 1924]

S. S. "Minnetonka"
Dear Ben -

I've been carrying out your injunction to forget business + enjoy
myself very completely thus far, + your basket of fruit + other things has

helped materially for the food hasn't been A 1 on this boat, tho' everything
else is extremely nice.

I'm ever so much obliged to you for it.

The one thought of business which I have had has come from reading
S.Morgan's letter to you with its message from Hautain.
send me a copy of your reply.

I asked some-one to

Looking at it in the large, while I can easily

see how France had to do something of an emergency nature when the fc. got

below

3.50,

I don't see how any of the Allied countries can justify a big

permanent stabilization programme till debts + reparations are defined +

dealt with

+ the results on their trade balances somewhat ascertained.
From the wireless messages that we've been getting it looks as tho'

Young was to take some important place + as tho' Washington was agreeing to it.
I'll hear more definitely in London, but it looks as if Wash. were getting more

liberal in its attitude which is all tothe good.

A real step in this direc-

tion, following the Dawes report, IA. be a good political move, + put LaFollette
in a defensive attitude as to his isolationist views, Ishd think. It's high time
we had some positive rather than negative leadership on foreign matters.
I hope your roughness - in- the-throat is all over long ago,+ that
you won't have any more alarms this summer.
Norman et all.




I'll write you again after seeing
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,
[Copy of handwritten letter to B. Strong from P.Jay, July 26, 1924]
Fleming's Hotel 9+10,Half Moon Street
41+42, Clarges Street, Mayfair, W.I.
July 26-

Personal file
Dear Gov. Strong,

I have your letter of July 14 asking me for a memorandum of my report
to the Directors, at a meeting shortly before I sailed, concerning your intention
of borrowing a considerable sum of money for a short period in connection with
changing some of your investments.

I did not ask the Secretary to make a

minute of it, or the Directors to take any action; but what I said was to the
effect that as it was a rule of the bank that clerks and officers should not

borrow money without reporting to the Governor, now you, in changing some of
your investments, found it necessary to borrow a considerable sum of money for
a short time in order to facilitate the transaction, and that you had asked me
to report this to the Directors in case they should have any comment or objection to make regarding it.

They appeared to regard the transaction as ordinary

and proper, for no one made any remark concerning it and the meeting then
adjourned.

Trusting that this will cover what you have in mind, I am
Sincerely yours




Pierre Jay

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[Copy of handwritten letter to B. Strong from P.Jay, Aug.3,1924]

tr'S,

Hotel gstoria, Rue Royale
Bruxelles, August 3d
Dear Ben+

A couple of days ago I spent an hour or more with Dr. Vissering in
Amsterdam.

He inquired particularly after your health + sent his best regards.

He was starting the next morning on his vacation, having been under a great
strain recently on account eirst of his wife's death + then of the Hotterdamsche affair.

The latter had all blown over now, he said.

The other banks, he said,

were a bit jealous of the R.B's rapid expansion, + not sorry to see them come a
bit of a cropper.
business.

They had expanded very rapidly + grabbed for other bank's

I saw a huge building of theirs in Amsterdam, + a very large one

(not yet finished) in the Hague.

I expect they were a bit over expanded like

the Guaranty with us in 1921.

Vissering said confidentially, that Hautain had been to see him recently
+ was anxious to develop more relations with the Amsterdam mkt. There was no
money mkt in Brussels + he was dependent on the Paris mkt.

He disliked being

so much tied up with Paris; + when he goes to see Robineau, R is very polite but

H. can't get over the feeling that R. considers him about as one of his branch
managers!

I asked after Teilingenf?] V. said he had now retired + was succeeded by
a very good man.

I asked if he retired on Pension.

he had made much money - too much.

V. said no, he didn't need too,

He said that he, V., had shipped a great deal

of gold to Java on balance, the J.B. being a sister institution; and that T. had
kept this gold intact but had sold most of the gold he had previously held +
at a huge profit, something like 25 million gulden, out of this pr

thebank

had pd a divident of over 100%, and had also pd huge"tantiennes" which I understand to be "managers profits", T's being 800,000 gulden.

This had raised an

inquiry in the gov't, + the tantiennes were being rearranged in some way, so that



[P.Jay to B. strong,

T's was being reduced to 650,000.
than a central banker.

Aug.3,1924

continued]

But V. said T. was more of a private

banker

He must have some McDougal in his makeup:

As to serious things, V. said he didn't believe Sweden coull swing
the gold

convertibility of her currency,+ was having to draw heavily on her

N.Y. credits.

He,V., had no intention of taking any step in th±s direction

ahead of the procession. He thought England wd have a hard time resuming gold

payments due to the huge interest payments to the U.S. He wanted to know what
our policy wd be,+ I felt I could not be very definite about it, except to say
that we would have to be guided largely by home conditions.

He said that he did

not think much Dutch money was going to London to take advantage of the higher
rates there; but it was too early to say what might happen.

Aug.11
I stopped here, before closing, to put in a word of my visit to
Hautain + have never stopped long enough to put pen to paper since.

The

last few days have been spent with the S. Morgan,s mot6oring in S. France.

There was nothing to report from my call on Hautain.

He was very

rushed + I hadn't much time,+ he couldn't speak much En,lish nor I much French.
He didil't strike me as a man of much mental calibre.

I spent a few minutes

with Jensen who spoke fair English.

I was mighty sorry to hear from Burgeg6
tonsilitis + was out a week..

that Case came back with

I hope it didn't press you.

I gather

cable about rate that he's back again on the job.




Hoping you're keeping well, + with best regards to all,
Faithfully yours

Pierre Jay

INCCEIEG CABLEGRAM
Etretat

August 16, 1924

Strong
Federal ILeserve Bank

New York, N. Y.

Yours fifth sorry not returning England or Belgium unless necessary

Jay

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[Copy of handwritten letter to B.Strong from P.Jay, August 23,1924]
Grand Hotel de la Poste, Rouen
August 23d

Dear Ben-

I got your letter of the 5th a few days ago on returning from our week
in the South of France with the S. Morgans, and as I'd already left England +
Belgium for good I thought I should telegraph you at once.

Many thanks for

your return message.
As to the gold of Chechbslovakia, I went thrill the vaults with Jansen[?)

* saw, each in a separate vault, (a) some Belgian coin in bags, (b) 6 billions
German paper marks retired after the armistice (c) some gold they were holding for
a foreign country; I couldn't swear it was Cz.+ etc but think it was, not knowing
that we were likely to become interested I didn't pay much attention to it as I
had but little time.

But it requres 2 people to get into that vault (+ the others

as well + one requiring 3 people) and there was no doubt that it was in a separate vault, + entirely by itself.

I do not however remember any marks on it
_

saying that it was set apart for account of any lender.

As to the matter between Norman + Woodward I had never heard of it and
doubt if you get any action soon as N. is on a vacation, as I wrote you.

I

gathered he was going somewhere in Savore.

I'm glad to hear that the protest matter is settled satisfactorily,+ am
wondering if Curtis is out of it altogether?
I'm sorry to find that my steamer (Pittsburgn, White Star,) doesn't sail
till the 6th instead of the 5th as I was informed in N.Y. + probably will not get
in till the 16th instead of the 15th as I had expected + been told in N.Y. she
would.

I'm sorry thus to be a day late, but at this rush season it would be next

to impossible to change.

Paris - Aug 26

Yesterday I had a half hour's chat with Logan + he told me about the American
appointments under the Dawes plan which I'll retail to you when I return. He has

http://fraser.stlouisfed.org/
asked irs. Jay
Federal Reserve Bank of St. Louis

and me to dine with him tomorrow.

He says h4s exhausted by 5

F.Jay to B.Strong, Aug.23,1924 continued]

the compromiser who kept it together.
of conference, work, + I gather bhat he was
Young + Morrow[?[ tomorrow.Yrs P.J.
I haven't seen anybody else bt hope to see

well, which I'm might* glad to hear.
From all collateral accounts you are keeping







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COPY
Paris, Oct. 17, 192
Dear Ben I started sometime ago to answer your letter of Sept. 4th and got
involved in writing you in a rather cryptic way some of the very confidential sidelights on happenings here which I have been hearing and
absorbing.
Then a spell of being very busy intervened, and now as I shall
see you so soon I've decided to wait till I can see you, as its now all
old stuffy anyhow -- tho' interesting still, I believe.
three friends of yours -- Plodge, Monsieur and a Banker with whom you were
formerly associated in the old Co.

It all

I was mighty glad you went to Colorado for a month, tho' Case in a
recent letter seemed to indicate that you were more poorly than your letter
admitted. But, at the best, it shows that you've still got your eye on
I'm sorry you've had such
the ball and that's where we want you to keep it.
a hot and tiring summer of it.
Why is it that our work is so tirin
I hate to be away while the Pascagula case is on, as
that damn subject, as you know.
But
job, we have someone 1,000 times more use than me, so I'm
that subject, both personally and officially. It is fine
a good recovery.

I'm interested in
as long as G.L.H. is back an
feeling happy on
that he made such

I've been having a most interesting time with Young and am greatly
obliged to you for your part in arranging it. I haven't been able to contribute
much, but was asked only to look after a very small end of it -- the receipt
and payment of money. Of course, I have absorbed a lot about the plan and its
ramifications. I wrote Crissinger a long letter a month ago, of which he sent
a copy to Case at my request, and I've no doubt C7flsent you a copy.
a copy of a second letter I'm writing today that I think gives all the news
that's "fit to print" in a confidential letter. As I've already indicated, I
have quite a little more for your private ear.
I hope you are already back as you indicated you would be by this time; but
Case's letter speaks of a stay in C(olorado) for a few weeks "to get rid of a cold."
I'm sorry if you found you had gone back more than you thought. But whatever it
is, I'm sure you'll get oh top of it again, as you always do.
With best regards and looking forward to seeing you soon in A-1 condition.
Faithfully yours,
(signed)

P. J.

I expect now to be here till 26th then 2 days in London and sail
"Majestic" Oct. 29, arriving on Election Day.
P.S.




FEDERAL RESERVE BAN

let)

OF N E W Yo R K

1
1925.

8,
Dear Governor Strong:

I am going to write briefly of a number of differen

things, just as they

come into my head.

I presume you 88M in the Times on January 19 that the pos

(1)

ffice

had decided to establish a rate of 4.87 for sales of postal money orders on Great
Britain, beginning January 22.

The executive committee of the Federal Reserve Council are meeting
here to-day to express an opinion to the Federal Reserve Board in regard to the
McFadden bill.

I went up to the Tuesday job meeting yesterday morning to get a num-

ber of matters settled up with the architects, and both Mr. Selerand I felt that
very satisfactory progress was made.

This did not, however, relate to the Abell

matter about which you left me a memorandum.
We have not had resolutions of appreciat4on made for Messrs. Smith
and Stevens.

The only director for whom we ever passed such a resolution was Mr.

Peabody, and my recollection is that the resolution was a personal one rather than
an official one.
and Stevens.

Both you and I have written appreciative letters to Messrs. Smith

I wrote on behalf of the Board.

It seems to me that we really could

not do anything more.

Progress is being made on the Hamilton matter, and I have no doubt
that it will be successfully settled.

Mr. Case and I had two of the lunches with New York City bank
officers and intend to have them every Tuesday and Friday until they are finished.
Thus far they have been most satisfactory.

To-day Messrs

Sailer, Harrison and

Kenzel begin weekly lunches for vice presidents of New York City banks, taking
about twelve



at a clip

FEDERAL RESERVE BANK OF NEW YORK

2

Governor Strong

1/21/25.

I am expecting to get Mr. HorEwitz over for lunch early next week, to
proceed with the discussion which you initiated with him.

Burgess, however, are mailing the annual report to-morrow to Stewart
for his consideration.

Mr. Reeves has made satisfactory progress with the Second National Bank
of Hoboken, has made an examination of the Bay Ridge National, and is working
very busily to effect results there but without much cooperation from the directors.
A new president has been elected in the Gotham National Bank, Frank L. Norris,

former ban

examiner.

ference with regard

We have not yet arranged with the Comptroller for a conto the banks reported to him, but hope to do so before very

long.

Sincerely yours,

10

Benj. Strong, Esq.,
C/o The Breakers,
Palm Beach,
Florida.




Dear Governor Strong:

A friend of mine sent me a copy of "The New Statesman," from which
I am sending you an interesting page.
I am glad to say that yesterday Reeves made real progress in the Bay

Ridge National situation by getting the existing president to become chairman
and by getting them to accept a man suggested by him as president.

This new

man is an experienced Canadian banker who has been acting as inspector of LatinAmerican branches for the National City Bank but resigned a few months ago
because (it is said) he did not like traveling in the tropics.
him all yesterday when he put this through.

Chapin was with

Reeves is now turning his atten-

tion to the Fort Lee situation which, as you know, is a Witham bank.
Sincerely yours,

Benj. Strong, Esq.,
c/o The Breakers,
Palm Beach, Fla.
Enc.

PJ/VR




t*
ACNOWtJtVt

FEDERAL R

AN K

OF NE \A/ Yo

JANt 1925

R

-

r

:N

447

Janu ry 26, 1925.
4

/

Dear Governor Strong:

I was very much obliged for your message regarding the visit
of the Deutscher Bank people, and read it to our officers council this
morning.

As a matter of fact I do not think the subject was discussed

at all at our lunch, which was very pleasant and informal and of

a

purely personal nature.

I am enclosing copy of an article which appeared in the Journal
of Commerce this morning.

I suppose they refer to the little investment

made last summer by the Bank of

The Federal Reserve System

seems to furnish a good deal of copy for the Journal of Commerce, does
it not?

Hoping you are having a good rest,
Sincerely yours,

Benj. Strong, Esq.,
C/o The Breakers,
Palm Beach, Florida.

WRAF'




if

//

Atirs:;,:iir .-'7,,,;: Ar,,,,KNOW

I.,- -911F

/;

7*,1

4.,

FEDERAL RE ,WWNWE'verWK
,

-

4

.
N.,.
.,...i, ..

,...-7

-

Dear Governor Strong:

/

m

4y11411

-4.1

OF N EW YO R K', .

A

b

7

gi

1 JE 1)(IFD

ta 1 1925

R

a

January 27, 1925.

I am afraid there is not very much to say except to thank you for your
telegram about the annual report, the status of which is this:

Burgess has been

in Washington yesterday and to-day and has gorie over the whole thing with Stewart
and Miller.

They have made some suggestions;

Stewart of a detailed nature,
,

Miller of a broad nature.

Burgess is endeavoring to make little change-here

and there which will embody their suggestions and will be here to-morrow to go
them over with me.

I gather from his that their attitude is not to attempt to

dictate about it but merely to make them as suggestions to me.
I shall have your suggestions.

At the same time

Then I think we can get down to a finish on it.

I am delighted that you like it in its present form.

Case and I are arranging to be in Washington Saturday morning to talk
to the Comptroller about the nineteen banks.

In the meantime, good progress is

.being mode in several of the worst of them.
We had Krech, Loasby, Frew and Schaefer in to lunch to-day.

Krech was

most enthusiastic about the simplicity and restraint shown in the building and
they were all very keen about it from every point of view.

You have doubtless

seen pictures of the new building that Trowbridge and Livingston are preparing
for the Equitable Trust Building on the site of the Mills Building;

34 stories.

Harrison, as you know, is in the South for this week, and at our suggestion is planning to drop up to Atlanta on his way back and have a little chat
with them about some collection matters which have arisen.

He will be back about

Tesnesday or Thursday of next week.




Mr. Charles Smith stopped in to-day just to pass the time of day.
I presume that you are getting regular information in regard to money

FEDERAL RESERVE BANK OF NEW YORK

f

#2-

Benj. Strong, 7

.

1/27/25.

'

);Jr9

conditions so I do not mention them.

We had a letter today from the bank of issue in Polan'd\inquir).

we would consider entering into relations with them, and
of England to give us some information about the bank.
Sincerely yours,

Benj. Strong, Esq.,
C/o The Breakers,
Palm Beach, Florida.
PJ/RAII




àve cab).*

e Bank

tidy

FEDERAL RESERVE BAN Kr)r
OF NEW YOR

41.

" 14*

/

4Q*

uary 31, 1925.

7 1 v.s

Dear Governor Strong:

Thanks for your two telegrams received this week.

The officers were

cautioned regarding discussing the Reichsbank with the Deutsche Bank representatives, but the matter never came up in any way at our lunch, which was very
pleasant.

With regard to the report -.your fiery telegram showed that the Southern

climate was not de-vitalizing you. I hope you won't have any need to adopt the
course you suggest.

Burgess spent two days with Miller and Stewart and came back

on tednesday with a draft which was slightly changed here and there but, in my
opinion, much improved.

The only thing they wanted to omit in toto was the last

page of our reserve bank policy where we talked about the possibility of a re-

dikribution of gold and about the automatic element which free gold movements
would introduce into the exercise c,f judgment and discretior in determining
Federal recerve policy.

I am quite ready to have the latter go overboard, tut

I am thinking about the desirability of retaining the former in some changed or
amplified form.

I understand that the Board itself is going to discuss the

whole subject quite fully in its report.

Stewart is inclined to look upon the pres-

ent export movement as temporary, and thinks we will have a net import for the
year.

Without attempting to analyze the situation (if indeed it can be analyzed

in advance) I am inclined to agree with him.

I have not received your comments,

although they may have come in this morning to the office.

I am working at home.

Stewart told Burgess on Tuesday afternoon that we could go ahead and consider
the report accepted.

Yesterday he said over the telephone that he hesitated to

assume this responsibility in view of the unusual nrture of our report. He thought




FEDERAL RESERVE BANK OF NEW YORK

#2

1/31/25.

Benj. Strong, Esq.,

that it should be presented in rather a formal way to the Board.
therefore,send it to him in galley proof on Monday or Tuesday.

Se shall,

I do not antici-

pate any trouble.

I have your letter about the visiting bankers, from which I gather
that our minutes ,o forward to you as they are typed and before they are approved.

In our minutes, as we approv)them, the reference to lunch was omitted and the
If all the country banks

figures given by Mr. Barrows were entirely erroneous.

should come in, 850 in all, the cost for lunch would be t.850.

As to seeking the

permission of the Federal Reserve board in advance, our minutes show that we are
all in entire agreement with you.

As to telephoninr, them about it for their in-

formation, we are working on e plan for dealing with that aspect of it which I

We shall not be able to beein

think will avoid any difficulties on either side.
our country tank parties until after you come back.
ahead with the city bank parties, four parties

P

In the meantime we are going

week.

Gaze and I are taking the

presidents and chairmen in groups of four, and Sailer and Kenzel the vice presiIt will be another fortnight before we

dents in groups of twelve to fifteen.
are finished.

Case and Imre planning to be in Washington to-day to go over the nineteen banks with the Comptroller, but he had to go out of town end sent word that
he would be in New York early next week so we can see him here with Reeves, which
is all the better.

Reeves could not get away just at this moment because he is

in the midst of the Bay Ridge situation, which is very had.
instance there is no case of delay.

In this particular

He read them the riot act last June and gave

them six months to perform in, submitting him monthly statements.

their performance zs very sli ht.
7)

4.

with them.
He is now going to the mat wi

Tao or three days ago Martin
of the Dallas Bank.




Unfortunately,

41,74/7;76,7

f St. Louie WES in, also two directors

They had all been before the Board with regard to salary

#3

FEDERAL RESERVE BANK OF NEW YORK

1/31/25.

Benj. Strong, Esq.,

:ustments which the Board had declined to approve.

In the case of St. Louis

the Board even went one further, and proposed to reduce the governor's salary by
5,000.

Martin gained a very definite impression that General Lord was interest-

ed in the operations of the Federal reserve banks and anxious to get his hooks
on them with a view to producing more earnings for the Government.

Martin also

gained the imnrcseion that President Coolidge was very sympathetic to this point
of view.

At our meeting on Thursday the application of the Bank of Poland to
open ar account with

11E

came up, and it was thoroughly discussed and approved.

During the course of the discussion the "exclusive" question arose and Young
made a very interesting point against it, entirely without reference to

competi-

tion with member banks, that our conditios were entirely different froraIhose of
the Bank of England.

There they had a homogeneous population and aAlznk which

was an accepted part of their economic life.

Here we have a hetrogeneous popu-

lation and a bank Which was distinctly on trial.

If we should attempt to get

the exclusive agency of the Beek of Poland and there should arise some critis

in Poland in Which the Bank of Poland might ieek aid and credit from us which we
felt disinclined to grant, it might create a great reaction against us among our
Polish inhatitants which would react very badly on us politically.
would be true of the Italians, Hungarians, Russians, etc.

The same thing

Mr. Young, therefore,

thought it ver- desirable that these banks should have other accounts besides
ours from whom they could seek credit, so that in case of a r

of credit

the entire 7Ipprobrium might not be cast on us.

At lunch -esterday we had Swenson, Mitchell, Alexander and Reynolds.

Case tells me that he was walking afterwards with Mitchell and Alexander and
Mitchell again brought up the question of our accounts from foreign banks of
issue, and asked Alexander what he thought of it.

Alexander said that he was

entirely in f-,vor of it as long as they were not exclusive.




As we were walking

1/31/25.

Benj. Strong, Esq.,

FEDERAL RESERVE BANK OF NEW YORK

into the Nassau Street banking room Case asked the visitors to stop and read the
inscription.

Whereupon Mitchell turned to me and crid facetiously that he thought'

we had left out one important element that we were serving; namely, "the foreign
of issue."

That party went off very pleasantly -ith no discussion of our

open market operations.
loans during 1925.

At lunch .e asked Mitchell about the prospect for foreign

He went around the circle in Europe and expressed the view

that they would not amount to more than1,250,000,000 as he now saw it.

I was glad to learn from your postal that you were doing lots of loafing
and not much .ork.

The evidence seems rather conflicting.

yesterday if she had heard anything from Miss Bleecker.

I asked Miss Small

She said, as I remember

it, that she had had one letter but that Miss Bleecker did not have much,time for
writing.

I have said nothing about money conditions 46 I assume you
daily detailed reports on those.

Hoping you are continuing to have ,good time, I am,
Faithfully yours,

b--\

Pierre Jay
Chairman

Fenj. Strong, Esq.,
C/o The Breakers,
Palm Beach, Florida.




ar

,

4..1,4

:RAL RESERVE BANK
OF NEW YORK

Fcd. Res. Bank

SENT BY

pj/RAH

COPY OF TELEGRA

/

4fr

,

\J

*qe,, ''

*,,,

Deni. Strong, Esq.,
C/o The :r-akers
Palui ::eadh, Florida

'

SEND TO FILES

4.0.,,,c4.

'Vvie
4fr ,4t9
7.,,,,e,

:,._

1925.

4/Pp/..,

v.

Find AbAl'a memorankium not mailed Oacurday.

A11

definite reoomm,Andation for your decision on your return.

riy with
Stop.

atop. Abell

already at o:ork on Equiteble Trust job 50 his situation le not proesing.




Pierre chly

'

I

40M 1-24

RAL RESERVE BANK
EW YORK

Federal Ret..,..-ve Bank

SENT BY
p 4,4

SEND TO FILES

f

"

1,474

COPY OF TELEGRAINL
-10

1, 4n.

ex

811

F4rWi.Xy 11, 1925.

Benj. Strong, Esq., .
C/o The Break-irs,
Palm F:each,

Your number 8.

No infoAlaticn riven Warturg but he himself sugpested

undeeira .ility of biscuscinp topics relatim. to Lorling 9.nd gold and
we heartily concurred.




Pierre Jra

ir

THIRTY THREE LIBERTY STREET
NEW YORK

ACWNOW1EDOED




MAR 18 1925
March 17, 1925.

4
Dear Mr. Strong:

Mr. Jmmes Byrne has proposed and I have
seconded Mr. Owen D. Young for membership in the
Century Club.

Would you feel inclined to write a

letter on his behalf to the committee on admissions?

/tf so, Mr. Byrne and I would appreciate it greatly.
Sincerely yours,

-

04,,tvi
Benjamin Strong, Esq.,
33 Liberty Street, New York




EDEF

1925 4

RECEIVED sovERNOR'S OFFICE

FEDERAL RESERVE BANK
OF NEW YORK

July 3, 1925.

Dear Governor Strong:

Burgess and I have just returned from three days in ChicaA) discussing
bank and public relations work with the Chicago, Kansas City and St. Louis banks.

Wills could not come, but I spent four hours with him in Cleveland Sunday morning
on the way out.

Chicago has been doing some excellent bank relations work and has

the framework all started for a general programme of educational work by the member
banks, each in its own community.

St. Louis is fairly -ell organized, but Kansas

City is poorly organized with only two men to travel that vast district, and these
two are under some assistant cashier who does not give them much supervision.

I

will send you a copy of the minutes of the meeting in a few days which will tell
its own story, and therefore, will not go into any details here except to say that

Traylor is going to make a speech before the Montana Bankers Association in about
ten days and has agreed to talk about the value of the British return to gold and
our participation in it, and the Chicago bank- is going to try to get wide circula-

tion for his speech by way of Quotations in the papers.
I had a bully talk with Traylor.

He gave me a copy of an interview that

he had granted to a friend of his on some St. Louis monthly paper which was to
have come out in June, but he said that the piece was not used in the June issue

And that we might use it in any way we like.

We are now cooperating

Chicago bank to see how best to get some publicity on it.

with

the

I send you a copy here-

with.

Inasmuch as I believe it was Traylor who largely inspired the A. B. A.
resolution of last September, this statement of his is most encouraging.

I think

that now he is 100 per cent. with us and ready to be as helpful as possible in the
way of telling people what the System is really trying to do.



#2

7/3/25.

Benj, Strong., Esq.,

FEDERAL RESERVE BANK OF NEW YORK

I also had a talk with George Reynolds who has recently been out in Iowa
and made a vigorous and frank talk on Federal reserve matters to the Iowa bankers,
of whom about 800 were present.

He talked without notes so his speech is lost, but
Incidentally

evidently he talked right from the shoulder and got a splendid reaction.

he is very enthusiastic about the prospects for the corn crop in Iowa, as the condition is not only very good but it is from two to three weeks earlier than last year's
crop, and if no mishaps occur this means that
can get it.

is ought t

mature before the frost

A good corn crop at good prices would solve many difficulties in Iowa

and other mid-Western states.

I also had a good talk with John J. Mitchell who was most friendly.

I

asked all of these three if there had been any criticism of the Bank of England
matter.

They said that there had not except that there had been some talk in the

papers about our not having gotten a commission the same as the banks did on the
Morgan credit.

I explained the reasons, also said a word to each along the line of

the importance to Great Britain of having the Federal Reserve System linked up with
the operation, which they seemed fully to appreciate.
Burgess and I were both enthusiastic about the time we spent in Chicago,
and feel that we should do more travelling about at the earliest opportunity.

McClure invited us to have aemeeting of our relations committee in Kansas City in
September if it can be arranged, and we are planning to try to do so.

With respect to the Ayres idea in regard to the charter matter, I discussed
this fully with 'ills, McDougal, Heath, and yesterday with Owen Young.

All seemed to

be enthusiastically for it.

Heath was at the opening of the St. Louis reserve bank the other day.

As

you knom the St. Louis Bankers Club gave a big party and invited in all the bankers.
About 300 to 400 came.
the Jefferson barracks.

In the afternoon they were taken on a boat on the river to
During this boat trip Governor drissinger was asked to

address them and, incidentally, spoke of the Bank of England transaction.
think it was



Heath (I

Heath) said that the Governor did not make a very good fist of it.

He

Benj. Strong, Esq.

#3

FEDERAL RESERVE BANK OF NEW YORK

7/3/25.

seemed to be a little on the defensive and did not seem exactly clear as to why it
was legal or just how it would be used.
Crowiter has ,,ritten Snyder that he intends to write a couple of articles

for Collier's on the Federal Reserve System, and wants to talk the subject over with
him soon.

This morning Assistant Professor Beckhart of Columbia (formerly in our
statistical department) is spending some hours with Burgess talking over a review

he has prepared and is about to publikconcerning Federal reserve policy in 1924.
It was a very poor and superficial article.

Burgess, who now has him out to lunch,

tells me that Beckhart is very sympathetic to our pointing out its defects, and we
hope that we shall get something sound out of it.
Incidentally, I learned from McClure that the Kansas City Bank supplies
lunch free to all its employes.
the salary of each employe.

They did this by adding $100 worth of tickets to

This, at the rate of, say

a meal, just about works out even.

,

thirty to thirty-five cents

All employes are required to lunch in the build-

ing.

Case is leaving to-day for his vacation

elich,

as you know, is going to be

interrupted by a week's trip to St. Paul with McLaughlin to attend the State Bank
Supervisers' meeting at the end of July.

Case is going to make them a speech.

I understand that someone is sending you Willis's article and the OhaleyEaton article on your European trip.
mentioned it at all.

They tell me that none of the other papers have

Case told me that in discussing the Willis article with the

newspaper men the other day one of them volunteered that it was rumored that there
were some changes in prospect at the Journal of Commerce office.
Our directors' meeting yesterday was a very quiet affair.
These seem to be about all the things I can think of outside of the
routine letter which I understand Burgess will be writing you to-day.

You may be interested to know that during this past week we have had four



FEDERAL RESERVE BANK OF NEW YORK

7/3/25.

Benj. Strong, Esq.,

#4

out-of-town bank directors inlout of our 8,000 or 7,000 invitations sent out, so
the Officers' Council have authorized the mailing of the other 2,000 or 3,000
invitations.

Hoping you and Stewart are having a fine trip, I am,
Faithfully yours,

/-

Benj. Strong, Esq.,
C/o Bank of England,
London, E. C., England.
enc.

ciA'LZ4-/ A-er-/-v-c)

Q.

/Yv-

44-trz
A

ea_t)




OUTGOING CABLEGRAM

July 7, 1925

Bank of tngland
London

#20

STRICTLY CONFIDENTIAL FOR GOVERNOR bTRONG

Referring to my latter of %lune 29th Wills,Heath,LicDougal,

Harrison and Owen Ioung all favor idea provided assumption
is correct that recharter will be up for consideration
next winter,stop

Idea has not yet been discussed with

others.




Jay

FEDERAL RESERVE BANK
OF NEW YORK
July 10, 1025.

Dear Governor Strong:

I am ever so much obliged for your prompt cable reply received yesterday to my letter about the A. B. A. and the re-charter question.

I am glad you

like the idea of charter renewal without amendment, and apparently the only dif-

ference between us is the question of the imminency of the agitation for charter
That, of course, is a question which it is difficult to ascertain in

renewal.

advance of the assembling of Congress.

I am in complete agreement with the

policy indicated in the last paragraph of your cable about consulting thelegislative committee and about our assuming no responsibility in the New York Bank.

As a matter of fact we have discussed the matter only with the people whose names
I wired you pending receipt of your views.

Yesterday afternoon Burgess, Harrison,

Owen Young and I spent half an hour discussing the situation in the light of your
cable.

Harrison and I are expecting to be in Washington on Wednesday, July 15,

and will discuss the idea with Orissinger and with Seay if we can get him to come
over.

Seay can then discuss it with his committee if he so desires.

e thought

also it might be well for him to sound Glass upon it..
It seems to me that the idea is a valuable one for the A. B. A. to

enunciate whether or not they decide to ask for action at the coming session of
Congress.

I think you will agree to this.

Young feels that the coming session

of Congress will probably be the most favorable opportunity we shall ever have
for bringing the charter matter up.

He bases this on the generally conservative_

nature of the incoming Congress, but more particularly on the conservative state
of mind of the country at present which he thinks may not last very long.
Nature is helping greatly.

unbelievably good if they only hold.




Hoy Young says conditions in Montana are

Conditions are also good in Minnesota and

FEDERAL RESERVE BANK OF NEW YORK

the Dakotas.

Benj. Strong, Esq.,

2

7/10/25.

George Reynolds told me he had seldom seen such corn prospects in

Iowa with the crop from two to three weeks earlier than last year's crop.

I am

sending you some clippings from this morning's Times which deal with this situation.

Of course, these prospects may all vanish in the next few weeks if we have

bad weather.

One of the clippings I send you indicates a possible change in

attitude on the part of Brookhart.
died.

As you know LaFollette and Ladd have both

McFadden's little episode has at least kept him from making his string

of speeches before banking associations.
if we do not make any ourselves.

The breaks seem to be coming our way -

I am glad to say that the talk about the A.P.C.

matter seems to have died down, at least as far as the papers go.
ardent

Traylor, from being our

September, has become an ardent supporter-

critic at the A. B. A. convention last

I sent you a copy of his article for

the St. Louis magazine which is soon to appear.

I am asking Dr. Burgess to send

you under separate cover, as I am writing from my house, copy of the speech
Traylor will make to-morrow at the Montana Bankers Asspciation.
pages 5, 6 and 7, for him while we were in Ohicago.

Burgess prepared

If we can get Chicago and

the Vest praising us and hew York knocking us we are certainly sitting pretty.
Traylor is ready to fly at it lxith heavy gloves, light gloves, or bare fists any
time.

anis has just written a most disgusting article in Burroughs Magazine
which is so full of half-truths,

.

.xxila0(xx misstatements, and general mental

crookedness that when you get over being mad about it you can't help feeling
pleased that he has written it.

From somewhere if we have succ, there

will

be

a good sharp reply.

Now I can see that I have drifted from the re-charter matter into the
byways, and I want to come back to it before closing.

There really isn't much

more to say at the moment except that we shall endeavor to institute some judi-




FEDERAL RESERVE BANK OF NEW YORK

Benj, Strong, Esq.

3

7/10/25.

,-Lous inquiries on the subject of imminency during the coming week, and before
July 20, when Ayres and Lichtenstein

to meet with Woollen in Indianapolic to

present their preliminary report.
i'aithfully yours,

Esq.,
England,

London, E. C., England.




FEDERAL RESERVE BANK
OF NEW YORK

July 17, 1925.

Dear Governor Strong;

I have received your two letters of July 6 and 7, one written longhand
from the boat and the other typewritten, the first giving something of your
itinerary and the second asking us to take on an additional "little bit of work."
We will take it on all right but your definition of it does not do credit to
your usual accuracy.

In the earlier letter you say that your visit to Berlin "will be Quiet,

no fuss nor publicity (we hope' Burgess has probably written you telling you
about the publicity which came out here through Berlin with regard to your trip.
It is quite obvious that you can't travel without publicity, and Burgess and I
both blame ourselves for not having realized this and urged you to deal with the
situation before you left.

Burgess is writing you about the subject of our recent cables regarding rate discussion, etc.

I am only writing a few lines to tell you a little

more of the progress of the A. B. A. report matter.

I went to .kashington

Wednesday to talk with Governors Crissinger and Seay on this subject.
and Harrison also were present.

Sprague

The first two agreed with you and Stewart that

the subject of re-charter is not absolutely imminent and that we will be in a
better position to deal with it three or four years hence from the System point
of view.

Sprague, on the other hand, is very strongly impressed with the de-

sirability of dealing with it this coming winter.

Harrison also leaAts somewhat

to this view, starting, however, from the other premise.

As a result of it all

I have transmitted these various views to Col. Ayres for his own information,
and Burgess has sent him the encloEed draft of a possible report or minute to
be adopted by the A. B. A. at its convention in September.



FEDERAL RESERVE BANK OF NEW YORK

2

Benj. Strong, Esq.,

7/17/25.

I understand Ayres is going to have a meeting with Woollen and
2_47,

Lichtenstein on Monday to discuss the whole subject.

I made it per

to Col. Ayres that this is his idea and this is the A. B. A. responsibility, not
ours, and have suggested to him that he give full recognition to their responsibility and that they should take advice as to their course from people experienced in legislative matters like Glass and others.
With regard to paragraph 7, page 3 of your letter of July 7,
enclosing, if it can be gotten in time, an article in the Tribune hhich recently
appeared on this subject.

Young has a very high opinion of Auld who was chief

accountant of the Reparations Commission for several years, was detailed by
Young to set up the Agent General's accounting system and organization last
September, and is now a partner of Haskins and Sells.
article myself, but heard Young speak of it in very high terms a few days ago.
Peple is coming over from Richmond next week to spend ten days or so
helping us on some of the educational work.
Hoping that all. goes well with you, your health, and your party,
Faithfully yours,

Pierre J
Benj. Strong, Esq.,
C/o Bank of England,
London, E. C., England.




I

FEDERAL RESERVE BANK
OF NEW YORK

July 28, 1925.

Dear Governor Strong:

Your telegram from Brussels has just arrived and is being de-coded.
Sailer and I have read enough of it to justify our telling Miss French not to
work overtime on it because she was down with some of her assistants until nine
o'clock last night getting off our cablegram to you.

From what

e haveread of

your incoming cable it is apparent that you have attached more importance than
we had anticipated to my cable inquiring about the possibility of E rate reduction in London.

'There has, of course, been considerable discussion of it in the

papers but a talk that Kenzel had recently with Mr. Duis of the City Bank made
us feel that we should cable you whet he reported and ask what your views were
on the subject.

I do not think I need to repeat anything we said in yesterday's

cable as we tried to cover the situation pretty fully.
I understand that Harrison ,,rote you to-day but do not know what he
wrote you about as he left a. bit early.

This is to acknowledge your letter of July 11 written from Berlin, giving an account of your trip there and your various interviews with Schacht,
Gilbert et al.

If the pape'rs had reported only the substance of what you and

Norman gave out everything would have been all right but, of course, as you have
seen from the clippings here, the German papers as well as ours have been full
of all kinds of surmises.

Mr. Ochs of the Times was in here a fortnight ago to look eround the
building with a party.

He said among other things, "We are all very anxious to

know whet Governor Strong is doing in Berlin."
You must have been hitting a great many high spots so far, and we shall
look forward with great interest to your account of them which we understand from
your cable has just been mailed.



FEDERAL RESERVE BANK OF NEW YORK

7/28/25.

Benj. Strong, Esq.,

There is not a great deal to say in the bank.

The work on Harrison's

investigation skeleton is getting under way and we are trying to formulate our
public relations work, but with great difficulty owing to the vacation period.

We are not trying any article on the Bank of England matter other than Traylor's
because we are waiting to see whether this gets any notice in the agricultural
papers.

Winston has said he would try his hand at something on the fiscal

agency work.

Seay has just sent me copy of a speech he made Which seems to go into
the queation of the McFadden bill, contrary to an understanding which I underI am enclosing a copy of

stood you had with the members of your committee.
it.

Regretting that I do not seem to find more of interest to ,_rite you, I
am, with best regards,
Sincerely yours,

P. S.

Thus far we have had fourteen country banle- directors visit us
a_

in five or six weeks, an average of about one half a day.
A.

menacing at present.

Benj. Strong, Esq.,
C/o Bank of England,
London, E.C., England.

PJ/RAH




So that danger is not

FEDERAL RESERVE BANK
OF NEW YORK

July 31, 1925.

Mr. Benj. Strong,
c/o Bank of England,
London, E. C., England.
Dear Governor Strong:

Burgess and I spent a morning at home talking over and trying to
plan out some work of an educational nature. We are working along a number
of different lines, one of which I want to mention to you. It is a good deal
easier to get newspaper notices about what some important inc..H11.1.1Mthan
The subject we have particularly in mind is the Federal
about an article.
reserve bank credit to the Bank of England. It has occurred to us that if a
nijmber of people from different parts of the country who are now abroad should
on returning include in the statements they often give out regarding their
trip, .something about the British return to gold and our assistance in it,
such statements might be quite widely quoted within a radius of a few hundred
miles of their home town. Very likely you will run across some such people
on the other side, and might suggest this idea to them if you think well of
I am hoping possibly Mr. McGarrah may say something upon his return as
it.
this would receive quite wide publicity on account of his being a director of
If you see him again, perhaps you would discuss it with him.
the Reichbank.
With regard to the A. B. A. committee's report, I have no idea
whet will come out of it. Sometime about the middle of August, Ayres and
Lichtenstein are going to meet with Woolen and talk the whole matter over.
In the meantime, Ayres-tell's me that Lichtenstein has written out a long
discursive report discussing our policies and amendments, etc., and generally
pussyfooting on everything. I enclose copy of Colonel Ayres' suggested draft
of a. report tiolther with the alternative one which we prepared here in the
bank through consultation with Young, first in the form of asking Congress for
prompt action, and second in the form of asking Congress when the time came for
considering recharter to omit amendments. It was this latter form which we
suggested to Ayres after Crissinger, Seay and ourselves had suggested the inadvisability of asking for action this winter. I am also enclosing copy of
my letter to Colonel Ayres in regard to our attitude toward this whole matter.
Do you happen to know anyone or any library that has a large collection of the substitute money used in different parts of the country in 1907.
If so, would you please send me the name of the party or library.
I am going on my vacation tomorrow afternoon, Saturday, August 1,
and expect to be back in the bank on Thursday, September 3. Case returns
Monday morning, August 3. There is nothing special for me to talk over with



F

EUERAL RESERVE BANK OF NEW YORK

2

Governor Strong

7/31/25.

him that Sailer could not do 58 well, end I find it suits my plans much better
to go two or three days earlier and return a bit earlier.
I am going to receive copies of all the letters written to you together with some of the data which you receive, so that I shall keep in pretty
close touch with the bank's work.
I heard from an A. B. A. man who was out at the bank supervisors
convention that Case's speech and presence there m&de a great hit with the
supervisors.
I have today received your cablegram after talking with KcGarrah and
am very much obliged for it. I am going to talk with the president of the New
York State Bankers Association about the composition of the committee tomorrow
morning.
Sincerely yours,

I am working at home today and find that I have not got all of the data
P. S.
'regarding the A. B. A. report on recharter, but Dr. Burgess will enclose in his
letter to you what I have not got here.

En cc.







New York, Sept. 9, 1925.

Benjamin Strong,
Steamship Olympic.

No. 21 (test)

Further conversations indicate desirability

you make no statement to steamer reporters but explaining that
you are reserving it for Weill Street reporters including Associated
and United Press.

Think this presents excellent opportunity

for country-wide explaAntion of reason8 and advantages of System's
maintaining relations with foreign banks

Suggest you make some

.

notes on shipboard to facilitate preparation of about four hundred
word interview same day you land.
Pierre Jay

Reply to above Olympic

Sept. 10, 1925

Federal Reserve Bank,
New York.

No. 16

(test)

Mr. Jay

Will follow your suggestion

briefly particular points to be covered.
Strong.

Wire

"NW




Received September 13, 1925

Beljamin Strong,
S. S. Olympic.

23 (test c.k.)

Following are merely some thoughts for your consideration without
attempting appropriate arrangement.

Suggest that introduction of

some personal incidents would add greatly.

ONE

Remarkable recevery of European credit and currency,
systems since post war disorganization

TO

Gold resumption by Great Britain and Holland
pivotal points toward recovery.

THREE

Banks of Issue charged with responsibility for
credit and currency conditions particularly
when return to or toward gold, since foreign banks
of issue established relationships with Federal
Reserve Bank New York and through it with other
Transactions mainly in gold
eleven banks.
and bills.

FOUR

Interrelation of other banks of issue.

FIVE

Value to us and more intelligent reserve banks
cooperation resulting from interchange of personal
visits between central banks especially from
information concerning international movements of
gold and credit which effect us and our commerce.

SIX

Stability in foreign countries vital to world trade and
American foreign trade in competition.

Jay

J k0
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Pointe d Pic, P. Q.
CANADA
August 20th [1925]

Dear Ben,

I have now seen copies of all your letters thru that of August 4th
relating to discussions with Hautain. In particular, this is to acknowledge
the batch of letters you wrote me from Spa around July 19 - 23d and your
later letter after seeing McGarrah on the subject of the vacancy in Class A
directorship. I left this matter in the hands of J. H. C[ase], thinking that
nothing would come up in my absence; but it seems to have come up, and I have
seen the cable he sent you about Mitchell vs. Frew.

The Spa batch came about an hour before I left for Canada, and I had to go
off without reading them, and it was nearly a week before the copies reached
me.
The one about Schacht is a remarkable document.
I did not see
of Schacht and his vanity did not strike me particularly; but his other characteristics which you mention I noted with pleasure. He seems to me the man for
the place at this time, and as to the Directorium being against him, that is all
in his favor. They seemed to me to be the quintessence of bureaucracy -- all
routine and precedent, and no imagination for the new order of things.
I'm also interested to see that you were impressed with the calibre of the
men -- of various nations -- selected to carry out the Dawes programme. They
struck me as quite remarkable.

Burgess writes me he has sent you the figures relating to gold movements,
for which you wrote from London.
The copy of the memorandum has no
nor a copy of your letter in which you asked me for some views on the subject.
I've written for both, but they don't seem to come.

The batch of Spa dictation about interviews and problems and personalities
has also reached me.
I didn't take to Stresemann, either.
Luther, then Finance
Minister, I only saw once, but he seemed a straightforward fellow, not understanding English very well, but well enough to know whether the interpreter was
getting his meaning across.
I was particularly interested in Houghton's views with regard to possible
readjustment of the British debt to a "most favored nation" basis, having great
sympathy with that view myself. We should doubtless gain great prestige abroad
if we should voluntarily propose a readjustment at the proper time. It would take a
good deal of the sting out of our whole debt programme from the European point of
view. And as it would include Poland, Finland, Latvia, and a lot of other little
nations which have already settled, in addition to England, it would not be, from
the Congressional point of view, a concession to England alone.
a "prodigal son" love feast. Think of the effect produced by our giving up some five
or six millions of Boxer Indemnity!

The one question you raise which needs answering, besides the Rentenbank matter concerning which Case has written you, is that relating to our purchase of
some mark bills from the Reichsbank should they request it.
The i
you predict wouldn't affect my willingness to buy some, but I should like to await




Page 2

the security pact, which the newspapers report as progressing, and I
should want to have some Government assurance to the Reichsbank of no
objection, etc.
As to the political effect at home, I think buying
some bills without mommitment to keep the purchases revolving, is entirely
different from the two-year credit to the B[ank] of E[ngland]. It is the
time element that has aroused whatever opposition there is. Such a moderate purchase of mark bills would react favorably on sentiment re the B. of
E. credit, indicating that this is the natural kind of thing for issue banks to do
for one another, and taking some of the limelight off the B. of E. transaction.
Of course, the State Department should be consulted, and judging from their comment to Mitchell re a new Czechoslovak loan, they might object.
Now as to the question of a shortage of devisen due to deliveries in
kind and recovery acts, it seems to me that these are really the problem of
the Germans, not our problem as long as we are satisfied with our bills
and our endorser, and as long as we are not engaged in a long time commitment. It seems to me that as a bank of issue we should not tie ourselves
up in long time commitments abroad, when we won't do it at home, unless, as
in the B. of E. matter, the situation, in our own interest, demands it.
ele

(we, vet King'

) situation, you say; and he is not
Gilbert is alive to the d.i.k.
giving any private priorities to long time lenders to Germany; and the
Dawes Plan bristles with warnings that the Transfer Committee mustn't break
down the German exchange. My feeling is that the T. C. is the marginal exporter of funds. In other words, they will have to let normal transactions,
which must willy nilly go through, take precedence over transactions of the
T. C. Otherwise the T. C., if it competes unduly with private transactions,
will depress the exchanges and fly contrary to its charter of existence.

Well, longhand is hard to write and bad to read and especially bad to
attempt on a vacation. So I'll quit till I get back to a stenographer again
which should be on Sept. 3d. Very glad you're against a meeting of issue banks.
I'm sure its unwise just now, and it could not be done without publicity.
I'm glad you had a good time in Biarritz. This is a fine place for a
vacation.
Yrs.,




P. J.
[Pierre Jay]




CLASS OF SERVICE

SYMBOL

DP

BLUE

-TTER

f

MESSAGE

NITE

r

LETTER

NI

wise its character is indicated by the

TEL

NEVVCOM B CARLTON. PRESIDENT

SYMBI

TELEGRAM

DAY LETTER

WESTERN UNION

If none of these three symbols
appears after the check number of
words) this is a telegram. Other.
,bol appearing after the check.

CLASS OF SERVICE

WESTEL

TELEGRAM

II

GEORGE W. E. ATKINS. FIRST VICE-PRESIDENT

BLUE

NIGHT MESSAGE

NITE

NIGHT LETTER

NI

If none of these three symbols

appears after the check number of
words) this is a telegram. Otherwise its character is indicated by the
symbol appearing after the check.

The filing time as shown In the date line on full rate telegrams and day letters, and the time of receipt at destination as show, on all messages, Is STANDARD TIME.

Received at 427 So. La Salle St., Chicago, Ill.

Telephone, Wabash 4321.

025

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ma 4

ND160 31 NL
NEWYORK NY 21
BENJ STRONG

X1782

//BLACKSTONE HOTEL CHICAGO ILL
NOTHING/FROM ANDERSON TODAY STOP LEFI I NGWELL RECE V I NG LONG IVE
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N THIS EVENING NOT YET COMPLETED STOP WILL WIRE YOU OUTLINE
LN MORNING STOP BELGIANS LUNCHING IN PRINCETON SUNDAY

P JAY .

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OF

Fr im

05




FEDERAL RESERVE BANK

OF NEW YORK

r ICE CORRESPONDENCE
To

Governor

FROM

Mr- 4.Y

Strong

Referring to your memorandum of April 15 regarding the engagement

of a private sitting room to be used by your party in order that during the
trip you and your associates may work over the material which has been assembled in .connection with the Questionnaire submitted by the Indian Currency

Commission, I feel that

private room is essential for this purpose.

8

public rooms on a steamer are noisy.
conversation is forbidden.

The

The only quiet one is the library where

Even if the studies you are making were not

private you would not find any satisfactory place in the public rooms in which
a group could work together.

With regard to the suggestion that you should absorb the expense
of the sitting room I believe that as the sitting room is necessary it would
be wrong in principle for you to absorb the cost of it,

Following Miss

Bleecker's oral inquiry about this matter last week

I spoke to the officers council on Saturday and they were unanimous in feeling
that the sitting room was a necessary part of the expense of the trip your
party is making.




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FEDERAL RESERVE BANK

OF NEW YORK
May 21, 1926.

Dear Governor Strong:

This is to acknowledge your two letters of May 2 and M ay 9 together
with enclosures.

The news they contained regarding the Indian currency matter

was most interesting, confirming the bare facts of which you had already advised
Your letter of May 9 was read to the directors yesterday and they

us by cable.

all expressed appreciation of the opportunity to learn something of the atmosphere of the inquiry.

Best of all was the news that you were really feeling

better, and the fact that instead of going directl

ttr Paris to your holiday you

were going to Italy seemed to us a proof that you must be feeling better.

What-

ever you may see or do over there will be of interest to the officers and direc-

tors, but they are far more interested in having you come back feeling well and
I cannot emphasize this too strongly.

refreshed.

I know that their feeling is

unanimous.

Harrison and Burgess write you so fully about matters in which you are
interested that I do not know that there is very much for me to add.

I think

perhaps the most interesting development in the past few weeks is the increase
of commercial loans in the reporting banks.

Whether or not this means good

business or merely a slowing up and an accumulation of inventories it is impossible to say.

The enclosed clipping containing a statement by J. J. Mitchell may be
of interest.

Meredith of the Bank of Montreal was in here last Reek and said

that their commercial loans had gone up about $35,000,000 in the past few weeks
and that with them this was a sign of decidedly increased business in Canada.

The other clipping enclosed from the Journal of Commerce indicates, in the portion
marked in blue, that the prospects of the McFadden bill are improving.



Harrison

FEDERAL RESERVE BANK OF NEW YORK

2

Benjamin Strong, Esq.

5/21/26.

tells me, and possibly may have widtten you, that Wingo is away and that in the

appointment of a conference committee which is to take place to-day or tomorrow
some other Democrat possibly less antagonistic to branch banking will probably
have to take Wingo's place.

Outside of the matters which I know Harrison and Burgess are writing
about I cannot think of anything else to say except that everyone here seems to
be well and on the job.
Sincerely yours,

Benj. Strong, Esq.,
C/o Bank of England,
London, England.




FEDERAL RESERVE BANK

OF NEW YORK
May 28, 1926.
Dear Governor:

At our directors' lunch yesterday, Mr. Alexander came over and gave
us a very graphic picture

of

the meeting of the Federal Advisory Council held

last week, which I will try to pass on to you.
Every member of the Council was in attendance.

They met at the

Mayflower Hotel on Thursday, May 20, and got fairly well acquainted with one
There are six new members this year.

another.

of

Mr. Miller's house, where all members
Mellon.

Then for supper they went to

the Board were present except Secretary

After supper Mr. Miller was showing Mr. Alexander some of his books

and Mr. Alexander asked him what the program was for the evening, to which
Mr. Miller replied that he had thought of asking Mr. Alexander to speak
foreign situation.

on

the

Mr. Alexander replied that he really had nothing new to

contribute on that subject, but that there was a topic on the Board's program for
tomorrow's meeting. which, if discussed

formally,

might take several days, but

which, if they all sat around informally at his house, might possibly be disposed
of during the evening;
Structure."

this topic was "The Place of Call Loans in the

Financial

Mr. Miller thought this was a good idea, so they all went at it.

Mr. Miller presented the view with which we are familiar, - that some
\

regulation should be prepared which would prevent Federal reserve funds from getting
1
1

into use in the speculative markets.

Mr. Alexander replied that he would be glad

to come down and help the Board to the very best

of

his ability to frame such a

regulation, and then if the Board would give him a week's time, he would go home
and arrange his

affairs

do it by regulation.



in such a way as to beat it;

Mr. Alexander said that when he

in other wordscould not

was 20 years old,

he could

FEDERAL RESERVE BANK OF NEW YORK 42

Governor Strong

5.28.26

repeat the National Bank Act word for word, but that now he had not any idea of

what was in it, except that he knew that the Comptroller had much more drastic power
and authority over the National banks than the Federal Reserve Board had over member
banks;

indeed, it was quite amazing that Congress had thought it wise to give to

one man such immense authority over banking institutions.
troller did not operate by regulations but by influence;

He said that the Comp-

when the Comptroller had

anything to criticise in the Bank of Commerce and the Bank did not agree with the
criticism, they would sit down and talk it out together, and if the Bank of Commerce
was unable to convince the Comptroller that he was wrong, they would, of course,
have to accept the Comptroller's view.

He said that the method the Board was sug-

gestinglof attempting to put the banks of the country into the straight-jacket of a
regulation just because a. few instances happened which the Board thought unfortunate,

was the wrong way of making progress.

He said that in his opinion, the banks in

New York did not know what the Reserve bank's policy was in regard to lending money

on call, and that perhaps one reason for this was that the Reserve bank did not know
what the Reserve Board's policy was.

He said that in his opinion, the way to ac-

complish results was for the Reserve Board and the Reserve banks to get together and
agree upon a policy, and then the Reserve banks through their contacts with member
banks (which he thought should be closer than now) could pass on their views to the
member banks when any occasion for expressing these views arose.

-Z:1-I should have said the discussion opened by Mr. Alexander's asking the
Board whether they regarded the Stock Exchange and stock exchange loans as something
vicious which the Reserve System would use its efforts to do away with, or whether
they regarded the Exchange and stock exchange loans as an essential part of our
financial machinery.

The Board took the latter point of view, to which Mr. Alexander

replied that he was glad they did because if the Reserve System should undertake to

prevent member banks from extending credit on stock exchange transactions, it would




FEDERAL RESERVE BANK OF NEW YORK 0

Governor Strong

5.28.26

Ozreak up the System in about a week.
Mr. Alexander said that they discussed this general question for nearly
three hours, not leaving until after 11:30.

He said that at the close both

Governor Crissinger and Mr. Hamlin came up to him and said that they appreciated
very much his full and frank discussion and the way he had handled the whole

matter, because they thought it had been a very good thing for Mr. Millert

Just

before he left the house, Mr. Miller drew him aside and said he wished to thank
him for the very full and frank discussion that they had had because he, Mr. Miller,
was sure it had been a good education for his colleagues!
The following day the Council met formally with the Board from 10 to 6,
and discussed i.e. various questions, including those which the Board had placed on
the program for discussion.

One of these, as I have indicated, asked the view of the Council as to
the place of call loans in our financial structure.

To this the Council had pre-

pared a very brief reply, saying that call loans constituted a valuable secondary
reserve for banks.

Mr. Miller asked if the Council would not be willing to add to

this reply some such wording as the following:
indebtedness to Federal reserve banks."

"To be availed of promptly to pay

Mr. Alexander said he observed some in-

clination on the part of some of the Council members to want to accede to this
suggestion, and that he at once took issue with Mr. Miller on the subject along
this line;

he said he thought it was a mistake for the Board to attempt to indicate

what reserves should be used to pay indebtedness to the Federal reserve bank.

If

they were going to make such an indication, would they propose to segregate some

other kind of reserve to pay their deposits, and another kind of reserve to use in
increasing their commercial loans, and still another kind of reserve from which
they would pay their operating expenses?

Mr. Alexander said that he would propose

an alternative wording to Mr. Miller's suggestion.

He said that in the past the

Board had on occasions made statements indicating that the banks should endeavor to
call in their slow loans; therefore he, Mr. Alexander, would suggest this formula:



FEDERAL RESERVE BANK OF NEW YORK

#4

Governor Strong

5.28.26

"Whenever a member bank is indebted to the Federal reserve bank and at the same
C.,

time has money loaned on cell, the member bank before calling its stock exchange
loans, should first make every effort to call in its slow loans in order thereby
to strengthen the banking situation."

He said that this caused a general laugh and

the subject was thereupon dropped.

Another question which the Board had put to the Council was "What course
should the Federal reserve banks pursue with regard to discount rates, open market
policy, etc., in case a business depression should set in?"

Mr. Alexander said

that there was some desultory discussion of this by the Board members, following
which Mr. Alexander said that they did not seem to be getting anywhere, and that as
this question presumably arose out of current consideration which the Board was
giving to this very topic, perhaps more progress could be made if the Board would
Upon this, Mr. Plett replied that the

state what its views were upon the subject.
.

Board was not there to be questioned by the Council, but to ask the Council questions.

Mr. Alexander immediately came back by reading the law to the Board and showing that
the function of the Council was to question the Board, and he therefore wished
definitely to ask the Board what they proposed to do with discount rates, open market
rates, tic.,

in

case business recession set

in,

stating that

unless

the Board was

prepared to express t4t14c views on this question, he considered the discussion a
waste of time.

As the Board made no reply, the discussion on this topic ended there.

At another juncture, ite said that during the conversations of the previous
A.

day, it had developed that in several of the districts the member of the Advisory

Council attended all meetings of the directors of the Reserve bank, thereby keeping
in close touch with all of the matters which came before the directors for consideration.

He said that he had some question as to the propriety of this, but it cer-

tainly gave the member of the Council an opportunity to be in close touch with the
views of the officers and directors of the Reserve bank of the district.

He said

that while he was talking he could see Governor Crissinger and other members of the



FEDERAL RESERVE BANK OF NEW YORK

r-tioard

Governor Strong

/5

5.28.26

shaking their heads adversely, and that when he finished, Governor Crissinger

0 stated that the Board was opposed to such a program, that the Board considered the
Council as its advisors, and that they should not come there as representatives and
advocates of the views of the Reserve banks.

To this Mr. Alexander replied that if

the Board thought any member of the Council came there solely as an advocate of the
Federal reserve bank's point of view, it was time such member be asked to resign.

On the other hand, it was up to each member of the Council to post himself as to
what the views of his Federal reserve bank were on various questions, because, said
II

Mr. Alexander, if the Board thinks that we are going to come to Washington biased
in favor of Reserve bank views, we way also think that members of the Board may be
biased on the opposite side and will not represent fairly the point of view of the
Reserve banks;

therefore, we propose to find out ourselves what the Reserve banks

think on various questions, so that we may be in position to make up our minds after
hearing directly from both sides.

Mr. Alexander said that after the meeting was over, Governor Crissinger
asked him to stop in his office and said that the agitation for a regulation about
the use of Federal reserve funds in the call market arose to some extent out of the
year-end situation in this bank.

Whereupon, Mr. Alexander told him fully of the

situation, criticizing you and us for our action; but assured Governor Crissinger
that in his opinion, the mistake' was fully realized and that this would never happen

again; therefore the Board need not be worried about it.

Incidentally, Mr. Alexander

and Mr. Reynolds had some good-natured chafing on the subject, which our directors
greatly enjoyed.

Mr. Alexander said that he felt that in spite of the fact that the Council
had gone after the situation without gloves, the meeting broke up with a most cordial
attitude on the part of all, except possibly Mr. Platt.

The officers and directors of the bank all feel that this was really an
epoch-making meeting, and that after nearly twelve years of wandering in the wilder
ness, the Council


seemed likely from now on to occupy the position which the Statute

FEDERAL RESERVE BANK OF NEW YORK

Governor Strong

5.28.26

L -intended to give it.

0

I might write more but have been delayed by the arrival a couple of hours
ago of Professors Hollander and Sprague, who have just now departed for their homes,
and it is necessary to hurry this off to catch the boat.

For the same reason,

Dr. Burgess' weekly letter to you is very short and ends very abruptly; but in
view of the mass of information you are getting in a routine way, I imagine you will
have ehough to keep you busy until the next week-end.
Hoping that you will have a restful vacation, I am,
Faithfully yours,

Benj. Strong, Esq.,
C/o The Bank of England,
London, E. C. 2,
England.




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FEDERAL RESERVE BANK

OF NEW YORK
June 4, 1926.

Dear Governor Strong:

Your two letters of May 15, written on board the Aquitania, came in on
Tuesday.

We are all most interested in your impressions of the strike and your
statements in regard to it, learned from inside sources.

Coming as

diately after hearing a discussion of the coal situation by Stamp it was doubly
interesting.

We read the letter at the last executive committee meeting and the

members of the committee enjoyed it greatly.

With regard to the confidential letter concerning compensation for the
professors we discussed this a little at the officers' meeting on Wednesday and
will take it up

in

earnest next week.

definite expression of your views.
to ouestion
on Wednesday was)whether,

in

We may even cable you for a further more

The only progress we made in our discussion

view of the intimate relations which prevail, of

their equal positions, and of the fact that the matter was at least tentatively

of Sprague came later, it

discussed first with Hollander and that the addition
would be

possible to give them unequal compensations.

The two professors:as I wrote you last week, arrived as I was in the
middle of dictating my letter of May 28 to you, and spent about an hour in the
office before departing for their respective homes.

They left with us a copy of

the testimony, told us a good deal about the hearings and a good deal of your
doings, and asked me to arrange a meeting with Secretary Mellon at which they
could give him an oral report and a copy of the testimony.

When Sprague got

home, however, he found so much pressing work awaiting him that he was unable

to go to WashirOon so Hollander is seeing the secretary this afternoon and
taking him, I believe, a copy of the testimony.



FEDERAL RESERVE BANK OF NEW YORK

Benj. Strong, Esq.,

2

6/4/26.

I am mighty glad that you enjoyed it so much and it came out so well
after all the work you aid on it.

I have been away for a day and a half.at Bryn Mawr graduation and have
not had an opportunity to ask Harrison whether he learned anything concerning
the Board or McFadden bill matters in Washington during his recent visit there.
If so, he is very likely writing you directly.
Two interesting things are happening over in New Jersey;

the Second

National Bank of Hoboken is contemplating converting into a trust company, and
the Fidelity Union is buying up a number of independent banks in Newark to convert into branches if the McFadden bill passes.

Mr. Herson arrived a few minutes before noon on Saturday, May 29, and
had all the current cash counted by Saturday evening.

On Sunday morn

started on the securities - over $2,000,000,000 - and had they all counted by
four o'clock Monday afternoon.

So that when we opened for business Monday morn-

ing all the securities and all the current cash could be released and we could go
ahead without any disturbance from the presence of the examiners.

The speed

they made in examining the securities was due very largely to the new system

which has been installed in the securities custody division since the Board's
examination a year ago.

We are recommending to our directors that we do not increase the percentage, at present 5 per cent., which we set up as reserve against our machinery
and equipment.

Our view is that the present percentage is ample to cover actual

depreciation and that this bank of all the reserve banks should be especially
careful not to lay itself open to the charge of padding its reserve account

and

thereby keeping surplus earnings away from the Treasury.




These seem to be the only items of news I can think of in a short week.

FEDERAL RESERVE BANK OF NEW YORK

3

Benj. Strong, Esq.,

6/4/26.

Hoping that by this time you are having a good rest on the Riviera,
I am,

Faithfully yours,

Benj. Strong, Esq.,
C/o Hank of England,
London, England.

P. S.

I see that I have not acknowledged the copies of news-

papers and other sheets published during the strike which you enclosed with
your letter.
them over.




The officers and directors were very much interested in looking

FEDERAL RESERVE BANK

OF NEW YORK
June 8, 1926.

Deer Governor Strong:

I started to write you atout the effect of the Treasury announcement that there would be no financing as of the June quarter day, but then
found that Mr. Case was writing you also, so have omitted what I had dictated on that point.

I enclose a clipping regarding brokers' loans, from which you will
see that as of June 2 loans were $84,000,000 up from the low point.
prices have been quite strong during the past fortnight.
are up 6 or 7 points and rails 3 or 4 points.

Stock

Industrial averages

I ran into Mr. Moreau Delano

at lunch and asked him if it was thought that another bull market had st,.rted.

He said that that was the question everyone was asking?

Bond prices have

also been strong of late and there has been considerable buying of securities
by banks, eridently in anticipation of easier money.

The earning assets of

the system have not dropped off as we anticipated they would. Evidently banks
are using the seasonal surplus of funds to buy securities rather than to pay
off the Reserve banks.

In connection Ath the quarter day Treasury tansactions we are arranging the usual temporary sales of securities and, in addition, as we under
stand tbat the Treasury anticipates having a balance of about $80,00n,000 in
the Reserve banks soonafter June 20, the officers' council is givin:_ some

consideration to a plan for making some temporary purchases of securities
to offset a portion




of

this unusual balance.

FEDERAL RESERVE BANK OF NEW YORK

2

Governor 'Strong

June 8, 1926.

Mr. Dewey reports that last Friday Professor Hollander, by appoint-

ment, spent nearly an hour reporting to Secretary Mellon on the Indian hearings

and that the Secretary seemed most irterested and gratified.
Faithfully yours,

Mr. Benjamin Strong,
C/o Bank of England,
London, ngland.

Enc.




FEDERAL RESERVE BANK

V

OF NEW YORK
June 18, 1926.

PERSONAL AND
CONFIDENTIAL
Dear Governor Strong:

This is in reply to your two letters of May 15 and June 6.
I sent you a cablegram in answer

First, with regard to the latter.

to the last paragraph about the period of your absence, which you have doubtless
already received.

The Case matter is settled so there is nothing to discuss further
about that.

I an sorry to say, however, that Mrs. Case has for the past week

been quite ill with a recurrence of her

old

trouble and Mr. Case has been very

much worried about it.

With regard to the special matter relating to yourself which you put
in my hands, I have no misunderstanding as to your intentions and I do not think
that there is any misunderstanding among the directors, though I shall call your
letter informally to their attention again after the meeting next week.

I understand confidentially that the Secretary is sailing about the
middle of July, but do not know for how long.

I do not think that this will

interfere with any plans that may develop.
Governor Crissinger has been quite ill for two or three weeks, and my
own belief is that he 19 e very sick man.

Should he be unable to continue, that

would present an opportunity, but in accordance with my recent longhand letter
I feel that unless this should occur there is not much likelihood of progress.
I understand that Harrison has communicated with you with regard to
270 Park Avenue.

Now, referring to your letter of May 15 with regard to compensation
for the professors, we have given it much consideration here and we understand




FEDERAL RESERVE BANK OF NEW YORK

2

Gov. Strong

6/18/26.

from your letter that you wish to leave the settlement of the matter to us.

We

have, accordingly, acted first by our officers and yesterday by our directors.
We seem to be unanimous in feeling that it would be rather invidious to compensate them at different rates in spite of your statement on the subject.
feel that a per diem basis would be more satiefectory than e lump sum.

We also

We have

made a number of inquiries and find that for expert testimony $100 a day is considered as a current rate

We have, accordingly, sent each of them a check for

$3;600, representing $100 a day for the period of their absence from this countly.

We believe that this will satisfy them, being just about half way between the
amount which Sprague and Hollander themselves suggested to you;
from L500 to L3,000 e piece.

namely, somewhere

I hope very much that you will be satisfied.

I m

enclosing memorandum giving the entire expenses of the Indian currency matter
which we hFd to present to the directors yesterday.

It is understood that I am to write a letter to the Secretary of the
Treasury with regard to the whole matter of compensation after we hear from
Sprague and Hollander characterizing it as a fiscal agency matter and leaving il
to the Secretary

to

deal with It with the Board in any way he sees fit.

Harris(

is writing you to-day about his understanding with fiineton in this connection.

I trust that this'will prove to be satisfnctory to you, even though
it is contrary to the two views which you yourself expressed in your letter of
May 15 which was read in full to both our officers and directors.
Hoping that you will continue to get a good rest, I am,
Sincerely yours,

Benj. Strong, Esq.,
C/o Bank of England,
London, E. C., England.




STATEMENT OF EXPENSES INCURRED IN CONNECTION WITH
PREPARATION AND PRESENTATION OF DATA TO INDIAN
CURRENCY 00MVISSION
To H. N. Lawrie
For services 8 days March 26 to April 3 inclusive .. $666.66
Expenses two trips Washington to New York and
130.75
return etc.

$797.41

To H. A. C. jenison
For services March 26 to April IB inclusive ...... $1,583.53
Expenses New York to Washington and return,
83.50 1,666.83
self and assistant .

To Arthur Notman
For services March 26 to April 15 inclusive .

To Prof. J. H. Hollander
For services April 23 to May 28 inclusive
Traveling Expenses Baltimore to New York and
return, three trips .
Passage to Furnpe and return
Expenses in London and on passage
Passport, letter of credit, etc.

To Prof. 0 M. W. Sprague
For services April 23 to
Railroad fare to Boston .
Passage to Europe and return .
Expenses in London and on passage .
Passport, letter of credit, and misc.

May 28 inclusive ........

GRAND TOTAL

******

1,500-00

$3,600.00
80.95
988.65
298.04
16.50

4,984.14

$3,600.00
8.26
986.00
318.90

Li -17.94.97
$13,883.35

The above statement does not include expenses incurred by Governor Strang
or by amployees of the Federal Reserve Bank of New York.

June 17, 1926.




FEDERAL RESERVE BANK

OF NEW YORK

June 22, 1926.

Dear Governor Strong:

This is to acknowledge your letter of May 23 in regard to the Carroll
article, and your letter of the same date enclosing translations of various news

paper articles which show that whatever Count Volpi did in giving the newspaper
men the right touch about your visit he did not attempt to, or at least did not
succeed in closing their imaginations.

We have all been mighty interested in

reading the translations.

With regard to the letter of May 23 and the Carroll article, since you
wrote the letter Harrison has cabled you several times on the subject after discussion with Case and me, and although you say, "I_hope you will take it up with
them (the Post) very energetically," we have unanimously reached the conclusion
that in view of the widespread discussion of all kinds which has appeared in the
papers nothing short of a formal statement from us here would cure the situation,
and that we believe would be most inadvisable and likely only to lead to further
surmise and discussions.

I am afraid you are bound to be bothered by this sort of

thing every time you go abroad and in every country in which you appear.

Under

the circumstances it has seemed to us in the bank that your intention of not returning to Paris in view of the situation there was a wise one unless, of coirse
some special matter should come up to require you to go there.

I only bring up

this subject ac,ain so that you may not feel that I have overlooked a request in one
of your letters.

I have noted the copy of the letter enclosed with yours of May

23rd.
_

Yesterday I received your letter of June 7 replying to mine of May 28 and
cabled you a reply today, copy of which I enclose.




Referring to the second sentence in your letter I do not agree with you

FEDERAL RESERVE SANK OF NEW YORK

6/22/26.

Benj. Strong, Esq.,

2

that the Council meeting "left everything up in the air."

I think it very distinct

ly convinced the Board that they would get nowhere by picking at the amounts loaned
on the Stock Exchange from day to day by New York member banks which are at the
same time borrowing from us.

In general it was a meeting which was very educational

to all members of the Board as to the attitude of the city banks in regard to Stock
Exchange loans.

With regard to the second part of your second sentence I do not think the
discussion "confused the views of the Federal Reserve Board as to the year-end .situ-

ation in New York," because, unless I am mistaken, Alexander's discussion of this
subject *as with Crissinger alone.

The whole effect of the meeting was to reverse

the Council's 11-year attitude and put it in what we all agree is the correct position of putting the Board on the witness stand.

Apparently the Board accepted this

position, and, as I think I wrote you, said they would be glad to have the Council
submit them in advance of the next meeting the questions the Council would like to
ask the Board.

This change in attitude is, in my opinion, mainly due to Alexander,

but thoroughly sympathized in by Wetmore.

With regard to the attitude of the Board toward this bank, what you have
said and written has thoroughly convinced Case, Harrison and me of the sincerity of

you; statement, and we, plus your letters, have, I believe, convinced the directors.
-

I think they are entirely in sympathy with your feelings on the subject and anxious
do everything practicable to bring about what you desire.

On the other hand,

from the outset they have felt that it was a very delicate matter which could not be
attacked in hammer and tongs fashion but must be gone at diplomatically and with

/to
11

some patience.

Harrison has shown me a postscript of a letter he wrote you June 18, which
I think covers the situation very fully.

I read your letter of June 7 to the mem-

bers of our executive committee after the meeting yesterday and intend to read it
to the entire Board after the meeting on Thursday.



If any further ideas develop on

FEDERAL RESERVE BANK OF NEW YORK

6/22/26.

Benj. Strong, Esq.,

3

Thursday as to what might be done I will advise you of them.

In the meantime

there is not much more to say.

Although I do not consider that it has any bearing on the subject I must
tell you of an incident in connection with Dr. Miller.

After the advisory council

meeting he told Alexander how much he appreciated the discussions which he and
Alexander had had on New York banking matters, and said that he would like some
time to talk further with him about them in New York.

Accordingly, the day before

he sailed, he lunched with Mr. Alexander at the Bank of Commerce.
Ward and Chandler were also present.

Messrs. Houston,

During the course of the discussion your work

for the System was mentioned and Dr. Miller went the limit in praising you and your
work.

After Dr. Miller had gone Messrs. Houston and Ward remarked to Mr. Alexander

that they had seldom heard such high praise given anyone as Miller gave you.

I

learned of this lunch indirectly through Reyburn yesterday and called on Mr. Alexander this afternoon to learn of it firsthand.

It was during our discussion of it

that I learned that Mr. Alexander had had a private talk with Mr. Mellon during the
Council meeting and discussed with him quite fully your attitude in regard to the
relation of the Board toward this bank.

I suggested to Mr.Alexander that possibly

you and Mr. Mellon might meet on the other side.

He asked me to warn you to regard

as strictly confidential any reports I might have given you concerning conversations
which he, Alexander, had had with the secretary on the general subject of the Board.
As to the renewing of your lease I understand from Mr. Harrison that he
gave Miss Bleecker and Phil a full explanation of the situation as he understood it
and that they then made up their minds to renew the lease.
Harrison tells me he has written you about clearing house matters and about
Winston having advised the Board concerning the Indian matter, so I do not believe
there is anything more to write to-night.

I think I should say, however, that Harrison

must have handled the clearing house matter with Gregory extremely well in order to

have gotten such a forward-looking report out of what seemed to be such an unforward



FEDERAL RESERVE BANK OF NEW YORK

4

Benj. Strong, Esq.,

6/22/26.

looking committee.

cp
We are all delighted to learn that you are having a good rest and
enjoying it.

Sincerely yours,

Benj. Strong, Esq.,
C/o Bank of England,
London, E. C., England.
PJ/RAH




CABLEGRAM

Benj. Strong

Replming your letter June 7 you have douttlese received

my

longhand letter regarding Board situation.
There is
are

really nothin

to

add except to assure you that directors

entirely in sympathy with your attitude and give informal consideration to

subject after nearly every Board meeting.
X learned confidentially from Alexander only to-day that he had

represented your personal attitude fully to the Secretary.
Realize how discouraged you muet feel at lack of progress but we
f

all feel that matter will require an opportunity and some patience before final
settlement.




Writing. further.
Jay

THIRTY THREE LIBERTY STREET
NEW YORK

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[Copy of handwritten letter]

Thirty Three Liberty Street
New York
June 30. [1926]
Dear GovernorThis is a line to supplement'the 'cables + letters you + Harrison have
been exchanging on the matter of your decision about resigning. A. couple of weeks
ago our directors, plus Case + Harrison, discussed the situation again quite fully
on the basis of one of your letters to me. I said that I thought we should acquaint
the secly directly of the situation. They all felt that that might be misunderstood
as a springing from a personal conflict between you + a certain board member, +
were opposed to it. Last week I took it up again with them, on the basis of another
of your letters and urged again that it should be done, omitting entirely any mention
of personal differences. They agreed that the secty should hear of it directly from
us. So yesterday I saw him for a few minutes and told him that just before you left
you had told me of your decision + asked me to advise the directors: that they at
first felt that perhaps you were not as serious as we, the officers believed, but
that later correspondence had convinced them, + they now felt that he should be
acquainted with your definite decision to retire unless before your return, or at
least in the near future, some organization of the Bd could be effected which would
improve the relations between the Bd.
this Bk. and do away with some of the misunderstandings and the impugning of OUT motives which had occurred during the past year
which he had had to take a hand in composing. I put your decision solely on the
ground of the effect which these situations had on your health. Isaid we were greatly
disturbed at the prospect of your leaving + thought he as chim of the Bd should be
fully apprised. He said he was most anxious to have you stay: that he had the
situation fully in mind + wished to effect a better organization of the Bd but that
he did net think Hamlin's place should be used for the purpose. He felt that the
illness of 2 members might soon give an opening in a perfectly natural way. This,
he said, he did not wish repeated to our Bd as coming from him, so kindly receive
it accordingly. But it is common gossip around the Treasury evidently, as Dewey
spoke to me of the likelihood of resignations thru' illness.
I said to the sec'y that it was naturally a delicate matter for you to
tell him of your decision, though I understood you had discussed with him the situation
in the Bd: but I suggested that if he were to meet you abroad and initiate a discussion
of the matter in the light of your decision of which he was now definitely informed
(he evidently had not realized from the indirect statements of others how definite +
serious your decision was) I thought it might be helpful. He seemed to like this idea
very much, and said he would write you after landing + try to arrange a meeting.
I have just cabled you the gist of the foregoing/

Now, as to the health
C. C. The Governor has returned after 3 or 4
weeks at Marion with his prostatic + acute attack apparently quite fully relieved
without an operation or the prospect of one. He looks tired + pale from the attack,
but I am inclined to feel that the prospects of anything immediate there are perhaps
illusory. But with that weakness another attack might be more serious.
The other C. is at J. Hopkins for 2-3 months under observation + treatment. Eady saw him Monday, + says that the prospects are that he will be greatly
benefited by the treatment + his diabetes gotten under control.
I am giving you these two personal diagnoses so that you may know the
situation as fully as we do. I wish most devoutly I could be more optimistic of
results in the near future.
Sincerely yours

[signed] Pierre Jay


FEDERAL RESERVE BANK

OF NEW YORK
July 1, 1926.

Dear Governor Strong:

This may seem a very inconsequential matter to refer to you, and if
you feel like returnint it to us without consideration in view of your preoccupation with vitally important matters we shall thoroughly understand it.

You remember that last spring we prepared a circular relating to the
ratio of capital to deposits in member banks.

This was a four-page circular

which discussed the subject in a way which you thought might possibly disturb
confidence in banks which had a small ratio of capital to deposits.

We are

now aboutto-send out our usual circular relating to the earnings of member
banks and it has occurred to

that if we simply added the facts in regard to
A

bank capitalization as a last-page of this circular it would come to all member
banks at a time when they were studying their affairs and would give them an
opportunity of seeing how they compared with other banks in this important
respect alany without urging them to do anything about it.

We believe that we

have taken out everything of a nature which might cause people to raise questions about banks having small ratios of capital to surplus, and believe that
this indirect method will raise the question with all member banks in a way
which will not be alarming.

On the other hand you may feel opposed to it as you did before,
which case we can send out our earning circular without it.

Perhaps you will

be good enough to indicate in one of your cables whether you approve or disapprove including it.

Do not bother to go into your reasons but just give us

your "yes" or "no."


Benj. Strong, Esq.,
http://fraser.stlouisfed.org/
Federal Reserve Bank nin Louis of England.
of St. 1RAI-1k

Very truly yours,

iLz,t-t-4-/41
London, Ensler.

FEDERAL RESERVE BANK

OF NEW YORK
July 8, 1926.
Dear Governor Strong:

I do not know what other officers may have written you except the usual

letters from burgess with regard to money market matters and Harrison with regard
to foreign matters, so I am writing you about quite a number of different things
at the risk of repeating what you may have heard through others.

I was very much relieved to get a letter from Sprague the day before
yesterday acknowledging our check for $3,600.

I had written him a second letter

on July 1 suggesting that if in any way the check was not in accordance with his
expectations or with any understanding he had with you I hoped he would write me
frankly.

Copies Lre enclosed of both Sprague's and Hollander's letters.

Now all

that remains is to write Secretary Mellon a letter transmitting to him a statement
of all the expenses in connection with the investigation.

I enclose copy of the

expense statement and hope to get off the letter to the Secretary to-morrow.
I have just had a letter from Oscar Wells saying that he has decided to

invite Newton Baker to address the A. B. A. Convention "on some subject which would
in some way pertain to the Federal Reserve System and which would have the effect
of enlarging the wholesome respect of the bankers for the Federal reserve banks.
He expects to invite Fancher's assistance in getting Mr. Baker's acceptance.
At the New York State Bankers Convention in Quebec Mr. Chase, president
of the First Trust & Deposit Company of Syracuse, was elected president, and Mr.
McGarrah, vice president, for the ensuing year.

There is quite a movement on to

reelect Mr. Treman whose term expires this December.
able to reelection
but not otherwise.




Mr. Treman's attitude is favor-

It is quite evident that the bankers wish him for another term,
He sailed on July 3 to be gone just short of two months.

FEDERAL RESERVE BANK OF NEW YORK

2

Benj. Strong, Esq.,

7/8/26.

As Mr. Appleton, executive vice president of the Montclair Trust Company,

0

has been elected president of the Guardian Trust Company, the new five million
dollar bank just about to open in Newark, (They have applied for membership and we
have recommended favorably to the Federal Reserve Board but have not yet heard
their action) the Montclair Trust Company is again after Mr. Line to become executive vice president.

The indications are that some arrangement will be arrived at

but the details are not yet settled.

At any rate he would not leave us for five

or six weeks.

With regard to mid-year salary adjustments Mr. Sailer has completed an
arrangement with the Board which enables us to advance employes from one grade to
another between $2,500 and $5,000 without prior approval by the board, so that we
are making a moderate number of such readjustments to take effect with the mid-.-uly
pay checks.

ihe Board has also approved our recommendation in regard to Downs,

but Mr. James expressed himself in such a way with regard to our proposal concerning Burgess, first, because it was a mid-year adjustment without any chanEe of
grade or title, and second, because he hesitated to pass on an important salary
change in an officer of this type during Mr. Miller's absence, that our directors

thought it was the part of wisdom not to press the matter but to leave it for the
But we got it in :the record so as to prepare their minds.

year-end.

In this con-

nection we were very glad indeed to learn from your cable that you approved both
of the recommendations.

I explained the situation to Burgess and he was both very

pleased at the action of our directors and quite content to await the year-end.
You have already heard by cable concerning the Clearing House action yesterday.

They adopted the Gregory report unanimously except for the section doing

away with exchange charges on checks, notes and drafts.
hed separately and the vote was 27 to 5 in favor of it.
the five were;




Action on that
I only know who two of

namely, the Bank of Commerce and the Equitable Trust Comleny.

FEDERAL RESERVE BANK OF NEW YORK

Benj. Strong, Esq.,

7/8/26.

When I was in Washington last week with Mr. Sailer on the salary matter
I saw Governor Crissinger who had just returned from four weeks' absence and he
seemed much better although looking pretty worn and tired.

I talked with him on

the telephone yesterday but understand that to-day he is again sick in bed and
likely to be there for a few days.

But Mr. Eddy tells me that it is nothing serious.

Someone has doubtless written you about Mr. Cunningham's being in the hospital Johns-Hopkins.

They are giving him rather heroic treatment there for Diabetes and

just at present Mr. Eddy, who saw him yesterday, tells me that he is in a rather
nervous shape, weighing only about 120 pounds and apparently a pretty

sick man.

Mr. Eddy thinks there is little chance of his being beck at work on the Board for
some months.

Governor Crissinger yesterday told me that over the Fourth there had been
a conference in Washington or some of the Witham interests, with a view to raising
$10,000,000 to save the system.

He was distinctly of the impression that the money

vaould not be forthcoming and he felt it was not at all unlikely that the whole chain
would go in the near future.
a number in Florida.

There are nearly 100 banks in Georgia, I believe, and

During the past year or more the deposits of many of the

Florida Witham banks have been deposited in and invested by the Georgia banks, and

now that the thew has come in Florida and deposits are melting away the Florida
banks cannot get their money out of the Georgia banks.

Already eight or

Witham banks in Florida have closed, I understand.
Witham member banks in this district are in very good shape.

Through the

joint efforts of Messrs. Case and Reeves they have reduced their loans to the Titham

System during the past three years from about two and a quarter millions to about
Only two of them now have loans aggregating more

seven hundred thousand dollars.

than their capital and surplus

to

the Witham system and should any re-percussion

occur up here they could probably easily raise more capital locally.




There is one

0 FEDERAL RESERVE BANK OF NEW YORK

4

Benj. Stah ng, Esq.,

7/8/26.

nonmember bank in New Jersey Which is a member of the Witham System and has a good

0

deal of money still loaned there, but their directors are men of means and probably
could take care of the situation satisfactorily.

Yesterday, Mr. Herson called on Mr. Case and me and presented the report
of the examination of this bank begin May 29.

The only matters discussed with us

were the following:

He listed 13 member banks in our territory and one in Buffalo
borrowing in excess of capital and surplus.
He listed 10 borrowers' financial statements in our territory and
9 in Buffalo territory which he considered unsatisfactory.
He listed 4 notes under rediscount in the Buffalo territory in
which there were alterations or irregularities.
He listed 1 piece of rediscounted paper in the Buffalo territory
in which the line was in excess of,the discounting bankIs
capital and surplus.
4-/o
He listed the member banks which have been frequently deficient in
required reserves.
His conclusion is as follows:
"Your examiner is pleased to report that the examination developed
no ttems of material criticism and conditions were found to be
generally satisfactory."
It was just about as near a clean bill of health as we could have.

Just before you left you will remember that we discussed the redistribution
of some of the work among the deputy governors.

In view of the fact that for five

or six weeks it was uncertain whether Mr. Case would accept Mr. Gilbert's invitation

elhelet;1-4,

it did not seem wise to bring this up,4 but we held an executive session of the

(
officers' council about ten days ego and had our first discussion of it.

I am

hoping that some time next week we can reach a conclusion which can be communicated
to you for your consideration.

Benj. Strong, E q.,
C/o Bank of England,
London, E. C., England,

PJ/RAH
encs.


Sincerely yours,




e,

Memorandum on the Credit Situation

Since last week our loans to New York City banks have been reduced
from 191 million dollars to 109 million and there is prospect of further reduations during the balance of this week and next week,
system have shown corresponding reductions.
appears to be past.

Total earning assets of the

The immediate credit stringency thus

Is to the general credit situation and its bearing on our

policy in the coming two or three months, the following comments may be made.

Money Rates.

We are entering upon the period of fall increase in credit demands at
a somewhat higher rate level than prevailed a year ago.

The figures for a

year ago, dates just prior to our two most recent rate increases, and yesterday,
are shown in the following table:
Money Rates

July 13, 1925
Our rate
Commercial paper
90-day bills
90-day time loans
Call loans, typical
for week

Jan. 6, 1926

4

3
4
3
4

4

Apr. 21, 1926

4 1/2

3 1/2
3 3/4-4
3 1/4

1/2
1/4-4 1(2
1/2
7/8

July 14, 1926

4
4 1/4-4 1/2
3 1(2
4 1(4

3 1/2
4
3 3/8
4 1/2

4 1/4

41/2

There is now a tendency toward higher open market rates which will be
accentuated as the fall demand for funds comes on.

There will, therefore, be

a tendency for open market rates to get out of adjustment with our discount
rate, unless this tendency is offset by open market purchases of securities.




2

Volume of Credit.
Member banks.
V

are

approximately

Total loans and investments of reporting member banks

one billion dollars larger than a year

ago.

This is

an in-

crease of bet-,een 5 and 6 per cent and may be compared with a tylAcal year to

year increase of 7 per cent for the past 50 years.
credit is shown in

the

The makeup of member bank

following table:
(In millions of dollars)

July 84_1925

All RwalKURE112152ML_3UIL1
Commercial loans
Loans on stocks and bonds
Investments
Total loans and investments

Jan. 6, 1926

8,188
5,092
5,498

Federal RAserve Banks.

8,492

18,778

Apr. 21. 1926

July 7, 1926

5444

8,608
5,263
5,579

8,525
5,533
5.653

19,624

19,450

19,711*

5,688

Total bills and securities of the Federal Reserve

System in July 1925 showed a daily average figure of 1065 million dollars.
figures thus far

available

The

for July 1926 appear to indicate a probable average

level between 100 and 150 million larger than a year ago, an increase slightly
larger than has been the case so far this year.

In addition to this increase in

Federal Reserve credit the country's gold stock has been increased approximately
100 million dollars since a year ago,

although

this increase has been partly off-

set by an increase of 25,000,000 in the anpunt of gold earmarked in the Federal
Reserve Bank of New York.

The change in makeup of Federal Reserve credit

as

com-

pared with a year ago and more recent periods is as follows:
(In millions of dollars)

July 8, 1925
2Aderal Reserve Banks
Bills discounted
Bills purchased
U. S. securities
Total bills and
securities*
*Includes other securities
and foreign loans on gold.




450

Jan. 6, 191,6

Arr_._ 21. 1926

July 7. 1926

450

33_9

593
345
369

229
389

556
228
389

1,043

1,318

1,081

1,173

241

3

in general the increase since a year ago in the volume of credit does
,aot appear to be seriously out of line with the normal growth due to the growth

No indication of a lack of adjustment between credit and trade appears

of trade.

in commodity prices, although there is possible evidence of such lack of adjustment
in prices of securities and real estate.

,ualitv of credit

As shown in the table for reporting member banks, approximately half of
the increase in credit since a year ago is in loans on stocks and bonds, and these
loans are now about as large as they were in February, when the spring high point

of stock prices was reached.

Loans to brokers and dealers in New York City, how-

ever, continue about 650 million dollars less than in February.

This difference

would appear to indicate that stocks are now being carried more largely by direct
loans to individuals rather than by loans to brokers.

They may also indicate a

somewhat wider distribution of stock ownership, or distribution into stronger
hands.

This volume of credit supports stock prices, which are not far from the

prices of last February.

The volume of trading is heavy but not quite as large

as last fall or in March.

The category of loans to show the second largest increase is the socalled commercial loans, which include loans by banks to finance companies as
well as direct loans to businesses or individuals.

There is no way of knowing

how much of this increase consists of loans to finance companies.
There is also an increase of over 150 million in bank investments.
The change in the use of credit since a year ago may be summarized by
saying that in spite of active business there does not appear to have been any
large increase in the amount of credit required for carrying inventories, advancing

wages, or other such increases which in the past have usually accompanied this




4

stEIN9 of the business (*Ole. Instead &dditiona/ supplies of credit apperr

to be utilized for incressed prices of stocks and bonds, new isrues of seesurities, some new business enterprises, and installment buying.
The examinations which pre currently made of the loans and invest-

ments of member banks do not reveal in general the unwise use of credit,

although the consequences are now being felt in oertain qty,rters of too large

advanoes for enterpriser connected Pith real estate.
2ovement of Funds.

So fir this year there hes been an import balance of gold &mounting

to about Se million dollars. At present the relative position of money rtes
in New York and London is so closely balanced that there is little tendency for

funds to flow in either direction. The tendency in both centers eill be for
firmer rates during the fall, but if rates should grow firmer more rapidlr here
than in London, the tendency would be to stimulLte a gold movement in this

direction. A pull of funds toward this countr this fall might be very embarrassing for London and smne of the European centers.




FEDERAL RESERVE BANK

OF NEW YORK
July 23, 1.926

Dear Governor Strong:

I have been away for three days

in Columbus and Cleveland. In Columbus

I was attending the annual meeting of the Supervisors of State Banks, were I

made a talk and heard a discussion on cooperation between these officers and the
reserve banks in regard to examinations and supervision, which was very satisfactory.

In Cleveland, we had a meeting of the Bank and Public Relations Com-

mittee of the Agents Conference, which did not produce much in the way of any
program for concerted effort, but indicated that quite a good deal of good work

was going

on in the various districts.

Martin, who was in Cleveland, had told me that during the period between the Clearing House Committee's report and the action of the Clearing House
A,

itself, which abolished exchange charges, the Chicago Clearing House had taken
action removing Boston, Philadelphia and St. Louis from the discretionary list
and putting them on the charge list.

We asked Heath about this.

He

said

that it was a rather hurried action taken in George Reynolds' absence, and that
when the latter returned to Chicago a fortnight ago, he was very much surprised

and disgusted at the action taken.

Heath intimated that perhaps a little later

the Clearing House might change its attitude.

In

the meantime, Boston has sent

its Clearing House examiner to Chicago to find out just the situation there,

having it in mind that the

Boston

action against Chicago checks.

Clearing House might wish to take retaliatory

At present Boston has no compulsory charges of

any kind except on nonpar checks.
of Atlanta may interest you.



The enclosed editorial sent me by Newton

FEDERAL RESERVE BANK OF NEW YORK..2.

Governor Strong

7/23/26.

Eddy tells me that Mr. Cunningham has just returned to Washington from
the Johns Hopkins Hospital and is soon going West for some months.
The enclosed copy of a letter from Mr. Winston regarding silver inquiry
',-

will interest you.
Mr. Peacock and one of the young Baringls called for a few minutes this
afternoon, largely to ask after your health and plans.

They are returning to

England next week.

I am very much obliged for your telegram about the earnings circular.
I saw your letter to Burgess as soon as it arrived, but did not notice until

after getting your cablegram that some one had sent you an earlier copy of the
circular than was enclosed with my letter.

In as much as we have sent out cir-

culars almost exactly like this for the past two years, and other Reserve Banks

the same, and as we often send out information not having to do absolutely directly with the operation of the bank, and as the circular in its final form really
would not be very suitable to our monthly bulletin, we have decided to go ahead
and issue it.

As you suggested in your letter to Burgess the text has been very

materially changed and one chart has been omitted from it.

We all feel that all

of the prickers have been taken out of it.

The closing of so many banks in the Witham System in Georgia and Florida
is making a great to do in that section.

The fact that yesterday two or three

of the closed banks reopened may be reassuring.

In our district there has been

some local gossip about the Witham banks but nothing in the way of real nervousness
has developed.

Mr. Reeves and the New Jersey Commissioner are taking active steps

to get the doubtful paper out of the three institutions which have any substantial
volume of it.

Burgess tells me that he is not writing you this week-end and I agree with
him that from the credit point of view there is very little about which to write.
Everything is going along smoothly;



money is fairly comfortable.

FEDERAL RESERVE BANK OF NEW YORK...3.,

7/23/26.

Governor Strong

The enclosed is a photostat of a chart which I keep from week to week.
The future depends largely upon the volume at which the autumn rise occurs,
beginning presumably some time in the next two or three weeks.
I am assuming that you get clippings as usual

although Miss

Bleecker

is away and you have doubtless seen that both lest Thursday and yesterday there
were rumors among the brokers of an increase in our rate.

I shall not write

anything about international matters as, of bourse, we have nothing to tell you
But the present controversy between the United States and

in regard to these.

most

British Treasuries as to the British borrowings here is making a
feeling here

which is finding

unpleasant

its reflection in editorials, some of which back

up the American point of view and others feel that it would have been better if
there had been no discussion on the subject whatever.
I remember writing you some time ago that Mrs. Case was quite ill.

I

do not know what Mr. Case has written you regarding her, but as he has gone it
9

occuraopoi to me to say

that she is now

considerably better and that he is expect-

ing to take her up to the White Mountains a week from today and

about a

are feeling fairly refreshed by your stay on the Riviera,

I am
Sincerely yours,

Pierre Jay.

Mr. Benjamin Strong,
c/o Bank of England,
London, England.

En c.




be away for

month.

Hoping you

PJ/MEM

to

CitljTh

FEDERAL RESERVE BANK

10ti

OF NEW YORK

August 5,

1926.

Dear Governor Strong:

We have just finished a rather long directors' meeting, and in the
absence of Case and Burgess it occurs to me that you might like to hear something

about the discussion we have had in the last two or three days on the subject of
an increase in our discount rates, concerning which we cabled you yesterday.

It

will all be old matter by the time this letter reaches you, but nevertheless you
might like to get a little of the background.
As you know our directors, about the middle of July, gave consideration
to the question of t.4m3. change in the discount rate, and a statement was prepared

for them, copy of which was enclosed.
you before.)

(Very likely someone may have sent it to

At that time it was decided that a. change was not yet indicated, but

it was suggested that one might be indicated before very. long.

At the meeting of

July 29, just before Mr. Case left on his vacation, he expressed his own opinion
that a change would soon become necessary.

On Monday noon the enclosed statement

appeared on the ticker and was at once the signal for a jump of eight or ten points
in General Motors which was followed by another similar jump on Tuesday.

On Tues-

day morning Governor Crissinger called up Mr. Harrison and said that it was his
opinion that we ought to raise our rate and sell :1.75,000,000 of securities.

We

had a meeting of our directors at lunch that day to discuss your cable about
certain further conferences with your friends which you had in mind, and after
acting upon that we discussed the question of a change in the discount rate,

Messrs. Reynold9

Reyburn, Sounders, Woolley and myself being the directors present.

Mr. Reyburn book no part in the discussionand left early.

Mr. Reynolds felt that

a change was perhaps imminent but that outside rates were in rather a transition
as he thought to a, higher level and that the picture would be much clearer a week
or two hence.



Mr. Woolley expressed the view that we should postpone action until

FEDERAL RESERVE BANK OF NEW YORK

2

Mr. Benj. Strong

8/5/26.

by an increase in our discounts we had an unimpeachable statistical justification.
Mr. Saunders thought our rates were out of line and we should increase at once.

Of

course, the discussion was merely informal.

Yesterday afternoon Governor Crissinger called me on the telephone and
said that the Board had just had a meeting at which he and Meesrs. James, Hamlin and

McIntosh were present, being all of the members who are now in Washington, and that
they asked him to advise me that three of them would be ready to approve an increase

in our rate to-day, but that Mr. Hamlin had said he did not care to express a view
until we first took action.

Governor Criesinger indicated quite strongly that he

felt we should act at once.

I reported this to a meeting of the officers' council

,Thich was held shortly afterwards to conaider the subject, and we were quite unan-

imous in our feeling that if conditions a week hence had not changed, and if you
saw no objection from the foreign point of view to a rate increase, the rate should

be increased next week, but that from several points of view we thought it better
not to make the change this week.

Among these were the fact that we are now in the

period when the month-end transactions had not clarified themselves;

last week's

re ort showed a decrease of. about $18,000,000 in brokers' loans whoreas the report
to 1-e made on Monday of next week would probably show an increase of from $80,000,000
to $100,000,000 of brokers' loans;
week hence;

the outside rate situation will be more clear a

to raise this week would make it appear as though our action might be

considered to be based largely on recent stock exchange activity and the Cochran
statement, whereas by next week the statement

ill perhaps be largely forgotten;

and in any event we were not ready to recommend an increase without first consulting
and hearing from you.

I telephoned Governor Crissinger of our attitude, and do not

think he felt very happy about it.

To-day we presented the enclosed statement and also read a letter from
Governor Crissinger, together with a statement which Mr. Goldenweiser has made to
the Board on August 4, recommending that we increase our rate.

As ourffJecommendation

was for no action to-day there was not much discussion, but Mr. Saunders and Mr.




FEDERAL RESERVE BANK OF NEW YORK

3

Benj. Strong, Esq.,

Runkle both expressed themselves as favorable to an increase.

0

Reyburn made no expression.

8,5,26.

Messrs. Reynolds and

Mr. Woolley and Mr. Young were both away and will

probably not be here next week either. Mr. Young, in talking with Mr. Harrison on

tle telephone yesterday, however, said that he was quite ready to go along on a rate

increase if the directors felt the situation justified it.
I have two or three letters from you lhich I have not acknowledged as I

believe they do not call for replies, but will try to write you further to-morrow.
Sincerely yours,

Benj. Strong, Esq.,

C/o Bank of England,
London, E. C., England.
PVRAH







Credit Situation
Since the statement prepared on July 15 the principal changes in the

credit situation have been a further inereaee in money ratee and an increase in
the amount of stock apeculetion, accompanied by increases in security prices and
brokers loans. The volume of production and trade continues large and the prevail-

ing attitude optimietic, in marked contrast with the attitude a few months age.
Money Rates.

The following table compares money rates in July and thus far in August
withthe corresponding periods 8 year ago.

Aa the tuble indicates, time money,

commercial paper, Treasury certificates, and bank rates to oustomere, have in-

creased since the middle of Jay and all the rates quoted are higher than they were
a year ago.
July Average

Mt

-WI
Call loans average
Time money.:
(ley

4 - C menthe

4.28

4.09

2.420.12I.e..1-4
1926
MA
4 1/4 - 4 1/2 4 - 5

- 4 1(4 4 1/2 - 4
4 - 4 1/4
4 6/8 - 4 1/2 4
4 V4 - 4 1/2 4 112 - 4 5/4 4 1 4 e 4 1/2 4 5/a 4
4

4

5 515

5,1/4

3 3/6

5.06

5.11

3.07

3.18

4 1/4

4 1/4

15/4

4 3/4

3 1/4

.5/8

4 1/2 *

Commercial paper

5 3/4

90-day bills

4

December Treasury

certificates

Bank rate to best
cuetomers

4

4 1,/4

* Still semewhet uncertain

The relationship between these rates and our diepount rate is shown in
the attachoddiegram. It would appear from this diagram thet the discount rate of

this bank is no soeeihat low relative to open market money rates, judging from
the experience of previous years.

And the present rate would appear to offer mme

inducement to member banks to borrow.



RATE
10

BANK

MARKET

BANKERS

COMMERCIA
PAPER

ACCEPTANCES
__I_

o

0
.

1919

1921

1922

1923

1924
1920 1925

1919

1926

RATE

1921

1922.

1923

1924

1925

1926

1924

1925

1926

RATE

10

1920

10

8

7-- L
c1311.1. BARK RATE
CUSTOA E Ft 5

coml.

PER

BANK

4
MARKET

COTERCI7

CERTIFICATES of
INDEBTEDNESS

APER

0

1919

1921




192;'.

1923

1924
1920 1925

1926

1919

1920

19 21

1922.

1923

Interest Rates at New York Compared with the Discount Rates of the Federal Renerve Bank
of New York. Rate. Shown are for Prime 4 to 6 Months Commercial Paper, Prime 90day
Banlcerc Acceptances, Certificates ilaturing in 4 to 6 Months, and CommeroAal Bank Rate
on Customers Paper

5

Volume of Credit

The total volume of bank credit outstanding is probably elightly

In gener4 the amount of total loans and

increased since the middle of July.

investments of reporting member banks ie about one billion 6ellare larger than

a year ago, - an increase of between 5 and 8 per cent.

This ia not out of

line with the usual year to year increase in the volume of credit due to the
growth of the country's business.

But in interpreting these figures it should

be borne in mind that the increase follows an exceptionally lerge inereaee in
the preceding year amounting to about 9 per cent, and that this yearle increase
has occurred notwithstanding a decline of about 5 per cent in commodity prices
and economy in the bueiness use of credit.

The increase in the pest year repre-

sents in large part an increaav in credit used to finance higher eecurity pricee.
The amount of credit extended by the Federal Reserve System and by the
New York Reserve Bank are shown in the fellowing table, which gives the figures

in daily averages for the month of July.
MIT AVERAGE

(In Millions)

New York Reserve Dank

System,

July 1926

July 1925
Discounts

Bills Purchased

U. S. securities
Total Bills and
Securities

482.3
232.7
537.1

1,085.3

,

b49.4
229.9
379.8

July 1925

July 1928

142.4
36.9

168.8

8.11

41.6
78.8

250.0

291.6

The month to month changes in the System and the New York bank are

shown in the following diagrsms.




1,165.3

3 000

of Dollars

2 500

2000
1500ALAI

f8t-,7t.r)

Ass et
Pc'At:11

1000
C49

500

OM.

ozt




Pccepec372 ces

19 2 2.

1923

7 924

ALL FEDERAL RESERVE BANKS

1925

1926

frvt-t I Itom of Dollars
1000

800

600

400

Assets

Earl-7177

Au 94

2.75

2.00

.ti.

166

.0%

ccept472ces,.

,

0
1921




1922

192)3

*N.

.1* 'NV

1924
F R B NEW YORK

7+

s-

Wei

35

1925,

/926

StPi,CUlutaon

In the p st few days representative avareges of industrial stook
prices have reached new high points for all time and railroad stooks have
reached the highest prices since 1915.

This movement has been accompanied

by an increase of about 100 eillion dollars in loans to brokers

an

dealers,

and when the figures are availeble they will probably indicete that total,

loans on securities by member bnks are Close to the highest points for the
year.

For some weeks past the stock market appears to have been largely pro-

fessional in character, and largely influenced by the activity of a number of
powerful pools, but in the past few days there appears to have been en increese

of public participation.

It would appear that the increase in stock speculation

in recent months has been facilitated by moderately eaoy money.
Volume of Trade.

The latest figures for bank transactions indicate that trade in July
was as active as in any previous month of 1926.

The rete of production of iron

and steel has been increasing recently, production in other lines is at e very
high level, and there appears to be oomewhat more freedom in forward ordering

than was the case earlier this year.

In the building industry there are beginning

to be evitences of overproduction end there are similar situations in a numhr of
other industries. The psychology of business appears to have undergone a marked
chenge and is more optimistic and less cautious than it was a few months ago.
Gold Movement.

Recent kold movements have included an import from Australie, which is

eikely to total about 20 million, email imports from Mexico, a stall export to
Canada, end an export of eamseeked gold to one of our foreign correspondents,




7

Which does not affect the credit situation. No lerge further movement appears to
be in immediate prospect.

Uhile the general tendency of an increase in our rate relative to foreign

rates is to attract gold to this country, it is not lealf apparent, with the rate
situation as at present, that there would be any gold movf.gRent resulting from an

increase of 1/2 of one per cent. in our rate. The BAnk of England discount rats is
now 5 per cent. and the bill rate in London 4 1/4 to 4 5,(16. Thus even 4th an
increase in our rate London rates would be higher than ratet in New York.

To the Direotors
August 5, 1928.




FEDERAL RESERVE BANK

OF NEW YORK

August 10, 1926.

Dear Governor Strong:

Your cable No. 52 to Mr. Harrison led us all to do a good deal of hard
thinking over the last week-end.

The first reactions of the officers to your sug-

gestion, with the exception of Mr. Kenzel, were all adverse.

The general feeling

was that such a large change would startle the country, coming at a time when the
general rate structure would hardly justify it.

It would give an indication that

the System saw something in conditions about which it was thoroughly alarmed, whereas
as

far as we can see, there AA nothing to be greatly alarmed about.

We all

thought about it over Sunday and talked about it most of Monday at the officers'
council and executive committee meetings.

Mr. Harrison at Jamestown got in touch

with Mr. Young down at the Cape and he had the same reaction as the rest of us.

I

an not quite sure whether KenLel felt in favor of your suggestion, but he did not

feel that it would be as startling as the rest of US felt.
We all felt that we should change to 4 per cent, now, which the general
rate structure amply justifies;

that we should watch the situation carefully during

the next few weeks, and if it seems desirable we could sell securities and later
raise the rate another one half of one per cent.

I may say, however, that on receipt

of Governor Crissinger's suggestion that we should sell *50,000,000 to *75,000,000

of securities and raise the rate to 4 per cent., Mr. Sailer consulted all members
of the open market committee and they felt at that time opposed to selling securities.
At the executive committee meeting Mr. Reynolds made a knowing exclama-

tion when we read the paragraph about fixing the limit upon heavy borrowers. That
suggestion was not discussed in the executive committee meeting, but ge discussed
it at the officers' council and are making n close study of the situation with a
view to seeing what if any line of action it seems logical and practicable to
adopt.



4

Benj. Strong, Esq.,

2

FEDERAL RESERVE BANK OF NEW YORK

8/10/26.

I must say we all felt relieved to receive your cable indicating that
you were satisfied with the action likely to be taken, after canvassing opinions,
on Thursday, August 12.

On reading your cable No. 52 some of us thought that perhaps our No. 43
to you, from the way it was phrased, had perhaps made a little too strong an
impression of alarm on our part, which really was not the case.

Mr. Reynolds at

the executive committee meeting, entirely independently, said that he gained the
same impression after hearing the two cables read.
This morning the stock market opened weak.

Dow Jones stated

was on account of the publication of the increase of over $80,000,000 in brokers
The market continued under pressure all day, and

loans during the past week.

the general list closed down from one to three points While steel was down
and General Motors down

sixteen.

five

Also money ruled at 5 per cent. in the latter

part of the day.

I think our rate change on Thursday will have a salutary effect.
Probably

you

have seen from the clippings that it is suggested that General

Motors is about to declare a large stock dividend now and Steel is likely, to
follow suit .after the first of the year.

I am enclosing a memorandum I have asked Mr. Roelse to make up, bringing
up to date the memorandum of a week ago cent you with my last letter.
Alexander tells me that he has to sail on September 15, two days before
the Advisory Council meeting.

We shall have to consider on Thursday appointing a

substitute.

I was delighted to read of Ben's promotion yesterday.
Warburg on Friday and he did not say a word about it.

I lunched with

He has gone to the Adiron-

dacks for a month with Mrs. Warburg and is expecting to spend most of next winter
in California.




Harrison is writing you aboat his encounters with the Clearing House

FEDERAL RESERVE BANK OF NEW YORK

Benj. Strong, Esq.,

3

8/10 26.

He acquited himself mighiy well in a. difficult situation.

committee.

I was much obliged and so was Mr. Winston for your cablegram with regard
to the Indian Currency matter.

I am keeping him Idly advised of any information

we receive.

You might be interested in the enclosed copy of a letter Burgess wrote

tO Mr. Winston yesterday.

Mr. Winston is

mo4

anxious to get your views after

reading the report.
Sincerely yours,

Benj. Strong, Esq.,
C/o Bank of England,
London, England.

PJ/RAH




L4iqi

PERSONAL AND
CONFIDENTIAL

FEDERAL RESERVE BANK

OF NEW YORK
August 10, 1926.

Dear Governor Strong:

As indicated in my last letter I have two of your letters to acknowledge
namely, the typewritten one of July 1 and the

dealing with your personal matter;
longhand one of July 13.

Since receiving the latter I have followed your recom-

mendation and attempted to forget the subject for the moment, but I don't need to
tell you that it is something one cannot very well forget because it is so vital
to me and to everyone else in the bank.
I think your analysis of the situation with the governor is correct. He
is not likely to retire unless illness compels.
contains the following sentence:

getting stronger each day."

A letter I had from him yesterday

"I feel that I am getting along better and am

He is now in Marion for a few days.

I feel that there is not anything else for us to do until we hear of
your discussion with the Secretary.
"Now it has occurred to me that no one

As to the statement in your longhand letter,
took my statement at face value, and that

the idea of dealing with it impersonally could get nowhere," I may make this comment';

the officers took your statement at face value but the directors did not.

They were at the outset opposed to dealing with it directly and it was only my
insistence and the evident failure of the indirect method that led them to
authorize me to go direct.

In the meantime 1. have seen copy of your letter to

Harrison in which you make two interesting suggestions regarding personnel.
Sincerely yours,

Benj. Strong, Esq.,
C/o Bank of England,
London, E. C., England.



-)

FEDERAL RESERVE SANK

OF NEW YORK

August 18, 1926.

Dear Governor Strong:

Dr. Burgess is theoretically away on his vacation during August, but as a
matter of fact, as he is only down at Atlantic Highlands we have had to call him in
on two or three occasions.

First, when we were discussing the rate change and

second, in preparation for the open market committee meeting yesterday.
In Dr. Burgess's absence I am trying to take his place in writing you about
money market conditions.

Our rate change apparently took the street rather by surprise, as you no
doubt have seen from the clippings sent you at the end of the week.

Owing, however,

to its coming at the same moment as the General Motors 50 per cent. stock dividend
the stock market took it rather calmly.

Industrials, however, have been not very

strong since, although rails have continued to advance somewhat and, as you doubtless

have noticed, are selling at very high prices, but the earnings of the good roads are
remarkable.

During the past week time money has firmed up to 4 3/4 and commercial paper
is much more generally on a 4 1/2 per cent. basis.
bills which are up about 1/4.

The greatest change has been in

Mr. Kenzel reports that bill dealers advanced their

rates quite sharply on Monday, not knowing which way the market was going to move.
They felt they had better put themselves in a defensive position.

We advanced our

buyirg rates from 1/8 to 1/4 on Monday so that they are at present as follows:

30 days
1-45 days
60 days
46-90 days
90 days
4 months
5-6 months
Trade acceptances

Sales Contracts


Old Minimum Established by
Directors for Prime Indorsed
Bills

New Rates at Which This
Bank is Buying Prime
Indorsed Bills To-day

3 1/8

3 3/8

3 1/4
3 1/2
3
3
3
3

1/4
3/8
3/4
1/2

3. 1/2

3 5/8
4

4

3 1/2

FrEIERAL RESERVE BANK OF NEW YORK

2

Gov. Strong

8/18/26.

At the officers council meeting this morning Mr. Kenzel suggested that in

0

view of the uncertain state of the market he thought he should be in a position for
a few days longer to maintain our rates in a somewhat flexible state.

He is inclined

to think, however, that in the course of a week or two we should advance our minimum
buying rate to 3 1/2 and 90 day rate to 3 3/4.

The purpose of this would be to make

our bill rate closer to our discount rate and perhaps to stimulate rediscounting
somewhat rather than sales of bills.

The Clearing house made no change in its rates for interest paid on deposits as a result of our change in discount rate.

The open market committee met here yesterday under Mr. Sailer's chairmanship.

Messrs. Harding, Fancher, Hutt and McKay were the members present, and Messrs.

Grissinger, McIntosh and James,z_re also present from the Board.

The meeting was

called to 'consider a request from Mr. Winston to purchase $40,000,000 of Third

Liberties, of which $25,000,000 were in the System account and $15,000,000 in independent accounts in other Reserve banks.

The net result of the meeting was to vote

to sell the 05,000,000 of the System account and to ask the other banks to turn
There are

their Thirds into the System account in eichange for other securities.

$67,000,000 of September 15 certnficates in the System account, and the question
ariEes whether to let these run off in September or to replace them.

It was decided

to hold anottter meeting of the committee during the first ten days of 6eptember, to
reach a decision on this point.
presented.

I understand that many differences of views were

One extreme view was gradually to replace 440,000,000 with other secur-

ities while the other extreme view, expressed by Governor Crissinger, was that the
whole $270,000,000 of securities Should be sold by the first of October.

Governor

Orissinger was very much disturbed about two things:




(a)

The stock market, which he is convinced is the most vicious
market in years, because in his opinion it largely consists
of an attempt by insiders to distribute their securities
to the public with a view of getting them back later in the
year after elections when, he thinks, we may very lily
Governor Crissinger felt that
have a democratic Senate.
if we were going to have a big market and then a slump we
should sell our securities so as not to be in a position
here people might say that the Reserve system had aided

FtliERAL RESERVE BANK OF NEW YORK

8/18/26.

Gov. Strong

3

speculation by keeping its funds directly in the market.
In his opinion, if Reserve bank credit is used it should
be taken through rediscounts at such a time.
(b)

Because he fears that in many sections of the country optimism
is not warranted and we dhould not let business get too
much of a gait.

On the other h'nd Mr. James felt quite content to carry our securities and
would not feel badly should the occasion warrant it if we had a considerably larger
amount.

The net result of the whole discussion was as I have given it above.
Governor Crissinger said that Ioii was having a fine corn crop this year,

while other sections, notably Ohio, Indiana and Northern Nebraska. and South Dakota,

were having a very poor corn crop, so that prices were rising, and he thought would
rise much further.

He felt that this would have a. wonderful effect in straightening

out the credit difficulties in Iowa.
We have lost $9,500,000 gold to Canada on the present movement.

Recently the exchange has been a little less

this will continue no one can tell.
favorable to exporting to Canada.

How long

On the other hand Canada may need the gold as a

basis for some of its autumn note expansion.
the movement will run to $20,000,000.

Mr. Ken',.el says that the guess is that

Mr. Harrison says that

all

guesses on the

gold movement to Canada have 80 far proved wrong.
Mr. McKay says that business in Chicago had never been so big in the history
of the city, and out there they were looking for a record-breaking autumn.
From the earnings of the Federal reserve banks to date it looks as if, with-

out any question, all of them would earn their dividends and have substantial amounts
over during the present calendar year.
Governor Crissinger stated that one of the brokerage houses in Washington

had telephoned to New York a quarter of an hour before we announced our rate increase
last Thursday stating that our rate had been raised.

He said he heard in several

quarters the feeling expressed that some of our directors were so close to large
business undertakings that it was felt that their howledge of rate discussions was
rather unfortunate.



I told him that I did not see how, if we were to get good

Fr13.ERAL RESERVE BANK OF NEW YORK

4

8/18/26.

Gov. Strong

directors they could avoid being in large undertakings.
The Governor's health is much better than when I last saw him.
Recently, Mr. Bowers of the National Bank of Commerce, came in to say that

Martin Saxe, who has charge for all the New York City banks of their suit to recover
some of their payments under the Monied Capital Tax, would like very much to have

the figures of the Stock Exchange Loans for the period beginning in 1921 after your
testimony before the Agricultural Inquiry Committee, down to January, 1926.

but

he was quite satisfied that if.they thought it essential to

their counsel in this suit they would be glad to ask us to give them

Mr. Saxe would use the figures in his brief and they
in due course.

sEid

banks objected to the publication

that he understood last year some of the larger
of these figures,

He

would inevitably

to

Mr. Saxe.

become public

The officers have discussed the matterand we all feel thatYthe banks

who gave us this information now want us to release it there is no reason why we should

Incidentally some of us rather feel that it might be a good time for the

not do so.

Federal Reserve Board, if it iished to do so, to Isk us for these figures and publish
them in the Bulletin, together with those you furnished the Agricultural Inquiry, as
a sort of background to the present figures.

You will remember that Stewart was

anxious to have them last JanusJy but (ice thought that they should not be given out at

that time PS it might cause too much of a shock.

Now, however, the public is used

to these brokerage figures and it certainly would be interested to see what they used
to be in former years.

It might also have some effect on brokers if they saw how much

above the level of previous years the present year's figures are.

like

If you should feel

cabling your views on this subject I think we would all be very glad to have

them.

_Noting a recent letter of yours about the Capitol National Sank and its

president, you may be interested to know that we have recommended to the Board adversely
will
in regard to granting them trust powers, but the intimation is that the Board

over-rule us, as I gather the Governor is very favorable to granting powers.



We have received the copies of the Indian Currency Commission report and

FE'D.ERAL RESERVE BANK OF NEW YORK

a/18/26.

Gov. Strong

5

sent one each to Winston, Urissinger and Goldenweiser.
Alexander will be unavoidably absent at the next Advisory Council meeting
eptember 17, and we have appointed MtGarrah to act in his plEce.
At this point le; me acknowledge your good letter of August 3 from /Amsterlam and refer to a few matters you speak of.

Mr. Baker could not make the address before the A. B. A.
some other names which did not strike Wells favorably.

We suggested

He suggested Governor Seay

and our view was that he would not contribute very much, so I think he has given up
the idea of having a key speech on the System.
Referring to what you say about the expense account of the Indian currency

matter, you may be interested to know that the account was not submitted to the Board
in detail by Mr. Winston, merely the aggregate figure.

In this connection Mr.

Harrison may already heve written you that Governor Orissinger told him recently
when he was in Washington that Mr. James had heard all about your appearance before
the Commission from some of the democratic senators.
In regard to Mr. Line the matter definitely crystallized on Monday and he
is going to leave September 15.

He gets a salary of $16,500 and a 20 per cent. bonus.

I have a little of the feeling that you have in regard to Mr. Downs, but
the question of the change will await Mr. Case's return on September 1st.

I think

ve all feel that it should be made if possible without taking in any outside people.

Mr. Harrison has just been in and showed me the telegram he is sending you
to-day which gives you most of the information I hEve already written about the effect
of our rate and the open market meeting.

Nevertheless, as there are some things he

has not touched on I won't re-write the letter but will let it go along as it is.
The Board has finally approved my vacation and

I

Saturday September 11, to be gone until the end of October.

NM

now hoping to leave on
The Board is planning

to have the autumn conference whortly after election.




Mr. Barrows returned on Monday from a month's vacation spent on the water

FERAL RESERVE BANK OF NEW YORK

0

6

Gov. Strong

and in England.

I am afraid this is a pretty rambling letter!
Sincerely yours,

Benj, Strong, Esq.,

C/o Bank of England,
London, E. C., England.
PJ/RAH




8/18/26.

FEDERAL RESERVE BANK

OF NEW YORK
August 27, 1926.

Dear Governor Strong:

Yesterday I received your letter of August 11 regarding the Indian
Currency Report.

I have sent a copy of it to Mr. Winston and have asked him

whether he wishes me to do anything further with regard to the last paragraph,
which speaks of an analysis by Professor Sprague and possible preparation of
material for public use.

As far as the bank is concerned, I think that we

have no reason to make any public statement.

There is a good deal of dis-

cussion of it in the papers and once in a while your connection with the testimony is mentioned.

I presume you get clippings of such things from Miss Bleecken

The report is evidently stirring up a good deal of interest in the country, and
of course it represents a very important change in an important country, which
cannot help having some effect on monetary systems elsewhere.
I am enclosing copy of a letter which a man named Fuller has been sending around to a good many banks in the Middle West.

I am also sending you a

copy of a letter which the Federal Reserve Bank of Minneapolis received from one
of its correspondents.

Harrison sent a copy of it to Winston and yesterday

Winston made a little statement on the subject, concerning which the enclosed is
a clipping.

Last Tuesday I was in Washington at a meeting of the agents' examination
committee with the Board's examination committee, now consisting of Messrs. Platt,
James, and McIntosh.

We presented again, somewhat redrawn, the report and sug-

gestions we presented last April and this time it appeared as though the Board's
comAittee would accept our view, which was that the agents should do the examining rather than the Board and should be held responsible for it; and should be



Governor Strong

2

FEDERAL RESERVE BANK OF NEW YORK

August 27, 1926.

required by the Board where examinations now are unsatisfactory, as the Board

0 feels there are in many states, to secure satisfactory examinations.

We according-

ly finally presented our report to the Board's committee for such disposition as
it sees fit to make of it.

I had felt rather hopeless about the matter because

James had been so insistent that the Board should do its own examining of state
banks.

As a matter of fact, due to the distressing situation in Florida and to

the now-up of the Witham system, under which some 80 banks in Georgia and Florida
have closed, and to the fact as I understand it, that many of the country papers
in Georgia are blaming the Reserve System for the failure of the Witham oanks,
which were all nonmembers, and to the fact that the Atlanta constitution has been printing

editorials saying how much better member banks are than nonmember banks on account
of Federal Reserve supervision, the Board feels it has a great responsibility.

Its

members have recently discovered that although the agents send in copies of all examination reports of state banks, they are pidgeonholed in Washington and not analyzed,
Consequently, the Board has voted to establish a division of member bank examination

which will

be in charge of a first-class man and a proper staff which will pay some

attention to these reports as they are sent in and will endeavor to keep the Board
informed as to the states in which state examinations are satisfactory and those in
which they are unsatisfactory.

Our committee feels that this is an excellent move

and will doubtless lead to our securing better examinations and probably better
supervision by the state supervisors.

At present we hear nothing from the Board

on the subject except a general complaint.

With this new divi

able to localize the complaint where it belongs and take steps to improve conditiona
Governor Grissinger is also busy engaging four or five high-grade examiners to be
attached to the staff of the new department, which can be loaned to Federal Reserve
agents to supDlement their own staffs and thus help secure better examinations.

But in all cases, as I understand it, the examinations are to be undertaken by the
agent rather than by the Board.




If used properly I think this is a good move

Governor Strong

FEDERAL RESERVE BANK OF NEW YORK

I think that this whole

also, but of course you will see that it has its dangers.

c)

August 27, 1926.

question will be the principal point of discussion at the agents' conference this
autumn.

I understand from Governor Crissinger that the conference will be held
shortly after election, which this year will be November 2.

My guess is that it

will be the week beginning November 8.
Governor Crissinger has got a new doctor and is very much improved in
health, spirits, and looks.

He told me that Mr. Miller had spent an hour with him

the day before telling him all about his trip, which covered England, France, Belgium,
Switzerland, Holland, and Germany.
Prague.

I forget whether or not he went to Vienna and

I asked Governor Crissinger whether Mr. Miller had heardany criticisms of

the Federal lieserve System on the other side, to which he replied that the contrary

was true; that Mr. Miller found everywhere a tremendous appreciation of the System,
which had impressed him greatly.

I find that Mr. Cunningham has been out in White Plains for about a month
occupying, with Mrs. Cunningham, a house lent him by a friend.

I called him on the

telephone yesterday and he expects to be back in Washington next week.
spend a day with us at the bank in the meantime.

He will

He has much improved, is walking

two or three miles a day, and feels that he has gotton on top of his troubles.
I have recently again discussed with Mr. Harrison your letter of July 5
on the subject of the Carroll articles, and your suggestion that I talk with Garrett
about

on the subject.

We feel that in view of the statements

articlesarticles in Mr. Harrison's

letter, dated May 27, and in view of the fact that the matter is now so cold and old, and
that nothing else of the kind is likely to come up during your present trip abroad, it
would be just as well not to take it up with Garrett.

But in the meantime, as I think

I may have written you, Julian Mason has become editor and you will doubtless find it
easy to discuss the subject with him when you come back.
factory to you.




I hope this will be satis-

FEDERAL RESERVE BANK OF NEW YORK

4

Governor Strong

August 27, 1926.

My programme is

I am planning to leave by the Paris on September 11.

to spend two or three days in Paris and then go straight to Naples, meet my family
there and spend a week in each of the following:

Sicily, Athens, Rome and Naples,

sailing from the latter place on the Duillio October 23, which should bring us
home on October 31, or at least Monday morning, November 1.

This is purely a

pleasure trip for me, but if you see no reason to the contrary I should like to

pay a brief call on both Moreau and Stringher, if you feel like sending a line of
introduction for me, care of Morgan, Harjes.

On the other hand, I can quite well

understand it if you think that Moreau has had enough of Federal Reserve for the
time being.

We have had rather a quiet week in the bank.

The System's statement

yesterday showed a decrease of 39 million in government securities and an increase
of 36 million in discounts, thus reflecting very accurately the sale of 40 million
of thirds to the Treasury, about which you have doubtless been advised.
town banks are not borrowing as much as they did last year.
not borrowing at all.
high rate.

Rerman's

The up-

bank is

Money is working stiffer and business is going ahead at a

Brokers loans have shown the following weekly changes since July 1:

Loans to Brokers and Dealers

jw

Yorklaty

Banks

(In Millions)

Date

For Own

Account

For OarreT12ndent Banks

For Others

June
July

30

"
"

14
21
28

August 4
11

937
919
942

1089

694

1105

719
717

"
"
"
n

7

18
25




1103
1019

Total

884

579
632

935

952
1016

954

1018

652
648

934

1015

653

2,602

995

1025

669

2,689
2,720
2,742
2,731

1073

2,565
2,603
2,601
2,621

FEDERAL RESERVE BANK OF NEW YORK

5

Governor Strong

August 27, 1926.

This morning we had quite a discussion at the officers' council meeting
,-

about operations in the bill market and I asked Mr. Kenzel to draft the enclosed
memorandum to send you.

The Board has granted trust powers to Max Radt's bank, in spite of our
recommendation to the contrary.

McFadden has stirred up thewtolebranch bank matter again by issuing a
statement about a month ago, the gist of which is that the banks had better express

their views on the subject to senators and congressman so that these legislators
will have accurate information before Congress reassembles.

As a result the A.B.A.

has appointed a committee of 100, with Walter Head of Omaha as its chairman, to
represent it in the matter and unquestionably it will be the leadirg topic at the
A.B.A. convention in Los Angeles.

Wingo has recently made a stirring speech in

Chicago against branch banking.
I was glad to hear from Leffingwell recently that he had seen someone
who had seen you and reported that you were looking very well indeed.
this is the truth.
Sincerely yours,

Encs.




I hope

COPY
PERCY JAY FULLER
522

Fifth

Avenue

New York
August 14, 1926.

Gentlemen:

From time to time we have forwarded you information with reference to
the foreign exchange markets, and especially information with reference to the
franc.

The last great drop of the franc went down to 196 and then came about
the formation of the Poincare Cabinet.
What is happening no
Bank of France and the Government of France are buying francs on the open market
with the balance of the Morgan Loan.
This action serves a double purpose, as
it helps sustain the franc to a certain degree as well as gives them their running
expenses.
There is nothing mysterious or complicated about this it is very plain,
and the vast amount of propaganda that is being put out in an effort to sustain
the franc is simply in anticipation of further loans to be obtained in this country.
It is our opinion that there is nothing that can save the franc, and I
am quite sure that it is unnecessary now to warn the public with reference to the
handling of foreign money, particularly of the continent, as it is almost a certainty that they will not pay their foreign indebtedness and are maneuvering in
every direction to get rid of it in some way by hook or crook.
It has been suggested that large loans have been made by the Federal
Reserve Bank of hew fork to the French and Belgian Governments, and they have
been secretely made, which shows the anxiety of Governor Strong who has been in
Europe for many months.
In fact, the most suspcious part of it is, that most
every financial personality connected with the Federal Reserve System and the
Treasury Department is in Europe at this time doing everything possible to obtain
something of some tangible security back of these loans.
Let us hope that they will be able to do something at least to protect
themselves, because it is almost assured that they will suffer huge losses as a
result of their indiscretions.
It is to be hoped that no persons shall be persuaded by the silly,
stupid and foolish propaganda which is now in vogue, because the franc, according
to the highest officials, is doomed and there is no way in which they can be saved.
The action of the franc at the present is just the same as a farmer trying to buy back the potatoes he has once sold to the public.
old phrase, "Beware of Entangling Alliances," whether financial or otherwise.




Respectfully,

PERCY JAY FULLER

FARMERS NATIONAL BANK
Blue Earth, Minn.

August 21, 1926.

Mr. h. C. Lilly,
Merchants 'Diational Bank,

St. Paul Minnesota.

Dear Mr. Lilly:

I am enclosing a circular letter from New York.

be possible that the Federal Reserve Bank
banks' funds in

French

Can it

?vt;'

of New York has invested other

bonds as this circular claims they have?

Do you think our Minneapolis Federal Reserve Bank has done the
same thing?

After you read this circular, wish you would return it to me
and tell me what you think about it.




Yours very truly,

F. H. Davis,

Cashier

THIRTY THREE LIBERTY STREET

?

NEW YORK

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[Copy of handwritten letter]

Thirty Three Liberty Street
New York
Sept 7th [ 1926]
Dear Governor.

This is to acknowledge yours of July 29 (redid Aug.20) and yours of
red'd today. Both were on the subject of your own situation. The first
left it just about the way it was when I talked with the secty; but in the second
there was a note of much more encouragement. We have naturally given much thought
to names, but it is difficult to cover a wide range of territory when you can't
discuss it much with others outside the bank. Jaffray of Minpeapolis was the only
name which came up that sounded at all promising. I don't knkr him. I will put
it up to our directors Thursday.
I like the Anderson idea and will try to get a
line on his circumstances. I did not like the Winston idea at first, but it grows
on me daily 4. I now feel quite enthusiastic. Harrison (I believe has written you
often about the personnel aspects of the question.) Cunningham has now returned to
his desk
seems to be much improved. The same is true of Crissinger.
Aug.

26,

I'm sorry to be away just as you
the Sec'y return -4- the situation again
becomes active. I should like to be able to be of some help in the matter. It is
almost impossible to picture what the bank would be if you were not in it, and your
departure would be the greatest loss to me personally; so much so that I can't
bring myself to feel that/ it will come to pass, however much I am convinced that
you are much in earnest.
Some way will have to be found to keep you.
Let me say that Harrison has been developing finely since you left. His
thought 4. his judgment on foreign matters 4. on everything else in the bank have
been excellent. In my opinion (I don't quote others as I have had no discussions)
he has made a great atride forward in the position he occupies in the bank.
Case had a talk today with Reynolds about borrowing.
he'd think it over
discuss it later. Case felt encouraged.

The latter said

Your discussion of rates in yrs. of Aug. 26 was very interesting; also
your hope that we may get through without another increase, It is too early to have
a judgment on that.
You asked me to let you know if Lins left.
the minutes that he is resigning as of Sept. 30.

You have doubtless seen in

Did you know that Whitmarsh's son died suddenly in the 7,7hite Mts. Satin'-

day, Sept.4?

I'm expecting to sail on Paris or Dlympic Saturday (11th). Sorry not to
see you on the other side - we may very likely cuuss on the ocean, I gather. Though
your last cables indicate your plans are very unsettled.
With my best regards 4 hopes for a satisfactory solution of the problem
you put up to the Directors,
Yours sincerely
[signed] P.J.




49 EAST SIXTY FOURTH STREET
NEW YORK

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49 East Sixty Fourth Street
New York
Copy of longhand letter
December 24, 1926
Dear Ben,

To me the high point of the dinner was your letter. That and
your newspaper statement have been, for me, the best things of the past
three weeks.
I can only hope that the prediction in your letter that I may
be of some use to Gilbert will turn out to be correct.
If so, it will
be due almost entirely to my close relations with you during the past
twelve years which have given me a glimpse of the many economic and other
ideas that go through your mind and of the thorough way you attack problems.
These twelve years have been without question the richest and happiest years
I hate to think how very much poorer they would have been if
of my life.
you had not been the guide and inspiration of the F. R. B. and all that
work therein.
The dinner seems to be generally regarded as a success. Of
course, for me it was overwhelming. But it had a note of reality about it
which I couldn't overlook and which made me very happy. And everything was
so beautifully worked out and in such good taste. The humidor you and the
others gave me is a charming piece of work and most useful. The resolutions
were all too good and the engrossing the most attractive, in its simplicity
and dignity that I have ever seen. But as I have said before, your letter
was the high spot of the evening, tho' the speeches were all good and short,
and 0. D. Y.'s [Owen D. Young's] was a brilliant piece of crisp composition.

I stopped in at a bookshop yesterday to find a book to send you, but
then I remembered a big pile of books which Ernest seemed to be packing; so I
thought I'd send you something of a more personal nature. So I've asked
Black, Starr and Frost to copy a pair of sleeve links that I wear constantly
and send them to you two or three weeks hence. They belonged to a fellow
named Frederick Jay, a brother of my great great great grandfather.
his initials on them, but, of course, the replica will have yours.
They're
rather thin and old-fashioned. But I like them, and I'e like you to have a
copy.

Winston says that the Secretary has arranged that filling my place won't
occur till after he returns next week. That seems to us all advisable as the Board
is perplexed by salaries and all such things at this time. Hamlin is the only one
we know of who is openly for Burgess -- not a very good beginning!
I expect to be
in Washington Thursday with Gilbert to meet some of the State Department people,
and shall certainly have a talk with Mellon, in addition to saying goodbye to the
Board members and staff.
In regard to the Christmas party, I found the Club had a dance scheduled
for the 29th and was beginning to sell 50$ tickets for a dafeteria supper.
felt there was no reason whatever why the Bank should not absorb this, and so it is
to be done.
In fact, I think we might do more, in other ways, to make Christmas
more Christmasy in the Bank, and Case and I are discussing some plans for next year.




- 2 -

I hope you got to Asheville in good shape and are continuing to
As I say my farewell's at the Bank, and the inevitable regrets arise
at leaving such an atmosphere and such associates, the really bright spot is
the prospect that you are going to come back so well and are going to be in
the Bank for so many years to come.
gain.




With my very best to you this winter and always,
Affectionately yours,
(Signed)

P. J.
[PIERRE JAY]







C
C

'DINNER
to

PIERRE JAY, ESQUIRE

given by

The Officers and Former Officers
of the

Federal Reserve Bank of New York

,

JvIONDAY EVENING, 'DECEMBER 27TH

Yale Club, New York

1926




00
,Menu

Present

G-1.9

Dudley H. Barrows

Thomas W. Bowers

DEMI-TASSE

Francis Oakey

Robert M. O'Hara
Jesse Holladay Philbin

George B. Roberts

Edwin C. French

Leslie R. Rounds
Louis F. Sailer

Arthur W. Gilbart

W. W. Schneckenburger

George L. Harrison

CRACKERS

Joseph L. Morris

Ray M. Gidney
ASSORTED CHEESE

Ralph T. Crane

Herbert S. Downs

ENDIVE SALAD (FRENCH DRESSING)

Walter B. Matteson

Edward L. Dodge
CAULIFLOWER POLONAISE

L. Randolph Mason

William H. Dillistin

POTATOES AU GRATIN

Adolph J. Lins

James F. Curtis

FILET MIGNON BORDELAISE

Gilbert E. Chapin

Jay E. Crane

CREAM AMBASSADEUR

Edwin R. Kenzel

Charles H. Coe

NUTS

OLIVES

J. Wilson Jones

J. Herbert Case
CELERY

Pierre Jay

Henry V. Cann

OYSTER COCKTAILS

Joseph D. Higgins

W. Randolph Burgess

HORS D'OEUVRES

Edward H. Hart

Stephen S. Vansant

I. Ward Waters




0

-

49




Dinit er
in honor

?

Esqdro

rre

Given bu the Directors and Officers
or

The Federal Reserve Bank of New York
liondau evenIng, December the twentieth
Univers-IN Cluth,New York

1928

44-24-14-4




o

0
SPEAKERS
cc"

HON. D. R. CRISSINGER
MR. ROBERT H. TREMAN
MR. OWEN D. YOUNG

HON. S. PARKER GILBERT
MR. J. HERBERT CASE

MR. W. L. SAUNDERS
Presiding

Th

0



-c-vi)

FEDERAL RESERVE BANK
OF NEW YORK

111!r, A ISO M 1-26

OOFFICE CORRESPONDENCE
To

r.f..

DATE

SUBJECT

FROM

7:7r,

,.;Lnt,i3 you to

hs looked ft it eri(1 thin"

it fine, but 'his; n,,verid

bE,,cp.u8e he wc.nteci to ttil k it oyt,r




1.

Govornor

ythin

L.,.-Jut

gefi-(.644j

'Z..

7-1...

It has

not always been my practice in the past to discuss possible

rate changes at the Officers Council meetinos
done.

although at timee this has been

You will' remember that the recommendations as to ratechanges have alwtys

-

been made by me as is-personal-recommendation, without indicating what has preoeeded

I -gather

the recommendation.

that some of the directors have been disturbed by

euggestionS of leaks, and by the further suggestion that there are so many people
discussing, rate action in the Bank that the possibilities oilealcs are consider-

able.

While I,'do not 'agree with this viewentirely, -I think it may be Asa to

have an understanding as to how rate discussion should be managed during this period.
,

It will be best not to

have

it dealt with

by a special

committ e of the directors,

because the Executive Committee aiready-has authority under.the by-laws to make rate
changes, and any

But as that
ing to

such di4cussion should

naturally be with the Executive Committee.

committee meete on Monday, it is too far ahead of

justify

such a discussion.

the

directors' meet-

My preference would be to have Mr. Case and

Mr. Harrison take up rate questions with Mr. Sailer and Mr. Kenzel on

tha

directors'

the

boa= who- Berra ea- the

meeting,

the idea of

do not like

and, if

possible,

the

day of

consult one or two of the members of

Executive Committee prior to the board :meting.

recommendations being made to

the

I

directors as coming

from the Officers Council, indicating formal diecussione and records of action
taken.

to

The question of relations with the Federal Reserve Board is bound
become active with both of us away.

which appear to establish

In the

a precedent as

past

of,

have

taken

been

to the Board's authority in certain

directions, which I believe have been unfortunate.

to have a small committee

certain actions

If

the directors feel

w-Illfng

say, three members of our board confer on these mil=t-

ters during the next six months, or even longer, my suggestion would be that
committee consisting of



the

Federal Reserve Agent (when appointed)

together

f.
.

with

6

Mesere Reyburn and ?looney represent the boara, and Mr. Case and Mr. Harrison the
officers.

Any important questions with the Board could then be considered by this

committee, and reoonamendations made to our directors.

I woula be inclined to have

the Federal Reserve Agent act as chairman, and Mr. Reyburn as vinechairman.
Tie may have some important matters in connection with our foreign busi-

ness to deal with, and it strikes me that a small committee ooneisting of, say,
"*"rv

Mr. Young and Mr. Reynolds, would be beet, with the understanding that they would
consider matters submitted by Mr. Harrison, or else meet with the deputy governors,
BO

ao to give general supervision to these matters during our absence.





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102