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also cur.; mai 3Liner- bong miring it wire chmn. bd., 1937-; china. Corp.. pr.. to 1937,Hanger bd., dir. Stir Service Boston. 1939-42: member board directors Calum Co., Detroit Mounting Corp., L. A. Young Industries and Recta. Incorporated. Fedders-Quigan Cm of Can.. Bowen Products Corp.: ret. Served in Potation, Maspetb. N.Y. Trustee Provident Institu Simnish-Am. War. Republican. lion for Savings. Boston. Director Medeira School Clubs: Detroit Golf. Detroit Baptist. Mason (32). Greenway, Virginia. Trustee. Athletic: Surf Beach). Home: 918 IV, Boston Blvd. Office:)Miami Boston. Knight First Class, Deaconess Hospital 9 2 00 Royal Order of St u.ell St., Detroit Died Oct. 20, 'estern Bell Olav (Norway). Republican. 1964; buried Episcopalian. Clubs milton Nat. oodlawn Cemetery, Detroit. Union (Boston): Country (Brookline. Mass.) ; Cosmos Life Ins. YOUNG, Owen D., lawyer and corp. (Washington). Home: 41 Spooner Road, Chestnut ores.. dir. Van Barnesville, N.... official; b. Hill 07. Mass. Died Dec. 31, 1960. id. trustees and Ida (Brandow) Y.:Oct. 27, 1374; s. Jacob Smith YOUNG, Smith Greshern, A.B., ilining Con- D.H.L., 1923: LL.B., Boston St. Lawrence U., 1994. merchant: b. West U., 1396; LL.D., Union Milton. Saratoga Co.. N.Y., July 14, 13 6 6; s. miustries of Coll.. Schenectady, N.Y., 1922. Tufts, Harvard, Dart- Samuel mid Lucy (ITungerford) Y.: ed. dint. sch. 31ernber mouth, 1924, Johns and Hartsvick Seen.. Otsego Co., N.Y.; grad. Master Hopkins, Colgate, Yale, 'lona/ Assn. bia, 1925, Rutgers, Princeton, Lehigh, 1926, Colum- Accounts, Eastman C.S. (dir.), II., Univ. State of N.Y.. Brown Business Coll.. Poughkeepsie. f C.. Amen- of Calif., 1923. Hamilton, 1929. Univ. N.Y.; m. Harriet Baker, of Holland Patent, Oneida 1930, Wesleyan (past dir., 1931, Notre Dame Univ., Univ.. Middletown, Conn., Co.. N.Y.. Apr. 11. 1994. Merrantile business. 1932, Queen's Univ., Kings- Lansing. Mich.. since 1895; Republican. ton. Ont., 1933. U. of Neb., 1934. Marietta Coll., Daley. The Ballantine Co., ores. Young Bros. & Shriner', 1935, Syracuse Univ., Lansing Warehouse Co.. 1940; Litt.D., Rollins Cull., Amid: Farms onquin Golf. 1936; D.C.S., N.Y. Univ., Community Land Co.. Young 1927; Co.' Nashington) falo. 1946; hon. degree, Boston Litt.D.. U. of Buf- Bros. Realty Co., di, Capital Nat. Bank, Lansing U., 1945. U. of Community Hotel Corp. Mem. Administrative Lake ('ty). Fla.. 1948. MiddleburY Coll.. Bd. 1948: m. Josephine Northern Rapt. CM), 22. Office: (N.Y. City): trustee Sheldon Edmonds, Jane 30. 1393 (dec.)/ Children- mazoo Coll., Daytona-Cookrnan Industrial KalaDied Dec. Charles Jacob. John Inst. (deceased). Josephine, Philip, IDas-tora. Richard; in. 2d, Mrs. Louise Powis Clark. In practice. eampaigns Fla.). in charge of carious successful for nromorion nf Y.M.0 A Boston, 1896; stern. Tyler & oil Rant. Chg. Henderson, Red Cro. Young until 1913: instr. Republican. Baptist. Mason. Russell and common pleadings, Roston U.. 1896-1903; moved to ,irbs: Country. Merchants Bureau. Home: 1720 if Tex., and N.Y. City, 1913. as counsel for Gen. Electric Co., v. Moores Ricer Drive, Office: 225 S. Capitol Av.. ifman. Tex., P. until 1922. chmn. bd.. 1922-39. 1942-44: hon. Lansing. Mich.; of since chum. board R.C.A.. until 1929, chairman executive (1911-21), committee until 1933; Class 13 dir. Federal Res. Bank YOUNG, Stark, author; b. Como, Woo.. Oct. 11, ember Sigma of N.Y.. 1923-27: Class C. dir.. 1927-40: deputy 1381; s. Alfred Alexander and Mary (Stark) Y.; cbmn., 1927-38; chmn., 1939-40. Served as B.A.. U. of Miss.. 1901; MA.. Columbia, 1902; ungroups to fed. govt. on econ. affairs bothmem, adv. marned. Instr. English, U. of domestic Aquebogue. Miss.. 1904-07; instr. and internat.. 1919--; Halsey and confs. on econ. matters.mem. delegations to internat. English lit.. 1907-10, prof. gen. lit., 1910-15. Univer9; graduated mn.. 1920-30. Stem. adv. including Reparations Corn- sity of Texas, and prof. English, Amherst Coll.. 1915groups Law Sch., problems, such as labor, youth. U.S. Pres, on social 21; mem. editorial staff New Republic, 1921-24; assn. R. Hudson, mem. bds. regents subs. and colls.unemployment. Past editor Theatre Arts Monthly. 1921-40; dramatic critic Gold medalist Nat. New York Times, 1924-25; mem. editorial staff New 1890; dint. Inst. Social Seas.. 1923. Roosevelt Meml. Assn.. Republic, 1925-47. Lecturer in Italy for Westinghouse ; justice Su1929; awarded Order of Rising Sun. Japan. 1921; Foundation, 1931. Mem, Sigma Chi, Sigma Upsilon, 916-Dec. 1, comdr. Legion of Honor (France). 1924: comdr. Order Phi Beta Kappa. Comdr. Order of Crown of Italy. reapptd., of Leopold of Belgium. 1925; LS. Supreme Red Cross, 1925: Grand Cross First Order of German Author essays, books and plays since 1906: latest of Crown of Belgium. book: The Pavilion. 1951: Best Plays by Chekhov. a. Mem. Phi 1930. Fellow of the Pierpont Morn. Library. Stem. 1990. Address: 32B E. 57th St., N.Y.C. 1 002 2. in, Williams bar and other prof!. assns., inst. assns. and scientific Died Jan. 6. 1963; buried Jan. 6, 196 3. ow Rochelle. hon. so.. and orgies. Mason. Odd Fellow. National YOUNG, Udell Charles, food mfg. exec.; b. St. Grange. Clubs: Harvard. Manhattan. University. Engi- Louis. Nov. 2, 1893; s. Charles Joseph and Nellie "as exec.: I. neers (hon.) (N.Y.): Tavern (Boston) Home: Van (Udell) H." B.S., Mich. Sub. Mines. 1915. EM., lames .kndrew Hornersville, N.Y. Died July 11, 1962; buried Van 1915: m. Vrances Vivian Pinkerton. Feb. 23, 1929. State Coil., Hornermille, N.Y. 1943-Dec. iietals and . 1944. rea Am. Zinc Materials . . 7.. 1913; m. Surveyor. Cerro de Pasco Mining Co., Morococna. YOUNG, Plummer Bernard, newspaper -James Doneditor. Peru, 19 15-1 7: ordnance engr. U.S. Army, Abermrd Aldrich. publisher: ta. Littleton. N.C.. July 27. 1884; s. deen Proving Ground. 1917-18: plant engr. Provih. 1918-29; Winfield and Sallie iAdarns) Y.; student St. Aigus- dent Chem. Works, St. Louis, 1913-21: sum. Calugen. mgr., tine's Coll., Raleigh. N.C.; LL.D.. Shaw U.. 1935: met Chem. Co., div. Calumet Baking Powder Co.. *.; di, Nat. L.H.D.. Va. Union U.. 1037: LLD.. Va. State Joliet. Ill., 19 2 1-29. plant mgr. Calum, Coll.. 1940, Tuskegee Inst.. Soc., Am. iiversity, St. . imas-01- White, 11)06 Thnmcc Iv., (dee.): 1943: m. Eleanor Louise Powder Co.. Chao.. 10'L°°' SAMUEL W. REYBTJRN 434 FIFTH AVENUE NEW YORK December 3rd, 1_927). Benjamin Stror, Esq., 270 Par',: lorenue, Yew York City. Dear Governor: Mr. Jay and I proceeded to .:ashinston on '.;ed- We outlined a definite program. As 2a.. needay evening. Case's answer had not been recei7e home Thursday morning. , I called him up at his His aneei wae that he liked the work he was doing, was better suited to it, and that to stay there rather than take the other place. ever, if both the :Federal Reserve mand that he do Board and he would prefer He said, how- our Board should de- so, he supposed he would have to be drafted. This enabled us to concentrate on Dr. Burgess, and at breakfast we put do.,:m on pacer his qualifications as we saw them and as we believed you and all the members of the Board saw them. I attach hereto a copy of the statement. You see it is strong, but I believe it absolute- ly; so does .ay; and we felt sure you would endorse every word of it and for that matter we beZieve the other members of the Board will. We then went to see Secretary Mellon. promptly shown into his office and very We were graciously received. His first question was to inquire about you and he was pleased to J,,:et good news. He spoku of the pleasure hJ enjoyed at being with you in Europe. eome down to report to th7.: on the matter he 1::r. Jay informed him that he had .:b7.rs was considerin.-. of the Federal l'.eserve _Board Then I told the Secretary that I was not only the representative of the Board but your personal representative, in coming Co he with the problem that would confront the Federal aesarve Board and our 2ak when Mr. Jay resigned. I told him that I had under Harrison that he had asked for the information and that yoa and the Board considered that we had an invitation from him to give In the presentation of the case, I described the consideration given by you and the members of the Board to the three men in our organization that we felt were eminently qual- ified for the place. Inasmuch as the members of our Board looked upon the place as second in importance only Cc that of Governor, it seemed proper to offer first to Mr. Case and then to Mr. Harrison the Board's endorsement and recommendation for This had been done and both of these executives the place. had expressed the desire to remain i4 their present places. I told him that I thought, and I knaw you did and I felt that all the other members of the Board thought this was a very and wise thing for the Bank. fortunate I told him that I had said nothing to Dr. Burgess and I didn't think anypne else had; that he had - been Mr. Jay's assistant and we thought there v'as no question in the world but that he would accept the appointment. -3I handed the Secretary a transariot of Dr. Bur- tell- gess' record and of the rating" . Jay and ing him that while r. Jay and I had out down the'statements we had done it carefully and deliberately and our opinion but also yours. they not only reflected He was apparently very much pleased with the terseness but thoroughness with been expressed I hed prepared, which our views had Mr. Jay shoved and asked a good many questions. him a picture, which by the way was probably six y,-.ars old. response to the Secretary's qunstion, In r. Jay told him that Dr. Burgess had his, Yr. Jay's, unqualified approval. Both Mr. Jay and I informed the Secretary as to what we thought the up-State bankers and the New York City bankers would think of the appointment and as to the latter quoted statement made by Mx. Reynolds, that he thought it would bankers to ask: the New York be natural for %Ito is this man?" -- but that they would not be disposed to make any criticism and upon in- vestigation he had no doubt they would all think it was a very splendid appointment. - The. Secretary then said he would have no hesitancy in supporting him. asked him the direct Question if he would not :take an active interest and use his influence to secure the appointment for Dr. Burgess. He said: "I will do what I can." :a die=ssed general conditions in the Bank and in a way the re- lationship existing between our Board and the Federal Reserve Board. I told him I thought that inasmuch as I was there, thought I ought to m:et the thr_e mombars ;.ho were in the city and if I did I would have to talk abo'lt this reco.:Imendation. He said that he saw no objection v,hatever to that; that it was ao. a natural thin:, to As we left, he told us to tall you that he would do what he could in this matter. raj ard I then went across the street to the hotel and decided to telehene to Mr. Case to get Mr. 17ousv. or Mr. Reynolds to join him in an interview with Mr. Platt and Mr. Hamlin to inform them of Kr. Jay's offer, of our recommendation to the Board for the maa to succeed him, and too if he Pot the chance to bring Governor CrissinTer up to date on what we had done. Yr. Jay did the telephoning Mr. James and Mr. Cunningham to notify them of his offer and of to ask them to lunch with us, or if they his intentions and couldn't do noon. that, to ask for an engagement with me in the after- Dr. Millar had other two and then called on Dr. Millar, an engagement for lunch but we joined the at one o'clock in their office and scent nearly two hours at lunch. Both of the,..-e gentlemen were most friendly and considerate and as many V:esterners can do, I think the throe of us got unusually well acquainted in so short a time. As I was vary annious to pay my respects to Dr. _liar, I took the initiative in breaking up the luncheon by telling them of the considerqtion we had given to My story was that being party Mr. Jay's an executive in a holding com- pany that.had a great n::.ny sush problems that as soon as Yr. Jay tola us that he thought the opening was to be offered him and - 5 that if it was, he believed it very likely that he would take it, I naturally began to think about his succescor and that other Direc- tors did the same thing, and of course we knew he did not have either the responsibility or the power to fill the place, but we also knew from the way the Board had handled such matters that he would be consulted and probably asked to suggest one or more names. That at first in discussing the matter we all thought that first it might be well to express our preference for men within the Bank. The idea of the desirability of a well-nown outside man was also discussed and we considered the idea of -leo having a recommendation of such a one. But as time we believed we went on and we discussed it more thoroughly, our-ht to be very frank end straightforward with them and concentrate on the one man that we believed would serve both the Federal Reserve System and the Hew York Bank with the greatest Jfficiency. It seemed to me, I said, that the position was of rtance only to that of the Governor, and that in considering thr, men within the organisation, Mx. Case should be considered first and Mr. Harrison next, as both of these men were eminently well qualified to carry on the ..ork. thought the work Some meabers of the Board th2:2e men are now 'doing is so interesting and impor- tant that they might not want to change, and we would then come to r. Burgess, who in my reJoects was probably bettor qualified for the place than either of the others mmtionsd. r. Harrison felt Both lir. Case and greatly complimented with the fact that the Board -G - of our Bank wonld offer to su,7;est their names for the place, but thought for the interests of the Bank as well as for the reason of following their own particular taste in the work,that they had better stay where they were; and then I presented each one with a copy of the sheet I have enclosed. James asked if we hal taken this matter up with Governor Crissinfar and Mr. Platt, as they were the memb-rs of the New York Committee and indicated that he was ready to back recommendation if the man was qus:.lified. thought tfr' Mr. Cunningham said he 30th said they were very glad to James was right. have our recommendations and each put the paper in his pocket. They then accompanied me to Dr. :fillar's office, but the Doctor was away, and 1:r. James volunteered to telephone him to see when he would be back. Then Dr. Millar was reached over the telephone, he said he had a luncheon engafament with some British visitors and it would probably be very late before he got doan, and unless r.Reyura deemed it very important, he would not come. 2.t my suggestion, Mr. James told him I only wanted to pay my respects and I weuld do that next tire I was in Washington. James I hoped to sea him often three days there sometime. and I would like to spend two or He said that would be a fine plan and he and Mr. Cunningham would take me in charge he hoped I would CO= I told :z. any time, and down before the 1Cth of January, when he was making a trip out West. It was now half past three, and I had to hurry to -7set my grip packed and catch the Conressional Limited at four o'clock. Yr. Jay remained and took the time to write a full report of what had been done for Governor Crissirser, and he caught a later train. He telephoned this mornins that his report to Governor Crissinser was in longhand and he had no copy of it but that he went pretty fully into the matter and that he telephoned Governor Crissiner this morning and everything seemed satisfactory. Er. Case with Yr. Reynolds and Mr. Saunders had a talk with Mr. Platt and he, I am told, expressed the opinion that the program was a one and that he thought he and Mr. Hamlin did not stop over so fine Governor Crissinser would recommend it. Yr. Jay in his telephone message to Governor Crissinger this morning asked him to go to see Mr. Hamlin and tell him both 1Ir. Jay's story and our story. Mr. Jay tells me that in his conference with Dr. Millar should be taken up the Doctor told him it would be a matter that by the New York Bank Committee, Governor Crissinger and Mr. Platt, and indicated that he would support their recommendation. Respectfully submitted, SAMUEL W. REYBURN 434 Fx.Frx AVENUE NEw YORK December 4th, 1926. Governor Benjamin Strong, 270 Park Avenue, Tow York City. Dear Governor Strong: Evidently from an asfda in a conversation Jay and I ht,12ver the telephone yesterday, I did not make I do not want tc take up all of your visitmyself soil am writing this note. ing cleh What I meant to say yesterday was that as you were to leave here on the 9th for possibly four months, and by the first of the year Mx. Jay would leave, and Dr. Burgess would in all probability become 2ederal -eserve Agent, and ue mi-ht under the practice have to use Mr. Case or some other Deputy Cover,lor as Acting Governor during your absence, you ought to see Dr. ii-a_gesL Llaybt, once or twice before you left; that before you saw him, possibly Mr. Jay should tell him whato had done and if you v,antad to, send him to me so that I could talk over the importance of the job and how he might begin to prepare himself now for it if it was offered to him and .1so prepare himself to go to ,ashin-ton if the Board asked _im to come therefor an interview. In addition to this, what I had in min_ to suggest was that during your absence two committees nigh. be very serviceable or possibly three committees; one a committee on rate; another a comAitteo on foreign problems; and a third a ewnittee on relations with the "federal Boserve Board at Washington. Each of thee committees would be composed of two men and the Governor, or in hio absence the Acting Go%ernor, would be an e::=officio member and Chairman of each. These committees should probably stand for the year, as I understand some other committees you now hsA-e, for instance the Welfare of the Staff, and there may be others that I do not know of. It sent was not my thought that Dr. Burgess should be that he would go only in case they His rapid develooment in those six years of by us to 7:ashincton but asked for him. course is not appreciated by anybody but those of 2.3s whO have, 0-4-, been close to him. Even though Some of the memb6re,may have '-elov:r_ him some years ago and been in casual contact with him _ince, they might want him to visit them a day or two that they ight quis him a bit and if this does happen, we should not let him go without having thought through on the plan and thoroughly 2 discussed the mattor with you. In volunteering to interview him, I had in mind to talk to him only about the general problems of an e::ecutive and the necessity of knowing about the men he may see if he is called to Washinfton, and helping him, if he wanted me to, in gathering information about them. The s-z4 cemr.Littees would be used in consultation and I think would be especially helpful at all times while you are away. The discussion of the important problems and plans for solving them with two members of the Board before the Board meetin,. would in the long run save time. Of course you know that I realize it would never do to have committees try to perform executive functions. This responLibility must always rest upon the chief executive, but to try out his ideas and perfect his plans and have two members of the Board thoroughly informed seems to me would be helpful. This letter, like the one I tool: over to you yesterday, has been very hastily written and may net be clear or complete so if you want to talk to me farther on the su:oject after you have read it and need my "legs" and my "tongue", I will come over and get your thoughts and start out to de. whatever I can to help you.. It seems to me if the committee plan appears to be a good ono, it might be taken up tentatively at the M91.:AK after- noon meeting and possibly formal action be if you expect to leave by next Thursday. T taken,-_ 4 Yours sincerely, Lord &Taylor 424 FIFTH AVENUE NEW YO R OFFICE OF THE PRESIDENT February 4th, 1927. Dear Ben: This has been quite a busy week and I haven't had a I was glad to hear yesterday that Harrison chance to write you. At Whitmarsh's request I have been trywas going down to see you. ing to keep him posted and just to save a little time, I am enclosing copy of a letter sent him today. Jackson Reynolds was right and when he and Owen suggested the little change in the by-law and persuaded Gates there wasn't any doubt about your enthusiasm for his coming, he accepted However, it is not to be announced until after he has the call. seen the Board at Washington and then presented the matter to his own Owen told us yesterday that he would begin to work on the anBoard. As I understand it, it will be just a simple matter-ofnouncement. fact announcement from Washington and then a dignified statement given out by the Federal Reserve Bank here that will cover the matter in a way that will most help the Federal Reserve Bank, and at the same time However, give proper consideration to the individuals most concerned. Harrison may know more about this than I do. Please give my best regards to Philip, and with my most affectionate regards, good wishes and good will to you, I am, Governor ,:enjamin Strong, Stuyvesant Road, Biltmore Forest, Asheville, N. C. SWR/FG Encl. Copy to Governor Strong. February 4th, 1927. Mr. Theodore F. Whitmarsh, New Hotel, Palm Beach, Florida. Dear Theodore: We had a good meeting yesterday. With Owen Young in the chair to ask questions and bring out discussions in regard to gold reserves, short time foreign loans in this market, discount rates, etc., our meetings are not only most interesting but very instructive. In my opinion it is a very remarkable Board. From the news Runkle and Jackson Reynolds had, it looks as if Wooden would accept the call of the nomination to take the Directorship vacated by Owen Young. I have seen no announcement of this so you must regard it as confidential until you see it in print. Owen Young told us Gates had planned to go to Washington tomorrow and then notify Chase Bank Board at the meeting I think next Wednesday or Thursday and sometime soon after that, notices of the appointment would be published, though it is not to be effective antil May 1st. Owen had interviewed the leading officers of the Bank and they seemed quite pleased with the new set-up. As far as I can tell, it promises to bring about a better understanding in the organization and with the Federal Reserve Board and increase the prestige of the Bank in the minds of the bankers and the public. I hope to have ten days or two weeks vacation before the Spring breaks. My own affairs are in pretty good shape but I think a trip to Washington on the Bank's business will he necessary before I go, and I will have to find the men I want to see at home before I go down there. It may be the last of the month before I can get away. My recollection is that you expected to stay in Florida about the 1st of March. If such is the case, I ray pick you up somewhere. until Another thought I have had is to get Mrs. Reyburn to join me and go to Asheville for ten days. She and I could play golf in the morning and I could take tea with Ben in the afternoon. I understand the Grove Park Inn is an excellent place for such a sojourn, the golf course pretty fair and the State roads and the drives through the timber and game reservations most attractive. Why wouldn't it be a good plan for you to come up that far and stop a while and let us do a little playing there together? visit Woolley is going out to Arizona to his family. I do not think I told you but the doctor advised getting their little daughter into a high and dry climate for the rest of the Winter, and Mrs. Page 2. Mr. Theodore F. Whitmarsh. Woolley went West with the children about a month ago. Yesterday afternoon coming up from the meeting, I told Mr. Treman and Mr. Woolley that I was going to pay Mr.Saunders a call as he was sailing for England today. They joined me and all three of us had a delightful little visit with *. Saunders. We found him in good spirits and good health, very much pleased at having recently received a splendid letter from you as well as from many other of his friends, and looking forward to a fine trip abroad. With best regards to you and Mrs. Whitmarsh, I aM, Tours sincerely, SWR/FG ,a6e.4441 7fLitta,..t.4644 11-9-70 1117-)-6 August 27, 1921. William L. Saunders, Esq., 11 Broadway, IngersollRand Company, New York, N. Y. Dear Mr.' Saunders: Governor Strong requests the pleasure of your company for dinner on Tuesday evening August 30 at 7:30 p. m. at the Metropolitan Club this city, Fifth Avenue and 60th Street, when the directors will meet Governor Norman and Sir Charles Addis. It will be rather informal, dinner coats being worn. Governor hopes that you will surely be able to attend. Sincerely yours, The INGERSOLLRAND CO. 11 BROADWAY EXECUTIVE OFFICE NEW YORK. 1-1 e, Allg.29,1921s ,/ AUG 3 421 S. A. M. J.Herbert Case,Lsq., Deputy Governor, 7ederal Reserve bank, 15 Nassau St., New York: Dear gir.Case:- I accept with pleapuretGovernor Strong's Q* kind invitation, extended to me in your letter of the 27th, for dinner on Tuesday evening, August ! 3u. at 7 :30 p.m. at the Metropolitan Club, when the directors of the kederal Reserve bank will meet Governor Norman anc Sir Charles Addis. Cordially yours,. 43- INGERSOLL-RAND CO. II BROADWAY EXECUTIVE OFFICE NEW YORK Sept.26,1921. Governor Benjamin Strong, Employment Conference, C/o Hon.Herbert Hoover, Secretary of Commerce, Washington,D.C. Dear Governor: I Sent you last week some papers from the Superintendent of our Works at Phillipsburg,N.J., and baston,Pa., giving figures on the subject of unemployment. I have just received further information from Mr.F.W. Parsons, General ivianager of our 1Norks at kainted Post,ii.Y., and Mr.Parsons says: Athens,Pa. "I have talked with a number of the manufacturers in this section and the general opinion is as follows: The shops are employing about 50% as many men but in most cases the hours are less. Of the men that are laid off 50 to 75% have secured work of some kind elsewhere. Taken altogether there seems to be a small percentage, who do not have some work. There will be many more idle men later in the season when farm- building and road tork slow up. Most of the shops expect the present dull period to continue until next spring." Yours very truly, viVERED-- PHILLIPSBURG, N.J. September 22d, 1921. Saunders, Esq., c/o Ingersoll-Rand Co., New York City, N. Y. Sub: UN.MTLOYIEMT. My dear Mr. Saunders: I herewith attach copy of report on the above subject about which you wrote me on Sept. 16th. I trust that this will give you the information which you desire. Yours very truly, G1E/EFS Enc. ,07 General Superintendent, INGERSOLL-RAND COMPANY. September 22, 1921. To- Mr. G.M. Forrest, General Superintendent. From- Employment Department. Subject- The Unemployment situation. In accordance with your instructions to submit data on this matter, the writer has searched our own records and made numerous inquires elsewhere in Easton and Phillipsburg, as a result of which he submits the following. Total number employed by I.R.Co. Oct. 26, 1920 peak in 1920) 3507 Total number employed by I.R.Co. Sept. 17, 1921 1526 Difference in number employed between these dates 1979 We can definitely account for, when leaving here, to take other employment, leave the town or country, or physically unable to work, 589 ( Leaving a total indefinitely accounted for, of, (The three foregoing paragraphs pertain to the Phillipsburg, 1390 Easton and Cameron plants of I.R.Co. ) As far as we are able to determine former I.R. employees found employment as follows. (Approximate, based on vague --- ----- statements in reply to inquires) In metal industries including local Railroad shops-Railroad work, outside of shops' _ Outside Contractors Silk and Hosiery mills Paper mills -Farms_ In business for self and acting as agents---Total number securing employment after leaving I.R. Plants Leaving a total of former I.R. employees without employment. ( Approximately ) Respectfully Submitted, TLC/R. Employment Department. 80 --- 100 175 300 7-- 25 30 860 530 =,:optegiuor 26* 194. Der-.4. 194'. a:aalacrgi TbAnic ;Ana vry =Loh 111:: eon WA' corr. r/ 3si your n ote a the 26thcr,11 cry int er( u Liu, inf orrli ti ort* E.thovJh only an k;if optai tart 0.612t a n..vo 'Jaen e4,eatly tbo line turning . Very truly ..mder q., 4..iroaLeauy, Lou I. is/Rat 'your on ,Nb.1 August 27, 1921. Charles Smith, ESq., Citizens National Bank, Oneonta, H. Y. Dear Mri.Smith: Referring to my telegram of to-day Governor Strong is giving a dinner to Governor Norman and Sir Charles Addis to meet the directors of the bank on the evening of Tuesday August 30 at 7:30 p.m. at the Aetropolitan Club this oity, Fifth Avenue and 60th Street. He desires me to exoress his hope that you will rather informal, surely be able to attend. It will be dinner coats being worn. Sincerely yours R. S. V. P. Form 1201 SERVICE SYMBOL ,ter Blue WESTEklaNi UNION AM , N. Nite Night Letter NL If none of these three symbols appears after the check (number of words) this is a telegram. OtherNise its character is indicated by the symbol appearing after the check. CLASS OF SERVICE SYMBOL Telegram Day Letter Nita NL If none of these three symbols Night Letter -114 NEWCOMB CARLTON, PRESIDENT' Blue Night Message I WESTERN UNION Message Wears after the check number of words) this is a telegram. Otherwise its character is indicated by the GEORGE W. E. ATKINS, FIRST V10E-PRESIDENT symbol appearing after the check. ,E0 TO RECEIVED AT 9H0 SF 18 AUC S ONEONTA NY 9A AUG 29 1921 192i M. 011 J HERBERT CASE ' DEPUTY-GOVEKNuR FEDERAL RESERVE BANK NEWVORK NY TO MY COMPLIMENTS/GOVERNOR STRONG AND ASSURANCE IT WILL BE A PLEASURE TO BE WITH HIM TUESDAY EVENING CHARLES SMITH 910A SHOWN TIME OF REOEIPT ON T1.4113 difiellAGE TOW_ 4441111.11M STAIWASIJ CHARLES SMITH, PRESIDER', GEORGE B.BAIRD, VICE PRESIDENT. M.C.HEMSTREET, CASHIER. 8920. TTENDED Cithrtio Nation al 16 unit of O*1921 1%) id S. A. M. 4110 Ortranta, N.V. August 29th 1921. Hon. Benjamin Strong, Gevernor, . Dear Federal Reserve liank, New York City. Governor Strong:- I beg to acknowledge through the hands of Mr. Case, the receipt of your kind invitation to dine evening at seven the Bank of England, and also Sir pleawure to accept the same. Club, on Tuesday with you at the Metropolitan thirty, to meet Governor Norman of Charles Addis, and assure you it is a Very respectfully yours, Gz A ; M.C.HEMSTREET, CASHIER. GEORGE B.BAIRD, VICE PRESIDENT. CHARLES SMITH, PRESIDEN, N9 8920. Citiz rtt ntiatud g unit. of Ottrol-tta. - ATTENDED TO Ott ratatt,ZgAttgytt 1th Mr. J. Herbert Case, Deputy Governor, Federal Reserve Bank, New York City. S. A. M. 1921. it My Dear Governor Case:I beg to acknowledge the receipt of your telegram of of invitation from Governor Strong to dinner on Tuesday evening, and also your regarding the same, and replying to them would say at nine A. M., this morning I sent you the following telegram, "My compliments to Governor Strong letter and assurance it will be a pleasure to be with him on Tuesday evening." I think this explains the whole situation and while thanking you for the interest you have taken in the matter, must assure you it will be a real pleasure to meet these gentlemen. Very respectfully yours, o "44 / 40"-\ cifrt% 14 z 9 )) -191.1", 26) August 2'7, 19.-'1 Charles A. Stone, Esq., c/o American International Corp., 120 Broadway, New York, N. V. Dear Ur. Stone: Governor Strong re luests the pleasure of your company for dinner on Tuescxay evening August 30 at 7:30 p.m. at the Eetropoliter Club this city, Fifth AveAue and 60th Street, when the directors will meet Governor Norman and Sir Charles Addis. coats being worn. it will be rather informal, dinner The Governor hopes that you will surely be able to attend. Sincerely yours, R.S.V.P. CHARLESAUGUSTUSSTONE b I &NOE') TO ROADWAY AUj2t NEW .Y0 R K 1111) fly August 29, 1921. tzar' J. H. Case, Esquire, Federal Reserve Bank of New York, 120. Broadway, New York. Dear Sir: In the absence of Mr. Charles A. Stone, I beg to acknowledge receipt of your letter of August 27th, inviting him, at the request of Governor Strong, to the dinner to be held at the Metropolitan Club on August 30th in honor of Governor Norman and Sir Charles Addis. Mr. Stone left New York on Friday last for a three weeks' vacation in New England, and it will, therefore, be impossible for him to attend the dinner. Very truly yours, 1, C77 10)s,-u-) Secreta y to Yr. Stone. (- foLeo_zwigig? ft, 1,1,f-- March 22nd, 1915. My dear Mr. Towne: I cannot begin to tell you how pleased I am with the certificate of stock of the Bnolr. of the United States of America, which is a souvenir to be most highly prized. It is interesting as to the bank, of course, but I presume that It has occurred to you that there is an additional intereA in the fact that you grandfather was a stockholder in that institution and you are now a director in this one. I could not think of letting you have it mounted, will do myself right away and have it hung in the office. With many thanks for your generosity, I am, Very truly yours, Henry R. Towne, Esq., 9 Bast 40th street, New York City. BS Jr/VCM THE YALE OFFICE OF TOWNE MANUFACTURING COMPANY 9 EA.sr 40Tf. ST. NEW YORK HENRY R. TOWNE May 13, 1915. PRCCADENT CHAIRMAN OF THE BOARD Mr. Benjamin Strong, Jr., Governor, Federal Reserve Bank of New York, 62 Cedar St., New York City. 4.8 -19,, Dear Mr. Strong:- This Company has an account in London with the National Pro- vincial Bank, where at present we have a balance of about 43000. As we do not need the money at present and as it would cost us about 2% to transfer it here, we propose to leave it there until needed. It is probable also that the present moderate amount may considerably be increased. Our London Manager informs us that the bank is not willing to accept this amount on deposit with interest unless we agree to certain formalities as to its withdrawal, which it might be difficult for us to comply with under war conditions. Knowing your familiarity with matters of this kind, I write to ask if you can suggest any other and better way for us to arrange for a time deposit in London, subject preferably to cable transfer on 7 to 10 days' notice, or to withdrawal by draft on like notice. Any information you can give me on this matter without undue trouble will be much appreciated. Yours very truly, HRT:AH Chairman of the Board. --' ... YMALINIO W1qUTDAltill A M aMWOT 18 aJAY 3HT .4 0 p ra 0 (C) ,1).90vL W3.. .1',... HT,-.--TeA.4 ,... 0 14` 0 0 0 0 t c;- 4 ,.... o) G? -. '7;.- V \i-1 gio 0 .1.10 YAW 3,1 494/4 May 18th, 1915. Dear Mr. Towne: Reply to your letter of May 13th has been delayed on account of my absence last Friday and Saturday. The situation in regard to interest on current balances in the London Joint Stock Banks is briefly as follows: In ordinary times, by agreement among themselves, the principal barIrs allow interest on balances which justify the payment of interest, at a rate Which is below the minimum discount rate of the Bank of England. This arrange- ment prevails, of course, only When the bank rate is effective. present time, the bank rate is 5 %, and IL% At the is very much higher than the mar- ket rate for discount, and I am informed that the joint stock banks, by agreement among themselves, are now allowing interest at the rate of 3 % below the bank rate, viz: 2 % per annum on accounts which justify the payment of interest. The bank which is named in your letter has the reputation of being most punctilious and rather exacting in its requirements, and as conditions at the present time make it difficult for the joint stock banks to make a profit on accounts which bear 2 % interest, I can fully understand their reluctance to convert your Company's account into an interest-bearing balance. In ordinary times, some of the joint stock hanks are willing to allow special rates on money at short notice, say -2- To May 18th, 1915. Henry R. Towne, Esq. subject to withdraws/ on seven days notice. yuld, also, make accounts of that character Present conditions unprofitable. I have never had any direct dealings with the National 1.ovincial Bank, and am unable to suggest any means for effecting the arrangements which you have in mind directly with them, If, however, you rould care to make a special deposit ':ith the Landon City and Midland Bank, Limited, of -Allich Sir Edwin Holden is a manaintr, dire,-tor, this could be done by paying whatever amount you wish to transfer to that bank for credit of the Bankers Trust Company, in which event it would carry 2 on that amnant, or whatever rate was currently allowed by the London City and Midland Rank, Limited, until mach time as you would care to withdraw it. This is the only suggestion T. am now course, it would involve able to make, but Of reducing your ace:ount with your regular bankers, which you may prefer not to do. My surmise is, that the National 2rovincial Bank is reluctant to make the arrangement because of the vary b:.' for money in the Very truly yours, .Lienry R. Towne, Esq., Chairman of the Board, The Yale & Towne Manufacturing Company, 9 East 40th Street, New York City. BS Jr/VCM London money market. THE YALE & TOWNE MANUFACTURING r, %.,OMPANY OFFICE OF 9 EAsTAOTI! ST. New YORK HENRY R. TOWNE CHAIRMAN OF THE BOARD VITTW; DIUMMay/722, 1915. 2FEDERAL RESERVE Mr. Benjamin Strong, Jr., Federal Reserve Bank, 62 Cedar St., New York. NK Dear Mr.Strong:- Your letter of 18th inst. was for the very complete informatio uly received, and I thank you therein given in response to my inquiry. We are still in corresp.!' dence with the National Provincial Bank, in the hope of makin satisfactory arrangements with it. If unsuccessful in this e fort, I may be glad to avail of your suggestion concerning t London City and Midland Bank, Limited. Yours very truly, ffr, ,Zeri,J-14.41 Chairman of the Board. HRT:AH r. January 17th, 1916. Dear Ur. Towne: Turner, who writes me the enclosed let or, is a first rate fellow, quite a friend of Mr. Treman's and a very good friend of the Federal Reserve Banks, have asked my brother, who is with Mr. Stet- tinius to lot me know if there is any opening that he can suggest for Ur. Turner and I thought possibly you might be able to make some suggestion. -,111 you be good enough to return the enclosures after reading? Very truly yours, Mr, Henry Rt.323"1-4a, 9 !est 40th :',treet, Nan l'ork City. BS/Jr/VCM THE YALE 8c TOWNE MANUFACTURING COMPANY 9 EAST 40T1.4 S T. NW YORK OFFICE OF HENRY R,TOWN E CHAIRMAN OFTHE BOARD January 21, 1916. Mr. Benjamin Strong, Jr., 62 Cedar Street, New York City. Dear Mr. Strong:Your letter of 17th inst. was duly received, and the papers enclosed therewith relating to Mr. R. T. Turner, Jr., are returned herewith. The latter were so interesting that I referred them to the executive officers of this Company to ascertain if we have any position in which Mr. Turner's services could be utilized. advise me, however, that this is not the case at present. Yours very truly, HRT:AH Ends. They Jnnuary 24th, 1916. Dear Mr, Towne: Your favor of the 21st inst., enclosing Mr. Turner's letter nnd memorandum is received to- day, and I most !Appreciative of your interost in the matter. Should anything develop later on in this connection, it goes without a4ing that I shall be very glad to hear from you. Very truly yours, Hr. Henry R. Towne, 9 East 40th Street, 7Tert York City. HENRY R.TOWNE LITCHFIELD, CONN. 23, )1((o. tt.A.t. li,shc,,TJ X-C 4,4.4- 4.4,t NAAA- , d4Lc4.-t- '1 4 y / kt.%, f.e.17 17E4 h1/LL(A14- 7fr, 414. -6 -kLe 1.4 yl,E,A.,4 sAri 410 cst t4j 4 ya, , -ttt- kt.4 4., te-,44 s.0 , iitzt ol-st ed. a-sAA... 436 GI44, 70, , )&12,,LAL,-Lly -647 c, 14,A k,at c. November 8th, 1916. Dear Towne: S...rwmate5.00., am divided between a feeling of saticfection and guilt in the matter of your renomination and undoubted election as one of our directors. If my persuacion hae had anything to do with your continuing with uz, I am glad that it had that result even though, as I know is the case, you are making a sacrifice of your personal plans and inclinations for the good of the bank. One matter in that connection, fer to in my former letter. 1 purposely did not re- During the pest two years you have repeatedly heard me say at Board meetirge that the iederal Reserve particulady the eew York bank will not establish itself with its members and with the country generally until it has met There are a great many evidences accuthe test of a real crisis. mulating every day thet such a situation will inevitably arise in the course of the readjustment following the conclusion of the war. System and een the time does coke, the Federal Reserve Bank of eew York will need seasoned and experienced directors who will not be swept off their feet by lack of courage or lack of knowledge of the affairs of the bank. You will then be a great aid to us in our councils. During the trying period of organization, most of our work was nec- essarily annoying detail and therefore unintereeting. 1 will feel greatly relieved in knowing that you and oodward will remain on our Board during the next three years, To Mr. Towne. Nov. 8, 1916. particularly as long as there is an uncertainty in regard to my return. I am, therefore, writing this letter to express my personal and very warn thanks to you for responding favorably to our urgent solicitation. With kindest regards, believe me, Very sincerely your Henry B. P2one, Esq., 9 Last 40th Street, New iork Gity. 3S/VCM THE YALE & TOWNE MANUFACTURING COMPANY 9 EAST 4O ST. NEW YORK OFFICE OF HENRY R.TOWN E January 17, 1917. CHAIRMAN OF THE BOARD Mr. Benjamin Strong, Jr., 4100 Montview Boulevard, Denver, Colo. JAN2 5 1917 Dear Governor Strong:- While you have doubtless heard from others concerning the result of the visit of our Committee last week to Washington, I think you may like to hear briefly from me also. The Committee consisted of Mr. Peabody, Mr. Woodward and myself as Chairman. We were heard by the full Federal Reserve Board, in- cluding Secretary McAdoo, who presided, and Comptroller Williams. The hearing lasted nearly two hours. I began by proposing to review briefly the antecedent facts concerning the Bank of England matter, stating that my purpose was to see if both parties had a similar and correct understanding as to the facts. Very soon J was interrupted by the Secretary, who said that if I was preparing a basis for complaint or criticism of the Board, the latter would decline to entertain any such charge. In reply I assured the Board of oar purpose to show all proper respect, and to recognize its responsibilities under the law, but that we hoped that the Board, on its side, would recognize our duties and the fact that we are responsible for the running of the New York This discussion was slightly warm, but helped to clear the Bank. atmosphere. The first hour was occupied in discussing the Bank of England ,/. Benjamin Strong, Jr. 122'latter, and something more than 50% of the talking was done by the Secretary, with occasional comments from Governor Hamlin. Of course this prevented a smooth presentation of my argument, but we all feel satisfied that our position was made clear, that, without admitting it, the Board realizes that a mistake was made, and that we are fairly safe against the occurrence of a similar mistake in the future. At the beginning the Secretary sent for a stenographer, stating that it was desirable to preserve a record of the meeting, but my impression is that it was chiefly to preserve a record of his own explanations and arguments in defense. It was made Quite clear that Gov- ernor Hamlin was a sick man at the time of the incident, that he was acting under pressure from above, and that he did not fully realize the effect of what was done. The latter part of the meeting was devoted to presenting our plea that correspondence from the Board to the Bank, relating to the executive work of the latter, should be addressed to its executive head, and not to the Federal Reserve Agent. In presenting this plea I stated that I had permission to quote Mr. Jay as concurring in it. Again there was considerable sparring in the way of explanations and excuses, but again we felt satisfied that we had made the desired impression. As to both matters the Secretary made no decision or announcement, but stated that the Board would "take them under advisement". As to the second, Mr. Treman informs me that since our visit to Washington, all letters relating to executive matters have been addressed to him. On the whole, therefore, the Committee feels satisfied that its 3- Mr. Benjamin Strong, Jr. vit was useful, and hopeful that it accomplished the desired results. We were entertained at luncheon afterwards at the Metropol- itan Club, where both subjects were again reviewed, informally and pleasantly, and our confidence strengthened that we had been successGovernor Hamlin especially assured me of his regret at the ful. handling of the Bank of England matter, and that it would not have occurred if he had been in his usual health. While alone with him in the Club, I showed him his last letter to Mr. Treman (which was very curt, and highly improper), and suggested that he might like to have me hand it back to him. He was a little surprised at first, and hesitated, but on my renewing my statement that if he so desired I would leave it with him, he replied "Well, perhaps I had better take it", whereupon I handed it back to him. We all miss you greatly at our meetings, but wish you to realize that our chief concern is that you devote yourself to getting well. and do not concern yourself too much with the affairs of the Bank. Trusting that you are making steady progress towards recovery, and with kindest regards, I am, Yours very truly, 14-1An HRT:AH R., Denver, Colorado, January 25, 191 Dear Mr. Towne: Your kind letter of January 17th reached m leaving for Colorado Springs for a few da s' visit consequently, my acknowledgment has bee Nothing has afforded me so g tisfaction dur y absence arrangements in England, and almost as though I you various difficulties and, rectors took up this matter announcement of our pro I think I can understand th a friend e aye. as the promptness and vigor with of the ust as I was had been present the iates encountered when the Pr matter was discussed Washington. Much as to the futur It also helps surmised and of which had been ver that the tire was ve rather a ions situation fled the oard in pursuin r 4 make clear the fact which 1 had autiously advised by others -- 0 make, this announcement and that a ast have arisen in other matters to have justi- Dart icular' the principle r le ter relieves my mind very he course it did. lighted that you succeeded in establishing /I cations respecting the business of the bank should be addressed to the officers of the bank and not to the Federal Reserve Agent. This will greatly help our work in the future. You, I am sure, realize that a great deal depends upon the success of these foreign negotiations. portance to the whole system. i regard them as of the utmost im- The fear that they had been jeopardised by this unexpected announcement was a great shock to me and almost 2. January 25, 1917. - 2r. Towne. tempted me to return home at once for the purpose of taking the subject up with our correspondents abroad even thou,gh it necessitated an im- mediate trim, but I am sure now that that will not look foraard to concludin the arrangements succe eventually, be necessary, and ully in London and, in Paris. ane feature of the matter has anno have developed some irritation and a great sacrifice for the bank and is discouraging to him I cannot Beyond everything, he is concilat episode has not in any way y. It seems to criticism of Mr. Tre o me :orally and an hing Which is a personal misfortune. nsiderate and I hone this nation to continue his work so long as it is neces Thank you most return. 2y progress summer will see Yiit expressions in regard to my ctory and I am hopeful that back rmest regards an many thanks for your /otter, I am, Very truly yours, Henry R. To The Yale & To 9 :,ast 40th St., New York City. BS/CC this August 22, 1917. Dear M. Town,: This will introduce to you Mr. W. T. Chapman of -;ashingtou, D. C., whom I know very well and wto is secretary to Mr. Warburg of the Federal Reserve Board. I understand that Mr. Chapman has invented a lock which he wishes to present for your consideration, and will grently appreciate the courtesy of an interview. Very truly yours, Henry H. Towne, Zsq., 9 East 40th Street, New York City. ch 5, 1018. Dear Mr. Pparce: Permit me to introTuce to you the bearer of this letter, Mr. Henry R. Towne, Preeident of the Yale & Towne Manufacturing Company, 9 East 40th Street. Mr. Towne wishes to confer with you about a business matter, and I take 7reat pleasure In intrortleing him not only aa a personal friend for whom I have a high regard, but also as one of the directors of the Federal Reserve Bank. Thanking you In advance for your courtesy, in the mator, lieveme, Very sincerely yours, Covernor. *2--C44--Eak.W.C44.Esq., Preoldnnt, Arnrican DrfLke hoe a70 Foundry Company, 30 Church Ctree't, Nei York,' N. Y. March 5, 1018.. Dear Jr.1 Cutler: OIL Permit me to introduce to you the beater of this letter, Mr. Henry R. Towne, President of the Yale & Towne 7,:anufacturing Company, 0 East 40th Street. Mr. Towne wishes to confer with you about a business matter, an'. I take great.pleasure in introducing him not only aa a personal frien1 for whom 1111111111111111:: have a high regard, but also as one of the direetors of the Federal Reserve Bank. Thanking you in advance for our courtesy in the matter, believe me, Very sincerely yours, Governer. Otia H. CRI1144_,Esq., natr77:5Board of Directors, American Brake Shoe & Foundry Co., 30 Church Street, mt York, N. Y. March 5, 1918. Dear Mr. Tosna: was sudlenly called to'"Ushington yesterday anl did not have time before leaving to zitc for you the letters of introduction to era. Pearce and Cutler. T have written them here thi morning, ana you will fihd them enclosed herewith. Tin.7.sting that you may be sueco3ful in your mission, -,elieve me, Very truly yours, Governor. Esq., Prcoil.ent, Yale t, Towne Mfg. Co., 2.2aat 40th Street, New Yor, N. Y. Henry R. To sil karoh 25, 1918. Lear Mr. Towne: The enclosed letter from the American Brake Shoe & Foundry Company will explain itself. Sorry the effort did not yield better results. Very truly yours, Jovernor. Henry E. Towne, Esq., 9 East 40th Street, New York. Eno. 1111111111111111111111111111111111 September 19, 1921. Mr. Henry R. Towns, Yale & Towne!lfg. Company, Stamford, onn. Dear Sir: Inorder, if possible, to get a somewhat clearer view of the present situation as regards unemployment, I am anxious to secure some information as to the extent to which waiters no longer reported on the payrolls of the industrial concerns found work in some other lines. lj Several of our directors and one or two others hove volunteered inquiry in their several concerns into just this question and to trace out as far as practicable just what has become of the men they to institute a brief have hod to let go, just what they are doing and what percentage of them are now definitely or nearly without means of livelihood. There is a great difference, of course, between this and just counting up how many Inlve betn dropped from employment rolls. 1 should like, especially, an idea as to what percentage of factory employees have gone back to the farms, or to domestic-service, or returned to . foreign countries. This information is for the conference on unemployment which is to be held in Washington next week and I should be very grateful if you could give ma some sort of an answer by Friday of this weak. Believe me, Very sincerely yours, BENJMIN STRONG, Governor. MIIII1010111 .4 THE YALE 8c TOWNE MANUFACTURING COMPANY 9 EAST 40114 ST. NEW YORK Sept. 23, 1921. OFFICE OF HENRY R.TOWN E CHAIRMAN OF THE BOARD Federal Reserve Bank of New York, Mr. Benjamin Strong, Governor, 15 Nassau St., New York. Dear Governor Strong:- Your letter of 19th inst., addressed to me at our works at Stamford, Conn., reached me here on the 20th inst., and I had it telephoned at once to our President, Mr. Walter C. Allen, at Stamford, in the hope that he might be able to respond to your request. When here yesterday he informed me that he was unable to do this for the reason that, except in a few cases; we have no record of what has become of the employes we were compelled to lay off because of the present conditions of business. I appreciate the purpose for which you desired this information, and regret that we are not able to furnish it. Of course it would be of no value unless accurate and fairly complete. With kind regards, I am, Yours very truly, .1414A, JV .74_,,frtiv. Chairman RECEIVED W. TAM. M 7-28 FEDERAL RESERVE GIANK,d,.. OF NEW YORK 9.,Dr , L) - ATTENTION t-- 1-4 .RE TRANSFER DIVISION TELEGRAM LIO)AMERCIAL WIRE-INCOMING TRANSLATION COPY JECODED CHECKED COMPANY i0OINU RV 12 BR PALMBEACH FLO 150P JAN 25 G L HARRISON YOUR EXCELLENT DcCUMENT HAS MY HEARTY APPROVAL HOPE IT PRODUCES DESIRED RESULT T. F. WHITMARSH 207PM Q94 .tL ti)-11AA., 9)-AAJW-4 kvo12-1 c441-977 22 -212_ - August 27, 1921. Richard H. Williams, Esq., c/o William ec Peters, 1 Broad wa.y , New York, N. Y. Dear Mr. Williams: Referring to my telegram of to-day Governor Strong is givin0 a dinner to Governor Norman and Sir Charles Addis to meet the directors of the bank on the evening of Tuesday, August 30 at 7:30 p.m. at the Metropolitan Club this city, Fifth Avenue and 60th Street. He desires me to express his hope that you will surely be able to attend. It will be rather informal, dinner coats being worn. Sincerely yours, R.S.V.P. WASHINGTON BUILDING I BROADWAY New York City, C> Au1240;01.1:.:, tv 0'1 AUG 2 9 1921 ).01- S. A. M. 7511 S',4` 101 J. H. Case, Esq., 15 Nassau Street, New York City. V Dear Mr. Case: I beg to acknowledge receipt of your kind favor of the 27th, as well as your telegram, which was repeated to me at my home on Saturday evening. I have just this moment reached my office, almost twelve, on account of an important errand uptown. I will be delighted to be present at the dinner tomorrow evening, and look forward to it with much pleasure. Sincerely yours January 11th. 19156 -131-!Wjr. k3T1207vG Dear Mr. Woodward: 24. We are expeot143 to dine to-nit at 7:30 at my kvartment, 903 'ark Avenue, and if you return from Boston in time, I nope you will be able to dine with us. If you are not in time for dinner, we will be delighted to BOO you after dinner. Ibiry truly yours, 9 East New York City. August 191 dear Mr. "':',Codward: I an enclosing with this, copy of letter addressed to Secretary McAdoo exact- ly as mailed to him to-day, and hope that it fully meets with your approval. The only change consists in the addit:_en of one para- graph on the last page with which I feel certain you quite agree. Very truly yours, Governor. liam TCodctard, Esq., "The Cloisters," Ochre ?oint, 'Newport, Rhode Island. BS Jr/VCM-1 Dict-ted by Ur. strong but signed in his absence. 1111 immaINEI 'ice-147 1.2 ffrvi7+7/ce-7 7 fa7 eaiaa( te-z-zz:cW 4.olie Ye peze4,,P, g;1--- /r. 41-5, e)t20,22/ ,1-Ze dezLaWf did( p.,44ai ,14` ) 1 ke/t ave p2;c-3 /tax teei elazz,t, xez ez444evi_ irez-eX Aug. 10, 1915. Dear "Gov": You can't work that title an me without taking the consequences for, as you know, we share it Thank you for your note. I envy you the loaf; in fact, two days of last week, after a hot trip to 'llshington almost broke down all of my resolutions, I was tenptod to cut loose for a few weeks. I sinceiely hope that the nemorondum met with your approval. It has already done the trick as I saw Secretary McAdoo yeeterday and there as no doubt whatever of his attitude. The Federal Reserve Board is holding a meeting here to-day to take action finally on this question of foreign credits and I believe the action will be absolutely favorable to our contention. Our guarantoe of Mexican debts, as you.put it, is Mely to prove one of the -lost interesting develepments in dollar diplomacy yet witnessed on this continent. Circumstances alter cases and I presume that, if an administration and a good obligor is furnished for that poor distracted country, it will be up to us to furnish the money. How have the mighty fallen: Thanking you again for your note and for no end of help on numberless ma#ters, 1 Cm, Very sincerely yours, llia eewport, R. I. Bc3t7r/PE Estes Park, Colo., July 22. 1916. Mr. William Woodward, Personal, Hanover-litatienal_1;ank liew York City. Dear Lir. Woodward: This is mu first opportunity to write you since getting settled on account of the restrictions imposed upon me by an exceedingly conscientious Doctor. I have only been allowed until recently one-half hour a 46- ram correspondence. of c in one of After some arranging we now have a fnd I am adually t the cottages conneced with the hote I litP'tke catching up with mail. The combined Influence d a rather hard trip, hot weather and the change in clima e and altitude set me back a bit but I thinkairipther week o two I will le to take a melNte , be pretty well readjusted t most \:3 uti-, part of the This is little exercise. country I have ever visit d The el Ication is about 7500 ft. and it is surrounded y pe ' that r.04 all the way from 10000 day'4.t Is wairth except in the shade to 14000 ft. On su als aiways cool at night and and when there is a b e ate-unknown. On the whole I bedust and perspiration a to a better place and in all likelieve I could not hay; X here. lihood will spend t e are keeping me posted generally men at e o -Maing and I gather from their letters as to hatters --eaMfortably an an old shoe. Had you and that Tre afita as he not bee* ,aval:lab-le to relieve me between you, I either would not ave left or else would have left with such uneasiness that I would probably have gene back again. I hire almost completed a memorandum in relation to It proves to be a more formidable When the draft is complete, I subject than I anticipated. hope that you, Treman and Curtis, as well as Jay if he has returned, go over it with a good deal of care and criticism and display no hesitation in making necessary changes. It should be submitted to the Board in Washington at as early date as the Bank o England matter. convenient. Observing the rather violent fluctuations in both reserves and interest rates in ilew York, I hope this period may prove the opportunity for us to demonstrate our real usefulness. It gives us an opportunity by maintaining a differential between endorsed and unendorsed bills to educate member banks when they are short of money or under in their reservesto endorse some of their bills and turn them in to us. 2. Adle one-eighth under ordinary circumstances may be a fair differential with rates Where they now are, I do not believe We can accomplish much with our members in these early days of development at les than a differential of one-quarter of When rates advance that differential will not one per cent. be out of line. Treman wrote me of the decision in regard to purchasing the one year 3 per cent. notes that werp,-e-flred. I think it was wise. In the course of a few yearfLour-lot, blem will be to dispose of excessive holdings of gove,,ilent b unless I am very much mistaken. It would be a great pleasure to hear and then. I would particula,r/YA,rite to s and notes, you now fr4benefit of your experience in dealins/Wh tiitOioardLat-liashing-ton in connection with the Amendme40 to thd0;layton Act. That was your handiwork and I am won4ering whOther after all it can be made cover the H4ver Vank-Uniorill,Prust Company situation. In any event, I hope Ou wal,writs/me when the spirit moves you and it will give m graat-OfaI of pleasure. With very bes and friendship, ids and many thanks for your help // //Sincerely yours, FEDERAL RESERVE BANK OF NEW YORK -November 8, 1914; Dear Mt. Woodward: Mr. Jay Just writes me that there seems no doubt of your reelection, as well as that of Mr. Towne, as members of our Board of Directors and no news from the office has given me such satisfaction as this. Let me respeat what I have just written Mr. Towne: The first two years of service in the bank were naturally annoying and ,uninteresting, and much time had to be devoted to matters of organization and detail. cleaned up. That part of the work is now pretty well What we have ahead of us nobody can prophesy with certainty, but every day seems to accumulate further evidence that the next few years will see readjustments of tremendous importance which may throw heavy burdens on the system. Those are the years where we will need experienced directors who will not be swept off their feet or lose their courage or lack the experience necessary for the bank's security. It would really be a great misfortune if you and Mr. Towne retired at this juncture. So please understand that I am very much relieved and very much delighted that you both have been willing to sacrifice your personal preferneces and consent to another term of service. With warmest regards, believe me, Very truly yours, William Woodward, Esq., Hanover National Bank, New York City. BStVCM FMF a5 Strevt. 44, New York, November 13th, 1916. 4 11'9/6 Dear Strong: Yours of November 8th is at hand, and I appreciate and thank you for all that you say. I am still of the opinion that Class A. Directors, especially in Group 1, should rotate, but after much thought and considerable pressure I have agreed to run. I do not know how the election is coming on and have not asked, but naturally hope that it will go through all right. I was guided principally in my decision by my wish to be of service to you at a time when you are not in the best fighting condition, and the fact that I felt that the suggested changes might not be wholly agreeable, or tend to maintain the organization which we have been building, and the ideas towards which we have been working. This is, of course, in full confi- dence to you. I hope that you are doing well. Vanderlip reports that he was very much pleased to find you gaining rapidly as he thought, and I sincerely hope that it is continuing that way. Things are dull here in a sense. There is of course the almost customary speculation and some very large loans every now and then. Then there is the working out of the contracts for shipments and some new orders, but from the routine banking Ata5 Strvrt. -2- business the Banks are only "rolling" their money. I do not think it will be as active a Winter as last Tinter, but the reason may be that we are more accustomed to it this year, and so it The gold situation is a most interesting rolls more easily. one. Some people talk of being alarmed at too much gold; I am not alarmed at that. The point to be alarmed at is the taing of too much credit by our own people. It is impossible to travel Without seeing almost every mile the additional plants being erected; even the smallest plants are adding one or two sections, _id on top of all of this they are crying protection on the inflated basis.. It may be wiser to place an export tax in order to reduce matters to a basis where we can safely protect, but this is all in the problems of the future, and we must not worry about them too much as yet. time. et me hear from you from time to Treman is running along very smoothly and so are things in general at the Bank. With best wishes, as always, Yours very truly, Benj. Strong, Esq., 4100 Mountview Boulevard, Denver, Colorado. t November 17th Deal 1916. .00dward: /our letter of NovelLber loth has u t reached me and has given me a great deal of pleasure. Your decis on to continuee great relief to me onG 1 believ has been a be shared by tile new York banker° who F2re gradoal confid.ence intthe tew York bank end it return is still too un- ur!nagem certain for me to build uith u I had s d and it was a weld ence on its ac.-;omplisnmert. Vanderlip an0 Trunbull and .ation vi ingrowing con templation. id situation expressos in a th nold. The danger lies en expending our domestic credits as a result of the gold it ip a gre satisfaction to get this view from you Whnt y few word tirely impar for these for it means you surely appreciate the importance of s vnich some day can be handed back with thanks. ings go along about the same with he and 1 am put- ting in the laziest Kind of a time. The now house welch I was fortunate eneuz4 to get is delightful in every way. To Nov. 17, 1916. Mr. Woodward. I am spending some of my spare time with my twelve year old daughter taking French lessons. She has always spoken French very well and I must say that my struggles affcrd her a tremendous %mount of amusement. The doctor continues IL, make go. gross but as yet is unwilli_ng to commit hi reports of my pro-, 31f in any way as to a possible data of return East. Treman writes me that he hears ter. 9 a plan on foot to issue 0 gold certif a s, 'Ibis is jus oout the if it looks serious, wrest thing they could dc would you feel disposed jections and whit the consequ ship some hundred scatter it from Nith Till Hanov New 'to PS/Ver doo and point out the obmight he 1iov, can we back to :-.urope if we ultr, to the other? Nazo Strevi. JAN 1 2 1911 New York, December 27th, 1916. Dear Governor "Ben": Your Christmas card has just come in, and I send you in return my very heartiest good wishes, but it is I hope, needless to send them at this time, as I think you know that you always have them and will continue to have them. We have had a monkey and parrot time here for about three weeks, and every time things get to be better the F. R. B. at Washington seems to moisten a blanket and place it upon us, then when we get cold under that process they light a fire under us to warm our posteriors. It is ridiculous! The paternal attitude, coupled with the fear that someone will get ahead of them, does not set well and will ultimately bring them to grief if continued, because everyone will tire of it, not only those closely associated, balt others as well. This last fiasco and breach of confidence was an outrage, and cannot be excused as far as I can see. We are to have a meeting this afternoon, and my general feeling at the moment is to put ourselves on record and protest. I think others will feel the same way, and I do not know just what the result will be. This will all be past history by the time you receive this letter, and its sole object is to send you Greetings, but I diverge, as I know that you are interested in hearing various 0 :\,Taozau -2- points of view. The markets have sobered down and will undoubtedly come back from their spasm. Of course it has affected many specialties and will continue to do so, as the boys are finding out that some of the wars brides will not have any children this year after all, and what may come in the future is speculative. We are likely to see a slight reduction in the price of commodities, not that the demand is not here, but in the wild uprush they probably have over-reached themselves to some extent and people are counseling a slowing down, which may result for a while. Of course it is impossible to estimate what may be the final values, in just so much as it is impossible to estimate the final destruction on the other side. Jay is away and has not been well, but he will soon come to himself. Bronchitis has been rampant all over the City, I had it myself earlier in the year, and now everyone seems to have a touch of it. things. Treman is getting more and more used to We are having a little dinner to-night, which seven or eight of our neighbors are attending, and together with Treman and Curtis we are going to talk over various phases, particularly in regard to the amendments. With best wishes in ev 7 I am, ncerely, Otadc Denver, Colorado, January 12, 1917. My dear Woodward____±_. Your letter of December 27th just reaches ma and I am so y is now a little sorry that it was delayed, although possibly m written more temperate than it would have been two weeks ago. 4: Federal We are just bow at a point in th: development of Reserve be required t System Where tact and Ski oid the eserve System dangers of paternal and Washington on the one pollfrom harmonious management of th ren independence in the honest enough to realize d and of a postle disruption of the System as a Who ts on th there by reason of too great I thinA I am her hand. s as much denser to be apprehended tam as there is from a political if New Yoric should dots& domination in .ashingt ut this Banc of matter, is a personal one to some t involve the broad question of policy of control. Which doe been in New extent Had I en h Board violated confidence on December 26th, I Y would certain/ ve resigned and would not have hesitated to state my reasons for doi so. confidence how serious In explanation of this, let ma explain to you in was the embarrassment to me and how nearly the action of the Board came to defeating what i believe will prove to be a great achievement. it In my conversations with Lord Cunliffe had been explained to him that our complicated machinery would necessitate the following procedure: 1st. An amendment to the Federal Reserve Act b Congress; 2. Januar: 12, 1917. To - Mr. Woodward. 2nd. Approval of our Board of Directors; 3rd. Consent by the Federal Reserve Board; 4th. Action by the directors of the other eleven Reserve Banks; 5th. Some consultation with and an opinion from the State DePartment. All of this before we could act. not to A lette doing so. regress on this anfidence unti take his own directors into hi side justified his ore, determined Lord C Cokayne, re- from Deputy Gove iffe had de- ceived some months after my return, stated that Lord m that we were sion un termined to adhere to this ready to act, consequentl unprepared, all but throe f his directors ound Lord Cunliffe entirely he announcemen you can realize t was that ho4Q,eib had been jeopardized. complete ignorance, and result of all of my work t to feel that he had been very .rely unreliable and badly treated and that irresponsible. us of m:y negotiations Another consideratic Fran a Those Frew with the Bank of I was unwilling re timid and suspicious. as far with them as with Lord Cunliffe and have all along felt that the sp rrangements lt-Dr-t71;;;7 concluding ment was made France. You with Lord Cunliffe contemplated first *tors with the Bank of rngland and then before any announceoffer a substantially similar arrangement to 11 realize ings We arranged, unless that in no other Any could identical understand- of course all throe institutions at the same time and place. the Bank of were negotiating That was the reason for the clause in the Bank of England memorandum, expressing the hope that a similar plan would be arranged between New York and Paris. Announcement of the London ap- pointment before an offer was made to Pallain therefore jeopardized 3. January 12th, 1917. To - Mr. Woodwazd. arrangements in Paris just as it did in London. Of course I want to be loyal to the System and finish the work, if my health permits, but I am not willing nor will I over be willing to accept the position of subordiantion and lack of independence which is implied by this action of the Reserve Bo nothing In su , strongly a dent that you and the others would fee have done , direct protest the way of makin and will not do so, at any rate without first consulti serve Board, I do not thIs 0 can afford depa the hank. from the principle tockholders. directors and office So long as we oard's regulations, keep them informed of what we are doing and has the Board must be monaged by the member banks of our distr in fact of self-sac cO bank is owned by the for which we have always comply with the law and do about it, I the Federal Re- relations Now as to the whole ques feeling so confi- the bank in a spirit of cooperation - e welfare of the Whole system, the Board ound for comp how much we shall invest, What our rates shall be, What kiss of bills we shall buy, what bills are good and what are bad, rests with t1ke directors of the bank. is an tnvasio Any attempt to interfere with that f the rights of the directors and I think must be resisted at all cost, so long of course as we are complying with the law and with the regulations based upon the law. The difficulty Which has developed during the past few weeks is due to the intrusion into the policy of the System of other considerations than those having to do directly with the wellfaro of the Reserve Banks 4. January 12, 1917. To - Mr. Woodward. This must have led the Bogrd to overlook the fact that themselves. without exception the policy of the New York Bank has been to make every This applies sacrifice in order to strengthen and develop the System. to our gold policy, to our policy in regard to the collection system, the Clearing to our relations ,litht ish division of House, rly to the sa ifice of time bank matters in rder to aid Investments of all kinds and more parti which might have been devoted to stria in the preparation of regulations and the formulation of So I hope the Board wi hoe i oral policies. ear to the Federal aeserve Board that they ca expect good to serve as directors or officers of the Federal Re e Bank of New k if their judgment and freedom is to be ove led, their conf violated and if they ar e a lot of school boys. system, let me thank you most heartily bioa that this is 0 for the nice things yo back, y in yo. ving that unfo I fear es are to be ignored and etter. I a literally pining to get rment which thrives on scrapping. Rows ess Treman, whereas, to my Shame, they generally stimulate ne and make li here before v Possibly someone from the bank will be out long and I can get in closer touch with what has been go- ing an. We are cèftainly going to have easier money for a time and I think you may count with certainty upon a further expansion of the bank position in New York and probably elsewhere throu,hout the country. Large loans in solo form to the allies are inevitable and just as inevitable the result is a larger deposit and loan account, so 1 hope the program of amendments will be conservatively shaped and carried through and enable us to double 5. January 12, 1917. To - Mr. Woodward. our stock of gold ready for later use. I am getting along pretty well just now, gaining a little in weight right along and the Doctor tells me that he wants me to play golf just as soon as the weather permits. conclusion that I might be able He also is gradually coming to the to go abro another Whirl at the western climate on Again, thank you many times for une, return. r letter, your and for your constant consideration of ug wellfare. - William Woodward, Esq.,. 11 Nassau St., iff _New York City. BS/CC sibly taking wishes 14 Nazsau Strert. 1 . If New York, January 17th, 1917. JAN251917 , Dear Strong: At the Board meeting yesterday we had a long talk, and the Committee appointed to look up the Deputy Governor matter made a report. and myself. As you will remember, it consists of hr. Peabody We recommended that Gov. Aiken, of the Boston Bank, be approached and offered the Deputy Governorship. ' This of course in friendly relationship to you and to Mr. Treman, who expressed a wish to retire, as he considers that he has fulfilled his mission and it is now time to organize definitely. Personally, I think it would be a very satisfactory solution of our problems and your problems if Aiken would take the Deputy Governorship at a substantial salary, you to remain Governor, and with the strength that he would add to the Bank you would feel that you could come and go as you wished, and remain with us and serve the system and carry out the ideas and dreams, which you have had and which all of us have had from time to time. This seemed entirely agreeable to all members of the Board (it being a full Board meeting) with the exception of Mr. Palmer, who has no objection, but as he felt that it was somewhat new to him he reserved his decision. He is to speak to me inside au trvvt. -2- of a day or so, and if you do not receive a telegram by the time this letter is in your hands, you will know that Mr. Palmer is entirely agreeable to the suggestion. We all of us thought that it would be much more satisfactory from every point if you, yourself, would take the matter up with Mr. Aiken. He is your personal friend, and: in a sense he would be coming at present in friendship to you, and you will work along together satisfactorily I am sure. So will you approach him and carry through the programme if it meets with your favor. It might be well, after you have mentioned it to him, to get him to speak to me or to Mr. Peabody, who are still authorized as a Committee. I have just received your nice long letter about the B. E. matter, but as the above is the subject of this letter and I do not want to complicate it, I will stick to my text in a some- what formal way. With best wishes, I am, Yours very sincerely, Benj. Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. Denver, Colorado, January 25, 1917. My dearQeld_i_..iwar,,-- Yours of the 17th reached me on Saturday before I left for eard nothing a few days' visit at Colorado Springs, an further as to Mr. Palmer's views, I ass e that he is is cord with the other directors and, consequently, am writing Gove Aiken as per enclosed copy of my letter, which I hope fully s with your VieWS. Ou have come to a very Let me say quite f wise decision indeed in netter and one th my awn future in the bank. have been reached ev e certain, as I am improving Undoubtedly every day steadily and to the entir- with me, however, eh I would hope might that You will agree etion of the Doctor. - ef fee. management of the bank's affairs ficers, and that will certainly be im- depends upon the healt entinue to be impaired if we do not build up paired pressure of so as to avo So I am both as to the our organization the last two years.. e you will understand Inv pleasure and satisfaction, cision arrived at and the evidence of this further con- sideration of ur own welfare. You will notice that I have said nothing very definite about when changes should be effected and my reason for that is because of uncertainty as to your views and those of the officers. following appeal to you? How would the Arrange that Mr. Treman remain at the bank until the first of August, if he is willing to do so; have Aiken spend 2. To - Mr. Woodward. January 25, 1917. as much time as is convenient in New the first York between now and then; about of June have him go with me while he is ill Governor of the Reserve Bank of Boston to London, Faris and possib y Amsterdam, to com- plete the arrangements with our prospective corresp familiarizing himself with the subject o officers of the banks. This would put tients there, thus being conducted by a Committee ins ing from abroad have him elect at meeting the r negotiations *vidually by me. of uty On return- or and take up his duties the Bank. The plan of sendin cussed at our conferen about it. He is by a has been frequently dissome entative talk with Aiken to go and i see many dvantages in the arrangement. ich I deeply appreciate. Very truly yours, William Wood Hanover National 11 Nassau St., York City. New 36.CC. form of 'grit yrUNION WESTE,, CLASS OF SERVICE SYMBOL Da, Day N sage Blue ..er Aessage WESTERNUNIOti Nile TEL,!-AM NL If none of these three symbols appears after the check number of Nig! dter words) this is a day message. Otherwise its character is indicated by the N EwC0M B CARLTON. PRESIDENT symbol appearing after the chock. CLASS OF SERVICE SYMBOL Day Message Day Letter Night Message Nit Night Letter NL If none of these three symbols appears after the check number of words) this is a day message. Otherwise its character is indicated by the symbol appearing after the check. RECEIVED AT 17 E. PIKES PEAK AVE., COLORADO SPRINGS, COLO. 3D HS 70 BLUE 5 EX CO NEWYORK CITY JAN 30 1917 VIA DENVER COLO JAN3 1 BENJ STRONG a ANTLERS HOTEL COLOSPGS COLO AM GREATLY EXERCISED OVER PROPOSALS ON ONE FEDERAL RECEIVABLE AT IMMINENT AND THIS IS THE IDEA AND I AM GOING A SECOND FEDERAL ACTION SEEMS SUBTLE FORM OF CREDIT THAT WE PROTESTED AGAINST MORE THAN BE DO^E TO PREVENT THE TO PAR MEMBERS CHECKS DRAWN A YEAR AGO SOMETHING SHOULD PUTTING INTO EFFECT OF THIS TO DO MY BEST BUT Tl'AT IS OF LITTLE AVAIL &) Answered. from Colorado Springs aind retained no coity, WILLIAM WOODWARD BS. 944AM 40 $c2rieo,c, Denver, Colorado, Marg*23, 1917. w. 11,31,41 PERSONAL. \ \'0\ SAINI; My dear Woodward: , I should have written you earlier in visit with me in Chicago but, to tell yo rega Alfred Aiken's the trutb for the moment I overlooked the fact that the matter of our personal been referred to a committee, and It will be impossible fo Mr. Treman. s to co rate for some little time to co would feel justified in makin zation had u I wrote Treman, I doubt if he the a. 'nal sacrifices that would be in- volved except it were ticularly in case I were unable ever to rat The increasi and others to manent b ank will undoubtedly cause you p the organization upon a more per- ob and of course as Doss e and would pa On the or hand, there d like to see that done just as promptly cularly like to assist in bringing it about. not the slightest doubt in my mind but 1 will If you and your associates =Miner be back t feel willing an Treman is about to run matters along without making definite arrangements until my return, I believe it will be by far the best thing to do. should Failing that, if the directors are positive that we so ahead or if Mr. Treman finds it impossible to continue, I think the matter is of sufficient importance to justify our having a meeting at the nearest convenient point, say Chicago. nection with the organization There are many things in con- which I think should be very clearly stated To - Mr. Woodward. larch 23, 1917. to you before any plan reaches an advanced stage, either for getting someone outside of the organization or for rearrangi,_ the present official I am sure that you and the others are co. staff. need that I have no thought in mind except the real interests of the and whether I return in June or later, or not at all,sure 11mayN.e you my recommendation will be the same in either case. Mr. Delano is here just now this matter at some length. iscussed a in Washington before very long and I, therefore, take the decision be arrived at with matter with him, even urally, we ha urging most earnestly that no OU pportunity first to discuss the cago does not prove to be practicable. You may be s talk with Mr.elano fident t when he return and rest in elthminating this opportunity to have a frank recent difficulties and I am conashington it will have some good effect ome of the difficulties that have recently arisen. they are about as usual except that I have joined the Country Club, bought some golf clubs and next woes hope to start playing golf - all under Dr. Setall's directions. As the best indication of my behavior, I always report my weight which is MOW about 155 nounds, and means that I have gained 26 pounds since coming West; the fact is that I have reached that stage where my clothes are no longer comfortable and I am seriously contemplating buying some larger size collars. 3. March 23, 1917. To - Mr. Woodward. This noon Delano and i are meeting the local National Bankers at luncheon and I suppose we will engage in mut ulation and quite a little brag. Once more let me take the opportun ty of tel I appreciate your personal interest and devotion to t ng you how deeply ffairs of the bank during my absence and your -0 my personal a concerning which I f having inconvenienced feel oppress everybody. With warmest regards Esq. William Good ank, Hanover Na y, N. Y. New York BS/CC gements, 1\Dtatt StrM. New York, March 27th, 1917. Dear Strong: Your letter of the 23rd has just come in, and I I only hope that heartily reciprocate everything you say. your improvement will continue and that you will be well enough to come on, even though it may be temporarily or in whatever way you and your Doctors see fit. Don't forget that the descent from the high altitude should be as carefully made as the ascent. Mr. Peabody and I are both for letting the matter rest until June--June is nearly here. haste that I can see. There is no reason for Financial matters are very quiet. body is waiting and strengthening themselves. Every- There have not been many new undertakings for a long time with the exception of the various Government loans, and there is lots of money around. The organization is in condition to take care of whatever may come up from its members' point of view; and I am quite sure that Treman is willing to stay on until June or thereabouts, but of course it is a problem that we must settle, and you doubtless want it settled more than anybody else does. There is little to add at the moment. waiting for the 2nd of April. We are all Everyone is turning over in their mind just what they are to do, and wondering how and where they aecu Strut -2- can be of service, but by the time this reaches you we shall all know more than we do at the moment. This is merely to acknowledge your letter, and to repeat the hope that you will constantly grow stronger and more able to undertake what you are planning. With very kind regards and best wishes, as always, I am, Yours sincerely, 11:L44, "16( Benj. Strong, Esq., 4100 Mont.view Boulevard, Denver, Colorado. June 29, 1917. Dear Mr, Woodwardt Many thanks for your kindness in sending me that fine picture of yourself, and my assurances that it is greatly appreciated. Very truly yours, 13144ax4low0A404.144 11 Nassau Street, New York City. WILLIAM WOODWARD , Presrdent E.HAYWARD FERRY, Vice Pres. 00,004 SAMUEL WOOLVERTON , Vice Pres. GEORGE E.LEwis.AsSt Cash ,&gicri&OFIrrs,,a4 JOSEPH. BYRNE ,Vice Pres. Chi; J. NIEMANN, As-t Cash. WILLIAM DONALD, Ast Cash. S 3.0,00 )000 .H.HAMPTON.Vice Pres. Foreign Department ,42) Wm. H. SUYDAM, Manager f4, P.TURNBULL, Vice Pres. ROBiNEILLEY,Ass't Manager Wit..it!Am E.CABLE JR,Cashier _ TH- HANOV E3) N OFTHECITYOFNEANYORK. szs. ArAssite 61/ N EW YO RK September 23rd, 1918. Dear Gov. Strong: This is to say that I will take pleasure in meeting you at the Hotel 21aza on the evening of September 24th to have dinner with the Secretary, and to attend the mass meeting thereafter. Thanking you, I am, Very truly your, Gov. Benjamin Strong, Chairman Liberty Loan Committee, New York, U. Y. November 18, 1919. Dear Mr. Woodward; The first thing that I did on reacning -Washington vas to develop a persistent hemorrhage of the nose which lasted about thirty-six hours, and made it quite impossible to think of le,iving 71anhington, or in fact to get very far away from the .fioctor's office. He finally stopped it, but only after heroic teatment. I tried to rePch you by telephone at Bowie, but was told that there was no such number as the one you ga ma, and . fter a nunber of fruitless efforts I was obliged to call my secretary at New York and as him to vt word to you through your office. Won't you express my regrets to Mrs. Woodward, and particularly that I was unable to send you word more promptly and directly. Possibly you will be good enough to invite me some other time. Very sincerely yours, Mr. Wm. Woodward, c/o Hanover National Bank, New York City. 44..:XVc ztzt JUN 1 5 1921 June 14th, 1921. Benjamin Strong, Esq., Governor, Federal Reserve Bank, New York City. Dear Gov. Strong; Yours of the 13th instant is at hand, and I enclose to you my check for 023.55 as requested. No acknowledgment is necessary. Will you kindly inform me at your convenience whether this amount is deductable under the Federal Income Tax Law Blank Heading, Section K, Sub-division 13, or whether it should be placed under Line 23 of Section Q, and if neither is correct, should special application be made on Blank Form No. 52313 (H--L). Yours very truly, June 13, li/21. PERMAL My dear mr. Noodwards Ve have only within the last few cocks been able ta conclude the final accounting of the expenses of the vtriour Liberty loans, and determine to rhat extent, if sny, expenditures made by the organization could L.t be reimbursed by the Treaeury under existinz lax, or ru2es of the Deartmeat. We find tioA the total amount of suoh it Of thit suird that cannot be reimbursed LE, the Federal Reserve i-)nk is able to absorb t M.74. The remainder, t.5oe.E.F.,I have ;aid persomally. The Liberty Loan Committee passed a resclutiab, agreeing personally to assume certain charges, u to a limited amount, which as I recall Waa5 If the members of the comrdttee care to pay their reapectivs shares of this sum, the amount of each committeemants proportion till be t23.55. Had these operations been conducted since the passage of the liolatead Act, it wou'd not have been necoosary to ask the cammitLee tu make any contribu- tion. Yours very truly, William WoodTala, Enc., 5 I.ILLau St., 1.. BS:MY T. June 15, 1921. My daar Wr. Woodward: thank you for the remittance of $21.55 enclosed in y:)ur favor of June 14. Youre very truly, William Woodward, Fso., 11 W4esau 3L., Neq fork, A. i. February 9, 1922. Dear Mr. Woodward: My friend, Mr. R. L. Van 7andt, who was formerly Governor of the Federal Reserve Bank of Dallas, is looking for a position with some New York bank. perience in country banking. He he had a wide ex- All of the circumstances surrounding his leaving the Federal Reserve System, I can explain to you in case you are looking for a man of his type. I em led to write to you because some time ago you mentioned that you needed men of just that type in the may be an opporiunity to get the man you Yours very William Woodward, Esq., President, Hanover National Bank, New York, N. Y. Hanover, and this want. truly, COLLINO T ON .D BE LAIR t3OWIE MD /" zy ,20-g &a Y LY A-7e }-L a'te ),/ke,(e e7r, Cr JAitt( 40` I) di/if/W.(244? October 11. 1922. Dear Mr. Woolley: I am enclosing by the New York City the admission card to the Testimonial Dinner being given Committee of the National Budget Committee, to General Dawes. Mr. Case, who is acting as have three of our substitute for Governor Strong as host, had hoped to A directors present at the table of twelve which Governor Strong, Today, however. I learned from the two others than yourself, that has engaged. they would find it inconvenient to attend. Messrs. Case, Kenzel and Sailer, and eight of our senior officers will be present, however, and we are all looking forward with a great deal of pleasure in having you sith 115. I would let you know pleasure of have another engagement not hesitate dining with some of your fellow directors, you '311 you would prefer to accept. to let me Know. Vey truly yours, Mr. Clarence M. WoolleY, 104 West 42d St., ,;ew York, N. P. S. however, how the party was shaping up as, in view of the fact that you would not have the might I thought, Y. Mr. Case suggested that dinner jackets be worn. If so please do 0 /92- 3 -,/9/6) a /119 /12 22 --,/2/5. iySt af Ateaicee. / 2 -// COPYFor . Ben Strong Nr.:RAL ELECTRIC COMPANY DATED LONDON, MAY 17, 1924 YOUNG GENETRIC GIVING US MUCH PUBLICITY AS POSSIBLE YOUR STATEMENT WHICH HAS STOP CREATED GREAT INTEREST HERE RE BANK HAVE SEEN SCHACHT AND AM SENDING AUDITOR AND LAMER BERLIN TO EXAMINE NEW LAWS STATUTES AND ACCOUNTS STOP SHALL FOLLOW PERSONALLY AS SOON AS MATTERS SUFFICIENTLY PREPARED STOP CAN YOU SUGGEST ANYONE TO SE#VE AS AMERICAN MEMBER OF BANK BOARD AMERICAN RESIDING PARIS STOP IF NOT WILL ASK JAY IF HE KNOWS SUITABLE PRESUME AGENT REPARATION PAYMENTS WILL BE AMERICAN AND THEREFORE BANK COMMISSIONER MUST BE OF OTHER NATIONALITY KINDERSLEY Dear Mr. Yourg: Have you any suggestion? Owen D. Young. p(1.4Cikr'!-,)\ 11011111, L.AM4 frA 1111111.1111111119111P- rreE sacyln 103-1"100 YZATMOD rJurryaJa 1 01 YAM .2100,40,1 (MAC ONUOY IRTailat aAH HOIRW TKSZTATa HUOY ameelai ea, YTIDIJEU5 HOUM EU ONIVIC URA THOLHOE Kan EVAH xam aR clOTE T8RR2TNI T;aap ISTAZED MUTATE FTAJ wax axImAxa OT GIME 9NYWAd au, 90TIaUl EHETTAM EA HOOE 8L WAX0892,1 WOJLIOS JJABB EA SAME OT ERMYKA TERDOUE UOY KAO &maim max ail SI YAL SBA ddIW TON SI anr aTO22YAH KOITLHAMS THEMA 2M1222,1 clOTE HOTE DifFIKELE KA ETNUOODA QNA CURANag 9A08 MAE SO Eaemau KA:3192U 40TE EIHAI OKIQIE4E NADIRS= TTLIAKOIT.41 HMO 10 aa r2EUM avmeenzaw XKLE S5IG1257.2HT au aLDIRviw. ae TaI8E11111131 :S=DY .114 Isea ?nol/aonua Ims moic ovsH .2,avoY new0 Auguet 27, 1924. My dear Mi68 KOrli8011t I would very greatly appreciate your courtesy in sending tne following meeeage in code to our Kr. Pierre Jay in care of Mr. Owes D. Young: Shral reply after consulting Criesinger and committee tomorrow. Hope to arrange but suggest riming date of return more definitely." Tnaaking you in anticipation, I am, Yodra very truly, Mies L. V. Morrison Secretary to Mr. Owen L. Young General Electric Co., 120 Broaoway, New York City. 'LONDON AUGUST 5, 1924. STRONG HAVE TALKED WITH MONTAGUE NORMAN WHOFRELS SUCCESS OF PLAN IS AS UNCERTAIN TODAY AS TWO WEEKS AGO BUT FOR DIFFERENT REASON PRINCIPALLY DIFFICULTY OF LOAN UNDER EXISTING CONFERENCE AGREEMENT ESPECIALLY BECAUSE TOWER STILL LEFT IN REPARATION comassION INITIALLY TO DECLARE DEFAULT STOP BY APPEAL GERMAN HE THINKS AFTER SUCH DECISION EVEN THOUGH FINANCIAL DISTURBANCE WOULD BE SERIOUS STOP PERSONALLY I AM /UCH MORE OPTIMISTIC BECAUSE I BELIEVE MOST OF DIFFICULTIES WHICH MONTAGUE NORMAN NOW OURSELVES CAN BE TAKEN CARE OF WHEN DEFINITIVE LOAN IS NEGOTIATED WITH THE GERMANS AND REPARATION COMISSION STOP PRESSURE PUBLIC OPINION EVERYWHERE WILL THEN BE VERY GREAT BOTH BANKERS AND COMMISSION TO REACH SATISFACTORY AGRMENT SITUATION HERE WILL BE MECR.ILTLUENCED BY ATTITUDE OF GERWWS ViHICH WILL PROBABLY BE DISCLOSE TOMORROW STOP ASSUME YOUR CONDITION(S) TODAY MORE URGENTLY JUSTIFY(IES) ACTION THAN TWO WEEKS AGO STOP iF BOARD THINKS HOME CONDITIONS REQUIRE IMMEDIATE ACTION I (VIE) AGREE ALTHOUGH CONDITIONS HERE ARE NOT AS GOOD AS I HAD HOPED OR AS SUPERFICIAL ACCOUNTS INDICATE aiS0,1177,,r=11,,,VOMIIIRIMPOWISIRSIMIfirrilCY, 110.47111 ..astogril.kr Amic7121.1.717 r August 4, 1924. Dear is Morrison: would very greatly appreciate your courtesy in sending the following dispatch in code to Mr. Owen D. Young: looks as though the gction whioh we have postponed for two weeks should be taken this Thursday. Have you any Strong." views. You will, of couree, realize the corfidential nature of this communication and safeguard it from becoming known in your office. ThEmking you in anticipation, 1 am, Yours very truly, Miss L. V. Yorrison, Secretary to Mr. Owon D. Young, General Electric Co., 120 Broadway, New York City. DS.117 1g1, "2- g,e0, 0 ovri'' 120 BROADWAY, N EW YORK ROOM 2058 OWEN D. YOUNG July 21, 1924. ACK NOW t .EDGED JUL 2 1 1924 R Benjamin Strong, Esq. Federal Reserve Bank, 15 Nassau St., New York. Dear Governor Strong: I quote below message from Mr. Young which came in code on Saturday too late for transmittal to you. "Private and Confidential for Ben Strong. I am in favor o rate reduction as suggested but I urge that no action be taken earlier than the thirtieth The situation here is not hopeful Stop We should know within a week whether we face a constructive program or a breakdown. Have seen Montague Norman who is sending you direct his message which I have not yet seen'" Yours very respectfully, LVM Pob-m4 July 17, 1924. Dear rise Morrison: would very greatly appreciate your courtesy in sending the following dispatch in code to Mr. Owen D. Young: *Frees dispatches give impression of undercurrent of divergent views between two principal parties which might defeat or delay adoption of plan stop Conditions here as to credit and public feeling are most favorable we have had since armistice for successful loan and subsequent cooperation looking to return to gold standard along lines of our recent discussions stop Speaking only for myself I feel that those conducting negotiations should realize that these favorable conditions may be jeopardized if disputes and delays throw doubt upon the good will with which the settlement is undertaken whatever its form may be stop We are contemplating recommending another rate reduction next or following week which is justified by local conditions but would first like your own views as to outlook on other side stop Suggest talk with Norman. Strong " You will, of course, realize the confidential nature of the communice tion and safeguard it from becoming known in your office. Thanking you in anticipation, I am, Yours very truly, Mies L. V. Morrison, Secretary to Mr. Owen D. Young, General Electric Co., 120 Broadway, New York City. http://fraser.stlouisfed.org/ BS.211 Federal Reserve Bank of St. Louis 1 etr7.2 WIR.ZLESS July 10, 1924. Young Thanks for message- Please consider following The integrity of the plan in the last analysis depends upon maintaining the value of new currency and this in turn depends upon the kind of control exercieed over the general operations of the bank and the management of transfers so I attach great importance to the character of the appointments controlling those matters and to the maintenance of the principle that the currency system shall be established as soon as possible on a gold basis and from the outset maintained at parity with gold if any technical points arise in this connection I hope you will cable me and I will burn the wires The discussion of the supremacy of dollars and sterling is liable to confuse the main point and breed dissention That subject will solve itself,: by the return of sterling to par which is rapidly becoming an obvious necessity If England and Germany accomplish that the way is than prepared for a program along the line of our Washington diecussion Appointments to important positions should give regard both to the security of the loan and to political prejudices in Europe where antagonism against the so-called money interests should be minimized principal egggestione Success to your efforts Strong These are my icet-fr p Pet-A4 17 EAST 8011..11 STREET ,-atta - c6.r,e, /.F 7/ 4 , 164,0,/; -u.se t/ e'Lle") \ZO . f Y/; rt1 et,/ tte, r tco",-/- cf-SLI r/ A A,. (1.? L /. 7atir s......tav - C. f4.., Sio toni4.22 Irlicate service desired: Date,--March 12, 1924._ CABLE DEPARTMENT: URGENT Please send the following ielevam to: cable STR,a.,HT WEEK" END DAY LETTER This message should not be tested should NIGHT LETTER 141. Confidential PA- ovsl* Owen D. Young, Ritz Carlton, Paris. I understand Dr. Schacht is in Paris Is it not important to point out to him importance of resting his credit bank on stable gold instead fluctuating sterling Incidentally it would be invaluable advantage for AmericFT: discount market if as a result of Americas entering the field now substantial portion future German gold reserve were invested in dollar acceptances England realizes that and makes sac. -. rifices to preserve predominance Sterling market. Could not fllerica be brought into the first line right now pan i passu with British banks? Pardon this cable but am frankly alarmed. at thought that we may miss this unique ppportunity for. putAvv, /Aq. ,h(.414,E,144 /ting America's discount market on the map,4Kihdest regards CHARGE TO: Paul M. rburg. G EN ERAL ELTCTRIC COMPANY 120 BROADWAY, N EW YORK OWEN D. YO U N G bLbruary 29, 1924. CHAIRMAN OF THE BOARD ro, pept).1 Mr. Benjamin Strong, Federal Reserve Bank of New York, 15 Nassau Street, New York City. Dear Mr. Strong: The following radiogram was received by this office from Paris dated February 28th addressed to you: "FOR BENJAMIN STRONG MESSAGE RECEIVED AND VERY SORRY BUT OP CCURSE I ACCEPT AND THANK YOU FOR ALL YOUR EFFORTS SIGNED OWEN YOUNG" Very truly yours, July 23, 1925. Dear Mr. Young: Here ie a letter I got from Strong a couple of days ago which I forgot to ehow to you to-day. I think you might be in.L. treeted to 141tC it before you 0 a4tay. Hoping you will have a very euccessful, and I hope very enjoyable trip, I am, Sincerely yours, Owen D. Young, Esq., 120 Broadway, le-N York City. r- 120 BROADWAY NEW YORK ROOM 2558 October 28, 1925. NV dear Governor Strong: I regret very much that I can not come to your dinner to Dr. Schacht an Thursday evening at the Links Club. I had supposed that the plan was that we were to meet him at luncheon on Thursday. I have an engagement of long standing to speak to the Electrical MAaufacturers Club on Thursday evening, and as their meeting is to be held at the Westchester Biltmore Country Club, I can not possibly come to you. I regret this deeply because I have looked forward to a dinner of exactly this kind given to Dr. Schacht. Very sincerely yours, Governor Benjamin Strong, 33 Liberty Street, New York City. 0P` 0 1:4,1 0 201d-i0 St\c10a2A01,-: CY/\17-302-LI tAid I 9261 63. DO Oototer 60, 1925. My dear Owen: am sorry indeed you coul not be with UF on Thursday evening, and 1 appreci,te your writing me as you did. director e The ch,r1ge in the pitt to have Dr. Schacht met our OGeb.8i0r1C0 by the fct it '4as nece6e,ary for him to 86e the Secretary of State in '. .aaninAon on Thursday mornirv). So on r.,ther ahor:, notice, e to make. c!inner,party of it. Hoever, e r. chacht will te here until about the fifteenth, I Jm hopeful that you and ha ',.ndI can have a wiet dinner together, 4th opportunity for chat; poseibly at my apartment. He will return from Chicago by a week from Yond-y, ,klen 1, Loo, will be Lack from 4ashington. ihve you a f'ree evenin,', that week which we might hold tentatively? 4th beet regards, I am Faithfully your, Mr. Owen Young, 120 Eroadway, New York (signed for Govrnor Strong in hie aL8ence) 120 BROADWAY, N EW YORK ROOM 2058 (72b November 2, 1925 OWEN 0 YOUNG My dear Bens a week from Monday is the ninth. I aln be in town on that evening and on Friday evening, the thirteenth. The intervening days I am obliged to go out of town as I have to speak in 6yracuse and Worcester, and it will not be physically possible for me to get back here and meet any appointments and those speaking engagements. There is a bare possibility that General Dawes may be here on Friday evening, the thirteenth, and that he will stay with me. If so, it might be interesting for you and Dr. Schacht to have dinner with me at my apartment that night. I will know probably on my return from the country on Thursday of this week whet the General's plans are and then I will write you again or let you know at the Board meeting. Yours v NT. Benjamin Strong, 33 Liberty street, New York City. y sincerely, t . ,*;(1. L .. sc. 1 : _aia , 17 - . r, :Law ieem inc., , . , .. ":1Vt: ' ."..) .' 7:1 tr.1,..3.._''ti , -,, .. KaDiti ,:. .! :.., ki 4 . , 1 ,. il ;Tx T.1"!..1`. T-1 4imirr e' frraiOG: dri3 JS - 1., I t 110V, 1 It ...,,,, ahi,1 : :._. , Mit November 6, 1926. My dear Owen: Your note of November 2 reached me here in WaShington when I was tied up in a. conference. And this is really a con- firmation of what was telephoned to you this morning from New York. Owing to Dr. Schacht 's absence in Chicago, end my absence here, it is impossible for me to send a reply until Monday, when I shall do so by telephone. I understand that Monday is now out of the question in any event, so if we can dine on Friday the thirteenth it would suit me slAendidly. I know you will underat:)nd and excuse this belated zeTly. Sincerely yours, Mr. 07en Young, 120 Broadway, New YJrk City. /)AAA CV1 '-')14 COPY OF TELEGRAM 1927 JAN 5 BM BILTMOLLE NC PM 12 1030A OWEN D YOUNG GENERAL ELECTRIC COMPANY 120 BROADWAY NEW YORK NY REPLYING TO WIRE RECEIVED FROM CASE WHILE WE HAVE NOT HEARD WRAT CLARENCE LEARNED FROM HIS VISIT TO WASHINGTON YESTERDAY FOR PURPOSE OF DISCUSSING PROPOSAL THAT HE FILL FIRST VACANCY HARRISON AND I BOTH AGREE THAT IT WOULD BE aPLENDED IF YOU MOULD ACCEPT THEIR PROPOSAL STOP OUR ONLY FEAR IS HOWEVER THAT IT WOULD BE SO SATISFACTORY AS TO ENCOURAGE THE BOARD FURTHER TO DELAY FILLING FIRST VACANCY STOP CASES TELEGRAM INDICATES BOARD BELIEVES THEIR PROPOSAL TO YOU MOULD FACILITATE MUTUALLY SATISFACTORY ARRANGEMENT CONCERNING FIRST VACANCY WHICH THEY SAY SHOULD BE FILLED BY SOME ONE BETTER KNOWN STOP IN VIEW 01 THIS INFKRF.NCE HOPE THAT YOU WILL BE ABLE TO CONVINCE BOARD OF WISDOM OF A COMBINATION OF THEIR PROPOSAL ANL OURS AND THAT YOU GILL BE ABLE TO ACCEPT ON THAT BASIS SO AS TO HAVE WHOLE MATTER PROMPTLY SETTLED STOP YOU REALIZE OF COURSE THAT THEIR PROPOSAL NCULD DISQUALIFY YOUR BEING AN OFFICER DIRECTOR LIPLOYEE OR STOCEHOLLER OF ANY BANK STOP BEST TO YOU AND ALL AT THE BA1NK RI= US BOTH STRONG January 5, 1927. to M-. Case, Telegram telephoned by Miss Morrison, ::::ecretn-y to M. Gwen L. Ioung, at 3:45 0. m. Asheville, C. 1/5M. "0. L. Young After full discussion seems best for Harrison to return Nev ion( tonight so so to report fully to you anc directors tomol ow. Hope this satisfactory. Benj. Ltrong." Miss Morrison reports that Mr. Young was called uptown, but said he zould this matter with you tomorrow. GiECUSC New York, January 8, 1927. C) Dear Mr. Governor: The developments during the past week have been momentous. I was called to Washington on Tuesday, the 4th instant, and was most cordially received by each member of the Board. The outstanding feature of my contacts with the memoers thereof was their manifestation of friendliness to our Board and to yourself. quiry Without solicitation by in- or suggestion on my part, they testified in unmistakable sincerity as to a genuine friendliness, admiration and respect for you personally, while their reference to your masterful leadership was not less emphatic than it was earnest and sin- cere. As a matter of fact they are proud of your record. Their appraisal of your work during and since the war stands as a splendid and eloquent monument of appreciation. Mr. Miller was quite as voCal as his colleagues in this connection. -2- You can imagine the thrill it gave me to receive their recommendation that Mr. Owen Young be transferred to a Class "0" status and thereafter be appointed by them as Deputy Chairman, only to be followed by the suggestion that Mr. Gates McGarrah be appointed by them as Chairman of the Board and Federal Agent. While dispelling all misgivings as to the possibility of naming a less distinguished and able incumbent of that key position, it brought a compelling conviction of their interest in the New York Bank, in you personally, and in their wisdom in thus fulfilling one of their most Important statutory responsibilities. Surely the biggest and most important Bank in tne world is entitled to such a set up as this presents. I am convinced that in giving yourearnest support and whole-hearted sympathy to this action, and thereafter in according Mr. McGarrah your cordial and ccmplete cooperation in prosecuting the operations of the Bank, your own peace of mind and its welfare can thus be assured. It will, I am persuaded accomplish another most important result, and that is the certain preservation of your own well deserved reputation for unselfish, distinguished and successful service in the upbuilding of the system, and at tne same time prove again your readiness to do all that in your power lies to safeguard its perpetuity in the interest of our country and of the world. Faithfully you /4 New York, January 8, 1927 De r Mr. Governor: The develoments dur inc the past week have been momentus. I ma called to ..ashington on Tuesday, the 4th instant, and was most cordially received by each member of the Board. The outstanding feature of my contacts with the mein al's thereof was their nanifestat ion of friendliness to our Board and to yo.xself. Without solicitation by inquiry or s'icr.,,estion on my part, the - testified in unmistakable sincerity as to a genuine friendliness, admiration and respect for yen personally, while their reference to your master tal leadership wa: not less emphatic than it was earnest and sincere. As a matter of fact they are proud of year record. Their appraisal of your work duri-kg and since tle war stands as a splendid and eloquent monument of appreciation. Mr. Miller was 3,12.1.to as yodel as his colleagues in this counection. You can imagine the thrill it gave me to receive their roc annvondition that Mr. Owen Yaang be transferrod to a Class "C" status and thereafter be appointed by them as Only t o be followed by the sugcest ion appointed by thrm as Chairman of Deputy Chairman, that Lr. Gatos UcGarrah be the Board and Federal Agent. 'ails dispelling all misgivings as to the possibility of naming a less distinguished and able incumAnt of that key position, it brought a compelling conviction of their interest in the Nei; York Bank, in you ,personally, and in their wisdom in thus fulfilling one of their mostimpertant statutory responsibilities. Surely the biggest and most important Bank In the world Is entitled to such a sot up as this presents. support and whale-hearted according I am convinced that in aiving' yowearnest symathy to this action, and tereafter in Ur. McGarrah your cordial and c cmpIete cooperation in prosecuting the operations of the Bank, your own peace of mind and its welfare can thus be assured. It will, Iam persuaded accomplish A another most important rem*, and that is the certain preservation of your own well deserved reputation for unselfish, distinguished and successful service in the upbuilding of the vstem, and at the same time prove agnin your readiness to do all that in your power lies to safeguard its perpetuity in the interest of our country and of the world. Faithful4 yours, New York, January 8, 1927. Dear Governor: Since October a very great many unusual and fundamental problems concerning our work and responsibilities have confronted the directors of the Federal Reserve Bank. The developments since Mr. Jay's resignation on the 4th of December particularly have been fraught with great significance as to the future policies and the effectiveness of the Bank. The lack of your constant counsel and advice has been keenly felt by all of us. While all of the directors have appreciated the great responsibility resting upon them and have given to the limit from their knowledge and experience, the duty of acting sanawhat as a clearing house has devolved, without planning but for sundry reasons, upon the three of us who are writing these letters. In thinking together, consulting together and studying the wonderful performance of the Bank in its brief history in serv- ing our nation, and not alone our nation but the nations of Europe and it is not too muth to say all of civilization - the outstanding, the startling, the inspiring part of it all is the great work you have done, and the sacrifices you have maue to do it. The wisdom of maw men and centuries of experience were behind the framing the passage of the law. possible to give anyone or any small group of men more than the credit of performing a duty in a most capable way. But even their good inten- tions would have come to naught but for Benjamin Strong, who threw him- It wo -2- self body and spirit into making a wonderfully fine theory a practical success as a benificent instrument for the service of mankind. Your interpretation of the law in its greatest fundamental, that Of having a self-reliant, courageous, independent administration of each regional bank, and in the manner of administering the great responsibilities, is unquestionably the sound one. The difficult pioneer work of interpreting and establishing tnese principles can justly be compared to the work of the great and distinguished Chief Justice, John Marshall, wren it fell to his lot to analyze, understand and interpret the constitution of our country. Your arduous labor as the great pioneer has been performed well, and we think you have almost established the principle. done must be preserved. Villat you have It is for that great purpose, after weeks of de- liberation, considering as we believe every pit of the evidence obtainable and the conceivable future possibilities, and in our sense of duty in meeting the great responsibilities which rest upon us and our sense of appreciation for the wonderful work you have done, as well as our obligation to you as a friend to serve you and preserve your great work for the generations to come, that we deem it imperative to place our views before you. We think a situation has developed, through no planning or influence of our awn, whiCh gives the fairest promise that we could imagine, not only to hold what you have already accomplished, but to add the few finishing touches that would complete it, and fix for all time the high '7 ideal you have conceived and worked for in our Bank. We believe we have investigated as you would have investigated if you had been here with us, we have analyzed as you would have analyzed, and have reached the conclusion that we feel quite confident you would have reached and which we believe when you have heard this presentation you will readily agree to. We have put upon Mr. Young the responsibility for presenting the facts in a letter that goest to you at this time. Yours most sincerely, Benjamin Strong, Esq., Asheville, N. C. New York, January 8, 1927. Dear Governor: Since October a very great many unusual and fundamental our problems concerning work and responsibilities have confronted the directors of the Federal Reserve Bank. resignation on the 4th Of The developments since Mr. Jay's December particularly have been fraught with great significance as to the future policies and the effectiveness of the Bank. The lack of your constant counsel and advice has been keenly felt by all of us. While all of the directors have appreciated the great responsibility resting upon them and have given to the limit from their knowledge and experience, the duty of acting somewhat ae a clear- ing house has devolved, without planning but for sundry reasons, upon the three of us who are writing these letters. In thinking together, consulting together and studying the wonderfial performance of the Bank in its brief hiatory in serving our nation, and not alone our nation but the nations o'.7 Euroae - and it is not too much to say all of civilization - the outstanding, the startling, the inspiring part of it all is the great work you have done, and the sacrifices you have made to do it. The wisdom of many men and centuries of experience were behind the framing and the paesage of the law. It would be im- possible to give anyone or any small group of men more than the credit of performing a luty in a. most capable way. But even their good inten- tions would have come to naught but for Benjamin Strong, who threw him- -2 self body and spirit into making a wonderfully fine theory a practical success as a beneficent instrument for the service of mankind. Your interpretation of th,l, law in its greatest fundamental, that of having a self-reliant, courageous, independent administration of each regional bank, and in the manner of administering the great responsi- bilities, is unnuestionably the sound one. The difficult pioneer work of intrpreting and establishing these principles can justly be compared to the work of the great and distinguished Chief Justice, John Marshall, when it fell to his lot to analyzekunderstand and interpret and conetitution of our country. Your arduous labor se the great pioneer has been pertiormed well, and we think you hays almost established the principle. done Evert be preserved. What you heve It is for that greet purpose, sfter weeks of de- liberation, considering. ef we believe every bit of the evi dence obtainable and the conceivable future possibilities and in our sense of 'duty in meeting the great rtsponeibilities which rest upon on' end cur sente of ap;recietion for the wonderful work you have done, es well as our obligation to you as & friend to serve you and preserve your great work for the generations to come, that we deem it imperative to place our vicvs before you. We think a situation has developed, through no planning or influence of our own, hich gives th.e fairest promise that we could Imagine, not only to bold what you have already accomplished, but to add the few finishing touches that could complete it, and fix for all time the high Ideal you have conceived and worked for in our Bank. We believe we have investigated as you would have investigated if you had been here with 118, we have analyzed as you would have analyzed, and have reached the conclusion that we feel quite confident you would have reached and which we believe kl.en you have heard this presentation you will readily agree to. We have put upon Mr. Young the responsibility for presenting the facts in a letter that Eoes to you at this time. Yours most sincerely, Benjamin Strong, Esq., N. C. (Dictated by S.J.R. 3igned by ail 3) New York, January 8, 1927 Dear Governors As you know, Mr. Woolley vent to Washington last Tuesday in response to the tender which the Federal Reserve Board had made to him of the Vice Chairmanship of the Board of Directors of the Federal Reserve Bank of New York. Mr. Woolley explained to the Board that he preferred not to accept that designation for personal reasons and urged the reappointment of Mr. Saunders. He learned at that time that the Board had definitely taken action establishing the principle of rotation in office of Government directors, and to secure that result Government directors would not be expected to serve more than two terms. Mr. Saunders had already been notified of the attitude of the Board. As a result of the discussion, it was suggested that Mr. Young resign as a Class "B" director and accept from the Federal Reserve Board appointment as a Class "C" director with the designation of Vice Chairman of the Board. The Federal Reserve Board, wit concurrence of the Secretary of the Treasury, and the Board of Directors of the New York Bank with the concurrence of the Executive Officers of the Bank, were all unanimously in favor of that solution, and accordingly on Thursday next, Lt. Youne will resign as a Class "B" director and will be named by the Federal Reserve Board as a Class "C" director with the designation of Vice Chairman. Mr. Young, in his letter to Governor Crissinger, While not making it a condition of his acceptance of the Vice Chairmanship, expressed the hope that a permanent Chairman would be promptly chosen so as to relieve Mr. Young from the burdens of Acting Chairman and - 2 - also because it would be in the interest of the Bank. The Federal Reserve Board indicated to Messrs. Woolley and Reyburn on Tuesday and Wednesday of this week, that the Board was ready and anxious to make promptly appoint- ment of Federal Reserve Agent and Chairman of the Board. The Federal Reserve Board expressed the hope that a man of the standing and experience of Mr. Gates MCGarrah might be found Who would accept that important place. In fact, the Board expressed the view that they would act on Mr. McGarrah's appointment at once and inquired of Messrs. Woolley and Reyburn as to the best method of presenting the matter to Mr. McGarrah. They asked the pri- vilege of making their suggestion on that matter to the Board later. Afte r the Board had been advised of Mr. Young's accept- ance of the Vice Chairmnoship, Governor Crissinger called Mr. McGarrah on the telephone and asked him to come to Washington. As a consequence, Mr. McGarrah is going to Washington on Monday evening and will spend Tuesday with the Federal Reserve Board. At that time the Board will urge upon him acceptance of the Chairmanship of the Federal Reserve Bank of New York. It is the imminence of this action Which leads us to join in this long letter to you and send it by the hand of Mr. Harrison. Inasmuch as the Board is ready to act on an appointment idich is satisfactory to us all, it seems to us that we Should make every effort not only to facilitate that action but to urge upon Mr. McGarrah the acceptance of the position. At tte conference in Washington, the members of the O 3 - Federal Reserve Board expressed the greatest confidence in and If there was any feeling on the part of respect for Dr. Burgess. the members of the Board, Which we doubt, that the New York Board had overstepped the proprieties in recommending Dr. Burgess, it is now removed. The Reserve Board, however, feel that it is more desirable at this time to take a man of high position from the banking world for that office than it is to promote a man less well known from the organization itself. The Board recognizes the beneficial effect of the appointment of a young man like Dr. Burgess on the morale of the bank organization, but they feel that the other course would now be wiser in the interest of the Bank of New York and the System as a whole. It is certainly impossible for us to say that that is an unreasonable position forthe Board to take. It has much to commend it, and indeed if we could obtain a man like Mr. McGarrah, we believe that the suggestion of the Board would be wiser than our own. We say this retaining our high appreciation of Dr. Burgess and supporting firmly our original presentation of his name. Now the question is can Mr. McGarrah be persuaded to accept the appointment. We think that lies largely in your hands. Obviously,he would not ccnsider it for a moment unless you made it known to him, clearly and enthusiaastically, that yau would like to have him associated with ycn in the work of the Bank in the full and equal partnership which should exist between two men occupying those high positions. We believe that if Mr. McGarrah can be persuaded to accept this appointment, it will improve greatly the relations between - 4 - the Federal Reserve Board and the New York Bank. We confidently believe that many of the irritations which have troubled you so much and given us so much concern will be alleviated and that you will have as Governor not only less troubles but a freer hand in working out the great programs Which you have initiated and Which, with difficulty, have been executed. One thing more would probably be necessary to induce Mr. McGarrah to accept the appointment, and that would be that the Invitation of the Federal Reserve Board, showing their unanimous action and emphasizing the importance of the Federal Reserve Bank of New York and the position of Chairmanship, be made public. Such an invitation would not be in derogation of the position of Governor but would emphasize the importance of the position of the Bank. Now we realize fully that this situation is not without difficulty. On the one side it is necessary, in justice to Mr. McGarrah, to create a situation so that the general public will not feel that he it stepping down from his high position in the banking world and taking a less important place. If that impression were created, false rumors would immediately arise of unpleasantness in his existing association and might have unfavorable reactions on the Chase Bank.. Therefore, we must all join in doing everything we can to emphasize the importance of the position to which Mr. MCGarrah is called. On the other hand, in creating that emphasis,none of us would be willing that any reflection should come on the dominance of the Governorship in the handling of the bank. That would be doubly unfortunate. First, it would be wholly unfair to you and certainly you must know that we Who sign this letter are as jealous of your position as you ought to be. Again believing as we do that the New York Bank should function as an individual unit, we could not Agree to any program which would give emphasis to the notion that the Federal Reserve Board was running our bank through its appointee Chairman of the Board. the Federal Reserve Agent and These difficulties we are confident can be met with justice to you and Mr. McGarrah and to all interests involved. We mention them only because we want you to know that we have them in our minds and that everything that we say in this letter is in full appreciation of those problems. On the other hand, we feel most deeply that no greater thing of advantage could happen to the Federal Reserve Bank of New York than to have you as Governor supported by such a man as Gates McGarrah as Chairman. In our judgment, if the matt rightly handled, ,it will increase in the public estimation the importance of the Office of Governor. From what we know of your attitude toward this *hole situation, we assume that this program will not only be acceptable but will be highly satisfactory to you in all respects. If you have any reservations about it, however, then we should like to talk the matter over with you quite fully before you came to any conclusion. We feel it so important that either one or all of us even, if that were necessary, would gladly come to Ashville for the purpose. However, that will probably be unnecessary unless we have fully misinterpreted your position. Most sincerely yours, Benjamin Strong, Esq. Ashville, N. C. New York, January 8, 1927. Dear Governors As you know, Mr. Woolley went to Washington last Tuesday in response to the Board had made to him tender which the Federal Reserve of the Vice Chairmanship of the Board of Directors of the Federal Reserve Bank of New York. Mt. Woolley explained to the Board that he preferred not to accept that designation for personal reasons and urged the reappointment of Mr. Saunders. He learned at that time that the Board had definitely taken action establishing the principle of rotation in office of Government directors, and to secure thet result Government directors would not be expected to serve more than two terms. Mr. Saunders had already been notified of the attitude of the Board. resign As a result of the discussion, it was suggested that Mr. Young as a Class "B" director and accept from the Federal Reserve Board appointed as a Class "C" director with the designation of Vtice Chiirman of the Board. The Federal Reserve Board, with the concurrence of the Secretary of the Treasury, and the Board of Directors of the New Yorkbank with the concurrence of the Executive Officers of the Bark, were all unanimously in favor of that solution, and accordingly on Thursday next, Mr. Young will resign as a Class "B" director and will be named by the Federal Reserve Board as a Class "C" director with the designation of Vice Chairman. Mr. Young, in his letter to Governor Criseinger, while not making it a condition of his acceptance of the Vim Chairmanship, expressed the hope that a permanent Chairman would be promptly chosen so as to relieve Mr. Young from the burdens of Acting Chairman and also because it would be in the interest of the Bank. The Federal Reserve Board indicated to Messrs. Woolley and Reyburn on Tuesday and Wednesday of this week, that the Board was ready and anxious to make promptly appointThe ment of Federal Reserve Agent and Chairman of the Board. Federal Reserve Board expressed the hope that a man of the stand- ing and experience of Mr. Gates W. McGarrah might be found who would accept that important place. In fact, the Board expressed the view that they would act on Mr. MeGarrah's appointment at aeyburn as once and inquired of Messrs. Woolley and method of presenting the matter to Mr. McGarrah. privilege of later. making their suggestion to the best They asked the on that matter to the Board After the Board had been advised of Mr. Young's accept- ance of the Vice Chairmanship, Governor Crissinger called Mr. McGarrah on the telephone and asked him to come to Washington. As a consequence, Mr. McGarrah is going to Washington on Monday evening and will spend Tuesday with the Federal Reserve Board. At that time the Board will urge upon him acceptance of the Chairmanship of the Federal Reserve Bank of New York. It is the imminence to you of this action which leads us to join in this long letter and send it by the hand of Mr. Harrison. Inasmuch as thE Board is ready to act on an appoint- ment which is satisfactory to us all, make every effort not only to upon Mr. McGarrah the acceptance of it seems to us that we should facilitate that action but the to urge position. At the conference in Washington, the members of the - 3 - Federal Reserve Board expressed the greatest confidence in and respect for Dr. Burgess. the members of the Board, If there was any feeling on the part of which we doubt, that the New York Board had overstepped the proprieties in recommending Dr. Burgess, it is now removed. The Reserve Board, however, feel that it is more desirable at this time to take t man of high position from the Ilank- ing world for that office than it is to promote s man less well known from the organization itself. The Board recognizes the beneficial effect of the appointment of a young man like Dr. Burgess on the morale of the bank organization, but they feel that the other course would now be wiser in the interest of the Bank of New York and the impossible It is System as a whole. for us to say that certsinly that it an unreasonable position for to commend it, and indeed if we could obtain a man like Mr. McGarrah, we believe that the suggestion of the onn. the Board to take. It has much Board would be wiserthan our We say this retaining our high appreciation of Dr. Burgess and supporting firmly our original presentation of his name. Now the question is can Mr. accept the appointment; McGarrah be persuaded to We think that lies largely in yoto, hands. Obviously, he would not consider it for a moment unless you made it known to him, clearly and enthusiastically, that you would like to have him associated with you in the work of the bank in the full and equal partnership which should exist between two men occupying those high positions. We believe that if Mr. Mcnarrah can be persuaded to accept this appointment, it will improve greatly the relations between 4-. the Federal Reserve: believe that many of Boardand the New the York Bank. We confidently irritations which have troubled you so alleviated and much and given us so much conoern will be that you will have as Governor not only less troubles but a freer hand in working out the with difficulty, great programs which you have initiated and which, have been executed. One thing more would probably be necessary to induce Mr. McGarrah to accept the appointment, nnd that would be that the invitation of the Federal unanimous action and emphasizing the Reserve Board, showing their importance of the Federal Reserve Bank of New /ork and the position of Chairmanship, be made public. Such an invitation would not be in derogation of the position of Governor but would emphasize the importance of the position of the Bank. Now we realize fully difficulty. that this situation is not without On the one side it is necessary, in juetive to Mr. McGarrah, to create e situation so that the general public will not feel that he is stepping down from his high position in the banking world and taking's, less important place. If that impression were created, false rumors would immediately arise of unpleasantness in his existing aseociation and the Chase Bank. Therefore, ne can to emphasize the importance is called. might have unfevorable reections must sll join in doing on everything we oC the position to which Mr. McGarrah Om the other hand, in creating thst emphasis, none of us would be willing that any reflection should come on the dominance of the Governorship in the handling of the bank. That would be doubly unfortunate. First, it would be wholly unfair to you and certainly you must know that we who sign this letter are as jealous of your position as you ought to be. Again believing as we do that the New York Bank should function as an individual unit, we could not agree in any program Which would give em- phasis to the notion that the Federal Reserve Beard was running our bank through its appointee - the Federal Chairman of the Board. Reserve Agent and These difficulties we are confident can be met with juetice to you end Mr. McGarrah and to all interests involved. ine mention them only because we went you to know that we have them in ear minds and that everything that we 65y in this letter is in full appreciation of those problems. On the other hand, we feel most deeply that no greater thing of advantage oould happen to the Federal Reserve Bank of New York than to have you as Governor supported by Such a man as Gates McGarrah as Chairman. In our judgment, if the matter is rightly handled, it will increase in the public estimation the importance of the office of Governor. From what we know of your attitude toward this ahole situation, we assume that this program will not only be acceptable but will be highly satisfactory to you in all respects. If you have any reservations about it, however, then we should like to talk the matter over with you quite fully before you come to any conclusion. We feel it so important that either one or all of' us even, if that were necessary, would gladly come to Asheville for the purpose. However, that will probably be unnecessary unless we have hilly misinterpreted your position. Most sincerely yours, (Dictated by O.D.Y. Signed by all 3) Benjamin Strcng, Esq., Asheville, V.. C. The Federal Reserve Board has informally advised the Board of Directors of the Federal Reserve Bank of New York of the intention of the Reserve Board, acting unanimously and with the express concur- rence of the Secretary of the Treasury, to nominate Ar. Gates McGarrah of New York as Chairman of the Board of Directors of the New The Board of Directors wishes to record its gratification at fork Bank. the nomina- tion of such an experienced and distinguished banker to not as its Chairman. The Directors of the Federal Reserve Bank of New York con- sides that the resignation of Mr. Pierre Jay as Chairman brings to an end the first era In the history of the Bank. Under the leadership of Mr. Benjamin strong as Goveruor and Mr. Jay as Chairman, the institu- tion has been created; its general habits and customs of doing business established; and its organization has become seasoned and adjusted both in periods of strain, suck as the war, and in periods of alternate strains and ease since the war. from every point of A new building has been erected, and view, the period of organization, initial growth and experience has been a truly marvelous performance, reflecting the greatest credit not only on the men above named, but upon their associates, the Deputy Governors, the Assistant iederal Reserve Agent, and the beads of departments, and broadly speaking all employees. A very real morale has been created both of loyalty to the institution and the System, and of service to the public.. During that period there has been between all of the men engaged, the most effective cooperation and the most unselfish and devoted effort which has accounted for the success of the Bank, and leach it is hoped may be continued through all Its life as a guaranty of the successful administration of this great undertaking, and as a monument to its officers. The Board of the New York Bank believes that at the this era the domination of a man of the standing close of of Mt. Gates McGarrah as Chairman of the Board and his aceeptanoe of that office sill per- manently set the standards for the future so that the entire financial community Governor of will recognise that positions of Chairman and the Cederal Reserve Bank of New York are the highest financial positions in this tederal the Reserve District. By way of expressing their appreciation of the action of the -3Reserve Board and of Mr. McGarrahls acceptance, the Board of Directors of the New York Bank, with the approval of the Governor, wish to establish In this instance such relationship between the offices of Chairman and Governor as exists quite generally between those offices in the great commercial banks and industrial institutions of this District, and therefore, the Board grants to the Chairman such powers as may be needed to accomplish that result. This grant is made supplementary to all powers which the Chairman has under the authority of the iederal Reserve Act and to all which have been or may be from time to time conferred upon him by the federal Reserve Board under the authority of the Act. In taking this action, the New York Board does not wish to raise any issue 48 to where its authority under the law begins or ends In the matter of delegating powers to the Chairman. Its only purpose is to make clear that so far as the New York Board can grant them, the Chairman shall have all the powers necessary to establish the relationship above indicated. It has been thought wise not to specify with any particu- larity the powers and duties of the two offices, and we believe that a 4 is not generally done in other institutions, because such specifications are quite likely to turn out to be limitations rather than grants of powers, It is generally recognized that the Chairmau, as the presiding officer of the Board, Shall be the director of such policies of the Bank as the Board of Directors lay from time to time adopt with the approval of the iederal Reserve Board exercising their supervisory powers under the aot. It is also reoognised that the Governor shall be the executive head of the Baak with the duty and responsibility of executing all action taken by the Board exaept in those specific cases where some exceptional duty is delegated to the Chairman by the Act or by the Reserve Board under the act. This action is taken at this time in order that experience ay be gained during the period of mft. lioGarrah's chairmanship as to how the great offices of Chairman and Governor can best function in the idterest of the System in general and of this Bank in particular. At the end of the Chairmanship, or indeed during it, and in the light of such experience, suoh formal action can be taken, as may be needed, to establish those relationships for succeeding periods. It is apparent that such experience should be had before final action is taken, because in the case of this Bank, the Chairman is not, us in other institutions, elected by the Board, but named by the Federal Reserve Board, and it may not always huppen that the oboice will b0, as in this case, of a man .how either board, acting independently, would have unanimously selected for that position. It mey well be that as experience develops, the federal Reserve board will desire to act without being bound in az*/ sews by this resolution or being oonsidered to have acquiesced in it, except temporarily, until further action, and therefore, it has been passed so as not to require concurrent approval by the Wooderul Misery* Board or to commit it in any way even to the extent of that Board assenting to this delegation of power to their own appointee. , present board of Directors does express the hope, however, that subsequent boards of the iederal Reserve Bunk of New York will treat this resolution as a representation of its intent to :Zr. McGarrah as to the powers and duties of Chairmen, and that sudh -6 powers and duties will not be changed during his term of office as Chairman without his approval and consent, and that of the Governor of the Bank. Biltmore, N. C. Suaday, January 9, 1927. My dear Associates: Mr. Harrison has just handed me your joint letters, and reported the developments of the last week. Had I ever doubted the devotion which you feel for the Bank, which I never have, those doubts would be dispelled by such letters as you send me. Fven more, I am touched and greatly affected by the evidence they give me of your regard and confidence, and for that I am wholly unable to express even a small part of my appreciation. But it heartens me wonderfully at a time when it has been needed, to have such letters to read and ponder. I hope you understand, as you must, that no one can replace Mr. Jay as my partner and confidant; or in my affections as an associate in the The present situation, resulting from his resignation and my illness, and now the termination of Mr. Saunders, service on our Board - leads me to write you as follows: First. You need have no thought that I shall attempt to accomplish the impossible in seeking or asking to have Burgess appointed. judgment, and still is, that in the long run, that would prove best for the Bank and the System. All this I have explained, and realizing now that it is im- possible, I cheerfully accept that decision, with which I understand our directors and senior officers agree. Second. There need be no hesitation in agreeing to any appointment on the score that it would appear, within or without the System to Minimize my personal position or authority in the Bank. It was always a regret to me that Mr. Jay never enjoyed the full recognition, publicly or privately, which he should have had. My effort has always been to make that clear, as you may recently have observed. So please dismiss any misgiving on that score. -2- persons]. advantages for myself, I would not now be in the Federal Reserve Bank. Third. As the Federal Reserve Board has decided not to appoint Dr. Burgess, I am fully and wholeheartedly in favor of the appointment of Mr. McGarrah, and have addressed the enclosed letter to him, for delivery as and when you decide, hoping that it may aid in inducing his acceptance. Fourth. The possibilities of misinterpretation of his appointment by the public, as you point out, are much in my mind. It has no personal signifi- cance for me, but has for the Bank and for Mr. McGarrah. My hope would be that such statement as the Federal Reserve Board and the Chase National Bank, see fit to issue to the press, can be carefully examined and agreed in advance. Of course I would appreciate seeing them, but that is not necessary if you are allowed to pass on them. Fifth. It seems important that Mr. MoGarrah be fully advised of the scope and character of his work and responsibilities in the Bank before he decides. Any change, certainly any considerable change in the present assignments, would involve many changes in our organization and possibly personnel, which I am sure would be detrimental. Sixth. We cannot overestimate the value of having Mr. Young accept the office of Deputy Chairman. It will strengthen our hands with the Federal Reserve Board and with the public. We owe him much already and this greatly increases our debt. Seventh. I have no fears that in fact, or even in appearance, these changes in our Board will alter or weaken executive management such as the law intends. Eighth. The outstanding failure of the past twelve years work, so far as I am personally concerned, is undoubtedly the inability to establish and maintain such relations with the Federal Reserve Board, as we should enjoy. Possibly other methods could have accomplished this, without too great sacrifice of The proposed appointments may, and I am hopeful that they will, independence. accomplish what I have failed to do. C) Nothing would please me so much, just now, as the visit you Ninth. are good enough to suggest, - but frankly I have no reservations to express or deYou may say to Mr. McGarrah that if any argument of mine is needed to bate. persuade him to accept, I would hope to have him come down and let me talk it over And if he does accept, I shall gladly make it my first responsibility, - with him. as it will also be a pleasure, to do everything in my power to make his work a success and his association with us a joy and satisfaction. Finally, I must add a few personal words.- It is as I have had with such directors as we now have, that the greatest satisfactions are realized. Your attitude, your earnest endeavor at any sacrifice, to serve the best aims of the Bank and of its officers, does give me a thrill of pleasure which makes it all worth while. Please understand how grateful I am, Sincerely, (Signed) To Messrs. Reyburn, Woolley and Young. (Note: The above is a typewritten copy of Mr. Strong's handwritten letter.) B. S. CCAFI': :ilAL Janu-ry 11, 1927. 1,r Mr. Young: I returned from Asheville yesterday afternoon, and am enclo6in a copy of h letter which Mr. Strong gave me to hand to you, Mr. ioolley and Mr. Feyburn, together with a copy of a letter which he wrote to Mr. McGasrah and uhich Mr. heyburn handed to Mr. McGerrah yesterday afternoon before he left for tashington. I shall, of course, be clad to tell you about my trip to Asheville at any time that suits your convenience. Suffice it to say now that Mr. Strong Was unqualifiedly in favor of the whole program. Very sincerely yours, Mr. c/o 120 New Owen D. Young, General Electric Co., Broadway, York City. MLitt Fnce. ISC. 3. 1-75M-9-23 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE DATE To 192_ _ SUBJECT. FROM # 12.0 7tte,E,e_coi) ortE ?Icto-0 q_pticuriTy ovr\ Z Ca/tA CLO a okm , fo-- ) ^ - /41-ep 171,4y "i-rvtj_ 7-10-wil et/Y\ 1C4 Pd-r-o7Q1'artuct.. Arvo_11(--- 1-64v1Co 4180. 8. 1 80 M FEDERAL RESERVE BANK 12.28 OF NEW YORK OFFICE CORRESPONDENCE To _0. D. T. FROM DATE JaP- 191 1927 192_, SUBJECT: B. S. Par. marked "A" will be interpreted by the particular person with whom you are dealing, =-19, fixing his authority in the bank as the "superior authority." I do not regard it as especially important, as that will or will not be the fact,- as circumetances and personalities later may develop. But it is important the words and letters be free from any ambiguity, = So it is merely now of exactly expreesire what the directors desire. that a question If they do not desire the Chairman to be the last and final "authority" in the bank - to "direct" the execution of the policies of the directere, then the expressions used will be come up to make difficulty. misleading, and later I am glad to agree to this or any other statement for him to base his decision upon - which the directors believe wise for the bank - except one which may be misunderstood - or mean something different for him than for I am also clear that only a more exact statement of the the rest of us. relationship, than one which is either ambiguous or indefinite, will be needed for this pertieular person. The one prepared is, I feel, a little indefinite. clear that the Chairman Why not make directors, that he represents the F. R. Board - that he participatein all decisions - and as a director is a participant in determining the policies - but is not the is the spokesman and executive head of the bank in measure supervisory. authority will (under operating and representative of organization duties. But if he is to direct the language) be the supreme. the execution of policies, I'd not System. his object to such a decision by the director, personally, - but believe it would be bad bank and for the He is in a for the Sc.i S. 1 815 m FEDERAL RESERVE SANK 12,5 OF NEW YORK nFFICE CORRESPONDENCEDATE To PROM 0. D. Y. Jan. 19, 1927 SUBJECT B. S. -2Please do not overlook that it has long been desired by some members of the F. R. Board - that the Chairmen should be in fact the executive and final authorities in the Reserve Banks. of that view). (See Parker Willis's book and his reflection Personally I think the directors are the supreme authority - and the Chairman is their representative - but not the executive head of the bank. Hence my fear of ambiguity. (copied from B.S. pencil memorandum) 192_ January 20, 1927. Dear Mr. Young: I am enclosing an original and four carbon copies of the memorandum which you left with me to-thy. As requested, I am sending e carbon copy to Mr. Whitmarsh without comment. I underetand that Mr. keybumn Is writing him separateiy. I shall send you ,.. copy of Pr. 't,rongts pencil memorncum to you sometime tomorrow. Very sincerely yours, Mr. OwenD. Young, 120 Broadway, New York City. January 21, 1527. Dear Mr. Young: I am encioeing the original and one copy of Mr. Strong's pencil note of January 19, concerning the memorandum which I took to Asheville on t,ednesday. I am also returning the original of your memorandum, of which I purposely have kept no copies. Sincerely yours, Mr. Owen D. Young, 120 Broadway, New York. City. GLH.MM Face. 1-7SM-9- 23 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To FROM DATE SUBJECT: 192__ M' . 1-75M-9-23 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE TO 0 DATE SUBJECT: FROM Vize Za,(, vv. tz/o 4//p1 tor ai,are( 192 . I-75M-9-23 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To DATF 1 92_ SUBJECT. FROM__ hryi, 7"4 461, 7/1-)4 ef,17 4f1 ev7L-. hartô the account of CLASS OF SERVICE DESIRED TELEGRAM DA. .ETTER NIGHT LETTER Patrons should mark an X opposite the class of service desired; THE wv74 UNION NO. WESTERN UNION NIGHT MESSAGE OTHERWISE WESTE Le: MESSAGE WILL BE TRANSMITTED AS A FULL-RATE TELEGRAM TEL, NEWCOMB CARLTON!. PRESIDENT CHECK AM TIME FILED GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT Send the following message, subject to the terms on back hereof, which are hereby agreed to (c ' c-i ' /.4c cOf cco iLc-7p( 4-6-fo.Le ta:CXF-71, CASH OR CII3 CLASS OF SERVICE SYMBOL TELEGRAM DAY LETTER BLUE NICHT 1VIESSAGE NITE NIGHT LETTER WESTE NI If none of these three symbols appears after the check number of words) this is a telegram. Otherwise its character is i ndicated by the symbol appearing after the check. TEL NEVVCOMB CARLTON. PRESIDENT UNION CLASS OF SERVICE SYMBOL TELEGRAM BLUE NIGHT MESSAGE NITE NIGHT LETTER AM DAY LETTER NI If none of these three 'symbol: GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT appears after the check number o words) this is a telegram. Other wise its character is indicated by thE symbol appearing after the check. A° 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. D27 FEP 1 )1- cPB242 36 CD NEWORK NY1 154P EiENJAL1 IN STRONG ST UYVE SALTS 201 ROAD B I LTNIORE FOREST B Irr TORE NCAR I AM QU ITE SA.T I SF IED THAT WE SHALL BR I NG THE PROGRAM THROMH SUCCESSFULLY STOP WE ARE NOW DEVELOP ING DEF IN I TE PLANS AS "AC HIS SIGNIFIED WILLINGNMSS TO ACCEPT IF PLANS CAN BE CARRIED OUT W ITH APPROVAL OF EVERYONE OWEN D YOUNG. 2 IS WE ILetter, r, ., /tod ay "rward.ed are , 1 4' iy to be _. ot like. I before Kited on onday A IvEsT, NIGHr ''MN UllioN GEr LETTER vy ENTION 144 '41URDAY EARLY UNION TEL NEWCOMB CARLTON, PRESIDENT CLASS 131- SLRVICt SYMUL TELEGRAM DAY LETTER NITE NIGHT LETTER AM BLUE NIGHT MESSAGE NL these three symbo If none of appears after the check (number of words) this is a telegram. Otherwise its character is indicated by the GEORGE W. E. ATKINS. FIRST VICE-PRESIDENT symbol appearing after the check. 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. ,tton Avenue, Asheville N. C NI 1/69 4717 .77 EPHONED TELEGRAM FEB 3937 2 PM NEWYORK NY 2 9 BE LJA11 IN STRONG ST UYVE SANT S ROAD B I LTMORE POREST B I LTMORE NCAR MAC IS HELD HERE TMAPORAR I LY BY SUBPOENA IN LAWS U IT WH ICH W ILL DELAY H I S TR IP TO WASH I IZTON HAVE MADE APPO I trrikIENT POR H l'" THERE SAT IIIDAY MORN I NG THEN ALL DETA IIS W ILL BE AGREED UPON !NCI UD l'O11M OP ANNOUNCEMENT STO P E )CDPAC TED SALAR ir,S TWO PR I NC I PAL 07P I CRS W ILL BE EQUAL STOP HOPE TO I SUE ANNO UNCMIENT OM WEEK PROM TODAY AND THAT MAY P IRST WILL BE DATE OF TAK I NG OTT ICE STOP 171 IL BEST TO DO M I5" 1+ All a, CLASS C 1BOL TELEGI, DAY LETTL., BLUE NIGHT MESSAGE NIGHT LETTER NI TEL a/. AM Other- wise its character is indicated by the symbol appearing after the check. NEVVCOMB CARLTON. PRESIDENT GEORGE W. E. ATKINS. FIRST VICE-FRESIDTTF. DAY LETTER BLUE NIGHT MESSAGE N1TE NIGHT LETTER NL 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 no 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 IME, Received at 62 Patton Avenue, Asheville, N. C. J. cn35 C2 2/74 GET DRAFTS OP AN NO UNCEMENT TO YO U FOR YOM S UGE ST IONS AND APPROVAL BEFORE I SSUE STOP I N V 1E17 OF MANY T H I NGS TO BE DONE HERE D UP I NG NE >C1' WEEK OR TEN DAYS BEL IEVE .110R H IL IT usirm TO TAKE T TO V IS IT YOU STOP AFTER PRESS I NG MATTERS ARE CLEANED UP THAT WILL, NAT URA.LLY COME STOP DELIGHTED TO HEAR SUCH GOOD REPORTS FROM YOU AND I AM SURE THERE I S NOTH INC THAT YOU NEED TO WORRY ABOUT HERE OWEN D YOUNG. SYMBOL TELEGRAM WESTERN If none of these three symbols appears after the check number of words) this is a telegram. UNION Alif t.STE NITE CLASS OF SERVICE 23 RiLEABL THURSDAY MORNING PApas. FaEUARY 10 On receiving notification of the appointment of Mr. Gates M. McGarrah as Chairman of the Board of Directors of the Federal Reserve Bank of New York, Mr. Oaen_1on, Deputy Chairmen of the Board, issU t e following statemont. fhe directors and officers of the Federal heserve Bank of New York Appreciate highly the action of the Federal Reserve Board in naming Mr. Gates t. McGarran as Chains:en of the Board, imd they are compli- zented by Mr. V cGarrah's accetance of that office. The Federal Reserve Lank of New York as the largest bank in Olet.t the Federal Reserve System and the Iii(rgast bank of issue in the world, A should have as its chief officers men of cutstandinb achievement in the financial field. tith Mr. Gates t. gcGarrsh as the :)residing officer of the Board, and Ir. Benjamin Stron14 as Governor, the board of directors feel the standards for the future are set. Both are intimately familiar with the banking needs of this Federal Reserve district and of this country ae a whole. In addition, both ure familiar with the economic and financial conditions of turope, and will be of inestimable aid in working out with the Fedora.' nouta.ve Board at-Ui;.shincton sound ad appropritAa policies. Stuyvesent Road, Biltmore Forest, Biltmore, N.C., March 6, 1927. My dear Owen; In default of opportunity for a full diecuecion with you, the next best thing is a letter, but I am afraid it will be a poor substituto for a talk. I have been meaning to write it for some time past. length is due to the necessity for recounting a little history. its By way of introduction: when the Federal Reserve Act became law - in the face of strong banking oppouition, manifested more In "Tall Street" than in any other part of the country - the principal fears aroused were, I believe, three - othere being of love consequence. The first was that the new banking system, which was compulsory upon national banks, would be politically controlled. number of districts The second was that dividing the country into a as it developed, no les than twelve - strong sec- tional fooling would enter into the management of the System and P. would to impotent to perrorm its chief functions smoothly and efficiently. The third was that the Reserve Lanks, taking over such vast resources or capital and deposits from the national banks and with such broad owere granted thaa, would become active competitors tc the detriment of the intereets of the member banks. This was the situation before the War started. In April or May of 1914, Warburg brought the Federal Reserve Board's request, with the approval of president Wile= and Secretary lc Adoo, that I should become the head of the New York Bank, organize it end be responsible for its success. I was on the eve of sailing for Europe, and declined positively 3/6/27. Mr. Young. 2. On my return about the first of July, the pro- to entertain the idem. posal was renewed with greeter urgency, and nein T declined. Then came the liar end, an you know, a derperately bad situation, liable to become grently worse as the vicissituden of the "ar developed unlene our new banking system imeedietely became effective. was egein epproached by ft Some time in September I committee of the rederel Reserve Board, of which Warburg was one, with n very Insistent plee that 1: should undertake the task. I think they else brought me a letter from Fresid,nt rilson urring me to do so. They then told me that the Board wes encountering the greatest difficulty in getting men to take positions in the Relervo Banks. My memory is thet they did not definitely have ft heed for even one bank of the twelve, and the argument was that if T would accept the position, it would set en exemple that would enable them to get good men in the other districto. After many conferences with my associates in New York, and especielly with Jock Morgan, Harry Davison, Dwight Morrow and r. Paker, I was persuaded to any "Yes". It involved a very greet finenciel eecrifice, as you renliee, fnd, aH it has later developed, my health as well. ft necrifice of But my ecceptence of the position was only after very clear declaration of my attitude which T made to 7arburg, Jack Morgan and Merry Davison, end which rarburg advised me he had conveyed to his associates in -ashington. They told me that the hoed of the Bank would be designated es the governor of the Banks that he would be the actual executive head of the Benk end would be permitted to ease upon the selec- tion of associates. T replied that I preferred to accept the nocition without any conditions whatever, either as to title or celery or otherwise 3. 3/6/27. 1Sr. Young. soy° that I yould head the Bank, but that everybody chould underctond what my position would be in certain contingencies'. Tn a word, it woo that any development in the lystom in the direction of a politicel control, or of control by the banks of the country or by the *1,11 3treet honkers, or any interference from any quarter with the autonomy and independence of the leserve Bnnk of New 'fork as contemplPted by the etatute, would reeu3t in my reeznation but would certainly result In my ettemoting by n'or; legItimcte mon= to defeat any suel effort. It developed thet the suggestion or my accooting this porition coming from the redorel leservo Boerd geve rise to some resontmont on the As I racer, the eix part of those directors ot^o had thor been selected. elective membero of the boerd had been elected by the. B nk nrui one out of the three Clacto C directors had been apoeinted - Mr. Ceorgo 7. roabcdy. The other two appointments hed not yet boon made. "Alen ' agreed to accept the ooeition of Covernor, the Nord with my assent appointed "r. Say, and, over my protect, appolrted "r. 47terec% to: the third Clow C director - a undentrablo appointment, ao it later developed. The directors then appointed me Governor of the Ban's, but not before T had received a cell from Toodwrrd, the object of which, as shortly developed, wre to satisfy himself and associates that the Fedorel Reserve, Bank, because of my relection, would not become promptly "!organized." satisfied before we got through. T think ho ors That possibility T never ?erred!. But I did fear the political control. Privately, I told those members of the Pectoral Reserve Board whom T knew that I anticipated difficult times aheed, on the one hand with I 4. 3/6/27. Mr. Young. the members of the system, many of whom were hostile to the plan, and on the other hand between the Reserve Dunks and the Federal Reserve eoard. I also anticipated the development of feeling and jealousy between the Reserve Banks. It is a singular fact that the Reserve Banks had not been organized three months before all of these developments were actively harassing us, and not the least was the imeedinte effort by the Tederal Reeerve Board to assume powers and exorcise authori*- not contemplated by the ect. result of the Governors' Conferences and our committee form of procedure, we have succeeded in overcoming sectional jealousies. work hemoniously together. The teelve banks Largely as a result of patient ecreepiege by the Reserve Banks rather than attempting to move too fast, most of the banking hostility to the System has been overcome. The one outstanding keeer in the System is in the unsatisfactory relations which now subsist between practically all the Reserve Banks and the Federal Reserve hoard. This difficulty is the result of inherent defects or weaknesses in the schema itself. The situation which has now arisen was almost bound to arise, and some of us clearly foresaw it in the early days. The only difference between what I anticipated being forced to do and what proves te be practicable, is uue to the circumstance that my health is now such that it is quite impossible for we to carry out such a program as I had outlined wave years ago, for I am simply not physically equal to the task of dealing with a development Which I believe is almost certain to wreck the System in the course of years; nor do I believe our directors would supper: me in the attempt. Let mo endeavor to give you the picture as I see it, and thereby explain, as I hope I may be able to do, the causes of the major difficulties. The Federal Government has never yet conetituted an independ- ent bureau as a permanent branch of the Governient free of depertmental con- trol under a member of the Cabinet which has been a success. The Inter- state Commerce Commission (certainly until the last three years) in bowing to the public clamor for lower rates in the face of increasing costs of operation, that is, wages, materials and taxes, wrecked the railroad system' of the country, and it was not many years ago that we had between 60,000 and my* 80,0G0 miles of our railroad lines in the hands of receivers - between a fifth and a quarter of the entire mileage. Many others barely eecceed. The 0hipeing Board - there is no need to recount the history of this unfortunate en4erpriee. The Federal Farm Loan Beard. l'ere the fects knoun in regard to the affairs of this organization, as they are eeadually becoming mown in the Treasury, I am satisfied that you would be astoeished. They would be fully known, were it not for the alarm which might arise among holders of the obligations cif a system which is today borrowing over a billion dollars from the eublic in one form or another. The Alien property Custodian. It has boon nothing short of a scandal of the first order, and here the independent officer of the Government appointed to execute this vast trust of :300,000,000 or more is directly responeible to the }resident. Fortunately, recent changes have improved matters. The Tariff Commission. It has been an unfortunate and imoot( 3/6/27. Mr. Young. 6. body fran the start. I could go on at some length recounting others with which you are doubtless familiar. The one notable exoeotion is the 7ar Finance Corporation, and its escape from the fate of these other independent bodies has been due to the good fortune of getting a man of ontstanding ebility 111 . and large independent means who dominated the citustion absolutely from the stert and was willing to devote himself to the work so long as he could control it, without fees of losing his job: The reasons for these foilures hew all been disclosed many times. The failures are principally due to inability to get good men. aries are smn73. tions. The sal- Political considerations enter too much into the selec- Put what is even more serious, these men, when they are selected, become timid and Inefficient, unconsciously almost subordipsting reo/ convictions to their fenrs lest they may not be reappointed or may encounter such a body, as the history of every buroeuc stic body glows, criticism. endeavors to cure its own inefficiency by seeking to grasp more powers. The difficulties of their odministration arise portly from inability to got good essisttntn, because they cannot pay enough, and partly because business is conducted as though it were a parliamentary body, votes must be had upon everything, end members hesitate to go on record for and against importent measures which may arouse antagonisms. The result is a fairly equal divi- sion between: Hesitation, procrastination Unfortunsto coarromires; and inaction; and Mistakes. Almost continuously throughout the past twelve years a compare- 3/6/27. Mr. Young. 7. tively small group of men in the Reserve Banks have been contending ugainnt those difficulties in the Federal Reserve Board. Their existence in well known and admitted even by members of the Board. Usually logical argument and frank submission of the facts and persuasion has been sufficient. At times it has even been neceseary, us you know, to seek the influence of ths Secretary of the Treasury. The first real toot that arose in this rather subtle reaching for authority by the Federal Reserve Board was, as T said above, within a few months of the opening of the Menke. The Board undertook to direct the Fedora/ Reserve Bank of 1Jinneapolin (as I recall) to 'make e chenge in its discount rate. The Governor of that Bank protested by direction of it director, and the matter was brought up at a meeting of the Governors in Washington. At a joint meeting with the Federal Reserve Board, this effort s very frankly discussed, the Board attempted to assort its authority to initiate changes in the rate, and as I was then Chairman of the Governors' Conference, I told the Board, k, unenimoue direction of the Conference, that if the Board undertook to do so the Reserve Banks would find it necessary to test the Board's power in the courts. It wee, of course, a bombshell, re- sulted in the Board's asking the opinion of the then Attorney-General as to their eoeere, and while I have never seen the opinion, I have been informed that it was somewhat adverse to the Board's contention, except that in the case of a Bank which proved obviously recalcitrant in remaining out of line with the general level of rtes or something of that sort the Board could initiate rate changes. T have since been informed that a later opinion was secured from Attorney-General Daugherty or One of his assistants, which rather sustained the Board's point of view. We at that time consulted Mr. Mr. Young. 8. John G. Johnson of Philadelphia es 3/6/27. to what the Act meant, and after some correspondence, as I recall, he wrote an opinion which was substantially similar to the one which I understand was given by President Wilson's Attorney-General and which I believe was written by Mr. Sohn W, Davis, although this is from hearsay. From that early beginning until the present time, there hes been conducted quietly, but nevertheless with a certain degree of success, v systematic effort on the part of some members of the Board to gradually set up precedents which would give them powers greater than the law contemplates to direct the operations of the Reserve Banks from Washington. It would make this letter much too long to recite the various efforts in this direction, but the files of our Bank, of the Governors' Conferences, and T believe equally of the other Reserve Banks, are filled with correspondence, memoranda, opinions of counsel, etc. constituting a long record of resistance by the Banks to efforts by the Board to centralize authority and assume executive duties in Washington. In the first few years of the life of the New York Reserve Bank, committees of our directors and sometimes the entire board, at timer) visited %eshington to protest against this develop- ment and, while Secretary Mc Adoo was Chairman of the Board, usually with complete success. This relates simply to the question of centralization of authority and direction of operations, etc. The other serious development lies, I believe, in the growing inability of the Board to make prompt decisions and in many cases wise ones whore important but nicely balanced questions appear for decision. I think the three outstanding examples are the pension system, what we call the non- 3/6/27. Mr. Young. 9. cash collection system, and the Cuban sion system A proposal for a pen- branches. Te has been pending before the Board for over six years. have spent ebout $100,000 in studying and formulating it, and during that entire six years the Board has never been willing to approve the plan pro- duced from the studies which they originally authorized. Mr. Banain, Finally, through a vote was obtained in the Federal Reserve Board to the that the Board would raise no objection if the Banks which was handling the matter ef;ect Committee of the Reeerve souEht to obtain the necesrary legisla- tion from Congress, but the Board would itself assume no responsibility. The bill was The Committee got to work actively within the past year. passed unanimously by the Semite, but has just failed in the House. result of this delay, which many of us feel was due to dissention and timidity in the Board, has entirely unnecessary and boon to accumulate a liabil- ity for accrued contributions approaching t4,000,000. with by a reedjuetment of the plan, but somewhat prise, and the delay of course makes the tinue this pending before the service, and if we do continue it, or without a service charge. be dealt to the injury of the enterextent now never be made. matter of the non-cosh collections, there has been argued and This can protection ineffective to the that some five or six years of contributions may As to the The for over three years Board, whether we should con- whether it should be done with It is the type of service which should be con- ducted uniformly as to methods and dharges throughout the System. The Board has now ruled that the Reserve Banks may continue the service, but charge or not as they please. The result is that some Reserve Banks will charge for doing the work, and others will not - a situation to be remitted to develop. thoroughly unwholesome , 3/6/27. Mr. Young. O. In the Cuban matter, which is a very long story, after some intimation from the Department of State, the Board was this important question by authorizing the led to compromise establishment of two branches in Cuba, one for Boston and one for Atlanta, both offices probably being illegal and conducting a business which is not justified either by the situation itself or by the Federal Reserve Act. . _ I am developing this subject in the two categories: one the ef- 111161. - fort on the one hand to obtain more authority, and the other the evidence which is now so convincing, that once obtained it is almost impossible to hope that it will be wisely and be impaired. intelligently exercised; efficiency will But there is still another point of view, and that is as to the capacity of_Ala body such as the Federal Reserve Board in Washington to Initiate and direct policies in credit matters when they are located such a distance from the money maesets, when all their information reaches them by word of mouth and second hand, or through written reports end from very limited sources. There is no bank of iscue In the world which has its ad- ministrative and executive headquarters elpeehere than in the money capital of the country as well as in the political capital. In our case, if the executive and administrative direction of the System is gradually assumed by the Federal Reserve Board, the political influences Board in Tashington will render so many of their which surround the acts subject to fear of political consequences that a clean-cut, decisive, courageous policy by the System will be impossible. again, in those matters requiring might prove to be an serve Board that Of this we have hod abundant evidence time influence. this or and decision where political considerations Repeatedly we hear from the Federal Re- that must be done or must not be done, because of 11. 3/6/27. Mr. Young. the reaction which will be felt in Congress. A11 of the above is to give you the background for what 1 wish to write you about - the present development in our own Bank. Before left New York, in my conversations with Mr. Jay, Mr. Reynolds, Mr. Woolley and Mr. Reyburn, I took the position thet upon Mr. Jay's resignation the wisest and best course would be to secure the appointment of Dr. Burgess if that were possible. If it were not possible, my second choice, as you know, was Mr. Mc Garrah. I had no doubt of Dr. Burgess' ability to fill the position and ultimately to develop into an influential and valuable officer of the Bank and of the System, but of course it would have taken some time. The appointment of Mr. Mc Garrah, I felt, would be in every way a happy one se far as personal relations were concerned, but as I explained at the time, selecting an outside person would be much more likely to open the door to the very development which we all feared, namely, to give a further impetus to the Board's desire to center the executive management of the System in Washington. This letter, in order to give you the whole story, must be frank to the last degree. I hap)en to have known for some time, as no doubt Mr. Jay explained to you, that the Board is contemplating changes in Feceral Reserve Agents in a number of other Banks. There are various causes, but it just so happens that these Banks are Boston, Philadelphia, Cleveland and Chicago. Those four Banks, with the New York Bank, represent three-quarters of the resources of the System, and the Governors of those five Banks constitute the Open Market Committee. Practically all matters of policy are initiated in that Committee. The development of initiative as to policy should originate in the Reserve Banks, where the operations are conducted; supervision and collaboration only should lie with the Board. Mr. Young. 12. 3/6/27. Feeling as I did that 'Ir. Jay's resignation would open the door to just this development, I awaited with much interest the terms of the Board's announcement of the change for some confirmation of my expectation. Certainly the announcement was ample confirmation. ceived the enclosed newe slip, which is undoubtedly confirmation of my belief that from I hove just now reinspired and is further now on the drift in the System will be in the direction of centralization and that in five or ten years we will not recognize the Federal Reserve System of that day as being even a cousin of the one that has existed for the past five or ten years. reason for writing this, second My The resistance I think, is simply common sense. to this development has centered in the organization of the Governors. It has taken concrete form in the Open Market Committee. Without the least desire to exaggerate my own influence in these matters, the battle has raged over my head most of the time. It unfortunately has happened that every time I have been away in recent years, efforts have been made by the Board to weaken the influence of this Committee and of the Governors. In 19n3, when I was in Colorado, the Committee of Governors previously conducting the open market operations (which I had appointed at the Governors' Conference) was summarily dismissed by the Federal Reserve Board and a new Committee appointed, not by the Governors' Conference but by the Federal Reserve Board, the some individuals constituting the new Committee, but with instructions set out in a resolution of the Board which deprived the Banks of even their statutory ment securities. powers in the matter of investments in A Protest was made as to the terms of the Reserve Govern- resolution, but some lack of perspicacity on the part of those present led them to look the fundamental encroachment, which lay in the assumption by the over- Ir. Young. 13. 3/6/27. Reserve Board that they had the powor to dismiss such a Committee and appoint a now one subject to their own direction. Similar occurrences of less Importance have taken place more recently and at times due, I regret to say, to a lack of vigilance on the part of the members of the Committee, who have missed the point of them) efforts by the Board to grasp in greater degree some sort of authority over the operations of the lyntom. So far I have discovered no one In the Federal Reserve Banks who, when I retire, will be willing to submit to all of the annoyance and give the amount of time necessary, by scrutiny of every single activity of the Reserve Board, so as to lead a proper and necessary resistance to this effort. Certainly the directors of the Reserve Banks have not got the time, nor is it possible for v director to scrutin:zu everything that transpires with this thought in nind. It is no exaggeration for me to state that the Board, probably under the influence of only two or throe of Ito :10.1bere, has rithin the past fee months seen an opportunity more favorable than any 111111111111 that has formerly arisen to consolidate its grasp upon the System. I be- lieve that come of them are consciously expecting that, as soon as I retire, they can gradually assume an almost undisputed control of the activities of the Reserve Banks to a degree far beyond what the law originally conten- plated, and to an extent which in the and will be disastrous, I believe, to 111111111,w40 the System and to the country. This will likely be expressed by an at- tempt to have Federal Reserve Agents servo on the Open Market Committee. M1116Of course, when Mr. Jay's resignation first became a pocsibility, I was In 7urope and had opportunity without the disability of illness to consider the situation resulting, and all of these fears of mine were most 3/6127. Mr. Young. 14, active at that time and were then expressed to Mr. Jay. illness made me doubt my own judgment somewhat, but my On my return, instinct, which I frequently find a pretty good guide, was so strongly against any outside the urgency and appointment that only led me to take the position persuasiveness of our awn directors It had seemed to me that the were so T did. many evidences that the Reserve Board and our awn directors felt, as had been repeatedly state to me, that I had too much the habit of wishing my own way, that I should in this instance, being a matter where I had absolutely no authority, surrender my own views completely to those of my assoc- iates, and I did so after melting perfectly clear in whet direction my doubts the Board's announcement Now frankly, Owen, the terms of lay. undoubtedly inspired and of this article in the News Bureau confirm every doubt that had in mind at the time of our correspondence. situation that causes me any personal mortification. embarrassment or uneasiness, or even As you know, I have been for a any responsibility at all, to nurse my health man. There long time eager to oecape and to feel that I am a free My anxiety is about the Federal Reserve Bank of New York and the Federal Reserve System, and I am writing you this long epistle to express to you my conviction that we are not only headed in the wrong direction, that we are in i-minent darer, looking ahead only but five or ten years, that very grave questions will arise which must be the subject of tion by Congress and which may indeed result In a very serious out the country about the System. The enclosed but considera- strife through- letter of Professor Allyn Young of Harvard is evidence of what may happen. You may properly ask what other course could have been pursued, 3/6/27. Mr. Young. 15. end it is not an eesy question to answer. The course which was followed The alternative, I believe, was the one which was certainly the easiest. I had advocated before loving for EUrope, and that was a definite, clearly drawn issue between the Federal Reserve Banks and the Federal Reserve Board on all these points where the Board was seeking to encroach in its authority. You must not gather from the above that I have not considered the possibil- ities of an equally successful System in case the Board were able to get the right type of men as Chairmen of the Reserve Banks and have whet might be called a "Class C" management of the Banks, with the Board directly govern- ing the activities of the Federal Reserve Agent, who would then be the executive head of the Bank. I think I can assert without reservation that such a scheme of management would be impossible of success. The Board has never been successful since the System got started (except in the case of Mr. Mc Garrnh) in getting the type of men escential to such a scheme, and they have endeavored to exercise such a domination of those they have appointed as to render them ineffective as managers anyway. land, and Mr. Perin of San Francisco were the outstanding examples of first rank men who were not dominated by the Board. high regard for the Board, died recently; earned, never really had the Federal Reserve Mr. Jay, as you have No one of those and Mr. doubtless Perin has Banks could be said to be Boerd, because the Chairmen in each case declined In the to submit to their domination. dominated in each instance. Mr. Wills, who never had a confidence of the Beard; een forced to resign in despair. run by the Mr. Jay, Mr. rills of Cleve- A other nine Banks, the Governors have "Civet] C" type of manegement for the System would result very promptly in losing some of the best men we have got in the 100011100010.11 3/6/27. Mr. Young. 16. Reserve Banks. (In our awn Bank I would expect shortly to lose Case, Harrison, Rounds and Gilbert). The executive heads would all of them awe their positions to the Federal Reserve Board. However honest such a man may be or however independent he may intend to be, after some years in such a position to be faced with losing it, and of subjecting his family to possible distress by doing so, he will usually submit, and that I apprehend would be the situation in the Reserve Banks. The feet now is that six of the nine directors of a Reserve Bank control the selection of the head of the Bonk, but if the Board has its way, while the Board names but three of the directors, it will nevertheless select and control the head of the Bank. There has been ample time down here to think these matters over deliberately. My fear is that circumstances heve now led to the development of a situation where it will be almost Impossible to stem the tide of centralization. My belief is that this development is absolutely contrary to the conviction and the desire of ouch men as the President, Senator Gless, and others who erest in its welfare. Secretary qellon, understand the System and who have a keen int- I feel very certain that such men as well, Parker Gilbert and Garrard Winston - and there are scell Leffing- none in better posi- tion to judge than they - will look with grave concern upon the development of such a plan for the FeCeral Reserve System as is forecast in this inspired article of the wall Street Journal. Now the question is, What to do about it. After expressing the views which I held, possibly not as urgently as I would have expressed them had I been sure of the future as to my health, etc., our directors, Mr. Mellon and the Federal Reserve Board have decided upon what to do in our own case, 3/6/27. Mr. Young. 17. in the and I suppose the Federal Reserve Board will now decide what to do case of the other four Ranks I have mentioned, and probably in one or two others which I believe are somewhat in their minds. I oersonally feel that my lest responsibility is discharged in meking clear ell that I feel about it. You and my other associates in the Bank have been so wonder- fully loyal and understanding and sympathetic in your attitude to me, that I feel more than willing, even more than obliged, to conform to any course which seeme to them to be wise. It is nevertheless e question as to whether this course, which I now feel is clearly embarked upon, will not force me to abandon all hope of achieving anything further in the matters in which T have been particularly interested all these years. If I should resign now, I fear only adding to the difficulty and emberrassment. Even though it may subject me to same criticism, it has seemed to me that I should continue at levet long enough so as to get the drift of matters personally and on the ground and form a better opinion than I now can as to what my real duty is. Rut for the last few weeke, I have felt that it was impossible for me to remain silent and watch this development without some warning. I have opened my mind to you very fully, but that, for the present, it should go no further. ing on me that with the conviction The thought has been grow- possibly the best plan would be for me to arrange to meet you in 'Washington within, say, a couple of weeks, as I could probably then make the trip without much risk, so that we could discuss this situation frankly with and, if Secretary Mellon necessary, with the President. I am sensible of some embarrneement because of the fact that you are now n Class C director and Vice-Chairman of the board and fool a natural sense of responsibility to Mr. Young. 18. 3/6/27. the board, which 7 would not for a minute ask you to lay aside and especially not f you did not pretty fully agree with some of the concern Aith I lave expressed. Sc I shall conclude by asking you to hold this letter .n confidence for the moment and consider Whether such a visit in Isshl on is not the wisest course as preliminary to any conclusion which I eight otherwise reach. With best regards, I remain Sincerely yours, Mr. Owen D. Young, 120 Broadway, New York City. COPY of a Letter written hy Governor Strong and delivered by hand by Mr. Harrison to Mr. Owen D. Young PERSONAL AND CONFIDENTIAL Stuyvesant Road, Biltmore Forest, Biltmore, N. C. March 6, 1927. My dear Owen: In default of opportunity for a full discussion with you, the next best thing is a letter, but I am afraid it will be a poor I have been meaning to write it for some substitute for a talk. Its length is due to the necessity for recounting a time past. little history. By way of introduction: when the Federal Reserve Act became law -- in the face of strong banking opposition, manifested more in 'Wall Street'than in any other part of the country -- the principal fears aroused were, I believe, three -- others being of less The first was that the new banking system, which was consequence. compulsory upon national banks, would be politically controlled. The second was that dividing the country into a number of districts -- as it developed, no less than twelve -- strong sectional feeling would enter into the management of the System and it would be impotent to perform its chief functions smoothly and efficiently. The third was that the Reserve Banks, taking over such vast resources of capital and deposits from the national banks and with such broad powers granted them, would become active competitors to the detriment of the interests of the member banks. This was the situation before the War started. In April or May of 1914, Warburg brought the Federal Reserve Board's request, with the approval of President Wilson and Secretary McAdoo, that I should become the head of the New York Bank, organize it and be responsible for its success. I was on the eve of sailing for Europe, and declined positively to entertain the idea. On my return, about the first of July, the proposal was renewed with greater urgency, and again I declined. Then came the War and, as you know, a desperately bad situation, liable to become greatly worse as the vicissitudes of the War developed unless our new banking system immediately became Some time in September, I was again approached by a comeffective. mittee of the Federal Reserve Board, of which Warburg was one, with a very insistent plea that I should undertake the task. I think they also brought me a letter from President Wilson urging me to do so. They then told me that the Board was encountering the greatest difficulty in getting men to take positions in the Reserve Banks. My memory is that - 2 - they did not definitely have a head for even one Bank of the twelve, and the argument was that if I would accept the position, it would set an example that would enable them to get good men in the other districts. After many conferences with my associates in New York, and especially with Jack Morgan, Harry Davison, Dwight Morrow, and Mr. Baker, I was persuaded to say 'Yes.' It involved a very great financial sacrifice, as you realize, and, as it has later developed, But my acceptance of the position a sacrifice of my health as well. was only after a very clear declaration of my attitude which I made to Warburg, Jack Morgan, and Harry Davison, and which Warburg advised They told me me he had conveyed to his associates in Washington. that the head of the Bank would be designated as the Governor of the Bank, that he would be the actual executive head of the Bank and would be permitted to pass upon the selection of associates. I replied that I preferred to accept the position without any conditions whatever, either as to title or salary or otherwise save that I would head the Bank, but that everybody should understand what my position would be in certain contingencies. In a word, it was that any development in the System in the direction of a political control, or of control by the banks of the country or by the Wall Street bankers, or any interference from any quarter with the autonomy and inddpendence of the Reserve Bank of New York as contemplated by the statute, would not result in my resignation but would certainly result in my attempting by every legitimate means to defeat any such effort. It developed that the suggestion of my accepting this position coming from the Federal Reserve Board gave rise to some resentment on the part of those directors who had then been selected. As I recall, the six elective members of the board had been elected by the Bank and one out of the three Class C directors had been appointed -- Mr. George F. Peabody. The other two appointments had not yet been made. When I agreed to accept the position of Governor, the Board with my assent appointed Mr. Jay, and over my protest, appointed Mr. Stareck as the third Class C director -- a most undesirable appointment, as it later developed. The directors then appointed me Governor of the Bank, but not before I had received a call from Mr. Woodward, the object of which, as shortly developed, was to satisfy himself and associates that the Federal Reseive Bank, because of my selection, would not become promptly 'Morganized.' I think he was satisfied before we got But I did fear the political That possibility I never feared. through. control. Privately, I told those members of the Federal Reserve Board whom I knew that I anticipated difficult times ahead, on the one hand with the members of the System, many of whom were hostile to the plan, and on the other hand between the Reserve Banks and the Federal Reserve I also anticipated the development of feeling and jealousy between Board. the Reserve Banks. -3-. It is a singular fact that the Reserve Banks had not been organized three months before all of these developments were actively harassing us, and not the least was the immediate effort by the Federal Reserve Board to assume powers and exercise authority not contemplated by the Act. As a result of the Gdvernors'Conferences and our committee form of procedure, we have succeeded in overcoming sectional jealousies. The twelve Banks work harmoniously together. Largely as a result of patient 'creepineby the Reserve Banks rather than attempting to move too fast, most of the banking hostility to the System has been overcome. The one outstanding weakness in the System is in the unsatisfactory relations which now eird6t between practically all the Reserve Banks and the Federal Reserve Board. This difficulty is the result of inherent defects or weakThe situation which has now arisen was nesses in the scheme itself. almost bound to arise, and some of us clearly foresaw it in the early The only difference between what I anticipated being forced to days. do and what proves to be practicable, is due to the circumstance that my health is now such that it is quite impossible for me to carry out such a program as I had outlined twelve years ago, for I am simply not physically equal to the task of dealing with a development which I believe is almost certain to wreck the System in the course of years; nor do I believe our directors would support me in the attempt. Let me endeavor to give you the picture as I see it, and thereby explain, as I hope I may be able to do, the causes of the major difficulties. The Federal Government has never yet constituted an independent bureau as a permanent branch of the Government free of departmental control under a member of the Cabinet which has been a The Interstate Commerce Commission (certainly until the last success. three years) in bowing to the public clamor for lower rates in the face of increasing costs of operation, that is, wages, materials and taxes, wrecked the railroad systems of the country, and it was not many years ago that we had between 60,000 and 80,000 miles of our railroad lines in the hands of receivers -- between a fifth and a quarter of the entire mileage. Many others barely escaped. The Shipping Board -- there is no need to recount the history of this unfortunate enterprise. The Federal Farm Loan Board. Were the facts known in regard to the affairs of this organization, as they are gradually becoming known in the Treasury, I am satisfied that you would be astonished. 'alley would be fully known, were it not for the alarm which might arise among holders of the obligations of a system which is today borrowing over a billion dollars from the public in one form or another. The Alien Property Custodian. It has been nothing short of a scandal of the first order, and here the independent officer of the Government appointed to execute this vast trust of $300,000,000 or more is directly responsible to the President. Fortunately, recent changes have improved matters. (5) The Tariff Commission. and impotent body from the start. It has been an unfortunate I could go on at some length recounting others with which you are doubtless familiar. The one notable exception is the War Finance Corporation, and its escape from the fate of these other independent bodies has been due to the good fortune of getting a man of outstanding ability and large independent means who dominated the situation absolutely from the start and was willing to devote himself to the work so long as he could control it, without fear of losing his job. The reasons for these failures have all been disclosed many The failures are principally due to inability to get good times. The salaries are small. Political considerations enter too men. But what is :even more serious, these men, much into the selections. when they are selected, become timid and inefficient, unconsciously almost subordinating real convictions to their fears lest they may not be reappointed or may encounter criticism. Such a body, as the history of every bureaucratic body shows, endeavors to cure its own inefficiency by seeking to grasp more powers. The difficulties of their administration arise partly from inability to get good assistants, -because they cannot pay enough, and partly because business is conducted as though it were a parliamentary body, votes must be had upon everything, and members hesitate to go on record for and against important measures which may arouse antagonism. The result is a fairly equal division between: Hesitation, procrastination and inaction; Unfortunate compromises; and Mistakes. Almost continuously throughout the past twelve years a comparatively small group of men in the Reserve Banks have been contending against these difficulties in the Federal Reserve Board. Their existence is well known and admitted even by members of the Board. Usually logical argument and frank submission of the facts and persuasion has been sufficient. At times it has even been necessary, as :au know, to seek the'influence of the Secretary of the Treasury. The first real test that arose in this rather subtle reaching for authority by the Federal Reserve Board was, as I said above, within a few months of the opening of the Banks. The Board undertook to direct the Federal Reserve Bank of Minneapolis (as I recall) to make a change The Governor of that Bank protested by direction in its discount rate. of its directors, and the matter was brought up at a meeting of the Governors in Washington. At a joint meeting with the Federal Reserve Board, this effort was very frankly discussed, the Board attempted to assert its authority to initiate changes in the rate, and as I was then Chairman of the Governors 'Conference, I told the Board, by unanimous direction of the Conference, that if the Board undertook to do so the Reserve Banks would find it necessary to test the Board's power in the courts. It was, of course, a bombshell, resulted in the Board's -5asking the opinion of the then Attorney-General as to their powers, and while I have never seen the opinion, I have been informed that it was somewhat adverse to the Board's contention, except that in the case of a Bank which proved obviously recalcitrant in remaining out of line with the general level of rates or something of that sort the Board could initiate rate changes. I have since been informed that a later opinion was secured from Attorney-General Daugherty or one of his assistants, which rather sustained the Board's point of view. We at that time consulted Mr. John G. Johnson of Philadelphia as to what the Act meant, and after some correspondence, as I recall, he wrote an opinion which was substantially similar to the one which I understand was given by President Wilson's Attorney-General and which I believe was written by Mr. John W. Davis, although this is from hearsay. From that early beginning until the present time, there has been conducted quietly, but nevertheless with a certain degree of success, a systematic effort on the part of some members of the Board to gradually set up precedents which would give them powers greater than the law contemplates to direct the operations of the Reserve Banks from Washington. It would make this letter much too long to recite the various efforts in this direction, but the files of our Bank, of the Governors' Conferences, and I believe equally of the other Reserve Banks, are filled with correspondence memoranda, opinions of counsel, etc. constituting a long record of resistance by the Banks to efforts by the Board to centralize authority and assume executive duties in Washington. In the first few years of the life of the New York Reserve Bank, committees of our directors and sometimes the entire board, at times visited Washington to protest against this development and, while Secretary McAdoo was Chairman of the Board, usually with complete success. This relates simply to the questions of centralization of authority and direction of operations, etc. The other serious development lies, I believe, in the growing inability of the Board to make prompt decisions and in many cases wise ones where important but nicely balanced questions appear for decision. I think the three outstanding examples are the pension system, what we call the non-cash collection system, and the Cuban branches. A proposal for a pension system has been pending before the Board for over six years. We have spent about $100,000 in studying and formulating it, and during that entire six years the Board has never been willing to approve the plan produced from the studies which they originally authorized. Finally, through Mr. Hamlin, a vote was obtained in the Federal Reserve Board to the effect that the Board would raise no objection if the Committee of the Reserve Banks which was handling the matter sought to obtain the necessary legislation from Congress, but the Board would itself assume no responability. -6The Committee got to work actively within the past year. The bill was passed unanimously by the Senate, but has just failed in the' The result of this delay, which many of us feel was entirely House. unnecessary and due to dissension and timidity in the Board, has been to accumulate a liability for accrued contributions appraching $4,000,000. This can be dealt with by a readjustment of the plan, but somewhat to the injury of the enterprise, and the delay of course makes the protection ineffective to the extent that some five or six years of contributions may now never be made. As to the matter of the non-cash collections, for over three years there has been argued and pending before the Board, whether we should continue this service, and if we do continue it, whether it should be done with or without a service charge. It is the type of service which should be conducted uniformly as to methods and charges throughout the System. The Board has now ruled that the Reserve Banks may continue the service, but charge or not as they please. The result is that some Reserve Banks will charge for doing the work, and others will not -- a thoroughly unwholesome situation to be permitted to develop. In the Cuban matter, which is a very long story, after some intimation from the Department of State, the Board was led to compromise this important question by authorizing the establishment of two branches in Cuba, one for Boston and one for Atlanta, both offices probably being illegal and conducting a business which is not justified either by the situation itself or by the Federal Reserve Act. I am developing this subject in the two categories: one the effort on the one hand to obtain more authority, and the other the evidence which is now so convincing, that once obtained it is almost impossible to hope that it will be wisely and intelligently exercised; efficiency will be impaired. But there is still another point of view, and that is as to the capacity of any body such as the Federal Reserve Board in Washington to initiate and direct policies in credit matters' when they are located such a distance from the money markets, when all their information reaches them by word of mouth and second hand, or through written reports and from very limited sources. There is no bank of issue in the world which had its administrative and executive headquarters elsewhere than in the money capital of the country as well as in the political capital. In our case, if the executive and administrative direction of the System is gradually assumed by the Federal Reserve Board, the political influences which surround the Board in Washington will render so many of their acts subject to fear of political consequences that a clean-cut, decisive, courageous policy by the System will be impossible. Of this we have had abundant evidence time and again, in those matters requiring decision where opolitical consideraRepeatedly we hear from the tions might prove to be an influence. Federal Reserve Board that this or that must be done or must not be done, because of the reaction which will be felt in Congress. 0 All of the above is to give you the background for what I wih to write you about -- the present development in our own Bank. Before I left New York, in my conversations with Mr. Jay, Mr. Reynolds, Mr. Woolley, and Mr. Reyburn, I took the position that upon Mr. Jay's resignation the wisest and best course would be to secure the appointment of Dr. Burgess if that were possible. If it' were not possible, my second choice, as you know, was Mr. McGarrah. I had no doubt of Dr. Burgess' ability to fill the position and ultimately to develop into an influential and valuable officer of the Bank and of the System, but of course it would have taken some time. The appointment of Mr. McGarrah, I felt, would be in every way a happy one so far as personal relations were concerned, but as I explained at the time, selecting an outside person would be much more likely to open the door to the very development we all feared, namely, to give a further impetus to the Board's desire to center the executive management of the System in Washington. This letter, in order to give you the whole story, must be frank to the last degree. I happen to have known for some time, as no doubt Mr. Jay explained to you, that the Board is contemplating changes in Federal Reserve Agents in a number of other Banks. There are various causes, but it just so happens that these Banks are Boston, Philadelphia, Cleveland, and Chicago. Those four Banks, with the New York Bank, represent three-quarters of the resources of the System, and the Governors of those five Banks The development of initiative _constitute the Open Market Committee. as to policy should originate in the Reserve Banks, where the operations are conducted; supervision and collaboration only should lie with the Board. Feeling as I did that 14±. Jay's resignation would open the door to just this development, I awaited with much interest the terms of the Board's announcement of the change for some confirmation of my Certainly the announcement was ample confirmation. I expectation. have just now received the enclosed news slip, which is undoubtedly inspired and is further confirmation of my belief that from now on the drift in the System will be in the direction of centralization and that in five or ten years we will not recognize the Federal Reserve System of that day as being even a second cousin of the one that has existed for the past five or ten years. My reason for writing this, The resistance to this development I think, is simply common sense. has centered in the organization of the Governors. It has taken concrete form in the Open Market Committee. Without the least desire to exaggerate my own influence in these matters, the battle has raged over my head most of the time. It unfortunately has happened that every time I have been away in recent years, efforts have been made by the Board to weaken the influence of this Committee and of the Governors. In 1923, when I was in Colorado, the Committee of Governors previously conducting the open market operations (which I had appointed at the Governors 'Conference) was summarily dismissed by the Federal Reserve Board, the same individuals constituting the new Committee, but With instructions set out in a resolution of the Board which deprived -8the Reserve Banks of even their statutory powers in the matter of investments in Government securities. A protest was made as to the terns of the resolution, but some lack of perspicacity on the part of those present led them to overlook the fundamental encroachment, which lay in the assumption by the Reserve Board that they had the power to dismiss such a Committee and appoint a new one subject to their own direction. Similar occurrences of less importance have taken place more recently and at times due, I regret to say, to a lack of vigilance on the part of the members of the Committee, who have missed the point of these efforts by the Board to grasp in greater degree some sort of authority over the operations of the System. So far I have discovered no one in the Federal Reserve Banks who, when I retire, will be willing to submit to all of the annoyance and give the amount of time necessary, by scrutiny of every single activity of the Reserve Board, so as to lead a proper and necessary resistance to this effort. Certainly the directors of the Reserve Banks. have not got the time, nor is it possible for a director to scrutinize everything that transpires with this thought in mind. It is no exaggeration for me to state that the Board, probably under the influence of only two or three of its members, has within the past few months seen an opportunity more favorable than any that has formerly arisen to consolidate its grasp upon the System. I believe that some of them are consciously expecting that, as soon as I retire, they can gradually assume an almost undisputed control of the activities of the Reserve Banks to a degree far beyond what the law originally contemplated, and to an extent which in the end will be disastrous, I believe, to the System and to the country. This will likely be expressed by an attempt to have Federal Reserve Agents serve on the Open Market Committee. Of course, when Mr. Jay's resignation first became a possibility, I was in Europe and had opportunity without the disability of illness to consider the situation resulting, and all of these fears of mine were most active at that time and were then expressed to Mr. Jay. On my return, illness made me doubt my own judgment somewhat, but my instinct, which I frequently find a pretty good guide, was so strongly against any outside appointment that only the urgency and persuasiveness of our own directors It had seemed to me that there were led me to take the position I did. so many evidences that the Reserve Board and our own directors felt, as had been repeatedly stated to me, that I had too much the habit of wishing my own way, that I should in this instance, being a matter where I had absolutely no authority, surrender my own views completely to those of my associates, and I did so after making perfectly clear in what direction my doubts lay. Now frankly, Owen, the terns of the Board's announcement and of this undoubtedly inspired article in the News Bureau confirm every doubt that I had in mind at the time of our correspondence. There is nothing in this situation that causes me any personal embarrassment or uneasiness, or even mortification. As you know, I have been for -9a long time eager to escape any responsibility at all, to nurse my health and to feel that I am a free man. My anxiety is about the Federal Reserve Bank of New York and the Federal Reserve System, and I am writing you this long epistle to express to you my conviction that we are not only headed in the wrong direction, but that we are in imminent danger, looking ahead only but five or ten years, that very grave questions will arise which must be the subject of consideration by Congress and which may indeed result in a very serious strife throughout the country about the System. The enclosed letter of Professor Allyn Young of Harvard is evidence of what may happen. You may properly ask what other course could have been pursued, and it is not an easy question to answer. The,course which was followed was certainly the easiest. The alternative, I believe, was the one which I had advocated before leaving for Europe, and that was a definite, clearly drawn issue between the Federal: Reserve Banks and the Federal Reserve Board on all these points where the Board was' seeking to encroach in its authority. You must not gather from the above that I have not considered the possibilities of an equally successful System in case the Board were able to get the right type' of men as Chairmen of the Reserve Banks and have what might be called a 'Class C' management of the Banks, with the Board directly governing the activities of the Federal Reserve Agent, who would then be the executive head of the Bank. I think I can assert without reservation that such a scheme of management would be impossible of success. The Board has never been successful since the System got started (except in the case of Mr. McGarrah) in getting the type of men essential to such a scheme, and they have endeavored to exercise such a domination of those they have appointed as to render them ineffective as managers anyway. Mr. Jay, Mr. Wills of Cleveland, and Mr. Perin of San Francisco were the outstanding examples of first rank men who were not dominated by the Board. Mr. Wills, who never had a high regard for the Board, died recently; Mr. Jay, as you have doubtless learned, never really had the confidence of the Board; and Mr. Perin has been forced to resign in despair. No one of those Banks could be said to be run by the Federal Reserve Board, because the Chairmen in each case declined to submit to their domination. In the other nine Banks, the Governors have dominated in each instance. A'Class C' type of management for the System would result very promptly in losing some of the best men we have got in the Reserve Banks. (In our own Bank I would expect shortly to lose Case, Harrison, Rounds and Gilbart). The executive heads would all of them owe their positions to the Federal Reserve Board. However honest such a man may be or however independent he may intend to be, after some years in such a position to be faced with losing it, and of subjecting his family to possible distress by doing so, he will usually submit, and that I apprehend would be the situation in the Reserve Banks. The fact now is that six of the nine directors of a Reserve Bank control the selection of the head of the Bank, but if the Board has its way, while the Board names but three of the directors, it will nevertheless select and control the head of the Bank. -10 There has been ample time down here to think these matters over deliberately. My fear is that circumstances have now led to the development of a situation where it will be almost impossible to stem the tide of centralization. My belief is that this development is absolutely contrary to the conviction and the desire of such men as the President, Secretary Mellon, Senator Glass, and others who understand the System and who have a keen interest in its welfare. I feel very certain that such men as Russell Leffingwell, Parker Gilbert, and Garrard Winston -- and there are none in better position to judge than they -- will look with grave concern upon the development of such a plan for the Federal Reserve System as is forecast in this inspired article of the Wall Street Journal. Now the question is, what to do about it. After expressing the views which I held, possibly not as urgently as I would have expressed them had I been sure of the future as to my health, etc., our directors, Mr. Mellon, and the Federal Reserve Board have decided upon what to do in our own case, and I suppose the Federal Reserve Board will now decide what to do in the case of the other four Banks I have mentioned, and probably in one or two others which I believe are somewhat in their minds. I personally feel that my last. responsibility is discharged in making clear all that I feel about it. You and my other associates in the Bank have been so wonderfully loyal and understanding and sympathetic in your attitude to me, that I feel more' than willing, even more than obliged, to conform to any course which seems to them to be wise. It is nevertheless a question as to whether this course, which I now feel is clearly embarked upon, will not force me to abandon all hope of achieving anything further in the matters in which I have been particularly interested all these years. If I should resign now, I fear only adding to the difficulty and embarrassment. Even though it may subject me to some criticism, it has seemed to me that I should continue at least long enough so as to get the drift of matters personally and on the ground and form a better opinion than I now can as to what my real duty is. But for the last few week's; I have felt that it was impossible for me to remain silent and watch this development without some warning. I have opened my mind to you very fully, but with the conviction that, for the present, it should go no further. The thought has been growing on me that possibly the best plan would be for me to arrange to meet you in Washington within, say, a couple of weeks, as I could probably then make the trip without much risk, so that we could discuss this situation frankly with Secretary Mellon and, if necessary, with the I am sensible of some embarrassment because of the fact President. that you are now a Class C director and Vice-Chairman of the board and feel a natural sense of responsibility to the board, which I would not for a minute ask you to lay aside and especially not if you did not )retty fully agree with some of the concern which I have expressed. 'or 0 So I shall conclude by asking you to hold this letter in confidence for the moment and consider whether such a visit in Washington is not the wisest course as preliminary to any conclusion which I might otherwise reach. With best regards, I remain Sincerely yours, Mr. Owen D. Young, 120 Broadway, New York City. BS:M 120 BROADWAY, NEW YORK ROOM 2558 OWEN D. YOUNG March 31, 1927. PERSONAL My dear Ben: When Harrison broughtme your two letters of March 3d and 6th, the Polish situation was particularly occupying our minds, and that was so kaleidoscopic that it was scarcely worth while to write about it. When Harrison handed me your long letter of March 6th he said I might read that entirely at my leisure. no thought of postponing it so country, long. At that moment I had Today, coming back from the I have had an opportunity for the first time to read it with the relaxation with which such a letter should always be read. I shall have the opportunity, I suppose, in a few days, of talking the whole matter over with you and then we can consider it fully. The only thing that I now want to say is that I have no fear of centralization resulting from the appointment of strong men to the Class "C" directorships, one of whom, of course, must be Chairman of the Board. My fear has .always been that the Federal Reserve Board, either influenced by political considerations or by its desire to secure control of the banks, would appoint as Class "C" directors men who would be mere agents and servants of the Board, and that such a group throughout the System, cooperating closely with each other and the Board., might be able to dominate the System. They would dom- inate it not because of their strength, but because they could. make it so uncomfortable for the elected directors of the bank that men of position and power would not serve. If I were on the Federal Reserve -2- Board and wanted to dominate the Federal Reserve System and centralize its power in Washington, I would name my own henchmen on every bank in the System, and be sure that they were men who would take orders. The present tendency is exactly the reverse of that, and whatever may be the motive back of it, it is to my mind all to the good. If the motive be to get control of the Federal Reserve Banks - and I think that motive may exist in the minds of some - the method adopted will fail. tration. Take our own situation in New York as an illus- I think that the influence of the Federal Reserve Board in our affairs will be less with Gates EcGarrah as Chairman than it would be with Dr. Burgess as Chairman; not that Burgess is not as strong as McGarrah, but he is less well known, and therefore his resistance would be less effective. As a matter of fact the Board might, with safety to itself, endeavor to dominate Burgess, but it could scarcely do so with LeGarrah and therefore would be much less likely to try. If equally strong men Can be put into the other reserve banks in place of the men already there, I feel that we will have insured the System against the very centralization which you fear and against which for so many years you have given such effective resistance. In the early years you were compelled to do it almost single handed in the sense that you had no outstanding men as associates in the officers of the other banks. what you did is my best argument. That you succeeded in doing If one man of outstanding character -3and, ability in a new system could resist the encroaciments of the Fed- eral Reserve Board aa the independence of the several banks, then it seems tome that a group of strong men as Class "C" directors could support the officers of these banks and make them almost invincible against any attack of any kind from the Federal Reserve Board, whether such an attack be induced by the desperation of a bureaucracy or by political ambition. Certainly you can not have any stronger views against centralization in Washington Woolley and myself. thanA Gates McGarrah, Clarence If the Class "0" directors of the other Federal Reserve Banks were of a similar type there is every reason to believe that we would all be a unit in our views on that subject, and I do not see haw the Federal Reserve Board could make any encroachments on the independence of the several banks, because the avenues through -which the Board could normally act would all be closed. I think the newspaper article which you enclosed in your letter was undoubtedly inspired, and may reflect the views of some members of the Board. It will take much more than newspaper articles or views of the Board, however, to accomplish the encroachments which you fear. I have tried to say several times that to my mind the Feder- al Reserve Act is like the Constitution of the United States, and all other great charters for that matter. At best it can only draw the out- line of the picture, and if it had been entirely wisely drawn it would have omitted many details which were inserted. After the outline is drawn, then we fill in the picture by precedents. shall did to the Constitutiam. We do what the British Parliament has We do what J done to the Magna Carta. Therefore, the work which you have been doing for these many years in watching precedents has been most important vital, I think - to the System. You have a great many precedents down already, and they are not likeIy to be broken. Now we have the foreign situation which was not in contemplation by the drafters of the Act at all. There we have to learn haw to make the Act function wholly on precedents, with very little outline to the picture. It is important how we handle that job in the early years in order that the precedents may be right. The point which I want to make on all this is to let you know that I appreciate the importance of the precedents which were established and that I recognize the necessity of watching them carefully in the future. I must say this, however: That when you were fighting pretty much alone it was necessary for you always to lean backward lest you make a concession which would weaken you tremendously in the future. That practice I do not regard so necessary now. If a man were fighting alone he could scarcely trust himself to a conference of any kind under a flag of truce. would all be over. One violation of good faith by his adversaries "ma it If, however, a man has an army back of him as well organized and as strong as the opposing army, he may quite safely trust himself under a flag of truce with violate it. full knowledge that neither will dare It is that to my mind which is happening now. Instead of assault and counter-assault on each other's positions, we are meeting to discuss them quite frankly and openly and with firmness. We are not go- ing to surrender any important positions, but we should eliminate much -5- petty skirmishing. If the Federal Reserve Board is able to tabs any major position as a result of negotiation, then I would be almost willing to concede that they ought to run the bank. It is wholly unnecessary for me to say that this letter is personal, and I will talk with you more about it when I see you in a few days. Sincerely yours, Mr. Benjamin Strong, Stuyvesant Road, Biltmore Forest, Biltmore, N. C. October 5, 1927. My dear Owen: During the past year I have been watching the development in Germany, as you doubtlese have, with a growine, feeling of uneaeineee. This le not tesed upon an conviction that there will be t break-down of German finance or of the German monetary position because I think the Dawes Plan of iteeif provides 1,131 the eate- euarde that are possible against ouch an occurrence. Illy uncertainty arises more from the possibility of political developmerte being permittied to interfere in one or enother way with the smooth operation of the plan as we,s intended by ite ,;uthors. The possibility of such a development became obvioue s soon as the dis- pute arose over the proposal of the State of Prueeia to borrow 4V3,000,000 in this market. We have been coneulted by the Department of State and finally are asked to submit a memorandum of our views as to these borrowinge. them out in the enclosed memorandum. I have attempted to set While not in its fine form it embodies in substance the points which I think require immediate consideration, FIX et brief sugeeetion at the end as to what may now be done to poetpone the day when a reckon- ing of the situation will have to be undertaken. I am not sending this to you in order to Let you committed in any way to these views, but I should greatly value any criticisms of the memorandum which you think are justified so that I may have the benefit of them before completing it. I shall, of course, send a. copy to Gilbert when it is finished. One can hardly escape the feeling that the situation might easily become critical in view of the increase yesterday in the dieeount rate of the Beichebank and our kriowledg,e of the fact that their reserves are now pretty close to the minimum provided by law, even including the undisclosed reserve of devicen which has practically an vanished. Mr. Owen D. young, Broadway, New York. http://fraser.stlouisfed.org/ BS/RAH enc. Federal Reserve Bank of St. Louis Sincerely yours, At (14t,f/m4a epki mt.", 044 ge /tut-4%4+4.10 4 Attmtdrit, toot PO.,044 vat 00/.6, tt4 172-111% tar* &Nth...AAA "g4 444 6"ArtA... off,t, 4i) 4 Vito IuoteA441.41444rwil eitt-64 41/ fa4n At4t. 1014i ettre *4 $i to-7, io, /3, FRoivy 411 5-5, Ow Lti &awes,' 44,4, ealt ktrAailm,c,--124"4--tel 414 dr4ale 120,12- 2_ Grand Hotel, Cri,460, Juue 11, 1928. Deer eeen: Yeu mey be curprioed at hearina from me, particelarly When you discover the eubject of this latter. It 1114 not only exceedingly vxivete, but relatea to cocm mattere of teem:Ivo on whiCh'T believe you have oinlone and to whidh 7 am very tnxious that you should give name deliberate theuglit between now end the September meeting of ths F1DA4C0 Coeeittee of the Leegue tf Nations. To refreeh your memory as to histcry, ehieh I doubt lu neeeseury, the Genoa Cenference paezed u rocclutien the subetunce of uhieh Into a decla- ration of for. of a poseible shortage of gold for world gold reeervez, =pp- reeulting in high benk rates and declining priceo, with poc- cible natisuarbankruptciee resulting; it cm:esti= that economy in the use tition.for gold of sold could be effected 1),,, the development of tho geld exthange ctundard, and fine/1y, with my two exthange centere like London and Lew York; rectian to the Uovernor of the Wnk of alglend to cell t e di- =Terence of the heeds of the varioue banks,cf iscue for tho purpcee of exploring tho subject aad devieing remedies.' This I quote simi/ly from memory, az the resolution is not before me. The invasion of the fitihr arrested a program for Nadirs ouch a' muotinc, und poetic:memento have since taken placo,. partly because everyone wee preoccupied with monotary reorganisation and partly because in a quiet way we have been ineloting that wo were not in sympathy with the Genoa reso- lution in certain reepecte and that we would regret declining an invitation 01/28. Mr. Owen D. Young. 2. to ouch a conference, if that was found necesoary, or on the other hand would feel the need for going under reservations which would protect the unique position of our on country. Thio idea Of the need for (economy in the uso of gold hao been very much agitated by a certain group of economist°, notably Ga000l, Keynes and others in'Europe, Fisher and others of like faith at home. the London bankers, notably go Konna, have Certain of held somewhat similar views. to the honesty of their point of view - at least as to some of them harp been As r. I inclined to raise doubts, because it offered possibilities of eMharrasnment to the lank of England 14 the way, of,eritiolems whidi some of the critics of the Dank are always ready to grasp. I had a long talk with Salter in Pariasobout this whole matter and expressed to him the many doubts I feel as to the wisdom of a program such as suggested by the Genoa resolution. said Something of thoosame sort to Professor Cassel When he called on me in New York. In fact, from the time I first heaol the Genoa reoolution until the preeont time, I have had definite misgivings as to its wisdom and, in fact, as to whether the grounds for any ouch action were substantial or sound. I want to recount to you at some length just what this proposal involves. Thies of course, is partly interpretation of the language of the reeolution and partly that I gather from advocate it. conversation with those who It involves a conference at Ohloh, by come sort of action, the world'e banks of issue would agree to maintain reserves in the two principal axdhaoge markets which would obviate the necessity of so large gold reserves being held in their own vaults. They would moat domands Ur. Owen D. Young. 3. 6/11/26. or geld for export eitner by legal memo of furniohing valuta to eatisfy demands for gold, or by using valuta in the exehange market to prevent the exchange rate pawing the gold export point. This, in subatance, is the proposal Which these gentlemen have urged upon me at various times. Sc the matter has slumbered until this year certain members of ew League organization, more especially Strakoschchave agitated the used for doing something, and possibly a reflection of that agitation is found in the resolution adopted by the Economic Comaittee at a recent meeting, recommending to the Finance Committee that steps should be taken in their discretion. The resolution was introduced in the Economic Committee by Layton, and the Finance Committee took cognizance of it and in turn passed a resolution Which in effect postpones the determination of the course of action until the September meeting. The League's attitude, as I gathered from talks with Strakosch, samsAbet confirmed by Salter, would be to explore the whole situation from a factual point of view, but, as I feared, to go somewhat beyond this by euggesting a course of action to the banks of issue. This 1 would object to on the general theory that the technique, individual relations, idlosyncraciea and prejudices of the various banks are such that it would be quite impossible to expect any constructive result fran a general meeting developed at this time under auspices of the League, according to the ambition of such men as Strakosch. They have approached the subject with a definite accept- ance of the view that a world gold shortage is impending and will result in a price decline, that economy of gold by this method in the only means of relief, and that the League should take cognizance of A and should call 4. Ur. Owen D. Young. 6/11/23. upon the central benke to deal with it. Now let me also explain some grounds for objection Whirl I. Peel must be uread very etronglys- (1) There is no definite, outheritative knowledge ce to the outlook or gold production in the world, outeide of etudiee ex4o. a law ywra neva the prospects of the south Africon mines. Thedmta has never teen aesembled as to world produaion. (2). It iv assumed by these gentlemen that rigid minimum roperve retied aro to be established by the banke oflesue throughout the world, so that flexibility Is reduced below what exieted before the ear. ie a taloa premiee, because T believ there will be et greet flexibility an, end peeoibIY Ereater thm, existed before the war. Yurthermoro the Latin Uoue- tary Union having boon denounced ,.the gold atandard will be an actual gold otandard nnd the great otoreo of cold of the countries in the Latin onotary Union will be available to an extent which was not the moo before the wnr. They overlook the fact that our policy at home is graduolly making available to the world CM amount which will be the equivelent of any vhortage in South Africun produetion for a good many years to came, and that Aiortage has not yet developed at the preeent timo, in feet, production is fLm record volume. The oetatliehment of a gold =Change stundard on these principlea 044MS that a bank of issue like the National bank of Belgium can Jew* notee againot balencee hold it Lendon and.Now York. In the case of Nee !fork, wo calculate at the Eenk that it would be posoible legally for the National Bank of Belgium to leoue 1CO. in notes in Belgium agoanst es gold balance Ur. eeee J. eeueg. 5. 6/11/28. indirectly held by the Federal ROSOCV0 Bank of New York for account of member banks of only t1.53. The plan takes no account of the fact that if 30 or 40 countries should rely upon centrel bank balances in New York and London as re- serve for not leeues or expansion of bank credit at home, the amount of those balances will be great enough and their investment would be of such consequence to the money market that the control of the domestic money market might indeed be delivered quite fully to others than the bank of issue. Demends for gold, as we have experienced them in recent years, we know at times originete from mental rather than actual influences. The introduction of a gold exchange standard in so many countries which are not practiced in central bank maneeement - of which Poland is a good enample means a real menace to the London and New York markets in cases where panic conditions arise. It is difficult to sea how such a responsibility can be formally assumed as the moult of formel meetings in which we participated, without subjecting the Reserve System to the hazords of political developments abroad, and to the even greater hazard of political investigation and possibly control at home. MY suggestion in this matter has been uniformly the same to ell who have discussed it with me:- That i yrs doubtful of the soundness of the basis of the conclusions suggested by the Genoa resolution and was quite certain that the soundness of the remedy proposed was open to serious question. That a "town meeting" such es proposed would be a sort of spec- Utr. Owen D. Young. 6. 6/11/28. tacular affair, would center the attontion of the world upon an assumed prograta for regulating all of these matters, including prises, to an extent which would never be posaible by that method and consequently would involve disappointmont and invite criticism. (3) That it offered too great an opportunity for uncontrolled inflation by countries whore political domination of the banks of issue or ignorance in management made self-control difficult, and there was an almoot equal hazard to the two countrios which were expooed to the consequences. (4)' That no ouch program ahould be undertaken until the outcome of the Dawes Plan was more fully developed, that the Dame Plea provided that it was a means of ascertaining how much Germany could pat and how much her creditors could afford to receive, and that the whole program of the exchanges mud the gold standard was mere or less wrapped up in the outcome. ,(5) Finally, that it might be a good plan for the League to under- take impartial studies of the facts as to cold production, the available amount of monetary gold, how it was distributed, whet were the legal and other limitations upon its uos, what was the experience of the world as to the secular increase in demand for monetary reserves, and all allied questions of fact, and then have them made public without reoemmondations as to any course of action. In 'the meantime, the subject it well be discussed privately by the five principal banks of issue, that is, London, Paris, Berlin, Rome and New York. My own idea, which I have not eapressed very freely, is that every of the nations should reestablish the gold standard, restore its gold reserve or create a new one where needed, making special arrangements for doing *Jr. Owen D. Young. 7. 6/11/23. so where neceusary, and reestablish its own domestic autonomy in monetary matters without any such dependence upon other markets as implied by the gold exchange standard. Important balances in London or New York of course may be highly desirable, but the most desirable thing is autonomy and selfrelience and good onduct on sound monetary principles at home. With this principle once established and gradually put into execution, relief from temporary strain in any particular quarter could than be supplied by diecounting bills in the principal markets, which should not be confined to London and New York, but be expanded to include at least the five countries named above. Obviously, the object of this scheme is to avoid the irritations and possibly the attempt at domination which might result from any such plan and on the other hand leave the two principal markete, London and New York, free to decide for themselves whether they would or would not furnish assistance in ease of need, have a lurking suspicion that a brood development of the gold eeohange standard might result in conditions which would bring about the very fall of prices which the proponents of the plan appear to fear; that is to say, unreasonable demands upon London and New York for gold, which would force high bank rates there and in turn protectively lift bank rates the world around. Such discussions of this matter as I have had in the past lead me to believe that Paris, Brussels, Zurich and Rome are definitely of the same view that I am; that Berlin and Amsterdam are probably of that view; and that London has heretofore rather leaned in favor of the Genoa resolution, possibly 8. Ur. On D. Young. 6/3.1/28. bocauce of the tradition of the London exchange market being a world .exChange center. This subject has so many rumificationo und the consequences of one or another course of action may be Go grave, that I am fearful a bit of the influence of a =all and rather determined group of men in the league wno aeon bent an having this question formally dealt with at an early date. In this group the '%nglish mawbera have a strong influence. I am not oending you this as u request to do anythivg, but simply to thinkaboutit, with the possibility always in my mind that your °aide acquaintance and very groat influence with practically all the men Who are active in these Matters abroad may reeult in your being consulted. - In fact, this seems twescapable, because of the relation which the Dave Plan bears to any development of this sort. All that I have solar.done is to suggest to Jeremiah Smith that the matter be delayed. Norman has thought thatit might be well to go slow with proposals, at least until we had a chance to examine it on our own account and have eome preliminary notion of what attitude we should take. Some months ago I asked Dr. Durgese to starta study in the rank of this whole mutter, end I understand 0=0 progress has been made. I RM enclosing a spare copy of this letter, in case you' should feel willing to ask Dr. BArgess to road it and talk with you about it, but I avail not send it to him, as ho than might drag you into a discuosion which you would feel juot now took too much time. Please do not in:or from this letter that I am engaged in any such lengthy correspondence as this every day. 2hile I have had some visitors Ur. Owen D. Young. V. 01/28.. hero and spent soma time in keris, I really have dcno little work and just letting matters accumulate for the moment. am I GM very much better, but etill suffering DOLIO of the after effects; of my illnuee, Lad fool the need of the rest that I am getting here. With boat regards and apologies for bothering you with thio matter, I roman youra, Ur. Owen D. Young, c/o General Slectric Company, 120 Broadway, New York. July 18, 19281 P. S. I have held the above letter, as I expected to see Salter again, WhiCh I have done. Between our meetinge, T have had oppor- tunity to co over ftll of the papers and resolutione, and with Dr. Stewart, end ee both agree that it ctuede out most prominently that thine gentlemen are really directing their efforte toward and ultimately - if they once etart - 1111 arrive at a determinntion to reek° some endeavor to induce tho central banks to accept the rusponaibility ter stabilizing the pure chneing vnlue of cold. fore the public. Thie le a moct hazardouc prepocition to lay be- It will armee endleso controversy, revive the waning hopes of all of the tectreme theoricte, and likely help to create a public opinion that the banke of issue can assure impocsible reeponsibilities. 10. Mr. Owen D. Yourc. 7/18/23. Believing this quite firmly, I have told Salter at a meeting When Stewart and Hhrrison wore present that 1 felt obliged to withdraw even the moderate suggestion I had already made in Paris of a factual study. This is where tbe matter now rests. Wisti Dear Owen: When I saw Jackson Reynolds in Paris we had a long talk about the The situation presents some diffioultiee, and suooessor. his possibilities are as follows: First, tradition in recent years has been established that Class A It is not directors shall rotate and not serve more than one continuous term. universal in the System beoause George Reynolds has served continuously in Chicago since the bank was organised. So the first question is whether, in the present situation, it may be desirable to continue Reynolds notwithstand- ing the tradition. Second, hae the time arrived to have a representative of a state Institution to repre.ient the Class A banks? Canvassing the situation I believe there is only one man mho stands out as eligible in this group of banks, and that is Potter, chairman of the board of the Guaranty Trust Company. This is partly because of his known ability and integrity as well as the fact that he represents the largest state institution, else that I know ef who approaches him but partly because there is no one in qualifications whose selection would not arouse bitter oritioism,from some of the large national banks who have been members from the beginning. Third, there is the undoubted natural course of electing the head of one of the largest national beet thing to do. tively few. banks in the city. On the whole this may be the In choosing, however, the choice narrows itself to compara- Alexander and Woodward have both served in the past. Challis Austin, who would be an excellent direotor, is too new in banking oiroles in New Tort. !lard of the Irving has been suggested. Be is . P-.17:ofir or so h undoubtedly a fl ret 1 a.ceept, the deal csiors or the eArectore In An matt.mrs 5rld not .1 - 2-. rate man, tut I think that choice might be regarded as a slap at the big national banks. Some day he would make an excellent director. The choice, however, probably narrows down to Mitchell of the City or Wiggin of the Chase. latter, I ma opposed to his election. As to the The reasons for it I shall not recount, but they are ample and oonvinoing and conclusive to me. As to Mitohell, I have a high regard for him. the ablest of our bankers. I do. He is truly one of You probab/y know his characteristics as well as For a long time he was a very bitter critic of what we were The doing. influence of some of my friends outside of the bank has been quietly exerted to educate him a bit as to our policy andphilosophy. A strong influence has been recently felt in young George Roberts who went from our bank to the City The same and who has done yoeman's work in making our affairs clear to him. . . is true of Gerrard Winarton who left the Treasury to join the firm of Shearman and Sterling and is straighten him more out very close to in our reasonalle and much cooperative. affairs. Mitchell For the last year Mitchell has been much less critical. I have had one and has been a good influence to site recently he has been most talk with him and Mr. Harrison has had on the general eubjeot of our work and the credit position and the a nuaber po4.6y of the City Bank. On tbe.idiole, I think he is my ohoice. It might be that Potter would be a better choice in some ways were it not that his health hs.e, recently been so very bad that I have been doubtful of his ability to serve. This would nerd to be my 'conviction investigated. that The real point of this letter is to. express if Mitchell should be selected it would be betit!at outset to have a. very frank understanding with him on two pointif,:. that so long as he is a member of to accept the decision of the board of directors tke One is he should bei willing the directors in adl matters and not 4440.ge,u outelde criticism but be loyal to the majority of his aseociates. I em convinced that a nice talk with him on this eubjeot would in .ure that cuch mould be the cabs, and it is not. eo much the need for having an understanding in advance as it ie to avoid ony possibility of minunderetanding in euvanoe, end the distinction in Mitohell'b osee is important. the inevitable influence which his knowledge upon his policy in running the City Bulk. in central banking. How can a The other point ie as to of whet we are doing may exert This is one of the oldest problems director who is interested in the other srice of all banking problems be disinterested and impartial Reserve bank as well as in confidential knowled&e, and steer in his attitude in the his own bank, not take an unfair advantage of his a clear course in a very delicate situation. Charlie litchell is one of these fellow° who faces the facts honestly, and I think it can be dieecuseed with him frankly and no possibility of alauncierstano- log arise. ils a minor matter, I have always felt that attend, very eilde ihtereets, many meetings to were he a director, his and pressure of the affairs of the City Bank and of the City Company, would sake it impossible for him to attend our meetings which eometimes last rather long and ehich occur twice a week. We would need to ht,ve an I believe that whet h. understanding with him a!out this. In general, director of his class gains edee, experience, information, etc., is ample time in otter matters. dignified from the repayment for the Besides that, it ie probably the root directorship of the country. carefully revised applying to his ease, and any talk to cover the with others. important and is to to the Board should, particular circumstances him should be had by you and by Jack Reynolds, and not by any active officer of Case, Harrison and the sacrifice of hie Should it be arranged that he nominated, the cuatomery letter sent him by the Chairmen of I believe, be very Reserve bank in knowl- the bank, which would exclude licGarrah, There hive been old entaoniams between licGarrahos bank and the City Bank and that situation should be avoided; as well as Mitchell'. -4amour propre respected by having the matter arranged by yourself and by Jack Reynolds. Your being Vice Chairman of the Board and Reynolds being the retir- ing Class A direotor makes that a perfectly natural suggestion. I hope this appeals to you as a reasonable discussion of the problem and not too urgent or definite a recommendation by me, which is something which I should wadi" avoid Just aow. Sincerely yours, Mr. Owen D. Young, iao Broadway, New York City. far. t-tH/t4 PERSONAL August 20, 1928. Dear Owen: I shall burden you with only one other communication, bit I fear it is rather long. Ny illnesses for the last two years have delayed putting into effect certain changes of detail of the bank's operations which I have undertaken to explain in the enclosed memorandum. nil. preparing this, it seemed desirable to expand it into an 'elk expression of some general views about the bank and the System. You may re- gard it as my testamentary direction to my successor. Should y explanation of why I send this to you you may understand that it is beoause I have so high a regard for your Judgment in these matters, euch confidence in your understanding of my point of view and the purposes in regard to the bank, and, more humanly speaking, ouch a persona affection for you, that I steal feel more content to have you hand this to ay successor with such comments and elaboration as you feel Justified in making. I am very anxious to see you soon for a little chat about some of these matters, but hesitate to draw on your time. If your seoretary could telephone me suggesting what time would be convenient to you I can certainly arrange to meet your oonvenienoe any day before Friday. Oa that day I may go up to the country and stay with my soul Vith best regards, and thanks also, Very sinoerely yours, St Kr. Owen D. Young, 120 Broadway, New York City. (Second Draft) ZT)4 August 17, 1928. .s There are certain matters in the work of our organization which require the thought and attention of the officers and which will only have the attention required if the head of the bank initiates plane for dealing with them and follows them to a conclusion. They are grouped in this memorandum according to a rough classification. I. INTERNAL DETAIL The Forms Of Reports Made to the Directore. 1. These are not, in my opinion, satisfactory,and do not disclose the bank's position, in its position by periods the causes the significant changes Of the changes, and, finally, a summary of the transactions of the various departments. In some respecte the reports are submitted in too great detail and much of the detail is not read and would not be very illuminating even if the directors did have time to study them. Each director now looks Over the papers for some particular item or items in which he is interested. reports- to' directors My idea of is quite ' different from our present' iriOti ce, and ImoUleli st the information to be submitted roughly as follows: r (a) The statement of the bank with the figures so consolidated that only those items where changes are important to the dir3ctors are clearly brought out, and every change for the period covered should be shown and the cause of the change explained. oe all of the information in regard to our This will comprise reserve, the members, reserves, changes in the investments,., loans, bills, etc.,, the note issue and other material facts. formia l(C)'doMMuniCaiions frOM'thEI'ledeiti Asserve BO/1rd. ForeignHmatters. The money market and changes in general conditions. LD th t(f) "%AIX '(g) vrt8ti<l(h) The rate situation and recommendations for Changes. The usual detail. Departmental reports. At intervals, suitable with regard to the importance of the department, each department should submit to the directors a brief comprehensible report of its transactions. This Should incidde every department of the bank, the more iiportant ones at freqUent intervals, the less important ones more infrequently. The whole subject of reports to directors should be Opernting. Reports to Officers. eration than overhauled. This requires more etudy and consid- have yet given to it, but the reports as at present being made are unorganized and they should be brought to a comprehensive whole by a careful study so that each senierofficer knows every day what the whole bank is doing. System. Quite frequently within the last year or two I have caled for papers which I know are in the files and have been unable to get them. Where I have examined some of the files I gain thelinpression that too much weight given to filing by pondent. subjects and too little to filing under the name of the isA corres- My belief is that the bank should have the master file arrane,ed by the name of the correspondent, and that file should contain the original of every letter re- caved from every source and the first carbon copy of every letter sent to that cor- respondent. The subject file should be subordinate and dealt with largely by cross references. I an inclined to think that the complication of the present correspon- dence is so greet that we must perfect a subject and numbering aystem9 and that Miss Parker should have the assistance of the best experts that can be hadi;. Personal Correspondence. We must have some better formula for deal- ing with personal and private correspondenoe of a confidential. nAure coe-4ucted by the senior officers of the bank which it is not possible to put in the bankvs files. My own correspondence I expect to deal with myself in due time, but a satisfactory formula to cover the eo ire organization should be promptly devised. Assignments of Officers Y For Duties. the first. time, I believe, in the history of the bank a serious mistake hoe been made in the aseignalent of duties to the senior officers. My retirement will now afford an opportunity to correct this, and it should be done before we become too deeply entrenched in an unbalanced and .;;7-.. eee. d *ft/ unscientifio arrangement of the work. . uztLuc/. Emortrf-, arisen le 0/ ' ilt.t* e to mix derstaneie II. Governors, Conference and Procedure. 6. to have been due getting PROCEDURE IN .EXTERNAL SYSTM MATTERS. Most of the difficulties the indifference of the Federal Reserve Board in the past. up a program, clay in reviewing the action of the iliarity of the Board with action previously, conference, and here Delay in the unfem taken and approved, has resulted in die- cuesion and dispute and sometimes serious misunderstanding. I think much of this mould' be obviated by the preparation of koareful formula,eoirculated among the rm.! serve banks,,, the members of the Reserve Board, and the staff of the Board, Which should be printed and sent out with the program as en integral part of the program before every conference. Such a formula can be gradually developed so that everyone in- opiference and tereeted may be Consulted in connection with the preparation for the conduct of the meeting and action taken subsequent to the conference so that it will be productive Of better resulte. 7, cooperation, a with Governor Youngs System Committees and Procedure. Here I think, great improvement can be effected. My idea would be in our procedure to have the formula above mentioned contain a committees of all providion for the reference to system subjecte which require epecial study either by the Federal Reserve Board or by the Federal changes of regulations. Board, and especially reserve banks preliminary to the'makine of rules or rulings or Much of the. difficulty between the Reserve banks and the between our bank and the Board, has arisen as a result of rulings made by the Board which later need to be Changed or reversed becluee of ignorance of all of the facts. The Board should stand reedy at any time to refer questions to committees for Study and report and recommendations, and the Board would not suffer in prestige by doing se, but would rather gain, becEease their rulings would be more Intel ligent bnd acceptable to the banks themselves. closed from objection in many The banks would, in fact, be fore- caees beceuse the Board would have had their recommends,- Lions in bend before making ouch rulings. 1 8. The Relations of our Bank with other Reserve Banks. difficulty Ohl& Almost every wa has arisen in our relations here has been due to misunderstanding Cr -4 C resulting from laok of interchange of views.. So System as a whole, more than Le the case the other nearby and more important such of what we with any other that I think reserve banks should be consulted more frequently of dieootuit rate (excepting in emergency) unless te had sion with the other nearby Reserve banks. I It is the best bank, fact, I should never think of recommending a. change and more fully than they are.. In transactions. Reeerve do, affects the had some preliminary aiscus- And the enme applies to way to cultivate a good spirit in many of our other the Federal Reserve System. THE CURRENCY III. The Greenbacks. 9. eral reserve The growth of the capital and the surplus of the Fed- banks is certain in time to give rise to some legislation. this year the total will doubtless be $375,000,000 or thereabouts. It is surplus possibly will be $115,000,000. At the end of Our capital and greater than is needed and may some they, _eee invite the attention of Congress and its lief, for some purposes which might not be setisfactory. altogether There 8 a great varietyof possibilities for dealing with this, but I think possibly the most satisfactory would be at the proper time to make a proposal to the Government to pay off the greenbacks and take over the gold now held in the trust fund. to It is not necessary elaborate the detail of a plan. It would get the Government out of the currency business, give as $153,000,000 of gold, and reduce the surplus of the Reserve bpnks gradually as the greenbpcks came in by a very consid ertble amount, possibly as much as 4160,000,000 or $170,000,000. of course, been destroyed and will never come in. any of them have, It will save a big printing bill f for the Government and eliminate one of the weak spots in our currency. If we paid them off they would simply be charged to our surplus and the currency replaced by issues of Federal reserve notes, and the burden on our reserve would not be great on " account of the gold we would receive. 7, ,. I The law should proviae, of course, that we . would only pay off greenbacks 'blob were surrendered to us before a stated date, and any greenbacks not presented by that date would thereafter lose their legal, tender quality and be retired by the Treasury out of current funds. close our a000unt at a definite figure. There is precedent what was done with old issues of Treasury their retirment shortly after the new pared in currency is issued. We should be well pre- the "twos" may be dealt with in 1930 when they required to to replace them. notes issued carry 40 for the may be retired fit I should say that on no account can such a way that we are this, as I recallbin, certain to arise a demand for advance of that date with some kind-of a program Government. -for notes. National Bank Notes. There is almost. 10. This would enable us to Treasury so that the option of the this be done, as things per cent. now are, in reserve against Federal reserve The Government should gie us some kind of a low interest-bearing obligation which would give Lte a wall revenue to cover our costs and a little over, and it would no doubt place in the currency of the be proper to have our ,note issue take its country as a fiduciary issue similar to that of the Bank of England and the Bank of France and others. CERTAIN SPECIAL VOIBER BANK MATTERS. IV. As I have already. written to Banc' talY . initely of the opinion that when Giannini applies to-us for Mr. McGerrah I am defan,exteneion of time in which to distribute the stook of the Bank of America we should decline to do so un- lees he will balance do certain things. sheet of The principal one is to furnish us with a the Bancitaly Corporation, and after extmining it complete I think we will', feel justified, as the inducement for an extension, to require him- to liquidate securities and invest the proceeds in Government eecurities or bills, which are eligible with us, with the understanding that they will be retained for uee in pro- tecting the position of the Bank of America (or, the Bank of Italy indeed) in case any emergency should arise; and that hie obligation te, ult in that reapect will con- tinue until,- the stook of the Bank of America Lo4odged in4he,hands stockholders and, fully paid for; byt theoll tone, ridtk 1 6 After the present storm blows over, I apprehend that Giannini will again We have no undertaking from him be ambitious to create a large bank in New York. not to extend his purchaeee in New York. for him to do so and retain manberehip On the other hand, it will be very difficult in the Federal Reserve Syetem so long as the Reserve Board has the power to withhold approval whore its approval is neoeeeery in 1 would not hesitate to notify Giannini definitely and finally that any particular. we will oppose'any effort on his part to establish a b,m1k in New York City under his control or the control of any holding company such as the Banoitely -12. Joneees. of their affairs. , They seem to be working diligently to improve the situation Somewhat the same nini; the essential attitude should be taken with him as with Gian- difference in the position is that *Jonae" is a purely domestic problem whereas "Giannini" extends from one coast to the other, with large foreign With lionas I ehouldebe inclined to insist right awty that his investments as well. holding company get Corporation. in iuch liquid shape thatit can help the Manufacturers Trust Company to any extent required at any time that any emergency arises. 13. The tendency in dealing with this matter Kanter Bank Borrowings:, has at times been,tureauoratic rather than preonal and direct:. Every time I hear the expression that a. member bank has been in our debt for a. continuous period or has gone out of our debt within a given period or borrowed in excess of capital, etc. I feel that the whole tkilosophy in this problems. matter is wrong. Each member bank has its own The "time" formula or the *basic banks, just makes trouble and does not linaw formula applied generally to member fit many eases.., With only a little over 900 membertathere should be no difficulty for the department handling these matters to understand the position of each member sufficiently well so as to deal with it as an individual Cabe rather than to apply some purely arbitrary mathematical rule. If we are undermanned in the .departakent to enable .us to do this letiss get more men. Here' again, a simple formula, printed mad. in theAtands of all:mf those interested, .givedLtvaid the handling of-AtivaseArattars http://fraser.stlouisfed.org/ proc3c8 Federal Reserve Bank of St. Louis hwtcht t. th( afiaa f;Lit', tO ti"' peekie hcacrer, I 7CO146 'elcve V. THE CREDIT SITUATION I am attaching a copy of a msmorandum prepared by Dr. Sters;rt which 4tiwas intended for my personal use only, and a copy if a letter which I wrote him in reply. It speaks for itself and I shall not comment on it. Broker& Loans for Customers and correspondents. I had intended to write a letter from abroad on this subject, but decided to await my return lest the letter be misinterpreted. I.am now sorry that I did pot write bebause the talk which I had the other day with Mr. George Roberts, Jr., convinced me that the true signifil canoe of the large growth of the loans made by New York City banks for account of their customers is not fully understood by our, bank. What takes place is about as follows, ani is partly responsible for the expansion of loans and deposits . which has recently occurred, If a correspondent or customer of a New York City bank decides to use, say $10,000,000 of a bank balance by making loans on the Stock Exchange the reeult on the banking poeition is that the member bank reduces ita deposits by $10,000 000 and reduces its loans by $10,000,000. It makes no difference whether the reduction of loans occurs directly On the books of the member bank h!kving the correspondentle account or on the books of other member banks, the result is to reduce the re.erve requirement* (in the case of New York) by 13 per cents of the amount of the loans made. In other words it is just as though a New York member bank paid off $10,000,000 of its deposits by turning over $10,000,TA of its portfolio to a depositor. $1,300,000 of reserve and.creates a surplus This releases reserve balance in the Reserve bank. The member bank at once lends the surplus and thereafter, by the rapid process which we understand well enough, this $1,300,000 forms the basis of an expansion of oredit of another $10,000,000 so that by the ship of transfer of bank deposits and bank loans ere not permanently reduced brokers loans from their customers. an the ownership of the mrAmber banks to the owner exception of consequence is where a member bank in New York owes money at the Reserve bank and uses the surplus reserve to repay. extent that process is taking plawright now. Broadly speakin" however, To some I believe neion of bank loans and deposits Which occurred during the last "ri? 8 nine months or year can be attributed to this development and can be found to closely oorrespomd to the expansion resulting from the reduction of reserve requirements on the one hand and the increase in loens resulting on the other hand. The last months of 1927 and the first six months of 1928. There is 18. occasion to reiterate my belief could have been avoided had January. Dim of that some the difficulty at the yesent moment our policy been more vigorous commencing the firet of We are probably three months late. This may result in considerable criti- of the system at the time of my retiriefsent. within the next situation no I an rather of the opinion now that few weeks a careful Judicial study of this year to date should be published. the situation last It should be prepared year and the in the form of a comparison of conditions in this period with 'she conditions in the corresponding periods of 1925-28 and of 1923-244 The country will be greatly enlightened and I believe some oritioism avoided. There is Hesitation. policy, and that dan;er has its noth!ng so dangerous as a effects six months or a year later when a preeent need for high rates an d the consequences of such high curtailment-of unfavorably. vacillating uncertait rates becomes reflected later in a construction and other business activities which might affect bueinese This lag in the consequences difficult things to of changes in appraise, especially as the time has come to take some of the our hand more than is inevitable. our policy is one of the most, to its duration. pressure off the My present feeling is that money market without disclosing This can best be done by taking over bills and any securities of a character which rill not give rise to the belief that we have suddenly changed front. Ltuse purchases of Government securities might easily revive the specu- The important thing is to lay out a program for a period ahead and lative tendency. then see it through without hesitation. Dealing with an Nmerg,ency in the Money and Stock Market. four principal methods of handling a sudden break-down, which are ezet (a) e By reduction,of.,discount rates. (b) EV open market purchases of Governments, tie have 710e 'tww By Purchase of bills, By purohaeee of foreign exchange. Discount rate rates reductions would probably not be effective unless na,irket were first eased off. Open market purchases of Governments disclose our hand. Purchases of bill s can be only limited in amount although we probably could buy bills directly from by what can.be had from mtwaber banks to some extent and increase the amount dealers. 'he should now purchase ourselves any bills sold by our foreign correspondents. Purchases of foreign exchange just now, except ment with the correspondent, is not a very in special case° by arrange- good method for dealing with an It puts us in possession of an asset which we might be embarrassed My conclusion, therefore, is as rapidly as it can be brought about, later that a gradual inorea,e in the is the first As probably desirable that a combination of emergency. in using. bill portfolio, thing that can be done. But it remedies for any enter ency situation is more desirable than relying upon any one. In a broad way, the situation presents itself to me at present about as follows: Pressure of to arrest money rates WEAL' required to arrest the expansion of credit and overborrowing in this country by.toreign undue strain upon our gold reserves, and, borrowers such as might put an in fact, to 'bring about some reduction in foreign balances held here which may even now be too heavy. One of the consequences of this policy, of course, is to check the advance in the Stock M rket. If carried too far either as to the level of rates or too long at the existing level, it might result in serious, possibly calamitous condition in the stock market followed by some business liquidation and unemployment next winter, etc. On the other hand, if we buy Government securities in e Urge ill there is ample evidence that there is soma 'danger that vs aight-again have arboiling stock nwrket and'that an increase in v. 10 volume of credit might iemedietely reeult. -) their importance and as to the or the other I general consequences to the think it is in every way desirable to /the situation by buying securities, sure to a point where we matter Weighing the two contingeeeice as literally must be country of one development void a possibly dangerous even though stocks do advance, than rosily had a to to continue pres- serious deflation and business setback. The judged from day to day, and I urge that comparisons be made of previous periods, notably 1923/24 and 1926, to see whether they do not afford some guide. It might be a good plan alto to luietly ascertain Just how liquid some of our banks are as to securities that can be bought by the Reserve bank. This must be done with great discretion. GENERAL DANICING PROELENS VI. The Outlook for the Federal Reserve System sents possibilities of two developments, the other can ultimately be avoided. and I heve One would be for of developing the local Reserve from Federal is too delicate autonomy of in the direction of a greater every question of System Board in the light of the other. In juotify the opinion, expecta- I think the management of our bank should policy and every new issue with the Federal a possible ultimate Reserve development of the System along one line or any event I apprehend that the time is coming when dissatisfaction with the Federal Reserve We should have the di- The present balance, in my upon too many human factors to tion that it will continue indefinitely. consider other more in the Reserve banks and more independence Board control or domination. end is dependent WA, to see how CMG or never been centralization of power in the Federal Reserve Board, and the rection the long future pre- Board will lead to an that in mind, effort by Congress to reorganize the System. and when the first indicatione arise, should prepare our- selves for it and have a definite policy and program. The Future of Central Bank Cooperetion. Possibly the best understand- ing of the outlook can be badeby a review of the periods which have developed since the Federal Reserve. System' was Organized. /J-m luny:try they I divide them into four distinctdivieions. icdL.-, First, the war period, when every consideration gave way to winning the war. Thie, applied generally to all financial and economic factors. §econd, the immediatelpost-war period of complete confusion, where no constructive work could be undertaken with any hope of bringing about monetary re- form and stability. Third, the period af reconstruction of currencies which undoubtedly had its beginning in the Dawes plan, and from 1924 until now, in an aetoniehingly short time, the reorganization of practically all the important currencies has been completed. Fourth, the period we are now entering, which I deal describe as the period of revival of competition, or economic contest. ,During the first three periods, national and international jealousies and rivalries and efforts to obtain monopolies, trade privileges and the like were at b. minimum. Now that budeets are balanced, debts are lees menacing and currencies are reorganized, the principal European nations are bein,; influence 0 by the fueling of strength and security which they have obtained, and the old evils of cut-throat competition are again showing themselves. It even enters into the policies of the banks of issue. my belief is that. the time has arrived to keep out of any complications of the sort which the huropean banks of issue are likely to encounter. our morel obligation to .Europe, be no further occasion for and there seems to me to entering into arrangements which might embarrass us in any way, We have diecharged politically or finan- cially. 22. The Finance Committee of the Leaole of NI tions. This matter has been so thoroughly canvassed that I shall make no further particular comment. We should have nothiag to do With such an inquiry as the Finance Committee of the League proposes or, the gold exchange standard, or gold shortage, or whatever it may be. we should make it clear to our banking friends abroad, as I have I think done with those with whom I have recently conversed, that we cannot cooperate in such a dangerous progrem. There was some suggestion, almost a threat, at Geneva that if the finance Digitized forcommittee abandoned FRASER the inquiry, they would be obliged to explain %het they did so - 12 - 4because the Bank of England, the Bank of France and the Federal Reserve Bank of New Should the Finance Committee make any euch statement I think we York disapproved. .mould be justified in ansvering them publicly. 23. Our Organization. the This is most important matter which I have Federal rederve The prestige and efficiency of the in mind to discuss. bank does not arise from the importance of the powers it exercises nor from the size of its capital and assets, nor from its fine building, nor from any material thing. entirely due to an erganization of human beings who determine and execute it. organization au coeds unless the No business inspired in some way to do a good job. The inspiration which is not run for profit is the policy It is of the bank people employed are in an institution like ours the essential requirement for its success. It would or never exist in our bank/in any other organization unless it were gained from the attitude of 4he head of the tank from the senior vinced deputy bank and Every employe of the governor to the porters and scrub women must be con- that there is some one in the is always thinking his immediate associates. bank, and necessarily the head of of their interests, their welfare and the bank, who their happiness. Failing that, any organization rill disintegrate and in the case of our bank, efficiency and success will immediately be in jeopardy. Never should a year pass but something is suggested of a constructive and inspiring nature for the benefit of the organize tion. I frankly believe that such inspiration is founded upon the relationship between the head of the bank and all of the people in it, and it can beat be described by the word, "affection." September 17, 1928, Dear Mr. Young: The accompanying copy of a letter from my physioial, Dr. James A. Miller, will I am sure make clear to our directors that it has now become necessary for se to resign my position as governor of the Federal Reserve Bank of New York. Dr. Miller expressed this opinion in Paris on August 27, follow- ing a full review of my physical condition, and at my request stated his con- viction quite unreservedly after twenty-four hours' reflection. Since that date, ad I have orally explained, the need for rest has become even more urgent beoauce of an intestinal complication which will require constant qttention. So I am compelled to submit my resignation to become effective at such date as the directors may determine. It is quite impossible for me to express the regrets which I feel in leaving my associates in the bank and in discontinuing service in an organiaa- Lion which for fourteen years has given as the greatest joy and satisfaction. These feelings are not lone due to the interest and importance of the work, but are even sore the consequence of the splendid cooperation and the hearty enthusiasm with which the entire organization has devoted itself to a great publics service! It fiats been inspiring enct-itorth every sacrifice. I hope the director's delatly rhave appreciatedAhei and all of the officers and cmployes realise how loyalty and sympathy daring ay long illnesses , and how deeply they have,elaiislhold ay affection. Vary sincerely, Governora Mr. Owen D. *Young, 1 Acting Chairman, Federal Reserve Ban), New York City, New York.