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de-e' 373 MEMORANDA Credit DEPARTMENT for Mr. Strong. 1914 Sept. 17, The attached is as much as I have been able to get on Tweedy, so far. I have tried to interview other members of the Exchange whom I know, but have not been able to see them as they are out of town, coming to their offices only once or twice a week. You will understand in mu conversation with both Holden and Allen that in each case they brought up the subject of the Pederal Reserve Bank, and I was non-commital to their questions as to whether that was the object of mu inquiry. .1.4K (PdcAATalt 3 -6 LAURANCE TWEEDY Laurance Tweedy, the son of John Tweedy, and Laura J. Wildman Tweedy, was bon in Danbury, Conn., October 17, 1877. Laurance fitted for Yale at Phillip's Academy, Andover, Mass. After gradThn, in the fall of 1899, he went to New York and took a position with the firm of J. H. Parker and Company. He was only there a few months, when he was taken ill with typhoid fever. When he recovered he went to New York again, and in May 1900, joined the Consolidated Cotton Exchange, and has been an active member there ever since, serving for two years as one of the Governors. In 1906 and 1907, he entered the firm of Sutro, Tweedy and Company, with Victor Sutra '97, and Griswold Smith '96. On October 22, 1901, he was married to Miss Alice Burbank, daughter of General J. G. Burbank, U.S.A. They have three children - Laurance, Jr., born December 5, 1902, James Burbank, born September 13, 1905 (and died December 29, 1905) and Alice Bradford, born August 7, 1908. Laurance's business address is 33 Wall Street. His residence address 227 Raymond Avenue, South Orange, N.J. g.q. at us) c,,-) r ru,4 iciA kA; C(AAILCLAkei e,auffly. 7.4,4 ; asuzs,-.0-e-c L4A-R.-77yvvikt.,4-44 1, uo-vxj..AA Jitz-V). 5E ,4 fg-WaajtAf 33 Wall Street. LAURANCE TWEEDY, New York City. September 16, 1914 Mechanics & Metals National Bank, mr. Roe said this young man was of the firm of Sutro, Tweedy & Co., which had offices in the building at No. 33 Tall Street, where the Mechanics & Metals National Bank used to be. He said that he was not acquainted with young Tweedy, but knew his father, who was a very The family, he understood, cane from Connect lout and was very nice man. respectable. Jenks Merritt said that he knows Tweedy as being a member of the Con17. solidated Stock Exchange, but does not know anything in particular about him. Aocording to the directory of the Consolidated Stock Exchange, Tweedy has been a member of the Exchange since May 25, 1900, and is a member of the Arbitration Committee. ETL. September 17, 1914 New York Consolidated Stook Exchange, Mr. Lynch, Secretary, said he knows nothing regarding the personal affairs of Tweedy, but that the latter has been a member of the Exchange since 1900, and for three years was one of its Board of Governors. He has always met his obligations andconducted himself with due propriety. He is an active trader on the floor, and,while his appearance is not impressive, he seems to be well spoken of by every one, and Lynch knows nothing against him. J.Frank Howell said that Tweedy is a trader who used to be in the commisSaid he is married and, he sion business, with Victor Sutro as a partner. tninks, lives in the Oranges; that he is "very honorable", and he has known him for 10 or 15 years; bears an excellent reputation, and, while he would not Julpress one at the outset, as he is not flashy, "he is a man", and Howell said that, while there is no reason ror his recommending Tweedy, he is glad to be able He to speak in high terms of him, as he cannot do so about a great many men. said he does not know what Tweedy is worth or what his Income may amount to, but that he never seems to want for money, and all relations that Howell has had with him, which were quite numerous in the past, have been very satisfactory. Hathaway,Smith,Folds & Co., Mr.Holden spoke in very high terms of Tweedy as to his qualifications for the position in question; said that he is a neighbor of his in South Orange, where he has lived for 9 or 10 years, and, while he does not know him intimately, he has had occasion to see more or less of Tweedy and the latter impresses him as being a man who has something to him. He is quite a student, and, in conversations which Holden has had with him, he has demonstrated the fact that he has studied questions on finance and is well read Holden said that Tweedy gave his name as reference on the "Tederal Reserve Law. and he not only saw Mr. Woodward in regard to Tweedy, but wrote a letter to Holden told me Tweedy is an Woodward setting forth Tweedy's qualifications. unassuming char, strictly honest, and a fellow who, he believes, could meet people and would know what heaas talking about. He married the daughter of General Burbank, has two children, and, besides owning his house in South Orange, has some little income, he believes, from money he got through a relation. His family came from Danbury, Conn. Mechanics & Metals Natl.Bank, Mr. Allen said he had not seen Tweedy for several years, until about two or three weeks ago, when he came to say that he Allen said he was going to apply for a position in the Federal Reserve Bank. knew Tweedy in college and that he was a very hard-working and persevering fellow, and he is glad to say a good word or him without knowing just what While he could not tell me success he may have met with in recent years. very much about Tweedy, he said the latter 'handles himself well". EWL. . Mr.Lawrence Tweedy was in the employ of Spencer Trask & Co. for a number of years, first in a clerical capacity in the New York office, and afterwards as a salesman in our Albany office. His work at all times was satisfact- ory and his leaving was due to an offer received from the Guaranty Trust Co., which, in his opinion, presented greater possibilities for advancement. In the opinion of the writer, who is well acquainted with Mr.Tweedy, he is bright and energetic and possesses a very pleasing address and personality. He is a Princeton graduate and comas of a good family and is very gentlemanly in manners and bearing. His work showed am- bition and his ability was entirely equal to the work of the various positions that he held. His advancement, however, had not reached a point before he left us that would make an opinion possible as to his executive ability. (Signed) J. Graham Parsons. September 14, 1914. Mr.Lawrence Tweedy is, I understand, a young man about 31 years of age, who for the past two years has been in charge of the London office of .lessrs. Bernhard, Scholle & Co. of New York, who are dealers in securities. Prior to that time he was a clerk in the employ of the Guaranty Trust Company where for about two or three years he had occupied a position in the Bond Department, for the last year or thereabouts having been manager of that Department. He is very highly spoken of by the officers of the Guaranty Trust Company, who say he is a bright, intelligent young man, but of rather limited experience in banking outside of the security business. Prior to his employment by the Guaranty Trust Company he was in the employ of Spencer Trask & Company, Investment Bankers, of New York, having had charge of an office which they established in Albany during the latter period of his employment. 3(-3 Beaver Street New York City, Sept. 9, 1914. Dear Sir:- The Hon. Ben T. Cable has told me of his talk with you regarding my desire to obtain a position with the Federal Reserve Bank of New York. In compliance with your request I have the honor to submit a summary of my business experience and qualifications. I am 36 years old and was graduated at vale in 1899, obtaining special honors in Finance, These honors were accorded me for work under Prof.J.C.Schwab in investigating the fluctuations in the price of gold during the years 1861 to 1879. Shortly after my graduation, I cane to New York and worked for the Cotton xchange House of J.H.Parker & Co. In 1900, I joined the Consolidated Stock Exchange and have been an active member there ever since, serving as one of the Eoard of Governors in 1906-7. For two years I was engaged in the commission tor Sutro under business with Mr. Vic- the firm name of Sutro, Tweedy & Co. Having a keen interest in financial affairs, I am desirous of entering the banking business, as it offers a broader and better field than the line of work in 7,:hich I am now engaged. The new Reserve Banks are in part an extension of the Clear- ing House System which is more highly developed here than in any other country. They present new problems ard offer opportunity to many to use their talents and be of service to the community. I am in a position to take up at once any duties that might Hon.Charles S. HamlinPage 2. be designated to me in connection with the organization of the Bank. For reference I can give the following: Hon.Ben T. Cable; Mr. A. B. Holden of Hathaway; Smith Folds Co; Mr. Marvyn Scudder, 55 Wall St; Yr. Hendon Chubb of Chubb & Son; and Dr. Granville White, Vice President of the Mutual Life Insurance Co. Thanking you for your interest in this matter, I am Yours respectfully, V43AAVQRAiie 'Hon. Charles S. Hamlin, Federal Reserve Board, Washington, D.C. f '1 October 30, 1914. To the Honorable C. S. Hamlin, Washington, D. C. Dear Sir: On Friday, October 23rd, at a meeting of the Honorable the Secretary of the Treasury, the 41e.ne,rabI41.-4he, Comptroller of the Currency, representing the United States Government, Sir George Paish and Basil B. Blackett, Esq., representing the Chancellor of the Exchequer of England; the members of the Federal Reserve Board; and representatives of banking institutions in this country; the undersigned were appointed a Committee to confer with a Sub-committee of the Federal Reserve Board -tke, andA representativesof the Chancellor of the Exchequer on the subjects discussed at the meeting. Your Cannittorrr:r,o tee recognizes the (e-xtraloz44-liery-Tmtlard) of the financial situation both in England and in the United States, and is conscious of the responsibility assumed in attempting to deal with this matter. It desires, on behalf of those it represents, to express to our English tz.i.azda its -s4-neere admiration for the energy, courage and ability with which the English Government and the Bank of England have prevented, by extraordinary but adequate measures, tfittit{ the financial catastrophe Ulimot ttleitteli otherwise. have en/\ veloped the business rorld., -2- Your Committee also takes pleasure, on behalf of the banking community of the United States, to acknowledge to the Honorable the President of the United States, the Honorable the Secretary of the Treasury, the Hernera434-e-t+me Comptroller of the Currency, and to the other officials of the United States Government not omitting the Governor and Members of the Federal Reserve Board, who have so recently taken office,its appreciation of their co-operation with the merchants and bankers --tho of the country in devising ways and means to meet the difficulties of the present situation. Your Committee submits its report herewith in the form of a proposed letter to Sir George Paish, and Basil B. Blackett, Esq., representatives of the Chancellor of the British Exchequer, accredited to the Honorable the Secretary of the Treasury of the United States. Attached to this letter are various memoranda mentioned etia. therein, all of which submitted for your Information, and as the best judkment of the Committee on the subjects discussed, as enumerated in the letter. /roticylitro In the course of our(discusbion? it has come to be understood that a definite proposal, or proposals, would be submitted. ak/O-ndifti) Inasmuch as thoseAwho are to con- sider proposals 14-London have not yet had opportunity -3to examine the memoranda submitted, and particularly in view of the fact that much of the information and many of the opinions contained in the memoranda sub7 ruiti` m it t ed are of a delicate and confidential -ellarraatea., which it would be unwise at this time to make pubic, we beg to urge upon you the necessity of regarding the privacy of this communication as being of the utmost importance. Respectfully yours, October 30, 1914. Sir George Paish, Basil B. Blackett, Esq., Representatives of the Chancellor of the British Exchequer accredited to the Honorable the Secretary of the Treasury of the United States. Gentlemen: At a conference in Washington, convened by the Honorable William G. McAdoo, Secretary of the Treasury of the United States, which was attended by the members of the Federal Reserve Board of the United States, and rep- resentatives of banking interests of this country, the . undersigned were appointed a Committee, representing the banking interests, to confer with you in order that, after exchding views as to financial conditions in England and A the United States precipitated by the war in Europe, they could submit to you memoranda outlining the conditions discussed, and possibly consider and submit to you, for transmission to England, such proposals as, in our judgment, would be to the mutual advantage of the business interests of both countries. Based upon the interchange of views at the recent conference, and upon facts that have developed in recent conferences in New York and elsewhere, and upon our general knowledge of the local situation, canbined with information in our possession regarding the situation in England, we -2submit the following explanatory memoranda. Because of the inherent economic differences between England's posi- tion and that of the United States, and the differencesbetween Banking Systemsand Banking Methods in your coun- try and ours, this memorandum is necessarily elaborate, but it will, we trust, afford you a full comprehension of the situation. FIRST: A statement of the position of the New York 01; courtikautifit 7 banks on August 3reter04001 of the reasons why it was deemed desirable for the banks to issue Clearing House Certificates, and to apply for Aldrich-Vreeland currency; including a state1 60u, Of me i,o1"-the-peititiolti.--errrthat *-iuernira0 day, of the Apa nits -emmi the Clearing House Association. (44reumm46. -War' SECOND: A statement of gold shipments made prior to 14. P/exadt AuguSt -40 in payment of obligations, -ateact estimate of the probable additional indebtedCe tg ness of American merchants, banks, and +/wirers THIRD: to Europe on or about September 12th lasti 5filSwi a 4 /4 aniosttiii Sx-ivvt WAtti:14, (64 6444144t mai* ,Effi, A statement explaining the reasons why the hAtttrexar 4-aat-ax-riatee4-1 settlement of balances necessarily irtm.49 A fails upon New York City and not o the country A tri&420 44C - 3- at large, and-4:4341transe-n-why a weakening of the New York City banks, -through e deple- tion of gold reserves, is serious, and is reflected at once in lack of confidence and curtailment of credit throughout the country. FOURTH: A statement ....nizatirlirmiet' the syn- litti-,O- dicate,to guarantee the payment &- 440 irt, ii,e141 about $80,000,000,of New York City Agit, due in London (and Paris) up to January 1, 1915. FIFTH: A statenent of the necessity for and the creation of the so-called "Gold Fund", the difficulties under which it was completed, its lVtUu method of operation, emMrthe expenses -4104:44-±ttritsr..mellreretTft, and the risk of loss incurred by the participants, incidentally, a memorandum with regard to the price paid by the Bank of England for American eagles delivered at Ottawa, and certain questions on which the "Gold Fund Committee" desirs5informa- SIXTH: tion, having to do with the price allowed by the Bank of England for gold delivered in Ottawa. A statement of the object and the terms and conditions of the so-called "Cotton Loan Pool" of $135,000,000, and of the method by which the cotton crop and its movement to market is financed 4'etetraiut *Luicia-. -4SEVEYTH: A statement in respect of the Federal Reserve Bank of New York now in course of organization, and its bearing on the matter under discussion. EIGHTH: A statanent in respect of a possible credit of B20,000,000, arlOPIA the Committee's opinion in regard thereto, Mitt& 7)14,*T etettpk.3 and (1/94+gleaka "141. &let daiii' These statements are submitted for consideration and discussion and are put forward for the information of the conference as an expression of the belief and opinion of the Committee. At the general conference between the Honorable the Secretary of the Treasury, and the Federal Reserve Board, and the full Committee representing the bankers of the United States, at which this Committee was appointed, with the information then at hand, it was expected that this Committee, after conference with you, and a careful canvass of the financial situations in England and in the United States, would have some specific proposals to submit for the consideration of the English Government, or of the financial interests in England. With the New York City Gold Syndicate andthe Gold Pool Committee funds aggregating $180,000,000 (only a small amount of Which has as yet been availed of), and with the completion of the Cotton Pool Loan Syndicate, all in this country, and with the expected early conclusion of arrangements to reopen the New York Cott-on Exchange with full protection to its members as to existing con- tracts, and with the arrangements made by the English Government to discount pre-moratorium acceptances of English Banks and Accepting Houses, and to postpone pre-moratorium liabilities to post-moratorium business, and the resultant facilities offered for new acceptance business in London, this Committee is of the opinion that the only additional step necessary at the present time to adjust the international commercial situation and. enable bankers, corpora- tions, and business firms of the United States to meet obligations as they mature at normal rates of exchange, is an understanding that the free purchase of American cotton by English spinners and merchants shall be encouraged by the bankers and goverrment authorities of England, and that arrangements should be promptly made to open the usual channels for advances against cotton or for the discount of cotton acceptance bills. The Cotton Loan Pool is estimated to provide funds to enable the banks and merchants of the South to carry over four million bales of cotton until February 1, 1916. The best expert opinions estimate the excess over the consumption at not over five million bales. This -6- Committee is of the opinion that the present low price, being considerably under the cost of production, will tend to induce cotton merchants and spinners of America and Europe to buy somewhat in excess of their needs, and that this inducement will result in the absorption of considerably more cotton than the mnount generally estimated. pa,talfalS7/t01.1 No retaraanes has been made kt-gdfli ,,,M.amar.a.113.8.....a.g.c.omloanyi,nt, to the international security markets, or to the opening of the New York or London Stock Exchanges? The measures above enumerated we believe are adequate and will eventually correct the international commercial situation, but would be entirely inadquate should any considerable volume of securities be thrown upon this market on the opening of the New York Stock Exchange. has been Until, therefore, the commercial situation adjusted, and the exchanges have turned in our favor, arr discussion bearing on the opening of the New York Stock Exchange to a free and unrestricted market for American securities owned abroad would be premature. Respectfully yours, kt-t, Cx.IP'-ax.Q t$61 P iv FIRST THE POSITION OF 1fl NEW YORK B.ANES At conferences of New York banlars held. immediately prior to the declaration of war by Fingland, opinions were unanimous that the banking position in this cou_ntry would shortly develop along lines similar to those ex-perienced. in-the fall of 1907. Up to the time of these conferences gold to the amount of about iill.30,000,000. hal been exported from the country aid it was feared that, in addition to the contraction of credit resulting from this large loss of gold aul reserves, a further largeskcontracti on. would be imposed upon the New / York banks by reason of the withdrawal of funs by banis throtuhout the country WhO might be inspire l_ -A rear to strengthen their position by increasing their reserves. In 1907, after the crisis of the panic had passed, (on December 2nd) the reports of the National Banks Tital7F,nti to the Comptroller of the Currency indicated that even 44-1.66n the country banks, as 'cli. tinguished from the Reserve City aid Central 6Srat Reserve City ban7K-s, held excess cash reserves of .415,000,000.; and it must be borne in mind that this leaves out of consideration 42 C4X0567.44t4 7710id-c --64411-1-er acctrmtlation of reserves yv about 18,000 State banks, as to which figures have not been compiled. In order to meet the strain imposed. by this probable clevel opmen t , the New York Clearing. House Association decided to issue Clearing House loan certificates for the settlement of clearing balances between members, and the Sec- retary of the Treasury announced his intention of is suing AldrichVreeland notes, as authorized by existing law. These measures P°si ./718° on of the N. Y. Banks -2- afforded protection to the banks of the City of New York, both National and State, and ev*A4-15-64 retain te about 4240,000,000. gold. reserves vhich thr held at that time. Of thera.gold. reserves :14.a-1-4-41f-leiTe-/TreT--Ymerk..4rewies, ii80,000,000. was shortly pledged for the payment of the debt of the City of New York, end, of that oinount, about 460,000,000 is still to be furnished, less Sae& viiiatipaw.er mount is ft rnis he d. in exch ange . Of about 420 , 000,000 already paid, 415,000,000 has been by shipment of gold ani 45,000,000 by purchase of exchange. CentTatthd. Of the 4;100,000,000 -i-r,i/r4rt-,."41 to the gold. pool 445,000,000 was pledged by the banks of New YorhA 6f which 411,250,000 has nav been called. raaar-ly 426,250,000 has therefore been taken to date, leaving 00 01/147,0 -1,i464);3"pirek4) still -to be furnished cat of the present t the present time the Clea1.1.43 House banks City bank reserves. OMNI New York 044A.1 '.,11.en the se obligations were en tered. shon a iiht excess reserve. 1600.0 /5:640.00*7T41,00*,15010 4444,11 into, the New York bonks were 31011107 their legal reserve. /N. .7hen the-.2edera1 esLve Bonk of New York is organized., dor it leinft10174 67,0. is estimated that a total of 412E3,000,000 will be 4619.1fekt-94-e' New York Ci ty National baalz to make capital and reserve payments '464,-, A164 for their own accounts those of their out-of- tovm correspondents. Simultaneously, the reserve requirenents will be reduced frau 25,, to g/c 16, aid, it is estimated that, after Mak. i re these payments 4128,000,000, the reduction of reserve req.-ulna/lents will leave art excess ero tirtatkO of the National banks of New York City aggregating rose rveS in the If this calculation is correct, we must consider the result of the completion of the three o rations referred t o, about 40,000,000. The Position of the N. Y. Banks -3- namely, the withdrawal of the entire anount of go ld. vh.ich may be called. for an account of City of New York and the Gold. ALM., ani the paynients and reserve reductions resu.lting fran the organization of the Federal Reserve Bank. The total payments to be made, aezregating, about 93,750,000, will be partially offset by ihe 40,000,000 gained. in reserves, due to r%duction of reserve requirements, leaving the New 41041.6611? ,S7oneteos York institutions at 440,000,000 belaca the required legal reserve. The anaorit of deficiency in reserve may, by the terms of the Fedora Reserve Act, be further offset attlitislett) 0.144) triad 4, member banks of the* privilege of rediscounting co mineral al paper; at the time of opening of the Federal Reserve Bank. -44.-.44eftezet===wakeiliprer, SECOED: GOLD SIIIPLIENTS PilIaa TO AUGUST 5BD An exact statellent of the diipments of gold during the first seven months of 1914, and of its destination, would require considerable investigation, which time doe s not permit. In general it may be said that in that period the bralm of the City of New York exported, in round figures, $130,000,000 of gold, largely in eagles, the principal amount having been taken by the Bank of France, aid, indirectly, by the Re i schbmik. The inducement s of fered by those institutions to attract gold in settlement of international balraces were understood in this country to have deprived the Bank of Eng3and of the opportunity afforded at that time to strengthen its golrl holdings, and undoubtedly was occasioned by the willingness of the English Market to continue to extend accommodation to its customers in the United States in the accustomed volume. It is possible that the occurrences of the past few months in international exchrage tray be explained by the fact that Prance and. Germany did not renew current American indebtedness as freely as the English Marlt did. Investigation conducted by a special committee appointed at the request of the Federal Reserve Board in the latter part of September disclosed the fact that, as of September 12th, the total ascertainable current international debt maturing between that date and January 1, 1915, amounted to about 450,000,000. The items investigated included bank boraces , matur- ing securities, interest mid dividend obligations, commercial credits, finance bills, end indebtedness for securities sold. As to some of Gold Shipments Prior to Aust 3rd: these accounts, estimates were necessary, and. it is recognized. that information of this character is inaccurate and liable to be misleading. The offset account s were db. osn to be about 4150 , 000 ,000 , leav- ing the net indebtedness as of that date maturing before January 1st, in round figures, $300 ,000 ;000 . due to Englai d, Frai ce , Germaiy, Canada, and, to sons extent, other European countries. The an aunt s maturing were about equally proportioned. over the fall period of the year, 40.jt should. be ttutsAio that a co ns id erab le port ion0 of the 4.mari can indebtedness to the London Market, maturing in the period. between October let and January 1st, was created. in anticipa- tion of the purchase of cotton bills, vthicb have always been considered cash in the London Market. No further data has been obtained in connection with the present amount of the current international indebtedness, hut opinions asked of bankers conversant with this matter vould probably justify the belief that over one-half of the net indebtedness has been paid. at the present time., Amp,' 01-40,444,67- 6-0114,4*, Elcciwatel, AAA,. 44,9 ,5171Tvule AuT6 (eJ. ben' frLtkr04(066,A 7i 0P-Atit;411. tyr, t 4 am_f. ci ecie*W THIRD; THESiiITTT.roxizIT INTSFITATION.LL BALANCES IN COI) 'JT.T.SINTIITLLY UPOL '11.12e.1 NE-.7 YOM CITY. The international exchanges reflected fears or the effect of the outbreak of -041r. war, by the latter part of July, an'i even before August 3rd there devel oped in Ameri ca an insi st eat dem-n(1 ibr 'mat-1,4 exchange to meet -cirs.4.1-Elt obligations to Europe. ugeri-Eitw0000ft;eqept._.+9-4e- The de.claration of war, and the ittaiii4,24,r-s4.T. suspension of shipping facilities, caused. such an interruption of the merican export trade as to dangerously reduce the supply of exchange. The following statement is made at sone length in order that the position taken by the New York banlz vith respect to go Id exports may be understood. bout SO ;:> of the foreign commerce of the L.tlantic Seaboard passes through the Port of New York. It is AmOnTr the large s5 manufacturiat; umataeaus center in the United States, and. is the: market where the quotation for foreign exchange is nude, and where foreign bills are assembled. for remittance to E-ar.ope for co lle cti on or di scount. There is no city in the United. States vhich can make a quotation ibr exchange, without a quotation fr am New York. The burden imposed upon the reserves of the balks of New York, theft the gold movement is adverse in both t1 foreign and domestic exchanges, has at times under our OM-- ?raiment banking system, proved to be too heavy for the banks to carry without employiru emergency relief measures. In 1907 the only such measure available was to issue clearing house loan certificates eetertticAi for settling babnces between members, vhichi,afforded no relief to the rest of the country. The new York bail Pita/ suspended free dai-pment of -2- currency to their co rre sponden. ts , Fu-r1 the i lane i ate result was a maximum premium of 3-l/2 on bo th currency aid gold.. This year the Aldri eh-Vreeland Currency Act re m it ted the mpr .-Airm. use of an emergency currency vh ich was acceptable to the people of the country. iithin a few days after Augu st 3rd, the New York banks were able to freely supply their correspondents wi.th cur Toney , and. at no time since that date Las there been a premium on either gold or cu rrency in .this co untry no 1"; in fact, has New York exchange atiliegact Peoropworret. Ain o s_]4 at 4i..i.e.r..o.uut in 411/' part.) of the country f- AC- distrust of the ability of the New York banks to promptly meet their obligations to thei r correspondents. This currency not being available for the sett lement of int ernat ion al balances, and it-having been impo s sib le for the balics to ip id to Europe , London exch mige reached a premium equivalent to a very co nsiderable premium on fj) ld Had, this situation occurred in our domestic exchanges, di strust of the ability of the New York banks to meet their cof imitments mid the ard demands of their depositors might have ari ero 1\76_ t h serious consequences. London exchange , after the first violent rise o a maximum of s even dollars. for cable transfers, gradually reacted until a fairly level price was established, in t'ne neighborhood of five do llars to the pound, wi th fluctuations within a range of about five cent s either way. In normal tire s exchange at this level would have caused a large export of gold, the burden of irh I ch would. have fallen not only upon the bmi-Lm LOMA of New Yolk City, but indeed upon the comparatively fewbaiis 'di ich draw exchange or vh ich carryA . accou_nt s of private firms which draw Aimbwatts. exchange, bub vhich do not carry gold reserves. tthe suggest ion of -3- the Federal Reserve Board, a committee of banlers formulated a plan for assembling 4100 ,000,000 gold for export, in order to make ex- 4047 change and to di sGribute the burden among institutions all over the United States instead of inlpoaing it upon a few of the banks of New York City. tevaM Yt ate/0x 6,,r, t 4,cete er-74 do' newt!: This li;100,000,000 wasx in addition to the4;;' 80,000,000, pledged by the banlm of the City of New York for the paymaat of New York City obligations maturing in Europe during the balance of this year. The necessity for pursuing this course, instead of allowing a free movement of gold, arises: FIRST: From the fact that the gold reserves of the United States are scattered among about twenty-fie thousand national and. state banking institutions; SECOND: From the fact that 'those banks in New York vh ich might ship gold vcruld be unable to recoup their gold reserves by calling loans; and, THIRD: From the fact that it is impossible for a bank which parts with: its gold for export to recoup itself through the excharge,s from other banks, and because av out 4,0 el .404A4 the proceeds of sales of exchaage are payable in New tSeit:itt. ault40"-/Iff York funds through the Clearing, .House and =tAsettled either in clearing house loan certificates or Vreeland notes. ch- ..VOU.?2H: MI NEW YORK CITY DEBT. The City of New York has for maay years been authorized, by the terms of its charter, to borrow money in anticipation of the payment of taxes. With the growth of the city, and. the enormous in- crease in the tax levy, the amounts of these borrowings have increased. to such an extent that at times the city iS indebted to the marlcet on 4A1 short loans to the extent of 4A00,000,000. ivhich ilat- ordinarily liquidated at the time taxes are paid in the fall, and., in recent years, in both the spring and. fall, as the tax levy is now divided. into semi-annual payments. The movement of the cotton crop in the fall of the year ordinarily furnishes su_ch a large volume of exchange ctigefi that borrowers have been able to count with reasonable certainty upon lower rates in the fall 'Gila" in the spring, and advantage eeiecf-Aia4 lora- e's..itetic-trfet, has been taken not only by the City of New York but by other municipalities vhich make similar loans to borrow large sums of money in the London market. On Lugist 3rd the City of New York P4V-04- had so borrowed a 'total of 82,000,000., a small portion in Paris, but the greater part in London. The breakdown of international exchange imposed upon the City of New York the na Gess ity of meetirg this large obligation by the export of gold.. The city carries its accounts in a large nunlier of institutions, both national and. state, located in the City of Net York, and, under ordinary circumstances, would have had. no difficulty in obtaining gold in large amounts fironi those institutions. The conditions existing early in igu.st, however, made it impossible for the dif4:0 40>t/C444 -b to furnish the anount of gold /, ' , The New Yori..?: City Debt; At) required, and, had the city been obliged to purchase exchange at the rates recently prevailing, the loss would have been enormous. It was therefore determined by the bailers who undertook the solution of 'this problem to ask all the baaks in the City to contribute to a fund of gold amounting to about ;;i;80,000,000, in proportion to the The co ntracts entered amount of th e ir respective gold holdings. into be t he City, the contributing b anks and the 141a,nagers o f the transaction (J. P. Morgan & Company, and. Kuhn, Loeb & Company) provided, for the sale of :1P'100,000,000 of obligatiore of the City maturing in one, two, and three years. the issues undertook to cent The banks Ithich -and erwro to Itt into-014o ) furnishA if required to .do so, eighty per of the amounts of 'their sub scripti ons to the syndi cate in gold, having the option, however, of furnishing sterling exchange in place of gold at the rate of I4.90 a pound. The practically unanimous response of the banks of the city to the call made upon than, as well as the universal approval of the trmisaction, indicates Prari9a.vmeAtraY that the ban'kers were correct in their belief that aAdefault in the payment of this indebtedness of the city dould not be contemplated, and that the consequences would be so serious as to justify the pledge of gold involved. While it is now recognized that "- the city could. have extended a large part of this indebtedness in London by the offer of an. issue of new notes payable in London in sterling, the city authorities/ nevertheless/ felt, no doubt influenced by the pressure of pub lic opinion, that it was to the city s advantage to extinguish the debt at once, and avoid the possibility of loss at a later maturity, rather than to advance its position and The New York City Debt. -3- to take the chance of being able to get gold six months or a year later. The contract so made by the banics of New York placed. one- third of their entire gold holdings miler contract for export, to extent that exchange could not be furnished. the Lttention is here called to the fact that tlz privilege of furnishing exchange in place of gold permits any contributor to this furri to avoid the loss of g3ld by purchasing exchange aid, therefore, contributors to this fund are, to soire extent, competitors in the market for the purchase of sterling exchange. FIFTH: THE $100,000,000 GOLD FUND. Statement "third" largely explains the necessity for providing a fund of gold by the method adopted, and it is the belief of the Committee that the success of the plan affords evidence of the willingness and intention of the banks of the United States to furnish the means to their customers for paying foreign indebtedness which the banks of New York alone, withGov out endangering the situation, were able to provide. Voluntary contributions were obtained from national and state banks in all central reserve and reserve cities (52 in number), those cities, under the law, being required to hold 25; and 12i5 cash reserves, respectively, as against C in other cities. Contributions of gold to the fund were received from 1,494 different banks, located in all parts of the United States. An amount in excess of $100,000,000 was promptly pledged through the co-operation of the Secretary of the Treasury and the Federal Reserve Board. Pending the payment of the first call of *25,000,000, nine New York institutions advanced *10,000,000 in gold for shipment to Ottawa. Pron.-pit, This enabled the Committee to meet the urgent demand for exchange, which A was selling at about The Committee desires to call attention to the fact that the gold fund was not created for the purpose of making a profit, but rather to atv n\ cteat CUA-0 4itt,tal exert an influence in bringing about a decline in the rate of exchange. The policy of the Committee has not been to sell exchange freely. This would certainly have resulted in the accumulation of exchange by debtors who desired to insure the protection of future maturing obligations, and, unfortunately, might also have resulted in releasing exchange to the The 100,000,000 Gold Fund ( 2) contributors to the fund provided to meet the obligations of the City of New York. It was rather the tt22illn ' of the Committee to use the fund to prevent an undue advance in exchange rates, but, nevertheless, to per- mit rates to follow-normal fluctuations and thereby induce American obli/N gore to arrange for renewals in the expectation that the creation of ext.-attempt. change .3pr restoration of export trade would avoid the necessity of export- ing any considerable portion of the gold fund. .464 This Committee, of which two members are also members of the Gold Committee, is convinced that the policy adopted was a wise one, and that the purposes of the gold fund have already been largely accomplished. After allowing for certain large pay- ments made for account of the United States Government, for which the Government reimbursed the Gold Fund Committee in gold, the total amount of the fund has been reduced not over one million pounds, and is substantially intact. PROFITS AND LOSSES OF THE GOLD POOL. Misunderstanding is liable to arise with regard to the ultimate profit and loss account of the Gold Fund Committee, and we are informed that the iatfivtLirti 44,0 attitude of the Bank of,.EnglandAill possibly due to the belief that large profits will accrue to the Gold Fund contributors: Consideration of the following will, we trust, make clear the Gold Fund Committee's position: ABRASION. The legal limit of tolerance on American gold coin is onehalf of one per cant. Eagles furnished by the Sub-Treasury at New York will rarely show an abrasion exceeding one-quarter of one per The $100,000,000 Gold Fund (3) Eagles shipped from western points, however, where gold coins cir- cent. culate much more freely, show a larger percentage of abrasion. The Com- mittee must figure on a loss of from one-quarter to three-eighths per cant. for abrasion. INTERESTfAtktpu944The gold furnished for the purpose of this fund is taken out of bank reserves, and held in safe denosit in New York, and is not held as a part of the reserves of the New York banks. to make payments in installments of 25. anticipation of The contributors are called upon first payment of 25, in which $10,000,000 was advanced by certain New York banks, was made as soon as the fund was completed, and the expense of transfer'ring this fund from all parts of the country was paid out of the fund. In order to arrive at the cost of exchange, it is also necessary to make allowance for the interest during transmission, and during the period when the gold is held in storage in New York, for all the expenses of shipment to Ottawa, as well as for abrasion; the gold being received by the Committee at its face value, and sold to the Bank of England at its bullion value. It is impossible to estimate the interest cost involved in ship- meats which have not yet been made, but a calculation has been made as to the first shipment, with allowance of interest to November 30th, and it is found that London exchange on the basis of this calculation costs the contributors about 4.92-3/4. The average price realized for exchange sold to date will slightly exceed 4.95, and, after making allowance for 2c1 interest allowed by the London banks, it is probable that if the account was closed at the present The Slog,000i000 Gold Ftnd. (4) C-6 time by selling exchange against balances now in London, the result would be a loss to all the contributors to the fund. This is occasioned by the thetar declineinexchangeafterthd_Atransfer to Ottawa was made, and before the entire balance was exhausted. At the time the fund was created, the Committee desired the co-operation of the Bank of England on two points only, pending a discussion of other matters of importance which could not be then taken up by cable. First: A better understanding of the basis on which the Bank was purchasing gold shipped to Ottawa; Second: An arrangement for advances, without interest, upon advice and guaranty of shipment from New York to Ottawa. AS TO THE PRICE PAID FOR ATIORICAN GOLD: The value of the grains of gold in the English sovereign in American currency is $4.86656 One ounce of American gold coin contains fine gold of the value of $18.6046 $18.6046, at the rata Of $4.86656, equals 76sh. 5id. which is the value, expressed in sterling, of one ounce of American gold coin. This is the exact price which the Bank of England was paying for American Eagles just prior to the outbreak of the war. Reductions were made to a net price of 3d. being further deducted for American Eagles shipped to Ottawa making the net price for Eagles delivered in Ottawa 76sh. 3d. 76sh. id. The $looLooq,000 Gold Fund. (5) A.:: &ran It hashas been stated to us that theel.4.11,..ee of 5d4is made wawa the following items: An allowance for the cost of melting and minting; An allowance for the cost of transferi.inz Eagles from Ottawa to London. As to the first item, inquiry arises as to whether the price which the Bank of England is required by law to pay for bars (77sh. 9d.) does not make allowance for the cost of coining bars into sovereigns, and that, therefore, a shipper of Eagles should not be required to make this additional allowance, which is already covered in figuring the equivalent of the bullion value of the gold contained in American Eagles. As to the second item, the question arises as to whether the Bank of England should not, if the exchanges turn before the gold is shipped to London, than allow in the price at which it resells the gold to New York, a rebate of the charge which it has collected for the conversion of Eagles into sovereigns. The same question will arise as to 3d. deducted from the price allowed for standard bars. The Gold Pool Qommittee feels that the deduction of 5d. on Eagles and 3d. on bars is not justified under the circumstances, but a clearer understanding of the reasons for these deductions may change the Committee's views. As to an arrangement for advances without interest, the request which was made for this accommodation at the time of the first shipment grew out of an emergency. Exchange was selling above five dollars a pound and the The $100,000,000 Gold Fund. ( 6) Committee desired to be in a position to draw exchanga at onpa before the dui eittivier eis,ifttMti necessity for gold shipped could be received and weighed at Ottawa accommodation on that account is now passed. With exchange approaching the point where gold exports become unprofitable and without a better understanding with the Of- as to the rate which they will make on Eagles Bank of England ef irony exported to Ottawev the Gold Fund Committee will find it impossible to make any considerable 6.4-&NCr64, a ptrrit shipment of gold without risk of loss on such shipments. The Committee desires to be in a position where it may furnish exchange so long as el- ' it may profitably cover with gold, but not to Artioth Advni- 14; risk of4.1+,,e4iitiA4Atft-i-ft-44-8 exchange market. run the SIXTH: THE COTTON LOAN POOL. It has been generally estimated, and. this Committee believe6with reasonable accuracy, that this year's American cotton crop will somewhat exceed 15,000,000 bales, and that Ateuet) the world's consumption of cotton will leave an unused balance of the American product of about 5,000,000 bales. At the conference in Washington, it was suggested that the maximum credit to finance the cotton crop would be required. at the time when the maximum of the crop had been pi4ed, and the minimum marketed, that is to say, about December 1st, at which time it was suggested that a credit of $300,000,000 might be iti2-4-4avu-a 4 zeirdett. This does not take into account two factors in the - situation. First: The method o f finmacing the growing and gathering of the crop. Second: The difference in price between this year and last year. As to the methodd, of financing the crop, it may be generally stated that the initial adiTances are made before the crop is planted. The", are largely made_ to the farmers by merchants attl Am supply houses, and are increased as the work on the crop advances, the merchants taking a lien on the growing crop and borrowing money from their banks. By the time the cotton is gathered, the last advance is made. The marketing of the crop through the ginning and compress companies and the cotton factors is a process of liquidation, and the problem coneta eia, F4 fronting the South todevyt, is not that of arranging new credits with which to finance the cotton crop as a whole, but rather //The Cotton J.89..an Pool -2 of providing a temporary credit to be employed in facilitating the liquidation of that portion of the crop which can be marketed.by enabling banks to extend or renew the loans that have / PftiolArt, attl -fr4ju1.et tliuo 't Pi. already been made *6 financ*lthe surplus which may not Ices4mar)1\ keted. This may be described as a process of clearing or lt a- Proem) ri, shifti rgif, oans rather than as the , oreatil ofts new credit, As to the second point, namely, the price, it is of course -,attuq evident that with cotton at six cents, those banks which loan A en( i on cotton .eai . carry two bales this year against one bale,at twelve cents, last year. In order to facilitate the process of liquidation, which contemplates that 10,000,000 bales will be sold and 5,000,000 bales will be carried, a credit is inillecourse of being arranged, amounting to $135,0009000, to be handled by the following plan: $100,000,000 of the advance is to be secured by a first lien upon cotton pledged at not exceeding $35,000,000 is to be six cents a pound, middling grade. secured by a second lien on the pledged cotton, t-he-Ax.t.tor parturk of the loan to be provided by the banks of the cotton growing states, to wham, or through wham, the loans will be made. A fund amounting to three per cent. of the amount of the loans made is to be set aside to cover the expenses of managing the transaction, and to pay any losses incurred. The fund is to be administered under the directionof aCommittee consisting of t. members of the Federal Reserve Board, the business, however, to be conducted by an operating committee, and, under its management, local committees, the machinery for the appointment 4 A ' The Cotton Loan Pool - 3 - cia 40444e6 of which has already been sasitaneale. This Committee believes that the cotton loan fund will be inadequate to restore normal conditions in the market for raw cotton, or in the cotton manufacturing industry, unless it is supplemented by energetic measures to bring about better facilities, both in the United States and abroad, for marketing, financing, and manufacturing cotton. Last year, sales of cotton to Europe furnished this country with $534,000,000 of Ptirmou, retards the free p rices for raw exchange. Anything which th trtq sale of cotton, or the restoration of stable cotton, will also rezard the restoration of normal conditions in the international exchanges, and work injury both in England and in the United States. In the opinion of this Committee, it seems desirable that the following measures be adopted: First: That the fund of $135,000,000 be completed and its administtation undertaken at once. Second: That the New York and Liverpool cotton - exchanges should be opened. Plans for opening the New York Cotton Exchange have reached a point where it may be reasonably expected that the exchange can open at an early date provided necessary co-operation is afforded by the Liverpool Cotton by the English banks. Exchange and A fund has been pledged which will enable,hr.alcigho.46:4001% members of the New York Cotton Exchange"mmi. The Cott on Loan Pool_ 4 MID 40 who are commItted for the purchase of cotton, at high prices, to margin their contracts down to 7-1/22cents. With this relief confidence is expressed that they may exchange with open the a reasonable expectation of beig able to meet the market conditions which will Co-operation bf the Liverpool Cotta arise. Exchange on similar lines i6-necessary before it will be feasible to open the New York Cotton Exchange. THIRD: It is also essential that no contraband question as to be permitted to arise in regard to export cotton. The Committee notes with great satisfaction that the British Government has already recognized FOURTH: this situation. Any restraint which may have been imposed upon English merchants or spinners in the purchase of cotton should he removed. Reference has been made to some agreement or understanding which we hatidbeen advised exists in England respect. It is not underetood Government has standing, English not in thie- that the British brought about any such underin fact, is it understood that purchasers of cotton have any definite agreement among themselves in this regard. Advises have reached this country, however, to The Cottgaltpan Pool 5 the effect that some of the English banks have exerted a strong influence in restraining the free purchase of cotton by English cotton merchants and spinners, and it is vflckJI 6t //Mu ad.., fa hoped that the English banks w*kt encourage the purchase of cotton within reasonable limits. FIFTH: That the usual means of financing purchases of cotton by English merchants and spinners shottld be reopened through advances ---itticatierA) against cotton bills40) the discount market. ^ SEVENTH:: FEDERAL RESERVE BANK vo The first installment to be paid for the capital ',-haos=Isrrr-eattdkeitt4zr4oe.-ra-idstock of the Federal Reserve Bank C16-vv,e-,t. The plan asw-aoatrempi-ated provides for the on November 2nd. transfer of lpite reserve deposits-a these banks, commencing with November 16th. If the operation is successfully con- cluded, the Federal Reserve Bank of New York, within a period of -six months (and possibly at the end of three months) will have received payment for over $10,000,000 capital stock in gold, ,6y/mor and will have received on deposit ab.e.at $100,000,000 of tha reserves of the National Banks of New York State7ami-/e0.044--(1 'NAO., 'ma-rt. The Federal Reserve Act provides that not exceeding 50% of the initial reserve deposits may be made out of the ve,Ack fru proceeds of commercial Out. 44, /it* se /L. h.k.c ALM, Acute paper rediscounto64,-41sommamoommbanks..- It is therefore impossible, at this time, to forecast the condition of the Federal Reserve Bank of New York resulting fram, oltrefd the initial transa,ctions, as the amounts of discounts awaited .4g-4y the member banks will depend,-(4)014 ?Tairw- tottat "a-`1 40vIN:1- s74 or-1u.; IttAvvtrt. Upon the rate of discount established by the bank;: Ptifewlml Upon the rate of interest T.12-evidel in the City of New York; and Somewhat upon the extent to which the New York City Banks are required to make payments for (lakpL4- q 444c6 4,; 4641"e, account of their correspondents located in Federal Reserve Districts. The Federal Reserve Banks of the United States the course of establishment. are in Calls for payment on the capital Federal Reserve Bank: - 2 The ability of this bank to furnish gold is a matter for future consideration7 ata ritt- 4444' OAT, 'hat- a-1G; 611 ge-,06fi oi stock have already been made. tiTtutlA c.nd),' Or- r to , SEVEN: SUPPLEMENTALMaM'ORAIMUE TO THE FitDERAL RESERVE BANK OF NEW YORK CITY It 'mist be borne in mind that there is no certainty as to the amount# of gold rhich will be paid. into the Federal Reserve Bank at the comraencenent of its operati on. The capital pwmants vth ich must be .11B t within a period of from ila d ys to six months, in gold, total about ),000,000. The payment of reserves, aggregating 4;100,000,000 , raw ..;;; made in United States notes end silver certificates. ..a).1.1.e it is 4tt Nhtreon. hoped that the banks of .triti-d di strict will make a. cond. der able portion of their reserve pa,vrnents in gold., it is, nevertheless, quite possible that a large proportion will be made in legal tender notes, aid. the ability of the Federal Reserve Bank to accumulate gold. frau other *ant sources than the United States Treasury will depend_ upon: A The degree of confidence 11 ich the bank enjoys from it s mauber banks, which now hold. the principal gold reserves. A change in the present currency laws, readjusting the various forms of 'Dd c erti fi cates aiid legal t ender no tes , lent-9P so as to withdrawsOfsmall denominations 0 gold. carA tifi Gates from circulation. No transacti on involving the present pie dge of the credit of the Federal Reserve Bank to furnish gold would be justified until the bank has been in operation a su-fficient length of time to demonstrate its ability to accumulate stzTfictient gold. reserve to justify such. a transaction. ,OIGLITH: \-) 0 CREDIT OF 20,000,000 STERLING. Oktut Your Committee has been informed. that --etortritttn a month ago, when the visit of Sir George Paish and Basil B. Blackett, Esq., wa tr proposed, one of the subjects to be considered at the conferences would be a possible credit which would, in effect, afford means for extension of the obligations due in England by bankers and merchants in the United States. If it had been possible to arrange such a credit by exchange of cables at that hate approved of the transaction. tine, your Committee would It would have supplied exchange at a moment when the demand was urgent; and it would have insured us against any serious drain on gold reserves for the time being, and given this country a period for readjustment .4pAr during which local conditions could have been- ttidge to meet the extraordinary situation. Since the date when the suggestion of a credit was made, exchange in large quantities has been supplied to the 'ePte restored t.itreerh the knowledge market, and confidence has beeV-6761 / that the New York City Syndicate and the Gold Pool Committees' operations have been clau4alairaa.t.441,--tre-4e effective. From in- formation which your Committee has gathered, it isstrongly of the opinion that a continually increasing supply of exchange is in prospect. The export of food products and raw and manu- factured materials that Europe needs in the present crisis (not to mention munitions of war), must continue; mills and manufacturing companies are working overtime on orders for goods which, in many cases, will not be ready for shipment 00 000 STERLING CPEDIT - 2.. for some months, and which will make a corresponding supply of exchange. The opening of the New York and Liverpool Cotton ExchangAbes, coincident with the completion of the Cotton Loan Fool, if accompanied by assurances to the merchants and spinners of England of the willingness of the English banking community to finance reasonable purchases of cotton from the United States will also add to the supply of exchange. For this, and other reasons that it is not necessary to elaborate here, your Committee is convinced that the caa eatiRa4pmettl-- adoption of any extraordinary or unusual measures at this A time are unnecessary, as such action might, in fact, be interpreted as an expression of the belief of this Committee that the present situation requires such measures, and because ;AA-unusual measureSAm likely to bring about un- expected and possibly undesirs41. results. It will be noted that the foregoing relates entirely to the commerci,a1 situation. No account has been taken of the possible operiing of the New York Stock Exchange, and the additional demands that might arise if any considerable amount of English owned American securities were resold /VS &Iv this country. Your Committee is firmly of the opinion that it is premature to discuss the opening of the New York Stock Exchange until the adjustment of the commercial situation 4-40.441 has been demonstrated. In the meantime, with a view to rt this step, it is recommended that a Committee from the New York Stock Exchange be appointed, which Committee should A-20,000_,000 Credit. - 3 - visit London for conference with a like Committee from the London Stock Exchange, and for a careful study, of the situation there. A tentative arrangement for a large Ster- ling credit, predicated on the understanding that its re- payment will not be made in gold, but in commodities and manufactured goods, would emit-l-ly make it possible to consider the opening of the Stock Exchange sooner than it kr oto *ogle As this step is recognized would otherwise be safe to doA 414,014, to be a desirable one from the point of view of both countries, a present discussion of the form of such a credit and a tentative agreement would be bene,424#1,..___ as to its terms, at this time, 0 4: Conditioned upon the undeXstanding suggested in -paga=47r-Alir/ memorandum Eighth, and withe view to assistance in meeting conditions which may arise t rough excessive sales QLAmerican 1Wa 4iiiiis bthy, tt4t4s1 4, 4. i e"),..wio 01,41.01.4) eld in Euro) seclj.ritie 1 P. (.3 .149-4.evagremteft that A evolving sterling credit of 1,20,000,000 shall be granted under the authority of the English Government, or the Bank of England, on the following plan: Oredit to be available as a supplement to and only after the $100,000,000 Gold Fund has been shippedliglart raizt Drafts at 90 days, with one agreed renewal, on an acceptor, or acceptors, to be designated by the grantors. Drafts to be forwarded direct to England for discount under an agreed arrangement, and demand or cables to be sold against them. Drafts to be drawn by the Gold Fund Committee, or a new committee representing guarantors, consisting of banks, trust companies and banking firms in the United States acceptable to grantor. Proceeds of sales of exchange to be loaned upon security of approved bonds and stocks as collater- al, with the obligations of borrowers, who are satisfactory to the guarantors, to maintain a margin of not less than twenty per cent. (20%) of the face value of the loan. -2- Drafts to be drawn only as required to supply exchange to take the place of gold remittances. Drafts to be covered at maturity in the usual way if exchange can be purchased at or below the cost of exporting gold. If exchange cannot be purchased as above, and payment of the bills would require the export of ,AartriCi4 gold, the 90 day renewanto be granted, provided that, in the opinion of the Federal Reserve Board, a further loss of gold would be detrimental to our financial (b) 604mit*m 4Q4:14.j.t.. The grantors of the redj.t to be ent'tled, aftet the first renewal, to 44Laa.F4 payment in part, in New York exchange. in whole or Such dollar bal- ances, however, to be used only in the purchase of American products. November 2, 1914. Sir leorSe atoll ZBlackett, liepresoutatives of the Chancellor of the British ,sehequer accredited to the nencr-_ble the sorotary of the Troseqry of te Qnited leatlemee% a canters...we in /.sishington, convened by the !qmorable Nekolco, l'iecretary of the rreN18177 Of the ;3111ted Antes, which 'ate attended by the members or the ?ederal fieterve i.ioard of the United Astes, and representatives of ban1cing intereste of this country, tho undersiGned sere nrrointed a Committee, renreeentin6 tho banking Interests, to confer sltl you IU order that, aftor exehancing ate to final:vial conditions in 4ag1and and. the United ;'Astes precipitated by the ver in Ilurope, thoy onbmit to you memoranda outlining the conditions discuesed, ar0 possibly consier stuA submit to you, rer transmission to Ingland, such proposals as, in our jA44.444, would be to the mutual ad'untsge of the business interests of both Countries. Based upon the interchange of viva, at the reoimt conference, awl upon fsets thet 1-eve developed In recant conferencos in 10. York sad 110110ere, sM van *nr general knevledge of the local situation, combinod volt11 information in our possevelon roger:Aug tho eitution in AWAnd, so submit the followin explsnatory !moorlands. Decaus* of the inherent economic difrorences between ktglan-6.'s position 40 that of the Aited fAntee, 4n4 the, differtww betrem banking opqms bankinc mnthods in your rg,untry and 'And .1.rs, this mimOralftri LP asoestmrily elaborate, but it /mill, w5 true, nffori you a full emprehonelon or Oe situation. .3 sh 21,,r -2A etsterkerat of th.0 position of the Nee YOrk banks ou .117 August 1st, and thereafter, of the reasons 110.7 It was dm (IRMA desirable for the, tertIrs to issue Clearing Komi" certificates., and t.':o ariply tor '1.drich..freelon4 enTrency; Lae ltacitnii, a stat...ettelit ,a or 'WepASt of thS raelltMre )f 1- St tilia Clearing lonso ,ssoci*tipn. st,,terient of oold aiint made prior to t. irith of August inpnyreent of obils/.tiona, estimate of the probable additional inde.litedn.ess of .,;.,arican etere!7ante, bunks, 40 corporations to l'-, tirope on or about September 12thlg....st5 and a. et.20,ene.nt of ths ersentre s esport ttalnallter far Auwat, 6epteriber,and '..,ctober (estimnted) 1914. A statement expll 1.: he rf.-4tIsorts viy tt1mnt. of intornationsi 4%1w:toes necess4rily ft.11.0 upon the beaks of lel York ity an-1, not of the country at large, arta itiv ookeeing of the Ara York City U.NZIke. thronch depletion Of goi'3. resrvls, i o f conf I dono rions. le reflected at on In laeit f4n_ei curtailment of credit throuetout tt 0 Otoolltry, _Ile A statement respectinz the awn State co roo01 to gl,asrant ere the psyriont of about 47-8010,11,00 of of no* York `-:ItY, London (and to met the debt ria) up to Jbreaary 1, 191.5. ft tAteront or the necessity for and t!le creation of the ao-oalled 'Gold Pend.'" tho dirrieulties =dor completed, it ih it ass method of opelPation, the expeneom thereof, e1(44 the risk. of loss incurred by the p.ertielpszte; incidanta1, 143.9m. zgksh a neneranAum with revard to th-J!,- prieo paid ky 1;1'4' Amit of :leeti for mmeriaan 4ing1ee delivered at '4tinna, mai ofartsla .:Alons on alqcb tbe -.0o1d Ned Oammittear &Asir's iaforwstion0 havink; to do with the -rice allowed V .11/# 4q1k of ',:4:And for Vgai delivered in Melee A, $t.terant of to objeet And t:01 terms and conditions of the 96-4111.ed 'Cotton Loma ?ool or 434,000,0:0. and of Vle thn cettalllisplind Its movessat to 4102*Mot IS rinovoed, with eartAn espostlons. A statement In row400t or the Pederel Were, Boak of 5:se York one In coarep of orioultetios, ssA Its boarinc on the teeter 114p dIresseles. A ebetemest in respo'zt of t possible credit of 1620010,003, Owl leneIttoe'e ivinlon in rovird thereto, an0 a aucotetad plea Atoll It be adopted at a las., let*. Thee* Okatements Sr@ sobmitted for WSWOrVIOn and disondistv- efal ern pot rerieri for the inforwel,ion of th nrre4,e4 an cwmts- sloe of t114' belftf and opinion of the ;ocvdttee. At MOO COOsTs1 aonferene, betimes thollonorobli the 6beerstery of tole Trogsqry, und ttto Anima '4serwe Ucayali, end 111A,A Pali dellnittee reprotemttne thg7 beeksre of to Oaltod. Asti*, Itt which thie OOMMittee Iva avnoleed, with t!,*, infnmetion then at bead, it woo ospestqd that this Allimittne, sfer eomfmmenee yam, sulk Serefol ensiess or title flnanA.,1 oltsAlons In Wien. end ts t.,he United Metes, eomo specific propc,e0a ;T'ov,wimmont, etr or 14/1. taw* sobmIt for ttte constailr Ion of $210 financial intorsts in Angl-nd. 44th the is York Aty 4oid 4aCiloste au,_ the i4o14 Pool Conetttw ae0r0,_ 41e -4 fmnds neerelestine 4:140,000,000 (onlo a seen seoten of ehlab has as yet boon evoiled of), end with the completion of the JOtton Pool Loan Oates All in this e,,untry, And vith the elpeeted eerly coeclusion of arrengeeents to reopen the tele Tore Ootton IsObeeee, with full ere- toction to its members es to existine contrecta, end with the arreneenente de by the lielith eevecneent to diseount ere-uorstorium ecoepteaces of Walsh benhe end aceeetine ittes, and to postpone prl*moratorlum liablii- tion to post-moreterinm booteeee, an the resalteut Aeoilittes oiTered for now occeptence ta ifl:leeedo* this 'eoemittee La of the opinion that the only adeitional step neeeseary at the preceat time to sCluse, the internationel comeeroisa eitmation and enable beakers, eorporations, end besineese firms of INIr United 4tota0 to meet 0411e:et-ions as they mature St noemel retee or exchange, Is en ueoerstenftlee that the free ourohoel Ø f !arricee cotton by leglieh erineern ane merchens shall be eneourseed by the honkere end governfeeee auteeritiee or . Ifitelerel, sue ehet erreegeeents mhOuld be premptlei msee to epee the neeel dennelic for 341'440'4 eesinat gotten or for the elecount of cotton aeceptance bills. The Catten 'i:.oan Poet if eatimeted to provide fund* to enable the ba), rvt merehents of the dermh to cerry ever four million bales of ootton until Febreary 1 1916. The boa werert opinions estimete the EMPOM ovi, the aorta-mention at not ovor five million bales. "'hie Committee In o" tb0 opinion that the present Toe eriee, beint lonsilernblo under the cost of production, rill tend to luduce ootton marabout* and spinners of merioe aee 'unix) to bey eozerchat In OXOWNI of their meads, am. tIlat this tadneement will reselt in the ebeorption of considerably rum ootton then the amount gomerally astimatd. So sapar atAtm. - be 4 e 1a regard to he internationsl York or :;...onclintok security rAarlitets, or to Cis* 0I:waine,-. of the ':bx01,15agea, Vleatfturee above enumerated se bellfrifsz ors a-,:o.u;ste sod frviatuany oorreet t*". int ;oat tonal. CW.:PrAC. re 1. s1 ituat Ian, bat would of seourit les bo bo ant irc. :14 taadefluete should any corusiiierbio Volume V)rown upon tiMs market on the opening of Vie 60-0 York 3tock ?msYnfin,ou -Vtprefore, th,", nortoterots2 situation haat boon .adjooted, Us/trine on the °netting eoto,ton6sa have turned in our favor, arty .7.1coussi. on nn4. uorestr)cted, mirkat for or ',NI, SON York ;Itock '''ausb1:144,10 to a fres ..,Tterittert yecuritios ovizuki brow' nou14 pram-tit:we.. Anapeot tally yours, (Ste6 .eaktA) iir11-471A) /304 a), rrInAei )7,itta. ,t aonforonces of Now York hmikers hold immediately prior to the declaration of uur by Ahgland, opinions were nnanimous thnt tUa bamking pOxiltion in this country mould shortly devolop along lines sililar to those exporioneed in th, fall of 1907. up to tho time of 'ales+) conforenoos geld to tha :!4mount of about 130,0(.0,000 bad bean azTerted from the eountry and it vas fearei that, in ad,i1- tion to the contraction of redit recultin from this large loso of zola resorvos, a further and Larger contraction z1d ho impOsed 4010 the DOW York hs:Mks by roaeon of the withdrawal Of funds Wif bubo throucbout the country Ato 441 bo inopired tbrough tow* to otrengthen their ponition y incteeing their resorves. In 1907, after the oriels of the peal° had passed (on December end), the reports of the Nationol %inks to he Comptroller of the Currency inOloatod that,evon at that 'time, country Laukr, as dintiguiAed from the and CenralJleserve City osorve City/banks, still hold ONSeos cash roserves of ,11b,000AJO: sod it meet be borne In mind that thin leaves out of consideration the accumulation of reaorves doubtless made by about 111,00 aUte blinks, an to which neuron have not bov.0 compiled. In order to moot 164, otraln Supomed by this probable development, the New Tor* ClearinE Noure Asoclation decided to leaue Clearing ECUs.) loan cortificates for the settloment of cienring balancoe between ehersbore, and the Secretary of the 7re1sary announced his Intention of issuing Aldrioh. Th8 kgillAthe rieT.j& Vreeland notee as authorized by existing law. "else MoWtUreS afforded protectien to the :EnzeLs of the City of 3ew York, both Zetional and Stete, anu enubled them to retain about ;,240,000,000 goLi reserves ehloh they bele at thut times Of those gola reeerves, *00,000,000 wae tiort1- pledged or the pent of the debt of the City of row 'fork, and, of that amount, about 60,000,000 Is etill to be ferniehed, less slob amount as in furnlehed in sechange. ee about 020,000,000 already paid, el5 000,000 has boon by ehipment of gold and :,.6,0e0,000 by purellase of (=hence. Of the 100$0e0,000 contributed to the gold pool, eua elseged by the banes of 17ew York City, of which 5,000,000 .1,:4io,ouo has now been called. 4Z6,260,000 hkix, therefore been tuame to date, leaving 95,750,000 still to be furnished exIt of the present Nee York City bulk reservos. At the preeent tiers the Cleerine Rouse banks show a SUal alteatia oalb reeerve. When those oblieetions were anterod into, the Sew York bunko were from 415,000,000 to A:CAW:1,000 under their legal reserve. When the Federal pee- rye 'arnIc of New York is organized, it Ira estimated that a total of about :120,000,000 will be eithdrawn froa 3ow York City nUtIOnal B44g0 to aeee capital eee reserve payments both. for terAr own eceoUnts end for those of their oat-oteteen correspendents. Simulteneeuely, the reserve requirmeDuts will be reduced from 25' to 32%, and it in eltheeted that, afterreaking these payments of 4104000,000, the reduction of reserve requiresonte will Leave excess reserves in thy vaults of the National Banks of Now York City aggregeting Cf about 00,000,000. If thil osiou.;.stion Is correct, we iztv:t Oonaider the result or the oompletiAl Of the three cr,._ rationi, mforrod to, 4, the sithdrawul Or thf.., entire amount oaold 10410b way be celled for on soomult ty the City of Vow Turk ema the 4e3.1 Fund, and the ympasnU and reserve reduction resultinc from the o4Ani,sation of the rem/ma Reserve Belo*. totillpegaMmts to bo made, actreg4tirc about 493,760,000, will be partially*ffset by the ;60.1,000,000 gained In reserves, duo to reduction of reserve requiromnts, leavinc tho Now York institutions pocAbly ,:35,000,000 to '40,0U0,000 below the ro4uired Legal. reserve. he amount of deficiency in reserve mrq by tho terms of the redaral Meserve Act, N) :ruzithq)r ofrast, it menbor tUra0 are alieltod d avnil or the privillice Ot rediseecntink: wootaereicU pas..ier.,, at the %Imo of opening of tho 7eder4 30sorve 3unice Statement of the Members of the New York Clearing House -Association From Reports as required under Article III of the Constitution. For Week ending Saturday, August 1, 1914. qos. 'CAPITAL MEMBERS. $2,000,000 2,050,000 2,000,000 6,000,0oo 2,500,000 I Bank of New York N. B. A 2 Bank of the Manhattan Co 3 Merchants' National Bank 4 Mech. & Metals Nat. Bank Bank of America 8 National City Bank 12 Chemical National Bank 13 Merchants' Exch. Nat. Bank Is Nat. Butchers & Drovers Bk 17 Greenwich Bank 21 American Exch. Nat. Bank 23 National Bank of Commerce 28 Pacific Bank 30 Chatham & Phenix Nat'l Bk 31 People's Bank 33 Hanover National Bank 36 Citizen's Central Nat. Bank 42 Market & Fulton Nat. Bank 44 Metropolitan Bank 45 Corn Exchange Bank 53 Importers & Traders' Nat. Bk 54 National Park Bank 59 East River National Bank 63 Second National Bank 6 65 First National Bank 67 Irving National Bank 70 Bowery Bank N. Y. County Nat. Bank 72 German-American Bank 71 74 Chase National Bank 76 Fifth Avenue Bank 77 German Exchange Bank 78 Germania Bank 8o Lincoln National Bank 81 *NET PROFITS Garfield National Bank Fifth National Bank 83 Bank of the Metropolis 84 West Side Bank 85 Seaboard National Bank 91 Liberty National Bank 92 N. Y. Produce Exch. Bank 96 State Bank 97 Security Bank 99 Coal and Iron Nat'l Bank 100 Union Exch. National Bank I18 Nassau Nat'l Bk., Brooklyn 82 102 Brooklyn Trust Co 103 Bankers Trust Co 104 U. S. Mortgage & Trust Co 105 Astor Trust Co 106 Title Guarantee & Trust Co 107 Guaranty Trust Co 108 Fidelity Trust Co 110 Lawyers Title Ins. & T. Co "I Columbia-Knickerbocker T. Co 113 Peoples Trust Co 114 New York Trust Co 115 Franklin Trust Co "6 Lincoln Trust Co 117 Metropolitan Trust Co 119 Broadway Trust Co $4,346,800 4,719,900 2,097,700 8,874,600 6,186,600 LOANS AND DISCOUNTS $22,317,000 36,130,000 20,489,000 80,745,000 26,538,000 LEGAL TENDERS SPECIE Average. verage. Average On Deposit with Clearing }louse Member. carrying 25% Cnah Reserve $1,218,000 1,541,000 1,457,000 5,882,000 2,749,000 $4,224,000 9,482,000 4,254,000 15,416,000 5,052,000 LEGAL NET DEPOSITS CIRCULATION $20,668,000 41,900,000 21,158,000 85,528,000 26,499,000 $772,000 Average 42 089,000 4,357,000 2,115,000 516,000 2,520,000 13,252,000 2,218,000 205,000 57,000 205,000 196,234,000 24,790,000 8,858,000 2,171,000 10,822,000 5,000,000 25,000,000 500,000 2,250,000 200,000 4,693,300 16,690,600 1,009,800 5,357,900 435,800 47,846,000 140,272,000 4,871,000 25,247,000 1,967,000 10,217,000 21,903,000 728,000 3,696,000 409,000 1,552,000 6,231,000 840,000 1,579,000 148,000 47,890,000 117,971,000 4,927,000 21,852,000 2,313,000 3,883,000. 7,912,000 21 23 1,173,000 28 30 31 3,000,000 2,550,000 1,000,000 2,000,000 3,500,000 15,054,800 2,371,200 1,948,100 1,779,400 6,916,000 77,634,000 22,339,000 9,221,000 11,717,000 63,823,000 21,082,000 5,111,000 1,498,000 i,603,000 15,850,000 2,582,000 611,000 984,000 312,000 3,269,000 88,412,000 21,819,000 9,257,000 11,595,000 75,814,000 50,000 1,531,000 56,000 1,500,000 5,000,000 250,000 1,000,000 10,000,000 7,676,000 14,344,700 65,200 2,870,500 23,177,700 26,591,000 90,034,000 1,561,000 13,867,000 115 527,000 3,759,000 19,503,000 452,000 3,102,000 25,158,000 2,387,000 2,572,000 107,000 123,000 2,159,000 24,077,000 91,241,000 1,766,000 12,625,000 106,457,000 50,000 3,497,000 4,000,000 250,000 500,000 750,000 5,000,000 3,468,600 789,000 1,916,800 706,200 9,645,700 45,247,000 3,163,000 8,667,000 4.215,000 102,020,000 9,082,000 786,000 1,536,000 979,000 23,462,000 3,063,000 71,000 768,000 212,000 5,460.000 48,208,000 3,403,000 9,127,000 4,180,000 115,201,000 1,579,000 100,000 200,000 200.000 2,000,000 1,000,000 2,091,600 803,800 7.000,300 5,789,800 1,290,100 12,928,000 3,219 000 4,901,000 15,027,000 9,293,000 2,610,000 509,000 1,137,000 2,963,000 2,332,00c 062,000 367,000 253,000 1,169,000 142,000 14,425,000 3,481,000 5,582,000 15,522,000 9,586,000 250,000 1,000,000 200,000 1,000,000 5,000,000 505,000 2,089,900 3,998,000 12,968,000 3,761,000 25,099,000 24,400,000 779,000 2,120,000 706,000 5,950,00C 5,218,00C 244,000 4,241,000 12,784,000 4,752,000 29,267,000 26,680,000 2,271,00C 5,891,00C 1,88o,00c 1,083,000 2,145,00C 1,430,00c 666,000 309,000 1,276,000 618,000 350,000 180,000 939,000 375,000 785,000 I08,000 490,000 75,9,700 2,598,500 2,844,800 926,Q00 520,000 1,752,000 1,433,000 1,000,000 $1,500,000 1,000,000 1,000,000 1,000,000 1,000,000 345,500 604,800 1,008,000 1,121,700 9,317,000 19,134,000 10,832,000 6,981,000 10,017,000 7,927,000 1,500,000 50,000,000 2,000,000 1,250,000 5,000,000 3,706,700 13,065,500 4,211,400 1,201,300 11,614,000 26,451,000 126,045,000 36,838,000 21,422,000 33,045,000 2,193,00C 14,824,00c 3,432,00C 2,097,00C 2,618,00c 10,000,000 1,000,000 4,000,000 2,000,000 1,000,000 21,222,100 5,307,900 5,388,900 7,348,300 1,566,800 187,702,000 7,534,000 55,877,000 48,628,000 16,360,000 18,729,000 842.000 1,218,000 5,501,000 1,839,000 1,140,000 3,000,000 1,000,000 5,000,000 2,000,000 1,500,000 11,545,300 5,565,500 555,700 5,892,600 848,500 45,951,000 928,300 T.750,700 10, 708, 000 9,901,000 29,899,000 14,129,000 ....... Decrease Decrease Decrease Cash Reserve ,Required, (25%) $363,644,500 (i5%) 72,186,450 $435,830,950 85 91 394,000 394,000 267,000 92 96 97 99 100 118, 3,677,000 21,394,000 1t3 ir6 "7 119 41,578,000 41,578,000 Decrease 163,000 Decrease, $13,430,250 Decrease, 1,798,450 Excess, $ 8,603,050 272,752,000 60,537,000 71,646,000 7,045 000 Totals, all members 2,058,755,000 332,889,000 78,691,000 Decrease Decrease 53,065,000 '3,234,000 Cash Reserve Required, (25%) $355,687,250 73,318,500 $429,005,750 Trust Companies' Reserves with Clearing House Members, $56,547,000 Decrease Decrease 106 Deficit, 1,423,407,000 635,348,000 346,000 495,000 Excess, $10,401,500 Actual figures this morning: Totals, Nat. and State Banks Trust Companies " August i, 1914, 82 83 84 3,094,550 Decrease, $16,524,800 Decrease, $3,677,000 Trust Companies' Reserves with Clearing House Members, $61,095,000 (15%) 1,454,578,000 451,000 21,692,000 $444,434,000 Clearings this Day 245,000 114 1,935,821,000 $1,838,183,016.11 1,588,913,808.47 296,815,972.90 81 29,554,000 7,541,000 8,669,000 20,436,000 53,940,000 61,095,000 July 25, 1914, 877,000 343,000 76 77 78 8o 3,338,000 1,042,000 1,016,000 2,223,000 1,642,000 85,054,000 " 72 74 527,000 129,000 223,000 250,000 692,000 363,380,000 Clearings for Week ending August 1, 1914, 446,000 3,946,000 997,000 1,049,000 2,746,000 1,384,000 2,056,190;000 $411,580,000 71 613,000 280,000 376,000 296,930,800 Cash Reserve in Vault, $344,398,000 ,, 67, 182,000 Trust Co's: " 70 197,000 17,988,000 981,000 1,388,000 4,448,000 2,252,000 4.6,000 175,300,000 Banks 67 107 108 110 Totals, all members 1,582,000 65 141,517,000 5,900,000 /1,883,000 38, 688,000 15,156,000 481,243,000 Increase 49,000 669,000 4,936,000 53 54 59 63 102 103 104 105 61, 095, 000 Banks : Cash Reserve in Vault, $374,046,000 " Trust Co's : " 70,388,000 42 20,788,000 102,559,000 28,179,000 15,590,000 20,843,000 6,973,000 2,286,000 36 2,696,000 11,028;000 7,156,000 1,576,000 2,322,000 74,081,000 17 State, June :to, 1914 15 Trust Co's, June 30, 1914. As of July 18, 1914. 33 45 10,795,000 12,753,000 6,987,000 10,125,000 6,720,000 12 13 15 17 44 24, I 15,000 63,415,000 .4 6 198,630,000 28,644,000 8,954,000 1,973,000 9,649,000 299,965,000 .4 3 .4 32,916,900 7,755,000 761,800 111,100 1,070,100 173,907,700 32,382,600 }1,425,7oo,o00 90,640,500 630,490,000 Aggregate 2 25,000,000 3,000,000 1,000,000 300,000 500,000 112,600,000 16,450,000 46,250,000 Aggregate 1,888,000 4,930,000 NOS. 3,679,000 397,000 475,000 48,000 Totals, National Banks State Banks " " Trust Companies *As per official reports 29 National Tune ,O, 1914 Average 56,547,000 1,422,749,000 488,790,000 41,737,000 56,547,000 1,911,539,000 41,737,000 Decrease 10,692,000 Decrease 46,776,000 Increase 3,000 Deficit, $11,289,250 Decrease, $35,004,250 Deficit, Decrease, 8,595,250 6,136,500 Deficit, $17,425,750 Decrease, $43,599,500 Decrease, $10,692,000 Balances for Week ending August I, 1914, " July 25, 1914, Balances this Day August I, 1914, $109,601,8(0 65 95,095,253.82 23,383,391.37 OO,106D: -To2!7.114110173 -a OR AU4UST 41 exact statement of the Shipments of oold durin6 the first aeven months or 1914, ond of itc destinstion, oculd reqoive consider- able inveatigation, Alio+ tie does not permit. In generel, it my be eold that in that period the bauXs of the inty of Kee York exported, in round figures, 4130,0O0,000 of gold, largely in tooles, the principal =oust havino been taken by the rank of France, and, Wireotly, by the Re/ohs:bank. The inducements offered by thooe institutions to attract gold in settlement of international balances uore rstood In this oountry to hove deprived the Bank of Ingland of the opportunity afforded at that A.me to strengthen its oold holdings and undoubtedly was oocaoioned by the willingness of the Inglish mart to continue to eotend accomoodation to its oustomare in the United Itats in the 000ustormd volume. It in possible that the occorrences of the past few months in internationol exohonge may be exolainedoby the fact thot rrace and 0ermany.did not renew current American indebtednees as freely as the laglish market did. Investigation condusted by 6. speoiol com- mittee opointed at the regnant of the 'oederal Reserve Board in the lattelo part of September disclosed the foot that, 3$1. of September 12tb, the total escertoinable current interomtional debt maturing beteen that dote and January l, 1916, amoonted to about 4460,000,000. The itens invootigated included bank hal noes, maturing seourities, Interest and dividend obligotions, commercial credits, finance bills, an indebteaoess for securities sold. As to some of these accounte, eetimateo were neaesoory, end It is recognised that information of this coaraoter is loaocuroto II Albas*A0 44.iaitsiMe-4 sad liable to ba misleading. The offset accounts were shown to be akon* 460,01Y4000, leavinG the net ladebtednote et of that Antio sestnrina- before January 1St, in round fit,ures, 0040.:0,003 due to Ingland, Pmnce, lemony, Consd, and, to some extent, other lampoon countries. The amounts maturing were about eqwilly proportioned over the fall period of the yo.r. It should bo unierstood tiv,t i conelfutrablo portion of the lloerican indebtedness, 10 the London mrket, oaturine, in the perioti betv- Oetcher lot and Jounnry 1st, was created in anticipation of the purcheee of ootton bills, which have alwa:0 been conslOored cash in the J-,crOola markot. Ao Porther dkta has beon obt, toed in connection with the present amount of the current intl.mational indeaednest, hiw opinions asked of 4ankers conversant with this matter sonid)probably juOtify the belief that over ono-b41f or thq not indobtodnees bze been patd. at the present tine. The foreign trade, etclusive of gold and silver ol1pmenta, was 1,011,00 adverse to the United State* in Augnst, )17,00,000 in its favor in VAptomber, an] will probab lotober. be 4c 54,000,009 in it favor for %est year, 6n3 In 1912, for these mu:ths, -.be balancers in raIDT of this United Antes wore, 413,0N,000 460,000,000 Aanber 64,000,000 47,000,000 ober 77,000,090 139,00n,000 TY-PPA 2- '"*" lAXL:ZA210 0? N44 "";:113 11*Y. " The iitoroit1onz1 exchanges reflected fears of the affect of outbreak of by the Latter part of July, ad even before August ard, there dere1ope0 in America rin inaiatent deTazd for exchange to meet maturinp obligations to 'Swope. The doolaration of wnr, and the suss:anal:on of shim-Asa facilittee, cauee0. such an totorruption of the Azmricen export trade as to dangerously reduce the supply of exchange. The following st-toment lz msd: At aornc. length in order that the position taken by the New York banks with respect to gold oxyorts may be better underotood. About 604 of the foreign c mmorce or the Atlantic seaboard passes through the Part of NOW York. It to the largest manu! turinn and bankinp zerter in the U Ate notes, and is the market where the quotation foP foreign exchange la made, are where forel9u bills are annombled for remittance to Europe for collection or discoutt, nem, s no city in the ilnite Antes which can make a quotation for e without a quotation free Bow York. of the bankso upon tho reserves ew York, when the .mold movement is adverse in both the foreign and .?tii JOYUi 7he burden impoesoll 4as at tiN93 under our old bark1n7 system, to be too heavy fo- the banks to carry without employin emergency relief eurea. In 1O7 the only such measure available 'ova to issue clearing Lone loan certificates for settliw. b:1 between megbors, :ho ottlemontoof intornatIonol. ,A tell In GfOld. etc. -2o towvor, arforded no roller to t root of tOe .,7oroltrod. The Xew York %was in 1N7 suspeOde fr4a ablimat of ourr0000 to thoir correspondlots, &Ito the immediate moult was a Mr 4.31m01 prOMitft of Z.-1M; on both corrouoo :!szsd goid. rhio geor the Oldriob-Vrooload romy Act petrol tod the oromot uso of an omergonoy currency which ea* aceoptable to the poop tho oovntro. Within af days altar Auoust rd, the Xow YorW banOo wore able to freely opOly their corrospondonts with. corrency and at re time einoe that date has there been a premium on oithor cold or corroney in this ocuotry nor, In. fact, as :goo or exebooge in otor parts of the co rtry tudicoted distroot of the abilIt7 or .0* ZOw Fork hanks to prouptlo root tor ObligWome to their corresIondonts. This ourroney 11,0t bet.M1 available for tho Apettlegole or into,!nstional balances, ood. it hovino. boon Impoostblo for the booOs to *hip rold to ,:t7rope, London coMooro roocboo s rramium oouivolont to 4 voro consi4oroble predt goId. on Ead this situutluo occurrod In our 6onloAtSe oxel. vas, d1itrut of the ability of the lieW' 'fork bognxs to moot %bar comoltmoots and the demands of their dopooitors mpht hovo oolsyn and vith seriouo conoeg0000es. london euhanoo, oftor tho first vi loot rill° to a mosil at of oovon dollaro for aoblo transfors, gradually reac'ed until a fairly level orioo Mat stublishela, in the nolghbortood of riTo *liars to the oonnd, with fluctuations within a rolou of about five cooto oltOor woy. In norrel times oxohalkos at this level would hove cousoOg large oroort of gold, the bordoo of which wonld loovo rollen not onio uoon the honks of ratively foe Largo bonlem which Zow loorlt City, but indeed i1O draw osoonoc or whloh earry the aoo lots or :rivoto firos whi(Al draw oichanre, bt io o not themoolvos carry gold renerveo. At the 14 1b4Le:SAAIVIAILAIAMI0?TatIPWa Delemees_in Golds_etc. segeeetion or the Apeteral Meeerve Ilmrd, a committee or bunkers formulated a plan for assembling $1004000,0e0 of geld far sepoTt, in order to make exabange and to thereby distribute Cie bur&m inetitetions ell over. the Vetted At-us instead oC Inestar. It upon a fey o' the bas42 of Veer Ye,k on The ban,'s of :reev Yore :ity pledevel 445,000,0)0 of the aeon-t. This 0.0o,aw.ty)o was in addl_lon to the 4t0,, 0,000 plortged by the banks of the New rerk for tho pee-rent of II** fork City obliMtiOns vatmaring! tn %urope during eel blame of this :mar. The necessity for purentm!: this course, insteut of renewing, n free movement of paid, arieos; mar:prom the f-ot that the eeld reserves oT the Unttee etztos are etattered among abiet timente-five thousand national and state banking institutions; Prom the fact ttat thane banks in Am York whieb might ship cold eeuld bo aleb e to recoup their geld reserves by ealling loens; and, 'Zrin4 Prom the faet that it le impossible for a benk etieh parte elth 5t4 meld for esport to recatv itvelf throueh the exchange* fror$ other berem, and because ,eo peoeeees er ezias or eeehaefe, as evil aa of ioees paid, are payahIe in Xse York feede tlerourb t:ee Aearine :eulles and have since Aaguat lot brave 0041414 either tu eleartne Votiee leen certificate* or Aldrich-Treelend notes. LT Milt The city of :few York has for 7Aany yoars boon autho47e4,by 42i* terac of its lharto, to borrow money In asticipation of the pay- aunt of taxos.. with the growth of the City, and the enormous inorease in the tax lomy, tho aeunts of th ao borrowin6e havo ineroased to snob.= extent that at ti cea the Cit la indebted to the market on short loans to the extent of W10,000,000, vhioh loans are ordinarily liquidated at the time taxes are paid in the f141, and, In recent yoars, in both the spring and fall, au te tex levy is nou divided into semiThe movenv,74, of thc cotton orop in the fall of the annual payments. rImm ordinarily furnishes auoh a lar.e volume of exohangt at that season that borrowers have been able to wunt with ***gleanable oartainty Upon lower rates In the fall tkrim in the spring, and advantuee ham been taivon (yr that foot not oy:Ily- by the City of :Tetr York but V other unniel- palitica utich make atilar loans to borrow large suma of money tu the Lorolon m4rat. 04 August rd the City of N3vi York had so borrosed 4- total of 01,009,0Q0, a small portion payable in Faris, but the Greater part in London. The breakdown or international sT,ohange imposed on the City of Vow York the n000esIty of mooting this large obligation by the onport of gold. ::40 City ourrioa its accounts in a large number of luatitutLims, both natlam4 and state, boated in the City of 2ow York, and, under orolnary oiroomitanoa, woult . have bad no difflmalty In obteinine gold in largo amounts from theee thtittikflP. The eon- ditiono *elating early in Nueust, heeevr, eeee it impossible for tho City's Sentare te furnish the emeantof gold required, and, bad the City been oblieed to 7earetase, exatuce at tee ratee iexiontly prevailing, t'he loss meld beim been onerous It was therefore determined by the banters who undertoek the solution o; ULU prob/em to asik all the benee in the City to contribute to a rend of gold mounting to about 80,000,000, in proportien to the amouet of their reepective gold eeldings. The contrects outered into btiia the City, the con- tributing banks, ene the eemeeert% of the trewection J. . Ilerean COmeeny. und Wu. Loeb ge Company) provided for the eule of 400,0e0,000 of obligations of the City turine in eao, teo, ace. three years. The beCks which underwrets the isemse nnortooc to furnish the Manaeere, if required to to so, elehty per oent4 of the meweeta of their subooriptious to the eyndicate in cold, having the option, however, of fernizeline sterlinc exchange in place of gold at the rete of a pined. 'e4.90 The'pructimelly unanimous response of the banks 01' the city to the eel/ nude upon them, an well as the universel approval of the trensection, leelcates thet the bankers were oorroct In their belief that a posteenoseret or default in tba Nowt of this indebtedness of the AV 00Uld not be contempleted, aaa tbet the conseveneoe would be so aerious as to justify to pledge of gold involved. ehilo it is uow reeeemieed tbet Lbe City °Quid /save exteand a larro part of thin, indebtedneea in esneon Ar the offer of :in. ilvale of nee notes payabie London in sterling, tho city authoritiee neeerteclese felt, no doebt 'cno Now ',"or4 Oity Ddit. influenced by the pro:flare of pu'ollo opinion, that it war; to tho City's advantage to extinguishhe debt at once, and avoid tho possibility of loss at a lator maturity, rAth r than to advance its 9coitIon and to tako the °bum of bein tibia to t wad oix months or a your later. The contract so made 1:5, tho Osnizo of ;ow York lacet ono-third of their entire gOld holdings under coatzact for sYport, at least to tho axtcnt that exchange could not be furnldled. Attentiwat ero aul_el to the fact that the priviloge of furnishing exchange in place of gold 2srmit,1 Any comtributor to this fund to xvold the loss at gold by. parehusiais; =bingo and, thoreforoolontributors to this fund are, to some extent, annpetltors In the 015,4010 for au parohase 01 sterlinc osohanign. 3totomoot "'third" lArgelv explains the neoesetty for providinc s Dead Of gold by the method adopted, -end It is the bolter of theommittee, that the socaosi or the plan 4f rords videm.co of the willinmess and Inte-,tion of the ilanke of the. Onite-, Antes to furnish the swans to tht..ftir :matemore for 0.7 uq: foreign indebtedness "Oh tø ba:nke of :ow TorX niono without endanper int th4 a Vitiat ion, were utfible to Ix'ovido. Voluntary contributions wore obtalne rrom national erd state bonlui in ell central reserve and reserve nit lee (52 In 1110bor), those oit0 es, nodor tc lea being roquirod to hold. 25; and 12b: cosh reserves relpoct Ivolv, eks apalast Cr, in other ott les. .:ontributions of rold to tbe fund wore mei ve6 from 1,424 dM'orett banks, locatel Ifs all part of the United. Antes. An amount in excene of 4100,0,00 wns prompt37 pledged th 71h 'VA co:operation of the 3ecreter7 or the .?roneury awl the ftderal Y- osorvo Board. :iendintrtepagrent of the rim,: cAll of 425,000,0004 nine New York lost itntione advanced 43000,CIU0 in cold Fr shipsorct to Ottawa. ?hie enabled Vise committoe to pramptl7 root the nrent domed for evollawre, which was A fq11tIr at about $5.0g. Zho ommIttes ,osires to call tteOtion to tte ft tbra the gold Pend was not creato41 for the purpose of makinr o pro,fit, lint ratter to met ar emergenoy end thereby exert on influents in bt'ingine 411mAt a decline In tLe rote of oxvhaego. The poliny of the 'o.rmittoe has not been to sell exchange freely. rhis would. carted nly hove resultoitl to thte twoumulation or inoxs:4100 by debtors who doelre to insure ths 'protection Of fetre oblightions, and, onfortwv4telv, mtpilt also have Dae..:14224pe0 Oole eund reeulte ill releasing. oxebenge to the contributors to tee Nee provided to meet the obliettlens of the Cite of Mew Tea. It was rather the police of tho Comettee to use the need to prevent ae undue edvance in exchange -etea, bet, nevertheless, to peemit rattle to folloe Miner nereel eleztu_time and thereby induce, Aserioen obligeme to arranew for rseveale in tbs expeetation that the creation of exciange followlne m reatoratiot of etport trade would avoid the eeeeeeite of extortiue ane consieerable eortion of tee Fold fund. Thie :emeittee, of which two eenbers are alec eenbera of the ecold ?end Oomnittee, Is on thee that the policy adoeted wee a ',tee one, and that the pirrelea of the eeld rued _have elreade been ereole accomplished. After ellowlee ror eertain large payments meee for sceseet of the United etetes Gevernment, for which the Goverment reimbursed the Gold Teed Committee in leod, the total aeoumt or the fund has been reduced. by not over one millioe ponds, mut Is substan- tially intact. lteji jpoz& jox.. Xisunderstendlue Is lieble to eriee with regard to the ultieete profit and lose aocount of the eold eued eommittes, ant we are ieformed that the attitude of the Seek of 'Zeeland later referred to 1140 possibly due to the belief that laree profits will license to the Gold eond centribetors. Consideration of the folloolne will, we trest, make clear the Gold 7-ned Committee's eositiont 43"eleIee. The leral limit of toleranee on American tTeld eole is one-half Of ems per cent. lefties fernieshee lay tee eub-Zreesere at New YerX will rerele show an abrasion eleeedine ono-quarter of one per cont. eerie* shined from eeotern points, however, eilere eold .:101DS circulate north more The 100,0 .0.00,9 !und freely, aloe a /treer percentage, of abrasion. 2be,,oeseittee mat figure on a loss of Aeogm oneeenarterto three-eihths .por cent. for abrasion. INT4M=1, I4 110i3-eJ. The ru ashed for the purpose of this fttud la taleen out of back reeerves and held in safe Arposit in Nes fork, and is not heid as a part of the reserves of the 141e Tork barks. on to eake payments in instal .mecto of The contributore era called 25,4. TM first paement of 25, in anticipation of wIJIch 40,W0,e,0 wag edveneed be certain :law 'fork bunko, it made ae 7.,ocon ns the fwad ITE.3 ,:eselAetod, and the eseense of transforrine this Pued from all parte of the oorntre was raid Ont or the fuad. In order to arrive at the oost of exehemee, it le also necosear7 to esee allowance for the interest during trunsmisslon, and 3uring the reriod when the it ha/ in storage in. BM York, for all the ox7poloaoo or shipeent to cAtees, as -sell as for abrio; the Id beite received he the* Oommittoe at tte ;sze volee, and sold to the lank of 4ne1and at Ito bullion wane. It is Imposaiblo to estimate the interest cost involved in abipments which have not yet been made, hut a culoulation has been made se to th first shipment, with ellowunes of tntcrt to lovembor 30th, and It Is found telt Lesion exchanpe on the basis of this talculation toots the contributors about 4.92i-3/4. -The average price realise,: for exchanee sod to date sill ellrhtly exceed. 4.95, *rut. after maidne allogeance for 2jf interest allowed by the London banks, it Is erobabIe thet if the aecouet Ma cleacel ut the present tins be ellinm exchange aeainst balances now. In Widen, the result eon/d be a loos to all the eentributore he the ^mad. This /a octastoned by the deelino In each/sere after the first transfer to Ottawa was made, tnd before the entire ba,lence was exhausted. 0..t the ti.lo the rud wv,I. created, the aammittoos deatro,2 the Gold , ag-110 .#0. ocoperatlen of or other of ' two points only, pendin 4 distlueslon of imiortence which oould not 14 then taken up b7 utc, bettor unnerst47" ding of tle hauls on vt.lot the 3suk 17irstl rurthasing gold whippez. to Ottawa; 4u rrrement for 2oe:, and 2erant7 of X11 Dees ithont In t, upon advice f1t from Nov 'fork' to Ottawa, GOLDs ?be value or: We grins Of rold In %4.e English sovorelmn in ........aatm..4. On 040/36646 ounce of American lold coin contains fine gpla or the Value Of 4046, kt th.e rate of 4.e.66156. 01 wtieh Is the value, expressea in storlinr., of aae oumlo of American ?his la the ezaot ,gles whltb the Unk of . 4:ingland was puyinr t prior to tbe outbreak or thl war. nations were neAo net price of., her deduute, for Amorloan 1141es slappeil to .. .... ....... .............. ..... Zd. making tho not price for Naglos dalverod 5n Ott we It haa boon stated to us that the ra4ection or 5d. was mile In ordor to oovor the following itomel (a) 4n allowance for the cost of thtin (hi An allowance for the coot of t eneferring arlos from . 1ttn Utteen to London. As to the first which the 4ank of .Suglend is inquiry artist' as to Cwther thertce r ':-Irea by law to pa7 'or bars (770. 94.1 (loos not make allowance for the c:let of colninc- bar Into sovortim , ftnd that, tberefore, a ehlwer of Eagles Should not be reouired to rake %his 4old 71,0 ad4it,onal allowance. which Is already *overed lu fienrinr the equilmlent of the bullion uf the gold contained. iu AnOrican Laelos. As to tho tea. lten, the question &rises as to liether the Bulk of Snitinod shoul4 not, if the exec:Lances tum before, the is shipped to London, thou allow in %Ls price at willoh. It resells the 7o14 to M'At, York, s. rebate of th chare which it ie co.lected tor the nouveraton of 2,aglae Into eaveroirtas. sans question will arise as to Zd. deducted from tiJA, VICO AilaWed tor 7,. ardard haro. ;old elo tft deduction of 54. on Zagies and Zd, et bars ti not 4ustlfiee. ender tkie circumstances, but a ?he oo eloaror ondsretsoding orzmittost o tireasons far these deductiona may cbanre to tonmIttaLea flee*. A9 to an arra/woat ('or advances witbout interest, the senet which was mailx for this ancoerodation at tiv tire of the first shiovnt grew out of wmtrency. Useta-V9 wao oolliap Tabowo five dollary a 4nd tbe Josemittoe desired to 14e In a position to draw ow:b. st Once before tho f7e14 'shine zgraid tm receive and aelvbed at Ottrove. an credits confirmed. :::"1.10 oozesaity or hzcomndatiori on t'rt aocennt is new rasoed. With exchsoce approachIng the rolut whore geld arporte boom* unprofitable aad without a bster nndorstezdio? with %be 3onk of 1;tg1on4 us to the 'ate wni,A they will maks on Lalos orportod to nr from OtUwa. the 3old Pend Lomnitteo will find it imposalblo to TielLe an7 considerable shipseut of .,11,1d rA ono tt thout risk of loss on a parttoe of ouch ahIpTonts. ne '''_ommittoe desires to bc ia 5 1:ositIon nLero it mny rornist exc:,nge so nsU prof-tablg cower with void, but not to run the :1100aXli220 9o1d !and rIsa cw a ra A -6- dt%f,-.1Ine I% the Gazhanea meeet. p,um: 2_112111.922.1., It has /Amu gonsially estimated, and this Committee believes with reasonable accuracy, that this year's or on cotton crop will somoehat exceed 115,000,04) bales, and tbnt the world's reducea oonsumption of Gotton will leave an 5,000,000 bales. unntod balance or tas Angnican procluot of about 4A the con eruo InWashington, it was augLe ted that the canimum ovedit to finance the ootton crop wed ae required ut the time when th(anTimamof the crop had boon picked, and the minima marketed, that is to about Deoember iot, at which time it was mig* gootod that a oredit of 300,000,0W stiJit be required. This does net take Into aceount two factors in the situation. virst: The method of financing the owing and catherin of tho crop; lecondt The difference in price between this ye: r 4114. Lan% year. 14) the suithod of finanoinc the crop, I:, may be goncrally utated t4at the initial admanees aro made before the, crop is planted. They are lar4o1y made to the farmers by merchants and supply houses, and aro incrinsed an the work on the crop advances, the morebnts taking a lion on tim rowing am arid borrowinc money from their banks. the cotton 13 gmtherod, tholast adiseco Is rade. 4y- the time The mulooting or the op through the gin.nin4 and compress compazdes and the cotton factors Cott,:as n j,>001. 2 is a process of liquidation, and the problem Oonfrontiw; the 0outh at tAis season is not that of arranging new credits with which to finance the cotton erop as a whole, but 1.ther of proviaing a tomporry credit to be soployed in facilit.Ainc the liquidation or thr,t Portin or the crop which can be marketed, by enabling bunk to extend or renew the ioans th43 have already been made, and thereby uszist in finanoing the surplus 'ihich may not be promptly maricated. This. may be describod as a prooess of clearing or Shifting loans rather than as a process of creating now credits. As to the second point, namely, the price, it is, of course, evident that with cotton sollinz at 612 cents, those bfInks uhi01 loan on cotton could car7-y two bales this year against one bale, at twelve cents, last year. In order to facilitate the :pr'ooeB. of liquidation, iisich comp. templates that 10,000900 bales will be .old and B4O00,000 bales will be carried, a credit is in cour of 'ening arranged, amountinz to AZ5,000,000, to be hAngled by the follooing plan: 4100,0,A,000 of the advance i. to be:cured by a first lien upon cotton pledged at net exceeding six opiate a pound, middlih- grad. ;05,000,000 i to be secured hy a second lion on the pIedgettootton, thi6 portion of the loan to be provided by the banks of the cotIom growing .t.ates, to %Thom, or throw% Thom, the loans will be made. A fund mon tini; to three per cant. 0: the amount of the leam made is to be sot astle to oovor the exi)onses of mana,jino the transaction, ana to igly uni losses incurred. The fund is to be administered under the direction of a Issenittec oonsisting of members of the Federal Reserve board, the business, however, to be condnetea by an operating oommittoo, and, under its ,15 411.. cualheau,at, bi local committees, the machinery for the aopointmet of uhich bus alreadybui oviso4 This Committee belioves that the c4,ton loar, fund will be inadoluste to restore normal conditions in tho market for raw cotton, or In th,, cotton manufacturine industry, unlemN it ix Nu 40m ntod by energetio measures to bring about better facilities, both in the United Vtatoe unil abroad, for ark*ting, flnanoine, and ran2ufooturinf4 cotton. 144t year, malen of cotton to urole furnibed V..le country with .514,00,04 of exchange. Amptning which retards t14 froo imIzlhazo or the froo male of cotton, or the rector:Aim of stable prioos for rev cotton, mi1l. also retard tho restoration of 'normal eonUltion4 in the intorno:Clonal ennWaces, la the or in4ury both ih Limaand. und In tho United Anites opinicn of this Commit'ose, It seams desirable that the following neasuree be adopted: rirots ThA the fund of 41Zb,000,000 bo completed and its adminictration undertaken st onoo. AIWA: That the 2ew York 424/ Ltserpool cotton exch-should be opened. PL4ts for openin the Now "tom Cotton 'izonzintsv have roadbed c point 'r,have it may bo roesomably oxpectal th-it tne axchztoge on Open ut carly Unto provided necessary co-oporati- n is ar- farad 'by Ube Aserpool cotton ittohares und by the banks. A run: hes been pledged which. mia :. 21s the mlbrs of the Now York Cotton .xchango, are oommittad for the purchase or oottr. at high priose, to mrgih their antrlotz down to 7-2/2 contf gottr.in Lean i'41)43 Witl; this re:Lief, coatficLoce is crpressed tiat 'they' opon the excharose with a reasorabie expectation or boir4: to root the zlariceZ co:41,N. tions ::hich wiA1 arise, Coeoptratien by the .1,Alrerpool Cotten Tatabango c i4 r lines is neo, essory borer° it will be feasible tc., open the New York ,'..!cotton Tachnnge. , it 10 also es.47.0ntia1 that no ,ineoticm a6 to contrWbael be pormittod to arise in reflard to eLport eotton. The Committee notes with great satisfaction tb.::t klart MICA 04;mer2msM has already recognized this situation. Amy rootraint whieh nny havo been imposed upon Shelieh moraMmtg, or tpJ.unor in the purc.baoo af cotton. Should be romori-.4. Reference hoe been zatai:le to soon agreexa.nt or Uliderist.aiditir, wbiab we h44 been 4:4viaoci =late in -.:421awl in this rehpset. it ie not undorotood that the British Govoromnt hes broullt about sn,y such undereVsiding* nor, in fact, is it unilerotood that n1iu3 Inirehasors of GOtt ca hare is -this regard. dofinite &grown/it therasolvou AfiViaOR /WM reached this eountr7t Imitate to the effect that soznoo tfbe ;wash *mks have ex.erted a straw: influonoo in reetrfAninc the free purJrhase of cotton by .,zglieb cotton siorc,,hg:.,nts and spinner', and it is hoped tiv1t ti30 Ihtz Watch barax, sacc9 be 1ndue4 to el 43"Nge the purauvee c ott on wi thin reasonable 1trtt. Thtt tho wraal IOW:air of f I nArte 14: purckAses of ootton by :lig/10h corobeNtr; and. spilibart; olio-414 be reonen.z4 through O.tiltainell 4,1. loot Gott caa bille through tht.. tileoount and dtriots aecorvo inFes:LorAl locz,tod cOrrespautimille of account for payments. City rork now mn vir to required are Saaks the which to extent the upon Sorowhat (31 York, Mee of City teo in provailincl interest of to twik; the by oetablishee discount of vill the rtto the Upon Upon (1) (1) beaks member the to allowed disoounts of casounts the us traseactlono, initial tho from reaultInu Tork New of ince Reserve ted4ral the of condition tho fOreoast to time, this impossible,,at therefore is It radiscount. to banks member the allow may banks the whioh paper ommemial of proceeds the of out mado be mwiy. deposits reserve initial the of exceeding:4e% not that provides Act lieeerve fedora. The more. much pos4;147 =id :Auto, York 3anita Zow of National the of rPiworves to of OD0,0Q04014) least at deposit will ac. gold, in eteek oapital 410,000,0)O over on received have for pegmcmt (and months recoived have) will moat/lei throe of six of period a within York, Uow and. tbe at possibly of Skak Resorvo Vederal the concluded, successfully is operation the If 16th. 3ovembor theletunics, to deposits reserve of tmasfor the for with aoa,:ponol.ng prOV1 announced plan 2nd. 2ovelgler on Thu of stook capital the for paid be to 1r; TJank inattalmont Reserve Poderal the firet The :172A: ;LIT (4) The cectcnt to which they moy dopozit 5/18 of thetir rocervos, tbc .tepocit of which is options). Ole Fedora Ficeorise 3anks of the United i.,;tatos are in the 047'41410 of eetabliehmut. al eatly been Calls for paynt on the capital stook him° as ability of this iA1.134 to furnish geld is amator for future oonaidor tion, anti chould not* at this time, be mde the baci 3 of any trraea,7tion or proposal. 31 Agigas Ou0 Mom* YOUr Committee has been informed that about a csonth whsn the visit of Ar Georo$ Faiah and i1 14mot, RIK. IRS first proposed, OM cy,' the subjects to bo considered at the confor.. woos would be a possible credit whioh would, in offoct, affor0 M4U128 for 4r:tension of the ob)..igations duo In :-'11,gl4mi by beakers and mer- ohmte in the United tatos. If it had been possible to arrvage melt s credit by e=hs:n67e of cables at that time, your committee would trtve slIproved of the transaction. It would &Lye supplied exchange at a moment when tho , omond was uruent; and it would him° insuro41 tv, any serious arain on gold roaervoi7 for to time boine, and given this country a period for roadjustmnt during which local conditions could have boon brought to :10(1't tho aztraordinftry situation, :ince the date whon the sureation of s. credit was made oxchango In larLm quantities has boon supplied to the market, and eonfidelco hue been 7.oatly routorod by the knowledge that the New To City dyndicate ank1 the Gold Pool CommitteeW operations have been effective. Fran ihforuation which your Oommittdo bore gathered, it Ia ltrongly of the opinion that a continually incroasing supply of ennew is in ,I-ospect. The export of food products and raw and m.nureotured materials that 'guroyo needs in tho present crieis not to mentim munitions of war) must continue; mills anAiseomfacturine 11,141% of g0.000 ciutlabut, cemeenies are workin overtime on ordere for goods whioh, inari.ny case's, will not bo ready for ohipment for on mcmths, and which will nnae a corrospanding *upply of exchange. The opmaine of the 3ow York and Liverpool Cotton sPIlohungoce, doineidont with the come pletion of the Cotton Lona Pool, if accompanied by aseur&noes to tee merhsta and spinners of 3sigland of the willingness of the-:Ziaglioh eankin6 00agesnity to :inane. reasonableprAtosoo of cotton from the United 5tateu will aloo mda to the supply of eicabeage. For this, and other reasons that it is not necessary Globe/et:to here, your Oemnittee le clInvinood that the adoption und employmont of uny extraordinary or unusual meanures at this time are uaneoessary, as soeh station miM, Ln fact, be interproted as impression of the bsUlef of this Ccamittoe that tbo proent situation requires aueh measures, and beoause unusual measures are likrAy to bring about unexpooted and possibly unassisted Malta. It vill be noted tha% the foregoing relates astiro/y to the oommercial sitUation. No account has boon taken of th=. poseible opening of the Lew York Jtook 71zobango, und the additional demc,mds that nii;tt arise if any ooze:Adorable amount of Isglizt owned 4morloan soourition wore resold in this country. Your Cormitteo is firmly Of she opinion thwt it is promture to di mos the opmling of the New York 3tock ;;xehango until the adjustment of the comearcial situation bum been decvnetratod. to thl took In the meantime, howevor, and, with a view t4p, it is roomeedWied that a Committoe from the Ilew york 1r,to be appOiated, whieh lommittee should visit London for conferanoe with ulico Committee, from the London tock i..inabange and Credit of L20.000,000 for a oareful study of the situation there. A tentative arrangement for a large sterling credit, predioated on the understanding that its repayment will not be made in gold, but in commodities and manufactured goods, would ilke it possible to consiaer the opening of the.took 2xehange sooner than it would otherwise be safe to do, Should other. conditions -permit. As this step Is recognised to be a desirable one from the point of view of both countries, a present discussion of the fore of such a. credit and a tentative agreement as to its terms, at this time, would be beneficial. A memorandum supplemental hereto, outlining a plan discussed with Sir George :i'aish and Basil P. Blackett, 7..7.sq., is attached. Gh s Conditioned upon the understanding suggested in memorandum widehth." and with a view to ussistanue in meeting conditions which may ariso through excessive sales of American securities bald in Lurope, the following has been tentatively discussed with Iir George Faish and. Basil P. Blackett, That s. revolving sterling credit of, wlys i20,000,000, shall be Granted by or throng t the Bank of rneland, or other British bankers, on the following plan: The credit to be available as a supplement to and only after the $100,000,000 Gold Fund has been shipped, in order to avoid further gold shipment. Drafts at 90 days, with one agreed renewal, on an acceptor, or acceptors, to be designated by the Grantors. Drafts to be 'orwarded direct to agland. for discount under an agreed arrangement, and demand or cables to be sold against them. Drafts to be drawn by the Gold Fund. Committee, or a new committee representing guarantors, consisting of banks, trust companies and banking firms in the United States acceptable to grantor. eroceeds of sales of exohange to be loaned upon security of approved bonds and stooks as collateral, with the obligations of borrowers, who are satisfactory to the guarantors, to main- tain a margin of not less than twenty per cent. (20%) of the face vLaue of the loan. dy, tth japa43nt ) Draftc to be drawn only az required to supply amehause to take the place of gold relaittances 7,,rafte to be covorei attilatiari t,sr in the usual my if exObarige can be purchased at or bolo, the cost of oxPOrtillf: gold, (e) U exehaso cannot be purchased .z.:3 ;,lbove, an.1 pk;,.yreont of the bills would require the export of gold, furt'r.or 90 da,7 renewal() to be gmutrid, provided that, in the op1non of the Fedora rte-erve :Jeanie a further loss of i;old would be detrimental to our fluailcial ei-uustion. (9) ho graitoro of the credit to tt). entitled, after the first to require paw:lout, in whole or in part, in Now 'fork exchange. Such dollar balances, however, to be teed only in the purchase of .merican prottac 5. Verember 4, 1914. Honorable aeries Honorable vaA, Hamlin, Governor, .rbur;, ?edema 4eserve -shington, Ds O. Gentlemen:- On Friday, October 2Frd*t a oonferenoe gulled by the lecretary of the Treasury* at wkAch were rrosent the .jeoretary of the Treasure* the z:eembers of the !cder4 Reserve aourd* tho troller of af the Ourrenoy* 7,12, George ?Mesh* Baeil Blaokett* and a oewittee of bane:Ors, the underniened were appointed a committee to prore a report and memoranda covering the V4r1onA eubjeots discussed t the oonference. After careftl consideration, yaar coma tee =balite herewith its report In he form of a proposed letter to tr cleorGe '2aish and Basil P. law:Mott, eq., representing the 'aveloollor of the.. &xchecuer. At tachee to thin letter 1.1,4) the vf,X1OU:s memo rand a meek:. I one, U1 of which aro S;Ubmittef for your information ane ae the best judg- ment of the etnin ttee an the mubjects dIoowod1 ti enumerated in the proposed letter. The plan forming supple et to memorandum "41eht40 herewith* wo believe briefly expresrems whet TeAm disoussed at our last conferenee in ' '':aohington, whieh was attended lay 31r George Paieh z,eld Mr.31ackett. It embodies the best jcigment of the members or the sub-oonedttee, but ha been preperec without conference with New York like0 hose co-operation and approval are eenerelal to the ouccoes of mnym.edh lion. J. 3. Hamlin. Nov.4,1924. Ilidortring. The members 9f the eommitteo thorofore respectfully gmliost that it would be harmful to the suocess of the plan were it to becmw, public before theno who would be intorented in Row ?oft (ed equally those is London) have boon given opportunity to oonsider it. We it a further expression of your views in this before taking any stoIs to uncertain the attitude of the bank:,rs of New York. Isompettully yours, ($0.) 9trones Jr. for the Ccomittee. November 2, 1914. Sir George ?aish, Basil ?* Blaokott, %sq., lepresentatives of the aanoollor of the Vitish :Aledhequer acered1te0 to the Ronoraiae the 3eoretery of the Treasury of the United Autos. Gentlomen4- At a Conference in 7ash1ngton, convened by the Fonerable William G. LicAdoo, lecretary of the Treasury of the United States, 'WW1 yea attended by the numbers of the Poderal Reserve Board of the United States, und representativos of banking interests of this country, the undereissed were appointed a Committee, representing the banking interests, to oonfer with yln in order that, after exChungine "TIONS as to fiwzolul conditions in 41g1ovi and the Unitee States precipitated by the ear in -,ftrope, they could submVS to you. memoranda outlinging the conditions diecusso6, and, possibly coneider an, submit to you, for tr,nemassion to 4ng1an1, such proposals az, In our jmdtent, 'meld be to the artual advents of the Wetness Interoets of boTh ocuntrion. Based npon the interchange of views at the recent conference, and upon facts that have developed in recent cont,rences in Now York and eleothore, and upon our general knowletlge of the local situation, combine yith information in onr possession reeArding the situation in ?;nland., we submit the follwing explanatory asmerunda. Because of the iahorent economic differenvis between nland's position and that of the Unitee ltats, and the differencos between bankini:; system, ant bankinc lethods in your country a& ours. thls rarArandtun is necoesarily elaborate, but it will, we trust, afford y'ln a fall comprehension of the situation. PlItus A statement of the position of the new York: banks on August let, and thereafter, of the reasons why It was doomed desirablo for the banks to issue (nearing House oartifhcatos, and to anly for Aldrioh-Yrealsal currency; ineluding a statossat, as of August let or the members of tho ClearIng H01180 Aosoolation. A statomnt of gold shipments male prier to the month of An t in payment of obligations, an estimate of the probable additional Indobtedwis of Amertoan merchants, banks. en e corporations to 111"OPO On or bout :;,eptember 12th Last, And a statement of the oountry's export balances for 4ugunt, 'eptomber, and Ootober (e8tlilate0) 1914. etatomeut explaining the reasons why the settlement of international balances neoeesarily falls upon the banYs of New York City am0 not of the country at Lam% and why a wakening of the Now York City banks, through depletion of gold reserves, is serious, and is reflootod at once In U,ok of confidence And curtailment of oredit throughout the country. F17717: A $tat nt respeating the syndicate formed to Luarantos the .1"yment of about ;40,000,000. of gold to moot the debt of New YorX City, due in London (and Paris) up to january 1, 1915* nzg, A statement Of the neotteeity fure and the creation of the se-oalled 'Gold, Fund," the diffloultiee under whien it was oomvlet its method of operation, the ,,xponses thereof,.,1td the risk of lose inourre4 by the partioipants1 incidentally Goore .Paiah a ronorandurn with mord to the price paifa b, the ni{ of England for Amorican .%ssies delivered at Ottawa, and certain questiales on which the 'Gold ?and Genaittee, dealre6 information, 1n171 to do with 'WW1 price allesnd by the Banii; of Nitiaami for f;o1.0. dellytwed In i'l.411; tte.... .) A statement of the objot, mitt tho term and °millions of the ao-oAllod 'Cotton in Pool" of436,000,04. and Of the nothodb,r which the cotton crop and Lt A moverint to market is finatkood, v7ith cort4in sumestions. .V7VTlik A statorient in respoot of the Fiodoral Yiewervo pa* Tom now In colvvo Of orlentleatiOn, and ttp bearing at the mntter under discussion. :3111,1 A stterent in respect of a poseible credit of t20,000,000, the Committees opinion in mgard thereto, und a sweeted plan whioh night be adapted at a later aato, These statomolte are pubitted for consideration ailidisousAo and are put forward for the info nation of the- cOnforence ark an exrree- sion of the belief and opinion of the ouvlitteS. .4* the eleneral conference botween the Honorable the flesrotary of the Treasury, and the Nderal . .leserve hoard, and the full Ommlitteo Amenting the bta34ore of the "United 9thtes, at whioh this Committee 01hted, with the inforrwt;,on cen at ;ulna, it UN Opeoted that this Cortaittec, after conference with you, and a. caroful 4OnVass of the financial situalons in England and in the United states, .ould have acme specific proposale to submit for the consi&ration of the Ynaliah Government, or of the financial intorstote in Hngland. With the "APW York City Cold Qyndiante and the Gold Pool CoraAttou ix aeqtre -4- funds aexTedating 4100.000,000 (only a small amount of whioh as ar yot 1;*oor availed of), ad with the aompletior of the Cotton Viool Loan Isrtiliorto, all in this country, and with the expected early conclusion of .arranipments to rotopen the Now York. Cott on Exchange, with fuu pro- tection to its members as to (misting contracts, and with the eraniosments .1.0 by the iMelish Government to discount toreraorat or Ito SOW: 1Io r)ce awes of iict SOCEptille houses, and to oostpone preeilaratoriont liabili- ties to post-moratcriuM businees, and the resultant facilitios offered for new aseeptanoe businessin7..onilon, this Committre is of the opinion that the only additional step neaossary at the present time to adjust the international commeraial situation end enable bankers, oorporatione, and business elms of tho United Itates to -eot obi ations ea they mature at normal rates of exman6o, is an understanding that the new free purchase of American ootton rAiglish spinners and imsrehants shall be ormolu-aced by the 'Walkers and ilaVOrntrKillt authorit i,es of Faglawl, and that ar;arwenents clad be 7romptly 5.1ftde to open the lama channels for advances e.gainat ..,on or :or the discount of cotton scow/Amoco bills The Cotton Loan Pool is estivetted to rrovide funds to ennble the banks (Lid ralr01121138 of the south to °navy ovor four million bales of cotton until February 1, Vie. The best export opinion° estimate the COex,oe over the ,:torissuptielsM not ever five TM:Ulm bales, Vile Con:tattoo is of the opinion that the ..resent low rioe, being conelderIbly undo.r the oost of prodluation, sslil tend to induce Gotten satrohants and. spinners of Amerioaand tirope to buy eomewhat in excoss of their neols, aW that this inducement "Nill result in the absorption of zonsidembly more cotton than the unount generally ostimate go separate statement has been made in regard to the international .5seaurlty markets, or to tho opening of the aew York or Doodon took btohanges. The meaAnres above ontwrAted we btAievs are 4dequate find will eventuejly -lorrsat the internattoml giLuntion, but would be ertirely insdequate should any oonsi:derable volume of seourltise be throz-n 111,021 thib Me-1M to the Opening of the New York ..tonk ,r4X011nneti Until, thbrefre, the flomerothl citation hAs been o4jmtet, and the eitathanges have turned ix our favor, figy. ilseqwton bearing on the opening of the Nor York '3o Ix L'xikange to a free ei,d umretktrioted market for Aulart rtOrfariti.e irrned abroad lt:ouL43. VAO rmutture. Resi,setridly yours, (sod. ) Jarsee. heaj. Strong', Jr.04 A. First. .1f4renel of ilia* York btackers impedlstely prior aso/srotion of IFir by 10.41and, opinions !,gero unnnirous that the Seeltion In this country Ykonld shortly develop alonk;, lines similar to theme experlomeed lo the fell of 1907. Up to the time of these tonfermeeee sold to Ole :omit of %tut 413c#000,000. had been exported from the OOMMtry .:nd It ens fe,red that, in sekiltio coutrao'ion of credit restWin. from this large loss of eeld reserves, further .:(111 Laver contrsolon would be istrosed upon thip New York b4mxs by on of tbe withdrawal of funds by balms throkhout the sour4r7 .i4b0 miipt be inspired thron01 fivAr to strongthenir posillon by Vlore...sing their reserves. It 1907, after the origin of :he (omit) had passed (on DeomIg4fr and), the reports of tNa 44tioat2 44ske to the C.omptroller of the Ourrenoy Inditvteet that (oven ,t thvt tize, Mabry banks, as listinctashed fro 'e At ,aid Uentra ve Banks, still hold esoefts* o,sh rsonrrs of A.15,C00,000g i it most'Ve ,WrilIt in rind thAt this )ewres out of coonidoriOn Ion uf reserve dtAbtless za:cia by about 16,00f: tv, to b. as ..ich fli-Aree Stive not been *emptied. In order to neet strain imposed by this probMAle devnlooment, the oc York. 011K5ring. AssootAion decided to Issue Olis,rinc ion omrtif10.ter for the eettlemen of e1ftrin6 bt5L,noteps betvesa members, te.nd the -7 of tdle -re pary Announced hs Intention of leonine ldrioh+ . lireelend notes, se oanhorixed b." existlat; Lavi, offoried p.rot.t:,,o. ion i-ot t IVM1 e the . hese tae,-stmree ty or Ws York, 'ooth :qetielTAM 3ttø,Knd enehled '_hen to retell* abest d reeervee Aloh they held at the' time. or t lot, &mid reawn...;,?1,14, osopor.,, pled,d for via,-014 the psysest of the aebt of the 4:12.+4 of *bout &ad. of that kmount, . ?-6',000.00 le et 111 to be to Ma eil4d leas sucth *count as In rum/ Abed in outlaw .-61re.tv pad., 416 ,f,r n,best by uhlenent f "AA and 4,.?5,,1500.000, by ,7groosvisq of LCOSMO . tThe ;(1:4100,000.!,(V,-, coctrroAted to the p;ed,und by the b-.11.- f 00 YorS pool, :.45,00-0000, City, or Ilth.ieh 411,-.41f.yX10. haf, ItaW , has there forq 404, ta Ken t o dte, le. vin4 bwm m41104, ,.:050,000, still to 've tarnished cnt of preeent Neu York ..;ity tAik. At the preeent tire the ClovInc Touss, imWe she% reserves, =411 olleeee eksh reserve. 'hen thee* oblitions vvere (Matured Into, the? York hAvs were ream t15e00000r30. to 44000,000. naer t.heir le6A1 -bon fie feder..I 4Vgwre of :qv. York 1$ or ionised, it Is estizmted that a total of about -."4:120#000.000, v411 bwithdrama from York :.:2t7 Action4 Dnks to !cake espitni kuld ramorve payweate both for their own accounts and for those of their out-of-t-ovst correspondents, lultanor..)u. t,he reserve r1roti71,Nts v4.11 bc 11K, and It in entirstei th.A, aft er reibutec'g from 14f) to those vq.. 03t,E. of Vie rlet:letion of retorve re uire:'.,ionts will le,:ee eseess r: Irfol4 itt the vaults of the nef.)1) T9rk Jitty. int The I'ositl ' of tJe row York .1Iaule. Abaft ;40,010,. If thls eCl.culltion 13 :;orrect, we must cider the resat ot the completion of the three operations referred to, ne.moly,.the withdrnr7e1 of the entire amount of eold whioh my be celled for on secount of the City Of Vow York vat the Gold Pund, and the payments end reserve reductions resulting! from the ormnisLotion of the 70doral Reserve l*nk. The total pcynents te be made, ageref!lating mbout will be part1o117 offset by the 4t0,010,0004. nined In reserves, due to red-action of reserverelArements, leavinp; the Los York loetitutionejo1bIy;0.:5,000,000. to t40,000,000* below the required legra reserve. The amount of deficiency In reserve muz, by the torls of the 7odernl Rooerve Act, be rurtbor oTet if member becks E,re r1,10/04. And &Vail of ttio p r vi logvof rodiso i in coiutil piper, wt the tine of openin of the rederal leaorve Bank. Statement of the Members of the New York Clearing House Association From Reports as required under Article III of the Constitution, For Week ending Saturday. August 1, 1914. COS, 'CAPITAL MEMBERS. Greenwich Bank 28 Pacific Bank 30 Chatham & Phenix Nat'l Bk 31 People's Bank 33 Hanover National Bank 36 Citizen's Central Nat. Bank 42 Market & Fulton Nat. Bank 44 Metropolitan Bank 45 Corn Exchange Bank 53 Importers & Traders' Nat. Bk 54 National Park Bank 59 63 65 East River National Bank Second National Bank First National Bank 67 Irving National Bank 70 Bowery Bank N. Y. County Nat. Bank 72 German-American Bank 71 74 Chase National Bank 76 Fifth Avenue Bank 77 German Exchange Bank 78 Germania Bank So Lincoln National Bank 81 Garfield National Bank 82 Fifth National Bank 83 Bank of the Metropolis 84 West Side Bank 85 Seaboard National Bank 91 Liberty National Bank 92 N. Y. Produce Exch. Bank 96 State Bank 97 Security Bank 99 Coal and Iron Nat'l Bank 100 Union Exch. National Bank 118 Nassau Nat'l Bk., Brooklyn 102 Brooklyn Trust Co 103 Bankers Trust Co 104 U. S. Mortgage & Trust Co 105 Astor Trust Co 106 Title Guarantee & Trust Co 107 Guaranty Trust Co 108 Fidelity Trust Co 110 Lawyers Title Ins. & T. Co Columbia Trust Co 113 Peoples Trust Co 114 New York Trust Co 115 Franklin Trust Co i ,E, Lincoln Trust Co 117 Metropolitan Trust Co 119 Broadway Trust Co Average On Deposit 1.1th el...NO...0 Memberv carrying ,,,,,, ,,w,c. R.,,, 1, LEGAL NET DEPOSITS 1,888,000 4,930,000 3 4 6 3,679,000 397,000 475,000 48,000 8 12 47,890,000 117,971,000 4,927,000 21,852,000 2,313,000 3,883,000 7,912,000 21 23 28 1,173,000 3C 2,582,000 611,000 984,000 312,000 3,269,000 88,412,000 21,819,000 9,257,000 11,595,000 75,814,000 50,000 1,531,000 56,000 33 3,759,000 19,503,000 452,000 3,102 000 25,158.000 2,387,000 2,571,000 107,000 123,000 2,159,000 24,077,000 91,241,000 1,766,000 12,625,000 106,457,000 50,000 3,497,000 49,000 669,000 4,936,000 53 54 55 9,082,000 786,000 1,536,000 979,000 23,462,000 3,063,000 71,000 768,000 212,000 5,460.000 48,208,000 3,403,000 9,127,000 4,180,000 115,201,000 1,579,000 6 4,901,000 15,027,000 9,293,000 2,610,000 509,000 1,137,000 2,963,000 2,332,000 1 062,000 367,000 253,000 1,169,000 142,000 14,425,000 3,481,000 5,582,000 15,522,000 9,586,000 505,000 2,089,900 759,700 2,598,500 2,844,800 3,998,000 12,968,000 3,761,000 25,099,000 24,400,000 779,000 2,120,000 706,000 5,950,000 5,218,000 244,000 926,000 520,000 1,752,000 1,433,000 4,241,000 12,784,000 4,752,000 29,267,000 26,680,000 928,300 1750,700 345,500 604,800 9,317,000 19,134,000 10,832,000 6,981,000 10,017,000 7,927,000 2,271,000 5,891,000 1,880,00o 1,083,000 2,145,000 1,430,000 666, 000 10,795,000 24,115,000 12,753,000 6,987,000 10,125,090 6,720,000 26,451,000 126,045,000 36,838,000 21,422,000 33,045,000 14,824,000 3,432,000 2,097,000 198,630,000 28,644,000 8,954,000 1,973,000 9,649,000 42 089,000 4,357,000 2,115,000 516,000 2,520,000 13,252,000 2,218,000 205,000 57,000 205,000 196,234,000 24,790,000 47,846,000 140,272,000 4,871,000 21,247,000 1,967,000 10,217,000 21,903,000 728,000 3,696,000 409,000 1,552,000 6,231,000 840,000 1,579,000 148,000 3,000,000 2,550,000 1,000,000 2,000,000 3,500,000 4,693,300 16,690,600 1,009,800 1,357,900 435,800 15,054,800 2,371,200 1,948,100 1,779,400 6,916,000 77,634,000 22,339,000 9,221,000 11,717,000 63,823,000 21,082,000 5,111,000 1,498,000 2,603,000 15,850,000 1,500,000 5,000,000 250,000 1,000,000 10,000,000 7,676,000 14,344,700 65,200 2,870,500 23,177,700 26,591,000 90,034,000 1,561,000 13,867,000 115 527,000 4,000,000 250,000 500,000 750,000 5,000,000 3,468,600 789,000 1,916,800 706,200 9,645,700 45,247,000 3,163,000 8,667,000 100,000 200,000 200,000 1,000,000 1,000,000 2,091,600 803,800 1.000,300 1,789,800 1,290,100 12,928,000 250,000 1,000,000 200,000 1,000,000 1,000,000 1,000,000 $1,500,000 1,000,000 1,000,000 1,000,000 1,000,000 1,500,000 25,000,000 3,000,000 1,000,000 300,000 500,000 32,916,900 7,755,000 761,800 111,100 1,070,100 5,000,000 25,000,000 500,000 2,250,000 200,000 4215,000 102,020,000 3,219000 1, oo8, 000 1,121,700 309,000 1,276,000 618,000 350,000 180,000 8,858, 000 2,171,000 10,822,000 ....... . 7C 197,000 71 446,000 72 74 7( 77 78 877,000 343,000 8c 245,000 82 83 84 85 91 346,000 495,000 92 9e 394,000 394,000 267,000 113 45,951,000 10,708,000 9,901,000 29,899,000 14,129,000 3,946.000 997,000 1,049,000 2,746,000 1,384,000 527,000 129,000 223,000 250,000 692,000 3,338,000 1,042,000 1,016,000 2,223,000 1,642,000 29,554,000 7,541,000 8,669,000 20,436,000 13,940,000 114 115 116 217 119 11,545,300 1,165,500 555,700 5,892,600 848,500 481,243,000 Totals, all members 175,300,000 296,930,800 2,056,190,000 363,380,000 81,054,000 61,095,000 1,935,821,000 Decrease Decrease 2,286,000 Decrease 21,692,000 70,388,000 (15°4) 72,186,450 $435,830,950 Trust Companies' Reserves with Clearing House Members, $61,095,000 1,454,578,000 Decrease 3,677,000 451,000 Cash Reserve Required, (25%) $363,644,500 $444,434,000 Decrease 21,394,000 I06 IIC III 41,578,000 41,578,000 Decrease 163,000 Excess, $10,401,500 Decrease, $13,430,250 Deficit, Decrease, 1,798,450 Excess, $ 8,603,050 3,094,550 Decrease, $16,524,800 Decrease, $3,677,000 Trust Companies ... 1,423,407,000 635,348,000 272,752,000 60,137,000 71,646,000 7,045 000 1,422,749,000 488,790,000 41,737,000 56,547,000 Thuds, all members .. ...... 2,058,755,000 332,889,000 78,691,000 56,547,000 1,911,539,000 41,737,000 Increase 1,182,000 Aggregate 53,065,000 (:5%) 73,318,500 $411,580,000 $429,005,750 Clearings this Day July 25, 1914, August 1, 1914, $1,838,183,016 . 11 1,588,913,808 47 296,815,972.90 Decrease 10,692,000 3,234,000 Cash Reserve Required, (25°(,) $355,687,250 Trust Companies' Reserves with Clearing House Members, $56,547,000 " Decrease Decrease 67,182,000 Clearings for Week ending August I, 1914, 118 16, 360, 000 61,095,000 " 97 99 IOC 107 108 6,973,000 " i51 141,517,000 5,900,000 11,883,000 38,688,000 15,156,000 74,081,000 Trust Co's: " 65 17,988,000 981,000 1,388,000 4,448,000 2,251,000 3,000,000 1,000,000 1,000,000 2,000,000 1,500,000 Banks : Cash Reserve in Vault, $344,398,000 6.3 1,140,000 46,000 613,000 280,000 376,000 187,702,000 7,534,000 15,877,000 48,628,000 63,415,000 " 42 44 45 18,729,000 842.000 1,218,000 5,501,000 1,839,000 21,222,100 1,307,900 5,388,900 7,348,300 1,566,800 Actual figures this morning. Totals, Nat. and State Banks 3C 2,618,000 299,965,000 Aggregate 31 102 103 104 105 2,193,000 173,907,700 32,382,600 }I,425.700,000 90,640,500 630,490,000 Trust Co's: 13 15 17 20,788,000 102,559,000 28,179,000 15,590,000 20,843,000 10,000,000 1,000,000 4,000,000 2,000,000 1,000,000 Banks : Cash Reserve in Vault, $374,046,000 2 2,696,000 11,028,000 7,156,000 1,576,000 2,322,000 13,065,500 4,211,400 1,201,300 11,614,000 3, 7o6, 700 9,482, 00o 939,000 375,000 785,000 108,000 490,000 1,500,000 10,000,000 2,000,000 1,250,000 5,000,000 17 State, June 30. 1914 is Trust Co's, June 30, 1914. As of July 18, 1914. NOS 1 $4,224.000 112,600,000 16,450,000 46,250,000 14 Average $772,000 $22,317,000 36,130,000 20,489,000 80,745,000 26,538,000 Totals, National Banks 0 State Banks " Trust Companies As per official reports 29 National lone .0, 1914 CIRCULATION Average 4,254,000 15,416,000 5,052,000 8 National City Bank 12 Chemical National Bank 13 Merchants' Exch. Nat. Bank 15 Nat. Butchers & Drovers Bk 17 LEGAL TENDERS SPECIE Average. $4,346.800 4,719,900 2,097,700 8,874,600 6,186,60o 6, 000, 000 21 American Exch. Nat. Bank 23 National Bank of Commerce Average. $20,668,000 41,900,000 21,158,000 85,528,000 26,499,000 $2,000,000 2,050,000 2,000,000 6 Bank of America LOANS AND DISCOUNTS $1,218,000 1,541,000 1,457,000 5,882,000 1,749,000 Bank of New York N. B. A Bank of the Manhattan Co 3 Merchants' National Bank 4 Mech. & Metals Nat. Bank I 2 RP *NET POPPS Deficit, $11,289,250 Decrease 46,776,030 Increase 3,000 6,136,500 Decrease, $35,004,250 Decrease, 8,595,250 Deficit, $17,425,750 Decrease, $43,599,5oo Deficit, Decrease, $10,692,000 Balances for Week ending August I, 1914, " Balances this Day July 25, 1914, August 1, 1914, $Iog,ôoi,8 io. 65 95,095,253.82 23,383,391.37 Sa.U.1..;_411.1U'!3ro "' 111` T 3 emT4ct tatemout of the shireents of gold during the first -won months of 1914, and of its destination, would muire considere able invoetige tion, whieh tte. dem not permit. In general, it may be maid Wit in that period the hanks of the City. of New York erported, In round figures, 0160,000,0016 of gold, largely in 77aglos, the principal Mount having be take' by the SIM Of Peewee and, indirectly, by the Aeichsbank. The inducements Offered by those inetitutions to attract gold in Rattle-mut of international balances were understood in this country to have deprived the 'Sank of rhglend of the opportenity orded at tkekt time to strengthen Ito gold holdings, anet undonbtedly we,3 owe:aimed by the willingness of the TligliSh morkot to continue to Aga accommodation to its mstAIIIISIS in the United States in the memilitmed volume. It Is possible that tbe eeellirrenoes of ON past few months in Internetional exehaapi NW be 1111.111ine4 by the fact t.ki.st aw e and, Gemeany did not nom current merle.* indebtetinese as freely as the Fatiglish wiriest did.. Me stigetion conducted by a special com- 'ttee srpreinted at the request of the Yederul Beeerve ioard in tic letter part of September .disclosed the fact that, Ns of ..;eptember 12th, the total .soortainoble current internstional debt maturing between that este one .rattukry I, 1916, mounted to about f460,000,000. The item investiented included bank bfaances, maturing securities, interest end dividend Obligations, commercial credits, fitenee bills, and indebtedneee for ellsourit is sold. As to some of th.ose n.000tette, eatims.tes were neceseary, It is rismehised that informtion of this charazter is inecourate and liable to be misleading. he oftsot accounts were shown to 4/ about ':150,000,000. leaving the net indebtsimoss as of that date mturinK before Jannally 1st, in round figures, ',$2100,000,000. due to naclond,Yraidi Gormany, Canaan, and, to sons extent, other Pnropean countries, The amounts mvtnilindrwo,-e about Ognolly proportioned over the fall priod of the year. It should be understood that a considerable/ portion of the Aneriflm indebtedness to the Loudon averket, maturing in tale perio,.betwelq Oatober let and JenuAry 1st, was emoted in antiolp.tion of the purchase of cotton bills, which have always been eonat ere* °ash in the tonion Met. No further data h b', obtained in connection with the provost amount of the current interhativan1 Indebtednase, but opinions asked of bankers coavarsant with this matter would irobbLy justify the belief th,*t over on/64W of the not indebtedness kaill boon paid at the prevent time, :ale foin to, exclusive of gold And oUrer ehicnte, was 420,000,000,adverse to the United States in Anepot417000,000, in its favor in SoptoMber, and willprobably' im 480,000000i in ite favor for Ooteber. Last year, and in 1912, for the,* months, the balanees in favor of the United tats were; 1912 1918 44000,000. 50,000,000. Urptembe 64,000,000. 47,000000. Oetobe, 77,000,000. 139000,000. August ftty n F int-guationnt ningintge* inflininiA tour* *X the *Moot fat tibo outtrwilt Itare, ot Jay. time Inior ard time eiteraopo4 in Amr.to& Med o.o.nri before AtIgnot truflotmt (tergma for *ten& to 4tot oloturtne obtioNtlene t4JAtrttp** Tho doolArotten 4mt Ono ottopseolon Of sitipptog :ttetTitlev, the we :MO% 4.01 Intentrtion el the reale* ti-ao inkl,plwc4 ozobarce =railtritral aspect troulom oe to Otwotrty tpolo 3111104 in over that the The felletalti 0116011wimtt imelittion tztion br tole tie* Tom woke oith anktoot to gold ocKArto mity bo bot.tor Mooin of tho foreciol oceviors0Ot tho It it the lAmeet eimafratortne throvets the ?oe, a new Yo Th&bv.rildne oomm*mr croak:Mos t* **aboard.. 7110t*** Pekl lo- the iivolet *en the tandas innelne to :,:sodet men ohne. towel bine atutelgod for remittent* to ALMS fOr 0013,00tial Or disocult Max* to otiv 11,n tin ::atod Pintos mitidsera onn ir;le sithout a qtactition fro to Vow raft. 1.1w ',uothtlett onntime*, 1,'1,amiten Wand tvqn noinient Si the b.44:14* of NOW YOWX. fthen the Bola movoilonS is nixotroo in both tie 1101.41n c,,ha ctomootto egoonnuou, how 4t UMW Under our ate totIttna vain, plemirod t,o be 1.zoo boor, tVir On banks to epanm IMMO employtorocrilenlif nate Aohonweikifl3,907 the catz web emonelam twaiV4ble vitom to Iowa ologArine, boos* tom etertino-Aoh Vor oottniTC11,41wgxwe beRvom ;10,*61-44 es relict to the root of AIN Toro ra 190? our 1,10(1 frog darrontri evoodento foct tko itrodisto Aiotitt wItro aortlika imOrratti 27; botUi emus!"isaplegia tee JIM 11616 ntxrenaz oso of Us 04:santn,. AtMin atelle 6 ZOW "brolm usro tiblo to freak; sups,ily that Itoorselloniieute vsath tiat rims %Ms wren.. pro,dos ss sit! wit &Ate Ir4 hose boso oomtrz, wv.wo in Volt, Mc rots 'fork esontave in otherprti t imis 6bizito o ti4) the mammy loAtorAiett tristruot ' uo Ttfer. 'Nat& to Prot;t10t their otaitotiorsT to taloir oarreloinioutoo gurrenazi not being trov4.2,4*lo .;!orr the bottloveat Olt tui rastionza bulkoass and it ring lossu tspesibls for the b?,.4fma to WO (tad to T'',::kraive, Lon(tais mediantla reimohed t1proKittra oloivaent to wit sitositi ctol44. 1061V TAX31.14ercibie Prultun on t our ttlwestia asoluuvos. distrust X of tills atkilit. of tile goo York bolo to 7.net thol,r .00-rxitvots tat; the Ofrmalso tbsir tiOrnsitore bora arisen flt. violoot rise to a lanticz orgahtore atile M 4ollars for o*Ilie with aeri.ous ouncor- grAtopalwy roosted. until A faiiiir prtos wvos fla Iblishod, in the mtehbortiood or five (Vattwot With flustuations within norl1 noes auohnies tisrf PAP thA) :1'1)01:1104 zlbo* five coots eititor wag. to this level weld riellte OgAfed 161ro onyrt of bunion of w14ob "4.tould have fallen not 4.047 van the City. but irikool qt.en the novani, -km dirie IMISAwses or *lob olvrzsr the. milsounte Eic sit tbovellise NagaIroyis few Lam Ng,40.21 priivito Sir.* N-Fzhiolt (trio clairroa. k;11, cutnt f Tntssykkon).4. eta. 1111111eation of tho 140.eral Teserve Board, a co4aittoo of baate3re formiatod A plan for aoca*line t100,000,000 of Mid for (t%7rert, in order to ral.lm elsohango and to thereby dietributo ti3e bark= wrong inetitatione all over the thilted "sitetioe instead of irvoeing it lime a few of the beWce of New York City. The banlet of1.71ra York City pledge& it,45,000,000 of tao avant* Thin C100,000,000 =a in ailditim to the ' ;80,000,000 plecicoci by the books of tho City of :Art,o York for tae rxweent of New !or% City oblitioas niaturinc -Lo balance of this year The necooeity for pamaine F44.rope bu1 this oonroo, inetead el free ;t1ovo;-.1ont ofCrpki. ttriMps )s Froa tbe fact that the mid Mattrvos of the United. 9testee are mattered on about t-flatIty-five tkmoon4 nationo] etate bariLIng .thettitilttione; MOND:. Frera the feet thee olti no banlis In Nil York ibis:3h cibrit ffhiP bo ailable to roomy their cold roservoa by waling loano; azd, 21121. roi the l'aot that it i- irvo. Ible for a bank widen parte wi.th Ito cold for avort to r000aL) itself throu6h the elcohaniNe fraa other b xii, =I baronet) the pr0000do Offillies of wohanco, as Tx31.1 am of loam paid, -are payable in New Yolit :;vincle throudi the Clearing Romeo and. hare Agee uwt let been eettLed either In Clearinc notoe lora sertificateo or ..,1drich-Vrooland Tho Olky Of 4ow York h,A, for nany yeare been authorised, by the ter*, of its Charter, to borrow one in anticipation of the payment or taxon. 'Ath the errwth of the our, and the onormon4 inoroaao X n the tax levy, the amounts of those borrowing* have Increased to each an extent that et 'Woes. the City is ihdebted to the. market on short loon* to the extent of 4300000,000v v4hio4 looms are ordinarily liquidAtod at the tile-taxes are paid in the fall, and, in recent -years, in both the sprint; ant fall, 48 the tax levy is no divided into semi- Milleal payment*. The reovemont of the cotton crop in the foil of the year ordinarily raraiahos pooh a Largo volume of exibango .at that acme= that borrowers havo been able to count with roasarable certainty upoll lower rate, in the fall than in the spring, and advantage has beet taken of that fact not only by the City of Now Ibrk, but by other runl, olpalitiee Which maks stellar loans to borrow large =as or on in the Loolon, maret. On ixeuct rd the City of ;7ew York had so borrowed a total of W1,000000, a mnall portion payable in, .ftrbs, bit thg; groator part in. Ionlion. 930 breeAdoen of international axonargetnvosed upon the Zity of Row or the necessity of otine this largo obliGation hy the export of eold. The City oarriea its a000unts in a large number of institutions, both national amd state, looatod in the City of liew York, 40i, under ordinary oirommotanoeN WoU14 have had no diffipulty The Vow York City . -2- in obtaining cold in large amounts from those institutions. The conditions existing early in Aucust, however, made It impossible for the City's bankers to furnish the amounts of lAld required, and, bad the City been obliged to purchase exchange at the rater recently prevailing, the loss would have Loon enormous. It was therefore determined by the bankers who undertook the volution of this problem to ask all the banks in the City to oontribute to e fixed of gold amounting to about $00,000,000, in proportion to the ariount of their respective gold holdings. The oontracta entered into between the City, the oontri... buting banks, and the gors of the transaction (az. NorE2D & Company, und maan, Loeb 8, Company) provided for the sale of 4100,000,000 of obligations of the City maturing in one, two and three years. The banks which underwrote the iseuee undertook to furnish the !tanagers, if required te do so, eighty per amt. of the amounts of their subs soriptions to the syndicate in gold, having the option, however, of furnishing eter144,0 exohance in place of gold at the rote of 44.90 a pound. The practically unonimout response of the banks of the City to the call made upon than, au well 17z the universal approval of the tronsection indicates that the bankers were oorrect in their belief that a postponevent or default in the pnyment of this indobtadness of the City could not be contemplated, and that the oonsequences would be so serious as to justify the plaice of gold. involved. Wile it is now recognized that the City could have extended a large pert of this indebtednees in London by the offer of an iiize of new notes payable In London in sterling, the City authorities noverthelees felt, no doubt Lam Y,,g4g, CS2ty.: .45011. influenood by the Dreesare of yublio opinion, that It wee to the Olty.a ndvantalge to extInznieh th3 debt at owe, ail woid. the posvibl/ity of lore vt 4 Inter matarity, rather tlwalto udrizoo it position is to tvale the ohnnec o oIng able to uot gal six zoo:the or a year latort The oontrnot co made by the bDnImi of 7Tew York plcoed ona-Mrd of their entire cold holdInce undor contract lOr orrort lowitt to the oxtont that orazinco could not be fuvniebea. fttention ir here czllod to tho f'not that the privilege of fJunichtkr embark.") In plate of Gold porAte Any contributor tlo VAIN to &Nola the love of cold by pnrchteina, (=chance audi tt4reforc, ,3critributore, to thi, rand are, to rovx) mtent, octrotitors in 111,74 Aarot for the purOhuso of eterLing oxohance, PIFTAs 3taterent "third!' largely explains the necessity for providing a fund, of gold b7 he method adopted, and it is the belief of the Cermittee that tho auccess of the plan affordo evidence of the willineness and intention of the banks of the United "tato° to furnieh the means to their eustaIrre for paying foreign indebtedness which the banks of Now York alone, without endangering the situation, were unable to provide. Voluntary contributions were obtained from national and atclts banks In all control reserve and reserve cities (52 in number), those citiem, under the law, being required to hold 2V;7!) and 12?1% cash reserves, respectively, se ngainst 6 in other cite. Contributions of gold to the fund wev'e received from 1,494 different banks, located in ell parts of the Uited 5taton. An &repent in excess of 400,000,000. was promptly Pledged threu#h the co-oporation of the jecrotery of the Treavery and the Pederal eserve liomrd, lending the payment of the first call of 45.000,000., nine Nov 'fork Institutions advtnoed 310,00000. In !7eld for shipment to Ottawa. This enabled the Committee to prorTtly root the urgent demrind for exchanqe, which wro selling at about 4Z4.02N The Committee desires to call tAtontion to the fact that the gold fund was not created for the purpose ofvmskinr a profit, but rather to nmot an emergency and thereby exert an influence In brincing about decline in the rote of exchange. The policy of the Committee hae not been to sell exchaneo freely. This would certainly have resu/ted in the acennulution of exchan4Te by debtors who doe 'trod to Insure the proteotion of future maturing oblilations, and, unfortunatoly, miPht also hGve 44MA 112,12911$4.2911.2NEA, resulted in releasing orebeess to the contributors to the fund provided to maet the obligations of the City of Dew York. it was rnther the policy Of the Commdttoo to use the fund to prevent an undue advance In exchRare rates, but, nevertholoss, to permit rates to follow fa1rl7 nermra fluctuations and thereby induce American oblirers to arraneo for renewals In tho expectation that tho creation of exclAnge following a restoration of export trade would &vold the necessity of exporting any considerable portion Of 00 geld fund. This Comrittee# of which two merlbers are clso m4r1bers of the 0014 'InmAl (emmittes, is conVinced that the polic7 adopted was a wise one, and that the perpoues of the Fold talui hvito alreloly boon inrcely seecoplished. talaving for certtin large pavmonts mule for account Of the tbited 'States lovernmont, for which the Govern:vat reimbursed the q.old ?und Comittee in 4:.7e1d, the totaizonouut of the fund has boon reduced by not over one million l'eunds, and la Jubstan- tally Intact. j liteunderetwading is lible to arise vith rer.Ird to the ultimte profit and loaa ac,ecunt of the aold, ftnd .:.;omtittee, amd we 7. re Wormed that the 4ttItude of the iank of 1;nr1snid later referred to who possibly due to tho 'be lief that la.r.m3 iotts JI CO Ina* to t he' Iola AIM contribut *re* Conaideration of the f011owing will, we trust, rAke clear the Gold Arad .0eordttents poottlons Antjaa, The lecul lizit of tolerance on American geld coin la ono-hulf of one yer cont. ZazTliee .iturulshed by the JuL- muoury kt ;iew Tort will rarely allow abrasion exceeding ono-quarter of one por cent. -i;acles shipped, from WIWern points, herever, 1,,her s eold coins circul:s.to much more 3 10 too uluat f AvoLy. for iibr 4ion lotal of tints on14q. of ti is takon out of t Iaam Yo*, gatt of fx The 4111WitriAlien 4" *Ailed biatiou tzita of atili to i ot roold The Myr* worm* of are In or 441o1 40.0,1 011 vxda ks,Ivivood 'by oartrAn Mae r1:110 w Toxic. br-mka Vksilcorsalutod, 'tz.-4141 tbo ()Kongo or tr:nid%rrlog 0cW-6 40 to/10 tr11.0 fund fm AUFirto of tho oaarity7 Witit PAU out of tho toPtimTiOretor to arrhe Ott tho 000t of incohAjo It la taao nosoascry to natal allomou tor tLwi Intoroot 4aring trlousolva.V4, to'Auld kst)Izep In :Am Yoic, as 11011 eor *RUA" siam Tht o-nd sold to t t tho pt'rioa -41fm t149 03111. U tic) expirpturfoot 140awnt to Atom, old bbtng meellood b Moilitton at its of itot1m4 4-4 its bullion v-1.3no It in tiO oottlopto th41itH3t coat involvoa In tgAztynte Obi* hoar not ,:ro. Won -AV, but a oalto4atiozt nzio Wen ton& 4u; t0 trtx LIMA alli'mrit. with allowiloo of tiatoreet toliowcbor 33the ma It Ls 0)uncl that Wilcox imiais of this okaAno.ttim )00. the oontributore &lout _Low 40, km 46),:-=-4/46 Zoo pgiers4o prioe roaltzoil for ozohiogo alo14 to 4.atotU taigallair 4111111111114 4. S, ionclo 4littcr twidrig 4.4.10-azoo for 4 intoroat ulloted b IOW :nallion woks, proem* titto It La prcibablo that If tbo woou t wuo oloto4 tit Igo oo),1,143 ozotikao .1.0),Inot 'orj:kirt000 row lii Lofton, tho rosult vaul4 be a logo to all tiv inntbributora to tan for*4. 0044-014034 b:7 tx do03140titioniNSION nano' lima) mado, faul borom on.tIxo batatto Ow lirot trul t'Isita to ?Atom. ox,Aatated Als tbo tbm the tuna wt,sti omatod tho Oorntttoe do; trexl the The :A00,0)0,000 Gold Fund - 4 co-operation of the Bank of England on two points only, pending a discussion of other matters of importance which could not be then taken up by cable. t: A better understanding of the basis on which the Bank was purchasing gold shipped to Ottawa: Jecond: An arrangement for advances, without interest, upon advice and guaranty of shipment from New York to Ottawa. AS TO THE PRICE 2.111) Faa AIL,2ICAN GOLD: The value of the of gold in the English sovereign in American currency is .4.66656 One ounce of American gold coin contains fine gold of the value of A8.6046, at the rate of ;;4.06656, ec.,uals ;l8.6046 ... 76sh. which is the value, expressed in sterling, of one ounce of American gold coin. This is the exact price which the Bank of England was paying Zor American Eagles just prior to the outbreak of the war. aeductions were made to a net price of 76sh. 3d. being further deducted for American Eagles shipped to 3d. Ottawa miring the net price for Eagles delivered in Ottawa 76sh. It has been stated to us that the reduction of 3d. was made in order to cover the following items: An allowance for the cost of melting and minting: An allowance for the cost of transferring Eagles from Ottawa to London. As to the first item, inquiry arises as to whether the price which the Bank of England is recuired by law to pay for 1),...rs (77sh. 9d.) does not make allowance for the cost of coining bars into sovereigns, and required to make this that, therefore, a .shipper of Eagles should not be .6611 additional ellawuncse which to a1ros4y covered in ftguring the eluivalent of tte bullion vklus of the (Told ContAnod In AmerictIn lagles Ad to the second item, the question arloos no to vther the ank of.Angland ehould not, if the eltoLmgat turn Wort the cold is shipped to tn the price et which it resells the gold to New York a rebate of the oharge which it has collected for U4e converelan of %ries London, then Into sovereigns. The Ogrie quelAton wtll arise as to 3d. de6ucted from the price allowed for standkrd tars. The Gold .Pool Committee feels tLat tha deduction of 64. on Naclee and 3d, on barn le not ustifisa under the circumstances, but a cletor understAnding of the rernons for the deductions mv. *Lance the jVI CCM Colunitt .A4i to an r,;,rri,rpNtmont for advances without Interest, the renest whiet was me.de or this acconmodLtion at the time 4. t143 first shipment out Of an emergency. &change was soiling above five dollars a Potlad end the committee deslrod to be in s position to amp exchunto at once before the gold stippe could to resolved and we7who4 at Ottawa and Credits confirmed. ne necessity for Accomodation on that socoqnt Is now passed, nth exchnsge spprouching the point where gold exorts 14)come unprofitable tad wit/but a bettor understanding vith the Bnnk of gucland SA to the rute which they will make on Beelon oxportod to or from Ottawt the GAO Pad Comittoe vill find it tspossible to make any considerable shipment of gold at one time without risk Of loss on a portion of suCh Shipments. The Committee destros to be in A plvdttn %hero it m.ty furnish exchwe ao long se it mAy .rofitsbly cover witti erlid, tut not to run tho 2b1,..211.1..._.1.0 (.2911,LiaL....agla risk of o raptd de31tne in the axe/vine,* market. It has boon genera1:7 estirate4, und this Committee believes with resonale noeurveri, that this 7esee Asserimn oottsr cro7:, will somewhat ezeeed 16,000,00U b,,Aco, a7:141 that the world's redviced comsrartien Of eetton will Itv,ipie an unused balance of the ,,,merlean product of about 5,000,000 baloe. At tho conforenne fr A.01112:igtOinip it Wall wrested the maximum credit to finr,nee the notton crop would bo re(13ired tito wheit the alelnum of the crop bad been picked, ,-,nd the minimum mvaiceted, that is to mv,r, about ;:licomter let, Kt which tine It was sue- geeted that a credit of 300,000,000 might os re nixed. tW0 into ''.,000unt ?his does not fciStors in the sitwAion. cl'he method of flummang The owig A oothering of the crops -7ho differeinee in price between this :rear Itat AO to i2ito nethod of rimming the crop, It may be 7eneral1y stated. that IBMs' sdimnoes are male Wore the crop lo The7 are 1r l7 mnde to the farmo-o by merchtinto ana 2IPPPI7 heralsoo :Lnd are increased. as the wort or the crop adenncee, the rtwohstU takine a lien on ti7e iiTowinf, crop and torrominq menry from their barks. By the 'OA, ne vett= is gothe/40 the Lot adwnse Is mtde. The morltetine of the erop throust the gitning znd catrese imposts, and the cotton flueors The ootton Loan oo1. 1 is a prooess of liquidation, and 'Wu) problem confrooting the 3outh at this season to not that of arranging new credits with which to finance the cotton crop as a whole, but rather of proolding a temporary credit to be employed in facilitating the liquidation of that portion of the °row, which can be marketed, by enabling banks to extend or renew the loons that have oireado. been made, and thereby aosist in financing the surplus which oay net be promptly marreted. his may be described as a orocess of clearing or eifting loafts rather than as a prooess of croating n credits. As to The second point, namely, the price, it io,Of course, ideot thot with cotton selling at six cents, those banks which loan on cotton could carry two bales th:s year aBsinst one bolo, at tweive oeots, loot year.. In order to facilitate the oroceoq of liquidation, which conLenrilates that 10,000,000 bales will be sold and 5,000,000 b les will be carried, c credit iu in course of beim,- arranood, amounting to -O,000,000, to be handled bo the following plan 100,000,000 of the Wvance is to be secured by a first lien unon cotton pledged at not exceeding six cents a'poond, middling oracle. 3.t:,000,000 is to be oeoured by a second liken on the pledoed cotton, this °ortion of the loan o be provided by the haaks of the cotton ?Towing states, to whom, or through whom, the loans will be =Ade. A fund mounting to three oer cent. of the amount of the loons olo4ie is to be set aside to covor ho imoenses of managing the transaction, snd to nay any /oesos ineurred. ad is to be administered under the directior of a Oommittoe car lstingof oembers of t e federal eserve Bard, the business, however, to be condacted bo an overating cemoittes, and , uruier its Qottor Loan Pool. management, by local committees, the machinery of which has already been devised. This Committee believes that the cotton loan fund will be inadequate for the appointment to restore normal conditions in the market for raw cotton, or in the cotton manufacturing industry, unless it is supplemented by energetic measures to bring about better facitities, both in the United States and abroad, for marketing, financing, and manufacturing cotton. Last year, sales of cotton to Europe furnished this country with 4534,000,000. of exchange. Anything which retards the free purchase or the free sale of cotton, or the restoration of stable prices for raw cotton, will also retard the restoration of normal conditions in the international exchanges, and work injury both in England and in the United States. In the opinion of this Committee, it seems desirable that the following measures be adopted: First:. That the fund of 4135,000,000 be completed and its administration undertaken at once. Second: That the New York and Liverpool cotton exchanges should be opened. Plans for opening the New York Cotton Exchange have reached a point where it may be reasonably expected that the exchange can open at an early date provided necessary cooperation is afforded by the Liverpool Cotton Exchange and by the English banks-. A fund has been pledged which will enable the members of the New York Cotton Exchange. who Are committed for the purchase of cotton at high prices, to margin their contracts down to 74 cents. 7h Cotton set* this relief, confidence is expressed that the:, nay safely open %he VIWAnfT ilith a reasonable expecta;ion *f beinG able to rset %he mete% co'd1to ne which will arise. 4c..operaIlor by the Liverpool Cotton Rs:change On similar lines is nec- essary before it will be feasible to open %he new York cotton Twohollyt. SEM It le also efeential thrkt no qutiofl as to coalrebnmd be permitted-to arise tr reTjard export cotton. The -:om.,littee notes with great oAtiefset1031 that the British lovernmen% already reoftrised thie situation. Any restraint which rjac have bees Imposed upon Tnglish merchants or spinnere in the parchase of cotton should be- reroved. Referenee hap been *sae to eons at;resment or landerstain which %,41 had beeo advised exists it ni1t tr this respect. It is not unaerstemA MAA the British Govertrfult am broupht about any sneh understandinr, nor. in is it nwierctood %as% nelish purchasers of cotton hove any 4.finitf= agrewsert amonF thfrotIves in this versr.J. Advises have riche this country, Weyer, to the effect that germ of tbe bamtv have exerted a trono Influence in restraining the free p'rt o otton by 1b1=1ish cot4n -erehaats and srisrs, an4 it 1v hoped thn% the 'e tzttar, LG.= 1op 'ash IMAM! nay be induced to encourmge ths purcilace o7 cotton. Iithin rer*sonebl linite net the aelai mealls of financtng. purchasee of cotton by Ileg1is4 laere4Ante and spinners should be reopened throurh adITInoca acainet cotton bills throw* the disooant swirkst The first installment it to Le oald for the capital stook of the ?edema Bosom° Bank OD November Itni. The ?Ian announced provides for the tranefer of reserve deposits to those banks, commencinr with If the otration is sucoessfUlly conollied, the November 16th. ,Ideral Reserve 13 of Now York, wi hin a period of six months (and poesibly ot the and of three months) will have rocolved p4,7ment for over t10,000,000 capital stock in gold, and will have reoeived on deposit at loamt 1100,000,000 of the reservet of tho National Banks of New York 3tate, aud possibly much more. The federal Reserve Act provides that notexceeding 59; Of the initial reeerve deposits may be made out or tAe prooeods of comercial per Walsh the banks may allow the ember banks to rediscomt. It is therefore impossible, at thin time, to foremast the conlition of the Poderal Reserve Liank of Faw York resulting from the initial transactions, 'i.e the amounts of disoonnte slimed to the vstiber Lanka will domed, Upon the rte of digtOolInt established bZ, the banks Upon the rate of taterest prevailinc in the City of row York. (Z) 3olgeghat upon the extent to whiCh the rag york City Banks are required to make mmento for aamnit of their correspondents boated In ?ederal iteoorvo Districto aL,L. Pederal FMTO gank (4) Tbe extent to whioh they ma7 depOsit 0/16 of their reerven, tho aopoolt or-whichts optional*, jib Moral aeserve Bank* of the United $taten aro In the ourso of establitariont. Jails for payment on the oupital stook have already boon =do. Tho ability of this bank to farnish re/d in a =,tter ror future aonntaaration, an4 mould not, at thie tine, be node the 'ualtio or any traneaotion or oropenni* 21GETI1'. CICTIT OF fap,000,000 famarc. Your Commdttee has been inforned that about a month aeo, when the visit of Slr George Petah ard. Bail p. Bladrett, :wee was first prpposed, one of the subjects to be corsiderrd et the oonferences would be a pomeible credit which would, in effect, afford means for extension of the obligations due in Nnglend by bearers &rd mer- chants in the United states. If it he been possible to arrenge such oredit by exchange of oableo at that tine, your Committee would have epproved of the transaction. It would how supplied exchante at a moment when the derand was urgent; mrd it would heve ineured us eanst avy serious dralt on gold reserves for the time beine, and given this country a period for reafjustmort during which local conditions could ht.ve been brought to meet the extraordinary eituetion. Since the date when the suggestion of a credit was eade, exchange in large teiartitiee ilLa been supplied to the market, end confidence has been greatly restored by the knowledge that the New York City Liyudieete and the Gold Pool Committees' operations have been effective. From information WhiCh your Coacdttee has gathered, it is strongly of the opinion that a continually incrousieg supply of excherge is in proepeot. The export of food products and raw and manufactured materiels that Euxore neede in the present oriels (not to mention nitions of war) must continue; mills end menufacturing Credit of 1120,000,000 Sterlinj. -2e ooppanies are working overtime on orders for goods which, in mepy oases, will not he ready for shipment fOr some menthe, 4nd which Will rake a corresponding supply of exchenge. The opening of the New York and Livereool Cotton oheneo, eincident with the owe- pletion of the Cotton Loan Pool, if a000mpenied by assurances to the merchants und spinners of 1i:belie:Id of the willinenese of the Anglia/1 banking oommunity to finuece reaeonabie purohasee of cotton from the United Stetes will Ellen udd to the supply of exchange. For this, and other reason that it is5 not neceesary to elaborate here, your Cormittee is oonvieced that the adoption and employment of apy extreordiPary or unueuel measures ut thio time are unnecessarv, es such /setter might, in fact, be interpreted as an expreeeion of the belief of this Conmittee that the present eituation required such meagures, end beoense unusual measures are likely to brine about unexpeeted and possibly uneeftired results. It will bo noted that the foregoing reluteu entirely to the conmerciel situation. No account has been taker of the possible opening of the Yew' York Stook exchange, god the additional demende that might arise if any considerable amount of 'awash owned Amerioan securities were resold in this ocuntny. Your Covnittee is firmly of the opinion that it is premature to discuss the opening of the New York Stock 7xollange until the adjustment of the coumeroial oituation has been demonstrated.. In the meantime, however, and, with u view to this step, it is reooemerded that a Committee from the New York should. visit London for Stock Bxehange be appointed, which Committee oonference with a like Coanittee from the London Stock *change, and Credit of fi20,000,000 Sterl -3- for a careful study of the situation there. A tentative arrangement for a large sterling credit, predicated on the understanding that Its repayment will not be made in gold, but in oommodities and manufbetared goods, would mrke it possible to consider the opening of the $tock Asehange sooner than it would otherwise be stfe to do, should other conditions permdt. As this step iF rocotmizsd to be a desirable one from the point of view of both countries, a presort discussion of the form of such a credit and a tentative Agreement as to its terms, at this time, would be beneficial. A memorandum 'supplemental hereto, outlining t plan ditcussod with Sir George Paish and Basil P. 31kwkett, nati., is attached. Oomditioned upon the understanding suggootod in memorandum "Eighth", and it a view to assistance in meting conditions *hid% soy ariae thro1i$1ox00 sive sales of Arairioan soeurities bold in Europe, the following hus boon tentatively discummed with Sir George Paish pad 3asi1 P. Illnahott* Esq. Th. at & rovolotag sterling soodit of, Way, 420,000,000. sh&U be crantod by or through the Fienk of igland, or other tiritish beakers, on the following plrets The orodit to be twollobt, s a supplement to and only after the U00,000.000 Gold Fund has been shipped, ta order to avoid farther gold shipment. Dimfts at 90 days* with one agreed real, on an aemptor# or aseoptorei to be defile:USW by the irrentorlis Drafte to be forwarded direat to Fag laid for disoomitt under (2) en agreed a:mon/cat, aawd denial or cables to be mild &Animist thou Drafts to be dn b the Gold Fund Committee., or a new %tee reprozonting guarantors* consisting of Umks, trust companies and 'banking firms in the United States acceptable to granter, Prooseds of sales oX: exehomes to be loaned upon seouritf of arproved bonds and *teas as collateral* with the obligations of borrowers, who are setisfestory to the ensrentors, to min,. tuts a margin of not loos than twlgt7 pr cont. (20'14 of the fees Tau' of the )oon. a. .....12,sroleraopt) (6) V Drafts to be drgwn /nly as required to supply exchancp to ta'al the plaoe of gold remittances. (1) Drafts to be covered at maturity in the Ilsual 0%7 if exohnnb, can be purchnse4 at or below the cost of ex?orting cold. (0) If exchance cannot be Durchaled 70, and parant of the bins "'Mad require the ex,ort of cold, further 90 day renewals to be orrmted provided that, in Vte opinion of he Peaeral licserve 30La1tL, a further loss of gold would be :7) detrt motel to our financial nitration. The grantors of the credit to he entitled, after the first renewal, to require pavraent, in whole or In pszt, in ram yarx exchange. rinel dollar balances hammer, to be used only the purchase of Ppierican prodnots. l'ArTnit 11,Aate. 70 Tr ' ' CITY. It suet be borne in w5n4 that there le no oertetnty los to the amount of gold whichwill be Feld, into the Yederel Aeserve Unk et the comeeMOMP0Set of ite operatics. The, capital payment, which most be not within e period of fromnimety dap to mix seethe, ie gold, total about $10,000,000. The payment of reserve*, tegrogating #100,000,000, be medo in rbited eteites notes rind 'diver cortifloctes. While It le hoped that the beide Se the WV Yerk Distriot will mks Womble portion *fiber MOM* ra711111ts in Fold, it is nevertheless quite possible thst u Urge proportion will be Aude in legal tender .. Jotes, and the ability of the Pederal Peeorve Bent to 4,ecenelute cold freeiether sources them the Vetted Stetee Treseur7 will therefore demnd Apont 44 The degree of confidence which the bank on*** Crsin Ito .;13ember bulka, whit*. nap tele. the principal. itad rescreens (1) chance in the rresent currency less, reedatesting the variouv forms of geld oertilloeto0 &nd level tender metes so ao to force the withdrawal of small derosdrottens gold oertiflostes Prop circulation. ofA trEnstctios involving the present pledve of the credit of th 1sdsm1Amearve Bonk to furnieb geld would be jaxtirted wertil the Federal Resorve Berk (Supplemental Nemo) -2- bank has beer In operation t sufficient length of tine to demonstrate It ability to Accumulate sufficient eo10 reserve to juetify such a transaction. Leeeeeele ekeeeeee 4. e fl,eevernee, Honorable Paul le. Warbueee Federal Reserve Board, Washington, D. C. Gentlemen: On Priday, October 23rd, at a conferenee called by the 3ecretery of the Treasury, et which were present the Secretery of the Treasury, the nembers of the Federal Reserve Board, the Comp- troller of the Currency, 3ir George Paieh, Basil P. Blackett, .esq., and a cannittee of bankers, the undereiened were appointee a committee to prepare a report and memoranda covering various subjects die- cussed at the conference. After careful consideration, your committee submits herewith its report in the form of a proposed letter to lir George ?sash and Basil P. Blackett, esq., representine the Chancellor of the Iritish Fa-chequer. Attached to this letter are the various memoranda mentioned, all of Which are submitted for your information end as the best Judemertt of the eoemittee an the subjects discussed, as enumerated in the proposed letter. The plan forming supplement to memorandum "Sighthe herewith, we believe briefly expresses what vas discussed at our last conference in Washington, which was attended by nir Georg* Paish and Mi. Blackett. It embodies the beet judgment of the members of the sub-committee, but has been prepared without conference with Yew York bankers, 'hose oo-operation and approval are essential to the success of any such Hon.0.3./larain. undertaking. -2 Eov.4,1' The members of the committee therefore respectfully suggest that it would be harmful to the BUO0888 of the plan were it to become public before those who would be interested in New York (and ariaally those in London) have been given opportunity to consider it. We await a further expression Of your views in this regard before taking:,.ny stens to ascertain the attitude of the bankers of New York. Respectfully yours, (s?4,) 49'. for the Committee. Ncmimber 4, 1914. Honorable jharles S. Hamlin, Governor Henorable ;41. Warburg, Fee4ere1 Heeerve Beard, Waohington, Geetlevens- Un nsiday, October Mrd, at a conference called by The eicrotary of the 4:reasury, at whieh were present the leeretury of the Treasury, the members of the Modena Aererve lioard, the Cop- troller of the Jurrency, 3ir George ?sash, Beet' P. Blackett, Si., ane.a oommittee of bankers, the undersigned were appointed 4 corrattoo to prepare a report unit memoranda coverine the various eubjeets dis- cussed at the cenference. After careful oonsideration, your oommitteo submits herewith its report in the form of a propoeed- letter to 3ir Goon+) faish and Basil Blackett, 3eq., representing the h11 or of the Britieb 3xchequer. Attached to thie letter aro the various mort4.114a mentioned, all of Whieh are Submitted for yonr information anti. as the best judge moot or tb oommitt ) on the subjects discussed, a* mum Aed In the proposed letter. The plan forming supplement to Iremoraodum "nighth" herewith, we believe briefly expresses what was dist:weed at our lart conference inehington, *doh was attended by Sir George ?Mph and ',- )..111ackett. It embodiee the best judgment of the members of the subecommittse, but has been preparcw without eonference with Aew York bunMwrs, whose oo-operation and eppro '1 c e oseenttal to the suceess of any suCh -2- Hon. C. S. Hamlin. Nov.4, 1914. undertaking. The members of the comiittee therefore respectfully sugost that it wou31 be harmful to the suocess of the plan were it to become public before those who would be interested in New York (11.41 equally theme in London) have been even opportunity to oonsider it. o await a further expression of your views in the recArd before takinc any steps to asoertain the attitude or the bankers of Sew York. i spectfully yours, (Sgd..) Benj. :Aronc, Jr. for the Committee. November 2, 1914. .ir George Paish, Basil ?. Blackett, nepreoentatives of the Chnncellor of the British fteheener aooredited to the Honorable the 3ecrotary of the Treasury of the United nate'. Centlement- it a conference in ',n1shington, oonvoree by the Honorable William G. Y4a400, 3eeretary of the Troneury of the United Antes, whioh vms attended by the members of the Federal lesenve Board of the United :Antes, and representatives of banking interests of this country, the undersigned were appointee a Committee, representiav the banking interests, to confer with you in order that, after exchanging views as to financial conditions in .':zIglani an0 the United States o'ecipitated by the war in Vrope, they could submit to you memoranda outlining the conditions dismissed, and possibly consleor and submit to you, for transmission to :nleand, such proposals as, in our judgment, mould be to the mutual advantage of tho business interests of both countries. Lased upon the interohwe of views at the reoent conferenoe, 3 upon feats that have develened in recent conferences In New 'fork and elsewhere, and upon or general knewledge of the local situation, combined with information In our possession regarding the situation in I:lug/an:0, we submit the following explanatory memorenda. Because of the inherent economic differenoos between '4ngland's position an0 that or the United nate*, and the differences between banking systems and banking methods In your country v.n0 ours, tbls memorandum Is neoessarily elaborate, but it, will, we trust, afford you 4 full comprehension of the situation. L George Paish FIg4Ts -2A statement of the position of the Vow York banks on August 1st, and thereafter, of the rousons why it wan dowse(' desirable for the Winks to issue Clearing NOM oertificates, and to apply for :=Lldrich-Vreoland ourroncy; including a statement, as of Ragnet let, of the members of the Cloaring Houso Association. A statemont of gold shipments mado Astor to the month of August in payment of obligations, estim).to of the proluble additional indebtedness or American morehants, banks, and corporations to Atrope on or about lopternber 12th Lot, and a statement of the oountry's export balances for =gust, September, and October (estimatod) 1914. Iglaas statement explaining the reasons why the settlement of International balances necessarily fal/e upon tho bunks of New York City unti not of the country at largo, and uhy a weakening of the New York City- banks, through depletion of gold roserves, Is serious, and is reflootea at once in lack of confidenee and curtailment .of ore it throughout the country.. ) A statosont respeoting the syndicate formed to guarantee the papcient of about ' 00,000,000. of gold to meet te debt of Nef York City, due in London (and Pule) up to 4anuary 1, 1915. lam= L statomont of the necessity for and the creation of the so-oalle( "Gold ?undo" the difficulties undor which it wan oompleted, Its method of operation, the expenses thereof, ane the risk of loss incurred by the partio5pants; inoidentally, ..)eoreeal sh a memorendoot pith remord to the pries paid by the Bank of 7fte1and, for American eagles delivered at Ottawa, and certain questions on ehioh the ',Gold TPund Oon-ittee' deeiree information, ligwing to do with the price alleeed by the Bank of lngleed. for mid delivered -La Otteea. Atetement of the objects end the terms and conditions of the so-called "Cottle. Leen Pool" of $135,00,000, and of the method. by which the cot 'on crop and ite molOnOnt to market is finanoed, with certain gumeetlinos A etetement in rempeet of the 1,edera/ Alserve enne of gew Terk now in lourse of organleation, and its bearing an the nnttor under aiseueeion. A statement to reepeot of a poseible Irodit of U0,000,000, the Committoeos opinion in reeard thereto, and a ougoeeted plan etich mieht to adopted at a Later date. Teem, statements are P bmitted for coneideration and discessiz and are put forward for the information of the oonferene0 as An =prossion of the belief and opinion of the Oommittee. At th0 general eonference between the Honorable the 5e0rtAary of the Treasury, and the ?edersi Reeerve Bonrd, add the Pull CommitIlm representing the benkere of the United States, at which thi Oommittee .s appointed, with the information then at need, it was expected that his Oonitittee, after oonference with you, and a 3areful eanvase of the financial eituations in Ragland and in the United 7,tetes5 would here 90006 speolfic proposels to eubmit for the eonsideration of the Yeiglieh Government, or or tee fineeeini interests in Rnerlanda -1th the Am York City Gold 4yndioate and the Gold Fund Goolatt -4- U-r GeorePLALA funds aggrogat tag .190,000,000 (only t*trysail amount of which haa as yet been availed. of), and with tho comolet lOn of the tIotton ?ool Loan Syndioate, ail in this country, and with the ek,00ted oarly nom 1UE ion of arranoomento to reopen the New Tort Cotton ftehange, with tall protection to its membore as to WO. etir.,i 2ontraotv, trd with the arrarr,,,.:.nts ,atle by the 7i-'1"217/ith Government to discount pre -moratorium aueeptanooe of lish banks and accepting housev, find to postpone pre-moratorium liabili- ties to post-moratorium business, and the resultant facilities offered for nee acoeptance usiis In raondon, this Corotttee ia Of the opinion that the on1;4 additional step neoessary at the prellorst time to odjust the Internist tonal =more ial taunt Ire lad enable bankers, corpor iOne, krxt businoss time of the Unitod Ittritev to meet oblioatlone as they nature at normal retro of oschstrim, Is an understending that the free purohase Of !porton/I oolvon by Znelish tpinners and merohantr hall be enaouragea by the bank.,erv and ovornmont authoritiee of Meland, and that arrengotszte should be zi rotoptl.y made to open the taeuel chtuntels for advances tvainst -e,stton or for the dismount of cotton s000ptanso The Cotton 1,0ati :Roo 1 is estimated to provide fogad* to enable the banks and morohanto of the -7outh to carry over four million bales of 'otten until rebraa,z7 le 1916. '11. best expert opinions estimate tho excess over the oonsumption at not over five million bales. Thin alleriittee in of the opinion that VA3 !Import low 7,1rioe, being considors.bly under the cost of production, will torsi to induce cotton r.V1 rchsnts and spinners of itnerion and Europe to buy somewhat in wcen of their needs, ana that this indutsoment rill result in the absorption of oone (1.orably more cotton than the amount generally ont Imatod. aorparato statohient has teen .rtkda in record Co the international Arr cAeorgo =salsa - 5-. socurity markets, or to the openinc of the 5ew York or London Stook iiktohAnges The measures above enumerated we believe z:re adequnto and will eventually oorroot the international commeroial situation, but would be entirely inadequate should any oonsiderablo volume of socurItios be thrown upon thls market on the opening of the Few York Stook ,cohance. Jnti1, thorofore, the commercial situation has boon adjustAi, the oxohatges have turner in our favor, any discussion an boarinc on the opening of the New York ';Aock liohange to a free and unrestricted market for Amerioan soourittos cwnod abroad would be premature. lespeotfully yonre, (gd.) James Brown, Benj.. ftrong, H. Wiggins 7117.,. lk,,,; 02'7- 2 tic At confersnco of 2,woct York bo2kore held innediii .ri r to the declaration of vsr ui %ngland, Opinions vire unnaimous that the banking position la this country would rhortly develop Ao y. lines similar to those ex!-,erionoid in the fall or 1907. Up to the tire or thece g'ig:1711g: rid,t° ga Ann ittgrihkirtelo0a4ob oontrlion of cre4it rosuiting from this l*rgo leer or gold reserves, v.,. rarther aad 1A^ger controw,ion would bo imposed upon the Nev York bunks by mison of the vithdrnma of funds by Winks throughout the country who mitiht bo inspired throu6h foor to strentfthen their pomition by Inoreheing their ronerver. In 1907, uftor the crisis of 010 :,ational &Inks to panic bad pvJescd (an Deoember !.nd), the reports of the the Gurreney lodio,4toci th.,t even 4t that time, country the jorptroller of banks, as diwincuished from the neserve oity and C!entrvil Reserve tty bAni,s, still held OX10088 ch reserves of 01116,000,00; and it mast be borne in mind that this loqvge out of coasiderstion the nommuleelou of reserves loubtless node by 6bout 10,000 tits balks, 4s to whisb floras h&ve not been compiled. ill Orqer to meet the XIV York ae ring strola Imposed by this prob. ble dovqlopment, eertlfio:Aqa Ioare ssooittion decided to tome 01erlug 170uso on of oievtn b91Aness betresl.n oembtme, ,nd the tbs for to ewtlement of issuing 1drich'e,serotary of 141 7reAsAry annonnood his intention The i'ostIU11.2.LINLEI-Ie Bailkeg -2Vreeland notes, aft authorized by existing law. These meanures afforded protootion to the Banks of the City of Xew raft., both National. and. itete, emei enabled them to retain about U40,000,000. eold reserves which they held at that time. Of these gold reserves, :',.60,000,000 was shortly ploq, e for the payment of the debt of the Oity of 'flew 'fork, and, of that amount, about 160,000,000 le atill to bo Parniehed, leer seoh amount an is furnlebed in esohange. Of about 20,000,000 a1reat4 paid, n5,000,000 ha e been by shipment of gold an4 5,000,000 by purchaee of exchange. Of the ::j00,000,000 contribeted.. to the gold pool, $46,00e,000 was ple6epd by the banks of New York City, of *Moll 01,250,000 has nor been walled. U4.250,000 hal therefore boon taken to date, leaving,: *93,750,000 still to be furnished at of the present Now York City bank reserves. At the preeent time the ;Ilearing ROU10 banks show a email excene eaeh reserve. When thee oblisations -mare entered. Into, the Now Trk Welke Iwo from 45,000,000 to ' 740,000,000 under their legal reserve. When the Pederal Reserve Bank of New York is orbeniee01, it is entlieeted that a total of about 026,000,000 will be withernem 'from New York .Ity National Banks to make capital and reeerve payments both for their own accounts ana for thnee of ttedr eat-of-town correspondents. Simultaneously, the reserve requirements will be redueed from 2.S% to 1, and it It ettlmatee that, after makine these payments of 12ag000,000, the reduction of reserve reeeirenewee will leave OXOOSS renervee in the vault f the Nationea Banks of now 'or"It' Aty augreeating The iesit7e f the New Tort ebout 440,000,000. If this eiculation is correct, we muet :ler the result of the completion Of the throe operttione referred to, . aimely, the withdrawal of the entire amount of goad which mey be called for on accommt of the City of New York and the Gold Puede and the paymente and reserve redeetions resulting from the areanization of the Irederal Reeerve Bank. The total payments to be made, agpTeeating about 493,750,000, will be partially offset by the 460,000,000. enined In reserves, due to reduction of rosorve requiromonts, loavinF the ;40g York inetitutions possibly 435,000,000. to 40,000,000. below the required legal renerve. The amount of deficiency In reuerve mey, by the term of the ?ederal Roaorve 4,ot, be rurthor offset If member banks are elloced and avail of the privilege of rediacennting commercial paper, tit the time of opening of the PederaiReserve Bank. Statement of the Members of the New York Clearing House Association From Reports as required under Article III of the Constitution. For Week ending Saturday. August 1, 1914. JOS. '"CAPITAL MEMBERS. $2,000,000 2,050,000 2,000,000 6,000,000 1,500.000 Bank of New York N. B. A Bank of the Manhattan Co 3 Merchants' National Bank 4 Mech. & Metals Nat. Bank i 2 6 Bank of America 8 National City Bank 12 Chemical National Bank 13 Merchants' Exch. Nat. Bank 15 Nat. Butchers & Drovers Bk 17 Greenwich Bank 21 American Exch. Nat. Bank 23 National Bank of Commerce 28 Average. $22,317,000 36,130,000 20,489,000 80,745,000 26,538,000 LEGAL TENDERS SPECIE Average. Average On Depont with C1.11114...., Member,/ carrying .% ca.th Re.e,rve LEGAL NET DEPOSITS Average $20,668,000 41,900,000 21,158,000 85,528,000 26,499,000 11,218,000 1,541,000 1,457,000 5,882,000 1,749,000 $4,224.000 9,482,000 4,254,000 15,416,000 5,052,000 $772,o0o 1,888,00o 4,930,000 300,000 500,000 42 089,000 4,357,000 2,115,000 516,000 2,520,000 13,252,000 2,218,000 205,000 57,000 205,000 196,234,000 24,790,000 8,858,000 2,171,000 10,822,000 5,000,000 25,000,000 500,000 2,250,000 200,000 4,693,300 16,690,600 1,009,800 1,357,900 435,800 47,846,000 140,272,000 4,871,000 21,247,000 1,967,000 10,217,000 21,903,000 728,000 3,696,000 409,000 1,552,000 6,231,000 840,000 1,579,000 148,000 47,890,000 117,971,000 4,927,000 21,852,000 2,313,000 3,883,000 7,912,000 28 1,173,000 3c 31 2,582,000 611,000 984,000 312,000 3,269,000 88,412,000 21,819,000 9,257,000 11,595,000 75,814,000 1,500,000 5,000,000 250,000 1,000,000 10,000,000 7,676,000 14,344,700 65,200 2,870,500 23,177,700 26,591,000 90,034,000 1,561,000 13,867,000 115 527,000 3,759,000 19,503,000 452.000 3,102 000 25,158,000 2,387,000 2,572,000 107,000 123,000 2,159,000 24,077,000 91,241,000 1,766,000 12,625,000 106,457,000 50,000 3,497,000 49,000 669,000 4,936,000 53 54 55 63 65 4,000,000 250,000 500,000 750,000 5,000,000 3,468,600 789,000 1,916,800 706,200 9,645,700 45,247,000 3,163,000 8,667,000 4 215,000 102,020,000 9,082,000 786,000 1,536,000 979,000 23,462,000 3,063,000 71,000 768,000 212,000 5,460.000 48,208,000 3,403,000 9,127,000 4,180,000 115,201,000 1,579,000 6; 33 3f 42 44 45 7c 197,000 446,000 71 72 74 1,000,000 1,789,800 1,290,100 12,928,000 3,219 000 4,901,000 15,027,000 9,293,000 2,610,000 309,000 1,137,000 2,963,000 2,332,000 I 062,000 367,000 253,000 1,169,000 142,000 14,425,000 3,481,000 5,582,000 15,522,000 9,586,000 250,000 1,000,000 200,000 1,000,000 1,000,000 505,000 2,089,900 759,700 2,598,500 2,844,800 3,998,000 12,968,000 3,761,000 25,099,000 24.400,000 779,000 2,120,000 706,000 5,950,000 5,218,000 244,000 926,000 520,000 1,752,000 1,433,000 4,241,000 12,784,000 4,752,000 29,267,000 26,680,000 2,271,000 5,891,000 1,88o,000 1,083,000 2,145,000 1,430,000 666, 000 309,000 1,276,000 618,00o 350,000 180,00o 10,795,000 24,115,000 12,753,000 6,987,000 10,125,000 6,720,00o 2,193,000 14,824,000 3,432,000 2,097,000 2,618,00o 939,000 375,000 785,000 io8,000 490,000 2,696,000 11,028,000 7,156,000 1,576,000 2,322,000 20,788,000 102,559,000 28,179,000 15,590,000 20,843,000 102 103 104 105 4140,000 17,988,000 981,000 1,388,000 4,448,000 2,251,000 141,517,000 5,900,000 107 3,338,000 1,042,000 1,016,000 2,223,000 1,642,000 29,554,000 7,541,000 8,669,000 20,436,000 13,940,000 100,000 200,000 200.000 2,091,600 803,800 f , 000, 000 1.000, 3::> 1,000,000 928,300 9,317,000 :1,500,000 $ 75o, 7o0 19, 134,000 1,000,000 1,000,000 1,000,000 1,000,000 345,500 6o4,800 10,832,000 6,981,000 10,017,000 7,927,000 i,008,000 1,121,700 ....... .... 18,729,000 842.000 1,218,000 1,839,000 613,000 280,000 376,000 3,000,000 1,000,000 1 000 000 2,000,000 1,500,000 11,545,300 1,165,500 555,700 5,892,600 848,500 45,951,000 10,708,000 9,901,000 29,899,000 14,129,000 3,946.000 997,000 1,049,000 2,746,000 1,384,000 527,coo 129,000 223,00o 250,000 692,000 Totals, National Banks " State Banks Trust Companies " 112,600,000 16,450,000 46,250,000 173,907,700 32,382,600 90,640,500 1,425, 700,000 299,965,000 74,081,000 630,490,000 63,415,000 6,973,000 61.095,000 1181,243,00o Totals, all members 175,300,000 296,930,800 2,056,190,000 363,380,000 81,054,000 61,095,000 1,935,821,000 Decrease Decrease ,, 17 State, June 30, 1914 15 Trust Co's, June 30,1914. As of July IS, 1914. 36, 838, 000 21,422,000 33,045,000 2,286,000 Banks : Cash Reserve in Vault, $374,046,000 4. Trust Co's : " 70,388,000 46, 000 5,5oi,000 Decrease 21,692,000 (i5.4) $444,434,000 Decrease Excess, Po, 4.0 Deficit, 72,186,450 $435,830,950 7 877,000 343,000 Sc 61 245,000 82 83 84 85 91 346,000 495,000 92 9( 394,000 394,000 267,000 'of io8 113 III 114 115 ii6 117 115 41,578,000 41,578,000 Decrease 163,000 Decrease, $13,430,250 Decrease, 1,798,450 Excess, $ 8,603,050 3,094,550 Decrease, $16,524,800 Decrease, $3,677,000 Actual figures this morning Totals, Nat. and State Banks " Trust Companies ... 1,423,407,000 635,348,000 272,752,000 60,137,000 71,646,000 7,045 000 1,422,749,000 488,790,000 41,737,000 56,547,000 Totals, all members 2,058,755,000 332,889,000 ,78,691,000 56,547,000 1,911,539,000 41,737,000 Increase 1,182,000 Banks : Cash Reserve in Vault, $344,398,000 67,182,000 53,065,000 f11 (I5) 73,318,500 $429,005,750 Trust Companies' Reserves with Clearing House Members, $56,547,000 July 25, 1914, August I, 1914, 3,234,000 Cash Reserve Required, (25'1() $355,687,250 $41i,58o,00o Clearings for Week ending August 1, 1914, Decrease Decrease $1,838,183,016.11 1,588,913,808 47 296,815,972.90 Decrease Decrease 46,776,000 10, 692, 000 Deficit, $ L1,289,250 Deficit, Deficit, $17,425,750 Increase 3,000 Decrease, $35,004,250 8,595,250 Decrease, 6,136,500 Decrease, $43,599,500 Decrease, $10,692,000 Balances for Week ending August July 25, I! " Balances this Day August ioc iiE 'IC 21,394,000 , 500 97 95 38,688,000 15,156,000 Decrease 3,677,000 76 77 ,. 1 ,883,000 1,454,578,000 451,000 Cash Reserve Required, (25.4) $363,644,500 Trust Companies' Reserves with Clearing House Members, $610395,000 21 23 13 15 17 21,082,000 5,111,000 1,498,000 2,603,000 15,850,00o 187,702,000 7,534,000 15,877,000 48,628,000 16,360,000 Clearings this Day 8 12 77,634,000 22,339,000 9,221,000 11,717,000 63,823,000 21,222,100 1,307,900 5,388,900 7,348,300 1,566,800 " 6 15,054,800 2,371,200 1,948,100 1,779,400 6,916,000 10,000,000 1,000,000 4,000,000 2,000,000 1,000,000 Aggregate 1 2 3 4 3,000,000 2,550,000 1,000,000 2,000,000 3,500,000 26,451,000 126,045,000 Trust Co's: NOS. 50,000 1,531,000 56,00o 3,706,700 13,065,500 4,211,400 1,201,300 11,614,000 Aggregate Average 198,630,000 28,644,000 8,954,000 1,973,000 9,649,000 1,500,000 10,000,000 2,000,000 1,250,000 5,000,000 As per official reports 29 National tune .o, 1914 CIRCULATION 32,916,900 7,755,000 761,800 111,100 1,070,100 / ,000, 000 Pacific Bank $4,346,800 4,719,900 2,097,700 8,874,600 6,186,60o LOANS AND DISCOUNTS 3,679,000 397,000 475,000 48,000 25,000,000 3,000,000 30 Chatham & Phenix Nat'l Bk 31 People's Bank 33 Hanover National Bank 36 Citizen's Central Nat. Bank 42 Market & Fulton Nat. Bank 44 Metropolitan Bank 45 Corn Exchange Bank 53 Importers & Traders' Nat. Bk 54 National Park Bank 59 East River National Bank 63 Second National Bank 65 First National Bank 67 Irving National Bank 70 Bowery Bank 71 N. Y. County Nat. Bank 72 German-American Bank 74 Chase National Bank 76 Fifth Avenue Bank 77 German Exchange Bank 78 Germania Bank 80 Lincoln National Bank 81 Garfield National Bank 82 Fifth National Bank 83 Bank of the Metropolis 84 West Side Bank 85 Seaboard National Bank 91 Liberty National Bank 92 N. Y. Produce Exch. Bank 96 State Bank 97 Security Bank 99 Coal and Iron Nat'l Bank 100 Union Exch. National Bank 118 Nassau Nat'l Bk., Brooklyn 102 Brooklyn Trust Co 103 Bankers Trust Co 104 U. S. Mortgage & Trust Co los Astor Trust Co io6 Title Guarantee & Trust Co 107 Guaranty Trust Co 108 Fidelity Trust Co 110 Lawyers Title Ins. & T. Co II i Columbia Trust Co 113 Peoples Trust Co 114 New York Trust Co 115 Franklin Trust Co 116 Lincoln Trust Co 117 Metropolitan Trust Co 119 Broadway Trust Co ____ *NET PROFITS $109,601,810.65 95,095,253.82 23,383,391.37 OLLOIPMFAV,i FRIWITO AUGUin 3rd. An exact statement of the shipments of gold daring the first Wen months of 1914, and of its destination, would require consider.. able investigation, whieh time does not prat. In general, it may be said that in tbet period the banks of the City of New York exported, in meek figures, 4130,0i.14000. of gold, leately in Eagles, the principel mneent berieg beat teken by the Bank of France, end, indirectly, by the lalohebanke The inducements. offered be those institutions to attract gold in settlement of international belences were understood in this oountry to have deprived tee eenk of Fngland of the opportunity afforded at that time to strengthen its gold holdings, and mmoloubtedly wa occaelomed be the willingness of the English market to continue to exteme aellemmodation to its customers in the United States in the aecestemed volteel. It is possible that the occurrences of the past dew menthe in international exchange may be explained by the fact that France anti Germany did not renew aureent American indebtednese as fueely tbe nnglish mart did. Investigation conducted by a wpeolal epee :Atte* appointed at the request of the Federal eserve eeard in tin latter pert of September disclosed the fact that, as of SepteMber 12th, the total ascertainable current international debt meturing between that date ani January 1. 1915, amounted to about 460,000,000. The Items investigated included bank bolances, maturing securities, interest end dividend obligations, commercial omedits, finance bills, and indebtedness for aecuritieo sold. As to sems of these eceounte, oetimates were necessary, and it is recognii,eel thet information of this chereoter is inaccurate and liable to be misleoaing. Its offset or:mounts were anown to be about :150,000,000.1eaving the net inaebtedneso as of that date maturing before January /et, in round tiger'', W0,000,000. due to Fagland,Frenoe, Germany, Canada, and, to some extent, other niropear countries. Me amounts maturing were :about equally proportioned over the fall period of the yeam. It sbould be understood that s considerable portion of the American indebtodnose to the Iondon market, Maturing in the period, between October lot and Jormegy let, wa created in anticipation of the purchose Of cotton bills, whieh have always been considered Gash in the UnTlon IX:, asst, ao further data hao been obtalmd in connection with the present amount of the, current international indebtedness" but opinions asked ct* bankers convorsant with thin matter would probably juntif the belief that over one-half of the net indebtedness has bean paid at the vivant tine he foreim trade, OX41,1411i10 of gold and silver shipmate, was P0,000,000. adverse to the United Otatee in Autuot, 441,00000.04, in its favor in October. SeptMOMM, OMR All probably be ;60,000,000. in 110 fewer for Lest year, and in /912, for these months, the balkacoo in favor of the United States were:. 13,000 000. 50,000,000. ,inglinober B4,000,000. 47,000,000. 77000,000. 139,000,000, Aucuet October THI1704 Gruzr;,44.,sNcr7.....11.11,11E The internotional exchanges reflootod foam of the el'foct of the outbrealz ol war, by the latterpnxt of July, and even bofore Aagust 3rd there developed in America an insistent dennwi for exchancs to most maturing obligations toEuropo. Tho declaration of war, and the auspetelon of ehioping facilities, *mood each AD interruption of the American o7port trade na to dangerously redueo the supply of ozahange. The follaiiing statoment is made at ewe length In order that the position talten by the New York banks with respect to gold evorts be better understood. About 80% of the foreign commeree of the Atlantisseabord passee through the Port of Lew York. It le the largoot mannfacturing and banking °enter in the .Slated litotes, and is the market ';riliere the quotation for forgim exchange is made, moiLibere oreign bills are smeeMbled for realttimme to Europe for oollection or die-count. There iv no eity in he United States whiCh can maYs a qvotation for oxchange, without a quotation from New York. The bunion imposed von the roservee of the banko Of Ass York, when the gOld movempit is adverse In both the foroign and domestio exohancee, hag at ti mos uader oor old bnnling eystem, proved tobe too heavy for the banks to carry without aMPloYinG elergelloY relief moasaren. In 1907 the only such measure nvalable was to IMMO olearing house loan oortificntea for eettling balances betwoaa menbers,. t of Inter,aittip. annee C,Opc.eAt. whtch, however, afforded no relief to the rest of the ooaltry. The now York Igatal 1,n 1907 suspended free shiponut or ourrosioyto tt.e.'r o,oiro.,spondouto, and the itaneW,ate result weat a maximum pro:du:4 of 5....1/,.; _both ourronoy alt. grade Thi- ye- the ;, ,Iiiri-Treold, Cu,rrenoy lot perztittoa the vroyag;:; 'oils of, om erlarmnoi eurreney w/xioh aeoeptable to thin people of the country. ".;ithin ;,.=. few daya attor Auistxt art, the New York hanloi hietr1ycstrlyly tloir eorreadondont& 7tith ournoj, avid. at no 'e'e time eime th.it date hq,i,s here boon prentkra ou either 6o10. Or currency in '7,his oAratry nor, in rtiat, hao POO TOT% 03-0.1.1antp IX other AN.rte of theeoontry indioatod diernet of the ability of the NMI York bvirm to promptly 7119-4.71; their obligh;titrot to their oorrelipondento. noi b ix Min cm:Ma oAlablo for the o tA;lezlent of international bclorinen, sod it havinc been imos*ible for the bltalc,.., to tthir iple. to zUropos Lo;.40r, nthalk,D.0 ireaahed zprertwa equivaloot, to a very' ooneidemblo pretaiwa on Told. Rad this oituatio urred in our dementio exoharoio, distrust Of VP, ability of the Nu m York hanIto to met thelr coAnitileutp and tillt dviands of tIvir-depoeitoreeight2UVVO arivozi anil with elorloas ogr,seT101100E4 Londol) 07ohav.0, aftor the first vi1 rise tb a ):4a;c1rnyl of seam donarr for oito,lo troaufors, vadually r000to4 until a f.id,rly price loaP,' eottlbliehod., in the noi,,,:lihorhotid of five dollars to the pound, with fluctoatiou3 within a ranae of alxiut five (mute either nay. In normal tin.les earehense at _this level would have caused a large ex2ort Of fro-fi, the burden of vidoh woulk have fallen not only twon the benko of Mrs York City, /nit indeed :VOA the covaratively row large 101113CEIoh awohantr or wizieh earri the tw000unts of privato i'irns which circa 0=1=09, bat lIteh do not thelselves owl, gold re/servos. A tio AM9-211:4PAP ..91jAtiotaiiilort4 LI,':,,zeetion a the Ataertia. 7.1000roes NIWAN'ist oosrdAtioe of barflare forzilz4ed plan for iimscrfaixe e1Nis0000000 ot gaol for owport, 5aa orlor to tdo.121 exelguve and to thortiag a1e'44roi60 t47k4^1 'intrdou 4;aokel latitititionct all over thsJiituci tateo iauteaa of i.voataisItIx.:5on. York Oitr The VON of '714.0 4.1%.(m).000 ese iz of roe fiSU of the York Cit7 pleKided 4445.00(4000 isf tieaAcittat. iü.tLo 0 the coo,04.4aipoo aekkod,bU eaaice of tbe Catzi Oliers 'iortAiz ear tpckplant of IloO York GitvLae:M.02w durille the baittatco of tate 'you,. The aewseditia for oars:41c tide coarse' 0111111064 of iflioving rof3 Amu:lent of aolet, 44'4.0001 nuts rran the goat UM tim cola Amoroso of MAO U. are oaattered aelong ;Aolf tutartq-Zive i*outfanol natiow1 etato baniclna inetitieliews ,trimcwi Prom the etv3t that thos* bloke in too Yoxit sozitiob. akeht ship aola moul4 bo unable to mow their rola Merv**bj loane$ tzti 7,41;21, rfro-.4 the tact that it la irn[com&ibic Ar a boak 71141.Cil parte with Ito aold for wArt to r000to threac:n Usti ozoiuziaos troll or b, $bfAatioly the prooklodA of .sales of asolisncio. Mf) of lotoe .pai.a. aro pzgalo in 7:kW or 11.14.1/13 throuat trot) Gloarizic Foul* 5o Aria ;'*ii:Ato alive Avozat it -booll 6-ottlo(t eitior i3tcaoaring Armee lean oartilio4tee or atirloh-ifroolieti botoo. J.:(11-lit. CITY ,IMI3T. Ate City of New York has for many years boon authorized, by the terms of its Charter, to borrow money in anticipation of the pay- . ont of taxes. With the growth of the City, and the enormous increase in the tax loyy, the meant' of these borrowing's have Increased to .1/ an extent that at times the City is indebted the market on it loans to the extant of 1100,0009000, which lovas are ordinarily liquidated at the time taxes ore paid in the f:al, aW, in recent yours, Ln both. the sprino and fall, as the tax lavy is now divided into semi- xmonts. The movamolt of the cotton crop in the fall of the .1* ordinarily furoihes such a large volume of exohance at that moason that borrower3 have boon =able to count with reasonable certainty upon lower rate in the fall than in the oprIag, and advantage has been taken of that t7aot not only Iv the City of New York, but by other icipalities which make similar loans to borrow large sums of money in the London markot. On )1,,ust 3rd the City of 4w York had so borrowed a total of 62,000,00P, a small portion payable in Pario, but the creator Part in London. The breakdown of internationsa exchange laposed upon the City of rev- York tho necessity of Y000ting this large oblimtion by the export of gold. The City carries its accounts in u large number of institationo, both national and state, located In the City of Vow York, and, nnZer ordinary oiroumotanoes, would have had no difficulty Ypktitui ei tu -2- in obtaining gold In large amounta from those institutions. The con- ditions existing early in tkoast however, made it impossible for the City's bankers to furnish the amounts of gpld required, and, had the City been ob1ige6. to ,Iirchase exchane at the rates recently prev:Mingo the lose would have been enormous. It was therefore dotormined by the bankers who undertook the solution of this problem to ask all the tanks in the Oily to contribute to a fund of gold amcuntine to about 4,0,000,000, in proportion to the amount of their respective gold holdings. The contracts entered into between the City, the contri- buting banks and the Xangers of the transaction (J.Pollicroln a Company, and J1Uhn, Loeb & Company) provided for the sale of 410040009000 of Obligations or the city maturing in one, two and three years. The banks which underwrote the issues undertook to furnish the Manacers, if required to do so, eighty per cent. of the amounte of their aubscriptions to the.eyndicate in cold, having the option, however of furnishing sterline exChanee 14 place of gold at the rate of 04.90 a pound. The practically un=inaus reolfonse of the bmke of the City- to the call Aade upon them, as well as the universal approval of the transaction, indicates that the bankers were correct in their bolter that a postponement or default in the payAent of this indebtedness of the City could 11()t be contemplated, and that the consequences wculd so serious un to :notify the 'ijedge of cold involved. VAhile it is now recognized that the City could have extended a large part of this indebtedness in london by the offer of an issue of new notes payable in London in sterling, the City authorities nevertheless fait, no doubt imanenoed by the prersure of public opinion, thst it wan to the eites advantAce to outinguiSh ths debt 44 woo, Id twoid tho possibility of loss at A later mtterity, rather thanto advance its position ant f4e talm the ohonoe of boiea Mae to get gold oig =raw or a year 16terf The oontraot so mode by the ban;is of New York 10004 WO-third of tneir entire dold holdires mde root =port, at least to the ea-tont, that edam& oould not be i'r4rnialled. Attention is here oalled to the faot that the privilege oftarnishing 030114mCP in place of gold peraits amv eoatribator to this fnd to 4moi1 the loss of gold by plIrehs.siOg erohance, ezd therefore, oomtailbotors to this Avid are, to sons extent, oewetitoro in the market for tho purolv4o 04: sterling exehaneo. lIgLA1al4222,222iii_1292. Statement 'third" lareely explains the necessity for ereviding a fund. of geld by the method topted, nd it is the belief of the Committee that the succees of the plan affords evidence of the wi1l1wi.ens end intention of the banks of the Uhited States to farnieh the means to their eustmeIrs for paylnr foreign indebtedness which the barks of New York alone without endangering the attention, were unablo to provide. Voluntary contributions were obtained from national and stete banks in til central reserve and rsservo cities (52 in number), those cities, under the law, being required to hold 25;:, end 12 cash reserves, reepectively, as egulnet 6 in other citIoe. Oontributions of eold to the fund wore received troc 1,494 different banks, located in C11 parte Of the United litats. An amount In excess of 400,00,000. waa promptly pledged through the co-operation of the jecrottry of the 2reascry tnd the rederal 4serve Boerde lending the payment of the limit call of 46,000,000., nine,New 'fork Institutions edvunced a0,000,090. in (old for shipmont to Ottawa. This enobled the Committee to promptly reet the urgent demand for exchtnee, which was 'selling at about 0*411 The Committee deliirea to call ettention to the fact that the eold fund we not created for the purpose of mekin a profit, hut rather to meet an emergency and thereby exert an influence in brining ubout a decline in the rate of exckange. The policy of the Co mittee ho riot been to 64511 exchange, freely. This would certainly have resulted in the aecumuletion of (melt:nee by debtors who desired to insure the protection of future maturing eblttttoa, end, unfortunately, mLeht also hew, The 4100,000.000. Gold Puede -2" resulted In releavieg excbange to the contributore to the rued provided to meet the oblieatione of the eity of Now York. It wet rather the policy of the Committee to use the fund to prevent au undue advance in exchange rates, but, neverthelese, to permit rates to follew fairly normal rluctee ations and thereby Wee° American obligors to arranee for renewals in the expectation that the creatlee or exchange following e restoration of export trade. would avoid the neceseity of exporting ane considerable portion of the gold Pend. Vele Uomeettee, of which two members ere else members of the Gold ?end Committee, ia convinced that the policy adopted was a wiee one, end that the purieses or the cold fund have already been largely accorelimeed. After elle/dee for certain leree payments made for account of the United etates Government, for which the Government reimbursed the old eend Committee in gold, the total amount of the fund has been reduced by not over Int+ million pounds, amd le smbetene tielly intact. ee0VITe AeD Oeeee OF Zee GOU lelqe eiseederstandiee is A:able to ariee with regard to the ultierete profit and lees aCcount of the (old rend Committee, end wo are latormed that the attitude of the Bank of Zeeland later referred to was possibly duo to the belief that large profits will accrue to the Gold TNcld contributors. Consideration of the followlegwill, we trust, meeee clear the.Gold Fund. Committee's eesition: ABU:3'M he leeal limit of tolerance on Amerlean gold coin is ono-half of one per ent. eagles Pareleted by the eeb-Treewury at Now York will rare"?' thew an abraelon exceedine one-quarter of one per cent. Loeles shipped from Western points, hovever, where eold coins oireulete much more JILIO frooly, larger peramatisp at oloiraii.a. o).ovr The Calm/Ate.", mot, fivare ou s l000 cot tram 011110witsetrtt,r t throsionislifts per o4:tot. for 1)7orowion. Thu Old frzusulohoa for thit pur,00sa of this fund to t.ken oat of bank xv Nos 41241 4314 trk otafo4ø.rit in Sin York, NId. IP not hold MI a kart 1)4, tho ri., 3,4-1.4roli or tho litro 'fork bc.nks. The contributors va'e `31,0 firot ramant of P,5514,ii ro,42e rgvuonti In inot.,1,:aent) of ZOfp. filen ovrtrAz rooiv 'fork bank*, sot to ipnt ion or lohloh 410,014,0".1 vvs sillitoectd vivo omraploted i4nd tho eXp4.1100 Of trmsferrint tbs Na4o as solo this fu :4 from al twatt: of tha col:ratty vcsla pead oat of Um fund. In **lir rTj t tho oo Lt to 40uo3 moo oniv.r7 o to111110011' allarzmnekt :Or VW intert)st durinc trmantorton,durin:; the ported-OM the it the myrcumeot sUlront to Ottem, k, for n *mov*1 La i2 fa veil ao for ut raja looi Vas row ?taw, ome. mad to Vie ld ixdut; moo tvo4 tty. tho Comitttwo at it 5)f 4104474 4vit its tgallon -cam,* initoosiblo t4.0 ti214410 13#4 /Atoroipt 000t tooDlvo.d. Vat a otplool4tIon lityest beim with aollorsaloc: NiMpon 44.4to*. tzgA 041xonto tc the firet shiptrzuts =Ala f into-root to 4io1uoloor .Xth, =4. tt is raw* thk,t lanai= on the -wits of this 44101111uttlit oopts tho contributors sbout The ;Aconwprto retaittod 'tor sys454,0ip s:olea to41:43c win 14114Atis ox4 443, diosi, mitina 44,1Q SW471043 rO r tritOre $4 #:411 mood .Ora :Loudon banks, it is psobAlik OM U trov, 44cooaat c p3ce,6rAt tire kif moult Atli/ad be 'avow/toned Ivt 4rolgolirt 410ov 10,0o4;', a V* row to l'oollon, thp a 114,s to ;kat tht, owtribittors to ttw fog. This la iodeinV IOtatthato, ci"447. OP first taAssair to Mom ,Ato mut. IfstIO... It th At trio tit* Us ftrad w bz-.:1.17zooe- wau ox:Irsoitttodo cerAcio. illsegrod taw Tho 410) )0000 Gold mud -4co-operion of the Bank of England on two points only, pending a dieouesion of other matters of importance WhiCh could not be then taken up hy sable. Viretg A better understanding of the basis on which the Dank VW parohasing gold shipped to Ottawa: An arrannement for advanoos, without interest, upon advice a CO and guaranty of Shipment from liew York to Ottawa. g TO 44-10,4d'T23 The value of the grains of cpld in the English sovereign in Amorionn Gurreney is -A.66656 One ounce of American gold coin contains fine gold of the value of )211.6046 A0.6046, at the rate of A.06656, Kuala Ush. 3id, Whioh Is the value, oxpross-d in aterling, of one ounce of American 7o1d 001114 This Is the exact price Which the innIk of Inaglana was paying for American Eagles Just prior to the outbreak of the war. Reduotions mere made to a not prioe 76104 444 544 boing farther deducted for Amorican 7:.agles Shipped to 3d. Ottawa making the not price for naglos delivered in Ottime 766h. It has been stated to us that the reduction of 30. was made in order to cover the following items: (a) AA allowance for the coot of molting and minting: (e) AA allonnnco- for the cost of trnnoforring Nugies from Ottawa to London. AO to the first item, inkiniry arises as to nhether the price whioh the Bank of England is required by law to pay fOr bris (77th. 9d.) does Dot make allowance for the cost of coining bars into sovemigns, and that, therefore, a :shipper of t:les should not be rsquirod to mrato this Tho ::.100.000.000. additional allowance, which in already covored in flouring the equivolent of the bullion value of the gold contained In American ?Arles. As to the second item, the question arises NS to Whether the Bank. of O/lgland obould not, If the cizoNam:es turn before the gold Is shipped to London, the allow in the price at vhich it resells the gold to row York, late of the choroe which It has collected for the conversion of Nales ;itOsovorolons. The same quottioo will arioe as to 3d. deducted from the price llowed for stondard bars. The Gold Pool Committee feels that the deduotion of M. on ogles and 3d. on hors Is not juatified under the circumstances, but cloorer uncle tootling of the reasons for theco deduotiono moy chonge the Committee's views. Al to all arrongemont for tdvonceo without loterert, the re000et which was made :for this 0000mmo4ot1-rt ot the tic or the Olret shiptant grow out If An omorootooy. XChtitl4111 uos3oiltngotovo five dollaro oound, end the Cotooitten deslrod to he in n position to drm fIrthanros at once before the gold s74pped could be received and welohod at Ottawa and credits confirmed. The necessity for ;,olcoomiodotion on that roOonnt is now punee4A With exohance upprotichinv the point where gold exports heoome unowofitoble and without a better landerstundthr with the lInnk of 7 gland to the rote which they will make on Bogies exported to or from Ottawa the Cold rand Committee will find it imporvible to mks any considerable shipment of gold at one time without the risk of loss on a postion of such shiomonts. The Coznittoo desires to be in a. position whoro it moy furnish echango so long os it may profitably cover with gold, but not to run tbo la2-11211J22kaLlIJaalL2e1 risk of a rapid decline in the exchange =arket. SIXTH TM COTTON LaA/T 001a. It has been generally estimated, and this Committee believes with reasonable accuracp, that this years American cotton crop will alomewhat exceed 15,000,000 bales, and that the world's reduced consamttion Of cotton will leave an unused balance of the american product of aboat 5,000,000 bales. At the conference in washington, it was suggested that the maximum credit to finance the cotton crop would be required at the time when the maximum of the crop has been picked, and the minimum marketed, that is to say, about December let, at which time it was sug- gested that a credit of A0,000,000 might be required. This does not taao into account two factors intthe situation. First: The method of financing the growing and gathering of the crop; Second: The difference in price between this year and last year. as to the method of financing the crop, it may be generally stated that the ititial advances arc made before the crop is planted. They are largely made to the farmers by merehants and supply houses, and are increased as the work on the crop advances, the merchants taking a lien on the growing crop and borrowing money from their banks. By the ti'e the cotton is aathered, the last advance is made. The maraeting of tae crap throua4 the ginning and oomçres3 comaanies and the cotton factors The Cotten ...tosn R **NC,. le a nrooeso of li.uldation, &nd the problem oenfreetlar the SeAth at this soason in not that of arranging new orallto'with -which *0 finerce the cottage Tnp as a whole, but rather of providing a tanrerary credit to be empl-ved in faellitatinFT the liquVetion of that poetion of the erer which or benvIt.-eted, by chablin:: baa,ts tr pttenet or renew the loans that have already been.veas, and thereby assist which may not be promptly marlteeet. This in financing the rplus ybc described as a process of elearing or 1411fting loans rarer than as a presses of creating new or-edits. A4 to the eeee*d point, namely, the rricc it in, of eourec, evident that volV cotton selling et six cents, those batiks Whicb loan en cotton otrld oarr7 two bales thie year against on bale, at tmelta eeets, it year. In order to PRollitte the pro ess of liquidation, which contemplates that 10 000,g00 bales will be sold and 5,04)0,000 boles will be carried, a credit is in course of beitc aragei,amounting to nzsooDioaxl to be andled Vs following :,W0,000,000 of the advance ia to be secured b7 a first lien upon cottanItemed at not ocein ix Wats pettrd, middling grads. 05,0000000 ia to be seeared bv a MINNA her on te pletirvd co Oiart thispertion of to be provided lir the banks of the cotton growihe states, to whoa, or throughlOhom, the loans will be nade. %.,Dend ameunting to three r cent. or the amount of the loans made is to be wet aside to onvor the ex,vmses of managing the transaction, and to pmy any lotlsoseincurred. The fund lo to be adminiztered unaur the direction or a Committee cnsioting of members of the 7cdeal Eesorve boardai the business, however, to be conducted by en operstInt esmittss, and, nae Its -3- ,rent, by local co itte, thMehinery for the appointment oh hoe alreakix been vie. This Cotttee aeliewe that the cotton l 4r1 fund. will be late to restore normal 00-niAtiOns in the market for raw cotton, or 1,11 the cotto anufcturtn iuetry, unless it is supplemented. by enereetic meaeures to briar about better lacillties, both in the United States and abroaq for marketing, Leek year, flnancine4 mlmgnufactarinc cotton* Alrope furnished this country with 3534 GOO Anything which Iftarii 0.0e of cotton ;_-) of exchanew. the free intrchase or the free sAle of cotton, the restorntion of stable pr1cos for rma cott.on,will lso retard tonal exchamree, the restoration of normal conJitions in the in and work injury both in linFland and in the 1.1nited opinion of thie Corrlittee, it se desirable e* in the -5.: The fol be adopted: Firit: That the rand of 1135,000,000 completed and its adt.ainistration undertaken st one. "lag: That the Few York and .Livfrkpool cotton OVIlifineell e -ould be opened, 'Cotton Nach.ange inane for opqralle the New York iie renehed a point where it rev be reasonably expected that the exellinge Can open at an early date provided necer,eary co-operation is afforded by the Liverpool CA)ttori Sxchafte nvl by the nglish banks, A fund bar been pledeed which rill enable the members of the Vew York Cotton rxchance, who ar ornitttd for the purchase of cot ,on at MO prices, to margin their entractr dam; to 7.. ceits. he Cotton Loan Pool. -4.- with this relief, confidence is expressed that they may safely open the exchange with e reasonable execotation of being able to meet the warket oondi- time which will arise. Co-operation by the Liverpool Cotton exchange on similar lines is nec- essary before it will be feasible to onen the New York Cotton ECtchange. TRIED It is also essential that no question as to contraband be eermitted to arise inregard to exnort cot on. Ate Comnittee notes with great satisfaction that the British Government has already recognized this situation. POUETH eny restraint which may have been imposed upon Xnglish merchants or spinners in the purchase of cotton shoeld be reeovel. Reference hes been elade to some agreement or undenetanding which we had been advised eeiste in ngland in this respect. It is not understood that the British Government has brought about any such uncle standing, nor, in fact, is it understood that zInglish purchasers of cotton have any definite agreement among themselves in this regard. Advices have reached this country however, to the effect that some of the 3nglieh banks have exerted a strong influence in restraining the free purchase of cotton by Snglish cotton merchants and spinners, and it is hoped that the vs13. Anglish banks may be induced te =courses , ho purchase of eottor within reasonable Unite. That the usnal 7eans of financing -urethanes of cotton by ringlish merer7ont9 and arinners eltooId be reopened thruogh advances atr,sinst cotton bills through the discount molkot- ...Lanr11 .v.7.,D261.1AIL The first instelment is to be paid for the capital stook of the ?Oderal Reserve Bank on novomber 2nd. The plan announced provides for the transfer of reserve aepoeits to thew banks, corencing with November 1604 If the operation Is successfully concluded, the 1?ederal Reserve Bank of NOW York, within a period or six months (and possibly at tile and or three rLonthe) will have received payment for over $10,000,000 Capital stook in gold, and will have receivod on deposit at least t100,000,004 of the reserves or tho National Banks of New York State, and possibly muoh more. The :No,deral Reserve Act provides that not exceeding 545 of the initial resenre deposits may be made out of the proceeds of commercial paper which the banks may allow the member banks to rediscount. It in tbereforo impossible, at this time, to forecast the oondition of the Irederal Aserve Bank of New York resulting from the initial transactions, as the amounte of discounts allowed to the member banks will depond,--. (1) Upon the ratio of discount established by the bank; Upon the rate of interest prevailing in the City of VMW York, (3) lomewhat ,ipon the cictect to which the New York City Banks are rrlouired to make payments for account of their correspondents located in ?edema Besorve Distriete and Fiera1 serve Bank (4) The extent to which they may deposit 08 of their reserves, Cae deposit of whioh is optional. The Ooderal Reserve Banks of the United States are In the course of establishment. Calls for payment on the capital stock have alreadv been made. The ability of this bank to furnish gold is a matter for future consideration, and Should not, at this tine, be made the Sasiscf any transaction or proposal. ORNDIT or h20,000,000 FTrRLIVG. Your Committee has been informed that about a month ago, when the visit of Sir George Puish erd Basil T. Bleckett, Nisci. was first proposed, one of the subjects to be considered at the conferences would be a poesible credit which would, in effeet, afford means for extension of the obligatione due in Englerd by barkers and mere chants In the United States. If it had beer possible to arrange such a creUt by exchange of cables at that tire, your Committee would have approved of the transaction. It would have supplied exchange at a moment when the demerd wee urgent; ord it would have insured us against any serious drain on gold reeervee for the tire being, and given this country a period for readjustment during which local cone ditions could have been brought to meet the extraordinary situation. since the date when the suggestion of a credit was made, exchange in large quebtlties has boon supplied to the market, and confidence has been greatly restored by the knowledge that the rew York City ayedieete and the Gold pool Committees' operations have loon effective. From infermation which your Comeittee has gathered, It is strongly of the opinion that a continually increasing supply of exchange is in prospect. The export of rood products and raw and manufactured materials that Europe needs in the present crisis (not to mention munitions of war) must continuo; mills and manufacuring 4 It. Credit of h20,000,000 Sterling. .2companies are working overtire on orders for goods which, in many cases, will not be ready for shipment for some months, and which will make a corresponding supply of exchange. The opening of the New York and Liverpool Cotton Exchanges, coincident with the completion of the Cotton Loan pool, if accompanied by assurances to the merchants and spinners of Fmgland of the willingness of the Itsglish banking community to finance reasonable purchases of cotton from the United States will also add to the supply of exchange. For this, and other reasons that it is not necessary to elaborate here, your Committee is convinced that the adoption and employment of any extraordinary or unusual measures at this time are unnecessary, as such action might, in expression of the belief of this fact, be interpreted as an Coralttee that the present situation requires such measures, and because unusual measures are likely to bring about unexpected and possibly undesired results. It will be noted that the foregoing relates entirely to the commercial situation. 'Io account has been taken of the possible opening of the New York Stock Machange, and the additional demands that might arise if any considerable amount of English owned American securities were resold in this country. Your Committee is firmly of the opinion that it is premature to discuss the opening of the NIP York Stock Exchange until the adjustment of the commercial situation has been demonstrated. In thc meantime, however, and, with e view to this step, it is recommended that a Committee from the New York Stock Exchange be appointed, which Committee should visit London for conference with e like Committee from the London Stock Exchange, and Credit of b20,000,000 Sterling. for a careful study of the situation there. A tentative arrangement for a large sterling credit, predicated on the understanding that its repayment will not be made in gold, but in commodities and manufactured goods, would make it possible to consider the opening of the Stock Exchange sooner than it would otherwise be safe to do, should other conditions permit. As this step is recognized to be a. desirable one from the point of view of both countries, a present discussion of the form of such a credit and c tentative agreement as to its terms, at this time, would be beneficial. A memorandum supplemental hereto, outlining a plem discussed with Sir George Paish and Basil P. Bladkett, nsq., is attached. Jupplenent) MIN Drafts to be drawn only as requirea to supply exchazgle to to:ze the place of gold remittances. Drafts to be covered at maturity in the usual we If exchenee can he purchaeed at or below the cost of eroortinc gold. (0) If exchanze cannot be purohaned as above, and payment of the bills would require the ex2ort of cold., further 90 day rcrewals to be grented provided that, in the opinion of the Feral Reserve llokrd, a further loss of Gold would be detri untal to our finencial situation. (9) The grantors of the credit to be entitled, after the first renewal, to require payment, in whole or in .rt in flew York exchange. such dollar balanoes, however, to be used only in the purchane of American produots, Gond I t Ione e epee the and e re tending awry sted in memorandum nichth," and elth a vie% to assistance in meeting conditions which my arise thrame, excessive sales of Ameriean securities held in rurope, the following has been tentatively diocunsee with eir GeOrge Nish and Basil P. Blackett, rage, That a revolving sterling credit of, say, is20,0W,000. shall be gronted by or throueh the Bank Of gland, or other British bankers, on the following plans (1) The credit to be available aa a nupplement to anJ only after the ,7100,000,0 el Gold Plead has been shipped, in order to avoitt further cold shipment. (n) Drafts at ee days, with one acreed renewal, on an acceptor, or Aoceptors, to be desigvated by the grantors. Drafts to be foreerded direct to tnelend for diseount under an agreed arraneseent, And demand or oables to be aold against theme s Drafts to be drawn by the Geld eund Gommittee, or a new committee representing euerenters, consiotine of bans, trent companies end banking firms in the 'United etates acceptable to granter. Proceeds of sele of exchange to be loaned upon security of approved bonds and stoeks an oollateral, with the oblieations of borrawere, who are setisfectory to the guarentoro, to maintamn a remain of not less than twenty per cent. {.20:71 of the fee° value of the loan. SDITIZatrzta. /rloorttarptua AS TO Trn ralePeL RaveRVE BAXR OF IITW YORK CITY. It mast be borne in mind that there is no certainty as to the amount of gold which will be paid into the Federal Reserve Bank at the commencemert of its peeration. The capital ptyneets which mast be met within a period of from ninety days to V37 mouths, in gold, tote). about 40,000,000. The reyeent of reserves, eggregating 'United States notes td silver certifie antes. While it Is hoped that the bulks of the Few York District will mike a oonsiderable portion of their reserve peyeeets in gold, $100,000,000. ety be made in it is nevertheless quite possible thnt a large proportion will be made in legal tender notes, old the ability of the Federal Reserve Bank to accumulate gold from other sources than the United States Treesury will therefore depend upon: (A) The degree of confidence which the bank enjoys from its member banks, whieh now hold the principal gold reserves. 00 A charge in the present currency laws, readjusting the various forma of gold certificates and legal tender notee oo as to force the withdrawal of &mall derominatiens gold eertificetes from circulation. To transaction involving the present pledge of the credit of the Federal Reserve Bank to Tarnish gold would, be justified until the Federa, -2. bank has boor in operation a sufficient length of time to domonstrate It s ability to aocumulate sufficient gold revervo to justify such a transaction. jovember 2, 1914. Ron. G. S. Hamlin, Governor, Federal Reserve Board, Naehinston, D. C. Dear Sir: The repoitts relative to the conferences with Sir Geor00# Paigh and Ba411 B. Blackett, Esq., of which copy yes left for you viith N1N. Warburg, requiredoorrection ia some nartiolllars and the lanoage had to be improved after a little quiet study of SOME of the matters discussed. Fresh copies have just been received from the stenographers, and I am erclasing oae copy to jou herein bet)re I have had opportunity to rcad it over. I am enolosing one copy also to Mr. Warburg. Unfortunately our stenogmy,hic arrangementa here .41./1 not permit maRing more than four copies, one of which will be signed by lir.Wiggin, Mr. Brown and myself on Wednesday, and fomarded to you formally, and the other, I am obli3ed to retain as a record. If, thereforetit is desirable to place one copy of the memorandm In Sir Ce)rgv laishas hands on ednesday as wae discusf-ed, I trust that you will explain $0J.hinfthat it was obliged to be a tidgae copy in anticipation of the signing of th3 mrmanent copy, which I hope to have done on Wednesday. Very truly yours, Eno- UNION VVESTE47PANI Form 260 WESTERN UNION eV NEWCOMB CARLTON, PRESIDENT ORGE W. E. ATKINS, VICE-PRESIDENT BELVIDERE BROOKS, VICE-PRESIDENT CHECK TIME FILED ,ECEIVER'S No. AM um SEND the following Telegram, subject to the terms November 4s 1914. on back hereof, which are hereby agreed to Hon. O. S. Hanain, Federal Reserve Board, Washington, D. O. Please refer my- letter Monday supplement second headed Gold Shipments Co last paragrajh page 2 foreiLn trade balance October shorld be thirty gee*-millions. Kindly make corpection. Benjamin Strong, Jr. (Charge Fedetal Reserve Bank) (Government rate) ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TE. To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office for co For this, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRA.... PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the telegram and this Company as follows: The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, beyond amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty t the sum received for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lines; Ri errors in cipher or obscure telegrams. In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery, of this gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued, u a greater value is stated in writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paidor agreed to be paid b on such value equal to one-tenth of one per cent. thereof. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary reach its destination. Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such office in othe cities or towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeavor to, contract for him for such delivery at a reasonable price. No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sent to such office by one of the Company's messengers, he acts for that purpose as the agent of the sender. ,6. The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the telegram is Sled with the Company for transmission. THE WESTERN UNION TELEGRAPH COMPANY 7. No employee of the Company is authorized to vary the foregoing. INCORPORATED NEWCOMB CARLTON, PRESIDENT CLASSES OF SERVICE TELEGRAMS A full-rate expedited service. NIGHT TELEGRAMS Accepted up to 2.00 AM, at reduced rates to be sent during the night and delivered not earlier than the morning of the next ensuing business day. DAY LETTERS A deferred day service at rates lower than the standard telegram rates as follows: One and one-half times the standard night letter rate for the transmission of 50 words or less and one-fifth of the initial rate for each additional 10 words or less. Subordinate to the priority of transmission and delivery of regular telegrams. Must be written in plain English. Code language not permissible. Telephonic delivery permissible. Day Letters received subject to express understanding that the Company only undertakes delivery of the same on the day of their date subject to condition that sufficient time remains for such transmission and delivery during regular office hours, subject to priority of the transmission of regular telegrams. NIGHT LETTERS Accepted up to midnight for delivery on the morning of the next ensuing business day, at rates still lower than standard night telegram rates, as follows: The standard day rate for 10 words shall be charged for the transmission of 50 words or less, and one-fifth of such standard day rate for 10 words shall be charged for each additional 10 words or less. Must be written in plain English. Code language not perMail delivery, postage prepaid, permissible. missible. kWESTE. 4,AEN UNION WESTERN UNION AM GE W. E. ATKINS, VICE-PRESIDENT CEIVER'S No. NEWCOMB CARLTON, PRESIDENT BELVIDERE BROOKS, VICE-PRESIDENT SEND the following Telegram, subject to the terms November 6, 1914. Hon. C. S. Hamlin, Governor, Federal Reserve Board, washington, D. G. Copiee report being prepared Hive to mail tomorro Benjamin Strong, Jr. (Charge Federal Reserve Bank) 21 ocki, TIME FILED on back hereof, which are hereby agreed to Form ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWINC To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating offi, For this, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TL, PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the telegram and this Company as follows: The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegrm _amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, bey°, the sum received for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lid errors in cipher or obscure telegrams. In any event the Company shall not be liable Jor damages for any mistakes or delays in the transmission or delivery, or for the non-delivery, of .gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued a greater value is stated in writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paidor agreed to be paiCi .D. such value equal to one-tenth of one per cent. thereof. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessat. reach its destination. 4. Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such office in otI cities or towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at l, expense, endeavor to contract for him for such delivery at a reasonable price. No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sent such office by one of the Company's messengers, he acts for that purpose as the agent of the sender. The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the tcl, gram is filed with the Company for transmission. ' , li" . . 1 No employee of the Company is authorized to vary the foregoing. THE WESTERN UNION TELEGRAPH COMPANY INCORPORATED NEWCOMB CARLTON, PRESIDENT CLASSES OF SERVICE TELEGRAMS TELEGRAMS 01 NIGHT Accepted up to 2.00 A.M. at reduced rates to be sent during the Telephonic delivery permissible. Day Letters received subject to express understanding that the Company only undertakes delivery of the same on the day of their date subject to condition that sufficient time remains for such transmission and delivery during regular office hours, subject to priority of the transmission of regular telegramE day. 10 business DAY LETTERS NIGHT LETTERS Accepted up to midnight for delivery on the morning of the next , A full-rate expedited service. .: night and delivered not earlier than the morning of the next ensuing . A deferred day service at rates lower than the standard telegram rates as follows: One and one-half times the standard night letter rate for the transmission of 50 words or less and one-fifth of the initial rate for each additional 10 words or less. Subordinate to the priority of transmission and delivery of regular telegrams. Must be written in plain English. Code language not permissible. ensuing business day, at rates still lower than standard night telegram rates, as follows: The standard day rate for 10 words shall be charged for the transmission of 50 words or less, and one-fifth of such standard day rate for 10 words shall be charged for each additional 10 words or less. Must be written in plain English. Code language not permissible. Mail delivery, nostdge prepaid, permissible. :AN 8- 191S ,diAL RESERVE BAN( January 7th,1915. Ly dear Governor Hamlin:- You asked me to write you in regard to the influence of the New York rate in other district*, and While there has not yet been sufficient experience to justify any very definite conclusions, yet so far as our experience goes, gathered largely from conversations with officero of large banks in New York, I am convinced that the result has been as I stated to you. The great bulk of bank borrowing through- out the country is effected at New York. Correseondents of the member banks of this district in all the sections of the country are, et times, borrowers from their New York reserve agents. The effect of a reduction of our discount rate, while only directly affecting the relations between the New York banks and their correspondents throughout New York State, indirectly, I believe, has the effect of reducing the cost of borrowings to their correspondents in other sections of the country. Two of the largest banks in New York have stated to me that they have felt obliged to make some reductions in rates on ac- count of our rate. If a bank in Georgia or Texas is able to borrow money from its New York reserve agent at 4, which is our rate for short paper, they naturally will make use of that accommodation rather than -2Hon.C. S. Hamlin. January 7,1915. at a higher rate. discount short paper with the i'ederal Reserve Bank of their own district' On the whole, this is not a bad result with conditions as they are at present. The discount rate at New York ought to be lower than it is at Georgia or Texas, and the member banks of those districts out to be able to borrow the cheapest money available. Later QM as banking relations art gradually re-adjusted to the no; system, the whole rate situation may take a different aspect, but at the present tine, with the great bulk of the surplus bank reserves In New York, it may be just as viell to have the member banks of other districts deal directly with the Cheapest market without Impairing the lending power of the Reserve Bank system 'which I am confident will come into play later on and perform a useful service to the country. Yours very truly, Governor. Honorable C. S. Hamlin, Governor, Federal Reserve Board, V4shington, D. C. BSJr/4VH-1 March 24th* 19115. My dear Governor Hamlin: Your note of the 22nd 1 received and indices that you are about well again. Please accept congratulations from your friends In this bank. I hope you will follOw the course I hav9 decided to adopt nod get away for a olinge. I am leaving to-day for Hot Springs, Va., to recuperate from a somewhat similar attack which started the last time I was in Washington. vith kindest regards, believe me* Very truly yours* Bon. C. S., Hanidgujsq,, Governor, rigial Reserve Board, a.s"lingten, D. C. Mir nr Aug. 9, 1915. Dear Governor Hamlin: Your note of the 5th instant is on my desk this morning and I am sorry that my absence practically all of last week has made it impossible for me to write you until to-day. 1:41 remarks at our meeting last week were based largely upon the belief that there is, in fact, a possibility of our becoming involved in the European War even though that possibility is quite remote, and that a certain amount of study should now be given to the problems which would likely arise should that unfortunate event occur and how they should be dealt with. No one will deny that the terms of the 'Federal Reserve Act as finally passed by Congress were not and could not have been prepared with the view of the possible outbreak of a war of such proportions as the present one. We must, therefore, somewhat readjust our ideas to meet the possibilities of the present Situation and some of the matters that should be dealt with, I think, are the following: 1. FEDERAL RESERVE NOTE ISSUES. The present machinery, although cumbersome,for issuing Fed- . eral reserve notes against the security of gold certificates should be further developed by arranging with the Secretary of the Treasury that the issue of all gold. certificates of ten and twenty dollar denominations be discontinued. This need not be given publicity. The mere discontinuance of their issue will enable us to judge of the results and, if any harm results, the Treasury can resume their issue without arousing any comment. Hon. C. S. Hamlin, 2 2. 8/9/15. ACCEPTANCES. This matter has been so thoroughly discussed that it is hardly necessary to review the suggestions already made. I think the regulations of the Reserve Board and the whole method of dealing with this matter should be liberalized. FISCAL AGENCY. 3. It would be well to study and develop plans by which the available general fund of the United States Treasury might on short notice be turned over in whole or in part to the Federal reserve banks. As our Government might find it necessary to make an issue, or issues, of bonds, a preliminary plan by which such bond issues could be made and distributed with the least disturbance to financial conditions should bd developed in advance of the need arising. ATMTrufPUTS TO THE FEDERAL RESERVE ACT. 4. There are a number of possible amendments to the Federal Reserve Act which, it seems to me, should be studied in connection with the circumstances which we discussed in Washington. The principal ones which now occur to me are the following: A simpler process should be provided by which Federal reserve banks can issue Federal reserve notes directly against deposits of gold. Any possible doubt or ambiguity as to the measing of Section 13 in regard to the power of national banks to accept drafts and the power of the Federal reserve banks to discount accepted drafts (as well as to purchase under Section 14) should be removed. give clearer recognition to finance drafts. The Statute might 3 (c). Hon. C. S. Hamlin, 8/9/15. Some consideration should be given to the possible neces- sary or wisdom (as an emergency measure only) of giving power to Federal reserve banks to lend money upon collateral security. (d) Also as an emergency measure, at any rate for the present, consideration should be given to some plan by which Federal reserve notes might serve as cash reserves for member banks. Cuggestions "c" and "d", it seems to me, could be dealt with by having a study made of the language of proposed amendments so that a general agree- ment would exist in advance as to the terms of any amendment which it might be thought wise to recommend to Congress. Please do not understand that I recommend the adoption at once of the various matters suggested. I do think they should be carefully studied now and an understanding arrived at in case action along these lines or any other should later prove necessary. I hope you will be good enough to give me an expression of your views on these points, and beg to remain, Very truly yours, Governor. Honorable C. S. Hamlin, Governor, Federal Reserve Board, Washington, D. C. B5Jr/PE Aug. 9, 1915, Dear Governor Hamlin: Your note of the 5th instant is on my desk this morning and I am sorry that my absence practically all of last week has made it impossible for ne to write you until to-day, remarks at our meeting last week were based largely upon the belief that there is, in fact, a eossibility of our becoming involved in the European War even though that possibility is quite remote, and that a certain amount of study should now be given to the problems which would likely arise should that unfortunate event occur and how they Should be dealt with. No one will deny that the terms of the Federal Reserve Act as finally passed by Congress were not and could not have been prepared with the view of the possible outbreak of a war of such proportions as the present one. must, therefore, somewhat readjust our ideas to meet the possibilities of the present situation and some of the matters that should be dealt with, I think, are the following: 1. FEDE4AL RESRVE NOTE ISSUES. The present machinery, Although cumbersome, for issuing Fed, era reserve notes against the security of gold certificates should be further developed by arranging with the Secretary of the Treasury that the issue of all gold certificates of ten and twenty dollar denominations be discontinued. This need not be given publicity. The mere discontinuance of their issue will enable us to judge of the results end, if any harm results, the Treasury can resume their issue without arousing any comment. 1111111r: 2. 8/9/15. Hon. C. S. Hamlin, Accual4vm. This matter has been so thoroughly discussed that it is hardly necessary to review the suggestions already made. I think the regulations of the Reserve Board and the whole method of dealing with this matter should be liberalized. FISCAL AGENCY. It would be well to study and develop plans by available general fund of the United States Treasury which the Might on short notice be turned over in whole or in part to the Federal reserve banks. As our Government might find it necessary to make an issue, or issues, of bonds, a preliminary plan by which ouch bond issues distributed with the least disturbance to financial conditions should be developed in advaree of the need arising. could be made and 4. AMEN=NTS TO THE FEDERAL RESERVE ACT. There are a number of possible amendments to the Federal Re- serve Act Which, it seers to me, should be stddied in connection with the circumstances which we discussed in Washington. The principal ones which now occur to me are the following: A simpler process should be provided by which Federal re- erve banks can issue Federal reserve notes directly against deposits of gold. Any possible doubt or ambiguity as to the meaning of Section 13 in regard to the power of national banks to accept drafts and the power of the Federal reserve banks to discount accepted drafts (as well as to purchase under Section 14) should be removed. give clearer recognition to finance drafts. The Statute might --1/11111NrIgrTW'r-1Mlir ,susamww A 3 (c) - .Ammurrmwmr 8/9/15. Hon. C. S. Hamlin, Some consideration should be given to the possible neces- sity or wisdom (as an emergency measure only) of giving power to Federal reserve banks to lend money upon collateral security. (d) Also as an emergency measure, at any rate for the present, 1111111111111111- consideration should be given to some plan by which Federal reserve notes might serve as cash reserves for .member banks. Suggestions "W! and "d", it aeons to me, could be dealt with by having a study made of the language of proposed amendments so that a general agree- ment would exist in advance as to the terms of any amendment which it mi ht be thought wise to recommend to Congress. Please do not understand that I recammend the adoption at once of the various matters suggested. I do think they should be carefully studied no and an understanding arrived at in case action along these lines or any other should later prove necessary. T hope you will be good enough to give me an expression of your views on these points, and beg to remain, Very truly yours, Governor. Honorable C. S. Hamlin, Governor, Federal Reserve Board, ashington, D. C. BSJr/IT PERSONAL ----CONFIDENTIAL. January 25th, 1916. Dear Governor Hamlin: Your favor of the 21st I am indebted inst. is just received and to you for the confidential at',vice as to plans of the *Federal Reserve Board which might be classed to some extent, as preparation for emergencies. The enclosed suggestion for amendments are those which have been consider:4 from time to time by the officers of this bank and, to some extent, discussed with Governors of other of the reserve banks at the various Conferenees the past year. during I am not prepared to say tfrt in this form I would finally recommend them, but they contain suggestions idh may be of value in connection by the with work along this line Federal Peserve Board. A careful study of the proceed:tires taken by England, Prince and Germany and by the central banks of those countries in connection with functions such the institutions as called upon to perform ity. war, brings to light very in strongly what the Federal reserve banks will be the event of any great national calam- These have unmistakably proven to be First: Almost unlimited extension banking institutions, of Second: Unlimited issues of notes to take the place of gold in circulation which rapidly disappears. cre'it to To Hon. C. " Hamlin. To take care of the demands of the character first mentioned, Federal reserve banks should be in a position to discount with freedom and without encountering technical obstacles, all paper of every character offered for that purpose by solvent members, within, of oourse, the limits of business prudence and the limitation of the statute as to reserves. To meet demands of the character described as second, it is highly important that the peocess of accumulating gold should be vigorously continued, giving note issues of the Federal reserve banks a quality by reason of the large gold backing which can be obtained by no other process than that which now preFails. The use of gold being impounded by the present process as a part of the bank's reserves, will greatly assist in making the notes acceptable for circulation and in justifying their use,(possibly only under emergency conditions), as reserve money. One of the consequences of developments which would lead to sudden expansion of the reserve banks, as above described, might prove to be a demand for gold, and ability to eeet this de- . mend willeiepend leen the gold resources of the Federal reserve banks. It seems to me, therefore, that the steos now contemplated by the Board in recommemiing various amendments are absolutely essential to the preparation of our banking system to meet eeergency strains. It had occurred to me that some of the legislation mentioned in your letter might be favorably received by Congress during ; ut.11.1. To in, Hon. the present session where some other features, such as the re- serve qualities of Federal reserve notes, might be dealt with by having the necesery legislation prepared and ready for submis ion should occasion arise which would require it. I very much appreciate you writing me so fully and will hold your letter in confidence. Very truly yours, Hon. C. S. Hamlin, Federal Reserve Board, Yshington, L. C. B2 Jr/VCM -5 Aug. 11, 1915. y dear Governor Hamlin: I enclose for your perusal a report of Labor's Loose In fil National Peace Council and its work. Since this was pre- pared, in fact only yesterday and this morn1nL7, statements appeared in the papers to the effect that First Vice President amellings is thoroughly disgusted with the whole affair and is retiring. _1 regret the delay in furnishing you with this report. Very truly yours, Governor. harles S. Hamlin, Esq., ttapoisett, BS.Tr/PE Enc. .Ref or r 0.1 ton letter Ites4cre or-6, \F4441- 5111 \ 1.K %Witt Mo. 1 IL LABOR'S NATIONAL PEACE COTTCIL AND ITL rtoo'' ORK. The organization known as Labor's National Peace Council was formally launched at a meeting held in the Willard Hotel in Washington on the evening of June 22, 1915. The meeting' lasted, according to the statement of one of the organizers, until early in the morning of June 23. Announcement of the organi- zation and the meeting was made by sending to various newspaper offices carbon copies of a statement giving the named of the officers chosen and Stating the purposes of the organization. The naMes of the officers were given as follows: , 1 President: FRANK BUCHANAN, Chicago, Ill, Bridge and Structural Iron Workers' Union. First Vice-President: =TON SNELLINGS, Washington, D. C. Stationary and Steam Operating Engineers' International Union. _Second Vice-President: WILLIAM F. KRA1.2113., Chicago, Ili., International Brotherhood of Blackamiths. Third Vice-President: RUDOLPH MODEST, New York City, Amalgamated Meat Cutters of America. Fourth Vice-President: JACOB C. TAYLOR, East Orange, N. J., Secretary-Treasurer of Central Federated Body of the States of New York and New Jersey. Secretary: L. P. STAUBE, Chicago, Ill., Commercial Portrait Artists' Union. Treasurer: ERNEST BOHN, New York City, Secretary Central Federated Union. Sergeant-at-Arms: FRED LOHN, Chicago, Ili., Leather. Workers' International Union. 1 -2- Er-Congressman H. ROBERT FOWLER, Harrisburg, Ill. General Counsel: PURPOSES OF THE ORGANIZATION AS DESCRIBED IN STATEMENT _ . The purposes of the organization were given as follows: To get the U. S. Government to take over the manufactUre of all munitions of war. TO ment of arms and have a proclamation issued stopping the ship- amunition to the belligerent nations of Europe. International cooperation between the labor uni:ons of all countries to compel the stoppage of the zar. To have the Government acquire the patent rights to all munitions of war, so that there would be no desire for war on the part of private manufacturing concerns by reason of their ability to profit thereby. Calling of an extra session of Congress "to promote universal peao.e." BUCHANAN GAVE THE FIRST HINT OF IT Although this organization was not formally launched until June 22, there is reason to believe that the period of incubation began a month or two before that date. Early in June, several days before the resignation of William. J. Bryan as Secretary of State, Buchanan appeared in Washington and gave the Chicago Tribune representative an interview. He talked about a -3- "labor peace movement" and hinted at the formation of an organization. terested. He indicated that he would see Bryan and get him inOne of the inferences drawn from Buchanan's talk at the time was that the labor union men in the House of Representatives and the peace-at-any-price men would be gathered together in a special organization for the purpose of embarrassing the Admini7tration and promoting the general peace propaganda. New :fork Sun printed such a story with some display. The Buchanan said he would see Bryan the next day and confer with him about the peace movement. At this time Bryan, probably unknown to Buchanan, was mulling over the question of his resignation and refused to see Buchanan, Buchanan went away and attended a meeting of the executive committee of the American Federation of Labor at Atlantic City. It was reported that Buchanan tried to get that committee interested in the peace propaganda but failed. happened at that meeting is not known. that the subject was not brought up. That Buchanan afterwards said One of the questions that he said was considered was the calling of a strike in the building trades at Chicago. called. As press reports show, this was afterwards Buchanan came to Washington again and once more de- parted. LEMING IN BEETHOVEN HALL, NEW YOIE CITY. Nothing mdre was heard of the peace movement, so called, until on the night of June 17 a meeting of 50 or more labor leaders was held, according to New York newspaper reports, -4- at Beethoven Hall, 'crew York. Buchanan was ciliated as saying that Bryan would head a delegation of 50 labor leaders to the White House in the interest of peace. to have been June 22. The date for this pilgrimage was Bryan never seemed to fall in with this plan, for it was not carried out, but on Saturday night, June 19, he spoke at Carnegie Hall,. Yew York, and one of the leading spirits at the meeting is said to have been Bohn, afterwards listed as treasurer of the Peace Council. Apparently, the scheme was -- Bryan had resigned at the time - to have the persons interested in the "peace" movement come to Washington on June 22 and with Bryan go tq the - .White House and make known their views under circumstances favorable for much publicity. perfected on top of this. for publicity purposes. Then the organization was to have been Bryan had been selected, evidently, This programme was carried out on June 22 in so far as the organization work was concerned. The scheme to go to the White House and call on the President was deferred until June 23. White House officials had a tip as to the nature of the organization, for When a dozen men, headed by Buchanan and Fowler, called there on June 23, they were told that the President was "engaged". As far as known, they never made any subsequent effort to get an interview at the White House. Bryan did not accompany the delegation. THE EELEqATON CALLS ON JOSEPHUS DAITIELS On the afternoon of June 23 they showed up at -5- the Navy Department and were permitted to see Josephus Daniels a few minutes. It was surmised that they attempted to see other members of the Cabinet, but this is not at all certain. is a member of the House Committee on Naval affairs. Buchanan After the delegation emerged from the Secretary's office none of the men would say anything as to what was discussed, but Fowler after much urging stated that they had discussed their proposition for government manufacture of arms and ammunition and that Daniels said he was in favor of this. to Presumably nothing was said about the scheme op the shipment of arms and aamunition to Europe. Daniels of course has been advocating government manufacture of munitions of war for some time past and this subject touched a responsive chord. Fowler's description of the conversation seemed plausible. One of the men in the party whom Fowler seemed anxious to advertise was H. P. Oehler of Washington, D. C., a labor union man. Fowler passed his card around and said he hoped the newspapers would print something about Oehler. Oehler, it appears, is a binder in the Covrnment Printing Office and of very little account. ENTEI: PARTIN. AND SCHULTEIS OF TTTE ANTI ITMT LEAGUE. The most interesting thing about this visit to Daniels' office was the appearance of Herman J. Schulteis, otherwise known as the "3aron," and Henry 3. Martin, respectively counsel and secretary for the American Anti-Trust League. Schulteis -6- and Martin have been hanging around Washington twenty years. They have a keen scent for any proposition that has about it the aroma Schulteis is or was a practicing lawyer and is still of money. Schulteis and Martin always work together. a member of the bar. They are frequently seen in the Capitol when Congress is in session. Their chief business for a long time has been to gather. in strangers and make what they can out of her by telling them that they are "on the inside" and have secret understandings with Senators and. Representatives. Business men coming to Washington for the purpose of opposing legislation, often fall into their clutches. One of Schulteis' favorite tricks, when having a "prospect" in tow, is to enter a Representative's office in the Capitol and use his telephone. He leaves the "prospect" in the corridor outside and the "prospect" is thus led to believe that Schulteis is on intimate terms with the Congressman. It is sur- prising how many strangers are taken in by this game. Martin's part in this is to hold the "prospect" outside while Schulteis is telephoning. It is related that Martin and Schulteis were found leading an ex-Governor of Pennsylvania around in this way when friends came to the rescue. SOMET:3ING ABOUT THE ANTI-TPUST LFAGUE ---- 4 Several committees of Congress have tried to find out something about the Anti-Trust League, but the only -v/ tangible objects in it were Martin and Schusteis. evidently trotted out before 1900. was to The League was One of its early achievements protest against the nomination by Theodore Roosevelt of of Philander C. Knox to be Attorney General. Representative Hartin The League pestered Littleton, when a member of the steel trust investigating committee in 1911, to such an extent that he was compelled to denounce Martin and Schleis on the floor of the House the opening day of the session of Congress in December, 1911. At that time Hartin and Schulteis had fastened themselves to Representative A. 0. Stanley of Kentucky, Chairman of the In- vestigting Committee, and were really on the "inside" of the steel investigation. For Mattin and Schulteis those were evidently halcyon days. Littleton in his speech in the House December 4 he arose to a question of personal privilege - denounced Martin as a blackmailer and called him the tool of David Lamar. At that time ;::ashington was not particularly interested in LaLlar. Real interest in Lamar was not aroused until two years later. In his speech La. Littleton said: "And let me say right here and now to my Democratic brethren, with respect to service on any committee in this House, that if in that service my loyalty to my party requires me on the one hand, to be obedient and do as I am bidden, either by a corrupt alliance such as that represented by Henry B. Martin, Herman J. Schulteis, David Lamar and the Anti-Trust League, 02, on the other hand, on the outside and far away, by the intolerant attitude and influence represented by the Commoner and its editor, or any other newspaper, or. the . combined influence of both, then I tell you I shall refuse to obey the mandate of my party and forswear my allegiance to my committee x x x". -8- Mr. Littleton said that Lamar's "unclean record ells to heaven". :Jot much was heard of Schulteis and Martin the tariff revision of 1913. until They were apparently busy with "pros-pects" who came to Washington regarding tariff revision. Then caLe the Senate lobby investigation and the Lamar episode. David Lamar when he was on the stand, testified had been "a regular contributor to the Afierican AntiTrust League" for and that he had "a very strong personal friendship .1-tin." Whether Lamar and Martin were intimate before they conceived the idea of having the steel trust investigated, does not appear. Martin, when he was called to the stand, testi fied hnt June". the league had been formed "fourteen years ago this That would have made the date 1899, but he afterwards said the date was 1901. organers. He named Schulteis as one of the original As far back as that time Frank S. Mennetva forer attorne:, general of Oki(); had been connected with the League. EASY TO BECOTT A lar,a3aim OF THE LEAGUE. The only real qualification for IJeL.ibership in the League, Martin testified, was the ability to give "intellectual support" to its principles. Martin wasn't certain how often the League met or When it elected officers - he said he was secretary - or who the members were. held a convention in Chicago. membership on thc He said the League once He declined to give a list of the -round that the members would thereby be exposed -9- "to the vengeance of the trusts". Martin read the names of the officers of the League from a letterhead as follows: M. L. Lockwood; Bride; secretary, H. B. Martin; counel, H. J. Schulteis. President, treasurer, Cotter T. Martin said the League was responsible for the creation of the Bureau. of Corporations, for the Department of Labor and many uther great reforms, and had given the Department of Justice valuable inforation about the Harvester Trust. The League, he said, was also responsible for the introduction of the resolution to investigate the steel trust, but he swore he didn't know that Lamar had "hawked" it about New York. The word "hawked" was supplied by Senator Walsh who was interrogating him He declared he had no knowledge of that at all The following is a sample of Martin's testimony on that occasion: Senator Cummins. How long has your office been in the Munsey Building? . Martin. About two wears. Senator Cummins. Where was it before that? hr. Martin. In New York. F.er Dow long? Senator Mr. Larti. For a brief time. We were at 1229 Pennsylvania Avenue most of the time. Those are the two places. Senator C=mins. Who kept the records of the league? Yr. Martin. I did, mainly. Senator Cu=lns. And whatever records there are will be found in your office in the Munsey Building, will they? I would not say that they could all be found Mr. Martin. No; there. Where are the others? Senator Cul-mins . Martin. I could not tell you at the moment. The Chairman. Who was the treasurer? r. Bride. Y.f. Martin. The Chairman. Does hQ live in Washington? Martin. Yes. The Chairman. What were his duties? hr. Martin. Those which are customary for an officer of that kind. TheChairman Did he pay you a salary? -10- 1::artin. No; I am not receiving a salary now. The Chairman. Did he pay out the money? hr. Lartin. Yes; he paid out a good portion of it The Chairman. Have you received the money? Mr. Martin. I have received most of the money. I was the active officer- and attended to the gathering of the funds in sup-port of the organization and to the conduct of its general work. I devoted a large portion of my time to that. The Chairman. The treasurer's office was a purely nominal office, was it? hr. h'artin. Largely; yes. The Chairman. You have done the work - collected the money and conducted the correspondence? hr. hartin. Exactly. The Chairman. And have been the legislative agent? hartin. I have been one of them. The Chairman. Almost the only one? L'r. Martin. No; from time to time other members of the committee have been here, but I have done it probably a great deal more than any one else. The Chairman. Are you willing to produce for the inspection of the* committee what papers and accounts you have, showing the collection of money, as well as the disbursement of money? For the reason that I gave, I do not think that I hart in. ought to be asked to do that- I do not think we ought to jeopardize the interests and the safety of honest men who are endeavorin, ; to do something patriotic. for the good of the country. Senator atiMirlS. I wish to submit to the committee for the committee to determine whether these things ought to be made public or whether they ought to reain secret. I do not think I would have a right to do that . 1;,:artin. without consultation with the men who -Senator Cunains., Very well; consult your counsel, and we will, take it up again. Hovr much of the money that you have collected has been paid to officers of the association for their compensa- tion? Martin. Only a small portion of it; probably 10 or 15 per cent of it. Senator Cummins. I do not know how much has been collected, so I do not know how much 10 or15 per cent.,of it would be Ir. Martin. That Would be only about 2,000 or 0,000, or possibly '4,000 altogether.; not over 5,000, I should say, in the Whole 10 or 12 years. The payments to officers were practically nominal. What they were paid they turned right around and spent in the work. Senator Cummins. You pay your own expenses out of that fund here, do you not? hr. Martin. No; sometimes I pay traveling expenses, and sometimes I pay a portion of my local expenses, but largely not. The funds are used principally for the maintenance of a headquarters, the circulation of literature, and the conducting of correspondencework of that character. Senator Cummins. I would like to know, though, how much of it goes in that way and how much of it goes in the other? Mr. Martin. The great bulk of it goes in that way, for the maintenance of headquarters and the conduct of the work. Senator Cummins. Do you maintain these headquarters and spend this money for the purpose of influencing officers of the Government, either in their legislative duties or administrative duties? 1:r. Martin. By presenting the facts to them. SenatorCUDJAJIS. Certainly, I aft not suggesting that you are doing it in any corrupt way. We do not do it in any Pr. Martin. I assure you we do not. but an open and public way, the :Tanner of which is simply to influence their judgment by presenting facts and arguments. Senator Ctumins. You represent, however, in all your literature and in your approaches to Members of Congress that you are the secretary of the Antu-trust League? h. Martjeo. Yes, sir. Senator Cummins. Do you tell the people how many men you actually represent? Pr. Martin. I do not think that a single Member of Congress ever asked me that question - either a Senator or Member of the Most of House or any other executive officer of the Government. the men I have talked with in Congress and the Government have known me a great many years, and, I believe, have confidence in my work. Senator CIL11111S. But I simply ask you whether you do tell them. You say now that you do not? Martin. Not voluntarily, so far as I remember. Is there anything upon your letterheads to Senator C1.12:11ins. indicate the extent of your league? Mr. Martin. Nothing except the members of the national committee, who are from about eight or nine different States, I be-, lieve. Marin and Schulteis were evidently not displeased with the notoriety they got in the lobby investigation. Evidently they liked to be in the limelight and considered it would assist them in their business. They were always on hand at the hearings and seemed to enjoy themselves. MARTIN AND SCHULTE'S FRIENDS OF FM,ILR. Their acquaintance with Fowler dates back, apparently, to the time (about a year ago) when he introduced a resolution in Congress for an investigation by the Interstate Commerce Commission of the Baltimore and Ohio Railroad's acquisi- tion Of the Cincinnati, Hilton and Dayton road. Previous to this they had been active with Lamar in efforts to have the New Haven Railroad investigated. The investigation is not believed to have been the result of any of these efforts, but they tried to make it appear so in conformance with their usual -programme. The investigation of the Baltimore and Ohio which Fowler was seeking through the introduction of his resolution, he was successful in obtaining. known. Whether 7Zartin persuaded him to take this up is not They were frequently seen together about this time It should be noted that ever since the lobby in- vestigation, persons at the Capitol have not taken either. Martin or Schulteis seriously. The average newspaperman, Congressman or attache rerzards them as permanent nuisances who however are harmless. Consequently, when 1;artin and Schulteis appeared wlth "Labor's National Peace Council" in the office of the Secretary of the Navy, the Peace Council immediately came under suspicion. Several New York newspapers published reports very broadly intimating that this was a peculiar business, but the Peace Council never replied to the insinuations. Fowler has been asked if the German were supporting the organization, but he always denied this and said "friends of peace are making small contributions." Havin-, been defeated for re-election, Fowlef left Washington about March 4, evidently not expecting to return 'nere. long When he did return in the interest of "peace" it was not before he was seen on the streets Yith 1-ax'-bin and Schulteis, -13- but whether he sou:ht the]: our or whether they fastened themselves to hin, cannot e ascertained. Where-er Fowler goes nowadays about Washington, either Martin or Schulteis is seen with him constantly. Fowler spends a few days in Washington, then goes west, then returns. He stops at the Willard Hotel and seems well sup- plied with Mild: . BUCHArAN A REPRESENTATIVE OF ORGANIZED LABOR. Buchanan is now serving his third term. in Conas. He served in the sixty-second and sixty-third congresses ,nd was re-elected to the sixty-fourth congress (which will convene in beceJyer). He is what might be described, as an organized labor man in Conresb - nothing else. Most members of Congress seem to realize the diversities of their constituencies, and the necessity for accoodating their political conduct to :the various interests of their districts, viz: capital and laboir, employer. and employe, different races, religions, political organizations, etc. Buchanan never4akes any secret of the fact that he has one object, namely, to promote the interests of organized labor. talks about trusts and corporations incessantly. He He 'seems obsessed with the idea that life is just a stru:,;gle on the part of the mass es to protect themselves against predatory corporations. This is. true not only of his speeches but of his private conversation. His conversation the year around is 99 per cent. the same line of stuff. In every economic development he sees the hand of the predatory corporation. much aloncr this line that conversatio http://fraser.stlouisfed.org/ proposition. Federal Reserve Bank of St. Louis In fact, he talks so with him is a boresome Very fen- of his colleagues care to associate with him. WAS CUZSIDERED A POWER IN THE LAST HOUSE He is nominally a Democrat, but he takes no real interest in the party except to use it as a Vehicle to get into office and to promote his own whims respecting labor legislation. influence of organized labor in the last Congress was so strong that Buchanan nearly always had his way. He has frequent- ly disarranged the plans of the Democratic leaders of the House eca7Ise ney would -lot do his bidding in laor tters. Rep. John J. Fitzgerald of He':: Yorl:, has freciuently had to bow to Buchanan in the ,natter of appropriations when Buchanan souht larger ap- ropriations for something labor desired - larger appropriaions .ban comAttee desired to give. He is in no sense a party organization man. sense he is a freak. In a He likes to tell his friends ,:fliat an in- dependent sort of man he is and how various interests have at- tempted to punish him for his independence. He has been sometimes referred to as the personal representative of the American Feder- ation of Labor in Con-es. He possesses a fair amount of vanity as evidenced by hi "C . ency to requires vE: tai 7- about himself and his family and little effort to induce it to get out a scrap-book and displag newspaper clippings about his record. "WAR MATERIALS TRUST" HIS FAVORITE PIMASE In his biographical sketch in the Congressional directory he says he was born in 1862. He is a large man of great strength and formerly an iron worker. Attempts made to con- -15- nect him with the Los Angeles dynamite conspiracy in which the iron workers' union was involved, have failed. His district in Chicago contains many foreigners and, of course, a large organized labor element. conspicuous "Little Navy" man. He has been a He has freciuently made speeches in the House about the "war materials trust". He seers to be- lieve that the Navy exists merely to provide business for the "war materials trust". The fact that the Navy might be used to defend the country in the event of war, does not seen to enter into his calculations. This phrase "war materials trust" was used by him lo - before the war broke out. When the war came he fre- eu-,ently said that it was the result of conspiracy on the part of the international war materials trust. This particular theory of his seems to be in line with his general theory that trusts are responsible for all the strife and trouble in the world. It hasbeen suggested that if the German propaganda is really behind this Peace Council, Buchanan was an ex. cellent choice for president - a labor man who has consistently preached against the -war munitions trust both before and after the war. This descrirtion does not fit Fouler who himself in congress last winter offered an amendment to the naval bill for a bigger battle cruiser than any other member seemed to want. Fg:ILER. JUST Ar ORDINARY DEUAGOGUE a lawyer, Buchanan is, of course, not a lawyer.. Fowler is and was born in 1861, and has served in both houses of the Illinois legislature. He is an excellent sample of the middle western demagogue who frequently gets a seat in Congress. Gossip atthe Capitol describes him as having been an ambulance chaser- in former days and this seems to be borne out somewhat by his own sketch in the Congressional directory. directory of December, 1311, says: The sketch in the "Is a lawyer by profession_ and enjoys personal injury practice, never taking the side of a corporation against labor, etc. He.was a member of the House post office committee and during- the past Congress probably got more space in the Congressional Record than any of the leaders. His favorite pas- time was to make speeches in favor of larger appropriations for the Capitol scrub women. ing in automobiles. greedy corporations. He denounced cabinet officers for rid- He can fly into a fury inveighing against He has the ability to make demagogic speech- ed that are plausible enough to be printed in the newspapers. He cultivated the acquaintance of reporters and gradually got to be very skillful in advertising himself. Withal, he was a hard ,Jorker, In order to hamper the work of the committee on appropriations, he would sit up nights hunting for old statutes to serve as the basis of paints of order or for reducing salaries or eliminating certain statutory positions which he opposed. While in Congress he was not regarded as a peace advocate. He has some detective ambitions. He once told a re- porter that if he could spare the time, he would obtain a job Under an assumed name in a Chicago packing house and find out how He is an excellent sample of the the Illinois legislature. middle western demagogue who frequently gets a seat in Congress. Gossip atthe Capitol describes him as having been an ambulance chaser in former days and this seems to be borne out somewhat by his own sketch in the Coneressional directory. directory of December, 1311, says: The sketch in the Is a lawyer by profession. and enjoys personal injury practice, never- taking the side of a corporation against labor, etc. He.was a member of the House post office COD- mittee and during the past Congress probably got more space in the Congressional Record than any of the leaders. time was to make speeches the Capitol in favor of scrub women. ing in automobiles. greedr corporations. His favorite pas- larger appropriations for He denounced cabinet officers for rid- He can fly into a fury inveighing against He has the ability to make demagogic speech- ed that are plausible enough to be printed in the newspapers. He cultivated the acquaintance of reporters and gradually got to be very skillful in advertising himself. In order t Withal, he was a hard worker, hamper the work of the committee on appropriations, he would sit up nights hunting for old statutes to serve as the basis of paints of order or for reducing salaries or eliminating certain statutory positions which he opposed. While in Congress he was not regarded as advocate. He has some detective ambitions. porter that if he under could spare a peace He once told a re- the time, he would obtain a job an assumed name in a Chicago packing house and find out how -17- After he had brought the packers "doped" the meats they sold. about this exposure, he would have it printed in the newspapers. He said he believed all meat was "doped" by the packers so as to preserve it. Fowler was believed to be economical. He never went in for society, and it is therefore believed worthy of comment that he now stops at the Yillard. When he was in Congress he stopped in a Capitol Hill boarding house. that he is a fair lawyer., but It is believed it is doubted if he ever had much He was prosecuting attorney df his county in court experience. Southern Illinois once. The press matter Which he is getting out for the Peace Council shows sone traces of knowledge of international law, but it is probable that Fowler is the author of all of it. He is a close student and with a couple of months reading would probably be able to give this matter the appearance of having been prepared by an international lawyer. He told a reporter that he has been travelling about "on this business ever since I left here in the spring" meaning :arch 4 or thereabouts. He has also stated that he is the "press agent" for the Council. Hilton Snelling, the first vice-president of the Council, is an organizer for the American Federation of Labor, His latest work has been to organize the brewery workers of Washington and not long ago they went on strike. His connection with the Council is believed to be merely that of an inactive officeholder. He lives in a very poor part of Washington and is -18- not rearded as a very thrifty person. GOITERS' ATTITUDE TOWARD THE COUUCIL. Although all the labor men who are listed as officers of the or:anization are members of oraniztions affiliated v:ith the ALlerican Federation of Labor, Samuel Gompers, President of the Federation, has expressed his opposition to that part of its doctrine which is aimed at preventing the exportation of arms and ammunition to bellierents. This opposition was indicated as far back as June 19, the date of the Bryan meeting at Carnegie Hall. Gompers was invited to address the meetin7. He sent a letter reretting his inability to do so, in which he expressed the view that while peace was much to be desired, there mieht come a time 7fien it would be desirable for the United States to,fiht to preserve its ri7hts. In other Tiords, Gompers could not approve of a peace-at-any-price policy. The meeting was called obtensibly to consider peace and Gompers did not refer to the subject of exporting-arm s- and aamunition. The letter was to have been read at the meetin, but Gompers gave out copies of it in Washington to the press. He evidently wanted to be sure of publication. Since that time (k)mpers has gone further. He has declared that labor is not concerned with the question of shipment of arms and &munition. He told a reporter in an interview 1Jonday, July 19, that labor is not concerned with the use made of these arms and ammunition. He believes that American manufacturers are making arms for any nation that wishes to buy -19- them, hence there is no discrimination. They are delivered free on board at the factory or at some port of entry. at becomes of them after their delivery is no concern of the laboring man. He expressed the opinion that the U. S. could not refrain from selling arms and ammunition, as if the U. S. were in war we would also have to buy arms and aamunition. It would be dangerous policy, in his opinion, to close the door. Asked if the Labor Peace Council had the support of the American Federation of Labon, he reTJlied that "they are not only acting independently of us, but are repugnant to us." Further asked to go into details, he refused to He evidently has no authority to prevent the say anything more. Peace Council from continuing its propaganda and at the same time he does not wish to stir up a fight within the ranks of the Federation itself. The fact, however, that Gompers is opposed to the Peace Council's doctrine will undoubtedly serve to take the sting out of any activities the Council may push in Connress next winter. It is pretty safe to assume Buchanan will be unable to make any progress in the Capitol with hisKropaganda because the rank and file of Representatives and Senators will know that the Federation is not behind the movement and will act accordingly. PEACE COUNCIL HAS ACCO=ISHED NOTHING YET. As far as is known in Washington, the Peace Council has accomplished nothing except to commandeer some space in the newspapers. have been made by it. Two noteworthy efforts to obtain publicity One was in a statement charging lack of -20- neutrality on the part of the Federal Reserve Board and the ofler was with respect to exportation of arms and ammunition from the port of liew York. The first named document was a petition to the Federal Reserve Board alleging that a conspiracy was afoot to have the Federal Reserve Banks discount notes for the bellir:erent nations "and their aents". This was a petition of 7,500 words which was formally presented to the Federal Reserve Board. The prayer sought two forms of relief, namely, that no federal reserve bank be permitted to discount notes which were the result of transactions in munitions of war and also that no nember bank discount any such notes, the Federal Reserve Board to admonish them against such practice by circular. This document contained earmarks of Henry B. Martin's study of the report of the money trust investigating committee- The petition to the Reserve Board said an:mg other things: w:re, charge that through the medium of an extens- ive conspiracy composed of certain bankers and officers and directors of federal reserve banks and member banks embraced in the federal reserve system, acting in conjunction with officers and agents of the governments of Great Britain, France and Russia,. the United. :tates has been involved in very grave and serious breaches of neutralityxxxxxx. The persons chiefly responsible for and the dominant factors in, this conspiracy are the members of the firm of J. P. :I-organ Co., and certain other persons now -21- serving as officers and directors of various federal reserve banks and member banks, who secured these positions through the ,influence of the firm of J. P. ..oran CO., or other business allies of s'aid firm or who are subject to an under-control of its influence. The members of this firm as early as Au(4ust, 1914, in furtheran cc of the conspiracy began making personal representations to officers of ihe overnments of Great Britain, France and Russia to the effect that in the event said governments would em- ploy the firm of J. P. Lorgan Co. as agents, said firm would pro- vide facilities in the United States which would enable one or more of these governments to obtain in the United States credits to the amount of at least 500,000,000, said credits to be based and upon secured by obligations of one or more of said governments ^ or by securities of American federal state and municipal governments, or railroad and industrial corporations as might be best available and procurable by or on behalf of the governments of Great Britain, France and aussiaxxxxxxx" The petition goes an to give the alleged details of these transactions and concludes: "Already the conspirators have drawn from the banks in the Federal Reserve System some 220,000,000 and used these moneys on contracting and paying for the erection of huge factories in different parts of the United States for the manufacture of instruments of death and destruction on a scale hitherto undreamed of, so that even now by the use of these vast sums of money secured from institttions, parts of a banking system only recently created by the representatives of the people in the hope -22- of breaking the grip of the :.:or.'-an group upon the finances and money of the country, we have the awful spectacle of the members Co. and their confederate conspir- of the firm of J. P. ::organ ators turning our reorle and our manufacturing industries into ane tremendously [-Teat a7;re-ation of murder factories, sending forth each day instrueients to kill countless human beings and sending, to the battlefields of Europe from day to day of poor dumb animals, 'here to he manner and as we have said slaughtered in a before, all thousands :mast inhuman this done by the use of the machinery and resources of a banking system created by the people and.sustained by the money and credit of the people. "Once more speaking for the nillions of men em- braced in the organizations represented by our body,we say to your honorable board these things ou-ht to cease and cease now. life say to you further fin, of J. P. :organ that if the law against the members of the Co. and their confederates, so as to pre- vent further use o± the moneys of the banks embraced in the Federal Reserve system for the purposes denounced here, your doing so will avoid much trouble and confusion to our country, but as a very last word and stating what we know to be the sentiment of the laboring people of the U. S., we say to your honorable board that end it shall, if not by your action, then by other means." (The last paragraph is an exact copy of the statement. A word appears to have been left out in the first' sentence.) tion. The Reserve Board took no action on this peti- -23- The Peace Council also called to the attention of the Secretary of State alleged violations of the neutrality laws in permitting British "transports" to sail from the port of :ork with arms and a=unition. An article in the New York Herald of July 9 describes a petition that was presented to the Secretary on July 8, but on which he took no action. This .article is: Herald Bureau, 1502 H. Street, Nal., ,shington, D. C., Thursday. Labor's National Peace Council, the organization which was launched on the heels of the resignation of William J. Bryan from the Cabinet, made public tonight a letter to iir. Robert Lansing, Secretary of State, in which, after the citation of ten alleged specific charges of violation of neutrality, is asked to obtain a publiC investigation of these chargesLansing through the Collectors of Ports. The letter is signed by H. Robert Fowler of Illinois, once 2-epresentative in Congress from thatate, and 1:r. Frank S. :fonnett, once Attorney General of Ohio.' The'letter sets forth the ten specific charges and then argues that under provisions of the Hague conference and under general international law it is a violation of the neutrality of the United States for transports in the service of the Allies to load munitions in United States ports and it also is illegal to ship submarines or aeroplanes in part or in whole to the Allies. The charges indicate that the Council is keeping well posted on the maritime business of the port of New York. How the inforation has been obtained was not divulged, but it believed here that the information is extremely accurate. These are the ten allegations of violations of neutrality as set forth in the letter: The steamship City of Chicago, now at pier 69, Hudson Tliver, New York, is a transport in the service of the British government and is about to sail for Swansea, Wales, with a cargo of ammunition for the British government. The steamship Lord Erne is now about to sail from pier 84, Hudson 'Aiver, Yew York, with a cargo of ammtnition, automobiles and other war supplies, intended for the British and French governments. This ship is a transport in the service of the British and French governments . The steamship 1:assurian, now at the Bush for 1,500 horses, the same to be shipped from Newport News, Va., doc17s, port of New York, is being fitted up with accommodations . -24- to France, for delivery to military lines of the British and French This ship is a transport in the service of the French governments. and British governments. The steamship Venicie has left New York for. 4, This Yorfolk, Va. to take on a shipment of horses for France. vessel is a transport in the service Of the British and French governments. The steamship Virginia is now loading This vessel is a transport horses at Yonkers 7.Y. for France. in the service 6.4the British and French :,7;overrrments. The steamship Jethon now at piers _os. 36 and 37, Hudson River, :7.ew I'ork, is now aking on war supplies This vessel is a transport in the service of for Havre, France. the British and French govelnydents. 59, The steamship Pascal, now at pier Hudson.;:iver., 1Tew York, is loading with ammunition and war supplies for the British government, and is a transport in the service of the British government. The steamship Lapland, at pier 60, Hudson iver,..;:ew York, is now taking on a cargo of gun carriages and other war supplies intended for the British government, in violation of the federal statute as well as of international law. The steamship Toronto, now at pier 54, Hudson .J.ver, :Jew York, is taking on a loan of ammunition and other war supplies intended for the British government. This ship is a transport in the service o f the British government. The British and French governments have been using the docks of the White Star and.Fabre lines to store and ship on their transports explosives, ammunition, submarines and aeroplanes. The principal argument made by the letter is that the chartered British ships which are carrying arms and ammunition from American ports should, under the Council's interpretation of the Hague conventions and existing treaties, be prohibited from doing that. The Council asserts that in these cases merchant ships may not leave United - tates ports without violating neutrality. The letter in closing says: "!e respectfully request that you direct that a public inquiry be held at once by the collectors of the ports or other Proper government_ officials at. which oral and documentary evidence can be submitted and opportunity given to the citizens to examine witnesses, to the end that your department be fully informed as to the situation." PERSONAL. August 25th, 1915. My dear Governor Hanlint Then I wrote you in regard to the various subjects which it seemed to me should be especially studied just now, with a view to possible future developments, I omitted to mention the matter of credit information in regard to member banks. If any emergency arose, the reserve banks should be in position to meet it promptly. One of the most essential requirements would be complete knowledge of the affairs of member banks n11 it not be possible for us to get the final conclusions of the Federal Reserve Board =4 the Comptroller at an early date so that we may begin the preparation of information if it is to be made available or, if it is not to be available, we may take 0th- or steps to obtain it. Thanking you in anticipation, Ibeg to remain, Very truly yours, Governor. Hon. C. S. Hamlin, Governor, Peueral Reserva Board, Washington, D. C. BS Jr/VC!-5 PhESONAL August 27th, 1915. My dear Governor Hap In reading through our correspondence file, I find in my letter of February 8th addressed to Vice Governor Dela- no on the subject of trade in contraband following expression is used: articles, that the "Commerce of that character is authorized by our own laws and by international law and That expression may not accurately describe convention." the legal status of the trade in contraband of war, and in what I now under- Mr. Delano's absence I am writing to express stand to be the present status of the commerce referred to. Trade with belligerents in articles which are con- traband of war and conducted by citizens of I believe, considered by act on the neutral nations is, some authorities to be an part of the individual, but it ter which impose s u-)on the ligation of restricting or eutral is not of a charac- neutral government any duty or obinterfering with the trade. Trade in war munitions is "denounced" by various in- ternational agreements or conventions, the penalty of confisca- tion is imposed and a neutral government tion or assistance to trade of din afford no protec- that character. The situation Aug. 27, 1915. To Hon. O. S. Hamlin. in this country in reseect of trade of t is Character now seems to have been made clear by the folloeing: The circular of the Department of State with reference to neutrality issued October 15th last states: "In the first place, it should be understood that generally speaking, a citizen of the United States may sell to a belligerent nation or its agent, any article of commerce which he pleases. He is not prohibited from doing this by any rule of internation- al law, by any treaty provisions or by any statute of the United States. It makes no difference aether the articles sold are exclusively for war purposes, such as fire arms, ex;losives, etc., or whether food stuffs,elothing, horses, etc., for the use of the army or naval belligerent. *****"For the government of the United States itself to sell to a belligerent tion would be an unnautral act, but for a private individual to sell to a belligerent any product of the United is neither unlawfulnor unneutral nor within the power of an executive to prevent or control." The note addreseed by Secretary Lansing to the gov, ernment of Austria-Hungary, under date of August 12th, also, contained the following wAoch are expression in regard contrabend of war: to trade in articles ""*" this government is reluctant to fee/ that the imperial and royal government will ascribe to the United States a lack of impartial neutrality in continuing its leRitimate trade in oil kinds of supplies used to render the armed forces of a belligerent efficient *****". Aug. 27, 1915. To Hon. C. O. Hemline, 3 The above quotations supplement and amplify the statement contained in the President's proclamation of neutrality dated August 4, 1914, from which the following is quoted: 'And I do hereby warn the citizens of the United States ***** that while all persons mey lawfully and without rostrictionsby the aforesaid state of war, manufacture and sell within the United 7tates arms and munitions of war and other articles ordi- narily known as 'contraband of war' yet they cannot carry such articles upon the high seas for the use or service of a belligerent, nor can they transport soldiers and officers of belligerents or attempt to break a blockade which may be lawfully established and maintained during the said war,without Aneurring the rick of hostile capture and the nenalties denounced in the law of nations in their behalf." The question having been raised as to the accuracy of my letter of February 8th, I take this first opportunity of submitting the basis of expression of views therein cont.ined. beg to remain, Very truly yours, Governor. Hon. C. O. Hamlin, Governor, Federal Reserve Board, Thshington, D. C. BS Jr/VCM ?ERSOW,L. -..i.eptember 2nd, 1915. My dear Governor Hamlin: Possibly, the beet reply to your favor of the 26th tit., in reeard to earnings and expenses of the Federal reserve banks, will be to send you the enclosed memoranda. This was not intended originally to be forward- ed in this form, but it will save &nay and re-writing to submit exactly the data as prepared in this office. The views expressed by our auditor, :Ir. Jefferson, regarding the policy which we have arrived at, were reached after considerable discussion and we have submitted the whole subject in detail to our Board of Directors and obtained their approval. I hope it may be of some service in connection the matter about which you :rote. Very truly yours, Hon. C. S. Hamlin, Federal Reserve Board, '-ashington, D. C. BS Jr/VCM -4 with ,.)eptember 10th, 1915. y dear Governor Mani" I have just received your telegram and am very sorry not to be able to take advantage of the opportunity to have a chat with you this evening. I have accepted an invitation from Br. Morgan to meet the Committee of English and French bankers at dinner and only on that account find it impossible to join you. It was very good of you to wire me. Very truly yours, Governor. Hon. C. S. livnalin, University Club, How York City. BS JR/VCM Dictated by Br. Strong but signed in his absence. October 11th, 1915. Dear Governor Hanlin: We are just harvesting a very satisfactory crop of apples at the farm, notwithstanding the adverse weather conditions, and I am taking the liberty of sending you a sample to show what sort of Ppples can be grown in Connecticut. I hope they reach you in good order. Sincerely yours, Hon. Charles O. H-mlin, Federal Reserve Board, Washington, D. C. Bfl JrfiCM. he above sent to the following: A. Delano, 1 M. Warburg, pJ. Harding, 4. C. 111er, . J. . lton A:\ PERSONAL -----CONFIDENTILL. Januery 25th, 1916. Dear Governor Hamlin: Your fever of the 21st inst, is just received and / am indebted to you for the confidential advice as to plans of the Pederel Reserve Board Which might be claesed to some ex- tent, as preparation for emergencies. The enclosed auggeetion for amendments are those which have been considered from ttme to time by the officers of this bank and, to some extent, discussed with Governors of other of the reserve banks at the various Conferenees during the pest year. I am not prepared to say tht in this form I would finally recommend them, but they contain suggestions which may be of value in connection with work along this line by the ?edema' Deserve Board. A careful study of the proceedures taken by England, France and Germany -and by the central banks of those countries in connection with the war, brings to light very strongly what functions such institutions as the Federal reserve banks will be called upon to perform in the event of any great national calam- ity. These have unmistakably proven to be First: Almost unlimited extension of credit to banking institutions, Second: Unlimited issues of notes to take the place of sold in circulation which rapidly disappears. -2- Jan. 25, 1916. Hon. C. 7. Hamlin. To take care of the demands of the character first mentioned, Federal reserve banks should be in a position to discount with freedom and without encountering technical obstacles, all paper of every character offered for that pur9ose by solvent members, within, of course, the limits of business prudence and the limitation of the statute as to reserves, r2o meet demands of the character described as second, it is highly important that the process of accumulating gold should be vigorously continued, giving note issues of the Federal reserve banks a quality by reason of the lorga gold backing which can be obtained by no other process than that which now prevails. The use of gold being impounkied by the present process as a part of the bank's reserves, will greatly ast,ist in making the notes acceptable for circulation and in justifying their use,(possibly only under emergency conditions), as reserve money. One of the consequences of developments which would lead to sudden expansion of the reserve banks, as above described, might prove to be a demand for gold, and ability to meet this demand will deoend u on banks. the gold resources of the Pederal reserve It seems to me, therefore, that the steps now contemplated by thr Board in recommen'iing various amendments are absolutely es- sential to the preparation of our banking system to meet emergency strains. It had occurred to me that some of the legislation men- tioned in your letter might be favorably received by Congress during -3To Jan. 25, 1916. Hon. C. S. Hamlin. the present session where some other features, such as the re- serve qualities of Federal reserve notes, might be dealt with by having the neceszary legislation prepared and ready for submis.ion should occasion arise which would require it. I very much appreciate you writing me so fully and will hold your letter in confidence. Very truly yours, Hon. C. S. Hamlin, Federal Reserve Board, 'shington, :D. BS Jr/VCII -5 C. Confidential. ay 5th, 1916. My dear Governor Hamlin: r. Jay and I have obtained from Mr. J, P. Morgan, a verbal statement of J. P. the financial condition of the firm of : organ & Co. and the allied firms of Drexel, organ & Co., Morgan, Grenfell & Co. and Morgan, Harjes & Co., wnich conforms to the plan authorized by the Board of Directors of this uank and which will justify placing that firm upon the list of those private bankers whose acceptances are eligible for eral Reserve Banks. office and the firn purchase Uy Fed- Letters have been exchanged between tnis of J. P. 7organ t, Co. which comply with our requirements for obtaining information respecing specific The information furnished us includes: The aggregate capital of the four firms The personal responsibility of the partners outside of the firms' capital, The liabilities of the firms, The amount of their acceptance A general statement of engagements, the character of the firms' assets. Our arrangement with Mr. ' organ includes an understand- ing that any material change in the firms' affairs will be Lrought to our attention. May 5, 1916. To Hon. C. S. Hamlin, It is undetstood with Morgan that is state- ment is confidential and that no announcement in respect ther(to will be made. The knowledge of the eligibility of bills accepted. by his firm will become current in the street as soon as we begin to buy them. It is importaat for various reasons that approval of the form of statement as above outlined, be given az promptly as possible and . Jay and I wouldeprreciate advice by t legraph on Saturday, if possible, -tnat tne information as above outsined is satisfactory to tne members of your Board. Very truly yours, GoNernor. Hon. C. S. Hamlin, Governor, Federal Reserve Board, W ashington, D. C. BS Jr/VCV Confieential ay 5th, 1916. 1 dear Governor Hamlin: Re -esers. Heidelbach, ickelheimer & Co. 35r8. Heidelbach, ickelneieler a: Co. have filed with us an auditor's statement of the condition of their firm in the form enclosed. in addition to the figures submitted, a member of the firm has made a statement to Mr. Jay and me in regerd to their af- fairs and policy and we have now placed their name upon the list of those firms whose bills are eligible for purchase by Federal Reserve banks. :Je will appreciate your approval of theform enclosed. This firm has likewise filed with us tne necessary letter specific bills if requested and r. ickelheimer has stated that he will inform us of eederteking to furnish us with information in regard to any material change im the firm's affairs. It is understood that the enclosed statement is confidenial and that no announcement is respect thereto will he made. knowledge of the eligibility of bills accepted by come Governor. Hon. C. S. Hamlin, Governor, Federal Reserve Foard, Washington, D. C. ES Jr/VCM-4 thlb firm will be- current in the street ae soon as we begin to buy Very truly yours, The them. , May stn, 1916. My dear Governor Hamlin: Re Meesers. E. Naumberg. & Co. ilesurs. X. Haumberg (lk. Co. have filed with us an auditor's statement of tee condition of their firm in the form enclosed. In addition to the figures submitted, a member of the firm has made a statement to Yr. Jay and me in regard to their affairs and policy and we have now placed their name ueon the list of those firms whose bills are eligible for purchase by Federal Reserve Banks. 44) will appreciate your aneroval of the form enclosed. This firm has likewise filed with us the necessary letter undertaking to furnish us with information in regard to specific bills if requested and Mr. eaumberg has stated that he will inform us of any material change in the firm's affairs. It is, understood that the enclosed statement is con- fidential and that no announcement in reseect thereto will be made. The khoadedge of the eligibility of bills accepted by this firm will become current in the street as soon as we begin to buy them. Very truly yours, Governor. Hon. C. S. Hamlin, Governor, Federal Reserve Board, Washington, D. C. BS Jr/VCM -2 CONFIDENTIAL Lay 23rd, 1916. My dear Governor Hamlin: When I wRs last in Washington, I left a copy of a confidential memorandum covering my conversations with the Governors of the Bank of England with Mr. Delano in order that it might be available for eubeequent discussion and such action as the Board considsrs desirable. There are a number of principal points for consideration in this connection: Paragraph E of Section 14 of the Federal Reserve Act authorizes Federal reserve benke to open and maintain banking accounts in foreign countries, appoint correspondents, etc., "with the consent of the Federal Reserve Poaed." The plan suggested by the elemorandum cannot therefore, he put into operation without the formal authorization of the Federal Reserve Board, which as a read the statute, should cover the opening and maintaining of a bank account and the establishment of the Bank of England as our correspondent in England. For reasons which I expressed in some detail while in ',Washington, it is in my opinion, absolutely necessary that the purchase of foreign bills and the operation of banking accounts in foreign countries by the twelve reserve banks should -2- be conjucted as one account. To Hon. C. S. Hamlin, May 23, 1916. I shall not attempt to repeat the explanation made in Washington, except to say that if the account is to be managed in that way, it should be done under a sufficiently binding agreement so that when the necessity arose for really protective measures to be undertaken to save this country from a drain of gold, the entire burden will not fall upon the Federal Reserve Bank of New York. I regard this feature of the Federal Reserve Act as one of the most important and far-reaching in its effects, so mudh so that, as I stated to Secretary McAdoo, if the other reserve banks decide not to participate in the arrangement, we would nevertheless undertake it ourselves, provided our Board of Directors authorize us to do so. The question of neutrality involved must, it seers to me, be taken into consideration by your Board when or withholding its consent to the appointment of the Bank of England. I have never believed that a Federal reserve bank is a government institution in the sense that it would implicate the United States Government in an unnentral transaction, if our relations with the Bank of England were considered to be unneutral. Furthermore, the Bank of England is a private institution and in no sense a part of the British Government. It is probably less so than we are, although, as you know, it is the principal fiscal agent of the Government in the management of its domestic financial affairs. The wisdom or unwisdom of undertaking investments in foreign bills at the present time depends,of course, .To Hon. C. S. Hamlin. kay 23, 1916. entirely upon the degree of security afforded by tee arrangement made with the Bank of ngland. After making a very careful study of conditions in England and France, I became convinced that the opening of accounts and purchase of bills abroad during the continuance of the war would not be justified by the Federal reserve banks unless we were eepecielly protected by an engagement on the part of the Bank of England in England and the Bank of Frnnce in France to liquidate our accounts in gold, if we require it. No other bank is eble to make as effective gold engagement as is the Sank of England, it being the custodian of the gold of the nation. There is no occasion at the present time to consider operations, but occasion may arise, however, scae time in the Fall and I would like to 'as prepared before that time arrives. ve might feel unwilling to any transactions, notwi-astanding that the arrangement Conditions may alter materially and undertake eas concluded in all particulars. Whether we undertake any business abroad before the conclusion of the war or not, it seems to me important that the Federal heserve Act should kle amended so as to provide that Federal reserve banks may receive accounts from such correspondents as they may appoint abroad, otherwise, it would be difficult for us to make the relationship effective. tay I ask he Board to give consideration to the de- sirability of acting upon this matter in order that I may continue To Hon. C. S. Hamlin. Ray 23, 1916. correspondence with the Bank of England and the Bank of France and, if necessary, submit the matter to the Governors of the twelve reserve banks? Your Board has been advised of the character of the arrangements already established with the Bank of the Netherlands and we are now in correspondence with the Javasche Bank with a view to establishing somewhat similar relations with that bank. You further understand that Mr. Warburg has discussed tentat*Vely with the Banco de la Racion Argentina the possibility of the establishment of a relationship with them. Our business with each of the institutions named will very considerably, but it may be desirable for the Board to cansider at this time the whole subject of foreign correspondents and whether it may not be edvisable to authorize the appointment of the banks named as our correspondents for the purpose of such business as we may be transacting with them from time to tine. I beg to remain, Respectfully yours, Governor. Hen, C. S. Hamlin, Governor, Yederal Reserve Board, Washington, D. C. BS Jr/VON May 25, J.J16. CONFIDENTIAL Dear Mr. Hamlin: Governor Strong and I have obtained from Mr. James Brawn a verbal statement of the financial condition of the firm of Brawn Brothers and Comlanz: and the allied firm of Brawn. Shipley & ComTany, .which conforms to the plan authorized by the Board of Directors of this bank and which will justify placing that firm upon the list of those private bankers whose acceptances Federal reserve banks. are eligible for purchase by e have received from Messrs. Brawn Brothers & Company a letter agreeing to give us such information as we may require respecting specific bills. The information furnished us includes The aggregate capital of - the two firms. The personal responsibility of the partners outside of the firr01 capital. The liabilities of the firms. The amount of their acceptance A general statement of the the assets of the firms. engagements. character of A general statement of the policies governing the conduct of the business of the firms. r. Brawn will inform us of any material change in the affairs of the firs. It is understood by Mr. Brown that his statement is tip.' and that no announcement in respect thereto will be made. confidenThe #2 Honorable Charles S. Hamlin, 5/25/26. knowledge of the eligibility of bills accepted by his firm will become current in the street as soon as we begin to buy them. We should appreciate advice by telegiaT1 as soon as possible of the approval of the form of statement as above outlined. Respectfully yours, Chaiman. Honorable Charles S. Hamlin, Governor, Federa,1 Reserve Board, Washington, D. L, PJ/ RAH June 16th, 1916. My dear Governor Hamlin: I was just about to write you this morning when you Now I. want to thank you for came in. both your fine and for coming in to see me to cheer me up. You and your as- sociates and the men in the bank down town have done in your and their power to relieve my letter mind of any evorything anxiety about going way and I am more deeply grateful than I can nossiblg express. I hope you get a good rest yourself this Fummer. the me!Tbers of the Reserve Board have bben working All under a tre- mendous strain and I can now with justice point to myself as a horrible examle of going through an exarienoe wh-ch all of you must avoid. Tith many thanks, I am, Very sincerely Hon; C. S. Hamlin, Care Federal Reserve Washington, D. C. 135 Jr/VC Board, yours, Estes, Park, e1o., Juiy 19, 1A6. Hon. C. S. Hamlin, lederal Reserve Board, shington, D. C. Dear Governor Hamlin: Thank you for sending me the In ex-Digest of the Clayton Antitrust Act. Please h4ve no fears, however, that 1 may become entangled itafbanking alliances here that might violg-tejtWAiw -- there is only one bank in Estes Par with E' ital of 0.2,1500 and, unless my lit;t1e- iice raj considered a Federal Reserve Bank,,,f/Is t trictly n-competitive district. 1 am jid now 4gaged in a little proselyting with the Ca ie the Bank, who is also Proprietor of the Lewisto, ere 1 am stopping, in an effort to persua -14m to\ mftat par. That seems to riilit"i.è for local be the limit o here. r p rt that 1 am improving. t. lad to yand rmest regards to all of my the same to your good self. I am 1 want _22 friends 'n activities out my 40. tai.g_ Cordially yours, CONFIDENTIAL. .Jear Sir: At the last conference of Governors of Federal Reserve Banks, held in Washington in April, Mr. Strong made a report of his negotiations abroad for the appointment of correspondents for Federal Reserve Banks in London and Paris. Since that date further progress has been made toward the completion of these arrangements in London and the Federal Reserve Board has now been asked to consent to the appointment of the Bank of England as the London correspondent of the Federal Reserve Bank of New York. The tentative arrangement discussed with the officers of the Bank of England contemplates that each of the Federal Reserve Banks will be invited to participate in transactions in the English market, if they so desire. We are writing you this letter, in acquainted with the for the purpose of obtaining following suggested method strict confidence, in order that you may be terms of the proposed arrangement and an expression of your views as to the of operating an accOunt in which all Reserve Banks that so desire may participate. Enclosed herewith is:Copy of a memorandum of conversations between the Governors of the Bank of England and the Governor of the Federal Reserve Bank of new York, prepared in London in 'rch, 1916. Copy of memorandum submitted by the Federal Reserve Bank of New York to the Federal Reserve Board, explaining the proposed arrangement. Please observe that memorandum No. 1. contains a provision that no statement or announcement respecting this matter will be made without the consent of both parties. Careful consideration of the character of the business to be conducted convinces us that satisfactory results can only be obtained by cooperation on the part of all Federal Reserve Banks which participate in the account and by the management of transactions as one undivided account. As a tentative suggestion of methods to be pursued, we submit the following:- (a) The privileges of participation will consist in:S/laring pro rata in the purchase of bills in London; Sharing in such balances as are carried with the Bank of England at interest; Sharing in purchases and sales of exchange; all of which transs.ctions are expected to result in (b) consist profits. The responsibilities arising from participation will of the following:A pro rata liability for any losses incurred in the purchase of bills. A pro kata liability for any losses incurred in the purchase and sale of foreign exchange. A pro rata liability for losses incurred on gold ear-marked by the Bank of England. A pro rata liability for any losses of gold in transit, shortage of weight on the same, or abrasion resulting from shipments. A pro rata liability for any losses incurred on the storage and ear-marking of gold held for account of the Bank of England, save losses occasioned by the negligence or misfeasance of the Federal Reserve Bank of flew York as custodian thereof. A pro rata liability for any losses resulting from the guarantee of bills purchased for account of the Bank of England. 7. (c) A pro rata liability for expenses incurred in conducting the account, except office and general expenses of the Federal Reserve Bank of New York. The following methods are also suggested for handling the account:- Each Federal Reserve Bank might, as may be decided, contribute "capital" to the account:In the proportion which the assets of the contributing bank bear to the assets of all contributing banks; In the proportion which the capital of the contributing bank bears to the total capital of all contributors; In the same proportion which now applies to the division of investments made in New York, or For an arbitrary amount to be determined by each bank, subject to review by either the Federal Reserve Board or by a Committee of the Governors. (d) The account and all transactions therein to be conducted by the Federal Reserve Bank of New York, which would render an accounting to each participant as soon as practicable after the first of January and the first of July in each year, which ac- count would state the amount of profits realized, or losses incurred, for which settlement would be made forthwith. (e) The accounts to be rendered by the Federal Reserve Bank to be audited and reconciled by a Committee of the Governors, (or their nominees) named by the banks participating, which Com- mittee of Governors would meet at stated intervals and determine the general policy to be pursued in the management of the account. (f) Every participant would undertake to be responsible pro- rata for all losses incurred on all transactions undertaken during the period in which it was a participant in the account and until such transactions were fully liquidated, and withdrawal from further responsibility could only be affected by giving say six months' notice, from which date no further liability could be incurred in behalf of such withdrewing participant. Weekly advice by mail or telegraph to be given by the Federal :eserve Bank to each participant, stating such particulars of the condition of the account as will enable each participant to make suitable entries on its books, required for the calculation of reserve. This advice would probably be necessary only at such times as ear-marked gold which would count as reserve might be held by the Bank of England for account of the Reserve Banks. Other than such gold, the interest of each bank in the account would probably appear on its books under the ledger heading "Foreign Exchange Account." The terms of participation, as above outlined, together with any modifications agreed upon at the outset, or subsequent- ly, to be set out in a memorandum and authorized and approved by each participant by resolution of its Board of Directors, in a form to be agreed upon in advance, to be uniform as to each participant, and copy thereof to be lodged with the Federal Reserve Bank of Lew York. The benefits and liabilities accruing to each participant to be subject in all respects to the original terms arranged with 4. the Bank of England and approved by the Federal Reserve Board, and of any modifications thereof. As similar arrangements may in time be effected with the Bank of Prance, the Jank of the Netherlands and other foreign correspondents, like opportunity to be afforded to each Reserve Bank to participate in such accounts, upon terms similar to the terms applying to the account with the Bank of England. The Federal Reserve Bank of :dew York to be allowed as compensation for managing the account the same rate of commission which it now receives for making investments for other Reserve Banks in Eew York, such compensation, however, to be subject to review every six months by the Committee above provided to be appointed. You will doubtless realize that considerable responsibility must be assumed in handling an account of this character. The Federal Reserve Bank of New York would undertake to use due diligence in conducting the account, but would assume no responsibility for the results of transactions, which would be handled with the same care as is given to the conduet of its own business. Will you be good enough to consider the above and submit your suggestions in respect thereof as promptly as possible, in order that no unnecessary delay may arise in concluding the arrangement. Yours very truly. E. JOPY Whereas experience has shown that the payeent of debts arising in the couree of oommeroial and financial transactions is often impeded and rendered difficult by reason of circumstances which interfere with and temporarily render impracticable the safe transportation of gold from one country to another, in consequence of which trade is deranged, values are rendered uncertain, and widespread loss and suffering take place, the High Contracting Parties, being desirous to guard against such grave inconveniences, have decided to conclude a convention for that purpose, and to that end have appointed as their respective plenipotentiaries. who, after reciprocally exhibiting their full powers, which were found to be in due form, have agreed upon the following articles: ARTICLE I. With a view to stabilize exchange and facilitate the settlement of balances, the High Contracting Parties agree that all deposite of gold, made within the jurisdiction of any of them for the purpose of paying debts incurred in the jurisdiction of another, in the course of private commercial and financial transactions, shall be treated by their Governmente ae con- stituting an international fund, to be used for the sole purpose of effecting exchange. To this end the High Contracting Parties agree never to appropriate any of the moneys included in such fund; and they -'-irthermere engage, each within its own jurisdiction, to guarantee the fund, in any and all ciroumstanceo, in war as well as in peace, against seizure by any public authority as well as against impairment by or as the result of any political action or change whatsoever. ARTICLE II. The High Contracting Parties agree to act as trueteeeof the fund mentioned in the preceding Article, and for this purpose each of them will designate a bank within its omi juriediotion to hold any part of the fund there existing as joint custodian with such person or persons or such institution as the High Contracting Parties may concur in appointing for that purpose. joint Duch/custodians shall hold the moneys BO entrusted to them, subject to the order of the creditors for whom it is held. ARTICLE III. The details of' the practical operations of the fund shall be regulated and determined by agreement between depositary banks, and in order the designated to simplify and facilitate such operations, the High Contracting Parties agree to take into consideration the reciprocal adoption of a uniform exchange standard, permitting the interchangeability of their gold coins, for which purpose they recommend the adoption of gold coins which shall be either a multiple or a simple fraction 341. or. a unit consisting of 0.334Z7 grams of gold 9/10 fine. ARTICLE IV. This convention shall be ratified; and the ratifications within two years, or shall be exchanged at sooner, if possible. In testimony whereof, the respective Plenipotentiaries have signs'a these articles and have thereunto affixed their seals. this copies, at Done in day of , 1916. (Seal) (Seal) (Seal) Memorandum of conversations betreen the 0overnors of the rank of ThrIand and the Governor of the Federal Preserve rank or New York regarding possible relations between the two institutions. The following points confidentially and tentatively agreed upon for stbmiseion and ratification by the respective institutions, t viaw to being put into operation. after the conclunion of the War: The Federal Reaerve rank of New York to act for itself and for such of the other eleven (11) Federal 'Reserve Banks as join the account. ACC0UNTS. The Federal Reserve rank of rev: York to nain, tain an account with the rank. of Englan.l. As the Federal Reserve Bank of New York can only receive deposits from its own renbors and the United States Government, any balance naintained by the Bank of England with the Federal Reserve rank of New York to be held as ear-,marked Raid. BITALS. The Bank of nngland to purchase, as and when so renuested, prime sterling bills for account of the Federal Reserve Bank of New York, for the payment of which,-t maturity, the Bank of England will be responsible, such 'bills to comply with Section fourteen (14) paragraph "Ps, of the Federal Reserve Act, which requires that they shall arise out of actual caernercial transactions, have no more thm ninety (90) ? 03 days to run, and bear the signatrre of two or more responsible parties. The Federal Reserve Bank of Nev York, likevise, to sell prime dollar bills of a similar nature to the PAT*ofrolgland, and to be responsible for their ptxyment at maturity. Such bills to be at the ebtolute disposal of the In/raster, in either ()es°. 4. !Otte actounts reepectively to be kept free of chames and cornier-lion «. except as regards actual out-of-pocket expenses. DiTrarST. When balances with the TV. r tit of Pngland connot be invested in Mile, the account of the Pederal Reserve Dank of New York ray be dealt with on an interest basis, at rte e to be or,reocl upon. AS the Pederal Reserve Dank of New Yo2lc is not autheriled by leca to allow interest on balanoet, or to receive deposits from other than member barks, boilimees ezrried bY the Bank of 4 :Jana in order to earn interest must be invested in 0h o debtor institution at the request of the creditor institution to FI et aside and ear-mark gold on a bullion basil representing balances due. Such gold to be clearly identified as to mirnership. Ontr) WIRITIITS. The debtor institution to Ship gold to the creditor institution, on request, at the Ooftt and risk of the orrAitor institution. Where gold is Shipped by one institution to the other for the purpose of kin exchange, and not for the purpose of settlim balances, suet shirt/lent to be at the risk and expenso of the Shipping irtstthition. kiamieement to be later srrnnged by correeponeence, or otherwise, to cover all questions of abrasion, price of bar gold, price of coin, Shipping charges, sad other details of that character, So that the effect of the arrangement will be to make all shipments of gold between the two institutions upon exactly equal terns as to each. 8. XTflAPXO11 Tt 1e expected that information will be exchtvred by correfpondence respecting credit matters INFOTTIATION. al.-11 financial oonditione. triletton. The arrangement to be subject to osylcellation by either institution, in whole or in pert, exoept se to transactions in process, on notice by letter or cable. it beixg understood that ettr unliquidated balance either Why' will be settled in lets if desired, under the terns of the understanding. Tr circumstances require or justify oorelencing operations before the oonclusion of the War, e,dv.toe to that effect will be given by the 9. ederel Reserve Pont of New York-. 10. rt, is hoped that the ?odors,' Resortve nark of 1,70tv. 'Tort will evont'061/7 Dee" cv-i orrammtant, on similar lines with the lketratof France. 1.1. No arsiouncemet directly or indirectly to be rade regarding the conterte of this memorandum without the explicit 'oonsent of both institutions., SECRET. emorandum of Conversations between the Governors of the Bank of England and the Governor of the Federal Reserve Bank of New York regarding possible relations between the two institutions. The following points confidentially and tentatively agreed upon for submission and ratification by the respective institutions, with a view to being put into operation after the conclusion of the War:- The Federal Reserve Bank of New York to act for itself and for such of the other eleven (11) Federal Reserve Banks as Join the account. ACCOUNTS. The Federal Reserve Bank of New York to maintain an account with the Bank of England. As the Federal Reserve Bank of New York can only receive deposits from its own members and the United States Government, any balance maintained by the Bank of England with the Federal Reserve Bank of New York to be held as ear-marked gold. BILLS. The Bank of England to purchase, as and when so requesteJ, prime sterling bills for account of the Federal Reserve Bank of New York, for the payment of which, at maturity, the Bank of England will be responsible, such bills to comply with Section fourteen (14) paragraph "E", of the Federal Reserve Act, which requires that they shall arise out of actual commercial transactions, have no more than ninety (90) ? 93 days to run, and bear the signature of two or more responsible parties. The Federal Reserve Bank of New York, likewise, to sell prime dollar bills of a similar nature to the Bank of England, and to be responsible for their payment at maturity. Such bills to be at the absolute disposal of the purchaser, in either case. The accounts respectively to be kept free of charges regards actual out-of- and commission - except as pocket expenses. INTEREST. When balances with the Bank of England can- not be invested in bills, the account of the Federal Reserve Bank of New York may be dealt with on an interest basis, at rates to be agreed. upon. As the Federal Reserve Bank of New York is not author- to receive deposits banks, balances carried by the Bank of ized by law to allow interest on balances, or from other than member England in order to earn interest must be invested in bills. The debtor institution at the request of the creditor institution to set aside and ear-mark gold on a bullion basis representing balances due. to be clearly identified as GOLD SHUMENTS. to the creditor The debtor Such gold to ownership. institution to ship gold institution, on request, and risk of the creditor institution. at the cost Where gold is shipped by one institution to the other for the pur- not for the purpose of shipment to be at the risk pose of making exchange, and settling balances, such and expense of the shipping institution. An agree- ment to be later arranged by correspondence, or otherwise, to cover all questions of abrasion, price of bar gold, price of coin, shipping charges, and other details of that character, so that the effect of the arrangement will be to make all shipments of gold between the two institutions upon exactly equal terms as to each. INFORMATION. exchanged by It is expected that information will be correspondence, respecting credit mat- ters and financial conditions. The arrangement to be subject to cancellaDURATION. tion by either institution, in whole or in part, except as to transactions in process, on notice by letter or cable, it being understood that any un- liquidated balance either way will be settled in gold, if desired, under the terms of the understanding. If circumstances require or justify commencing operations before the conclusion of the War, advice to that effect will be given by the Federal Reserve Bank of New York. It is hoped that the Federal Reserve Bank of New York will eventually reach an arrangement on similar lines with the Bank of France. No announcement directly or indirectly to be made re- garding the contents of this memorandum without the explicit consent of both institutions. JA. 0011 ,OMFILENTIAL ne- last couferenoe of Governere of Federal Reserve in 4aehl4gton in Apri19 Mr. Strong made a report of his 3anite ::tegetiations abroad for the appointment of correspondents for Federal .aterve Banks in london and Paris.. Since that date further progress han been made tc*ard the conpletion of these arranEements in London and the Pederal Reserve Board has now been asked to consent to the appointment of the Bank ofEngland as the London correepondent of the Federal Reesrie Bank of LRW York. The tentative arrae.?:ament discussed with the officers of the ..,ank of England contemplates that Guth of the Federal Reserve Bunke wIll A:vited to partioipate in transections in the Engliah marketo if they o desire. - We are writing you thin 1etter9 in stric confidencu, rder teit you may be-acqUaintecl With the terms of the pranosed arranire- ,Nat and for the purpose of obtaining an expression of your views as to tee following suggested method of operating an account in which all Re- serve Banks that so deeire may partieipate, Enclosed herewith is:1. Copy of a memorandum of conversations between the Governors of the Bank Of England and the Governor of the Federal Reserve Bank of New York, prepared in London in arch, 1916. 2 Copy of memoranduw submitted by the Federal Reserefe Bank of Rew York to the Federal Reserve Board, expaining the proposed arrangement - Plows observe that neenc7andnu No 1 contaan a. provision stktement or ae:noncement respecting this matter will be mad, consent of bat:. part. Carefnl ccnisideration of the character of the business to be conducted convinoes us that satisfactory results can 0317 be obtained by 000poration on the part of all Federal hesorve Banks which participate in the account and by the management of transactions as one undivided account As a tentative suggestion of methods to be pursued, we submit the following:- The privileges of participation will consist in:lv Sharing pro rata in the purchase of bills in London; 2. Sharing in such balances as are carried with the Bank of England at interest; 3, Sharing In purchases and sales of exchange; all of which tranaaotions are expected to result in profits. The responsibilities arising from participation will consist of the following:. 1 A pro rata liability for any losses incurred in the puronasa of bills A pro rata liability for may losses incurred in the purchase and sale of foreign exchange. rata liability for losses incurred on gold 3, 1 4. A pro rata liability for any losses of gold in 5 -A pr i rata liability for any losses incurred on the storage and ear-marking of gold held for ear-marked by the Bank of EAgland, transit/. shortage of weight oil the same, or abrasion resulting from shipments, account of the Bank of England, save losses occasioned by the negligence or misfeasance of the Federa?. Reserve Bank 3f New York as custodian thereof -A pro rata liability for any losses resulting. from the guarantee of bills purchased fo:, account Of the Bank of England, 5 A pro rata liability for expenses tneurred in conducting the accunt, except office and eene oral expellees of the Federal Reserve Liank of New York The following methede are also ea6gested for handling the azootuat:- Saoh Federal Reeerve Bank might, as may be decided, con- tribute "capital" to the acoount:l. In the proportion which the assets of the contributing bank bear to the assets of all contributing banks In the proportion wh:Ich the capital of the eon- tributine bank bears to the total capital of all contributors: 3- In the same proportion which now applies to the division of investments made in New York, or 4, For an arbitrary amount to be determined by each bank, subject to review by either the Federal Reserve Loard or by a Committee of the 3overnors The ecoount and all transactions therein to be condueted by the Fe1ere2 Reserve Bank of riew York. which would render an ac- oountine to each partieipant as soon as practicable after the first of Janeary and the first of July in each year, which account would state the amount of profits realized, or losses iric:.rred for which eettlement would les made forthwith. in) T'ae aecouate to be rendered by the Pederel 'Reserve ,eaaa ee 'ee aedited and reconciled by a Committee of the Jovernors, (or eeeer nontueen; naaod by the "39.11ke participating, which CoMmittf), f Ca7erncre eoeld meet at stated intereals and determine the general aolIee te be pursued in the management of the account, if) Lvere eerticipaat would undertake to be roepenelbleproala eeeeeeit7/.tlic &771 all transactions endertaken during the it ',?Ats eartleirent te tee aecouat P.nd Nlly 11ouf:dat(1 and withdrawal from farther rasl-onsJhEity oc:Ud. c1.1. be ;,,;'-fes.ted. by q..vInJ.say six months notice, frcl, 1:urther liability could be incurred in behalf of Bich wittirminc 171i.rt:.cicsLt ig) Wee41y advice by mall or telegraph to be given by the :isderal ReserveJc to each participant, stutiug such particralars of the condition of the account as will enable each:participant to make sujtable entries on 'Ate b04ke, required for the calculation cf reserve. 7hIs advia wlad probably be necessary onlj at such times.ae ear-mrked gold which wouid count as reserve might be held by the Dank of England for account of the laserve am-As, 1.1. Other than mach p:old;, the Interest cf each the accionnt would probablr appear on its books mader the ledger. hesZinF; 'Foreicn krelkan:78 Aocount" l'he terms f partio:ption, as above outlined, poetiw.4 with eaz, mcidifications agreed 1:4DOL at the outset .)111 tn or 8ubsequent4, tn ho as* nemorandnm and auth,-;ri3ed and approved by eacii. participant by ro,lolutioL of Its Board of Directors, in a form to bo agreed upon in adbe uniform as to esan participant, and copy thereof to be lodged with'the Pederal Reserve Dauk of New York iebifoefts and nabilities aceruing to each participant'to nhbject tn all roe-beets to the orictnal terms arranged with the Bank of England and approval by the Federal Reserve Board and of any modIfice7 tLca thereof As simile- arranf-;ementsma:; lo time be effected with the -3arik - of France, ';:le.ilank of the 14ether1ands and other foreign correspondents, 1iceoppc,rtunf,ty to be afforded to each Beserve Bank to partiaipate in sue% tams stm4lar he terms emil..ying to tta account 1,hth 'rrort.te C.7' t ze t: s -7;Q t:Ais r. 1 v.' - (ler` _ . - rfutal no re 31' ; ;..tre,:;:r 5 f."{:f".,C 117 Die - 1!. 2. M FOR SUBMISSION TO THE FLRESL1VE BOA FREPATD BY BENJAMIN F,TBONG, GOVERNOR OF THE FEDERAL RI:SERVE BOK OP NEW YORK ttached is a copy of "Memorandum of Conversations between the arnors of the Bark of England and the Governor of the Federal Reserve lank of New York" which was prepared in London during the month of Marnh, 916, as a preliminary step toward the establishment of foreign correspondents for the banks of the Federal Reserve System, The general object of he plan described in the memorandum is to give effect to those portions of the Federal Reserve Act which authorise Federal reserve banks to conduct a so-called "Floreign" business, Those sections of the Federal Reserve Act :wing applicability cry quoted in fall as follows: Any Federal reserve bank may, under "Sec. 14 rules and regulations prescribed by the Federal Reeerve Board, purchase and sell in the open market, at honm or abroad, either from or to domestic or foreign banks, firms, corporations, or individuals, cable transfers and bankers' acceptances and bills of exchange of the kinds and maturities by this Act made eligible for rediscount, with or without the indorsement of a member bank. "Every Federal reserve bank shall have power: (a) To deal in gold coin and bullion at home ..broad, to make loans thereon, exchange Federal reserve notes for gold, gold coin, or gold and to contract for loans of gold coin or bullion, giving therefor when necessary, acceptable security, including the hypothecation of United States bonds or other securities which Federal reserve banks are authorized to hold. 4.4... ***** ** 4 certificates, To purchase from member banks and to sell, (a) with or without its indorsement, bills of exchange arising out of commercial transactions, as hereinbefore defined. ***** ********** ****** With the consent of the Federal Reserve (e) Boardc to open and maintain bankIng accounts in foreign countries, appoint correspondents, and establish agencies in such countries wheresoever it may deem best for the purpose if purchasing, selling, and collecting bills f exchange, and to bay and sell with or without its in, dorsemento through such correspondents or agencies, bills 't f actual oamMercial transactions s s-of sx R.- ninety ms dn "te ep Jorresponden ld madUm is submitted to th 'serve Bank t, 6 4, Iew Yo: nnaection with plic 016 Board's eons. o ti - of t of the Bank of England as it corresp n6.unt the City of L,r(ion ing statement LI respectfullysobmitted in connection therowith Tho application should li The for.° - ba considered in two aspecta: FIRST, As to Its legalilr, SECOND As to it desirability as a business arrangm.emito Considered in its legal aspects, the business contemplated to be done seems to conform to the powers expressly conferred ulen the Federal eservo banks by those portions of SecQ 14 alcTe quoted The business would consia Ors A Opening and maintaining; a deposi acoount with the Bank -f Eng- land 'see paragraPh (e) above quoted) B. Purchasingv selling and collecting sterling bills of exchmagc of the Character permitted by pasagraphs (o) and (0) quoted above, 0 Purchasing dolla tile of exs,hange selling be same with the indorsement vf the Fedelai reserve banks, and collecting the same at maturltl, all for account rf the Bank of England fitee karagrapto 'o) and (e) quoted abovs..,) Beceiving and bolding gold coin and bullion for account of he Bank of Englaut Dealing in go'-d °obi and bullion both at brme and &brawl (sea paragraph (a) qux."!ed 60)01. Purchasing or rerielving gold abroad and having sameimsr-markul' by the BLak of England (see pa *graph (a) quoted ab)wei E All transactions ccntomp.Ated by the memczandum are awasoilzed by the statute None of them consist -f transaotiom which may be considered as incidental to ,r necessarily !implied in connection with the lus7inese stich is expressly authorized, no extrema construction ogth. neceeeary tOr this authoritaton Si far theveZoze as the Eademl Resar-e Act is concerned, its language seems tc clearly prow...de for the 'conduct of such business a: is deseribed in the memorandum The Federal Beserv 744 4 already 7,0 'mks =ay take ths 6t111:06.7 At to ';he ump consider.. on, thar is 3 et ee lie: statute sae k..114611 es kept ele eneros has been at times ha aesed ectreme fluctuations of interest _aye /ears past our foreenn nd, i even seriously impeded as a result of rate, accompanied by derangement of the foreign exchanges: either causing et,. following large shipnents of gold years 1893 to 18989 The 1907 and the two years of the present war afford exrema illustrations of these occurrences. While a continued period of adverse ex- changes will generally result in exportation of geld, the principal commercial nations of Europe have developed means by which their banking syeteina cal eitigate the evil consequences and, to some extent, control excessive gold shienarts resulting from those conditiona, Losses are occasioned by violent fluctuations in exchange rather than by continned high or low quotations This was demonstrated in the fall of 1914 and again in the late summer of 1915 The object to be attained is to give stability to foreign exchanges. The United States is the freest gold market in the world. Federal Reserve Lot beoame law no moans existed by vibieh either our Until the banking institutions, in cooeeration or a central bank acting for them, could use their resource in a large way to arrest or moderate extreme fluctuations in interea-e end exchange,, or prevent excessive mo7aments of gold gland France and Ger- .:any ell mainten a certain degree of control over gold movements through their central banks The United States has been powerless to do so save by enseension of 'old nayment, with its seriouo consequenees. The Federal Reserve Ace authirizee Federal reserve barite to invest a portion of their i'unds n foreien bills for the exeress purpose of enabling :hem to carry a large portfolio of illn abroafe so that when the exchaegee ere adverse theee bills mue be !.ieuidated and the Larket supplied with exchange, teeperine an insistent doeand for eeport cf eold and avoiding the eers and odium of liver lseending :;old eaynent an Were the Federal reserve banks :s is tle 'ank of France or were 'V thee able_ ThE., - -%311 f in d. i,he Joh 3tock -f London. the appointment of an a7sent, or possibly tha stablishment of an aceney to deal directly with the London discount hdtasea and bill brokers. After lerinps all three possibilities (a) alone seems fasible Act v either (b) or (c) would result in our obtainins Service :siderably let , Ificient than that Which we could obtain under (a). DualoCk Lanka, (bi would at times place these transactions the lc:I-L. -- the control ( 1.ie largest competitors of the SyateL in the London mar- Dealin; with the discount houses would place the System at a disadvan, .:714 tAilsted with the local and long established clientele of those Ab cases. there would be the added disadvantaee of being unable J.ranty of the Bank of inland on all bills purchased The a pure/laser of bills in the open market; bills are for iliecount, and purchases made by the Bark of England eser hanks would be' handled by an a 6nt -.1hich was no,: J.dpal_ :;a:' he MA7 In view of' the foregoing; consider- 7-111ES either (b) or (c) at greater -_ouse of Enrope; it is the :Le principal L.old market of banks 1:laydeal with the ' - for t"ee Imancial Atbric of the -nation he object cEn 'se best accomplished and posa iy acc with the Bank of England, as contrast ith indepem nistic operations in'the London marke A farther reason for dealing wit t Bank of England lies in the fact that A institution bears a relationship 10. h and pc a. 'ay ant basks and bankers of England which ie sizilar in many ways to that which t Federal reserve banks bear to taerican banking institutiens.. It is more dignified and natural that these institutions should deal with each other and in eeperation rather than independently ef each other and in possible oppee- tlen, By dealing directly with the Bank of England the Federal reserve bark' obtain a smarantee for the payment of bills of inestimable value. They are able to a: range in advance the price at which gold will be released, they ale aloe able to establish a basis for avoiding the expensive and wasteful meltins; and re-oolnina ef sovereigns and eagles, and when gold is ear-marked for aocuart of the Federal %eserve banks it is held in the sagest custody It must not be overlooked that the Reserve Syste the teat service, must either empley 4 disinterested an acency of ite revea in order to secure correspondent, or establish By dealing through the Bank of England we shall not only obtain disinteeested sereice S'or, as shown above. competition stitutions will net emist, bu, also obtain the between the in- advantage arising from an ar- rangement vhich will be bete mutual and reciprocal will occupy the possible, position of agent in New York and The Federal reservebank perform similar services for the Bank of EnglaeS to those it desires performed in London. The two institu- tions, haying the lane objects to accomplish, will work in cooperation rather than antagonism; Te-day, every important bank in Lendon has close relationships, of my years standing, with,j7ew York banks while the Bank of England has none. e proliosed relationship is the , only one the Bank ot Eneland would entertain. the efore, no conflict of interest with member banks an arise, --,Yo ive character of the arrantk-senel:t will 1;ractioally make ice of criticism on the art of our Leeser banks Meeleover, ortai:. the rsse-- - As an indication that the ee-eaneassan'. proposed Is natural .end ev.elop in other foreign counte i'rance indicate that a screee. eetitution. 7ank. negotiations already poumenced with similar plan can -711 Ame be effoci- areane, 7'ettherlanrie es this chorea n. have row "!as Federal ,.. ,rve Pan:. 6 a: than vrrr.1.1 ha, e 01. aftor-the c :41blu Tire favorable than a. nd,artases of 1.7:e 2;uarantec az of thes feature vr. v nder yhici) now exist F;elleving thatthe Ymded to alT/y to Net such em rssult of the European war, I bel es as hal .isen and will recur as a it to be ..r.aarly the duty of the man the Federal Reserve S:.stem to Lface awFle trcIarations at the Iresen,, e7chanels are in Tavor of the United Seates, for the strain -.7hioh : 011 its akinrsyste:. at the c*nolusion of the war, who) at LIM the e:xllailt;es are liable to run adverse for a ?wit; loriod These 1r and the principal trail...auctions Iroposed. ;1.i.bed as follows: At the present tire or possible this i q3 e_ehane,e se11ix Lela. serve banks qin coopeirat 3ite or 90 daL, 1)1110 )f Alich would ,Jither be held in .try and later collection in London acceitanceo IL the Lion r Jr pa-plant by the Batt of Englt r!ailled by the rate of -(21 seoUr _ 7 - di 7 Befnre th -Aame de nrmal rate n for ocee A and n.4,: ;4e forced to reduce .113 price for 47"-SO that the Banit nf England Ty' liff4re nearly than at preient atutory purchase taois of 77 perse Ier (uncle paM4,7 of exchange would thereby '-, Tho A.rt etored to abcut 4 066', so that only when exehange rose above 4 8c2 cor! rts of gold be made a. a Ilrofit When exchange however reached a pr where it became Cheaper te expert gcld than to buy checks or cable transfer Federal reeerre banks would begin to supply the Aarket with exehaage 1,7-7 first s.ainst whatever ,_;c1d nigh" have been ear-malted for their a_ Eank of England The the nupply of earparked gold was eXharsed wenld e!ther !le anewed :o run rff er would be sold and the prroeeds check acainst in supplying the maficet with exchange Atrde the Reserve bark a Upon the eathaustien of bc. ther uvler the 1,:eposed arrar- sell exchange for account cf the ?auk of England. or the Bark tw:.,1, could buy dollar exharge (which would Le at a coreop ndloc; diseour London) and mold' it '.4c, New Tent for its account The preceeda If New 310r7c sa7e8. or of London .s ,a4cLittances in dollars, would be invested in Lille in New Y(Tk for account of the Bank cf lIng.tand .:Teserve batiks would be oblIgated lag'm ter the payment of which the Federal in Other words the Bank of England would then o operara tr dollars with New York just as in the first i:astance New York in eterllm6,.wIth London If It - t).ezzley tweL i4n.;gland five mill asstreed t'hat the Federal Rese2: in it ,he niark- a an . eS"- a 5hly.,ent i 10 triflinG co! 7Tin the fixobances axe deranGe -Ltable toat confiaence lcsses in both financi -;,. 11.1c)cting this businee. 1 thee are aLcst ne;11ib1e :atton of a dlmwer in !Luny ca, epts( eaoh instance by the lly the clearinz banks , a 079 :orsement of first-olaes bil: as the Union Discount Compt 7 will ' --71aranbeect irno the aareement a the cb1i,,L;a4. 71h5ch can :ither be cal-c-r. tn this country zed on suCh an account must als --22-AR of profit one ex:ch L7_1 arent the :.;rdha: 712.0 acc xod for a on 7ith a 01L15 hOWC ,woul ,rficlity ehe Reserve banks -:ril'ar) in London balances from :5 per cent. ik in bue) tc 5 712 per cent In the. Bank of &Leland 'eould possibly bear a terest, these ates bethj era. reserve, h'ete: eariNie can at present et etabiltzing eL a. than any rates at which the fends be employed,. mind that thie account would not be f3, r , It must, however conduced primarily fer prefi le in eet for the exchange and exercising son* control over gold shiymen in the fUture_ The arrangement propesed are tentative and experimental and it is expected that experience will derelop in what respect improvements can be effected, Same improvements essential to advantageous managemen, of the accoan. will require amendments to the Federal Reserse Act These amendmen'e shcald .erovide that Federal reserve barks are authorized to purchase bills having 90 lays to Ten s411.1e;tve ef daye,s4; Emu., ceive deposit accounts from and that Federal reserve banks may re- inetitutions as they se,ect to be t/rir correz- .pondente !/1 foreigu countries, The laremage of the stetute conferring unlimlted powers upon Federal reserve banks tc, deal in god would seem to imply that gold held abroad far ac- count of Federal reserre banks would nevertheless count as reserve for unless the xtatute so intended- the limitationr which would be teposed anon them in their foreign operations weuld seriously impair their abilitj effectively to perforr this important funcAvi It has been euggested that it would be more natural for the Reserve banks to parehase in thee country 60 and 90 day bills with documents attadeed, drawn. on English acceptors by American exporters, ship these bills to the Bank of England for acceptance and hold them there in portfello said, would represent soeely Ameican commerce and we eetieime that fanas oF the Fe4e/10. reser7e system a- Blecle Lii is it therefore avoid he . ' 115edthj leee'eet for the jemmet ou of Englesh cemmerce e:ii O3 11 ee. Tally th& f(11 17. : :Lae t aeon .he 11? JO af4 delivery of the ;4)c,le All Amle u bark, charaeter reeegnize the rske:'involved and have developed aft ef training:, a force cf Wcil/ed men especlally.tralned to pass ereaSte and tIe!, technicalltias involved This the Federal reeert should avoid. 2n1 By purehasileg bills at the point cf origin it weuld be dif ficult to make any arrautewene for unoonditional Guaranteo by our aorrespot.dent in ;endue. The Bank of Ena].and is williee; to .:13.arantee bills for the Reserve banks where it reseed on the credits itself ana knows ehit the billo are aCesalutely good It would not guarantee bills Where our ludoment aorne determined what bills oheuld be purohased Zied If the Federal reserve banks 3o int, the American market to buy long bills they will be directly competing with their own neember and in a department where the profits are already oeneiderably reduoed by competitiok and where it in essential that eneoursi3emont be afforded to the membee badre for'immeatate develotmen of their business. The Federal Reserve 8:intern wa desienea among other things to promote the extension of cur bankini: aystoi into forei,tn countries for the benefit of our country s foreign commerce Tee e will be little inducement for the member banks to do so if at the outset they are met with coml.otition from the Recerve banks. Nor could the member banke meet ads competition as they aIlew interest ou practically all the einde whidh they amlloy *hopeful thu aoserve banks pay no interest on their deposits and eould always underbid them an buyera of loik; bine in this eountry While mome bills xeuld doubtless be drawn on acceptors who would be satisfactory to the Lank of Ruglan: and such as they would ouarantee it would be imrossible tt werk out a plan by which when the acomint is reversed the Bank of England oolld 1=7 bills it the same mannor drswn vu American aoeptors as most Of the now in the New York market aro drawn in the East or in South America or or the Continent and aever reach the London market for-nootistzen acceptsnsf5- While the law therefore, autherizes Feeeral le hills IA this country prior to aceektance abroad 1.7 see. thole oterctoinie this peeler. In brief the plan proposes that the -eeserve banks nail 'r 1):.c.,;, parity and invest the proeeeds in London tz e l( t At ,a.rniw withdrawn' if 4tel When excl.:an. London at a diaoola_ the Reserve bank Itader ::he Bank of invest the Zftlit in New.7% - iilr gaarantees. It ia suested that the roa op3ration of tile Federal ahould rot be cueendea or poetpcned until the conclusion of the should be inaugurated at the present time in order to meet the emergencic. Whioh ara certain to develop as a result of the war Coasideration has been Avon to the question -fsrha.:, dense: ra.%-h4- artse In case of war letween the United States and Great Bri*.ain Ti to ,:eard ai2aiL2t such a contingeacywoald involve either The negotiation of a treaty or The inoluaion of one o..% more other parties with carotin trust 'features embolied La the place, Le to (a), nothilu would go so lar "award Lnproperly invo1ein4 cUT GoverraeW than making the Government a party tc the nef:otiaeng aua tht time require& is prohibitive Evan a treat,e m14ht not afford prote%.tion case of war 113 to 0)), some plan may be poseible, after frper7'.enoe by whieh three or mere banks of as many natione may be brukeht to join it a plan where- by the interests cf any bolligerent parti)s could be tafegusraed throuji the acency 01 the neutral parties Prance Nolland, and Sattserland are about the only Wropean nations with which such Ae:;ottatione evaild now be possible or where similar hankinj arrala;ements wolaa be juntlfied ant later thew' may be faaelble or solae of them it the delay involved in ouch a course would obviously be prohibitixe at the present time and any such onlargement of the plan should not4 thereforeo lc ceriously on.0tderEx . o such attest to rafe- guurd banking tatorests ta time of war has heretefore beln za, old Cna requirement of such measures carried to a logical cooelvein, %nal. imply that all International busines7. wee unsaro a.T2,. all pr-Ima,t: able to forfeiture in time of war Such a v.ew of tlk,s ;--iata of Ma? 10i. business is not jut. fled by past exper'flno 14-*, .zaplated or necessary under the p .r1 ar such unusual .afelyttaAts sox the, Ac.:.- Jr. :0,10 s Tem, .. a...,:ohan;es a.. Reserve .arry out the real he >f the Bar." and 3 Reserve Bank or be'ivan. Yo. ..k J'aga..4 33,3 4 tlif i0119. po ris confl.de: 17 and tecOaci-e7.7 agreed upon fq:.' red: th 3 r`tew to be on by ,t- - -,'ederal. t. at Lflt ieser.re raL. rith the Bonk o.L ."ork to Bank of New Yoi own numbers ar balance na.r.intal, only re United 07 the the Federal Reser,,Y Bank of h auk Je aroarkld golde aoglad to purchase, as and when aterling bills for account of e Dank of New York for the pay ma:nitity0 the Bank of ment be 7.: ft. OE; . -e thar they shall arise '..;ransato t:ons 9 ha ,.. tiro gland w-1,171. such bills to complj with Section zagrap.h "E"- of the Federa:, 3iistN3 PO) 1"'",` t Ayts te011c pal ke v/ lb Isar of no 'UTP nal 1 _ 04, 0 112 , a .4..luvir,o-A to to ,aelb reps eent14 to ship gold araditar ,sk of ttt or by one in, .king Onaliv o 'oalanG ,:ne of 7 later OCrv :1.10 prie af , 17- r s0; the opet Where gold other for the - for the purpose et' to be at the rek tituron. reidene r Qt abrasion, price -App*ng ohorges and sc that the effect to maks all shipments of -7t1ons upon enautly equal nformatAnn will be ....:,;4.H. ,.speoAng ozedAt matters be-øubje O or in part, °a/e).Niabo'.te on notfiaa by let= ..:lorsteod that any unliquidoi-,, oettled in gold. if If a understandingc proeOes r.7)-mmoing operations .Hee to that effeot of Now Yorit :,iank of Now 'fork ua similar lAnes to nnoorur-lut withnL1,. a , NODITIONAL NMEZANDIlir TO THE FEDERAL RESERVE BOARD IN RE FOREIGN CORRESPONDENTS FOR THE BANKS OF THE FEDERAL RESERVE SYSTEM Paragraph (e) of Section 14 of the Federal Reserve Act requires that the ederal reserve Board must give its consent to the appointment of foreign correspondents and does not limit or cIrcumsoribe the power of con- sent conferred upon the Board, and should the Board feel that it must take into considerntion in giving or withholding its approval of the application made by the 'Federal reserve Bank of New York, not only the terms of the Federal Reserve Act but of any other 1ew or treaty of the United States, and of international lnw, before giving consent to the appointment of the Bank of England as a proposed correspondent, the following considerations are suggested as affecting the decision of the Board on those points: 1st. the business proposed to be conducted unneutral In character, and 2nd. character, does the conduct of this business between the Federal reerve banks and the Hank of England in any way implicate the government of the United States in unneutral acts? As to the first Is If it is considered to be unneutral in depend upon the consideration, the character of the business would construction placed by our government tions which are necessary in affecting commercial of this country and citizens upon financial transac- settlements between citizens of a belligerent country. The provisions of the Federal Reserve Act, authorizing Federal reserve banks to purchase bills in foreign markets, were designed to facilitate and arises out of the magnitude of our ted export trade, a large part of which con- munitions of war; but the proposed arrangement 'would not ' ...._nmeocia,,!__ with any ment towards be the country's foreign The necessity for embarking upon the business at the present time commerce. slate of protect no doubt. partiorlar class of exports. the export As to the attitude of our govern- of munitions and the financing The transactions proposed do not involve a violation by our government of its recognized obligations of neutrality. declared that our 'citizens are entitled to conduct a ents in munitions of war; thereof there seems to Its officers have commerce with belliger- that la, articles which are contraband of war and conditional contraband of war, such commerce having been described by the State Department in one of its ciroulare as "neither unlawful nor unneutral" and by Secretare Of State Lansing in his reply to the Austro-Hungarian Government as "legitimate trade." The conduct of stomeerce of that oharacter nec- essarily results in financial transactions between the citizens and banking institutions of this country and those of belligerent nations. merce which gives rise to these financtial transactions is If the com- "lawful" and "legitm imate," it can hardly be held that the financial transactions necessary to the conduct of the commerce are nevertheless unlawful 'or illegitimate. Admittedly, the government of the United States can have no part in such commerce, nor can it use its funds or credit for the conduct of sech °amerce, without being implicated in an =neutral sot, and the question really involved, therefore, is whether the Federal reserve banks can be held to be departments, agencies or instruments of our government, and whether the Bank of Pngland Onn be held to be a departeent, instrument or agency the Retie: of government to such a degree that the relationship pronosed to be established between these two institutions would result in making the government of the United States a party to transactions whioh might be cone- trued as =neutral, although otherwise "lawful" and "legitimate.' As to 2ederal reserve banks, they are corporations created by Act of Congress, with which the relations of the government are distinctly set out and limited by the statute itself; they are privatele owned and are as distinct from the government as is a national bank. The points of contact between the gevernment and Federal reserve banks are 'principally the following: They are created by Act of Congress. They are supervised by a government appointed Board. Their business is conducted by a noard of Directors of nine, three of whose members are appointed by the Adore' Board. They are authorized to act as the Fiscal Agents of the United States Government, and are all of them so acting at the present time and hold large deposits of the funds of the government. E. They are made the instruments for the Issue of Federal reserve notes, which the government of the United States is obligated to pay. 6. A specified share of the profits paid to the government an a franchise tax. of the bank is required to be 7. In general, the wupervision exercised by the government through the Federal Reserve Board and the three government appointed directors is probably greater than with other corporations oreated by the laws of the United States, or of any of the separate states, with the possible exception of the national banks and common carriers. An examination of the law, however, discloses the fact that the 2ederal reserve banks wee no different in substance from the national banks so far as their legal relations to the Federal Government are concerned. one would hold that a national bank is prohibited, by Probably no reason of the existence of war, from opening an account with the Bank of England, from buying bills and making other investments in England, or through the Bank of England, or, in fact, from making direct loans to the British Government for the express purpose of financing that government's purchases of munitions of war in this country. National banks are created by Act of Congress; their business is supervised and they are examined by a government official (the Comptroller of the Currency), whose powere in that respect are similar to the powers of the :aderal Reserve Board. (The supervision of national banks does not however extend to the appointment of government directors.) instruments for the National banks are the lame of national bank notes for the payment of which the government is obligated by Section 6, Chapter 708 of the Act of Ally 14, 1890, ,iust as effectually as is the government obligated to may the ?edema reserve notes. The share of the profits of Federal reserve banks accruing to the government is stated in Ssotion 7 of the Federal Reserve Act to be a franchise tax and was undoubtedly imposed in lieu of other taxes banks might have which Federal reserve been required to pay as consideration for an exclusive and Valuable franchise. National banks likewise act as fiscal agents of the United States Government and hold large amounts of the government's funds on deposit. They also pay substantial taxes called "duties" to the Federal Government.' It Is difficult to see low in law any exist between the relations sustained difference can be shown to by Federal reserve banks to the govern- ment and national banks to the government. As to the Bank of England, it is a private by Act of Parliament in 1844. corporation The British Government assumes no control and has no legal connection with the management of the bank; reestablished it gets no share of the profits, nor has it any monied interest in the stook of the bank. Rela- tions between the British Government and the Bank Or England are those of principal and agent, the Bank of England acting in a most elteneive way an the banker and fiscal agent of the British Government, for which it is paid large compensation. It is not, however, an exclusive agency es the government also has dealings with other financial institutions. It is generally understood that in the relations between the British Government and the Bank of England the bsnk jealously guards itself from governmental interference on the one hand and the government on the other hand carefully refrains from assuming responsibilities in eon-Aection with the management of the bank. DRAFT OF PRESS STAITILENT Negotiations for establishing relations between the Bank of England and the Federal Reserve Bank of New York, which were commenced by the governors of the respective institutions some months ago, have now been concluded'. The arrangement provides that the Bank of 7ngland will act as the correspondent and agent in London of the Federal Reserve Bank of :Tem York and that the Fed- eral Reserve Bank of Zcra York will act in a similar capacity in New York for the Bank of England. It is not the intent of the plan that these institutions engage in coercial foreign transactions, the relationship established being primarily for the purpose of affording greater stability to rates of exchange by maintaining with each other mutual accounts of deposit, and by representing each other in the purchase of bills. The plan will also create machinery by which transactions in gold and gold coin will be facilitated, which should result, in normal times, inselininating or reducing the extensive and unnec- essary shipments of gold between nations to settle international balances, which have heretofore not infrequently prevailed. also establish a means by which it is hoped financing The relationship will between the two coun- tries can be accomplished in tines of emergency without undue strain upon the exchanges. Provision is made for participation by other Federal reserve banks of the Ilnited States desiring to join in the transactions contemplated. Denver, Colorado, January 2, 1917. Dear Governor Hamlin: It was good to hear from you and I appre ted your writing me very mach indeed. My progress is satisfact y but slaw just now, n very easily but, as you realize, my temperament with this irksome inactivity. Governor Harding's lette announcement has net yet reached me and I await it It is, of course, most going to be in position to linit satisfactory to feel that we Bank of Aigland up our Federal Rose I hope with the of Europe. It other great and ultimately central banks d seem to me tt the supreme importance of this reciated, not as to present condi- relationship ha ages which will result fran such all ces in future years. the Board's anno Whi The only fly in the ointment is the fact ement really violated a very sacred pledge o with I had entered Lord Cunliffe and having been made as it me abroad and worse than that auuse him a deal of embarrassment with his own directors. ,00d Concerning all of that, however, I will be able to write more fully a little later. With warmest regards and every good wish for the liew Year, be- lisse me, Faithfully yours, Hon. C. S. Hamlin, Federal Reserve Board, Washington, D. C. http://fraser.stlouisfed.org/ BS/CC Federal Reserve Bank of St. Louis Denver, Colorado, January 15, 1917. CONFIDELITIAL. 2v dear Governor Hamlin: of the 9th. I was delighted to receive your eX dential let As you may imsgine, it is only my car spondance that p development of a mental stagnation out mere - that wo making worst fate that I could cont though at this stage it is ther slow, vents the be about the progress, al- icular y as I a-- disbar- red as yet from much acti exercise, parti on account of the weather and partly due to t lye caution of doctor, but I have added a total of 18 lbs. t of course indicates pro In reply to what much tempted to writ air done so to the peat now. municated to as could have can come from * SO sterious process, and that L_.) if nothing else does. the foreign arrangements, I am e account of the situation, but, having possibly it is better for me not to reintention to make the announcement been cow,- I could have pointed out many reasons 7ikay it was unwise en done also from the office in New York, but little good Tying over spilt milk, and 1 am now hoping that nv health and arrangements at the bank will permit me making another trip to Europe this summer and make these foreign arrangements complete and effecting and as comprehensive as present conditions justify. In conclusion, let me suggest that the establishment of these relations between the System and the great banks of Europe is to my mind 2/' To - Governor January 15, 1917. the most important development Which can now be undertaken for the purpose of regulating after war developments, and I know that that view is shared by some of the most important bankers both in New York and abroad. I hope that no consideration -al with their prompt conclusion. With kindest regards and again sy thanks for yo 3 letter, I am, ours, Hon. C. S. Hamlin, Federal Reserve Board, Washington, D. C. qv Denver, Colorado, January 26, 1917. Dear Governor Hamlin: It was very good of you to write me again seem unresponsive to the needs of any I do not want to -tion, particularly when I am so far away and out of touch with things, b ment, as I wrote you, did give me I hock. am now corresponding -11ain of Prance and feel quite sure tha the Bank of elude negotiations with that institution, but in Paris much more arise in dealing with importan pondence. ground righ Were I o hat announce- in London many difficulties d to al a matter by corres- sow, I am sure the matter could be promptly conolud This si in my e is alwa titn to once illustra foreign espondenta better than any other truth of the saying that a man with money popular. live and keep and imp where such rela health, you will see our bank in a close with all the great central banks of Europe nships can be of value, and it is one of the matters which has been uppermost in mg mind ever since we started our organization. When that part of the work is done maybe I will retire and grow potatoes. Again thanking you for your letter and your good wishes, I am, Very sincerely yours, Hon. C. al Reserve Board, Washington, D. C. BS/CC July 11, 1919. /../E3RARY JUL 1 2 1919 FEDERAL RESERVE B. Dear Mr. Hamlin: It was fine of you to send. me that little book, which I will read. on the steamer with a great deal of interest and profit, I know. Also many thanks for your good wishes. I have been looking forward to this trip for a good while and. know that it will be most interesting as well as a good. rest. With kindest regaras to you and your associates, I am, Sincerely yours, Honorable, Hatn, Federal Reserve Board, `Washington, D. U. Hotel Trianon Palace, Versailles, July 29, 1926. My dear Mr. Hamlin: Many thanks for your nice terday and which I letter of July 16th, which reached me yes- have read with a great deal This you will understand to be a of pleasure. private reply. and personal You understand of course that I have at times, and more recently than formerly, felt a good deal of anxiety about my relations with some of the members of the Board. phere of It will be very difficult for us suspicion or mistrust or hostility. to accomplish much in an atmos- The news of your reappointment gave me a good deal of satisfaction and relieved my mind, because you end I have managed to get along so well over so many years and without a hint of any such develSo I am relieved and pleased, although you may feel opment in our relations. that it is a bit out of place for me to say so. The situation over here is most complex and at times has been filled with peril possibly beyond what is understood at home. I shall not attempt an account of it all in this letter, but await my return to discuss matters verbally to supplement the reports I have made to Mr. Harrison writes me that the Bank. he has taken opportunity to keep the members of the Board informed of the substance of my reports, which is quite as I wish it, but I was a bit surprised the other day that a resolution had been introduced directing that some sort of inquiry be made of our Directors an to the object and need for my stay over here. Of course I we unaware what may have inspired this, but such inquiries, and especially made in that way, are not calculated to accom- plish very much and they appear to was full explained to Secretary Mellon and Governor Crissinger was fully understood overlook the fact that the object of my trip and and, I am sure, approved. Unfortunately, it will be a bit longer than I had planned, because of 2. Mr. Hamlin. July 29, 1926. my illness which kept me at Antibes considerably longer than T. wished. In a few days I am leaving for Amsterdam to have a visit with pr. Visswing. T shall probably see Schacht and then make an effort to visit the Banks at Prague and Budapest. It looks as though I could not complete my trip in time to get home before September. 7ith best regards and many good wishes, T Sincerely yours, Hon. Charles S. Hamlin, Mattahoisott, Massachusetts. 73S:14 am RESERV BOARD AsHiN7bN September 11, 1914. Dear Mr. Strong: \\,.._ I enclose a Igfe)qrlonr. Lawrence Tweedy, who is strongly recommended for a position under the Federal Reserve Bank of New York. Would you quietly find out something about him and let me know. Very sincerely yours, Governor of the Board. Benjamin Strong, Jr., Esq., 16 Wall Street, 1s1ew York City. Enclosure. FEDERAL RESERV BOARD WAS IN 1'0N September IP:4116 SEP 1 4 1914 Dear Mr. Strong: send herewith a note from Mr. Fleming, in charge of one of the Bureaus of the State Department. Will you kindly look it over, and see if there are any suggestions which will be helpful in dealing with present problems. Very sincerely yours, Governor of the Board. Benjamin Strong, Jr., Esq., 16 Wall Street, New York City. Enclosure. AD. -SS OFFICIAL COMMUNICATIONS TO TIE SECRETARY OF STATE, WASHINGTON, D. C. Aolui'VISP 11 1914 DEPARTMENT OF STATE WASHINGTON September 4, 1914. The Honorable C. S. Hamlin, Governor, Federal Reserve Board. Sir: In compliance with your suggestion made at the informal conference at your office, we are sending you a memorandum of the suggestions touching the possible use of the Consular Service in facilitating trade between the United States and foreign countries. Very truly yours, MEMORANDUM. At an informal conference between Mr. C. S. Hamlin, Governor of the Federal Reserve Board, Mr. W. B. Fleming of the Office of the Foreign Trade Advisers, Department of State, and Mr. G. L. Brist, Chief of the commercial section of the Consul Bureau, Department of State, some suggestions were made which it was thought might interest the Federal Reserve Board. These suggestions were in reference to affording trade facilities in the way of bank credits or exchanges where the credits or exchanges were disturbed by war conditions. Pending the establishment of American banks in foreign countries or the reestablishment of former exchange methods, it was suggested that the Consular Service might be brought into use for the purpose indicated by having it act as an intermediary. For example, if a foreign merchant is prevented from selling goods to an American importer, by reason of the lack of commercial exchanges, let the American importer place the necessary funds for the purchase in his bank and, through the Department of State and its Consular Service, notify the foreign merchant and his bank of such deposit; or, vice versa, if the American seller suffers under the exchange disability,let him and his bank be notified through the Department 2 Department de* of State and its Consular Service of the deposit made abroad by the foreign buyer. Quasi official information as to the responsibility of the depositary might also be conveyed and, in the absence of a responsible bank, the Consul himself might be made the depositary. In some cases at least a course like this might tend to bring about that confidence which is necessary for the transaction of business. If to this were added information by which the credits between the respective countries could be cleared, much might be done to unfetter trade. This plan, if deemed practicable, could be submitted to the Department of State for its approval. FEDERAL RESERVE BOARD WASHINGTON September 12, 1914. SEP 1 4 1914 To Messrs. J. B. Forgan, S. Wexler; L. L. Rue,' Benjamin Strong, Jr., and Thomas P. Beall Committee on U. S. Clearing House Banks. Cenclemen: For your information, and for such suggestions as you may care to make, I am enclosing a copy of a notice given to the press yesterday by the Federal Reserve Board. Very truly yours, Governor. Enclosure. Washington, D. C.,, September 11, 1914. The Federal Reserve Baard at its meeting today renewed consideration of the report of the corittee in favor of establishing a fund If 0.5o,000,00n in gold for protection of the foreign exchange situation. In view of the announcement that New York City has completed arrangements for payment of her maturing obligations and for providing for the necessary gold remittance's to Europe, the Board felt that it may not be necessary to create the proposed fund of 0150,000,000 in gold, and decided to await developments before giving the matter further consideration, holding itself in readiness to consider any additional suggestions which may be submitted by the Bankers' Committee to meet the altered situation. FEDEIRAL R ESE RVE BOARD WASHING...T.0>r' September, 15, 1914. Dear Mr. Strong: Many thanks for yo r two notes of September 14th. I shal to see you and Mr. Forgan be very glad any time. have just received a tele ram from Mr. Beal in Boston stron tion of the propos hope, before long, the formafund.,,/ I have rom the other members of the committ Very sincer ly yours, Gov rnor of the Board. Benjamin strong,/Jr., Esq., President, Bankers Tryst Company, 16 Wat1 Street, New York City. I FEDERAL RESERVE, OARD WAHING 0.1,1 Septembef 15, 1914. Dear Mr. Strong: I have your note of September 14th, as to Mr. Fleming' note and memo- randum, which I will se,d to him. think your suggestion I e a very good one. Very sincer ly yours, Gove nor of the Board. Benjamin Strong, ,r., Esq., President, Bankers Trust Company, 16 Wall: Street, New York City. / FEDERAL RESERV BOARD WASHINGTON 6, 1914. Septembe, Dear Mr. Strong: Many thanks fo September 15th, as to 4t.. your note of Tweedy. Very sinceirely yours, ernor of Benjamin Strong, Jr., Esq., 16 Wall Street, New York City. the Board. FEDERAL RESERVE BOARD WASH! NGTO N September 28, 1914. Dear Mr. Strong: The Secretary of the Board tells me that the typewritten copy of the letter addressed by the Board to the Chairmen of the Clearing House Associations which I sent you, is the only copy they had and that it is needed for their records. Will you please be good enough to return this document to me,and oblige Faithfully yours, Private Secretary. Benjamin Strong, Jr., Esq., Bankbrs Trust Company, New York. POSTAL TELEGRAPH COMMERCIAL CABLES .- CLARENCE H. MACKAY. PRESIDENT. TELEGRAM RECEIVED AT 20 BROAD STREET V YORK CITY 1278. 1279 RECTOR DELIVERY NO. 4oH The Postal Telegraph-Cable Company (Incorporated)transmits and delivers this message subject to the terms and conditions printed on the back of this blank. DESIGN PATENT NO. 44529 16NYC-18457 lk ru 17 kiovt. 1. 4aOhn. D.O.Nov 4-14 imniamin Strong Jr., Saq, 27 Pine St-, N.1. Telezram received will make correction G. hamlin. , 235? 06-0 POSTAL TELEGRAPH-CABLE COMPANY 911E:7" THE COMMERCIAL CABLE (1. COMPM AND 16] THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY ( INCORPORATED) TRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS: To guard against mistakes or delays, the sender of a telegram should order it REPEATED ; that is, telegraphed back to the originating office for comparison. For this, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the telegram and this Company as follows : The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery,°of any UNREPEATED telegram, beyond the amount received for sending the same; nor for mistakes or delays in the trantmission or...delivery, or for non-delivery, of any REPEATED telegram, beyond fifty times the sum received for sending the same, UNLESS SPECIALLY VALUED; nor in any case for delays arising from unavoidable interruption in the working of its lines; NOR FOR ERRORS IN CIPHER OR OBSCURE TELEGRAMS. In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-deliveryof this telegram. whether caused by the negligence of its servants or otherwise, beyond fifty times the REPEATED telegram rate, at which amount this telegram, if sent as a REPEATED telegram, is hereby valued, unless a greater value is stated in writing hereon at the time the telegram is ofiered te the Company fortransmission, and an additional sum paid or agreed to be paid based on such value equal to one-tenth of one per cent. thereof. 8. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach its destination. 4. Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be made to cover the cost of such delivery. 6. No responsibility regarding messages attaches to this Company until the same are presented and accepted at one of its transmitting offices: and if any message is gent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the message and any notice or instructions regarding it to the Company's agent in its said office. The Company shall not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the telegram is filed with the Company for transmission. The above terms and conditions shall be binding upon the receiver as well as the sender of this telegram. NO EMPLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING. CHARLES C. ADAMS, VICE-PRESIDENT. CLARENCE H. MACKAY, PRESIDENT. EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER. CHARLES P. BRUCH, VICE-PRESIDENT. UNIvii AM 1#6400 y Aorkmairir GEORGE W. E. ATKINS, VICE-PRESIDENT TEL BELVIDERE BROOKS, VICE-PRESIDENT NEWCOMB CARLTON, PRESIDENT RECEIVED AT 16 Broad St. (Stock Exchange Bldg.), N. Y. A:6W 2K TV 36 GOVT. 6TH K WASHINGTON DC BENJAMIN STRONG I JR_ES 27 PINE WITH (ASE 27NEWYORK. PREPARED OF ALL EXHIBITS MEMORANDA ..EARL1EST CONVENIENCE. NOV. 1914 ST ..PLEASE HAVE TWENTY COPIES THE LETTER OF BANKERS ETC S. HAMLIN GOVERNOR 1155 F"71 AND SEND TO ME AT FEDERAL RESERVE BOARD WAS November 9, 1914. My dear Mr. Lewis: I have your note of November 7th, and have received the twenty additional copies of the report of the bankers committee, for which please accept my thanks. Very truly yours, Governor. J. H. Lewis, Esq., 27 Pine Street, New York City. 0 / FEDERAL RESERVE BOARD WASHINGTON atc2 .0( *194 December 23, 1914. Dear Governor Strong: I take pleasure in enclosing a copy of the Monthly Bulletin of the Chamber of ...4.04.44.0~4,355t* Commerce of the State of New York, containing my address on the Federal reserve system. Sincerely yours, Governor. Benjamin Strong, Jr., Esq., Governor, Federal Reserve Bank of New York, 62 Cedar Street, New York City. R EC, IT ',I Et) FEDERAL RESERVE BOARD WAS H IN GTO N L. March 22 Benjamin Strong, Jr., Esq., Governor, Federal Reserve Bank of New York. Dear Governor Strong: I want to thank you and the other Governors for your very kind thought of me sending those beautiful tulips. I have had a hard time for the last two weeks but I hope now to go out tomorrow, and I can assure you I look forward to that event with great pleasure. With best wishes, Very sincerely yours, ' 13A1;\ sinur Form 120,. .E SYMBOL Message otter at .JSSage .yht Letter Blue gif ZSTE,,,7N- Nile NL lone of these three symbols ,pears after the check number of words)this is a day message. Otherwise its character is indicated by the symbol appearing after the check. 015 TEL UNIte4 AM NEWCOMB CARLTON, PRESIDENT BELVIDERE BROOKS. VICE-PRESIDENT GEORGE W. E. ATKINS. VICE-PRESIDENT CLASS OF SERVICE SYMBOL Day Message Day Letter Blue Night Message Nile NL If none of these three symbols Night Letter 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 16 BROAD ST. (STOCK EXCHANGE BLDG.), N. Y. A'S K K WASH I NGTO1\ , C. 1226PM JULY 14TH 1515 1068 BENJAM I N STRONG JR. FEDERAL RESERVE BANK, W LL YOU K I N7jLY ASK ONE TWO OUTSIDE ROOMS ON THE OF YOUR CLERKS TO ENGAGE NEWBEDFORD STEAMSHIP LINE FOR FRIDAY EVENING IF IMPOSSIBLE RESERVE NEWYORK . TWO SEATS ON FIVE PM LIMITE FOR PROVIDENCE. 6 C.S.HAMLIN 1229P,M A1 fq -\\1 1111 JUL 14 PM 12 37 ANS WER,TED JUL 30 P/15 P. J. FEDERAL RESERVE BOARD F !2-- WAS AIL ö 196 10 08AM July 29, 1915. FEDERAL OF N: , Dear Governor Strong: I enclose herewith a copy of a letter sent iv the Federal Reserve Board this day, dismissing the petition of Mr. Fowler. We wanted to wait until we heard from-you, but we felt that delay was inadvisable. Of course our action will not interfere with any investigation you are makinginto the matter. I leave for Mattapoipttt tomorrow at four o'clock, taking the 11:15 train from NOW I shall be at the University Club, York. New York, from 9:30/until 10:30, and in case you wish to communicate with me you ,tan send any letter there. If you want to reach me either Saturday, Sunday or Monday, up to three o'clock, I shall be at Mattapoisett. MY telephone number is Mattapoisett 40. Very sincerely yours, Governor. Hon. Benjamin Strong, Jr., Governor, Federal Reserve Bank of New York, New York City. Enclosure: ED E BANK 313 The Federal Reserve Board today cont the following letter. July 29th, 1915. Hon. H. Robert Fowler, General Counsel, Labors National Peace Council, Care Hotel Willard, Washington, D. C. Sir: Your petition filed July ninth, nineteen fifteen, on behalf of the Labor's National Peace Council, was duly received and submitted to the Board. I am directed to say in reply that after aralyzing and considering the averments and allegatons contained therein, the Board has concluded, under advice of counsel, that it is without jurisdiction to try the case presented and that it is not within its power, under the laws of the United States, to impose by regulation the restrictions which you seek to have imposed upon the operations of either Federal reserve banks or national banks. Your request for a public hearing is accordingly denied. I am further directed by the Board to repeat the request contained in its letter to you dated July 21, 1915, that you furnish it forthwith with the names of all directors whom you charge in said petition with having personally profited from rediscount transactions of certain Federal reserve banks. Respectfully, C. S. HAMLIN, Governor. wgsTE:zap UNION , ATKINS, VICE-PRESIDENT TEL AM NEWCOMB CARLTON, PRESIDENT TIME FILED ND the following Telegram, subject to the terms BELVIDERE BROOKS, VICE-PRESIDENT CHECK COPY on back hereof, which are hereby agreed to t6apoisett, Zass., Aug. 9, oirnor Strong, Federal Reserve Bank, Nassau St., New York. ,.ee my telegram to Harding sent your care. Please answer telegram immediately. I leave for New York New Bedford Line or Fall River Line. - Hamlin, Governor. N frall Form 260 find hi to-night and have him either on ALL TELEGRAMS TAKEN BY THIS ..7'OMPANY . ARE SUEJECT TO THE FOLL To guard against mistakes or delays, the sender of a telegram shwild order it REPEATED, that is, telegraphed back to the orig. For this, one-half the unrepeatecl telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPE PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the telegram and this Company as follows: The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEAT,. amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery of any REPEATED tek the sum received for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the world errors in cipher or obscure telegrams. In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-o, gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereb. a greater value is stated in writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paidor agreed t. on such value equal to one-tenth of one per cent. thereof. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when n, reach its destination. Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such offic, cities or towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent ex expense, endeavor to contract for him for suel,,delivery at a reasonable price. No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is s such office by one of the Company's messengers, he acts for that purpose as the agent of the sender. The Company will not be liable for damages or statutory penalties in any ease where the claim is not presented in writing within sixty days after the gram is filed with the Company for transmission. THE WESTERN UNION TELEGRAPH COMP No employee of ,the Company is authorized to vary the foregoing. INCORPORATED NEWCOMB CARLTON, PRESIDENT CLASSES OF SERVICE TELEGRAMS A full-rate expedited service. NIGHT TELEGRAMS Accepted up to 2.00 A.M. at reduced rates to be sent during the night and delivered not earlier than the morning of the next ensuing business day. DAY LETTERS A deferred day service at rates lower than the standard telegram rates as follows: One and one-half times the standard night letter rate for the transmission of 50 words or less and one-fifth of the initial rate for each additional 10 words or less. Subordinate to the priority of transmission and delivery of regular telegrams. Must be written in plain English. Code language not permissible. Telephonic delivery permissible. Day Letters received subject to express understanding that the Company only undertakes delivery of the same on the day of their date subject to condition that suffioiPnt time remains for such transmission and delivery during regular hours, subject to priority of the transmission of regular telegran. NIGHT LETTERS Accepted up to midnight for delivery on the morning of the next ensuing business day, at rates still lower than standard night telegram rates, as follows: The standard day rate for 10 words shall be charged for the transmission of 50 words or less, and one-fifth of such standard day rate for 10 words shall be charged for each additional 10 words or less. Must be written in plain English Code language not pei Mail delivery, postage prepaid, permissible. missible. W E STEkbalAA Form 260 m WESTERN UNION _.--AGE V CEIVE ATKINS, VICE-PRESIDENT S No. TEL .4 "r NEWCOMB CARLTON, PRESIDENT TIME FILED BELVIDERE BROOKS. VICE-PRESIDENT CHECK ti 4D the following Telegram, subject to the terms on back hereof, which are hereby agreed to CUPY 4ug. attapoisett, Mass., . 9, 1915. Hardim., care Governor Strong, Federal Reserve Bank, Nassau St., 'New York Have called special meeting of Federal Reserve Board for to-morrow, Tuesday rning, in New York at office at ten o'clock of Federal Reserve Bank. illiams, Miller and Willis will be present. Have also telegraphed Warburg. re me on receipt of this saying that you also will be present. M:y address Is Mattapoisett, Mass., care '::estern Union Telegraph Company, New Bedford. Charles S. Hamlin, Governor. r ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJE To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that For this, one-half the unrepeated telegram rate is charged in addition. LInless otherwise indicated on PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the telegram and I The Company shall not be liable for mistakes or delays in the transmission or delivery, or for amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for / the sum received for sending the same, unless specially valued; nor in any case for delays arising from t errors in cipher or obscure telegrams. In any event the Company shall not be liable for damages for any mistakes or delays in the gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFT DOLL a greater value is stated in writing hereon at the time the telegram is offered to the Company for transn on such value equal to one-tenth of one per cent. thereof. The Company is hereby made the agent oi the sender, without liability, to forward this tele; reach its destination. Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,01 cities or towns. Beyond these limits the Company does not undertake to make delivery, but will, wit expense, endeavor to contract for him for such delivery at a reasonable price. No responsibility attaches to this Company concerning telegrams until the same are accepte such office by one of the Company's --ncssengers, he acts for that purpose as the agent of the sender. The Company will not be liable for damages or statutory penalties in any case where the cl gram is filed with the Company for transmission. THE WEi.nii_ No employee of the Company is author iced to ;ary the foregoing. INCORPORATED NEWCOMB CARLTON, PRESIDENT CLASSES OF SERVICE TELEGRAMS A full-rate expedited service. NIGHT TELEGRAMS Accepted up to 2.00 A.M. at reduced rates to be sent during the night and delivered not earlier than the morning of the next ensuing business day. Telephonic delivery permissible. Day Letters received subject to express understanding that the Company only undertakes delivery of the same on the day of their date subject to condition that sufficient time remains for such transmission and delivery during regular office hours, subject to priority of the transmission of regular telegrams. NIGHT LETTERS lip DAY LETTERS A deferred day service at rates lower than the standard telegram rates as follows: One and one-half times the standard night letter rate for the transmission of 50 words or less and one-fifth of the Accepted up to midnight for delivery on the morning of the nex' ensuing business day, at rates still lower than standard night telegran rates, as follows: The standard day rate for 10 words shall be charge( to the priority of transmission and delivery of regular telegrams. Must be written in plain English. Code language not permissible. less. initial rate for each additional 10 words or less. Subordinate for the transmission of 50 words or less, and one-fifth of such standard day rate for 10 words shall be charged for each additional 10 words or Must be written in plain English. Code language not perMail delivery, postage prepaid, permissible. missible. MATTAPOISETT MASS 40.40-7. Are. ed...Aat S-e1 -.eAC: e- (-04-G4 Ale..416...116,1111L. AUG131915 (IQ ,FFICIO MEMBERS CHARLES S. HAMLIN. GOVERNOR FREDERIC A. DELANO, VICE GOVERNOR PAUL M. WARBURG W. P. G. HARDING - WILL1A:. G. MCADOO SECRETARY OF THE TREASURY CHAIRMAN ADOLPH C. MILLER TON WILLIAMS ...HOLLER OF THE CURRENCY JOHN E FEDERAL RESERVE BOAFZD PCM. H. PARKEF: WILLIS, SECRETARY SHERMAN ALLEN. ASST. SECRETARY ADDRESS REPLY TO WASHINGTON LING DEPT. FEDERAL RESERVE BOARD August 14, 1915. AUG 1 0 1916 FEDERAL fiEtiffilfE BANK Dear Governor Strong:- This will acknowledge he receipt of your letter of August 13th forwarding five copies of a report, copy of Which you state -has already been sent Governor Hamlin. Very/truly yours, /te-WA_Va4 Assistant Secretary. Hon. Benjamin Strong, Jr., Governor, Federal Reserve Bank, New York City. Oa, CHARLES S. HAMLIN, GOVERNOR FREDERIC A. DELANO, VICE GOVERNOR PAUL M. WARBURG W. P. G. HARDING - ADOLPH C. MILLER FEDERAL RESERVE BOARD dECORRENCY H. PARKER WILLIS. SECRETARY SHERMAN ALLEN, ASST. SECRETARY ADDRESS REPLY TO WASHINGTON FEDERAL RESERVE BOARD August 25, 1915. Dear Governor Strong:I am directed by the Federal Reserve Board to refer to the Executive Committee of the Council of Governors for its consideration, the question of the desirability of daily settlements between the Federal reserve banks through the Gold Settlement Fund; and if the adoption of such a practice is considered desirable, when it dhould be undertaken? That the Committee may have before it, informa- tion as to the cost of telegrams in connection with the weekly settlements through the Gold Settlement Fund, I am enclosing a memorandum of such charges to and including the settlement of August 129'1915. Very respectfully, Governor. Hon. Benjamin Strong, Jr., Governor, Federal Reserve Bank, New York City. FILINa DEPT. Auk.= 2 ci 1978 RESERVE BOARD FED A RE8ERFEDERAL VE BA NCINGT°N AUgU. 19, 1915. Dear Governor Strong: Your note of A sent s just to Mattapoisett, me here. I have rea slip from theWall ust 16th, reached the enclosed ret Journal with much interest, and ;ill also read the item in "The Stat t". Thanki g you for sending the clipping to me , Iam, Very sincerely yours, Benjamin Str ng, Jr., Esq., Gover:or, Federal Reserve Bank of New York. FEDERAL RESERVE BOARD WAS October 14, 1915. Personal Dear Governor Strong: I was delighteg to receive your letter of October/ I have just re- turned from Indianapolis, where I attended the Bankers' Cony/ention, and I hope I shall find the applea/at the house to-night. I am very folic' of apples, as perhaps I have told yu, and I appreciated those you sent die last winter. // With best wishes, Sincerely yours, Benjamin Strong, Jr., Esq., Governor, Federal Reserve Bank, New York City. .RKEA WILLIS SCRETARY Att" FEDERAL ESERVE BOARD SHERMAN FALLEN ASSISTANT SECRETARY WASHINGTON 112- Personal and Confidential. Dear Governor Strong:- Your letter of January 4th, in which you refer to a letter to me under date of August 9, 1915, came duly to hand. As you are aware, most of the questions which you raise have been under consideration by the Federal Reserve Board. It is this consideration which has seemed to prevent me making an earlier reply. The Board is generally in sympathy with the view which you express to the effect that it is the duty of the Board and the Federal Reserve system to be pmaalszmylemAR, I can state to you in confidence, and in fact this entire letter should be regarded as personal and confidential, that with respect to the issue of Federal Reserve notes, the Board contemplates the recommendation to Congress of an amendment substantially on the following lines:During the year 1915 the circulation of Federal Reserve as of December 31, 1915. notes has increased to Believing that the country should be prepared against any contingency, the Board had authorized the printing of about 000,000,000 of these notes. Almost one-quarter of the total supply printed has been placed in circulation. On December secured by commercial paper 31, 1915, however, $ pledged with the Federal Reserve Agents was outstanding as an obligation of the Federal Reserve Banks. The liability of the Federal Reserve Banks as to the remainder has been discharged by the deposit with the Federal Reserve Agents of a like amount of gold and lawful money. This result has been achieved by the Federal Reserve Ranks responding to the requirements for currency by issuing Federal Reserve notes rather than parting with gold. While the gold pledged with (2) the Federal Reserve Agents represents a very valuable protection in case there should be substantial demands for gold, it must be Observed that the process is an expensive one without, at the same time, giving to the Federal Reserve Banks that additional strength and lending power which they would secure in case the law were so amended that the Federal Reserve Banks would remain liable for the outstanding notes but would, on the other hand, retain property title in the gold deposited with the Federal Reserve Agents, which, in that case, would not be paid in for the redemption of the notes but deposited as collateral for the security of the same. The issue of Federal Reserve notes to Federal Reserve banks should be permitted against the deposit of notes, drafts, bills of exchange and bankers' acceptances acquired under Section 13 and 14 of the Act, or against the deposit of gold, or of commercial paper and gold in such proportion as said Federal Reserve Board may, from time to time, prescribe. This appears to the Board to be the main measure to be taken at this time, as once Federal Reserve notes are issued freely in this manner we can neither expect to accumulate the amount of gold that we should control nor can the Federal Reserve banks be expected to cover the heavy expense of keeping their notes out unless the collateral advantage be secured of strengthening the system by such issue. As to acceptances, since you wrote your letter in August, considerable liberalization of the acceptance regulation has taken place, and we now propose to submit to Congress an amendment asking for permission to national banks to accept against certain domestic transactions. As to the question of fiscal agency, a beginning has been made in turning over the funds of the Government to the Federal Reserve banks and the plan will have to be further developed now from time (3) to time as the development of the machinery of tne Federal Re- serve banks will warrant. Under 1149, you mention amendments. Points IL and B of this have, we believe, been, or are being, disposed of as above outlined. is to C, under which head you recommend that some consideration be given to the possible necessity or wisdom (as an emergency measure only) of giving power to Federal Reserve banks to lend money upon collateral security, the Board proposes to recommend to Congress that Federal Reserve banks be permitted to make short time loans to their member banks against the collateral of eligible warrants and Government bonds. The Federal Reserve Board feels that, at this time, it should be moderate in asking only for as small a list of amendments as possible, because, otherwise, consideration of the subjects might be delayed and our chance of securing any amendments might be seriously weakened. When this amendment under C has been secured it may be easier to widen this paragraph later on so as to include powers to be exercised in an emergency only. Under D, also as an emergency measure, you recommend that, at any rate for the present, consideration should be given to some plan by which Federal Reserve notes might serve as cash reserves for member banks. (4) As you know, this is a much controverted topic upon which public opinion is gradually swinging to the view expressed by you. It would, however, in the opinion of the Board, be a strategic mistake to take up this question at this time. Moreover, the Board has not reached any definite conclusions as to the advisability of such step as some members entertain an adverse opinion concerning the same. Very sincerely yours, Honorable Benjamin Strong, Jr., Governor, Federal Reserve Bank, New York, N. Y. RECEIVED FEDERAL RESERVE BANE OF NEW YoRK Copy Trarrgral, 1-61-f 11O2244c. Prepared b TELEGRAM Departmemts Interested Check by. 19 Code used O. K. File Clerk CHARLES S. HAMLIN, 'GOVERNOR FREDERIC A. DELANO, VICE GOVERNOR MEMBERS - PAUL M.WARBURG W. P. G. HARDING ADOLPH C. MILLER MCADOO ETARY OF THE TREASURY CHAIRMAN ', .,KELTON WILLIAMS FEDERAL RESERVE BOARD .iPTROLLER OF THE CURRENCY H. PARKER WILLIS, SECRETARY SHERMAN P. ALLEN, Ass, SECRETARY ADDRESS REPLY To WASHINGTON FEDERAL RESERVE BOARD 678 June 1, 1916. Dear Sir There is enclosed for your information copy all of a letter sent by the Treasury Department, to Federal Reserve Banks, relative to conversions of United States 2% bonds as of July 1, 1916, and a "Schedule,:tie: of Conversions of 2% bonds July 1, 1916". This schedule and the letter which accampanies it are forwarded for your information and guid- ance in making such conversions of bonds as you may desire. You will note that applications must be re- ceived by the Treasury Department ten full days before the date of conversion. Very truly yours, Governor. Mr. Benjamin Strong, jr., Governor, Federal Reserve Bank, New York, N. Y. 2 inclosures. )1 4,V:ill 'Ylcr J,J1 FEDERAL RESERVE BOARD WASHINV60100,, PERSONAL r June 13, 1916. Dear Governor Strong: Mr. Delano told me that he found you under the weather when in New York, but that the Doctors say that six months will bring you up to fighting trim again. I am awfully sorry to hear of this and beg you to feel absolutely free to go off and take a good long vacation, the only condition being that you leave all bank worries behind. I cannot tell you how delighted I am to learn from Mr. Delano that six months is all you will need to pull yourself together again. I have been through somewhat similar experiences and can feel that if six months is all a man needs to be restored to health he is a mighty lucky man. With my very best wishes, believe me, Very sincerely yours, f ,r,c-o5.ecAe...g 41-441'' "15 Hon. Benj. Strong, Jr., Governor, Federal Reserve Bank, New York City. 1-c. ; OF SERVICE CLASS OF SERVICE SYMBOL SYMBOL Day Memos Day Message Day Letter M. Day Letter Blue Night Message Mte Night Message Nile Night Letter N L. NL le of these three symbols Night Letter It et.. after the check number of von ..nis is a daY mossage. Other- It none of these three symbols appears after the check number of wordslthis is a day message. Otherwise its character is indicated by the symbol appearing after the check. NEWCOMB CARLTON, PRESIDENT wise its character is indicated by the symbol appearing after the check. RECEIVED AT , A539W 4" NL 1 NEW Yoi-t- I 1. EX WASHINGTON DC 28 1/e BENJ STRONG JR 903 PARK AVE NEV YORK THE BOARD AT ITS MELTING TODAY VOTED TO AUTHORIZE ME TO EXPRESS.TO INCERE GOOD WISHES AND HOPE YOU ITS THAT YOUR JOURNEY MAY BE VERY COMFORTABLE AND YOUR VISIT IN COLORAD MAY PROVE EFFECTIVE IN RESTORING YOU TO COMPLETE HEALTH AND STRENGTH C S HAMLIN GOVERNOR. FEDERAL RESERVE BOARD WAS July 11, 1916. Dear Governor Strong: I take pleasure in sending you, under separate cover, a bound copy of an Index-Digest of the Clayton Antitrust Act and the Kern Amendnent, just finished by me, and printed as a public document. Very sincerely yours, Hon. Benjamin Strong, Jr., Governor, Federal Reserve Bank, New York City. FEDERAL RESERVE BOARD WAS August 2, 1916. Mr. Benjamin Strong, Governor, Federal Reserve Bank of New York, Estes Park, Colorado. My dear Governor: I was delighted to receive your letter and to learn that you were progressing in health. I am con- fident that a few months' rest will send you back in perfect health. Some of the Mississippi banks issued a cir- cular the other day stating that they would test the legality of the clearing system, and they put in the statement they had reason to believe that the Federal Reserve Board regarded this as a friendly suit. We at once issued a publio statement that we fully recognized the right of any person to test any portion of the Federal Reserve Act, and that if the meaning of the words "friendly suit" is that both parties are uncertain as to their rights and therefore wish to test it, the Federal Reserve Board will not regard this as a friendly suit, for it has no doubt of its power to act. You will note that we were obliged to ask the Postmaster General to suspend his order to postmasters to collect checks through the mails. We are making arrangements now for bonding and insuring the postmasters, and it will probably be at least thirty days before that arrangement will be perfected. I trust that you will not fail to write me whenever you have time. It is always a pleasure to hear from you and I beg you to believe that my colleagues are perfectly satisfied that the bank will run along satisfactorily. They are all hoping that you will not worry but take plenty of time to recuperate. With best wishes, Very sincerely yours, Governor. FEDERAL RESERVE BOARD AkSTON 't December 27, 1916. Dear Governor Strong: I duly received your Christmas card and want to thank you for your kind thought of me. While I have not troubled you with many letters inquiring as to your health, yet you can be sure I have kept myself informed almost day by day from those who hear from you, and the news I hear is certainly delightful. However, do bear in mind that you must take time, but how ever long that time is before you can come back absolutely cured we shall rest content, so I trust you will not worry about it. Governor Harding tells me that he has written you about our announcement the other day of authority to the New York bank to appoint the Bank of England its foreign correspondent and agent, so I will not bother you with any of the details. I feel, however, that the news was received with great favor throughout the country as evidencing an indication of the Board to take up the matter of foreign exchange in a practical way. With best wishes for the New Year, believe me, Very sincerely yours, Hon. Benj. Strong, Jr., 41 Montview Boulevard, Denver, Colorado. FEDER S.E,SERVE BOARD - JANi 5 19;/ CONTIDFZTIAL: AIGTON January 9, 1917. Dear Governor Strong:I duly received your note of January 2nd and cannot tell you how glad I am that your progress is satisfactory, even though slow. The main thing to achieve is progress and a slow steady gain in the long run is much better than a sudden change which may later give way to further set-backs. I fully share your gratification at the authorization of the Board to the Federal Reserve Bank of New York to appoint the Bank of England as its foreign agent and to open reciprocal accounts with it, and I hope, with you, that similar action may speedily be taken with the other great central banks of the world. I cannot, however, quite comprehend your further statement "that the Board's announcement realy violated a very sacred pledge which I (you) had entered into with Lord Cunliffe and having been made as it was might discredit me (you) abroad and worse than that cause him a good deal of embarrassment with his own directors." I think, on reflection, you will see that the vote which our Board passed and published was really an authorization to the Bank of New York to take up the matter of the appointment of a foreign agent with the Bank of England. The vote contained no reference to any pre- liminary conversation or understanding which had been had with the Bank of England. On the contrary, the vote clearly relates to future action -2- and. not to past understandings. s a matter of fact, the memorandum of your talk with the directors was never read'officially at a meeting of the Board. On the contrary, the Board felt that if, acting under its authorization, you were to proceed to enter into any arrangement with the Bank of England, the arrangement itself would be formally submitted to us for our approval. Speaking confidentially, I would say that the warning the Board felt impelled to give to the banks of the United States as to keeping their affairs liquid andavAdinginvestments in securities which though nominally short time may ultimately develop into long time bonds, was resented at the first, and some intimation even was given that it revealed a Pro-German inclination on the part of the Federal Reserve Board. It is hardly necessary to say to you that this was a pure banking matter and that the Board in giving its warning simply per- formed what it deemed to be its duty in warning the banks of the United States as to the necessity of keeping their assets in a liquid condition. When, however, the Board had voted to permit your Bank to appoint the Bank of England as its foreign agent the Board felt that It would be plainly improper to keep such a vote from the public. It was perfectly clear to us that it was our duty to mention the fact in our forthcoming annual report and we felt that the only proper way was to take the public into our confidence and state what the vote was. So far as any action Of the Board is concerned, it would, of course, be open for the Bank of England to decline to enter into any arrangement as to an agency, so far as our vote at least is concerned. 3 Speaking personally, I do not believe that you will be placed in any embarrassment through Board. It was received the publication of this vote of the with enthusiasm by the press of England and also universally by the press in this country. I only hope, as I have said, that it may be the beginning of many other arrangements with the various great central banks. With my very best wishes for the New Year, Very sincerely yours, Honorable Benjamin Strong, 4100 Montview Boulevard, Denver, Colorado. believe me FEDERAL RESERVE BOARD WASHINGTON January 19, 1917. 0.P, C=FIDEIMIAL- JAN26 1917 Dear Governor Strong:- 1 was very glad to receive your note of January 15th. If you have added eighteen pounds to your weight, I am sure you ought to feel that you have made splendid progress. You say that if the Board's intention to make the announcement had been communicated to you, you could have pointed out many reasons why it was unwise. When I see you I think I can whisrer a few words into your ear which will satisfy you, thet it was not only not unwise, but was the highest part of wisdom. By the way, I notice in the Journal of the American Bankers' association for January, 1917, an interview with the Governor of the Bank of France to the effect that he hopes a similar authority can be given to the Federal Beserve Bank to enter into negotiations with the Bank of Prance. I have read many editorials in European papers and every one welcomes the authority to enter into the proposed arrange- ments as most wise and beneficial both to the United Ztates and Great Britain. I earnestly hope thnt we can now go farther and make similar arrangements with the other great European ara Asiat!c banks. Trusting soon to hear from you again and with the kindest personal regards of my colleagues,believe me, Very sincerely yours, Eon. Benjamin strong, Denver, Colorado. FEDERAL RESERVi BOARD WAS H I N GTOOBR AiRly 04 1919. I / FEDER . g P-19 ESE IQ JUL 1ti6BA Ar Hon. Benjamin Strong, Governor,Federal lieserva Bank, Hew York, U. Y. Dear Governor Strong: I take pleasure in sending you a copy of a sturnnary entitled "The Viar with Germany," which I think you will find very interesting to read on your way across. With best wishes for a calm sea and a happy voyage, I am, Sincerely yours, Enclosure.