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F.D. 12A.3 9

013./

No.

Federal Reserve Bank

19,9-PEX2 S

STRo

District No. 2
Correspondence Files Division

SUBJECT




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December 27, 1925.

My dear Hoover:

Our Mr. Snyder has received a letter from your Mr. Grosvenor M. Jones,

looking to the compiling of somewhat similar information to that which was previously

obtained in regard to certain invisible items or international payments, and I am
anxious, as you know, to do anything possible to further studies of this character.
Unfortunately, last year we got rather unsatisfactory replies, and in some cases none

at all, and in connection with these replies rather vigorous protest that the work
involved was so considerable and the information so confidential that those to whom we

sent the questionnaire were moot reluctant to reply.

There are in the neighborhood

of 100 firms and institutions to be approached with the questionnaire, and in order to

get any results at all, it will be necessary for me to 'peke a rather personal matter
of it, which I em reluctant to do, as we have burdened these same bankers with so

many inquiries in the past that they are becoming rather restive.
Do you feel that there is any other method of approach?

I am very certain

that were the questionnaire sent out by the Department of Commerce, the replies would

be negligible because of the reluctance of investment houses to give informatior to a
department of the r.lovernment.

This is deep-rwated and widespread. Before doing

anything further, therefore, I am writing to get your best advice and a more definite
expression of your wishes.
Yours very truly,
norable o. uomrnerce,
uepartmentriaDert Hoover,
Washington, D. C.




DEPARTMENT OF COMMERCE
BUREAU OF FOREIGN AND DOMESTIC COMMERCE

WASHINGTON

November 21, 1923.

*Ur. Carl Snyder,
Federal Reserve Bank of New York,
15 Nassau St.,
New York, N. Y.

IN REPLY REFER TO

24

Dear Mr. Snyder:

The Bureau is making preparations for getting out the study
of the balance of international payments of the United Slates for
This year the Bureau will do this work alone. Moreover,
1923.
it is Mr. Hoover's wish that the study be issued in January next,
In connection with the study for 1922 the Federal
if possible.
Reserve Bank of New York was good enough to send out to banks ana
bankers in its district a questionnaire on the purchase and sale
of foreign securities and currencies. The results of this questionnaire were very valuable, and as the items mentioned will probably
loom up large in the study for 1923, it would be very much appreciated if the Reserve Bank would perform the same service this ye.ar.
In order to get out the study early in January, it is thought advisable to have the questionnaire sent out early in December, and to have
the data reported as of December 1. While it would be more logical
to have the data as of December 31, it is felt that the banks will
be pretty busy around the first of the year with the closing of their
books and making up of annual reports, and that a month's difference
will not vitally affect results.
The form of the questionnaire will be slightly changed in order
to make the questions somewhat more specific.
Will you kindly let me know whether the Reserve Bank is willing

tundertake this work?
I trust that you had a fine summer in Europe, and I hope to hear
With kind
more of the results of your studies when next I see you.
regards, I am
Very truly yours,

Grosvenor M. Jones,
Chief, Finance and Investment Division.
ADDRESS ALL COMMUNICATIONS TO

BUREAU OF FOREIGN AND DOMESTIC commERcr.
WASHINGTON, D. C.




DEPARTMENT OP COMMERCE
OFFICE OF THE SECRETARY

WASHINGTON

TO BUSINESS EXECUTIVES.

May I bring to your attention a phase of the work of the
United States Department of Commerce which is especially designed
for the assistance of American business men, and in which every
American business man,
I believe, ought to participate.
I refer to COMMERCE REPORTS, the weekly survey of foreign
trade, issued by the Bureau of Foreign and Domestic Commerce,
which is published for the purpose of informing the business and
industry of the United States as to economic developments abroad,
and pointing out to American business men opportunities for the
sale of American goods.

Whether you are actually engaged in shipping merchandise
abroad or not, the Department feels that every business enterprise
in this country, consciously or unconsciously feels the effects of
a depression or a prosperous era in our international trade, and
that therefore these executives should have access to reliable and
authentic information on the phenomena affecting its 'conduct.
More
than 1,000 correspondents, located in practically all the markets
of the world, collect this information which is classified, digested
by experts, and published weekly in COMMERCE REPORTS.
It is of importance in the extension of our foreign commerce
that this service should receive as wide distribution as possible
and it is the desire of the Department that COMMERCE REPORTS should
be available to the commercial community in every part of the
United States.
Under the law a fee of $3 per annum is payable for COMMERCE
REPORTS and $1 for the supplement (the monthly Survey of Current
I
Business) this being the actual cost of paper and printing.
would be glad if you would give consideration to the matter of
assisting us in its wider distribution by subscribing, and further
by bringing the publication to the attention of your associates.




Yours faithfully,

Secretary of Commerce.

DEPARTMENT OF COMMERCE
BUREAU OF FOREIGN AND DOMESTIC COMMERCE

WASHINGTON

August 11, 1922.

IN REPLY REFER TO

42

RETORT ON STOOKS OF BITUMINOUS COAL
IN THE HANDS OF THE RAILROADS,
AS OF AUGUST 1, 1922.

The report of the American Railway Association on stocks of
bituminous coal in the hands of the railroads as of August 1,
1922, shows that the carriers had 5,967,404 tons in cars or in
stock piles, which is a decrease of 1,746,644 tons from the
amount so held on July 15th.
The average daily consumption for the period from July 15,
to August 1, was 291,193 tons, or an increase of 12,237 tons over
the similar figure for the first half of July. During the latter,
half of July the carriers consumed, on the average, 117,140 tons
per day from their stock on hand, which is an increase of over 33,000
tons per day over the similar figure for the first half of July.
Four railroads increased their stock on hand on August 1,
slightly over the amount held on July 15, while the rest of the
283 roads reporting had decreased stocks. The remarkable part of
the report is the increase in consumption, the Southern Railway
leading with an increase of 2,500 tons per day or 23%; the Pennsylvania with an increase of 2,000 tons per day; and 258 other
roads with an increase of 13,760 tons per day, or about 10%. Out
of the 283 roads included in the statement, 267 reported increased
daily consumption for the last half of July over the first half of
the month.
The statement shows for the first time the full restriction
effect of the railroad shopmen's strike Upon the movement of coal
to railroads, as indicated by decreased receipts*nd,increased
consumption from stocks.
The following statement shows the amount,of coal loaded at
the mines, the railroad receipts for the saMe.,periok,and.the percentage:
,

ADDRESS ALL COMMUNICATIONS TO

BUREAU OF FOREIGN AND DOMESTIC COMMERCE
WASHINGTON, D. C.




Tons Loaded
at Mines.

Month
April
May
June 1 to June 15,
June 15 to July 1.
July 1 to July 15
July 15 to Aug. 1.

Railroad
Receipts.

Percentage.

13,624,700
17,936,350

3,558,000
4,314,000
3,213,000
3,174,254
2,921,016
2,621,251

26%
24%
33%
31%
36%
35%

10,167,800
8,217,400
7,541,500

6,697,350

The following statements showing the information for the carriers
as a whole are self explanatory:-

Consumed from
Current Coal Received

Total

-Zionth

Consumption

Consumed from
Stock

April

8,350,000

3,52d,000

4,830,000

May

8,520,000

4,205,000

4,315,000

June 1 to June 15

4,300,000

3,015,000

1,285,000

June 15 to July 1

4,490,000

3,094,000

1,396,000

July 1 to July 15

4,180,000

2,921,000

1,260,000

July 15 to Aug. 1

4,368,000

2,611,000

1,757,000

Stocks on
Hand

Day

Total Daily
Average,

Consumption

Daily Average
Consumption
prom Stock

Days.' Supply

on Hand
*

April 1

19,845,833

271,000

May 1

15,052,268

278,000

160,970

94

June 1

10,846,567

283,947

143,380

75

June 15

10,288,778

286,349

79,148

130

.0

July 1

8,973,032

93,080

96

2

July 15

7,714,048

84,000

92

2

Aug. 1

5,967,404

117,140

52

*

291,193

Based only upon that portion being actually taken from stock at the
rate established during the months of April and May, the first half
of June, the last half of June, and the first half of July, respectively.




DEPARTMENT OF COMMERCE
OFFICE OF THE SECRETARY

ACK NOW LEr, a ED
AUG 14 1922

rt

WASHINGTON

August 11, 1922

Mr. 3enj.. Strong
Federal eserve Bank

New York City
My dear Strong

:

Your statement of August 10th is correct
except that experience April first has demonstrated
that the invisible supply of coal was rather larger than
anticipated at that time and our reconstructed estimate
on August first was that the total coal and stocks was
then about 20,000,000 tons.




'ours faithfully,




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DthiPE'1.L O. COWNE.ESCE

August 10, 1922.

PEriSONAL

Ity dear Hoover:
I itould greatly appreciate your advising me if the following figures are

reasonably

accurate:

There is reported to be practically no anthracite coal in
storage and almost none being produced.

On or about April 1 it was estimated that there were about

e5 million tons of bituminous coal - at the outside, possibly 70 million tons -

in visible supplies.
The reported output for the four months - April to July inclusive is placed at 74 million tons, from vhicb we have a total of 144 million. tons
to cover the four months consumption.

The estimate of veekly consumption of bituminous coal throughout

the United States is 8 million tons, !waking a total of 12R tons for the four
These figures in4icate an available supply of storage coal at
the ,,resent time of about 16 million tons, or for the whole country two veeks
supply.

The figure must be modified to the extent that difficulties of distri-

bution, etc., make the available supply practically much less than these

figures indicate.
I am sending the above just to check up for our information department.
Yours sincerely,

Honorable Herbert Hoover,
Del:artment of Commerce,

ashington, D. C.


ES.


44-

`..\

August 1, 192?.

RAILROAD STRIKE MEETING

Around seven o'clock (New York time) last evening, Secretary Hoover
called me on the phone and asked if I thoughtit wise, and if so, if it would be

possible for me to arrange for him to meet some of the financial men of the city
early this morning - say at ten o'clock - so as to discuss the strike situation
with them prier to his meeting with the railway executives at twelve o'clock.
I had previously had some discussion of the possibilities of such a meeting with
Mr. Hoover when I was in Washington the previous week.

As it seemed desirable

to arrange the meeting, it was held at ten o'clock this morning, and the following gentlemen were Present:

Charles Peabody, President, Mutual Life insurance Company
E. R. Stettinius, Partner, J. P. Morgan & Company
n
Thos. Cochran,
Jackson E. Reynolds, President, First National Bank
Charles E. Mitchell, President, National City Bank
Charles H. Sabin, Chairman, Board of Directors, Guaranty Trust Company
Frederick Strauss,Partner, J. & Y. Seligman & Company
G. 4. Davison, President, Central Union Trust Company
John J. Pulleyn, President, Emigrant Industrial Savings Bank
Mortimer L. Schiff, Partner, Kuhn, Loeb & Company
James S. Alexander, President, National Bank of Commerce.
Mr. Jay and Mr. Strong also attended the meeting.
In addition to those attending the meeting, an effort was made to secure
the attendance of Mr. Speyer, who is in Europe - Mr. Dryden of the Prudential Life,
who is in Europe - Mr. Day of the Equitable Life - Mr. Fisk of the Metropolitan Life Mr. Dennis of Blair &. Company - Mr. Siggin of the Chase National Bank - Mr. Prosser

of the Bankers Trust Company, and one or two others, but for one reason or another
none of these gentlemen could attend.

Mr. Hoover reviewed the entire strike situation both as to coal and
railroad operations.

He explained what the Administration felt it was necessary

to do, and stated that inasmuch as important and possibly radical measures might
have to be taken if an adjustment of the railroad strike Gould not be arranged to-day,
he felt that it was desirable and fair that the men of such influence in financial

matters- as


those attending the meeting should be informed.

2

He was careful to explain that he was not asking them to bring any
pressure or exert any influence upon the railroad executives.

The object of the

meeting .vas simply to make sure that the important financial interests of the city
The

had accurate and timely information on the subject of the strike situation.
discussion at the mooting - which lasted until 11:15 -

brought

out very clearly

That the crux of the railroad strike situation was the adjustment of

seniority.
That all parties appeared to be

willing to

abide by decisions of

the Railroad Labor Board.

That the railway executives - at least a large number of them - and
those bankers who had railroad affiliations were pretty clear in their minds

that

they could not violate their obligations to the men who had not struck and to the
new employee in the way which would be involved were they to restore the strikers
to their former priority positions.

That

the sentiment - at least on the part of those who spoke - leaned

towards standing pat in the present situation rather than in making a surrender on
the question of seniority, which would possibly have the effect of strengthening
the hands of the coal strikers.

That some of those present did not associate the relations between

the coal end the railroad strikes in quite the same way that Mr. Hoover did, and
felt that it was better to go through the ordeal of fighting them both rather than
give way on seniority so as to have the advantage of dealing with the opal strike
alone.

Mr. Hoover took the position that the adjustment of the seniority question
by taking the old men back would not be

a

surrender of

a character 4hich would

impair the prestige of the Railroad Labor Board, and it that were done, similar
tribunals could be established for other divisions of organised labor with good
effect.



3

The meeting adjourned without any

particular action being taken,

follo*ing Mr. Hoover's statement, 41aich occupied about half
simply informl general discussion by
listed above.




an

and

hour, there was

those present which created the

impressions

June 12, 19??.

Dear Mr. Secretary:

Thank you for your nice note of June 5, a.ntainins
ducticn of the President's lceter cf May ?,9, commenting upon the work
of the Unemployment Conference.

My only regret iq that the Federal Reserve conference 4hich
T %V being held at the same time prevented my giving t.e much assistance

to you in that matter as your fine effLrts certainly deserve.
with kindest regares, believe me,
Youre very truly,

Honorable Harbert Hover,
Department of Commerce,

4ashington, D. C.

BS.MY.




THE WHITE HOUSE




WASHINGTON

May 22, 1922.

My dear Mr. Secretary:

Now that the revival of employment through the country - except for the strikes
has so greatly Improved our situation that our
anxieties in this particular are largely removed,
I wish to extend my gratitude to every one of the
great body of our citizens who gave such efficient
service in the organizations set up and coordinated
under the Unemployment Conference of last autumn. The
conference members and its Standing Committee deserve
great credit for the successful inauguration and
stimulation of the great simultaneous movement in
the community, and its continuing organization, which
has so greatly succeeded in the mitigation of what
otherwise would have been great suffering.
We have passed the winter of the
greatest unemployment in the history of our country.
Through the fine coordination and cooperation among
federal and state officials, mayors and their
committees of employers, relief organizations and
citizens, we have come through with much less suffering
than in previous years, when unemployment was very much
less. So much has this been the case that except for
the intensification of public works by the federal, state
and municipal governments, the demand for aid to the
unemployed from the federal treasury disappeared in the
country. Only two or three of our larger cities failed
to secure cooperation to the best advantage.
For this inspiration, organization
and coordination of the community, and for the
forces making for common action, the Unemployment
Conference and its Standing Committees deserve
great credit for a work quietly and efficiently
carried out.
In this note of appreciation I wish
to include the Secretary of Labor, and Colonel
Arthur Woods, the director of the work.
Yours faithfully,

Hon. Herbert Hoover,
Secretary of Commerce,
Washington, D. C.

DEPARTMENT OF COMMERCE
OFFICE OF THE SECRETARY

ACKNOWLEDGED
JUN 19 1922

WASHINGTON
E

June 5, 1922.

Mr. Benjamin Strong,
15 Nassau St.,
New York, N.Y.
Dear Sir:

I have the pleasure of transmitting to you a
letter from the President expressing his gratitude for
the service that you have given to the Federal Govern-

ment in the cooperative measures taken for the alleviation
of unemployment.

The business tide has turned and unem-

ployment is decreasing so rapidly that we have safely
passed the crisis.

Many of the community committees in-

augurated by the Conference have settled themselves into
permanent bodies for the better care of employment and unemployment in industry.

Furthermore, the studies in funda-

mental questions inaugurated under sub-committees by the
Unemployment Conference are making good progress, and these

measures together with the experience gained during this
winter should all give continuing results of constructive
character in dealing with these problems of the future.




Yours faithfully,

j

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44-ux.70

COPY
FEDERAL !IESERVE BANK

OF NEN YORK
April 22, 1922.

.hear 21r. Secretary;

In this letter I hope to state to you the principal points which were
brought' .out in our discussion of means for overcoming the difficulties which are

inherent in the uevelopment of our foreign trade while it continues to be subject to
the hazards of violent and unregulated fluctuations

fn

the values of foreign curren-

cies, that is to say, in the rates for fariegn exchange.
The nature and extent of these exchange hazards need not be described;
they are familiar to all who have studied or had experience with that subject.

The task now before us is to deal with the causes of the fluctuation in
such a way that

it

becomes safe for certain nations which are now or will shortly be

in position to do so, to return to the gold standard, to resume free golu payments,
and as a consequence to maintain their currencies at parity with ours.
Certain causes for excessive exchange fluctuation with certain countries
have already been minimized or have disappeared and may be disregarded.
These are:

(a) Excessive trade balances caaseu by demands for goods arising

out of the war.

Interruption of international remittances for the use of travellers;
Or by aliens residing in one country to relatives in anotilar country.

Large loans between the governments for war purposes.
Interrupted shipping.
:-ro argument is needed to support the statement that these causes have

until recently been disturbing to the exchanges between certain of the countries.

They have now been so reduced in importance, or so nearly eliminated, as to warrant
their being ignored.




#2

Honorable Herbert Hoover

April 22, 1922.

As to causes of disorder in exchange remaining to be aealt with, I should
say that they are principally:

(4) The continuance of inflation of the currencies of various countries
whose budgets are not in balance, and where generally sound monetary and fiscal
policies continue to be beyond control.
(b) The abandonment of the gold standard and suspension of free gold payments both domestic and international.

Demands upon Germany for payment of reparations in cash in excess of
Germany's capacity to pay under present conditions, and which will continue excessive
so long as present policies are pursued by the German Government with respect to
government finance and the management of German economic affairs generally.

The possible requirement for payments of interest and principal of
debts owing between the Allied Governments and our own which might prove to be in
excess of the capacities of the respective debtor nations to meet without endangering
the gold standard and free gold payment should they be restored.

The question is how to deal with these respective causes so that any plan
for stabilizing certain of the exchanges may have reasonable assurance of permanency.
Before suggesting a plan, I must emphasize the danger of adopting any of the various
proposals which assume to deal with the entire subject of the exchanges by one
general scheme, just as though the
all countries.
based

causes

and extent of the disorder were alike in

Any such plan is doomed to failure.

The following proposal is

on the assilmntion that the exchanges of certain countries, by reason of more

stable and more favorable conditions, may in fact be dealt with by one general plan,
and that all others must be

subsequently

dealt

with

by separate schemes applicable to

their varying conditions.

The conditions of stability to which I refer are:
Reasonably well balanced government budgets.
NO excessive currency inflation, and consequently a less serious discount upon the currency.



April 22, 1922.

Honorable Herbert Hoover

#3

A reasonably well balanced foreign trade.

A government debt not in excess of the capacity of the people to
support by taxation.

A sound and well managed

bank of

issue.

A reasonably large gold reserve held by the bank of issue.

The European natione which fall within this description in greater or less
degree are the following:
Spain and Great Britain.

Holland, Switzerland, Sweaen, Norway, Denmark, probably
In the East: Japan.

In North America:

Argentina.

And in South America: -At least

CAnada.

It will be observed that if the currencies of these countries can be maintained at parity with the dollar, the great mass of the world's international trade

and of our trade with the rest of the world will be relieved of exchange hazards.
Much of the trade of the Aast is financed in dollars, sterling, yen and guilders.
The trade of South America is largely financed in dollars

add sterling.

It will in

fact reduce the exchange problems to such a point that those nations, such as France,
Italy, Belgium, Germany, Russia, and Middle Europe, will then be in a class by them-

selves, each to be separately dealt with according to the character and extent of
their difficulties.

Any plan devised for dealing with the exchanges of the countries first

named should be based upon the well recognized fact that free gold payment cannot be
successfully maintained except the central bank has a gold reserve adequate to con-

vince the pecple that its notes will be freely paid in gold upon demand, and that an
export movement of gold is not likely to arise in excess of the ability of the bank
to meet it.

Under those conditions gold will not be withdrawn for domestic hoarding

and a demand for gold for export can be mot by credit.
If, as assumed, the conditions relating to the countries first named above
to
are as described, the arrangement would simply contemplate a large gold credit

their banks of issee by the Feueral Aeserve System, to be drawn upon in case of need,




Henoraolo Herbert Hoover

#4

April 22, 194-i.

not -necessarily for the purpose of making domestic gold payments, the need for which:,

if it arose, would likely not be large, but in point of fact to enable the bank of
issue to maintain the exchange at a point where it was no longer profitable to export
gold to this country.

The "credit" would indeed be available to take the place of

a demand for gold for shipment; the mere fact of its availability would limit and
likely prevent the development of a considerable demand.
The details of any such plan must, of course, be worked out by conference
of the managers of the respective banks of issue.
The situation with the nations named is somewhat analagous to that of the
United states Treasury in 1878, when sherman was secretary of the Treasury.

By that

time the revenues of our government exceeueu expenditures, the national debt was being
reduced, our foreign trade was in balance, and the Treasury had accumulated a store of
gold.

sherman then made the statement that "The way to resume is to resume."

He

realized that general appreciation of the Treasury's ability to pay gold would protect
the Treasury against a drain of gold, and in fact it developed that when gold payment

was resumed in January, 1879, only 50 or 100 people appeared at the subtreasury in
New York with greenbacks for redemption.

But little gold was paid out, and within an

hour or two the country was back on a gold basis, the gold premium had disappeared,
the exchanges were normal, and gold was no longer demanded.
The danger of breakdown of an arrangement such as described, is in my opinion
noW reduced to two principal difficulties;

One is the possibility of demands upon

Germany for reparation payments in excess of the capacity of the German people to pay.
The other is the possible adoption of too rigid plans for requiring payment Of interest
and principal of the uebt owing to this government by foreign governments and corres-

pondingly of debts ming between them in excess of the capacity of the debtors to pay.
As to the first difficulty it would arise as the result of the German
Government adopting various desperate means for obtaining foreign credits with which
to meet reparation demands and converting those credits through exchange arbitrage into
the currencies of the creditor nations without regard to the effect upon the exchanges.



Honorable Herbert Hoover

April 22, 1922.

This danger can be eliminated in my opinion by establishing the following principles
to govern reparation payments:
(a) That they shall not be in excess of capacity.

(o) That those made in 9cash9, that is, in credit transfers as distingaished
from transfers of goods, shall be strictly limited and subject to control from time
to time.

That the German Government -shall promptly adopt a sound fiscal and
monetary policy.

That the negotiation of credit by Germany in foreign countries shall
be subject to supervision.

As to the second difficulty, it will arise in the first instance, if at all,

as the result of fixed payments which may soon be made upon the debt owing to the
United States by Great sritain.
A method of dealing with this difficulty is possible, although it might be
found that the existing legislation does not confer sufficient authority upon the
World War Debt

efunding commission.

In brief, it would contemplate that while the

greater portion of the debt may now be funded in a form requiring fixed payments of
interest and principal at definite dates, that at least some portion shall be expressed by obligations for indeterMinate payment according to the position of the
exchanges.

That is to say, if sterling should not only be restored to parity, but
advance to a premium beyond the gold shipping point, so that we might be called upon
to make heavy shipments of gold to England, we would then be in position to call

upon England to increase the rate of payments so as to prevent an excessive gold
export movement.
gold.

To, would in a word ship them their obligations instead of our

Conversely, should dollars return to a premium and sterling be at a discount

so that gold might move from England to this country, some part of the amount to be
paid by England could thereupon be temporarily deferred.




This might be dune by

Honorable Herbert Hoover

46

April 22, 3.924.

ver,ting in the President, the Funding Commission, or some officer of the government,

the right to accept short time interest bearing obligations for given payments pending restoration of the exchanges.

Roughly,

I should suppose that such authority

could be limited to periods not exceeding say six months, with authority for say one

or two renewals, and that the amount of payments so to be deferred need not at any
one time exceed a total of 4150 to 4250 millions.

This plan again would be based

upon the sound. principle that the return of a premium on dollars vis

L

vis sterling

would be an indication that payments being made by England were in excess of capacity
and should temporarily be suspended.

In this connection, it should also be borne

in mind that the south African gold mines will shortly resume production and again
form an important contribution to the capacity of England to make payments in this
country.

If any such principle were established in dealing with the debt awing to
our government by Great Britain, it should likewise be applieu to the deut owing to
as by other governments, and to the uebts owing by the Allied Governments between
themselves, so that whenever payments upon any such debts became a menace to the
stability of the exchanges between those countries

which

had resumed gold payments,

an increase or decrease of amounts paid could be employed to assist in maintaining
stable exchange and protecting the reestablished gold standard.
In resume, therefore, the above suggestions contemplate:

That any plan for stabilization of exchange rates be confined at the
outset to those countries which present favorable conditions for pelmanency.
That it be effected by means of a gold credit to be extended by the
Federal Reserve Banks as

a private arrangement between the banks of issue of the

respective countries.

(0) That the danger of failure of the plan because of excessive payments
of reparations may ue controlled as the result of a limitation of the amount of
payments to be made by Germany in foreign exchange.




April 2a, l92.

#7

(d) That the danger of the failure of the plan because of payments upon
the debt owing to the United States Go,Jernment be eliminated by introducing a

flexible plan as to some portion of the amount to be paid.

With so much accomplished towards the restoration of stable exchange
conditions, any farther control attempted to ue exercised should be through the

individual action of the respective nations whose budgets and currencies are in such
disorder as to require some more radical readjustment than is contemplated in this
plan.

Probably no legislation will be required to enable the Federal Reserve Ranks
to extend the credit contemplated.

some legislation might be required to introduce the necessary flexibility
into the scheme of payments of debt owing to the United States.

A formula for such flexibility in specific terms can be prepared if
desired.

Three additional copies of this letter will be sent for your use, and I am
sending one additional copy to Assistant Secretary of the Treasury Wadsworth.
I beg to remain,

Yours very truly,

Benj. Strong,
Governor.

Honorable Herbert Hoover,
Department of Commerce,
Washington, D. C.
135:111

( IF )







December 19, 1921.

Dear Sir:

In Mr. Strong's absence I acknowledge

receipt of your letter to him of December 17, together with the report of the President's Conference
on Unemployment, which I am mare Mr. Strong will
enjoy reading upon his return.
Thanking you,

I am,

Yours very truly,

Secretary to Mr. Strong.

Honorable Herbert Hoover,
Secretary, Department of Comm/Arco,
Washington, D. C.
GB. Nit

THE PRESIDENT'S CONFERENCE ON UNEMPLOYMENT
DEPARTMENT OF COMMERCE

ACKNOWLEDGED
DEC 1 9 1921

WASHINGTON

December 17, 1921.

Benjamin Strong, Esq.,
Governor, Federal Reserve Bank of New York,
15 Nassau Street,
New York City.

Dear Mr. Strong:

As one who aided in the success of
the President's Conference on Unemployment, you will
be interested in the printed record of the Conference
findings, which I am sending you.
The results of the conference are
evident on every hand; in action by municipalitiew, by
states in creation of emergency committees, by employers
and labor in co-operation, by establishment of short time
work, and in many other directioils. Unemployment has
been so mitigated as to remove the greater anxieties of
the matter for the present, although relapse of effort
and winter conditions may necessitate increase of measures
before the winter is over.

The more permanent work laid out by
the conference is being organized and if sufficient funds
can be secured to warrant thorough work, it will be
pressed.




Yours faithfully,

AL-74-c'




mvawviez1.01.1

(7) h. COIN E !AC
.

Kg1.4CE 014.

InA.E;3A11:21-00k144.EVI.i.




DEPARTMENT OF COMMERCE
BEAD AND NOTED,

OFFICE OF THE SECRETARY

B. S.

WASHINGTON

November 8, 1921.

Honorable Benjamin Strong,
//
Governor of Federal aeserve Bank,/
New York City.
/
,f
f

My dear Governor Strong:

,

/

I have your letter of October 31st
with regard to Mr. Eigo Fukai.

I will be de-

lighted to see him when he}bomes to Washington.

Faithfuly yours,

HH-W.




es,

,v0114,044

*

tt-e

.
ilk*

,

MY2Y-111,1e1014

ohh)CE CE. 114E 2Z63E.I.V16A

Cm. COVIIIIEBCE

October 31, 19?1.

My dear Hoover:

With this I am enclosing a copy of a 'letter of
introduction which I have just sent to my friend, Mr. Eigp
Fukai, which will explain itself.

Washington will be with the Japanese

His quarters while in

Delegation to the Con-

ference on Limitation of Armament.
Mr. Fukai was one of the financial advisers to the
Japanese Delegation to the Peace Conference
one time he represented the

Bank of

in

Paris.

At

Japan in London, and when

a young man was private secretary to Marouis Matzukata.
Mr. Fukai speaks English fluently and is one of the
best informed men that I met in Japan.

I shall greatly appreciate any courtesies that you

are able to show him, and especially any assistance which you
are able to render him during his stay in

Thanking you in anticipation,

Washington.

and with cordial re-

gards, believe me,

Yours very

Honorable Herbert Hoover,
Secretary, Department of Commerce,
Washington, D. C.
BS:MM
Enc.



truly,

October !I.

1921.

toy dear Mr. Secretary:

This letter will be presented to you by my friend,
Mr. Eigo Fukai, Deputy Governor of the Bank of Japan, who is

visiting this country as financial adviser to the Japanese
Delegation attending the Conference on Limitation of Armament.

Mr. Fukai ie a wtIrm personal friend with yhom I
have had many most enjoyable visits while in Japan, and !'nom
whom I received many courtesies while there.

I am anxious

that he should become acquainted with you and with the membera
of the Department of Commerce.

Anything that you are able to do to make his visit in
Washington an enjoyable and profitable one will be greatly
appreciated by

Yours faithfully,

Honorable herbert Hoover,
Secretary of the Department of Commerce,
Washington, D. C.
BS:MM




7ashington, D. C., Octobr 24, 1921.

(a'

Vr. Lear Ir. hoover:

.7
The enclosed letter from Congressman Moore of Illinois

together with my rep1y. explain themsolvos.

6incere1y yours,

Hon. tiorbert hoover,
Depsrtment of Commerce,
Eishington, D. C.

Enclosure.




September 24, 1921.

Deer Mr. Secretary:

I think I shall send you the enclosed copy of a letter which I am
to-day writing to Secretary Rudloff, together with copies of the °able* referred
to.
Sir. deg, as you icncel, is an officer of the Federal Reserve Ronk of New
York arta chairuan of otir board, of directors. I have great confidence in his

judge-ant and the conservatism with which he always expresses his viws.

The picture presented by these two cables inlicates the likelihood on
the one h nd of a collapse in eustria if the possibility of SO 111: constructive

aid is not shortly forthcoming, ard cu the other hard, the prospect in any event,

thet scene sort of food relief will be required. in the near future.
Tour Ova familiarity with the .situation in .A.ustria will doubtless give
eh.asis to the importance of those se (scree-mei ca ti ens

Lay I as you to advise me whether in your oPinion it would he desirable

possi ble to ind i oats to G eve rn or Nor= t ha t the re will be no impropriety

in direct representation.s being made to cur Gevernment as to the need for e ssis-

tame and direct inquiry eeine addressed as to bether such assistance could be
in part rendered by this country.
I am eipectiree to a.tteni the conference on Monday, but I shall unfortunately be obliged to be in New York on Tuesdey, and I fear that eneeeeenents, of

which I adviced you this ecele, will prevent rei beine in attendance during a part

of the tiete then the conference is in session.
I um taking the liberty of sending you this word to-day so that you Ivey
adjust any

crk expected of me with regard to my possible absence.

Herice.eble Herbert !never,
Secretary of Comierce,

-;



"+"

T.

Very truly yours,




September 23, 1921.

Dear Mr. Secretary:

With this I 4SOSOc1osing a study which has Illtssade

by ths department of statistics of the bank re3atin6 to the
subject of unemployment,whioh I believe you will

i

worth

reading. eurther saterial is in course or pre0.1rationdnd will
SO here, 1 hope, not later than Monday.

My attention was especially directed to ens fouture

brmht out in this study; to wit, that the amount a employ
ni,t in 1920 as amnpared with 1910 doss not appeLx to be unduly
111812

30tostrana

ad Mondr4 I hope to have opportunity to

discuss tly unclosed statement with you, aad hope that you will
find opportmnity to send a reply to Roan 181, Treavari BuildiMik

or possibly by telephone, extension ...b. 705. If I am not in
the building the MOS0a6 can be VWcss for ne mad will be promptly

transmitted.
Very truly yours,

3enj. Strobg
Gyvernar
Honorable Herbert hoover,
Department of Commerce,

'..ashington, D. C.

1111

Ati

April 22, 1922.

Dear Mr. Secretary:
In this letter

I hope to state to you the principal points which were

brought out in our discussion of means for overcoming the difficulties ehich are

Inherent in the development of our foreign

trade while it continues to be subject to

the hazards of violent and unregulated fluctuations in the values

of foreign curren-

eine, that is to say, in the rates for foreign exchange.
The nature and extent of there exchange hazards need not be described;

they are familiar to all eho have studied or had experience with that subject.

The task now before us is to deal with the causes of the fluctuation in
such a lemy that it becomes safe for certain nations which are now or will shortly be
in position to do so, to return to the gold standard, to resume free gold payments,
and as a consequence to maintain

their

currencies at parity with ours.

Certain causes for excessive exchenge fluctuation

have already been minimized or have disappeared and

These are: (a) Excessive trade

with certain countries

may be disregarded.

balances caused by demands for goods arising

out of the war.

Interruption of

international

remittances

for the use of travellers;

or by aliens residing in one country to relatives in another country.
Large loans between the governments for war purposes.

Interrupted shipping.
No argument is needed to support the statement that these causes have
until

recently been disturbing to the exchanges between certain of the countries.

They have now been so reduced in importance, or so nearly eliminated, es to warrant
their being ignored.



April

Honorable Herbert Hoover

#2

As to causes of disorder in exchange remaining

a,

to be dealt

191with, I should

say that they are principally:
of
The continuance of inflation of the currencies earioue countries
=hose budgets are not in balance, and where generally Pound monetary and fiscal

policies continue to be beyond control.

The abandonment of the gold standard and suspension of free gold payments both domestic and international.

Demands upon Germany for payment of reparations in cash in excess of
Germany's capacity to pay under present conditions, and which will continue

excePeive

so long as present policies ere pursued by the German Government with respect to
government finance and the manneement of German economic

The possible requirement for
debts owing between the Allied Governments

affairs generally.

payments of interest and principal of

and our on which

might prove to be in

OXCEWs of the capacities of the respective debtor Rations to meet

without endangering

the gold standard and free gold payment should they be restored.

The question is hoe to deal it

these respective causes so that any plan

for stebilizing certain of the exchanges may have reReonable

assurance of permanency.

'lefore suggesting e plan, I must emphasize the danger of adopting any of the various

proposals which assume to deal

with the entire subject of the exchanges by one

general scheme, just as though the causes and extent of the
all countries.

Any such plan is doomed to failure.

disorder were alive in

The following proposal is

based upon the assumption that the exchanges of certain countries, by reason of more
stable and more favorable conditions, may in fact be dealt

with by

one general plan,

and that all others must be subsequently dealt with by separate schemes applicable to

their varying conditions.
The conditions of

stability to which I refer ore:

Reasonably well balanced government budgets.

No excessive currensy inflation, and consequently e less serious discount upon the currency.



(e
f3
r4

It

Honorable Herbert Hoover

April 22, 1922.

(c) A reasonabl well balanced foreign trade.

A government debt not in OICOPB of the capacity of the people to

support by taxation.
A sound and well managed bank of issue.

(1) A reasonably large gold reserve held by the bank of issue.

The European nations which fall within this description in greater or less
degree are the following: Holland, Seitzerland, Sweden, Norway, Denmark, probably
Spain and Great Britain. In the East: Japan.

And in South America: At least

In North. America: Canada.

Argentine.

It will be observed that if the currencies of these countries can be main-

tained at parity with the dollar, the great mass of the world's internetional trade
and of our trade with the rest of the world will be relieved of exchange hazards.

Much of the trade of the East is financed in dollars, sterling, yen and puilders.
The trade of South America is largely financed in dollars end sterling.

It eill in

fact reduce the exchange problea to such a point thet those natiene, such as France,
Italy, Releium, Germany, Russia, and Middle Europe, will
selves, each to be separately dealt eith according to the

then he in

ft

class by them-

character and extent of

their difficulties.

Any plan devised for dealing

with

the exchanges of the countries first

neeed should be based upon the well recognized feet that free gold payment cannot he

successfully maintained except the central bank has a gold reserve adequate to con-

vince the people that its notes will be freely paid in gold upon demand, and that an

export movement of gold IS not likely to arise in excess of the ability of the bank

to meet it.

Under those conditions told will not be withdrawn for domestic hoarding

and a demand for gold for export can be met by credit.

If, as assumed, the conditions relating to the countries first named above
are as described, the arrangement would simply contemplate a large gold credit to
their banks of issue by the Federal Reserve System, to be drawn upon in case of need,




a
s.
o

es

e

//ti

o
o

i

os

Honorable Herbert Hoover

April 22, 1922.

"-snot necessarily for the purpose of making domestic gold payments, the need for which,

if it arose, would likely not be large, but in point of fact to enable the bank of
issue to maintain the exchange at a point where it was no longer profitable to export

gold to this country.

The "credit" would indeed be available to take the place of

R. demand for gold for shipment; the mere fact of its availability would limit and
likely prevent the development of a considerable demand.

The details of any such plan must, of course, be worked out by conference

of the managers of the respective banks of issue.
The situation with the nations named is somewhat enalagous to that of the
United Stutee Treasury in 187B, when Sherman wae beoretery of the Treasury.

By that

time the revenuee of our government exceeded expenditures, the national debt was being

reduced, our foreign trade was in balance, and the Trensury had accumulated a store of
gold.

Sherman than made the etatement that "The way to resume i.e to resume."

He

realised that generel appreciation of the Treasury's ability to pay gold would protect
the Treasury against a drain of gold, and in feet it developed that when gold payment
was resumed in January, Ifl1, only 50 or 100 people eppesred at the Subtreasury in
New York with greenbacks for reOemption.

hour or two the country

But little gold was paid out, and within an

as back on a gold basis, the gold premium had disappeared,

the exchanges were normal, and gold was no longer deeded.
The danger of breakdown of an arrangement such as described, is in my opinion

now reduced to two principal difficulties: One is the possibility of demands upon
Germany for reparation payments in excess of the capacity of the Garman people to pay.

The other is the possible adoption of too rigid plane for requiring payment of interest
and principal of the debt owing to this government by foreign governments and corres-

pondingly of debts °sing teetseen them In excess of the capacity of the debtors to pay.

As to the first difficulty it would ariee as the result of the German
Government adopting various desperate means for obtaining foreign credits with which

to meet reparation demands and converting those credits througia exchange arbitrage into

the currencies of the creditor nations without regard to the effect upon the exchanges.



April 22, 1922.

Honorable Herbert Hoover

15

his danger can be eliminated in my opinion by establishing the following principles
govern reparation payments:
That they shall not be in excess of capacity.

That those made in "cash", that is,
froa transfers of goods, shall be

strictly limited

in credit transfers as distinguished
and subject to control from time

to time.

Thmt the (erman Government shall promptly adopt

FR

sound fiscal and

monetary policy.

That the negotiation of

credit by Germany in foreign countries shell

be subject to supervision.
As to the second difficulty, it %ill arise in the first Instance, if at all,
as the result of fixed payments ehich may soon be 'Tiede upon the debt owing to the

United tetes by Greet Britain.
A method of

dealing

with this difficulty is possible, although it might be

found that the existing legislation does not confer sufficient authority upon the
World War Debt Refunding Commission.

In brief, it would contemplate that ehile the

greater portion of the debt may now he funded in a form

requiring

fixed payments of

interest and psincipal at definite dates, that at least some partion shell be ex-

pressed by obligations for indeterminate pnyment according to the position of

the

exchanges.

That is to say, if sterling should not only be restored to parity, but
edvance to a premium

beyond the gold shipping point, so that we might be celled upon

to make heavy shipments df gold te England, re would then be in position to cell
upon England to incresse the rate of payments PO 9S to prevent an excessive gold
export movesent.

gold.

We eould in a word ship them their obligations instead of our

Conversely, should dollars return to a premium and sterling be et a discount

so thrt gold might more from England to this country, some part of the amount to be
paid by England could thereupon he temporarily deferred.




This might be done by

C11

Honorable Herbert Hoover

16

April 22, 19V2.

vesting in the President, the Funding Commission, or some officer of the government,

the right to accept short
ing restoration of

time interest bearing obligations

the exchanges.

could be limited to periods not

for given payments pend-

Poughly, I should suppose that such suthority

exceeding

sey six monthe, with authority for say one

or two renewals, and that the amount of payments so to be deferred need not at any
one time exceed a total of 4150 to tE50 millions.

This plan again eould be

upon the sound yrinciple that the return of ft premium

'Aped

on dollars vie &vie sterling

would be an indication that payments being made by England were in excess of capacity
and should

temporarily be euepended.

In this connection,

it should also he borne

in mind that the South African gold mines will shortly resume production and perain

form an important contribution to the capacity of

England to make payments in this

country.

If

any such principle were esteblished in dealing with the debt oeing to

our government by Great Britain, it should likewise be applied to the debt owing to
us by other governments, and to the debts owing by the Allied Governments between
themselves, so that

whenever paymentm upon any such debts became, menace to the

stability of the exchanges between those countries which had resumed gold payments,

an increase

or decrease of amounts paid could be employed to assist in maintaining

stable exchange and protecting the reestablished gold standard.
In resume, therefere, the above suegeutiens conteuelate:

That any :lan for stabilisatien of excanee rates be cenfined

It

the

outset to those countries vhich present favorable conditions for eermaaeacy.
That it be effected by eeaas of a gold credit to be extended by the
Federal eeeerve Eanks as a private arrangement betveen the banks of issue of the
respective countries.

That the danger of failure of the plan becauae of excessive payments

of reparations may

be controlled ae the result of a limitation of the amount of

payments to be made by Germany




in foreign exchange.

April 2?_, 1922.

#7

(0) Thet the der of tta fellure of the plen beeause of ieymente upon
the debt owing to the UnIted States Government he eliminated by introdueing a

flexible plan an to some portion of the 5mount to be psid.
With so much accomplished towerds the retortion of !table exchange

conditions, any further control attempted to be exercised should be through the
individuel ection of thn respective natione whoee budgets and currencies are in eucb

dieorder es to require one more radical reedjuetment than is contemplated in this
plan.

Probebly no legislation will ba required to eneble the Federal Reserve 3enk8
to extend the credit contemplated.

Some legislation might be required ie., intreduce the neceseery flexibility
into the scheme of payments of debt ewing to the United StRtes.

A formele for such flexibility in epecific tern on be prepared if
desieed.

Three edditional copier of this letter will be sent for your 1.196, and I am
sending one additional copy to Assistant. secretary of the Treasury TeAseorth.
I be to remain,
Yours very truly,

Benj. Strong,
Governor.

Honorable iierh.ert Hoover,
Department of Commerce,
Weehington, P. 0.
BF.MM







September 12, 1921.

My dear Hoover:

Thank you for your note of the Cth.

I have

just returned from a week's absence, and accumulated

work will keep me at my desk for the balance of this
week; but I expect to be In 'Taehington next week to
keep a number of engagemente and will let ycu know

promptly on arrival there.
Taithfully yours,

Honorable Herbert Hoover,
c/o Department of Commerce,
Washington, D. C.
136:MM




September 8, 1921.

Dear Sir:

Tour letter of September 5 is received in Mr.

Strongie absence, to which his attention rill be called
on his return to the city next Monday.
Yours very truly,

Secretary to Mr. Strong.

Honorable Herbert Hoover,
Secretary of Commerce,
Department of Commerce,
Washington, D. C.
GHt11V

DEPARTMENT OF COMMERCE
OFFICE OF THE SECRETARY
WASHINGTON

ACKNOWLEDGED
Sg, 1 2 1921

September 6, 1921
Mr. Benjamin Strong
Federal Reserve Bank
New York city

My dear Strong:

Certain things have come up that make

it desirable that I should talk with you in respect
to the proposed plan of currency refoims.

There is no hurry about it, but if you
will let me know when you expect

t.io

be in Washington

next I will arrange for a meeting.
Yours faithfully

HH.AGS.




icksso tuts




Septanber 1, 1921.

Dear Tilr.Hoovert

I an grateful to ymu for your note of
August 30 containing the draft of a proposed letter Idlich we have
recant ly dis cussed.

Only one sugmstion occurs to me, which
might be made paragrm-th d. on the second page, somewhat tl,s
follows:
if

(1.

A plan for ftishthiadeanate securities

for credits granted."
This vronld appear to be desirable, especially with regard to
Austria where those who may participate :in any plan will need
convincing evidence that loans granted will be well secured.
I an in heart;t7 accord with the tatenents
contained in the last paragraph of the pmposed letter.
Paithfully yours,
BMJ, MOM,
Governor.

Honorable Herbert Hoover,
0/0 The Department of Commerce,
Washington, D.O.




inauguration and. -.maintenance of suoh economio polioi es

as 'would give premise of econonio stability.

I fear that unless sone such helpful aotion
of this kind can be taken by private institutions of reat
responsibility to the Public, recovery of foreign cortnerce may be

prolonged over mar reare an d I know of no more beneficient service
that can be performed by private business.

A plan of this kind must fail if, as has been
proposed, it be confined to only one of these states because none
of them are economically independent of its neighbours but it would
succeed if established in three or four of them. Such a plan
should be welcomed by each of than and its oonsunnation throw"' the
processes of business and economic life would avoid infinite

pitfalls of int ezne.tional political aetion.
Yours faithfully,




T-.10074iL

COW,

August 30, 1021.

Benjamin Strong, Eso.
Federal Reserve Bank,
Veer York City.

Dear Vir.Stronge

I am glad to heere occasion to refer to our
discussions upon the comercial problees arising from the after
war situation in the new and enlarged nations of Eastern airope
between the Baltio and the Tlediterranean.
The economic rehabilitation of these
100,000,000 people is vital to our oommeree, not only directly
with theth but also with the other states whose prosperity so much
In the last analeteis the rebuilding of
depends upon then,
economic life among these people is of daily importance to every
worker or :earner in our country and the Whole world,
In the two years trince the eereistice "aline
the Production of food and the situation in many industries has
improved, yet it is apparmitly impossible for them to accomplish
certain fundamental steps unaided. Not only have their fiscal
and currency situations become steadily worse but their continued
political fears serve to maintain a host of economic barriers
ethic% defeat the flow of mods end services between them, that are

so vital to their recovery.

We must reeeenber that these states represent
a readjustment of old political boundaries with scores of years of
injustice and wrong in the background. The conflict of political
objective between them and, between the great powers seas to
render beneficient political action of little hope. I believe
that if most men of economic and amino re :Lai thought are agreed
that if these states are to recover it must be by forces entirely
divorced from political origin or action, that is throuel the
healing power of assistance of private finance and °amerce.
Therefore it is the hope of the President and
my colleagues in this adeinistration that you can pursue the
conversations which have been suggested, that is, to dot ereine
'whether the great public banks in the interested countries as well
as the United States could not formulate a plan for financial
cooperation with these states of purely private character that
would millrace essentially:
Rehabilitation of currencies,
Prot:121°n for initial raw raterial, cooperation of
Conditional to the above such proper
goverreeents in the




each of the Pkestem Pliropean

inauguration

D.Q171

DRPART*SN'T OP 007r MIME

Office of the Secretary
Washimton.

August 30, nn1.
Mr.Benianin Strong,
Federal Reserve Bank,
Mew York City.

Dear Mr.St rang:

I said you herewith draft of a letter
Whieh perhaps neets the case.
have to make.

I would like any sufr,estions you

I have sent a copy of the letter to
Secretary Hughes and *will send a copy to the President, but have
not yet had their reports on it. It may be that we do not need.

to take any particular care but it mirtit be that such Circumstances would arise that would make it of importance.
Yours faithfully,




(Signed.)

IMBERT HOOVER.

Hotel Ritz,
August 21, 191P.

Mj dour Jr. Hoover:

Met enolosed very rough penal figuren give an Indication af the erobable
nsit01)00 of the edeeneee on the Gerean gold. The freetions ere in some Oases
t.qerfAtin beemeee of putilated cable advices, but I believe that the fieure of
;)eeee,-e le reeseeably accurate and the figure of 13,n),-0C, le as elope as
can e, e1ted until I hese eeble dvices from New York of the exact amount
d.

tide

,

word, I chatted estimate thet out '41Z7,Antee00 will be the amount
weeleed an tee N eer coat. beele, on all of the gold held in Brueeeis, and
Cetc",0,',0e out of the 440,0eseee hele la Aesterdem. IV the veluee or the reeinine 1:.-0,":',00C, in Amaterdem run about es] &won in previous lots the adeneoe el the 72 per eeet. beeis ebould amount to about 12,5CO3000, but the
40,re' -77r, merIce now being rouehly estimuted include 17ee bers,
Me ee ter

OY (1140416.40,Q;N Auutrien crowns and ',5PO,DVO roubles, concerning which
rtevkillit:grifitild be doubtless subject to a greater variation, but based upon
,1111,40 inrviuil 1 now have, I certainly think that the advances to be made
by Alm Benit tya the ell eer cent. basis would amount to about 7cee'?",,eee, This
wattle e,ve e toee:. veiue for the golf, of t17,,5- ,C00, .10avins It groso equity
due to the Gereens of";;,,(1.00,00r), cut of which all ex-en-eels. ere to be eeti.

Out of the equity of eight per cent., so far as I can now forecast, the

folleeing expeesee meet be either ...aid or deducted eending thefinal disposition
of the gold:
1.

The ectuel out-ofeeocket expensee of the Nederlendsche Bank end 1..:,10

Beneue Nationeee do Beleleue for the aetuel headline, eounting and peckieg of
the gold, and possibly same mall comeensation to each bank, which would be a

miaer :utter.

Fret and insurance to London upon that pert of the gold actually

moved end, based neon the expereence in that movement, an ellovence for what
it would cost to move the belance to London in ease it became neoeusury to ship

it there.

The actual exevemee iecurred by the Benk of Eiegland in handling the

sold and the exnense of eelting and mowing by the Mint, for any pert or all
of the gold ae it muy be necessary to treat.
The expenees of the Bank of Englend in attending to the shipmeate and
eudling the gold in transit and In London. As to all of the Charges Nada by
he three banks,. ..they !lave exereueed no 4esire to chrge anything in the nature




H.R.- 2.

of a commission or compensation, but simply to be reimbursed for ehat it costs
them to handle the gold, including the melting and refining charges in London.

The aetua_ cost of freight, inuaranee and handling, with the uauel
allowance for abrasion, of moving all the gold to Sew York, which will be
estimated and deducted, but reinbursed to the Gernan government in case the
gold can be disposed of more economically then by moving it to New York.
Some slight expense, without any charge for comeensation, incurred

by the Federal Reserve Bank of New York.

Our propeeel for moving the gold covered in cublea gent by the Treasury
Department through the State Department to Mr. Davis, contemplatee that the
deduelees ehoula enc-ude every cost In4olved in =Dying tee eold front Ito
present custody to New York,/ includine eherece for roducie, et to 2ine bars
if that became noceseary. It is my Intention to make a complete eetimate of
all ox see which we will incur in nuch a moveelent(eheuld it be necezeary)to
.deeuet, that from L116 amount to be ?Aid to the Green Corporation, aed whatever
saving may be effected over and above the emount of the deduction to tc result

of the ectael disposui of the gold by eame more osonem:_oel method we will account for to the Grain Corporation.
Of course, as a mutter of convenience, should the grain Core3retion not
eealre to eaintela .X.4 open aceoent :Jr the length of time !nvolued, I eevo no

doubt the Federal Reserve 13e0L
' be tilling, ueon directioe ef the Grtan
Car :oration, to effect a dieeet aettlement with the Liereuin eeverratenL, eure
we furnished with the necessary authority and instructions to enable us to do
so, end I will recoreeend teat couroe to the Beak later en if you eoneider that

it is the

procedure.

Of course all the above fi,eure ere merely estimetes, the boot I can give

you at the preeent time, and in the near future I ehell try to give you the
figures on the exact eeet of moving the gold, including the expennee above named.
Hopis

the abeee will prove of some assistance, T

am,

Very truly yours.
Herbert hoover, Eee.,

51 AVenue ilentaignee Paris.
The eevement to NOT York to include cherges vie .London
BS/V






NEDERLANDSOME BANY WEIGriT

Lot

KilogriAms

let

794,

2d

Grams

Troy Ounces

GERMAN WEIGHT

Kilograms

Difference

Grams

W

7945

255,494.3
(5)
565,1/2 255,455.672

7945

5ct

7945

705-1/4

255,460.173

7945

4th

7245

317

255,447.6827

7945

5th

7946

6

255,469.B989

7945

6th

Terk,

9,;'%

455,466.523i

7946

7th

745

2725

Z55,446.25a

7945

5706

5.1

773-1/2

68.

82.2

2548

9.1/4

998-1/2
(0)

0,6

?

41g

ADVANCES MADE BY F. R. BANK

Against gold in Brussels,
Against Lots 1 to 6 iuc. in kasierdam,
Asainst Lots 7
Estimated advances tots 8 to 1 incl.
Beiii 92 of suR2osedvaiue of
(Mks 290, 000)(700 Brussels)
(Vke

Amater4am

92,4, advance mi'490,00C,000 err equals
tr
" 240,000,000 " estimated Say
92%

Total to be advanced on 92% basis (est.)

;0096,e97.47
21,

$94,003,286.27
_13,117,4n.r.5
3107.120,310412

107,u0,1o.04
52.500,0101

t159,6ze,00.02

190.6

14i.;




This estimate, compiled with the most possible approximation on the basis of actual prices, is drawn up together with
the State's Administration and the "great Banks".
In calculating the freight figures we have reckoned that
great part of coal coming from United States should bd transfered bT american tonnage.

The estimate dOes not comprehend the purchase of vessels
which could amount to 200.000 tons gross gauge.

The above statement received from Mr. Pietro Fenoglio,
of the Banca Commerciale Italiana.

Carried Forward

320.620

2.371

RAW MATERIALS & MACHINERY

:

Coals

.

0.00 omrited

4.000

!O 0

.

24.000

.

:

.

Cast iron
Blade and cast steel

275

:

7.000

60

3.000

Iron fragments

200

5.000

Various metals

30,

12.000

250

9.000

60

6.000

175

105.000

24

14.000

120

6.500

24

4.800

2

19.000

12

5.000

5.232

220.300

Kerosene, spitit and fuel oils
Lubricating oils

Cotton
Tobacco
Timber

Paraffine
Shoes and hides
Machinery

TOTAL

Freights for tons 4.000




0

120.000

0

GENERAL TOTAL

7.603

660.920

ESTIMATE OF PURCHASES BY ITALY FROM UNITED STATES OF AMERICA FOR THE
CEREAL YEAR 1919

(sept.lst) 1920 (August 31st)

Tonn.

Dollars

FOOD STUFFS
:0 0 Oomitted

Cereals for human alimentation

:0 0 0

omitted

2.000

180.000

160

10.000

Dry pules

12

1.920

Frozen meat

60

33.600

Canned meat

6

6.300

Salmon

6

2.400

12

4.200

Oats and surrogates

Dry fishes
Condensed milk

.

6

.

.

Animal fats

Butter and

and svine meats

.
.

48

.

cheese

6

.
.

.

36.000
6.600

.

:

Comestible oils

2.400

.

9

Feculas

TOTAL

atte;

C7(7

lie 01,1

5.000

2.371

Miscellaneous

250

5

.

7.000

1

Sugar

4.950

40

:

320.620

Citerrir N'4A.C- 67

1/.000,6701)
t
9

iti4164.ttc 6,17,1



- --telLat-0
4149

COPY
'TRANCE REQUI.7.1.ITTS

by

Mr. J. morttie.E..a/PA4-4

Article

Amouilt dollars

Cotton last half 1918

300.000 bales

66.000.000

Cotton fit half 1919 700.000 bales

150.000.000

Petroleum

25,000,000

Wheat

150.000.000

Frozen meat

40.000.000

Rolling stock

80.000.000

Sugar

43.000.000

Live stock

13.000.000

Textile machinery

10,000.000

Coal




160.000.000
Total

-:-:-:-:-:-:-:-:-:-

727,000,000

0021

17 Juillet 1919.

STATEMENT OF FRErca REOIREMENTS

A

BY Mr. J. MEOW 9nfrn,ra/Z

T M

ifro

1.260.000 d'Argentine h 300
1.500.000.des Etats-Unis 650
750.000 d'Australie h 320

Wheat

Pr.

;otal

437.500.000
825.000.000
210.000 000
1.502.500.000

750.000 des Etats-is'.;0

Oats

250.000 d'Axgentine

250

2,;..500.u00
62.500 000
325.000.000

200

200.000.000

400.000 des Etats-Unis
1600
et Cuba.

Sugar

200.000.000

600.000 000

1.000.000 d'Argentine

,orn

200.000 des Indes 1'Teer-

1andaioe2, Maurice, etc.,
1500
Frozen Beef
d'Austra1ie
Genl.
"isel-..

2350

300.000 000

900.000.000

300.000 d'Argentine
705.000.000
705.000.000

erchan1.000.000 provenances
diverses,
Amdrique du Nord,
centrale,
du Sad,
Antilles,
Indes,
Indes neerlandaise
L
2000 2.000.000.000 2.000.000.000




GELIERAL TOTAL

:

5.632.500.000

accurately stating the account.

Trusting that this will completely meet your situvtlon, I beg to
remain,

Very truly yours.

Herbert Hoover, Nsq.,
Avenue Montaiene, Paris

25/7







Hotel Pits, leris,
August 16

1919.

My dear !7r. Mover:

quite unexpectedly it seem necessary thnt t should accoupany
General Parbord to Constantleople nc;. in th,i! reantimeI hare arromged
matters with the 'oank of Rnginnd, with the Rational Bank of Belgium

and with the Nederlandsche Bank. 50 that I believe the pld shipments will proceed promptly nnd in the menutime payments4;be made

to the Grain Corporation cen los facilitated.

The exact eettlement of the account I fear it will be necessary to
defer until we have had actual experience in the cost of moviree the
gold from both emsterdam and Brussels to London, but by the time of my
return d euffieloat amount will have teca. completed to stelae es to
ms:ee reasonably accurate figares, ond of course the finol settlemeet
of the Germen account must necessarily sit the conoluzion of your
account for food supplies, which Iunderntead rill not be for some

little time yet.

Pt the present moment I uoeerstand the account is an followe:
en;yment of 92T of the estimeted value of 290101,1(r marks hold In
Bruzsele hos been made to the Grain uorroratIon.
Payments for /tots examined by the Rederlendeche Bank are proceeding and instructiona.have been given to certinue Vent method of payment until a total of ten lots of approxieately 21010,000 marks each
has been completely examined. By this method pep:vents will have been
completed up to 927- of ths estimated value of 2nO,nlYI010.1 marks,
the examlnetion of the seventh lot had been completed. when 1 was in
emsterdam this week.

:,15 to the reimaining 240,1po,q0D marks in Amsterdam, I have arranged to exoedlte the examination and payment for that smouet can be
completed as soon as the necessary weighing is finished.

I would estimate thet within ten days or t

received 925; of the total of approximately 7304

upon my return from onsV:,-ntiao-ple we can proist

weeks -ou willakAvs
Fia
RWYgata

(Received at Paris August 16th)

Paris, August

13, 1919.

Bentiamin Strong,

Care National Bank of Belgium, Brussels
Nash 883

Mr. Hoover away from Paris this week.

Have repeated to

him your wire reference German gold but doubt if answer can be received in time
to reach you at Brussels.

Could you not arrange with Banks to give them

telegraphic instructions from Paris tovering

final

position better after discussing matter with you.




shipments as we will know
ShermanN

Hoover.

TELEGRAM

Amsterdam, August 10, 1919.
HERBERT HOOVER

51 Avenue Montaigne Paris

Am making progress in arranging matters here and Brussels stop

If you can advise me total amount due you out of gold de?osite I will
endeavor to arrange to leave balance due Germans in custody here and avoid
expense and risk of moving that amount stop, Telegram can reach me care
National Bank of Belgium Brussels including Thursduy this week stop

Leaving Friday for Paris




STRONG

H. H.- 2.

Since dictating the above I find dujicate original of your
P. S.
letter of June 24, addressed to Mr. Davis, stating that 29c),O00,01.r
marks held by the National Bank of Belgium and 200,C',M,CC marks held
by the Nederlandsche Bank were deposited in your name as President
of the United States Food Administration Grain Corporation and
marks in the Nederlandsche Bank in your on name per210000,Your letter of June 27, addressed to Mr. Davis, states that
sonally.
of the io,C00,000 marks additional deposited by the Reichsbunk ;#0,,YX4000
marks were allotted to you and that the?roceeds are to be paid to the
underUnited States Food Administration Grain Corporation, so
marks we would
stand from this correspondence that as to
account to the United States Food Administration Grain Corporation and
marks we would account to the Commission for Reiief
as to 21P (X,O
in Belgium if we were correct in assuming that the deposit in your
name :>ersonally was for account of the C.R.B.




,r,-(!o,coo

that I

Hotel Ritz, Paris,
July 31, 1919.

My deer Ur. Hoover:

Your favor of the 31et Int:Aunt in dilly received. My understending when I was in New York was otmey that'conteined in the cables excheeged betesen the Treasury Doeartment end the Auericen Mioeion, to
this effect that a portion of thegold had been deposited In your nem,
persenully and e portion in the !ewe of the United Stetes Food Administretion GnAin Corporation and subsequently that the entire umount would
be turned over to the Federal Reserve Beak of New York by whoever held
the title, end pereianally I had underetoed that the whole peynent was
to be mede to the Grain Corporetion.
Before I left RewYork, however, the Guuranty Treat Compeny made
inquiry es to whether we were prepered to wake them e peyment of

15e,e,eee for account of the C.R.B., but we had no instructions and
referred them to Mr. Barnes or Mr. Shattuck.

It will doubtless be necessary for us to receive eauc exact
statement as to the division ofnthe eunde at e leter date when the
emouat is determined, ead I take the liberty of suggesting that
the directions be seat us sperately as to the exect emount for

which accounting mast be weds to the C.R.B. and the xact amount
for which accounting uuet be made to the Ueda Doieoretion.

I further understood that instructions had been sent to the Nat-

ional Bank of eeleium and the Nederiendsche Bank to turn over the gold
to the Federal Resetve Bank, which I aseuee you intend as authority to

them to make the trensfers as raldly as Lie gold is checked and euld
for. This, es you knew, I em arranging to do as erometly es possi-

ble and hope to facilitate the mutter when I reech BrusweLs and Amsterdam.

That you mentioned in regard to a mieunderstending by the Treesury Department is entirely unknown to me and I em cabling to the Beak
to make inquiry and reply at once.

Faithfully yours,
Herbert Koover, Esq.,
51 Avenue Monteiene, Purls.
BS/V



SUPREME ECONOMIC COUNCIL
OFFICE OF

THE DIRECTOR GENERAL OF RELIEF

Paris, 31 July 1919.

Benjamin Strong, Esq.,
Hotel
Paris.
My dear Mr. Strong:

with regard to the gold at Brussels and
in Holland, I trust that the Federal Reserve Bank understands
clearly that this gold is a payment to me, personally, on account of not only foodstuffs furnished through the Grain Corporation but also for foodstuffs furnished from the Commission
for ilelief in Belgium.
In the arrangements which I have set
up, the latter two accounts, that is, Belgium and C.R.B., are
combined so far as the Germans are concerned.
Therefore,
payments to be made in New York out of the realization of the
gold are entirely separate as to these different accounts and
the two institutions, that is, the Grain Corporation and the
C.R.B. have an independent responsibility to the Germans, and
they have no inter-relationship with each other.
Upon the
realization of the gold, the directions given through the
Treasury were that the first 400,00,4000 realized was to be
paid to the Grain Corporation and that the second .50,000,000
realized was to be paid to the account of the Commission for
Relief in Belgium at the Guaranty Trust Company in New York,
the remaining realizations to be paid to the Grain Corporation.
I mention all of the above because there seems
to be some misunderstanding with regard to the matter in Washington and the impression that the whole of the moneys realized
are payable to the Grain Corporation, although the instructions
through the Treasury are explicit on this point.
Faithfully yours,

HH:AK







July 2,, 1919
HEMBERT HOOVER

American Mission, Paris

Am just advised of yAlr telegram to Shattuck snggesting conference
on sly Arrival in Europe.

Till be in Paris Monday and have no doubt

details can be promptly arranged.
STRONG

-




UNITED STATES FOOD ADMINISTRATION
WASHINGTON. D. C.

October Twenty-Second

1917

IN YOUR REPLY REFER TO

10-H-2/GG

Benjamin Strong, Jr., Governor,
Federal Reserve Bank,
New York City.
My dear Governor Strong:

I am enclosing copies of
three bulletins which we have published, as representing our national

policy, and would be glad if you
would look over them.

If you approve, it would
be exceedingly helpful to the whole
work of the Food Administration if you
could send this out ovor your cxvn re-

commendation to your member banks, asking them to lend their assistance in
production, and
especially in encouraging increase in
the production of hogs, particularly

promotion of general

pointing out that their financial assistance in that direction would be
extremely valuable.
Yours faithfully,

iz

)4LZtt

Zt/Az





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102