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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 37nav - 'S t4i/7-,/ CoR RES . / f /7 - /73 .3 -P-00,0 ip_k--e.7-6 4:0 /./. -"leo e e72_ mpsrn...,47-io a. Ge-A, z 0 - 1/7 Re-4/6-,c, 84 'gee,* /9""e/e/e_Atiti Rea 4--,c eee niopy 4-pm/ 4.,./s fr.4197d SEE "kro -/ 7_'p, srx,04/a / 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, g7744s--(":1 pOrn. (1' '11 T M Y211 Aatoil 0+4.t,ACC 04, IHE eRCESEIVIS,t, 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 a:)filabitA03 Q TVIENITAA,,13Ci YRAT311038 3HT10 331.110 140Tai4IfieA , a *Irsir, ..----- -..., Z C''' IP /,,,,,,,,111, -,, '.4. 7 .i:. ct. k ,,,," "y c7.; ;., -,..) .,.....t.L.N.__z 0.... C' 7 ...Q.. -1'.. it .TBLaasroY .53.11t....LI. CPI _. e : . ab , al Is/;vrn) 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