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I 9,; The Outlook Company PRESIDENT FRANK C.HOYT The Outlook Three-Eighty-one Fourth Avenue LAWRENCE F.ABBOTT LYMAN ABBOTT NEW YORK TREASURER EDITOR R.O.TOWNSEND PAANAGING EDITOR ERNESTABBOTTsEc,,ARY LFAMB December 30, 1920, My dear Mr. Strong: I wonder if you will be good enough to look over the proof of the enclosed article entitled, "The Income Tax and Liberty Bonds", which explains itself, and give me your views or criticisms regarding it. I am inclined to think that the suggestion of substituting non-interest bearing notes for at least some of the outstanding Liberty Bonds is impractical, but I have ventured to make it with the among our readers in of your permission to questions of hope of stimulating public interest governmental economics. I should be glad print such comments as you are willing summary of them--in The Outlook, to make--or a is it not important that whatever action Congress may take regarding the acute problems of taxation and finance which the country is now facing should have behind it an intelligent public and is it not true that the only opinion, way you can make the public intelligent on these subjects is to get them to think about them? I am Yours sine Benjamin Strong; Esq., The Federal Reserve Bank, 15 Nassau Street, New York City ely, OU, P. S. I am writing to ten or a dozen other men of financial knowledge and experience an hope to print their replies with yours in a brief symposium. Advance proof o f article to appear to The Outlook o f January < ,1921 5 * THE AND IN C O M E TAX L IB E R T Y B O N D S A N unpleasant, inconvenient, and in some cases disastrous fact o f the present financial situation in this country is the depreciated value o f Liberty Bonds. A t this w ritin g every issue of these bonds save the tw o Vic* tory Loans are below ninety. T his means that every man who has a hundred-dollar Liberty Bond and is com pelled ,to get cash for it w ill lose all the way from ten to fifteen dollars when be sells it, except in . the case o f the Victory Bonds. The Victories, since they are payable w ithin a year, or two, are nearer par. A corporation which has a hundred thousand dollars’ worth o f any of the first fou r issues and has to sell them to get cash for its business or to pay its taxes may lose from ten to fifteen thousand dollars. The sm all holders who can put their bonds in rafe-keeping and retain them until the day when they are payable by the Gov ernment w ill lose nothing. But there are com paratively few people w ho can do that. Various plans have been suggested to rem edy this situation— a situation w hich is unsound and unjust. Most of these proposals are based on a plan o f refund ing all Liberty Loans at a higher rate of interest. A New York financier has recently advocated that the entire issue of Liberty Bonds be refunded— that is to say, redeemed by a new issue o f Gov ernment bonds to run for fifty years and to pay 5y2 per cent for the first five years, 5 per cent for the second five years, 4% per cent for the third five years, and for the rem aining thirty-five years 4 per cent. He believes that such bonds w ill sell at par or over. This o f course means that the Government would have to raise by taxation a much larger sum for interest than it is now paying on the present L iberty Bonds. The result would make it m ore difficult to reduce the war increases of the in come tax. Thus the problem is how to bring Liberty Bonds to par in an open m arket w ithout increasing taxation. I venture to suggest the follow in g out line of a plan to be considered in solv ing this problem. Let the Government announce that all L iberty Bonds w ill be received at their par value in payment of the incom e taxes. The first objection to this plan is that the Government needs the proceeds of incom e t a * « in current money to pay its obligations';, that Liberty Bonds are no! curren t; jt.nd that t . h e f l o v e m m u m ..ouiu.uawe to s '.’.l thesf> bonds in the open market f r cash, which would at once dep.o-fate their value and we shohld-be in the same state as before. M y reply to this objection is that the Government m ight borrow currency from the Federal Reserve Bank to the fu ll par value of the bonds. I f this could be done, the advantage to the Gov ernment would be that it would substi tute its non-interest-bearing notes for. its interest\#g-bearing notes, a trans action w hich every business man would like to perform if he could. There appear to be two objections to this substitution o f Federal Reserve notes for the bonds which the Govern ment w ill receive in payment of incom e First, there is no revioron in our present financial laws for such a strb6titt>o< This objection could be met by proper legislation in Congress. If desirable, Congress in twenty-four hours could pass an act perm uting the Secre tary of the Treasury to receive Liberty Bonds at their par value fo r incom e taxes and issue in their place noninterest-bearing currency. The second objection is m ore vital. It m ight lead to an inflation o f the cur rency, and many students of finance feel that we are now suffering from cur rency inflation. To this objection 1 have no reply to make, except that pos sible inflation m ight be mitigated by receiving Liberty Bonds at par for only a specified portion of the incom e tax, s u c h as the surtax or excess profits tax. It may possibly be a choice of evils w hich the financial experts of the coun try w ill have to consider and decide upon. I briefly restate the problem . A vast amount of money, amounting to hun dreds of m illions of dollars, is tied up in Liberty Bonds w hich are now below par. To use these bonds in in dustry or taxpaying the business men of the country must lose from ten to fifteen per cent. Shall this unjust and unhealthy condition be remedied by in creasing the rate of interest on the bonds, thus necessarily increasing tax ation, or by the Governm ent’s receiving a large portion of them at par from year to year before they fall due fo r in come taxes and issuing in their place non interest-bearing currency by means of appropriate legislation? A , t' \l ^ L avjbezycb A bbott. January Zi, 121. dotoLts Dear Ithini I must aek you to accept this reily to your letter of Decemter 30, it40'as t fireonal one and not or publication. / / amjuet taok from Europe and have not yet had opiortunity to discover whotiher the article of whloh you sent me t prouf ap,eared in the Outlook or oot, but I do think t.,.t I should send you a frank oomment on the eogoestion contained in the article. The °ejectionr to the ilao whico you pro se are eomorous, but I shall refer k to only one ne being, In my mind, abseluteay controlling. say nineeme taxes" you menn the varioue direct tenkee, NUCL I assume that when you ,eroon I inC0/26, excess These taxes, te you know, iroduos a very large prot'its, on:: war irofitc taxes. If your plan Aare aao,ted, it would oeftn t)o.t more thin half amount of money indeed. of the revenue of the Oovernment wco'd to enid by printing fiat money, - a Aholly uneou(nd ,iroject an,: one *hien would lowve In its trail a wr000 of distressed industrial ad' butineo- enterprises wten the day of reckonin, arrived. K But more than that, the inflation resulting from such ,In operation would defeat the very object for ohioh it wt. designed, lith rising irioes and the reduced .:, purchasinc:power of money, investment securities would deciine, incluoiog Government bonds t 4not.he Atter oaoe too deciine/being further stimolated by the sentimental ef.oeot Of 't-uch an operotion, which I hel1eve would shook the country and ohake toe confidence Of the general public most Fieriously in the Government's credit. , The difficulties inherentoin war fintnoe on the occasion of such a devaetat/ ing }tcar/[:te the one just concluded ap,ear to be unsurmountatio, and 1 think, in general, The ioesees ooettined by suwe m4$, r6o.rd the losses resulting as unescapable. scribe e po Government bonds are serious indeed, but eertainly not more serious than thnee leu0ained tv many others throt01 the various effects of the war, and 1 J.R4 wonderjustify making Government bondholders wholly exempt from loss on this c type Of\inVestment, when we are unableto indemnify other large olasseepoC our citizene, and particUlarly those who have lost !their relatives fis well as some :,t,rt of their / property: I I should feel very much darmed if a project of this sort were unoertaken. , i . . , ' , You will, I am sure, understand my writing you quite frankly. , ' Very truly yours, LAO-6nel* t.40tott, E6q., ?reW6iii; The Outlook Company, $81 EOurtn Avenue, New York. , .71,1 ASSOCIATIOKOF FOREIGN', I liV,D)(,--**1: 4 c;ii...,0; CORRESPONDENTS IN ,THE UNITED LA( 01' WWI AR,12,-2- I) . J. ) -FEDERAL RESERVE - -Apen-3.9in, 1919. FAREWELL DINNER TO THE EARL OF READING You are cordially invited to a farewell banquet to and High Commissioner and Lord Chief Justice of England to be given by the Association of Foreign Press Correspondents in the United States at the Hotel Plaza at 7.30 P. M. on THURSDAY, APRIL 24th. Cheques for twelve dollars per cover should accompany acceptance and be made payable to the Treasurer of the Association, Percy Sutherland Bullen, Secretary, 6G Broadway, New York. N.B. An early reply is requested. January 8th, 1917. Dear Sirs: order for one year's subscription to Collier's Weekly, to be mailed to Will you kindly enter Mr. Steve B. Hewes, HewesKirkwood Inn, Estes Park, Colorado, sending bill for same to nr. Benjamin Strong, 4100 Montvie w Boulevard, Denver, Colo., and oblige, Yours very truly, Secretary to Mr. Strong. aalli sr s 416 sest 13th Street, New York City. VC The Outlook Company L Three-Eighty-One Fourth Avenue RENCE F.ABBOTT PRESIDENT FRANK C.HOYT NEW YORK TREASURER ERNEST H. ABBOTT The Outlook LYMAN ABBOTT EDITOR R.O.TOWNSEND MANAGING EDITOR SECRETARY L FAMB Jant*i.y 22, 1921. if My dear Mr. Strong: I appreciate very much your letter of January twenty-first. ballon d'essai. My brief article on Inceme Taxes and Liberty Bonds was a It. has resulted in a large amount of exceedingly inter- esting correspondence. I quite / agree that my interrogatory suggestion as to the payment of income taxes' by these bonds received at par is im- practical because of the inflation that would ensue. What interests me most in the correspondence is1 that some first-rate authorities differ as to the propriety of refundiag the entire issue of Liberty Bonds at a higher rate of interest. categorically. /tome good autnorities advocate this proposal The weiglit of opinion, however, seems to be against it and in favor of letting the natural course of industry and finance bring the bonds back to a par market value. Again thanking..you for your letter, I am Yours sincerely, Benjamin Stron,;, Esq., governor of The Federal Reserve Bank, New York City http://fraser.stlouisfed.org/ Federal Reserve Bank ofAwn Louis Ada St. Form 1204 SYMBOL Blue WESTE TEL NI none of these three symbols appears after the check number of words)this is a day message. Otherwise its character is indicated by the symbol appearing after the check. UNION CLASS OF SERVICE SYMBOL Day Message Day Letter NEWCOMB CARLTON, PRESIDENT AM GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT appears after the check (number of words)this is a day message. Otherwise its character is indicated by the symbol appearing after the check. 92b xb 14 I223p Aug 12 Benj Strong Jr Iltrcmdshoel as Have you done anything about article when are you coming OP 1.0me please answer colli.as Peter Dunn 236p Nile NL Night Letter , If none of those three symbols MEWED AT Wk Erewyork Ny Blue Night Message WESTERN UNION Nile Letter .n. lac. 34 FEDERAL RESERVE BANK rw NEW YORK (SEND TO FILES) Sent by COPY OF TELEGRAM Woods Role 8.12.18 W.U. Night Lotter August 12, 1918. D. Dunn, Req., h. Y. ,fra starting on an article this week Will probably finish Friday Probably not returning until about tventioth. STRONG Collier's THE NATIONAL WEEKLY P F COLLIER E.9' SON INCORPORATED 416 WEST THIRTEENTH STREET WILLIAM LEBARON MANAGING EDITOR F P DUNNE EDITOR NEW YORK August 29, 1918 Benjamin Strong, Esq., Mass. Woodshole, Dear Ben: In accordance with your request I am sendthe article mutilated by my awkward hands in order ing you to reduce it to an effective length from the standpoint of a publisher and further stained by the industrious hands in our Composing Room. I also send a proof of the article as it would appear when reduced in size. You will notice that I have taken the liberty to place near the top paragraphs which were near the end of the manuscript. I cannot flatter myself that my changes have improved the article. I would never have thought of making them if you had not suggested that I might and if it had not been necessary to gain brevity. If you are satisfied with the article as it stands in type, or if you want to substitute another, won't you please let me know at once? In order to be printed in time for the next Liberty Loan the article should be in our hands by next Tuesday, September 3rd. Please don't forget you promised to call me up I have some thoughts of political when you get back to town. economy which I think might direct your wayward feet into a path becoming to a Governor of the Federal Reserve Bank. I may say that John Fox, author of "Drop Dead" and other serials, agrees with me. Yours, en Cs 1r December 10, 1916. gy dear Peter: My doctor, A.ustin W. Hollis, a man of a good deal of intelligence and a personal friend, has written the enclosed article, which,I presume, is the outlet for four years of contemplation of the war in which he was unable to take any part. I want you, as a personal favor to me, to read it over and let me know just af.1 promptly as possible whethe:* you think it could be published; whether it is worth publishing; and the best place to have it published., I am hoping to get away the latter part of this week and wish, very much you could send me a reply before I leave. Cordially, P444,,,,g440,10044,04, o Collier's Weekly, 416 West 13th street, New York. BS/M3B Colliers THE NATIONAL WEEKLY P F COLLIER & SON INCORPORATED 416 WEST THIRTEENTH STREET NEW YORK F.P.DUNNE WILLIAM LEBARON MANAGING EDITOR EDITOR February 1st '2-1Nc 11147; .'" i 1 9 1 9 7.91) Pirtrni,L iiiSER1 B444c. Ben: Y As IOU may have heard, I have been under the weather for over a month and could not attend much to business. But I will read at once your friend, Dr. Hollis, article on "The Meaning of the Great War to the American Nation" and let you know whether it is available for publication. Yours sincerely, Benj. Strong, Esq., Federal Reserve Bank, 15 Nassau Str., City. fpd-gd Lake George, N. Y., February 5, 1919. riLING Dept ON v I1 41 191) r.Percer: MY. etriAL, nANK I had not heard of your illness and am grieved of it. Kindly accept my apologies for to learn burdening you with that article. It would be a personal favor to me if you could read it and make some disposition of it that would be satisfactory to him. Sincerely F. P. Dusrla,Req,, Editor, Collier's, 416 West lath Street, New York. BS.MSB yours, IT ii,mi AN ir :,`, Lake George, N. Y., February 7, 1919. 191) n .-.4dCRAI, Dear Peter: . RZSERIT DANE .$?7- 11'4* tff,,e :73 , Hol1is' --- -- Thanks for writing ma'-about Dr. article. 1 feared it could not be used, and am writing him about it to day. will be in New York about the fourteenth, "IcJ14.: S.Ps''14,06,40 and hone to see you. Best regards, Sincerely yours, Fe Pt_Dunns,_ilsq-,-_, gditor, Collier's, 416 - West 13th Street, New York. BS.MSB a LI Z-1)vmi ; 6 0 June 27, 1024. ; Der buo Fhur: - You d1i recAl oroonver6:.!Lion on the Jte-mer conin; hole, I prorai&ed to .;end you picture of him, in rrd tory friend "Jeff." and print k re enclo-;ed with Cal.. The story zhui. the picture.3 I t'nink zt,...! tr'eIjn ithc:rienclo in the F.-A iL1 4f:u ru. \se In 1920 l little know.ilnd bj 1-4,4-ile bli. The populAion i lliçnu, and the ff the cot of Jai:ad of the Dutch. Government; in fct it i one of the pLrt of the Patch st Indie3, and i governed by Dutch. re3ident, ill t:ff to 1.1i.,t him in the Other thf..n the i'.utch Government,' 5 I reciAl it, doe, not permit ,!..,...ayon,e to :-.;ettlo there, ,!.n.(.1 vlit to the 1.3.1.-.:nd only be m.c.ie by, ppiicatiori to the Dutch Government in Jv.. The there 7.:ro no z-lite re,iitient.5; in i 3 C3Mi.Y.- r:-ti V ancient overflol,i, of - crter iore C5i): mil s but exceedingly fertile. hich On our acro.3..-3 and is no'. crater, It eanAr,t..z of the y to vi.zAt the lld uunz, Kung, where e 6Lopi.;ed st. to4la thi3 temple. D-31 d took a picture of '30 TR e of the ci...rvinLy.i. I mt,y o;:y th,t the BL.lino;...e population Ath a leania: their re:Adence, and even the F,tone eo1e re c.ron di!-4cevered very Ample .,ericultur1 c:rchitacturc. crved Mmy of covered ih little Hindu templtf.. aimilr .nd the to the one of which I till 6ending you print.i. oramentoci. How it hp2eneci that. "Jeff" founO pl:ce there is beyond my imrinAion. I think you iill zrue. thA it riAlJt be "Jeff" 7ben I tell you that the I.:11iner;e an hi.ve no 11:.ir on their fac- t all, any more acein to th.n h4ve the J'Lv;Jnee jeoie, here: "jelf" in thi:t hve pretty :,e11. develeyed mu,tr,ehe and berd, tilt.veu in tree "Jeffer,..onizm" 5141e. o54erve If you are a all im,ereed in :.rt of thio ch..a..L;cter, you will curiou medley of Lrchitectur:,1 treAment in the building. of the 0 1:IA1'1'Am to., ion sp;..!e!tr::: to Le o 2:ome. very ,.nclont Ayle, re.mblino; mother fiure in Che picture b a di .1tinctly di!trikinE recilbl,:alce to the neErcid ct, !e,here s the g,x,oyie both Lnd:gree.:37, ueveloEaent of c.thodrz....L.: in the miedle :Ige-fJ in contiaentl Europe!. coily fr..rAod to .3e1.14:1 I at ter., ,i!N at fir,t to '.w..ve the to you bo.t you-Flvy preft-:r to put it in an ,Ioum or otherAe proerve it, , 11. LI r. o I cm Lr. Bud 1 c/o 1c nin It Just ).cr, c)ck. Pull tcr Su14ing, litIN York ity. ither it cme from the photogrphor. 6. 27. 24. dee t/t, 20-24 VESEY STREET NEW YORK, N V WHITEHALL 9000 1.-LERH0NE Ngtv- .gorlt 'Orrting- Vast OUNDCO 11101 October 30,1925 Mr. Benjamin Strong, 33 Liberty Street, Nev York, 1:Ly dear Governor Strong: Permit me at this late date to express my apreciation of the opportunity you gave me to meet Dr. Schacht at your dinner the other evening. I for one feel very much closer to some of Germany's problems than I did before your dinner. incerely yours, 0-41 41):/4 Colliert . AzTtelsTAWAIMthit....v A.C. G. HAMMESFAHR SALES MANAGER OF ADVERTISING NEW YORK October 18, 1915 Mr. B. Strong, Jr., Governor Federal Reserve National Bank 62 Cedar Street New York City My dear Sir: I am sending ou under separate cover a copy of the Octob9é 23rd issue of COLLIER'S, u will find an editorial On on page 14 of which the great War Loan ,Which I think will interest you. Very truly yours a gh -k ia,4244. /9/4- 11:-.)-4-tir 1-f jovember 22nd, 1915, Dear Sirs: Mr. H. ?arkerWillist rocent book, "The Federal Reserve" arrived safely, nnd I would appreciate your sending me anothr copy, togrAhor with statement of cost of same. Very truly yours, ors. BouP: Garden City, N. Y. VCM December 7th, 1915. Geatlemen: Please send to :Ir. Benjamin Strong, Jr., 62 Cedar Street, six copies of the book "The Federal Reserve", published by Mr. H. Parker Very truly yours, Secretary to Jr. Strong. :essrs. Doubbeday, Page & Co., 11 est 32nd Street, New York City. VGLI Worn,. Immalca- nmGen.m DOURLY:DAY PAGE Se CO. MAGAlm. GARDmN C TIER C OENTRY LIFE PILE S S --G Se4. <9 - , N.Y. .#7.., <9 los November 16, i915. Dear Sir: At the request of Mr.H.Parker Willie, the author, we are sending you a complimentary copy of his little book, "The Federal Reeerve" Which we have just publiehed ae an addition to our "American Books Seriee." You no doubt are familiar with Mr.Willie'n writings on financial subjects turougn nil articiee tor tie Journal of Commerce, the New York Evening Poet, and otner tinanciat publication,. We hope that you will find the little book interesting and worth while and Should you be moved to any comment upon it we Should greatly appreciate a line from you. Your sincerely DOUBLEDAY HEM.HA Benjamin Strong, Egg., Governor, Federal Reeerve Bank of New York, New York City. rrhoPt 6VA-7 C TRE WORT., WON E TEE NATURE LIBRARY DOUBLED AY PAGE & CO. CoturrEnTri II:AMERICA TEE GARDEN MAGAZINE nOMErrolor,r, THE COUNTRY LIFE PRESS N/ GARDEN CITY, N December 10, 1915. Mr. Benj. Strong, J r. , 62 Cedar Street, N.Y. City. Dear Sir: Referring to your esteemed order for six copies of "Thc Federal Reserve" we regret to advise that this book is temporarily out of stock and shipment will therefore be delayed for a few ,iays. However, just as 30071 as our stock has been replenished, the order will remeive our most careful attention. Trusting the short delay will cause you no inconvenience, we remain Very truly yours, DOUBLEDAY PAGE ec COMPANY r\ E inntiattbtInø. NEW YORK Mr. W. Randolph Burgess, Federal Reserve Bunk of New York. Dear Dr. Burgess: In line with your suggestion, I am submitting a ollestion which our office would like particularly to place before Dr. Schacht. story which came from You are doubtless familiar with the Berlin last week. 44,yra,? eAssariateb Press. NEW YORK Has your visit been concerned with na world financial compact" which would ensure Wall Street's control of the world's money m..rkets? (Berlin dispatches on Nov. 6 reported that such a development was expected from your conferences with American and English financiers in New York.) In this connection, also, are there any plans for New York and London to give Germany financi-1 accomodation which will enable her to extend credits to Russia for trade purposes? DAY BERLIN P)*---A "world pact Nov. whioh will 1 EnsurE EvEntually thE Wall 3trEEt an undisputEd.hEgnnony in world's monEy markEts to rEsult from is ExpEctEd by GEman financial oirolEs York bEtutEn confErEncEe now prooEEdiqz in NEW Ohhaoht,, hEad English finanoiErs and Dr; lidalmar 14mErican and a thE REichsbank. GEM.DR, BRP 6 1615 12Ip r7k-nr.TM.r J,) 21q /1//6- /9/ BENJAMIN STRONG lAstee Park, Colorado. September 20th, 1916. My dear Noyes:. I have been intending for some time to write you about the discrepancies which appear each week in the calculation of the nevi' movement of currency to and from the interior, and am reminded by an article in the Evening Post that it has been overlooked, this article having been published a few days ago, calling attenticn to the discrepancy of t40,000,000 in the cash movement. think you will find that this is largely accounted for by the shifting of cash through the Federal Reserve Bank of New York and the Geld Settlement Fund. If one of your representatives will call at the bank and ask them for an explanation of this operation, I an sure it will be found possible to get a very much more accurate forecast of the bank statement than can be made otherwioe. The following is what sometimes happens: hen ew York exchange is at a discount, say, in Chicago. St. Louie and other Western cities, the /ederal reserve banks at those points aeaumu. late considerable amountssof 14ew York exchange, which is shipped to us for their credit. We collect the checks through the Clear. ing House, which resuits, of course, in large credit balances and a considerable lose of cash by the Clearing iiouse banks. On Thursday of each week, we ee'tle the balances owing to the other reserve bunks through the Gold Settlement Fund. That is to say, . To A. D. Noyes, Beg, Sept. 20* 1916. gold held in the Fund whic counts no part of our reserve, ie transferred to the credit or the other reeerlee banks and then counts as part of their reserve. When these balancee runes° heavy au they have recently as to exhauat our balance in the Gold Settlement Fund, the New York bank surrenders gold certif.- icaies to the Subtteasury in New York which are there cancelled and reissued in Washington in the names, of course, of the banks with which we heve settlements to effect. This operation has the same effect an a shipment of currency. .1 am sure that my associates will be glad to give your representative ouch information every week as will enable you to take this movement into account in forec-Aing the bank statement. Very truly yours, A. D. Noyes, Esq., Care New York Evening Poet, New York City. BS/VCM Denver, Colorado, December 16, 1916. My deareUozeiti, Thanks to you, the tedium of my exile out e in Colorado has been broken by a few days which I have been ab enjoy While reading to thoroui.;hly - "Fieencial Chap(s d'. It is far and away the best thing that I have r subject and, as you realize better n the it deals with so many -21UL-a with which I have had one) that 1 can appre- elate the care and thought that even to AS preparation. There are a few unimportant Useeic ot of usfficient moment to runs through a number refer to unless as e to have me, I would be of editions, in tihic glad to write you i hic and logical statement of This h there could be written between facts co lines so interesting the publ that I an almo them all 0 ories of occurrences that have never reached tempted to take the time some day to write ody with your facility of expression work Ahem into e story. winter and the As you know, I spent over two months while there got much of What in Europe last mi-ht be described as the - "underground story" of the occurrences Mitch you relate and Which are of even more humen interest than the personal chapters in our own ex- periences following the outbreak of the war. Someday also we may. have opportunity to discuss those matters and should you happen to be in tho 2. December 18, 1916. To - Mr. Noyes. neighborhood of Denver before my retern, please let me know and try and arrange time to spend a few days here wit!' I cannot close this letter without refe 1., to the reviews appearing in the Chronicle of December 9th and t Chronicle's editorial of that date. termined systematic The Chronicle has unfortunatel- criticism of Vie policy of the Hes of issues of nor the one discussed in the anks in the ma Federal Reserve notes. Neithe Editorial seems to be compr template a particular study of em. Should you at any time con- '9 .ject, wont you be good enough to ity is placed to your disposal let ma know and I A itors of the Chronicle seem to get the facts unwilling to inve o in s Clea to re the n referring 1. the gold movement states that - itoria The nexplicable 'u)plies of money pass ar.9a7,- from the House banks in o the Reserve banks and then disappear never This is ab t as sensible as blaming the Croton .Lqueductfor e water reservoirs of New York City when all rmitting their taps to run day and night. What is taustion Of householder happening to the gold is gummed up roughly as follows: 1. The Reserve 3anks are holding larger amounts of gold in their general reserves because of the increased reserve requirements of member banks, resulting from the general enlargement of deposit liability of all national hanks. 3. To - 1.1r. Noyes. December 18, 1916. The Reserve Banks have gradually accumulated :265,000,000 of gold against issues of notes, which gold does not appear in bank reserves. he general fund of the United States vernment contains more gold since last July by a considerable sum, to income tax collec- tions, etc., Which have not yet been disbursed. Small denomination gold cert in gold are being used large volume - The actual cash reserv 5. d to hand ans of the country, held in the form of gold certific ased in the Reserve Cities and with the country banks much no Reserve City of New against imported dly than in the the Central or e annlysis of the Last blish e condition report to by the National City Bank this month. The Federal H great bulk een the distributing agency for the e gold Europe, that part ahic'e has gone to the into or being ethibited by the persistent Nev Yor °serve in execs bank, f the debits e)ods shippe vh credit balances of the for a recent period have aggregated 4390,000,000 lie import gold is sent to the interior to pay for , and it would go anyway eines there no Reserve Banks in existence, only the cost of sending it would be considerable, Whereas the transfer through the gold settlement fund costs nothing. Were the Federal Reserve teat in proper form the greater part of this gold would noe be hold by the Reserve banks end represented by Federal Reserve notes, either in circulation or held by the member banks in their reserves. Let ma repeat bow greatly I have enjoyed reading yOur book, Which I hope has a very wide circulation. With kindest regards, Very truly yours, BS/CC ;NTetri Writ gttitin# Vol December 26, 1916. Benjamin Strorg, Esq., 4100 Iontiver Boulevard, Denver, Colorado. Ey dear Strorg: I an- greatl., obliged f r your friendly letter regarding my "Financial Charter discriminating a that it interested so well info wed ard I an aware, better than anyon acies crept in,ard am alread cases importart, alteration .- ardirg information which r", and an glad of the critic. else, that a number of inaccur- makirg minor, ard in ore or two on the plate. Vhat you say re- ou could give me is extremely wel- come, and I shall certain y take aldvartage of your offer in or of the book. case of a general rPvi text was written or th So much of the basis of information which was necess- arily partial, and so many of the matters discussed have leer affected by subseque_t developments, that many charges would undoubtedly be rece eary. Like y, I fail entirely to understand the violence of feeling on th part of the Financial Chronicle regarding the io1ic3 of th Reserve Barks in the matter of gold and Federal Reserve notes. is very apt to The Chronicle has curious hobbies, and o off on a targert in ratters of this sort ard to stick to it ever when the facts have beer prover-agairst it. Trusting that you are fully recovering your health, irbe New Roth egbeltilt#1)00 ard with all the best wishes of the Seasor, I an Yours very truly, adr-sr 131 Netu gork tkflut9001- RECEIVED couN0,0 1 DEC 13 1117 801 12, 191 Decer ) e cexe Hon. Benjamin Strong, Governor, 'Federal Reserve Bank of New York, New York City, N. Y. <4;?:l / /I< iA My dear Strong:- ftNkilt0 9---"-- ..:-F-- fil MAIL TELLER. The Evening Post expects to include in its Annd-SWEINEBNi yogic Financial Supplement a symposium of brief statements on the financial and economic outlook from a carefillic'6d,e/r. group of Tell-known economists, public men and LtiiialC714547. In this I am very desirous of including you,T vi7s14711PW4We'a7W briefly expressed. I do not wish in any way to confine the expressions of opinion to one or another aspect of the situation. Some- times a few lines on the extent to which the calntry's futures. financial fortunes are at stake in, the issues of this war are more impressive than anything else could be. I enclose a set of queries which we have sent to bankers and financiers at various points throughout the country. But you will yourself be the best judge as to what should be the central consideration, even if treated in a few sentences. I sincerely hope you will see your way to do this. It is not a question of the Evening Post, but of assembling somewhere a group of cool and sane opinions from men of high and responsible position, at a time when the public is sorely in need of just such enlightenment or encouragement. If, as we hope, you should feel disposed to give us your views, we should like to receive them between now and December 20, when preparation for the special edition begins. Very truly yours, Ndu 111:1 tit T.tirnin4 Vot coUNDE-0 1801 FEnR,,L RESn'jt PAM( On economic and political grounds, do you expect early peace or prolonged war, and why? How would the business situation and the national prosperity be affected by another year of war:and how would it be affected by the early ending of the war? What do you regard as the strongest,element in this country's economic position, and what do you contider the chief dangbr to be avoided? In caPe of increasing war costs, ought taxes to bear a larger share than now of the total expenditure, or less? In view of our 07n financial activities in the war, what, in your judgment, will be the economic position of the United States in the period after the war - both individually and in relation to the rest of the world? H431. 1Pth, 1917. Iy dear Noyes: I am moru than sorry to be cornelled to refuse your request for a B tut en eut for he Azmual. Financal Sup- plement of the )?vening Post, but the fact iu thit I have not oeen very fit since the close of the laat Liberty Loan campaign and have found it necessary to be away from the office for some time and leave undone all bit the essential things. And While I might make a. specil ef fort to get ur a short article for you the fact is that 1 have refused a number of similar requests within the past two weeks and feel that I must be consistent. Feeling sure that you will understand the situation and with kind regards, I am, Very truly yours, k..._11.-2RY.#4* 78(1'1 4 Financial )itlitor, he1vening Post, 1,_ P. 0. Box 794, Few York-tray VC); tflje XPil3 gortt FAIntin4 Pot co'-N0e0 18 01 0 December 6, 1918. Hon. Benjamin Strong, Governor, Federal Reserve Bank, 120 Broadway, New York, N. Y. iu 19ig My dear Stiong: The Evening years, to include in its of brief Post Annual Financial statements on the financial and carefully selected group of financiers. briefly expects, after In this well-known we hope to its custom of past Supplement a symposium economic outlook from a economists, public men and include your views, however expressed. I enclose a set of queries which we have sent to bankers and financiers at various' points throughout the country. They will indicate the points on which, as it appears to us, the public is most anxious to get light. You will yourself, however, be the best judge as to what should be the main consideration, even if not included in If, our query. as we hope, you should feel disposed us your views, we should like to receive them to give between now and December 20, when preparation for the special edition begins. Very truly yours, Financial ,ditor. Xetu girk T.benintic Pot couN0,0 1801 C) December 6, 1918. Hon. Benjamin Strong, Governor, Federal Reserve Bank, 120 Broadway, New York, N. Y. a My dear Sti,ong: The Evening Post expects, after its custom of past years, to include in its Annual Financial Supplement a symposium of brief statements on the financial and economic outlook from a carefully selected group of well-known economists, public men and financiers. In this we hope to include your views, however briefly expressed. I enclose a set of queries which we have sent to bankers and financiers at various' points throughout the country. They will indicate the points on which, as it appears to us, the public is most anxious to get light. You will yourself, however, be the best judge as to what should be the main consideration, even if not included in our query. If, as we hope, you should feel disposed to give us your views, we should like to receive them between now and December 20, when preparation for the special edition begins. Very truly yours, 0 a.fbt Xriu gark 7gi)eitilv Pot coUN0E-c) 1801 in the larger view, do you look for continuing prosperity or for industrial reaction in the United States as a result of termination of the war? Will the immediate future differ from the longer future? What is your expectation as to the course of prices in the commodity markets? How far will disappearance of the war orders be offset by the filling of postponed commercial requirements for home consuTers and neutral markets, and by demands for purposes of reconstruction in the damaged districts of Europe? these to materialize? How far will they depend on prices, and, in the case of foreign orders, how far will they depend on our advances of credit to such markets? How Can wages be maintained at the present level? If they can, then how will the market for the products be affected? If not, what wil situation? Is there a prospect of reducing the present volume of bank loans and of Federal Reserve notes? Have we ahead of us easy money, or high money? What do you consider the most encouraging facts in the financial, economic and political outlook for this country, during the period which will follow peace? What are the chief dangers, and how may they best be avoided? December 10, 1918. My dear Ur. Noyes: I am just arranging to leave for an absence of indefinite period, and if it is possible for me to prepare soTething, as suggested in yours of the 6th instant, in time for publication, I will be glad to do so. I am so rushed at the office, however, that I can hardly expect to undertake it until I get away. - Very truly yours, Alexander D. Noyes, Esq., The New York .Evening Post, Ne.i...yoik. 153/1L3B it1JeNet13 gortt bininJ3 11104 couNoo 1801 December 13, 1918. Hon. Benjamin Strong, Federal Deserve Bank, 120 Broadway, N. Y. C. My dear Governor: I have your letter of the 10th relative to the matter of participating in the discussion by of our economic future in our Financial Annual. I greatly hope that you will be able to do so, as there seems to me to be need of thoughtful and wellconsidered expression of judgment on such matters and in this way. We can probably handle any communication up to December 28th, though_ of course the earlier we well-known men get it the better it serves our purposes. Very truly yours, Financial adn/hmh ditor. tThNew gorttjgbotin4 Pot couNo" 1801 December 13, 1918. Hon. Benjamin Strong, Federal Feserve Bank, 120 Broadway, N. Y. C. My dear Governor: I have your letter of the 10th relative to the matter of participating in the discussion by well-known men of 'Annual. our economic future in our Financial I greatly hope that you will be able to do so, as there seems to me to be need of thoughtful and well- considered expression of judgment on such matters and in this way. We can probably handle any communication up to December 28th, though_ of course the earlier we get it the better it serves our purposes. Very truly yours, Financial ditor. eolnle New goaT.tintin4 3t coursio,0 18 01 December 13, 1916. Hon. Benjamin Strong, Hon. Federal Deserve Bank, 120 Broadway, N. Y. C. My dear Governor: of the 10th relative in the discussion by I have your letter to the matter of participating well-known men of our economic future in our Annual. I greatly Financial hope that you will be able to do so, as there seems to me to be need of thoughtful and well- considered expression in this way. of judgment on such the earlier truly yours, Financial we the better it serves our purposes. Very adn/hmh and We can probably handle any communication up to December 28th, though. of course get it matters ditor. Form 1201 CLASS OF SERVICE SYMBOL ..agram &Day Letter Blue Night Message Nile Night Letter NI lre, WESTERN UNION If none of these three symbols appears after the check number of wnrds) this is a telegram. Other- .te character Is indicated byte symbol appearing after the check. ,. BIRIVRIP MC WESTEkASN1 UNION m.15;41, AM ,,,T.T.NEPRESLIDENT GEORGE W. E. ATKINS. FIRST VICE-PRESIDENT CLASS OF SERVICE SYMBOL Telegram Day Letter Blue Night Message Nite NL If none of these three symbols Night Letter appears after the check (number of words) this is a telegram. Otherwise its character is indicated by the symbol appearing after the check. 4 DA NEWYORK NY HON BENJAMIN STRONG GOVERNOR DEC 21 1918 SUS FEDERAL RESERVE BANK EQUITABLE BLDG NEWYORK NY M ARE EXTREMELY DESIROUS OF HAVING YOUR ANSWERS TO QUESTIONS RECENTLY SUBMITTED TO YOU WE CAN USE YOUR COPY IN OUR ANNUAL FINANCIAL NUMBER IF RECEIVED NOT LATER THAN DECEMBER TWENTY SEVENTH IF YOU CANNOT SEE YOUR WAY CLEAR TO ANSWER ALL QUESTIONS ONE OR MORE WOULD BE APPRECIATED NEWYORK EVENING POST 9427M lAcembor 23, 1918. New York Evening Poet, 20 Vesey Street, Nev York aty. Deqr Sirs: ram of the 21st, I regret Aftswertng yyrnr ut of the city and is not is away for a rest. that cted at he offt6,0 1 C 1 b 4eve Ur. Strong j 4 / d the reas9e whx he could not prepare a stAte-ert f r jthe Annual Fi Post. ttor of December 1Pth _cial Supplement of the Evening 1 Very truly yours, GB Secretary to Mr. Strong. December 24, 1918. My dear Noyes: I have been away, as you know, but, so far, have been unable to prepare anything for your financial annual. To-day I have hastily dictated something which is to be mailed to me in a day or two and if it can be got ready in time I will be glad to have you use it, otherwise, please tear it up. Very truly yours, A. i. Noyes, "38(1., 2inancial Editor, liew York Evening Post, 20 Vesey Street, New York. BS/MSB signel in. r. Strong's aence. TELEPHONE BARCLAY 4200 20-24 VESEY STREET, NEW YORK titht pot Tile New gorlt December 15, 1919. DEC 16 1919 Eon. Benjamin Strong, Governor, Federal Reserve Bank, New York City. My dear Strong: Your letter of the twelfth reached me while I was laid up at home for a couple of days. I appreciate your feeling in the aatter of writing for our annual number, and yet I know you are sure to be so broad and clear in what you write as to remove any possibility of adverse criticism., I should like above all things to see you and talk matters over; in fact, I have been trying for a week to make sure of an hour or two in which I might be fortunate enough to make such an arrangement with you. I shall look forward to having such an opportunity before long. Very truly yours, ,5 TELEPHONE BARCLAY 4200 20-24 VESEY STREET. NEW YORK rtjt Nen) gork fa) enitua December 15, 1919. DEC 16 1919 Ron. Benjamin Strong, Governor, Federal Reserve Bank, New York City. My dear Strong: nnoi Your letter of the twelfth reached me while I was laid up at home for a couple of days. I appreciate your feeling in the matter of writing for our annual number, and yet I know you are sure to be so broad and clear in what you write as to remove any possibility of adverse criticism., I should like above all things to see you and talk matters over; in fact, I have been trying for a week to make sure of an hour or two in which I might be fortunate enough to make such an arrangement with you. I shall look forward to having such an opportunity before long. Very truly yours, 6 -5 o 0 3 4e6( (çiifà 6a a Juno 13, 10'32. My dear Sr. Noyes: Your note came this morning just as I was about to write you RS I had promised Mrs. Noyes. The courier for Jaen is I. J. Nishi. His regular mailing address is c/o ,Iliyako Hotel, Kleto, Japan. He is really an eAceptionally capable man, and while of course one must nat let-,loIn the bars too far ho nevertheless is riulte a companionable with a person in that folk, filled with infomation about japc:.n, and To found that he added Ho wss reco!mmonaod to us by i'eter ,ho had emoleyed him some years before, and I had him tharou;gh- greatly to the interest of the trip. ly investigate.d.by the lank of Japan officials before I decided to employ They gave him a very good report. him. As Mrs. 7oyes states that you -lin only be a month in Japan, I hesitate to make any very definite recmmendati,ins about your trip. Cne ,of the moot interesting thinc5 that /0 did was to spend a couple of ni,;:hts at Keys San, :hich i no more than a s.:.1testion of D.,_IddL:f:tmonastaries on the top of a mountain 4ith a little Villje Ojalcent and a very -vonderful old cemetery a mile C)1 more in extent leaatsd in a ma&lificont grove of To me it las one of the most imoressive things that Cryptmeria trees. ,ve sag. I las disap,,:einted in hiys Jima,- A cruise of al-cut .a week or ten days that we made in a. junk in the Inland Cea Tao in over gay delightful. -fie were fortunate in havin;g good go!Aher and esoecially in having :!..fullmeon.Ift.vou will be fortunate and 1111 be reid for the crulso under those conditions. To really sec Japan enc must get &-way from the coact cities, but there are some cxsr.odinly intarectin7 trips right near the big cities. Ono of thom is to come) d,22:la the rapids in a. river, the name of rhich I do not recall, it brings you nut not far from Tokyo. I am ooIrv t,e take tI.J=J liberty of sendiog you 505.0 letters introcluction to fil_endn throu.,!-,hout tho East, but in ardor to avoid a of enough to givu me your itinerary. If you visit Java, I especilly -4ould like to give you letters to booking frienda there, and lou13 cartf.nly rosommend your visiting the Island pf t is cn of the most primitive Pali,, which is th.) neat island cast, duplic!Aion of advises, 'scald T..e.a be com7anities in the i'!;ast in E01'10 ways, rzid th.7,1%,; you 'All have the expeTience of travelling over a bctiful voic:',ole island, uagaificant there arc practically no Ihit;e peelJle vlhure of tb:-) Dutch Covernmant effti.c), #2 June 13,'1V.,?. Mr. Noyes viii find and of course you will star at the Dutch rest houses uhich you (-I very comfortable. will If you travel through Java and go up the Malay Peninsula, it the spolak Yaley, as that is be desirablo to have a guide or courier who.cen almost all of the and most common language throughout that section hotel servants and others und.rstand,it. you go to Siam, I as unable to visit Siam or jndo. China. at Eangkek, 4.110 I .would like to give you a letter to a Danish friend giving you aline on Iaz. sure, greatly add to the interest of your trip by shut to do. - which sas unable In Eurms, the trip up the Iragadi River members Iof tho party to did make on account of the heat , cut shich the other is a moot interestiog make - is not especially intereoting; but Landalay pagodas to to found beautiful old. Eastern community alp G;)ii1C.3 of the moat The trip up the irasadi above Landalay they tell anyshere in the East. me is very beautiful and interesting. will If you go up the alay Peninsula from Singapore, I hope youto accept reservations as not fail to stop off at Cualla Lumpur (please The motor trip from spelling as I m dictaing entirely from memory). right through the built Cualla Lumpur over a nes mad shich has been railroad hotel in the Jungle is sell worth making and there is a splendid that trip you ;ill Tolcin, etaln vhere you 'ill he most comfortable. tkfllangand there taLe a steamer to Calcutta. df course DatV., probably go on he cold -shell you are there and probably act feasible, although jeeTing in the world. .thevies af nachin unga is one of the most Eorgeou Governor sould like to sso! you lotters to Lord Ilonaldshay, tale the kno4 but I Jill General of Pengsl. Lord heading you already I shall also send you oDuortunity of sritiug hdm if you .ill permit ma. of the Viceray&Council, a letter to my friend Ar. hailey, Finance :Leiter 1 did not get to Es:mtay. and to Sir George Lloyd, G-..)vernar General of certainly Jant to go to kgra You ill Madras, nor did i viLit Ceylon. and there cro t3M0 root intereting old ruins of to visit the Taj Mahal, of the slave kings in Chat region. the flogul dynasties and of the period In.Delti you vill save suns similar Do not f1l to visit Fattipur :1%ri. interestiaE trips to old ruined cities no completely. deserted, see the the great capital of the Logul Kings, and in the galled ton visit haIrdeAinzNorks to be ojoyed our stby at Esnares, constructed by Akb.s.r. on they told there, ho ever, khea there sas a full eolipso of the moon, to bathe in pilgrims there us there were some hundreds of thousands of ar-.;Jttea, and of course you v..7Annot sight ROVeI to the river. It .-,M1,3 a the eclipse, butto you-c!JIn select a psriod of if have the advantage of be well ,iertt stopping there for a fey days. pilgrimage, it Aould - , (i) Mr. Noyes 113 June 13, 1,??,2. 1 told Krs Noyes that. she Iould enjoy visitins the establishThey have the best gold and silver brocudes ment of Gerdi and Hari Das. a in India, and possibly it is net quite Pair to are. Noyes to give you this warning in advance for it may be expensive. It is at Fonares. I vas unable to get to Udipur and the deserted cities of that section rhich the7 say erelost wonderful of all in India. Kashmir will probably be inaccessible on account of the snot", Oen you are there. can only be reached by automobile er aag-:11. It The Indian Government was aLill in Simla when oo, acre there, but will. he in Delhi in January, and I doubt if the trip to Simla lould pay. Travelling in an Indin train at night neoesE,ittes tskini.; soivo You 4ill need your on sheets 9nd _,ad sleeping erluinment. blanLets; but did n:71., fin ,1 it necessary 'cc ta7,:e any hevy teddinj as the bunks are reasonably *all upholstered. Eein.g there cut of the usual trn.vellin seoxon cf course, encountered mcre7Dsgults than you will, and I ehould say that geneally the things guard against in. travellirq in the East nre the following: The sun. Pram the middle of' the ,alornir-, untilcuite late in the afternoon do not -I'd' In hot sotlus. .,?ear .a stcu.% ;roteetion in Cne does not become aware of the influence of the cun tntil it is too late snmetimes, J,le it is a c,recaution 7?hich every American shouAd tole Nitheut rail. This is eapecially true in ind1a- Do not drink any water that is nut bsttled srd of a wellTan San in Japan is the test. Thera are a great variety to be had in the Dutch Indies and in British India that are good. knovn brand. Uncooked food of any kind, I believe is dangerous and any fiah which has not been very thoroughly c)ase. If there are mosauites about take recautians that yuu do The varieties that carry malaria fevers are principally found in the foot-hills of the Himnlays Ucuntains, hut they are dangerous all through the Enst on aeoeunt of the rice fields vhlch are breeding go-onn& for them, and while some people advice you that it is lerfootly safe to sleep at night undoea fan cr runk.a, I believe myeelT that it is mach safer to have a good mesrluito not. ost or the hotels provide them. not gat bitten. 1 perconrily believe that a great many 1,uoplo are unduly concerned about these daners and that reason able crecutiens on the p_.cintn that I have sentioned are all that are reuirr, i, and travellin::: is perfectly safe and reasonably comfortable. June 13, 10?2. # I cannot tell you much about China as the aeathe-e prel9eated my getttn,,:; t the Anterior. C:,ne of the most important precautions to observe is to hook up steamship 2.o.sge .vell in advauce, mks sure that your location on the eteemer is absolutely .contrexted, and thct the steamer will sail Ihen scheduled. They have a disagreeable .lay of changiar; thsir schedules and. not notifyinc you. I .as delayed some weeks at one point by having that happen. As to your business arrangements 4ith Nishi. As I recall, is r'aC 3 yen paid him 4 yen per day per -erson Ihich is about I think his arrsnerient re subject to serge reer da,id for his expenses. EZ,jueUent cnd he Tay have changed his rc.tec since ve lere there. Put I %fro cenvinoed th3t'he we thc,rouE,nly honest, never overcharged us,and ho keeps the most. accurate accounts of the money he spends. ionit you let me kno.,-; if the above is about That you cant fld particolarly dye i.e some idea of your itinerary so tht, 1 can send the it 4No ay.reat pleasure to see you and Mrs. Noyes and I 4ish I might have it oftener. letters. Yours sincerely, F1'ank 13. c/o The Associated Press, star Luilding, Vaainztn, E. C. ES.W1 e FRANK B. NOYES, WASHINCTON, STAR, STUART H. PERRY, ADRIAN TELEGRAM ARt TIlE, SECOND VICE-PRESIDENT. BROOKLYN EAGLE, FIRST VICE-PRESIDENT. PRESIDENT. MELVILLE E. STONE, COUNSEL01, FREDERICIC ROY MARTIN, CENTER. MANAGER 2 if/wri HERBERT F. GUNNISON KENT COOPER, ASST. GENPRAL POMANDER. J. R. YOUATT, TREASURER. JACKSON S. ELLIOTT. ASST. GENEBAL MANAGER MILTON GARGES, CHIEF OP TRAFFIC DEPARTMENT. D I IIIECTOR S. VICTOR F. LAWSON, CHICAGO DAILY NEWT. W. L. AncLEAN, PHILAOELPHIA BULLETIN. FRANK B. NOYES, WASHINGTON STAR. ADOLPH S. OCHS, N.. Y.. TIM. `- CLARK HOWELL, ATLANTA CONSTITUTION. S. NMCLATCHY, SACRAMENTO BEE. CHARLES HOPKINS CLARK, HARTFORD COURANT. CHARLES A. ROOK, PmssuRN CHSPATCH. c0,-7, nrilr''')Ifl WL,T.ii)(37--!D JUN 13 19 44 H. COWLES, SPOKANE SPOKESMAN-REVIEW. ELBERT H. BAKER, CLEVFLANO PLAIN DEALER, JOHN R. RATHOM, PROVIDENCE JOURNAL. FRANK P. MncLENNAN, TOPEKA -.TATE-JOURNAL. H. V. JONES, MINNEAPOLIS JOURNAL. PRESIDENT'S OFFICE. STAR BUILDING, YtAWNIT.4-4-.1N, D. C. D. MOO., NEW ORLEANS TINEs-PwArims. LANSING RAY, ST. LOUIS GLOBE-DEMOCRAT scle-1 - 10 ' J. zr:_vc, us s oTe 0.eLe guide 2111:LE; fo-, 0.11 1:11 5.-i 3t -4 t L.). L., , , e L11 2.L1- to 10 c Ict Le 171 -7 I '1. e, C rfAI, pie gtTrtilt5Sfar-VjfreSu.'itil-aV,.%nr WAS HI N GTON, D. C. a _, $ I7" -,-' 1 5iTaau t-,":-, - I, -FT 7, - e 111U 7)11 f r - - t 0 10 thO:r011:: -' ten t07.._,72:(AV Ct = Cr=7: :77 CI , t7.-.7 vc;.%.: 7 7o1,-. of 417 =, ^1^, t t rs,a7(7.E:1, o , . ei6'31.)7.1 &Aro - 6 -1-417 z . 2- STUART H. PER Y, SECOND VICEPRESIDENT. -FIRST VICE-PRESIDENT. MELVILLE F. STONE, couttsFLon. FREDERICK ROY MARTIN, GENERAL mASAGER. , AmANTELEGRAmANDT., BROOKLYN EAGLE. WARHINGTuh, STAR, PP.ESIDENT. 664 1,3,026 HERBERT F. GUNNISON FRANK B. NOYES, J. R. YOUATT, TREASURER, KENT COOPER, AssT. GENERAL MANAGER. JACKSON S. ELLIOTT. Ass, GENERAL MANAGER MILTON GARGES, CHIEF OF TRAFFIC DEPORTMENT DIRECTORS. VICTOR F. LAWSON, CutcAoo DAILY NEwS. W. L. McLEAN, PHILADELPHIA BULLETIN. FRANK B. NOYES, WAsHINGToN STAR. o ADOLPH S. 00-IS, NEW YoKK TtmEs. e'cr t"; i? CLARK HOWELL, ATLANTA CONSNTuTtoN. S. McCLATCHY, SACRAMENTO BEE. CHAP.LES HOPKINS CLARK, HARTFORD COURANT. CHARLES A. ROOK, PirrsouRo DisPAycl.t. H. COWLES, SPOKANE SPOKESAIAN-REVtEW. PRESIDENT'S OFFICE. ELBERT H. BAKER, CLEvELAND PLAIN DEALER. JOHN R. RATHOM, PROVIDENCE JOURNAL. FRANK P. MAcLENNAN, TOPEKA STATE-JOURNAL. H. V. JONES, MINNEAPOLIS JOURNAL. D. MOORE, NEW ORLEANS TIMES-PICAYUNE. LANSING RAY, ST. Louts GtOSE-DEMOCRAY STAR BUILDING, WASHINGTON, D. C. July 18, 1922, Honorable Benjamin Strong, Pederial Reserve Bank, New York, N.Y. My deer Governor Strong: I have intended writing you before this regarding our proposed itinerary and your v,ry kind ' letters. In general, our trip will be to the suggestion that you would give me Some following points: 4,65,ffti U. .,.- ,, - 0 ,1";"t'''' I .,..,ri ' , c Japan (pin cipal cities) China (2eki n, Shanghai, Horrf-Eono) ,, Saigon, 9.1ev Singapore , Java ed.e Rangoon Calcutta Bemires Belhi ,IV A\ AAA. A ttt,y, r Agra Bombay Bj,4, co,y, c .c. ,'(00" .:: n-C11:'''., ,-. ,..., : Ceylon It is.possible, of course, that I may have to onit some of the points particularly Saigon and Bankok. In India, also, it is l2ly that 1:Rtw, will visit other point, (Madras, Bangalore, etc.) . ' ,' HonoT'able Benjamin Strong-2 !oz) While I have seine acquaintance with Lora Roaai, I woula be very glad inacea to have you write him as you suggcot. I will erect to reach Inaia about the idale of J8nun.x7. I very much al:Tree:Late your trouble in writillg uo EJO fully. With covaial regarao, Very sJ.ncorely, Frank B. Noyes flfron .144t-T 6 July lc', 1022. My dear Mr. Noyes: Here are the notes of introduction, and in addition I have written to all of the persons to whom they are addressed, advising of your prospective trip so that I believe they gill all be on the lookout for you. a word about the letters. Governor Inouye and hr. Fukai Pre officers of the Bank of Japan, Tokyo. Governor Inouye is one of tho ablest Japanese that I know. He is especially vall informed and speaks English quite well, as does 'r..Fukai. They are both warm ooreonal friends of mine. I think !c'tr. Inouye is regarded as onecf the ablest'ron in Japan, especially in finance and economics. He belongs to the younger, rore progressive and enlightened party, and some day I anticipate will be Finance 7:dnister. No Nishi is the guide that I spoke to you about. If you decide to engage him, I sug:ost writing well in advance as he is usually pretty busy Vat the time you are likely to be in Japan. I an sending you not only tho note of introduction, but the letter cf advice as Tell, so that you ray send the letter of advice yourself only in ,case you decide to engage him. Viscount Shibusava is one of the leading business men of Japan. He is sometiri.es called the J. P. :.'organ of Japan. Hs is a man possibly 8C or 87 years old, speaks no English, but has an excellent interpreter. Ha is very rich, and nov spends all of his tico in philanthropic :;ork. He is a charming and enlightened man. You probably know him by reputation. . Baron Uegata is a member of the House of Pears, and ham soxe influence in business affairs, although he is no retired from tusineso. Both ho and Viscount Shibusawa have visited this country a number of tires. The lattet in the early days was private secretary to Prince Ito. Colonel Cheney, I think you and !,1rs. Noyes probably know. He now flilitary Attache of the Americ,Fm Legation in Peking, and just before leaving uarried Louise Delano of 7ashingten. Sir Lawrence i. Guillemord is Governor General of The Straits Settle rents srd High Commissioner of The Federated Malay States. He and Lady Cuillemard had only been at that post a few months yben I as in Singapore. They are charming people and have a. beautiful house in Singapore .':here you probably will find them at the time of your visit. Mr. Frank B. Noyes July 19, 1922. MesEre. 7eilinga and Van den Berg are the head officers of De °11,IS'avesehe Bank at leltevredee,thich as you knot is the business part of Batavia. Yr. Van den Berg has a charming tife whom I am sure Mrs. Noyee will be delighted to meet, and you :7ill find them most hospitable and delightful people. Unfortunately, the Governor General, Count Van Limburg Stirum, who was in charge when I ;as in Java, has left, his term of office having expired, and I do not personally knot the present Governor General, but 1 al sure that Mr. Van den Berg will be deliehted to make you aceuainted tith him. Lord Ronaldshay Is Governor General of Bengal. Se visited him at Darjeeling. He is a man of great energy and ability, and l think is regarded as one of the ablest men in the Indian Government. Lord Reading you already know. Mr. Halley is the Finance Member of the Viceroy's Council. le and Yrs. Hailey'at Simla, es the Indian Government was in the Mountains when ae were there; but they will be in Delhi during your visit. I an sure that you will be delighted to meet them. They are most hospitable visited and entertaining, and 1r. Bailey you aill find as tell posted as any one in India upon conditions and especially upon the Indian Government. spent his life in the pork. He has Sir GeorgeIloyd is Governor General of Bombay, and is one of the youngest men in high office in India. He also is a man of most unueuel energy, and although he had been in office but alshort time Ihen I was there, he was making himself strongly felt in the more progressive development work of that Presidency. It has seamed to inc better to furnish you with this rather Ellen number of letters to men of more importance, than to give you a large number of letters which might prove to be a burden, as courtesy requires me to advice their having been given cell in edvance. I an sure it is not necessary for ee to Eugeest that in the cast these gentlemen in the Indian Governmeat find it necessary to wake engasenents in advance, and I think you rill find it a convenience to yourself end to them to send the letters by mail or messenger on your arrival, or if possible in advance of your arrival, so thet they may e-Toct you and plan accordingly. It may be just as well also to warn you that net only the Viceroy but the Governors of the States are in the habit of keeping open house. I think if these letters are seat in advance it is quite likely - unison other engagements interfere that you and Noyes will be asked to visit at the Government house in each instance. Thet proved be te the case when I -ees there, although .ee were not always able to accept the invitations. la found it particularly interesting tin stay with the Viceroy, and I mey eay ee had the same experience in Jlva ehere we visited the Governoi General at the Palace at Deitenzorg. Mr. Frank B. Noyes July 19 .1922. Messrs. 7eilinga and Van den Berg are the head officers of De 411-1).avasche Bank at Seltevreden,which as you knoa is the business part of Batavia. Yr. Van den Berg has a charming wife whom I am sure Mrs. Noyes nill be delighted to meet, end you viii find thsmi most hospitable and delightful 1:eople. Un- fortunately, the Governor General, Count Van Limburg Stirum, who was in charge when I vas in Java, has left, his term of office having expired, and I do not personally know the present Governor General, but I al sure that !-:r. Van den Berg will be delighted to make you acquainted with him. Lord Renaldshay is Governor General of Bengal. No visited him at Darjeeling. He is a man of great energy and ability, and 1 think is regarded as one of the ablest men in the Indian Government. Lord Reading you already know. Mr. Bailey is the Finance Member of the Viceroy's Council. le visited ?,1r. and Yrs. Hailey'at Simla, as the Indian Government was in the Veuntains when 5e were there; but they will be in Delhi during your visit. They are most hospitable I an sure that you will be delighted to meet them. r. Bailey you aill find ar. 4011 posted as any one in and entertaining, and India upon conditions and especially upon the Indian Government. He has spent his life in the pork. P Sir GeorgeLloyd is Governor General of Bombay, and is one of the youngest men in high office in India. He also is a man of most unusual energy, and although he had been in office but acchort time then I was there, he ,as making himself strongly felt in the more progressive development york of that Presidency. It has seemed to me better to furnish you with this rather snail number of letters to men of more importance, than to give you a large number of letters which might prove to be a burden, as courtesy requires me to advise their having been given veil in sdvance. an cure it is not necessary for an to sugc-est that in the East these gentlemen in the -Indian Government find it necessary to make engasenents in advance, and I think you rill find it a convenience to yourself and to them to send the letters by mail or messenger on your arrival, or if poEsible in advance of your arrival, so tht they may expect you and plan accordingly. It may be just as Yell also to tarn you that not only the Viceroy but the Governors of the States are in the habit of keeping open house. I think if these letters are seat in advance it is quite likely - unless other engagements interfere that you and ro. Noyes 411 he asked to visit at the Government house in each instance. That proved to te the case when I as there, although we were not always able to accept the invitations. Se found it particularly interesting to stay vith the Viceroy, and I may say ye had the same experience in JAva General at the Palace at Buitowlorg. ye visited the Govarnoi July 39, 19. These visits give one an exceptional op:ortunity to learn some0Ang of what is going on in the East, and no part of my vicit vas more enjoyable than these stays at the various Government houses. I an looking up the name and address of a Danish friend at Bangkok, but am unable to send the letter with this as I seem to have mislaid his address. ground. llon't you be good enough to lot me know if this covers the Sincerely yours, Frank B. yes, c/6 The Associated Press, Star Building, lashington, D. C. ES.IVM cries. * p I., Since this letter was written, I have discovered that Lord P3onaldshay's term of office has exoired and that he has been succeeded by Rt. Hon. the Earl of Lytton, Governor General of Bengal, whom I do not know, and so I have omitted a letter to the Governor General of Bengal. B. S. SRoRTSToRms Do UBLY:DAY, PAGE Co. TrIE COUNTRY LIFE FRONTIER PEviEw c7IICATIORAL HE COUNTRY GARDEN & HOME BUILDER LIFE PRE SS RADIO Etwara,CAST GARDEN CITY,NY M li 24, 1927. Iarch Dear sir: I have learned from Senator Glass that you have read his material entitled "An Adventure ih Constructive Finance', and have expressed your approval of it to him. I wondered if you would be so kind as to let us have a comment that we might quote in connection with our efforts to se3ure an adequate distribution of this fine contribution to the subject. Trusting this may be agreeable to you, I am Sincerely yours, DOU3IEDAY PAG: 1 00. 7Aitoria1 Department. 3en3Attift Strong, Esq., Gov. N. Y. Federal 33 Liberty Stre,A, New York City. eserve Bank, LBS:Y3 4:54; Hotel 3righton, Atlantic City, N. J., April 12, 1927. My dear Sir: The delay in answering your note of March 24 could not be avoided on account of my absence and illness. You ask me for a comment upon Senator Glass's book entitled, "An Adventure in Constructive Finance." Possibly the most pertinent comment is to express the satisfaction which all of Senator Glass's friends feel that he has at lust given intimate and authoritative account us the of the legislative history of this masterpiece of legislation. No one after reading this book, even though they do not know the author intimately as I do, can doubt that it was his energy and devotion to the task which resulted tion of the Act and its passage by Congress. in the construc- hope the circulation of the book is as successful as its merit justifies. Sincerely yours, Mr. 3eecher Stowe, -ditorial Department, Doubleday, l'age Co., Garden City, New York. SRORT STORIEti DO REvrs-w U ISLE DAY, PAC- E & CO. CoumTRV LI r GARDEN 8c HOME Bumnint E FRONTIER RADIO BROADCAST rEnuumoNAL GARDEN CITY,NY teHE COUNTRY LIFE PRESS April 13 1927 Dear Er. Strong: I wish to thankprou most sincerely for sending us an endor9rement of Senator Glass' book. This fine wird from you should help us to secAre circpation for the book, which, I am sorry to s, is proving surprisingly difficult. I pnose the fact of the matter is that the n ple have been so bored by economic and inancial books that when a man comes along ho can write in a human and entertaini of his -or way he has to suffer for the sins ecessors. Sincerely yours, Bezjjaroin Strong, Esq., Ho el Brighton, Atflantic City, N.J. LBS/EAD Form 1220 IS EXPERTID CLASS OF SERVICE SYMBOL by the seader Telegram of this message. Day Letter or telephone it to Blue Night Message Please give it to the messenger Nite NL If none of these three symbols Night Letter appears after the check number of words) this is a telegram. Other- WESTERN UNION NEWCOMB CARLTON. PRESIDENT GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT wise its character is indicated by the symbol appearing after the check. 2477 F390CC 1R 85 NL 5 EXTRA NEWYORK NY OCT 16 1923 BENJAMIN STRONG 15 NASSAU ST NEwYURK NY FIVE YEARS SINCE SIGNING OF ARMISTICE WILL HAVE ELAPSED NOVEMBER ELEVEN THE WORLD SEEKS FOR PUBLICATIUN THAT DAY SYMPOSIUM OF OPINIONS OF LEADERS OF THOUGHT THROUGHOUT EARTH ON DEVELOPMENTS THESE YEARS AND THEIR PROMISE OF GOOD OR LLL FOR FUTURE ARE THE (7- NAT IONS IN CLOSER ACCORD ARE THEY COMING CLOSER WHATS THEIR GREATEST NEED HOW MAY IT BEST B SECURED WILL YOU BE GOOD ENOUGH TO TELEGRAPH COLLECT ANSWERS TO THESE QUESTIONS BECAUSE OF SPACE LIMITATIONS BREVITY WILL BE APPRECIATED NEWYO RK WORLD HERBERT BAYARD SWOPE EXECUTIVE EDITOR 1204A 17 lirdin.&44(dfct arAaJ,, '77t44,11 GiAhri4u; eNire-f2r 4,0-1-70 ev Fr) ge-a. C0-0-0 otAtia;,, 4,2,4A at; IL.645,21:-14dx7,-----or 72_4- 1.4F7 i U-42 1. /4A' frri 411A,L_ 0-4/111-4-1-4-m-'' el &rut e7a6_ 3 pet,;/, CA eu 6/0K POSTAL TELEGRAPH - COMMERCIAL CABLES CLARENCE H. MACKAY, PRESIDENT TELEGRAM RECEIVED AT This is a fast Telegram unless otherwise Unheated by signal after the number of word Blue" (Day Letter)"N. L." (Night Letter) or Nile" (Night Telegram) STANDARD TIME INDICATED ON THIS MESSAGE .53 WD OX 11 FM 83 NL COUNT 4 QUESTION MARKS 4 EXTRA AN SIG WD NEW YORK OCT 30 BENJAMIN STRONG 11115 NASSAU ST 1923 Ili :1 NEWYORK NY MANY LEADERS OF THOUGHT IN AMERICA AND ABROAD HAVE EXPRESSED OPINIONS ON WORLD DEVELOPMENTS DURING THE FIVE YEARS SINCE PEACE WAS DECLARED FOR PUBLICATION IN THE WORLD'S SYMPOSIUM NOVEMBER ELEVEN, MAY WE NOT AGAIN ASK YOU TO TELEGRAPH COLLECT ANSWERS TO FOLLOWING QUESTIONS WITH COMMENT STOP ARE THE NATIONS IN CLOSER ACCORD ? ARE THEY COMING CLOSER ? WHATS THEIR GREATEST NEED ? HOW MAY IT BEST BE SECURED ? BECAUSE OF THE MANY REPLIES BREVITY WILL BE APPRECIATED, HERBERT BAYARD SWOPE, EXECUTIVE EDITOR NEWYORK WORLD nmn N 17, 2/1-vto FIFTEEN NASSAU STREET NEW Yo October 29, 1923 Editor, New York World, Pulitzer Building, New York City. Dear Sir: It is my sincere belief that conditions economic and industrial in Europe and in other countries since the close of the War have been in general persistently exaggerated or misrepresented and have been, broadly speaking, returning much more nearly to their normal paths than anyone would imagine from the overdrawn and sometimes hysterical accounts which have been printed regarding them. Even countries like Germany, Poland, Austria and others, which have been very deeply disturbed by indulgence in wholesale inflation (I can give it no other term) have suffered far less than some of our economic theorists would have us believe. The dislocations due to the arbitrary chopping up of natural economic units, to satisfy the vanities of "national" or "racial" egos have probably affected European life more seriously than anything else, but even here the adjustment has been steady and considerable. The rapidity with which a country may recover from the orgies of inflation seem vividly illustrated in the case of Austria, which, in the face of enormous difficulties, appears to be making steady and solid I have sometimes wondered if the endless embroglios which progress. seem the stock in trade of European politics might not be a natural means of effervescence,or sublimation of some sort, of popular and even domestic irritations and animosities, and relatively harmless save where they coalesce with profound economic =Mots to precipitate such a conflagration as the World Via believe there is scarce any country in , rope a as not shown fairly steady industrial improvement since '" the Armistice, and that if we could lift the smoke screen engendered by political controversy we should be quite astonished at the general tranqui ty of the picture. It seems to me that it is the consuming egos f nationalists everywhere that most seriously threatens the peace of nations, and relatively little else. Very truly yours, 47'114-i4:ti kV:7 73 0/... ;;4114.-7( /,' 1444 y_ Zip 13..Llortil irecrWor/r/ December 28, 1925. HERBERT BAYARD SWOPE EXECUTIVE EDITOR ACKNOWLEDGED DEC ?01925 Dear Governor:- B.S. Because I have regard for your judgment, I am anxious to get from you an expression of opinion as to the workability and general value of the enclosed suggestion. It was written by B. M. Baruch after a discussion with myself and some of my associates on the paper, as to the needs of the present financial and economic As it deals so largely with subjects situation. on which you can speak with authority, from both an academic and an empiric standpoint, I am eager to learn the reaction the memorandum produces on I ask for my own guidance. Neither the you. memorandum nor your reply is intended for publicaI told Baruch I was going to send it to you, tion. and he agreed that your judgment would be valuable from the standpoint of your impartiality and knowledge. I hope you have a very Happy New Year. With sincere regard Faithfully, Honorable Benjamin Strong, Federal Reserve Bank,New York City. v3,0 When you send your reply please be good enough to return the memorandum. P.S. 71F NeP5z) , n 6 0 .44 170RA7DUIT The United States is making settlements with our Allied debtors on the basis of their ability to pay. I myself am one of those who felt that we never should have asked the nations to pay all the indebtedness incurred in the prosecution of the war; that that part of the indebtedness incurred for military purposes should have been regarded as a contribution to the common cause. It is possible to find this out from the records of the Treasury Department, the War Industries Board, and the Allied nations. The net result of this would have been very little different from the result of what is being done now; only we have lost the opportunity of doing fine thing finely. Our policy having been decided otherwise, I believe we should accept the determination of President Coolidge and Secretary Yellon because they have certainly done what they, the responsible heads, have deemed wise and proper in the circumstances. "le have made these adjustments, or compromises, or less- ening Of the debts--in fact, a cancellation of a large part of the principal--for the purpose of restoring trade and commerce in the world. Our Allied debtors have come to us and said that their combined ability to pay amounts (depending upon what the 2rench settlement finally is) to between .;';230,000,000 and c250,000- -2- 000 a year. The same nations tell us, in discussing the German reparation, that Germany alone can pay ,625,000,000 a year, plus a certain amount measured by an index of pros-. perity. To the ordinary man the measure or manner of arriving at these two amounts, the Allies' ability to pas and Germany's ability to pay, seems to be quite different. One sat of figures must be "wrong, although they are made by the se4pe people. Evidently a different yardstick is being used, because sentiment has been debarred from the Only cold facts are supposed to be taken whole transaction. into consideration. I think, with trade and industry revived, that even the present debts would become comparatively and astonishingly small in proportion to the burden they are generally supposed to be. But of that avail will be the cancellation of a Dart of our debt, if our acceptance of inter-Allied indebtedness is based on facts, unless the whole economic circle is closed by placing the German reparation in a position there it cannot be merce and trade? a disturbing cause to American com- I say "cancellation of a part of our debt" 3 because an examination of the present cash value of the arrangements made with the various Governments will show, at 4 1/4;L interest, the following results: Estimated Present Values of Debts Due Under Funding Arrangements Expressed as Percentages of the Principal mounts due December 16. 1925. Country Percentage Relation of Present Values at 4-A/4;, to Principal Percentage Percentage Relation of Relation of Present Values Present Values at 6,,Z to at 7 1/2% to Principal Principal Belgium 54.1 38.1 Czechoslovakia 80.6 56.1 Great Britain 83.7 62.2 Italy 26.2 16.4 Poland 83.6 62.1 France (offer made by 45. 11.6 French) France (offer made by America) 70. If going rates of interest are used, they would have a much smaller value. So a large percentage has been cancelled however Are may dress up the phraseology of the transaction. To make possible the results which we desire to achieve by reestablishing the economic balance through an adjustment of. the -ennalls adt lo is *s.sv eWt cfiv ebiza aI..7rem adl z4nemebnzTvi leZnU anti z;tdetl lo BenisV tnoaol betsmileL erit lo sestaety!el as bes20-iqx:: uel olBataecale lo nolts105: eals.E.BVIneaut:i ot ts Isqloallq 1 .Z1 ledmegs(1. soh elpLig anstaso-le to noltulefi aeLlsV Idedolq °I 3 ta evEstneoqe': lO noftsle vslanoU aanIsV ot '4\11s Isqlon11 mvinleE s1Jisvolsodcez0 IseTD 8.11 bnsloci 7Mo) ennef6. a)sca (doileA len()) eomslci md ebm (soPlemA B evsd bivou, ILeri/ ,bey em ;teolelni ao belloonso need asff e8stsreoleci Kimal s ngtol /1 emlsv .15)11sme aura .abitosansql adt lo mnolooesIdg ad/ qv aeettb vso tym levowod avaios ot olfaeb w dc,idw atIvael edl eld.T.eacq egsm oT afl 'ao InemteuLL2 as dzoondl eonslsd k;iM011009 adt nnitrialideteeo-r .md 4 debts, there should be an adjustment of the German reparation somewhat on the mire scale as the Allies' debts were adjusted if the yardstick determining the Allies' ability to pay i s correct. The greatest difficulty international trade is meeting is the fluctuation in the media of exchange. England has just gone on the gold basis. The difficulties of the French are apparent to all; and so on through the list. So this plan is suggested.: that in offier to settle the whole problem -- not a S --t,Lpt/ Z.4 B. palliative, but as a curative -- (1) -Llt,R the German reparation4 should b fixed, at a determinate sum, arrived at on the oasis of the settlement of the Allied debts. This should. no t be done by the United States Government; it is a transaction for the governments themselves involved.. (2) The French must balance their budget and determine at what price they will stabilize the franc in gold. (3) The German reparation hav- ing been definitely fixed. by the same yardstick that has determined the Allied indebtedness, there should be an international issue, in gold. dollars, pounds, francs at the determined stabilized rate, marks, lira, pesetas, all forms of exchange of a ;32,000,0-)0,_ 000 series A German reparation loan to be secured by sufficient railroad and..industrial bonds to make the loan good beyond peradventure. Under the Dawes Plan, Germany has created such mortgages, which rank ahead of those which are now being issued in increasing quantities by American bankers. The balance of the reparation bonds WO uld De held. under an arrangement among the 1 del+ bI - ei LtflOF% Ms a i - 191- 9IL ±Ja s 7c Joc d )*Terf3 els a OfialI .;zioz.rfoxe izo trrlol I. , 1c1 r ra3cd L.. od E 91.a. a . Of various countries interested and to whom the securities would be coming. If the loans issued by American bankers are good, this loan would be much better; if this loan should not be good, the loans handled by American bankers are not good. From the proceeds of this loan there would be allotted to the various countries their percentage as they may determine or as has been determined under the bpa Agreement. Under this France would get something over a billion dollars, and the balance would be divided among England and the other countries. This would immeuiately and definitely stabilize the pound and the franc. The French havin balanced their budget and determined upon a gold value for the franc, there would be no doubt in the mind of any one, including the French investors who are now so panic-stricken, that with a credit of over a billion dollars behind them, the franc would be stabilized. Gold money would come out of hiding and international trade would be stimulated because here would be a final determination of three things; Allied debts, (2) the German reparation, (1) the (3) the stabilization of the various media of exchange. This would be a great economic step to provide for the continuance of peaceful pursuits, which has its political parallel in the Locarno Jompaot. -4 , od biwow aaiJilLn0 Vr ;ay 4A,,,ons belaele" 400- aidJ ,boo s 014 alagntd,LlselasmA teu,3ai anaul 9di 1: 963 ,booa ad :%11 Lluoria naol alA3 21 .boo amoo ;10:119d noum,sd Lluow nAol Jon ola 3119inad asoilemA 14d 1.91bnad O 3 LeJJoila od biuow elehJ' 11401 aid,/ as lo onimle3on 145m conJ i OluowosPiaif1J aebred I() al-An:4.01g edJ 8Aa.111.4016c1 7isd/ eiiJLwo awoilav a46 90J 19Lnu bentmle/9b used aad bobivib 96 biLow eon:Iad onJ Una ,a/Bliob Loillid a leyo anidJsmoa ioa faaa oJai.Lemmi biuow lidT aniyad rionotil .onall 94/ bni t3n3T1 ons lol aulay Oloa od/ .aell/nuon TE,d10 0L1.1 LITZ bukui nomn rso ci3 ezilidaJa bsoulad noau beiliml93ob Lula seabud ..,71a 10 bnim od4 Li Jduob or ad Lluow 919d/ law) lu liboun3 dJiw IadJ tno;ininin134 03 W0ii :314 CifiW 310.1297111 0110M Lick .bomilida.ta 90 billow 0171311 edJ ,m9AJ bnidod 1)0j81;.,MiJ2 9d 1,:uow oUalJ 1anoi33L1e3.41 00 (1) ;?.aLidisirf lo noi/aLimIo/eb 10 donaniiida/a 9dS L.LLiii to 0=0 ,LiWOW ed biwow alsd eavan noiJ.epclo7 narwra ea4. (4) ,aldal, ielliA , ..98naanxe lo albem WOilAV 911/ -non mai lol sbiyolq o/ cieJe oLmozoce Jaela 4 00 iamow aidT 9ii ut lellalaq laniJiio4 aJi azd Anidw paJivalug lulanzeq to eonaunii unlsood 171:14"1 December 50, 1925. My eear Swope; km replying et once end possibly rather hestily to your note of the twenty-eighth, as I em obliged to go oet of town today end there would be considerable delay. You will, of couree, anderetend what I am writing to be purely personal views and sent to you quite privetely. This is e subject on which I have never Wide any etetement for quotation. It eeeme to me the debts of foreign governments to our government must be considered in three specte: (1) Morel, (2) Political, end (3) Economic. As to the morel questions involved, the debts were honestly incurred with every expectation that they would be considered as debts and be repaid. But the developments subsequent to our becoming e belligerent, that is, the prolongation of the war and the immense destruction which it brought and the difficulty which we encountered in rendering prompt and effective aid in t military way, have elweys led me to believe that upon strictly moral grounds there Was justification for at least a generous policy in eettling the debts which, on the one hand, would preserve the principle of the sanctity of these international debts, but on the other hand would recognize some moral obligation to be lenient to a debtor who is in great difficulty. This point of view; in regard to the debts, is ilIuatrated by the feet that the allied nations of Europe who were engeged against Germany are all of them recognizing their domestic debts, and not attempting by one or another method to avoid payment or extinguish them, and consequently &Te laboring under tremendous burdens of taxation; whereas the enemy countries wiped out their debts by inflation ' and have relieved themselves of e large pert of the debt burdens, ao far as the government is concerned. le now appear to be in the position of adding fresh burdens to some of our allies, at the eeme time that we have made e contribution privetely, to be sure - but nevertheless e real contribution to enable Uermeny to work out her debt to the allied governments. Our efforts, unfortunately, seem to be directed more energetically towards making our own partners in the war pay what they owe, rather than to make the defeated enemy pay, end that feature of the present situation I have never liked. The second aspect of the question - the political one - is the most difficult. Between do end 70 percent. of the people living in this country are of recent foreign origin. They or their parents have come here to escape all sorts of things:: which troubled them in other countries, such as compulsory military service, heavy taxation, one or another form of what they regarded as rereecution - and they considered this a free country wherein by labor and good wages they could enjoy prosperity and comfort. Instinctively they were freeing themselves from a political system in Europe which they dictrueted. They learned that we taught the principle of not interfering with i2 Mr. Herbert B. hope 12.30.25 Europeen effeirs and they liked it. I think they appreciated that the foreign policy of thie country 5t8 deeigned to keep U8 out of thia very wer. It was the commonest eort of doctrine taught in schools 30 or 40 years. ego. Notwithstanding this; fundamental principle of our political life, iwe were drawn into the war; we abandoned our isolation; we aent 2 million people to Europe, aria spent $35 billion. When peace Vitti mede, I think the people of the oauntry felt that et greet eacrifice of our independence, we had made a contribution to e great cauee, but that now ee were entitled to return to our position of independence, Isolation, comfort and proaperity; that those who owed us money should pay. I think moet people west of the Alleghenies regerded our war enfort as eomething a little extraordinary, ad that IL involved gleat eecrificee which we were neither politically nor morally committed to make. It is therefore ealey to explain the feelinn in the west that our debtors should pay 1118 ehat they owe. nnd politically, I have no doubt that these settlements are necessary even though they seam difficult, and that once made, we may look forward at some time in the future to e reedjustment of the whole account when the political atmosphere is more favorable to doing so. It is benter to have them eettled on some basis then to have them remain uneettled and have etttle conditions indefinitely deferred. If.they have to be resettled, let us later face that question courageouely end take the matter up again. Pa to the economic conditions involved in the debt settlements, 1 consider Germany he becoee obligated to pay 025 million a yeer in . standard year, teat ie 1P28, and to transfer co much of that to her creditors through the transfer organization as is capable of being transferred without breeking down the German economy. If the eccumuletion of untreneferroble runds reaches 5 billion marks, then psyments,are to be suspended until transfers cen he effected. On the other hand, the debts oting to our governsent by the allied nations, when funcea, will probably Wens mane by our private involve payments of 250 to 300 million dollars a. year. citieene to foreign noverrmente, largely for reconstruction purposes since the Armietice, new or ehortly *ill require payments annually approaching $250 million, and may even reach $500 million or more ithin the course of a. year or two. no that some years hence, *ben the maximum payments on the allied debts to our goverement are reached, the nmount eLicn ae erc to collect from the rest of the eorld will just about equal what 'aeimenn Is obligated to pay, then be can pay, under the Paves Plan. them en-out as follows: But there is this vest eifference between the two sets of obligations Germany will not pay if transfers cannot be eftected. I eometimes doubt whether for e long period Germany can be capable of paying more then, say 400 million a. year, or 300 million a year at the outside, and no default sill occur if tranenere in excess, of that aunt ceenot be effected. The obligetions incorren by the foreign novernments end borrowers to our government and to our citizens, nowever, are axed obligations. No method is provided for their reduction or suspension in case Germanyte payments are not equal to meeting them. These pnymente doubtless must be made in pert by a continuance of our policy of lending abroad. If developments in our finance mete it imposeible for us to continue that policy, the test of the world's, capacity to continue to pay us will again occur. No one chn say whet the ooneequencee will be. The world has had no experience in making payments of this magnitude. Tte greet war debts of the European nations, with the exception of the French indemnity to Germany, have been doneatic debts, and even those incurred by the Napoleonic wars teve not been repaid as yet. The payment which Franee eade to Germany is atilt indirectly forming part of the domestic debt of France, and the payment which France actually did make wss largely These payments must be made not out or the grows proceeds of the made by borrowings. #3 Mr. Herbert B. Jenne 12.50.25 sale of goode, but out of net proceede or profits. They are a charge on the profit& of bunineee, and not on the total selee, and I should imagine that eonetime within five or ten years of the present dete, a situation ie likely to eriee where the eubject will require review, not tea the result of any particular agitation, but ee the reeult of some economic pressure which will force a review. Thie opinion ie, of course, largely epeculetive and etAa be based neither upon calculation nor experience. The nneerlying economic problem, huwever, is much more imnortant than tne mere payment of these debte. A condition of contentment in the woric, which meens seciel titre. noliticel etebility, can only be eetebliehed and eainteined if etenderne of living ere on a supportable beeis and are improved over the present basis in rainy pErts of the world. The enormous:sly heavy t&A66 now being paid in Europe are bound to effect etendarde of living. If they ere continued at a low level, the world's trade will be effected. There will be recurrent periods of unemployment ad discontent. I would rather eee moderation in debt settlement:en full employnent, noon. bueineee and contentment, than a stern policy of ,:lebt collection with diecontent, idienene and enhappinees. In other. worde, it would be better for, sty, en Americon fermer to eave 0.00 more income and pay n5 or n10 a year more taxes, than it would be to have hie tees reduced by collecting theee debts urn; then be unable. to merke hie surplus crops ebroad. The above reflections are not directly ederreeeed to Mr. Beruchte memorandum which eeearti to me cane for coneent beyond the ebove on only one point, nemely, bis scheme for e loen of 2 billion dollars. In the present situation, l thine that would be a mistake. The French doaestic debt is 500 billion francs. The French foreign eebt cannot be stated beceuse it has not yet been funded. Cell it 100 billion revues more or less. If Germany ehould raise E loan of 2 billion dollars by the plan propoeen, France would get 1 billion dollars eey eoughly, 25 or 60 billion 1're:rice. It would effect a reduction of SO amll E percentage, thet the French Jobt problem rould not be settled beyond at postponement of the day of reckoning in France wnen their whole debt problen, domeetic eno noreign, must be deelt with. On tie other hand, an enouity fro w Germeny of 100 or 150 million dollars a year, strikeo me es affording greeter relief to rrnuce, keading an aenuetmant of croneetic finance, than eould a round--cum pnyment. In a general nay, it strikes ne that the time is not yet ripe for auch e proposal. If tne trench finances could be reorganized, ad teen e enallar loen of this nenarel cherecter be erreened a. na aid to a echene for the etabilizatioe of the franc, eith continuance of ennuitiee from Germany at poeeibly a lower rote than that proposed in the Dewee Plan, i eeeeld toinx the outlook for Prance vould be Letter than it would be If such s capital operation is proposed. You kriwv there are bOAC eituetione ehien can be cured by sone form of normal treetnene eithout e crisis, and othereeehich cannot be cered or dealt with except ns the reedit of nujor crieie. It may be thet Frunce would be better off if the crisis arose proaptln teen if it is indefinitely postponed, as night be the case under .Jome such plan as Mr. Baruch proposed. Novi, .the4e are very perplexity and complicated natters on which volumes can ee eatten, tied whieh eke no more thnn touched. upon in e most epeculative way by ne. above, but it will give you z, general notion of how it all strikes me, and this I send for win.t, it is worth. The imeediete danger in thie debt matter is that Conereso will fail to ratify- the funding agreements new made. Congreee will teats considerable re- eponeibility if the debt question is generally left open wAth the added poetsibilitiee or dinorgeeiention reeulting erom that, in preference to settling the matter now hen the opportunity is here, even though oowe difference of view may exist as eo the per 5,4 ' Mr. Herbert B. 3wope 1E-31.25 tioular terms of one or zother eettlement. 1 have been amazed by the number of people from all parte oV the country who tell me thet they want to eeo the debts settled end are not particular 8.8 to bhe terms so long as a settlement is retched. With beet regarde end wishing you also very happy New Tear, I em, Sincerely yours, 11.. Herbert Bayard Swope, Executive Editor, The 1Porld, Nvo Tort City. \/) / I /I& ST e been oblieed to dictste just fore leaving, for liaehington, end will. .:5.k yithi.f. i\r., gie ett. to sign it .17-or me. Ette. )41-/.v4r4cL tr-73OFFICERS .RINCETON UNIVERS ITV PRESS COUNCIL JRGE A. ARMOUR ROBERT BRIDGES GEORGE W. BURLEIGH C. WHITNEY DARROW PARKER D. HANDY JOHN G. HISSER CLARENCE B. MITCHELL CHARLES SCRIBNER, PRESIDENT M. TAYLOR PYRE ARCHIBALD D. RUSSELL ARTHUR H. SCRiBNER CHARLES SCRIBNER CHARLES SCRIBNER, JR. AUGUSTUS TROWBRIDGE ANDREW F. WEST M. TAYLOR PYNE, VICE-PRESIDENT CLARENCE B. MITCHELL, TREASURER C. WHITNEY DARROW, SECRETARY PAUL B. TOMLINSON, MANAGER Up. .;f t JUN 8 1918 JUN1 Princeton, N. J., June 17, 1918. Dear Sir: Herewith are copy and proof of the article you so kindly contributed to Mr. E. W. Kemmerer's book, "A/B.C. of the Federal Reserve." ismomwereporoweeseiagoono....65...... Trusting you will find it in satisfactory shape, we are Yours irery truly, PRINCETON UNIVERSMY PRESS. Benjamin Strong, T/B Governor of the Federal Reserve Bank of N.Y. 15 Nassau St., N. Y. City. X OFFICERS PRINCETON UNIVERSITY PRESS COUNCIL CHARLES SCRIBNER, PRESIDENT M. TAYLOR PYRE ARCHIBALD D. RUSSELL ARTHUR H. SCRIBNER C. A,ITNEY DARROW CHARLES SCRIBNER PARKER 0. HANDY CHARLES SCRIBNER, JR. JOHN G. HIBBEN CLARENCE B. MITCHELL AUGUSTUS TROWBRIDGE ANDREW F. WEST DAM EATON GEORGE C. WINTRINGER ROE A. ARMOUR VT BRIDGES M. TAYLOR PYRE, VICE-PRESIDENT CLARENCE B. MITCHELL, TREASURER C. WHITNEY DARROW, SECRETARY -- PAUL G. TOMLINSON, MANAGER Princeto New Jersey October 7, 1318 00 I Dear Mr. Strong- We are mailing you by parcel poet two copies of "The A B C of The Federal Restrve System". One of these is for your own use, and I understand from Professor Kemmerer that you are desirous of forwarding a copy to the governor of the Eank of England, and we are sending the second copy for this purpose. Yours very truly, Manager. Mr. Benjamin Strong, Jr., Federal Resefve Bank of New York, New York City T-F October 14, 1918. Paul fl. Tomlinson, Esq., Manager, Princeton University Press, Princeton,. fr. J. elr On October 7th you wrote to Mr. Strong advising that you ,:vere forwarding by parcel post two copies of "The A B C of the Federal Reaerve System. copies ;lave not been received, As these am writing to ask if they have been mailed, and on what date, Yours very truly, Secretary to Yr. Strong. -.TON UNIVERSITY PRESS COUNCIL R. -0.10UR DES OFFICERS M. TAYLOR PYRE ARCHIBALD D. RUSSELL ARTHUR H. SCRIBNER CHARLES SCRIBNER, PRESIDENT . PRINCETON M. TAYLOR PYRE, VICE-PRESIDENT UNIVERSITY PRESS C. WHITNEY DARROW PARKER D. HANDY CHARLES SCRIEINBR JOHN O. HIDDEN CHARLES SCRIBNER, JR. CLARENCE B. MITCHELL AUGUSTUS TROWBRIDGE DAVID PATON ANDREW F. WEST GEORGE C. WINTRINGER CLARENCE B. MITCHELL, TREASURER C. WHITNEY DARROW, SECRETARY PAUL G. TOMLINSON, MANAGER Princeton, V. J., October 17, 1918 Mr. George Beyer, c/o Mr. Benjamin Strcng, Federal Reserve Bank, New York City Dear Sir- Replying to yours of t e 14th, we locked up the order for sending two copies of"A B to Mr. Strong, and find tha been shipped. of the Federal Reserve System" through some error these had not We sent them out yesterday however, and trust that Mr. Strong will receive them promptly. Yours very truly, PRINCETON UNIVERSITY PRESS FC -TON UNIVERSITY PRESS COUNCIL TMOUR GES C. WHITNEY BARROW PARKER D. HANDY JOHN G. HIDDEN CLARENCE B. MITCHELL DAVID PATON OFFICERS M. TAYLOR PYNE ARCHIBALD D. RUSSELL ARTHUR H. SCRIBNER CHARLES SCRIBNER, PRESIDENT CHARLES SCRIBNER, JR. AUGUSTUS TROWBRIDGE ANDREW F. WEST GEORGE C. WINTRINGER PRINCETON M. TAYLOR PYRE, VICE-PRESIDENT UNIVERSITY PRESS . CHARLES SCRIBN. CLARENCE B. MITCHELL, TREASURER C. WHITNEY DARROW, SECRETARY PAUL G. TOMLINSON, MANAGER Princeton, N. J., October 17, 1918 Mr. George Beyer, c/o Mr. Benjamin Strong, Federal Reserve Bank, New Ycrk City Dear Sir- Replying to yours of t e 14th, we locksd up the order for sending two copies of"A B to Mr. Strong, and find tha been shipped. of the Federal Reserve System" through some error these had not We sent them out yesterday however, and trust that Mr. Strong will receive them promptly. Yours very truly, PRINCETON UNIVERSITY PRESS FC Per Ootchor 18, 1918 Yy de,..r Mr. Tonlinson: The two copies of "The A B C of the Federal Rnserve System" were reeeived today for which thank you. Xheve also acknoTledged their receipt to Professor Kemmerer. Vory truly yours, Mr. Paul G. Tomlinoon, Prirretop_Univt::; ?reca, Princeton, N. 3. , . y ,, FT,,,_ --7701A, July 14, 1:325. Deur Wasson: ailbAk til you vely wuca for your fraak note .A juii 10. am very glhe inueoo to knot, the newspaper reaction on mattOre of this sort &Lid Iba ourt. the Governor will be also. 0 taat t.G.c,vsihor dC 1,114,L u Lurck:. . The Pict fs .thout 0,y COAIWcht arising, th5t he felt itm...-eht, be poscible to do so still. kLow You Ilat he dilikis exceeeingly private publicity hnd would prefer to hvole it, but I ,iuite agiee with you, 'and the events show, that I am going to 1,,0 on your roction to him hope that you give it to him ih perL hor, a returno. Sinctry youre, LUILGiZL. ,:sietant Feaerhl LLeserve Mr. L. G. fiaLegn, Ti' Nzi4 York Tribune, 20 Vesey Etreet, Ne.; York.