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(handwritten letter)

The Manor, Notgrove, Gloucestershire

15/1/25

oured Governor & Best of Hosts
stay in New York was full of interest & I owed it to you.

A good deal of the money tUk was Dutch to me but I saw 2 devoted men one of USA
one of England giving themselves without reserve to brinE the world a great boon &
that cooperation way I assure you a very heartening sight.
So whether the change comes now - or soon- or late more power to you & take care
of yourself & come to England in the summer to see that Master Monty does the same.
Thanks again to you - & to Phil - ever so much from your very appreciative guest




Alan G. Anderson

ilnit of 6itgland,
3Tontion,

E.c. 2

28th July, 1925.

My dear Ur.B.S.Governor,

I am glad to hear from your letter of the

24th July that, in spite of hard work, heat, dust and depressing
people, you all survive and still hope to have a reasonable
holiday.

I s e your letter, which reached me this morning,

was written a day before Monty's letter which reached me
yesterday and which makes us think that he may perhaps be back
at his desk to-morrow.

If it is necessary either for you or for us
to move the rate imaediately, I agree that probably it would be

worth while for him to pay a flying visit here, but apart from
this one critical decision we can hold the fort alright without

him unless the coal strike starts some political squalls which
the chief wizard will be needed to calm.

I will send him a

daily wire about the coal strike and I do not suppose he will
be ever further away than one night's journey.
Dr.Stewart arrived last week and spent
yesterday with us here.

He was quite tired out by Berlin: at

least he asserts that the headache from which he was suffering
had nothing to do with the German beer and, as he is our guest,

we have to give him the benefit of the doubt.


http://fraser.stlouisfed.org/
Benjamin Strong,
Federal Reserve Bank of St. Louis

Yours

Esq.

Biarritz, France,
August 1, 1925.

My clear Sir Alan:

Since you wrote me on the twenty-oil:nth, Monty
has been in Lonucn and you and he have exchanged all the newe,
except that included in the enclosed cable which I am sending
to rew York today.
I have also sent a copy of it to Stewart.
It 530'13 to settle the c;uestion sc far as can be done by thin
triangular organization of ours.

Monty reached Paris night before last after a rather
tirinc, trip, but in good spirits. And we had a very comfortable
trip down yesterday.
I really think he is mu61 better.
Ho is
resting today and tomorrow, and then we shall play a bit.
I am
glad to say that with the Morrows and Leffingwelle here we shall not
lac': diverting company. And then Mr. and Mrs. Gilbert arrive next
week.
It seems mysterious that m7 colleague Stewart dof not
;s
stand ne racket of a trip like this em well as/ do.
It is very
suspicious.
Tou might warn him that Paris will probably reveal
such to me, and I
expect him to turn up there in condition
fit for anything.
With b st regards,
Yours von.; sincerely,

Pr Alan G. Anderson,
arputy Governor, Bank of Tngland,
tendon, R. C. 2,
England.




eff thvianA
Littrint, E.0 . 2

25th September, 1925.

Dear 7r.Governor,

I have received your letter of the 6th
instant enclosing a package addressed to ::r.Parer
Gilbert, which has been placed in two plain sealed
envelopes and sent to him through the Foreign Office
bag.

I hope that, by this means, it will reach him

without being tampered with and without its origin
being disclosed.

reedless to say I an always glad to be
able to assist you in this way.
With kind regards, believe me,
Yours sincerely,

Benjamin Strong. Esq.




November 18,

My dear Sir Alan:

I am enclosing with this A parcel containing bOMO matters
that I 03M anxioua to have conveyed to Honorkble

Park,er Gilbert

at P53 Luisenatresse, Carlin.
I

anxious that it should be transmitted in su(th a way

t

that there ie no rick of its being tampered vita in the mail.

Can

you arrange by come convenient method to have it tient to him, or

reenclosd and mailed in url envelope hict, will not disclose
its origin.

I

NTI sorry to trouble you with thi6, but the matter le

rather important.

With cordial regarde, believe mc,
Sincerely yours,

Sir Alan i'Aidereoh,

Bank of England,
London, Fnc,.ls
Enc.

BC.LE













CONFIDEliTIAL.




December 7, 1925.

CONFID ENTIAL

Deer Sir Alan:

Your latter of November 27 expreesee erectly the view that I nave held
QQ

in regard to the whole Belgian situation.

All along

have

rtther dieposed

to accept the views of youreelf awl thoee who are so much mole familiar with the
immediete coedit -tone then we can be at this dieteenee; to teat tu ec

extent I have

felt out of eympathy with the rether buster() ettitude which some of my friends in
Morgen's teoumed in regard -tee tile Belgian budget.

I 6o think, end have right along felt, that there were evieencee of too
complaisant an attitude in tegard ,o the hudgei in Eelgium for the lest two or three
yeere, and Le I ccbled you, I have ale° felt that the policy of the Etnk red not

been eufficiently otern to edequately supplement the attempts to ceg the exchange.

In other words, the two e4;tetenAng afficultioe of my position were
inability to :rawer criticieme of the huflget becsueo of lack of information, and in-

ability flea LAD Five eomplete arrovel of the policy of the Netionel Bank where it
enowed that their portfolio had increeeed 3GC million frence, otfsettin,e ty two-thirds

aalee of 900 million trance of their enlutt.
I am hoping today to have a talk eith Mr. Morgan pr rsonelly about the
eiteetion,

t

d from not on I am planning to keep in touch with the progrote they make

towards a better understanding, and I hope a more sympathetic undetetanding, of the
Belgian budget situation.

The 6overnor will be here on the 22d, enc I believe that hie visit will be

most helpful


in carrying out the larger program.

Ur Alan G. Anderson

it

12.7.25

I ass ao glad to have your letter, I:8 it con:1=0d such t.hich I had sur-

sad, but which did not reach me so directly and completely.
With best regards, believe me,
&incerely yours,

Lir Alan G. Anduruon,
Deputy iovernor, Rant of England,
London, Lngland.




CONFIDE:TTIAL.

Yank of thitIlin0
3Emtbint,E.C.

2

10th December, 1925.

Dear :7r.Governor,

Very many thanks for your letter of
the 28th ultimo with its interesting
picture of

the Belgian position as it appeared to you at
that date.
As this business is, I hope,
comfortably settled for the time being, and as a
most competent missionary visits you from here

next week, who can explain anything that
remains
obscure, I will not do more than
acknowledge your
letter.

With kind regards, believe me,

Yours siLcerely,

Benjamin Strong. Esq.






CONFIDENliAI.

Benjamin Strong, Esq.

Page 2.

22nd December, 1925.

expensive to borrow on these foreign currencies.
must come to

is that, in order to

So that what it

improve the statement of the

National Bank, they will be forced to incur a considerable expense
and in a roundabout way to indulge either in inflation or in a
gamble in foreign Exchange - perhaps necessary, but not attractive.
And from whatever angle one looks at the problem, the answer seems
to be the same - that their one hope of success is to keep their
market so tight that they keep down their prices and gradually
force their own nationals to bring back the reserves which have
taken refuge in foreign currencies.
Vie debated to-day whether we should wire in

any detail to the Belgians, but the general opinion was that they
understood the whole situation so thoroughly that it was unnecessary to say anything more until we had your message to-morrow or
the next day.
Believe me,

Yours sincerely,

AW-c

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Benjamin Strong, Esq.




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CONFIDENTIAL.

Cablegram sent in code to :KR. 8111030, MaRAL RE3RRTE BANF OP JEW YORX,
IIMW YORE.
Despatched :

7010

(time) L:on. 28th Deo.19Z.b.

(date)

(7496) 7/24 -3000

pe.

Confidential for Governor.

69.

Following for lorman:
1.

Met to-day Tan 7eeland ter

ulen

an

London

Bankers.
S.

Your 60 paragraph 4 - Yes this was one cause of loss of
valuta.

3.

Your 64 paragraph 3 - Do not cut your visit short but we
agree that distance probably accounts for the divergent
views and it would be desirable if a !'organ uartner ooald
accompany you. to gurope in the near future.

4.

Vow :time position is practioally as envisaged by Uorgans'
2416.

Temporary ore Its have been enlarged and Belgians

have Leen enabled to go ahead at their on risk.

They are

well satisfied with th,? results up to date.
b.

aaving weighed the views and advice of all their friande
Belgians still prefer the course they proposed but in view
of apprehensions expressed they hope to renew their
floating debt without promises to repay valuta at all
events until after disoussion on your return.

6.



Of floating Ubt of say Yos.15,8") ,010,0X) two-thirds or

Yos.3,70) ),Y,I)J3 are being regularly r Hewed by small

investors 708.1,200,0009000 by large investors without
special conoessions.

Thus :08.4,90)000,0)0 have been

renewed nornu.11y from day to day both before and since

rate of interest was increased.

Further Fos.7/10:10,000

have been renewed with special privilege of re-discount
and of these last some Fos.3509000.000 to Fce.400,000,0:D
have been discounted with National Bank.

There remain

some Fos.20%-r0,000 which have been financed by short
2reasury Dert'ficates making in all Fos.6,8T),000,000.
7.

7hile Bank Bate is 7i the open Market rate is about 8.e,




because National Bank has restricted creztit.

CONFIDENTIAL.

anit of 6itglanti,

Sontion,

E.C. 2.

29th December, 192E.
Dear I:r.Governor,

As the movements of my Governor appear to be a
little uncertain, I confirm to

you confidential cables exchanged

with him, No.67 of the 24th and No.69 of the 28th instant, as
per copies attached.
I hope that our

No.69 was clear to you:

we

purposely avoided a good deal of detail which might have been
interesting as we did not want to promote further discussion by
cable.

-;;e understood my Governor's message to indicate that

enough hat_ been said for the moment and that the next move should

be a personal visit to Europe by one of the American Bankers,
and with this we agreed.

At the moment the Belgians are pleased

with their situation and confident of the future.
continue:

Long may this

It is obvious, however, that without wishing to call

our truant home before his time,

it would be convenient that

this American visit should not be long deferred.
In our discussion yesterday,

I.I.

Van Zeeland

made clear to us an important detail about the use of these
proposed foreign credits concerning which I am afraid we have
been rather vague.

The Belgians, finding that owing to the

discount on forward Exchange foreign Bankers who has previously
subscribed for their Treasury Bills declined to renew, proposed



to




CONFIDENTIAL.

CONFIDENTIAL,

Page 3.



Benjamin Strong, Esq.

29th Dece'lber, 1925.







January e,

CONFIDENTIAL

Deer

Alant

Your letter of December FP arrived rturing tte time thet the Governor
and I wer.-: visiting our friends in k-.shington, end this is my 7'irat opiortunity to
send you E. reply.

My cables have poe,dhly not made clear the points which impressed

me

shout the proposal of the Finance )4inieter to place stable currency Treikeury bill.
abroad.

The tranGection, ea I understand it, would involve Gelling such bills in
England, Ho liend, :..witzerland, end possibly other countries, trd receiving peywent

in the currencies of those countries.

This valuth would thereupon Le cold LI, the

Tree eviy to the Nrticnr1 Ptnic of Belgium it. .xchenee for Belgian francs, tt e i mune

being used to reps), maturing tills flof-ted ir. Belgium, but largely held by foreigners.
The National Bank would retain the valutr purchesed from the Tra!,sury er,d invutt it
abroad.

The clangers strike !re e.e being principally three.

Tte first is ttt:t the

Belgians, becoviey. etwere of the opportunity to lend mor,sy to their on Goietntsot end

get repsyment in steble currencies, might be tempted to seta ?xistinv lloldints of
frenc Treasury bills, end then apply to the Pl9tior:1 Bank for valuta (which they would
pay for with their fr)..nce) anti use the valuta to purah,:se

in stable currencies.

Of course, so Ion

f,

13;.1.12k

tIVA ',he vulute the Treeeury

would be able to meet the bills at maturity, i.nd the effect of sucAs t: trsnerction would
be simply to 'revolve' --z.he St!** e preeent holdings of foreign exchange.



I hav-; not

1.6.28

Sir Alen G. Anaereon

iplowed thie danger to trouble we very much.

In fact, I do not think it would

clOcelop in any large volume, ena protection would be afforded by the feet that the
Blink would lode none of its foreign belencee.

The second danger, hotever, is F more serioua one.

If a large part of

the floating debt of the Belgium Government were converted from e franc debt into a
stable curreney debt, and then ieter on tee wick:re of tee eteble currency bills decided that they would like to La Je them repaid, the Belgium Treasury would be obliged
to repuceeee tne valute from the Benk, auo if it ilk:e unable to eeli franc bills to
give it the meena for doing ao, it would be driven to direct. borrowings :Tom the

teak, - an alternative which could nut be teought of.
The elird podeibility ie that tire proceed of issuing franca to tee Government to buy

1:6.4.411Cej creaeae uy the deie of stable currency bills would

create an in.eletioe.

i3uL tele

isi6ely

natter of .evneeemune.

ehe bank rate

is high enough eau tneee is e careful rationing of credet, it is nerd to due hoc a
dangeroue enfAseion could occur, alteougn it is, see course, e poseibility.
All of tilia is belled upon the assumption that tee proceeas of bills sold

in foreign currency will be oerletiy degeegaeed by the Bank for the purpose of enabling
tee 1r-eel:eery to meet tnem at maturity ;I' the :1010ol'e demend payment.

The effect of the high bank rate and tight money seeme to be he ::ould be
anticipated.

nautain cables as teat to December 31 they nave repurchased and cave

on hand over N,000,000 of valeta after tekine care of the Goverment' es requirements
of foreign payaenta.

lei- is certainly encouraging.

The Governor and I are living in accordance with our habits, with which
you are familiar; but we eisa you and there 18 no one to fill the vacant place et the
dinner table.

I shall write you deperately in e dey or two In reply to your wile with




¢b

41! :hristmae

pit

ilia G. madcu6om

1.6.8

g;eetinge, which gives me the opportunity to epeculate t bit upon the

All,

future and some of our pereontl plans.
With oordihl greetings, believe 2e,
:sincerely yours,

Sir Alan G. Anderson,
Bank of gngland,
London, Lnglynd.

bS.LS




copy

FEDERAL RESERVE BANK
OF NEW YORK

COPY OR HATED WRITTEN LETTER ADDRESSED TO SIR ALAN G ANDERSON BY
BFNJ. STRONG; MAILED TO HIM UN JANUARY 11, 1926, AFTER HAVING
BEEN READ BY MR. MONTAGU NORMAN.

"PRIVATE

270 Park Avenue
January 10, 1926.

Dear Sir Alan:

This acknowledgment of your fine Christmas message is belated only
because I wished to make your cable the eicuse for a rather personal letter.
And here it is! - ament the future.

You must know that my own plans have been determined, and must be
hereafter, by a rather selfish consideration of my health, - as well as by a
wish to finish up my work.
So long as I am willing and able to carry on, my
colleagues wish me to do so, - and health alone does not yet impel me to
though it is always a sword and the thread is a bit frayed.
Finishing the work is partly internal and partly external. The
internal part, - building, organization, (and reorganization) personnel, etc.,
is completed in all particulars save a decision as to my successor. who is a
mythical person, - possibly already with us, probably not.
The external
part has much to do with you and the Bank.
We have had a fortunate and a
happy association.
Those are already the foundations of good understandings
and of accomplishment.
As an asset it is beyond appraisal. So I am speculating about what comes next and especially in view of your cable aria all that I
learn from Norman.
My own case is rather simple.
It means staying on until 1927, more
or less as events may determine and in the interval deciding upon a successor.
rOiith you I am clear that you must decide between a tradition and a person.
As
infants, we of the Federal Reserve Bank, have no tradition and may over value it.
But I verily believe that your old ways have great advantages if the old conditions
are to return, - but must be modified if we are about to establish new ways in
The gold standard permitted and facilitated,possibly necesCentral banking.
sitated rotat on and all that went with it,.
A new standard will require more
ontinuity and (if you please) a more technically trained management than the old
t
dition did.
Norman combines qualities and abilities which are singularly
ted to the period of indecision as to what the world has in store for us.
ad51
My
gueSlis that the period is nearly ended and that another year or two will see the
app o ch to normal monetary policies as we knew them before the war.
Therefore,
is it not worth while to attempt to save the tradition, and if so, how about the
pers n?
It may be that by March 1927 the need for any particular person, Norimian - will have passed.
If not, I fear a compromise.

A plan to continue him in the rather uncertain indefinite role of
;AivIeor or specialist seems likely to deprive him of authority but leave him with.,
great responsibility.
On the other hand, has the Bank the organizatlon, or can



1911

copy

FEDI:MA L RESERVE BANK

OF NEW YORK

14pit make one, capable of dealing with highly specialized problems still unsolved
(international) in case they persist and Norman should retire?

On the whole, my thoughts lean to a clear cut decision, - either save
the tradition or keep the person - the former if the sky is clear, - the latter
so long as the clouds are about.
The prognosis is for clear sky - but it may be
well to have the umbrella handy.
but this ignores my conviction that in any
case you need to strengthen the bank's staff and change your ways internally so as
to relieve the office of Governor of a part of his routine.
How that shall be
done is so much a matter of domestic housekeeping that I am without an opinion.
Partly by inference, I conclude that you have nearly reached a decision to have
a new Governor by 127.
If that is the case, a specialist who could work under
the Gcvernor and relieve him seems more logical than a new Governor over an old
one.
And the specialist would need training soon.
One thing I cannot over emphasize.
Nothing must be allowed to weaken
our now well established and almost sole tradition of cooperation.
My leaving will
not no so here - and that will be taken into account in selecting my successor.
with these quite inconclusive and possibly intrusive reflectionp, I
send you my prayers and good wishes for a sound and satisfactory conclusion by the
Bank, upon which much depends both with you, with us, and with much of the world.
I only venture to write so much because of your cable and because of my affections,
which are much involved.
4th all good wishes,
Faithfully yours,
(signed) BENJ. STRONG.

S. You may show this to your colleagues in your discretion.




CON itn,NTIAL

January 15, 19E8.

Dear :dr Alan:

Your letter of recemher 29 wee largely :Tswered by the ons 1 wrote
you on January 3, enu since then the chenges in the ealgian eituation
to be vary greet, 60 der

ppeer not

I can gather by eables which coma aLeut once a week

giving us the bsmkse position.

The two important developments ere in the valuta eccount, is which
tney advise me thet up to the eiEhth of Jenukry the bPnk bed seined over
4,9,G3C,000 /20d repaid 0,50C,006 on the first credit-

Yeeteie.v t

came

through to iforgen's, indiceting that they had lost eomewhat in the lest few days.
This leads le to aonder whether the year -end inflation due to windowdr:is:a:1g cnc other yeer-ene transactione mey not heve resulted in tome inflution,
arld whether the techine is working efrectively, so that the surplust,; of both

current recounts sad currency ere peomiAly mopped up efter the year-end need is
over.

bank rate, I ahoulc think the return to the bank would to oo

prompt as to prevent eny drain on the exchange, sopoclelly ee our reports of the
condition of the market for Belgien franca here, which hre been steadily etrong,

would indicate Lat, tine enuuld be little, if any, danger of loss.

I am awaiting

Hautainie next cable, therefore, with much intereet.

Your letter is very illuminating se to the position of the floating
debt.

But, as you say, the important thing is that a representative of the American

beakers should make a pereonal visit to Brussels t6 soon es poeeible.
to your Governor, nee now been arranged.




This, thanks

Mr. Leff ingwell le bailing with him on

Eir Alen G. inCerbon

the Majestic on ..15turdsty, end I heve r

1.15.26

promise from the Governor thet ht will go

to Brubeele while Leffingwell is there.

The importance of thie iF obvious, es

he will explain to you, and I em relighted thht he feels able end willing to do it.

Between them, end with such meetings es they noubtlebe will have with the others
who are interested, eome definite progrtm ehould result, ene when there it

9 defin-

ite program, uncerteinty will .ce elimintted; end when uncerteinty is slimincted,
setters should improve.

The three principal points to be covered &le, in my opinion end in order
of imeortence, the following:
1.

At whbt rat;; should the new franc be fined in terms of
gold?

2.

Vlatt is Belgium/e cepseity to make foreign payments?
In other woroa, how Duch is it ssfe for Belgium to
borrow ebroad?
how oecure is the post Lion Pe to the domestic floating
debt? Of what does it consist, eed now definit-Ay
can its renev.al 5nd ultimate funding be relied upon?

Of course, this 111 turns more cr lebb upon the budget, which I ebsume
will be cerefuily explored find better unclelstood than is posAble at this Cietance.

With these reflections I bend you my very best of gooc wishes for the
-;:kew leer.

By now you will hove received my letter of JeJlutry 10, which I hope

by no possibility hill be mieuuderatood.
.,ineerely yours,

Sir Alen G. Anderson,
Veputy Governor, Benk of England,
London, En6lhnd.




CONFIDENTIAL.
anh

S

of &gland,
1314104, RC. 2

29th January, 1926.

Dear 1:r. Governor,

Referring to your confidential cable, No.80,

of the 11th January, we puzzled over the meaning of this telegram
when it arrived but finally came to the conclusion that Governor
Norman would reach us shortly and would certainly be able to
explain it.

Unfortunately, we find that he also is 'ouzzled,and

we therefore write to enquire exactly what is the meaning and
purpose of "gold certificates withdrawn ... for London."
I have received your letters of the 15th and
10th January; the former though later in date out-distanced the
latter by many days.

The Governor is spending his time now with

Leffingwell over Belgium and

I have nothing to tell you about

this business except that the figures have proved rather difficult
to collect but are,

I hope, now very nearly complete.

I will answer your letter of the 10th later on,

but in the meantime I send you my thanks for writing to me so
fully and assure you that you certainly shall not be misunderstood.
Believe me,

Yours sincerely,

Benjamin Strong, Esq.



.aromPril

,(Copy of handwritten letter)

Bank of FnglEnd
11.2.1926

I, dear Strong.
I hope I may answer your letter of Jany loth. informally to a friend & not to
a "Governor" or even a "Mr.".
You & I seem to see the road rather differently - to the same end.

You say we must "choose between a tradition & a person". I dont want to choose they're both good & I want them both. Moreover this tradit iha ilaL77 a summary way
It cut off Charles I's head & lost George III
with people who dont keep it.
s ome promising colonies. Idont think its senile yet & if we upset it it will
upset us & Parliament will name the next Governor.
for the "person" - he is the man for the job -'the new & hard job - so it seems
pity to lose him or to let him kill himself. and why should we? Why should we
let our best razor blunt himself by s harpening pencils? Curiously enough it isn't
the work - the new & difficult work - that fags him.
As

The work for which he's needed this year next year & the year after doesn't involve
long hours & every day at the office. He could carry that -cork on for years without
violating tradition or getting s tale.
I should like him to drop the title as soon a: may be & all the daily tie: that go
with it: it doesn't handicap a partner in Morgans to have no title nor I believe
would M. find his counsel less regarded because he spoke as the untitled voice of
the Bank.
I have been slow in answering you not so much to think what to say as what to prune..
I dont think the choice is between the tradition & the person but between substance
& shadow - & the title is the shadow.

As I see it the domestic task with its title - its powers - its daily t iea & w orries
can & must be separated from the international teak which needs a permanent guardian
with technical & personal knowledge. If that guardian needs any title beyond his own
name it must not be one that violates tradition or involves him in daily routine.
I meant this to be short but it's grown for which I apologize.
I hope youve had a good rest x feel all the better for it.
Yours very truly
Alan G. Anderson
M. has read your letter
this




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CONFIDENTIAL.

Decode of cablegram from
17.:D2R,IL 7E3ERYE BAEZ OY NEW YORK, WICW YORK.
Despatched :

29th March 1926(date)

Received in C.C.O.: 1.10 a. m.

(time)

u'e. 30th March 1926(date)

(7489) 1/26 -15w

N 0.

41.




Confidential for Governor
my 40
1.

Neither Ryan nor Kelly can appear and we are certain
it would be unwie,, but they will supply needed data.

P.

I AM detained by some important hearings in 'Yashington
and will try to sail nJt later than ''Olympic
17th ,;pril.

3.

14 own appearance cannot be promised until we finally

kno* Treasury attitude on Zecretary's return and from
you whether hearings are public or not.
4.

Reply from .lexander and Chandler expected to-morrow.

8.

You realise the importance of Ilving loberts and
Strauss fully posted.

?ROI G.




CONFIDENTIAL.

Cablegram sent in code to :FEDERAL RESERVE BANK OF NEW YORT, NEW YORK.
Despatched:

2 .10.pm

(time)Tues.3eth ITaroh 1926.

(date)

(7496) 7/84 -3000

rerf.

Confidential for Governor.

Your 41 1.

In Governor's absence have communicated essentials to
Hilton Young.

2.




Paragraph 3 - hearings not public but see our Lo.66
paragraph 2.

CONFIDENTIAL.

Cablegram sent in code to :
FEDERAL RESERVE BANK OF NEW TORY, NEW YOR.

Despatched:1.40 p

mo

(iimfturs.lst April 19n6

(date)

(7496) 7/24-3000

No19.

Confidential for Governor.
Your 42 -

Mailing you to -de.y Addis, report oh evienoe given by

Governor and himself who submitted no written statoment.

Hilton Young regrets that statements by Blaokett and others
are confidential until Report published.




ANDERSON.

MrsStrong:

1.
Or

I have taken the liberty of

showing this to Dr. Burgess, and of giving

to him copies of the enclosure.







Page 2.

Benjamin Strong, Esq.

M.C.I. is

1st itpril, 1926.

having a week ofi and as he has

disappeared without leaving an address I hope he is having a real
holiday;

he certainly needed it.

Influenza and Belgium taken

concurrently pulled him down a good deal.
Believe ue,

Yours sincerely,

Benjamin Strong, Esq.




2







ff:;04/1 6 L',14.1474y
CONFIDENTWI,:miwLEDGED

CONFIDENTIAL

S

Page 2.

Benjamin Strong, Esq.

cheerful to tell :Tou.

trade does not improve;

29th July 1924.

We are all feeling rather depressed:

on all sides we are threatened with

labour disputes, and in order to avoid serious trouble wages
are constantly being raised, first in one trade, then in
another, without any guarantee of increased production.

All

this does not give us any help towards a reduction of our price
level, and we have a new Housing Rill which is likely to become

law;providing large subsidies from public money.

It will

certainly make houses more expensive, but it is very doubtful
whether it will rake them more plentiful.
housing is one of the most serious

This question of

that confronts us at home:

as long as it persists in its present acute form we have no
right to expect to be free from discontent and unrest and
Communist threats.

You will have seen that money here is in strong
denand, and rates have steadily risen during the last two or
three weeks:

a rise in Bank Rate is generally expected, but

people are now beginning to say that as it has not come yet,
it woit't come until the Autunn wten the Governor returns from
his holiday.

When Jove is away, his thunderbolt is not

+-seared.

But of course for the moment the centre of
interest is the Conference, and the great issues that depend
IIT'on it.




I have




CONFIDENTIAL

Ala

August 8, 1924.

CONFIDENTIAL

lity, dear Lubl-ock!

Your letter of July 29 has

Jet reached me.

I am glad heat you have

had opportunity for a visit with my associate, Mr. Jay.

le have been in

partnership in t!le organization and conduct of the business of this bank from
the inception of the Federal Reserve System.

You have now had opportunity to

judge for yourself' what a satisfactory partner he has been.

In regard to the question of our balance, please have no hesitation in
allowing the matter to await the Governor'e return.

Of course, I have a very keen appreciation of the difficulties with
which you ore confronted;

e. rather extraordinary combination which includes

rather poor trade, Suite a little unemployment, and at the ease time a series
of threatened strikes with wage increases as the price of their avoidance.

But

unless. I am mistaken, better days are coming.

De ca.bled you last night of the further reduction in our discount rate
to

per cent.

The cable was delayed in sending because inatead of holding, our

directors meeting on Wednesday morning, which is the usual time, the vacation
seaeon made it neoeseary for us to meet Thursday afternoon.

This change in our discount rate will require the Clearing House Committee,
which is the governing body of the Clearing House, to meet at once and review the
rates allowed upon balances.

If it should reeuit in a further reduction of

interest rates on hank ,ccounte and deposits generally in this city, we may see
some flow of funds out of New York.

taken to fix



But the Clearing House has not yet under-

the rates allowed on foreign balances, as your Clearing House does,

August 8, 1924

2

and it may be that the ohange in our rate will not be so promptly reflected in

40

the foreign exchange rata as aould Ca the case if it caused an automatic reduotica in interest rates alloaed on foreign accounts.
Cterling was very strong yesterday after the market closed, and there
have been intimations that immediately upon our announcement ceing made at 3:30,
there was quite a scramble to buy sterling.
The news of the Conference to --day ie rather more reaseuring h6 to the

outcome than some of my private advices have been recently=

In a general way,

it looks to me as though the condition of your money market and ours and

t.r.,e, now

possible solution of Continental difficulties may justify a renewal of our discuseione of the general buoject of tae gold ecandard.

I shall await a letter

from you or Norman on that subject with great interest.
Please remember me moat oordially to your associates, and wi.h kindest
re4ards to youreeif, believe me,
Yours sincerely,

Mr. Cecil Lubbock,
Bank of England,
London, England.




CONFIDENTIAL
4..0U

14~1

ACh'NOWl.HrIF.i
SEP 9

-

ant of Ongland,
Sondon,

EC. 2

25th August, 1924.

My dear Strong,

Many thanks for your letter of the 8th August.

The Conference being over, the Governor left London for a
holiday at the beginning of last week, and he may not be back much
before the end of September.

He was much dissatisfied with the

conclusions reached on some of the points on which he had
insisted: and I enclose an account of an interview with the
Chancellor of the Exchequer which generally expresses opinions
similar to those which the Governor holds.

On the other hand it is felt by other people here
that the Conference has taken a definite step forward on the right
path, and that the financial security which will be offered will
be so strong, and the danger of political interference so remote,
that Germany ought not to find great difficulty in raising the
loan of 800,000,000 gold marks.

Meanwhile steps are being taken to appoint the
by the Dawes Scheme, and we await the result
in the French and German Parliaments.

he question of the gold standard will no doubt

e very long.

As you know, the prohibition of

comes to an end on the 31st December, 1925,

arliament is passed to extend it:

so that in one

question has got to be definitely dealt with in




the

CONFIDENTIAL

Benjamin Strong, Esq.

Page 2.

-O

25th August,1924

-4b

the near future.

Moreover, it is probable that before the end

of the year the fiduciary of issue of Currency Notes will exceed
the limit authorised by the Treasury.

Consequently, something

will have to be done soon: but are vie to force our prices down,

or will you allow yours to rise?

I enclose a copy of a Resolution of the London
Conference and the Protocol and Agreements, in case you have not
already received them.
Believe me,

Yours sincerely,

Benjamin Strong, Esq.







-J

September 10, lefe.
My dear Lubbock:

It vas a pleasure to -Isve your letter of August i5, and I have read
the enclosures with much interest.

Just as I am about to dictate this letter I am advised by Mr. William
eoodward, Chairmen cf our new York Clearing House Committee, that at a special
meeting held on September 5, it we unanimously voted to send the original
Tankard presented to Governor Houblon to the sank of Fhgland with a suitable
Mr. 1oodwerd advisee me
communication from the Chairman of the Committee.
that it is being forwarded through Veeers. Tiffsiy & Company. This, of course,
is all confidential and anticipates the formal eevice which you will in due
The next
but I am Bo glad the Clearing louse hat done this.
course receive;
time I Em in London I hope to have opportunity to see the Tankard which so far
I have not been able to do.
Of course, t have understood the difficulties weica the Governor enHe felt countered in the negotiations for definite adoption of the DtV.*06 plan.
at least when I last talked with him - that it was doubtful business to meke a
a pistol
about, one of whom vex
loan to a man
On the
at the borrower's hs ad. - The Ruhr situation stands for the pistol.
other hand, I cannot help but feel that oometimes he is a shade pessimistic
about some of afire matters and that the compromises dealing eith the Ruhr
situation may in the end prove to be a liee solution of the deadlock,-avoidine
as it does the economic. disaster which would have resulted from a failure of
accord.

The question of the gold standard is really new before us in a more
I am very anxious indeed that we should have
active way than at any time.
In fact, the understanding must be of two
some sort of an understanding.
characters: (1) as to what is likely to happen in the way of economic developments which might favor o/ retard a resumption of cold payment, and (E) as to
whet we can do to facilitate the restoration of the gold standard.
The first in some ways will be more difficult than the second. I have
a feeling that our studies have not vet proved conclusively whether a change in
relative price levels in your country and ours must be relied upon as the major
or whether we may not have cause and
cause of a return of sterling to parity;
effect reversed and that some thorough-going plan for restoring sterling to par
must be relied upon as the meane for a readjustment of relative price levels to
purchasing power parity upon the basis of par of exchange.
Unfortunately, it seems as though your prices moved up and dome with
Certainly nothing heeB been done here which could possibly be construed
In fact, our domestic situaam an effort to restrain our prices from rising.
tion has been such that we have been led naturally to a policy which, according
to the text books, would favor an advance of prices, while your higher bank

ours.




September 10, 1924.

2

411

and yet the price levels
rate would traditionally have favored lower prices;
f both countries have shown a tendency, until very recently, to decline, and
prior to this recent period of decline the price levels of both countries showed
a tendency to advance together.

In a general way, the picture ae I see it may be described graphically
by a chart on which are four lines - one representing changes in the quantity of
another representing changes in the quantity of goods; and
credit and currency;
the third (being the product of the other two) changes in the prices of goods.
The fourth line is an imaginary one which would represent in a general way the
psychology cf the people generally, whether they are in the mood to buy and make
forward commitments, or whether they are hesitating, pessimistic and uncertain
about the future, so that they are led to sell goods and reduce future commitments.
On the whole, I should say that since the period of liquidation of 1920 - 1921,
the business rorld generally has been in so conservative a frame of mind that
"mood" has had more influence upon prices than either the quantity of goods
produced or the quantity of purchasing media in existence.
These reflections are somewhat thinking aloud; nor need you regard
In fact,
them in any way as an indication of discouragement as to the future.
Put the time is coming when something definite must
I am rather optimistic.
This conclusion is forced upon me by the situation in which
be considered.
eterling will be left after the German currency is reorganized on a gold basis
and having in view, of course, the situation with which you will as confronted
by the termination of the prohibition on the export of gold and the need for
I only wish we
dealing in some way with the fiduciary iesue of currency notes.
might have another meeting to discuss these matters and possibly the Governor
may be persuaded to come over and give us a little visit for that purpose later
in the year.
On the 18th I 011 leaving for e month's vacation which I shall spend in
On the 10th of November we have our regular fall conference of the
Colorado.
After that my
officers of the Feserve Banks in Washington, which takes a week.
calendar is free and we can then better determine what the position of the Dawes
plan and its relaticn to the gold standard may be.

If you have occasion to write to the Governor, I wish you would give
him my warmest regards and tell him I had a delightful visit with Mrs. Norman and
found that she was greatly interested in a visit to our new bank building.
With kindest wishes to you and to your associates in the hank, I beg
to remain,

Yours sincerely,

4
gr. Cecil Lubbock
Bank of England,
London, England.



15 Dec 1926
IC 0 F Y.]

Bank of England

My dear Strong
I am conscious of two facts: -

promised I would write to you: (1) that, at our last talk, I
(2) that I have never done so.
quite give
did not feel that I could
Well, I didn't write, because I cross-currents of opinion on the question
the currents +
at
you a full account of all
it seemed hardly north writing
which, as
discussing: + unless I wrote fully,
adopted was the one
we were
that the solution
But I was glad to reflect
all.
I hope it s5l for the best: I
not break your heart.
you said to me, would difficulties of the future, though postponed, will have
believe it is, but the
to tee settled some day.

rejoin Mont in April, and
it is intended that I should Governor, I ought to try to
As you know,
succeed him as
if you are in
though I do not think I shall ever
to do so. This means that
if I was going
educate myself as
promise that, if I came over, I
I hope you won't forget your
N.Y. next fall,
true faith of Fed. Reserve banking.
should be instructed in the
here, and he is the
greatly enjoyed having Mr. Harrison
You know how
We have all
heart-felt good wishes to you.
affectionate
and we eagerly welcome news
bearer of many
all are in your health + welfare,
deeply concerned we
with you, in Colorado or elsewhere.
strength. May all be well
of your returning
but
better + more peaceful days;
we like to take
Europe struggles forward towards
the other side of the Atlantic,
when we have a true friend on
with all my heart,
so I wish you health + happiness
him to our hearts ask you not to forget
especially at this Christmas time, +
Yours most sincerely




[signed] Cecil Lubbock

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[C 0 P Y]

Bord S. S. "France"
Some day early in February 1927

My dear Strong
I seem to have so many hundreds of things to say to you that I don't know
i00
But, first, at any rate, I must try to tell you how grateful I am for
where to begin.
e friendly + generous hospitality you gave me, both at Biltmore + at N. Y. We were
tirely comfortable + happy in your apartment in Park Avenue, + the homely comfort that
surrounded us was something that no mere h[otel] could have given us. And [I] shall
always have the happiest memory of those two summer days at Biltmore. The simple fact
is that It is always a delight to me to be with you + I can't tell you what I feel as
to the way in which you have admitted me to your friendship.
I had a wonderful time at your Bank, and I feel that my mind has been greatly
enriched + enlarged by all I have seen + all that I have learnt. I couldn't help having
a feeling of regret, all the time, that you were not there, but I was impressed by the
pervading consciousness that you were present in spirit. Well, it is good to think that
you are, before very long, going to be quite well + sound again, + I shall be continuously
looking forward to seeing you in London some time in 1927, + in New York some time in 1928.
Mont + I, at least during those few hours of the day or night when he is not
recumbent on his b[ack], pass our time together in peace [+] contentment. We don't talk
much, my remarks consist chiefly in comments on our lady fellow passengers (by the way,
there is such a pretty girl writing at a table nearby, how I wish she would speak to me), +
it is a great joy to me to have him to myself like this. I think our conversations at
Biltmore showed you the inwardness of some of the problems that we have got to face at our
Bank + in a few days time I expect to be expounding my views on the subject, to the Committee,
of which we told you. It is hard to know our own hearts, but I do believe that I have no
desire or ambition whatever to be Governor. What I would like best to do would be to get
Mont to change his methods in such a way that every member of the Court should wish to keep
him as Governor + as long as possible. But I fear that to do this he must change his nature
+ miracles such as that do not happen. However I shall [do] the best I can, and you can
be sure of one thing, that there will be nothing but loving gentleness in the handling that
he will get from his Deputy.
I had a very interesting time at Washington + I was able to have a good look at
the F. R. Board in their visible + corporal shape. I understand much that I could not
have understood a month ago. I spent my mornings studying Goldenweiser's book (which is
Now (it
very good), + trying to gather up + consolidate the knowledge that I have gained.
is about 12 30) I go to find Mont, + we shall take a walk till lunch - - - - A day passes
This infernal ship is rolling rather more than I like, but really the
+ I go on again.
weather is not bad for the time of year, + I trust it will not interfere with my lunch.
I wonder how your problem is getting on. I see, in my mind's eye, important
individuals travelling from N. y. to Biltmore to consult the oracle, and I earnestly ho[pe]
that the situation will develop in such a way as to be satisfactory to you. But I suppose
we can never get things exactly as we would like to have them, or, at any rate, as we would
all like to have them, and I can hardly hope that the solution of our problem (whatever it
may be) will please every one.
Well my dear Ben (for that is how I think of you) I won't go on gossiping. I
know you are not writing letters now (quite right too) and this neither expects nor
desires an answer. But don't forget me + whatever the future may bring, let me have
your goo6. will.

Some lines of an old poem (written by Ben Jonson) go humming in my mind:
My Ben, Or come again, Or leave to us

Thy wits' great overplus.

well I wish I could have some of it, but, however that may be,
'Thy wits' great overplus'
be sure to come again + let me see as much of you as possible.

http://fraser.stlouisfed.org/
My Bank St. Louis
Federal Reserve bestof respects

Eve*:,,yours sincerely,

[signed] Cecil Lubbock
to Phil.

Stuyvesant Road,
Blitmore Forest,
Diltmore, N.C., February 21, 1927.

PMSONAL

Ily deur Cecil:

This lo not a reply to your delightful letter written on the
stez.mer.

That Is reserved for a little later, when I am writing letters

by hand.

I an writing, however, at once to lot you know that a bundle of

most welcome books arrived from Tngland yesterday, and tht'ee I am sure came
from you.

They- will be much enjoyed.

There are a lot of things floating around in my head that I want
to write you about, but they must for the moment be ,ostponed.
you a good account of our affairs hero at Piltmore.

I can send

We keep well, and the

writer feels t1-1::t the last few weeks ehow Ecod progress.

?lat.:it) give my warmest regards to Monty, and the same to your

goodoelf and many thanks for the books.
Sincerely yours,

Cecil Lubbock,

c/o Bank or eland,
London, 11:.C.2.




COPY
5 April 1927

BANK OF ENGLAND

1

My dear Ben
I owe you thanks -- many thanks for two letters -of Feb. 21 and March 8 -- but I put off answering them, meaning
to do so the first thing after my election as Deputy Governor.

We have

Well, here I am -- The election has taken place.

5,600 holders of Bank stock entitled to vote, and perhaps you
might be fancying that they have been crowding in in the thousands
to have the privilege of voting for MN and CL.
fancy this, you would be mistaken.

Well, if you did

The number of votes given for

the two individuals in question was 26, of whom 15 were Directors.

Anyhow, we are elected, and, as I said to Mont, "Here we are
again."

I am very happy to be with him, and shall strive with

might and main to keep him happy and well.

I'm no use really, and

have no desire to take his place; but I do want to help him.

I am

hopeful about the future here, and I believe he will do what is
needed.

It was horribly baa luck, my aaving to go out of town just
as Harrison arrived, but he returns to London on Thursday, and I
shall see much of him, I hope, on Friday, if not on Thursday evening.

I did make some good friends at your Bank, and constantly think of
them all, one by one, with real and strong affection.

And, as to

you, do you know a poem (I forget who wrote it) addressed to Ben
Jonson?

My Ben
Or come again,
Or leave to us
Thy wit's great overplus
(I forget all the rest).
think of you.




This constantly runs in my head when I

I wish indeed I had some of thy wit's great overplus.


However,


- 2 -

it is good to think that this summer we may see

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23 May '27

BANK OF ENGLAND

My dear Ben
I know what M. has said about Poland and me.
When Harrison was here, I had only been in office a few
so how could I know what had been going on?
days:

M. is doing splendidly, and I hope to be looking
after him for a long time to come.
No time for more now, but if there is one thing
you need not bother about, it is the relations of M. N.
and C. L.
Ever yours,

C. L.
(Signed)
[Cecil Lubbock'

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18 June 1927

BANK OF ENGLAND

My dear Ben,

I went up to dine with M.last night, and when I got
there, he handed me your letter, saying,iiere's a letter from
I haven't read it": so I took it and read it aloud to
Ben:
him, meanwhile abstracting your note to me, which he did not see,.
Well, it was good to get word from you on my own account,
and I treasure your "'love Which you send me, because I believe
you mean it and because it is so very much a case of 'same here.'

But as to your particular injunction, what do you suppose
I gave up every scrap of freedom to move about: I gave
I came here for?
up the financial margin of income which would have enabled me to make
my old age less straitened than it will be: M.'s conception of the
duties of Deputy Gov. is so different from mine (and his must prevail)
that I don't enjoy the work, and in moments of weariness my mind is
flooded with the question: Why on earth did I come here?
Well as a matter of fact I know perfectly well why I came
It was because, however ignorant and incompetent I may be,
I believed (I might say I knew) that there is no one here who, as
Deputy, could do as much as I could to lighten M.'s burden. I know
I can only do it in the lesser things, by loving care and watchfulness, by trying to keep from him all unnecessary disturbances and
worries, and by allowing him, without any scolding protest, to work in
I try to efface completely my own self and my own
his own way.
wishes and I can do no more.
here.

If I was alone in the world, I might perhaps do more, but
I have duties and anxieties elsewhere, and life at present is no
holiday game. Well, there is my answer to your bidding.
I shall be constantly thinking of you both during the next
it would
few weeks, and wishing I was with you. Do send me a line:
We shall all get our release
cheer and comfort me to hear from you.
some day, and if the clouds are dark and gray, there is red glow
behind them, of which from time to time one catches a glimpse.

I don't say anything about Poland, gold, France, or such
like topics, because M. will do all that.
From your affec.
C. L.
(Signed)
[Cecil Lubbock]

Just as I finish this letter, M. comes in :P.S.
I'm writing to Ben.
C.L.:
Well don't say anything that will make him speak to me too
M.N.:
severely.

No, I'm only writing a letter in self-defence.
So don't reprove him in consequence of anything I may have said.

C.L.:

C. L.

June: 27, 1927.

)PEASONAL

Dear Luhtock:

Last. Friday I received a call from one Dr. N. H. de Kock who bore

a sort of L-eneral credentird from the NJoieter of Finance of the Union of
South Africa, etz,ting that he hhd been commissioned to inquire into central
hankin, currency and monetery

e ff,.ire in other countrhe for the information

of the South AfricFin Government.

He bore no letter of intro.:tact-ion addressed

to as either by the inist, r or by Clegt:. It shortly developed in rtiy talk
with his that Pose difference of opinion rind poseibly controversy had arisen
between the Government, the reerve bank and the comaterci.1 banks ac to the

functioning of the reserve bank, and under those circumste.ncea I felt that it
was desirable that we should know more of chat see trunepiring and, if possiLle, something of Clegg le wishee before pursuing the conversrtione very ex-

tensively. In f ct, I as e/ways euspicious of these general intrdductione

Sc I took the

which give no indication of what is behind the scenery.

liberty of cablink you, as per the end
°odd with th
sage.

sed

onfiraation, because, having no

reserve bank of South Africa I hesitated

o

end an open mes-

A-Ithing which you can get from Clegg which will throw lik,ht on the

subject will id me in my attitude towards Ir. look and, of course, I shall
ask *organ for his advice when he arrives.

ie are looking forward to this visit with keen pleasure. It will
relieve we of what might have been a fr.tiguing trip nt owe hazard to ay

health, but, on the other hand, will subject poor Monty and the others to a
certain amount of unavoidable publicity end speculetion ee to their visit
which, I fesr, be may not enjoy. To safeguard against this I as taking thee




Sir Cecil Lubbock

ji

2

/27/2?.

down to Long Island immediately f.ftcr their arrival, where we shall etey at
e privete house where he can have some tennis and swimming end there we will

be reasonably protected against any intrusion it all. Also,

,,-

can mt,ke the

trip hack and forth to Mew York in a very comfortable fact beet, eo you will

see that I &a doinf the beet I ct.n to make his visit a comtertatle one.

As

for what is to be ancompliehed, the success depende upon all foul- of U6, and
we will do the beet we can.

At least you and Monty both know that ae have

been enc'eavoring durinh this rather difilcult period to 1 id in a pr,:ctical
way in the solution of the puzzle, and we may be able to make further and hood

proE,rese as a result of this meeting.
My beat regerde to you and all at the ban{.
Sincerely yours,

Cecil Lubbock, Esc.,
C/o Bank of Engl end,

London, E. C., England.
BS /RAH

eno.







COPY

0 July 1927

BANK OF ENGLAND

My dear Ben,

It is always pleasant to hear from you. I often
think of you all, and I wish so much that I was with you that I
can't feel much pity for Mont, in spite of publicity, fatigue,
and other disadvantages incidental to his great position.

Would you like to give me a present as a token of
esteem (supposing you feel any)?
I believe you gave evidence before a Committee at Washington last year, from which
I could learn a good deal. I wonder whether you could send
me a copy?
I have studied the evidence which you and the
two Professors gave before the Indian Currency Commission in
London and learnt a good deal from that.
I wonder how you are all getting on.
Here we are
living from day to day, and from week to week, waiting for the
flood of light which we presume will shortly burst forth from
Long Island.
With affection,
Ever yours,

(Signed)

CECIL LUBBOCK

We had the pleasure of a visit the other day from Mr. Platt of
the F. R. Board.




?Sank sf Ct.4,11a10

40%




July 2,

PERSONAL

1927.

Deer Cecil:

fine letter fro, you which I shall aneser

I have

at the very first opportunity, tial: in th9
you will
EtLr:

}.e

;;:pufive.

Tou will

t

the enclosed clippin6 from tht: te.chington

obea-ve rh.t dnubtful company I

My beat reu)rde

you.
Sincerely yours,

Mr. Cecil Lubbock,
C/c Fen's of Pr lend,
London, C. C., Engl and.


PERSONAL


t:tlieve

nn

in.

July 19, 1W7.
My dear Cecil:

Tour hots of July B ie on my desk this morning on
returning from a short yachting trip with the Governor on the
"Corsair." The pe rty comprised Mr. Jack Pio rgen, Mr. No rot no

Mr. Leffingwell, Manny

Ire he
good t.me easpits very foggy weath*r, and
cruised ae rt.r north se North riven,
or course diacuesed
Many things, all of which yei will hear et first hind on Monti' s

arrival.

There has hen inexcusable delay in printing Liza
evi]ence preaentec to the Banking and Currency Committee of the
'c.o.'s::: of flepreeentutives, but I um now told by Cr. Bui6esa tLat a

ahi2ment of as becuete muster of copier bill shortly be received,
when two or three copies sill be forwarded to you for each ube of
them t.e you may

I.T.Te in the btnic.

Trint-. erg vc-,y quiet nere, br i feel that we are
drifting into our midsummer calm, end newa will be infre.luent end

unimporte.ut.

6-06 with it.

My uest 1..44orde to you to bibifiya,

sincerely ycure,

Sir Cecil Lut5ock,
c/o Bank

or :England,

London, E. C. 2,
k:inglend.




itttl eh ei:rection




COPY

BANK OF ENGLAND
23 July 1927

My dear Ben,

Your letter of the 17th (1) reached me on Thursday
21st
(2) did me no end of good. It was just the kind of
I have thought of
thing I wanted, and I bless you for it.
you much. Of course, I would like to have been present at
all your financial palavers, but still more I would like to
But I
have been with you. What fun it would have been.
live in hope of seeing you before too many months have
passed. We have gone along fairly smoothly during Mont's
The French position has ceased to be acute, and
absence.
Moreau writes that his purchases of foreign currency have
ensiblement diminue' during the last fortnight and that
for the present he does not want to buy any more gold in the
London market. So we have time to take a good look round.
As Mont has probably told you, we are in a maze of
talk here about arrangements for the future, and I am afraid
that he has ideas which his Court are not at all likely to agree
to;
but if he will be patient and concilatory, there is really
no reason why he should not go on happily for some time to come.
Unfortunately, autocratic power, once tasted, creates fresh
appetitwee, but I will do my best to help and guide him.
I am so glad you made Rist happy:
that is all to the
I have had one or two visitors from your great country:
Platt of the F.R. Board--Milton C. Elliott
late Sec. and
Counsel to the Organization Committee, and Crapo, Class B. Directir from Chicago;
also Parker Gilbert, who is always welcome.
But, dear me, how we have missed B. S.
good.

,

I wish your exchange would (from our point of view)
brighten up a bit. But we are not on the rocks yet, and I hope
we shan't have to involve you in political trouble on our account.
My love and blessing to you.
Ever yours,
(Signed)

C. L.










Af.,6




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PERSONAL.

C0
8 Aug 1927

/1

Bank of England

dear Ben
10.

Mont is in a state of suppressed agitation because he hasn't been
able to
find time to write to you. (He has had a lot of visitors
since his return, Franck of
Belgium is with him at this moment). He evidently thinks that something
terrible
will happen unless a letter goes off to you: hence the enclosed,
which, as you see,
is nothing at all, but it will perhaps serve its purpose.
My love to you.




Ever yours
[signed] CL




Emit

of 60410

August 16, 1927.

Dear Mr. Deputy Governor:

Your letter in behalf of the Governor has just reached me, and
my first duty in reply

is

to urge you to r'lieve his mind of any .anxiety as

to my feeling neglected when I do not heer from him because of the many
demands upon his time.

I know just how it is myself.

I am grateful to you for writing me about the position of affairs
in London.

Since our rate reduction the exchange position has altered so

materially that yesterday we were able to draw on you for L1,000,000 at the
minimum rate mentioned in our recent cable exchanges;

,,nd it may be that we

will liquidate the account still further as opportunity arises from day to
day.

This I understand is according to the Governor's desire, although, of

course, if he would prefer to take advantage of the present opportunity to
further reduce the French balances we will not object.

The important thing

is that we should know precisely your own preference.
The present position h,..s improved and of course the foundation

of the improvement is not a very substantial one.

Doubtless it is less

substantial than it would be had not the French skimmed everything off the
market for a time including such loose gold as came to London.
Yesterday I had a call from Mr. Armitage of the Commonwealth Pank
and expect later to u.eet Mr. Mason.

Mr. Armitage had a Mr. Collins with him

anu we had quite a disc:;esion of their plans for opening an office in New York;
for placing loans here;




'nd more especially in regard to shipments of gold

Deputy Governor
2

Otos Australia.

.

Bank of En--21 and

8.16.27

I pointed out to him that were it.possible to induce the steam-

ship companies to make reasonable rates to London it would be more satisfactory
for us to accept deliveries of gold there at prices which we could afford to
buy at rather than to have it come here;

and that ultimately arrangements of

this sort which would keep gold out of this mouse trap would be to the Advant.ge

of everybody, especially the European banks of issue and quite possibly the Bank
of England.

Our money market has not been working quite as easily towards a lower
level as we had hoped, largely because of what appears to be a considerable demand
for funds in the west, where the crops are now being harvested snd

has turned
-Vlach

the domestic exohm1,;es ,Iciveroe to New York and drawn down our gold reserves and
impai red New York member banks' reserves.

But I still feel that we can handle

the situation satisfactorily through the period of fall demand.
Word has recently reached me of a project under consideration by the

German Government to make a public offering of some of the preference shares of
the German railway company in this market, with certain guarantees by the
German Government as to dividends.

Various c,uestions obviously arise is con-

nection ith any such proposal and I would greetly apprecite some expression of
the Governors views on the subject.
It would be of much service could I have a last word from you in
regard to the position of the Bank of France in London.
finally and satisfactorily arranged?

Has everything been

I certainly hope so.

Please convey my warm regards to the Governor, and my best to you
as well.

Faithfully yours,

Mr. Cecil Lubbock,
Deputy Governor, The Bank of England,
London, England.






28 Aug. 1927

Parliament Piece,
Ramsbury,
Wiltshire.

My dear Ben,

I am living for a short time peacefully in the
I have three letters from -L
It is Sunday afternoon.
you, and what better thing can I do than to sit down to write
I am so glad you like my letters. I feel the same
to you?
about yours, and I feel I get close up against you, though we
are 3,000 miles apart. My word, I am glad I paid that visit
it is a very happy memory, and I can
to you at Asheville:
easily (in fancy) sit with you again under your veranOah, in
Indeed, it was with some reset that
that glorious sunshine.
I had removed from the seat of my breeches the resin that
adhered to it when I sat down by you on the wooden steps.
However, in spirit, it is there still.
country.

Your quasi-official letter of August 16 I have sent
to Mont, and I do not answer it, except to say that I am very
glad indeed that you had taken from us £1,000,000 of your money
and I hope that you have since taken more, but I get no news
from the Bank, nor do I desire any when I am away.
There remain then your letters to me, of Aug. 9 and
I wonder whether I shall get a sight of you in Europe
Aug. 16.
this coming winter.
I wish indeed that I could, because there
are so many things that I could easily say by word of moth,
which I almost hesitate to write -- and yet I don't know why I
should hesitate to criticise Mort -- I mean in a spirit of true
criticism, which is not a process of finding fault'(which most
people take it to be) but an effort to see the object as it
really and truly is.
I confess I am not altogether happy about
him -- perhaps this is partly because he is not quite happy
about himself, but he has views and ideas which certainly are not
The
those of his colleagues, and he is not good at a compromise.
main difficulty lies in his essential incapacity to reveal his true
mind.
This is what makes me feel that he will never build up an
organization -- which implies an organism -- something in which
the parts so work in relation to one another that they become something
more in cooperation than they were in isolation.
But the trouble is
that though he can get the parts, he wishes them to work in isolation,
as he does himself.
I confess that the future is dark to me. There is no
doubt whatever that he -411 be asked ',-;(3 go on from April 28 to
April 29, with a definite prospect of (at least) a year after
So that (unless he lays his ears back) and asks for terms that
that.
the Court is unwilling to give) there is time before us.
If only he would not take things so deeply to heart.
If only he would not regard as of desperate importance matters
whose importance is really much slighter than he thinks.




-2 However, we must take him as he is, and be
thankful for a personality so lovely and so interesting
-- Bless him. You may be sure that to the best of my
limited power and capacity I shall watch over him with morethan brotherly love. You will, of course, hear of any
definite arrangement that is made.
It nearly always rains now, and the sun hardly ever
A few weeks of settled sunshine would help us all in
our difficulties, whether we are farmers or merely bankers.
shines.

I am truly, dear Ben,

affectionately yours,

(Signed)

C. L.

[Cecil Lubbock)

/717
PARLIAMENT PIECE,
RAMSBURY,
WILTSHIRE.

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[C 0 P Y]

8 Oct 1927
AmOr1

Bank of England

My dear Ben
I am quite alone. I don't hear a sound, except
It is Saturday afternoon.
a pigeon cooing in one of the Courts - every one has gone - + now is the time
to write to you.

Your letter of Sept. 26 reached me a few days ago.
comforts and heartens me, + I am grateful.

A letter from you always

I cannot see, or feel, any suggestion of a "rift".
Of course I can only be
certain of my own feelings, and when I think of 270 Park Avenue, + 33 Liberty St,
two places into which if I could walk at this moment, I should have a feeling of
coming back home, there is not much "rift" feeling in my mind.

And I have never heard Mont say a word that could indicate any such feeling
in his mind, either. And yet I can understand your wondering sometimes.
Even I,
so close to him, wonder sometimes for a moment whether he cares a brass farthing
whether I am here or not.
But then, for me, this is cured the next m
word, or even by a look. And if you were close to him, it would be the same for
you.

And yet - and yet - his temperamental preference for working in isolation, fills
me, from time to time with real distress; and we are bound to suffer for it some
day. As you know we have had here a lot of talk + consultation, + a Committee
Report, on our future. But I fancy it will die down - without any definite result,
but leaving Mont to go on as hitherto. This will be all fight for the next few
years; after that the prospect is wrapt in clouds, but I daresay that in a year or
two it will be clearer. In a year or two - where shall be all be then, I wonder?
I have watched your gallant operations during the last month or two, with
grateful admiration, + I trust that you will emerge triumphant from any struggle
in which you may be involved. I am so glad it is all right about Mr. Ft. Young.
I wonder whether I shall see you this winter? I have no idea. I wish Mont
was more generous about sharing his friends + visitors with me. Sometimes I am
tempted to think that he tries to keep me from seeing them.
Anyhow I don't think you would come to London without letting me see you.




Yours affectionately
[signed] Cecil Lubbock

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18th October, 1927.

My dear Ben,

Vie were greatly interested to learn from your

letter of September 29th that Dr.Burgess is bringing out a book
on the Federal Reserve System; and while I cannot give any
undertaking on behalf of Mont, I shall certainly read it myself

with the keenest interest, especially the introduction.
I as afraid that we have no expert here in the

publishing line, but enquiries we have made from expert quarters
seem to show that as Harpers are publishing the book in America
it would be natural that their London Office should bring it
out, and I presume that this is what will actually be done.

As to the prospect of its circulation, we will
do our utmost to see that it receives proper notice and I hope
that in.this respect we may be able to help.

Its publication

should be of great value here; and on that account, and also on

account of our regard both for Dr.Burgess and for the author of
the introduction, you may be sure that we shall do all we can.
You will let us know how the matter proceeds,
and about what time the book is likely to arrive on this side,
so that we may be ready to receive it.


Benjamin Strong,


relieve me,

Sincerely yo

Esq.




November 9, 1927.

dear Cecil:

Thank you for your kind letter uf October 18. Juet

as soon ae the book is rely cop;es till be sent to you, and
besides rehding it yourselt, I hope those who ere interested
in the Federal Reserve Systole cn your aide 411 find pleasure

N.nri profit in reading it too.
ainosrely yours,

Mr. Cecil Luttook,
Eank o'' Figlend,

London, E. C., EX land.







[COP Y]
17 Jan 1928
Aren't you sly, you Governors?




Bank of England

Here was I, in N.Y, + MN to be in BS to be in
bed innocently imagining bed in Hertfordshire (ta
+ lo + behold, all the time you are both in the ga

7elve got some queer money-market conditi
I shall leave M. to write to you about this- + mea

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[COP Y]
17
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Bank of England

March 1928
my dear Ben
Harrison's cable about Mont
Mont went off to Madeira yesterday +
He says he is quite well - he admits
in bed: but as to this Madeira trip,
a rat in a trap; + he is very angry.

came this morning - + I have replied;
will be home at the beginning of April.
he was tired + perhaps needed a few days
he says his family came + caught him, like

As I told you there is nothing organically wrong, and if he would only
take care of himself he could go serenely on for years to come. But I am afraid
that his incapacity to work in moderation is increasing. I hope when you write
to him you won't say anything about illness; all that should appear to be known
is that he was rather overtired, + went away for a short rest.
But things are by no means easy here. He is getting out of sympathy with
me: and though I have undertaken to go on as his Deputy till April 1929, I shan't
go on beyond that date, and I should be thankful if I could get my release earlier.
I don't know what Mont would say as to the possibility of a trip to the
U.S. in the near future. Perhaps when he comes back you might sound him on thct
subject, but don't put it as if he needed the trip for the benefit of his health:
if you did, there would be absolutely no chance of his coming.

As to you + me, dear old Ben - well it would warm my heart + do me good
to be with you for a bit, but I don't know when it will be, the sooner the better
for my health + happiness.
My love to our dear George Harrison; I hope I may see him before long.
Ever yours
[signed] Cecil Lubbock

I am still rather worried about Moreau + Roumania, + I shall be anxious to know
what will be the result of the New York negotiations.







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29 March 1928

[c 0 F Y]

Bank of England

My dear Ben..
Your letter of March 9 - written on the familiar yellow paper of
which I have so much in my possession, covered with notes made in Jan 1927)
arrived on March 24, and made me hopeful that things would work out as I
had hoped vis: that the "plan" would be referred back for further consideration by us all, and that we might get through without agreeing to anything
of which we could not approve, but (at the same time) without slamming the door
in the face of certain friends of ours.
Then came your cables, which disturbed me. I won't bother you with all
that is in my mind, with regard to the situation, because by the time you get this
letter, the matter will probably have settled itself, one way or the other.
I will only say that I trust that you agree with our interpretation of the
"Italian precedent" viz: that it implies leadership + responsibility on your
part, + not merely the acceptance by you of an invitation to participate in a
credit.

The whole situation is so complicated + disturbed, in the
country in
question, + is giving rise to so many acrimonious feelings, that I can see
no happy solution at the moment. It has brought ie very great unhappiness, and
I am at present living under a cloud. Will it pass away, or grow blacker?

I had a jolly letter from Mont, written on his way to Madeira, and now
he cables saying he is not returning till April 10 (instead of April 2 as
originally planned). I take this as a very good sign, as I expect he is feeling
that the change is doing him good. I expect him to return well + serene, +
prepared to carry on here far a bit - in which case I propose to give a thought
to No. 1, and to be off myself.
I, too, have been going on rather too long
without a break, + this last worry has rather upset me, + I am being taken in hand.
Menawhile I am living on drugs, + on April 5 I mean to put myself to bed (not at
home) for a week or 10 days, + then (I hope) to take my holiday + go abroad for a
month.

Well my dear old Ben, I give you my love + blessing,whatever troubles may
be in store - and would give almost anything I possess for an hour's heart to
heart talk with you at this moment.




Your

affectionate

[signed] CL




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Bank of England
11 June 1928

1041,41t My dear old Ben
I felt very sad at leaving you.
Thank you for my week with you, + for
your generous hospitality: thank you, still more, for your friendship + affection.
I don't like thinking of you being without a loving friend at your side: but we
are making arrangements for Stewart to leave London on Thursday morning 4 to
be with you on Friday.

I told my wife that you + George had torn open my old Roumanian wounds,
+ then had only laughed at me (at which she said that she wasn't sure that she
loved you as much as she had thought she had!), but, mercifully, friendship does
not depend on business efficiency (of which I have very little).
I shall constantly think of St. Paul, the Cap d'Antibes, the Cafe de
Paris at Monte Carlo, + Caprice Viennoise, + the happy hours we spent together.
And in the future I shall see the Villa des Roches, with a piano and a fine
library, and I have visions of a great hearted philosopher passing his days there,
in sunny + serene tranquillity of mind, + welcoming friends who will regard it
as a place of pilgrimage.
Bless you, old chap. May you have good health + freedom from care, +
inward happiness - whether at Grasse or in New York.




Ever yours
[signed] CL

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CC 0 P Y]

Bank of England
16 June 1928
My dear old Ben

fl

bits I

Your letter + your telegram arrived this morning.
(1) Your letter. Bless you for it.
It was a privilege and a delight
to spend a week with you, + the chain of affection which binds me to you is
stronger than ever.
(2) Your telegram. I presume this means that you + Stewart are going
to have a talk with the Bank of France about their plans. I trust that you are
well enough for this, and that you won't get overtired. However I am thankful
that Stewart will be with you to look after you.

Mont went off on Thursday, + will be out of reach for two or three months.
His mind + temper have recently seemed to me to be at their very best, but physically
he is exhausted + he knows it. He confessed to having the same symptoms as he had
in February, + he realises that his holiday is a necessity. I should like you to
know that he wrote me on the boat, just before starting, a letter such as I have
never had from him before, + which I shall treasure to my dying day. "Even though
I cannot say half I feel (and I never cant)" so he writes, but he seems, from
what he says, to realise something of what I feel towards him + want to do for him.
I shall look forward to seeing Stewart, and to hearing all the news of
you, personal + otherwise(but chiefly personal!)
My love to you, as ever
[pigned] CL

My best remembrances to Ernest




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[COP Y]
Bank of England
23 June 1928
44011py dear Ben

How are you, dear old friend? Steadily improving in health + strength,
I hope, at any rate, I had a letter from Stewart, written from Grasse, which makes
me hopeful.
I am now imagining you all talking at full blast about the French plan.
I am very glad Stewart is with you, I don't want him to hurry back, as it might
be more useful to us to have his impressions of the Frehch state of mind, +
of the general position, after the decision had come into force.
I shall want to hear from him all about France, but I shall want, even
more, to hear about you.
My love to you. How I wish I was going to see you again quite soon. I
need your affectionate encouragement (even though you may give me a clout over
the head, now + then:).
firer yours

[signed] CL

I am addressing a letter
to George Harrison, at your Hotel.




.TTIE

rVENIN

CITY NOTES.

THE SLUMP
IN

HOME RAILS.
How Stocks Have Fallen
r"

I

Since Amalgamation.
City Office: 5 Drapers' Gardens, E.C.2.
Tel.: London Wall 0498.

THE Home Railway market was yesterday
enshrouded in its usual gloom. Quotations again declined throughout the list.
North Eastern Deferred was sold at.. one
.,..
time at izi, the-equivalent of "is.. 6d. for a
share, while the Second Preference-al
Trustee stock-fell to 49.
.

.

-

Investors in Home Railway stocks are daily
becoming more insistent that a statement on
the position should be issued by the boards of
the different companies and that immediate action
remedy the situation.
to
should be taken

Amalgamation" was heralded as the solution
of all the railways' difficulties, but so fax from
bringing prosperity it has been followed by a
steady fall in the position.
The market valuation of the Junior stocks of
the grouped Home Railways is now £100,000,000

-less than it was shortly after amalgamation wa
effected. The contemplation of this figur

should be sufficient to arouse the most supin

board of directors to action, and it is to

hoped that it willhave the salutary effect in th
case of the boards of the Home Railways.

Copper.

In the last day or two the buying movemei

for copper seems to have shown signs of slacke
ing, and prices, as a result, have tended
recede. The lull is scarcely surprising in vi

of the unusual activity which has prevailed f

some time past, and is by no means an u

healthy sign.
Taking the long view, the outlook for copper
is favourable. Stocks of the metal have been

reduced and current production and consumption are in a state of equilibrium.
Steadiness of prices may therefore reasonably
be anticipated. Agreement among produce
may be expected to keep the price from fallin
away from present levels, while potential pr
dnctive capacity is sufficiently in excess of cur
rent consumption to prevent a sudden intensifi,
cation of demand from sending up the price t
new high levels.
41111111se_ w e
/Mk




S
S

t tet.

111k1db

Cut
oNErVARKET 171v CERTAINTIES.
CITY : 6830.

Monday evening.

Uncertainty continues to be the dominating force in the Money Market, and
is rightly being regarded as implying
caution. While several recent events,
notably the BANK OF ENGLAND'S gold Re-

quisitions, the further steps taken to-

wards the stabilisation of the franc, and
the recovery of the American exchange,

have all tended to renew hopes of an
early reduction in the Bank rate in this
market, hopes are not being too freely
indulged.

It is recognised, in the first place,

that the stage is probably far from bein

set for the amalgamation of the note
issues, a step in our monetary policy
which the authorities cannot desire to

Amalgamation on
see along delayed.
the basis of existing gold holdings would

provide a gold reserve of less than 40
per cent, of note liabilities. The exist-

ence of a large mass of short-term

foreign balances in this market is also
a factor which inspires caution, since
its effect is enormously to increase the
effects of movements in discount rates,
and hence to make control an extremely
delicate task. We understand that at
present the GOVERNOR of the BANK OF

ENGLAND is in Paris, where one would

aturally surmise that he is engaged in
iscussing the implications of the
ench FRASER
Digitized for situation with the French authoities
http://fraser.stlouisfed.org/
TRONG.
Federal Reserve Bank of St. Louis

with GOVERN OR
and







is
Pt,

[C 0 F Y]

Bank of England

111L.,.. 27 June 1928
IIP

My dear old Ben
-- These marks represent the worst swear-words I can
think of. I was assured that Hotel George V was in Rue de Bussario, + that
I ought to address my letters accordingly. But now I learn that Hotel
George V, in Rue de Bassario, is a blasted little place, quite different
from the palatial establishment in which you are living.

Well, old man, I hope that Mr. Moore has retrieved the letters
I have written you, otherwise you will think me a cold-blooded sort of cuss
for not having said a word to you all this time.
It is good to have George Harrison with us, + to have Stewart back
Poor George had a very bad time crossing the channel last night + is
very tired today.
again.

Life is full of perplexities but we must do the best we can. No more
now; this is only to send you my love,
to blow off about my former letters to
ypu.

.




Ever yours
[signed] CL

Royal Hotel,
Evian-les-Bains, July 3, 1928.

My dear Cecil:

Since writing yoL by hand last night, I find that I have
received four letters from yva, dated Juno llth, 16th, 23rd and 27th.
That a splendid, faithful and conscientious correspondent you are.
But I shall not endeavor to elaborate upon this theme - namely, what
you are - lest you conclude, as the 'Ioys say at home, that I am 'kidding
you".

Thank Goodness, Ian feeling mush better.
all at the Bank.

Cecil Lubbock,
uty Governor,
k of England,
ON, Z.C.2.



Sincerely youri,

My love to you and

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[c 0 F Y.]

Bank of England

4 July 1928

my dear Old Ben
Bless you for your letter of July 2, a letter from you always does me
good.

George Harrison was here last week, and dined with me on Thursday; we
had a small family party and I found it very pleasant. But my wife + I and
Peggy were all feeling ( + we said so more than once) how delightful it would
have been if you had been with us, too.
I would much like Siepmann to visit you, and I will await your schedule
of visitors. But I depend on him a good deal, and it is just possible that I
might be afraid to let him go: But even if he couldn't come to Evian, I feel
sure he could meet you in Paris at the end of the month.

Mont's ship will, I believe, reach Cape Town in a day or two: what he
will do then, I have no idea: I imagine that he will wander about, and that I
shall see him again about the end of August.
I am trying to follow your instructions, + to keep cheerful + serene.
Some of our problems are not easy, but I do my best, and my friends are kind
to me. (It sometimes amazes me that you should be so good to me, + should have
given me your friendship ,x you have done, but I bless you for it every day).

Well, old man, I hope you are in pleasant surroundings, with increasing
health + peace, of mind and body. I would love to have a few days with you, and
it is hard that, while you are in Europe, I should be a prisoner here.
You will be hearing from me again.
is only on paper.




I like talking to you, even if it

Your affectionate
[signed] CL

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Bank of England
11

July 1928

4111i

Ben, may dear old Ben,

Your letter of July 6 was one of the most welcome + delightful letters
I ever received. I was in a very unhappy mood when it came, owing to discussions
that have been taking place about our future goverment here, + to my fears of
of the possible difficulties that Mont's intolerant + domineering temper may
lead us into, in the autumn. Your letter did much to restore me. What you told
me about an incident in 1919 gave me far more pleasure than, if, say, you were
to tell me that I was an efficient Dep. Gov. of this institution (which would be
manifestly untrue); bless you for feeling in that way, + for telling me about it.

The news of your health is grand, + gives me such joy that I seem to
feel better myself. I do indeed rejoice.
I will now mention one or two official matters.

We have received an invitation from the Bank of France to participate
in a Central Bank credit for Roumania, + we have accepted it. (you have heard
of Roumania, haven't you? It is a country in South Eastern Europe, in which a
certain M. Moreau has been taking an interest). But there are a good many things
to be done yet, before the credit is fixed up.
And now comes news from Chicago - and while we are trying to get used to
it, in comes a telegram, from George Harrison indicating the possibility of a
similar change at a Bank with which you have some connection. But we shall try
to hold on where we are, and I do not see why we should not succeed, if the
pressure from your side does not last too long.
I am not forgetting about Siepmann + the visit; but at the moment I am
rather uncertain.
No more now, but I shall be writingagain. Don't bother to read my letters,
if you get bored by them; but I like writing to you. I am often wondering about
your plans fo: the future, but I shall learn them in due course.
My love to you.
Ever yours
[signed] CL

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17 July 1928

Bank of England,
hx_4- /1414

44111

Dear old Ben

Thank you for your letter of July 13: as always, I feel the better for
No one talks to me quite as you do; I keep your letters in my pocket, +
if I feel a bit low I just read them through, + get fresh encouragement.
it.

I rejoice in your improving health; how you will enjoy your family
gathering in AugUst.
I am much impressed by your list of visitors, + I think of Evian as a
kind of financial Mecca, drawing distinguished pilgrims from all countries.
There are still rumblings from those infernal Eastern Europeans, + I hesitate to
let Siepmann go to Evan, but he shall come to you in Paris. To make a definite
suggestion: - how would it be if he were to arrive Friday evening July 27 +
spend Saturday 28th + Sunday 29th with you?
If you approve I wonder whether
Mr. Moore would be kind enough (in order to save time, hotels being so full) as
to reserve S a room in your Hotel? I would like you to see him, + also I would
like him to see you.
It is curious to think that when you raised your rate to 4% we were
wondering whether we could possibly remainat 4 1/2%. And here you are at 5%.
I was a little apprehensive at first
but fortunately no one gotexcited, +
yesterday + today we seem to be going along quite steadily. Gold flows in: apart from S. Africa we had £500,000 from Russia last week, and we are getting
another £500,000 today. Addis continues to enveigh (in his courteous + charming way)
against the policy of sterilisation:
I don't like it myself.
I wish we could let
nature take her own way: but just at present we can't altogether do this.
:

I write this amid constant interruptions + must shut up now.
write you again; bless you.
Ever yours
[signed] CL

I'll

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21 July 28
17, Cranley Gardens, S.W.7.
Kens. 3252

my dear Ben
convenient to you. How I
Siepmann's arrangements are all
I hope that
you again before you go.
wish I was going with him + could see
Don't bother to telegraph
hasn't he?
Mr. Moore has booked him a room,
if this is all right.
but I shall write to you again before
I don't count this as a letter,
you leave Europe.

My love to you.

[signed] CL

artive Tuesday night between 11 + 12.
S. - as he has wired you - will

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9 Aug 1928

Ili

Bank of England

Dear old Ben
I have been thinking about you so much - your journey - your arrival in
New York - + all the talk you must be having with George (I wish I could overhear
it all).

I hoped I should have a dull quiet time during August, but, as you may
imagine, we are finding it anything but dull. The only thing that really worries
me is the fact that we have got some government financing to do this month £35,000,000 1st Sept. maturities have got to be replaced - + if we had to change
our rate before September it would be a disaster. So I hope with all my heart that
you won't raise your rate; + if you don't we may be able to hold on all right.
I would like to have a line from you, telling me about yourself - how
you are, whether you have any plans maturing for the future, etc.
Shall I go
on sending my private letters (of which I shall probably write you a good many,
during the coming months) to 33 Liberty St?
Bless you for that cable you sent me just before you left Europe; it did
me good;.

Your affectionate
[signed] CL

THE EVENIN

1L

A LOOK ROUND THE MARKETS.

UNCERTAINTY
IN MONEY

TOSITION.
Speculative Business QuietA Few Industrial Features.
TRUE to

anticipations, the past week,
which has been the closing period of a
21 -day account and started with the Bank
Holiday, has not been productive of any
general revival in the volume of speculative
business in the Stock Exchange.
Most departments have remained quiet,
but, taking all circumstances into account,

the general tone has not been unsatisfactory.
A certain amount of scattered liquidation has
witnessed here and there from tired
" bulls," but no more than was to be expected
in the absence' of anything to stimulate public
been

interest, and the general state of markets
appears to be sound.. The monetary situation,

however, is giving rise to uncertainty owing to
the loan position in New York, and this is tending to check investment business, although as a
whole high-class fixed-interest stocks have kept
fairly steady.

Gilt-edged Market and New York.

British Funds developed a sligh-A- weaker
tendency owing to fears that the New York
Federal Reserve Bank might raise its re-discount
rate, but tn the absence of such an advance the
market became steadier. The possibility of a
higher rate in New York, however, has not been

removed, so that a c,...itious attitude is likely
to be maintained, and it would not be surprising if prices sagged a little. Funding has been
a weaker spot than other stocks owing to the
American interest in that security. Some of
the selling is understood to come from Wall-

MR. BENJAMIN STROIINC, Governor of the
New York Federal IWerve Bank, which is
making strenuous efforts to reduce brokers'
leans

in Wall Street.

DRASTIC SHAKE DOWN.
Cause of the Sharp Break in
Cauadian Markets.

From MURRAY

MONT

The market has had a d

ment for credits in New York and London.

and large quantities of stocl
way from weak into strongc
Most observers take the vi
don may last for some tim
only a guess, it is less of a
a more or less protracted
(Imam+ for stocks will be
governed by tight money.
A considerable portion of th
to purchase at the substan
existing, but brokers are gettii

Heavy Home Rails.

lenders may call a portion

street.

Foreign bonds have remained a quiet market
as a whole, but Portuguese have advanced on
renewed expectations of a loan for stabilisation,
while Spanish have strengthened on the arrange-

After displaying firmness in anticipation of a
good showing by the holiday traffic receipts,
Home Rails have again resumed their air of
depression. Public interest fails to be stimulated and there is no appearance of an early
revival. Great Western have held up fairly

order, and are fearful that
loans.

Many

have

wondered

markets broke so violently

York was acting well.

Ta

question is not difficult to find. (Jar a
relatively much higher than New York, au..
well, but this has been due to the existence of a had built up a much more vulnerable speculative
" bear " account rather than support from structure.
investors.
Although

NEWSPRINT EARNINGS.
not showing much activity, the
Although the earnings of the newsprint comForeign Railway section has been well main- panies are down substantially, it is said that
tained. Argentine Rails have displayed firm- Wayagamack, which deals largely in Kraft
ness, while in Brazilians a feature has beet) the paper, is only a little behind last year. The
strength of San Panlos.

Activity in Gramophones.

violent fall in re

was dun, apra
weak holders becoming frightened.
Not so long ago the market was . ra
Shawinigan on a level with Montreal Po..
The wide spread now existing between the twc
stocks is due 4o over-speculation in Shawinigan.
The repeated tips for the stock attracted a small

Although the Industrial markets as a whole
have been quiet, activity has been shown in a
few directions.' The Gramophone section has
been prominent again, but the course of prices
has bRen irregular, a good start being followed
by profit-taking and a reaction. The market, army of speculators, and judging by the sever(
tioidaai r_otorde_v with a firm
tr,vr.vsr
Is
IsasA
rwrts
+
US,
4

IS

tendenoy. Artificial-Silk have aroused some to hang on.
interest on the understanding that reports of
Now that speculators and investors
a cut in prices by the International Cartel were ning to reason a little and think about yie ds,
unfounded. The question of price for the pro- more people are calling attention to the fact
duct, however, will probably come to the fore that in our enthusiasm we elevated both Power
again before long. Movements in prices have and Shawinigan far out of line with two stanbeen uncertain. British Celanese issues have dard utility issues in the United States-Conweakened owing to the poor response to the solidated Gas c.f New York and Public Service
Preference share offer, but Branstons have of New Jersey.

sharply
strengthened.
advanced

and

Courtaulds

Advance in Match Shares.

-

have

The Iron, Coal and Steel group has been idle,
with prices generally steady, and does not look
likely to revive in the immediate future.
Imperial Chemicals, however, closed with an
improving tendency. The Telegraph section
has eased and Marconis have gone back a little.
Match shares have attracted attention and have
been a strong feature, Kreuger and Toll leading
the movement. Tobaccos have shown firmness
and Brewerkes have improved in some cases.
A quiet investment business has continued in
Electric supply securities. Insurance shares
again met with a strong investment demand on
resumption after the bank holiday, but the
tendency of prices has since become somewhat
irregular, which is not surprising after the

General business in Canada is good, and the
crop outlook excellent. The building trade is
enjoying greater prosperity than ever before.

U.S. MONEY FEARS.
Stock Market and General Motors
Dividend Action.
From Our Own Correspondent.
NEW YORK, Saturday.
A switch from General Motors to Chrysler

Motors
profits.

strongly recommended for quick
This is in accordance with a movement
is

now in progress in the Stock Market here 'to
carry Chrysler to 125 before the end of the
In fact, conservative boosters confidently predict 150 before next spring.

month.

Dissatisfaction over this

week's

dividend

action by the General Motors Corporation has
lost considerable market support -for the stock.
Oil Shares Firm.
Oil shares have provide,d one of the most There has been a big transference of interest
active sections, and finished with a firm tone. to Chrysler, but the bulls in General Motors call.
On the 'account this market makes a satisfac- attention to the enormous increase in earnings
tory showing for the " bulls," prices being thi.3 year, and the probability of a stock dividend
higher in many cases. There has not been a in November.
lot of public interest in the market, but en- Do not forsake General Motors entirely. It
couragement has been derived from the prospects will sell above 225 within six months. Chrysdue time will pay a handsome return on
of an agreement between the leading groups to le'
curtail output. Shares of some of the smaller invcs*.ment, although judged by current earncompanies have also been favoured in the hope ings the present price appears unwarranted.
that those undertakings will participate in any
" BULLS" AND RESERVE BOARD.
benefit that may result to the industry from Wall Street is worried over the Money Market
may
reduced output
the leaders. With a lot -I situation, and a break in Industrial stocks might,
oil only shut in, however, too much reliance on carry for a considerable distance before confia permanent improvement must not be placed dence could he restored.
by buyers of the shares.
The " bulls " in the stock market claim that
Although business in the Rubber share sec- the Reserve Board has so " doctored " the
tion has been on a very slaall scale, the tone cf money market that an old-fashioned money
the market has been firm. The commodity squeeze might well be ushered in before the
market has given a little encouragement. Spot autn.nn credit demands become acute.
smoked sheet has strengthened to 9,d. per lb.,
If this happens there will undoubtedly be a
or a rise of ld, on the week.
cra,b in prices, particularly in the high-priced
stocks, which have moved upward with hardly
Kars Apathetic.
The South African Mining section has been an interruption for a year or more.
apathetic, with often not enough business passTle2re is litt12 danger in buying better grade
ing to test prices. The general tone, however, railroad and oil stocks. Standard Oil of New
nt the close was firm as a result of a little bear York and New Jersey are strongly recommended,
covering, West Rands in particular rallying for w'th ?garland, Sinclair, and Texas Corporation
that reason. Tin advanced £2 10s. per ton on as the most likely reprdsentatives of the indebalance on the week to £215 Ifis. 3d., but Fin pendents to enter the upward movement. New
shares have not always followed the course of York Centrnl, Union Pacific, Southern Railway,
the metal. A firmer tendency, however, was Southern Pacific, Baltimore and Ohio, and
shown yesterday, which gives a little better Nickel Plate are the favourites in the investment rails.
promise for the new account.
advances previously recorded.

/.3
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4144.

C

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13 Aug 1928

Bank of England

4111,

So the individual, whose hidden hand can strike me down at any moment, is the
pleasant looking young man whose portrait I enclose.
Well, well, he seems to have a nice kind face, + perhaps he will spare
me.

You are not very free with your cables, my dear old Ben - at least, not
as free as I should like. The newspapers have been, + are still, frightening us
about your Tate: I hope + trust that you won't move this month, but I should like
to be reassured.
I have just sent a note to Mrs. Livingston Smith, regretfully declining
the kind invitation which I have received, for the wedding, but I won't forget
you and yours on Aug 20.
I have just received a letter from Mont dated July 23,
but he has no very good news to give about himself, so far.
I wish I had you by me during these days.
No more now.

Your affectionate
',signed] CL

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10111

o E Y]

18 Aug 1928
My dear old Ben

Bank of England

ing, with the feeling of comparative peace that
change has recently been behaving in a more
t can I do better than to have a talk with you?

nk you for your letter of Aug. 3, written on board
easure, with other letters of yours. My inner
ed by the thought of the visits I shall pay you
It may not be the case - that for you (in some
. Your record of magnificent practical achievethen your work stands foursquare like a great tower.
our anxious activities, they sometimes look to me
ce, because I know that the ultimate bedrock of
s the basis on which we will remain united; + I,
raw strength + encouragement from your mellow

her you to write to me often, old frienc: but you
from time to time, how you are in yourself, + any
u know them)?

esterday + I look forward to meeting him at Waterloo
ill give him your note (which is now locked up in my

than I was a week ago2 when your exchange wa:
lk in the papers of your rate going to 6%. But at
all government issue will go all right on Thursday.

Tuesday, + manoevred, successfully, to prevent any of
going to you. As a last resort I was prepared to
tory price, sooner than let any of it go to N.Y.,
s turned out, it was unnecessary to do so.

wever, that while we were making all our efforts to
hose blasted Poles should have performed an action
aking gold from us + sending it to you, at no
of a few hours. It is something to be pondered over,
es with gold movements, gold points, + such like

from such dusty topics, and tell you that the
antly in my mind, though I confess that for me, the
either the bride, nor the bridegroom, but the bride-

lessing to you, as always.

4

ust 20, 19:13.

Dear Cecil:

Fy this time you have read my letter to Abater Stewart
stand my dictatin,

d and r-

reply to your fine letter of the 9th just received.

Personally, I have not only felt no need for a further incree,e Jour di count nit., but believe it a mistake to do so a- it. might have crave

conce_quencee at home, and certainly, a most unfavorable effect internationally.

Evt you re flee that I am not going to the bank at all these days
that the last word will re.ch you from Harrison.

Nowepeper dispatched

indicate; that your government financing has been well received, and that that
worry ie now really behind you.

I am very glad.

Supplementing what I wrote Stewart, I can noc Alit you the good word
that the immediate danger which erode following the X-Ray pictures has wholly
fleeted.

From now on I shall be a slave tone very carefully prepares diet,

possibly the rect of my life, as th,:re is nothing which can be done to eradicate;
the difficulty except it be done wit'

the knife.

No one recommende that that

haltrd be attempted, and I would not have it myself anyway.
So, from now on, you can understand that I ehall literally "eat to
live." for I guewe my future depends upon what I eat.
I always thorou hly enjoy your lettere, bu

I think it would ta

better to continue to addreet me at the bank, for in another week I shall
probably go up to the country to stay with my son, if the doctor allows.
very beet to you, dear Cecil, and etrength to go ri,ht on.
Moet affectionately yours,

Mr. Cecil Lubbock,
C/o Bank of England,
London, E. C., EnLland.

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Bank of England

29 Aug. 1928

4041k
My dear old Ben
It is evening here, + I reckon that the
wedding has just about taken
place: I have thought of you many times
during the day, and I am thinking of
you now, with (if possible) extra special affection
after reading your letter
to Stewart. I grieved much when
I read it: but I will think chiefly of the
great
hearted courage with which you rise above
with you, that it is spirit + not matter your physical ailments; and believing,
to your enjoying many many more years in which wins in the end, I look forward
peace
tranquillity.

I must break off here but will write
again.
Your affectionate
[signed] CL

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Bank of England
41.11111,

31 Aug 1928
My dear old Ben
I wrote tia-ynul rather hurriedly, last night; and this morning your
letter of Aug 20 arrives. I can add nothing to what I said yesterday, except
that if thoughts of health + peace, wafted across the Atlantic from me to
you, have any efficacy, health + peace should be yours.

Stewart has been away but, to my comfort, has now returned. I am glad
he is here, not only because of the wise advice he gives me, but because his
feelings + mine towards you, are a bond of sympathy between us, + I like to be
able to talk to him about you.

Mont arrives in England on Monday: I look to seeing him at Thorpe Lodge
in the evening, + during the week we must gradlially put him in charge of the
I think that what we have done so far is right; but our dollar
situation.
selling has remained an absolute secret, and I am beginning to fear that our
markets are beginning to build too firmly on the hope that gold will not move
from us to you, + that our rate will remain indefinitely where it is.
I will write to you again next week, + will tell you how I think Mont
The question of our future government here may soon be coming up in such a
way as to give us much difficulty + anxiety, but anything that I may say to you
on this subject must be
is.

Don't trouble to answer my letters, old man, if it is ever troublesome
to you to do so. But you know that any "news" about yourself personally will
always be welcome.

Your affectionate
[signed] CL

eid
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Ze'

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CONFIDENTIAL

September 15,

'!g?.?..

My dear Mr. Cr,vernor:

September 4 has

Your kind note
distressed Lc

just reached me, and I am

learn that Norman has been .::bli,red

to go array zn account

of indisposition, especially such a trouble as lumtag; shich can be
painful in

the extreme.

any

You wnuld, I know, cable me in ca!:e

serious indispositi(.n.

That you 4:Ate

that I

about the meeting of central banks is suite

expected and o.n the sh,le suits

us very

tell, as an earlier

meeting might encounter emtarrassments which can be avoided .Then the

political

atmosphere

clears e(meshat.

A great many thanks to you and to your a, 8:,ciates for

the

courtesy which yGu have shoal to various people tearing our letiers
introduction.

le are loth to burden you sith these receptions but .pith

those pith shorn ve have

hard

to

of

such

relations

as the 8entlerian

named

it is

escape.

lit.h kindest regards to you and to my ether friends in the
bank,

I beg

remai

,

Sincerely yours,

H. A. Trotter, Esq.,
Bank of England,

Luddon, En ;land.

CONFIDENTIAL

Vault of (Ifqtai0
( th March,12-3.

Dear Mr.Governor,
The Governor has asked me to acknowledge,
and thank you for, your letter of the 2?nd ultimo; also to
express his apologies for not having written since his
return, but he has been extremely busy - apart from an
ordinary full day's work - first with the question of the
debt settlement and then with the negotiations as to the

Austrian loan, which meant being at it day and night to get
all preliminaries - both here and in the various participnting countries - fixed up.

The result has been eminently

satisfactory and a much better atmosphere has be n created

here and in Europe, which promises well for the long-term
loan when it comes: but without Norman behind them the

Austrans would not have achieved much.
He told us on his return that your rate was
likely to go up if the rise in commodity prices and Stock

Exchange speculation continued, and from the points you
now mention the course you have taken seems the only possible
one, although of course we regret that it is no longer
possible to cooperate as to rates.
Here we are running along smoothly: the rise
in

lift am hoping that he will be able to get away for a short

It

holiday before the election of Governors on April 24th, when,
as you will have realised, I am giving up.

I think you will

understand my feelings when I say that I hope Norman will go
on as Governor as long as possible and that no one could fill
his place.

My misfortune is that I have a business and a

family, and the former does not look after itself!

I shall

be awfully sorry to go and I could not have served under
anyone with greater pleasure or for whom I could have quite
the same admiration and something more.
I am so sorry to hear you have not
been well and we all hope you are now alright again.

Your

message to Hawtrey shall be duly delivered, and with my
kindest regards to yourself and Mr.Jay,
I remain
Yours very sincerely,

Ben. Strong , Esq .
P.S.

I am also to thank you,

on the Governor's behalf, for the

Eighth Annual Report of the Federal Reserve Bank of New York.

so-

August 10, nie
Deer Mr. Deputy Governor:
I

em enclosing copy of a letter introducing tc you Profteser Luther

A. Harr, who has been rent to ue by Congressman MeoGreger of Buffalo with the
recuest thet Governor Strong give his c letter to Governor
Not eiehing to bother Governor Norman personally, in the absence of

Governor 3trcng I have taken the liberty of sending Mr. Harr to you, with the
hope, however, that you will turn his over to eoaeone who will relieve you of
any burden whetever in the mutter.

Mr. Herr, wheel we had never met before

Congressman NecGregor sent him to us, it Aaelstant Profeseor of Finance in
the Wharton 3chool of Finence, where he teP,chet the subject of banking.

I

understand that he iE being aent abroad by the University of Penneylvanie to

make certain studies on the Continent and in England, there he plans to devote
himself to the particular subject of branch benking.
I have explsined to Professor Herr that you very probably would not
be eble to give him any direct help in thytt epeciel field, but in view of

Congressman MecGreger's repeated requests I hope thet ycu will understand my
writing you era I have.

Aeeuring you of my appreciation, I as
Faithfully youre,

(MEG? L. HAkhISON,
Deputy Governor.

Mr. Henry A. Trotter,
Deputy Governer, The Bsnk of Fuglend,
Threadneedle Street,
London, F. C. 2,
En 1 end.

how

August IQ, 19F8

Dear Mr. Deputy 'overnor:
Thie letter sill

prevented to you by Profeesor Luther A. Harr,

of the tharton School of Fin_nce of the University of Pennnylvenia, whom
Congressmen tip c:Gregor of Buffalo has been ,-sod enough to introduce to us.

Professor Harr has only recently sailed for Europe, where I am
oendinp his this letter, and I understand that he expects to go to London in

bout six or eight weeks for the purpose of making a study of the English
banking system, particularly the subject of branch banking.

While I am not certain Suet what his plans tre, or in what
detail he expecte to pursue his studies, we shall very much appreciate anything that you may be able properly to do for him.
tith kind personal regerds, 1 am
Faithfully yours,

GEOPGE L.HABII3ON,
Deputy Governor.

MT. Henry A. Trotter,
Deputy Governor, The Bank of EnFland,
Threadneedle street,
London, E. C. 2,
England.

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