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Federal Reserve Bank of New York,Directors, 1914 - 1928

[see-separatt-file]

Franklin D. Locke, 1914 - 1918
William Woodward, 1914 - 1919

[-See-refaMte-file]

[See separate files]

,Robert H. Treman, 1914 -

A
Leslie R. Palmer, 1914 -

/

[se.e...4e.par1e]

Henry H. R. Towne, 1914 - 1919

1914 -

(William B. Thompson,
/ George F. Peabody,
)(Pierre Jay,

1914

1920

t

)

1914 -

1921

1926

[see separate files]

[See-separate-fila4

(Charles Starek, 1914 - 1917 h'

)

W. L. Saunders, 1917 - 1926
Charles Smith, 1919 - 1924
James S. Alexander, 1920 - 1922

[5*e-eepax2ta-1211e]

Charles A. Stone, 1920 - 1922

Richard H. Williams, 1921 - 19231'

(Frank L. Stevens, 1922 - 1924
Clarence M. Woolley, 1922

t

-

XGates M Garrah, 1923 - 1925, 1927 Owen D. Young, 1923 -

[See separate file]

[See-rep:MS-TM]

Theodore F. Whitmarsh, 1924 ( Delmer Runkle, 1925

-

t

Samuel W. Reyburn, 1925 -

(-Jackson E. Reynolds, 1926

-

kx.

64.1iam H. Woodin, 1927 -

1 4)

cI

)

it)

*All men completed their various terms, which ended Dec. 31, with the exception
' of Charles Starek, who resigned Jan. 31, 1917 and his place was 44..,7 by 'U. L.
'1\N
Saunderg#Pierre Jay,who resigned in Dec. 1926, which resulted in Owen D. Young
15-edbming a Class C director in 1927, Gates Mc Garrah becoming another Class C
on Feb. 10, 1927, and William H. Woodin being elected April 2, 1927 to fill Young's
r r
place as Class B. [Source, Federal Reserve Bank of New York, Annual Report, 1915 - 1928

I

t No Strong correspondence with these directors in these Strong Papers.



Federal Reserve Bank of New York,Directors, 1914 - 1928

1914 - 1918

/Franklin D. Locke,

[See separate file]

1914 - 1919

[See separate

.'lkobert H. Trenan,

1914 -

[See separate files]

1,,,tes1ie R. Palmer,

1914 -

Woodward,

1921
[see separate file]

,-Itenry R. Towne, 1914 - 1919

t

William B. Thompson, 1914 - 1920
v'Georze F. Peabody,

'Pierre Jay, 1914

1914 -

1921

- 1926

[see separate file]

[See separate files]

Charles Starek,

1914 - 1917

/T. L. Saunders,

1917 - 1926

v Charles Smith,

1919 - 1)24

L-ames S. Alexander, 1920 - 1922

[See separate file]

//Charles A. Stone, 1920 - 1922
chard H. Williams, 1921 - 1923
Frank L. Stevens, 1922 - 1924
)(Clarence M. Woolley, 1922
Gates Mc Garrah,
/7.

ren D. Young,

t

-

1923 - 1925, 1927 -

1923 -

[See separate file]

[See separate file]

1/Theodore F. Whitmarsh, 1?24 Delmer Runkle,

1925 -

!Samuel W. Reyburn,

1925 -

Jackson E. Reynolds, 1926 William H. Woodin,

1927 -

t

*All men completed their various terms, which ended Dec. 31, witkttoecpption
of Charles Starek, who resiL;ned Jan. 31, 1917 and his place was filed by W. L.

Sunders, Pierre Jay,ho resined in Dec. 1926, Alich resulted in Owen D. Youn:.;
becoming a Class C director in 1927, Gates Mc Garrah becoming another Class C
on Feb. 10, 1927, and William H. Woodin bein elected April 2, 1927 to fill Youn
of New York, lainual Report, 1915 Place as Class B.[Source, :Cederal Reserve

ank

t No Strong correspondence with these directors in these Strong Papers.



1923




-764-7(.4-e

2-4

/

2- 2-

PRESIDENT

I--

JAMES S.ALEXANDEP
VICE PRESIDENTS
R. G. Hu TcH IN S
H ER BERT P. H OW ELL

NATIONAL BANK OF COMMERCE
IN NEWYORK

CASHIER

STEVENSON E.WARD
ASSISTANT CASHIERS

OLIVER I.PILAT
FARISPARUSSELL

(ORGANIZED 1839)

A.J. OXEN HAM

WILLIAM M. ST. J OHN

CAPITAL SURPLUS AND UNDIVIDED PROFITS FORTY MILLION DOLLARS

MANAGER FOREIGN DEPARTMENT

December 13, 1913.

F. BORGEMEiSTER




cro,-tiy

Mr. Benjamin Strong, Jr.,
c/o Bankers Trust Company,
New York, New York.

Dear Mr. Strong:

I have your letter of today's date, and
give you below the percentageSof reserves carried

by this bank for the weeks indicated, which are the

low points reached during the latter kart of 1007:
Week ending Nov. 2, 1907,
"

VT

16, 1907,
23, 1907,
n
30, 1907,
Dec. 7, 1907,
14, 1907,
21, 1907,
"
"

If
fl

If

1907,

22.7%
21.4%
22.3%
22.3%
22.3%
22.5%
23.P%
24.4%




July 17, 1919.

4aar Alec:

This is to let you know that I received your note of the 11th, and

once more conscious of your thoughtfulness and friendship.

I expect to have an interesting but restful trip. I am plan4g just now to be back in New York before the let of October,
rdy for anything that turns up.
id

I hope you will have a most enjoyable sumaer and a good holWith warmest regards and thanks,

Sincerely yours,

'Tara" 5Alexander, Esq.,
e/qational Bank of Commerce
New York.




NATIONAL BANK OF COMMERCE
IN N EWYORK

OFFICE OF

THE PRESIDENT

September 11, 1919.

Dear. Mr. Strong:

Permit me, as Oairman of the Sub-

/

Committee on Resolutio0,to present to you
the accompanying resolution as adopted by the
Liberty Loan Committeeifor the Second Federal
Reserve District.
Very truly your

'man Sub-Committee
on Resolutions.

Mr. Benjamin Strong, Jr.,
Governor Federal Reserve Bank,
New York City.




September 12, 1919.

My dear Mr. Alexander:

In Mr. Strong's absence, I wish to thank you
for the Resolution as adopted by the Liberty Loan Committee
for the Second Federal Reserve District.

I shall take pleasure in placing the Resolution
before Mr. Strong on his return to the office the latter part
of the month.

Yours very truly,

Ir:ecretary.

Mr. J.
Alexander
31 Nassau Street,
New York City.




October 7, 1g19.

Dear Mr. Alexander:

It is difficult for me to express the satisfaction and pleasure which those resolutions, passed
by the Liberty Losn Committee'Naave given me.

Nothing

could be finer and whoever may have been the author tv,s

expressed, without overdoing it, exactly the sentiment
which I would like to have the committee feel in regard to my work as its chairman.

The result of the two and one-half yere'
work h

been to leave me with a respect and affsction

for the men in that organization which nothing can
alter.

Some day soon I hoe to have them all for

dinner, when I can tell them something of my trip
abroad.

Sincerely yours,

James S. Alexander, E,q.,.
Chairman, Sub:Committee on Resolutions,
care of NA.ioaal hank of Commerce in New York.

BS.MSB

NATIONAL BANK OF COMMERCE
IN NEW YORK
ORGANIZED 1839
CAPITAL SURPLUS AND UNDIVIDED PROFITS OVER FIFTY MILLION DOLLARS

OFFICE OF

November 14, 1919.

THE PRESIDENT

Mr. Benjamin Strong,
Federal Reserve Bank,
19 Nassau Street,
New York City.
Dear Ben:

It has occurred to me that those of us who have been associated with
Robert H. Treman, now retiring as Deputy Governor of the Federal Reserve Bank, would
be glad of an opportunity to tender to him a tangible expression of our personal regard for the man and his work.
The many outstanding points in Mr. Trema
and ability together with his very substantial contribution to the financial guidance
of the nation have caused us all, I am sure, to esteem, admire and respect him during
his cooperation with us here in New York.
A modest and unassuming man, Mx. Treman would doubtless be embarrassed if
such a testimonial took the form of a gift purely personal to him.
There is one interest very close to Mr. Treman's heart - that is, Cornell University.
He was graduated from Cornell; he has been a Trustee of the University for many years; and his
home, to which he now plans to return, is also the seat of the University.
Some of
us who have discussed this matter informally are convinced that anything that might
be done for Cornell would please Mr. Treman more than anything else we could do.

Cornell University is now engaged in increasing its endowment fund by
The suggestion is that those of us who comprised the Liberty Loan Committee, together with the Directors of the Federal Reserve Bank, each make a contribution to create a fund, which will be presented to Cornell University as a permanent
foundation to be known as the "Robert H. Treman Fund." X This might be designated as
for lectures or other instruction in finance, but I believe it would perhaps be more
acceptable to leave its use to be designated by Mr. Treman.
i;10,000,000.

Does the establishment of such a fund appeal to you?
glad to co-operate in bringing it about.

If so, I shall be

If I don't see you myself in a day or two, I will ask Mr. Roger H. Williams
of this bank to talk it over with you.

This letter is being sent to each member of the Liberty Loan Committee and
to the Directors of the Federal Reserve Bank.




ainoerel




November 18, 1919.

Dear

lex:

Your letter of the 14th instant suggesting
the establishment or the Robert H. Treman fund has just
reached me.

I think such a testimonial to Mr. Treman's

fine character and splendid work silabe appreciated beyond
an.7thing that tne barkers of New York could do as an expression

of their esteem. You aay count upon my assistance to the limit,
in malting it a success.
Very truly yours,

Mr. J. S. AlexInder,
NailOrni-Bank CrT4mmerce,
New York.

NATIONAL BANK OF COMMERCE
IN NEW YORK
ORGANIZED 1839
CAPITAL SURPLUS AND UNDIVIDED PROFITS OVER FIFTY MILLION DOLLARS

OFFICE OF

THE PRESIDENT




December 28th, 1919.

Mr. Benjamin Strong,
Federal Reserve Bank,
19 Nassau Street, N.Y.C.

Dear Ben:As nearly everyone interested in the proposed ROBERT H. TREMAN FUND
has been heard from, and as practically everyone has
willingness to to be counted in on it, and in the majority of cases the
response has been most cordial, it would seam that we might put the
I em accordingly sending subscription sheet,
proposition through.
and, if you are disposed to join in on the project, I would be glad to
have you enter your pledge.
As the payment is to be to an educational institution, it will be
available as a reduction of taxable income; and the date of payment
may, I am sure, be made to accommodate itself to your entire pleasure
after January 1st, or later if you so prefer.
The preamble to our subscription I am of course expecting to have
properly engrossed in parchment form before presentation, and would
accordingly welcome any suggestions for improvement in the expression
This would not
of our united undertaking before having that done.
carry the amounts.
I am happy that so many have found the proposal appeals to them,
and believe we are doing something really worth while that will
enormously please Mr. Treman.

Since

ours,

&AA,

c

NATIONAL BANK OF COMMERCE
IN NEW YORK
ORGANIZED 1839
CAPITAL SURPLUS AND UNDIVIDED PROFITS OVER FIFTY MILLION DOLLARS

ROGER FL WILLIAMS
VICE PRESIDENT




04-

December 22nd, 1919.

sao
Mr. Benjamin Strong,
Federal Reserve Bank,
19 Nassau St., N.Y.C.

Dear Mr. Strong:-

Mr. Alexander said that you wished this list submitted to you
I in accordingly sending
when we got practically to the end of it.
it along so tbat we, if possible, can get the matter closed up
before Christmas.
Faithfully yours,

Vice President.

December 23, 1919.

Dear Mr. Williams:

Enclosed please find my check for t-500.00 as

a contribution to the Robert R. Treman Fund.
Yours very truly,

Encl.

Mr. Rogor H. Williams,
Vice l'resident, Jutional Bank of Commerce,
Hew York City.




May 24, 7.921

My dear Aleck:

It was very good of you to send a check to the
Rational Builget Committee.

They have really done some

excellent work and deserve help and support.

Of course,

most of the bills have been paid direct by the members of
the Committee out of their own pockets.
Sincerely yours,

James S. Alexander, Esc.,
President, National Bank of Commerce,
New York, N. Y.
&SON




June13,1921.

PERSONAL

My dear Mr. Alexander:

We have only within the last few weeks been able to conclune the

final accounting of the expenses of the vrious Liberty loans, and determine
to what extent, if any, expenditures made by the organization could not be

rei bursed by the Treasury under existing law, or rules of the Department.
We find that the total amount of such items that cannot be reimbursed is

0,535.97.

Of this sum, the Federal lieserve Bank is able to absorb $2,2k9.74-

The remainder,' 306.23, I have paid personally.
The Liberty Loan Committee passed a resolution, agreeing personally

to assume certain charges, up to a limited amount, which as I recall was $1,000.

If the membere of the committee care to pay their respective shares of thia sum,
the amount of each committeemanie proportion will be $23.55.

Had these operations-been conducted since the paseage of the Volsteade
Act, it would not have been necessary to ask the committee to make any contriOu-

tion.
!ours very truly,

James S. Alexander, Esq.,
c/o Xational Bank of Commerce,
New York, N. Y.




NATIONALBANKOFCOMMERCE
INNEWYORK

ieL rt.

JUN 1 5 1921

FICE OF

THE PRESIDENT

June 14, 1921.

Dear Governor Strong:

Referring to your letter of
June thirteenth, I am pleased to enclose
herewith my check for $23.55.

Very tru

yours,

Mr. Benjamin Strong,
c/o Federal Reserve Bank of New York,
New York, N.Y.







June 15, 1921.

:J1r dear Mr. Alendor:

I thank you for the remittance of ii23.55
enciceed in your favor of June 14.
Yours very truly,

Jhmes S. Alexander, Esq.,
c/o National 'Ian/ of Ookmeroe,
31 Nfuleau Street,
New 'York, N. T.
GB IV




August 27, 1921.

James S. Alexander, Esq.,
National Bank of Commerce,
31 Nassau Street,
New York, N. Y.
Dear Mr. Alexander:

Referring to my telegram of today Governor Strong
Is giving a dinner to Governor Norman and Sir Charles Addis
to meet the directors of the bank on the evening of Tuesday
August 30 at 7:30 p. m. at the metropolitan Club this city,
Fifth Avenue and 60th Street.

He desires me to express his

hope that you will surely be able to attend.
rather informal, dinner coats being worn.
Sincerely yours,

It will be

NATIONAL BANK OF COMMERCE
IN NEW YORK

OFFICE OF

THE PRESIDENT

August 29, 1921.

11 4-NDED TO
Mr. J. H. Case,
15 Nassau Street,
New York City,

AUG 3 0 MI
-1.

A. M.

Dear Mr. Case:

I have received both your telegram and letter of August twenty-seventh, and
accept with pleasure Governor Strong's invitation
to meet Governor Norman and Sir Charles Addis
at dinner on Tuesday, August thirtieth, at
seven-thirty o'clock at the Metropolitan Club.




December 20, 1922.

ear r. Alexander:

The organization to which I referred at luncheon to-day is
the U. S. Grain Growers Sales Company of Minneapolis, whose office Is

in the Corn Exchange of that city, and the officers are as follows:
?resident - J. F. Reed,
President, Minn.
Gary, S.D.

Farm Bureau

Federation,

Vice President - A. F. Nelson,

Sec'y, Minn. Farmers Grain Dealers Assoc.,
Benson, Minn.

Manager - T. H. Hagen,
Minneapolis, Yinn.

Secretary

:_reasurer-- Thomas E. Cashman,
Director, Minn. Farm Bureau Federation,
Owatonna, Minn.

H. Cunningham,

Director -

Seey, Iowa Farm Bureau Federation,
Cresco, lowa.
Director - H. W. Green,
N. D. Farm Bureau
Leal, N. D.

Federation,

The gentleman with whom I had my conversation is Mr. T. H. Hagen,
secretary and manager.

I was impressed with the

opportunity for some

fact that-this

situation may present an

valuable business which will be of

real service to

that section of the country and to a very important class of our

Yours very truly,
Mr. James S. Alexander,
c/o National Bank of Commerce,
New York City.

http://fraser.stlouisfed.org/
BS.MM
Federal Reserve Bank of St. Louis

citizens.

Jenuary 6, 1P2Se
Deer Alexander:

Enclosed are two letter
U. S. Grain Grorers Sale
in

received a few days age from Mr. Heron OP the

Company, which largely explain themselves.

I nm

both
both letters to you es they give A pretty gooe indication of the straight-

forward and bueinosaliee way in whinh these gentlemen are undertaking t

Not only mr. "eon, but the ether

the business of merketing their own crops.
memeere of the comeittee

thee

told me that, they proposed

net

go into

I net in Chicago impreesed me favorably.

Vr. Fsgen

only to publish their LOC,:AIGT6 but to have them

audited by reeponaible auditors.

They seemed to be willing to meet eny reason-

able requirements so that lenders may be afforded adequate security.

They

anticipate that the smell aseesement which they :,:rasose to levy upon grnin heneled -

something like one cent per bushel - will in

the course of a fee years produce a

working capital of between $10 end 40 millions.
In view of the fevorable impreesion which I received. In my talks with

tease gentlemen, I sincerely hope that you will be able te send 50Va one oet to
Minnespolie, as you expressedee desire to do when I last saw you, and see ehether
eome meens cannot be developed for extending come accommodation to this enterpriee
from New fork.

Of course, I would be the last one te suggest eoing so unless: the

business eere safe end the term& satisfactory.

Just now there tE nothing that I

pee imeediately ahead of ue which will produce so satisfactory and lasting an
impression upon the fermere of the Northwest as just mien an intereetF.,e you

riclicated you will take in giving thea advice and endeavoring, if poesible, tc aid

their financing.

Would you mind returning

you desire them.

James. S. Alexander, Esq.,

c/-.' National Bank of Commerce,
New York City.


http://fraser.stlouisfed.org/
BS.We
Federal Reserve Bank of St. Louis

Ur. hagenis letters,

lours very truly,

retelning copies if

January 13, 1923.

Dear lir. Alexander:

The enclosed letter from ;al% Hagen explains itself.

I will be glad to discuss this matter with any of your
officers wtenever c,onvonient.

Ufb very truly,

T. James 8. Alexander,
c,fo National Bank of Commerce,
New York City.
BS.MM

Enc.




0,1

t

P. if 7 (

fru!,

THE CHICAGO RATE CONTROVERSY

Thie memorandum is prepared solely for the uee of Mr. J. S. Alexander

- New York member of the Federal Advisory Council - to aid in the discussion of
the above matter at the Council meetine to be held in Washington on September 18,

This etatekent und the documents attached are confidential, not to be

1927.

published, entered in any record of the meeting, nor distributed to the

bera.

Mr. Alexander will use his own discretion in making references to or reading
from the papers.

The discussion will be confueine uniese care is exercised to separate

the three very distinct questions involved, to wit 1st. The eerits of the policy cf lower discount rates.
2nd.

The general method employed to adopt a eystem policy of lower rates.

3rd.

The particular method employed in the case of Chicago.

But before disceesing theae questions it 13 necessary to refer to
some erroneous current reports as to the motivee which may have actuated the
Federal heserve Bank of New York.

(4

Those which have currency are mainly, -

To aid the Treasury's program for the 15th September financing.
To aid the Bank of Eneland.

To support stuck speculation.

As to (a).

When Mr. Wedlon first took office in kerch, 1921, he

held the view that our rates were to high and might be reduced.
probably right - but never urged that view.
early in 1921.

He was

It was discussed more then once

From that time to the present neither he nor his aseistents

have ever urged, reeueated, or ouggested any chance° of rate, or any policy as
to open market operations.




4e have always considered it our duty as Fiscal

Agents to keep the Treasury fully informed es to our policy and have done

83.

It has always been initiated free of Treaeury suggestion or influence, and
we have never proposed or volunteered policies beneficial to Treasury financing which were not based upon sound consideration of Federal Reserve policy.
At the time of the July 27 meeting of the Open Merket Committee, rthen

ft

change was to be proposed, the matter maa reported to Mr. Mills, then Acting

Secretary in Mr. Mellon's absence, but he refrained from advice even, and

said that he would observe the policy of not interfering with any Treasury
consideration.

He attended the meeting in Mr. Mellon's absence, and when

asked by me if he cared to discuss the eubject of rates and openmarket policy,
he declined on the ground that the Treasury should not attempt to influence
the decision.

So far as the Federal Reserve Bank of New 'fork is aware, the

Treasury under Mr. Mellon has scrupulously pursued this policy of non-interference.

As to (b).

The relations between the Federal Reserve Bank of New

Yoric and the Dank of England ere little understood and frequently misrepresented.

It has been our purpose and policy, so far as might be possible

consistent with our own position, to aid in the resumption of table monetary
conditions, stable exchanges, and the reestablishment of the gold standard
In Europe.

We believe that this policy is sound and not only aids in the

restoration of world trade sod prosperity, but particularly in the preserve,tion of our own markets abroad, and full employment and prosperity at home.

There has never been any obligation, express or implied, to aid the Bank: of
England or any foreign bank of issue when such aid is incompatible with our
domestic welfare.




Any suggestion to the contrary must be hazed upon ignorance

3

of the facts as to our relations to Europe, especially to London, in monetary
and credit matters.
But since 1924. and 1925 it has been in the power of the Federal
heserve Bank of New York at any time, by rate advances and by a dear money

policy - to break down this very structure of stability we have been striving
to erects.

Withdrawal of foreign balances by American banks, closing our

merkets to foreign loans, causing large exports of gold to New York, and

forcing dangerously high bank rates in Europe, could easily destroy all that
has been accomplished.

The penalty for us would be a recurrence of dis-

ordered exchange, and *lose of our export trade - no less in food stuffs and
cotton than in manufactured goods.

Europe and the Bank of England are de-

pendent upon us - not we upon them - and unless we recognize that fact and

avoid a hostile or destructive policy we shall suffer consequences about as

serious es those we could inflict.
As to (c).

It is hardly necessary to refute a charge that me aim

to promote speculation or protect the speculator.

But I have no hesitation

in expressing some views on this puzzling complication in our situation.
There is no doubt that the liquidation of 1:320 and 1921 en4 the depreciated.

vaaue of the dollar still remaining after liquidation Was concluded, left both
fixed interest and equity inveatments below their real values, considering

the still reduced purchasing power of the dollar, that is, gold, and consider-

ing also the generally lower level of interest rates prevailing.

During the

past few years a gradual, and latterly a rapid, readjustment of these values
has been under way.

It has been much accelerated by the enormous savings

of the country, producing an unsatisfied demand for investments, urgently




4

reinforced by the release of from $500,000,000 to a billion dollars of funds
each recent year for reinvestment, due to the repayment of the Government
war loans.

The same development occurred to a less extent in the real estate

and building boom which reached its climax last year.

These readjuatments

were bound to take place and to be largely financed by borrowings.

Fixed

interest investments have now greatly advanced and become more nearly stabilized; but speculation as Wds to be expected, has been centered upon common

stocks, although recently both the rate of advance of prices and of growth of
loans have been eomewhat reduced.

The real question is whethei we should

ignore all other objectives of policy end direct our efforts solely to checking stock speculation.

If so, we have the choice either of high rates or of

some form of direct aggressive action.

It is our opinion that either course

would involve policies which could not be supported on the ground of our

primary responsibility, which is not the stem market, and if successful in
reducing the speculation would have had other consequences, as abeve end later

suggested - too grave to face.

The Federal Feeerve System was no more organ,

'zed to replete the prices of stooks than it was to regulate the price of
cotton or real estate or pig iron or wages, or rents. And during most of
these last two years, there has been no commodity speculatien and the price
level ha a declined.

One great peril to the Federal reserve System is the aseumptio n,

by the System, or by the public, that it can manage or regulate or in some
way control these isolated and special movements, such as speculation in

etooks or real estate, or advances or declines in prices of individual commodities.

The demand that We should mutt etoca speculation is one manifesta-

tion of this tendency.




Once we submit to this demand, we must submit to all

- 5-.
othere and our responsibilities will crush us.

The pending bill attempting

to charge us with the duty of price control is no lose an evidence of this
tendency.

As to let.

Merits of the hate Chan e.

The justification of our policy is to be found in four or five
simple facts.

One is that we are dependent upon Europe for a market for

our marginal production of export goods, mainly cotton, automobile, wheat,

meats, oils, and copper.
Another that we shall lose that market if monetary disorder, exchante

troubles, high interest rates end price declines abroad force liquidation there.
A third is that we cannot sell our surplus abroad during these years of recovery without extending credit.

A fourth is that Europe already has heavy obligations to meet in the United

States for war loan payments and the service of private ions, no less in

fact than a billion dollar's a year.
And finally, that a restrictive credit policy will force gold shipments to
this country in defeult of other means of payment.

Let us briefly examine these facts.
cotton, the most important export we have.

The first is illustrated by
Last yeae we grew our largest

crop on record, 13,000,000 bales, of which we exported

11,000,000 bales,

within two million and a halt of this year's total eetimated crop,-end onehalf of our exports went to Englend.

Had the world not been able to borrow

about one and one-quarter billion dollars here that year, we could not have

sold all that cotton.

This applies equally to the meat animals, which

consume the corn crop, and automobiles and other export goods, upon which

the Chicago district largely depends for its prosperity.



No discussion of the adverse influence of monetary disorder upon inter-

6

national trade is necessary before a meeting of bankers.
the world has expressed a unanimous opinion.

On that subject

A depreciation in the veluee

of Europels currencies after the good progress made toward stability would

mean a brief period of artificially stimulated exports by Europe, curtailment of our exports and thai collapse - and world wide edam.
The need for credit aid to Europe during reconstruction is shown

by simple facts.

In the last few years we have loened over $5,000,000,000

net abroad, end during that period have had no net exports of gold.

The

only way the borrowed dollars could be used was to spend them in buying
American goods.

So except for the balances left with our banks, all this

borrowed money has been ueed to pay for aux koods.

Had we not loaned it

the goods would have been unsold, unleee they had been paid for in gold.
We have maintained a lending market at reasonable rates and kept our trade
going and our people employed.

The liquidation of war obligations to our Government and meeting

service of loans privately held calls for gross payments of about a billion

dollars a year, - less what applies to securities repurchesed by foreign
investors, - some fraction of the whole.

Pending the gradual restoration of

trade, elevation of living standards, increased capacity to consume and increased exports by

irope, these payments are now possible only by borrowing,

mainly in the United States.

That is feasible only if rate relationships

here and abroad are such as to make borrowings not only possible, but not so

costly as to impoverish the debtors.

In time the adjustments of production

and trade and of services to be paid for - or possibly even readjustments of
debts, will enable these payments to be made without unsupportable strain on




--

central beak reserves.

But in these years ef recovery our credit is not only

needed but essential, and undue curtailment means a stoppage of payment and

disaster.

Finally, if credit is restricted in the united States and other means
eayment for new goods and old debts fall, We shall be paid in gold to the
extent gold can be spared.

So fax we have succeeded in avoiding a perilous

told inflation, and we can probably continue to do so if we are fairly liberal
as well as careful in lending.

Once we stop we will drain Europe of large

amounts of her gold, inflation here will be unavoidable and we shall then face
another period of worldwide monetary disorder - Europe drained of gold, we

glutted with it.
There are decided advantages to be gained other than those relating

to our trade, by deferring the test as to whether war debts can be met without
breakedown of monetary systems.

The D6LW68 plan has so far proved to be a

success, but it must be rameebered that the entire payment so far made by
Germany has been borrowed abroad, meetly here, and even 25 per cent or more

In excese of these payments.

The fourth annuity year just commenced will

likely impose no strain which cannot be met.

In the fifth year commencing

September, 1028, the full payment of *625,000,000 is to be made, and then the

test will arise.
to pay us.

If Germany cannot pee, her creditors, they may not be able

The plan provides means for certain cepital payments which can

be employed to emeliorate the burden.

Political considerations indicate

that an adjustment of that oharacter will be unlikely until the German, French,
and American elections, all occurring in 1928, are out of the way.

So a policy

which maintains the present equilibrium in the meantime is justified on that
account as well.



-8it will naturally be imbiolod - what relation hao all this to the
Chicago (which also applies to the Philadelphia lnd Lan Francisco) discount

rate.

The answer la in New Yon money rates and their relation mainly to

London rates.

Ilth the Chicago rata at 4 pet cent., and New Tr k at S 1/E, we
can eapeot and believe we now cbserve three tendencies.

lat. Bank balances carried in New York tend
districts.

to

move

to

higher rate

Interior banRe (and other borrowers oleo) tend to increuse borrow-

End.

ins in Noe York, where ra.tee h,e no somewhat chevanet.
Srd. Money employed in Stock :..tchanee loans at 3 1/E -ier cent tends to

be drawn home to the interior - especi ly by icalber ban 8, which at this
season need to borrow from the iierserve Bank.

The all tends to accentuate the UJUtli .secsonal Cenand on New York

imptirs their reeerveo, forces larger borrowing from us, und may cause
higher rates for money th$11 ctm be c,mtinued without irciQg advances in dia.

lnt rates. strond.

following chart

The operation of these tendencies le illnetrated in the
The chart on reserves indicates that the Sec.lid
table4.

District lost 188 Millon &llare to other districts between July 1 and
September 7.




/1/L IL /(JIY .)oj 141/.LAK 5

12001

1150

.1100

I 05()

1)00,
950

1111

900

13

20

I

27

3

10

17

24

31

7

JULY
AUG.
5EPT.
Gold Reserve., Federal Reserve Bank of New York.
RATE

5




'

1927

R.

9

16

JULY

23

30

20

AUG.
AvArage Call Money Hat

27

.5ETJT.
(F %newal ) .

Loans to Brokers and Dealers - Secured by Stocks and Bonds
(GOO Omitted)

For
Account
For

July

.ug.

town
Banks

Others

41,155,799
1,204,315
1,202,644
1,187,441
1,189,518
1,216,369
1,248,136
1,246,848
1,222,914
1,238,325

4864,579
863,466
874,561
906,144
872,771
910,290
918,796
920,265
915,475
921,900

43,126,327
3,059,279
3,058,974
3,141,193
3,171,845
3,190,329
3,188,969
3,168,074
3,184,058
3,206,299

652,296
648,223
653,302
669,379
692,498
718,937
717,012
666,746
664,707

2,602,788
2,601,257
2,620,952
2,602,042
2,688,717
2,718,332
2,742,388
2,731,210
2,758,274
2,763,029

Account
6
13
20

41,105,949

27
3

1,047,608
1,109,556
1,063,670
1,022,037
1,000,961
1,045,669
1,046,074

10
17
24
31

Sept.

For
Account

Own

1927

out-of

7

991,498
981,769

of

Total

1926

July

7

14
21
28

Aug.

4
11
18

25

Sept.




1

8

1,019,298
932,813
954,368
933,881
994,572
936,741
918,775
941,544
991,437
963,901

951,852

1,016,148
1,018,361
1,014,859
1,024,766
1,089,093
1,104,676
1,072,654
1,098,091
1,134,421

Discussions with the officers of at least five or six European
central banks, as well as our or observations, convince us that the importance
of the relative rate level between New York and London and some of the conti-

nental money centers, is greater than is generally understood.

For a.me

months after we advanced our rate to 4 per cant, thus reducing the differen-

tial to roughly 112 per cent, sterling and continental exchange rates were
maintained above their gold export points.
loans to foreign borrowers.

This was largely due to our

Early this year, however, an unseasonable

drain upon European reserves atarted, end so far this year we have imported
net about $145,000,000 of gold.

Az the season of active exports of American

that
food eroducte and cotton epproached it eppoared/vory much iareer imports of

gold were likely.

Ae learned that the heads of two important continental

banke of issue were consulting the BAOk of England regarding a policy of

rate advances by all three on that account.

Our rate reduction at least

deferred and possibly prevented general advances abroad.

Something of the influence of our rate reduction may be seen in the
strength of sterling this Aueust and September compared with a year ago. The
average monthly rates have been as follows:
1925

1927

July

4.8589

4.8518

August

4.8540

4.8565

September (1-10)

4.8514

4.8574

If the drain on New York from other parts of the country causes such
advances as to much reduce the present differential of 1 per cent between New
York and London money rates, we will either be forced to buy large amounts of




- 12 e
securities in New York so as to reduce reeee, or take in more of Europe's gold

- until finally they are forced to advance discount rates.

Our policy would

than fail.
It must not be understood that the Chicago rate is itself fatal to
our policy.

We could adjust our plans to meet a 4 per cent rate there. But

it will be easier now that they have reduced.
Evidence wee and is still accumulating that there is some slowing

down of business in certain lines, notably iron and steel mad automobiles, beyond the usual seasonal recession.

This Is usually h condition in which rate

reductions can do no harm and may be helpful.

A reduction of cur eeasenal

esports would greatly accelerate a. basinees recession.

Finally, we have a great advantage in our 5 1/2 per cent rate in case
an advance later becomes neceesary.

Meeking up rates from a 4 per cent starting

point would be much more dan4erous than if we start from the 3 112 per cent level.
As to End.

The Method EMployed to Adopt e System Police of Lower Rtes.

This will involve narrating the events of the last few months.
On May 9 a meeting of the Open Market Investment Committee was held ia

Washington, at which the whole situation was reviewed, and it was decided to pur-

chase, as need appeared, not over $100,000,000 of eecurities, the program to
terminate August ie

We have rarely held a meeting where discussion and exchange

of views was more complete and it fully covered the ruropean problem.

The situa,

tion was also set out in writing, and the statement has been sent to all Reserve
Banks and the Federal Reserve Board.
Between June 28 and &lily 20 we had meetings in New York with Governor

Norman of the Bank of England, Dr. Schacht of the Reichsbank, and Dr. Riot mad

Monsieur hicard of the Bank of France, and reviewed the entire situation with




- 13 them.

Governor Crissinger and all the members of the Open Market Investment

Committee spent a day in New York with these gentlemen, and discussed the

situation fully.

Governor McDougal heard all of the discussion, took part

in it, and then reviewed it separately with the officers of the Federal
Feserve Bank of New York, even to point of himself sugsesting that Governor

strong or Mr. Harrison go to Chicago to discuss the whole matter with his
di rectors.

The gentlemen from abroad met our directors, individually and at

eeetings, and our directors heard all aspects of the problein discussed.

They

spent a day, July 7,, in Wasshington and discussed the situttion with members
of the Federal Reserve Board.

Ali those responsible were called into con-

ference, given opportunity to ask questions, and all questions asked were
freely answered by our visitors.
Finally,F. z. 8 our authorization to make open market purcheses was ex-

piring on Autust 1, a meeting of the committee was held in Washington, all

being present, on July 27.

In addition the Governors of the Federal "rieserve

Banks of Kansas City, ,St. Louis, and Minneapolis attended, and the Chairman
from Bt. Louis.

Again a written memorandum was submitted, and e discussion

lasting all day covered the entire subject.

No more complete or enlightening

exchan,?e of views could have been possible.

The position of the Federal heserre

Bank of New York was briefly as followst

We were convinced that the time was

at hand when we should reduce our rate to 5 1/2 per cent.

We felt that to

5ace the reduction effective we might need to purchase additional securities,
say $50,000,000.

reserve.

We invited those present to discuss Ju r rate preposel without

We did not suggest that other banes should reduce their rates.

Governor Crissinger, supported by othei members of the Board, did suggest that



- 14 a.

ttd that it wee
the chenee shvuid firet ba oado ia the Ciddl
out naturist to us ehe reduced tirat nor over, absentia that all should.
We felt it welt be most helpful ond wee .possitiky necessary, for
sea* other reduction. tu be Tade sAmially Boston, Philodelphis, Cleveleady
reduce.

'

Chicago.

';'-e would welt, or reduce first, as 1.4ht be agreed.

The meeting *S6 unsmiaoua az to * reduction in Ng* York.

Governor

eeDouvl said hle directors would not then be in favor of ratc reducti,un in
Weave and certainly would not take the ead, tho4th hey eitht folios if
Z'oese of the other toeern r expressed the *lee that
couditiona chaft4:ed.

local eonditUne alone did nut teen , usttify lovtr rates, but that ae matter
of general tyatam .licy they favored a reduction. *Still other, favored
reductioa la their banks on both frounde.
neer Criasinger tnd the embers of the 4so Market Committee
were in few clic, Governor Crieeinger suguested that La zi I thoeld visit
Cleval Id d Chico fur the purpeet of aestic the director* of those two
Nhes Go

banks and mipialning ti s situation poi' artily.

raised the

Jaatioa sesin

either by tulaphote or whenI as neat to taelllafton. 1 thzutht it over,
°unsuited ay semseipAce here, and decided taut it ofld be unsiiss for ge to
apposr before the direetors of my other rnere Boot for -0.0 iiurpus of
diem:siting, a rate cheat. by that bank, and ecoordiftly wrote Governor Cri

copy of 2y letter on that subject being.
Geer three xenthe bee he

Felity by the .ystec t
Por0,01~10M.




.base aecomptaying thie moo-madam.

devoted to tbsse meetin

and na chases of

ever been canvassed 're tbi'ircm.gby thalt

a this oat.

of reference a chronelea et Ulla diecuesins le Ltte4 bare.

- 15 Chronology of Events Leading to Eatd Reduction.
a III 0 et i lag of the Open Market Investment Committee was held in

Washington at wMh a.. mmaerandum was submitted discussing this whole situa-

tion, and this resulted in the authorization of purchases of $100,000,000
Government securities in the open market, of which, however, only about
$E0,000,000 were purchased.

.June 28, Dr. Hist and W. Ricerd of the Bank of France arrived in New
York, hevin g come for the purpose of discuesing the whole central bane problem and the relations between the European and American money markets.

July 1, Governor Norman of the Rank of England and Dr. Schacht of the
Reichebenk arrived in N OW York for the same purpose.

Following the arrival

of these gentlemen continuous discuesion took place a e we -immediately left
New York and spent V. ye or six days at a private house on Long Ieland.

July 8, Yesers. Norman, Scbecht, iqet, icard and. Strong rent to
Washington and spent most of July 7 in discussion with the members of the

Federal Reserve Board, lunching with them at the Hotel Willard.
July 8, the members of the Open Market Committee, Mesere. Harding, Norris,

rancher, McDougal and Strong, together with Governor Criesinger, spent the day

in Few- York, most of it devoted to e discussion of these ese eubjecte with
Messrs. Norman, Schacht and !list.

Thereafter the visitors from abroad left

on different dates, the last, Governor Mermen, sailing en July 20.
July 27, a meetine of the Open Market leoreetia t Committee as held in
,
04:06,49 -717

Washington for the purpose of reviewing the,situaticin, especially in the light
X1,,e)

of the eeetings previoumly held, anellbocause the authority to purchase securitiee up to $100,000,000 was expiring on August 1.

In addition to all the

members of the .Open Market Investment Committee and the members of the Federal



- 16 eerve Board then in Washington (Dr. Miller and Mr. Cunningham were away)

there were present Governors Young of Minneapolis, Biggs of St. Louis,

Mr. Martin, chailmanof the Federal Reserve Bank of St. Louis, and Dr. Burgess
of the Federal heserve Bank of New York.

Governor Bailey was in Washington

the day previous when Governor Strong was also there, in order to discuss the

situation with the Federal Reserve Board, and left at once for Kansas City as
his meeting occurred the following day and he had to return in order to lay

the matter before his directors.

At this meeting of the Open Market In-

vestment Committee a memorandum was submitted similar to the one submitted

at the meeting of May 9.

Following this discussion, on July 29, the Federal Reserve Bank of

Kansas City reduced its rate to 8 1/2 per cent.

A few days later the Federal

Reserve Bank of Boston reduced its rate, requesting the Federal Reserve Board
to make the announcement simultaneously with the announcement of the rate reduction in New York when that occurred.

On August 5, the Federal Reserve Bank of New York reduced its rate

to 3 1/2 per cent, and that reduction, together with the Boston rate was
announced on the same day.

The other changes were made in the following order:
Cl 6Veland, August 6

Dallas,
Atlanta,
Richmond,

12

15
*

16

On September 7, two meeting days having elapsed in Chicago, the

Federal Reserve Board reduced the Chicago rate to 3 1/2 per cent and announced




On September 8, Philadelphia reduced.

- 17 On September 10, San Francisco reduced.

September 9 and 10, Governor Strong was in Washington on other

matters having to do with the Treasury Department, his visit there having

been arranged by dr. Parker Gilbert prior to the action by the Federal
heeerve Board in reducing the Chicago rate, and his visit there was not a

result of the Board's action or in any way related to it.
September 12 Minneapolis reduced.

As to Zrd.

The particular method employed in the case of Chicago.

There may be little gained by discussing the meaning of the law

as to rate changes.

At beat it is indefinite.

I have never been willing

to believe that Congress intended the Federsl Reserve Board to initiate
rate changes.

But on the other hand no formula appears for cases where

changes having been disapproved, a new rate must be fixed, or where a new

It

rate can be fixed, if an existing rate is not changed by the directors.

does seem, however, that Cangreee would hardly have required the vote of five

out of seven members of the Board to fix rates for rediscounts between heserve
Banks, an infrequent and relatively unimportant occurrence, and then give un-

limited authority to initiate changes of discount rate, our most important
act, by vote of a majority only.
This has been a matter of controversy from the start.

Early in

1915 the Governor of the Minneapolis Reserve Bank, by order of his directors,

reported to a meeting of the Governors that the Federal heserve Board had

attempted to force a reduction in their rate.

The Governors passed a resolu-

tion unanimously protesting, and suggested testing the question in the courts.
This never became necessary, but I was told that an opinion, possibly informal,
was asked of the then Attorney General who did not sustain the Board.



T have never had confirmed nor has such an opinion even been published.

This

- 18 in 1919,

or practically the entire year, and with increasing

insistence in the autumn, the Federal Reserve Bank of New York advised and

urged rate advances.

The Board never approved our doing ex, clearly their

right, but then also the opinion of the Attorney General was asked and Acting
Attorney General King wrote an opinion upholding the Boards s present conten-

tion that they could initiate a change.
In 1915, the Federal Reserve Bank of X ew York obtained an opinion

free John 0. Johnson or Philadelphia, who, as I recall, held that the'Beard
could not initiate a change but cculd detexmine a rate differtett from one
established by a bank and sent to the Board for review.
In 1920, White and Case rendered an opinion that the Board, under

its general supervisory powers, could initiate a rate Change.

These opinions

are attached.

The nearest cese to initiating a change by the Board of which I
have heard, was taco in Chicago where the directors, on leaviing of the Board's
intention, anted promptly enough ee that an issue was avoided.




In the present instance our relation to the Chicago rate change has
already been explained seve on one point.
After seven or eight
banks had reduced their rates, Governor Criseinger telephoned
me that Chicago had declined to do so, that the En.:ax-d had disapproved the continuance at 4 per cent, and at a meeting to be
held on Tuesday, September 6, proposed to make their rete 3 1/2

per cent. I stated to his that I hoped the Board would not do
ec I doubted the wisdom of that course a well as the Board's

power.

Tuesday morning he 'phoned me that the Board would act
that morning. I suggested that Yr. Mellon was in Pew Yore end
asked whether they could not wait one day until he reached
Ye.sh.ington, when the flail Board would be evailable. He asked me
to see Mr. Mellon and get his views. This required time to go

uptown, which I did, explained the situation fully to Mr. Mellon
and asked his 'Views.
he said he hoped the Board would await hie
return kednesdey =mire, and he wculd ree the Governor at once
on his arrival. When I 'phoned this to Governor Criseinger soon
after 1.2 o'clock (after 1.1 Weshington time) on that Tuesday he
said that the Board had already acted, the wire was being or would
be sent, and he thought it would add to the difficulty were he to
report my talk with the Secretary. I did ask him to think it
tf-

.Ene, lovEa_

- 19 The Feder' Reserve At is lamentably lacking in separating and
defining the respective powers of the Board and the Bunks.

It would be

far better, however, to find means of adjusting different views just now than
to attempt a series of amendments such as may well result from this contro-

versy, or than to attempt arbitary action which invites controversy which is
detrimental to the system.
My own judgment is that the Board is too detached from the scenes
of operation and from operation problems, money markets and all the oomplext-

tise of the business to wisely initiate chenges of discount and open market
policy or attempt their execution.
more experience.

A nice balance can best be found after

If the Act must be changed - then a limited power to initiate,

say upon a specified number of majority votes, and only in a case where an

individual bank is recalcitrant, - might be granted to the Board.
There is one point upon which there must be no misunderstanding.

It

has been too frequently published in recent Chicago press articles to be ignored.
There is no desire and never has been any conscious attempt by the
Federal Reserve Bank of New York to dominate the Board or the System. We have

in the past and shall in the future, urge views upon our associates, as we expect
them to do with us.

We are ready to submit our individual views to the authority

of the Board where it is Clear the Board has authority, and I know of no case where
we have failed to conform to System policies, even when our individual views were

contrary to those of the other Reserve Banks.

The practical question is how

policies are to be adopted and then executed.

Our views are clear enough.

Expressing the problem, in one extreme there is the choice of complete centralise,

tion of power to initiate policy and direct its execution in the Federal Reserve



Board, - or at the other extreme, complete decentrelization, with power in

each bank to conduct its business in each district in a watertight compartment, with no System policy:

Either weuld be fatal to the System.

The plan has gradually evolved, se as to escape either danger, of
arriving at policies by agreement at meetings of the Governors and Chaiman,

or of Committees of those and other officera.
is the one on Open Market investments.

The meat important committee

This committee was first appointed

by the Conference of Governors, but in 1923 the Board arbitarily, witheut
previous notice, diemi seed the committee, and reappointed the same men as e

committee with largely the same functions, but with an attempt to subject it
completely to the Bowl:Its control.

That was a mistake which caueed much un-

necessary controversy and frictions theugh there now exists a much better
working understanding.

My position as chairman of that committee has sew ed

to everyone necessary, as the New York bank, in the principal money, security
and foreign exchange market, must execute most of the orders.

The alternatire here again is for the New York bank to ignore the

other heaervs Banks, develop and execute its own policy, or subject itself to
some supervision and enjoy with other deserve Banks some sort of cooperation

in a System plan, through committee supervision.

This latter we have done as scrupulously as possible.

Repeated in-

euiry of members of the cesSaittee and of the banks not represented on the com-

mittee oonvinces us that they are satisfied and approve not only the plan but
the way the hew York bank executes the committee,




wishes and directions.

This committee now flee supervision of (

All open market purchases and sales of Government securities,
save strictly intrm-district transactions, with member banks.
(But even transactions with members, the Federal heserve Bank
of New York voluntarily makes a part of the committee account).

- 21
All purchases and sales of bills.

The diatribution of these two investmente between the Leserve
Banks.
Operation of all foreign accounts (beaks of issue) which are
ratably divided.
(0) All inveetmeets for foreign account.
(I) All special foreign transactions, such as the credits to the
Bank of England, Bank of Belgium, and Bank of Poland.

(g)

All gold transactions abroad.

(k)

And as a matter of courtesy, and because changes in the New
Yuric rate of discount probably have more effect upon other
districts than their changes have in New York, we have never,
since the committee came into existence, made a change of




rate without first consulting the committee either at a
Leetiag, or by letter, or by telephone.




etft,

ROGERS,LOCKE 8c BABCOCK
yFRANKLIN- b.LOCKE
LOUIS L. BABCOCK
CHARLES B.SEARS
ALBERT E.J ONES
EDWARD Mg MANI LLS

COUNSELLORS AT LAW

pm
J.

810-826 FIDELITY BLDG.
BUFFALO, N.Y.

April 23,1915.

EVAN HOLL.ISTER4_

FEDE

ANSLEy...W_SAVVVER
J. LEROY KENEF ICK

BANK

ROBERT S. STEVENS

Hon. Benjamin Strong, Jr.,

Governor, &c., 62

Cedar Street,

New York City.

My dear Governor:

I have yours of yesterday.
1 wish you would let me off on the dinner next Tuesday.

My coming is very problematical anyway, but the ride of 401 miles down
wearies me to sudi an extent

that 1 am.

fitted for sal purposes,

after I reach that noisy city. I never leave my roo
and the papers and try and rest

get a much

up.

1 cannot understand how you could t ink that 1 misinterpreted any remarks you made at the meeting y sterday. The only attraction to me

of

those meetings rests

upon t

ferent, each from the other,and are so

fact that we are all so difee in the expression of our

notions. For instance, I am very fond àf Mr. Jay and have absolute conapacity. At the same time I do not

fidance in his integrity and in his

think that any procedure should. ob amn in the Bank which will enable

a successor of different calibre to run the institution. I feel perfectly
free to assert in open board t at he
of the Department; that he h s no

is nothing but the watchdog

right to be purchasing acceptances

or to guide the policy of/t1e institution except through his vote as a
Director. He has precise
so far as

'y

the same rights that I have, but no greater,

the Bank itself is concerned, according to my interpretation

of the law. 1 think he knows that there is not the remotest personal



--2--

feeling in the matter; and 1 feel as free to differ from you as from
him, believing we are both men of sufficient calibre to hear what the
other says and understand it correctly. At the same time 1 am always
prepared to badk you up to the last ditch, even if 1 am compelled to
scold in the operation.
Most sincerely yours,




ILING TAPT.
\PFQ14i1cra DEpp.
April 26, 1915.

FEDERAL ROME BANK

Franklin D Agslat,"_

F -71771nilding,

Buffalo, N. Y.

If you are not too tired tomorrow evening and will let me know Whore

you are stopping, All be glad to drop Ir. for a little
Benj. 1~trong,
I011-4

Charge to Federal heserve Bank.




n11.

ROGERS, LOCKE

BABCOCK

COUNSELLORS AT LAW
FRANKLIN D.LOCKE
LOUIS L.BABCOCK
1711

810-826 FIDELITY BLDG.
BUFFALO,N.Y

OiNd--"DPE
EDWARD NI,M.MILLS

MAY

rd

ANSLEY W. SAWYER

J.LEROY K.1EFICK

May

cEDBAL REETIVEVL.

17, 1915.

Benjamin Strong, Jr. Esq.,
62 Cedar Street,
New York, N. Y.

My dear Governor:
I shall not be down Wednesday.

I know of nothing to

come up of importance.

There are two matters of which I wish to speak:

I was

hurt by the Chairman's persistence with regard to the bank reports,

and the

evidence that he had been talking with Warburg about it

He had his say

to overcome the unanimous resolution of our Board.

with regard to that resolution, and all of his associates were
against him.

If a resolution so adopted is to be disregarded by

him or any other officer, then there is no use in having reports or
resolutions, and I shall not bother myself again.
Warburg has nothing to do with running our bank.

Of course Mr.

I had a talk with

the Chairman, as I promised, but said nothing about this matter for
fear that I would say too much.

Secondly, I think that you ought to appoint that man Sailer
cashier.

The fact that he was interviewed by the two members has

nothing to do with his fitne3s, or with the need we have of such an
officer.

I cannot conceive of a bank without a cashier to superintend

the clerical service and look after all the details.
which it cannot be expected that you will perform.



It is a service

So far as their

Benjamin Strong,Jr.

interview is

#2.

concerned, after full reflection it seems to me that

you exaggerate its importance.
breach of good taste.

I should regard it simply as a

If either of them

mentions the subject I

shall express myself to them frankly, but I have avoided having any
word of any kind upon any subject with any Director since I left the
Chairman.




Yours very truly,




May 18th,

1915.

Dear Mr. Locke:

..

Your letter of May 17th is just received, and I am sorry
that you will not be

able

to attend to-morrow's meeting.

In regard to the two matters mentioned in your letter, I

am sure that Mr. Jay's attitude in regard to the bank
have been misunderstood by you.

the Board's expression

reports must

Re and I have accepted absolutely

as contained in your report, notwithstanding

that it nartly defeats, so far as this bank is concerned, a plan which

had been prepared and

agreed upon in Washington for

furnishing us

with

all information necessary to enable us to deal intelligently with all
None e2 us

credit mattero coming before the management of the bank.

have any intention of disregarding the resolution or its purpose.

Mr.

Starek has been furnished with a copy of it, but so far, we are still

without any information in compliance with the terms of the

resolution.

AS to the appointment of a Gashier, I expect to have an in-

terview to-&y with Mr. Sailer.

A competent Cashier in this bank would

be a tremendous relief to me personally, and I cordially eddorse your

statement that it A's hard to

conceive of a bank without a competent

Cashier to suPerintend the clerical work and look after all
and I hope you agree with me that it is

just as

details;

difficult to conceive




-2-

May 18, 1915.

To Franklin D. Locke, Esq.,

of a bank so managed that any of its directors negotiate for the employment of a Cashier without the knowledge or assent of the head of
the bank.

You will, I am sure, not object to my saying frankly to you,

(and at the proper time to the other directors), that I must know

whether the directors of this

bank intend that it

shall be run in

that way, or as any well-ppanaged bank should be run,

it is a mat-

ter for the directors to decide and not for me,
I submit this to you most respectfully, for I value your
ouinion and regard it most highly.
Very truly yours,

Franklin D. Locke, Esq.,
Fidelity Building,
Buffalo, N. Y.
BS Jr/VCM

June 0th,
1915

dear Mr. Locke:

Your favor of the 4th inst., wax duly received, also, your

two letters of the 7th.
I was absent Saturday writing a speech and unable to answer

the longer letter yesterday, as I had hoped.
It is quite apparent to me that a number of the Directors, have
not understood the deliberate oliey adopted by the officers of this bank

in the matter of our staff. It was exceedingly important that we should
not be embaressed by electing in as officers without absolute certninty
that they would be satisfactory.

On that account, only La.. ':enzel was

appointed and he as not appointed until after we had had considerable ex.-

perience of his ability as a member cr.: our telilporary volunteer organiza-

tion.

The other important positions that have been filled have all been

classed as clerical, and if their occupants prove a disappointment, we
would be able to change them without embarassmont to them or thbeak.

In one or two caoes, the arrangement has been a distinct-

ly tentative one for six months, pending

tion.

tl

demOstration of satisfac-

This gives us opportunity to peemdtgood men who deserve it, and

furthermore, has avoided too expensive an organization at the outset. It
goes without say that Mr. Jay, 21r. Curtis, 7,:r. Kenzel and myself have been

obliged to take up the slack, which e hove willingly done on account of
conditions.



-2To

June 8, 1915.

Franklin D. Locke, Esq.

Lest you may think that no effort had been made to increase

our staff, please recall that ee made a very determined effort to get
nr. Gregory; prior to that we had made an effort to get Er.
the Irving National Bank.

rd of

At the same time, we had been discussing

qx-iong ourselves the advisablitity of asking Governor eeay of the Reserve

Benk at Richmond, to join our force,

eral reasons.

had to abandon this for sev-

Except as to :Ir. Gregory, none of these negotiations reach-

ed the point where we were justified in asking the Board to consider them.

As to :;x. Sa:ler, I was lost eeioun to conclude the matter
promptly and the delay was caused by unwarranted interference and by

that alone. Not only was it due to that cause, but it was delayed
at the specific request of one of our Directors who was unwilling to
vote on the matter until he was further advised.

This situation,

as you can imagine, imposed more detail upon nr. Jay, Mr. Curtis and
myself than would ordinarily be necessary.

The particular collection that you thought objectionable, I
entirely agree should not be handled in the way proposed, unless it

were made payable at the office of a bank which had joined the co/lec-

tion system and could ge through as part of the collection clearance. It

is the method in vogue in t#e bank for all collections, but our collections so far have all Mien confined to chocks,and notes discounted for
member banks which they have endorsed, and acceptances which are the ob-

ligations of, and payable at, the offices of our member banks.

I must,

also, agree with you that unless it could be clearly established and
Dade known to all payers and endorsers that it id not final Payment,
doubt mlecit arise about our recourse =Don the endorser.




Of course,

0

0

".1.

"

d

-eTo

June 8, 1915,

Franklin D. Locke, Esq.

the note in payable at the place of payment and not at this benk, and
it might likewise be held

that we

had merely purchased the note, using

the funds of the bank to which sent for collection, for the purpose of
paying the purchase money, but of course, doing it with their assent.
About your letter of
turers

the 7th,

if the customers of the Manufac-

Traders bank continue their present custom of remitting their

checks to Buffalo and asking for Mew York exchange, no difficulty would

arise in handling the account. if
doubtless

they

Changed their practice, as they

would, the Manufacturers & Traders Bank would be liable to have

its account considerably depleted by having these checks offered for col-

lection at our office.

You have presented the most difficult ease to

deal with in connection with the collection system.

I

can personally,

see no objection whatever, to following the course which you suggest if
it becomes necessary, but I am even in doubt as to whether experience

will thew it to be necessary.
Might not an
respondents to

arrangement be made with your other Hew York cor-

make transfers to this bank for your credit under some

standing instruct ions

upon our notifying them of drafts of large amount?

If the Mnnnfacturors e Traders Bank feels willing to adopt the collection system, you may be sure we will be willing to adopt any plan which
they feel is necessary in order to make the scheme a workable one from

their standpoint. In due time, we will likely have a branch in Buffalo,
and this will dispose of any difficulties, such an your letter mentions.
I am sorry that you will not be here

at the meeting

to-morrow.

The Governors' Conference takes place in Chicago next week, my oldest




June 8, 1915.
Franklin D. Locke, 7sq.

To

boy' s commencement exercises at Exeter are hold on the 22nd and 23rd,

and for these reasons I fear that I nust beg off attendance at the
meetings for three weeks.

I shall hope to see you on the 30th of

June.

Could you not arrange to run up to the country with me af-

ter that meeting and spend the night with us on the Farms

If I can
not arrange this visit pretty soon, I am afraid you will think the
Farm purely mythical.

-1th kindest regards, believe me,
Very truly yours,

Governor.

Franklin D. Locke, Esq.,
Fidelity Building,
Buffalo, N. Y.




Jr/VC11-11




October 11th, 1915.

Dear Mr. Locke:

am taking the liberty of Bending you

a salad° of those Connecticut apples that Iwas
anxious to show you in the process of craning,
and hope they roach you in good order.
Yinagerely yours,

Franklin DI...Luake,10,,iia4,,

Fidelity Building,
Buffalo, N. Y.
BS Jr/7CM

Misc. 34

F117-11AL RESERVE BANK
NEW YORK

Sent by

(SEND TO FILES)

COPY OF TELEGRAM
itimegiii Wen

rranlaio 11, Locke,

malty 311110imR,
IteraLa,

:Thtronii and I

oala be deliOhteA to hove yoa opondtakandaynialt

:AIM and 10, tboottAuttunity oi looking ovor the familiAxirmadv
ioneoh4
(Charco

eaj. rtrang, :r

62 Coaar f;t,
9-5



NNW. ntrong, Tr.

ROGERS, LOCKE & BABCOCK
COUNSELLORS AT LAW

810-826 FIDELITY BLDG.
O.LOCKE

BUFFALO,N.Y.

aFRANKLIN
LOUIS L. BABCOCK

CHARLES B.SEARS
ALBERT E../ 0 N ES
E. OWAR 0 M, M. M ILLS

EVAN HOLLISTER

October 12,1915,

ANSLEY W. SAWYER
J. LEROY KEN EF ICK

ROBERT S. STEVENS

Hon. Benjamin Strong, Jr.,
62 Cedar Street, New York City.
My dear Governor:

I have yours of the llth,and am prepared to
begin enjoying the apples the moment they arrive, Please accept

my thanks for them in advance. I shall know all about them when
I

see you next week,

I was very glad to

have your presence at the meet-

ing held at the National City Bank to talk over the matter of foreign exchange, noted in the Associated Press dispatches. The more
we come forward in such things, the better it is for the Bank, according to my belief. and

I

doubt if anybody there knew as much

about the question of foreign exchange as you did, or was as capable of making meritorious suggestions.




Very truly yours,

Clr EMI IWI
I
iiira .1117

'IN

WESTERN UNION

NIGH

1V1570,

TTER

BELVIDERE BROOKS. VICE-PRESIDENT

NEWCOMB CARLTON. PRESIDENT

GEORGE W. E. ATKINS. VICE-PRESIDENT

TIME FILED

RECEIVER'S No.

CHECK

-

111

1

SEND the following Night Letter, subject to the terms
on back hereof, which are hereby agreed to

November 15th, 1915.

Franklin D. Locke,

Fadelity Building,
Buffalo, N. Y.

am arranging for our Directors to dine at my apartment Uonday
night very informally and discuss same bank matters. I hope

you can be there.

Benj. Strong, Jr.,
BS Jr/VCM

Charge to




Federal Reserve Bank,

62 Cedar Street,
Nov York

ALL NIGHT LETTERS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERMS
The
the next en
transnaissio
To g
For this, o
AND PA!
1.
mint
the
fif

..ly for delivery on the mo
Telegraph Company will receive not later than midnight NIGHT LETTERS, to be transm.
worriQ 01111 be charge
at rates still lower than its standard night telegram rates, as follows: The standard day r:
standard
rate
r less, and o
aCe for
at night
takes or dela
ged i
eated night
is
in considerate
no
nsmission or deliv
all not be liable f
e transmission or de _
for
same; n
able /11,,,L1
; nor in any case for delays arising from
g the same,

Sy,

II n

here
tenth of o

ever the lines of any

the asLe

ESTERN UNION

-EGRAPH COMPANY

INCORPORATED

NEWCOMB CARL-TON, PnEstorNT

CLASSES OF SERVICE
TELEGRAMS
A full-rate expedited service'.

NIGHT TELEGRAMS
00 A.M. at reduced rates to be sent during the
not earlier than the morning of the next ensuing
day.




at rates lower than the standard telegram
and one-half times the standard night letter
ssion of 50 words or less and one-fifth of the
nth-Hi-Inn...1

111 n,nrric nr Ince

SIA-Inrri in n+

Telephonic delivery permissible. Day Letters r
express understanding that the Company only un
the same on the day of their date subject to condi
time remains for such transmission and delivery d
hours, subject to priority of the transmission of re

NIGHT LETTERS
Accepted up to midnight for delivery on the morning
ensuing business day, at rates still lower than standard
gram rates, as follows: The standard day rate for 10 wor

charged for the transmission of 50 words or less, and one-fif"
svn,le h.i1 I,n
rata for

ROGERS, LOCKE 8. BABCOCK
COUNSELLORS AT LAW

810-826 FIDELITY BLDG.
FRANKLIN CLOCKS

BU F FA LO. N.Y.

LOUIS L. BABCOCK

CHARLES B.SEARS
ALBERT E.JONES
EDWARD NI, NI.M ILLS

EVAN HOLLISTER

December 20, 19

ANSLEY W_ SAWYER
J. LEROY KENEFICK
ROBERT S. STEVENS

.z9
cP
-

Hon. Benjamin Strong, Jr.,
62 Cedar Street, New YorkCity.
My dear Governor:

I am strongly in favor of keeping our expenses down as much as possible, but it does seem to me that
Mr. Jay's salary should be raised to $20,000. If he were
doing nothing except the work contemplated by the Statute,
it would be a different thing; but your duties as dry nurse
for the Washington gentlemen leave him a good deal of the
time

in practical charge of the Bank. Could you not take it

up with Mr. Hamlin and Mr. Warburg, or do you not wish to do
it?

I shall be curious to hear your report at our next
meeting, touching your last visit to Washington.




Very truly yours,

Decemr 23rd, 1915.
dear Mr. Locke:

I delayed a dy or two in replying to your personal letter
of the 20th inst., until I might have opportunity to have a word with

r.,arburg.

I did have a chance yesterday and have put the thought
you suggested into his mind, exlaining that for various reasons that

he will thoroughly appreciate, I would prefer to have him take the matter up with his associates upon his own iniatttive.

There ar various situations in the other reserve banks which

makT it a little difficult to put throuel 5T,Aar suggestion at once. This
has been confidentially ex21ained to me by Mr. ':,arburg.
You can count upon my keeping the subject alive as nothing

ould please re more, nor could the Board take any action which would
Se more justifid and appropriate than the one suggested by you.
Thank you for writing roe.

Tt is simply another evidence of

your constant thought of us.
Very truly yours,

Franklin D. Locke, T:sq.,
810 Fid-dity Building,
Buffalo, N. Y.
BS Jr/V0M-1




Governor,

ROGERS, LOCKE & BABCOCK
COUNSELLORS AT LAW

810 - 826 FIDELITY BLDG.
FRANKLIN D.LOCKE
LOUIS L. BABCOCK
CHARLES B.SEARS
ALBERT E.JONES
EDWARD PA, M MILLS

BUFFALO. N.Y

EVAN HOLLISTER

January 17, 1916.

ANSLEY W. SAWYER
J. LEROY KENEFICK
ROBERT S. STEVENS

Hon. Benjamin Strong, Jr.,
62 Cedar Street, New york City.
My dear Governor:

I have your note stating that you will sail
on the first of February. I assume that we willY have a meet-

ing on the 26th of January, and if so, I shall have the opportunity of bidding you good-bye in person.

The Bank can probably get/along all right in your
absence, but Heaven only knows the result so far as Washington
is concerned. I wish we had a good man whom you could delegate to look after them
I

in your place and stead.

do not anticipate any possible trouble from tor-

pedoes, but if you

should be lost, you can rely upon us all

sending flowers.




Very truly yours,

"
ROGERS, LOCKE 8. BABCOCK
COUNSELLORS AT LAW

810-826 FIDELITY BLDG.
FRANKLIN D.LOCKE
LOUIS L. BABCOCK
CHARLES B.SEARS
ALBERT E.JONES
EDWARD MF

BUFFALO. N.Y.

EVAN HOLLISTER
ANSLEY W. SAWYER
LEROY KENEFICK
CHARLES A. HAMLIN

16.

.4

June 14,

1916.

194

Hon. Benjamin Strong, Jr.,
Corner Pine & Nassau Streets,
New York City.
My dear Governor:

Of course I am exercised to hear through Mr. Curtis
of your illness and your enforced absence from the
several

months.

Bank for

It had seemed to me as if we were at last in

smooth waters, waiting only for the day when under your capable
supervision and control we could show our worth to the financial
interests of the country, but I do not believe we need look for
trouble for six months to come, and before that time expires you
will be fully recovered and back at the helm.

I hope you will

not worry for one instant about the affairs of the Bank.

Under

the contemplattfrttrrangeMents they will take care of themselves.
It is up to you ireftliot an abundance of fresh air and proper diet
A

to build up your health and bring you back at the earliest day
possible.

I doubt if you

know or appreciate how close you have

come to the lives of the men around that Board.

Wishing you a pleasant sojourn in the West and a speedy
return to your place, believe me always,

Yours faithfully
FDL/M




June 16th, 1916.

dear Mr. Locke:

Your letter of June 14th has just reached me and,
franidy. I feel quite unable to send a suitable reply.

The

fact is that you hit the nail right on the heed, for it has
really been my ambition to sit in that bank when the supreme
test came and see the machinery work, as I am sure it
perform a great

service for the

country.

I am not willing

to prophesy a 3anic and certainly not in the near

before I am

able to

fature

return to =' ew 7ork, but I believe

some day we will be called upon

will

in this country to

and

that

carry some

part of the load of readjustment followilig the war and when

that time does come we are going to be under some pressure.
I am not going to worry

for one instant about th-

affairs of the bank., The arrangement contemplated will take
care of that per"ectly,

It adds to mu sense

c)

obligation

to my as ociates because I know it involves a sacrifice that
I hare no right to ask, by one of the directors.

I mm going

away to get well and if I do not succeed, it won't be for leek
of trying.




To

-2-

6/16/16/

Franklin D. Locke.

Now just a word about you and tho e other men who
They have become my warm friends and.

sit around the Board.

hnte to think of leaving them.

Your own interest in the

work of the bank and the confidence you have shown
been one

of my greatest

in me has

pleasures in connection with the work.

I hope you don't mind my telling you that I am going
you very each indeed.

Very sincerely yours,

.

Franklin P. Locke, 'sq.,
Fidelity Building,
Buffalo, New York.

BS Jr/VCM




to miss

Estes Park, Colo.,
tctober 12th, 1916.
- Dear 14

A recent letter from the bank advised me of the views
which you had expressed at a recent meeting in regard to our

policy in purchasing bills accepted bj state ba ks and private
bankers, which were not endorsed by member banks.

I am very

sorry to be away when the question arises, as it is one which
should be very fully and carefully consi&red and the subject is
altogether too large to be covered by correspondence.
Mr. Vanderlip was here when the question came up and

took the liberty of discussing it quite fully with hi. he
thinks that the state betake ale no in position to indirectly enjoy the protection of the system without taking membership or con-

tributing their share in carrying the burden, and were it not for
other consideratior,s of importenoe, would be inclined to adopt
your view. On the other hand, he is most deeply impreseed, as

I am, with the importance of developing our foreign credits as rapidly au possible, and in me large volume as possible, that being
one of the most important mehne which can be employed to offset a

heavy drain of gold whenthe exchanges turn against us, as he and
both believe they will when our tremendous export trade is reduced by the discontinuance of purchaser of munitions, etc.




-2-

0

To

Franklin D. Locke, Esq.

Oct. 12, 1916.

Mr. Vanderlip he expressed hieself to me as quite eontented

with whatever policy the reserve bank adopts and particu-

larly appreciates the value of the present

arrangement by which

we are purchasing bills in the New loll( market for the whole Sys-

tem, thereby preventing

bound to occur.

demoralization in

My own views are

rates, which would be

briefly as follows;

This matter should be

viewed from a national aspect

and not in the narrow partisan aspect of attempting to repress
the activities of state banks and private bankers in order

to pro-

mote the business of member banks.

if no emerg

such as the war, I might feel differently about it.

This war

period gives us an opportunity such as will never again arise to
establish American bankers in foreign markets and to get a grasp
upon the commercial credits under which the world's commerce is
conducted; and the object to be attained in a national sense in
to get the largest share of the business possible in the seertest
possible time, without regard to whether it is haneled by state
banks or national brinks and defer

all discrimination as between

the two classes of 'bills during the period in which we are build-

ing up this new business field.

great

A very large volume of foreign credits will be a
protection to the country if we cut er the inconvenienceeand

possible danger of a long period of

adveree exchanges.

When the

war broke out, England, by cancelling there credits, or by reducing

them, drew gold from every




part of the world.

In the same way, in

To

Oct. 12, 1916.

Franklin D. Locke, Esq.

situation put such a strain upon the Bark of
England that rates were sharply advanced and credits extended by
1907, the American

English bankers throughout the world were cancelled or curtailed,
money flowed to London for investment in bills and, as I recall,
Ur. Withers states in one of his books that England drew gold
from 17 different countries in order to meet the drain which wee
imposed upon her by the United States and which wee caused, not
by high discount rates, but by a premium on gold such ae we may
be facing with conditions revereed when

the war ie over.

The

object to be attaineu at present is to create volume.
It would bo unfortunate for our directors to change
the bank's policy after having concluded arrangements with private
bankers which were, in fact, based upon the polticy which we pave
followed to date.

arrangements

it was a considerable achievement to effect

with all the principal private bankers in New York

necessary to make their hills eligible. If
we now declared that their bills are no longer eligible without
the endorsement of member banks, it would put us in the light of
having indulged in a species of trickery, and would probably justo get the information

tify their withdrawing- from the arrangement.
If the Federal Reserve Bank of New York discontinued
purchasing these bills, there is

not the remotest possibility that

we could persuade the other reecrve benks to adopt the same policy
or even impose it upon them. The consequence would be that unless
we discontinued acting for them, we would still be buying these same

hills, probably just as many gs at present, only in the division
we would not take any of them ourselves.




Our policy would be one

-4To

Franklin D. Locke, Mee.

Oct. 12, 1915.

of form and not of substance; the alternative would be to decline
to represent the other reserve banks in purchasing this particular
class of bills; we would reopen the situation as to the New York
market; they weld be forcing their money without any cooperation
into our district and instead of being able to maintain some discrimination in rates between the bills endorsed by members and
those not endorsed, we would be very likely to ace then all sold
on the same basis and the situation would be worse than it is new.
I am very sure that this would be the opening wedge which
would break down

OUT

inveetment arrangement which has afforded pro-

tection, not only to the New York Reserve 3ank, but to all of our
member banks and the etoney market gonerelly.

Our oporal.ions are

constantly groviing in cite and importance and we cannot afford to

risk the lone of prestige which would result from the abandoning
of our present plan.

an Francieco, who has just been here for a
short visit, is one of the most experienced bunkers in this class
of business in the Federal Reserve 'ystem. I asked his opinion of
the suggestion and he was very strongly opposed to it. He believes
as I do, that all clasces of American bunkers should have every inMr Kains, of

40P4.,

ducement extended to them to develop this businese while the oppor-

tunity is here.
5.

Many bills now coming to New York, particularly from

the East, are not accepted by bankers at all, but are accepted by
mercantile houses that are exerting goods to the Orient. These




.

To

Franklin D. Locee, Esq.

Oct. 12, 1915.

bills find their way to us through all kinds of institutions not
necessarily member banks, and it is a class of business which
should bc encouraged by giving the bills the beet possible standing in the market. If we begin to diocriminate between bills of
this clage,ee we should if we discriminate ageinet bills accepted

by private bankers and state banks, bankers in foreign countries
where American drafts are first negotiated, can never be mode to
understand the basis of such diecriminaj.on ane it will prove an
added obstacle to the negotiation of good bills at their point of
origin, it would prevent our perchasing bills Indorsed by such
institutions as the Sng/ish beeke which hove agencies in hew York,
and whatever rate discrimination arose Pt.:7 a reeult, would be just
so much to the advantage of eterling bill. Our competitor for
this busineee is glend. The agenciee of the banks of all no

tionalities scatterel in tAl ports of the world are able to quote
rates for all elasseo of bills accepted payable in London, whether
the acceptor be a private honking house gener lly krown ae a acceptance houee; the agency of an Fnglish bank; the agency of a
foreign bark;;provincial bank or one of the great joint stock
clearing banks. They arc all eligible for the portfolio of the
Bank of England

how can we educate bankers all over the werld

to use bills drawn in dollars if this discrimination is imposed
upon the market by the Federal Reserve System!

We rust not overlook the question of earnings.
already owe our stockholders in excess of a million dollers in
dividends and 1 would be reluctant to see the bank continue to
6.

run behind any faster than it is at present.



To

Franklin D. Locke,

sq.

Oct. 12, 1915.

In conclusion, it is well to consider what the law
really intends and whether action as proposed might not be suspending the operation of the law in one respect and defeating an
7.

object it Was designed to oncomplieh.

The prevision authorizing

the reeerve banks to buy thee bills ie the open market certainly
I think it meent,(and in this I am supported
meant something.
by the records of the hearings prior to the adoption of the bill),
thet the reeerve banks should be given bred lttitude in beying
eligible bills in the open market, not onlif for the purpose of
protecting their earnings, but for exerting an influence upon money rates and throug!-, that in bringing en indirect influence to bear
If the law intended, as I beupon imports and exports of gold.
lieve it did, that we should exerciee these powers as part of our
routine business, why then should the directors of our bank now
determine that their exercise was unwise in the interest of the
This is one piece where the statute neems te have
membee banks?
recoenieee that we neve a dual seatem of banking, half state and
half national and that the importance of the state system ae well
ee the busineea of private bankers, must be recognized as part of
the country's banking macninery*

It would be most unfortunate in my opinion if this action was taken at the present ti e. No one feels rere strongly
than I do the necessity for eringing the state banks into memberThis will aceemplish nothing in that direction. It will
ship*




cause a god deal of irritation and complaint*

After the state

To

Franklin D. Locke, Esq.

Oct. 12, 1915.

institutions have been given every opportunity to form their own
judgement of the value of the system, if they titan do not take
memXership, I think the Federal Reserve Board and the eederal Reserve Banks should join in asking eongrese to force them in. There
are lots of ways in which this can be done and I am innfavor of
recommending that it be done at the proper time. That object
will not be promoted by the kind of discrimination suggested.
In exHressing my views RP positively as I have at times

on this matter, I roOkize that the charge might be made that my
former relations wit e state institutions may influence my views

in this matter.

I will take that

however, relying somewhat

upon the fact that the Federal Reserve Board, whose judgement is

certainly impartial, holds the same view that I do and quite as
strongly.
It would be quite embarrassing to all of us if we now
withdraw from arrangements heretofore entered into in good faith
and upon the bade of which various firme and inetitutiene are
undertaking to develop an acceptance buviness which they hitherto
have not done.

I hope you keep well and will not lose your interest in
the work at the bank even though sometimes different views do develop.
I

am movirg to Denver to-morrow where I have taken a fur-

nished house for the Winter. If the spirit should move you to
take a trip West, please let we know well in advance, and the latch




To

Franklin D. Locke, Esq.

Oct. 12, 1916.

string will be out at 4100 Montview Boulevard and it will bc q
greal pleasure to see you there.
Ath warmest regards, believe me,
Very sincerely yours,

Franklin D. Locke, Esq.,
Fidelity Building,
Buffalo, N. Y.
BS/VOM




ROG ER S. LOCKE Bc E3ABCOCK
COUNSELLORS AT LAW

810-826 FIDELITY BLDG.

FRANKLIN D.LOCKE

BU FFALO. N.Y.

0 LOUIS L.BABCOCK
CHARLES B.SEARS

ALBERT E.00NES
EDWARD NI,NEMILLS
EVAN HOLLISTER
ANSLEy W. SAWYER
LI. LEROY KENEFICK
CHARLES A. HAMLIN

October 17th 1916.

:on. Benjamin Strong,

41 Montview Boulevard,
Denver, Colorado.

My Dear Governor:I have your letter of the 12th.

I am very sorry that you should have felt called upon
to write so long and careful a note regarding such a matter.

Our

meetings have been very uninteresting, with nothing to consider except
the mere routine.

Sitting in the Board I thought I might give

them something to think about by giving notice of a motion, and so
gave the notice to which you refer.

I expressed no views.

I had

a letter from Treman yesterday asking me to postpone the matter
because of his expected absence to-morrow, which was the first intimation I had that anybody regarded the matter as of serious import.

It is very unfortunate that we are so much limited in
making money for our stockholders as to compel us to enter into direct
competition with more than ninety per cent, of them and I do not
believe our foreign trade by any means so solely dependent upon or so

much to be assured by the extension of dollar acceptances as you seem
to think.

With our navigation laws in such shape as to prohibit

practically the existence of American shipping, with our large home

market and the indisposition of our people to meet the conditions of




et-

-on. Benjamin Strong -2-

C)

Oriental and South American trade, I fear it will be very long, indeed, before we have a controlling position.

The two years and

three months that have elapsed since Germany was shut out and since
England and France were fully occupied in their own affairs and we

have had the field to ourselves, have resulted in comparatively small
results.

Certainly no structure has as yet been started that the

Germans and British could not knock down in thirty days were peace
declared to-morrow, and I fear it will not be very different if the
war continues two years longer.
The best argument you advance, to my mind, is that if
we do not buy these things the other Federal Reserve Banks will come
Into the market and do it for themselves.

I see no answer to that

and I am not absolutely clear yet that any buying we have done has
seriously affected the earnings of any of the New York institutions,
although they think we have.

The thing that most interests me in

your letter is the statement of the purpose to compel by legislative

action ( which I suppose means taxation
State Banks and Trust Companies.

)

the coming in of all the

Unless a panic helps us, the

Federal Reserve Board will probably be able to accomplish this at

about the time we drive the English and Germans out of the eastern
and South American markets.

It is far more probable that the

Federal Reserve Board will be reduced to three and some other radical
changes effected by the next Congress.
I hope you do not worry about the affairs of the Bank.
The only thing there that annoys anybody is the clearance business
and that will adjust itself.

I believe the books were out of balance

at our last meeting by only about $25,000 - we being over that much
instead of under.




Such a discrepancy may mean anything, as you and

Hon. Benjamin Strong -3(.4

I know,

but

Treman will probably find it.

You say nothing
going well

with

about your health so I

you in that direction.

Believe me,

Sincerely yours,
?DL: S.




conclude

all is

ROGERS, LOCKE 8< BABCOCK
COUNSELLORS AT LAW

810-826 FIDELITY BLDG.
BUFFALO. N.Y.

0 LOUIS L.BABCOCK
CHARLES B. SEARS

ALBERT E.JONES
EDWARD NI,M.M ILLS
EVAN HOLLISTER

October

ANSLEY W. SAWYER
J. LEROY KEN EFICK
CHARLES A HAMLIN

Hon.

19, 1916.

Benjamin Strong,
4.100 Montview Boulevard,

Denver, Col.

My dear

Governor:

Some time when you have an idle hour and feel like it

October 12th.
unless we accumulate a

I wish you would write me supplementing your letter of
The fair inference

from that letter

sufficient volume of acceptances
gold so soon as the war ceases.

we might as well kiss

is that

in this

country we shall lose our

I fear if you are right in this

the gold Good Bye.

I

agree with Professor

Spragueof Harvard in his article on "The Reserve Banking System
Operation", published

in

in

the Ctuarterly Journal of Economics, and

which I suppose you have seen, that with the termination of the war,
despite any efforts we can make, the great volume of trade will
resume its normal course and reach its settlement in London, but I
cannot see how Europe is going to
ways:

get our gold save in one of two

First, by selling us government bonds at a rate of interest

higher than our money here produces, or Secondly, by deluging us
with importations, making us the dumping ground of their surplus production.

This latter

trouble

we could control at once by raising

the tariff on all foreign manufactures.

The sale of the bonds of

foreign governments could not reach serious proportions in the United
States unless favored by one of five or six concerns, say, J. P. Morgan



Hon.

Benjamin

Strong - #2.

Company, the National City Bank, the First National Bank, the Guaranty
Trust

Company, Bankers Trust

Company, and Kuhn, Loeb & Company.

It

should be comparatively easy to make wmeit an arrangement with these

American institutions, which would minimize the risk in that direction.
None of the

banks or

monied institutions in the country would go into

a foreign loan that was not backed up by one

or more of the concerns

I have mentioned.

These are all crude ideas of my own, of course, and I may

be far away from the true road.
I can understand Mr. Vanderlipis state of mind

because

of his trading corporation, and the special efforts he has made and
is making to reach foreign business.

I therefore regard him as an

interested witness, whose testimony can be scrutinized and rejected.
Please tell me some time or other where my fallacy is,
and when you write me tell me the

condition

of your health.

Are you

getting stronger, and are the lungs clearing up?
I did

not go

down yesterday, Mr. Jay wiring that there

was nothing but formal business to be considered.
Fai

fully yours,

FDLA




./Lze

I fit /--Le

J Montvie, Boulevard.

Denver, Colorado,
lictober 23rd, 1916.

Dear Mr. Locke:

Your letter of October 17th ha

deal of

be

read with a good

interest.

I deplore, as you do, :t4e_necessity to
earnings at all in connection

would not have influenced me to
been followinz for
I fear I

with South America.

th s acceptance matter. Were
/

that the only object to be

r/
0
\

t-,year an

nnot agre

onsidering

you may be sure that it

the policy which we have
half.

ith you, however, about our trade
we did 30

li',

of all Laet trade
the y

with the re ).1ils toNtiee_ae th of us and as I rocell the figures

prior to

/

f the war, our trade with Southern republics,
including
lied in volume the xico,
combined tote's of any
other two
'one
With the exception of two lines, it is mostly carried in foreign bottoms and begore the beginning of the war
e outbrea'

was financed almost exclusively with English and German credits.
The German credits have been almost entirely

transferred to American

institutions which are now acting as the agente for German barks in
South America.

Some of the iinglien credits have been transferred

As you say, however,
in the same fashion, but not
extensively.
our navigation laws at present prohibit the development of our own




eo acoeq melte bLogLew,.

-2
To

Franklin D. Locke, Esq.

Oct. 23, 1916.

steamship service and in my opinion, laws or no laiveeethe trade
will not be carried in American bottoms until the cost of operi
ing ships has been equalized.

*

There is not much proseect of

any suce development with our wages climbing to unprecedented

prospect that labor abroad after the war
can be obtained at lower wages than ever.
Our trade with the Orient, an you k ow, is carried now
exclusively in foreign bottoms and bieta tril ng part of it is

heights and with every

financed under American credits.
from India, some silk
American credits,

from Chi

to some e

dling jute
iental nations under

While we ar

eat buisi Ti*4i1e11lliAAViire"

financed by the English banks

eve a network of

But with all

elopment.

there, the product

connections

this, if this counr1 has the

eapest and largeet supply of float
war is v r, we can r,Ace a big dent in this

ing capital after
business, i

ouri bank'ere

machiner .

We do no

r

enterprising enough to establish the

need to enlarge our trade

all we need is

the exisg trade:

to finnn

argument, however, for continuing the present

plan is in order that our market in New York may not be demoralized and I eee glad that you feel that this is worth considering.
aa
-

To me, the one discouraging thing about the iederal Re-

serve System lies in its inability to kind a normal and natural
place in the banking structure of the country. Just now we seem
to be a sort of excresence. This is probably due as much to the
abundance of money as any other influence.




would make erogrese

To

Franklin D. Locke, Esq.

Oct. 23, 1916.

faster with our membership if the whole machinery of the eomptrol-

ler's office was tuken

over than by

any other means.

The Clearing house bueinese is still more an annoyance

then anything else.

We have three collection systems in New

York just now where we should have but one.

patience and

tact, however, to

It will take some

persuade the leering House people

to turn their organization over to us as it

a

rum not worrying a partic17-alveveti

my ability to over

times 1 have doubt of

doctors

reports

done in kostbn.

office.

Some-

return

that another six months

encourage me

will put we in my feat.

11 find opportunity

1 hope you keep well

the

inter to crack t

They must not be a
Aith

n w an

ed to bee ne uninteresting

o

armk.regards

4r/ trul

Franklin D. Loc ifrEsq
Fidelity Building,
Buffalo, N. Y.
BS/VC




en at the

elieve me,
yours,

Board

through

meetings.

4100 Montview Boulovardm

Denver, Colorado,
October 241,

1916.

ad finishnd a

Yours of the 19th reached me after

letter to you yeeterdai.
I wRa amueed at your sue

about an

tI

die hour".

me

Almost any hour i3 file with

apt two or three em-

played every day fn taking n

although I have a pretty

large corren.ondence which pasne

manage to do a littl

a

y sou e

he b

of the t'me

and

at t'.a office one way or

another.
Possibly,

e ;)ost co

raised by y7tter wol

recently

e ete answer to the questions

e to refer you to a little book

lished by -1artley Wit ere, called "War and Lombard

Streot",wihIl

%1 g the liberty of sending to you.
al -alrat-A agree, but not quite entirely, with prof°floor riorague as expressed in the article to which you rrfer.
The great volume of trade will in fu opinion resume its normel
course, our

proportion ponnibly

bin g less after the irar than

it was before on account of lower wages abroad.

The contest

will be between low labor cost, high interest rates and very high
taxes abroad, and high labor costs, low
nal taxes in this country;




interest rates and nomi-

the cost of labor beng the

largest

eee
To

F. D. e.

Oct. 24, 1916.

Esq.

item in cost of production will probably control the world's
trade except as interfered with by political measures such as
tariffs, etc. On the other hand, I do not agree with Professor Sprague that settlements will necessarily be effected in
London just the same ae before the war. If we have cheap
money, we should be able to hold some pert of the business and
it may not even depend upon the developee-Wf-tr banking recallglish bkçe may find it
ties approaching those of Fr:gland.
open dolA.r credits in
more profitable, in fact be forced,
teis country simply because wA-heeeeethe c'10
-

money and their

t, aft r\ all, that was net excluse
letter: I intended to
ively what I meant by pox gaph 2
\\
customers will demand it.

cre&,,Eiore general sense and more
use the words "fore
it was used by eithe s. n his book.
11 arise from the causes which
A drain on Au
eu mentiened and

e or two others of minor importance
roue if we heve made use of the new gold

and wil

imported f m E'uro e ele the besio of a huge,unwieldy and danger-

ous credit e. cture. In that case, the loss of gold will mean
pulling down e structure but if t.is expansion of our credit
structure takes the form of foreign leers and credits of all kinds,
when the demand for gold arises we can hend back their loans and
ask them to pay them.
Foreign government bonds which we are now buying are all

made payable in dollars.




Their value

RS

offset will only arise

Oct. 24, 1916.

To Y. D. Locke, Esq.

at maturity.

The best and most available offset will be bills

payable in London in sterling,

owned by Amoric n bankers.

The

volume of such bills will not be great enough to afford us much

every three

protection but as they mature
able

at

ing.

months, they are avail-

either as they ma ure or by rediscountlso, will b these acce tence
offset,

almost any moment,
An advantageous

\

credits of various kind, nor need they be et nded solely to 7ngwe are carrying
lish barke in order to have value aafoffse4say *500,000,000 of bills in Am i.10. barks, ope d in favor of
merchn.ts




and bankers in

parts

oth

where the world's t
diate discount of

world, we can force

them when exchange is ad-

their transfer to London by
verse to us, because L

the

York will be the only markets

elan, an

gefeCs'm e ass ed, first, of getting imme
i le, and 00 ond, of converting the proceeds

of discourts into g]ifie6,4 ear y.
York banks have

recoenized the

necessity of givirg

towers the o tion of drawing on New York or London according t
ich )4e cheaper, and many of them are now issuing
their cu

-----7-

aommercial letters of credit under which drawings may be made
either

in

rates of

dollars

interest

or sterling. Then we begin to lose geld, our
will rise and it will be more profitable for

rawer9 of bills to draw on London than on New York at the same

tine that it is more profitable
in New York than in London.

for lenders

of money to buy bills.

In beth of tees& ways, the strain on

New York's gold will be lessened.

-4To

F. D. Locke, Esq.

act. 24, 1916.

The bill which is most useful in arresting adverse exchange and loss of gold is the finance bill, because the termie.
naion of finance credits does not result in inconvenience to
merbhants and traders.

These big acceptance credits now being
made to the Allies are simply short time demands for gold wnich

exercised the minute exchange is ad e se io this country
and, of course, the shorter the maturity of tie credit, the more

may le-

available it is for this purpose.
We can protect our mar

Goods if we want to by n high

ainst a fl

of foreign
t if our money continues

to be the cheapest money i

for some ti:ee, that will
not serve necessarily to protectte exchanges. Argentine may
not have a nrotecti
port huge quantities of
cheap goods from E g and, 7ran and Germany; a high tariff will
I(
not prevent Argentine from bo r wing money in this country to
\
pay for th
ode adra*Ing on us in favor of London against
the cred t so accord. This will apply to the whole world's
trade an
lb the/r fusal of leading bankers to make large government ioariw-mx.u4-d. be a strong influerce to protect the exchanges,

generally speaking, no measures can be succeesfully undertaken to
prevent what might be described as the "seepage of credit" through
thousands of different and comveratively insignnficant channels.

After all, I have never been alarmed as to this particular influence being a real basis for a serious loss of gold. A
more serious poosibility 1 tnink lies in the development of an actual quoted premium on gold in 7euronean markets at a time when we




I

F. D. Locke, Esq.

Oct. 24, 1916.

do not enjoy the protection of a tremendous favorable trade
balance.

You will recall that in 1907 that is exactly wie,t

haeeened; a premium of 3 % or 4 % on gold in New York necessie.

tated the Bank of England reusing its ra'e to 6 or 7
don't recall which), and resulted in our thking t70,000,000 of
gold in a very fee mont'se
,!easured by int 'national standards, there is a premium of 12
about 30 % in Germany and

'1,

or 13 % on

something

ld in France,

r more in Russia.

like 50

That premium is caused very largely by

tnie co

t

es export

trade. that is going to happe
t' t export trade vanisheeT
I don't thiek anybody can ea
n willing to surmise teat
we will see them all over her t
to buy gold.
If you will
all
d States Government purchased gold preparatory t
tion of specie payment. It also
purchased three and

in ounces in Europe when gold was

d'e administration, and probably
the only re son why we did not bring gold to this country during
the Civil r period w en it was at q high premium was eecuuse
.
/
we hodnothi g
ey wore willing to accept in payment. The
Government's credit was ruined for the time being. exports of
cotton wore not available to the earth and English bankers, as
at a premium

ng -

you know, were hostile to our Coveenment loans.

This is e very rainbling letter and I am afraid doee not
make a very cleer answer to your inquiry.

Let me suggest the

program which I think should be adopted and this may make my own
views clearer)




-6To

F. D. Locke, Esq.

Oct. 24, 1916.

I think the expansion of our credits resulting
from the inflow of gold should be as largely an possible in a
form where we can demand repayment of these credits from those

foreign nations which may later call on us for gold.
Our banks, which have the experience and knowl-

.edge to do so should buy short sterling bil
kei in anticipation of a later premium on o

in the London mare
ange.

d buy bills in Landon and Paris with gold guarantees with the saely, tives.
4.
oreign governments by
All loans negoti
our bankers should be payabXOát th
'ion of the holder, both
The Federal reserve ba94e43-

principal and interest, in theNtr4ncy of the issuin governace at the conclusion of the war.
ment at a fixed rate
5.

The

gest poss

e amount of gold now circulating

sbills s ld be withdrawn from circulation
In connection with this
i*ve niTtaa 1474-b1ituted.

in small denominati
and Federal

particula

rograM, Congress should authorize us to count the gold

and count notes as a liability.
Th s
h way I would like to see the situation "wind
up", so to speak, under preeent conditions. The unwinding would
so collet, d as an a

then be comparatively simple.

If for any reason exchange becomes

adverse, our first answer is to withdraw investments in bills in
London.
Our next is to resell these foreign government securities which, being payable in the foreign currencies, will have a
market there. Next will be to cancel the acceptance credits or




'Jo

Oct. 24, 1916.

F. D. Locke, Esq.

reduce them as referred to earlier in thiu letter.

And last,

if it becomes necessary, the Federal reserve banks can ahip
some part of th gold wish they have accumulated, the effect
being simply to reduce their reserve percentage without any
shock to the country.

About myself, things are certainly iroving with me.
take practically no exercise, which is pw 01 the program.
,4 cough has about disappeared and lAsave

u

nearly twenty

N,

ago. r_ne
T'--wto six mo
day is about like another - I O/'il t.e work in the morning;

pounds from my lowest weight.

noon.
read and take a short walk n he
So far, I have been ab ut half through Shakespeare,




all of Hartley WitI.00

n cu

uy and banking (

are excellent), a u,ber of be ike about the war, Lord Cromer's
T,:ssays, Jusserand'

n w book

"Americans of Past and

Present

e me a bi-t- shamed of my countrymen and th

Days", whi

little t

have donr-for Prance in tl,is war, and :aso, some of

Stevenson

books,

son's life b,

ell as a very interesting story of StevenOusin,Robert Balfour. Aluu, Horace Aite's

book on "Money and Banking".

are worth

Lost of these I had read, but they

reading again.

agree with your postscript about 7a1son's election.
Hughes' campaign, it seems to me has been uneignified,a4d :lacking
in constructive suggestions, whereas, the President has ben able
to point to what he r,gards as a constructive administration in

8..
F. D. Locke, Esq.
which he han redeemed

Oct. 24, 1916.

his party's pledges.

As I wrote a friend,

they serm to me to have been redeemed in Chinese
money, in many
casne, worth about ten cents on the dollar,

or lees, but voters

believe what he says and unless sorething
happens pretty quick
I am beginning to feel that A.lson

will be elected.
This is good weather for traveling
Why don't

pack up a bag and come to see me sometime!'

a great deal of pleauure.
With warmest regards

Sincerely

Yranklin D. Locke,

s

qdelity Building, 17---Buffalo, N. Y.
BOOM




lc

wOuld give

you
me




December 8th, 1917.

Dear Mr. Locke:

I skipped back to New York for a Directors meeting this
week and to clean up an accumulation of mail.

After this one

hop I expect to go back South and spend a few weeks with my daugh-

ter at Aiken, S. C.
Some one at the bank said that you were not quite up to
the mark.

I certainly hope that you are not really ill and the

object of this letter is to urge that you take care of yourself
and get out of Buffalo during the bad weather.

If you should con-

template a trip anywhere in the neighborhood of Aiken do let me
know and give me an opportunity to see you.
With warmest regards,

Faithfully yours,

Franklin D. Locke, Esq.,
Fidelity Building,
Buffalo, M. Y.
BS+VCV




H

April 17, 1918.

My dear Mr. Locke:

Just a line to let you know that you are not
out of our thoughts and that we rejoice to learn that you

are getting along so well after an experience in the hos-

pital.

I hope that your recovery is complete and prompt,

and that we will see you at our meetings again.
With warmest regards, I am,

Sincerely yours,

Franklin D. LOnAft,A4up
Buffalo, New York.

BS/EL

fr,

December 11, 1918.

Dear Mr. Locke:

I feel a very great sense of loss and deep regret that you
are no longer to be a director in this bank.

You have been in our

counsels during the most difficult period of the bank's existence,

that is the

period

of construction and

early aevelopment, and for the

bank, b,t particularly for me, personally, you
sympathetic and helpful counsellor

at

have

all times.

been a wise,

You have also been

an encouraging partner and supporter of the policies of the bank, all
of which I particularly appreciate and value.

I never wanted this

job, and frmikly

would be glad not to

have it now, but once having undertaken it, I may say to you with the
utmost frankness that I do not regret having done so,

because of the splendid friendship and

help which you

and particularly
and the other

directors have always given in working out our problems.

accept my warmest thanks.
ilerj sincerely yours,

Fidelity Building,
Buffalo, New York.

)36/MSB




Won't you

FRANKLIN D. LOCKE
LOUIS L. BABCOCK
mAUI,CE C. SPRATT
ALBERT E. JONES
EDWARD M.M. MILLS
EVAN HOLLISTER

R. C. VAUGHAN
HERBERT W. HUNTINGTON
HOWARD R. STURTEVANT

LOCKE, BABCOCK, SPRATT & HOLLISTER
COUNSELLORS AT LAW

810-826 FIDELITY BUILDING
BUFFALO. N.Y.

FILING DEPT.
30th December,

'

J. EDMUND KELLY
PERCY R. SMITH

1918.

1..:13

FEDERAL

Rr_SERITE D.72Tri

Hon. Benjamin Strong,
Federal Reserve Bank of New York,
New York City.

My dear Governor:I ought to have sooner acknowledged
your pleasant
letter, but had half an idea I should find
the'Chance to
thank you for it in person before the New
Year. But I
think now I will not come down for
Wednesday's meeting
which will be largely perfunctory, as everything
has been
done which should be done in 1918, and I
do not wish to
spend the holiday
on the train.'

In closing my official relations with the Bank,
I must express my gratitude to all the
Board for the
gracious treatment I have experienced on all sides, but
my thanks are due to you in a special manner.
It has been
a great pleasure to see you come on month by
month until
you have come to be one of the most prominent
of financial
personages in the Nation.
I have said that you alone have aided
more in the
great work of placing the loans than
any other fifty men
who can be named, and while this work
and anxious, it represents very little has been most arduous
You have had to guide the Reserve Board of what we owe you.
and, so far as the
peculiar make-up of officialdom
as well. With it allI realize permitted, the Treasury
that in great degree the
work of the system has come through
your own good self and
your influence with the New York financiers,
to stand as it
does in public estimation and regard.
happiness.

I wish you restored health, long life
and all

Aff

FDL -IC




ionately yours,




,d7sce-A-12-4.-

lqAt
/9/((-19-2-1

August 27, 1921.

Leslie R. Palmer, Esq.,
10 East 39th Street,

New York, N. Y.

Dear Mr. Palmer:

Governor Strong requests the pleasure of your company

for dinner on Tuesday evening August 30 at 7:30 p. m. at the

Metropolitan Club this city, Fifth Avenue and 60th Street, when
the directors will meet Governor Norman and Sir Charles Addis.

It will be rather informal, dinner coats being worn.
Governor hopes that you will surely be able to attend.
Sincerely yours,

R.S.V.P.



The




,1411/-

cl

7

/9 21
florce_e_

1




Nem York City, Dec. 8th, 1914.

George Foeter 'sea

Saratoga aprings, N. Y.
Will bo delighted, to accept your imvitation for lundheon

Benj. Strong, Jr.
VOL1-5

temoz-rov4




WESTE

UNION

Form 2138

WESTERN UNION

GEORGE W. E. ATKINS. VICE-PRESIDENT

TEL

AM

%,.01

NEWCOMB CARLTON. PRESIDENT

BELVIDERE BROOKS, VICE-PRESIDENT

RECkID AT
D55A LE 18 HG
SARATOGA NY DEC 8 1914
BENJ STRONG JR

85C,
62 CEDAR STREET NEW YORK NY

WILL YOU LUNCH WI Ili ME
ONE OCLOCK TO MEET

TOMORROW WEDNESDAY CENTURY CLUB

HENRY VANDYKE ANSWER PREPAID PLEASE
GEO FOSTER PEABODY
148PM

11
WESTE44,6sNikv,
WESTERN UNION

ak..L.e. W. E. ATKINS, VICE-PRESIDENT
RECEP,ER'S No.

TEL

criff

W

Form 2

uNI944/
AM

NEWCOMB CARLTON, PRESIDENT

TIME FILED

CHECK

SEND the following Telegram, subject to the terms
on hack hereof, which are hereby agreed to

To


SENDER'S ADDRESS
FOR ANSWER


At-

191

dt.

6

SENDER'S TELEPHONE NUMBER

111111111111111111111111LEALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING
To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office for
For this, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATE)10 TELEG.
PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, b
amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond
the sum received for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lines,
errors in cipher or obscure telegrams.
In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery, of
gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valuo,s, u
a greater value is stated in writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be paid ba
on such value equal to one-tenth of one per cent. thereof.
The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary t
reach its destination.
Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such office in othe.
cities or towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at hit
expense, endeavor to contract for him for such delivery at a reasonable price.
.5. No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sent tc
such office by one of the Company's messengers, he acts for that purpose as the agent of the sender.
.
The Company will not be liable for damages or statutory penalties in any case where the claim id not presented in writing within sixty days after the tele.
gram is filed with the Company for transmission.
No employee of the Company is authorized to vary the foregoing.

THE WESTERN UNION TELEGRAPH COMPANY
INCORPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
TELEGRAMS
A full-rate expedited service.

NIGHT TELEGRAMS
Accepted up to 2.00 A.M. at reduced rates to be sent during the

night and delivered not earlier than the moraing of the next ensuing
business day,
DAY LETTERS
A deferred day serv'..ce at rates lower than the standard telegram
rates as follows: One and one-half times the standard night letter

rate for the transmission of 50 words or less and one-fifth of the

initial rate for each additional 10 words or less. Subordinate

to the priority of transmission and delivery of regular telegrams.
Must be written in plain English. Code language not permissible.



Telephonic delivery permissible. Day Letters received subject tt
express understanding that the Company only undertakes delivery ol
the same on the day of their date subject to condition that sufficient
time remains for such transmission and delivery during regular office
hours, subject to priority of the transmission of regular telegrams,

NIGHT LETTERS
Accepted up to midnight for delivery on the morning of the nexl
ensuing business day, at rates still lower than standard night telegrair
rates, as follows: The standard day rate for 10 words shall be charged
for the transmission of 50 words or less, and one-fifth of such standard
day rate for 10 words shall be charged for each additional 10 words oi
less. Must be written in plain English. Code language not per.
missible. Mail delivery, postage prepaid, permissible.




PERSONAL

JIMB 11, 1915,

Dear Ur. Peabody:

I an grateful to you for your note received yesterday advising the result of your trip to Washington.

The Con-

ference of the Governors of the Reserve banks will take rn out
of town to-morrow, but I hope Mr Jezr on his return ontionday

will have an opportunity to discuss the ratter either person,
ally or by telephone.
We will spare no efforts to do what we ought to do

in this natter, and I think you have arple evidence of our desire to reLakp this institution a real bank.
Yours very truly,

George Foster.jmNs44,0psq.,
Saratoga Springs, New York.
BS.Tr/RAH

Form 1201
VICE SYMBOL

AAL_Al

age

-etter

Blue

..ight Message

Nite

TEL tt

Night Letter

NL
b; these three symtols
d after the check number of

words) this is a day message. Otherwise its character is indicated by the

symbol appearing after the check.

UN ON

WESTERN UNION,

epg.

LL1

AM

L-rn
NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS. VICE-PRESIDENT
BELVIDERE BROOnVICE-PRE
NT

--

_..,r...
Gr13aY Letter

LI-Night Message

7->

4roa

LL YOU AND MRS STRUNG DINE WITH ME THURSDAY EVENING HERE




9AM

NL

symbol appearing after the check.

62 CEDAR ST NEY:YORK

GEO FOSTER PEABODY

Nite

words) this is a day message. Otherwise its character is indicated by the

SARATOGA NY 840AM JUNE 7 1915
maii;

Blue

II mane at these three symbols
appears after the check number of

59A YL 11

JR

SYMBOL

_

cilIght Letter

RECEIVED AT

BENJAMIN STRONG

SS OF SERVICE

"-Day Message

Form 260

NEWCOMB CARLTON, PRESIDENT

GE W. E. ATKINS. VICE-PRESIDENT
riECEIVER'S No.

I

TIME FILED

BELVIDERE BROOKS, VICE-PRESIDENT

CHECK

SEND the following Telegram, subject to the terms
on back hereof, which are hereby agreed to

,

Str

Y

en r

'laird tat




tar'.

ESTEOISL1 UNION
s

Form 260 *

WESTERN UNIIM

GE W. E. ATKINS, VICE-PRESIDENT

TEL

vik

AM

NEWCOMB CA RLTON, PRESIDENT

TIME FILED

RECEIVER'S No.

tt crif

BELVIDERE BROOKS, VICE-PRESIDENT

CHECK

SEND the following Telegram, subject to the terms
on back hereof, which are hereby agreed to




utl 0,

-,ter

,

,

Retv_

-

en

mum, lilippgignigiummummint
ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT T..) THE FOLLOWING
To guard against mistakes or delays, the sender of a telegram should order it
REPEATED,
that is, telegraphed back to the originating office
For this, one-half the unrepeated telegram rate is charged in addition.
linless otherwise indicated on its face, THIS TELEG
AN UNREPEATED IS
PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, be
amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fife
the sum received for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lines;
errors in cipher or obscure telegrams.

In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery, of t
gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valuer',
a greater value is stated in writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be pt.
on such value equal to one-tenth of one per cent. thereof.
The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines ii any other Company when necessary t
reach its destination.
Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such office in other
cities or towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his
expense, endeavor to contract for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sent to
such office by one of the Company's messengers, he acts for that purpose as the agent of the sender.
The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the telegram is Sled with the Company for transmission.
.

No employee of the Company se authorised to vary the foregoing.

THE WESTERN UNION TELEGRAPH COMPANY
INCORPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
TELEGRAMS
A full-rate expedited service.

NIGHT TELEGRAMS
Accepted up to 2.00 A.M. at reduced rates to be sent during the

Telephonic delivery permissible. Day Letters received subject to
express understanding that the Company only undertakes delivery of
the same on the day of their date subject to condition that sufficient
time remains for such transmission and delivery during regular office
hours, subject to priority of the transmission of regular telegrams.

night and delivered not earlier than the morning of the next ensuing
business day.
NIGHT LETTERS
DAY LETTERS
Accepted up to midnight for delivery on the morning of the next
ensuing business day, at rates still lower than standard night telegrr To
A deferred day service at rates lower than the standard telegram
rates, as follows: The standard day rate for 10 words shall be charged
rates as follows: One and one-half times the standard night letter

rate for the transmission of 50 words or less and one-fifth of the

initial rate for each additional 10 words or less. Subordinate

to the priority of transmission and delivery of regular telegrams.
Must be written in plain English. Code language not permissible.



for the transmission of 50 words or less, and one-fifth of such standard
day rate for 10 words shall be charged for each additional 10 words or

less. Must be written in plain English. Code language not permissible. Mail delivery, postage prepaid, pbrmissible.

CHARLES C. LESTER,
COUNSEL

...E FOSTER PEABODY

CHAIRMAN

ALBERT WARREN FERR1S,M.D.

FRANK N. GO DFREY

MEDICAL EXPERT

BENJAMIN F. TRACY

FREDERICK EDWARDS, C. E.
ENGINEER

IRYIN

G. RoU1LLARD

SECRETARY

STATE OF NEW YORK

FILING DsAtiff RESERVATION COMMISSION

agerAe:

AT

JUN 2 3 1915

SARATOGA SPRINGS

/9/0.,

June 17, 1915.
_

I wired you, asking if Mrs. Strong and you
could dine with me, thinking that Mrs. Strong might
possibly be with you.

I had wired Mr. Warburg with

the idea that Mrs. Warburg would be with him, going
through to the Adirondacks.

I have word from him that

he can not be here and that Governor Hamlin will
substitute.

I am wiring Governor Hamlin,feeling

confident that Mrs. Hamlin will not be with him, and
that it will probably be a stag dinner, unless I may
have the pleasure of finding that Mrs. Strong is with
you.

If so,

I am hoping that Mr. Jay will still be

of the party and that I may find Saratoga ladies to
help make suitable companionsi,ip for Mrs. Strong.
I am,




ours very sincerel

Form 260

47;takNA
WESTERN UNION

GE ,RGE W. E. ATKINS, VICE-PRESIDENT

TEL
TIME FILED

RECEIVER'S No.

BELVIDERE BROOKS, VICE-PRESIDENT

NEWCOMB CARLTON, PRESIDENT
CHECK

SEND the following Telegram, subject to the terms
on back hereof, which are hereby agreed to

June 18th, 1915.

Mr, George Foster Peabody,
SarateCN-MIrtngff, U. Y.

Nf-ve just recoived your kind invitation but repot it seems necessary for no to return to New York on Thursday.
not ho with me.
Charge to



Mrs. Strong will

Benj, Strong, Jr.

Benj. fltrang, Jr.

62 Cedar Street.

Lk>/4

August 25th, 1915.

dear Mr. ..'eabody:

It was very good indeed of you to send
me a copy of J.1rs. Trask's book. I have so far

only been able to read a few pages of it, but
hope to read it all in the near future.

Mrs. Trask's style is charming and
graceful, and of course, her character s:eaks
pretty loudly in what she hays4ritten; possibly
more so than she rc,alizes.
Cordially yours,

(looms Foster Peabildy, Zags,

Saratoga Springs, N. Y.







Governor.

September 14th, 1915.

(1,..)ar Mr. 'eabody:

?lease accept my aologies for the delay in
writing you, this delay having been occazioned by a
nuMber of matters which dera=nded my attention and gave

no no opportunity to consider the matter we vmro discussing

I find now that it will be a week or two

before I arm reach -ny conclusion on this subject, but
will advise you promptly when I do.

Very truly yours,

Governor.
mr.
22 The

:62,11

.4ay,

-oston, -ass.
VOSiwal




Marblehead, Mass.

September 17, 1915.
Gov. Benjamin Strong,
Federal Reserve Bank,

62 Cedar Street,

New York City.

My dear Governor

Strong:-

I have your letter of September 14th, for which
I thank you.

I am at present doing

and writing on my own

account on the

some investigation
merchant marine

question, and any time that I can be of help to you in
this matter I shall be only too glad to come on to New
York.

Hoping to hear from you soon, I am
Yours s icerely

Saratoga Spri.nos
New York
October 2, 1915.

Dear Mr. Strong:Mr. Coudert writes to me in response to my letter
"I should be delighted to meet Mr. Benjamin Strong,Jr.
and if we could lunch with you some time next week
it would be doubly interesting.
I would suggest
that perhaps you will be good enough to invite also
my partner, Mr. Lorenzo Semple, who is doing the actual
law work in connection with the loan and who is well
posted on the technical side of these things, to
lunch with us."
I shall be most glad if it will be convenient
for you to lunch with me on 7ednesday next at the
Down Town Club to meet Mr. Coudert and Mr. Semple.
If it will be convenient for you perhaps in order to
save the time of telegraphing me and my telegraphing
back, you will be good enough to let your secretary
call up Mr. Coudert's secretary and arrange for an
I will be at
hour that might prove most convenient.
liberty at any time after the adjournment of our
If Wednesday should not be
Director' meeting.
convenient I will remain over for Thursday and you
I shall Teach the Hotel
can make it on that day.
Belmont on Tuesday evening and can be advised there.
I am,
,

Very truly yours,

Mr. Benjamin Strong, Jr.,
Federal Reserve B
62 Cedar Street,
New York City.







October 4th, 1.915.

Dear Mr. Peabody:

Ttlank you for writing me in regard
to an nppointment with Mr, Goudert and I am

telegraphing you that an appointment for ':ed-

nesday will be ontirely convenient for me.
Very truly yours,

Governor.

George rooter 1,eabody, Esq.,

SaAtoga Springs, N.Y.
BS Jr/VG11-1




CLASS OF SERVICE
D
Day

SYMBOL

ssage

tter

Blue

Night Message

Nite

Night Letter

NL

If r ,o of these three symbols
',ter the check number of
ar
va.

s Is a day message. Other-

wi-ol.-naracter is indicated by the
symbol appearing after the check.

Form 120)

WESTEOAEN UNION
.
TEL
AM

CLASS OF SERVICE

Day Letter

WIL

Blue

Night Message

WESTERN UNION

N ite

Night Leger
NL
If none of these three symbols
appears after the check number of
words) this is a day message. Otherwise its character is indicated by the

NEWCOMB CARLTON. PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS, VICE-PRESIDENT

RECEIVED AT

symbol appearing after the check.

AO

Air?

46SO (<1< 21

OPEN

SARATOGA NY 140P OCT 4 1915

.1487

BENJAMIN STRONG JR

62 CEDAR ST NYC ITY
HAVE Yr)UR TELEGRAM

I

ASSUME YOU ARE ANFORMING COUDERT OF

TIME AND PLACE AND INCLUDINGfSEMPLE At SUGGESTED IN MY
LETTER
CEO FOSTER PEABODY
*11

ommemmilimems.

202P

SYMBOL

Day Message

I.

TELEGRAM.
Saratoga Springy), 7. Y.,
October 14, 1915.

Tnjamin Strong, Jr.,

62 Cedar Street,

Now York City.

wrote Coudort that I would not be in tom this week
and you might invite him for a conference. I believe
you will be away next reek 'then I am there. I am

sorry to plics it.
Send paid.
Charge 22.




George :boster 2Woody.

,pRGE W.

NEWCOMB CARLTON, PRESIDENT

E. ATKINS, VICE-PRESIDENT

41RECEIVER'S No.

FILED

BELVIDERE BROOKS, VICE-PRESIDENT

CHECK

ITIME

SEND

the following Night Letter, subject to the terms
on back hereof, which are hereby agreed to

November 15, 1915.

George Foster Peabody,
Saratoga Springs, N. Y.

I an arranging for our Directors to dine at my apartment Monday
night very informally and discuss some bank matters.

you can be there.
Benj., Strong, Jr.

BS Jr/7CM
Charge to




Federal Reserve Bank,
62 Cedar Street.

I hope

ALL NIGHT

IC

LgPT+ERS

TAKEN BY THIS
The Western Union Telegraph
the next ensuing
business day, at rates Company will receive not laterCOMPANY ARE SUBJECT TO
transmission of fifty words or less,
still lower
THE FOLLOWING
than midnight
To guard
and one-fifth than its standard
NIGHT LETTERS, to be transmitted
For this, one-halfagainst mistakes or delays, the of such standard night telegram rates,
TERM..
as follows: The standard day
the unrepeated night letter sender of a night day rate for ten words shall
AND PAID FOR AS SUCH,
only for delivery on the a..
letter should order it REPEATED,
be charged for each additional for ten words
rate is charged in addition.
rates
The Company shallin consideration whereof it is
shall
that is,
ten words or less. be charged
not be liable
Unless otherwise
the amount received
for senditm the same; for mistakes or agreed between the sender of indicated on itstelegraphed back to the originating office for
fifty times the
face, THIS IS AN
sum received for sending the nor for mistakes delays in the transmission or the night letter and this Company IT NREPE,ATED
comp
nor for errors
or delays in the
in obscure night letters,
delivery, or for
NIGHT LE
as follows:
same, unless specially
In any event the Company
rained; nor transmissionfor delays or for
in any,case or delivery, non-delivery, of any UNREPEATED
etter, whether ,aused by the
non-delivwy, of any REPEATED
shall not be liable for damages
unless is ereater 1,1nne is
arising from ll
negligence of its servants or otherwise, for any mistakes
unavoidable interruption in the
aid based on such valuestated inn writinehereon at
or FIFTY
equal to one-tenth
the time the night beyond the sum of delay in the transmission or
The Company is hereby made
of one per cebt. there'd. letter is offered to the
deliv6ry, or
DOLLARS, at which amount for
on.
the agent of the
Company for
this
sender, without liability, to forward
transmission, and an additi
rs will be delivered
td
free
this night letter
Beyond these limits within one-half mile of
over the lime of any oth
the Company
the Company's office in tcwns
N'Or it, Ca./ met far hi RI for
doe-, rat undr rtalm to ma'
if A.,00 population i.e lees,
such delivery at a reasonable
atmehes to this Cc mpany
is by One , frill.
and
prier'. delivery, but \Ain; without liabPity,
Croamm a a. notCompany's irreasenrers,concerning iii alit at re until tlre
at the
lie itt,I0 for dmineres /10 rims far ;:art
same are accepted
purpose
'.",caparly for tr:ir,eteii"aj
-trt ftirther
or statutory p,mni:irS '1 5O as the a,cnt of the send,.at one of its
ii,
transmitt
eorcrHersion
A. NIGHT L ETT E RS ,,f
muse wit, to the claim
rer!merl rem for ads smcia/
have diselmr.red i's olMemlioa /11ur nit 1:,0
is not presented
of I h0
in wetting within Si
NICHT LETTER " serviee, the
It.
is sir' h etlara Wid; rmmect
NIGHT LETTERS shall Ire writrea
7. Ito ,utplogo:
to dr hatry Cormr,:a tie mailed at destirmtion
following
of One cumpavy
in plain English,
medin, such NIGHT LETTERS to rho speekd terms ere berr,liv armeed to
addressees.
is authurized to vary the
Cron, language is not permissible,
and the C.mnpany shall be
at destination,
jaregoieg.
postage prepaid.
THE WESTERN UN
ION-TELEGRAPH COMP
INCORPORATED
unwcomn CARLTON,

TELEGRAMS
A full-rate

expedited service.

NIGHT TELEGRAMS

PRESIDENT

CLASSES OF SERVICE

Accepted up to 2.00
night and delivered not A.m, at reduced rates to be sent
earlier than the morning of the during the
business' day.
next ensuing
DAY
ERS
A
day service at rates lower than
w8; One and one-half times
the standard telegram
nsmission of 50 words or the standard night letter
less and one-fifth
eh additional 10 words
of the
or less.
Subordinate
elivery of
regular telegrams.
de language not permissible.




Telephonic delivery
permissible. Day
express understanding that the CompanyLetters
the same on the day of
received
only undertak subje_c
time remains for such their date subject to
conditions
transmission
hours,'subject to priority of the and delivery during
transmission of reg
NIGHT

LETTERS

Accepted up to midnight
ensuing business day, at for delivery on the
rates
gram .rates, as follows: The still lower than
sta
charged for the
transmission
standard day rate for 10 wo of'
10 words or less.
Must be
not permissible. Mail. deli




Saratoga Sprisios
New York

-







December 27th, 1915.

Uy dear nr. Peabody:

Meek you many tin no for your nice note of
Christmas Thy.

The help and support that you and other mem-

bers of the Board have given us really hes enabled the
acemelelishment of many things that otherwise would have

been imposcible.

I share your hope and eish for the Nes Year.

7/e do need to develop t, e businese of the bank a little
more actively now that we have

geol found .tion upon

which to rest it, and our etforte next year will be largely devoted to that work.

We appreciate the public apirited vie that you

take of our work here, and pertieularly the s,eeort and
cooperation we have had from you.

':ith kindest ragerds,
Sincerely yours,

1r. George ioster Peabody,
Saratoga prings, N. Y.

BS Jr/7L

HARVARD CLUB
27 WEST 44.7. STREET

76at%--A

/4






0

0

,

J.)

6,)
IP)

4

o




HARVARD CLUB
27 WES T

4 TH ST

ET

(

r




6v-C




June 16th, 1916.

Dear VT. Peabody:
It is very

dif'icult for

me to express my gratitude

to you and the other members of the Board for their sympathy
and for their desire so clearly evidenced, to make it easy
for me to recover my health.

The association with you and

the others in the bank has given me,
pleasure,

but

not

only a great deal of

the kind of satisfaction that iF really worth

while and the thought of breaking it permanently, or even
temporarily, is a pretty sad blow.

You are all helping me very much and I can only
ask yo-1 to accept :Iv most grateful thanks.

I will be might7glad to see you any time that you
can spare a few minutes

for a All

Yours very sincerely,

George

Foster

Peabody, -Farl.,

Saratoga springs, 1:ew York.

BS Jr/ITCM

at 903 Park Avenue.

Saratoga Springs
New York

.&
A-Affdze,"---

/t- >td

4eA7 /2_-

vtA-L

Z_____ z_,L 4-7,

/
,,,,(_%1----1--




a

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--.---7




Saratoga Springs
New York

CA,7
a-

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FEDERAL RESERVE BANK

a

OF NEW YORK

August 2, 1916.

Dear Governor:

I am glad to hear from Lr. Curtis to-day of your continued improvement
and that you are allowed to walk as far as the post-office occasionally.

I

think, perhaps, you will after all be strong enough to have another letter come
in your mail.

The reports from you have been followed with great interest by

all the directors and you may be sure by none with more interest than the writer.
It has been cheering to learn that you are having good weather,and that you are
probably now well adjusted to your surroundings.

I hope that your profound

interest in the problem which we have been working out here will not lead you
to give too continuous attention to the reports which, I understand, are being
sent you from time to time.

We are all more than glad that you continue your

interest, but we are more desirous that you should conserve your strength as
it returns and give to us at your leisure the results of your clearer thought,
because your longer range of perspective will, I am sure, be of very much value
to us all.

In the absence of 11r. Jay, I have been privileged to indulge myself

again in a good deal of our city hot weather, and have come to be in touch
more with the detail of the business and have found it interesting and hope
that the bank may find it worth while in time in my fuller apprehension of
the problems and business of the bank.

I, personally, do not mind the hot

weather so that part of it has been no burden, but I do not enjoy brick walls
as a contrast to the foliage of my Lake George mountains.




RESERVE BANK OF NEW YORK

2

Benjamin Strong, Jr.,

I am, with earnest interest in your welfare,
Sincerely yours,

Benjamin Strong, Jr.,
The Lewiston,
Estes Park, Colo.

GFP/PE




Esq.,

8/2/16.




Estes Park, Colo., August 7, 1916.
41..,CleolVIJLakitaxaaia4dy,
FeTIWTIT-Reserve Bank,
_New York City, fi. Y.

Dear Jr. Peabody:
It was very good of you indeed to WT te me and

you seem to realize that letters are my 0 ief enjoyment
and recreation. It is no erfort to keep' itp with the
office correspondence whatever, as an haat here without
interruption enables me to dispatch all pr my correspondence and get in a little worke6-1Vtheir matters in
addition. Jore I able to give_ Ft, whole
ing say to
bank matters every day, there
a good nov things that

one eould do out here to $er

vantage Vherin in the
office, and later on I he)/able to contribute

somethin6 toward reliev

the office.

'4.eman and the others at

while I ro
tilee onditions have been extiik fence during the past
month, tihere is/some sat Ofactlbn in knowing that you and
Treman havebeen broiit into such close contact with
the work, that, u will th have e fuller appreciation
of the-dIllicaA4 gs,/6 me of our problems and the
earnes ess eithh,i_ch-all the members of the organization eve devoted themselves to the work.
hat has en done during the past two years is no
more . an layl c- the foundation.
I am corresponding with 11r. Treman about the arrangements for our foreign business. It is very much
In my mine and as the fall approaches I are getting more
anxious to see the Reserve system prepared to meet whatever developments may arise internationslly. It would
be a ood thing to have everything completed by the end
ceedingly uncomi'Ortable

of September.

with warmest regards and many thanks for your letter,

which I hope is only the first of others, I

am,

Very sincerely yours,

Saratoga SprLngs

JAN

New York

January 6, 1917.
Dear Er. Strong:

I have just returned after an absence of ten
days from a strenuous New York trip and find your card
with very kind Christmas Greetings. I have wanted to
write to you but have felt sure that you were having
far too much mail to attend to and would better delay
receiving confirmation of your faith in my interest.
I write this line now not being sure whether you are in
Denver or Estes Park. I will ask the Bank in New York
to address it properly. I beg to express to you my
continued interest in your welfare and of my particular
satisfaction upon learning from Mrs. McLaren of your
I think you have done too
marked improvement in health.
much work, of course, but I suppose it is rather
difficult for you to cut it down. I think I can quite
understand why, but do put the brakes on all that you
can.
A number of things have happened respecting which
you have had I am sure quite enough correspondence, but
I merely'want to assure you of my own sympathy with your
feeling respecting the extraordinary publicity given to
I am very hopeful that the year
confidential matters.
1917 will bring in Peace and feel very confident of
its being underway nowmore so than some of our friends
do.

Again, with kindest regards, I am,
Faithfully yours,

Mr. Benjamin Strong,




Denver, Colorado,
January 12, 1917.

.

Dear gr.0041,1

It gave me a great deal of pleasure to read your kind letter
of January 6th and 1 thank you most heartily for your good wishes.

heavy

and sometimes light, but I

times it is

y mail -

There is no real need to worry abo

it when it

asy and let it

take

accumulates too fast.
The announcement by the

I have explained Why in recen
had all been explained verb
derstood

without

repeating

se explanations

judging of the relations

ar in mind

eserve Board is really

spirit Which actuates the

tion of these problems.

New York have devoted

and directors of the R

more eel

embarrassment was un-

iy and I am sur

between the Reserve Bank

to

although the facts

tters to

The important

energie

a good deal.

Reserve Board disturbed

System as a Whole as

the develo

The

the

officers

their best

distinct from a

and personal development of their own institution, and they
floe, both of their time, health and energy

have done so a

and of the ea
must not take ad

re and development of

tae of this

result in the su jection

the ban4

itself.

attitude of helpful

cooperation so as

of the New York Beserve Bank to

management from Washington.

It will mean

the

The Reserve Board
to

domination and

downfall of the System for

they cannot keel good men 6n our bank and have it run that way.

I have always

had great confidence that your influence in these

matters has been a great protecting force to the bank and it is a




pleasure

2.

January 12, 1917.

To - 2r. Peabody.

to feel that your sympathies lead you to realize my own embarrassment
and chagrin at recent developments.
I am hopeful, as you are, that WO will see peace this year much more in fact than the press seems to be
in New York and Washington are willing ti

that your wishes and mine are not simpl

many of myfriends

etters. I hope
.uit in the
fathers to the t ught.

Once more many thanks for your le ter and with wa

George Poster Peabody Esq.

Saratoga Springs, N

Bs/cc




ork.

t regards,

Saratocia Sprinqs
New York

FEB ,? 1317k

January 25, 1917.

Dear Governor Strong:
It has been a very real personal regret to
me that continual pressure upon piy time and energy
during the past week in New York\and the previous
week in Washington prevented my wftting to you as I
desired.
I wish particularly to tell you of my very
complete sympathy with your very proper feeling
respecting the manner in which publication was given
to the action of the Board concerning the authorization,
of the Reserve Bank of New York in appointing the Bank
of England as its agent.
You will have heard more
or less of the detail of the hearing of the Committee
by the Board at Washington.
Mr. Towne made a clean
cut presentation for the Committee of the view of the
members of our Board of Directors. While the surface
result was that the Reserve Board members all maintained
the claim that there was no breach of confidence that
involved you or your Board of Directors and agreed
that they would take into consideration the suggestions
of the Committee from New York, yet the true result
was, I am- sttisfied, to get more clearly into the minds
of the gentlemen at Washington the true situation,
and the later coming of Governor Harding and Mr. Delano
to New York gave the opportunity I think for clearing
up the situation. I remained on in Washington a couple
days longer and saw most of the Board members and as
well had a talk with Secretary McAdoo after the hearing.
I think I was able to clear up some various
misapprehensions which seemed to have gathered in the
minds of a number of persons and I have some faith
that there will be a better understanding hereafter.

While I sympathize entirely as I say with
your feeling and was completely in accord with the
views of the members of our New York Board, I found




Sa ratoga Springs
New York
Governor Strong #2
after my visit to Washington that my previous thought
respecting the occurence was doubtless correct,
namely, that the matter of public announcement was
not considered at the time of the passage of the
resolution but that later on in the strained condition
of International relations due to the serious
misapprehensions respecting the Presidents note,
there was most urgent reason for proppt announcement
of this impending friendly arrangement with England.
I am personally satisfied that,without official warrant,
Sir Spring-Rice was a very considerable factor in
connection with the announcement. This, of course,
is only for yourself, although I doubt not that you
had already surmised the same condition of affairs.
I presume you have already been advised that the lack
of prompt advice to New York and the evidence of
suitable cooperation was due mainly to the fact that
Governor Harding was taken quite ill following the
meeting of the Board and had not recovered when the
sudden)call was made for the announcement and,
therefore, probably had no practical opportunity when
the matter was pushed over on him to confer with the
Acting Governor at New York,in fact it probably
developed when the Acting Governor was at Ithaca
over the week-end, and as Mr. Jay was in the South
the actual handling of the case in proper fashion
would have been difficult to accomplish. As Governor
Harding said to me there was no slightest motive
for anything but to deal with the immediate situation
as then presented,and never the least intention to
Ithink that
ignore or embarrass the New York Board.
is true and that the incident was largely due to
the peculiar circumstances of Governor Hardingls
illness and the 442tical International situation.
I must thank you very heartily for your
good letter of 12th January which was delayed in
reaching me by reason of my absence in Washington.



Saratoga Springs
New York
401

January 25, 1917.

Governor Strong #3
In your letter you Cite the "important thing" as
"the spirit which actuates".
I think that spirit
is all right on both sides but there evidently
has been some lack of thorough understanding of
the New York situation by the Washington people.
The peculiar situation as regards personnel, that
is the committee for the New York Bank and some of
the members of the New York Board or their assumed
relationship probably accounts for some of the lack
of understanding. I thank you for your word respecting
my eitghac-CsTO'possibleminfluencet
I hope that it
has been of service recently and I trust that it
may still be exercised. I expect now to be in
Washington on February 22d for Secretary Houston's
dinner to the President and shall hope then to have
opl;ortunity to further emphasize the real situation.
I suppose Yr. Stare/k may shortly resign from
our
Board and I trust that the choice of a successor
may open the way to a further clearing up of the
atmosphere.
I beg to assure you that I shall be
most glad to have you turn to me for any service
that you think I can render bedause I am entirely
persuaded of your generally sound judgment and of
the advantage in certain particulars of your present
somewhat larger -point of view from not being too
closely in the melee, although in this last particular
I think had you been on the ground you would have
(as I have indicated above) thought there
were special
conditions which justified the announcement, but
probably not to justify the lack of consulation
with the New York Board--a consulattion, however,
which I think would have been more likely to have
suggested itself to Washington if you had been here.
I feel entirely satisfied now that Governor Junliffe
really understands the situation and that you can
personally feel a sense of relief as to no "embarrassment
or chagrin".




Saratoga Springs
New York
Governor Strong i4
I am more hopeful than many close to us
around the Bank that Peace is actually underway,and,
in spite of the violent utterances of some of our
personal friends like Beck, I think the situation
has been greatly helped by the President's recent
I am satisfied that the more carefully
utterances.
hiqecent address is studied the greater impress
will it make. Of course personally I look at it
from the pacifist point of view, but I think, looking
at it in the large from the International financial
point of view that I am right. I strongly suspect
that Lloyd George is clever enough to have realized
soon after his assumption of the Premiership, if not
before, that his one chance for permanent fame is
through being the maker of a righteous PeaceT-rather
than through the line of being one of a triumverate
of conquerers, even were that more nagaIg surely
possible.
Mx. Woodward has written to you of our thought
as a Jommittee respecting the finding of someone
whose capacity and general vitality as well might
prove of real support to you in the arduous double
task you have on hand of recovering your own health
and directing the right development of our Bank and
the system into the realization of the real and great
potentiality which some of us believe in. I shall not
be in New York again until next week, butmeanwhile may
hear from Mr. Woodward of your thought respecting the
suggestion, which has as you know greatly interested
Mx. Warburg and others at Washington.
I am, with congratulations to you upon your
progress and with earnest hope for your continued
recovery of strength,
Sincerely y
Mr. Benjamin Strong, Jr.,
4100 lontview Boulevar
Denver,
olo.






Denver, Colorado,
February 2, 1917.

Dear Er. Peabody:

Ur. Curtis and I returned from Col rado Spr

so this is mg first opportunity to rea ly
It was exceedingly goo'

ary 25th.

answer y

yesterday,

otter of Janu-

to write me so

ly and

uence with our friends in

I feel particularly grateful t

with success - to eliminat-

.ashington has been directed

ing possibilities of friction bet%

ur bank and the members of the

Reserve Board.

I appre

While

n concluding our negotiations

abroad, there will

tainty in

remain

rve Board so long as Secretary

elat

o

that unforturPte uncer-

McAdoo'

Yctrine is pe

o go unchallenged, namely - that the

Reserv

oard is a publ

body and that its official actions must be

made p
Mr.

rtis is j

ments effecti

oow visiting me and if

these last develop-

relations with Germany don't make necessary a

sudden return to New York, we are planning a short trip to Arizona

and an

outing together, Which is

With kindest

just What I need.

regards and many thanks for

Faithfully yours,
George Poster Peabody, Esq.,
York.
BS/CC

your letter, I am,




CENTURY CLUB
NEW YORK

/97

/Ce-47-r

w,a_21

_

z7







June 28th, 1917.
My dear Mr. Peabody:

I am more than grateful to you for your
kind note of yesterday in relation to our meeting
with the Clearing House Committee.

Those meetings

have been productive of a great deal of good and
wile 1 have beendble to attend only a few of them
it strikes me we are developing greater confidence
and cooperation than would be possible by any other
means.

Again with warmest thanks, I mn,

Sincerely yours,

George Foster ?eabody, Esq.,
Saratoga Springs, New York.
3S/VCM

January 4th, 191P.
fTRSONAL.

Dear Yr. Peabody:

&mistime I would like very much to discuss the enclosed letter
with you.

It bears on many discussion which 1 have had with members

of the Uberty Loan organization.
It seems to me quite impossible t determine questiore of human

life, that is, the soldier question, upon principles of economics and,
likewise, quite as impossible to determine these questions of finance and
economics upon the same principles which apply to human life and the ac-

tivities stimulated by feelings of patriotism.

The separation of the two

princielee takes place when we find it necessary to place a limit unon the
amount obtained by taxation and gettine the balance by voluntary subscrip-

tions to bond issues. The saAseparation takes niece where reliance uron
conscription is abandoned in favor of the volunteer army.

If taxation is unfairly and unwisely applied, industries essen-

tial to the war will dry up; if conscription is unwisely applied, it will
withdraw necessary labor from essential industries and they will dry up.
Consequently, in order to successfully conduct a war we must limit taxa-

tior to what industries can. bear and rely upon volunteer subscriptions for
the balance and in applying conscription we must limit its application as

nearly as possible to those individuals Who are not essential to industry.




-2-

To

Mr. Peabody.

Jan. 4, 1918.

Were it humanly possible to make an effective and just conscription of profits and capital for war purposes, I would strongly

favor doing it but, frankly, I do not believe that the science of
Government and finanee ha0 yet reach a stage of development where any
such plan could be apnlied.

Possibly, some night we can have dinner at the Century and
talk this out. I was very much interested indeed in reading the en-

closed and thank you for letting me have it.
Very truly yours,

George Foster Peabody, Fsq.,

Saratoga Springs, N. Y.
BPVCK

Inc.







October 3, 19180

My dear 7:ir

Peabodyl

Many thanks for the onrsohlets entitled "President
'Miser and His Critics," and "President Wilson's War Mind" which
you were good enough to send to /re.

shall read then with much

interest and pleasure.
Cordially yours,

Mr. fleor7a Foster Peabody,
Saratoga Springs,
Mew York

;Tune. lett bkliker...141.

30q 1S "19
Dear Governor Strong:

E\I

I was piaci to ear that you are
planning for an early sail. I am deeply interested,
as I said to you, in your nuking the trip for
ohs ervat ion.

I have a 'letter from Prof. Fisher,
evress tog his desire to talk over, with yertt the
question of "stabilizing the eollar," before Cvtting
out his preliminary edition, -Ahich is to mo to those

who would naturally be interested. and. waled upon
to pove counsel concerning the arguments that he will
Pet forth..

I.hope it y be possible far you to
arrange to keve Prof. Fisher confer with you before
you ID sway.

I an looking forward to the pleasure
of seeing you on 7londay or Tuesday, as I understand

you are to be here thou,
I am

ealthitilly yours,
GEMGE FOFTER PEABODY
idated by Mr Peut ady
Skflned In his lib




e.

Dr

ae retaxy to r. Peabody.
To

Benjamin qtrong',

Plaza Rote/,

Nev York City.

Copy to Madera Reserve Baa

Dear Ar. B.33ody:

t is noat kind of you
you have 1 your letter of Jul

write me in awe cordial terms as

3t,

And I very greatly appreciate your

sympatheW attitude and your unrailiee support of what we are trying to
do in teeaanee

It has always somagd to me that a part of our iork, and one

Of oer particular responsibilities, to keep ourselves posted. first hand
ou ieportant conditions 4L1311 relate to the eevelopment of the Aystem.

That, as you Anew, determined me to make this trip to urope.

I

sincerely hope that it pays.
The sudeestion in regard to legal tenders has not received
favorable ooaelderatiou by the 2eueral Reserve Board, due to their belief

that it ill stir up attempts at all sorts of unsound legislation.

This

impresses me as an attitude of timidity rather than courage, and I greatly deplore their unwillingness to deal with the matter. Possibly Secretary

effeegwell will look at it differently.
As to legal tender qualities for federal reserve notes: After

Glass and Mr.

all,

at is the fundamental question

The history of legal tender money

is simple enoegh;

it eonsists of the recognition by the eitizens of a
State that the Jtate itself has the riget to regulate the coinage and
currency, determine its standard in value, and, as between citizens,

establish its qualite for the purpose of paying debts.

The legal tender

of the world present a great variety of treatments of this matter, 


in feet they vary all the

from imitation of gold as legal tender to

bills of exchange.

7/2/19,

George foster Peabody, Zeq.

2

The underlying principle, however, is to limit

money of legal tender quality to metallic money or to paper currency

which is unquestionably redeemable in metallic money.

Our Oongress

has dealt with the subject of legal tender upon the basis of expediency
rather than sound theory, giving to our different kinds

of currency a

variety of legal tender qualities -- the worst variety being greenbacks,
whioh originally were irredeemable, but
National

bank

which are now redeemable in gold.

notes, gold certificates and silver certificates not being

legal tender, are, nevertheless, redeemable in legal tender notes, or,
indirectly, in gold.

We, therefore, have in our currency at the present time a novel
situation, - with the best paper money

in circulation, i.e.,

ficates not legal tender, and, in fact, largely retired.
in quality, being the federal reserve note, is
following that,

have lost

greenbacks, silver

gold certi-

The next best

not legal tender, and,

certificates and national bank notes

their value ae having possibilities of legal tender because of the

increased circulation of federal reserve notes.
is developing, and in case the

As the present situation

greenbacks are retired, we will have in this

country practically nothing in circulation for current use as legal tender
except through a laborious and expensive process

of redemption, a process

in fact which is not available to the ordinary citizen in many parts of the
country.

The banking nations of the world - England particularly - have

long recognized the soundness of making the notes of the banks of issue
full legal tender, and if

circulation all

the

time ever comes when we can sweep out of our

of the miscellaneous

paper money now in existence and re-

duce it to federal reserve notes with an adequate gold reserve, it is hard
to see where sound objection could be raised to meking those flutes legal

tender.




In fact, the only objection that I can see lies in the fact

George ?caster Peabody,

sq.

7/2/19.

that they are obligations of the Government, and always present the sug-

gestion that legal tender quality can be given to a piece of parer by
printing the Government's obligation upon it.

The greater part of this dissertation is a bundle of straw
that has been well thrashed over.

cannot tell you how greatly I appreciate your letter.
Sincerely yours,

George J'oster 4 bo

aaratoga '_,rings, N. Y.

B./MB




&sq.,

Aagust 27, 1921.

George Fester Peabody, Esq.,
Saratoga Springs,
New York.

Tear Mr. Peabody:

Referring to my telegram of today governor Strong
is giving a dinner to Governor Norman and Sir Charles Addis

to meet the directors of the bank on the evening. of Tuesday

August 30 at 7:30 p. m. at the Metropolitan Club this city,
Fifth Avenue and 60th Street. He desires me to express his

hope that you will surely be able to attend. It will be
rather informal, dinner coats being worn.
Sincerely yours,

R.S.V.P.










GL=9

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