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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 -.r,- --.---7 Saratoga Springs New York CA,7 a- z / - .----a- 42_ ( 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