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NATIONAL INDUSTRIAL CONFERENCE BOARD, INC.
247 PARK AVENUE,NEW YORK

MilrUSWALEXANDER

October 6, 1925

PRESIDENT

ACKNOWLEDGED
My dear Mr. Strong:

nr"r

g ltrm

rprvived a letter from my
I have juli
good friend, Dr. Hjalmar Schacht, the President of the Reichsbank of Berlin, advising me of his intended trip to New York
City in the immediate future.
Based on my conversation with Dr. Schacht,
when last I saw him,and in subsequent correspondence I wrote
Dr. Schacht that I should be delighted to arrange a dinner for
him at which he could intimately meet a small group of the
leaders in American industry who are associated with the National Industrial Co :ference Board and whom he is anxious to
meet in this manner.
Gen. Guy E. Tripp, Cornelius F. Kelley, Irenee du Pont, L. F.
Loree, W. H. Nichols, H. H. Westinghouse, Walter S. Gifford,
Charles Cheney, etc.
In his letter to me Dr. Schacht says that
he arranged with you that all dinner and luncheon engagements
for him would be made in consultation with you in order to
I heartily approve of such an arrngement
avoid any conflict.
and am therefore asking you on what earliest evening you think
I could plan a dinner for Dr. Schacht without interfering with
any important arrangements that you have already in mind.

Naturally we would be delighted to have you
at the dinner which I am planning to arrange with the industrial
group.

Requesting the favor of an early reply, believe me,

Very truly yours

Mr. Benjamin Strong, Governor
Federal Reserve Bank of New York
33 Liberty Street, New York



I r

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October 26, 1925.

My dear Mr. Alexander:
Referring to your note of October 6,
Dr. Schacht has eeked me to eCvise you thrt preeure
of engagements which he hre ban oblijed to bake in
coni:;eetion with hie trip till occupy ao such of hie time
during his short stay in Nsw York, *_bat he fines himetlf
unable to accept your kind invitrtion to attend E dinner
to be arranged for him by the National Induetrial Conference ?oard.
ie,

I believe, ttriting you himself on

the eubject.

I

beg to remain,

Very truly youre,

Magnua I. Alexander, Esq.,
National Indnatriel Conference Board, Inc.,
247 Perk Avenue, New York.







N







0
October 16, 1925.

My dear Yr. McDonald:

Your note of October

has just Lean received, taid

I shell here plee sure ir_ brinciing it to Pr. Cob/

F

ttcLtion

rpon hie errivni next peek.
11.e. time here ie very bhort, tric he is alreecy meaty
much occupied vith
moment

VEFiCUb

engtesael,ts,

60 I

Very truly yours,

Jambe G. ilcDoneld, tec.,
Chairman, Foreign t'olicy Asaocietion,
9 Leet:41 street, Aew York 6ity.




t the

edrise you whet the prospects ere of hia accepting your

kind invitation.

PL. La

air: uneb;e

Executive Board
G.

JAMES

MCDONALD

FOREIGN POLICY ASSOCIATION

GEORGE M. LA MONTE

For a Liberal and Constructive American Foreign Policy

CHRISTINA MERRIMAN

Treasurer

CAROLYN E. MARTIN

Assistant Treasurer

Chairman
-N
EDWARD HEAD EARLE
HUGHELL FOSBROKE
BRUCE a

CARLTON
CHARLES

J. H.

PA UL I)

LOGG

Membership Secretary

NATIONAL HEADQUARTERS

HAYES

. HOWLAND

Secretary

ESTHER G. OGDEN

TELEPHONE:

9 East Forty-Fifth Street, New York City

VANDERBILT 5740

CABLE ADDRESS:

GEORGE I . LA MONTE

LOFN A, NEW YORK

MRS. HENRY GODDARD LEACH
MISS CIIRISTI NA MERRIMAN
MISS RUTH MORGAN
RALPH S. ROUNDS

October 15, 1925

T. SHOTWELL
MRS. V. G. SIMKHOVITCH
MRS. CHARLES L. TIFFANY
MISS LILLIAN D. WALD

JAMES

National Council
THE EXECUTIVE BOARD
and
MISS JANE ADDAMS

Illinois

ARTHUR E. BESTOR

New York

FRANCIS B. BIDDLE

Benjamin Strong, Esq., Governor
Federal Reserve Bank
33 Liberty Street
New York City

ACKNOWLEDGED

Pennsylvania
RT. REV. BENJAMIN BREWSTER, D.D.

OCT 161925
"

13- S.

Maine

JOHN GRAHAM BROOKS

Massachusetts
CHARLES C. BURLINGHAM

New York

MISS MABEL CHOATE

New York

JOHN DEWEY

New York

STEPHEN P. DUGGAN

New York

ROBERT ERSKINE ELY

New York

FELIX FRANKFURTER
Massachusetts

MRS. ROLAND G. IloRxitis
Massachusetts
FREDERIC C. HOWE

District of Columbia

EDWARD KREHBIEL

California

THOMAS W. LAMONT

New York

My dear Mr. Strong:

We understand that Dr. Schacht of the
Reichsbank will, while in this country, be
making his engagements more or less through
your office. Our Executive Committee is very
anxious to have Dr. Schacht as their guest at
a small, informal dinner.
It is not our thought
that this should in any sense be a public
meeting, but merely that there be an opportunity
for our Committee to meet Dr. Schacht and talk
over with him some of Germany's current economic and financial problems.

SAM A. LEWISOHN

New York

S. GALE LOWRIE

Ohio
BISIMP FRANCIS J. MCCONNELL
Pennsylvania
JULIAN W. MACK
Illinois

I should appreciate very much an opportunity to drop in and see you just a moment
to explain a little more fully what we have
in mind.

ROBERT R. MOTON

Alabama

MRS. BEVERLEY B. M UNFORD

Very

Virginia

n erely yours,

WILLIAM A. NEILSON
Massachusetts
MRS. GORDON NORRIE

New York

ROSCOE POUND

Chairman'

Massachusetts
VERY REV. HOWARD C. ROBBINS

New York

REV. JOHN A. RYAN

District of Columbia

JGM:OLS

HENRY R. SEAGER

New York

HERBERT KNOX SMITH
Connecticut
GRAHAM TAYLOR

Illinois

HENRY M. WAITE

New York

P. WALSH
Missouri

FRANK

MRS. H. OTTO WITTPENN
New Jersey

agliĀ°339




Endorsed by The National Information Bureau, Inc.




*

SOVERN:R'S OFFICE

1:.1

92
061 1`3 1925




October 22, 1925.

My deer Mr. McDontad:
Ay arrival in !ea York, Governor 01, ong
mcnLioneci to me your kindness in inviting me to be tue
your Executive Committee at a dinner, and much
guest ce
you
to Esk him to
to my r2grat, T '-al ohlit7e
of my iwptility to %vzil myeeli of tnis opporLunIty uecLuse of the I.:rga number of ang6gazients vhich I have been
abligad to meke and tho very short. time *Mott I have for
my vieit.

Please be assured thet I appreciate your kindness and this evidence of your hospitality.
I tei to remain,

Ancarely yours,

Mr. James G. McDonald,
Chairmen, Foreign Policy Assocition,
9 Eskat 45 Street, Mow York City.
Ea.S.I45

0
October 22, 1925.

My dear Mr. McDonald:
just had opi:ortuntty to epetk to
Dr. SchR,cht in reserd to your letter of October 15.
He ?ludo that his erk;z,gemsnts rill occupy so
much of th tip of hir. Olort viail here, thvt he r.:ela
it is impossible to accept the kind invitation which you
extend to him to be the guest of yoar Committee at t.
dinner, anr! hue asked ale to ex.:,/-ese hie regret.

I beg to remain,
IL..ry truly yours,

Jr_mee G. McDonald, Eaq.,

Chairman, Foreign Policy Assocition,
York City.

9 Ea at 45 StreTt,










I

te.es
Edwin X. Alderman

Robert S. Brookings

Whitefoord R. Cole







Mr. Fred I. Kent

page 3.

contributing factor, it is not a controllin

one.

For examples:

1873-1879 -

We had almost continuously low interest rates here
and in England, but loans did not expand, nor did
prices rise.
Other factors wore unfavorable.
In
England, money loaned in '76 at a rate as low as
1/2 of 1 per cent; but few business men were willing to pay even that, because they could not see
a profitable opportunity. In the United States,
we find that bankers were threatening to go out
of business because the business of lending money
had become so unprofitable. The recovery of
business in '79 is definitely assignable to other
causes than cheap money.

1893-1896 -

Low interest rates, with minor variations, all the
time.
1,:onetary controversies and generally unsettled business conditions more than offset whatever stimulating effects cheap money might otherwise
have had.

1913 - Autumn
of 1915
Low interest rates, narticularly after the lowering
of reserve requirements by the Federal Reserve Act
which became effective in the autumn of 1914.
There was no expansion of business activity; in fact,
in thy; year 1914, loans, I believe, showed a slight
contraction, - any way, prices fell a little. The
uncertainty over the European situation more than
counter-balanced any stimulating effects of cheap
money.
In the autumn of 1915, however, loans expanded because it was then apparent that American
business men could make good nrofits in filling war
orders.
They went to the banks to get the money
with which to expand their business activities.

In brief, the trend of business is governed by a complex
of factors, of which the rate of interest is only one of many.
Looking ahead, I should attach much greater importance to the drift
of events on the Continent of Europe during the next twelve months
than to the fact that we have a large gold supply. I would also,
I believe, attach more importance to the labor and transport shortage
in this country and to the maladjustment that still exists between
agricultural and manufacturing prices.




Hoping this will be at least provocative, I am
Sincerely yours

Director.

S
December 11, 1922.

My dear Mr. Moulton:

Your letter of December 1 has been awaiting an opportunity for me to
reply because I have been laid u:,; for a week.

I sr

leaving to-day to str.end

the Convention at Chicago, and will hoe to meet Dr. Nourse.

Also as I am

,-roposin,- to address the Convention, I shall hope to be able to dodge quickly

enough in case anything is thrown at ie.

You and so:re of your fellow

economists are really reei,orsible for ay going, so the damage will be on your
heads.

I have read your letter to e:r. Kent with a great deal of interest,
and the followine, com:-ents occur to me:

It seems to me that the total supply of gold, as you state, is not
necessarily a controlling influence ucon the trend of business or tr:on prices;
rather it ie what is done with the gold.

?or instance, if it is coined into

money and goes into circulation in substitution, say, for hank notes, it

probably has a very slie)t effect.

On the nther hand, if it goes into bank

reserves and the 2olicy of the bank of issue, :\ermits of an expansion of credit
based u;on an enlarged reserve, then it has a very etrour.7, effect upon the course

of business and ?rites.

In other words, as to the absolute amount of monetary

gold, it impresses : :e as one would be impressed if' but a small corner of a cloth

were lifted from the front of a large picture and then one attem'ted to form an

opinion from that stall corner of the bicture as to what sort of a picture it
was.

Charts which should show the amount of monetary fold should also show the

total amount of all kinds of currency in circulation, and the total amount of
bank credit.



r
Mr. H. G. Moulton

#2

December '1, 1922.

Then beyond that, we have a factor which no one can chart, and that

0

is the state of mind of the public;
to buy;

whether there iE confidence and the Toed

or whether there is distrust and the mood to cell.

The important

thing as to our own situation seems to he what you state on page two of your
letter to

Nt

.

Kent -

that the Federal 7serve discount policy is the most

significant factor in the situation.

This I admit;

and it is the most

important factor for the reason that I have above stated, - that if our eolicy
permits of the pyramidieg of credit upon the foundation of this enormous gold
reserve, then we will affect the course of business and prices.

Liut if we

can hold the volume of credit reasonably constant, and yet suf!icient for the
needs of legitieate business, then it seems to me we can oecape the disorders
otherwise conseruent upon an enle.rged gold surely;

at least so far as the

influence of credit might under a eisteiken -elicy of eJeansion he allowed to
produce disorder.

I am inclined to lock at the reserve eercentage of the neearve Systee
in this way: -

The law requires us to maintain minimum reserves of 35 per cent.

of our deposits and 45

cent. of our note liabilities.

4e shov-LJ now

ignore the law, end assume hypothetically that this enoreoue reserve impoees

upon us the responsibility of working (in our own minds) upon a different
reserve -rercentage, say, 65 or 73 or 75 per cent.

That can not be core exactly

/fld actually, but it can be some sort of an intePectual sup ort for a policy
designed to avoid the dangers which might result from our large gold holding.
ielt, on the other hand, I do think that the influence of interest
rates is very considerable;

we are possibly too inclined to consider this from

the standpoint of absolute stated levels of rates rather than from the stenopoint of the influence of chaneik; rates.




I

Mr. H. G. 'Moulton

IS

Certain bueinesees

9

are of such character that they are necessarily

conducted upon a pretty narrow -argin;
necessit,:tes 5,1teration in

is tle very

strong

December 11, 1922.

a change in the level of interest rates

calculations of

ef'fect upon the

business in the face of rising

profit.

And beyond that, of course,

mental attitude of

saopl..1 who ,re doing

interest rates, or, on the other hand,

Nith

the advantages of falling interest rates.
dut I do agree with you (-,om.-letely that

the

trend of business is

governed by a complex of factors, of which the rate of interest is only one
But

of many.
you do;

-1-ossibly I attach more significance to it than I

at least from what, you said the other

It was a

pleasure

with me and I only hope

night at my apartment.

to hsve you and your friends erenft such an evening

that we can do it to;ain.

much by it.
Yours sincerely,

r. H. C. loulton,
Director, institute of Economical
26 Jackson Place,
Washington, D. C.




gather that

Cert,--Anly I

-rcfited very

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