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Denver, Colorado,
March 17, 1917.

117 dear Professor Fisher:

Your favor of March 2nd, enclosing a repr u
was sent to me at the ,ederal Reserve Bank In New

received here where I am recuperating from a rece
read the article with much interest, a

you were good enough to send me in

irk and has just been
illness.

we

I have

us article which as a p
to interest

ti

To mg mind there is no a

of the direct relationship

between prices of goods and t

of bank expansion.

appear to observers who are not fam

It may

with the oolicies of the Reserve

System in detail that
served by the Lanag

from the Financier,

eived the attention it deanks, or at any rate that they

have not displayed

in efforts to control the inevit-

able exnansi

orts.

Such a conclusion is hardly

or of 1914, less than two months after
the Res

would r

e Banks were o

ized, the possibilities of expansion which

ult from the me' table movement of gold to this country as a

result o

purchase

Federal ReserV-6

s very fully considered by the management of the

of New York, and at that time a policy of accumulating

gold by issues of notes was definitely adopted.

Early in January the plan

Which we had worked out was submitted to the ,aovernors of the other eleven

Federal Reserve Banks and to the Federal Reserve Board, and from that time
to the present every effort has been made to accumulate as large a proportion
of the imported gold as could be assembled by this means, and, as you will
.

realize, with




considerable success. The Federal Reserve Bank

of New York

2.

To - Professor Asher.

March 17, 1917.

now holds $154,000,000 of gold behind its note issue, in

addition to

about $220,000,000 in its general reserve, and all twelve of the Reserve

Banks hold a total of 028,000,000 in

addition to

In order to make our effort

the general reserve.

38,000,000 held in
ore effective, various

amendments have been prepared and submitted to Coa.ess by the Federal Reserve Board,

which unfortunately failed4.

Had these amendments passed, I have a

ion would have been added to

Banks and swrie hundreds of ml

note

Unfortunately, the wisdom of this

policy, I might almost

at

d the antagon

Congress and has aro
tions, particularly

I had hoped

e
q.41t

Commercial

efforts

courage

or two influential publica-

Imancial Chronicle of New York.

friends of t

students o
give us

aoubt that ananal ,250,000,000
reserves of the Federal Reserve

of gold would have been added to

the fund now accumulated by

he last session.

Reserve System and particularly

roblems growing out

of the war would

e benefit of their independent support and encouragement in

are

these

being 4, I may say ich considerable expense, and enat

re friendly

d helpful attitude both in Washington and among

While I feel obliged to write to you privately and confidentially
on this subject, I do so in the hope that you may be led to take some in-

terest in studying this feature of the work of the Reserve System and that

you may possibly find opportunity

to give your influence to the encourage-

ment, rather than discouragement, of our further plans and efforts.




Should you have time and feel disposed to write me, 1 will be

3.

To - Professor Fisher.

klarch 17, 1917.

most pleased to send any further data that you would

11230,

or that would

prove to be of any value or interest in connection with your work.

It seems to me that the dangers of the future (and of course I
rophesying) will

realize that there is no greater danger

by very low rates

manifest themselves in a collapse of p
for liquid capital and very high rate
in fact for long government

or fixed or pe

loans, accompanied by

a gra

ent capital, even
loss of our
ity, unless it

unwieldy gold reserves and a

One feature

can be controlled and unle

uz' gold is a

able for export.

of future developments abr

Which is shro

d in mystery, and in connec-

ehend

tion with Which I

ngs have been suppressed abroad.

military dictatorship gol

if the domestic value of gold

our exchanges be affec

I ha

sent us by

90

of the consequ
which one rare

the

Un-

How may

abroad

rid to its international value as re-

is suddenly readjust
the internatio

in

the belligerent nations.

possibility of a quote

fleet

will develop, lies

t difficult

exchanges?
1UYar of the much advertised flood of cheep products

and its consequent effect upon the exchanges, than I have

ces of our direct financial transactions of the character
sees mentioned.

Is it not more likely that England, France

and Germany will at the conclusion of the war be distinctly sterile as
lenders of money in foreign markets and will not the burden of paying off
Practically all maturing loans no.7 owing

in

those countries by various

smaller neutral nations fall entirely upon us?

Furthermore, will not those

countries and colonies which are without tariffs on imports be large pur


4.

March 17, 1917.

To - Professor Fisher.

chasers of goods from belligerent nations and will they not find it

necessary to borrow here in order to pay for them?
These problems might be viewed

with reaso

We the compact, centralized and well controlled b
Plans to control, or even influence t

or Germany.

le unconcern, had
ng system of England

activities of 25,000
in number are allied

or 30,000 banks, of which hardly more t
to the Federal Reserve System, will Indeed be a task o

when these postwar

developments ar

those of us who are studying

we can obtain from students of th

Prof. Iry
Fisher,
Departmen of Political
460 2rosp et St.,
New Have
Conn.




and I am frai

to say that

elcome every suggestion which
re and, personally, I would

and Inc
kindest regards, I am,

Thank you for

BS/CC

,

correspond with you, if you

greatly value and appreci

have the time

or

an proportions

110111y,

Denver, Colorado,
April 5, 1917.

My dear Professor Fisher:

I have received your kind letter of 1arch 28th, as wsll as the

reprint from 'The New Republic" and the copy of "Haw to Live." It was
most kind of you to send me this
order from the publishers on

the

little book, Which I was just about to
recommendations of my friends, Mr.

Jerome Greene and Mr. James P. Curtis, Who have recently been visiting
me and were most enthusiastic about the book.

I had not read Professor

'Sprague's article in the New Republic, but will write you further after
reading it.

Referring once more to some of the activities of the Reserve

Banks, I think we may now say that their strictly banking functions

ouite fully developed, with the
change charges.

exception

are

of the puzzling problem of ex-

Thislivill be worked out in time and we have started,

as I feel sure you realize, upon a conservative and sound basis.

The important
do with

development work of the

our currency. Realizing, as we do,

sound and progressive currency

Congress on the subject,

chief obstacle to

that the

reform has been

the profound ignorance of

it has not been the policy of the managers of the

Reserve Banks to push this
is needed.

System from now on has to

matter too

aggressively; additional legislation

Of course the greenbacks should be retired, the National Bank

notes should be

reduced as rapidly as possible and

ultimately retired and

the silver certificates should be relegated, to quote
to the




position of "large

change".

All of this, in my

Professor Taussig,

opinion, should be

2.

To - Prof. Fisher.

April 5, 1917.

brought about by the gradual expansion of the Federal Reserve note issues

of the Federal Reserve Banks, as rapidly as other currency is retired, without employing the use of Federal Reserve Bank notes at all, so as to avoid
perpetuating a bond secured bank note.
The necessary

preliminary to any such extensive program of reform

is a large gold reserve held by the Federal Reserve

Banks and our policy

of accumulating gold, as I recently described to you, adopted over two years
ago, has already resulted in a total accumulation as of Uarch 31st of no
less than 4937,030,000 in

both the

note and deposit reserve accounts.

If

the proposed changes in the reserve requirements of the Federal Reserve

Act

A

are adopted, about 4250,000,000 additional gold will

be accumulated and the

continuance of our policy of issuin Federal Reserve notes in exchange for
gold can be

counted on to produce 4200,000,000 or 4300,000,000 more,

proba-

bly within a few months. This would give the Reserve banks about 41500,000,000
of gold and upon that huge gold base

believe we would be justified in assum-

ing at once all the greenbacks, taking over the 4153,000,000 of gold now held

in the Trust fund and a low

Government bond for the difference of

0.93,000,000 on such terms that they could be gradually marketed.

the National ban, notes would remain to

Then only

be dealt with, and, with 7?,1,650,000,000

in gold in our vaults resulting from the changes in

the Reserve requirements,

the retirement of the greenbacks and further note issues, i see no reason why
at least one-half of the National bank notes should not be retired just as
soon as the war situation is behind us and it becomes possible to affect the\

necessary conversions and sales without interference
financial program.



with the

Government's

3.

To - Prof. Fisher.

April 5, 1917.

You will observe upon reading the Federal Reserve Act, the
curious inconsistency in the provisions for the issue of Federal Reserve
notes and for dealings in gold.

It gives the

Reserve banks

the

right to

buy, sell and borrow gold and to pledge or sell their assets for the
purpose.
of notes.

It does not give them the right to buy gold by direct issues
But how can a

Reserve Bank buy

gold except by the issue of its

obligations in some form? The sale of its assets is

not a purdhase of

gold -- it is simply withdrawing from the market, that is disconLinuing
lending money so as to talcs in gold as investments mature, or as their

maturity may be anticipated, by selling them.

MY believe has right along

been that the first

step in prepara-

tion for currency reform must necessarily be this accumulation of gold, and

il

\

I am hopeful that the wisdom of our policy will be demonstrated When we find
ourselves able, as later we UD doubt will be, to persuade Congress to corn-.

plate the Federal

"/

Reserve Act by

providing for real currency reform.

I have road but one of Wicksell's articles on the subject of
interest rates, and am inclined to agree with his theorty in part, but un,

fortunately we must realize that in this country even a very strong central
_
ban & is impotent, so long as American banking is decentralized

(

to

the ex.,

tent that it is, and conducted by 30,000 independent and, let me say, exceedingly indenendent, institutions.

I fear that the employment of a brake or expansion, through arbitrary control of interest rates,would mean Government control and for
that we are not yet ready.




4.
To - Prof. Fisher.

April 5, 1917.

Could you send me some of the literature, thct is to say what
you have written in relation to standardizing the dollar?

I am interested

particularly in considering What relation this might have upon the foreign
exchanges.

is going

For some years to come this subject of the foreign exchanges

to be of vital interest the world over.

The pendulum which has

made such a long swing in one direction is some day going to swing back,

and for that we must be well prepared and we are undertaking the most important work of preparation by this very operation of accumulating gold.

In fact, it was somewhat with that in mind that I went to Eurooe last winter
,1

to ne,otiate the pending arrangements with the Bank of England and the Bank

of France, whic are now in a fair way to be concluded.

Expressed in

a few

words, I hope to see the Bank of ngland, the Bank of France and the Federal
Reserve Bank of New York operating in gold, in

complete harmony, under some

arrangement which will be nearly, if not quite, as economical and effective
as is the gold settlement fund Which is now emoloyed for settling balances
between the twelve Reserve banks.

progress towards

It is a rather ambitious program, but

success will be vastly promoted by our alliance with England

and France in the war.

My thought in regard to assistance from those Who are studying
these currency questions was largely prompted by the attitude of the Chronicle.

If you and Professor Sprague, Professor Kemerer and others whose

carry such
hind us

opinions

weight in these matters, could just at this time get squarely be-

In support of some

such program as I have indicated, it would be a

Liost patriotic contribution to the work of preparedness, which is now occu-

pying the attention of the nation.



Frankly, 1 have a great dread of the

5.

To - Prof. Fisher.

April 5, 1917.

possibility of all sorts of freak legislation in such times as the present.

Senator Thomas of Colorado recently introduced a bill to authorize the issue
of $500,000,000 of greenbacks to partly defray the cost of military preparation.

It seems inconceivable that any one familiar with the history of our

Civil war finances could for a moment suggest
chinery for the soundest possible

such a course,

When the ma-

msrsgement of our currency is right at

hand and ninety per cent completed.

I have written you quite frankly and I fear burdened you with a
very long letter, because I am conscious of my inability to do very much
while I am out here a cripple

ton and New York are so

and

at a time When my associates in Washing-

deeply engrossed in a great many important matters.

My health has shown such wonderful improvement since I came to
Colorado last July that I am hopeful of returning to New York within the
next two months.

Possibly I may have the pleasure later of seeing you at

the bank,in the operations of Which 1 know you will be greatly interested.
This sojourn in Colorado has been a benefit in more ways than one.

It

has added twenty-seven pounds to my weight, given me an opportunity to do
some reading of Which I have long been deprived and, furthermore, I think
has given me a chance for some quiet reflection, which we all need now and
then to get straight on some of the problems of the day.
With kindest regards and again many thanks for the little book,

which

I shall read with much interest, I am,

Very sincerely yours,
Professor Irving Fisher,
460 Prospect St.,
New Haven, Conn.

SS/CC






May 11th, 1917.

Dear Sir:
Mr. Strong hg,s asked me to ae.;nowledge

receipt of your letter of April 28th Which has
been forwatded to him here and say that he will
reply on his return to Denver.
Very truly your

Secretary to Mr. Strong.

Professor Irving Fisher,
Yale Univereity,
New Haven,

onn.

Denver, Colorado,
Lay 17, 1917.

ity dear Professor Pisher:

I have only now had opportnnity on my return from Wew York to
read the enclosure contained In your letter of April 28th.

Seaator Thomas'

nronosal has been discussed somewhat in Denver and I gather from my banking

friends here that they view his activities witn

some concern.

1J

I am taking the liberty of bringing this matter
of the

President of the

to the attention

leading business organization in the state, - the

Denver Civic and Commercial Association, and

I have no doubt they will be

willing to start an agitation that will aid in convincing 3enator Thomas that
he does not in this matter represent the views of his constituents and that
the people of Denver and Colorado view his activities with concern.

My trip to New York was for the purpose of starting the Federal
Reserve bank organization in the work of placing the new Liberty loan and

preparing for the huge financial transactions in connection with clearing
the payments.

l think we have the work mapped out so as to avoid disturbance

to the country's business and finance but expect to
end of the month and stey there

am working away here on

and hope and believe

return again before the

until the matter is concluded. Meantime I

such matters as can

be attended to from this distance

that two months hence the

country will view with satisfac-

tion the demonstration of strength and facility Which will be shown by

the Re-

serve banks.




Just as soon as Lho pamphlets you were good enough to send me

reach

2.

To - Prof. Fither.

Liny 17, 1917.

Denver I will read them with great interest and write you further.

With thanze for your letter, I am,
Very sincerely yours,

Prof. Irving Asher,

460 Prospect St.,
New Haven, Conn.

Bs/co




UNCA
jun 3$ 191,
4101111101111/1101




June 29, 1917.

Dear Madam:

Mr. Strong has asked me to acknowledge re-

ceipt of your favor of the 12th instant, with enclosures, which were forwarded from Denver, and state. that

as soon as the pressure of work permits he will take

pleasure in reading the literature forwarded by Professor Fisher.
Very truly yours,

Secretary to W. Strong.
Miss Nary Prentice,
Ueeretary to Professor Irviao: -Asher,
460 Prospect Street,
---/le* Haven, Conn.
VOTA




September 19th, 1917.

Dear Sir:
At

."x*. Strong'

request, I

sending you

under separate cover copy of the chart regarding call
money rates about which he spoke to you thili morning.

Very truly yours,

Secretary to Ur. ' :trong.
Professor Irving Fisher,
The Yale Club,
New York city.
VCV




aptember 22, 1917.

lAy dear Professor Fisher:

I thank you very much for the "radio chart" and
diagram vihich you have kindly sent me, and which I shall
examine with much interest.

Very truly yours,

Governor.

Professor Irving Fisher,
460 Prospect Street,
New Haven, Conn.

December 6th, 1917.

Uy deaf Yr. Fisher:

repTet the delay in replying to your kind letter
of November 2.2nd.

aril just in New York for a day or two 30

am taking the lierty of asking Wr. Jay. to consider the matter

and you will 'Isar either from or from me a little later.




Very truly yours,




December 7th, 1917.

Dear Sir:
Your letter of November 19th has been received

by Ur. Stronr and he has asked me to express his deep

regret at having m seed you both at Hot Springs and in
Washington.

He ',vas recalled to 7-Ashinrton and Yew York

during this week and next week is compelled to be in
Washington again, after which he hones to continue his

vacation at Aiken, S. C.

yr. Strong has found it necessary to neglect
all mail for the past few weeks but hopes to be able to

give more attention tt it a little later.
Very truly yours,

Secretary to tr. Strong.
Professor ving Fi3
46C Pospect t1et,
New Haven, Conn.




September 13, 1918.

Dear Professor Asher:
Thank you very much for the reprint of the article
"Stabilizing the Dollar in Purchasing Power,"
just sent me.

which you have

It will be read with much interest.
Cordially,

Governor.

Professor

IrvinAlisner

edt;
460 'PFBIMI
Lew Haven, Conn,

BS/MSB

FiTLING
Lake George, N. Y.,
February 19, 1919.

T91.)

FEDERAL RESERVE. BANK

op)

Dear Professor Fisher:

r. Peabody sent me your note of Decembe_r00/rith
enclosure, and I regret the delay

in

writing you about it, but

have }led no stenographic help until very recently.

Mr. Musher, Whom you will observe has

advertising extensively, is the head of an
ports olive oil from Spain.

recently bean

enterprise Which im-

He got caught in his foreign ex-

change commitments and made a greet deal

of trouble for the

Federal Reserve Board and the Federal Reserve Bank
making all sorts of extravagant accusations which

justify.

he could

not

Unfortunately he has had a close relationship with

Senator Oren and some people feel that
in causing Senator Oren

to

establishment of a Federal

he has

push proposed

Foreign Mxchange Bank.

tell you a greet

deal more about this

embarra:sing and

troublesome in the

saved from

bankruptcy

rith vhich

to

insatiable in his desire

obligations

to

willing to spend large sUMS

to see you, I can

matter, vhich has

extreme.

by the decision

settle his

been instrumental

legislation for the

Some time rhen I have opportunity




of New York,

to

been

He was literally

furnish

him with gold

in Spain, but apparently is

continue a propaganda because he seems
in advertising for

that purpose. It




Sheet No. 2

tv*oktittr
1.#
-

1` AL"

aher

2.19.19.

"
I

is supposed

at his propaganda is financed wit}' his arm money.
DER7 R E2ERvE

Professor Irving Fieher,,_
Praapsct Stroet,
rev Haven, Connecticut.

BS.MSB

piclially yours,




April 4, 1919.

T)ear Professor Fisher:

I am indeed sorry to learn from your
you will be -,revented from attending the conference this
tolethat

,rning.

e wore comting on your presence as we antickpLte

having a very enjoyable meeting and luncheon.

7e sht.11 miss

you, but possibly ie may have the pleasure of soein you in the

near filtuic.
.i.th warm regards, believe Ine,

Very sincerely 'yours,

l'rofessor Irving Fisher,
Haven, Conn.

GB




i RA
1::
)1'
1.

8

.

FPDERAL,

July 2,

1919.

Dear Professor Asher:
'he package of manuscript came and I am looking forward

to reading it on the steamer.

My sailing, however, has been

delayed until the 12th, mulch may afford opportunity to send

the additional sheets.
Many thanks for your courtesy in giving me this opportunity.
Sincerely yours,

PZofe.s49J7J17.1-14g-4A4P-ts,,.

46-0-Prospect Street,
New haven, Conn.

BIVILSB

V

V.)9'°
(.3

\`)14)

ZIY-

elttly

Ny 1eaa Mr.

1919$V4Sc6°1(

sher

Many thatks for your prriphle t "3tabi1izth
the Do1143.r" *hieh I shall to.le pleasuro in reading..,at the

first o-.opwtrnity.

I am sailing for Europa on the 12th :vd shall
likely be away far ten or twelve maks.

With red,

,
Yours s incor ely 9

Irviaas_Piener&

480 Prospect Street,
Nov; Haven Conn&




GB

October 7, 1919.

Professor Fisher:

I feel very guilty in not having written you before this
in regf,,rd to the manuscrl_t you were good enough to'1eave with me, which

I brought back with me, but which is now packed L,
other papers when. I am

with a izreA, mass of

unable, to get at it at the moment.

I read the manuscript with great interest, and took the

erty of asking r. Kent of the Bankers

Tru

1.

Comany, who

VSHAi

with me,

to read it at the same time, but I was so deeply engaged in various matters
durinL my 6tay in Euroe that I could reaiiy give very little thought to

the subjet. Nor, in fact, Was I able to sele Lord D'Abernon, is I had
hoped to do.
Many develoAlents, now taking place in Europe have a very

direct bearing upon

your plan and some day

soon I shall hope to have

ortunity to discuT.s it with you, .,otioning again, for the
writing you in detail.
With kindest

regard:, I am,
Lncerely

Professor IrvinE Fis c460 Pros,ect Stree
New haven, Connecticut.




your,

moment

Dec. 30, 1919.

My dear Professor Fisher:

Under separate cover i am returning the manuncript of
your book !IZtabilizing the Doliar" which you were co kind to ltt me

look over just prior to my sailing for Europe last. July.

As you

expect to send me an advanced cupy of the book when it is published,

felt thut you my wish to keep the manuscript in your own files.
With kindeA regards, and the SEidEOLV6 greetings,
believe me,

Yours sincerely,

fessor Irving Fisher,
460 Prospect Street,
New Haven, Conn.

=26




cede tinibmiiip
%Department of (politica ecottomp
PROF. IRVING FISHER
.0 PROSPECT STREET
NEW HAVEN, CONN.

March

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

14.

My dear Sir:

410

\

\

slittO

MAR 1 6 1917

I send you the enclosed article which has
recently appeared in the Financier with the hope that
you will find time to glance at the diagrams.

The

plainly indicate that the present rising cost of living
is mainly accounted for by superabundance of money and
only slightly by scarcity of goods.
Inasmuch as few persons are at present

aware of this important fact and inasmuch as misunderstanding is leading to food riots, socialistic agitation
and reckless proposals; I would suggest that the

monetary side of the problem be considered with the rest
in any investigati-n which you may cause to have made.
Very sincerely yours,

AG/c
Enc.




(64 Unibersiip
ii)esrftnenf of Vofifica gconotnE
ro` ROF. IRVING FISHER

.60 PROSPECT STREET
NEW HAVEN, CONN.

rch 28, 1917

Yr. Benjamin Strong,
4100 Montview Doulevard,
Denver, Colarado.

My dear Mr. Strong:I have yours of March 17th which I have read with
very great interest.

I hope that your Colorado sojourn has rested you.
Colorado always bringback my own experience, for I spent e)me
months there with tuberculosis in 1898 and 1899.
I should be extremely glad to correspond with you
and help in any way that I can.

I am entirely in sympathy with

the policy which you descrne and if you can tell'me how, act any

time,I can by writing letters or otherAse,help, I should be very
glad.

did not realize the details of the activities, which
you mention in the effort to impound sold.

I did realize in a gen-

eral way that something of the sort must be in process.
When the bills, which ought to be passed to help this,
are again before Congress, I hope you will let me know and give me,
their exact numbers with copies, if possible.

The Commercial and Financial Chronicle seems to lack
much vision and ability in its field.

it seems to be a chronicle

and little else.




I wonder if you have seen an article by professor Sprague

Mr. Benjamin Strong, March 28, 1917

-2-

on how to finance the war advising a taxation policy, rather than
a bond policy.

I will try to get .a copy sent to you.

It was in

"The New Republic".

I think the idea of Knut Ticksell of Sweden,that the
control of the interest rate of banks should be a public function
and not so much in the interest of the borrower as tradition has
made it, is a vary good idea.

In particular, when) as at present,

prices are rising ,the rata of interest should be raised even above
what unthinking. supply and demand would make it, in order to put

a brake on the business boom and save us from a crash.

If the

Federal Reserve system can achieve this, it will help immensely,
T believe, to prevent over-expansion of loans and deposits and,
therefore,of prices.

Of course the Bank of England has regarded

the control of the rate of interest as a public function, but only
in order to protect its reserve for the nation.

Wicksellts idea

goes further.

My own idea of standardizing the dollar is, I believe,
one which ought to be practically considered.

But there is so little

general knowledge concerning it at present that it seems almost hopeless to attempt to promote it until after the war.

We never seem to

be able to lock the door until the horse is stolen.

Very sincerely yours,

B.S.

As one interested in health you may be interested in

to Live", a copy of which I am sending you.

MS/m




a book; "How

re4e,
epottnent of

.1..ttioerecitp
pofiticaf economp

,"OF. IRVING FISHER
J PROSPECT STREET
NEW HAVEN, CONN,

March 29, 191?.

APR 5
Mr. Benjamin Strong,
4100 Montview Boulevard,

1917

Denver, riolorado.

My dear Mr. Strong:
In accordance with Professor Fisher's

instructions I am

sending you enclosed a copy of Professor

Sprague's "The Conscription of Income" to which Professor
Fisher referred in his

letter to you of march 28th.
Very sincerely yours,

0..

'

).),AAVAD__.

Secretary C81/4"A-ving risher.
to
Pdr.E.

Enc.




Taft UniDtrisifp
ciZerdrfment of (pofificaf economp
ROFJJNGJSH E_
,.60 PROSPECT STREET
NEW HAVEN, CONN.

April

2)
Wit OW

4

40344/,
r. Benjamin Strong,
4100 Montview Boulevard,
Denver, Colo.

4-; ji

I"
4'4,1x

MAY 17 1917

My dear Mr. Strong:

Thank you very much for your interesting letter
of April 5th.

I am not at this time, owing to the pressure of

very important, work, able to give you a complete reply but I am

sending you under another cover a number of pamphlets bearing on
my plan for standardizing the dollar and should be much interested
t o have you express youseif on the subject when you have had
opportunity to peruse them.

I am very glad to know of the great improvement in
your health and trust that it will not be many months before you
will be able to be back in New York.
discuss these matters

It will give me pleasure to

with you.

Very sincerely yours,
'

JRdAG
ressional
I am enclosing herewith some pages from the C
Record of April17th. Senator Thomas of -Cinel-nrk&ter has again
in Congress. Could not
introduced his inflationistic..
some of his constitutents be influenced to influence him against
this sort of thing' Can you do anything in this way or suggest
anything that might be done
P.S.




'--'6,

TafttncU
Ceeparftnenf of (I) ofif ic f economp
PROF. IRVING FISHER
60 PROSPECT STREET
NEW HAVEN, CONN.

June 12, 1917

.

Mr. Benjamin Strong,
4100 Yontview Boulevard,

Denver, Colorado.

My dear Mr. Strong:

Professor Fisher has instructed me to
write you in acknowledgement of your letter of May 17th,
and to say we are sending you today duplicates of the

pamphlets which we sent with our letter of April 28th
since you had not received the original set when you wrote
Professor Fisher on May 17th.
Very sincerely yours,

Secretary to
Pc1EE




n

r)
Fisher.

o
S TA TEM EN T
Do Not Detach
D A TE

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AMOUNT

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55

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5-20

EE OF
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Receipt i s hereby acknowledged of fiv e hundred (500)
d o lla rs, *pai,d to Sinclair Kennedy by the Boston Herald and Journal
for fa ilu re to carry out i t s contract to publish in it s issues of
February 26, 28, March 2 and/§7~ 15T §», e quarter page advertisement
!b
consisting of quotations ^6my^resident Wilson, Treasurer KcAdoo,
and the Chairman of the WarS^^vings Committee, said advertisement
having been stopped bjZ/the
February 28, 1918,

raid* a fte r it s second publication on

x ;—

Th^yBostcm Herald end Journal joins herein in acknow­
ledgment that the SB
frd-^gum is paid and received on account of the
above described breach of contract, and in f u ll of a l l claims on
the part o f said Kennedy.
Dated

tz. lg l8

resident,
In his address to the farmers,
January 31, 1918, said:
“ It means the utmost economy, even to the
point where the pinch comes. It means the
kind of concentration and self-sacrifice which
is involved in the field of battle itself, where
the object always looms greater than the
individual. ”

The Secretary of the Treasury,
In a statement published in the Official
Bulletin, December 28, 1917, said:

o
a




“ The people of the United States can render
the most far-reaching patriotic service by
refraining from the purchase of all unneces­
sary articles, and by confining themselves to
the use of only such things and the expendi­
ture of only such money as is necessary to
y
y
maintain their health and efficiency/

The Chairman of the National W ar
Savings Committee,
At the Boston City Club,
December 3, 1917, said:
“ The Government should have a free track
in the workshop. It should have labor which
is not competed for by unnecessary things.
No matter how well we can afford to buy
unnecessary things, no matter how well we
can afford to do it, the Government cannot
affdrd to have us do it.”
T I I I 3 A D V E R T I S E M E N T 13 I N S E R T E D B T
S I N C L A I R K E N N E D Y , 10S0 B E A C O N S T ., B R O O K L I N E , S IA S S .

_D ollabs




'7

i

>,

'

/D

A A 'V<

'’-

W h y Massachusetts Lags
THE

T h e p osta l rates, con tin u in g p ea ce tim e p olicie s, still c u t d -

FACT

d iz e a d v ertisin g.

A c c o r d in g t o th e A p ril I figures o n T h r ift an d W a r S avin gs
S ta m p s, M a ssa ch u se tts w a s fa r b e lo w
c o u n tr y .

fo r 1 c e n t fo r 2 ou n ces, w h ile p erson al letters co st 2 cents o r
3 cen ts p er o u n c e ;

first a m o n g th e states, w h ile M assa ch u setts,

In d ia n a ,

I o w a , O h io, Illin o is — o f th e

an d p eriod ica ls o f all th e v a rio u s s o r ts

fro m n ew spa pers t o m agazines, w ith th eir b u lk s o f advertising*

h a v in g p u t in 8 8 ce n ts p er ca p ita , s t o o d th ir ty -fo u r th .
K an sas,

F o r exam ple, p rin ted a d v ertisin g p o s t ca rd s

g o fo r 1 cen t, w h ile w ritten p o st ca rd s c o s t 2 ce n ts ; circu la rs g o

th e a v e ra g e o f th e

N e b ra sk a , w h ich h a d p u t in t o sta m p s $ 1 1 .0 6 per

c a p ita s t o o d

o

g o anyw here in the U n ited S ta tes for 1 cen t fo r 4 ounces, w h ile

M id d le

o rd in a ry m erchandise costs m ore.

W e s t w h ic h o n ly a fe w m on th s a g o M a ssa ch u setts p eo p le

A d v e r tisin g

ta lk e d a b o u t “ w a k in g u p ” ; W is co n sin , w h ose lo y a lt y M a s s ­

at

su p p orts

m ost

n ew spa pers

and

m ag azin es.

O reg on , C a lifo rn ia , A r iz o n a , T ex a s, w h ere th e W ild W e st

la rg ely o n th e press fo r th eir fa cts an d fo r g u id a n ce in th eir

su rv iv es in th e m o v ie s ; M a in e , N e w H a m p sh ire, V erm on t,

op in ion s, th is a d v ertisin g c o n tro l is a g ra v e d an g er.

R h o d e I s la n d , C o n n e c t ic u t — th e o th e r N e w E n g la n d sta tes: .

are u n w illin g t h a t a n y interests, b y c o n trib u tio n s to o u r

a ll o u t-r a n k e d M a ssa ch u se tts.

colleges, sh ou ld c o n tro l th e te a ch in g o f o u r y o u n g m en an d

THE
M a ssa ch u se tts

la g s

o f th e

am ount

an d

S ta m p s.

L ast

p olicies shall b e p resen ted t o th e p u b lic in th e g reat p o p u la r

C h ristm a s,

fo r in s ta n c e ,

c o lle g e o f t h e press, th u s p re v e n tin g th e A m e rica n p u b lic

they

fr o m p ro fitin g b y th e u n d o u b te d in tellig en ce an d in t e g r it y

p u t th e ir m o n e y in t o C h ristm a s p resen ts — so m u c h o f it

o f t h e m a jo r it y o f jou rn a lists.

t h a t o n e store a d v e rtise d its D e c e m b e r sales as “ b r e a k in g all

M o s t new sp a p ers in M a ssa ch u setts h a v e o p p o s e d th e idea-,

r e co rd s.”
T h e y h a v e p u t m o n e y in t o p leasu re cars. B etw een
Ja n u a ry I a n d A p r il 6 , 1 9 1 8 , th ere w ere o v e r 1 5 ,0 0 0 m ore
n o n -c o m m e r cia l

a u to m o b ile s

reg istered

in

o f d e v o t in g a m a x im u m a m o u n t o f th e n a tion a l resources t o
w in n in g th e w ar.

M assa ch u setts

th a n in t h e co rre sp o n d in g p e riod o f 1 9 1 7 .

us n o t t o b u y ; in th eir n ew s colu m n s t h e y h a v e su ppressed
th e

p u t in t o p leasure cars a n d n o t in t o G o v e r n m e n t secu rities.
T h e e n u m era tion n e e d g o n o fu rth er.

p o lic y .

in to th e p ro d u c tio n a n d tra n sp orta tion o f th a t th in g .

v a r io u s

a c t iv it y in

a m iser .

(a n d

“ C lo th e s are g o in g t o c o s t a w h o le
t o g e t in

A ll y o u n eed is g o o d o ld C O M M O N S E N S E .

w h ile

p r e s e n t ------- v a lu es

are

still

ob ta in a b le . . . .

t o b e W E L L N I G H U N O B T A I N A B L E !”

an y

A ty p ic a l a rticle sta tes: “ E c o n o m y in c loth es is n o t pursued

longer

t o a great e x te n t fo r several reason s.

O n e is th a t w e all

realize th a t t o so m e e x te n t tra d e m u st ru n in its usual c h a n ­
nels.

S e c re ta r y o f th e T re a su ry said o f th e sale o f th e S ta m p s:

W e m u st n o t c u t d o w n t o o strin g en tly o n a n y sort

o f sp en d in g , fo r fea r w e m a y cre a te a sort o f p a n ic an d b rin g

“ T h e a ctu a l sale o f t h e se cu rity , h ow e v e r, is n o t as im p o rta n t

h a rd sh ip fo r som e classes o f w ork ers . . . B u t last y e a r ’s

as sp re a d in g a b ro a d th e g osp el o f th e c o n se rv a tio n o f lab or,

sk irts!

fo o d , a n d m a te r ia ls , a n d th e a v o id a n c e o f c o m p e t it io n b y

D e a r m e, t h e y are q u ite im p ossib le, m o st o f t h e m .”

A n e d itoria l rem arks, “ E c o n o m ie s o f dress are a t m a x im u m

th e c iv ilia n p o p u la t io n w it h th e fig h tin g fo r c e s .”

in

T h e ch ild re n o f M a rsh a lltow n , Io w a , h a v e g o t th e idea.

sav a ge com m u n itie s, b u t th e ‘sim p le life ’ is o b ta in e d

th ere a t th e c o s t o f c iv iliz a tio n its e lf.”

T o th e q u e stio n “ H o w ca n I h elp w in th e w a r?” t h e y g a v e,

C o m p a r e th ese w ith th e a p p e a l o f th e G o v e r n m e n t, d is ­

1918, such

trib u te d b y t h e N a tio n a l W a r S av in g s C o m m itte e : “ A re

replies as fo llo w :

y o u w ea rin g o u t y o u r o ld th in g s?

“ G o w ith o u t c a n d y a n d g u m .”
“ G o w ith o u t a C h ristm a s T r e e .”

B y so d o in g y o u are

sa v in g la b o r a n d m a teria l t h a t sh ou ld b e e m p lo y e d fo r w ar
w o r k . . . T o dress or liv e e x tr a v a g a n tly in w a r tim es

“ S a v e m y c lo th e s b y n o t lettin g th em g e t t o m . ”

is n o t o n ly

“ B e satisfied w ith w h a t I h a v e .”

u n p a tr io tic, it is b a d fo r m . . . . R e m e m b e r

t h a t la y in g in a su p p ly fo r th e fu tu re m a y b e g o o d h ou se­

T h e y ea t t o o m u c h .”

k ee p in g in p e a c e tim e s — in

“ S a v e p ap ers a n d su p p lies a t s c h o o l.”

h oa rd in g ,

“ T e a c h oth e rs t o b e t h r ift y w h o d o n o t k n o w h o w .”

and

h in d ers th e

w ar tim es it is u n p a tr io tic,
G o v e r n m e n t.

D o n ’t

q u estion

w h eth er y o u c a n a fford it, b u t w h eth er th e c o u n tr y ca n

“ A lw a y s ask , w h e n I b u y a n y th in g ,‘ D o I r ea lly n eed t h a t ? ’ ”

afford t o le t y o u h a v e it .”

“ D a r n m y stock in g s as so o n as th ere is a t in y h o le so it

T h e d a y a fte r th e T h ird L ib e r ty L o a n d riv e term in a ted ,

w o n ’t g e t la rg e r.”

a M a ssa ch u setts p ap er p rin ted an a rticle con cern in g a u to ­

“ L o o k o v e r o u r scra p b a gs fo r c lo th th a t ca n b e used fo r

m ob iles, w a rn in g its readers n o t t o b e lie v e all th e stories

garm en ts o r q u ilts .”

about

“ G e t a lo n g w ith o u t teasin g fo r th in g s.”

th e

fr o m

“ S a v e g a so le n e .”

a u to m o b ile

W a sh in g to n .”

in d u s try ,

It

sta ted

“ p a rticu la rly

t h a t it

w as

d isp a tch es

p a tr io tic

fo r

m o torists t o u se u p gasolen e in th eir cars a n d sa id , “ I f y o u

“ D o w ith o u t v a le n tin e s .”

are th in k in g o f b u y in g a car, g o a h ead a n d d o it.

M a ssa ch u se tts p e o p le , o n th e o th er h a n d , w h ile d e v o tin g
som e m a teria l a n d la b o r t o th e ca u se o f w in n in g th e war,

g rea t m a n y m iles o f e n jo y a b le r id in g .”
C o m p a re th is w ith th e

sh o w , h a v e d e v o te d m u ch m aterial an d la b o r t o th eir ow n

G o v e r n m e n t a p p e a l:

“Do

you

sav e g asolen e, ru b b e r, a n d sk illed la b o r b y c u t tin g o u t all

g ra tifica tio n s, as th e C h ristm a s sales a n d a u to m o b ile reg is­
tra tio n s, a m o n g o th e r th in g s, sh ow .

T h e re

w ill b e fu e l en ou g h a n d tires e n ou g h t o g u a ra n tee y o u a

as th e ir L ib e r ty B o n d s a n d th eir fe w W a r S av in g s S ta m p s

u n n ecessa ry u se o f m o to r cars?

T h e y h a v e n o t con fin ed

m o st im p o r ta n t w a r s u p p lies.

th e ir sp en d in g t o th e d em a n d s o f “ h ea lth an d e fficie n cy .”

G a s olen e is o n e o f th e

E v e r y g a llon c o u n ts.

R ubber

is also in demand. Chauffeurs are needed on Government
w o r k .”
T h e p a g es o f som e n ew sp a p ers h a v e n o t b e e n o p e n t o

T H E R E S P O N S IB IL IT Y
W h o is re s p o n s ib le fo r this lagging?
T h e y w an t

t h e G o v e r n m e n t p le a fo r T h r ift, e v en as p a id a d v ertisin g .

th em selv es,

A n a d v ertisem en t co n ta in in g o n ly q u o ta tio n s fro m officia ls

I t is n o t b eca u se t h e y

o f th e G o v e r n m e n t w a s d ro p p e d b y th e B o s to n H era ld in

N o t th e g re a t b u lk o f M a ssa ch u setts p e o p le .
w in th e

c loth es

G o o d c lo th e s are n o t o n ly g o in g t o b e h ig h — t h e y ’re g o in g

S o w ell d o e s th e G o v e r n m e n t u n derstan d th is, th a t th e

“ G e t a lo n g w ith o u t ca ts an d d ogs.

by

C o m m o n sense e n ou g h t o b u y th e clo th e s y o u ’re g oin g t o
n eed

w ar a n d m o re d eath s.

to

t o ju d g e

Y o u d o n ’t n eed a r a b b it ’s f o o t . . .

o u t o f th e r a in !

T h e G o v e r n m e n t d o e s n o t ask

C ross M a g a z in e , Ju ne,

g o in g

is j u s t as fo o lis h a s ,” e tc.

fo r p a r t o f th e su rplus ovter th e d em a n d s o f “ h ea lth an d
a

. W a r is n o t w o n b y k illin g bu sin ess o f a n y k in d .”

l o t m o re !

M y s e lf first — - t h e n eed o f

W ith h o ld in g

be
can

w h y n o t w ear clo th e s t h a t w ill m a k e th e m ju d g e y o u a W o rld -

fo rts r a t h e r th a n t o g ro w fo o d , b u ild ships, m a k e m u n ition s,

m u n ition s,

m u st

all y o u

B e a te r in s te a d o f a G u tte r-P u p ! . . . W e a r in g p o o r c lo th e s

W ho­

t o e m p lo y m aterials an d la b o r fo r m y o w n ta stes an d c o m ­

less

“ T h ere

“ Spend

t h e y ’re g o in g t o w h eth er or n o t y o u h a p p e n t o lik e it) —

e v er b u y s in excess o f th is m in im u m says in e ffe ct: “ I ch oose

b u t fo r all o f t h e surplus.

a re:

all bu sin ess.”

O r a gain , “ I f p e o p le are

fo r th is p u rp ose, th e G o v e r n m e n t h a s ask ed t h a t w e b u y
n o th in g fo r o u r o w n p u rp oses b e y o n d w h a t is a b solu tely
n ecessa ry t o m a in ta in o u r “ health a n d efficie n cy .”

a d v ertisem en ts

a ffo rd . . . . dress as w ell as y o u c a n — d o n ’ t sh ow y o u r s e lf

A n d , so th a t

th ere m a y b e en o u g h m aterials a n d la b or in th e m ark et

th e R e d

u rg in g T h r ift ;

T h e fo llo w in g q u o ta tio n s are fr o m B o s t o n p a p ers

in crea sed

The

G o v e r n m e n t has a ik e d u s t o let it use o u r m o n e y in b u y in g
m aterials a n d h irin g la b o r t o w in th e w ar.

a c c o rd in g t o

N a tio n a l G o v e r n m e n t

d riv e.
A m ong

E v e r y tim e w e b u y a n y th in g , w e ta k e from th e lim ite d
n a tio n a l su p p ly all th e m aterials a n d th e la b o r th a t enter

p a r t m e a n s less fo o d , less ships,

o f th e

o f A p ril 6 t o M a y 4, th e p eriod o f th e T h ir d L ib e r ty L o a n

sh ow s w h a t M a ssa ch u se tts p e o p le b u y .

e fficie n cy ,”

m essage

an d e d ito r ia lly t h e y h a v e n o t su p p o rte d th e G o v e r n m e n t

A g la n ce in t h e sh op

. w in d o w s o r a t th e a d v e rtisin g p a g es o f th e new spapers

th e c o u n tr y a fte rw a rd s.”

O n th eir ad v ertisin g p ages th e y h a v e

u rg ed p e o p le t o b u y th e v e r y th in g s th e G o v e r n m e n t asks,

I f th ese cars

c o s t o n a n a v e ra g e as lo w as $ 1 ,0 0 0 , th is m ea n s $ 1 5 ,0 0 0 ,0 0 0

o r oth e rw ise h e lp w in th e w ar.

We

ca n , b y th e sp a ce t h e y b u y , d eterm in e w h a t fa cts an d w h a t

o f m oney

M a ssa ch u se tts p e o p le h a v e p u t in to th in g s o th er th a n L ib e r ty
B onds

th is d e m o c r a c y w h ere th e p e o p le d ep en d

w om en . B u t it has c o m e a b o u t th a t th e a d v ertisin g interests

REASON

b e ca u se

In

p resen t

a ch u setts q u e stio n e d ; M is s o u r i, w h ic h h a s t o b e “ s h o w n ” ;

w ar sp e e d ily , a t a n y

sacrifice t o

for t h e y k n o w th a t d e la y c o s ts liv es.

are u n w illin g t o d o th e ir p a rt th a t th e y h a v e fa ile d a d eq u a tely

th e m id d le o f a c o n tr a c t (see o v e r ) an d w as refu sed b y

t o su p p o rt th e fig h tin g m en a n d th u s t o insuire th eir ow n

B o s to n P o s t (see b e lo w ).
T h e sh ort-sig h ted business m en an d th e new spapers m ig h t

fu tu re sa fe ty .

T h e y are n e ith e r so u n p a tr io tic n o r so stu p id .

h a v e b een en lig h ten ed b y th e state leaders.

T h e y h a v e b e e n r e a d y t o d o w h a t w as n ee d e d — i f o n ly
is

th e

N a tio n a l

G overn m en t

sa id cle a rly w h a t sh o u ld b e d on e.

resp on sible.

It

in th e cau se o f releasing m aterials an d la b or, th e state leaders

has

of

A s e a rly as M a y , 1 9 1 7 ,

sh o u ld

cea se e m p lo y in g la b o r in

M en

en g a g e d

in

p ro d u c in g

a t o n c e as a p a t r io t ic a c t .”

lu xu ries

sh ou ld

cease

an d

W ar

S avin gs

S ta m p s

th en

is resp on sible?

th eir n ew sp a p ers, th e n a tu ra l ch a n n els th r o u g h w h ic h th e
G o v e r n m e n t sp ea k s t o th e p e o p le , h a v e n o t tra n sm itted it

w ere

fid d led

business m en,

M a ssa ch u se tts bu sin ess m en , in

m any

R om e

b u rn ed .

N ero

M a ssa ch u setts p eo p le t o d a y
N o t rea lizin g w h a t th e y

w ere d o in g , M a ssa ch u setts p e o p le h a v e b e e n u sin g u p fo r

cases, h a v e n o t

th em selv es m aterials a n d la b o r n eed ed

b e e n w illin g t h a t th e n ecessa ry m aterials a n d la b o r sh ou ld
b e c o n trib u te d t o t h e p u rp ose o f w in n in g t h e w ar.

t o b a c k u p th eir

o w n b o y s in F ra n ce.

T hey

h a v e w a n te d th e p e o p le t o g o o n b u y in g m u c h as b efore,

M ORAL
C u rta il a d v ertisin g.
T h is ca n b e d o n e b y ta x a tio n , rev ised p osta l rates, an d

t h u s u sin g a g re a t d e a l o f m aterials a n d la b o r in n on -w a rU su a l.”

w h ile

m a in ta in a n o rch estra o f fid d lers.

n ew sp a p ers an d sta te leaders.

w in n in g w a y s.

RESULT

a n d h a v e cou n selled th e p e o p le in o p p o s it io n t o it.

S h ort-sig h ted

A

m essage o n w a r e c o n o m y b e ca u se th e ir lo c a l lead ers an d

d evised t o h e lp to w a r d th is end.
W ho

it.

M a ssa ch u se tts p e o p le h a v e n o t r e c e iv e d t h e G o v e r n m e n t

m aterials a n d la b o r w h ich ca n b e released b y th e c iv ilia n
T h r ift

to

T h is a ttitu d e has b een general.

TH E

S in ce th e n , th e P resid en t, th e

S e cre ta ry o f th e T re a su ry , a n d o th ers h a v e em p h asized th e

The

o p p o s itio n

“ L e t th e ch a n g e b e as gradu al as w e c a n m a k e it . . . T h e re
is d an g er o f o v e r -th ir ft.”

n e e d o f p u ttin g a t th e d isp osa l o f th e G o v e r n m e n t all th e
p o p u la tio n .

en cou ra g ed

th e la b o r-w a stin g ind ustries t o th e w a r-w in n in g in d u stries,

u n n ecessa ry

bu sin ess. . . . W e w ill th r o w n o o n e o u t o f e m p lo y m e n t,
b u t in to a situ a tio n w h ere t w o m en are n eed ed in stead o f
one.

have

m ittee a n n ou n ced , con cern in g th e tra n sfer o f en erg y fro m

n o t p a trio tic t o sp en d m o n e y fo r a n y th in g b u t necessities
Y ou

M a ssa ch u setts

p rom in en t m em b er o f t h e M a ssa ch u setts P u b lic S a fe ty C o m ­

M r . V a n d e rlip o f th e A d v is o r y C om m ission t o ld us, “ I t is
now .

B u t in stea d o f

ex p la in in g th e G o v e r n m e n t’ s p o sitio n an d using th eir p ow er

t h e y h a d k n o w n w h a t th a t w as.
N or

th e

A y e a r a g o t h e y cla m ored fo r “ B usin ess as

I f th e y h a d su cce e d ed in fa sten in g th is p o lic y on

oth er co n stitu tio n a l m eth od s.

th e c o u n tr y , v e r y litt le m aterials an d lab or w o u ld h a v e been
a v a ila b le d u rin g th e p a st y e a r fo r w ar w ork .
o f o th e rs p re v e n te d this.

S IN C L A IR

T h e w isd om

B u t o p p o sitio n to “ T h r ift ,”

th e S e cre ta ry o f t h e T re a su ry defines it, “ sa v in g t o th e p oin t
o f sacrifice — self-den ial

o f ev e ry th in g

u n n ecessa ry ,”

KENNEDY.

1 0 8 0 B e a c o n S treet,

as

B r o o k lin e , M a ssa ch u setts.

still

Ju ne 4, 1918.

con tin u es.
T h is o p p o s itio n has been m ad e effectiv e th ro u g h a d v ertis­

o

in g , w h ich stim u lates p e o p le t o b u y w h a t t h e y oth erw ise
w o u ld n o t b u y .

T h is sta te m e n t m a y b e p u b lish ed b y a n y o n e an d extra

T h e m eans used are b ill-b oa rd s , electric

co p ie s

-d isp la y s, th e m ails, new spapers, m agazin es, etc.

m ay

be

o b ta in e d

fro m

th e

a b o v e address.

Copy of An Affidavit
I,

JO SEPH

P.

DRAPER

OF

CANTON,

M ASSACH U SETTS,

I A M A N A T T O R N E Y A T L A W W IT H
AND
ME

O F F IC E A T

M AKE

A

CONTRACT

P U B L IC A T IO N

COPY

OF

OF

W H IC H

A

W IT H

THE

C E R T A IN

IS A S

OATH

BOSTON

“ IT

M EANS

M EANS

THE

BATTLE

THE

THE

K IN D

P R E S ID E N T

UTM OST

OF

IT S E L F ,

SECRETARY

IN

W HERE
THE

THE

“THE

IN

PEOPLE
BY

OF

THE

U N IT E D

R E F R A IN IN G

FROM

THE

o

THAT

C H A IR M A N

OF

TO

CAN

P U B L IS H E D

RENDER
OF

THE

N A T IO N A L

T H E IR

THE

ALL

W AR

HEALTH

S A V IN G S

DECEMBER
“ THE
LABOR
CAN

GOVERNM ENT

W H IC H

AFFORD
THE

TO

SH OULD

NOT

IN

OF

BUY

CANNOT
OF

BOSTON

IM M E D IA T E L Y R E F E R R E D
ANT

STATED

THE

BOSTON
HAD

NEDY

THAT

HE

HERALD

N O T IF IE D

TO
W AS

AND

H IS

AN

IN S E R T IO N

REFERRED

TO

H IM .

W AS

A G A IN S T

IN

H IS

P U B L IC

PAPER.

C O N T A IN E D

TREASURY

TH E

A D V IC E
GOOD

AND

W H IC H

THAT,

AS

L E A D IN G

TO

THE

AND

HE

AND

W IT H

ME

THAT

AS A

A T T E N T IO N
THE

H IS V IE W S U P O N

THE

A U T H O R IT IE S ,

T H A T T H E F O R E G O I N G IS T H E
IN

OR

TEN

THE

THE

IT

F IE L D

I N D I V I D U A L .”

O F F IC IA L

B U L L E T IN ,

THE

THE

A R T IC L E S ,

P A T R IO T IC

AND

BY

CON­

OF O N LY

SUCH

TH E BOSTON

HOW

NO

C IT Y

CLUB,

UP

THE

THE

M ANAGER

IF

OF TH E
AS

REQUEST

DO

HE

HAD

SEEN

T H IS

IT

AND

FROM

KENNEDY

THAT

W AS

M R. M ARCH-

E D IT IO N S )
CAME

MR.

DEPART­
AND

IN

THAT

M R.

KEN­

SH OULD

BE

A D V E R T IS E M E N T

P R IN C IP L E

HE

NOT

P U B L IS H

A D V E R T IS E M E N T

M ERELY

THE

U N IT E D

W OULD

SEEM

THE

EXCERPTS

W OULD

STATES,

S A V IN G S

SECRETARY

S U B JE C T S IN C E

WE

TO

THAT

THE FACT

THE

PAPER.

TW O

POST,

C O N S ID E R E D
OF

A D V E R T IS IN G

A D V E R T IS E M E N T

FOR

A

THE

THE

AFFORD

CAN

HAVE

W ELL

I T .”

THAT

OF

SH OU LD
HOW

WE

W ELL

I CALLED

IN

IT

M ATTER

A D V E R T IS E M E N T

HE

TH A T THESE W ER E .

W ORKSHOP.

APPEARED

C O N T A IN E D

SHORT

F A R -R E A C H IN G

SECRETARY

A C C O R D IN G L Y

OF

THE

AND

TO BE

TREASURY

STATEM ENT

FROM

THE

C O M M IT T E E

ABOVE

SPEECH ES

OF

THAT
G IV E N

HAD,

HE

QUOTED

AND

OFTEN

M IS ­

W ERE

N O T W IT H S T A N D IN G W H A T I S A ID , H E W A S O F
T H A T H E W O U L D N O T P U B L IS H

S U B S T A N C E O F T H IS T E L E P H O N E C O N V E R S A T IO N

IT .

W H IC H L A S T E D

M IN U T E S .

W IT N E S S

W HEREOF

I HEREUNTO

SET

MY

HAND

T H IS

T W E N T Y -N IN T H

DAY

(S I G N E D ) J O S E P H
S U B S C R IB E D

AND

SW O RN

TO

BEFORE

OF

A P R IL

1918.

P. D R A PE R .

M E,
(S I G N E D ) H E N R Y

(S E A L )

COM ES.

IN

E F F I C I E N C Y .”

T H E O P IN IO N T H A T T H E A D V E R T IS E M E N T W A S A B A D O N E A N D
F IV E

C A M P A IG N ,

P IN C H

T H E E X P E N D IT U R E

N A T IO N A L W A R

THAT

THE

THE

M OST

D E S C R IB E D

M ATTER

TO

P R E S ID E N T
OF

IN

T H IN G S .

DO

HAD

THAT

DECLARED

C O N S ID E R E D

IT

DEPARTM ENT

A D V E R T IS E M E N T

OTHER

US

A D V E R T IS E M E N T

C H A IR M A N
HE

IN

M ATTER

HAVE

(W H E R E

TOLD

AND
H IS

FROM

A U T H O R IT Y .

B E L IE V E D , C H A N G E D

T H IS

THAN

C O M M IT T E E , A T

TRACK

NO

TELEPHONE

A C Q U A IN T E D

THEN

THE
THE

BOSTON, FO R

1917, S A ID :

M R. A. H. M ARCH AN T, TH E

OF

P O L IC Y

AND

K E N N E D Y ’S R E Q U E S T ,

BY

JO U RN AL

I CALLED

Q U O T A T IO N S

THE
UPON

HE

TO

THE

IN V O L V E D

UNN ECESSARY

UNN ECESSARY

T H IN G S ,

A D V E R T IS IN G

FOR

3,

FREE

BY

AFFORD

MR.

POST

A

FOR

UNNECESSARY

PU RSU AN CE

THE

HAVE

COM PETED

GOVERNM ENT

THAT
M ENT

IS

IN

T H R IF T

2 8 , 1917, S A ID :

PU RCH ASE

M A IN T A IN

IS

GREATER

AS

IS N E C E S S A R Y

W HERE

W H IC H

M ONEY
THE

THE

FARM ERS,

P O IN T

LOOM S

STATEM ENT

STATES

THE

TO

T H E M S E L V E S T O T H E U SE O F O N L Y SU C H T H IN G S A N D

IT

SAY

P U B L IS H E D

W IT H

THE

S E L F -S A C R I F I C E

ALW AYS

A

TO

F IN IN G

HE

AND

1918, S A ID :

EVEN

AND

O B JE C T

TREASURY

31,

DECEMBER
S E R V IC E

NEW SPAPER

CONNECTED

H IS A D D R E S S

ECONOM Y,

C O N C E N T R A T IO N

OF

POST, A

A D V E R T IS E M E N T

JAN U ARY

IT ,

DEPOSE

STR E E T, BOSTON , M ASSACH U SETTS,

FOLLOW S:

THE

OF

ON

STATE

15

T H A T O N M A R C H 5 , 1918, M R . S IN C L A IR K E N N E D Y OF B R O O K L IN E , M A S S A C H U S E T T S , R E Q U E S T E D
TO

THE
A

AN

MY

C O M M IS S IO N

L. B U R N H A M , N O T A R Y
E X P IR E S

JAN U ARY

P U B L IC .
10,

1924

Taft Unthaifitp
ii)eparfmetsf of Vofific4f economp
PROF. IRVING FISHER
'OSPECT STREET
NEW HAVEN, CONN.

460

September 20, 1917.

PEP..
ILT..13:Strong, Jr., Governor,

1 Lr,

Federal Reserve Bank of New York,
19 Nassau Street,
New York City.
Fr
My dear Mr.

Strong:
In accordance with

our conversation

I am sending you the "Ratio Chart" and a copy of the
diagram showing how closely changes in the price level
follow on the heels of changes in
I am delighted

at

money in

circulation.

the prospect of get-

ting full statistics in regard to deposits subject to
check month by month.

I shall be intensely interested

in studying these.

I shall also be interested in seeing
the charts which you

spoke of.

It was a great pleasure to have met
our acquaintance
and talked with you and I hope to renew f on my return
from California

in a couple

of months.

With kindest regards, I am
Very sincerely yours,
AGm

Enc.




Taft tiniursiip
izeparfment of pofificaf econotrip
P

46-C .ROSPECT STREET
NEW HAVEN, CONN.

NoVember 19, 1917.
= Afra-

:r. Benjamin Strong, Jr.,
16 Wall Street,
Yew York City.

,u
t,o5et
f-",!
k

V

WO

My dear Mr. Strong:

On my return from my Califon-II:la trip I learned
that you

had

gone south.

and restful vacation.

I hope you are having a pleasant

As you kindly suggested that during

such a period you might like to talk over, or correspond

concerning standardizing the dollar, of which I spoke to
you before going west, I am writing you to say that I found
a great interest in the subject in the west in response to
the various lectures I gave on the subject.

For instance,

John Perrin, Federal Reserve agent for the Pacific
coast, is particularly enthusiastic and anxious to have the
meeting
He had a special/of the
matter pushed as a war measure.
Chamber of Commerce at San Francisco called in order that
I might present the matter before them and expects to have
committee of that chamber appointed to memorialize the
President.

I have also had a talk with George Foster

Peabody which we very helpful. I hope to get the pivotal
men in the country sufficiently interested to give the
subject a thorough study.

If so I do not fear the result

so far as their opinion, at least, is concerned.

I am hoping soon to run down to Washington and if
down
you are still at Hot Springs I might run/and see you if




Mr. Benjamin Strong, Jr.
perfectly convenient

-2-

to you.

But if you do not wish your

vacation interrupted by "shop" please do not hesitate to
say so.

ould you be interested to see

a chapter or
on

two of my

proposed book on standardizing the dollax/which

I am working?

17ith kindest

regards, I am
Very sincerely yours,
r-

.AGm




4TA24-4_

Exransiun and

PreSS Statement No. 4

In the couree of the oampaign to raise the third
Liearty Loan of 4,010,000,000 the Tar Finance Corporation wa$
created with a oapital of $500,00,000 and power to issue bonds
amounting to $8,000,000,000 for the purpose of providing credits

for Induetties in the United States necessary or contributory to
the prosecution of the war.
The Corporation is also empowered to limit new iosues of

securities for eiscellanecue purpeaes during the reriod ef the wax in
order to prevent the diversion ef oepital needed for war work.
Altho it may not be realized, the fact is that these two
greet war measures, the raising of the Literty Leen end the oreation
of the War Finance eeeperation are connected lin'es in a chain. The
Liberty Loan puts Uncle Sae in funds for buying geode of our induatriesi
the Finance Corporation helps cur manufacturers make the zoods.
lien 0,000,000,000 or more hae oeon subscribed the third
But it is only the
Liberty Loan campaian is hailed as a auDOOSS.
first step. We can't buy equipment, food, and munitione until ae make
them.

We are oalled upon not only to subscribe to Liberty Loans
but to help make or release the goods. If we subscribe not with savings but with borrowings the Loan will not be a great success tho
fully subscribed.. For the burden of the Loan will then be thrown
back upon the banks, and banking funds will be withdrawn from war

industries.
Furthermere, if vie lend by borrowing it will be beoause



-1-

we are not curtailing our personal expeeaiteeee but are insisting
en *luxuries as usual", which means that the industries producing
luxuries must produce as usual and be financed as usual.
To be effective the funds subscribed for Liberty Bends
must be saved, saved chiefly by econemies in consumption.

In

general, the family that buys 4,000 worth of Liberty Bonds during
the year should reduce its consumption by $1,000, se that it will
not only turn over to the Government the money but will do its
part toward making available to the Government the supplies for
which the money is to.be spent.
The most careful estimate of liquid savings known to
the committee, that of Prefeaeor David Friday, places the figure
for the United States in 1917 at eleven billions. This is in
addition to about seven and half billions Which are not liquid wad
au not available for financiag the war: Part of this eighteen
or nineteen billions saved in 1917 was enforeea by the greet rise
in prices which produced great profits of corperations and correspondingly discuureged consumption by the public.

The corporations

saved their profits by putting teem to aurplus account. It is
Impossible to fereCaat exactly the liquid savings of 1918 as so many
new conditions have -entered.




not curtailing our personal expenditures but are insistinL
on ffluxuxies as usual", which means that the industries producing
luxuries must produce as usual and be financed as usual.
To be effective the funds subscribed for Liberty Bends
must be saved, saved chiefly by economies in consumption. In
vneral, the family that buys $1,000 worth of Liberty Bonds during

the year should reduce its consumption by 4,000, so that it will
not only turn over to the Gevernment the money but will do its
part toward makinc; available to the Government the supplies for
which the money is to.be epent.
The most oarful estimate of liquid savings known to
the oommittee, that of Profeoeur David Friday, placee the figure

for the United States in 1917 at eleven billions. This is in
addition to about seven and a hi.lf billions Which are not liquid end
so not available for finaaciag the war: Part of this eighteen
or nineteen billions saved in 1917 was enforced by the gre-t rise
in prices. Which produced greet profits of corporations and correapondingly discouraged consumption by the public.

The corporations

saved their profits by putting tem to mirplus account. It is
Impossible to fe*st exactly the liquid savings of 1918 as oo many
new conditions have entered.




ESTIMATED EXCECS OF PRODUCTION OVER CONSUMPTION IN THE UNITED 9TATE2
AND AMOUNT AVAILABLE FOR INVESTMENT AND FINANCING THE wPR.

(Billions)
xoess of Productift,
cvre uzpttcn'

source

Available for Investment
Financia6 the W4x

c/1

1913

corporations
Other businesses
Farms

All other
TOTAL




1.5
1.2
1.2
2.5

1917
NI

1913

1916

1917

3.0

5.4
3.0
2.8

6.5
3.5
5.0

.5
.2
.1

3.6

3.5

2.0

2.0
1.5
1.0
3.0

6.4 14.7 18.5

3.2

7.5

2.0
3.0

3.0

If there be security flotatiens for private investment
and for finanoine the war in excess of savings such exceed, will have
to be provided by new savings through a deceease in oonsumption, or
by a greater speeding up of production.
If we subscribe for Liberty Bonds and do not save by
dacreseed consumptien, the amount necessary to pay the subscription
price, the banks will be obliged to carry the burden. The local
banks will atteg4t to get relief by borroeing on bond oollateral froM
the Feeeral Reserve Benks. Banking expansion in conjunction with a

:Jae in the prices of goods well result..
The Federal Reserve Board has givet us a warning which
ee should heed:

*It cannot have esoaped the attention of
the *Inks that, since the beginning of the war,
deposits have increased at a rapid rate and that
loans, disceunts,and investments have grown at
an even more rapid rate.
"Conservation of credit as reg rds non-eseential
enterprises is necessary in order to provide, without
undue expansion, the credit required by the Government
end by businese essential to the success of the war
and the well-being of the country."
The shipping engaged in the import of at goods or
rueeer or silk free the 14r East might be oarryine supplies to France.
do not eoonoraiie in art goods or pleasure autoeobiles or fine
If
clothes, we are, in effect, insisting that the shtps do rbusinees as
If es subscribe to Liberty Bonds we are providing funds to
usual*.
convert the shipping to war bueiness. Neither ships nor manufacturing
plants can do Nbusinees as usual" and add war business as a side line.
To attempt to do both will end in failure.
The crux, both of the industrial and the financial guestions
confronting us is speeding produotion of essentials and limiting
If too great an issue of bones be
oensumption of non-essentials.



made there will be credit expansion, increase of prices, and other
economic dieturbancq. If we do nct economize now we will be forced
to economize thru higher prices.
Thy Government oan expend the proceeds of bond issues
efgactivoly only if the goods it wants are produced in the required
They c.an only be so produced if the public buys Liberty
amounts.
Bonas and pays for them out. of the savings arising from reduced consumption.




Yr

0

cotsputsAu'is

of

0,,G os-ER'




AMEETCN ECONOMIC ASSCCIATION.

Special Reports of the "Committee on the Purchasing
Power of Money in Relation to the War."

Members of the Committee:-

Irving Fisher (Chairman), Yale University
B. M. Anderson, Jr., Harvard University
E. W. Kemmerer,

Princeton University

Royal Meeker, U. S. Commissioner of Labor Statistics
W. C. Mitchell, Columbia University
W. M. Persons, Colorado College.

RELEASED FOR MORNING NEWSPAPERS
April 26, 1916.

(269)




Third Report - "Loans, Ilaxes and the Purchasing Power of Money."

37nopsis of Report
The present generation mast pay the whole cost of the war;
the burden cannot be shifted to the next generation.
-,Financing the war by long-term bonds does not put crushing

tax burdens on future generations, because the taxes they pay out
of one pocket come back to the other pocket in the form of interest
and principal.

In former times the rich lent money for

war and the next

generation was taxed to repay the heirs of the rich, but in this
war the bonds are so widely distributed among all classes, the
rich of future generatiors may be the chief taxpayers.
Saving is the soundest method of financing the war, but
rapid readjustment makes necessary some credit expansion to
stimulate war industries and conserve peace industries.

Washington, April 25
The Committee of the American Economic Association,
appointed to investigate the purchasing power of money in relation
to war, has submitted the following report:

(269)

TEXT OF REPORT.
There is a widespread idea that, so far as the war is paid for out
of loans, its cost is shifted to the next generation, and that only so
far as it is paid for out of taxes does the cost fall on this generation.

The whole cost of waging the war falls necessarily
This is an error.
on this generation alone, and cannot be shifted to the next by loans or
any other device.
This would be perfectly clear if there were no money or credit to
If we should wait for the next generation to provide the
confuse us.
soldiers' food, shoes and guns, clearly our soldiers would go hungry,
barefoot and gunless, and we shoun lose the war. This essential fact is
not in the least altered because food, shoes and guns are obtained through
that convenient shuffler of goods, a circulating medium.

But even when
No one doubts this when the money is paid as taxes.
the money is paid as loans, the same principle holds true; for the next
It can only regeneration can never reimburse the present generation.
imburse itself: When our descendents pay back the billions "borrowed"
today to carryon the war, they are simply as tax-payml,j=iiignIIIM
The money simply goes out of one
back to themselves, as bondholders.
The payment and receipt
pocket into another, via the Government Treasury.
cancel themselves out.
Some people are afraid that great loans will saddle the future with
a crushing burden of taxes. We might just as well talk of great loans as
a means of enriching the next generation by what their bonds will bring
in to them: It is exactly as broad as it is long. That is a chief reason
why, after the war, a nation recuperates so fast as to astonish those who
think of its war debt as a burden. When the war is over, the cost of
waging it is over too:
Future generations willebe saddled not with the burden of paying for
the war, but with the .burden of disease, of shattered men, destroyed lands,
forests, mines, and factories for which the havoc of war is responsible.
These conclusions hold when we view the country as a whole, or a
generation as a whole, or when we look at the case of "the average man."
It is when we view the distribution of the burden among individuals and
among classes that the differences between loans and taxes begin to appear.
If you subscribe to war bonds beyond your share of the burden today, your
son or grandson may receive more as bondholder than he pays as taxpayer.
Thus if the rich finance the war by bonds, and if taxes after the war fall
largely on the poor, the descendents of the rich may live on the interest
and principal of bonds, paid by the poor. This is a way by which, in the
past, wars have often been financed.
The opposite situation is possible, however, and is today actually
The poor of this generation are
more likely than ever before in history.
buying many bonds; and, in the next, the rich will probably be n
taxed and so contribute to the millions of inheritors of small bonds.

e'ly

A further important difference between loans and taxes grows out of
their effect on the current money income of the people, and their effect
on the volume of bank credit. A tax receipt has no commercial value,
The former is not property and the
while a bond is a negotiable security.
latter is.. The bond sets aside a future return to the individual but it
Inel.ead it
does not assess the future tax to pay it with against him.
spreads this tax over the whole community. Consequently, a man is not so
likely to borrow in order to pay his taxes as he is in order to subscribe
(269)




to bonds.
The tax-payer is more likely to give up a part of his
current money income to the Government. The purchaser of a bond may
borrow at the bank, with the bond as collateral, either at the time he
lends to the Government or later, and remain with as undiminished moneyincome, competing with the Government in the commodity market, and forcing a rise in commodity-prices. A large bond issue is almost certain
sooner or later, to lead to the expansion Of bank loans and deposits
which tends, under conditions like those present today, to raise commodity prices.

But high taxes may also force men who can do so to borrow at the
There is evidence that some
banks, using other property as collateral.
large corporations are planning to borrow to pay thein excess profit
taxes.
Rich men, of taxes very heavily, may also borrow to avert a
drastic reduction in their customary mode of living.
From the standpoint of the purchasing power of money over goods the
important thing is not whether the tax policy or the loan policy is most
used.
The important thing is that the cost of the war should be paid as
far as ossible out of conscious savirross and not out of borrowin s
While a heavy tax policy helps toward this end, it could never of itself
achieve it.
The public should understand that lending by borrowing, though much
better than nothing, is still a very unsatisfactory way to help the GovBy raising prices such a procedure tends to shift the cost of the
ernment.
war to the poor who pay it in a higher cost of living.
But there is a further difference between taxes and loans which must
not be overlooked. A policy of exclusive taxation would cut drastically
into the earnings of many businesses, and force them into bankruptcy. The
creditors of these businesses would also be in danger of insolvency. And,
apart from actual bankruptcy, doubt and timidity on the part of business
men, with reduced efficiency of industry, would result. We must take
account of the motives under which modern industry is carried on as well
as of the iron necessities, growing nut of the interwoven fabric of debts
and credits, under which business is conducted. The loan policy on the
other hand, increasing the volume of liquid securities, available as bank
collateral, increasing the activity of banking .operations and the volume
of liquid bank credit, tends to "grease the wheels" of commerce and inaustry, and makes the readjustment to war .conditions proceed more smoothly.
The very rise in commodity prices which goes with it compensates in
part for the reduced volume of sales which many businesses must meet,
and gives business men a breathing spell during the necessary but painful
process of curtailing activity in the non-essential industries.
.

Under many economic conditions, and particularly in times of panic,
stress, or rapid readjustment, expanding bank credit is often needed to
tide over temporary difficulties, and to make transition easy. At the
present time we are going through a process of rapid readjustment, in
which many industries are being speeded up at the same time that others
are being checked and shut down, and this cannot be carried through efficiently if sand is thrown into the oil. Some expansion of bank credit,
therefore, and even some rise in commodity prices, must be tolerated. In
the long run, prices will be lower, and aggregate production greater, if
things take this course.
Just how far we can go in the tax policy is a question for the
special students of taxation, rather than for a committee on the purchasing power of money.
A wise discrimination, however, on the part of thOse wha control the
extensions of bank credit is important. Loans to enable people to continue
luxurious living do unmitigated harm; but loans to the industries expandLoans to non-essential
ing to meet war needs must be made liberally.
(269)



1,4

industries to enable them
volume of production, are
guarded loans to business
by them to maintain their
assets are justifiable.
.

to expand, or even to continue at their present
clearly pernicious; but limited and carefully
men in non-essential industries to funds needed
sol7enoy and gi7e them time to liquidate slow

The purpose underlying the projected Finance Corporation, is apparently, to make just this kind of discrimination in the extension of bank
credit in financing business, -- to lend liberally 1,-,here expansion is

required, to lend where bankruptcy is menaced, but to prevent the financing of business a:mansion in non-essential lines. This committee expresses no opinion as to the need for this particular legislation, but it is
convinced that some organized public policy should guide the distribution
of banking accomodations.
We feel that the danger is so great, however, that expansion may be
carried too far, rather that taxation will be made too drastic, that we
feel justified in placing heavy emphasis on the need of limiting expansion
of bank credit by every practicable means.

(269)




Taft Unibtreitr
epeafmettf of cpofificaf Gconomp
PROF. IRVING FISHER
60 PROSPECT STREET
NEW HAVEN. CONN




June 28, 1918.

Mr. Benjamin Strong,
Federal Reserve Bank,
50 Wall Street,
New York City.
My dear Mr. Strong:

I am writing to thank you
for your letter of June 15th relative to the December
meeting of the Economic Association.
It is not at all due to
lack of courage

that the subject of reduction of con-

sumption of less essential godds during the war is not,
as such, included on the program.

Under separate cover I am

sending you copies of four reports of the Committee on
the Purchasing Power of Money in War Time (of which I
am Chairman),s0 that you may see that we are not neglecting this subject.

Ihre of these reports have already

been published by Mr. Vanderlip's War Savings Committee, and
we are expecting the fourth to be printed

'y soon.

; have encountered a good deal of difficulty in getting
\c,

S

ç\-

X

this material of ours before the peopleen account of the
newspapers being controlled by advertisers of non-essentials.
In this connection you may be interested in the experience of Mr. Sinclair Kennedy of

0
Mr. Benjamin Strong,

0




June 28, 1918.

Boston as outlined on the enclosed sheet.

I should be

glad if you would return this when you have

finished

with it as it is my only copy.

I shall hope to see you when
it is convenient for you and talk over my plan for
standardizing the dollar

which has received the endorse-

ments of many bankers-s-,-.:, )

(

Vd,!eix

With the hope that you are
feeling well and with kindest regards,

I am

Very sincerely yours,

Di& alnitteroite
ii)evartment of politica (conomp

UP.
Dear Sir:

PROF. IRVING FISHER
460 PROSPECT STREET
NEW HAVEN, CONN.

SEP 1 3 191$

I enclose a reprint of "Stabilizing the Dollar
in Purchasing Power" taken, in advance of publication,
from a book of joint authorship entitled "American Problems
of Reconstruction".
I also enclose a selected list of written
statements of approval, to which might be added important
oral ones, e.g., from President Wilson and Mr. Frank A.
Vanderlip.

The reprint is a condensation of the Hitchcock
Lectures at the University of California, given last fall,
and to be expanded into a book presently.
The close of the War will doubtless bring, as
one of the great public questions, that of reconstructing
standards of value.

Already certain people, interested in silver
and gold mining are starting their respective propaganda.
A conference of such interests has been called to be held
at Spokane on Sept. 5th and 6th next "to discuss the gold
mining situation".
The conference is said to be "in the
nature of a patriotic response" to an alleged official call
"to do everything possible to speed production" of gold.
To prevent the discussion of this question from
degenerating into a contest between special interests or
between debtor and creditor, ought not those who believe
in justice endeavor to secure a just, i.e., a stable
If a better method for this purpose than that
standard?
here proposed can be found, I hope you or others will
point it out.
In any case, I should value, for future use,
any comments which you may be moved to make.




Very sincerely yours,
Irving Fisher

Diet KilliWrgitE
esrfinent of porifica Gomm
t,

PROF. IRVING FISHER
460 PROSPECT STREET
NEW HAVEN, CONN.

December 10, 1916.

Mr. Georae Foster Peabody,

25 Broad Strezt,
New York.

My dear Mr. Peabody:

I am enclosing a page from the Washington Star which
I have just received from the Rusher Company. Have you any idea what

the financial interests behind this are?

Very sincerely
P/ t

Eno.




tea& ainioersitp

4.,

o!'"'14471

iNstiment of potific4f economp
OF. IRVING FISHER
PROSPECT STREET

NEW HAVEN. CONN.

FiLINC-0

-4I 4s

February 24, 1919.
111)

r7DERAL ROME

DIU11(

Mr. Benjamin Strong,

15 Nassau Street,
New York.

dear Mr. Strong:

eeelMy

I thank you for your letter of February 19th1
which is just received, in regard to Mr. Muller. I am glad to
have the information which you have given me in regard to him,
and shall welcome an opportuniti to hear more of the matter, sometime when I see you.

sincerely yours,

P/t




Form 1201
CLASTbF

CLASS OF SERVICE

SYMBOL
Blue

Message

Day Letter

Blue

Nth)

' otter

Night Message

Nite

NL
If none of these three symbols
Night Letter

NL
If none of these three symbols
Night Letter

appears after the check (number of
words) this is a telegram.
: ,:wise its character is indicated by the
syn

SYMBOL

Telegram

'elegram

'spearing after the check.

Other-

NEWCOMB CARLTON. PRESIDENT

GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT

appears after the check (number of
words) this is a telegram. Otherwise its character is indicated by the

symbol appearing after the check.

tAr-

t!Ik';'RECEIVED ATT/

4.1,1 AM

4
FY NEWHAVEN CONN

829AM APRIL 4 1919
.10

it 594

BENJ STRONG

FEDERAL RESERVE BANK 'NEYORK
URGENT NEED OF MY PRESENCE HERE TODAY.PREVENTS ATTENDANCE

GREATLY REGRET
YOUR .MEETING




IRVING FISHER
tit

843A

Tat UnibtrSiir
Vesrfmenf of Mofifica economp
PROF. IRVING FISHER
460 PROSPECT STREET
NEW HAVEN, CONN.

28 June 19).9

Mr. Benjamin Strong,

Hotel Plaza,

New York City.

My dear Mr. Strong,

In accordance with uur conversation, I am sending you
the enclosed copy of the manuscript of my book. This is nearly

complete, but if it should happen that your sailing is postponed,
I should be glad to send two missing sections of the appendix.
I can mail these early next week if you will let me know.
'11W2ading Chamber of Commercd, where I have just

spoken, has appointa committee to study the matter with a view
to adopting resolutions. The American Federation of Labor has,
by resolution adopted at their recent meeting in Atlantic City,
directed the Executive Counsel to study the plan.
I envy you your opportunity to go abroad! Among others
whom you will meet will, I suppose, be Lord D'Abernon, who has
been thinking somewhat along these same lines in regard to dur

monetary probieT. I appreciate your willingness to look over this
material.
Very sincerely yours,
El*t




Taft Unibersiip
Qtparfittertf of porificaf economp
..ROF. IRVING FISHER
460 PROSPECT STREET
NEW HAVEN, CONN.

July 10, 1919.

Benjamin Strong, Jr.,
59th Street,

Hotel Plaza,
Fifth Avenue &
New York City.




My dear

Governor Strong:
I enclose some addenda which almost complete

sent you.
also enclose copy

the manuscript

of correspondence with

Lord D'Abernon which explains itself.
With kindest regards, T am
Very 4incere1y yours,

IFdG
Enc.

Taft Unibersiip
Npatintent of pofificof economE

October 2, 1919.

PROF. IRVING FISHER

460 PROSPECT STREET
NEW HAVEN, CONN.

Mr. Benjamin Strong,
Federal Reserve Bank,
New York City.
My dear Mr. Strong:

I am sorry so much time has elapsed
before replying to your letter of July 17th, in regard
to the manuscript on stabilizing the dollar. I suppose

I let th4atter go as you spoke of writing me again
first.

The questions which you state in that letter

are briefly dealt with in the manuscript which you
have.

In the compass of a letter I can not add very

materially.

Your first question refers to the
effects of the plan on the gold mining industry.

As

John Hays Hammond, who is one of the backers of the
plan, has said, the plan would, it seems to me, scarcely
affect the miner one way or the other.

He will, while

gold is depreciating, get fewer dollars for an

ounce

of bullion, but these dollars will, of course, have
an increased

purchasing power.

He will be able to get

as much in goods for an ounce of metal as he would without
the plan.

Though his net proceeds in dollars are less,

so also is his cost of living less than it would have
been with an unstabilized dollar.

Though his receipts

are leas, so also is the cost of running the mine



Mr. Benjamin Strong

-2

(outgo for wages and equipment) less.

The present trouble of the gold miner is
due to the depreciation of his product due not so much
to the great amount of gold as to the great amount of
credit substitutes for gold which the war has produced.

Your second question refers to what shall
be done with our present silver currency.

My idea is

that that would remain in circulation just as at present.

I should personally like to see them made specifically
redeemable in the gold bullion certificates, and hence
in gold itself, though at present this redeemability
practically exists.

The value of our token currency

would thus be stabilized together with the rest of the
currency.

Your third question, in regard to the

effects on international commerce if the plan were
adopted in this country alone, is treated with some
fullness in Appendix I, section 8, of the manuscript
which you have.

In a word, it would be best to secure

either international action, or at least concerted
action by a number of the more important powers.

Pars

of exchange are already broken, however, and the present
is therefore an opportunity for any nation to launch
the plan, confident that, when the advantages of the
system are seen, other nations will fall into line.

If this country, especially, should take the lead, with
its present financial supremacy, that result would be
sure to come to pass.

In the meanwhile, if we were

temporarily alone, the advantages to our domestic



Mr. Benjamin Strong

- 1 -

commerce would fax outweigh the slight

disadvantage of a

shifting par of exchange for foreign commerce, -- our
domestic commerce being many times as important as our
foreign commerce.

I hope that while you are abroad you
will get in touch with Lord D'Abernon, whose recent

remarks as

to the relation between the high cost of

living and Bolshevism have attracted considerable
attention.

His address is 114, Piccadilly, London, W.I.

and his telephone number Mayfair S968.

I have written

7.

him of Your trip and he responded that he would be
interested to meet you.

Very sincerely yours,

AGc




91

04

XJ.9

Taft timibusiiE
Vepairfmenf of pofificaf econotnE

PROF. IRVING FISHER
460 PROSPECT STREET
NEW HAVEN, CONN.

December 22, 1919.

ttik*

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

My dear Governor Strong:

I am expecting in a day or two a few advance copies of
my forthcoming book "Stabilizing the Dollar" (which will be published in January), and shall take pleasure in sending you one.
You will note from the enclosed memorandum that the idea
has made some progress, although as yet no organized propaganda
has been begun.

Four Congressmen have offered to introduce a bill

on the subject and one of them has done so.
Very sincerely yours,
tJ

Eno.

P. S. I shall greatly value your comments.




PROGRESS OF THE IDEA OF STABILIZING THE DOLLAR
-

Anticipations of the Plan
Plans for stabilizing the dollar have been proposed,

substantially like that which I am advocating, by at least nine
other persons, including Simon Newcomb.

I published my own presentation first in 1911 in the
Purchasing Power of Money and have elaborated it in various forms
since that time, including that in the Hitchcock Lectures at the
University of California in 1917 and my book Stabilizing the Dollar
to appear in 1920.

Public interest dates from 1912, when the plan was presented before the International Congress of Chambers of Commerce.

A resolution approving the stabilization idea was adopted
unanimously by the economic faculties of the University of Washington, Washington State College, and the University of Montana, including altogether seventeen economists.
A committee of the American Economic Association, corn4c4r

posed of experts in money and prices, reported the plan to be
desirable and economically feasible.

CA

This committee included

B. M. Anderson, Jr., now of the National Bank of Commerce;
Prof. E.

W. Kemmerer, Princeton University; Royal Meeker, Com-

missioner of Labor Statistics; Wesley Clair Mitchell, then Professor of Economics at Columbia University; Warren M. Persons,
now lecturer at Harvard University, and myself.
President Seerley of Iowa State Teachers

College re-

ferred the matter to a committee made Up from his economic and
political science faculties.

The committee reported favorably.

The Schoolmasters' Association of New York passed a
vote of endorsement.



A distinguished foreign economist, Edwin Cannan of

-.

the University of London, says:

nWs have all long recognized that the use of metallic
money as'a medium of exchange' has been largely dispensed
with by the help of banking machinery which substitutes a
civilized system of bookkeeping for the primitive method
of exchanging counters, and most economists, I think, have
expected that the material of metallic money would not
permanently remain the standard of value, but that it will
eventually be superseded by something bearing a closer relationship to the satisfaction of ordinary wants. It has
been difficult, however, to see how the transition could
be effected without a disturbance which the commercial
world would never face. Your scheme appears to me to
provide just what was wanted - a method of making the
transition insensibly without any shock to existing
habits of thought and expression."
F. Y. Edgeworth of All Souls College

Oxford,

England,

says:

"I entirely concur with the verdict pronounced on
your standardized dollar by Professor Pigou in his reSubject to
cently published work, WEALTH AND WELFARE.
the reservation which he had indicated, I say with him,
'I am inclined to believe that 'a very considerable net
benefit would probably result."
Achille Loria, of the University of Torino, Italy, says:
"Je viens de lire avec un grand charms votre
interessant projet dun dollar invariable et je
m'empresse de vous dire qu'il me semble parIl pr6sente quelque analogie
faitement raisonne.
avec une des nombreuses m6thodes de regularisation
de la valeur de la monnaie que jai signalee dans
mon Essai cur la valeur de la monnaie."

At the present writing I find, on consulting my files,
42 economists and 28 other academic professors and university presidents who have, in some specific way, expressed approval

of

the

proposal._ These include, besides those already named, Pres. Arthur
T. Hadley of Yale; Allyn A. Young, ex-President, Amer. Stat.

Ass'n.i...

Pres. Frank L. McVey, Univ. of Kentucky; Joseph French Johnson,

Dean of the School of Commerce, New York University; J. B. Clark,
Columbia University; Gilbert N. Lewis, Univ. of California;.Dean
Fredericx S. Jones of Yale College; Paul H.

Douglas, Univ. of

Washington; C. L. Stewart, Univ. of Arkansas.



2

The Business and Industrial World
The entrance of the project into the world of business
marks the second stage.

Only a mall, though a good, beginning has

thus far been made.

Among those who approve of the general idea of stabilization as desirable and feasible are twenty-four prominent bankers of
whom ten are bank presidents and about fifty other individual business
men, not including the members of the various business organizations
which have passed resolutions of endorsement.
Among the prominent bankers are:

John Perrin, Federal Reserve agent for San Francisco,
The late Henry Lee Higginson of Boston,

George Poster Peabody, Director Federal Reserve Bank, New York,
Clarence H. Kelsey, President Title Guarantee and Trust
Company, New York,
Evans Woollen, President Fletcher Savings and Trust Company,
Indianapolis, Ind.
Robert Kent, President Passaic Bank of Passaic, N. J.
Among the prominent business men other than bankers are:
John Hays Hammond, mining engineer,
John V. Farwell, Chicago,
Roger W% Babson, business statistician,

James H. Brookmire, business statistician,
A. B. Farquhar, York, Pa.,

Norman Lombard, President, Western Farm Credit Company,
San Francisco
Richard A. Feiss, Cleveland,

J. Kruttschnitt, Chairman, Executive Committee, Southern
Pacific Company,
Albert H. Mowbray, Vice-President and Actuary, Liberty Nutual
Insurance Company, Boston.




Selected quotations from some of these men follow:
Roger W. Babson, "Your only critics are those who misunderstand you."

Albert H. Mowbray, "It seems to me, that to a large degree, the
success of many of our plans for attaining social justice
depends upon a stabilized dollar."
Richard A. Feiss, "I am in hearty accord with your idea and feel
that it is not until the dollar is stabilized that industry
can get together for the proper solution of its problem."

J. Kruttschnitt, "Your proposed plan is ingenious, clear, and
convincing."
The business organizations before which the subject has
been brought have either formally approved the idea or referrei it
to committees which have not yet reported.

None have thus far

voiced disapproval.

In April 1919 the Bridgeport Chamber of Commerce, follow-

ing a favorable committee report,passedaresolution as follows:
RESOLVED: That the Bridgeport Chamber of Commerce, recognizing
the many evils that flow from the ever-changing value of the dollar,
hereby calls upon Congress to enact such legislation, if it be
feasible, as shall tend to make the dollar stable at all times, in
its purchasing power; and to that ehd it respectfully recommends the
adoption, in substantial form, of the plan put forward by Professor
Irving Fisher for stabilizing the dollar by adding weight thereto or
subtracting therefrom in accordance with the fluctuations of prices
as represented by the index numbers.

RESOLVED: That this action of the Bridgeport Chamber of
Commerce shall be transmitted to the Secretary of the Treasury,
the Comptroller of the Currency, and all of the Senators and
Representatives from Connecticut.
The Chamber of Commerce of Waterbury, Conn., passed a

somewhat similar resolution as did the Society of Polish Engineers
and Business Men in America, and the New England Association of
Purchasing Agents.

The American Bankers' Association at its annual meeting,

October 1919, voted unanimously to investigate the subject.

A

committee has been appointed, under the Currency Commission of the
Association, to make a thorough study of the plan.
Seven other business organizations have appointed
.committees to consider the subject.
- 4 -




As to the world of labor, only a small beginning has yet
been made.

At the session of the international Socialist Congress at

Berne, Switzerland, February 1919, the following resolution was
adopted as part of Article 10 of the International Labour Charter:
"the contracting States shall call as soon
as possible an international conference instructed to take effective measures to prevent the depreciation of the purchasing power
of wages and to insure their payment in a
non-depreciated money."
The American Federation of Labor (June 1919)

resolved:

"That the Executive Council be and is
hereby instructed to make a study of the
problem of establishing a dollar of stabilized purchasing power as it may be presented through legislative effort, or otherwise during the year, and to submit a report
upon the subject at the 1920 convention."

Among those interested iriour labor problems who appreciate
the need and value of the plan for stabilizing the dollar are Louis F.

Post, Assistant Secretary of Labor, Dr. Royal Meeker, Commissioner of
Labor Statistics, George W. Nasmyth of the Trade Union College in
Boston, David J. Lewis, mentioned below, a former labor leader, now
on the Tariff Commission, and Hugh Swindley, an active Canada labor
man.

Four women's organizations in Washington, D. C. adopted
resolutions favoring the idea of stabilization.
Newspaper and Popular Publicity

Newspapers and magazines have given the project an increasing amount of attention.

Over one thousand clippings touching on the

proposal have been received.

Many papers have commented editorially.

The total number of editorial comments which have come to my attention
is over two hundred, of which about a third did not take sides.
1914 there were two favorable editorials to three opposed.
1919 there were about three favorable to four opposed.
 August


1919, I find two favorable to one opposed.
- 5 -

In

Up to July

Beginning with

The Newspaper Enterprise Association carried two articles
descriptive of the plan which were pUblished by the many members of
the Association.

Articles describing the plan have also been carried

by big popular magazines,
the
the
the
the
the

Independent,
Review of Reviews,
Red Cross Magazine,
Saturday Evening Post, and
Scientific American,

I have had frequent requests from persons in many sections
of the country for material to aid them in speaking on the subject
before Rotary, Commercial and other Clubs and associations.
In the World of Public Life
This phase of the movement has only barely begun.

Royal

Meeker, Commissioner of Labor Statistics, has favored the plan both
before he was in office and while in office.
Labor Louis Post favors it.

Assistant Secretary of

Representative Husted of New York has

introduced two resolutions in Congresb on the subject, the last one
to appoint a National Monetary Commission which should investigate

the currency problem "especially to the end that the purchasing power
of the dollar may be stabilized."
Three other members of Congress have offered to introduce

bills looking toward the practical application of the stabilized
dollar plan.

Others have indicated interest in the question.

the Senate also some leading members have shown an interest.
The late Ssaator Newlands wrote:

"Your plan of stabilizing the dollar by so adjusting
the amount of gold in it from time to time as to make it
at all times purchase approximately the same quantity of
a number of things which constitute the necessaries of
life, is an excellent one, and will make the dollar as
real a standard of value as the yardstick is of measure.
Nothing better could be done to establish justice between
debtor and creditor, producer and consumer, employer and
wage earner, and to avert the economic crises arising
in all these relations because of the uncertainty of
the value of the dollar.
I wish you great success in the propaganda which
you are urging."




-f-

In

Ex-Senator Shafroth has endorsed the plan as follows:
"The pamphlet you sent me is a most excellent one. It
is clear and very convincing. -I think the necessity is
very great that we stabilize the dollar in purchasing
power and I hope that you will send your pamphlet to all
of the members of the Committee on Banking and Currency
of the Senate.
I regret that I am not in the Senate now, in order
to be of service in formulating legislation that will
stabilize the dollar."
Senator Myers wrote me as follows:
"I am interested in stabilizing the dollar. I think
it would be to the interest of everybody in this country
to have it made stable. It is a subject of great
importance."
Senator Owen says of the plan:
"The plan is feasible and meritorious."

David J. Lewis, now United States Tariff Commissioner and former
labor leader writes:

"Having carefully gone over your proposal to stabilize
the gold standard and giving it the best consideration I
could, I have reached the conclusion that you have found
the method in your 'Compensated Dollar', a method, moreover, so simple and easy of application as to command
admiration. Next to the economilc havoc of war itself
there is probably no more devastating agent at work than
the rudderless and ballastless unit of value which has
I
resulted in the prices anarchy of the past generation.
think of a depositor at three per cent in his savings
bank, who has allowed his savings to accumulate, along
with the principal, for the last fifteen years. He has
actually less money in the virtual sense than when he
made his deposit. Our dollar has become Mexicanized,
and it seems high time that thoughtful men should be
looking out for a remedy. I think they will find it in
your brilliant and well considered proposal."
William Kent, also of the Tariff Board, writes:
"The only question in my mind as concerns your scheme
is as to when it should be adopted."
William S. Culbertson, also of the Tariff Board, writes:

..e your proposed remedy for fluctuating price levels
should have the serious and immediate consideration of
Congress."
Official interest extends to other countries than the
United States.

The rise in prices since 1896 has been world-wide.

Interest in remedies has not been confined to this country.



-7-

Sir David M. Barbour, one of the chief originators of the
gold exchange standard for India, wrote:

... think it likely that some such system may ultimately
be adopted."
Lord D'Abernon arote me:

"With regard to the precise means suggested for
stabilizing the dollar, I think your proposal is the
most ingenious I have seen, but I would not bind myself to this solution to the exclusion of all others."

Marshall Stevens, M.P. is now interested in introducing
a bill in the British Parliament looking to monetary stabilization.
The Minister of Switzerland, Hon. Hans Sulzer, wrote me
as follows:

"Your solution strikes me as an excellent one. I have
not failed to transmit your views to my Government, and
I shall be delighted to have an opportunity of discussing
the matter further with you."

New Zealand officials have shown particular interest in
reviving the idea of an international conference and in this
in particular.

plan

I have received two cablegrams from the New Zealand

Board of Trade on this subject.
The outcome of this correspondence and the study in
New Zealand of the material sent by me is indicated in the following
quotations from the 1919 Report of the New Zealand Board of Trade
(chiefly concerned with the regulation of prices and other aspects
of the high cost of living)




"That control of the general price-level by standarization of the purchasing-power of the monetary unit of value,
the sovereign, is the way out of the economic labyrinth
has been suggested by many economists; and this solution
is being advocated by Professor Irving Fisher with a
brilliancy of statement and wealth of statistical reasoning that has attracted world-wide recognition.

So hopeful does Professor Irving Fisher's suggested
remedy appear to the Board that we earnestly recommend
it to the serious attention of the Government.
W. G. McDonald)
J. R. Hart,
) Members of the Board."
P. Hally

A bill introduced in Parliament, empowering the Board of
Trade to deal v:ith the prices situation, resulted in considerable
debate.

0

I quote extracts from the remarks* of Hon. Sir J. G. Findlay

(Hawke's Bay) on the Board of Trade Bill in the House, September 12th:
"Sir, that is why I have taken the liberty of asking the
House to listen to the details of the scheme which, in my
judgment, for what it is worth, will do more, if we adopt
it, to remove the evil of the increased cost of living
permanently than any other cause you can discover. I am
glad to say that when I brought this matter before
the
Prime Minister, and later before Sir Joseph Ward, they
both very fully sympathized with it; and, although it
involves an amount of consideration I could not expect
them to give to it in the short time they had to consider
it, both were prepared in the future to give it patient
and indulgent consideration. Sir, with these preliminary
observations, I proceed as rapidly as I can to place you
in possession of what has been declared the greatest discovery or suggestion in this branch of economic thought
since the early days - since the time of Adam Smith, or
.....
I do not want to say one word to
even ea:clier.
reflect on the Victory Loan we are to have issued, but it
is relevant to my suggestion to the House that we should
cure the evil inherent in that loan, as it is inherent in
every time contract, and we should as far as possible prevent the interest on the bonds in the Victory Loan dwindling
down, as they will dwindle down, in purchasing-power to 2i
per cent0 or even less if the present reduction in our money
...... ........
standard's purchasing power continues.
Sir, is it unnatural that with this marked dwindling of
money in purchasing-power there should be resentment, and
even violence, on the part of those who suffer? Not only
are there the evils of inequitable distribution of wealth;
not only the evils produced by inflation of our currency;
not only the oppressive high cost of living, professional
profiteering, and speculation - these are all great evils;
but the evil which I would impress upon the House and upon
the leaders of the House is this: that the people do not
understand the cause of these evils, and they have a blindfold sense of wrong - that sense of wrong which cannot distinguish its true justification, and which is the most dangerous sense of wrong that you can have. If the people can
see the real cause, and it is pointed out to them that that
cause is being grappled with, you will escape the wild fury
of the mob. It was found at the time of the French Revolution, and has been found all thewomlci over, that the main
evil to contend with is that the mob are often left in ignorance of the real cause of their misery. ........ Now,
Sir, what I want to say is this: that if you do not cure
this evil it is going to be accentuated. While the war
was on the great mass of the people were prepared to
accept the war as sufficient explanation of these soaring

* New Zealand Parliamentary Debates, Sixth Session, 1919, Legislative
Council and House of Representatives, pp. 498-505.



-9--

t,

cr

The war is over, and unless these soaring prices
prices.
are checked you will rtncrease the resentment. One th:ng

is clear - and I say this after fair deliberation: if the
present high prices have come to stay, if your h is to be
worth no more than 13s. 2d., then the sooner the proper adjustments are made in increased wages and salaries - including the super-annuation of your Civil servants who have
retired and your old-age pensioners - if the depreciation
in the value of money is to remain or is going to go on,
then you must adjust matters by increasing the rate you
......
pay, so as to restore its purchasing-power.
It may seem a startling proposition, but it is
nevertheless a true one. Our monetary unit - and I would
ask the House to pause upon this statement - is the only
unstable unit left in Christendom or civilization.
I do not think there is one man in this House but will
admit that, if the present trend goes on, increasing injustice will be done to the unhappy victims of this condition
of things. I had not long ago, a retired Civil Servant in
He was an old
my office who had served his country well.
man who retired some years ago, and he pointed out that his
superannuation, which was something under L300, I think,
had shrunken in value to about h200, and he had to get
along as best he could on that sum with an ailing wife,
and he asked me whether I could influence the Right Hon.
the Prime Minister and other members of the House to
recognize this shrinking of the purchasing-power of his
I know the difficulty of a remedy in our
annuity.
With some people everything new is dangerous,
money system.
and there is no conservatism more resistant than that which
is aroused by any attempt to deal with our money system.

...

$o I would urge on the Prime Minister and the Government to give us a chance of having this matter investigated,
1 would beseech the
as is being done in America today
Prime Minister to regard this as one of the most important
propositions with regard to reducing the cost of living in
this country we have ever had before .us.'

The Hon. W. D. S. MacDonald, who was until recently
Minister in Charge of the Board of Trade, is quoted in a newspaper
interview on the Board of Trade Bill (which was drafted on his
instructions) as follows:

"The real root of the cost of living problem is to be
found in what the Prime Minister termed in his speech
of the currency.' ..............

'inflation

"If the rise in prices is due to exploitation and
profiteering, then these figures clearly show that New
Zealand suffered a good deal less from exploitation and
profiteering ),,h&n any other country in the world, with
the solitary exception of South Africa, and that in
neutral Sweden exploitation and profiteering must be
at least six times as bad as it is in New Zealand. ....
The question raised by the member from Hawke's Bay
is, in my opinion, the greatest problem that the war
has bequeathed to us; and a solution is imperatively
- 10 -




demanded, if our country is to escape economic and
financial disaster.
During my presidency of the Board of Trade, this
matter received my most earnest consideration; and,
on the advice of the Board of Trade, early this year
I. got into communication with Professor Irving Fisher
as to the details of his scheme.
On June 23rd, 1919, I received from the acting
chairman of the Board of Trade the following memorandum:'The industrial unrest throughout the world,
from which New Zealand is not free, is directly
attributable to ascending prices which are now
on a higher level than at any previous period
of history. Most competent judges consider
that prices will go higher yet, and will then
subside somewhat, but not to the pre-war level.'

00 Ot

"I am profoundly impressed by Professor Fisher's scheme,
and if applicable to New Zealand, its importance cannot be
exaggerated.
Therefore, I suggest, and earnestly recommend,
that you appoint a Royal Comrission to study this vital
question from the point of view of New Zealand's interest,
and to report to you from time to time the result of its
inquiries.
I also venture to suggest the following personnel of the commission:- The Hon. Mr. Justice Sim
(chairman), Sir John Findlay, K.C., Dr. J. Hight (Canterbury College), Professor H. W. Segar (Auckland University),
Messrs. A. Jolly (inspector, National Bank of New Zealand),
W. D. Hunt (Wright, Stephenson and Co.), Gerald Fitzgerald
(accountant, Wellington), and myself.
The order of reference should be as follows:- To
inquire into and report upon - (1) The effect of the war
(2) The various problems
conditions upon price levels.
that will arise in connection with currency and exchange
during the period of reconstruction after the formal
declaration of peace.
(3) What steps are required to
bring about the restoration of normal conditions and
reduction in the cost of living. (4) The causes of the
variations in the purchasing power of money and the
practicability of preventing violent fluctuations in
price levels so as to render the purchasing power of
money stable.
I urged upon the members of the National Government
the necessity of appointing a Commission to inquire into
the practicability and the feasibility of this scheme
and into matters in connection with currency generally,
as suggested in the Order of Reference. I again urge
this matter upon the serious attention of the Government.
GO

The remedy for the tide of rising prices as urged by
Professor Fisher and Sir J. G. Findlay seems to be the
only scientific remedy that has been propounded."
Future Plans

The publication of my book "Stabilizing the Dollar," in
the immediate future, will enable all who are interested to secure



- 11 -

a full discussion of the proposal, with a description of the
technical details involved in the plan and with answers to
objections.

If there is sufficient interest of others I hope

to see this followed by the formation of a "Stable Money League"
for the purpose of educating the public and bringing
to any legislative action for the adoption of the plan.

support

Espe-

cially will it be necessary to gain the attention and support
of business men.

These can be reached through the Chambers of

Commerce, which comprise the important men in each community.

I hope myself to address the more important groups and secure a
referendum to the local Chambers of Commerce the country over.

With their support, there can be no delay in securing the passage
of a bill establishing a monetary commission which can make a
searching investigation of this and other plans to meet the
troublous currency situation.




- 12 -

0

YALE UN IVERSITY
DETARTIOL T OF P 01. ri2IJAL Ea& OLIY

NEW HAVEN ,

JUIN EOT I OUT

April 24, 1926.
.kvernor Benjamin Strong,
Federal Reserve Bank,
New York.Jity.

dear Jovernor dtrong:
Thank you for yours of April 19th.

I think I unierstand your

position and sympathize with it to a large extent.
not approve of the bill in its present form.

I realize that you do

I hope it may be changed so

that you may be in general sympathy with it
I realize the dangers to which you refer, that the passage of
the bill may lead to extravagantAaopes and disappointments and consequent
criticism of the Federal Reserve system.
I also understand the misunderstandings likely to occur as

illustrated by today's editorial in the New York Times.
As you may have noticeu in theitestimony which I sent you I
have myself said some of these things very much as you have said them.
I shall further take to heart your letter and consider carefully all your cautions.

I should be the last one to want to upset or

impair the work which you and your associates are doing.
I cannot help but think, however, that some sort of legislative

declaration can be framed which will help you both with the public and with
and will
your less enlighteneu associates in the Feueral Reserve system

safeguard against any pressure from the Treasury or public clamor which made
the trouble in 1919 and 1920.

There is such a thing as being unduly cautious and self defeating.

At any rate this has been nu observation among business men ia

mEppy

dases.

I should expect it of many of your associates and I think I could name some

who would try to influence you and your policies unduly in that direction.




2

Governor Benjamin btrong

I think they would differ more radically with the views to which I incline
than would you.

With kindest regards,

I am

Very sincerely yours,
(bigned)

Irving Fisher.

could you reciprocate by sending me a copy of your testimony?

I had mine

copied especially for you.




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