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eiffie-ae 7 Az EQUITABLE BUILDING NEW YORK June 20th, 1916. Dear Mr. Strong: The trouble is the boys talk too much. have been very uncomfortable for about a week but it does not come from any strain, as I am/quite sure that I have not hurt my back again. of I guess it is simply a letdown y nervous system. I thank you very sincerely for suggesting that I see your doctor and will do so should it be necessary. I feel very much better today and an sure that by resting as much as possible, it Will only be a question of a few days before I will be all right. You need have no anxiety regarding my being here and I sincerely hope that you will get away at the earliest possible, moment, and I am sure that my worry over you is more or less responsible for the trouble with Faithfully -ours, Mr. Benjamin Strong, Jr., 903 Park Avenue, New York City. LHH/VCM back. June 19th, 1916. Uy dear Hendricks: The boys tell me that your back has not been behaving well and 1- am writing to urge that you get at it right away, 6 d energetically. Do not forget that you and some of the others at the office have been preach- ing to me about taking care of myself ad 1 think it is appropriate and fair that 1 should take a list at you now. While generally do not believe in recommend- ing doctors to one's friends, if you are not having good attention, do not hesitate to call on Dr. '7.. Halsted Kyers, 49 West 50th Street. He has straightened my liack out on this last attack with just a few pull r and punc:les lnd he may be able to do the same for you. I feel rather anxious about going away if you are not there and put it on selfish graounds, as well as friendship. Sincerely yours, L. H. Hendricks, Esq., 604 Riversioe Drive, hew York City. BS Jr/VCM 4974,,,I 604 Riverside Drive, New York. September 10,1916. Mr. Benjamin Strong, The Lewiston, Estee Park, Colo. Dear Mr.Strong: Enclosed you will find a copy of a letter that was sent to a friend of mine by Mr.Lyford which I thought might interest you. Do not know if the Tribune published it or not. Sincerly, I Why do the immix State banks refuse the oft repeated invitation to join the Federal Reserve system? Some of them acknowledge that its note issuing powers insure stability of financial conditions, but say that they do not see any reason for contributing toward the cost- the National banks are taking care of that. Does not the ques*ion thus arise, what are the National banks paying for the privilege(?) of membership in the Federal reserve system, and for stabilizing financial affairs? The system has taken from these commercial banks so far over $600,000,000. the larger share of which was income producing, not less than 2%, so the first cost os the loss of about $1,000,000. per annum to the banks, is it not, and is it not also an economic loss to have several hundred millions of dollars idle? It is admitted that the country banks are suffering a loss under the par remittance rule, some claim 20% to 30% of net earnings.What are the figures on that? Reports of the Comptroller of the Currency for 1913 show net earnings of National banks about 3160,000,000, for 1915, $113,000,000. a very large decrease, 80 large that no one cab blame the banks for protesting against a rule which adds largely to the decrease of profits, especially when it means no pa* for actual service rendered and the doing away with a legitimate charge, can they? What will the loss of exchange figure? There are over 7000 country banks and some 500 or more city banks, assets of the two classes not differing much, so it would be fair to claim that the country banks are earning about one-half of the net profits as showm by the Comptroller's reports, or $50,000,000. to $60,000,000. annually. Instead of figuring 20% or 30% loss, suppose we call it 10% or $5,000,000. or $6,000,000. would that not be fair? These losses of by member banks, as the Federal reserve would double, would interest and exchange must increase as more money is paid in required under the Act, ans as more business is done through banks, and if State banks should enter the system the loss it not? Under the Aldrich-Vreeland bill, which held us safe for six years and in 1914 quieted one of the most seriaus financila disturbances we have ever had, the cost was about $126,000. or a little over $20,000. per annum. Compare the figures. Republican ideas as expressed by the Aldrich-Vreeland bill cost us $20,000. per annum for a term of years; Democratic notions under the Federal reserve act costing us $15,000,000. per annum, and more to follow as the years roll by. As an insurance proposition isn't the rate far beyond reason and absolutly unnecessary? Will some one tell us if the other features of the Act are io valuable for business needs that we should continue to pay every year $15,000,000. and more for them? Sent ecopyI Signed. N.Y.Tribune 9/6/16 F.E.Lyford 17,4,//01 Es'es Park, Colo., September 11th, 1916. Dear Mr. Hendricks: The stetement of eeptember 51h just reaches me, showing balances due through the Gold Fettlement except tql the other bnnks, Bosten, Fund of '32,750,000. Cleveland, Philadelphia and Richmond apparently have sent us unusuelly large York exchange, resulting in tender amounts of New our piling up $27,000,000 of legal nnd silver certificates. I take the liberty of suggesting that this situation er desreves a warning, unless, as mny prove to be the case, some special circumstances it is due to piling the nave brought about this result. up exchange Possiblyy in New York in order to pay for 'rench and Xnglish Has apt the time come when we should be advised dnily or frequently, or quotations for Lew York exchange at the other reserve bank cities? Since writing Mr. Treman on t is subject a week ago, it might be a good it occurs to me thet the 'rreasury weakness of 'epartment our whole time to give demonstration of the pin some people a practical S ituation currency adamWxWURSUOM by asing them to of tnis "chicken feed" You would hear a great howl, of course; in gold certificates. and I only sugust it for discussion, believing teet it may eome day be necessary to pursue this course in order to force consideretion of this weak spot in our system. redeem ten, fifteen or twenty millions To L. H. Hendricks, Esq. Sept. 11, 1916. I would not hesitate to try and work up a plF,n with the big banks in New York by which you can get round amounts of exchange on the other Federal reserve cities from time to time and vend some big offsets and see what effect that would Always hear in mind that the arrangement should not have. be a permanent one as otherwise, we would be liable to accumulate too much flont. I hope you all keep well at the office and not too busy. Pleas give all the boys my warmest regards and tell them I am thinking of them constantly. Sincerely yours, L. H. H4ndricks, Esq., Assistant Cashier, Federal Reserve Rank, Equitable Building, New York City. BS/VCM Estes Perks Colo., Septenber l915. My dear Mr. Hendricks: lt was mighty good of you to telegraph me in sply to A. later letmy letter about the Geld Settlement operations. ter to T. Jay will indicate that I was not actually worrying about this matter, although, as you know, it baz always given I am sure it will straighten up and as you me some concern. say it is a seasonal movement,..poscibly combined with some speoial transfers in connection with the big foreign loans just negotiated. Lyford's questionnaire, which I think it is doubtful the Tribune could have publiened, will give those attending the Kansas City Convention an opportunity to prepare in advance for the line of alteck which he and some of his associate kickers will likely bring to bear. Don't you think it would be a good plan to send a copy of this to all the Governors who propose attedding the Convention, suggesting that they post themselves on these particular questions and be ready for Lyford and his pals when they let Of those with whom I am in correspondence, I find, that loose? Wold and McDougal and, of course, Yiller, will certainly be there. Aiken is considering going and 1 believe some of the other banks To L. H. Hendricks, Esq. September 15, 1916. will likely send representatives. I suggest writing a confidential letter to each of the barks likely to eend representatives, telling them of the origin of the article and eez,Eeoting that they melte some preparation ulong the line 01 these ques- tione. won't make any euegestione in this letter as the answers are all too obvious. It is well to bear in mind"however, on certain special points that the loss of exchange will be made up; that the tax paid on the Aldrich-Vreeland notes amounted to nearly 4,000,000; that the difference between the earnings of 1913 and 1915 have no relation whatever to the rederel Reeerve Act and cc e be readily explained by other lectors and that the probable earnings of 1915 are the greetest in the history of banking in this country; that of the f600,000,000 held by the reserve banks, the greater piert never earned any intereet, etc., etc. It strikee me that the whole article is ridiculous in the exteeme -in e in the hand' of some one understanding these:matters, could be made to reflect very eeriouoly upon Lyfcrd's intelliI think the matter is vortt following up only for use gence. et the Convention, in case oeportunity arises. With best regards, Sincerely yours, L. B. flendricks, iederaReserve Bank, New York City. 604 Riverside Drive, New York, September 17,1916. It//fr Mr.Benjemin Strong, Estes Park, Colo. stp2, 0/6 4. y g My dear Governor: Your letter was most welcome and it is no wonder that you were disturbed at the large drain on us through the gold settlement fund. It may be that having been present at Washington when the drain on New York was discussed so many times and from every angle was the reason I did not share the view held by many in the office that our gold holdings were about to disappear and it seems to me to have been rather unfortunate that we held up the other banks last week when our statement of the 15th shows very little silver or legal certificates on hand. The Morgangold and large purchases of investments took all our clearing house certificates. It seems to me be a good thing for us to have from 115,000,000. to $20,000,000. of clearing house certificates on hand as our transactions with the clearing house are pretty sure to be large As it stands now we will have to pay in gold or exchange with some other bank, the result as far as we are concer- ned being the same. As long as we cap keep the larger part of our assets in gold a few millionL in "chicken feed" is of email moment. It was probably a good thing to hold the other banks up as a warning of what might happen and it may slow some of them down a bit in their purchasing of New York exchange. So long as our exports continue to be so large and to be paid for here in gold is thereany way to prevent a large part of this gold going to the other parts of the country and is it not equally true that should our imports be very large, much of this same gold would find its way back to New York? We are issuing all the Federal Peserve notes called for and are requiring the banks to give us gold for all new notes furnished and our expense account is on the rise. The Treasurer of the United States sent us abill of$12,-000Todd -2- being cost of redeeming our notes and we will have to cancel and ship to Washington this week about 500,000 bills. The check collection department is certainly doing a land office business as we are handling about 40,000 items daily and we feel that we are making progress in the organization but the things that 35 women can do to you are plenty. A Baltimore bank sent us acheck on Pittsburgh with a notation on it that it was immediately available as it was stamped collectible through the clearing house. This was a $25,000. check and we returned it with advise that it was not available and came within the restriction placed on items on other districts endveed by banks situated in still another district. This part of the work of the department has been much neglected as it has been impossible to give any attention to these matters. my attention will As soon as the department is running as it should be given to these other and more important matters for undoubt7 edly many items are going through that we should not accept and we should work out some direct routing for the large items. Am leaving for Kansas City on Saturday of this week and feel a little guilty of shirking some of the work but on the other hand think I sould go for many reasons. Will try and write you from there. Keep up your courage and patience for we are all looking forward to your return. With warmest regard, I am, as ever sincerely and faithfully yours, Estes Park, Colo., 15eptember 22nd, 1916. Dear Adr. hendricks: Thank you for your letter of September 17th. It is a poor way to spend bundays, althougn 1 am deiignted to get your leiter, if it does not burden you to write them. The serious thing about the movement of gold to the West through the Cold Settlement oped. Fund has not yet really devel- While the foreign exchanges are favorable to New York and it is impossible for gold to move abroad, there will be little difficulty comparatively speaking, in working off our silver and legal tender noteo whnever they happen to accumulate, because the domestic exchanges do not always aning in one direction. As we have repeatedly observed, with gold cGming in and with other large operations going through the various accounts, we always get out of the hole some way or other. But suppose sterling exchange was adverts and London wao taking gold from New York in sufficient volume to cause high money rates throughout the country, and under those conditions New York exchange is almost always at a premium Chicato, Philadelphia and other important poinqithe most economical method of settling exchanges with the interior being through the Cold Settlement Yund, the Federal Reserve Bank of ;iew York would be constantly shipping gold to the interior at the same time it was furnishing gold to the big banks and banknrs of New York To L. H. Hendricks, Fsq* Sept. 22, 1916. for shipment to Europe. There would be no possibility og getting out of accumulating silver certificates and U. S- notes, except by presenting them to the Hubtreasury for redemption. I figure from the statements sent no that since the 8th of August, the weekly adverse balances in theft 1-o" accounts have totalled over 40,000,000, all of whLch, of courno, have not been settled but which tight have bean settled had every dollar been °ailed for. Your inquiry about the change in the balance of trade boars somewhat on this point, but I cannot 300 that it would leave any accumulation of gold in New York. It would likely give rise to the very conditions I have delcribed. Would you mind asking the boys to send me a memorandum of -the Y.sderal resorvo notes outstanding, divided according to denominations! I an very much interested in the detsile contained in your letter, particularly about the organisation. I an surprised thet things havn. gone ac well as they have, with over 40,000 items a day going through. It is a big job and has certainly been well done, thanks to the hard work and loyalty of the men. Sincerely yours, L. H. Hendricks, Esq., Federal Reserve Sank, Equitable Building, New York City. RR/VCM Denver, Colorado, March lb, 1917. Dear Mr. Hendricks: Thank you for yours of the 7th. I had a long talk was in Chicago, McDougal and McKay about this Seattle sit and am satisfied from what they said t this experience by all of the Reserve be anparent. ks. her, that Banks have got to be caref on for items sent for collec , steps to have all the f well as opinion of c Let me suggest that you take shape for discussion at that meeting, as week spots in our collection plant e roundabout n the inter-district service where all .se Reserve Bank to another, instead of by shorter routes which til ght in some cases be possible. sending of it third weakness districts, as In District. which they accept ubject of the liabilities involved. is that th liof Federal Reserve ubject of special consider- ation at the next G items go n prompt for- cannot be followed up too dilligently to sati One Two thingeem to me to One is that somewhere the e is negligence warding and presentation of i My belief be drawn from a lesson is The second weakness is the direct to the banks on which tye are drawn. the the And the inexact timing of items on the remoter sections of instance recently cited by Mr. Peple in the Richmond These occurrences lead me to urge that we go very slow in adopt- ing that plan for furnishing member banks with Federal eserve exchange. Very sincerely yours, L. H. Hendricks, Esq., Federal Reserve Bank, New York.- City. Denver, Colorado, March 30, 1917. Dear Mr. Hondricks: It was a great pleasure to have your letter of the 24th ana; another on the 26th. First about that expense item, you must never forget that I have endeavored consistently, both as to my expenses and my salary, to avoid anything Which would subject the bank or myself to criticism and at any cost that is the thing to do. The choice was zjven to me to put in a bill for all of my expenses and I preferred myself not to do so. I do not understand your refereace to Harding's speech, which 1 would like to see if you have a copy available. I was particularly pleased and touched by your looking up Grandin. He is a bully boy, none better, and I can understand how keenly ho appre- ciated a party with you for he has written me most enthusiastically. oldest boy started for a mobilization can today as he is My in the National Guard at Princeton. 1 am playing golf at last and it has set mo up so that I feel like a fighting cock. Thera seems now little home around June first and I can hardly wait doubt that I will start for for the time to come. I have written Mr. Treman about the Clearing House and hope we will not make a mistake by taking in some out. If most of them Come in, we no doubt lino. With best regards and raw thanks and leaving the others can coax a few recalcitrants into for your letters, Faithfully yours, L. H. Hendricks, New York City. arrangement