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'er{ht SW lilt

Ter qPriiii6entbes

sen

18.6.25.

IfteifiTobanft -Tireftforiums




Benjamin STRONG, Esq..

Prosident of the Poderal 7eserve Bank
NE:I

Dear President Strong

YORK

:

I beg to send yo

herewith copy of my cable

I forwarded to-day to your ad rocs

:

As I an doubtful whether a

otter will reach you before your

departure I bog to confirm b

cable your ::ind leter of Hay 25

"

and beg to say that I s all be very glad to meet you on this s
I am in constant touch

our London friend. Best regards.
Schacht."

and boj to believe me

Yours sincerely

I

I
RZICESBANR POLICY
(Lipeech made at Cologne on June 25, 1925, by Dr.
Hjalmar Schacht, President of the Reichsbank.)

remain stable.
The German currency is stable and will

1.

strangely enough there are still people who strueele aesinst
3o far as this struggle is not
a recognition of this fact.
questionable interest,
based on ignorance, nor on any kind of

sea it rests upon two facts.

In the first place, that the

place that
prices of goode are not stable, and in the second

the value of the gold upon which our currency and the money
Economic
of the entire world rest is likewise not constant.
entirely impossible to create a
history proves that it is
stability of prices since the prices of goods are dependent
other factors.
upon innumerable factors of production and

Undoubtedly an exact calculation and observation of price

movements is necessary for all measures of currency policy,
but to make a price index

or a combination of several indices

just as much
the basis of a currency itself would be a mistake
in the Rhine
as if'ir tried to measure the depth of the water

by a floating peg.

ee need as a currency basis a measure as stable as

2.

posEible, such as the metre for the measuring of distance,
and tha gramme for the measuring of weight.

Thrauebout the

centuries, in spite of its own fluctuations in value which
gold has
take place only within moderate limits and slowly,
provcn to be such a measure.

Iurthermore, Germany is

today more than ever a country dependent upon the international

economic system, bri cannot afford to experiment on a peculiar
derreacy, but must adjust herself to the currency principles

of the countries ruline tha world market, above all, America
tld Ln7land.



- 2

3.

To all those who today speak too liehtly the word

41

"inflation", which only a fee years aro teas

carcely known

to the public, I ben to pcint out the fact that the bank note

circulation of the Reichsbank may in theory be reduced to
lG narks, but that the value of the Reichsmark notes in
relation to the notes of foreign gold currencies may be

changed in important respects onle by e violation of the
bank law, which the present administration of the 7eichsbank
as well as any German Government wouli never permit.

The

tasks of German currency policy include. therefore, not only
a formal maintenance of eold value of the T7,eirhsbank notes,

but go far beyond thisoled are directed towards a sufficient
supple of the German economic life with such full value
Reichsbank currency.

Therefore the Reichsbank law is

the basis of German currency only in a formal respect.

The

real basis of the German currency is the German economic system.
If German economy does not of its own strength suprly the bases

for a sufficient note circulation, the notes will indeed remain
stable but owing to the lack of a sufficient quantity will be
of no use for German economy.
4.

The necessity of maintaining at their gold value the

quantities of Reichsbank notes in clirculation at a glven time

prevents the 7eichsbank from meeting the far-reaching desires
of industry for the opening of the !ieichsbank as a source of

credit in greater degree than hitherto.

A policy of a

restriction of credit is therefore indispensable for the
Reichsbank.

Moreover, this policy is nothing new.

It was

also applied regularly in time of peace although by other means.
In addition to the question of the solvency of the applicant
for credit, which naturally plays its role today unchanged,
the Reichsbank in time of peace made use aesinst too large

requests for credits of the means of defence in increasing. the
discount rate.




Theoretically speaking, thiE same means could

4e made effective today.

However, in view of the fact that

the capital requirerents of industry as a result of losses
throe a1'.

the war ard inflation are so extraordinarily.

r'reat,

and are, furthermore, not as in time of peace temporary but
continuous, the Tleichsbank has added to the means of defence

of the fixing of the discount rate the further instrument of

defence in the en-called restriction of credit.

This restriction

is not applied to the individual customer but it is a self

restriction, that is, a mathematical licit which the eeichsbank
pieces upon its own branches.
5.

series of objections, not unjustified in themselves,

is brought forward arainst this policy of restriction.

These

objections are that such a policy of restriction amounts to a
certain arbitrariness in so far as the enterprises involved in
the Reichsbunk disccunt trshsuctions receive preferential treat-

ment as compared vAth the enterprises not participating.

It

is objected, furthermore, that an artificial holdinm down of the

discount rate as is made possible by the policy of restriction
prevents savin7s activity and the formation of capital, and

finally, we are told that a policy of restriction causes the
banks to keep lancer liquid reserves than are necessary during
an automatic functioning of the discount policy.

In reply to

these objections it may be said that the whole commercial

administration of the eeichsbank is based upon the desire to
erant applicant:: rcr credit as just as possible a treatment.

It is to be emphasised that in the whole period of the application
of the eelic7 of tee restrietion of credit really serious complaints
in this re Bard have never reached the e.eichsbank.

3o far as the

promotion of savines is concerned I believe that a Reichsbank
discount rate of gie is entirely sufficient to promote savings,

and I do not believe that under the present conditions of German
industry the formation of capital would be hastened in any way

if instead a Reichsbank discount rate of l2e or l5e, existed.




S
Finally, so far as concerns the necessity for the banks to
41

maintain large liquid reserves, the statistics of the two
months' balance sheets show that the liquidity of banks is
today not at all greater than in times of peace, .but remains

a few per cent below liquidity of the last year of peace.
6.

Cn the other band the question of the restrictions

of credit policy offers the great economic advantage that it

makes possible the relative holdin down or the Reichsbank
discount rate am thus is the stron!est means to force down
the interest rates 17

the 3erman economic system.

If we

should abandon the instrument of credit restriction the aeichs-

bank discount rate would have to attain much higher figures in
view of the enormous capital requirements of German industry.
Perhaps the more speculative part of industry would be able to
bear this higher rate anal also numerous enterprises which are

not accustomed to maldn7 cloy calculations, but sound and closely
calculated industry woull have to suffer most from such a measure.
7.

In spite Of

the reserve which the Reichsbank must practice

in the granting of credit, the total amount of the credits Riven
to industry by the 7.eichsbank directly and partly

currency institutions is not inconsiderable.

y othe

At1,7iddle June

the credits at the 1?eichsbank amounteel to al:out 1,400 millions,
at the ligntenbaclk to 756 elllions (aside from. the Rentenbank

creditse0, the Reich)

,

at Private rote banks to about 22C millions,

and at the Golddiskontbank to about 100 millions.

This makes a

total credit granted of about 2.5 milliards which is given purely
on tne basis of the currency.

Thus the maximum of the endurable

at present has been reached. unless industry forms a better basis
for the amount of the note circulation.
8.

At this time conditions in industry do not, however, indicate

that any considerable improvement will take place;

covered by too much inflationAust.


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

we are still

In particular, the whole

of distribution of our industry is still inflated in

- 5 -

,`the most enormous proportions.

Furthermore, the attempt is

oft9n made to cover the lack of capital power by transformation

mte

Orexpansion of the

ternal fcbrm of the enterprise.

In

Berlin, for example, the number of the firms included in the
trade registry has increased from 31,600 at the end of 1913
to over 61,000 in 1924.

The increase in the number of stock

Companies is estimated at easily four times the pre-war number.

The address book of directors and members of supervisory boards
indicates an increase in such positions of 600 to 70% above
peace time conditions.

The number of banks and banking firms

in Germany is still far beyond twice the peace figures.

The

number of Stock Exchange companies is still disproportionately
great.

These are all factors which point to a positively

terrifying unproductivity of our economic apparatus.
9.

air large part of the superfluous enterprises has its

final effect in the form of links in trade, and thus in unnecessary
increases in price.

It is very regrettable that great increases

in the price of almost all raw materials took place as a result
of the war, but this difference in price is far below the difference between retail prices and manufacturing prices.

Zven in

the cases of most necessary food stuffs this difference is today
often twice and three times as great as in peace time.

In the

cases of other articles of daily use, textiles for example, the

difference between the retail price and the price of production
is still much greater.
10.

The figures of the bankruptcy statistics are lower than in

peace time, but it must be remembered that the statistics do not
include those bankruptcies which are never actually openr owing
to the small sums involved.

This number may, nevertheless, be

today considerably higher than in peace time.
11.

b severe burdening of the apparatus of production is also

represented by the unemployment which the economic system must




41

still carry.

In Enrrland it is often pointed out that our

unemployment figure amounts to only a few hundred thousands.
German economic system

Actually, the charge upor.

through

unemployment is much greater because the whole cost of reduction
of employees and of pensions must also he borne by the economic
system.

The exact figures in this respect are at hand only

for portions of the system.

In the case of the railways, for

example, in 1913 an expenditure of 100 marks for wages contrasted with an expenditure of 17 marks for pensions and allowances, whereas in 1924

37 reichsmarks were necessary to meet

in 1925 there Pere 339,000 active employees

these charges;

of the railway Company as compared with 230,000 employees
receivincr pensions, including widows and orphans; that is,

for every three active officials there were two persons
entitled to allowances but not employed.
12.

Among the phenomena of inflation which have not yet been

eliminated is the disrespect for the pfennig.
calculates is pfennigs.

No one today

In every case round numbers are used

and naturally in the upward direction.
13.

Unfortunately the cartels for the most part occupy no

satisfactory position from the point of view of national
economics in the price policy directed -401~6e-ern upward tomesmeT.
The number, and especially the number of price cartels, has

grown enormously as compared with peace time.

German

industry can be aided only by increase of productive capacity
one must regard with skepticism in a very large degree the
policy of cartels.

The price cartels attribute in a large

degree to the circumstance that the overstaffing of our distributive apparatus, complained of by me, is not more quickly
eliminated.

l',ore than ever the German policy of production

must be directed towards lowerine prices and thereby attaining
enlarged sales.



The reduction of the costs of production, and

thus of prices is the only really effective means to maintain
our competitive capacity.
4w

14.

But ahatever we may do in our internal economic pdlicy

to bring about greater production all will remain in vain unless
the fundamental cause of all the evil brought about by the
constant disquiet of for,:ign policy is eliminated.

It now

proves that the great laws Of judicial and economic reason cannot
be broken, even by the victorious powers, with impunity.

Our

situation in Germany is very bad to be sure, but conditions are

not good in almost the entire remaining economic world.

The

confidence indispensably necessary for the revival of the
national exchange of goods is constantly weakened by the policy
of the :Entente.

The inner insincerity Um: thus the unworthiness

of confidence can no longer be concealed in a policy which has
disarmed Germany but is itself bristlinfr with arms, which sets

up the ritit of self determination of the nations but would like
to prevent for ever the union of Austria and Derrany, which

declares plebiscites decisive for the ownership of an area but
has assigned Upper Silesia to a foreign power in spite of such
plebiscite, which creates the League of Nations as the protector
of a policy Of justice towards all,' and through this same League

of Nations deprives the Saar district of its rights, which delays
the payment of its own debts but gives others credits for military
purposes, which demands the right of private property for itself

but disrespects it for the enemy, w:Ach emphasizes the supremacy
of the white race, but misuses the coloured race to fight and
suppress members of the white race, which demands reparation
payments but would like to fight an increase'in the production
and exoort of the debtor, and which declares th
German people
incapable of colonial activity but is itself
constantly involved
in colonial wars.

4!.11 these are internal untruthfulnesses

which violate the natural laws of _ievelopment of humanity.

3o

long as the political plindness which leads to such inner
untruthfulne2ses is !lot .elim-Lnated, so long will the
economic




8

k.
restoration of Europe be delayed.
15.

of

It is a further

misfortune

that the shortsightedness

our opponents has caused us to take highly unwelcome measures

if we do not want to be ground between the foreign millstones.

Only from this standpoint are our present proposals with regard
to customs policy comprehensible.

Never was the free inter-

national exchange of goods so necessary in the world as today.
Instead of this we see how every European State, even the smallest
of those newly created, withdraws behind protective tariff walls,
and chases after the phantom of a separate national industry.

Every .Mate would like to sell as much as possible to the others
but buy nothing from them, whereas only the combination' of really

great markets will assure a rational economic development.
16.

It is no yonder that in such an atmosphere voices are

raised which already today deny the possibility of a transfer
of the payments under the Dawes\ Plan.

These predictions
of
kV/

regard" the Transfer Problem, it seems to me,r premature assettions

to the contrary.

But we see here Also again that the formal

provisions of the Dawt* Plan have been understood everywhere, but
that the great economic and human fundamental ideas of the Dawes

Report threaten to pass over the blinded world without a trace.
The Dawes* Report is a serious and well considered attempt to
remind the political rulers of the world of their economic res-

ponsibility upon which the material and sniritual welfare of the
nations depends.

(drily if thd sense of this responsibility prevails

in authoritative quarters shall we save Europe from Bolshevism
and chaos.

ihe attempt to prove the figures of the Dawohl Plan

to be impossible may possibly result in a weakening of the sense
of responsibility.

e shall theeefore do well to remind ourselves

that the Dawes' Report clearly emphasizes that the estimates
cunt fined therein are based onnassumption that Germany's
economic
activity will be hampered
and restricted by no other
foreign




organisation than the control organs contemplated in the 'report

and that the Plan is founded on the condition precedent that
all measure:

lich hamper this activity shall be made retroactive

Or shall be sufficiently modified as soon as Germany has begun
telkarry out the proposed Flan.

I believe that a public state-

ment is necessary and useful, that also in this case Germany has
fulfilled and her opponents have not fulfilled

,

and that this

declaration is necessary to make clear to the world the responsibity for the consequences.
17.

That Germany and her economic leaders have not lost their

extremely taut nerves in such a difficult situation, that on the
other hand they have always been conscious of the great responsibity devolving upon them, is a fact which will be accounted to our

credit by all the seriously thinking merchants of the world.
I note with thanks and satisfaction that especially the English and

American banking world have maintained their confidence in us in
spite of the difficult situation in which we are.

hen the

Stinnes case became known offers were received from abroad to
aelp by the supply of foreign credits.

;,e have expressed our

tha.ks for this, but added that we should settle such matters

ourselves and had sufficient strength to do so.

We wished thus

to thow our foreign creditors that there is no c'reater security
for the creditor than a sense of responsibility on the part of the
debtor.
18.

In the difficult struggle ahich we are carryina on for our

national existence and which we can and will conduct only with
intellectual and economic weapons, the Reichsbank policy covers

only a small section, but within this field it will always work
towards the end that responsible circles abroad may not deny their
respect and aid to a great nation which was perhaps once; led astray,


http://fraser.stlouisfed.org/ has
but which
Federal Reserve Bank of St. Louis

always been honest and competent.

Ter "-)rii1i6ent

2ertin SW111, m,

Sco

21.7.25.

etch banf -Tirehforiunm

(761k1
Dear Er. Strong

!

I gladly received your very kind letter of the 20
and hope you -.All have a nice holiday in Spa.

As promised to you I beg to hand you enclosed a translation
of tho items of the Reichsbanki weekly statement. Furthermore I

have ordered, that a copy of each weekly statement will be sent
to you as lone; as ve can reach you during your european stay.

On Monday I had a very nice and extended talk with Er.Hautaii

who seems to be auite willing to let his colleitgues in saris and
Rome all alone andtoin our policy. However he thinks that ho is
depending upon

a settlement of the german mark nuestion, about

which Mr, Norman

be able to give you some details. He has re-

duced his portfolio constr-.1t1:-, as lie tells me,

but his total

circulation is still far too high, as it is about 50 Dollars per
head. But the chief thin;:

is,

4

that he is willing to stabilise

and in consecuenco to reduce this amount, so that a conversation
with him and Mr. Normar thdbyou will certainly have,may be very
useful.

Mrs. Schacht and I have been very glad that you keep a kind
remembrance of your. Berlin stay and we hope that it has not been

the last time, that we have seen you here. Please Live our best
regards to Mrs. Humphrey and to fir. Norman and believe me
dear Mr. Strong,

Yours very truly
11±.Benjamin STRONG
Governor of the Federal Reserve Bank
of Nov York,
_S_p_a__




Brussels, Belgium
7/27/25.
IVEEXLY STATEMENT OF TNE REICHSBANK

July 7, 1925
ASSETS:

1.
2.

Reichabank shares, not yet issued
Gold (bullion) as well Pe German and foreign
coin, one pound (the pound equals 1/2 Kilo)
fine calculated 1392FM, divided es follows:
a. Gold at Home

RM 974,947,000

b. Gold (no t pledged) al
foreign central banks
RM
90,654,000
3. ForeiEn valuta (DiAsen) used es cover
4.
5.
6

7.
8.
9.

Rif 177,212,000

Portfolio of bills and cheques
German ;,.)in

NOt'3 of other German Banks of issue
(not including the Rentenbs.ak)

Loans against securities
Soeuri ties
Sundry Assets

1,065,601,000
355,200,000
1,579,680,000
67,930,000
18,936,000
15,611,000
P0.I. 344,000

685,708,000

LIABILITIFS:
1.

Cspi Lai

a.

2.

Issued and paid up

... RM 122,789,000

b. Not yet issued
Reserve funds

177,212,000

regular reserve 'Hda, provided in the law
special reserve or future dividend payments
sundry r-serve funds
3. Outstanding Circulation
4. Other Liabilities on cell
5. Liabilities on term
a.
b.
c.

F.

7.

Debts toward the Rentenbsnk

Sundry Liabilities

Bills rediscounted

2,403,000

33,404,000
127,000,000
2,442,639,000
573,994,000
- -2,142,000
661,650,000

RM 543,406,0a0

(Translated by the Reichabank in Berlin, July 10, 1925, and sent to B.S. at Spa)




Memorandum

July 29,1925.

.

DISCOUNT &TD CURR7NCY POLICY 077 'MR REICTTTIANT.

The morning newspapers of July 29,1925, publish the
account of an address made yesterday by Dr.Schacht

following

to the Central Committee of the Reichsbank:"Since the last session of the Committee on March 23,

1925, the still depressed situation of German industry has
been reflected plainly in the money And capital market.

The

great demand for long- and short-term capital has not
diminished.

It proves now that the reduction of the

Reichsbank discount rate from 10 per cent to 9 per cent, which
was made in February lest, occurred at the proper moment for an
interest concession to German industry; in fact,the curve of
interest rates from the beginning of the year to the end of
April shovm a declining tendency but from that time it begins
once more to rise slightly.
"In the past quarter,

the Reichsbank has regarded it

as its task to aid German industry so far as is reconcilable
with the protection of the currency.

We continue to hold

the theory that the maintenance of the German currency, which has
been completely successful, must take precedence over all other
demands.

In this connection. if we do not want to create a

situation of complete disorder on the interest market, we
cannot renounce also for the future the process of rationing
credit.

We note with satisfaction that the original objections

to this polic7- have been almost entirely silenced and that all

important industrialist circles have expressed their approval


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

On the other hand, in view of the fact that

ideas have recently been expressed, based exactly

n the fact

of the rationing, wh ch desire a further reduction of the
Reichsbank discount rate, we should like today to take occasion
into

to explain to the Central Committee in a special report the
reasons why such a reduction cannot be considered at the present
time if the Reichsbank is to maintain the influence on the

fixing of interest rates on the open market, which it

has had

so much difficulty in obtaininp,..

"It is no secret that in the p-:st few months

the demand

for foreign exchange has been very stron7 on the German market.
The reason for this outflow is partially to be found in our trade
balance.

Without attempting to discuss the reasons exhaustively,

I should like only to point out that a considerable portion of
industry dos not devote to export that attention whic;- is to be
desired in the interest of our balance of payments.

On the other

hand, the purchasing power of the domestic market is artificially
increased by an administration of public monies, which is often
mistaken, and thus gives the appearance of a stimulation of
business activity which, in vieN

if the tax charges upon

industry, must necessarily reach a speedy end.

The permanent

strengthening of domestic purchasing power which is so neces -'ary

can be obtained only through the cheapening of production
especially through an increasing of agricultural production.
"fi further cau-e of the demand for foreign exchange wasth
refusals t' renew short-term foreign credits,

owing to several

reasons, partly political and partly economic in nature.

The

Reichsbank has pointed out repeatedly to German industry the
objections to such short-term foreign credits.




The careful

colic: of the Reichsbank is to be thanked that difficulties
se_ have not arisen in repayment.

Industry will, ho-.;ever, have t)

keep in view the possibility that even in the future, under
certain circumstcncel, the Reichsbank will not give up forei=m
exchange against credits but only against payment in marks.
"Finally, it must not be forgotten that the reparation
obligations also resulted in a serious burdeninl. of German

industry in foreign exchange.

The payments for tYe interest

service on the Dawes Loan, for the Recovery Act and for those
costs of administration and occupation which are transformed
their receivers into foreign exchange, have thus far
certainly exceeded the amount of 25m million Reichsmalts in foreign exchange.

Furthermore, the deliveries in kind naturally

also burden our balance of payments directly throw --h the imports

of raw materials necessary for these deliveries in kind,

whereas, on the other hand, our trade balance as a whole is
made considerably more unfavourable by the crratis del:veries
'n kind.

"Nevertheless, the Reichsbank has been in a position
to increase its holdings of gold now to over 1100
We intend to continue still

million

Reichsmarks.

further

to increase our gold supply.

We regard the

partial foreign exchange cover permitted by the Bank Law

merely as an emergency measure and believe that

regardless

of the small loss of interlst, cover in coined and uncoined
gold is far preferable for a bank of issue. Although,

therefore, we have hitherto shewn regularly one-fourth
of our total cover in foreign exchange

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fourths in
Federal Reserve Bank of St. Louis

a d only three-

gold, we shall in future endeavour, by

transforming foreign exchange cover into fold, to modify
the ratio in favour of gold.

"It is fortunate that the Reichsbank has been
in a position to meet all the demands for foreign
exchange made or it, without having to undertake a
reduction of the credits hitherto granted by it. Neither,
as things are at tl-o moment, is there reason for anxie'Aes
as to the future.

On the other hand, no incr,ase in

the amount of credits granted by the Reichsbank can be
counted upon at this time.

'Wherever concessions to industry on the part of
the Reichsbank seem possible, we are endeavouring to
make them.

Thus,recently, in order to promote payment

transactions without cash and to simplif:- our business

with clients' bills, we have undertaker a considerable
reduction of the fees for such bill business.

We hope

that the Banks and other organisations concerned will do
ever thing on their part which may lead to simplifyin-,. our

payment transactions and to reducing expenses and costs."
The Vice-President

of the L-eichsbank Directorate,

Kauffmann, then explained in detail the reasons against
a lowering of the discount rate of the Reichsbank.

The

Central Committee, almost all of the members of which were
preseilt, approved unanimously the standpoint of the Reichsbank
Directorate and considered a further redi2ction of the

discount rate impossible in view of the present situation
on the money market.




2RA7SLA:HOTT.

Extract from "7rankfurter -eitung"

1st Augu

The T:eserve 7olicy of the :ieichsbank

Gold instead of Davison

On Tuesday after an interval of several months a meeting
of the Central Board was called.

At this meeting the Reichsbank

''resident explained fully why a reduction in the Bank Rate was

not being considered at the present moment.

The members wore

surprised to hear such an explanation at a time When, in view of
the strained situation of the money market, the possibility
of a reduction in the rate could hardly be discussed in serious
economic circles.

The unanimous approval which the Board has

given to the point of view of the Reichsbank management will
have strengthened the latter in the view that there is no room
for non-economical considerations in decisions regarding the
discount policy.
%.t the same meeting another announcement in the

programme was made which in a certain sense shows a turning point
in the gold policy of the Roichsbank.

The Bank management having

hitherto been out to stren-then as much as possible the gold
and devisen position of the Institution, they now surprise us
with the announcement that they merely considered as a measure
of exnediency the partial devisen cover allowed to the
:eichsbank by the Bank Law and far preferred cover in minted
and unminted gold for the investment of their reserves.

It

is known that the Bank Law binds the Bank always to hold a
cc

-

o77 at least 4.0 per cent. in gold or c7sorisen a-:ainst their

notes in circulation.
consist of gold.

Of this at least three quarters must

Hitherto the Reichsbank has arranged in

accordance with the authority granted to them that a quarter
of the total cover should only consist of devisen and only
three quarters should consist of gold.

In future by the

conversion of the devisen forming cover into gold they will




endeavour to alter the proportion in favour of the gold.

They

renounce voluntarily the .oseibility loft (r,.en to them in the

Bank Law of Aacing 25 oer cont.of the total °over in interestbearing devisee.

The opinion that cover in actual told le preferable
for a note-iesuing Bank le not uncontested.

The legal

reEulation re:arding minimum cover is on the whole only a
conce tion of currency policy which is out of date.
reserve which is prohibited from
its ell.ef meanin.

bein,

.:very

touched has forfeited

Always the devieen conceasion stands in

contrat to the costly hoardin of sold an the rational form
of thie kind of reserve policy.

i)evisen are - excepting for

wartime conoiderations which need not be taken into account superior to gold as an invest:3ent for the available reservee

of a Central 3;.: because the stocks of gold in order to become available for balanoing temporary fluctuations in the pegoent boaanas - their particular oureose

muet first in all

oases astAn be converted into the currency concerned.

in the addition] advantage of intere.A.

Ale Le

For irioveriehed

Germany this is certainly not without imorteace.
he Reichebankpmanagement moots each objections by
pointing out that to-day only five currencies zae) conoldered
for investment purposes.

IT meAns are oo limited a utL.to of

undesirable dependency might (molly axle°.

Currency looses

must be absolutely avoided by the Central Bank.

The German

eeichsbantie etocka of gold are suitable for use in the exchang
mo.rket because, one hears, the object in view for a lone time
hue been to erocure chiefly minted ;-old.

the lose of interest cannot be oveLestimated.

irre)rtance of
:ku the lArmik Law

only :iermita of a quarter of the cover being head in devieon,
three quarters must in any case reAlin non-interest bcv:rine.



3

There are surely other points of view which have
influenced the T,eichsbank to decide to give up the proportion

of 3 to 1 of covering gold and covering devisee.

The

',,olution of the Rreat problem, of the threatened redistribution

over the orld of the accumulated American gold reserves, will
depend on what gold polio: the german 'eichsbank pursues as
the chief of the rehybilitute
continent.

great note-issuing banks on the

The conduct of the 7eichsbank,

.hich of course

only has scope ithin the narro.: scope of the Dawes Laws, will
stand as an exti-ole of the practice for Central 'Ranks to

follow when their currencies are similarly stabilised.

Only

when America succeeds in effecting the return of the gold to
Europe will the duration of the danger of an international
-ePreciation in the value of gold be checked.

There is no

better means of ensuring the maintenance of the value of gold
than propaganda for actual gold cover.

According; as the

-eichsmark is fir-ly pegged to the gold currency the lerman
7eichsbank feel themselves, as guardian of the value of
Thrman money, responsible for turning the gold currency to
goo- account.

They could not then logically refuse their

active cooperation in the distrib-ition of the American gold.

If such a polio

brings with it the advantage of a

closer rel &tionship of confidence between the man: gelent of

the Anglo-American currency banks and the reichsbank, if the
support which the lerman central bank gives in this manner
to the -'eaeral reserve system also enables them (the Bank)

to be considered to a certain extent as being in
trust of common interests on the Europe n continent.

those who are not convinced like our -eichsbank of the
superiority of actual gold cover but are of the opinion that




-4devisen deserve the preference as an investment for reserves
will be able to reject such principles.

For Germany in

her )resent position more depends on the firm establi:hent
of her international credit relations than on the materiali2ation of a reasonable currency theory.

The conjecture is not amiss that a thorough discussion
of all these questions took place with the Governors of the

Bank of England and the Federal Reserve Bank on the occasion
of their recent visit to the Reichsbank ?resident in Berlin.

Mille the anxiety, which the decentralisation of the
stocks of gold has for a long time caused the Americans, is
not under-estimated, it is to be emlhasised that no acute
reason for definite measures is present.

Therefore, as we

already stated in No.311, only an agreement as to principles
was established between the three Bank chiefs, business agreements on the contrary not being made.

For el:ample, re-

discounting negotiations between the Golddiskontbank and the
American Banks were not brought up at the conference.

These

were conducted independently tiald quite unceeLioniously with

various Banks after the Institute had increased the loans
granted by it to £6.5 millions and had thus exhausted its own
means.

Just as these negotiations have nothing to do with

the visit, no conditions were made regarding the purchase of
gold.

The heichsbank has, as before, a free hand, and it is

not to be assumed that they will shortly enter the geld
market in great style as buyer.
the

That a readiness exists on

>art of the Reichsbank to hoard gold does not depend

on a promise which may vanish to-day or to-morrow but on the
assurance based on principle of the money-producing countries.
The American currency policy only fits in with the granting of
credit to :::urope when a movement of the yellow metal is

thereby occasioned:

he stocks of devisen of the -eichsbank as we know
after the wa,, in which they have been chained during the last f




1

5

months, are not

o rlentiful as at the beginnin-, of the year.

The gold

The total reserves shown have considerably increased.

reserve rose from the end of 1924 to the :3rd July 1925 by 343
millions to 1,103 millions and the stock of cover devisen by
about 115 millions to 7"367 millions.

458 millions in the cover shown ho,ever there is a greater
decrease in the stock of free devisen.
connection are not available.

In

of the devisen market the Reichsbank shuns the disclosure of
their special reserves.

Consequently one has to dra!:

circumstantial conclusions from the movements to which the
account 'ether Assets" is subject after deduction of the 7-enter-

banK-notes entered therein.

Exclusive of '-,entenban!-_-notes, it

still onl: came to 339 million -7. on the 23rd July.

An

indication of the extent of the free devisen stocks of the
7eichsbank is not provided by this figure. for according to
the not inconsiderable credit- entered in the devisen account
during the past year the position of the Reichsbank is stron'er
than appears from the balance sheet.
'.-hould the influx of foreign credits be shortly

renewed, should in particular the Fenten bank loan be satisfactor:,

in its first instalments, the proceeds of ":hich will

hsrdly he directed et sll to the financing of foreign imports
but similarly to the 800 millions Dawes Loan :ill go entirely
to the 72eichsbank and %e exchanged by them for ^-er

an increase in the reserves 7:ould result.

In vie.,

n ',onev

of the

contraction of the circslation of 7entenbank notes .;hich is to

be expected in the late Autumn, such an increase
not be undesirable.




ould perhaos

lip

Ter qt?recribent

-13ertin SW 111, ban

bes

10.9.25.

"Ilteichsbanit -Tireitforinins
ACYNOWLEIXIED
SEP

4 1925

fl

Dear Lr. Governor

!

d'
I boL. 'o send you enclosed copy of my latter, I sent

AuLust 20th to :Ir. Paul 7;arburg, uhichIthink, after our
conversation, will find your interest.
2elievo no,
dear

Govornor,

Yours very truly

BonjaminSTRONG
Governor of the Federal Ilesorve Bank




Uo- York

Ter P-grafibenf

"A4rfin SW 111, ben

21.9.25.

bes

lieicitobank

-Tirektoriums

Dear Kr.Strong,

enclosed I beg to hand you a list of acquaintances
on your side for your lists. I keep strictly to our arrangement
that I do not accept any invitations unless they are
you

.

To-day Fr. Herring, who is as I understand

40-ea

by

your commercial

Attach6 in Berlin, asked me whether I should like to accept an invitation of the American Bankers ,scociation and I asked him to
apply to you.

I am sailin, with Mrs. Schacht

,

my daughter and Lr. -;leismann

as Secretary October 9th by the i)eutschland of the lianburg-AmerikaLino and hope to arrive in the course of the 19th.
Believe me,
dear tar. Strong,

'Tours very sincerely

Benjamin STRONG, Esq.
Governor of the Federal floserve Bank of Yew York




New York




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14 " Tv 10,1(0,s"

if2.1%..tit440 ti3101,41.,

AV,..'4.ryre

t-eadc.c.e/
There h ye

rious rumors afloat

to this country to the effect that I

ction,, of the Dawes plan, or

I wish to say egrin, as I
without foundation.

I bed

concerain, the

purpee of my visit,

came to exranre credits or to euggest

to negotiate some

kind

of world

modifi-

financial coup,. et.

e, id on my errival, tht thee rants

solutely

nothing of the sort in mind before costing here, nor has

anything of that nt,tura. developed

.'it.tring

fly visit.

I hove bed no esoret motives

whatever in coming hare end the atetement which I made upon landing here w. a a
frank -nd complete stetorrent of tiff purpoaes.

As far as the Dewse plen is concerned, I hi, ye only one comment to make

and that is en expression of appreciation of the Kork which is being none in connection with the Dawes plan by the
conk:et.

These gentleman

Jv:ricen

repreeentetives with whoa I come in

A'e working in perfect harmony with

cials and with the Peichetank.

We

our govt.rnatt,nt offi-

see frequently Mr. Gilbert and Mr. Shepard

Morgan, his economic ,dvieer, Mr. '..terrett of the Transfer Committee, and Mr.

McGarrah, who is a member of the toard of the Reichsbank, and we hrve come to feel
the highest respect

esteem

for

them.

tactfully and so wisely that we hi.ve come

They he,,ye conducted their business so
to look

upon tl_ent

friends who k re

helping us in working out some -f our difficult problems.
Concerning the

object

of my visit,

let me repeat what

I veld in a pre-

vioue statement thct the purpoef. is, first, to pay my ree?ects to the Gov,.rnor of
the Federal Fieservc Balk of Now York with atom .f.e h: ve many important bueiness

relations. I have alto been to Wilshington to pey my respects to my
to membsrs of the
Kellogg.




Federal

ReeervF )3otrd, end to Socretar,- Mellon an

ambassador,

Secrethry

-2-

di

becond, the visit co this country hes given me en opportunity to meet

bankers here many of lithos I bees met before is Gernany, and to exclienge with Vlore

views regarding the sorle credit a;tuttion, giving them information ebout German
conditions and securing from them informetion about conditions here.

We are,

or course, iartieularly interested in conditione fn the Aserictn money market
Lecause financiers and the invewting public here nerve teken such e-ir intereet in

aiding in the reconstruction of Germany by slaking loran to us.

°tummy apprecietes

gret.tly the help given by this country.
Concerning general conditions in Uorneny, we have many difricult problems

to face end much herd work to do before *6 eh,.11 recover to our old time
but so now heve r working basis.

11,uid aeaets sere dissipated.

Our greatest need is working csoital,

rosperity,
Our

Fortunately t he currency to e now become reestablished

on a eound basis end we no longer fear tiny recurrence of infletior. The Peichebank

is in e strong position.
recognise ti,r t

ltri furnishes e basis for 6 wise use or crodit but re

cr dit must be discriminating t

ve recognize our responeibility

in that regard. It is For this reason t,iet the government end the heichebenk keys
dieoouraged borrowing by at, tee end aunicipelities for any but productive and

essential purposes.

An edviaory board hers been created by the government, with the

minieter of finance e6 chuirnant which




1

exercises rigid control over ap,licstione of stetea and sunicipelities to
float lone ':brood,

commerce in

trude.

.11,1 only epproves those lone enich promise to essiet

eue to the feet that mny municipalities own .roeuctive

plente, such as electric

lants, harbor improvements, etc., there ere m

municipal loess ehich may hews e genuinely productive iurpose.
therefore, hes to be dudged upon its own merits.

teleh CC60,

he such control is needed

fcr industrial and egriculturul lo. ns, Witch are favored because they ere of

direct rid in increasing the country's productivity.
Besides the lack of li ;uic funde there are otLer problems Germany
le facing.

One is the dif"iculty of finding nerkete for our producto.

ith

the erection of Imlay nes ',tete& in europe, customs burriers have been bet up
and it will t!lico boa. time either to find new merkets or to open up the old

markets by setiefectory commercial treaties.

e ere not nieceuraed by thee.

robleme.

Germen ineuetrial ;1-nts

Lre in good shape and scientific invention is increasing their efficiency.

Farming prospects ,re txonising with the Lid of N wider use of fertilisers Ald
etehinery than before the war.
still prevails es before the war.
lost our courage.

German industrial and commercial enterprise
Although as have lost money as have not

Our banks are handled along the old, sound financial lines

nd e believe perhape the greatest security chich those who ueal with Germany
hive is the continuence of complete resioneibility in meeting our commercial
engugemente.

I went to pepress my thenke for the hospitality which has been
extended to me eere and to say hoe sorry I aa th!..-t I have not been able to
ccept sort than a limited member or the many invitations ehich hove been so







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MANY THANKS FOR

KIND WISHES AND GIFT AND ONCE MORE FOR ALL

COURTESIES EA TENDED TO ME




SCHACT
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TELEGRAM
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8 6 N A IbtnA t.1
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15 NY RU 41 BLUE

HOBOKEN NJ NOV 14TH 1925
FEDER

TANK FOR GOVERNOR STRONG
33 LI

ALL YOUR COURTESIES EXTENDED TO

MANY THANKS ONCE MORE FOR
US

V

IF WE WOULD

HAVE KNOWN T3EFOKE WHAT YOU

DID WTH OUR MOTOR CAR

VIE WOULD NOT HAVE USED

IT SO FREUENTLY AND LARGELY
FRIENDS

SCHACHT FAMILY



EilTY ST NY

1 2PM

PLEASE REMEM.PER US TO ALL

TEN

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OP NEW YORK

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-18P0 MQ 118 BLUE

COMPANY

HN HOBOKEN NJ NOV 14

OV STRONG.

IN THE MOMENT OF LEAVING YOUR COUNTRY

I

WISH TO EXPRESS

Y FULL SATISFACTION WITH THE RESULTS OF MY STAY THE MANY

ONVERSATIONS

I

HAD WITH YOU WITH THE WASHINGTON AUTHORITIES

ND WITH A GREAT NUMBER OF LEADING FINANCIAL AND INDUSTRIAL

EM HAVE GIVEN ME THE FULL CONVICTION THAT THE AMERICAN PEOPLE

AS DECIDED TO HELP RECONSTRUCTING OLD EUROPE

IF THE EUROPEAN

EOPLE ARE WILLING TO COOPERATE IN FRIENDLY UNflERSTANDING EACH

THER AND PEACEFULLY DEVELOPING THEIR ECONOMIC AND INTELLECTUAL



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FORCES,

I

S I RCTNu.

HIGHLY APPRECIATE THE SHARE

TASK AND ADMIRE YOUR CLEARNESS OF THOUG

IN CARRYING THEM THROUGH YOU WILL ALWA
COOPERATE WITH YOU IN THE SAME SPIRIT.
HJALMAR SCHACHT
1 2(1)

W.T. 11.1 50M 1-25

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RE JAY
0/YORK

THANKS FOR KIND GIFT AND

E MORE FOR ALL

KINDNESS SHOWN TO US HOPE AU R




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Ter 2Pthrioent
qReici 41artil-

alerfin SWiii,

21.1.26.

irektorimm

Confidential

Benjamin S t r o n g, Esq.

Governor of the 4deral Reserve Bank

ew York
Dear Mr. Governor

!

It is very kind of you to trouble about a special
arrangement for our cables

andIappriciate very much getting

a special shuttle for the Hammond used already with Governor
Norman. I quite agree with you that only our secretaries have
to handle this method and all cables for you sent directly by

me shall be addressed: Strong

Reichsfed

hew York.

As soon as I have the shuttle inhand I shall let you
know by cable.




Believe me,

with kind regards

very truly Yours

er Trdri6ent

ert in SW 111, Son 6.5.26.

bez

-4eicriara

-Tirektorimm

Governor BenjaminStron g,
Hyde Park Hotel

London
Ny dear Mr. Strong
it was a groat disappointment for me that the
circumstances did not allow me to come to England these days.The
telegram, which Governor Norman sent me arrived just half an hour
:

before I had to go to the railway station.Nevertheless I am grate
ful that Li. Norman advised me not to come, as perhaps it would
would have been
have been difficult
important for me, as to-morrow I have to be in Darmstadt. I was so
glad foreseeing thapportunity of seeing you in London that I feel
very sad learning from your letter, that I may not see you before
July. I hope howev3r that you will find a full recovery for your
health on the Riviera and that the various european problems, which
are vaiting for your help, will develop until July so far that a

solution Mon can be reached. I shall stay in Berlin the whole summer
except a few weeks in July but if you can let :ne know in time, when
you expect to come to i3orlin, I can easily arrange to be here when
you come.
Please give my best regards to Mr. Norman, who was kind enough
to write me th© same day you did. I am waiting for some further
news of his part telling me when my visit to him will be convenient.




I remain,
dear

Strong,

very sincerely Yours

Ter

rii
'Perlin SW111,

bes

ben

11.6.26.

-1Reattf)-banit -Tireftforiunus

My dear Li.. Governor

!

I am much obliged
letter of June 5th. In order
shall be in Berlin, when you
my holidays already the 27th

for receiving your very kind
to make it absolutely sure that I
pass here, I have arranged to begin
of June. My address in Holland is

Hotel Rembrandt,Noordwijk aan Zee. If you will kindly
let me know a few days before when you expect to be in Berlin,
I shall certainly be here.
In the meanwhile I hope you will have a perfect rest so

that I shall have the pleasure to meet you in full health.
Believe me,
dear Lr. Strong,
Yours very sincerely

Governor ljenjamin 3trong
Hotel du Cap d'Antibes

Antibes



WW. T. 11. 1 50M 11-26

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12WUO 131

NL

NEVNORK NEVYORK JULY 13TH

GOVERNOR STRONG.

AT THE MOMENT OF LEAVING
YOU DEAR MR STRONG
FOR ME DURING
ORKING ON A

THIS COUNTRY

ISH TO

FOR ALL THE KINDNESS YOU

MY STAY STOP ALTHOUGH WE
SPECIAL PROGRAM

I

THAT OUR FRIENDLY CONVERSATICNS

ILJTUAL UNDERSTANDING ENLARGEMENT

'

THANK

HAVE EXTENDEE

WERE NOT

FEEL ABSOLUTELY

SURE

HAVE CONTRIBUTED A GREAT

DEAL TO THE FURTHER DEVELOPMENT OF



I

INTERNATIONAL PEACE
OF ViORLDS TRADE AND

WINE TRANSFER

4T. 11. 1 50114 11-26

TELEGRAM

DERAL RESERVE BANK
OF NEW YORK

11

COMMERCIAL WIRE

ATTEN11_

TRANSLATION COPY

GOVR STRONGi

(

REALIZE HOW LARGELY
FRIENDSHIP
THE GOOD

-

DECODED_
CHECKED_

COMPANY_

2ND SHEET)

ECONOMIC RECONSTRUCTION

THESE

INCOMING

DIV IS'

STOP MAY PEOPLE MORE

PERSONAL CONTACT KNOWLEDGE AND

ARE BOUND TO FOSTER SUCH
OF ALL

I

HOPE WE

ME TO ALL MY FRIENDS

FEDERAL RESERVE BANK SYSTEM

A DEVELOPMENT TO

SHALL TO CONTINUE ALONG

LINES ON WiANY OTHER OCCASIONS

PLEASE REMEMBER

AND MORE

TO COME STOP
WITHIN THE

AND BELIEVE ME TO REMAIN

WITH WARMEST PERSONAL REGARDS VERY SINCERELY YOURS.




DOCTOR HJALMAR SCHACHT.

9AM

M. DEN

REI CHS BANKPRASIDENT

/1-

DR. HJALMAR SCHACHT

07&&

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r

Ter 213thriSent
P?Bertin SW111, den

bes

e4 balt -Tirek forimm

29.7.26.

Dear Mr. Strong
I still have to thank you for your letter of the
15th and I beg to say that I shall be in Holland (Noordwijk
Hotel Rembrandt) from the 3rd of August in the morning. I shall
!

stay there for a week. I hope that you and Norman, whom I have
informedielljhe same end, will give me an opportunity to see
you there/.--trf course I am also ready to come to London from
Noordwijk, when-ever you prefer me to do so.
Believe me
dear Mr. Strong

Yours very sincerely

Governor Benjamin S t r o n g, Esq.

Hotel du Cap d'Antibes




Antibes
France.

7:Serti

SW111, ben

3.8.26.

Ter '-(ringiSenf
bes

qkeicf-t6cmh --/Areizforiu-nui

Dear Lir. Strong

Thanks so much for your letter of the 11th.
The Eupen and Lialmedy nuestion has become a general object

of the Belgian papers. As far as I can see all the rumours
come from Brussels. he -erman papers behave so far well
in that matter and show a great reservation. I do not pay
attention to all the various news about you or me or any other
friend, because they are all guessings and everybody really
concerned knows that they are guessings and do not touch
the real ground.
I absolutely agree with what you sayin your letter
about political affairs and I myself shall absolutely keep
out of the political side of the whole transaction.
I had a long talk with Gilbert about the whole matter,
whom you presumely will see in a fey days.
I hope you will enjoy your Evian stay very much,
should circumstances arrive I may come to see you there.
I remain,
dear 7221. Strong,

Yours 44

Benjamin S t r o n g, Esq.
Governor of the Federal 2,eserve Dank of

c/o Lessrs Morgan,Earjes & Company
14 Place Vendome




Paris

ew York




Ter2Praoen1

Der Tt-60ent
---)-3culin

2:eichc,balift -




SW111, MI

trek foridniti

Dear 1:x.Stront;

I think you micht be interested in havinL; a

.

report about tie events: of the last weeks on our money-market
and therefore I bob to enclose copy oC a let r vhich I have 3(
to-day to Nr.Norman.

I remain
dear

Strong;

You-:s very sincerely

,1

,

.!:onournLlo

ti/

:7ontnL.,uNorua

n,

Covarnor of tho 1.1un% of

.'i>

%.:

Loudon 1;

Covornor

;enr

::nciosod picas° find copy of our mi-chon;.:o of
and lot vzo thnnh yo6 for the confidence ,;:hich (1,:nin you
have shom no by your anm;or,

It ia not vGrr on37 to cot n e]oar picture of our ituntion by

zy:rrly follw:inz no

C=02 do not prom t.:1
yoLr roca. 7h:A crontc

.31;C:

1-.-;a1c.tod for no;,1th3

fivo nom .1:aid

unfturi'ltsly in
otTwit do corps, whic',
much noi:lo )1070 VI('

nortlls to tho ndvico

ovory bodr v:as cl,:r:wiT3odtbnt

situation
nootly lonctor.:1 foroija lonns n
for: or Doiaon flo..; in
no t
ta,on.




to

s.%44.1

"sr14'
Uti_O

v=ount
it.7-.odioi

al

:.:011/00. for finr.:10

o
sd bu t
f:LOC,

,

2,70CULf16

Lino, ns you
-3
ler' hard
contra, ovor tho zo-callca public funds,
croditc
to tho tours°.
courso
Al

'o.

-

to r:.3....co

t

o," tho 7cich-bhn!: vns nnlmdid but Exit or
zoz.oy. 1 lo:t total17 control o: tho n.e.ot,

)oreUlTo :en

t
down to almoct 1:0thirCO ro thcrororo v

t

1

a cood doal of foreiL,n short mono:' loft tho county!. :nfortunato.
ly tl!o fornor *Anis:tor

uod tho

!inanco for intornal nolitical roasons
7:eichs-lonn, in mv abnonco (I snont a short timo

in. :lor(Jnce) without civin:i any notice to ml in timo 'and
out com)ly-in- with .c;y Irish

,ohicb I toloraphod) to postpono

tho rootinj.; c-C the s;:ndicato until my imlodihto rcturn. ?ha loan

had not a bad succons but vas to bic for boinc totally placod.
loroby tho bond narl:ot 1.ocano disturbed for a lonz whilo rnd
spoculotin:7 in sharos as still mor fovourod.
2ome tino later short-tor m =nay flow in ricainfor vhich
thoro wan no neod in co:-,orco and trod° but which was olacod
noroly into credits on the stoch exchonco.
no continuous boom
in shares attractod oocially a comparatively onornouc amount
of w:nrican =nay, '.;&ich was partly given as liourco crodit and
partly invostod on joint account an tho hours°. As to tho ;ovison
nituation, this tic tLincsdevolopod not as toy did in
vAlon o:ports woro favourod by your coal ctriko, 'out o.oinc:, to the

groat delicioncy in our Lalanco of trade tho Dovicon did not
cono to tho
eichsbank but wore absorbod I'Ijo the inpo
by
cony Lmhinc of proCits on tho bourso contributed a groat deal
to to incroaco of imports, as can be'soonfrom the orticlos
importod for nero consunption. Go the tine was roachod that T.
had to chance my porpotuouc warnincs to the banhs into direct
action. I cot the banks togothor and told than that 1 considorod
tho businons thoy did not nl-: to be a dancorous one from tho
statidpoint of the mark oxchango, but that I also say a.croat
;:ancor in their loch of liquidity, as I could not conoi::.or thoir
t.11.V.W.0O2 on sharcs civen so frooly to be a liquid nosot. no I

inhinc busi-

lichod on the
vordin of
loft it to
aninc to con-

ing bolero




inotec

ou L,; conuonces. 2one anh
seci
bc,

trosjvins.

I

on the stock er:ohall:e, incimted before me that

should raise tho rate
&lotion in businosn.

113-:;

-05x:11z:bank

interost inntead of ashin;:. for a ro-

answer was that this was just wiint tho

watcd, :)ccause they thought that b' raising the rate,
ctill mom foroi;:nmonoy wolld cone in and woulk! finance thoir.

sloculatione. On the other hand the portfolio or the eichsbanh
had Imanwhilo increased
but not to such an extent, that I
could not moot all
regular doand of couuorco and trade.,"
,

7:von to-day after the colla-)se-the portfolio of th,:i
is only about 1:?(;0

7.:larhs and ir 1 cm not going to loose

=o2'° Dovicon I can oLsil:- toot another concidorablo increase

of tho portfolio. i0, I told thou that I imp not going to raino
rato boi'oro not thoir anount of business was reduced. Airthermore, I
you, Kr. Govoraor, to undorstand from all these
control of the Iy,blic .oas,
events, how important itfunds. and dtill learn from should got
is, that! Mr Charles
thin (3oh, that wc have not yet
Adis, who car :o to coo
reached an unCorstanding about the Colddiscountbank and that
Gilbert as m311 as ,delis aro blaming mo for taking public funds
into the Golddiscountbank by payik; intorost, uhich ti o 7eichcban
is not allowod to do. I want you to I:now that oven to-day soma

hundreds of millions of railway money are placed with the private
banks and T would lne you to toil mo ho7i I can mank:s the
currency and how T can control the market if hundreds rind hundreds of millions public money is left outside or the control.k
:::ow the Consor:uonces

:

a good deal of the short money is

Join- withdrawn and of course I am loosing Dovison. Tbo
has come down to 2.0:)0 million marks now of gold and :evisen,

-

i.hich of course is still satisfactory but which ma7 be further
reduced during the next 7/oohs. IC the %.-indoncy continuos, the

1.41uk shall certainly be obliged to raise the rate which will
beco:.:o more ofrectivo now after I have cut down (2,11alin;2,.

I

cannot toll you when the time for a raise will havo boon reached
bocauso that depends upon how many Davison I am going to loose
akid ho;, many bills will como to tho )ank.




I

-A-

coorso no D'a'rn 2oymonto contributo a Lood dool to ny loosinf]
7)cvioon and it
cloorl sbown that so far no transfor ic LoinL
modo out or borrowed foroigi. clonoy.
thinl: you wM oL;roo with

co that on no

run a countrylc curroncy cannot 1+13ed
on boovowin:_, Povioon m
certainly not on short foa.oiLn lonno.
u. :,oforo iotorin upon that, nostion, TAI:ich at all cvonto oP1
have to ix. solvod ono day, 1 think 1 Lava to do ovortin:.7 to
cut down spcculation, luxury conoumption and to induce pooplo to
be thrifty and ocononizin, which is a very difT'icult thin,: to
do in a country, wbicb has imnsoa such n frightful imflotion no

ro

havo.
I

oc;: in cl.oco touch with Cilhort and ho ic all7nEs iuforrod

about ovor:itbinc what i3 goin on bore and I think tic is clearly
awaro of tho situation and undorstando it.

Now Lhcro is one tochnical noint which I 'Mould liko to deal
with. V:c [Ain have 301;O goroign Lalancos on torsi with .rlorica.
2110 sold which lieo with yoo rand




arong

most Droboy.
he absorbod Yo

J

sh

and as I do not ::a n

moturc, 1 call moot
or',':.

II' you ?mow a

advico, as collin
rojIrding tho stow
rronch oporntiono h
naret. f-lontually I
a tologram after hov
I bopo that thoco
hopponin4Joro and i
Ali:;11 ratlor, whic
:)th. I think it Wou
the credit to the
'ancuo do 'ronco, b
nosoot to the uholo
anxioun. Purthormoro
i'olos towardo the .
theca lnst

ooks, t

\01

Ter ')raribertt
23ertirt SW1 11, den

bes

21.9.27.

Rieick-kanit-Tirehforium.,:,

Dear Mr.Strong:

I was very much pleased to learn from your letter
of August 31st about your health and about your European plans
for the winter. Needless to say that I shall have great pleasure
in meeting you, be it in Algeciras or whereever you are going to
ask me to come. Of course

Algeciras would suit me perfectly because

I know so little of Spain and it may give an opportunity to Ers.

Schacht and to myself to combine a few holidays with my visit to
you. I hope that Norman and Moreau will agree and that also Visserint
and Bachmann will come. So I am looking forward to further news
and in the meantime I remain,
dear Yr. Strong,
Yours very sincerely

Benjamin Strong,Esq.
Governor of the Pederal Tleserve Bank
New




York




Ter P-..ra Pent




Ter

3rafilSertt

REicHsBANKpRAsIDENT
0 DR. HJALMAR SCHACHT

BERLIN, DEN

2.7.928.

Dear Mr. Strong!

As I see from your very kind telegram that my
visit at Evian about the middle of this month will be convenient,

will you please give me the name of your hotel so that I may
telegraph the exact date of my arrival in time.

Hoping to find you well I remain, dear Mr.Strong,

Yours very sincerely

Benjamin S t r o n g

Esq.

Governor of the Federal Reserve Bank of New York,
c/o Morgan & Co.,




Place Vendome

Paris.

lir

REICHSB.A.NEPRASIDENT

DR. HJALMAR SCHACHT

BERLIN, DEN

6.7.1928.

Dear Mr. Strong!

Thanks for your telegram. I shall arrive at Evian
in the course of Thursday Morning and would be grateful, if you
would kindly reserve for me at your hotel (if convenient to you )
a bedroom with bath for two nights.
Thanking you in advance I remain, dear Mr.Strong,

Yours very sincerely

Benjamin S t r o n g, Esq.

vernor of the Federal Reserve Bank of New York,

Evian- les
Royal Hotel.




-

Bains

Ter '-'riiii6ertf

'A3erfirc SW111:

bes

ben

5.

Jun; 15)28.

tcfmbank - Tireilforiu$
i
nt
/I/ 5/04.
gn bet jamiworf iff

6ic

porNhenber Junmer erroanrchf

Lieber Herr Strong !
Die deutsche Ausgabe von

Dr. Burgess'

Ruch "Vie Reserve Bankrn and der Geldmarkt",
welche ich emit einem Geleitwort vrrsehen habe,

ist jetzt fertiggestellt and im Buchhandel er sehienen.

Ich erlaube mir, Ihnen ein Exemplar zu
ilberreichen, und bin mit den besten GrEgen
Ihr

sehr ergeener

TRANSLATION: (O.E.M.)
Dear Mr. Strong:

The German edition of Dr. Burgess' book "The Reserve
Banks and tle Money Market", which I have written a
preface for, has now been completed and has appeared
I am taking the liberty of sending
in the book Shops.
you a copy, end remain with beet regards --

An
X.4

Ilerrn Ernjamin
z.:7t.

S t

r o n g,

Evian/Schw eiz.




1
14.-4

ARCON !GRAM
reiix

RADIO

P

No. of Words
12
Service instructions
Number

Handed in at

Time handed in

SCHACHT

ubject to the conditions printed on the back hereof.

ENQUIRY RESPECTING THIS MARCONIGRA




12)49

2
Date Recd.
2

To

S S 1 NCEREST REGARDS

TO

SHIP

BERLIN

Date handed in

GOJERNOR STRONG .0.1_

SHORE

I C KA J

Time Roc'd.

1514

Ree'd from
K.A J

By

KSC

This article is protected by copyright and has been removed.
The citation for the original is:
“Dr. Schacht Dies; Nazis’ Economist.” The New York Times (New York, NY), June 5, 1970.




This article is protected by copyright and has been removed.
The citation for the original is:
“Schacht is Buried in Munich; 150 Attend Rites for Financier.” The New York Times (New York, NY), June
10, 1970.




FEDERAL RESERVE BANK

W6(.4.1-7.0014-1-24

OF NEW YORK

OFFICE CORRESPONDENCE
Mr. Jay
FROM _

OAT

May 25, 1925.

SUBJECT:

Governor btrong.

The attached draft letter to Dr. Schacht explains itself.
I would like to know how you feel about it.




742

992_

a
y 25, 1ki25.

My dear Dr. Schacht:
I

DI srritin3 you xell in r'.civeince of the development

plans for the Gunnar in the hope theit I may be able to cAsrry out my

seilins for Furops in July, and, 'it that time, bh.ve the

intention

as it id oossiblo

pleasure or n_.eting you.

the futures

J

1341. d :lope to spend .-.,bout, two lontnw

this time ad. el e lisic to )1e:rlin.

late July.

'this

r

to anticipate
and during

:likely be in ..:kueuet or

liky I nek you to a.lvise me if you ar: ;:llni-king to be

there th,:o and if it will be in evuy way corvenient for me to carry
out taie program.
Dependent sokecah t

;.12on

;:-,y friend 6w/et-nor Ao man' a i/lfind,

shall ex..;ect to ret.ra to thie country srly in ,:isptember, but may
be in Lurope :again in Octoocr.

!lave you considers° the possibility of mlkin6 a visit to this
country?

If co, I woulo certainly *dell to be here.

,fter

::

h re the opportunity

4erc you abla to

ret,:rn from .tbroad, 1 ouid hope to m.ke your presence
m4ike you acoueinteci

it

the members of our

°realization and to err:tags for you tc meet any of our ttaikero whom you

will be interested in hawing.
My home just now is at the Llotel k,.rguery, Sc. 270 Para Avenue,
(au I k111.91; rbcantly 6iveira up houdeke,...ping) but if you felt disposed to

kitty there with se I would Lid very




to la fxVii ;cu do so, and I think

br. 3c&i:cnt

you woula find it quiet and comfortktie.
,with asturtnotle or

reg,rda, bEdieve me

%fy Lruly yours,

br.

Setrat,

?rcaideat, %AGurt,.n.c,
III
Berlia,

Gerrny.




5.2b.25

a
June 15, 1525.

Dear Dr. Schacht:

I wish to acknowledge the receipt, and thank you for your
radiogr

of June 1B, 1925, reading as follows:

"As I am doubtful whether a letter $11 reach
you before your departure, I be6 to confirm by cable
your kind ietter of Nay 25th and beg to say that I
shall be very glad to meet you on this side. I am
in constant touch 4th our London friend. Beet
regards."
and to confirm the reply which I sent you by cable this morning, reading:
"Yours received.

Our Lc:I:lora friend has

probably advised you we shall be in Berlin before
Riddle of July. Many thanks."
I am looking forward with pleasure to our mbetinb shortly,
and with assurt...nces of my estecm, I beg to remain

Very truly yours,

Dr. Hjalmar Schacht,
President, Ratchsbank,
Berlin, Germany.




Brusoels, Belgium
July 27, 1925

My dear Dr. Schacht:
Your kind letter of the twenty -first reached me just

as we were leaving Spa, and I hasten to thank you for the statement
which you were good encugh to send me.

interest I shall watch the figures from now on, especially to learn
what success you enjoy in your difficult task.

As I telegraphed you, we decided to come up to Brussels
on Sunday in order to have a visit with Monsieur Fantain.

And from

here we o%all probably go to some seashore resort for another week.
After that our plans are net made.
Mrs. Humphrey and Mr. Norman join me in warmest regards
to ycu and Mrs. Schacht, and we all still remember with great

pleasure your many courtesies to us and the enjoyable time we had
in Berlin.

I beg to remein,
Sincerely yours,

Dr. ftalmar Schacht,
President, The Reichsbank,
Berlin, Germany.




Hotel du Palais,
Biarritz, France,
August 7, 1925.

My dear Dr. Eehacht:

As I premised you, I wrote tc New York reporting our conversation
in regard to a possible sale of some of the portfolio of the Gold Discount Bank.
And I was sorry not tc haws been longer in Berlin so as to learn the result of
your conversation with Mr. Max Marburg.
It seems desirable that I should advise you right away that 80130
slight impreosion seems to have developed in New York that a number of different
inetituticne were figurinE on this transaction, and, of course, this might result
to your disadvantage, especially whore the paper is not very well kno'em, and any
feeling developed that a number of different concerns wore working on the same
business at the sam3 time.

This, I have no doubt, is due to the importunity of various bankers
My con feeling, you will recall,
in approaching you to buy some of the paper.
was that an initial transaction with raxturg meld be desirable because of the
and that
in this buenles in the
interest
it might be possible to meet the criticism that you were dealing exclusively
with his by retaining the freedom, in some way which would be entirely agreeable
to rarburg, to dal with others later.
'

I am adv"sed that Mr. Paul irarburg reaches Hamburg the middle of this
month, and I am taking the liberty of writing him, as per the enclocod copy,
which will keep you fully informed.

Could you conveniently sondes MOUS of the statement of the
Reichsbunk for he weekly periods subsequent to the one which you were good enough
They may all
Alsc similar statements et the Cold Discount Bank!
to give me!
I shall
be mailed to me in care of the Hotel Majestic, Avenue Klerber, Paris.
find them a convenience to refer to in connection with any cables which may be
exchanged with my office.
Please do not hesitate to write
willing
if you please, whatever you feel
to the portfolio of the Gold Dismount Bank,
some service in rew York in connection with

me quite fully your impressions, sad,
to toll me of your plans in regard
as, indeed, I may be able to be of
this matter.

Mr. Norman is still with me, but is returning to London next rednesday
And we shall go to Paris on Thursday, remaininE there probably until about
night.
After that my address will be in care of the Bank
the twenty-fifth of August.

of gland.




Biarritz, France
8,7,25.
lit

Dr. Schacht

(2)

if daMliapments prior to my sailing for home about Vie ninth of

September make it NM deslre7e for us to have another meeting, I hope that you
11 feel free to gems to Lon:on, and, in any event, I hope you will not hesitate
Ilikeep me informed of how your program develops.

Te have many pleasant memories of our visit in Berlin, and Shall
always be most grateful to you for your courtesy.
With kindest regards, believe me
Sincerely yours,

Dr. Hjalmar Schacht,
President, The Iaielsbank,
Berlin, Cermany.

P. S. (8.8.25)

be good enough to see that Mr. Paul Marburg
May I ask you
receives the enclosed letter, as I am not certain whether he into stop in Berlin
or you are to meet him in Hamburg.
,nc.




It

BENJAMIN STRON.

SS

Mr
OL?IG CV:HOUR:I
RNOR

[cations de service.

LE PORT EST GRATUIT. Le facteur dolt deltvrer on reeepisse a !ouch.
lersqu'il est chargé de recouvrer one Laze.

1,:1o1opniout.

N.

1.1

.

n

JRA V
L

NI-IA

30CE

502, 13.

..L;

I SHE S

A ND

£

KC INCE ST

REGA RCS

cAzt GAT .,

t

Ittek ita



MENTIONS RE SERVICE.

EN2;0'

Oar

e_Aairwi, Ace

ar he ,nie

A DECHIRER

Wce

Sr-41-1A CHT

or

1111111WIDIMITIAL:

September 19, 1925.

ify dear Dr. Schacht:

Ath this I am enclosing a copy of the telegram .hhich

I sent you this mornin6, concernim; which, however, I shall not

hrite you until I her from you, when I will write you full
parti cul
Sincerely yours,

Dr. iljalmar Schacht,
The Reichabank,

Berlin, Germany.

Enc.




*0.

Ee2t.atb,3r 2.1, 1925.

My dear Dr. Schacht:
This will semisc you of my safe r;:turn home with many
plese:Ant memorise to look beck ui,on, not the least of whibh being

ay visite with you.
shrill ho?e to make your trip hers one. of profit as

The progma whioh I laid out

Weil ms one o!' enjoyment.

or your

stay with 118 seem° to meet the views of my seaociates, and es soon

as definite word comae of your date of sailing, I will proceed with
the neoesbf.ry trraniImente.

%on't you give my kindest rqlarde to Frau Lichacht

to your dtuahter, and tte same to your good self.
Sincerely yours,

Cr. Hjalmitr Schacht,

Tde Reichebank,

Berlin, Gerany.




snc

do-

September 24, leVa.

My eter Dr. Schacht:
I am asked by my friene, Dr. Lemuel McCune Lindsay, presi, ent of the

Academy of Political Science, to transmit to you the enclosed invitation to eddrees their organization et a banquet to be given in New Tort on October 28, at
the conclusion of the annual meeting of the organization.
I Lave taken the liberty of writing him as per enclosed copy of my
letter, which I am sure you will understand.

Naturally, I eo not Cant to attempt to impose any restrictions upon your
freedom in accepting invitations of this character, but I know you expect M6 to
advise you, and my best advice is that the invitation should not be accepted.
The general subject of Anti-Trust Lets has for many years been one involving
considerable political controversy in this country, and it might well be that the
topic would prove embarreesing for discussion just now by someone from abroad.

Even

if you die accept the invitation, it would be neceseery to speak with the utmost
caution and reserve sc.. to any phase of this problem which might give rise to contro-

versy or criticism.

This is partly the reason for my advising ,that the invitation be

not accepted, but I also hive in mind a discussion we

in London, at which I recall

that we concluded that addresses before large public meetings might be inadvisable
anyway.

Of course, my first eeaire is that your visit snould be not only successful
but agreeable to you in every way, ho I am sure you will urv'erstend my desire to

you the bast information and epinion which I am able to do.




ive

Dr. FIJEdmar Schacht

12

9/24/L5.

We are looking forward to your visit, r-nd I am Psbuming that you will

carry out your plan of sailing on the ninth, but will still
word before concluding the arrangementa.
With kinleet regards, believe me,
sincerely yours,

Ls. Ejaimaz Schacht.,

President, The Reichebenk,
Berlin, Germany.
Encs.
P.S.L.




wait more definite


http://fraser.stlouisfed.org/
InpSember 21,
Federal Reserve Bank of St. Louis

1926.




September 21,1928.

Dr. Hjaiwar Schaacht

If you can plan year trip to America so ate to be here

Aron October 28th, I hope you will cable me your accep*OCO of this
invitation so that we can announce your prmsenos it ihe,dinner at

as early

date as

ossible.

We can give you any fuettkir information
_

I

or arrange details concerning your speech and such pnilicity as you
may be milling to have given it

either by cable or letter after the

receipt of your acceptance of our invitation.

Looking forerd with such pleasure to seeing you in the
United States, and nopir.g that you can arrange your plans to be here
by the end of October, I tim,

Tours sincerely,

Preoident.

My cable address is Lindsay NewYork




eptember E4, 1925.

Derr Jr. ?resident:
'

I have to scknolNledge and thank you for your kind
letter of the 10th instant, which I rind on my return from WF..ehington.

Ne both quite undtrstand the situation in this matter, tnd
I h%ve had opportunity for a talk with Warburg on tLe subject.

When

you reach New York, we can have some further discuasion, and I fuel
sure tLat it will be helpful in avoiding the possibility of any
future misunderstanding.

Nith essdrtnces or my esteem, believe le,
Faithfully yours,

Dr. Hjalmer Schacht,
Preeit eat, The ileichaCanic,

Berlin, Germany.







Ao

GUESTS

Dinner, Metropolitan Club, October 22, 1925




Dr. Hjalmar Schacht

#2

all of this I hope may be helpful to you.
With a.surftnces of my wriest regardb, I beg to remain,
Very truly yours,

Dr. Hjalmar Schacht,
Pres1-!eat, T..s EAchatank,
Germany.




9/24/25.

DINNER AT METROPOLITAN CLUB

OCTOBER 22, 125

411

Mr. OF DR. SCHACHT.
IN HONORAlbert H. Wiftin,
Chase National Bank

4e-f

Mr. Geo. F. baker,
First N,tional Bank

Mr. J. E. Reynolds,
First National Benk
James S. Alexander,
National Bank of Commerce

Mr. Otto H. Kahn,
Kuhn, Loeb & Co.

Wm. C. Potter,
Guaranty Trust Company

Mr. Cla,rence Dillon,
Dillon, Reed & Co.

Seward Prosser,
Bankere Trust Company

Mortimer N. Buckner,
The New York Trust Company

Mr. Lloyd W. Smith,
Harris Forbes & Co.
Mr. Fredk. W. Allen,
Lae Hi. inson &

Alvin W. Krech,
Equitable Trust Company

Lewis E. Pierson,
Irving Bank - Columbia Trust Company

John McHu01,
Mechanics & Metals National Bank

Mr. Berl Von Lewinaki,
Counsel General
Governor D. R. Crisoineer,
Federal Reserve Board
Mr. Rufus C. Dawes,
H,rrie Trust bldE.Chicego, Ill.

\//'

P. M. Warburg,
International Acceptance Benk, Inc.

Challis A. Austin,
Seaboard National Bank

Richard Delafield,
National Park Bank

Welter E. Frew,
Corn Exchange Bank

invited by Governor Strong.




Mr. J. Herbert Cese,
Federal Reserve Bank of New York
Mr. Thomas W. Lemont,
J. P. Morgan & Co.

Charles E. Mitchell,
National City Bank

Wm. Woodward,
Hanover National Benk

Mr. Pierre Jay,
Federal Reserve Bank of New York

Mr. Joe. E. Sterrett,
55 Pine .Areet, New York
Mr. Jerome D. Greene,
Lee, Hi:Eineon & C.
Mr. Roger Whittlesey,
Central Union Trust Co.
Mr. John H. Fulton,
National Park Bank.

Mr. Gent Weismann,
kmba9eadJr Hotel
Sir Charles iddis,
Ritz-Carlton Hotel

Mlbl.

4

I-ZOOM-1-24

FEDERAL RESERVE BANK

OF NEW YORK

OFFICE CORRESPONDENCE

DATE

lot

To

SUBJECT

FROM




1

7'

410

ECONOMISTS who expect to attend dinner on Saturday evening, October 24.

H. ti.

E. Chandler

David Friday
George E. Roberts

Wesley C. Mitchell
Walter W. Stewart
0. M. W. Sprague
Edwin R. h. Seligman
Allyn Young
Leonard P. Ayres

Jacob Hollander

JOURNALISTS who expect to attend dinner on Tuesday evening, October 27.




A. D. Noyes

Geoffrey Parsons
!alter Lippmann
Franz Schneider
B. C. Forbes
Paul W. Garrett

Misc . 24. 1

40 M 6-25

FEDERAL RESERVE BANK
OF NEW YORK

SENT BY

SEND To FILES

09b,
/9j_

111,

COPY OF TELEGRAM

cp

OctobalV28, 1925

CARTER

care CPISSINGER

,JASHINGTON

Please send following by hand to Mayflower for Schachts arriv-1 five this afternoon
Messase in question sent both to washington Embassy and New York
Former notified of your arrival this afternoon and
Consulate
Please collect from Embassy
that you are not aware of contents.




El eecker

Misc. 24. 1

40 M 15-25

FEDERAL RESERVE BANK
OF NEW YORK

SENT BY

.tr,1,6,44=e)

FILES

COPY OF TELEGRAM

onj

ro n6

-z3_,A=s;1=tAat:e.t._

==-

r-

IMMEDIATE

Meelmge in fueetioki; QM. Wen Lo 1,T.1.6hint;ton
_

,

New York Coneulnte

th,.t. you

Former notified mS .1rrivIll tbiH 9:rternoon sad
a
m :,
co

r'i not a,,littre of conLento.

i'icwise collect from EmbE:boy.

-

Ioentic,d zne...ig,e to M-Iflowel throu,;hrO,rter




Falt.p.itiey had

Y.

5. bloacker

DINNER -

LINKS CLUB - OCTOBER 29, 1925

Yes

No

Mr. Gates W. McGarrah
Mr. Delmer Runkle

(V(

Mr. Samuel W. Reyburn

Mr. W. L. Saunders
Mr. Robert H. Treman

11/

Mr. Theodore F. Whitmarsh

3

Mr. Clarence M. Woolley
Mr. Owen D. Young

Mr. Weisman
1,111r

Mr. Pierre Jay

it°$°
Mr. J. Herbert Case

Mr. Louis F. Sailer
Mr. Edwin R. Kenzel

Mr. George L. Harrison
9_.

Dr. Schacht

/

Gov. Strong




ta




November 9, 1925.

FEDERAL RESERVE BANK

OF NEW YORK

4

DATE

OFFICESchacht
CORRESPONDENCE
Dr.
To
FROM

November 12,

SUBJECT:

W. F.. jurgess

It ha:; occurred to me that you may be interested in looking
over score of the periodicals which were mentioned during the lunch
conference the other day.

I have, therefore, had this little collection

made.

You will find that a number of them try very hard to be
literary, at the expense of Pxcluding informative .A.ticles.

My own

belief is that you will find most valuable the Literary Digest, the
Review cf Reviews, and the Monthly 'levies of the National City Bank, the
Cleves and Trust Company, and this bank.

I should be very Oz,d to make

the necessary arrangements for you tc receive whatever of these publicstionc you wish.

It is my hope that they may at least provide some amusement
/for your steamer journey.

Att.



1 926_

FEDERAL RESERVE BANK

KIK. 4. .40011-7-44

I

OF NEW YORK

OFFICE CORRESPONDENCE

DATE

November

' 4

SUBJECT:

To

FROM

CO y .

r on g

Teo co ler, of the .tinched memorgclum, which rPs recd by Mr. may
echrict Pt Mr. Owen vounF s
and Inter by 'hr. Owen Younk, were hnn,'ed to

nnrrment lest nikbt, November 'F, with the atRtement mRdc verbnlly thRt
while it was not nossible to make it . nprt of +he memor,neum, I wished to
refresh his memory ns to the stPtement which I hpd mode to Pr. Luther of
the im-crtance of the ndontion Rnd rPtifir..tion of the Securi ty Pnct which
since t)-.pt date wis negot:Pted at Locrrno.

t'tt.




Tau (01 1
3r

,

AR.,ctici

ToAlt"Ai

,

1

192__

'NORA/1MM

LCF/aCHT

Our converectione regarding, poeeible purcbeeee of Dille by the
Fecerel Reserve Beak of New Tort from the Reichebenk lead we to sake the following eueeeetioner
1.

Any Wale eo purcheeed by this beak or by it for account of

other Fecierel reeerve benirs, would be jrime c.oaers-rciel bi i t o growinr out of

commercial treaseetions her ring et leeet three good nemas, one of which would

be the toceptence or endorsement of e firet-cltes bank or benker, the bills
having a maturity of not over three /writhe, excluelve of deye of grace.

t.

The Reichebenk oot.ld gutrente.e repayment of the bill° c.t maturity

in dollars ir riew Tort end ship gold in order to lest thee, if neceseery,
un -torte/Le t

t the Federel 14.40,:sOrTe Bank will eustein no lobe on exchange.
3.

:.o obstacle will be interposed by the German Government to gold

shipments by the Reichebenk in order to reps,' bills held by the /Peden,' re.,erve

bents et maturity, it not otherwise paid in dollars.
4.

LttteAento would be rendered weekly by the Reichebenk giving

perticulers of all bible purchteed end rr.tee *meld be fixed by exchange of cables.
5.

The obligation of the Peichvbenk would be expreseed in fora

eatitraotory to the Federal Reserve Rena or iito, York, and conform to the law
governing the operetioha of the Reichebeek.
6.

The establis.heent of reletione which would result in purchases

of bills e,d deecrited, suet neeesearily be predicated upon the confidence which
our Directore would have in the independeece ens efr,-..ctiveneee of the etnegement

see Toney of the Feichebenk in both. monetary ant. credit ieattere.

It le hoped,

tqfyrefora, that in eonaidering any such plus for utlee of bible to the Federal




-2-

a

Reserve Bank, the Reichebank will be able to tdvise the Federal fiescrve Bank of
oom;leted arrtngemehte ta to ttle handling and management of the ilinds of the

keioh and funds of similar character, such

tlrooe of the postoffice, the rail-

ways, the insurance office, etc., which af.& . ,molly satisfactory to the Reichebank

and to the FeJeral Reeerve Bank.

By this, or course, it ie meant thtt they

should to under the control of the Rtichshtnk ;,enline, Choir disbursement.
7.

in vie% of tht im,ortance of the whole ;rotlem of the service of

external obligations by Germtn borrowers, it is cleo hoped that the Reichebank
will be able to advise the Federal Reserve Bonk of estiLfactory arrange5lents for
control of borrowings in the United Btates by estates, municipalities and other

establishments in Germany, 60 that they may be confined to those which are not
only useful, but actually productive end helpful to the development of German
economy.

Xew York, Rovesher 16, 1925.




ISC. 34.

1

40M 1-24

FEDERAL RESERVE BANK
OF NEW YORK

CONFIRMATION OF TELEGRAM

44,
TO BE MAILED

oar
E HAVE TODAY TELEGRAPHED YOU AS FOLLOWS:

November 14. 1125

Hj,Amar 3chacht
3.

Nitsve imdterci,m

Thanks both telegrams

.,4e

(Holland imericen Line)

all wish you a safe and comfortable voyage home

Have enjoyed your vieit greatly h. nd join in hearty good wic-lec to f,.11 the




BLEJ. STRONG

RADIOGRAM
WORLD WI DE WI RELESS

411E FILED

CONTINENT
f-- TO ,--1
CONTINENT

CLASS OF SERVICE DESIRED

Full Rate Radiogram
Deferred Radiogram

SHIP

SHORE
.4r-i/ TO ---i-i-"

Patrons should mark an
X opposite the class of

T0

SHIP

SHIP

service desired : otherwise
FULL RATES will be
of
charged.
See back
this blank.

" fialmE- " RADIO CORPORATION OF AM ERICA
FORM No. 100P-100

Send the following Radiogram "VIA RCA" subject to terms on back hereof, which are hereby agreed to

HJALMAR sCHACHT
SS. Nisuve Amsterdtm

mler 14, 1925.

Am just able to thtnk you more expresoivel:, for your tslegr= mcs which
htve given me the gret test poeALle st.tisftction e peci!,11y to knon ti.: ; your visit
here wt.s

t

Euccess for yourself t s v,e certainly

it fit

reciproct,te the kind uxpressions oonttined iL your teleErtm

v.:y fully the spirit which prompted you Lo

ir us

I

stront,:ly

she re with you

it

UT: ONG




FULL-RATE RADIOGRAM UNLESS MARKED OTHERWISE

a

November 17, L)25

My dear Dr. Schacht:

4.th this I m Jencint; to you the eollt,ction of -retie
which were fgatbered curia; your st4 here.

I believe

you have seea .11 of them, but you may find both inteke,:t anu use

for them in this form.

It was indeed a pleasure to ilve you .:ith us, nd the
benefit to 1.16 both, I Ja sure, t'rom these personA. exch,Ft.n

,

is

well worth the eacril'ice of Lsin, sway from home ehen there .are

so mluly pre_sin;; m.tters to be dedt With.

I

5h: All shortly hope

to .rite you more fully.

comfortale trip

ite,intime, I hope that you have h
home.

-,ith cordial regards, I

%.m

Faithfully yours,

),
Dr.

Schacht,

President, The heichabank,
Jseberstrsese, Berlin, Germlny.



inc.




January 7, 1928.

ky dear Mies Steffeck:
Almost kiirectly we hail tiii.,,patch.:, our letter of yesterday

concerning the special shuttle to be employed 4th the Hammond type-

writer in the coding of mesa ea between Dr. Schhcht .,.nd our Governor,
we learned from the manufacturer that there 4ould be sn unavoidlble
lay of possibly 6wo weeme in the completion of the shuttle.

I yonder

if you will be good enough Lo explain this to Dr. .?chacht, so that

he will not be disturbed by the non-receipt of it.

It 411 go for*ard

just b.8 promptly as possible.
Your thoughtful Uhri tmas greetines 'were very such sp-

preciated, and I sm hoping for 813 early opportunity to *rite you
personally my thane.

4th all good wishes to my Reichabank friends for the
New Year, I em
Sincerel

use Clars. Steffeck,
Secretary to the Presioent,
The Reichsbank,




you,-

Jenuery 18, 1926.
My deer Dr. .6checht:

We here juet had a most interesting visit from Governor Norman, who
defied for home lent Saturday on the MaJestic.

He expects to see you within a

couple of weeks, and you will hear in general t'rom his of the various matters we
have been diecueeing.

Mr. Gilbert ie &mill here, end I expect Lim to be at the bank most of
this week.

This is my first opportunity to write you tome explr_mstion of the edvence in our diecount rate.

The feeling bye been eloxing that while possibly the

advance which hee taken place in tee stock market hee been justified by the intrinsic position, neverthelead it has involved employment of a large ea ount of
credit, and a aceeewnet simila r eevelopeent her: taken place in some parts of the

country in real estate speculation and in tee general activity or building.

The tendency for the amount of Federal Reuerve credit, that is, the amount
of our portfolio to expend, also became rather pronounced lute in the year, although
the major part of it ie accounted for by the usual year -end activity of windowdressing, etc.

All of this led 116 to feel unwilling to facilitate in any way the

employment of the year-end funds released to the market in the speculative eccount,

and tho advance in our rate to 4% promptly after the turn of the year rather insures
that there will be a prompt return of tte currency and a prompt reduction of our port!olio.

Thee hha, in fact, taken place moat satiefectorily at New York, end ie

ereeuelly taking place throughout the country.
Since the rate advance



stele in the fall by the other Reserve Banks,

#2

V

Dr. Mjslmar Schacht

1.13.28

there has been a noticeable tendency Imt the volume of dealinge on the stock exchange

tatocrease, end rather shurp periods of recession in price° occasionally, but as
yut no 'v .:Ty material reduction in the total of the loan account which /mu nether con-

tinued epsmodically to increase.
Realizing, ce we all do, the possibility that any wort of speculative spirit
is liable ultimately to reach comimoditiewan

tive about tile use of the facilities
advance.

commodity prices, wo have felt coneerva-

this bank, and hence determined upon the

Legitimate buninesu will not be penalized by a 4f rate.
We noticed, with such interest, the reduction in 'four rate,

hope that

it is an indication that the readjustments which you htt in mind are now being completed.

If my present olrne materialize, I shell ces you in the early summer, posAbly
in May, as I hope to sail th.

50th of March, stopping first in Italy.

If you find it possible to send figures, concerning which I recently write
you,

I think it would be helpful.

They may arrive while Mr. Gilbert is here, which

will be perticularly fortunate.
With kindest regards, believe me,
E.incerely yours,

Dr. Rjp1mar Schacht,
Presiaut, The Reichobank,
Germany.
PS. LS




.44

Hyde Park Hotel,
London, ley 3, 1926.

ny dear Doctor Sehadht:

I would have written you ore thin, had I not expected to

pee you in London today, but Governor Normanehowod me the telegrnms
exchanged with you about your visit, and it racy be that the strike

situation will pormit you to come to London before I leave about the
middle of this month.

My awn plans have been somewhat modified, because I have not
boon well and it will be necessary for me to take at least n month's
cost after I am through in London;
place on the Riviera.
untll July.

I am hoping to do so in some quint

This means that I probably esnriot read: Porlin

If you do not reach London before I leave, I hope you v111

roc hero in care of the Bunk of 3.neland, advising me of your own

plans, and especially of any possiblo abeonc

from Berlin, no that I

may bo sure of finding you there when I come.
7ith kindest reeards, believe

one

Sincerely yours,

Cchacht,
..rooident, %110




',.eichsbank,

S
Hyde Park hotel,
London, 1.:e.5 14, 1926.

:V dear Doctor Schacht:

Your kind letter of the 6th has just reached me, and indeed
I share your disappointment that our meeting is to be delayed.

Pos-

sibly it may be better, as I have not teen at all well, and after a
rest I shall not only have more leisure than I had in London but will
to in better shape to enjoy our talks.

My present plan is to leave for Paris Saturday and spend
only about four days there, after which Mr. Winston and I will be
motoring to the Riviera.

I shall keep you posted from time to time

and see that you get word well in advance of my going to Berlin.
I shall certainly give your message to Mr. Norman.

With kindest regards, believe me
Sincerely yours,

Dr. Hjalmhr Schacht, Fresident,
The Reichsbank,
Berlin, S.W.111.

B5:1!







Hotel eu Ccp d'Antiber,




Hotel du Cap d'Antibes,
Antibes, July 15, 102e),

PERSCIAk
Dear Dcctor Schacht:

Your letter roaches me today, and I am very glad to have it.

.chile

I have not been quite well, the rest at Antibes seems to have been effective,
and I an feeling veil enough now to continue my trip.

!y plans are a little indefinite, except that I suet be in Switzerland
about the first of August and after that will be free to keep an engagement with
you concerning which Norman is writing you today.

He has b

a month.

No one is quite co well qualified to disregard newspaper stories as I
am, so I have never for a moment imagined that you wore in Paris.
"e are both glad to have the good news of your flank position.

will remedy itself in time.

The rest

Norman joins me in warmest regards, and we both

look forward with much pleasure to seeing you during the first half of August.
I an leaving here on Monday, and my mailing address will be care of
Messrs. Morgan, Harjes & Company, 14 Place Vendome, Parini.

With best wisher as always, believe me
Cincerely yours,

Dr. fijalmar Schacht, President,
The Reichabank,

mum:, 57.111.
11-Lf




Hotel de l' Europe,

Amsterdam, August 11, 192G.
PRIVATE
My dear Dr. Schacht:

Our visit was moot enjoyable to me and most enlightening as well.
I certainly hope that you found as much profit as I did.

Unfortunately, this morning the Dutch papers print despatches from
Berlin referring to supposed conversations which we had on various matters, including a discussion of the Ilapen and Malmedy matter.

I hops you realize that

I shall continue to take no notice of newspaper rumors of any kind, and especially those relating to political matters.

As I explained to you and to the

others during our talks, T can take no interest in a discussion of political
adjustments or affairs, which are entirely outside my province, for as you so
well realize, my own interest is confined to discussion of monetary questions,
even though in some instances these may seem to have an intimate association
with what appear to be political questions.

I hope you agree with me that it is

desirable to pay no attention to these irresponsible statements in the press.
I am leaving tomorrow morning and am not certain of my address, but if

you have occasion to write or telegraph me, I think the quickest communication
will be through Messrs. Morgan, Harjes d Company, 14 Place Vendome, Paris.

7ith kindest regards as always, I beg to remain
Sincerely yours,

Dr. Hjalmar Schacht, President,
The Reichsbank,
BERLIN, S.W.111.




a
Hotel Grand F tiler,
Basle, August 13, 1926.

a
Dear Mr. President:

You will recall that I cabled to New York in regard to the possibility
of getting bars at a lower cost than coin to cover the shipments now being made to
the Reichebank by the Federal Reserve Bank.
A reply has just reached me advising that the coin now being shipped is

uncirculated coin which has been specially furnished by the Philadelphia Mint at an
extra cost of only 893.75 per million, whereas the charge which the Treasury makes
for fine bars is C500 per million.

You will therefore see that it would be very

much more expensive to ship bars than coin.

In fact, the shipment of new coin as

now arranged is very much more advantageous than shipment of the ordinary used coin,
which we find on investigation involves an abrasion loss which will aver- e in the
neighborhood of 4600 per million.
In view of the very economical arrangement which has now been effected, I
have no doubt you will prefer to have us continue the shipments of coin.
I am also advised by cable that a statement has been made to the press in
regard to these shipments, in substantially the form suggested in my cable, of which
a copy was sent you.

In the same message, they advise me that the rate of discount

has been increased to 0, of which you have doubtless been notified direct.
ly plans from now on are still uncertain, and unless you hear from mo to
the contrary, I suggest that any communication be sent, as already arranzed, through
Messrs. Morgan, Harjes & Company, 14 Place Vendome, Paris.
7ith kindest regards, believe mo
Sincerely yours,

Dr. Hjalmar Schacht, President,
The Reichsbank,
BERLIN, S.T.111.
DS:M









Princess Hotel,

tl

411

Diltmore, N C

February 14, 192 ?.

My dear Doctor Schacht:

At last I seem able to at least make an effort to answer a

grott

accumuletion of mail, which I could neither read nor deal with during my Moose.

You may understand this to indicate that I an considerably better, but

still unable to return to the office or assume any responsibilities.

This letter is really my belated thanks for the gift which you were
good enough to send me through your Ambeseaeor
ing us in 7,aehington.

shish I understand le await-

I very deeply apvreciate your thoughtfulnese indeed, and

especially of this cnaracter.

tray I hope to share my enjoyment some day with

you!

Until more is known about the consequences of my sickness, it will be

impossible for mo to meke definite plum for this Summer, but I have net abandoned
hope of a trip to Europe later on,ane il I am able to make it, shall look forward
to a good visit with you either in Berlin or at soeis convenient place.

I am still so much out of touch with the office that I can write you
nothing of business, but an glad at last to Le able to gelid you my greetincs and
cooLi wiahes.

Won't you writ me when you have opperturity, addressing me in

care of the Dania

ith kiheest regards, believe me
Faithfully yours,

Dr. Hjalmer Schacht, President,
The Reichsbank,
Dorlin, Germany.







Alisc 24. 1

40 M 5-25

FEDERAL RESERVE BANK
OF NEW YORK

SENT BY

SEND

To FILES

COPY OF TELEGRAM

1*

July 14, 19n.
Hjaliar Schacht

On Board S. S. New York

All of my associates join me in expressions of good wishes and of rotitude for
your message and especially of appreoiation of the high purposes which listinguiahas
your work at: collaborator with all of us in the various problrms we he7e to deal
with. Stop. The accomplishment of the results deqcribed in your message will
only be possible if they are all attacked by those h,ving the vision and oourato
May I express the hope that our meetings
which you have no often exhibited to
will become a tradition of centre/ benk mansi:ement and that they will lead to the
stablishment of cooper tion and good will.




Strong.

Auguet 16, 1927.

14 dear Dr. ';chf..cht:

ify friend, r. G!...rrard E. Ariston, is sailing for Europe
in a few ditye, rill be in B.,rlin .nd I hove ti:en the liberty of
assuring hits that you van bQ glr,.d to see him if he c%lie t the
Rai chebhnk.

You will nioa.11

ry or oar
h t e.

ci t e of mine.

Tel &try

t for a nuTter of ye -.re he ire Underrtincrit Inc in thtt oap!..ci ty a close

He is now s,.soci...ted with Masers: .._.'ho-.r2L.n end

:sterling, who sre, couneel for th-. liation,11 City B'nk in *ow Yuri.

Ir. fact Mr. intton is ir,ikine; this

6"bro.e ritt: Yr. Chrles E.

Mitchell, the Preeident of the Nt,tionl City P-r.;, .ho early all on 7ou
'.ith kr. Ane-ton.
I have given fir. ..incoo co letter of introdiction,

1

n

eriu,ry

to CO t:O.

qi 0.1 gindest regards, believe ne

nincerfly yours,

Dr. lijA.m.,.r

?reeident, Thy Re-ichubrink,
Berlin, Gerrn,-ny.




it

Auk:ust 31, 1927.

PERSONAL

My dear Dr. Schacht:

Sine:-; enjoying your visit here I hove been rs subject of close scrutiny
my physician, and I am gled to say he givers me very excellent reports.

Be

favors my leinc away from New York in ilanualy and February which are the two most

severe and dangerous months for me, so I am now planning to nail from New York on
th, Conte 'EsiancLunano on January 4

tin

after spendint, a few days et Gibraltar,

settle down for some ?0, k© at, Altecirus.

I have advised Governor Norman of this

and Governor Moreau, and em planning alto to write Dr. Visafring and Dr. 3achmann.

This word to you, well in advknce, is in order that I may express the hope of
seeing you while I as th. re, nd that it will not be a greet inconvenience to you

that I should so arrange my trip as to avoid the severe wint-r climate both here
and in Northern Europe.

It will probably preclude my visit in Northern Europe at

all. After some weeks at Algeciras I will likely spend a month in some :t,tractive
place on the French fliviera before returning home.

since our rate reduction I have been planning to write you some account

of the situation h re, but SO far have hcd no opportunity to do so, by, you may

:,xpeot a letter shortly.
In the moantim-;,, with kindest regards, believe me,
Sinoerely yours,

Dr. kijalmar Schacht,
C/o The Fieichebank,

Berlin,




Octot.er 3, 1927.

Dear Doctor Schacht:
Tour very

,

ind letter of the 21st hae just reached mu, and

I have read it with much satisfaction.
An unfortunate complication has arisen which may delay my

sailing date, and in some respects, all my plans.

tome people think

that there may be efforts in Con .rose this winter to amend the Federal

Reserve Act, and if so, I should like to be here as they may wish me
to appear b fore the Banking and Currency Committee. I will know s

little later and you may be sure I will keep you advised of my plans.
With every z_,00d wish, believe me, my dear Doctor Schacht,

Sincerely yours,

Dr. Hjalmar Schacht,
C/o The Reic.hsbank,
Berlin, G,-rmany.
BS /RAH




November 10, 1927.

PERSONAL

My dear irec,Or Flobeobt:

You oarcainly Lace en excellent memory, and you certain di.iplay
tosarc.s your man -La.

I have just raceivad copy ,)-f the English tranalation of "The

ataoilias.tian of the Mark," and you may to ore that I am looting forward
'co reading it with the ksenset

Shea I have done co, may I

Cu privileged to ivrite jou ts,re comment& i t' 4-ny occur to me.

Without reauing it, however, I as

to expreec the view that

in this great aohievement for Ct.rmany you Laub perforee4 a Service for your
country and your countryrna. of a vi.lue far beyond whet is w.enerally recognisec.

May I

ev.iei that I have learned ,rery rscently, with much concern,

that you neve oemn intilapobed to an extent possibly to ()twee some concr,rn

to your friends. Gert,ialy that Le Ty era: feeling, and I wie very much you
oulu write and relieve rny
11th coruhal

h-lleve mu,

Sitoorely yours,

Dr. Hja lmar Schacht,
The Reichsbank,
Eer lin, G rn any .




March 31, 1g2e.

Dear Dr. Schacht:
Herr Hans Furetenberg has come and gone,
bee him.

',And

I was not able to

This is just another ciisappointmait due to the limitation which

the doctor has put upon my working, hours,

to the fact that it

VI*2.8 nec-

essary for me to be in a,ishington during pr..rt of the time Herr wuretenberg
roe in New York.

I am sure I have miseed a. real pleasure, but I hope that some clay
I x111 have another opportunity to meet Herr tUretenberg.

Please be Easurec of my sincere regret, anc of my tv:-.rm personal
regards to you.
Sincerely yours,

Dr. Hjelmar 5'chacht,
President, The Reichebank,

Perlin, SI 111,
Germany.








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