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FEDERAL RESERVE BANK OF NEW YORK NEW YORK CITY 62 CEDAR STREET MEMORANDUM Regarding proposed_ issue of $6,000,000. State of New York Revenue Warrants. ---oo0oo--- 1915 June 2 Mr. W. S. Fanshaw called and in the absence of Mr. Strong stated to the writer that the State of New York proposed to issue $6,000,000, of warrants against taxes. The warrants would be issued WM time early In June and mature on October 15, 1915. He stated that the State had been Offered the money at 2 7/8%, and he thought they would be desirable investment for this bank. We asked Mr. Fanshaw what his interest in them was, and he said that he had brought them to our attention at the request of Mr, Wendell, Deputy Comptroller of the State of New York, who had endeavored to communicate directly with Yr. Jay in regard to them, but was advised that Mr. Jay was out of town, and therefore requested Mr, Fanshaw to bring them to our attention. He said it would be entirely agreeable to him to have our negotiations and transactions, if any, made direct with the Comptroller's Department. When pressed for a statement of what he expected to get out of it, he said that if we cared to give him anything for his services, he would be glad to receive anything that we thought proper. He was told that the matter would be referred to Mr. Strong and Mr. Jay. June 5 The above having been referred to Mr. Strong and Mr. Jay, we communicated with Mr. Sabin of the Guaranty Trust Company, who confirmed that their company had offered the money to the State at 2 7/8%, but that their negotiations were now off, and suggested that we Should obtain our counsel's opinion of the issue if we were to consider taking it. We already decided that we would require opinion of competent counsel in regard to the issue in view of taxpayers' slit for an injunction restraining the State from this borrowing, Which we understood had been dismissed by the Court of Appeals. We had consulted with Mr, Geo. Case, of White & Case, in regard to the best counsel in the city to furnish such an opinion, and he suggested Spooner & Cotton, Mr. J. P. Cotton, o which firm, is well known to us. June 3 Mr. Fanshaw called bathe morning and we told him that we would require an opinion by Spooner & Cotton regarding the issue before we could consider the purchase, and such information -would have to be furnished at no expense to us. He stated that he would* have such information provided. June 3 In conversation with Mr, Fanshaw over the telephone, we stated that in the event of our purchasing these warrants through him that we would be willing to pay him the sum of $500 as full compensation for his services and expenses, if any, for this bank in the matter. He replied that $500 seemed a small sum for a transaction of 46,00p,0o0, and asked how we would consider 1/32 of ]:%. Our reply was that We would not consider a commission of 1/32 of 1% at all, as it was entirely too much. $500 was all that we thought this bank should pay, to which he replied that anything we thought right would be entirely satisfactory to him, Memorandum of conversation between Mr. Strong, Governor of the Federal Reserve Bank of New York, and Mr. W. S. Fanshaw, held in Mr. Strong's office on the afternoon of June 8, 1915, at which the writer was present. ---oo0oo--- w Mr. Strong stated to Jr. Fanshaw that there had been a misunderstanding in regard to the proposed issue of 6,000,000. State of New York Warrants proposed to be issued by the State of New York and oensidered by this bank for possible purchase; that we had understood from Er. Fanshaw that the warrants would be issued to bear interest at the rate of 2 7/8% and that the matter of this bank's purchase of such warrants had been under negotiation with the state officials prior to Mr. Fanshaw having brought it to our attention; that When klx. Fanshaw did bring the matter to our attention it was Ar. Strong's suggestion that in consideration of services which Mr. Fanshaw might render for this bank in the matter, that we Should pay him 000 in the event of our purchasing the warrants. Referred also to the later development that on June 7, 1915, Er. Fanshaw called and stated (to Mr. Jay) that he wished to correct one statement he had made in regard to the proposed issue, ie., that they would be issued to bear interest at the rate of 3% but would be sold to this bank to net 2 7/8%. This was not in accordance with our understanding, and hence the Whole transaction with Mr. Fanshaw is declared null and void. Mr. Fanehaw acquiesced in this unconditionally and stated that he wished Mr. Strong to distinctly understand that the suggestion that the warrants be issued at the rate of 3% instead of 2 7/8% was made by the Comptroller of the State of New York, (the difference being to cover the expenses involved for which the State had no fund provided) and not by Mr. Fanshaw; that he,.,Mr. Fanshaw, had no desire to make a profit out of the transaction. ERE/LCE Ass istan.t Cashier. -2- 1915 June 5 Mr. Jay has taken up with Mr, Wendell, Deputy Comptroller, the requirements of this bank in regard Co warrants eligible for purchase by Over the telephone the Deputy this bank, both by telephone and writing, Comptroller stated to Ir. Jay that he had no doubt as to the legality of the issue. June 7 Mr, Fanshaw called in the afternoon, accompanied by Mr. Judson, in regard to the proposed issue of State warrants, and stated to the writer and Mr. Jay that the opinion of Spooner and Cotton would be ready the next morning, and also stated that if there were any questions which we wished to ask regarding the issue, Mr. Judson was in position to answer them, Mk, Jay replied that we would have no questions to ask until our counsel had examined the opinion of Spooner and Cotton. Mr. Fanshaw then stated that he wished to correct one statement Which he had made regarding the proposed issue; that is, he had stated to us that the warrants would be issued to bear interest at the rate of 2 7/8% per annum, but that in view of the fact that the State had no fund from Which it nould pay for outside legal services or opinions, or any other expenses in connection with the issue of warrants, that the warrants would be issued to bear interest at the rate of $%, and would be sold by Er, Fans:haw to this bank to net 2 7/8%. Whereupon Mr. Jay told him we had understood that the warrants would be issued at 2 7/8% interest and that our whole understanding in regard to the issue was based on that assumption, and if there was a change in the rate of interest that the warrants would bear, the Whole matter would have to be reconsidered as new business. Assistant Cashier. ERKACE Estes Park, Colo., August 5, 1916. Dir. E. h. Kenzel, % Federal 2eserve Bank, Lew York City. Dear Mr. Kenzel: The net time my friend Mr. IN man of the Journal of Commerce stops at th.2-e-f-ft tell him that his paper is no good. There_ eems-1-6 something the matter in their .-1.ai1lo:_, rtment. ast night's mail brought me copies 9f the urnal of ' mmerce of both July 29th and J11;34i 61st, d by the same mail 1 received the Evening ost August 1st and the Times of August 2nd. ts the five days behind the times and glyea_the lap - that they sent me a rather ancient' / nter sted in yourweekly reports of Or nsaction in bills. Between now and much) the end of t year iji 4s going to require a lot of skIllgto i t st of the market, iii which 1 is' "ii think 4t-she1.d be the leader. (/ Pbeqp give my best regards to all the boys my syrnpL1y that they have been so hard pushed u the/ ,weather. Sincerely yours, 1 arrl tery 3 10) Park, Coll, September 2nd, 1916. Dear Mr. Kensel: I have your two very interesting letters of August 10th and 29th and regret the delay in answerinkithem. Tell Mr. Hoffman that the Journaio5 ommerce is do--ing better. The papers arrive much more rigiN y and I think 1 ( I they have now caught up with/the Po8t14!the Times,#till beats , them a bit. The dotaWeIxirt m about the various credits, etc., are just w posted. I wan te \and good of you to keep me - The change_ n the/Brown credit, it seems to me, sh uld very possfble objection and I am glad they took our advice, pay]. C.ff the'o'L credit and establishing a new one. makes one feel optimistic to hear of the develppment of the various credits to which you refer in yours of the 29th. meet , r Don't ever forget that the real influence at the present time is rates. Our rates are just about one-half of the London rates, and that influence is irresistible. Beyond and behind that, however, is the question of gold payment. Bills that come to us from all over the world for discount create bank balances against which,ordinarily,fsveign banters draw checks. 'Once the exchanges go against us, however, it becomes more profitable to withdraw -2- Sept. 2, 1916. E. R. Kenzel, Esq. gold and we must be prepared to ship the gold or all confidence in our new banking system and in dollar bills will vanish like That is one reAlon why I am so keen to see the Summer snow. Federal Reserve Bank of New York accumulate a large amount of gold which can be furnished for export whenever exchange turns against us, as it is bound to some day. I suggest that you get a little book cg ed *Money Changing", written by Hartley Withers, where you 11 find a good deal of interesting material on thtivsulal I hope you keep up your lottok when it tnot too t )) great a burden. f the boys, I am, With watmest regards i 6 ntiiSlx \7 R. Kspzel, Esq. Assistaat Cashier, deral Reserve Bank, EquitabLf Building' E. New York \S:44,..____9 BS/VCH Uovember.@th, 1916. Dear Mr. Kenzel: J-n reading over your address, I am that both you and Dr. Miller (in his in fallen apolis nd s), have into the same error in figuring The amount of f e gold held by the-.:eederal Reserve system. You state that the res 90,000,000, of Which over capital 0,000,0O0 the gold holdings of the re . preeented by -t, allowing for 35% reserve on deposits, the f banks to now t to enable ihe reserve rediszount Pederal reserve notes to the extent of about 150 figure it th about The deposit liabilities a. e 550,000,000, g 1 what les 0,060,000, earnings, some- than 3 % on th therefore, i. he. omount of our earnings u penses :and a rea -1,000,000 is t' on the cld The firut allov:ance to make, hich sapitra; Will be 1os1 when we bring fcllouing for increased ex- neble amortization for accrued dividends, least that 300,000,000 of gold. 35 should be alloyed. hia leaves reserve on f550,000,000 of deposits is t187,800,000 ane a/lowing a trifling m-argin, say $200,000,000, is the minimum to which or gold reserves could be allowed to fall. To Nov. 6, 1916. Jr. Kernel. This leaves the f,oe gold at about i100,000,000 which would sup;)ont an isue of ;!1250,000,000 of note, s leoving out of consideration of course something over i.200,00U,000 of gold held by the Reerve Agents. Antiher importent aepect of this ratter le that under coneno consideration should the managers of centage as th Linimum template permitting any ouch reserve allowed by the statute. 7,e need an nwexist safety fl or be- yond the legal minimun and it is for that reason that have esues and been 70 urgent about accumula will count as rewe will do, hut in serve. n a crisis, there s no knowing w kr first t safety f,Ictor'and normal t%mes we ough to co .timistic on that point. it strikes me your view are thing, I am afraid, without We have all been guilty to the portance of the situation. giving sufficient thou get-,ing the statute amended think your thnt it quoted in full Wi a mighty good one and glad drs8 the Chronicle. en, Sncorely yours, E. R. Kenzel, Esq., Assistant Cashier, Federal Reserve Bank, Equitable Building, Lev York City. BS/VC/ November 15th, 1916. r. Kenzel: Dear Yours of the 11th with enclosures Your inquiry about the City fian very just received. espondence is not view the definite, but I think I can in its applica meaning of the statute as amend to finance retations of the Reserve drafts according to the var Seard. eeferring only to drafts as f s,i drafts drawn ageing , awn against importation and. ex- Firet, eligible, must be of a cnarac- portation of goo evide imeo t or be co e, or by collateral documentary ,roo , that the proceeds are or vill be actually applied to The French credits, therefore, can export tran this evidence because they bear marks rued as afro of ident usually with documents ition: attaehed, I thin ter to a distinguished from dicating that they are drawn under a specific commercial credit agreement, P. copy of which his been Therefore, under the original provisions of furnished us. the Act, be- fore the amendment was adopted, these French drafts would be eli- gible beceuee of their affording complete evidence of their characnot be ter, but drafts otherwise drawn without tnie evidence, would eligible. -2 Nov. 15, 1916. Mr. Kenzel. The amendment to the Act Second, provides that drafts furnish drawn to borsivaxamxi dollar exchange will also be can be shown that the usages of the country where eligible if it they are drawn are such that the drawing of long bills for the purpose of settling imports and exports is a well esta With this class of drafts, shed evi therefore, CO2 marks or inscriptions on 01 written agreement as in the c do not consist of rather of evidence which must b that the bills are drawn the country where business of eligibility he drafts submitted to custom. nor even ..ch drafts, but t serve noard e with business usage in they o Considering theee eligibility, definitions of hat the bills described by within which class Fr. Cardine wil do not fall wit first class be tion on the bills and because no document exi e evidence of how the proceeds chec cons in the e may go to settle for travelers or for investment purchases or for any other teing. within the first category, can they be If not fall ued as coming one - thin the second! -sry only, and that is It seems to me that if business custom is established by one or possibly by a few transactions. a never would by action were tax business custom or usage if the There initial trans- It reminds me of the Irishman who, beaccidents arose from one train smashing into prohibited. cause all railway the rear car of another last car, suggested that take off the last car. train and killing the passengers in the it would be much better for them to To ir. Knzel. Nov. /5, 1916. Another theory which might be advanced to justify eligibility in the case of the draft referred to is the fact that American banks have long made it a practice to draw 90 day bills on London banks which have establish a a business custom on one side of the account and, consequen on general grounds of mutuality, the custom could be recogniz the other way around. I think t as being justified , however, is a little thin. , The law leaves us nfortunate pos tion. technically today in the peon nations by reason of same position that South They must have credit in ountries have formerly been in. finance their imports. They would like to ado hey have employed in fi- nancing their ° -We heve no machinery to enable them to usage. ave established a custom ley must arrange finance orde credi s in some way pro Ame you ilted by law fr Euro- r s with or acceptance American institutions that are extending credits in that way. If all an aceeptipg h see wore members of the Reserve System, A see tha ne Act instead of being an authorization to would really operate as a prohibition, except as to those countries which had already established the custom with their foreign bankers. do the bus I think the best way out of the difficulty is for these English and Continental bankers to establish the cueto by opening To Yr. Ken20.. Nov. 15, 1916. credits with banks and bankers not members of the System. That means that we are promoting the business of nonmember banks at the expense of member banks, but I do not see any other way to reach the difficulty. Does this answer the inquiry con ined in your letter? 5ircerely yours, E. R. KenTel, Esq., Aseistant Caehier, Federal Equitable Building, New fork City. BS/VCM WM 11 r SYMBOL UNIC Mr- ge Ater a Blue Message Nite TEL NL none of these three symbols ears after the check number of .ds) this is a day message. Other° its charar indicated by the INL EIVED AT SYMBOL Day Message Day Letter AM' Venver, .ov Blue Night Message NEWCOM B CARLTON, PRESIDENT GEORGE W. E. ATKINS, VICE-PRESIDENT BELVIDERE BROOKS, VICE-PRESIDENT after the check. Form 1201 CLASS OF SERVICE WESTERN UNION Night Letter thol apnea. v Rite Night Letter NL If none of these three symbols appears after the check number of words) this is a day message. Otherwise its character is indicated by the symbol appearing after the check. !er 2 1 . Kenzsl, 7-77111edera1. eserve Banc, rprX i.;.1V(.3 1,1 still triirt jfSiOL illy t.tt pro)osed jifVerential is i-- E f-ke. 1r.}1 y cause tro.able wentioned by Alexander as well ac,at ctr. letter to r:re!:an now,ver recoumenied effort to weibt Ver! lositive vieva neserve Board beoupe of tteir actien l!si Frenen credt: -,ra to avoid issue. FJtop. If Reserve Borq decided beea.ue of our utti4ude to rule t1-i renewal bills act. inelij.ble or if jomptrolle.:' rule.; creuitr.! ultra vires for tionul ha:As as ne tar._'.tened, it would' craie in my odnion a eerious !Ind deolor-Jde situation. !:ton. There-foc, tuink it mr,:y be Rise to try to restrict our puroaarser t'cfclilit r. r rate eF a coaeaegio 10 loarl tewnorary exleriment. lenj. Stronq!,. ChArge "mid, Renj. Strong, 4100 "onivie w loulavnrd. le1en'nons nrk 130S. 11/ I-I LiJ FEDERAL RESERVE BOARD WASHINGTON December 4, 1916. My dear Mr. Kenzel: Assistant Secretary Peters has asked me for some information about Mr. W. L. Sanders, President of the Ingersol-Rand Company of New York City. Would you be good enough to find out for me what you can hear about the man? With many thanks in advance, Very:truly yours, E. R. Kenzel, Esq., Assistant Cishier, Federal Reserve Dank, New York. 4,,ir (:2,-.. (7, Se_e_ A.-c - FEDERAL RESERVE BOARD WASHINGTON December 7, 191e. -Mt.& afa Dear Mr. Kenzel: Thank you for your letter giving ne the information concerning Mr. Saunders which is just what I wanted. If my friend should require any further information, I shall not fail to avail myself of your kind offer. Very truly yours, E. R. Kenzel, Esq., Assistant Cashier, Federal Reserve Bank, New York, IP December 6, 1916. My dear Mr. Warburg: I have your inquiry of December 4th regarding a 1W. W. L. Sanders, president of the Ingersoll-Rand Company of New York. I have no doubt that 4 the gentleman who is the subject of your inquiry is Mr. William L. Saunders, chairman of the Ingersoll-Rand Company. There is a W. L. Saunders in New York who is vies presidert and director of the Actual Appraisal Company at 152 areadasy, but he has no connection with the Ingerooll..Rand Company. Saunders' home is in Washington Park, North Plainfield, N. J. I learned from and through where he has lived for upwards of twenty years. residents of Plainfield that he is very highly thought of in that town, reputed to be a man of wealth but one who has worked up from the ranks in his profession as a mining and civil engineer and is regarded as an authority, particularly in the mining branch of engineering. In politics he is a democrat and has been a firm and ardent admirer of the president and local report in Plainfield has it that he might become a member of the cabinet. The Directory of Directors states him as Director A. S. Cameron Stearn Pump tVorks, Edison-Saanders Compressed Air Company, International Harvester Company of New Jersey, International Harvester Corporation, International Pneumatic be Company, Peoples Bank & ?rust Co. of Westfield, N. J. Presideht- American Institute of Mining Engineers, Ingersoll-Sargent arill Company, and Director - Rand Drill Company, Chairman of the board of Inaersoll-Rand Company. "Who's dho in America, 1916-1917" states: "William Lawrence Saunders, 2 12(6/16 engineer, born at Collaabus, Ga., November 19 1856. He is the son of W. T. and Eliza Saunders; holds the degree of B. S. of the University of Pennsyl- vania, 1876; married Bertha Louis Gaston, August 4, 1886, who died in 1916; in charge of hydrographic work 1878, sub-aqueous rock excavation 1879-81; was twice elected mayor of North Plainfield, N. J., was a member of New York - New Jersey Herber Commission, Board of Commerce and Navigation, vice chair- man of the Naval consulting Board U. S., chairman for Nicaragua International Pan-American Commission; president of the American Institute of Mining Engiteers; member of American Society of Civil Engineers, American Society of Mechanical Engineers, National Civic 2ederation, New York Chamber of Com- merce; trustee of the New Jersey State Chamber of Commerce, New York Southern Society and member of various clubs. a democrat. Be is an Episcopalian; He is author of "Compressed Air Information" politically, "Compressed Air Production" and co-author of "Subways and funnels of New York" and "Rock Drilling". His home is at Plainfield, New Jersey, office at 11 Broadway, New York City, which is the address of Ingersoll-Rand Company, he being Chair- man of the board of directors of that company. The president atone of our large local banks who is a co-director with him an the board of directors of the Peeples Beak & Trust Company of Westfield states that he has known Mr. Saunders in a persoaal way for sane time and knows him to be a man of high integrity. 'His moral and financial responsibility are above question and while he believes him to have considerable means cannot say haw much he is worth. He further states that every- body regards him very highly. The vice president of one of our largest trust companies states: "I have known Mr. Saunders for at least twenty-five years and think very highly of him and his attainments. with home at Plainfield, N. J. He is a man of about sixty years of age As to his parentage, I am linable to say, 14/6/16 3 Li neither can I give you any idea of his wealth, outside of "ring that he may be worth from 000,000. to 01,000,000. He is what I consider a top notch man, being in close touch with all the business affairs of the country at the present time, thoroughly understanding all details and absolutely sure of where he gets on and where he gets off. BB has been very successful in business and is interested, with V. A. Grace, in a number of different lines. His responsibility, moral and financial, is not to be questioned. "Mr. Saunders is very close to 7oodrow Wilson, in fact, as close as any man, I think, can be. He worked very hard for Mr. Wilson's reelection and it has been said that he is being considered as a possible cabinet member. I onnnot say definitely, but it is my impression that be is spoken of as the successor to i*ir. dedfield who is Secretary of Commerce and Labor. He is a college man and, I believe, holds several degrees but just what they are Me. Saunders is the proper type of American business I am unable to say. man who is successful. He is held in high esteem by all who know him and he never undertakes anything which he cannot thoroughly falfull." Throunh another source I have obtained an estimate of him by the president of a large State bank in this city with whom the Ingersoll-Rand Company keep their principal account and who has known Mr. Saunders for a This gentleman states that Mr. Saunders is not now active in long time. that comenny but that formerly he was very active in it and successfel in building up the business of the company. He judges his age as probably betees4a* and 65 years but does not consider him flan old mant, but one whose faculties are thoroughly acute and whose mind and judgment are absolutely unimpaired by work or years. He regards him as an A No. 1 man in every respect. I have some farther inquiries on the way from which I may not hear for a few days. They are made through other than banking channels and may 41 41 ZIY 4 41 b. 4! 4 12/6/16 develop some side lights that will be of interest to you. As so much of the inforMation that is not a matter of public record has come to me in confidence, I am passing it on to you practically in tote in order that you may be thoronjIly advised. If there are any particular lines that you would like further investigated, I shall be glad to do my best for you. Very truly yours, orable Paul IL Warburg eito Federal Reserve Board, Washington, D. C. .33,4Eis 47.IL'LIAM L. SAUNDERS Office - 11 Broadway, N. Y. C. House - Plainfield, N. J. 12/5/16 Mr. Rollin P. Grant, President, Irving National Bank, states: "I have known Mr. Saunders in a personal way for some time and know him to be a man of high integrity. His moral and financial reponsibility are above question and while he has considerable means I cannot say how much he is worth. He is about sixty years of age and is a home man. I meet him at the board meetings of the Peoples Bank & Trust Company of Westfield Everybody regards him very highly. He of which we both are members. has a number of large business interests but I cannot say offhand just what they are." The Directory of :drectors gives; William L. Saunders Director - A. S. Cameron Stearn Pump Works Edison-Saunders Compressed Air Company International Harvester Co. of New Jersey International Harvester Corporation International Pneumatic Tube Company Peoples 3ank & Trust Co. of Westfield, N. J. President and Director American Institute of Mining Engineers Ingersoll-argent Drill Company Rand Drill Company Chairman of the 3oard of Ingersoll-Rand Company. 12/6/16 J. Herbert Case, Vice 'resident, Farmers Loan & Trust Company states; "I have known r. Saunders for at least twenty-five years and think very highly of him and his attainments. He is a man of about sixty years of age, with home at Plainfield, N. J. As to his parentage, I am unable to say, neither can I give you any idea of his wealth, outside of saying that he may be worth from 4300,000.00 to 41,000,000. He is what I consider a top notch man, being in close touch with all the business affairs of the country at the present time, thoroughly understanding all details and absolutely sure of where he gets on and where he He has been very successful in business and is interested, with gets off. William R. Grace, in a number of different lines. His responsibility, moral and financial, is not to be questioned. Mr. Saunders is very close to Woodrow Wilson, in fact, as close as any man, I think, can be. He worked very hard for Mr. Wilson's reelection and it has been said that he is being considered as a possible cabinet I cannot say definitely, but it is my impression that he is spokmember. en of as the successor to r. edfield who is Secretary of Commerce and Labor. He is a college man and, I believe, holds several degrees but just what they are I am unable to say. Mr. Saunders is the proper type of American business man who is successful. He is held in high esteem by all who know him and he never undertakes anything which he cannot thoroughly fulfill.. Taken from Who's Who in America 1916-1917; "William Lawrence Saunders, Engineer, born at Columbus, Ga., November 1, He is the son of W. T. and Eliza Saunders; holds the degree of 1856. 3. S. of the University of Pennsylvania, 1876; married Bertha Louis Gas- -2- WILLIAM L. SAUNDERS 12/6/16 ton August 4, 1886, who died in 1916; in charge of hydrographic work 1878, sub-aqueous rock excavation 1879-81; was twice elected mayor of North Plainfield, N. Ji was a member of New.York - Ne:: Jersey Harbor Commission, Board of Commerce and Navigation, vice chairman of the Naval Consulting Board U. S., chairman for Nicaragua International PanAmerican Commission; president of the American Institute of Mining Engineers; member of American Society of Civil Engineers, American Society of Mechanical Engineers, National Civic Federation, New York Chamber of Commerce; trustee of the New Jersey State Chamber of Commerce, New York Southern Society, and member of various clubs. He is an Episcopalian, politically, a democrat. He is author of "compressed Ai Information" "compressed Air Production" and co-author of "Subways and Tunnels of New York" and 1q-lock Drilling". His home is at Plainfield, New Jersey, office at 11 Broadway, New York City, which is the address of IngersollRand Co., he being Chairman of the Beard of Directors of that company. 740/1153. 12/6/16 . Geiieft-i-a-1 National Bank advise that Mr. Frew, president of the Corn Exchange Bank with whom the Ingersoll-Rand Company keep their principal account has known Mr. Saunders for many years and speaks in the hist terms of him. Zais gentleman states that Mr. Saunders is not now active in that company but that formerly he was very active in it and successful in building up the business of the company. He judges his age as probably between 60 and 65 years but does not consider him "an old man" but one whose faculties are thoroughly acute. and whose mind and judgment are absolutely unimpaired by work or years. He regards him as an A. No. 1 man in every respect. ( Mr.A6pper is also checking up through J. P. Company of which firm Mr. Lamont is codirector with Er. Saunders in the International Harvester. Mr. Henry Tome is making some inquiries which he will report to us in a few days. .0 Mr. Saunders' home is in lashington Park, North Plainfield, N. J., where he has lived for upwards of twenty years. I learned from and through residents of Plainfield that he is very highly thought of in that town, reputed to be a man of wealth but one who has worked up from the ranks in his profession as a mining and civil engineer and is regarded as an authority, particularly in the mining branch of engineering. In politics he is a democrat and has been a firm and ardenf,admirer of the President and local report in Plainfield has it that he might become a member of the cabinet. S4WC. CLA44,1. Mr. H. H. Lowery of the CWk+4410-±134 National Bank whe has been a resident of Plainfield for many years while not well acquainted with Mr. Saunders has known him by repute very favorably for many years and an intimate friend of his who is also an intimate friend and close neighbor of Mr. Saunders informs him that he knows him to be a man of high integrity. His moral and financial responsibility are above question. andwhile he believes him to have considerable means cannot say how much he is worth. ,ILLIAM L. SAUNDERS He further states that everybody regards him very highly, and further suggests that the American Institute of Lining Engineers of which Lr. Salnders was the organizer and president should be able to give full particulars as to his professional career. 74,4 1-,s . 4, at._ - 4_,, Z,J 6"- e,6 Rivw hArkar J /IAA . MISC. 41 AFTER 5 DAY, RETURN TO CORNER PINE & NASSAU STREETS FEDERAL RESERVE BANK OF NEW YORK NEW YORK CITY December 13th, 1916. Dear Mr This is in reply to the Weekly R t of December 9th. The arrangement about gove excellent and if Chicago fails to come into invited to handle the matter accord t they be g to their own will find 11 irate competitorsing on them in It will be an excellent th . este. They short tine. 'nicago and to the Federal Reerve Board. About the pur4 prepared for so of hills a s an excellent Mr. in every way. the memorandum you The hi4 rat keeping a steady cour showing stify the Reserve Bank in ering opportunity for its members to get money if the d purchases of bills in a large doubtedly delve e situation ex ctly as it should snou way drift into a continued period of high have d rates, the o ered in conn .Reserve Bank y possible radical change of policy to be consid- ion with rate adjustments is the attitude of the o ard non-member institutions. Under certain con- ditions, we ought to consider (although I am not yet ready to recommend it), dealing directly only with member banks or with has not arrived, how- member banks through brokers. The time ever to take such a radical step and it would lead inevitably 2 To Mr. Kenzel. Dec. 13, 1916. to serious embarrassment in barAers who are not dealing with the bills of This is simply eligible for membership. a suggestion for debate among the officers. I notice Lazard Freres down on the Are these bills endorsed or have t850,000. private list for about zard Freres fur- nished a statement and is it thoroughly satis a tory! Thank you for such excellen ii one. Very sincer,,-ly E. R. Kenzel, Esq., Assistant Cashier, Equitable Building Ner York City. BS/VCM details f your transac- Denver, Colorado, January 10, 1917. Dear Mr. Commenting on the Weekly report of December 22nd. my to accomplish anything towards arrange The only cater facilities , for carrying bills will be to submit a ,, .ful stateme. ' of this mat- ter to the Reserve Board, or to persu, the bill house 4r to effect arrangements with member b under the 15 day collateral no can use us for their benef' thin that I can do from with. R. Kenzel, ssis lew City. BS/CC Esu, F to carry their n , so tha t they want srtfolios e member banks °nit elieve there is anycertainly should be dealt 0 11--,frg/I ' FEDERAL RESERVE BOARD 0 WASHINGTON 7th, 1017. ' Mr. B. P.,. Kenze1, C/o ioa'i ieerve Bank, Hoy: York I,ry door Mr. Kenzel: Could you have letters prepared introducing mu son, Benj. Strong, Jr., to the following: Herman H. Har es, Messrs. :Torgan, Haves Co. ic.<5.14,5gait Georges Pa Hain, C/o Bank of France, Major loan, 'American 'Embassy, Captain Saulas, American Embassy, laris, . Ambassador Wm. C. Iaris, Charles E;. Ave. du Bois de Boulogne, Sir Ed:ward H. 7oldon, 5 Threadne Iondon, 1.Tontb.ut C.elormen, an:: of 'England, ,, Gronfet.l, Messrs. Morgan. OrenfXela ,!): Co. Bro,_. St. Iondon. , Hon. w. H. American Amtassador, 1ondon.a. Meco I 7:L2.nt to deliver to him imedic'..tel:? on kI L.,. retiarn TaeLdau cfternoon, icl I form ,J1:1c1i can be ILL-ed for each leiter. ver onelosin 0 Lear ,Der :;:on>,tu:P ,Dear .7.ajer._.. 0 ..Der v-Deax CuI)tain sales, ...--:Dea-,' Lir /Dear I.hilliy.s, v-DearcYormon, ,--'Dcar jranfell- vDear :L.- Rzibassador. Ter ift,..--/ This letter viill be yresented bv my oldest son, Benj. Strong, jr., who is proceedin to laris to tahe u..p his duties in the Allerican Ambulance service \:ith the rrench He has been a student of Irinceton and is oins Ykrmy. with a number of his Triends from there. Ben has been in the Yational Guard for about a Ve* -has.beon Liu;:tored out of the sery;:60, much to hi 2 rezret he .,.'ecL,use his es,yes failod to riect.the re:lufred stiLadro, aE: year L,nd .v,.as mustered into the United States Lriny. _ he 12 oblized to v:ear i:Jaues_evenen on dut ----tilvally, 1 do not V:nt'hiL: to yu.sE 'Cl-irouh ondon (or Iaris as the case lay be) without ta:7ing the oortunity, if yossible, of lieeting you. T have told him not to hesitate to call upon you any time t:or advice. Thankins you in Edvance for anythin . that be able to do for him, 1 am, Very sincerely -yours, you may :C.; _h7 I V Li; D AUG 11. 3 1025 FEDERAL RESERVE BANK OF NEW YORK Spa, Belgium, July 21, 1925. Dear Mr. Kenzel: I am very much obliged to you for your confidential report of July 8, with attached clippings, concerning the failure of Dean, Onativia Company; I have read it with a great deal of interest, but it needs no comment. I am writing separately to all of you at the bank about various matters requiring attention. Very truly yours, E. R. Kenzel, Esq., Deputy Governor, Federal Reserve Bank, 33 Liberty Street, New York. Royal Hotel, Evian-les-Bains, July 5, 1928. Dear Mr. Kenzel: Mile Dr. Stewart was with me, we had quite a talk about the recent expansion of European acceptance credits by New York City bankers; possibly he had a similar talk with has been watching it from this side, and expressed some concern lest the growth of the business was not somewhat at the expense of safety. ferred especially action of the to the type of Federal He Mr. Harrison, but I am not sure. He re- credit recently made possible by the Reserve Board in liberalizing the rulings so that we are now able to finance the movement of goods within or between European countries. Of course you realize that this type of bill, that is, a bill to fasilitate a movement of goods in which we are not directly interested financially, has never been accepted by the Bank of France, and only as exceptions to the rule by the Bank of England. It is generally here as a "domiciliary bill*, that is, in this case a bill which is domiciled in New York though it described over the payment of relates wholly to foreign transac- tions and goods. I am not willing to say that we should change our practice. credits have degree. had an indirect influence in The difficulty we one than a technical one. banks have not yet maintaining our exports Those in no small would experience in New York is more a credit Dr. Stewart feels, as I do, that many of our developed the knowledge or gained the experience to enable 7/5/28. Mr. Kenzel. 2. them to thoroughly understand all the credit risks involved, and it is a business which even the London bankers, with their experience, handle very gingerly. It occurs to me that it might be a good plan for us to pick out some of the institutions which are developing this business in a rather large way and make some careful and particular inquiries as to just what the business is, what the credits are and how carefully I should think two good avenues of inquiry would be the it is being handled. International Ac- ceptance Bank and the Equitable Trust Co., just as a start, and possibly later the National City Bank. large port My impression in the past has been that a of this business done in London is arrangement by which the London bankers are done under some joint reasonably account protected by the local knowledge and frequently the actual obligation of the large banks in the country where the business is done - for instance, Germany. It may be that later in the year it would be feasible for you to come over here and look into some of these matters on the ground. The developing a money people in the Bank of France are facing the need for market along the lines of our development, and I think they would be grateful for a little help on that subject also. We can talk it over when I get back to New York. Please give my best to everybody in the Bank, and the same to your goodself. Sincerely yours, Mr. E. R. Kenzel, 33 Liberty Street, New York. Office Correspondence T. Wt" S-71- From Subject: 0-t-0-45 Date _ el-C-4-,Zezie-e -- CTL (MX FEDERAL RESERVE BANK OF NEW YORK 7-L 14e. ILL &,_674c4Lc 5L. kW-19-POU4S (UV SiaALIC) tl;,' ,crA-ed,eir No. D340677 tatro 3Intrntat 'Itruritur, °I'e-#6.- OFFICE OF COLLECTOR, Form No. 1. (Revised May 5, 1913.) 2nd District of New York. MAY 22, 191 191 or7gt Err iurb )--.---Dollars, on account of A INCOME TAX /01g (En er heti on what account paid and period of liability, e. g., "Special excise tax, 1913," "50 per cent penalty, It. L. D., 6 months June 30, 1913," "Offer in compromise," etc.) Five per cent penalty Interest at f per cent per month for Total amount pajd months 576, Collector. - **"--.< allstfa 71701841.614 10 301R10 . egg.. P - irmo-r. --( out -- \ MAY 111(14:: b. bin (.ale ",e&iLITONEEIOCI ill w110" k.64. jaiv, ,08 Dant ottluom 8 .11 ,vInaoq /non loq ",81(11 ,x.n1 0813X0 I" toIztv5q zAistom - Airtom .m inn .mq irsuorris Isto't 15t skra it, its.r5isil ge,e4. OW. I, No. C 438651 3ttifr ta1r 3rttrrnal Eturttur, OFFICE OF COLLECTOR. Form No. 1. (Revised May 5, 1913.) 211d District ofNEW YORK, JUN 3 1915 , 191 Eyriurb INDIVIDUAL ,00 Igi Dollars, (Enter here on what account paid and period of liability, e. g., n accoun of / 0 "Special excise tax, 1913," "50 per cent penalty, B. L. D., 6 months Jima 30, 1913," "Offer in compromise," etc.) Five per cent penalty Interest at 1 per cent per month for months y Total amount paid i9 , Collector. 2-602 , W YORK CITY ODAR STREET FEDERAL RESEIRVE BANK OF NEW YORK 62 4,4 Form 1042. UNITED STATES INTERNAL REVENUE. ANNUAL LIST RETURN OF AMOUNT OF NORMAL INCOME TAX WITHHELD AT THE SOURCE ON SALARIES, WAGES, RENT, INTEREST, OR OTHER FIXED AND DETERMINABLE ANNUAL GAINS, PROFITS, AND INCOME EXCEEDING $3,000 FOR THE TAXABLE YEAR. The income to be made the subject of this return does not include dividends on capital stock or net earnings of corporations, jointstock companies, etc., subject to like tax or income derived from interest upon bonds or mortgages, or deeds of trusts, or other similar obligations of corporations, joint-stock companies, etc., or from interest upon bonds, mortgages, or dividends of foreign corporations. Filed by for the year 191 6 (Name of debtor or withho irtg agent.) To be made in duplicate to the Collector of Internal Revenue for the District in which the debtor or his duly appointed withholding agent, as the case may be, is located, on or before the first day of March, showing the names and addresses of persons who have received salaries, wages, rent, etc., as above described, in excess of $3,000, on which the normal tax of 1 per cent has been deducted and withheld during the preceding calendar year. I (we), of (Address in full.) (N a the dv---J17 of (State official title.) /e-c-d-e-2-vc located at (Debtor or withholding agent.) (Address in full.) do solemnly swear (or affirm) that the following is a true and complete return of all salaries, wages, rent, and other fixed and determinable annual gains, profits, and income in excess of $3,000 as above described, which were paid (or were payable) to each of the persons listed herein, and on which the normal tax of 1 per cent was deducted and withheld during the year stated, and there are herewith inclosed all certificates claiming exemptions and deductions with respect to said income. NAME. ADDRESS 1N FULL. CHARACTER OF INCOME. (State whether Rent, Wages, etc.) AGENT IS LIABLE FOE Tex. 000. e24,-C AMOUNT OF INCOME ON WHICH WITHHOLDING AMOUNT OF EXEMPTION AMOUNT OF INCOME. AMOUNT OF Tex WITHHELD. Xtrz-i-C O00 /2... .0 cr,...s,73,4_ cf.#11-(f ge, a 0 ae.-4--v-1,.-4- C".../3ar/ ortot r- e Totals for calendar year $`ri ZT Amount of tax remitted herewith (if any) to Collector Sworn to and subscribed before me this District of (Address.) day of t7Ze--4.4.A , 191 Axe, CASIO* Ze7-7Y NOTE A.Withholding agents may, if they so desire, pay at the time this list is file during the year for which the list is made. Signed: (Capacity in which acting.) o the Collector of Internal Revenue with whom the list is filed, the amount of tax withheld 2-7358 1 AFTER 5 DAYS. RETURN TO FEDERAL RESERVE BANK OF NEW YORK YORK CITY 62 CEDAR STREET t-vi 1 4. r 0.1.4. EXEMPTION CERTIFICATE Form 02d (For claiming exemption at the source as provided in paragraph C of the Federal Income Tax Law of October 3, 1913.) To FEZEIAL ESEEVE BANK OF NEW YOU. (Give name of withholding agent.) (Full post-office address.) I hereby serve you with notice that 1 anadiaimplemarried, with my; (wifebisiminowi) living with me, and that I now claim the benefit of the exemption of $ /I C, c, c:, , as allowed in paragraph C of the Federal Income Tax Law of October 3, 1913 (my total exemption under ) paragraph being $ Date, OCT 2 9 1915 ,191 '' 41(i #said Signed: Address: / ull post-office address.) / Seirv.W. P- NormClaim for exemption on Form 1007 can be filed with the debtor or withholding agent at any time, not lest than 30 days prior to March first next succeeding the year for which exemption is claimed. http://fraser.stlouisfed.org/ (SIGNATURES MUST BE CLEARLY AND LEGIBLY WRITTEN.) Federal Reserve Bank of St. Louis EXEMPTION CERTIFICATE Form 1007. (For claiming exemption at the source as provided in paragraph C of the Federal Income Tax Law of October 3, 1913.) Revised. (Give name of withholding agent.) x.cal-t-/ L4f2,(1/ (Full post-office a ess.) I hereby serve you with notice that I am isi1-married, with i9ay (wife o, with me, and that I now claim the benefit of the exemption of $ /74ru - living , as allowed in paragraph C of the Fe eral Income Tax Law of October 3, 1913 (my total exemption under ). said, paragraph being $ 000 .c--' ,..,cl,.., Date, aGC X----- ,19th Signed: Address: 'f-t e-2-W-Y1.44, NOTE.-Claim for exemption on Form 1007 can baffled with the debtor or withholding agent at any time, not less t succeeding the year for which exemption is claimed. http://fraser.stlouisfed.org/ (SIGNATURES MUST BE CLEARLY AND LEGIBLY WRITTEN.) Federal Reserve Bank of St. Louis laaaa.babaire}) Form 1007. Revised. i T i EXEMPTION CERTIFICATE (For claiming exemption at the source as provided in paragraph C of the Federal Income Tax Law of October 3, 1913.) ,e-----A...,,c -- - /r..11.-A-ar,A-444.--4-4--aI 1,, IlraE: of withholding agent.) - - - (Full post-office address.) I hereby serve you with notice that I am singlemarried, with my (wifehusband) living , as allowed with me, and. that I now claim the benefit of the exemption of qi.cr.et.ct in paragraph C of the Federal Income Tax Law of October 3, 1913 (my total exemption under said paragraph being Date 1916 Sign Ad.dress:.2..207,-JTe.-4*C-a cf, (Full post-office address.) NarmClalm for exemption on Form 1007 can be Med with the debtor or withholding agent at any time, not less than 30 days prior to March first next succeeding the year for which exemption is claimed. (SIGNATURES MUST BE CLEARLY AND LEGIBLY WRITTEN.) EXEMPTION CERTIFICATE Form 1007 (For claiming exemption at the source as provided in paragraph C of the Federal Income Tax Law of October 3, 1913.) Revised. To FEDERAL RESERVi BANK OF NEW YORK, (Give name of withholding agent.) g (Full post-office address.) P-1 4 H I a, 14 A I hereby serve you with notf that I am iditilemarred, with my (wifehiwitsmecl) Jiving D. , as allowed with me, and that I now claim t e benefit of the exemption of $ in paragraph C of the Federal Income Tax Law of October 3, 19'3 (my total exem tion under v 0. ). said para raph being $ 19t5--- g Signed C"k"1/4-A-AA-A.4-4.-/- ykrt.v-X-- Address r4 nil ddress.) NOTE. Claim for exemption on Form 1007 can be filed with the debtor or withholding agent at any time, not less than 30 days prior to March first year for which exemption is claimed. (SIGNATURES MUST BE CLEARLY AND LEGIBLY WRITTEN.) e succeeding the _g Exemption CertificateFIRMS, ORGANIZATIONS, OR FIDUCIARIES. Form 1063. Pkte, (For use of firms, organizations, or fiduciaries entitled to receive income other than from interest on bonds, to establish their identity and nem/liability to withholding at the source.) _Oef 64-0' (Give name of tor.) (Character of income, other than interest on bonds, as, rent, dividends from foreign corporations, etc.) I do solemnly declare that the firm, organization, or person named below is entitled to receive the above-described income, and that under the provisions of the income tax law and regulations said income is exempt from having the tax withheld at the source, and that all the information given herein is true and correct. Date, Ofr',GE BEi , 191 r fiduciary,)' EAc., 'Rfirt By (Signature of person duly authorized to sign for firm or organization and his official position, or name of trust.) Address: (Give full post-office address of firm or organiation or fiduc / Exemption CertificateFIRMS, ORGANIZATIONS, OR FIDUCIARIES. Form 1063. (For use of firms, organizations, or fiduciaries entitled to receive income other than from interest on bonds, to establish their identity and nonliability to will "ng at the source.) (Give name of debtor.) (Character of income, other than interest on bonds, as, rent, dividends from foreign corporations, etc.) I do solemnly declare that the firm, organization, or person named below is entitled to receive the above-described income, xempt from having the tax withhold at the and that under the provisions of the income tax law and regulations said inco source, and that al formation given herein is true and correct. Date, , 191 (Name of m, organization, ciary.) alifax_A By (Signature of p son duly authorized to sign for firm or organizatio official position,or name pf trust.) Address: .... ait/ 07*/ (Give full post-office address of firm or organization or fiduciat rtc,14 (/`wi' 2-- 4AIJA4Y LIST A,EST1VE aaix OF .7E4 YORK OFFICERS WSITION SALARY Benjamin Strong, Jr.: Governor 430,000 Pierre Jay Federal Reserve Agent 16,000 J. F. Curtis L. F. Sailer Secretary and Counsel 12,000 Cashier 10,000 E. R. Kenzel Assistant Cashier L, H, Hendricks " 4,200 6,000 ?? ELIPLOYEES: Arthur W. Gilbart Discount Dept. A. B. Fletcher i, 2,400 il 1,500 Walter B. Matteson Securities Dept. 2,400 I. Ward Waters Paying Teller 2,700 Roderick P. Fisher Receiving Teller 1,500 n George Hoehn Wh. M. Kettner *Nan Raaseh " Dept. Note Teller " IS 1,200 1,500 Dept. 1,140 Thomas M. Day, 3d Clerk 600 Ralph G. Wills Clerk 450 Michael A. Hanson Clerk 480 G. V. 21. Veghte Transit Dept. 1,200 Miss 3elle Furstenberg Transit )ept. 900 Wm. A. Ehm Clerk 720 Arthur M. Kesses Clerk 500 E. D. Hassard Clerk 540 Salary List continued: Federal Reserve Bank of new York: POS/TION E4PLOXELES: ZA.4_41. $97,930 AmOunt carried forward E. G. Blackford Debiting Dept. Rudolph E. F. Wiese Harry W. Dennington, Jr. 1,400 700 Bookkeeper Frank J. Ramsden, 720 1,000 Pedro L. Schellens Statement Clerk John A. May General Bookkeeper H. V. Cana Credit Dept. and Federal Reserve Agent's work 800 2,000 /1,000 Fred. W. Opper Asst. Credit Dept. Miss E. E. Bushnell Caief Miss L. C. Elliott Stenograpuer 1,200 Miss R. A. Holmes Stenographer 1,200 Miss Jean Miller Stenographer 936 Miss H. H. Reynolds Stenograther 936. Miss I. W. Banks Stenographer 936. Miss E. E. 'Burrell Addressograph 624. Miss Justine Miller Typist 520. Miss Mary C. Parker Files 1,500 Miss Hilda W. nese Files 900 John MeAlevey Files 466 Harvey B. Prescott Stationery 520 Miss Elizabeth Bruce Telephone Operator 820 MTS. V. C. McLaren Governor's Secretary James Hood Scott Watchman at Vault Edward J. McCabe Floorman 1,500 tenographer 1,500 1,500 900 1,040 List continued: ?ederal Reserve Bank of New York: ;POSITION EMPLOYEES IAR $125,548 Amount carried forward James J. Delahanty Floorman 900 Jean A. Sullivan Messenger 360 Francis SoraCco Messenger 360 Walter 11, Riedel Messenger 260 F. F. Goodman Messenger 260 J. J. Parnan Paying Teller's Messenger 1,200 Geo. S. McNair Watobnan John J. Phelan Watchman 900 900 Harry P. Aumadk Assists in Fed. Res. Jos. D. Biggins Chief Clerk 3,000 Adolph J. Line Officers' Clerk 1,800 Howard U. Jefferson Auditor 3,500 W. D. Goodwin Auditor's Assistant 1,800 D. A. ReintoreCht Agts. Dept. & Credits " 900 --...14.4.22 4 142,388 Al_44 /. 6 v SAURUS An, DIN os OF OFFICERS An 1PLOYERS AJD THEIR SECURITY BOCeS. DEPT. Loans and Secur4ties EePLOYEIa Custody of bills discounted, Arthur W. Gilbert loans pee collateral thereto, deposited with Federal Reserve Agent, to secure Aaron B. Fletcher circulation, substitutions and withdrawals; accep- IVA Chief of Loans & Discounts Asslstant Loans & Disceunts SAIARX 4 2,400 1,200 BOND 410,000 v' 45.0 0 5,000' tances, loan and discount records. Custody of securities purohased for our own account Walter B. Matteson and for others, in cenjenc- Chief of Securities 2,400 10,00 tion with an officer. Details arri records thereof. Paying Teller Custody of cash, vault record I. Ward ,aters Of cash held at Clearing House and Subtreaaury, signatures, Clearing House balance, clerks' payroll. Teller 2,250 Receiviemg Receipt of counter deposits, Roderick P. Fisher verification of checks, etc., and preparation of cash for George Hoehn Paying teller. Teller 1,500 1,000 5,000 Teller 1,200 10,000 Asst. (Clearing House Settling Clerk) Credit Books Asst. 1,000 5,000 Teller Note Teller City and Country Collections Wm. X. Kettner Incoming Mail John Flaasch Clearing :louse Lack Registered :Lail and Express (Valuable) Preparation of Credit Books Preparation of Expense Vouchers Return and Protest Items Thomas M. Day, 3d. Ralph G. Wills Lichael A. Transit Hanson Collection of out of town cash L. H. Hendricks items Oatgoing mail G. V. N. Veghte Securities Correspondence Asst. 360 4f.0 Debiting Preparation of Debit Books Manager 6,000 changes (Wiese assists on outdoing mall ir'e //1462 20,000 -/ let Asst. 1,200 5,000 / Miss Belle Sur- Asst. 780 5,000 stenberg WM. A. Ehm Asst. 600 5,000 Asst. 500. 5,000' Asst. 540. 5,000 -/ E. 0. Blackford Chief 1,400 5, 000 Aset. 700 5,000 ?roof of incoming ex-Rudolph E.F.Wiese V 5,000 ' E. B. Hassard (L. H. Hendricks) 1200 5,000- 480 v 5, 000- ArthurM. Kesses (L. H. Hendricks) Parolees° of Supplies p. v 20000 Asst. cO 25,000v VI (21 DMA SISOkkea4 444= Members Ramadan, Statement Keening General Bookkeeper Member Banks' Stateneute Pedro L. 2chellone Statement Cleft General ledger Other Aderal Beserve :Unit John A. -:4sy General 5,t2poo 1,000. Prank J. Federal Aeserre danks' Statements =Q. * 600. Barry W. Dennington, Jr. SAT.A.,fox 5,000 410. 5,000 1,500 7143 V 5,000 BookLndgers(temporary assign-keeper ment) Capital Stock edger Proiaration of general statements. Credit In Charge s,cetpt, analysis, and filth& R. V. caw of borrowers' statvsentit and other credit information. (Cann Part ttme Credit Dept.., Fred. W. Omer bal9nce with Pea. ;.Ziad4 Agt.) Asst. to E. E. Bushnell Steve. " " L. C. _Elliott Steno. R. A. IOlmes Joan 4111er are. t.Battereon It Mist; 5. 3. itaynolds " I. Banka FL. lurreli Typist Justine Uiller Piltn latter Piles 5,000 Chief Dictation Itmeariting Copying and duplicating Addressograph Stcnogranhie Inc.In F.S.Ate Dent. 1,500. Ules anry C. Parker pus 1,200 1,040 2,040 640 936 936 700 624 540 1,000 1,000 1,000 1,000 1,000 1,000 Stationery Purchase and distribution of stationery amd sup. 1,500 1,000 Mies 51,11a7ff. Einne Asst. 900 1,000 Jeha MeAlevey General Piles Librar, 466 1,000 520 5,000 Cleric Anat. Harvey 5. Prescott Asst. (1111.4an_ plies Telephone Operator Coveraor's ocrE:tary. Vault Keeper ?loom= dricks In oh00.) Tetilbone &witeldiesisi Mine Elizabeth aperator 728 Laren Cire'y to 1200, 4000 900 5,000 14040 5,000 700 5,000 300 260 260 260 1,000 1,000 1,000 1,000 5,900 Bruce Dtctit Ion, etc. Watchman at vault Auditor's Transfer tiles V. C. Goer. James 400d Scott Vault atar o J. LcCabe Ploorman is Relief et Mora Guard on floor Officer for laying Tellies Messenger Direction of Pages Jar.les J. Dolahanty Lessencors Uesseneers for officers un-Jean A. Sullivan der direction of floorman Frannie Serrano ilesencer Walter t. Riedel F. F. Goodman 3. Parnan charge of allJ.ship-(Relieves PAying Tellers 4eassager ments of currency and securities Incoming Registered. also Clearing House Balances) flOorman when 2101cessary) 1,200 )1,00 0..-0 V Pierre jay Fele:cal Reserve Agent 416,000 4 10,000 250,000 to U. 5. Charles Starek Depuiq Federal Reserve Agent 10,000 Govt. 150,000 to U. S. Benjamin Strong, William Woorlward Deputy Governor J. P. Curtis Secretary of Board Counsel to aank G. E. Gregory r Governor Acting Cashier E. R. Kenzel Assistant Cashier B. W. Jones Acting Aassistant Cashier 10,000 R. H. Giles Acting Aassistant Cashier 10,000 30000 12,000 10,000 10,000 10,000 4,200 no, 20,000 Govt. i3) Iiii- g1220 Patrol of 2atdbeen r hora . Geo. S. raNalr AUK P44'411. Watchman 4 900 John J. Ebel= Federal Re- Joint custody off. R. Notes U. V. Cann received frot Po R. Board Joint custody of notes, etc., Harry P. Aumack serve AaN2,2,4 a Department rediscounted Joint euetody of gold deposited Records and reports Zeubors of Agent's Staff: 900. Chief Asst (Assists 4, 000 700 25,000 Te0. 3. Oft 5,000 10,000 t°.-"-- Govt. 10,000 10,000 Direction of staff, dernrtmental developmst, etc. Jos.. 23. amine Adolph J. !4n6 Capital stock records exiI cept ledger Auditing 5,000 credits) k. Jefferson Officer' Clerk Special investigations for officers t 5.000 en BA Reseal H. Hene.ric4s Chief Clerk Zlig, Chief' Cie& 3,000 Officers' 1,5,30 10,000 3,500 20,000 Asst. 4200 5,000 Asst. 4000 54000 Clerk General auditing of bank and Seward U. Jefferson Auditor agent's securities, records etc. f. D. Goodwin kuditer also on agent** Earl anI sabstitutoe as officer D.. A Reinbrscht on vanit control / 00 / -WU Arbi& oztv. MattAIRMSRA-12,ALI Pli_g0.2_17 _InApjjazzu. fikunpF MEP WM'S 014 JAILL The following adjustments are recommended by your Committee after careful considera- tion and in recognition of ability that has been developed and the attention and devotion to duties at all times displayed. Here follows the names of the employees, the date of their employment, the salary at which they were employed, their present salary, and the salary reaommended, together with a brief comment in each case: Initial alltla 12,1am, Pre- Pro- Palare pOsed *Alqry. Nov.16/14 Assistant $1,200 41,200 Date of MAE. A. B. Fletcher ftlelment sent gagagatt 41,500 Is the expert machine operator who prepares the records of each day's transactions for Washington. He was hired for this purpose, but he has developed ability in the Discount Department, and has displayed willingness and capacity in assist in a number of other departments in the bank. I. W. Vetere Nov.13/14 Paying Teller 42,250 42,250 $2,700 Mr. Waters has displayed the ability essential to handle the large sums of money which pass through his hands in a thoroughly efficient manner. We consider him to be a valuable man for the work he is doing. We thlMt the responsibility of his position justifies the proposed increase. Geo. Hoehn Jan.11/15 Assistant 01,000 Receiving 41,000 Teller 41,200 He was employed as a bookkeeper. He is a good all around man and each an expert money counter that we propose creating a Money Department under his charge. We feel that the added responsi- bilities justify the increase. 1. R. Hettner Jan.4/15 Note Teller $1,200 01,200 41,500 He has had abundant ex- parlance in his line and in addition is doing the work of the city and country collections. He handles all receipts and shipments of currency. (2) Initial Date Ewa of Bmplwamt, Pre- Pro- Posit lan Salary sent posed SalarY aaleaa. #1,000 #1,000 ed,140 Has acted as our settling clerk at the Clearing House; bundles all transfers of funds, and is responsible for the preparation of all expense vouchers. He is a good Mall. 360 4 360 4 General Clerk John Raasch Nov.11/14 Thomas U. Day, 3rd Dec. 5/14 Clerk CnNmQL.A.N.a 600 A graduate of Princeton.; without former tanking experience; is a man of intelligence and has developed into a very capa- ble clerk. Miss B. Farstenberg Nov.16/14 Transit Dept. # 780 43 900 780 Is remarkably efficient in her line of work and we have found her capa- ble of carrying respon, sibility. William A. Ehm Nov.17/14 Clank 4 600 600 4 720 Assists in Transit DeHe is acpartment. curate and willing and we expect to advance him to more important work. H. W. Dennington, Jr.,Ap1.28/15 Bookkeeper* 600 # 600 4 720 Although only recently employed this man has Shown ability and willingness to work. He is a son of one of the directors of the Union National Bank of Schenectady and was anxious to get in here even at a nominal salary for the experience. He is a student in the School of Commerce , New York Uni- verbity, and is earning far in excess of his present salary. John A. May jan.15/15 General $1,500 Bookkeeper $1,500 42,000 He was cashier of the Peoples National Bare: of Potsdam, and came to us at a reduced salary on account of greater op- portunity for advancement. He is a thoroughly capable and efficient man of excellent exnerience and we expect to use him an one of our examiners of state tanks; his acquaintance and experience in amen banks up the state will doubtless render lam of great value in that capacity. His training. L :fLtted him for important responsibilities and for develop- ing the various depart- ments. We consider him the best all around man in the force. (3) Initial Date Ifgar Miss E. E. Bushnell of bEgjayaitat 4sition. lalla Nov.13/14 Stenog- rapher 41,040 Present Proposed ;alary Salary. 41,200 41,500 Liss Bushnell undertook Comment the difficult task of organizing the work in the Stenographic Department, and has displayed ability, earnestness in her work and devotion to the interests of the baerl at all times. We feel that this department is under excellent supervision, and that her wort should be recognized by the adjustment proposed. L. C. Elliott(Mess) Dec. 7/14 8tenographer R. A. Holmes (-Miss) Nov. 23/14 Stenographer Jean Miller (Miss) Jan.15/15 Stenographer Miss Elizabeth Bruce Switch- 41,200) The quality of the work ) of these employees is 41,040 41,040 4 950 41,040 4 840 4 840 4 936) made. 4 728 4 728 4 340 41,200) such that we feel this ) adjustment should be board Has given satisfactory service and her ability justified the increase, operator Mrs. McLaren Nov 13/14 Secretary 41,200 41,200 41,500 James Delahanty Jan. 28/15 4 780 4 to Goversor 4 780 900 Was emploYed on trial with the promise that if satisfactory he would be paid 475. per month. His wort justifies the increase. Jean A. Sullivan Jan. 4/15 Page 4 300 Prank Soracco Oct .16/14 Page 4 260 $ 300 4 260 510) These boys were pages ) and have developed into Will be * 360) messengers. $ useful in junior clerical work. Harry Aumack Oct.14/14 Clerk 4; 700 4 700 4 900 He has assisted Ur. Gann in the Federal Reserve Agent's work; also in the Credit Department. He is an exceedingly capable and willing worker, and has handled his complex duties to the entire satisfaction of Mr. Cann. A. J. Line Oct.4/14 Officers' 41,500 Clerk 41,500 41,800 Mr. eLins has had entire charge of the stock ledger and the subscription records regarding capital stock, also of increases anti decreases and has con- ducted practically all of the correspondence re- lating thereto, and has had charge of the printing and issuing of all circulars. He is one of the most useful in the bank. to this inentitlee crease. (4) Initial Date of Ewa. W. D. Goodwin lapjammt PosilLaa SalarY Jan.11/15 Assists ,Auditor 41,200 Present PTO- posed aak.a.aIgsimsag. 41,200 #1,800 He has had seventeen years of practical banking ex- perience and is a little older than the average employee of the bank. He was practically the manager of the affairs of the Fowler Estate. He has been the Auditor's first assistant ever since he came with the bank, and has been a faithful, capab1e and efficient employee. The Auditor relies on him for the care of the details of his department. He came to us at a very much reduced salary, in view of the unexpected ter- mination of the trust of the Fowler Estate. He deserves the proposed ad- justment as only a fair recognition of the value Of his services. We recommend that he be made Assistant Auditor, Downing A. Reinbrecht Apl. 5/15 $1,000 ;-1:- 0 t. $1,000 41,200 Was employed as a bockkaoper. By reason of his superior ability has 1-7 14 17,d t. been made an assistant to the Auditor. , ?he relieving usiossata aft reememes4 by your Committee after WOW SOMAdOlii- tion and to rvcocnitlea of ability that itilliMM0140Yrcioped snd the atteuties ad *Motion to duties at aLi times displayed. Mere fellows as MOWN Of the employees', the date of their aftploymeat, the salary at unleh they wart: evloyed, their present 6.1111W$ end the eA.iery res14,mondal, tocotharsIth a-brier elinehil In each cam& tat Akt,,,XX A; e; 014Wher Nov18/14 Alatetent 3141490 Pre. lost Pree, loped WW2 Aka= 44.800 GaiMai elt#00 is the =pile usahlaiope rater WM prozArfs* recasts et mob. 4W* truassealaas for ztashixoton. Re was hired for this purpose, but he has developed ability in the Disct ppartemut, and .44yei villinenms Tof14.53 AtY in assist la 411, or other depart- la the basks Le J. liters hor.liVit Paying teller 01, Am at, _Ago has Alepl*Fea the abiliti to handle the large ewe low which pore his heads in a offialsal ossnNo eaustler him to a Ira.Leabie am for the is tiolass lie *him sr. Jansil/ILS Amestant 4.1.000 toscsirthe 41,00,(X) toiler osaibility at his ,lition justifies the repeat& twesse. #1,20q Sawa emPlInratatITkeepers 01 round naa oa1 math au t money coaater that ooSsathe a ;- 'toast under his Sharon. ',4a yeal Vat the so,del osavosaiA baliOisa justify the ism creases lioto IsLiar *1000 03040 ill.) has had abundant 06. perigee, is his line Oad in witilLioa is doing the weft of the eity and 4001s1M1 collect/One. Rs ismalso all recelpte and Ohdreate of earremir. tel UAW* akiliZ 4raIcleat 7,650 General Clerk $10000 sent 5,650 $16000 21*plowed imam, ii0/41Z 6,700 #1,140 Has motet no our settling clerk a* the Clearing nouve; hamdies ell tuts* fore of Mods and is re* sponsible for the prepara- tion of ail ervease voudh.. WO. /home O4 Day, 3rd Lies 3. bor 360 # 360 # 101 Peeo 11116 Clerk TOO * 16/14 Ilanatt Catt.4. a good MIII4 all A Phduats of Itetneetoni elthent termer ban4ler ost,rtenee, is a loan of intelLicanoe and ban dew 'eloped in It:1y caw. ble clerks * 900 Is Ineoricably efficient Ss kor line or work and so Iwo fotoj nor gape- Us or carrylsw! mesas- Otittlity /Mime A. Ate alowelf/201 Clerk # 600 * 600 # ?to OSOiliS is TimMOMM DoisfliSs4. MO lo seOurate amd tura 1116 wont to advance hint to morn boportant work. * 600 WO WO Pennine:ton, 44,4,Aplii2e/15 TAO Although only recently employed thle man has shown ability and will- itwolese to works He le a son of om or the di- victors of, the Union *Atonal aloft et 3cheneotedy and 'one ansiese to cot to hove even at $I nominal salary tor tho experiemee. 3e. is a etuaent to the School of Commerce , new fork Uni- versity, and is essoise tar in excess of his ure. coat salary's Joirs A. 'zieW Jan.13/18 GesteNil 64000 allOMMNIPer 434500 "000 Monne °ashler of the - 36,tional 3aW of reinana, and arZIO to us at reduced ol:Ary on amount of greater op.. tmattr for adranSineas to a thoro4Ohly 6$106., We an0 offlotent mum Of excellent ompertenoe and we expect to ere him ea one or our seeniners of state beide; his ae- qftiatenee sed foxparleMee in feel' boast ap the state will doubtless rem. der is of groat Value Ls ososoilw.iii training has fitted him for itportant responsi- bilities 1,t-tp . 3nd ter (1011,10p. veriees 0560:1411.0P the beet 341 anew nen in the tones lett- Doti MIL MANI Eik Sit SmOblill of 24374.4-41*. Presant 10,490 411040 1r,1_90 tag '44i.ahklzu nov.13114 Stench- ra her t1,200 Prow Pose& 44,44z, .411291111, 1;:1,780 04010 ti4e Bushnell umocrtook the difficult task of organising thw work Lw the Oterogruphic Dap"sent* sal has displayed ability, earnestness In her we* Ane tievotisa to the interests of the bunk at all times wit fool that this delartwest Is under eminent sever- vision, and Vlat her Oork Should be reloNmised bw the adjustment proposed. L. 0. Elltott(Litee) Deo* ,/44 Asses* A. A. MUMS (Mbee) am 23/14 Jew Mbar WINO $4040 #1,040 930 44040 840 0$40 72S $ Tie nav.14/16 Vecrotagy 01000 I. Gortunsol Jans19/15 Tao 1, SOO rsphQr Ja$115/16 Nome - also Elisabeth armee 0043/14 Mrs. Oa fAran Zee De4abantw robs, Mophar 1114tch- board spemator 6 Irso 41,200) The totality at the work ) of tamps smplOVess la 44,2001 $eek that as Ossi thls isijosessmi shssld be # 954) rade. 4 84n Has givem satisfastort service sed her ability justified the luereasei 4 BOO 6 too Was employed on trial with the premise that if satisfootogy be 'Mai be paid ON per month. Ale wort justifies the Luerease. lean A* btAtn J. 4/15 ftge Prank Sairases) Ost.16/14 Paps # 11$0) these boys Imre pope eel hare develOped into # 360,moseencers. W111 14 useful in junior clerical out Ram Aiwa* # 000 4e has assisted Z. Num OCU14/21 CierR is the fedora/ Reserve Adsmes work; ease in 1010 Credit 'eArtmont, AO to an exceadluel7 eapable ono willies worker, end hae handled h1e complex duties to the entire satisfaction of lir. Calm. A. 41, 4tme Octal/id °Mee Clerk Otorxi i1,50O $1,900 Lies halt h ftttro *horse of the stoci, ledger and the oubscripttce roamed ree-Ardiag 3%1'4341 stock, *leo of teareases and /leers/sees eat he* sea, praet1oall7 oat of oCorres; ordenae re- lig thereto, ana bac bud whereto Of the prise- tms and, Iseutes of all eirculAre. me to see of the -oet useful Ma la W., bank, Ma Aram tlim to this i crease. (4) Init- Date Lai St boa IN De 406.1611 POO. *ems POW. possi Supet Wan Alm Waft 20,070 19 8PS lalowted. Jan.11/14 mistes ol:210 #10110 allfloo as his %as twormsess oressisat %Oft OSpowileihit End ie UM* older than the eifeinfi Anditef implepee of the bank. no Oas piestietaly the manager!f the aftairs Cf the Puffier Rotate. bus been the Auditor's first asoietaat ever since he care with the bank, and hos b.qaft letitistal. capable eat Ob. ft tent explwee 'Che /Mater relive on him for the nave of tato &static or Me afitif&rtrent« Lie serbs to um at a yew auft reduce& 04377, in view of the uneereeted to*m ablation of the trust of the ?awls, '.4tate. Re deserves the ProVon44 md- justroat as only Wit rooemitiela of the value o Woo Of hie aenieee Omani that be be role Asoietent Auditor, Owning As oeinbrocht Apl. 0/15 #4000 04000244 400 employed so a beakkeeper. Ay mason of hle waportorebilltY been made an aeoletant to the Audits!. 22,028 7ncrease 22,278 27,475 -5,T9E3 Office Correspondence Governor Strong To Fro' FEDERAL RESERVE BANK OF NEW YORK Date July 1A, 1915. Subject: 1144/4&t.:0,111-e Kenzel - '4;r4st31::Ze23'"'r The attached marked copies of the Industrial News, issues of 61 %44 '7 e4VVbotA and July 10th, were received by the undersigned on the 15th instant, having been delivered at the bank to Mr. McCabe for me by Mr. Delahunty, the editor of the publication. In each issue there is an article relating to the Federal reserve banks and the action of ex-Representative H. R. Fowler of Illinois in bringing certain matters to the attention of the Federal Reserve Board. It may be well to note for reference that Mr. Delahunty, the editor of this publication, has called at the bank a number of times soliciting the patronage of the bank on behalf of the Knickerbocker Lithographing Co., 18 Oak Street, this city, in the matter of printing and providing our stationery. Mr. Delahunty has made representations to the undersigned and also to Mr. Hendricks, who has charge of our purchases, that he is on very intimate terms with the President of the United States, the Secretary of the Treasury, the Comptroller of the Currency, and the Secretary of the Federal Reserve Board, and that he rendered valuable political services for Mr. Wilson in his campaign for governorship in New Jersey and that he also rendered valuable services for some of the above named gentlemen in the last presidential campaign. Mr. Delahunt9-, on each occasion that he solicited the bank's work in the matter Of stationery, was told that we had no present need for their services but we would keep the matter in mind should occasion arise when we needed some lithograph work. IMK/LCE Mis,37 Pffice Correspondence FEDERAL RESERVE BANK OF NEW YORK Date lir. Jay -m June 23, 1916. Acceptances under Brown Bros. Federal Reserve Bank of New York and the other Federal reserve banks at the close of business June 22, 1916. Sulakrt: and-Bbnbrighttrediteheld by the E.ii. Kenzel. Held by Federal Reserve Bink of New York American Exchange National Bank Bank of New York Chase National Bank Irving National Bank Mechanics & Netals National Bank National Bank of Commerce Broadway Trust Co. Bank of America Bankers Trust Co. Brawn Bros. Columbia Trust Co. J. P. Morgan & Co. J. & W. Seligman & Co. Brown Bros. 4 287,500 268,750 750,000 Bonbright 4 297,778.73 628,333.34 425,000.00 547,500 1,170,000 249,999.96 185,000 867,500 578,750 331,250 818,750 500,000 339,522.27 12,500.00 46,305,000 41,953,134.35 565,000 125,000 674,722.24 1,033,333.36 20,000 921,666.64 Held by other Federal reserve banks American Exchange National Bank Chase 14ational Bank Irving National Bank Bank of New York Mechanics & Metals National Bank National Bank of Commerce 608,250 327,500 560,000 Bankers Trust Co. Bank of America Columbia Trust Co. 260,000 268,015 444,750 Brown Bros. 151,250 850.940 J. P. Morgan & Co. 04,179,765 GRAND TOTAL 410,484,765.00 1,049,055.61 43,728,777.85 $5,681,912.20 5,681.912.20 416,166,677.20 This is less than half of the acceptances outstanding under these three credits, which now amount to 45,000,000. ERN/ PE FEDERAL RESERVE BANK OF NEW YORK 414 Benjamin Strong, Jr., Esq., The Lewiston, Estes .'ark, Colo. Dear Ir. Strong, I was exceedingly glad to receive your letter of August 5th and -ieiately took up with our friend Ir. Hoffman their ailing mailing department. He promised to have an adjustment made at once so that you will get your papers promptly. He seemed to stand being five days behind the "Times" well but your reference to their not keeping up with the ,ost seemed Ppretty to get under his skin. I am glad that my little weekly bulletins on bills interest you. . James Brown had luncheon yesterday with kir. Treman and 14r. Curtis in the course of which he told them that their Bank of 2rance ' 20,000,000. credit would not be renewed but that,after a lapse of one week from the first maturities of the last renewal bills under that credit, bills drawn under a new credit would be available. He did not state the amount of the new credit but lir. Treman inferred it would be about 20,000,000. Mr. Brown also told them that, while he was not in a position to make any definite stateent, plans were maturing for another and much larger 2rench credit, the details of which he would give us in due course. These and the numerous other smaller credits all providing for several renewals and constituting by far the greater bulk of the new acceptance business and r. darburg's attitude with regard to finance bills, make FEDERAL RESERVE BANK OF NEW YORK a ,Anjamin Strong, Jr. 3 . 8/lo/16. me rather apprehensive of what attitude the Board might take if a large volume of it should come on the market through offerings and sales by member banks of their own acceptances under these credits. A few weeks ago when Li'. Warburg last discussed these bills with us, he was of the opinion that the Federal reserve banks had gone about far enough in the purchase of this class of paper especially if the Brown credit was to be extended or renewed in any way although he expressed himself as realizing that, if the prime member banks offered their bills accepted under such credits, we could not draw the line too fine. I sincerely wish that you could be with us this fall to give a little adjusting touch that I feel will be required and will appreciate very much any suggestion from you as to the best way to meet such emergency, if one should arise. In one of your letters to LIT. Sailer, you referred to the possible I am very certain that accumulation of gold by our friends down the street. your surmise is correct and that the new gold which showed in the bank statement after the bulge in money a month ago came from their vaults. I have since been confirmed in my belief by :Li'. Joyce's reply when I suggested to him that we might use more of their bullion receipts. He told me that he would be very glad to let us have some after their own supply of gold had been replenished. 2reman is a trump and is working like a major. He is keenly in- terested in the application of the new collection system and the "Short analysis" to country bankers and has had some good heart-to-heart talks from the standpoint of a country member banker with some of the kickers who have visited us and he has written a great many first-class letters to others. I shall reserve a little news for my space in the bulletin to-night <ESERVE BANK OF NEW YORK 3enjamin Strong, Jr., Esq. 8/10/16. and so, with best regards, I shall close this epistle and remain, Sincerely yours, S. FEDERAL RESERVE BANK OF NEW YORK August 29, 1916. My dear Governor Strong: Since the last weekly bulletin I have talked with lary if Bollinger of the Guaranty Trust Company regarding their credit to the Banque Russo-Asiatique,which I mentioned in the bulletin to you the week before last. Owing to Er. Bollinger's absence on vacation we were not correctly nor fully informed regarding this credit which, he tells me, was negotiated for by them during May and June of 1915 in a series of letters and cables. Under the terms arranged, the Trust Company agreed to loan to the Banque Russo-Asiatique five million dollars to cover exports of cotton and other merchandise, to be repaid within eighteen months from date of original acceptances under the credit, the Trust Company to control the documents. Owing to various causes, chief among them being the lack of bottoms for export during 1915, the credit was not availed of until January 3, 1916, after the cotton shipping time had gone by, and the bills then drawn covered exports of powder. The bills which we bought in the market are the second renewals of the January acceptances. I discussed with NT. Bollinger the eligibility of renewal bills under regulation "S", and he explained that their arrangement with the Banque Russo-Asiatique antedated the Board's regulation regarding renewal bills; also that the period up to c'EDERAL RESERVE BANK OF NEW YORK 2 Governor Strong 8/29/16 1A111-6 eighteen months provided for the repayment of the loanAto enable the Banque Russo-Asiatique to repay within that time, when the conditions of exchange should make it convenient. Both Er. Treman and Er. Jay have given consideration to these bills, and we are all of the opinion that they are eligible inasmuch as the limit of eighteen months within which they must be paid is not an indefinite period and such period was agreed upon at the time of the opening of the credit as a condition incidental to the exportations involved; also, in view of the exchange situation, that period was reasonable. The credit has not been fully availed of, and I think that we and the other Federal reserve banks have about all the bills under it that the Guaranty Trust Company has sold. You will be interested, I am sure, in the following which was told to me by Mr. Farrell of Smithers & Company yesterday,in confidence but with permission to advise you. Brown Bros. are arranging to have the Egyptian cotton crop financed by dollar credits, and Smithers is to quote rates good for five days for the bills to arrive. Brown will cable this quotation to the Bank of Egypt which, I understand, will draw the bills. I understand that the whole list of eligible American acceptors has been forwarded and that the bills will be drawn on a great variety of names; also that there will be no renewals, just straight bills. The crop exported from Egypt during the past several years, up to and including 1915, was valued at from one hundred million to one hundred and twenty-five million dollars, or from nineteen million to twenty-five million pounds, Egyptian. .0ERAL RESERVE BANK OF NEW YORK ..... Governor Strong 8/29/16 Plans are also making for the financing of practically the entire exports of American cotton on dollar credits this year, so that it would seem that we shall have plenty of bills a little later. The first lot against Egyptian cotton is expected to arrive in September, their cotton shipping season being about the same as ours. Er. Treman read us the paragraph from your letter received yesterday morning, and I am glad indeed to hear of your improvement and to learn that you will soon be able to get about more actively and enjoy the sports for which there must be such abundant facilities in the beautiful region in which you are staying. Very truly yours, stant Cashier. Benjamin Strong, Esq., "The Lewiston," Estes Park, Colorado. 411:,.._:Appor EQUITABLE BUILDING NEW YORK September 11, 1916. Dear Er. Strong: I was very glad to receive your letter of September 2d, and have delayed replying to it until I could send you a copy of the memorandum I prepared for Mr. Jay on the operation of the Gold Settlement Fund as applied to this bank. He is in Washington to-day, and has taken with him a copy of the memorandum, and is going to take the question up with the board. I prepared as forceful an argument as I could in the limited time I had to work, and purposely avoided discussing the larger question of the distribution of the new gold that has been brought into the country since the inauguration of the Gold Settlement Fund, as from data and statistics available in that regard large items would have to be estimated with no probability of accuracy, and the result might be very misleading and open up endless argument. concrete position of New York as a center. I, therefore, kept to the The following figures which I dug out may interest you. From May 21, 1915, to August 18, 1916, excess of imports over exports of gold was 4549,000,000. The increase of gold in circulation from May 1, 1915, to August 1, 1916, was 4445,000,000. Increase in gold held by Federal reserve agents against notes from May 21, 1915, to September 2, 1916, was 4126,000,000; and the increase in gold held by the Federal reserve banks on May 19, 1915, to September 1, 1916, was i0.08,000,000. The estimated increase in amount of gold held by all national banks from May 1, 1915, to June 30, 1916, was 4154,000,000. -2- Mr. Strong 9/11/16. This amount has to be estimated because the Comptroller's report groups 0 all clearing house certificates as one total and does not separate those representing gold and those representing silver and legals. We have estimated that 50% of the clearing house certificates represent gold, but that is arbitrary and may be altogether wrong. The estimated figures of 4154,000,000. held by all of the national banks is an increase of approximately 50% within the period. If the amount held by'State banks has increased proportionately during the same period their increase would equal about one hundred and forty million to one hundred and ,fifty million dollars. You will see that these known and estimated increases would amount from five hundred and thirty to five hundred and forty million dollars, which is more than the increased gold in circulation, and almost as much as the total increase through importations, and I think there must be something radically wrong in the estimates. The two factors that have not been considered in the above are the domestic production of new gold, and how much foreign gold coin held by banks figures in their increased gold holdings in the statement to the Comptroller of June 30, 1916. The situation outlined in my memorandum to Er. Jay seems very serious indeed, and I hope that you will approve what I have said. The new Brown Brothers' French credit will become operative tomorrow, and Er. Curtis is in communication with Er. James Brown and will ask them for a copy of the new agreement for our confidential files. I learned from other sources that there are four new acceptors, i. e., the National City Bank, Lazard Freres, Alexander Brown & Sons of Baltimore, and the Ti. S. Mortgage & Trust Company, New York. The latter, -3- Mr. Strong I understand, will take up their own bills. 9/11/16. Lazard has filed a letter with us so that their bills are now eligible if indorsed by a member bank, and they are considering filing a statement with us to make their bills fully eligible. Smithers thinks they will do so when Blumenthal gets back. We had a letter from the Federal Reserve Board dated the 8th instant advising that the President had signed the amendments on September 7th and that they are, therefore, law, but that through error the Conference Committee omitted the following words: "Except by authority of the Federal Reserve Board, under such general regulations as said board may prescribe, but not to exceed the capital stock and surplus of such bank, and such regulations shall apply to all banks alike, regardless of the amount of capital stock and surplus," which are the last six lines of the second paragraph appearing on page 440 of the Bulletin of September 1st. This error was discovered by the board and it endeavored to have it corrected but the time was too short, and they, therefore, advise that pending correction by next Congress the board cannot grant new requests from member banks for permission to accept 100% under the power now eliminated from the law. I am much obliged for the suggestion about Hartley Withers' book "Money Changing", and have sent for it and will take it with me when I leave to-morrow for a vacation. with much interest and profit. matter I have read some of his other works He has a way of presenting his that is much more intelligible to the average reader than many writers on technical subjects, which I think is probably due to his early training as a newspaper man. -4- Mr. Strong 9/11/16. I enclose also a little pamphlet on the "Credit of Austria- Hungary, France, Germany, Great Britain and Russia During Two Years of War," which was issued in great numbers the day after the 4250,000,000. British loan was announced. I do not know that copy of it has pene- trated yet to Colorado but it demonstrates thelatiduous nature of the work of the propaganda. I am leaving to-morrow for a motor trip up through the White Mountains. I dislike to be away from the bank very much at this time, but they all seem to think I must take a vacation. I shall not be far away at any time and will be available for the recall, which I hope will be put into operation should there be the slightest occasion for it. hope that when I return there will be a whole sheaf I of good news from you. With kindest regards to you, and remembrance to Mrs. McLaren, I am, Sincerely yours, Benjamin Strong, Esq., Estes Park, Colorado. ERK/I0. Enos. 'ALIMICAN EXCHANGE OPTIONAL NOTE SCHEME. The British government to offer to, sell Optional Notes in lots up to a total of 41,000,0,D0 00Qat an exchange of not less than 4-:76 for LI, and having a currency of not more than 2 years The rate of Exchange for the present to be 4.78,at which, with higher insurance and freight, it about pays you to take sovereigns from the Bank of England. The rate of Ecahange may however be raised but not lowered Sal Te denomination of the Notes to beidby 4I0,000,or at Exchange 4,78 L2.092. The purpose of the Note,viz. to maintain exchange, is shown on its face. The buyer would have the option to subscribe either in dollars or Sterling nd the holder to ask for payment either in Dollars or Sterling. If at the time of purchase Exchange were above 4.78 the Note would be paid for in Dollars; if below 4.78 in Sterling. If at Maturity Exchange were below 4.78 payment would be asked for in Dollars. if above 4.78 in Sterling_ Vohile the note would be a Dollar Note payable in Dollars, it could, by sale as an Exchange instrument, at any moment be turned into a Sterling Note payable in Sterling, thus adding greatly to its negotiability. The first lot to be offered might be for 4300,000,000. It could be divided into two categories,short and long,-4150,000,000 of each, In the "short" category would be 50,000,000 3 months at say 3% 450,000,000 6 ditto 3e% 450,000,000 9 ditto 3Z% And in the "long", 12 ditto 4% 450,000,000 16 ditto 4i% 450,000,000 24 ditto 5% 450,000,000 Any one line of the "short" to be sold only with an equal amount of the "long"; but the "long" could be sold independently; The Notes would be offered on a discount basis, and at rates approximating to the value of money in New York. Full power would, however, be taken to alter the rates of discount when considered desirable. The Notes would be on sale daily. An additional profit to buyers would be provided in the rate of Exchange. When Exchange was below 4.78 buyers would of course elect to pay in Sterling. The profit would increase with every fall in Exchange, which would stimulate the demand for the Notes, and therefore for Sterling to buy them, and thus tend to again raise Exchange. Any fall in Exchange would have more effect on the yield of a short Note than on a long. On the other hand the long Note stands a better chance of maturing when the War is over, by when the Gold point will presumably have reverted to 4.84. The discount in hand also increases the yield of the long Note. The British Treasury to appoint an Agent or Agents in New York for the issue and payment of the Notes, But to facilitate business Sterling would be received by the Bank of England, which would cable to the indicated Agent to deliver the Notes in New York. Against maturity of the Notes a reserve of about one third of the Notes outstanding would be maintained in New York,to consist of a proportion of gold, a proportion of money at call, and a proportion of American securities to be sold as required. A weekly statement to be published in New York showing the amount and usance of the Notes outstanding, and the amount and composition of the reserve. -3- The proceeds of the Notes sold for Sterling could be used for the purchase of American securities to be placed in the reserve in New York. As the Notes are issued at New York money rates there should be no loss in interest in holding the securities pending sale. During the next few months we have to meet in America liabilities of several hundred millions Sterling on balance. we can pay in Gold and by the sale of American securities, some extent been done. Ultimately as has to Apart from the gold contributions of the Allies and our own reserves, the British Empire now produces W0,000,000 of gold per annum; while our holding of American securities is still very large. What we require is time to mobilize our Gold and American securities. This we can gain by let. Borrowing in America on Bonds, which has already been dcbne and probably cannot, anyhow for some time, be repeated. 2nd, Borrowing for short periods on Bills or Notes in New York, where there is a large field, which the imports of Gold are steadily making larger. 3rd. Borrowing, or receiving on deposit, in LondonlAmerican funds totbe attracted by the higher rate of interest, provided there is confidence in the future of Exchange. The Scheme is an attempt to deql with the situation as a comprehensive whole, and on a scale calculated to produce confidence, which is of the utmost importance. With the knowledge that one billion Dollars of Optional Notes are available at an Exchange of not less than 4.78, confidence in the future of Exchange should be assured for some time to come. With confidence restored the means would be afforded for the rapid and safe flow of money -4- from New York to London, from where it is relatively cheap to where it is relatively dear, and its equally safe return. Through this issue of Optional Notes, a machine for adjusting Exchange would be set up. It would operate openly and automatically, always tending to produce equilibrium. We would have complete control of the brakes on the machine, represented by changes in the rate of discount, in the classification of the Notes, and in the upward movement in Exchange. But it is America that would really drive the machine. the Notes; We only offer to sell her desire to do business would compel America to buy them, as otherwise she would find her exports restricted through lack of cover. The amount and composition of the reserve in New York would indicate the means by which the Notes would be liquidated. This and the adaptability of the Notes for Exchange purposes at any moment should make them popular in New York, where money is very cheap and where gold imports are making it still cheaper. The provisions of the Federal Reserve Act have also given Banks which are Agents for other Banks large temporary deposits. To a certain extent within twelve months, and wholly within two years, these deposits must under the Act be transferred to the Federal Bank Reserve, or to the Banks' own vaults. Thus there is a great deal of money looking out for short liquid employment such as our Notes would afford. A recent ruling by the Comptroller of Currency is to the effect that National Banks are not restricted in making loans under the National Bank Act to a maximum of 107 of their capital and surplus when the borrower is a Government. This is all in favor of a direct Government Note such as the Scheme proposes. The annexed table shows the approximate yield of the Notes with Exchange at, for example, 4.74. Written Sept. Oct. 1915 JFD -4- from New York to London, from where it is relatively cheap to where it is relatively dear, and its equally safe return. Through this issue of Optional Notes, a machine for adjusting Exchange would be set up. It would operate openly and automatically, always tending to produce equilibrium. We would have complete control of the brakes on the machine, represented by changes in the rate of discount, in the classification of the Notes, and in the upward movement in Exchange. it is America that would really drive the machine. the Notes; But We only offer to sell her desire to do business would compel America to buy them, as otherwise she would find her exports restricted through lack of cover. The amount and composition of the reserve in New York would indicate the means by which the Notes would be liquidated. This and the adaptability of the Notes for Exchange purposes at any moment should make them popular in New York, where money is very cheap and where gold imports are making it still cheaper. The provisions of the Federal Reserve Act have also given Banks which are Agents for other Banks large temporary deposits. To a certain extent within twelve months, and wholly within two years, these deposits mast under the Act be transferred to the Federal Bank Reserve, or to the Banks' own vaults. out for short liquid Thus there is a great deal of money looking employment such as our Notes would afford. A recent ruling by the Comptroller of Currency is to the effect that National Banks are not restricted in making loans under the National Bank Act to a maximum of 10% of their capital and surplus when the borrower is a Government. This is all in favor of a direct Government Note such as the Scheme proposes. The annexed table shows the approximate yield of the Notes with Exchange at, for example, 4.74. Written Sept. Oct. 1915 JED -5- If Exchange were at 4.74, the difference between that rate and 4.78 is .84%, which would make the actual yield on Optional Notes at the discount rates suggested in the Scheme as follows: Difference in Exchange. Discount Yield. Short .84 x 4 3 mos. 3.3E6 p.a. 3% 6.36% p.a. 6 - .84 x 2 1.68% p.a. 3% 5.18% p.a. 9 - .84 x l 1.26% p.a. 3% 3% p.a. 12 mos. .84 x 1 .84% p.a. 4% 4.84% p.a. 18 - .84 xl--2 .63% p.a. 24 - .84 x .42% p.a. Long 5.10% p.a. 5.42% p.a. 5% (It is a question whether the 3 mos discount rate might not be 2i%) The yield, especially on the long Notes, is really more than the above, as, the Notes being on a discount hasis, the interest is paid in advance. It is however only the discount rate that would be borne by the Government. The long Notes, and particularly the two year Note, have an additional attraction in that they may mature after the War is over, when Exchange would likely have risen to about the t.' ;';e=War point of 4.84, thus giving an additional profit of over 1%. Gold for Governor strong. - FEDERAL RESERVE Correspondence BANK OF NEW YORK" Date Sept. q, 1q16. Subject:_gseration of the Geld Settle- .Jay ment Fund as Applied to the . B.Kenzel, ; : - The operation of the Gold Settlement Fund as applied to this bank requires us to settle in gold, balanoes due to other Federal reserve barks built up with us by their remittances of New York exchange, in payment for which we receive practically-nothing but silver and legal tender note. Since the inauguration of the Gold 4ettlement Fund in May, 1916, up through the settlement of Wednesday, September 6th, we have lost to the fund $182,000,000. of gold, And at the cloue of business that day held legal and silver certificates amounting to 424,000,000. It has been possible for us to provide the gold Wherewith to make settlement without depleting our own gold only through the courtesy and cooperation of some of our large member banks and others in New York who have given us of their gold in exchange for silver and legals or our cashier's checks, which, when settled through the clearing house, we were able to pay in silver or beindefinitely gals, but it is obvious that we cennot continue/to get more in this way or depend upon it even for a short period. This enormous drain of gold through us from the banks and bankers in New York City gives rise to serious thought as to where a continuance of this procees will lead us, and what conditions will confront us when gold may be required in volume for export. City is the principal reserve center of the country. amount of recent importations of gold have come. New York To it naturally a great Foreign balances have been built up in New York both through credits and oollections. When the time comes for those balances to be withdrawn the banks in New York and the reserve bank particularly must be in a position to furnish gold freely, otherwise our position as an important world financial center will be seriously impaired and the confidence that has been created by the establishment of the Federal Reserve System will be dissipated. Co- 0.'hice Correspondence FEDERAL RESERVE BANK OF NEW YORK Date To Subject: From -2 - During the period from May 15, 1915, to September 2, 1916, the clearing house banks of the City of New York have gained in gold 435,000,000., their total holdings September 2d amounting to 4315,000,000. During the same period silver and legal tender notes have decreased only 46,000,000, their holdings of these kinds of money on September 2, 1916, being $130,000,000. During the same period their net deposits have grown from 42,000,000,000. to 43,0004000,000, an increase in net deposits of 4910,000,000, and excess reserves have decreased 455,000,000. to a total held on September 2, 1916, of $113,000,000., and to -day's clearing house statement shows actual excess re- serve of only 469,000,000. The increased net deposits in clearing house banks of New York ap- proximate one half of the increase in gross deposits of all the national in the United States during the same period. The figures of all the national banks are not readily available. of the banks net deposits The increase during the same period in gold held by all of the national banks, estimated from the Comptroller's reports, is 4154,000,000. The combined figures on all of the state banks in the country for June, 1916, are not yet available for comparison with their figures of June, 1915, but it is clear from the above that the increase in gold holdings by the national banks throughout the country is mach greater in proportion to their increased deposits than the increase in gold held by the New York Clear- ing House banks in proportion to their increased net deposits. The Federal reserve bank in New York during the period from May 21, 1915, to September 2, 1916, has increased its gold holdings by $58,000,000. againstincrease of net deposits due member banks and the United States Govern- Office Correspondence FEDERAL RESERVE BANK OF NEW YORK Date Subject Tc From .00, -3- ment during the same period of 4i165,000,000., and the gold held by the Feder- al reserve agent in New York against Federal reserve notes has increased during the same period by $43,000,000. Of course the Federal reserve bank cannot impound gold in excess of 102% of its reserves except through the issue of Federal reserve notes, but if it had not settled in gold for the balances of exchange created in favor of other Federal reserve banks, or. if the Federal reserve banks had not accumulated those balances for settlement by withdrawals of currency from New York to the interior, the gold position of all of the banks in Sew York might have been much stronger,and if transfers of currency to the Interior had been required in volume equal to the New York through the Gold Settlement Fund, I. e., *182,000,000., every dol- transfers of gold from lar of legal tender and silver notes held by the New York Clearing House banks might have been shipped and the New York bank's reserves in vault would have been all gold and still leave a margin of *52,000,000. of gold that could have been impounded against Federal reserve notes by the Feder- al reserve bank in New York. You will remember that the Executive Committee of the Conference of Governors on August 10, 1915, adopted the following resolutions "RESOLVED that should any Federal reserve beak accumulate a large amount of silver certificates through dealings in domestic exchange by other Federal reserve banks, on notice, such beak or banks shall cease such dealings in exchange." On last Saturday, and Tuesday and Wednesday of this week we were paid credit balances at the clearing house amounting to approximately 4;40,000,000., of which about iig8,000,000. were silver and legal tenders, and on Wednesday of this week showed net balance due to the other Federal sc-37 Office Correspondence FEDERAL RESERVE BANK OF NEW YORK Date Subject: To From -4- reserve banks of over *30,000,000. ,largely accamaipted through their dealings in exchange, and although we withheld from settlement, by transfers to investment accounts and otherwise, more than 410,000,000., we lost in gold on settlement and through transfers more than 425,000,000. Aside from the fundamental unsoundness economically of our position in being required to pay in gold for items that we cannot collect in gold our situation is further aggravated by the practice of other Federal reserve banks in purchasing New York exchange or taking New York exchange for immediate credit at par, which is equivalent to a purchase, when we could not purchase exchange on them if we wished it because it is not available in New York, and while we, conforming to sound banking practice, do not take items on other cities for Immediate credit. It may be argued that in buying or in taking New York exchange from their members for immediate credit that they are only granting to their members the facilities of the system in providing them an easy means of effecting needed transfers of currency to'the interior without the risk and expense of currency shipments. But the ordinary need for currency in the interior is not for gold but for small bills for general circulation, payroll and similar purposes. This has been demonstrated within the past few weeks by requests for shipment of small bills to other Federal reserve bAnkR, and the large demand that we have had in our district from our member banks for shipment of bills of small denominations. During this period practically all of the large banks in this city with out-of-town correspondents have also shipped their available supply of small bills and have come to us for additional supplies of small silver and legals as well as Pederal reserve notes. This small currency has been actually fice correspondence FEDERAL RESERVE BANK OF NEW YORK Date Subject: -5- eshipped by us and other New York banks, but the balence in the Gold Settlement Fend September lot was ',104,000,000., a decrease of only $6,0eu-000. from the previous week, but an increase over the month previous, i. e., July e8th, when the balance was 0102,000,000., which month has covered prac- tically the entire seasonal movement of currency to the interior. It does not seem that the comparatively trifling advantage to individual banks in the interior Should be alloeed to outweigh the great dis- advantage to the banks en the principal reserve center of the country and through weakening their position to the system as a whole. Primarily I believe that we should not be required to settle exchange balances in gold, Secondly, I believe that other Federal reserve banks should net be permitted to create balames with us arising from purchases of exchange on New York unless those balences be left with us until withdrawn through _ like process, i. e., salp-of their drafts on us, and farther, that they should not be permittee to 'receive or accept for deposit or otherwise exchange on New York excepting on a deferred time of credit basis not less than the deferred time of credit basis upon which we would accept items payable in the principal cities of their ERK/IWB. districts. FEDERAL RESERVE BANK OF NEW YORK . ovember 11, 1916. Dear Mr. Strong: I am enclosing copy of the correspondence which passed between the National City Bank and the Federal Reserve Board in regard to finance bills and the interpretation of the law and regulations regarding bankers' acceptances which Mr. Wall of the National City Company handed to me late last night. I wonder if it will occur to you that Governor Harding's letter of October 9th accepts in principle the contention of Mr. Gardine that a credit extended by a national bank in New York to a foreign bank, the proceeds of -which would be used only in financing exports from the United States, is really based upon transactions involving the importation or exportation of goods and therefore need not be considered as finance credit extended for the purpose of furnishing dollar exchange. It seems to me that in principle such a transaction would be substantially the same as those approved by the Board on the French renewal 'credits where credit was granted to bankers who drew bills under them, the proceeds of which were disbursed in this country in payment for American exports and would be free of the renewal feature which has caused so much recent discussion. The new regulation B, series of 1916, does not specify who or what shall draw bills and Mr. Harding's letter seems to indicate that it was not the intention of the Board in that regulation to take ,ERAL RESERVE BANK OF NEW YORK 2- 11/11/16. away from national banks the iprivilege of accepting bills drawn by bankers. We should all be glad to learn how you interpret this correspondence as so far I am the only one in the office who has given it more than a casual glance. With kindest regards, I am, Very truly yours, stant Cashier. Benjamin Strong, Esq., 4100 likIntview Boulevard, Denver, Colorado. EYWELS acs. FEDERAL RESERVE BANK OF NEW YORK November 14, 1916. Dear Mr. Strong: I have your letter of November 8th and have studied with interest and profit your criticism of the estimate stated in my talk to the exporters as to the amount of credit that the system could extend through the issue of The figure Federal reserve notes based on the free gold/ held at that time. urely theoretical and my own feel- named (about ,00,000,000) was, of course, 1) ing in stating it was to indicate the greatest possible limit to which the system could go in time of extreme necesiity and to invite a comparison between that ability and the frozen cond'tion of credit that had existed during the more recent panics under our old ystem and to emphasize the fact that Federal reserve note issue is limite by the amount of free gold held by the banks, realizing, of course, that i ordinary practice we should not even con-* template approaching such an,expa sion of note issue and that in time of stress every effort would have to be ma '.e to accumulate additional gold to provide the base for a large increase of n te issue. crease inour gold holdings b I hope that there will be some in- the voluntary transfer by member banks of a portion of their vault rese eves to the Federal reserve banks, but I do not really believe that we sha 1 get much gold in that way unless some of our big banks in New York coopera e I am glad, in ed, that on the whole you 0 liked my address and was, naturally, gratified, vnough surprised, that it got so much space in the papers. //". RESERVE BANK OF NEW YORK Benjamin Strong, Esq., 2 11/14/16. The payments to Morgan last Friday on account of the last 400,000,000. British loan were cleared Saturday and doubtless had great effect on the bank statement last week, which was reflected in a firmer call money market on :Ionday. To-day the renewal rate was 2 1/4 and money immediately dropped to 2% and was very easy for a time at the middle of the day but closed at 2 1/2, and I look for a poor statement this week on account of the transfers of reserves to the Federal reserve banks due for Thursday. Some of the quiet talk downtown indicates apprehension of a flurry in the money market if nothing more, and I think it is rather significant that this afternoon the National Bank of Commerce sold us practically their entire portfolio of eligible bills (about 4,000,000) with their full indorsement, the greater portion of which was member banks' acceptances under the various French credits having from 40 to 60 days to run. I expect that to-morrow our directors will consider rates, both academically as to the differentials between bills arising out of different kinds of transactions and also practically with regard to the outlook. Mr. Aiken over the telephone to-day told me that money was tight in e 4A-L. Boston, that they had had no -goi-d market for the last few weeks, and that their discounts and purchases from member banks had recently been quite heavy, the National Shawmut Bank having discounted twice within ten days. With best regards; I am, Sincerely yours, Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colo. ERK/PE (05 FEDERAL RESERVE BANK OF NEW YORK CONFIDENTIAL: November 16, 1916. Dear Er. Strong: You have doubtless seen recent press references to forthcoming sales of British Exchequer bills of short maturities in this country and the reprint in last week's "Chronicle" of the Chicago Herald's story about the Davidson dinner in Chicago and what it is alleged Mr. Davidson said at that time. I am enclosing herewith a copy of a memorandum that was written during September and October of 1915, by Er. J. F. Darling, Deputy Manager of the London Joint Stock Bank, who is now in this country and who gave Charlie Smithers a copy of the memorandum as an interesting document in view of recent developments. Mr. Smithers showed it to me in confidence but very willingly agreed with me in my suggestion that it was a unique contribution to the financial thought of the time, which it would interest you to see; therefore, I am enabled to send you this copy. With kindest regards, I am Very truly yours, istant Cashier. Benjamin Strong, Esq., 4100 Montview Boulevard, Denver, Colorado. ERK/HAB Enc. FEDERAL RESERVE BANK OF NEW YORK November 18, 1916. Dear Er. Strong; Following Er. Darling's memorandum on British Treasury bills, I sure you will be interested to know that yesterday am ,morning Er. Darling called at the bank and saw Er. Curtis and me and told us a little something of the-history of his plan. It seems that his memorandum 1VaS the final summing up of long discussions and considerations of various modifications of the scheme, and was presented some of the leading bankers. a year ago to the Treasury and It was generally approved by the Treasury officials and advisors, particularly by Sir John Bradbury, who then occupied a position 'somewhat similar to that of - our Treasurer of the United States; by Sir Samuel Montagu0 and Hartley Withers, but was opposed by the Bank of England as not necessary and inexpedient at that time, and for the further reason that their inquiries in this country had led them to believe that the time had not yet arrived when the scheme would be well re- ceived over here. Kr. Darling was so convinced that the matter was dead that he did not bring a copy of his memorandum to this country but during his stay here the question of issuing short bills on this side was revived and he was consulted and sent home for a FEDERAL RESERVE BANK OF NEW YORK November 18, 1916. Dear Mr. Strong: Following Mr. Darling's memorandum on British Treasury bills, I am sure you will be interested to know that yesterday ,morning Mr. Darling called at the bank and saw Mr. Curtis and me and told us a little something of the -history Of his plan. It seems that his 'memorandum 1VaS the final summing up of long discussions and considerations of various modifications of the scheme, and was presented a year ago to the Treasury and some of the leading bankers. It was generally approved by the Treasury officials and advisors, particularly by Sir John Bradbury, who then occupied a position somewhat similar to that of our Treasurer of the United States; by Sir Samuel Montagu0 and Hartley Withers, but'was opposed by the Bank of England as not necessary and inexpedient at that time, and for the further reason that their inquiries in this country had led them to believe that the time had not yet arrived when the scheme would be well re- ceived over here. Mr. Darling was so convinced that the matter was dead that he did not bring a copy of his memorandum to this country but during his stay here the question of issuing short bills on this side was revived and he was consulted and sent home for a EDERAL RESERVE BANK OF NEW YORK 2. Mr. Strong 11/18/16. copy of his plan which he received only very recently. He tells us that he talked it over with the City Bank people, who think well of it, and also with Er. Otto Rahn of Kuhn, Loeb & Company, who favors it, and he was expecteglyesterday afternoon to see Ir. Davison in regard to it, but up to a late hour, I am advised, he had not seen Mr. Davi-son. Mr. Darling said that while he expected to sail this morning if this thing was really to materialize that he might defer sailing for another week. He said that so far as he knew nothing had been definitely done by any one in regard to the placing of short bills here, and it would, therefore, seem that all the talk in the press articles on the subject so far, has been merely in the way of propaganda. I shall keep you advised of any developments that come to my knowledge. You will see in to-day's Times that Kuhn, Loeb & Company are about to bring out some more French municipal issues. Very truly yours, Benjamin Strong, Esq., 4100 liontview Boulevard, Denver, Colorado. ERIOWB. FEDERAL RESERVE BANK OF NEW YORK November 27, 1916. Benjamin Strong, Esq., 4100 Montview Boulevarde, Denver, Colorado. Dear Mr. Strong: I enclose copy of our letter of November 24th to Governor Seay outlining a new plan suggested for determining the allotment of investments among Federal reserve banks. We have sent copies also to Governor Aiken and Governor, members of Governor Seay's committee and expect that the matter will be discussed at the conference of governors on December 11th. Very truly yours, Assis KIK/JGC Enc. nt Cashier. a& 5- 1,51. o. o o 0. / y44 o, oo e.4-2 ee CI, / / /.7 IA49 , 0_ ti/1-141-42 V " 0)--4 4- TZ . --K. /I< r4. /1-c tOC-4-A.s c7604. V 0 v. - F ZO000,.. ( witsiiiiittoto. tr-e) _ dence BANK OF NE-v7(761V: Date LECTORS, Subject LIELIO-AEDIM 2 MARCH 14TH RE CONVERSION OF U. S. BONDS. DUPLIC 'TE MAR 1 9-19p on and hold in suspense account in Washineton 2 .bonds LWe entiecto - - - - - - - -------- _ - ----- - 70,550. WM ihich may be converted into 3% thirty-year bonds and one-year 3% treesone-half each, as of April 1, 1917. lirnotes, At the same time there may be converted the proportion of bonds 15,000,000 offered to the Treasurer of the United States by member under section 18 of the act that the board will require this bank relies° this quarter. If the entire 15,000,000 is offered by mm- emits, our alleteent would be apereeimately 3,206,450 INID added to the 10,550 of bonds on hand, would c';ive an apeeoxieate for conversion on April 1st of _,277,000 This bank has the privilege of converting thie year nls, and, all Federal reserve banks 1 5,370,900 ;7-coneert durine the remain- f the year- -- ---- 11,402,800 diference between that sum and :7;30,000,000'havine been converted he system in Januery, 1917. Heretofore the applicetions of Federal reserve banks to coneort, h resolution of the directors authorizine the application and agroeine purchase one- Dar notes have been reouired by the Treasury Depart ent in their bends, in Washington, ten days before the end of any guarIt is not practicable this quarter to furnish by that time the cations and resolutions for the exact amount of bonds to be converted reaso that member banks may filo their applications to sell bonds and including March 21st. T. devise a moans of overco ine; this 'lenity, the Federal -Aserve Board on February 28th wrote, in reply to ,UE.KAL ItE5EliV BANK OF NEW YORK Date is Mr.-tnth q 1917. Subject: BIERMODULI ?OT Z DZMOTORS W,P4P 1Correspondence 3!4 14 genzel ileROH 14TH lee CONVEIVION OF TT.S. 2% HMI eem PLICITE re "ehoads1 letter of February 27th: "The Treasury Deperteent desires to beve the resolutions frolA the bemee ceverine anticipated conversions of bonds promptle on Enrch 20, and would prefer that thez- be filled In for the maximumamounl.;'or any part thereof, When you are advised of the amunt ee boues ehich you will be eeleired to take throeeh offerines to the Treasurer of the United Stntes, you can 'ire the Borrd and we eill have the necessary' adjuet ent made in your resolution," -and, on Terreh 3rd, they further wrote to r, Rhoads, in reply to his let- . ter of March 2nd, as follows: "I have again taken the eatter up with the IvIsiou of Loues eed aurrenc:, fro: which the bonds aro- issued, end am in recpipt of a MOAYMalatIM free the Ghief of teet division readine es follows: rehet the.proseut situttion differs free eecifted, for now for :the first time eppliAcne throuJi the Treasurer to retire emueioe will receive ettention; an,1 so I thine le)e situation at any previous conversion Is under all the c/rouastanoos it would be well to advise the benkc that the depart. out viehes affirmative information at the earliest poesible 'e, ani that if it is not feasible to have the lications in the eecretar 's office by'eerob , ane,bank intonlin to corvert will alvise the Secretary of its intention awl then send :Inite aavice concernin_; the applications to aeivert, which will include the denominations of the notes end bonls, at the earlieet posciele _element, but, of dourso, they must actually be received net later than the close of business Saturday, March 31, and the bonds must be in eand not later than the openta of business on e-e-lay A, ril 2d,/ a 21, r. sure that this will be satisfactory, and sue- t in view of the concession which is beine made, you bankn to submit their resolutions promptlron March Are the eeounts to be inserted in the resolutions as soon after as possible upon receipt of advice free the Board ef the elloteent made," It will, therefore, be necessary to pass resolutions at the meeting /Correspondence JiAINkS ur PIC.W 1UIU Date'TLiareh 9. 1917. Curtis Subject 422,10RANDIN _IA T107 14T/ E. R. Kenzel ETIN FOR DIRECTO Eir) fl1n r17,17,1r T OTT OP TTS, ROTITIFt -3U P L-I C 0 - TE ..-rch 111t1i to include any conversions that we may wish to malce as of April lot. The maximum amount of bonls that we mny have to con7ort would A be our full proportion of the 015,000,000 0,205,450 -.--. and the bonds owned at proseut, or a total of WO WO 70,55, 3,277,00' 11.4, and wo should nort1; thereafter advise the 2veas7:17:- Depart-ent of the maximum ar]ount thot vie wish to convert in ancorgance iith the Foderal Ro- servo Board's letter of arch 3rd. Tlie resolutions roquirf.d are attached hereto, viz: 2qpyi 903: "RESOLUTION OF FEDERAL RESERVU BAIM AUT1i02IZING AWL IOAT I OTT 'CP 'COT= 101I OF TET12.; D gm 2% BON-C." 905: "RFSC- um OP FTOERAL r3ESERV1 BANK OBLIGATING TO PITICHASE 0D 1R TZE40URY NOTES." March 10, 1917. Since writing,the above we are advised br the Federal Reserve Board )ur allotment, computed on a basis of offerings of15,000,000.1, will 3081,70: ad of the annroximate amount heretofore advised, which added to our 7055( ake a possible maximum for conversion on April 1st of 3,252,PF' 1 VB. 1011.111M 4111111. Correspondence To From FEDERAL RESERVE BANK OF NEW YORK Date Subject _Nr.--.Tay E. B. Xenzel Apri 1 4-, 1917. SUGGESTION FOR AMENDMENT: FEDERAL RESERVE ACT PERMITTING FEDERAL RESERVE BANKS TO MATM LOANS OTHER THAN TO DINMBEI HAM OF ELIGIBLE BANKERS ACCEPTANCES AND U. S. GOMM= SECURITIES.' Consideration at this time of the situation and money market conditions that may shortly develop attendant upon any extensive financing by the Government, suggestOthat immediate attention be given to putting the Federal Reserve System in a bettor position to stabilize and regulate both discount and open mailaet rates. An open market requires discount houses and dealers that will buy bills at all times. Banks with their varied interests pTidoustomers requirements are occasional and not constant buyers. They buy only when it suits than to do so and sell at the first advance in money rates. They have shown no disposition the rediscount facilities of the Federal reserve banks for the accommoda- f discount houses and dealers but prefer to hold their lines at Federal rebanks open for their den saergency. Diesunt ' Ieunes and dealers in bankers acceptances carry their portfolios on money borrowed from the beaks on call at current rates. In times of flurry rates on these loans are maered up along with rates eel other collateral loans end the result is a general and sadden advance in no open market rates for bills and a great contraction of buying even at advanced rates. These coerlitious developed in July and again to a greater degree in December, 1916, and were discussed at those times. A somewhat similar condition has operated against our getting best re- sults on sales of U. S. conversion 3% bonds as dealers have had to take into con- sideration the unstable rates for call money When figuring to carry their pur- chases until resold. varrespondence 0 FEDERAL RESERVE BANK OF NEW YORK Date April 4. 1917. Mr. 'kV Subject iromZ. B Kenna -2-- amendment to the Federal Reserve Act that would. permit Fedora/ reserve banks to make direct loans to approved houses dealing in bankers acceptances and Government bonds secured by bprIkers acceptances eligible for purchase under seotion 14 and or Government securities would reileve these conditions, and further would eve the Federal reserve banks a better and needed control aver rates both up and dawn without unduly competing with member banks. I would suggest tale that would give a reasonable discretion to the banks as to time and rate on such loans, say up to 15 or 30 days as to time and n the rates established for open market purchases. Misc-37 Office Correspondence To FEDERAL RESERVE BANK OF NEW YORK Date April_51,_ 1917, Inquiries made in New York re Subject :Government Bend -Issues-,- -synopsis of which was telephoned. to Air. .Lieference_ --Tremn-at-Washingtort, -13- C. to-day. From E. R. 'Cense)._ Er. Treman telephoned Mr..Jny asking him to ascertain the prevailing opinions in well informed quarters in New York as to what form of Government issue the 4500,000,000 or 01,000,000,000 should take at this time, with particular regard to the maturities, sinking fund, and rate of interest. Later in the day, after inquiries had been made the following summary of replies was telephoned to Mr. Trelan by Mr. Jay and Ur. Kenzel: ER. WOODWAaD thought that the immediate or temporary requirement for 4500,000,000 or 41,000,000,000 could be met by the issue of 3% bonds at par, running not more than five years and with privilege to convert into out during that time. any higher rate issue put This to provide for immediate needs, leaving the mode of the major borrowing to be determined at leisure. Iga_0. E. MITCHELL. PRESIDENT OF THE NAT/OWL CITY COLTANY, who had issued a statement published in the press this morning, thought the immediate issue of 01,000,000,000 3% thirty-year bonds, convertible at par within one year into any higher rate issue that might be put out, could be sold at par after a strong advertising campaign and thorough arrangements for general distribution, emphasizes the neces- advantage of the first flood of patriotism. sity of taking 221. HARRY SACHS OF GOLDMAN. SACHS & COMPAITY stated that his company had given careful consideration to this question during the past few days, and that it was their belief amount in 0% that if only 4500,000,000 to 01,000,000,000 were to be borrowed that that bonds running twenty to thirty years, with conversion privilege, would sell at a premium, but that if a much larger amount is to be needed, it would be better to make the rate 4% on the initial, as well as subsequent issues, as the success of the initial issue would be essential to the success of future issues, and that the 4% rate would bring a big premium and be sufficient to attract funds from every quer.. ter. e4c Correspondence To From FEDERAL RESERVE BANK OF NEW YORK Dee April 5, 1917.. Subject : Reference E. R. Eenzel, LIR. FELIX WARBURG OF EUEHE. LOB COMPANY, having consulted with several of his partners, stated that in their opinion 0500,000,000 of 3*% twenty-five or thirty year bonds offered at par could be successfully sold, even without conversion privilege, but suggested a redemption feature for the protection of the Government. so that they might be retired after three or five years. He was not sure that the above would be equally true as to an issue of He thought it hard to judge the patrioticpeople, enthusiasm of the 01,000,000,000. but is not unmind!t1 of the beneficial effect on such an issue that the current remarks regarding heavy taxation might exert. He emphasized a first issue be a "howling" success. FABRELL OF F. S. SLITHERS & COMPANY thinks 0500,000,000 the limit of 3%s at par, but that 01,000,000,000 or more 3-06, would go at par or better and that any amount, even $5,000,000,000 or $10,000,000,000 at 4% mould be well taken. If the lower rates were adopted on the first issues, they should contain the privilege for conversion at par into higher rate issues. He considers maturities of ten to thirty years preferable. Later, after the above .had. been communicated to Mr. Treman, A. WESTERVELT OF HARVEY FISK & SONS stated that he had discussed the same question with Mr. Pliny Fisk this morning and that Mr. Fisk was of the opinion that $500,000,000 3Z thirty-year bonds, with privilege to convert into higher rate Issue, could be sold at par, but that if larger future needs were to be considered, it would be better to make the rate 4% for ten to thirty-year bonds, with conversion privilege up to five years. This rate would insure a world demand for the bonds and the increased interest cost would be offset by the premium realized. He also suggested that prepayments on account of subscriptions should not _ Ace Correspondence FEDERAL RESERVE BANK OF NEW YORK Date Subject : 7.T,:aference FromE K. Kenffel, -43 take the full interest rate of the bond as discount, but that discount only at a lower rate, say 3%, be allowed, as otherwise there would be an incentive to pull too much money from the banks at one time, ERKPOSB. Form 1201 CLASS OF SERVICE fl fe Letter WESTEALLM UNION TEL AM Message Nit m Letter Blue Day Message Day Letter 111., NL If none of these three symbols wise Its character is indicated by the NEWCOMB CARLTON. PRESIDENT symbol appearing after the check. 36 appears after the check number of words) this is a day message. Otherwise its character is indicated by the symbol appearing after the check. t: t AV DikLEAIL L1,414,B Q NEWYORK NY 345P MAY 24 1917 BENJAMIN STRONG to be 1150 4100 MOUNTVIEW BLVD DENVER COLO OPEN AND RENEWED TWO AND ONE HALF HIGH THREE ONE HALF CLOSE THREE AND ONE Bite Night Letter NL If none of these three symbols GEORGE W. E. ATKINS. FIRST VICE-PRESIDENT RECEIVED AT 915-919 SEVENTEENTH ST., DENVER, COLO. A igar Blue Night Message WESTERN UNION Nite appears after the check (number of words)this Is a day message. Other- 196NY SQ CLASS OF SERVICE SYMBOL E SYMBOL Day Message AND ONE HALF LOW TWO AND QUARTER WITH BIDDING FAIRLY STRONG STOP LOOKS LIKE PREPARATION FOR PAYMENT TOMORROW CERTIFICATES OF INDEBTEDNESS E R KENZEL 216PM Form 1201 ,ERVICE &moo SYMB-1 ,,r ght Letter , le of these Blue WESTE x UNION CLASS OF SERVICE SYMBOL Day Message Day Letter TEL 1., ars after the check (nun u fwords)th is is a day message. CAW,. , wise its character is indicated l'"of Lsymbol appearing after the ',thorn thu rieck. _ cIEWCOM El CA RLTON, PRESIDENT 11117-Zzfil AM Blue Night Message WESTERN UNION el,te Bite NL If none of these three symbols Night Letter appears after the check number of words)thisisaday message.Otherwise its character is indicated by the symbol appearing after the check. GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT RECEIVED AT 91 104NY HO 5-913 SEVENTEENTH ST., DENVER, COLO. At;grr 22 --PAliFfri3 0724inlitiTat A 11 4 Q NEWYORK NY 442P MAY 25 1917 3ENJ AM I +4 STRONG No 1116 4100 MOUNTVIEW BLVD DENVER COLO OPEN AND RENEWED AND CLOSED ONEHAL F LOW TWO AND hLL DAY E R KENZEL 7, 317PM THREE PERCENT HIGH THREE AND THREE QUARTERS EASY AND ACTIVE - tO 11.., --_____to be - POSTAL TELEGrMrrl W7-RECEIVED AT MAIN OFFICE ,...3"..ERNEST CRANNIER BUILDING 920 17TH STREET C.InNVER, COLO. TEL' ,HONE : MAIN 4600 evi ERCIAL CABLES CLARENCE H. MACKAY, PRESIDENT. TELEGRAM The Pos al Telegraph-Cable Company(Incorporated)transmits and delivers this message subject to the terms and conditions printed on the hack of this Wan' 8-32352 DESIGN PATENT No. 40529 429CH 0 21 230P CB NEWYOF-sK MAY 23 1'7 BENJ STRONG 4100 MOUNT VIEW BLVD DENVER OPEN RENEWED AND HIGH TWO AND ONE HALF LOW TWO AND ONE QUARTER CLOSE TWO AND ONE HALF EASY ALL WELL E h KENSEEL POSTAL TELEGRAPH-COMMERCIAL CABLEB IAL THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY ( ,INCORPO RATED) , TRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT-T(5 THE FOLLOWING TERMS AND CONDITIONS: To guard against mistakes or delays, the sender of . a telegram should order it comparison. Tor tlds,.cineAutlf the unrepeated telegram rate is charged in addition. REPEATED: that is, telegraphed back to the originating office for indicated on its IS AN UNREPEATED TF,LEGRAM' AS!) 'PAID AS SUCH, in possideration whereof it is agreed between Unless otherwisetelegram and thisface, THIS as follows: the sender of the Company L The Company shall not be liable for mistakes or delays in the amount received for sending the same; nor for mistakes or delaystransmission or delivery, or for non-delivery, of any UNREPEATED telegram, beyond the in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty tithes-the sum reritred fey sentltOgithe e, working of its litteS NOR FOR ERRORS IN' PHUrsLESS SPECIALLY VALUED: nor in any case for delays arising from unavoidable interruption in the '1,70R OBSCURE TELEGRAMS. 2. In aisy event the Company shall, not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery of this telegram, whether caused by ths.negligence of its servants sent as a IIEPEATIA telegranW is hereby. valued, unless or otherwise, beyond fifty times the REPEATED telegram rate, at which amount this telegram, If a greater value is stated in Writing transmission, and an additional sum paid or agreed to be paid based on such value equal to hereon at the time the telegmm is offered to the Company for one-tenth of one per cent. thereof. 8. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach its destination. 4. Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be made to cover the cost of such delivery. 6. No responsibility regarding messages attaches to this Company until the same are presented and accepted at one of its transmitting offices; and if any message is sent to such office by one of this Company's messengers, t regarding it to the Company's agent in its said office. he acts as the agent of the sender for the purpose of delivering the message and any notice or IructionsCompany shall not be liable for damages or statntory penalties in any case where the claim is not The telegram is filed with the Company for transmission. presented in writing within sixty days after the 7. The ilt,,ve terms and conditions Shall be binding upon the receiver as well as the sender of this telegram. 8. NO FU LOYEE OF THIS COMPANY IS AUTHORIZED TO VAY,THE R FOREGOING. , I ' . . '-'10iRLES C. ADAMS. VICE-PRESIDENT. IrIDI Cl CE: H. MACKAY. PRESIDENT. EDWARD REY S,I THE FASTEST TELEGRA P/ICE,REST. AND GENERAL MANAGER. V CHARLES P. BRUCH, VICE-PRESIDENT. OPERATOR'S NOTATIO TIME SENT, Ere. POSTAL TELEGRAPH - COMMERCIAL. LiAlliLt 'ECEIVED AT MAIN OFFICE touit-5,4. a RANMER BUILDING .114:04WYN STREET D4NVER, COLO. TELEPHONE: MAIN 4800 CLARENCE H. MACKAY PRESIDE?, TELEGRAM DELIVERY NO. *Posfal Telegraph-Cable Company(Incorporated)transmits and delivers this message subject to the terms and conditions prfr,te', 18-32352 DESIGN PATENT No. 40529 49 CR TN 241 pm 18 - B 211j zzin Strong CB New York May ` 2 17 4100 Mount View Boulevard 0,s,irtrfr Open renew and high two and oneltalf low two close two and one quarter easy all clay. E R Kenzel. un the back of flits blank. TELEGRAPH-COMMERCIAL CA L Nliff NEWFOUNDLAND O -4-4-"Vaa-2, 4111,pattr THE GREATEST TEEEtRAPH AND CABLE SYSTEM IN THE WORLD. -- EXTENDS OVER TWO-THIRDS OF THE WAY MOND THE EARTH. THE POSTAL. TEL'EGRAPH-CABtE dalVIPANY (INCORPORATED) TRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS: To guard against mistakes or delays, the send4 comparison. REPOinjr; ,that. ip, telegraphed pack,to.the originating office for Foi,t1, .ene-haif the sweated tele, am rate charged in ad 'lion. -Unless oti rwise indicated on its tace,'PHIS IS AN UNREPEATED Mi.f,dirsideration whereof It is agreed between the sender of the telegram and this Company as toklowS: The Company ffall not-be liablefor mistakes or, delays in the transmission or delipel,y, or for non-delivery, of any UNREPEATED telegram, beyond the amount received for sending the sante; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty times the sum received .for sending the same, UNLESS SPECIALLY VALUED; Or in any case for delays arising from unavoidable interruption in the working of its lines; NOR FOR ERRORS IN CIPHER OR OBSCURE TEIAGRAMg, 2. In any event the Company shall not be liable for damages fotiay Tstftte *Milts -in ffeasVansmIsion cir ,delivery, or for the non-delivery of this telegram, whether caused by the negligence of its servants or otherwise, beyond fifty times the' REPEATED telegram rate, at which amount this telegram, if sent as a REPEATED telegram, is hereby valued, unless a greater value is stated in writing hereon at the time the telegram is offered to the Company for TELEGRAM ANT4117F7R StS D transmission, and an additional sum paid or agreed to be 'paid based on such value equal to one-tenth of one per cent. thereof. S. The Company Is Irreby made the .044, of4,3se,sen4er,fadthout liability, to forward this telegram over the lines of any other Company wlimi necessary to reach its destination:. 4. Messages will be delivered free Within the established free delivery limits Of the terminal office. For delivery at a greater distance a special charge will be _ made to cover the cost of such delivery. I. No responsibility regarding messages attaches td this company until the same are presented and accepted at one of its transmitting offices; and if any message is sent to such office by one of this Company'amessengers, he acts as the agent of the sender for the purpose of delivering the message and any notice or kistructions regarding It to the Company's agent in its itaid office. aThe Company shall not be liable tor damages or statutory penalties in any case where the claim is not presented In writing within sixty daysafter the am is filed with the Company for trAnsmission. The above terms and conditions shall he binding upon the receiver as well as the sender of this telegram. NO EMPLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING. Cn7LES,C. ADAMS, VICE-PRESIDENT. CLARENCE H. MACKAY, PRESIDENT. EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER. CHARLES P. BRUCH, VICE-PRESIDENT. A . TIME SENT, ETC .; POSTAL TELEGRAPH - COMMERCIAL CABLES RECEIVED AT MAIN OFFICE IFINSBY CRAMMER BUILDING -020 17TH STREET I ENVER, COLO. TELEPHONE: MAIN 4800 CLARENCE H. MACKAY, PRESIDENT. TELEGRAM KiheYostalTelegraph-Cable Company(Incorporated)transmits and delivers this message subject to the terms and conditions printed on the back of this blank. 32352 DESJGN PATENT No. 40529 147 db kb 20 227p 77/ db Newyork may 18 17 Benjamin Strong 4100 Nount Vi3W Money opened and renewed two two and one quarter afternoon Blvd Denver ----- and one half plentiful at closed two and one quarter. E.R. Kenzel POSTAL-TELEGRAPH-COMMERCIAL CABLES THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY TRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBjEt (INCORPORATED) p:-.? THE FOLLOWiNG, TERMS AND CONDITIONS: To guard against mistakes or delays, the a 'telegram should order it comparison. For this, one-half the .unrepeated sender ofrate is charged In addition. REPEATED; that is, telegraphed back to the originating telegram office for TELEGRAM AND PAID FOR AS SUCH, in Consiffdation whereof it is agreed between Unless otherwise indicated on hi face, THIS IS AN UNREPEATED I. The Company shall not be liable ioemistakes the sender cf the telegram and this Company as follows: or delays amount received for 'sending the same; nor for mistakes orin the transmission or delivery, or for eon-delivery, of any UNREPEATED delays in the telegram, beyond the fifty times.the sum received for Sepding the same, UNLESS SPECIALLY transmission or delivery, or for non-delivery, of any REPEATED VALUED; telegram, beyond working of its lines; NOR FOR ERRORS IN CIPHER OR OBSCURE TELEGRAMS.'nor in any case for delays arising from nnaVoidable interruption in the 2. In any event the Company shall not ' be liable for damages for any mistakes or delays in the transmission telegram, whether caused by the negligence of its servants sent as a REPEATED irjeg ram, or otherwise, beyond fifty times the REPEATED or delivery, or for the non-delivery of this . is transmission, and an affffitional Sumhereby valued, miless a greater value is stated in writing hereon at the telegram rate, at which amount this telegram, if paid or agreed to be paid based on Bach value etjual to one-tenth oftime the telegram is offered to the Company for S. The Company is hereby ,maile one Per cent. thereof. the agent of the sender, without liability, to reach its destination. to forward this telegram over the lines of any other Company when necessary 4. Messages will be delivered free-within the established free delivery limits of the terminal office. For delivery at a greater made to cover the cost of such delivery. distance a special charge will be S. No responsibility regarding messages age is sent to such office by one of this attaches to this Company until the same are presented and accepted Company's messengers, he acts as the agent of the sender for the purpose of of its transmitting offices; and if any stone ructions regarding it to the Company's agent in its said office. delivering the message and any notice or The Company shall not be liable for damages telegram is filed with the Company for transmission. or statutory penalties in any case where the claim is not presented In writing within sixty days after the The above terms and conditions shall be binding upon the receiver as welt as the sender of this NO,MPLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING, telegram,' L, ARLES C. ADAMS, VICE-PRESIDENT. CLARENCE H. MACKAY, PRESIDENT. EDWARD REYNOLDS. VICE-PREST, AND GENERAL MANAGER. CHARLES P. BRUCH, VICE-PRESIDENT. "THE FASTEST TELEGRAPH SERVICE IN THE WORLD OPERATOR'S NOTATION',TIME SENT, Erc. POSTAL TELEGRAPH TELEGRAM RECEIVED AT MAIN OFFICE ...... 17TH STREET CRAMMER BUILDING -b20 *NVER, COLO. TELKPMONt COMMERCIAL CABLES CLARENCE H. MACKAY, PRESIDENT. MAIN 41100 DELIVERY N . The Postal Telegraph-Cable Company(Incorporated)tiansmits and delivers this message subject to the terms and conditions printed on the hack of 111-321"") 110cb ja DESIGN PATENT No. 40529 14 CB NewYork may 17 17 Benj amine strong, 4100 yountyiew B1Yd,nenver Money renewed two and one half easy all day closed and one quarter 1f25p R Kenzee two blank. POSTAL TELEGRAPH-COMMERCIAL CABLES ALASKA a JAPAN ENGLAND VANCOUVER PACIFIC OCEAN CO , SAN FRAN ISCO YOKOHAMA MIDWAY CANADA NEWFOUNDLAND ktirlit. ,044k, "11100725910 41h3OWF. k AZORES 'ORK BERMUDA ATLANTIC OCEAN AT,MCENT GUAM t`i THE GREATEST TELEGRAPH AND CABLE SYSTEM IN THE WORLD. TH _ EXTENDS OVER TWO-THIRDS QF THE WAY AROUND THE EARTH. e FF8fRil fet_Eaihm4.26-AdEi 6131oFTANIC TRANSMITS AND DELIVERS THE VilJT,J-1.11)1 TEL,EGR 4§.U.J3,JEC..T,T THE_TOhifyING TERMS AND CONDITIONS: k To guard against mistakes or delays, the sed of a teleg.ram lona OriTer ftl'AVE 71'..11: tans. Yeregraphed back to the originating office for comparison. For this, one-half the unrepei ed telegram rate is charged in addition. Unless (410/,ViSe indicated on i,... face; THIS IS AN UNREPEATED al TELEGRAM AND PAID Ff AS SUClk consideration whereof it is agreed between the smiler of the telegram and this Company as follows: . ,fler .?I'lielConstatnyiSliall.:not be:lasgro4 takes or delays in the transmission or delivery, or for non-delivery, of any UNREPE.A.TED telegram, beyond the amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty times the SUM received for sending the same, UNLESS SPECIALLY VALUED; nor in miy case for delays arising from unavoidable interruption in the work of its lines; '01.FOR,ERORri eta. OR OBSCURE TELEGRAMS. . In'any evdsitthe'ech liwnyestiali"not alab damages for any mistakes or 'delays in the transmission or delivery, or for the non-delivery of this telegram, whether caused art the negligence of its servants or otherwise, beyond fifty times the REPEATED telegram rate, at which amount this telegram, if sent as a REPEATED telegram, is hereby valued, unless a greater value is stated in writing hereon at the timethe telegram is offered to the Company for tranemisp, gild anAtdditioisalstnn paid or agreed to be paid based on such value equal to one-tenth of one per cent. thereof. 8. -: The .Company' it herebst Made the agent of the, sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach its destination. 4. Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be made tr-qqver the cost of such delivery. - 6. sponsibility regarding messages attaches to this Company until the same are presented and accepted at one of its transmitting offices; and if any message is Sent to Bitch office by one of this Company's messengers,, lie acts as the agent of the sender for the purpose of deliveringthe message and any notice or instructions regarding it to the Company's agent in its said office. 1.. 6. The Company shall not be liable for damages or statutory penalties in any case where the claim is not presented In writing within sixty days after the telegram is tiled with the Company for transmission. The above terms and conditions shall be binding upon the receiver as well as the send, of this telegram. -N(3)..KMPLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGoING. CHARLES C. ADAMS, VICE-PRESIDENT. CLARENCE H. MACKAY, PRESIDENT. EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER. CHARLES P. BRUCH, V ICE-PRESIDENT. THE FASTEST TELEGRAPH SERVICE IN THE WORLD OPERATOR'S NOTATIONS, TIME SENT, Ere, POSTAL TELEGRAPH RECEIVED AT MAIN OFFICE EN1117 & CRARY. IWILIP4*0 40 17.04 STREET NI V g.11, COLO. fira.,-orat: MAIN 44041 COMMERCIAL CABLES CLARENCE ri. MACKAY, PiEssoEm-r. "TELEGRAM DELIVERY NO. The Postal Ielegraph-Cabha Company( Incorporeed)transmits and delivers this message subject to the terms and conditions printed on the hack of ff,s tlank. DESIGN PATENT N. 40529 112 cb q 16 221pm CB New York May 16 17 Governor Strong 4100 1.2ountv ew Blvd Denver Col Call two and one half all day stop Time loaning more freely at five p er-c ent mixed E P Kenz el -POSTAL TELEGRAPK-COMMERCIAL CABLES 'oRic BERMUDA ATLANTIC OCEAN 157. VINCENT THE GREATEST TELEGRIC1311 AND CABLE SYSTEM IN THE WORLD. EXTENDS OVER TWO-THIRDS OF THE WAY AROUND THE EARTH. THE POSTAL TELEGRAPH-CABLE COMPANY ( .INCORPORATED) TRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS: To guard against mistakes or delays, the sender of -..,. a telegram should order. comparison. For this, one-half the unrepeated telegram rate,is charged in addition:it REPEATED; that is, telegraphed back to the originating office for Unless 'otherwise on TELEGRAM AND PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the indicated and it, face, THIS IS AN UNREPEATED telegram I. The Company shall not be liable for &stakes this Company as-follows: or delays ampunt ,weeerved ler sending the same; nor for mistakes orin the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, beyond the delays in the transmission or delivery, fifty thnes the Mirk- feceived for sending the same, UNLESS SPECIALLY VALUED; or for non-delivery, of any REPEATED telegram, beyond Working of its lines; NOR FOR ERRORS IN CIPHER OR OBSCURE TELEGRAMS. nor in any case for delays arising from -unavoidable interruption in the 2. In any event the Company shall not be liable for any mistakes or delays In the transmission or delivery, or for the telegra.in,14.__,ietr eMismkby'the negligence of its for damagesotherwise, beyond fifty non-delivery of this Servants or Belem; a REP :ATEDtaggram; IS times the REPEATED telegram rate, at which amount this telegram. if hereby valued, 'sinless a greater value Is stated in writing hereon at the time the telegram is offered transmission, and an 4domonai to the Company for sum paid or agreed to be paid based on such value equal toone-teeth of one per cent, thereof. ?he., to reacii ItsCO_.....4mY jo hereby made the agent of the sender, without liability, to forward thls telegram over the lines of any other Company when necessary dlislfilmatitm. . 4. Messages Will be delivered f,ree within the made to established free delivery limits of the terminal office. delivery at a greater distance a special charge will Le g[. the cost of such delivery. For . S. No , onsibility regarding messages thesiage Sent to Erich office by one of this attaches to this Company until the same are presented and accepted at one of its transmitting offices; and if any Company's messengers, Instruction. regarding it to the Company's agent in its said office. he acts as the agent of the sender for the purpose of delivering the message and any nofice or 8. Th. Company shall not be liable for damages telegram is flied with the Company for transmission. or statutory penalties in any case where the claim Is not presented In writing within party days after the The skboFe terms and conditions shall be NO f*,pLoYlilli OF nus COMPANY binding upon the receiver its well as the ,sender of this telegram.. 18 AUTHORIZED To VARY THE FOREGOING. ), . . (. ,,' CHARLES C. ADAMS, VICE-PRESIDENT. CLARENCE H. MACKAY, PRESIDENT. EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER. CHARLES P. BRUcH, VICE-PRESIDENT. THE FASTEST TELEGRAPH SERVICE IN THE WORLD OPERATOR'S NOTATION& TIME SENT, Ero. POSTAL TELEGRAPH - COMMERCIAL CABLES CLARENCE H. MACKAY, PRESIDENT. TELEGRAM RECEIVED AT MAIN OFFICE ERNEST CRANMER BUILDING 0 17TH STREET ,VER, COLO. TELEOHONE: MAIN 4600 DELIVERY NO. 5-?) The Postal Telegraph-Cable Company(Incorporated)transmits and delivers this message subject to the terms and conditions printed on the bazg 16--323r-) DESIGN 2I91C.ST11 21 Ca3 PAIENTLTEpH 3411) ToZ.7ARlz 07ifY OR K -MAY 15 17 BY ------- ------ BENJAMIN STRONG 4 I 0 0 MOTJNTVIEW BLVD DENWM C OLO MONEY YESTERDAY THREE XSIXXX PERCENT HALY HIGH THREE LOW TWO TODAY RENEWAL TWO AND ONE CLOSED TWO AND THREE VARTERS TENDENCY EASY E R KEN SEM, PL:zi l'AL TELEGRAPH-COMMERCIAL CABLES THE GREATEST. trPEGRAIYH AND CABLE SYSTEM IN THE WORLD. OPERATOR'S NOTATIONS, TIME SENT, ETC. EXTENDS OVER TWO-THIRDS OF THE WAYfAROUND THEIARTH:' ,J42,,,,r .THE:,-POSTAL-5glitPKT.CAB. LE co. NI P./4.NY itNAORPORATiED)ter olv TRANSMITS AND DELIVERS THE WITHIN TELEGRAM SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS: To guard against mistakes oredelays, the,,asenolv of a telegram ,§0,1114 oider 1-t, N.T.zp,; that* telegraphed back to the originating office for comp arison. F or this, one-half the, witepeitea,110314 11/11 rate' chp,rgesl In ladJiition.:elotiierwise teh on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR A$ SUCH, in consideration whereof it is agreed between the sender of the telegram and this Company as follows: The Company shell not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, beyond the amount receiviit tor, ekettslisig-thio same; nor fast mistakes or delays in the transmission or delivery, or for nomdelivery, of any REPEATED telegram, beyond fifty times the 'sum reasstied for sending the 'est:ffeWN LESS SPECIALLY VALUED; nor in any case for delays arising from unavoidable interruption in the working of its lines; NOR FOR ERRORS IN CIPHER OR OBSCURE TELEGRAMS. In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery of this telegram, whether caused. by the negligence of Itg serAnts or"Otherwise, beyond fifty times the REPEATED telegram rate, at which afnount this -telegram, if sent as a REPEATED telegram, is hereby valued, unless a greater value Is stated in writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be paid based on such value equal to one-tenth of one per cent. thereof. 8. The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach its destInittion,.;. Messages will be-611,7;4d free Within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be made tor-Niir the cost of such delivery. N6-jponsibility regarding messages attaches to this Company until the same are presented and accepted Al one of Its transmitting offices; and if any message is sent to such office by one of this Company's messengers, he acts as the agent of the sender for the purpose of delivering the message and any notice or instruction.. regarding it to the Company's agent in its said office. 8. The Company shall not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty daysafter the telegram is filed with the Company for transmission. "7. The above terms and conditions shall be binding upon the receiver as well as the sender of this telegram. 8. NO rtpLOYEE OF THIS COMPANY IS AUTHORIZED TO VARY THE FOREGOING. CHARLES C. ADAMS, VICE-PRESIDENT. CLARENCE H. MACKAY, PRESIDENT. EDWARD REYNOLDS, VICE-PREST. AND GENERAL MANAGER. CHARLES P. BRUCH, SIDE-PRESIDENT. THE FASTEST TELEGRAPH SERVICE IN THE WORLD ,(-90,41-20 ---A-19-1 5. FEDERAL RESERVE BANK OF NEW YORK DFFICE CORRESPONDENCE TO ROM Governor Strong DATE SUBJECT JIlly 1, 1920. Discount Market Developments E. R. Kenzel Early in April, the bill market was very much disturbed by indications reason of that the Federal Reserve Board, or some of its members, were inclined to the feeling that bills purchased by Federal reserve banks, bearing the indorsement of member banks, whether taken direct from the indorsers or through dealers, should be considered as part of the rediscount line of such members. This suggestion came about in the consideration given to the application of progressive rates of discount. Governor Harding had an informal meeting with prominent dealers and bankers at our office, who represented to him that if such a plan were inaugurated, it would effectually kill the discount market, as no member bank could then consider bills bought in the market strictly liquid assets which they might dispose of at any time in the market without its affecting their discount facilities at the reserve bank, and it was the consensus of opinion that under such conditions, member banks would cease to buy bills in the open market. Governor Harding thereupon arranged that these gentlemen and others should visit Washington and discuss the whole matter with the full Board, and delegations from New York and Boston visfted 1.Nashington for that purpose very shortly thereafter. The discussion developed that there was an inclination on the part of some members of the Board to regard the bankers acceptance credit as an important element in inflation and, in fact, rehash all the old arguments that were so thoroughly dis- cussed in 1914 and 1915. The time allotted by the Board for discussion)one morning/was entirely inadequate and was consumed in a large part by a monologue by the Comptroller. Feeling that the outcome was unsatisfactory and that few of the visiting bankers had had an opportunity to be heard at all, and none at length, Governor Harding invited them to submit their views in writing for the further consideration of the Board, in the form M19C.3.1-901.11-20 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE DATE Governor Strong TO FROM SUBJECT: July 1, 1920. Discount Market Developments R R. Kenzel -2- of replies to a questionnaire which would be promulgated by the Board. This they all agreed to do, and the meeting adjourned. The development of the questionnaire centered in this bank and was later adopted and put out by-the Board, whereupon Mr. Warburg and the American Acceptance Council got busy and, with the Board's approval, prepared answers to and discussion of the points raised, which were discussed very fully at a meeting of the Executive Committee of the Council on May 20, and adopted as the unanimous views of the Council. These appear in the little pamphlet "Practical Problems in the Development of Bankers Acceptances," copy of which is enclosed herewith, and they have been considered by the Board, who has sanctioned the wide distribution of the pamphlet by the Acceptance Council. I think the danger is over, at least for the present. A further important development, which will be felt in the market, but relates more particularly to the operations of Federal reserve banks, is that the governors in conference have agreed that the support and helpful assistance in the developing and broadening of the market is a problem of the whole System rather than of a few banks, and a Committee was appointed at the last conference to prepare recommendations as to the procedure by all the banks to this end. Governor Fancher is chairman of the com- mittee and the other members are Governor Morss and myself. We have had one meeting and I am now preparing a report for submission to the other members. It will include recommendations reflecting in some degree the views of the American Acceptance Council, which we all share, with regard to district banks' purchases from their members in their own district, urging that they not take from members, the members' own acceptances, but restrict themselves to the purchase of prime bills which members will have taken for their investment through the usual channels, and that mi8C.3.1-90144-20 FEDERAL RESERVE BANK OF NEW YORK DATE--4-111-Y-1-4-4-9211.- L;FPICE CORRESPONDENCE TO FROM Governor Strong SUBJECT. Discount Market Developments. E. R. Kenzel -3- they buy such bills freely at all times with the indorsement of the member bank; that they exert their influence, each in its own district, with their members to the end that member banks normally will hold for investment, as secondary reserve, a reasonable amount of prime bills; that the district banks encourage and assist in the development of local markets in Federal reserve bank and branch cities, using their influence and, on occasion, their funds, to foster a call money market or its equivalent, that would permit local dealers and branches of discount houses to carry moderate portfolios locally; that each Federal reserve bank should normally carry a portfolio of bills purchased in proportion to the total amount held in the System, relative to their resources, as compared to the resources of the whole Sys- tem, and that, to this end, where local purchases do not provide this volume, they should participate in the purchases of those banks in the larger markets who acquire in their daily operations an excess of bills over their proportion. It is the hope of the committee that this will have the effect of practically re-establishing a general distribution, such as we had a few years ago, without setting up a hard and fast rule that any bank, at all times, irrespective of the condition of their own reserve or local conditions, must receive allotments from any other bank's open market purchases, when to pay for them they might have to immediately rediscount. Both Governor Mores and Governor Fancher felt that they could not get such an iron-clad commitment as to their own banks past their directors and, therefore, would not agree to recommend it. I am also enclosing copy of the first installment of the so-called "Primer" on Bankers Acceptance Credit, which is published by the Council rather than by the banks. I assume that you will recognize the voice of Jacob under the hand of Esau. FEDERAL RESERVE BANK OF NEW YORK C December 16, 1920. Dear Mr. Strong: Some of the others have doubtless advised you that we had a delightful visit here with Mr. Zeilinga. We had a series of very agreeable and useful conversations with him and more particularly he discussed with me the subject of refusals of bills drawn under confirmed credits of American bankers. He told me that they themselves, up to the time that he left Java, had suffered no inconvenience on this account, and from our own knowledge, there has been no refusal on any bill remitted by them to us for collection. The whole subject is a most distressing one and has been an acute aggravation in our banking situation since the price of sugars began to decline rapidly in the late summer. I have gone pretty carefully into the whole matter with Mr. Warburg and Fred Kent on behalf of the American Acceptance Council, and am enclosing a copy of an editorial written for the Acceptance Council Bulletin for last month by Mr. Kent, dealing with the subject so far as we dared to at that time, and it will be followed up editorially this month in the light of subsequent developments, since the cases have become more numerous and a number of important court decisions have been given, the most important of which is that of the Appellate Division, Supreme Court of this state, written by Justice Greenbaum, copy of which I also enclose, in which is affirmed definitely the principle that the contract of letter of credit is distinct from the contract of purchase and sale of the commodity. What happened was that in many cases importers seeking to avoid loss, if not bankruptcy, through receiving sugars which they had contracted for at,high prices, sought by injunction to restrain the banks from making payment under the terms of their credits, most of which were irrevocable, and setting up in such attempts every technical question in respect to the shipments that they could devise. After the Greenbaum de FEDERAL RESERVE BANK OF NEW YORK 2a Benjamin Strong, Esq. 12/16/20. apparently in the effort to avoid its effects, other tactics were pursued, i. e., seeking enjoin the beneficiaries under credits from availing of them. A very important case was yesterday decided adversely to the applicants by Justice Cohalen in the Supreme Court of this state. The printed record is not yet available but I am enclosing copy of the ticker announcement of the decision, which is quite self-explanatory. The main difficulty as to imports has been with respect to sight credits issued to local customers by interior banks on the faith of which our large banks at the ports, particularly in New York, issued their sight credits for the importers. When prices fell and the local customers of the interior banks were faced with ruin or severe loss, they sought to escape from their liabilities by obtaining injunctions in their local courts, restraining their local banks from honoring the sight bills drawn on them which had been ne- gotiated by the banks at the ports, who, of course, had the bills as holders in due course for value. In many cases, the interior banks, not understanding their obligation as issuers of credit, appeared to connive with their local customers in these regards, but also in a great many cases such local banks were brought to see the error of their ways by their New York correspondents. New Orleans is a sore spot and at least one of the important banks there appears, from the one aide of the story that we have heard, to have placed itself in a very unenviable position by declining to pay bills drawn under its confirmed credits which were negotiated by one of our best local institutions who had issued its letters to the importers on the faith of the New Orleans letters. The great majority of all of the cases that have come to my attention have been sight credits, so that the trouble is not to any material degree coupled up with acceptances. There have been many abuses and sharp practices on the part of shippers against our importers and some cases where refusals were absolutely justified and necessary, and lack of experience and prudence in the issuing of credits and lack of understanding of the nature of the obligations assumed by the issuer of irrevocable credits are at the root of the whole thing, emphasized and accentuated by the conditions which prevailed in the commodity markets before the break in prices. FEDERAL RESERVE BANK OF NEW YORK 3 Benjamin Strong, Esq. 12/16/20. I had a most interesting talk just before he sailed a day or so ago on the Aquitania with Sir Frederick Huth Jackson, who hopes to see you in London, and I learned from him that the situation was not entirely unique with us or without precedent, as even the joint stock banks in London had not sufficiently appreciated the nature of their obligation under letters or credit and a London High Court had even issued orders designed to prohibit the payment of an accepted draft. If you have an opportunity, he will, I am sure, be glad to relate some of his experiences to you as he did to me, hut they are of such a nature that I should not care to enlarge upon them in correspondence. Our exporters and banks have been experiencing also great difficulty with respect to cancellations of confirmed credits issued by banks abroad, available to our customers. Again, these are generally sight credits. Curtis had a case for a client in respect of coal to France, in which, after the coal was on the water, the correspondent bank here of the foreign bank declined to make payment under instructions received from the other side, asserting that they were acting merely as agents. I am enclosing a recent newspaper clipping, the statements in which I do not think are exaggerated. Paris. Curtis advised me that his client finally compromised the thing in I am also enclosing another clipping from tonight's "Post" which refers to the wholesale cancellations in respect to coal exports and other matters which may interest you. I have written you the above rather fully believing that you would be interested in having some definite information at hand while you were on the other side, and trust that it reaches you in time. There is one other matter I would like to call to your attention, i. e., the present status of prominent international firms, such as Balfour, Williamson & Company, Huth & Company, and others which are established in this country through partnerships with the English principals. Huth & Company here is, I understand, a partnership betneen the London firm and a resident in this country, Mr. Sonn, who is not a partner in the London house. I am in- formed that they have transferred substantial capital to this country and will make a full FEDERAL RESERVE BANK OF NEW YORK 4a Benjamin Strong, Esq. 12/18/20. statement to us of the American firm, but prefer that that firm be accredited on the xtent of its assets in this country, rather than through their relationship to the London house, which does not care to make a statement here. In respect of Balfour, Williamson & Company, the situation is just about the same as it was when we had luncheon here with Sir Robert. We have a combined bal- ance sheet of all of the houses, with the supporting schedules of investments, etc., with respect to each house, and a rather informally drawn general guarantee of the London house in respect of all paper and indebtedness of the American house, in which we might be interested, and San Francisco has the same, but we have not separate statements as to the individual firms in this country and it is explained to us that it is impracticable to furnish such individual statements. I do not think it is material with us whether we have statement of the New York firm, which we know employs no assets in this country. They are not borrowers in this market and their paper which we see consists exclusively of commercial bills drawn on them against imports of staples which, if they come to us at all, bear very strong banking indorsements, but in San Francisco it is different. Balfour, Guthrie & Company there are large borrowers, and the San Francisco bank feels very strongly that the time is rapidly approaching when they must require a statement of the San Francisco house or decline the paper. Calkins has been in communication with me regarding the various aspectsof the whole matter and I feel that if you could pick up some definite information regarcingtheir present status, it would be helpful in the whole situation here. As is usual with these international houses, their combined balance sheets are always prepared as of a date that is stale. For instance, our last statements, am as of December 31, 1919, but were not received until September of this year, so that up to that date our information was as of December 31, 1918, almost two years old. Calkins feels that it would be the part of wisdom for Balfour to incorporate in this country-their American interests, and since the Gibbs interests have incorporated here with transfer of capital to this country, I know that Sir Robert has been giving further thought along that line, and Mr. Blyth, one of the New York partners, is now in London, and FEDERAL RESERVE BANK OF NEW YORK 5. 12/16/20. was drected to tnke with him general information as to the application of tax laws, 0 etc., as to British capital invested here. Without burdening you with further details of business, I shall cut this -hort, but want to tell you how we all look forward to seeing you again in the office tnd how we confidently hope that you will come back in fine fettle and, by not undertaking to do ten mens' work every day, keep fit. I have received your very kind messages via Mr. Jay, and your postcard, which are much appreciated. With best wishes for a Merry Christmas and a great many very happy New Years, I am, Sincerely yours, nzel, E. R. Depute Governor. Benjamin Strong, Eso., c/o Morgan, Grenfell & Company, 22 0 Broad Street, E. C. 2, London,England. Enos. P. S. I also enclose copy of Mr. Warburg's annual report, as chairman of the Executive Committee of the American Acceptance Council, in which he deals rather vigorously with the subject of defaulted credits but in which he has, perhaps unfortunately, linked it up with acceptances rather than stressing the point that it is the obligation under the letter of credit that controls. copy FEDERAL RESERVE BANK OF NEW YORK TTOKER ANNOUNCEMENT Fall in price no bar to contract Justice Cohalen in Supreme Court denied a7plication of 24 sugar buyers in Baltimore and other cities for a court order prohibiting A. H. Lamborn & Company from negotiating Letters of credit obtained on a contract to deliver a cargo of Java sugar to the plaintiffs. Consignment was valued at was made for delivery approximately t1,100,000 and contract at 220 a lb. shipments Taiho Maru in August last. to be made by the Steamer Defendants however said they were able to ship two weeks earlier by the vessel Texas Maru and did so. c,?..rgo consignees refused to acept delivery. plaintiffs contended in their applic-,tion On arrival of the Market price had fallen and for the injunction that Lamborn & Company had no right to substitute another vessel for the one named in the contract. Justice Cohalen however held that to enjoin Lamborn & Company from negotiating the letters of credit received in consee_uenee of the contract would be in effect making of a new contract through the court; something the court did not feel called upon to do. Applic'Ition was therefore denied. (Business at l!ints and Assay Offices) . Sec. 1. 3. -- ADVANCES ON PARTIAL PATIENTS ON DEPOSITS. In case of deposits, the fineness of which may be readily deter- mined approxinately by inspection, payment nay, at the discretion of the superintendents of the coinage mints and the assay office at New York, be made within 10 per cent of their value, or within 2 per cent when already closely determined by assay and awaiting renelting or reassay for exact determination: No partial payment shall be made on a deposit containing less than PROVIDED, 5,000 in gold or 5,000 ounces of silver. Sec. 2. In case of deposits of foreign coin of known value where the de- posit is not less than ::a,000,000. an advance of 99% of the value of such deposit may be made. PROVIDED, that the depositor, a bank of unquestioned standing, gives a written guarantee as to the weight, count and value of the gold. )119C. 3.1 6:44-4.22 FEDERAL RESERVE BANK OF NEW YORK OFFICE: CORRESPONDENCE To Mr. Case DATE April 26, SUBJECT: 1Q23' Cuba: Its currency and finances. With respect to proposal to establish branch of Federal Reserve Bank. F-Rofvra. R. Kenzel Before 1920, but particularly during that year and subsequently, the project of establishing a Government bank of issue in Cuba has had serious consideration by the Cuban Government and foreign banks operating in Cuba, and our Government. The support of the project by the foreign banks, which are largely American and Canadian, was lukewarm, particularly the National City Bank, which operates several branches, has considered that the establishment of a branch of the Federal Reserve Bank of New York in the Island would be the best thing that could possibly be done in the interests of banking in the Island. addressed to Governor Strong.) (See George E. Roberts! letter of August 15, 1921, Governor Strong's reply, dated April 17, 1921, indi- cates his general objections to the plan and particularly he states that the law, under its then present terms, would not permit. He further states that his own opin- ion has remained unchanged from the beginning "that Cuba should have a central bank of issue, but that it should be under American supervision," andthat "whe_ ther that is feasible or not remains to be seen." He further I not believe in our own bank of issue establishing offices and performing its normal banking functions outside of continental United States, and especially outside of our own country; that is, that p and direct sovereignty. of the United States over which we exercise complete He refers to some suggestion that we had theretofore made of a means by which the greatly mutilated and worn out currency in circulation in Cuba might be retired and fresh supplies issued without involving our doing a banking business in Havana. I have not found in the files any copy of the suggested plan referred to. lr. Roberts, replying under date of August 20, states: "I would not favor the establishment of reserve bank branches around the orld, but, in view of the Platt amendment, which establishes a degree of control over the finances of Cuba, it has occurred to me that possibly 1111SC. 3.1 .M.442 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE DATE April 28, ToMr. Case FROM SUBJECT: Cuba: 192 Itz_ourrenay_and_finances E. R. Lanza' -2- an excuse might be found for the establishment of a branch in Havana, provided the policy was agreeable to the Cubans, and the Cuban Government would pass legislation making it the bank of deposit for the Cuban Government. The branch doubtless would have deposits enough to provide it with capital for its business there, so that there would be little or no investment of American funds outside the country." Incidentally, about that time the National City Bank was invited by the Cuban Government to confer and recommend banking and financial reforms in the Island. A memorandum in the files, dated September 28, 1921, unsigned, but apparently ted by Governor Strong, is as follows: "Mr. Roberts called, and in verbal reply to the inquiry contained in the attached letter I told him that we would urgently oppose any plan to have the Federal Reserve Bank of New York open a branch in Cuba, as it would be an extension to extra territorial administration of the Federal Reserve System, subject possibly to legislation and control by a foreign country, which we could not contemplate. I pointed out that if the treaty with Cuba could be further amended so as, in effect, to write the charter of a central bank of issue into the treaty, under such terms as would give it substantially American control and supervision, and the basis for a thoroughgoing revision of banking control in Cuba generally, I should regard it the most satisfactory method of dealing with the Cuban situation. /di "He said this thought had not occurred to him. lent and said he would see what could be done about it." It struck him a itas Under date of September 29, 1921, letter of Mr. Case, addressed to Mr. Peabody advised the action taken by our Executive Committee that day, with the approval ofthe Federal Reserve Board, in appointing the National City Bank of New York our correspondent and agent in Cuba, with the understanding that no actual transactions would be en- gaged in until regulations should have been prescribed by the Federal Reserve Board, and recited Lthe occasion for the action, namely, the moral support publicity of the appointment would give in Cuba where the reserve bank is highly regarded. It was hoped that it would end the runs on the branches in Cuba, brought about by organized propoganda. apparently had that effect. It MISC. 3.1 60M-4-22 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To DATE April 26, Mr. Case 1Q2 sueJEcT,Cuba: Its currency_and_finannea -3- Under date of February 8, 1923, Mr. Case's memorandum to Governor Strong commented on the conversation had with Mr. Dwight Morrow with regard to the question of supplying Cuba with fit paper money, and Mr. Morrow's inquiry if we had given consideratio o the idea of circulating gold notes on the Island. of F Governor Strong's reply ary 19, follows: "This whole question hinges upon the larger question of whether Cuba shall have a Cuban Banking or Currency System, or be nursed by the United States Government or the Federal Reserve System. General Crowder, Governor Harding and the Department of State all agree, at last reports, that they should have their own system. If they fail to adopt one (and one is now pending designed by Harding) then maybe the American Government might wish to attempt some plan for introducing clean money. I am positively opposed to our undertaking any expense, duty or responsibility in the matter unless our Congress directs us to do so. We are novoriticised for the large services performed gratis for American banks, not to mention the Treasury, and cannot see the logic of doing as much as is proposed for Cuba, also gratis thoughts" of which the crop if perennial abundant." March 15, 1923, Dr. Burgess' letter the Federal Reserve Boardeaclosed table showing $97,000,000 currency transferred by this bank to Cuba during the years 192 1921,b, 192 and through February, 1923, which, with transfers and shipments by other banks, was increased within the period to $101,000,000, as compared with 16,000,000 received from Cuba, these figures exclusive of direct shipments by the National City Bank prior to 1923 . Their shipments to Cuba during 1922 were 4'6,137,000. Governor Strong, in a letter dated June 13, 1921, addressed to Mr. Prather of the State Department, opposed the idea of a Cuban central bank, noting that the Cubans were lacking in skill in banking and currency matters and that the American currency circulating the Island in effect constituted a loan without interest by Cuba to the United States. MISC. 3.1 60M-4-22 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE To FROM DATE 1g2 suBJEcT:Cuba: Its currency and finances Mr. Case F. April 26, _4_ R. Eenzel The pertinent facts as to CubaEre that the investment3of American capital in the sugar and tobacco industries which were made before 1920 were tremendously augmented as the result of the crisis following the collapse of sugar prices in 1920 when the Island was reduced from the extreme of prosperity to' the opposite extreme of adversity. American and Canadian banks operating in the Island had made very substantial advances to centrals which, following the collapse, became rather permanent investments, so that today American interests control a very large majority of plantations, centrals, sugar railroads and warehouses. The excessive imports of the Island during its flush time, many of which were not actually re_ ceived in the Island until after the collapse, were the immediate cause of the greatest distress through the inability of importers to take up their bills. Important failures among the native banks followed quickly and the losses to American shippers and to the American and Canadian banks which resulted were enormous. Inspired by blackmailing newspapers, runs on the American and Canadian banks which operate branches not only in Havana but throughout the Island, made it necessary for them to import very large amounts of American currency to meet withdrawals of deposits. 75% of deposits held as cash in vaults was not considered too large for safety. The only currency (in addition to gold, which quickly went into hiding) is U. S. currency and its physical condition quickly becomes deplorabl unclean habits of the population. The expense of its redemption and rep with new currency has hot been calculated but is sufficient to operate quite effectively against exporting the old and importing the new. The difficulties of American banks with respect to collections in the Island, which are always slow, adds another difficulty and expense in conducting trade with the Island. The moratorium declared in October, 1920, added materially MISC. 3.1 50M-4-22 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE DATE To Mr. Case FROM April 26, ig2 SUBJECT: Cuba: Its currency and finances E. R_Kenzel -5- to that difficulty and I underst from two causes: one, the reduc that severe losses on of goods after the moratorium which had deteriorated during it and through thefts of goods which just disappeared from the wharves and warehouses where they were placed on arrival. Also, the practice or law of the Island which permits delivery by the carrier to the consignee without surrender of shipping documents caused great loss to American shippers. Practically the only native bank of any importance that survived the cataclysm was Gelets & Company and that is a Spanish firm rather than Cuban. The Cubans, being all mixed blood, more or less black, are regarded by bankers in the Island as an unstable people, in whom are emphasized the bad qualities of their origins. The American banks operating in the Island are: The American Foreign Banking Corporation, the Bank of Central and South America, the National City Bank of New fork, aneT-a-iderstand that the First National Bank of Boston is about to establish itself in the Island. The American Trading Company is also classed as a bank. The Royal Bank of Canada preceded the American banks and operates many branches throughout the Island, the Canadian Bank of Commerce and the Bank of Nova Scotia also have branches in Havana. It would seem that a very great service could be rendered to American as well as Cuban interests in the Island by the Federal Reserve System if the law would permit an agency to be established there which could facilitate the business of collections in the Island for reserve banks and their members, the redemption of unfit Federal reserve aote issues in the Island, and to maintain there a reserve supply of currency sufficient to relieve the American banks there established from the burden of carrying excessive cash reserves; also, it is conceivable that the strong influence of such an agency might correcting have the effect of argatimg -some of the malpractices of busi ness as conducted in the MISC. 3.1 60M-4-22 FEDERAL RESERVE BANK OF NEW YORK OFFICE CORRESPONDENCE DATE April Tn Mr. Case FROM SUBJECT. 28, 92_ nuba: Its currency and finances I. R. Kenzel -6- Island and establishing a better relation toward, if not better moral control over, the finances of the Island, whose securities are held almost entirely in this country. Whether or not it would be either safe or desirable for them to rediscount in the Island is a subject for careful study. I would suggest that the views of Mr. Albert Straus on the whole proosition would probably be as enlightened and as valuable as any that we could have. I LA I -4 .tin VIMAW! =1 II CLARENCE H. MACKAY, PRESIDENT. TELEGRAM RECEIVED AT MAIN OFFICE 225 CLEMATIS AVENUE, WEST TELL M BEACH. FLA NE CALL POSTAL' DELIVERY NO. This is a fast Telegram unless otherwise indicated by signalalter the nunsberof words:..Blue"(Day Letter). W .L.'"(Night Letter)er"Nite" (Night Telegram) 60b1SS 109 STANDARD TIME INDICATED ON THIS MESSAGE. 27JRM ZP 58 CB NEWYORK NY JAY 16'44 BENJAMIN STRAONG BREAKERS HOTEL HEAD OFFICE CABLED HOSHINO SHAKE TOTKIO RESULTHIG TEMPORARY PALIBEACH FLO ON FIFTEENTH QUITE STRONG IN VICINITY OBSTRUCTIONS TO FEW CASUALTIES MOSTLY RESULT CONFISTON DAMAGE SLIGHT NOT COMPARED TPANSPORTATION AND COMMUNCATI4 IN GENERAL TO SEPT CATASTROPHE BUSINESS CIRCLES NOT AFFECTED AND STOCK MARKET QUIET HOSHINO ALSO ADVISED CENTER OF DISTURBANCE ABOUT SIXTY MILES SOUTH OF TOKIO AND POSSIBLY RESULT SEPT KENZEL DISTURBANCE CONFIDENTIAL MEMORANDUM July 8, 1925. 'id: B. S. FROM: E.R.K. Sublect: Failure of DeaqL_Onativia & Co. You have probably heard something of the failure of the Stock Exchange house of Dean, Onativia & Co., which was suspended on Friday, July 3, with liabilities of about $35,000,000, said to be the largest failure ever made by an Exchange house. Their loans in New York were well-margined and those that were sold out realized very well in a rising market. The size of their commitments was a surprise to almost everybody and the fact that it has not disturbed the market at all is probably due to the peculiar position of the house and the nature and occasion for its suspension. It relates back to Chicago and the effort inaugurated a year ago to combine the Rosenbaum Grain Company, the Armour Grain Company and others into the Grain Marketing Corporation. The gossip, as I hear it from friends quite conversant with the grain trade in Chicago, is that the Rosenbaums incorporated their interests and that Dean, Onativia & Co., which had become somewhat of an issuing house, had underwritten the stock. The success of this issue if it had advanced in the market might have helped the sale to the farmers of stock of the Grain Marketing Corporation. Then two of the Rosenbaums became partners in Dean, Onativia & Co., contributing as capital 50,000 shares of the Rosenbaum stock as at $50 a share. The effort of the firm to advance the market so that they could liquidate this block and convert that capital into cash resulted in their having to support the market and take in large amounts of the stock that had previously been placed, so increasing rather than decreasing their position in the stock. It seems that this stock was borrowed on in Chicago at $50 a share and that very recently the Chicago banks marked the loan value of it down to $5 a share, with the result that bankruptcy proceedings promptly ensued. -2- The papers now state that friends, customers and creditors of Dean, Onativia & Co. will save the firm by putting up $2,500,000, and take over their slow assets, including this stock. Simultaneously it is announced that the Grain Marketing Corporation will be dissolved. It seems that the Chicago banks loaned the Grain Marketing Corporation $4,000,000 for one year as working capital, the loans to be repaid prospectively from the proceeds of sale of the company's stock to the farmers, but the farmers have not bought, the $4,000,000 obligations mature on July 28, and the Rosenbaum interests having received this black eye, it looks as if the effort will be abandoned. Various middle-western states, including Illinois and Indiana, have invoked the operation of their Blue Sky Laws against the sale of Grain Marketing Corporation stock and it looks as if the jig was up with thatventure. Also off the record I hear that the Grain Marketing Corporation did not behave very well in the collapse of wheat prices in the spring; that the practical managers of it, who have long been regarded as speculators, did not remove their hedges when they sold the farmers' cash wheat at from $1.40 to ti.ao a bushel, this resulting in a large short position on a rising market, and it is hinted in some well informed quarters that it was through them, in the effort to retrieve their position, that some rather notorious bear operators were brought into the picture and that this was probably brought out in the recent Jardin investigation and is a possible if not probable explanation of the attitude taken by the Chicago banks in respect of the Dean, Onativia loans against Rosenbaum stock. I am attaching for your ready reference two clippings containing the announcements above referred to. W3C.3.i40M-424 FEDERAL RESERVE BANK . OF NEW YORK OFFICE CORRESPONDENCE To DATE Augmet 1926 217' SUBJECT: 24 M. Kenai", _ Before the advance in the discount rate at New York on Auguet 13, These mtes unindweed 90-day bankers bills eere quoted at 8-5/8 de 8-1/2%. *ere su, orted by the =vier:A& demtud of foreign leek buying and Federal Re- serve Banks taking the shorter meturitiee freely. L e modest; cell money we 4 - 4-1/2%; The supply of new bills time money 4-3/4%; commercial piper 4 - 4-1/4 - 4-1/2% firming during August as the seLeon adv,nced. New York Pill dealers' banks were lending, good commercial customers et 4-1/4 - 44/2. portfolios averaged eroure' $30,000,000 and they were paying, 3-1/2 - 3-8/4 for their moderate money revirements. their general desire market. WKS None wished to mere as portfolio, and to avoid taking bills unless buyers were in the There we little ere dth to the mtrket, end higher retee were in view Whenever the sueply of new paper ehold Meterielly increace. Following the advance in diecount rate, all money ratee firmed about 1/4%. Federal buying rates were advanced in two stages 1/4 of 1% for the active msturities. And the carrying rate advanced from 3-1/2 to 3-3/4%. Inthe discount market rates immediately followed upward so that the relation of the merket to Federal rates Wt6 restored. This resulted in dealers -uoting unindoreed 90-&y bine at 3-1/8% bid; offered at 3-3/4% with E tendency to advance a further 1/8 or 1/4% ae eeesonel bueinets eroueht incre,sed flu elY. The eueely be not incrweed as yet for two ;, riacipel reteeons, 1. e., some banks would not sell freely at 3-7/8% bills which they were accepting, end the cost of credit and discount combined he prevented some bills 192 FEDERAL RESERVE BANK MISC. 3. 54014-4-24 OF NEW YORK OFFICE CORRESPONDENCE To__ DATE 192_ SUBJECT FROM being dram where the domestie customer had the option of borrowing. For inetGnce bank 1.Lne et 4-3/4 on grain, cotton, etc., bEve been available and taken rather than accepttnee credit Which with discount would cost at least 4-7/t - 51. Distribution he not improved A 3-3/4 Nad dealers expect 'Vat when cotton bills begin tobe drawn in volume that 4% or even a higher rate will be reluired to attr ct general buying. Government issues do not cam,Aste so strongly now because of the reduced Imount of short meturities, but call riid time money rtes at from 1/2 - 11 above 4% does prevent distribution. Also short Municipals of pratty fair quality are offered at 4-1/4 It appetra to me that with the undoubted bullish sentiment that exiAs on money, that presently the bill rates will be pushing the 4% discount rate, but that until baik ratee for commodity tonne exceed 5% the volume of bills will be below the uaual eeaonal proportion of bills u comp red with bank . This will have a tendency to fcrce rediscounts rtther then sales of bills to Reeerve Bnks. System statement of August 23. This was a. feature of the Feder 1. Reserve July BD, 1028. Dear Governor Strong: I was delighted to learn from Mr. Harrison upon his recent return after seeing you of the great improvement that you have enjoyed during the past few weeks, and your letter from Evian on July 5 was another welcome evidence of your recovery. Mr. Harrison tells me that Dr. Stewart had spoken to him only very briefly of his apprehensione over the volume of credit that American banks are extending for foreign account and probably does not understand the business that has been and is being accommodated or the transactions which are permitted under the Board's new ruling of last autumn. From my frequent and almost constant contacts with the men who are doing the bulk of this bueineas, I am convinced that there is very little undertaken for foreign traders, mills or industries, without the intervention of foreign banks and the business as it is done in New York for foreign banks is identical with the very large volume of similar business that is and also in Paris. being done in London American banks make available to their foreign bank friends lines of acceptance credit which the foreign bailee parcel out to their customers, advising the American bank in each case that under their errangeraent they have opened a credit in dollars on the American bank in favor of some designated shipper against goods to be shipped to a designated customer of the foreign bank. The American name for these is reimbursement credits and the foreign banks are directly debtors to the American banks. I believe that more than 90% of credits given by American banks to foreign takers is to banks. The new ruling of the Board did not inaugurate thie business but it permitted it to be extended in respect of certain transactions in imported goods In practice, it applies particularly after they had reached the country of import. to the sale of American cotton, ex-warehouse or steamship in Germany. Before the although many bills were drawn in such transactions they were ineligible, ruling now they are eligible providing that the usance of the bills does not exceed the You will recall that the Reserve Act as credit time customary in the trade. originally drafted specifically permitted financing movements of goods between the United States and foreign countries and between two foreign countries and we have always regarded ae eligible also bills secured by staple goods stored in foreign countries. I am quoting below the most recent figures as Acceptance Council on the volume of bills outstanding at compared with the previous month and the year previous: bled by the American the end of June 30 lest, Totals a year ago were $751,000,000 At the end of May, At the end of June, The ciaseification according to 4,040,000,000 0,026,000,000 the nature of the busineee shows that ooepered with July 20, 1928. -2- a year ago imeose credits have increased *156,0'0,000, export credits have increased *99,000,000 and in this claseification is included credits given for the purchase of cotton by spinners in Germany from stocks of cotton held in Germany. The domestic storage credits have increased *17,000,001, dollar exchange 7,000,000 and the largest increase, 1. e., *114,000,000 was in credits based on goods stored in or shipped between foreign countries. This includee credite to American cotton houses that carry large supplies of cotton abroad, and also a great variety of goods moving between foreign countries. Prineipal among these are Swedish ore going into the Ruhr district, coffee from Brazil to France, copper drom Chile to all of Europe, the export of Swedish matches in world trtde, lumber end cellulose from Finland and Scandinavien countries to England and other Turopean countries. I have been informed repeatedly by prominent English benkers, includ- ing the Pertngs, Schroder, Huth and Samuels, that they have eilvya done these types of transactions and that it was regarded as entirely desirable that they should extend British credit in the movement of goods of British origin or osnerehip through every channel of trade in foreign countries up to but not including consumers' credit. De Neuflize has told ale that before the war French bankers did a good, deal of foreign sort and / have understood from the many conversations 4ith our recent visitors from the Bank of France that such bills were eligible for discount at the Bank of France. financing of tne same From the very important sampling which our purchases for the System so- count and for foreign clients gives us the opportunity to make, the bills which we have recently taken have been principally in the following transactions: exports of cotton, atorase of tobacco, imports of silk, imports of coffee and storage of sugar. The domiciled bills discriminated against by the Bank of England and by the Bank of France I have understood to be bills accepted in sterling or francs by foreign banks or merchants who generally kept no considerable assets in England or France and who would have to be sued abroad in case of trouble. The big complaint in Sew York on the part of the banks is the competition on the part of the London clearing banks for the reimbursement credit business of the strong German and other foreign barites, the acceptance commissions way below the 1% competition taking the form of cutting per annum regarded oy American /Asks as a The Midland Bank has been the worst Quite recently, on account of the higher discount rate competitor in this regard. in New York, a little businese has been going to London and some to France, but in all of the cases. I have heard proper minimum. the tskers of credit in this transfered business have been Alerican shippers. Also recently there have been considerable amounts of old time finance bills drawn by American banks and firma on London and Paris. A good deal of teis has been just plain berrowing but some has been joint account to permit the foreign banks and firms to take advantage of the here. Much of that money has been loaned on the Stock Exchange, as it used to be years ego. American banks with foreign branches have drawn quite heavily at ninety days on those branches and the bills are higher interest rates discounted in Paris and London. Our two French friends, Messrs. Brevet and Guitard, sailed for home, the former about the middle of June and Guitard last week, and two more from the Bank of France, Messrs. Rousseau and Guerin, are due here on the 28th for a study period of three months. I should be glad to go over this autumn or any time if / could be of assist- ance to the bank of France in setting up a more important money and discount market there. From conversations that I have had with Messrs. Quesmayand Reist, I judge July 20, 1928. -3- that they are anxious to encourage the granting. of a substantial amount of foreign commercial credita by French banks and bankers and to make the Paris discount market much more important. The difficulty so far as this program would apply to American takers of credit lies in the limited lines granted by French acceptors, 500,000 to 1,000,000 francs seems to be about their limit and that doesn't go far with a cotton shipper like Anderson ,Pc Clayton. I shall be glad to discuss these affairs more fully with you when you return and in the meantime I will have some Lore definite aguree lined up as to what our more -,rominent acceptors are doing for foreign clients. Sincerely yours, E. R. NEN2F,L. Eenj. Strong, EN., c/0 Messrs. Morgant& Company, 14 Place Vendomey Faris, France. FROEX AMERICAN ACCEPTANCE COUNCIL Monthly Acceptance Survey, Advance Report TOTAL OF BANKERS ACCEPTANCE'S OUTSTANDING FOR ENTIRE COUNTRY CLASSIFIED ACCORD- ING TO NATURE OF CREDIT June 50 1928 May 31, 1928 June 50, 1927 Imports 1-329, 486, 311 017, 929, 635 t 293, 902, 299 Ex,crts 500, 682, 829 383, 562, 435 261,412,053 19,898,724 18,910, 222 19, 233,513 117, 277, 473 133, 114, 546 100,065, 651 25, 204, 602 25, 434,516 18, 684, 602 175, 615, 356 161, 983,822 57,972,055 Domestic Shipments Domestic Warehouse credits Dollar Exchange Based on g,00de, stored in or shipped between foreign countries ., THE FEDERALIST MR. EDWIN R. KENZEL Mr. Edwin R. Kenzel died on August 9, 1933. He had gone to St. Andrews, New Brunswick, to spend his vacation and the end came suddenly soon after his arrival. Mr. Kenzel had been associated with the Federal Reserve Bank throughout its entire history. He joined the staff as Assist Cashier in November, 1914, and was its first appointive Officer. Later he was made Controller of Investments, and in 1920 he was made Deputy Governor, which position he held at the time of his death. Prior to his association with the Federal Reserve Bank, he had been a member of the staff of the Chemical National Bank. He was in charge of acceptance operations at the Federal Reserve Bank. Mr. Kenzel was a member of the Ameri- can Acceptance Council, and he was a pioneer in the development of the acceptance market in this country. Because of his position in the Federal Reserve Bank, and because of his knowledge of investments, he was widely known to the bankers of New York City, whose esteem and respect were a sincere tribute to his character and ability. His home was in New Rochelle, where he was senior warden in St. Paul's Episcopal Church. He was fond of golf and was a member of the Green Meadow Country Club of Harrison, N. Y. He was also interested in painting and was a member of the Salmagundi Club in New York City. The Federal Reserve Club has lost a valued friend. Mr. Kenzel always stood ready to aid the Club by advice and help, and the officials of the Systematic Fund particularly owe much to his knowledge of investments. No move was made without consulting him, and his advice, based on sound judgment and knowledge, was always of the best. To Mrs. Kenzel the Federal Reserve Club extends its deepest sympathy.