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OF SERVICE SYMBOL

CLASS OF SERVICE SYMBOL

Day Message

Day Message

Day Letter

Blue

Day Letter

Blue

Night Message

Nite

Night Message

Nite

N L

Night Letter

N L

i Night Letter

If none of these three symbols

If

appears after the check number of
words lthis is aday message. Other-

appears aftar the check number of
words)this is aday message. Otherwise its character is indicated by the

wise Its character Is indicated by the

symbol appearing after the check.

none of these three symbols

NEWCOM B CARLTON,

PRESIDENT

GEORGE W. E. ATKINs, FIRST VICE-PRESIDENT

symbol appearing after the check.

RECEIVED AT

C74.1 71, NL

/1918 AUG '7 AM 8
04

WOODSHOLE MASS 6

PIERRE JAY

'706

FEDERAL RESERVE BANIr NEWYOR7 NY

AM SATISFIED Tg HIVE TELEGRIA SENT AS YZJ SUGGEST SO LONG AS IT 'pea
NOT COMMIT ME TO ACCEPTING A DIRECTION CR CRITICISM THROUGH A CLEW'

EMPLOYED BY THE IWO OR IN ANY WAY MUTT AE Tg THE PROPCSED CHANGE OF
RATE (Al TO, THE PRINCIPLE THAT THE RESERVE BOARD HIS AUTHORITY TO

INITIATE A RITE STOP SUGGEST Y2U READ THIS TELEGRAM Tg GUR 3GAR D AS
11X1Ri,SSIti,'N

MY VIEWS ON RATE AND AS TO

PROPRIETY CIT ADELSON "-"T"'"R




3ENJ STRONG.

IIECEIVL-0

5-1

AUG -9 1918

FEDERAL RESERVE BANK

OF NEW YORK

k

.

91

AUG 1 0 191P

August 7,

FEDERAL
Dear Mr. Jay:

REEfettrit4
AUG

Your telegram reached me on my arrival yesterday, and I

tEDERATA.

':RVF Ht,

replied as follows:

"Am satisifed to have telegram sent as you suggest
to long as it does not commit me to accepting a direction or
criticism through a clerk employed by the Board, or, in any way,
commit me to the proposed change of rate or to the principle that
Suggest you
the Reserve Board has authority to initiate a rate.
read this telegram to our Board as an expression of my views
about rats, and as to propriety of Adelson's letter."
I am sure you understand what an intolerable situation
would arise if the administration of discipline in regard to directions
made by the Reserve Board was entrusted to a clerk in the Board's employ,
and I certainly would never consent to having our relations with the Board
established on any such basis.

That was the reason fcrmy replying to Mr.

Adelson's letter, direc' to Governor Harding, in the hope that he would
take the hint.

Enclosed is the envelope in which you sent me a note on July
15th, which neydr reached me until yesterday, and I presume you have been
wondering why I was so discourteous in not replying.
The libarian at Princeton is Professor E. C. Richardson and
not Professor Robinson, so the note apparently went to Princeton, to my
mother's apartment in New York, and from there was readdressed to Woods Hole.
I was much disappointed not to have a visit with you -- better
luck next time.

Very sincerely yours,

Mr. Pierre Jay,
Federal Reserve Bank,
New York, N. Y.


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

(61-

607t5,

December 12, 1918.

Pierre Ja

Esq.,
irman, Board of Directors,
Federal Reserve Bank of New York,
New York City.

Dear hr. Jay:

I am addressing this letter to you just before leaving for I.ake

deorge in order that you and the other directors of the bank may consider it
at a meeting after I leave.

doctor, after careful examination, has advised me that I must
have a

considerable 1.eriod

of rest, free from the pressure of work at the bank.

1,t one time hie advice was that I should resign and give up work entirely, but
he has since modified that view and now tells me that he wodld like to have
me go away for a rest, change, fresh air and

building up, and

allow the date

of my return to be subject to results after I have been away a little while.
the whole whLt he tells me is encouraging to me to believe that
I can ho back at the bank for some considerable period of activeeservice after
I have had a reasonable ,period of recuperation.

To carry out hi

views I am proposing to

leeef

in a little cottage

at Lake Ceorge where I would hope, if entirely in accordance with the views of
- the directors of the bank, and after a few weeks of complete rest, to undertake

such work of the bank as I can do at that distance.

It would probably be

nec-

essary for me to hame a stenographer or my secretary go to Luke deorge, either
occasionally or continuously, and I would also hope to have Mr. :Trowbridge
visit me there for some weeks perhaps, to make a study of building plans.
During this absence, and particularly in vie:, of the proposed increase

in salary which the directors have so kindly recommended, I want the directors
to feel



absolutely free to discontinue my salary, reduce it, or treat it in any

way us m41 seem best to them.

iurthermore, if the directors should feel that

it wore wiser forme to resign now and have a successor appointed, I want them

tJ

state that feeling without the slightest hesitation, and you already have a

resignation in your hands which can be used for that purpose.

One cannot have had the experience of the past four years without a
great feeling of reluctance to leave work of the character which we are doing
unfinished.

It would be a grievous disappointment to me to be lbliged to do so,

and yet on the other hand I recognize
somewhat anomalous

that

the bank and its officers are in a

position when I am obliged to be away for a considerable

period and I will most cheerfully and gladly accept any plan which the directors
think wise in the interests of

the

institution.

ion't you take this matter up with the directors and advise me just
how they feel?




daithfully,

overnors

\

FEDERAL RESERVE BANK
OF NEW YORK

Lake George, N. Y.,
February 3, 1919.
Dear rr. Jay:

"1th this, by registered mall, I am returning the draft of the
annual report on which I have made various notations Which explain themThose relating to Foreign Banks and the Progress of Foreign

selves.

Banking may be a little obscure, however, and I think it may be just as
well to suggest

leaving out

the phrase comparing the relations of the

Bank of France and the Bank of England, also characterizing the Bank of
//

Italy as "the principel government bank."

In the

three banks of issue in Italy and the other two
reference.

As to Japan -

Our Government

atter case there are

ay feel slighted by this

as really made no oarticular

arrangements other than very informal dis ussion as to Japanese exchange.
In the case of Japan I would also suggest a phrase indicating our desire
to extend our arrangements.

On page 112 there seems

e a badly con tructed sentence.

Also on page 119 it is not clear vhether the totWof all bonds includes
Government bonds;

I would suggest reversing it//aking the second

column "Government Bonds" and the third "Total

Bonds - Including Govern-

ment Bonds."
Do you think we would be justified in commenting upon the
activities of the Red Cross Organization

in

the Bank?

I understand it

has been very active and successful.
The report strikes me as excellent in every way.
of it the Federal Reserve Board may consider




encroguhes

Some parts

upon their field

FEDERAL RESERVE BANK OF NEW YORK

2.

pierre Jay, Esq.

of reporting, hut that will develop then they see it.
Very truly yours,

Pierre Jay, Esq.,

Chairman, Federal Reserve Bank of New York,
15 Nassau Street, New York.

BS.MSB

Enc.




2.3.19.

FILING DEPT.
Lake George, N. Y.,
February 5, 1919.

r 111)

op, n

FEDERAL RESERVE B2UIK

Dear Mr. Jay:

Enclosed are three personel letters

rill be interested in reading, and which I

from Mr. NormanAhich you

will ask you to hand to Mr. Beyer

in order that they may be placed in my personal files.

an official letter from

Sir Brien Cokeyne, Governor of the Bank of England,

marking a paragraph on the second

written Sir

I am also enclosing

I have

page which requires attention.

Brien that the question of the return of the gold is referred to

the office and that he will hear from you about it.
with the Board for discussion.
the return of the greater

Won't you take this up

My own feeling is that we should secure

part of the gold,

but ask the Bank of England to

credit our account with a round amount so as to have at least a complimentary

account with

them, similar to the one

with

the Bank of France.

hesitate to leave a million dollars on deposit

less than that would be

sufficient.
truly yours,

Pierr

;see

airman, Federal Reserve Bank
15 Nassau Street, New

BS.MSB
Erica.




York.

of New York,
-

I

ould not

there, but possibly something

RECEIVED AND REGISTERED
.

{Article No.

c?

___,

class postage paid.

From
mmmm

Addressed
Return receipt desired
Delivery restricted To addressee in person
.6-6869




To addressee or order

-Postmaster, per

11
RE

V

1917

Lake George, N. Y.,
February 77, 1919.
FEDERAL RESERVE BMIK

Dear Mr. Jay:

I am sending you for your confidential information a letter
Just received from "r. Anderson, which. explains itself.
afford to lose 'fr. Morgan.

Ire can't

I know that he has, and will have, other

good opnortunities, and hope that you can effect an arrangement with
him right slimy.

If he is not interested in that you suggest, won't you tell
him that I have 'Titter. you about his position, and that on no account would I care to have him coma to any decision without first talking

ma.

Faithfully yours,

Pierre Jay, Tsq.,

Chairman, rederal !kaserve Bank of Net Yorks,
15 Nassau Ftr- A, New York.

Tnc.







CLAVS OF SERVICE SYMBOL

,....
Day L

,

Blue

Night Message

WESTE

UNION

CLASS OF SERVICE SYMBOL
Day Message

Day Letter

NL

a

19191*EL

If none at these three symbol.
appears after the check number of
words)thls is aday message. Otherwise Its character is indicated by the
symbol appearing after the check.

Rt727,11
.4

AM

Nita

NL
If none of these three symbols
Night Letter

appears after the check number ef
words)this is a day message. Otherwise its character is Indicated bytha
symbol appearing after the Cheek.

GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT

NEWCOMB CARLTON. PRESIDENT

Blue

Night Message

WESTERN UNION

Nits

Night Letter

.

RECEIVED AT

--2,5P 28

231)5

'04

4';',p

,

.

"

-.-{.AIRIIAN FEDERAL RESERSVE BANK 15

NASSA.(1WP

'

ST N-A/IYORK i\IY
7-s

C'?,
.:_41

'0 ATTEND NETTING ON TUESD.A.Y. AT ILLTROEOLITAN T

L

URE A TICKET FOR VIE AND IF ADDITIONAL ONES FALL TO0W
I CAN

DISPOITION

'NJ STRONG,

A,'

Lake George, N. Y.
February 28, 1919.

Pierre
"

airmen, Federal Reserve Bank of New York,
15 Nassau Street
New York.

ANXIOUS TO ATTEND MEETING ON TUESDAY AT METROPOLITAN
FOR ME




AND IF ADDITIONAL ONES

WILL YOU SECURE A TICKET

FALL TO MY ALLOTMENT I CAN MAKE DISPOSITION
Benj. Strong.

Washington, March 29,1919.

Dear Mr. Jay:

The enclosed personal no

from Mr. Trowbridge explains itself.

am sure the proposed arrangement can be made satisfactory to all

parties and If I am not in New York before the next meeting of our

directors I will send a letter sUbmitting the whole plan in definite
terms.

Very truly yours,

Mr. Piegra Jayl----




Federa/ Ite,,n.ve Bank,
New York.




_hington, March 31,1919.

Dear Mr. Jay:

Referring to your ecent letter in regar to the
proposed arrangement between the Federal Reserve Board

-A Mr. A. B. Trowbridge, I new enclose a letter just
received from Govirnor Harding to be submitted to the
Directors on Wednesday, when I hope to be present and

explain the situation.
Very truly your,

mr,_alarrA

Federal Reserve Barl,
New York City.

Misc. 37

l' Ice Correspondence '"r"-'7""
To

All Senior Officers, and

Dee July 11, 1919.

FILINO DE
JC

Mr. Crane, Foreign Exchange Division.
Ben,j, Strong

From_

An arrangement nas been completea by which cables of a confidential

nature which should be sent to me in uoae may be sent through the State Department in Washington, ana, if necessary, the State Department will put them in
coae.

It may be aesirable to transmit such cables through Mr. Kelly in the

Treasury Department, who is Mr. Rathbone's assistant.

This, however, should

not alter the arrangement about serial numbers for all cables sent to me.

xy itinerary contemplates stopping but a few aays in London first,
then to Paris, then to Brussels and Amsterdam, returning to Paris and from
there to London.

my address in Paris will be care Of

Morgan, Harjes & Company,

Boulevard Houseman, but until I cable to the contrary, all cables and mail
shoula De adaressed to me care Of Morgan, Grenfell and Company, 22 Old Broad
Street, Lonaon, E. O.

33/MSB

PLEASE INITIAL BELOW:




Mr. Jay
Mr. Treman
Mr. Curtis
Mr. Case

0/

Mr. Sailer
Mr. Hendricks
Mr. Kenzel

Mr. Crane (Foreign Ex.

S

'(.ice Correspondence
To
From

'Isrs. Jay
Governor

FEDERAL RESERVE
BANK OF NEW YORK

Treman

1019

,7tx1,7 19
Date

ii

Subject:

trona

I

1

AUG 2 1

A MI last rain:Ito suggostiOnS:

FEDERAL

1!)
,,, '

I hame rot officially designated :lg.. fluid diroetor of -ar Locm
Organisation.

This had bettor be dozy vAdlo T am away, Ikon you arc perfectly

satisfiod of his performance.

At ,;',00nonikes meting of thc Soard, each lrector nhould be acquiintvith the terms of tho program af cc:anent/an relating to communicationn with ece

potitiors, and. warning elm Cis% only vritten convmanications in the form prescribed should no ta:In place.

have alkod 4r. Curtis V melm a stutv of all laus be 'tag on labTreasury oparations, amd he proposes turairg7; it over to L. ces..

This should

be followed /IT and gumestions sent to 111° Poderel oservo Board, as T am satisfied

that the bill will need careful study*
It Is ImporVnt that ar. Hopf Should understard thrt progrons in his

rorkci on be mods by his indorta1dng to notify ono of Ma senior officers whenever he needs to attend a senior officers' mooting, and °cruelly important that the

officers sh:fald sc.° that heattonan the motIngs.




.raqdv:Pn. '

1sc 4

ice Correspondence
To

FEDERAL RESERVE

BANK OF NEW YORK

Date

Air,_Jay

From

October 17, 1919.

Subject.

Benj. Strong

cc
fffA

The attached explain themselves.
to prepare such an article?

BS.MSB
Enc-




Could you possibly arrange

If not, whom do you suggest?




CC!IDENTIAL

December 20, 1g19.

Dear Mr. Jay:

'Rhea you advised me of the action of the directors in regard
to ray le:Are of absence, and their decision to make r. Case the acting

head of tha bank during that period, 1 at once had a. Prink talk with Yr.

Case in order to express, asI understand it, the feeling of the directors.
pointed out that during the entire period when Yr. Traman or

were connected with the bank and on duty no real, final responsibility

In fct, that it wat only since October
t, i. e., since Ir. freman resigned and 1 returned, that he had opportunity

had rested upon his shoulders.;

carry it mt.:jor share of the responsibility for the bank's management;

That I had observed with the greate,t satifaction the fine way in which he
had shouldered responsibility and discharged his ;IuLiet, and yet, tnat

still felt that neither he, nor the directors, nor I were in ixnition to
determine whether he w
in fact, qualified to be the respoi,sible head of
the institution.
explained that my absence gave a ieriod of tent,
that ha ,ould, him,elf, know Letter at the end of th-t time what his capacitieL
were, and that certainly the directors and you nd I would be better able to

judge, so that hie mind must is open on the subject, that be must realizt the
possibility of disappointment, but, neverthel::,_, I had strong hope that
this opportunity would bring cut the bet, in him.

I advised him to pass along the .of,;, cle : his desk, ,Jaid consider

the tank's policy and outlook rather th.n the detail of its buaineE
think he fully un.erLtande the poLition and is prepard to do his utmost to




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tAlbotantially the ground oge covered.

Faithfully yours,

Pierre Jay,
49 East 64th Street,
blew lork City.

December 31, li019.

My dear Mr. Jay:

It is the greatest possible disappointment to me that I am obliged to
leave the Rank for an extended absence at this time.

On the other hand, you mnd

your fellow direotors must realioe that I have had the greotast satisfaotion in
the feeling that wy absence is made possible by the most liberal aotion, so genorou ly worded, of the resolution which the directors panned two weeks ago.

PosoiLly were I to follow my on best judgment as to the interacts of giy
astocimtes in the bank, I would have mace thin: the oportunity to reeion but, as

I have aire.dy stated to you, after the most careful thought, it seemed to me that

I had no right to do thnt if the directors' best judgment were to prefer not to
have me.

But I eannot acknowledge this further evidence of tho confidence and re-

gard of my aosociates in the bank without at the same time saying that it is now osid

will altoys beo I fear, a very difficult thing for me to contemolate leaving this

institution.

The as,00lationo have given ma the greatest plesisurs.

This is

peculiorly oo in an institution devoted to a great jAiblic service.
Oon't you ,3,y to the direotolo, at the next meting. that I am more than

grateful to them for their many mots of courtesy and their most patient considera-

tion of my difficulty in giving the kind of attention to tho business of the bank
which they really tove a right to expect.
3Iith every good "vial to you and to them for the Ne Year, I am,
Sincerely yours,

Pierre Jay, ac.,

Chairman, Federal Reserve -64-nk of New Yon,
Igooeau Street, Ne, Yoro.


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

ANSWERED

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JAN 20 1920

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Misc. 4

Office Correspondence
-u

Mr- -a5,
_

FEDERAL RESERVE

BANK OF NEW YORK

Elate Feb. 13, 1920_
Subject ' Letter from Sir Brien Cokayne dated

and Mr. Case

January 3rd, 1920
from Mr. Montague C. Norman,
beflring dates of 5th, 6th, 15thl
and 16th of January, 1920.

Mr._ Beyer

.Lettere-

v.,

Governor Strong desires that you peruse the attached letters which were recently
received by him from Sir Brien Cokayne and Mr. Montague C. Norman of the Bank of
England.

He prefers

the letters to me




that no one

after you have

else should see
read

them.

them, so will

you kindly return

T4261

FEDERAL RESERVE BANK
OF NEW YORK

Prepared by

Copy

Translation
No.




A

TELEGRAM

?1,62(fr

19

Departments
Interested

Checked by
Code used

TEL. D. 1

FEDERAL RESERVE BANK OF NEW YORK
PRIVATE WIRE-INCOMING

X
Cr3

'

162f pf SanFrancisco Mar 9-203.1a

CO

.<.cr"

BEYER
NEW YORK

Room and bath reserved at Palace Hotel April seventh to tenth include for
0 ri
Governor St,rong's Son.
1
7,01

Ambro a
340p

Phoenix, Arizona, March 30, 1920.

Mr. Pierre Jay,
c/o Federal Reserve Bank.
New York City.
Dear Mr. Jay:

Your letter of March lath was here on our return
from camping and I have read the Bank of England's letters
You will
with a good deal of care and return them herewith.
probably agree that they should not go into the bank's file,
and possibly cm be handsd to Mr. Beyer to be filed with my
personal correspondence after you have sent a reply.

My suggestion woulA be that in reply to that part
of the letter regarding foreign branches you should write
personally to Mr. Norman (
r possibly to Sir Brien
Norman has succeeded him as governor) explain fully the situation which has develpped in this country, and the reasons for
making the inquiry by cable rather than by letter, v.hich would
have been the natural course and would have permitted a more
detailed explaination of the reason for asking forthe information.

The report which Cokayne sent you was handed to me
personally in London and I think I recall showing it to you
on my return with the explanation that it was most confidential
because it had not yet-been submitted even to the British
Government.

r,

1

As to that part of the Governer's letter bearing on
our rate policy,
think he understands from our talks in
London and from my letters a good deal of the difficulties under
which we are laboring, but we must always have it in mind that
advances in rates by us work a great hardship with them, and
an increasing one as sterling continues to decline and their
money makket becomes increasingly dependent upon ours. By
this I do not mean to suggest that our policy should be shaped

r

with
does
with
give

regard to their interestbut rather that when our policy
appear to impose hardship upon them,the least we can do
such an intimate associate is to keep them advised and
them some explanation of the reasons for our course.

As to the postscript to his letter, I feel a good
deal embarrassed. You will recall that the arrangement for
exchanges of cables every week was a most private and confidential
one.
During ny absence in Lake George, the Federal Reserve
Board insisted upon copies of the cables being sent to them and
it was done without my knowledge. That, I felt, was a mistake



Mr. Pierre Jay

New York City,

and somewhat a violation of confidence,
done, and I saw no way of undoing it.

but it had been

My suggestion on this subject it to explain to
Ookgyne that our Board of Directors is a very small body
of only nine men, three of whom (yourself, FekSdy and
Treman) have been active officers of the bank, and that
wishing to continue a vary frank exchange of information
and views by cable we will be glad to make whatever limitations they desire in safeguarding the information. Please
notice that Cokayne states very postivaly that in the
future he desires such confidences to be exchanged as
personal telegrams.
Our people in this country do not seem to understand the different methods and views which prevail in the
Bank of England from those which are common to us. If we
want the information from them, we must, of course, agree
to their terms, or else abandon the relationship, which would
be indeed a calamity.
I must rely upon you and Casein work
this matter out in some staisfaotory way with our directors
and with the Federal Reserve Board.
Our relations with the
bank of England are of such a personal and confidential
nature
do not see how 1/73 can expect to maintain them
if their cables and letters are to be made common property
in Washington, where our experience indicates the ever present
possibiltiy of oversight of their confidential nature.

that I

Am returning the letters herein, and am sure that
you and Case can fix the matter up all right.




Best

regards

to you and all at the office.
Very sincerely yours,

W7.16-54W1-20

I FEDERAL RESERVE BANK 1
OF NEW YORK

TELEGRAM

WIRE TRANSFER
DIVISION

PRIVATE WIREINCOMING

jr. . ..

-.APR 1

llbdth.Sanfrancisco.Apr.13th-330pm.Apr.14th-

Pierre Jay.
I shall be here until Saturday Morning and you canizatsChatio\Rtr private

n,,r:nATOR
wire. lan answering your bully letter today ITUite f-' regards

4

...........

all at the Bank.




4

Benjamin.Strong.
915am.

A

TELEGRAM SENT OVER LEASED WIRE
FROM r'SDERAL RESERVE BANK OF SAN FRANCISCO

To

DATE

Pierre Jay

April 14, 1920

Federal Reserve Bank
New York

<1.4

-

1.1

,
4

A

)4

I shall be here until Saturday morning and you can reach me over private
Best regards
Am answering your bully letter today quite fully
wire

to all at the bank
BENJAMIN STRONG

WE CONFIRM OUR TELEGRAM AS ABOVE:


MIS i6A-25M-5-29-19 co


1'

ASSISTANT CASHIER

DEPUTY GOVERNOR

April 14, 1920

Pierre Jay, Esluire,
Care of Federal Reesrve Benk of Nev York,
New York City.

Dear Pierre:
Your letter from Bryn Mawr gave - fine budget of news,
and I am teking advantage of a dey or two before sailing to write
you fully in reply.
First, my best thanks for your good eistes and your conAside
I am rely vary much better.
cern about my well being.
from my old trouble - I think possibly nervous - I bad become e
The doctor in
little frsyed, and I certainly needed a rest.

Phoenix, to whom Dr. Miller bent me, gave ma a splendid report of
improvement on my return from the camping trip and said it was
I hope this long
O. K. to carry out the rest of our program.
will do the trick.
holiday
What you say about the Treasury situation is elaborated
Our course has been sound
in a letter just received from Case.
enough at the bank end our record clear enough to satisfy the
We really went to the limit that the law persharpest critic.
mitted as to rates; angels could do no more.
I still disagree with the opinions of toth the Attorney
General and qiite and Case in regard to /that the law means about
The law provides
rates, basing my opinion upon this hypothesis:
in one instance that the reserve banks shell esteblish rates subject
In the case of redisto review and determination by the Board.
counts between the Reserve banks it erovides that the banks may
make them, but ueon the affirmative vote of the Reserve Board, with
five members voting in favor of such action, 'he Reserve banks may
Looking
Board.
be required to rediscount at
language as lawyers do, the
at the Tatter sensibly end without
intention e peers in the law - although, possibly, not in the minds
of the law makers .hen they expressed it - to be to place the rate
Taking power with the Reserve banks in the first instance with power
of veto or approval vested In the Reserve Board, ,nd in the case of

rates fixed by he

EROgfftWiligbgtaraegriXPlinlistiPBEW.




13f0f9W11;4113-41-fdw ns

the language used to express one intention in one place end whet
appears to me to be quite a different intention in nother piece.
Common sense has got to be used as well as e lot of legal sophistry,
and certainly if the rate making power is to be vested in the Board,
Congress should make it clearer then it is now by the present language.
Reluctently I idmit that I 8111 in . fair way of being defeated in this,
hut were I at home from now on, I would certainly make a stiff fight
for my own views.
I am interested in the report of the conclusion of an agreement with the Bank of Japan and shall, of course, discuss it with them
when I em there and learn something of their affairs.
The bill market development is splendid.

Keep it up.

good deal.
My
This British gold movement will worry u
to keep it out of
original thought, ehen we took the German gold, w
our statement, considering it as gold in transit even though in the
hands of the Bank of England, end thereby increase the pressure for
higher rates and to reduce ex2ansion.
That water hl,ving gotten over
the dam and the precedent heving been established, I hardly see ehat
can be done with this gold which actually com,e into our possession
I hate to see it go there and
except to put it into our reserves.
were it left to me personally alone, I would leave that gold with the
Treasury for treatment just as long as possible and, while it was
there, carry
or in process of refinement and
leeve it out of our statement, but I know that our friends in Washington
would veto any such program.

it as gold in transit

Thank you for sending the reports, which are here and which
So far I have been unable to read them.
I shall use in the East.
for the new deputy
I can see that you are striking high
Don't forget that anyone we Pet from the outside will be
governor.
less familiar with our affairs, precedents of the System, and particularly
Its technique, than sdme of our own men, and any man we get must justify
taking a position over those other good fellows by his own outstanding
Whet you say about Kenzel is true enough, and were he locking
ability.
in certain characteristics, he would be an ideal men.

The new director is excellent.

I hope he is elected.

All thRt you say About Weshington is most interesting, but
Those 9(3W-hem banks will pet licked in 'heir
requires no comment.
pressure for exchange, and the sooner the licking is administered, the
better.

I am glad you eot Bert.
I want you to tell him that I send
a hearty welcome to the bank and would write him so personally had I time.




-3-

About the Vanderlip party, let me say that it is nobody's
I em still a
business but my own what I may wish to do of that sort.
free agent, and it is absurd for anyone in Tashington to object to my
accepting the invitation from some important J-eanese bankers to visit
You may tell those people in Washington just that from me.if the
them.
On the other hand, all that I propose to do is to
question comes up.
join the par'y for 8 couple of days because it includes some of the
Japanese whom I know and have intended to visit, such as the people in
It would look nice
the Bank of Japan, Baron Magata and Baron Shibusnwe.
for me to be in Japan when this entertainment took place, having been
especially invited by the Japanese bankers, and then to pay absolutely
Our Washington friends must be having some
no attention to them.
bre,in storms.

Can it not be arranged for Bop? to have regular meetings with
It is necessary if we are to secure the best
the Managing Committee?
from his services.
In connection with 'uilding plans, won't you tell the Planning
Committee that provision should be made, in the efires of the Chairman,
deputy governors, where
the Governor, End certainly one or two of
they may have files for their personal correspondence -nd for confidential
In fact, a small safe for filing cabinets would be justified.
matters.
An idea of the size for mine can be obtained by looking at the present
files or asking Mr. Beyer.

as

I am still of the opinion that we should defer actual building
All signs, so far as I have had opportunity to get any
operations.
indications, point toward he bursting of the bubble before very long.
But
A delay of a year or so strikes me as justified end reluired.
the remedy Por these matters rests jointly kn the hands of
after
the Treasury and of ourselves, Pnd it seems to me that things are
gradually working out their remedy largely as the result of our great
policy.

ell,

am 'lad to bear about the Clue and the bonus, 8nd particul rly
If you have that right up to date and on tab
about Dilleston's work.
for immediate use in an emergency, you will never regret the foresight,
because the dclr is coming, and it may be near at band, when bank credit
has got to be examined vith the utmost care.

Your paragraph on rate policy disturbed me . little, indicating,
possibly, an inclination to be affected by views from Boston, which I
I think in this particular
think may be temperamental to some extent.
matter we must isolate ourselves, form our own opinions, and ende,-vor
The six per cent basis which
with determination to have them adopted.
It
you advocate is the goae -nd should apply to every kind of credit.
ie probable the general r, te in the market will stay above ours for
a considerable volume of the business any way, but I can see the necessity
for e six per cent rate by the Reserve banks before the situation clears.




-4-

Try to get the Bank of England cables on a personal and
confiential basis or the first. thing- you know they will be appearing
in the Bulletin.
They will be of great value, and even greater now
that Norman is Governor.
I hope you keep them going during my absence.
Case's letters give

me a good

deal of

confidence in his sound

ut I fear the results of overwork hoth for him and
It is your besetting sin and his. I have never been able
views,

for you.
to understand
how men who are in position to employ all the eseistente they need
prefer to kill themselve- by doing everything themselves, but,as you
know, I have exhausted argument on this and must let nature take its
course, only hoping that 'he victims survive.
A thousand thanks. for your bully letter, for all the news,.and
reciprocate many times.

for all the good wishes which I

Faithfully yours,

ES.I,




TELEGRAM SENT OVER LEASED WIRE
FROM

P,

)ERAL RESERVE BANK OF SAN FRANCISCO

To

Pierre

DATE

Ari1le, 19.?0.

Fedeml Reserve Eank,
Ne-2,

'York.
18

Propo&v1 for change in bank plans I h ve no doubt 'me inevitble

and necess,ry and I see no objection.

It will unfortunstely destroy s

certtin architecturd syTaletry and observance of trydition ,s to bank
buil6imse which

will

probably affect you more than the rest of us.

Alinic it -iorport,:at-that-plun_sawacL_provi e rey ccees by
officers to files, library and vrriode inform-tion departments, and that

my suestion reg.,rdi% enlarging f-cilities for Mini; <-tfld other matters

required

by officers should be

eveloped.

Hope you press for some reasonable
r-il-6-6?

drIerstAadinL:.

reasury'buili1W-where coin

with ''resury

currency dertmefAs

.1(' be loc-tee without inconvenience to us or
If sketch of re-rr_nirement

c5,11

'me forwarded to me would be

erested in ex,Iminim: it.

Am aillrL. reply to your other telegram.
(_.00d

Luck to you anu the others and good bye.

'ENJ.

S1RONC

^

WE CONFIRM OUR TELEGRAM AS ABOVE:

Digitized MIS FRASER
for 16A-25M-5-29-19 ®


ASSISTANT cASHIER

DEPUTY

GOVERNOR




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14 words

Received May 17th, 1920.

Federal Reserve Bank,
New York

#2.

(Testword OK)

Hold mail continue telegraph address care Embassy until advised.




Strong.

P.irterE
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fedixby ancluiLv csme Ewpwe'ca imuT

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ISOCOTAE04 TVA TVP Taw'

Translation of Incoming

FEDERAL RESERVE BANK
OF N'DA/ YORK

Date

CABLEGRAM

c

From

No. C-Z-Z

9 WEDS.

4
F CABLEGRAM
DAZED BARONE-MACH'

RECEIVED JUNE 8, 1920
FEDEitAL IESMIVE BANK
NEW YORK.

3 (Testword OK)

Jai1 address care of International Banking

Corporation Shanghai until June 18th cab le uncnjed.

Underlined word. mutilated-




NZGUR-we re ad-UZGUR

(unc banged)

Misc. 37

04r.
lice

orrespondence

To

Pier

BANK OF NEW YORK

Date August 8, 1918
Subject

Mr- Strong

From

FEDERAL RESERVE

Jay
a

Your reply to Mr. Adelsohls letter was left on my desk and I
got it on Monday evening.

It contained two statements which were in-

correct inasmuch as both our directors and officers had had the matter
under consideration and we had already written the Board our views on
August 2d.

I wired you Monday evening, sggesting that you authorize

me to make What would be a correct reply in your behalf, but addressed
the telegram simply to Woods Hole.

Not having received a reply by 2;00

o'clock Tuesday, I sent a telegram to Governor Harding acknowledging the
letter on your behalf, stating that you would reply to it, and have received the following telegram in reply:

"Adelson's letter was written under misapprehension.
Board has under conBoard's letter July 22d was not a regulation.
sideration your letter explaining views of your directors and will
reply definitely Thursday or Friday."

I was in 7ashington yesterday aneGovernor Harding again
mentioned the fact that Adelson's letter was written under a misapprehension
and he was sorry it was written,
out.

Pj..MSB




so I think the matter is all straightened

FEDERAL RESERVE BANK
OF NEW YORK

January 7, 1919.

Dear 4overnor Strong:'

I am sending you herewith the rough first draft of the balance
of the annual report other than the draft which Mr. Lorgan sent you last
night regarding the fiscal agency functions.

Inasmuch as the time is short

it has seemed to be best to send it to you in this form- rather than in a

further revised form so as to get your impressions from reading it through,
and any suggestions oi points to be covered or different ways of treating

points already covered or amplifications thereof which will improve the
document;

heaven knows it needs it.

am proposing to write an introduction to the report this time
covering two points;

one, a brief summary of the things we did for war

finance during the war, two, a brief summary of the changes in banking con-

ditions which have occurred since the Federal Reserve J7stem was started in
1914.

The matter relating to relations with foreign banks strikes me as
too long and too detailed.

I should like especially to have your views on

the treatment we should give to foreign banks and to our relations to the whole
foreign situation, having in mind the responsibilities now about to come upon
us, also Senator Owens' attitude in Congress.

The portion of the report on

business and banking conditions has been prepared by Mr. ioster and I have
not even read it over.




Very truly yours,

'n otrong,

meden,
Tre, .1..

MP'




FEDERAL RESERVE BANK

OF NEW YORK

January IL, 1919.

FiLING DEPT,
MO

5' 191)

Dear Ci-overnor Strong:

BliNK
I am 171.4AW, RESERVE e:Ttract from the minu
;-; you an
of the last meeting of the board of directors relating
to your absence and salary.
Very truly you],s,

Benjamin Strong, Esq.,
The Oluneden,.
Lake i-eorge,
PJ/ R4H
Znc.

Z_IITUTEj Oi ji1iECT0116

January 8, 1919.
The chairman

read a letter

:i2TIN;

from riovernor jtrOng, dated
December 12, 1918,

informing the board of Directors
that his doctor, after careful
examination, had
advised that he must have a
considerable period of rest free from the
pressure of

work at the bank, but that his
dooz,or encouragda- mo_believe that he
could be
baCk at the bank for some considerable
ii)4r!"
period of active/tea after a reasonable
period of recuperation. -iifter
Oh'
describingi4is plah'tto ppfnd some time at Lake
:.-eicr.,;e, N. Y., he expressed

fri

1)

his desire that thAr.ilt$kors should "feel
absolutely

free to discontinue my salary, reduce
it, or treat it in
to them."

AT7 as may seen best

The letter was ordered to be lAaced on file,
and, on motion duly made
and seconded,
the following resolutions were unanimously
adopted.
iOLV4) that the Board of Directors express
to ,,i-overnor

3trong its deej.
regret that his heavy responsibilities
of the past year in developing
the work of

the bank and in carrying to a successful
conclusion two difficult Liberty Loan
campaigns, together with his chairmanship of the

1..oney committee, and his constant
touch with the Treasury
Department, should again have impaired his
health. Throu,:l'
out the year, as throughout
the war,..covernor jtrong as given unsparingly
of his
energy and vitality to the pressing
requirements of C;overnment finance,
and it is
the opinion of the Board that to his
leadership is attributable in a marked degree
the united support of the 46vernment's
financial programme by the banking insti-

tutions of this district.
3OLVAD

that it is the sense of this Board that the
present duty of

4overnor jtron: to the bank, as well as to
himself, is to conserve and regain his
health, and that for this purpose he is hereby
granted a leave of absence until
further action of the Board.

that for the three months beginnihg January
1, 1919,
trong be paid his salary at the rate
established at this



iiOLVED

meeting.

:;.overnor

CCP

PARAPHRASE

In 1,
July 2', 1919.

ORIGINAL
TO
From

American Embassy, Lan on
Department of State, sgned

Dated

Recd

July 20, 10 a. m,
July 20, 7:41 p. m.

No.

'Philliee Acting'

5697

From Rathbone:

Treasury A-28
The Feder. Reserve Bunk of New York sends the following messa,e
to Benjamin Strong, care of Morgan Grenfell and Comi.:,any, 22 Old
Broad street, London:
Cable No.

Paragra7h 1

Shattuck of Grain Cor,oration cabled
your sailing and
Hoover has suggested postonement of consummation of transaction
until he can confer with you in Europe stop
This is satisfactory to
Cor?oration and we have advised them it is agreeable to us stop
Paragraph 2. We cabled Banque Nationale Belgique July 14th that their
preliminary examination W4S satisfactory and today received following
cable from them quote New examination German gold which can be made
only by a small number of reliable agents and under clo e surveLlance
would necessitate considerable time, probably six months or more

Hoover substance his conference with us day before

The bags have bison marked by the Reichsbank ought to be remarked by
Banque Nationale ?le are obliged to decline all reaene bility end
of quote.
We replied today by cable as follows Quote Owing to
apparent misunderstanding of our desire regarding German gold we

-

suggeit

matter be held in abeyance until arrival in Euroe Governor Strong of
this Bank who is now enroute and will confer with you on arrival end
of quote.

FEDERAL RESERVE BANK

Kr. Williams




FEDERAL RESERVE BANK
OF NEW YORK

July 31, 1919.
Dear Governor:

As Ir. Treman has been writing you almost daily the news of the bank, I

havenot_written, but as no is going on his vacation to-morrow and I shall be on

band for three weks before going on mine, I will try to take up the song where he

leaves off. In the meantime, may I su&est your making such inquiry while in London

and elsewhere, as to the effect on the business of the local banks of permitting
foreign banks to establish branches or agencies in London and elsewhere, as would be

of interest in talking over the subject with the New York banks when you return,
With a view to getting amendments to the New York State banking law, which would give

greater freedom of operation to such foreign branches and agencies us mk,ht be established in New York City.

You will remerber that we talked this over last winter but felt that it
would not be possible to Wke it up without some study in advance.
I am asking Mr. Treman before he leaves to-morrow, to show me copies of

the letters he has written you so I may see if anything occurs to me which he has
omitted to say. At the present, I do not think I will write more for fear of

repetition.
The architects are coming down, two fresh mon from each office, at two

o'clock this afternoon to make their second trip through the bank with Mr. Trowbridge
and me.

There is nothing new on leases as practically all of the tenants are away
on vacations, and cannot be reached for another few weeks. Ze are, however, constantly
keeping Ely Esc Company on the job.

Benjamin 6trong,
Morgan, Horjes CO.,
Boulevard Houseman,

Paris, France.
PJ/MLB



Very truly yours,

FEDERAL RESERVE BANK
OF NEW YORK
August 5, 1919.

Dear Governor Strong:

Ever since you went away Mr. Treman nas been writing you regularly
and I have therefore refrained in order to carry out your pet theory of avoiding
Now that he is on a vacation for two, and we hope three, weeks

duplication.

I will give myself the pleasure of writing every

day

or two.

I spent yesterday in Washington, the first time I have been there
for three or four months.
to stick at it.

Leffi%well looked rather tired but seemed willing

Harding seemed generally discouraged and I guess is pretty

tired carrying SO much of the load.
appointment to fill the vacancy.

Thera seems to be little likelihood of an
He has just gotten up a new idea for the

printing on checks collectible through the Federal reserve bank

a symbol

which would indicate the number of the district and tne number of days of deferred
time.

While we have not yet studied it completely we are inclined to feel

quite strongly opposed to it as unneceesarily stirring up the whole situation.
I won't go into details but
August 18.

a

meeting of the transit men has been called for

You may imagine that we shall be busy preparing for it.
The Board has decided to ask the 700 member banks who report weekly

their condition to the Federal Reserve board to sub-divide further their loans
and discounts so as to make a separate item of the loans on stocks and bonds,
effective August 15.

This, I understand, will take the place of the proposed

suggestion to publish the amount of cull loans of the member banks.
The planning committee and the various controllmsare busy daily with
the details of the chart below the line of managers, and we are now preparing
the necessary changes in our by-laws for submission to our board of directors
to become effective when we are ready actually to put the chart in operation,



#2

Benjamin Strong, Esq.,

8,5,19.

FEDERAL RESERVE BANK OF NEW YORK_

which te hope will be within the next fortnight.
Senator Owen dropped in this morning, anxious to find out what was
being done by way of extending credits to Europe, and I made an appointment
for him to call on Mr. Davison.

Mr. Platt, chairman of the House Banking 6ommittee, is going abroad
in a few days for a hurried trip and I have written to him suggestingthat if
he so desired we would be glad to put him in touch with you for such assistance
as you might give.

I note a sentence in one of Mr. Treman's earlier letters to you relating to the payments of architects' fees, and think you might be interested in
the wording of the final paragraph wftich is as follows:
"7. PALMENTS--; The Cwner is to pay the

Architect for his services,

a sum equal to six percent of the cost of the entire building exclusive of
movable furniture and special equipment (the word "cost' as here used includes
of
all materials or equipment required to be fired or built in before occupancy

the building by the Bank organization);

and as additional compensation and for

the employment of engineering specialists, one and one half percent of the
total cost of the work which is to be cared for by the consulting engineers
previously referred to, less. previous payments made to the engineers by the

Owner as payments-on account."
I am planning to go away for two or three weeks' vacation on August
22.

On looking over Mr. Treman's letters to you

note some references

in Forty-fourth
to the Federal Reserve Board's examiners' criticism of affairs
Street.

but merely
These criticisms do not involve any money discrepancies

Victory Loan Associafailure to keep up the accounting end of the -work in the
tion and



the latter part of the Fourth Liberty Loan Association.

Messrs.

Benjamin Strong, Esq.,

RESERVE BANK OF NEW YORK_

8/3/19.

a
up there for a fortnight, are straightening
things out in good shape, Mr. Sailer reported at the meeting of the senior
Foye and McCrum, who have

been

officers this morning.
Very truly yours,

Benjamin Strong, Esq.,
Care

liorgan, Harjes & Co.,

Boulevard Houseman,
Paris, France.

PJ/BAH







FEDERAL RESERVE BANK
OF NEW YORK

August 5, 1919.

Dear Governor Strong:

In a letter recently received from Mr. A. B.
Hepburn the following sentence occurs:
"For my own personal satisfaction, I
would like to obtain, with approximate
accuracy, the total currency put in
circulation by the Bank of France, plus
the circulation of the Chamber of Commerce
in different municipalities, which has
bee h very generally used for small change."

If you can do anything to assist Mr. Hepburn in getting
this information I am sure that he would be over so much
obliged.

Very truly yours,

Benjamin Strong, Esq.,
Care Morgan, harjes & Co.,
Boulevard Houseman,
Paris, France.

PJ/PAH

FEDERAL RESERVE BANK
OF NEW YORK
August

a, 1919.

Dear Governor Strong:
(August 7th)

The meeting of our directors held yesterday
was a

very routine affair, the only thing interesting
was the authorization to the
officers to buy 800 or 900 books of

a

recreational cnaracter for our circulat-

ing librery at a Cost of about $1,200 or 451,300.
We have decided to have officers' meetings'at 9:30
every day and to
close them promietly at ten o'clock in order that
we may not have our entire

quesday and Friday mornings spoiled as in the past.
(August 8th)

for Curtis which was

Yesterday evening we

had a

dinner and theatre party

very pleasant ciffair ending with a little temperance

cool-off at the ffarvard Club.

This morning we had our first short and sharp officers' meeting.
e took up the designations on the chart and ,,pproved practically all of them

so that we should be ready to submit to our directors at their next meeting
proposed amendments of the

by-laws which will make it

chart into effect in about ten days.

possible to put the

We think it would take about that

length of time to polish up the few remaining odds and ends and prepare the
1

necessary announcement.
The thing that is agitating us just now is a proposal by the Federal

Reserve Board to establish a universal system of symbols on all checks indicating the Federal reserve district through hhich checks may be cleared, and the

number of days' time which it takes to collect it, also to eetablien the maximum
exchange charge which may oe made by a member bank for collecting checks through
the Federal 'reserve banks.

all agree with him.




A

4r. Aendricks thinks it is full of prickers and we

meeting of the transit men has been called for August

--- FEDERAL RESERVE SANK OF NEW YORK

Benjamin Strong, Esq.,

8/8/19.

18 to discuss it and we are now taking the matter up with some of the hew York
City and out-of-town banks to get their reaction.

In the meantime the par

point campaign progresses well; 2,300 new points since January 1, of which 504
were obtained during July, none of them through express company collections.
Subscriptions for certificates, Series A of 1920, closed yesterday,
the total amount subscribed being about 4533,801,500;
and our subscriptions $192,326,000.

our quota was $139,500,000

Mr. Leffingwell thought well enough of

our performance to send Mr. Treman a telegram of congratulations.
John Mason of the'Commercial Trust uompany of Pniladelphia, has been
appointed director of the Aar Loan Organization, effective August 15.
Broderick has left the Federal Reserve Board and becomes one of the
vice presidents of the bank of Commerce in :New York, assigned to do foreign
business on September 1.

Hutchins has left the Bank of Commerce to join

Hallgartsn.and eerkins has left the City Bankta join Montgomery

Company.

The strike in Brooklyn has rendered it difficult for our many employes
living there to get to and from the office and we have a service consisting of
.four army trucks which operate morning and evening between the office and certain
central points in Brooklyn.

We had to penalize the Marine Trust uompany $3,000 for deficient reserves during June and shall have a larer amount to penalize them for during
July.

We all think that if they continue to keep deficient reserves during

August we shall have to make it membership or nothing.
Very truly yours,

Benjamin Strong, Esq.,
Cio Messrs. Morgan, Hodges & Co.,
Boulevard houseman,
Phris. France.
PJ/RAR



Chairman.




(Received

Amsterdam August

New York

493

7,

1919)

80/79

BENJAMIN STRONG
Amsterdam (forwarded from Brussels)

Cable No. 5

August 5th replying to your telegram No. 7:

Grain Corporation agrees to disposition of funds by Hoover as
outlined in your telegram.
Treasury Department replying to our inquiry
quoting your telegram says quote replying to your telegram of today
quoting telegram Governor Strong in relation to German gold transaction
please advise Governor Strong that he is free to make settlement for the
German gold purchased from Hoover without assent from Treasury unquote
We await your instructions regarding payment.
Following cable received from NederlandschenBank quote fourth
lct approximately equals amount gold marks completed gross weights
kilograms 7945 grams 317 Troy ounces 255,447.6827
German weight
7945.2348.
Difference grams 82.2.
Coins genuine.
Are awaiting fifth
lot unquote.
Your number 4 only received today through State Department to
which reply will be made after conference with Straus.

FEDERAL RESERVE BANK OF NEW YORK.

(The above cable received by Mr. Strong 10 a. m. August 8th, morning after
arrival at Amsterdam)




PARAPHRASE

TRANSLATION

(The following cable was forwarded from Brussels and received at Amsterdam
August 9, 1919.)

New York

467 7 Westun

PCV

Fr

3.60

Benjamin Strong,

Care Nederlandsche Bank

Amsterdslm

CA4t4.
August 6

Referring your number four paragraph one Strauss

opinion (doubtful whether?) quote in view of the facts that India can
take gold in the United Kingdom and ship it to India it would seem as
though the government of India will (make?) an exceedingly large profit
on any gold shipped from here to India on the basis at least of recent
price for rupees

This being so we should not wethink take a position

that would lay us open to thecharge of having the Federal Reserve Bunk
cooperate (with?) the Indian government in making a large profit on the
shipment of gold from this country while they prohibit the shipment of
gold for private account
Paragraph two

conference
Strauss further recommends/with Rathbone who will

not return to New York until next Tuesday when we will cable you results
of our conference
Paragraph three

Referring to paragraph number two it would be

interesting to know suggested minimum price

FEDERAL RESERVE BANK
OF NEW YORK

.August 11, 1919.

Dear Governor Strong:
Your cable of August 6th was received to-day through the State
Department containing recomilendation of yourself and Mr. Kent that from

80,000,000 to 90,000,000 marks should be left on deposit earmarked with
the National Bank of Belgium, which was approved by our executive committee
tnis afternoon and

you, of course, nave been notified by cable accordingly.

we received to-day from the Treasury Department a request that
e accumulate through the medium of the Mercantile Bank of the Americas
some 55,000,000 pesetas to be deposited to our credit as fiscal agent in the

Bank of Spain at Madrid in order that they might be used in reducing a
maturing loan.

Our executive committee has authorized the necessary steps

to be taken by the officers to carry this transaction through.

The building committee at a meeting to-day voted, on the request
of one of the competitors, to extend the time for asking questions by one
week.

I enclose

clippirig

from

to-day's

Times quoting Governor Harding's

excellent, letter to the Senate Banking Committee about currency, etc.
Very truly yours,.

Benjamin Strong,,Esq.;
trd. Messrs. Morgan, Harjes?4.- Co.,

Boulevard Houseman,
Paris, France.







(The fdalowing cable received At American Legation, The Hague, Aug. 10)

Iew York 303

139/138

WESTUN

BENJAMIN STRONG,

American Embassy, The Hague
Cable Number seven.

Ninth.

1.
Referring to our No. 6, Rathbone states over wire Blackett
preseated proposal outlined your cable No. 4 to Treasury Department who
felt we should not participate an operation resulting in considerable
profit to the Indian Government by reason of our gold being taken at a
Rathbone further states that Treasury Department
discount in Indiaa
has submitted (tzgna for tugna) alternative proposition to Blackett from
whom nothing has yet been heard.

Following cable received from Nederlandsche Bank Quote Fifth lot
approximating equal amount gold mArks completed gross weight kilograms
7946 grams 8 troy ounces 255,469, 8989 German weight 7945, 998-1/2
difference grams 9-1/2
Are weighing sixth lot Unquote
Coins genuine
Replying your Nos. 6 and 8 Grain Corporation has given satisfactory obligation fully covering any deficiency for gold in both Belgium
and Holland and formula having been fully complied wia4 we have made
advances to Grain Corporation of 63,596,827 dollars Wcents against
gold held in Brussels and 21,861,276 dollars Wcents against first
five lots held in Amsterdam.
Your number 9 received.
Chubb advises if 10,000,000 dollars
shipped on one conveyance it will be (isdvo'for iidvo) necessary to use
New York as well as London market in which case limit of New York market
would be about 3,O00,(700 dollars.
However if shipments could be
limited to four or five million dollars in one conveyance whole amount
probably could be placed here as this market could then have London
market available for reinsurance if later &dap plan adojed policy covering
aJ1 shipments could be issued (horta?) here and prompt cable advice of
each shipment could begfiVAP-PelelUhubb & Son.

FEDERAL RESERVE BANK

(Cable received at Brussels August 13, 1919)

SSS New York 137 102/101

via Westun

Benjamin Strong,

American Embassy, Brussels
Cable Number 8.

We have advanced

Awast 11th.

$4,372,627.35

to Grain Corporation against

following cable received from Nederlandsche Bank confirmed through
Treasury Department quote sixth lot approximating equal amount gold

mnrkscompleted

255,466. 5231

Gross weight kilograms

German weight 7946 grams

'coins genuine

794,

95, 6

grams 903 troy ounces

difference grams 190,4

Are weighing 7th lot unquote

Referring to your number 9 Chubb quote rate about
per 100

40

7-1/2

cents

dollars covering all rislm from Rrusoels to London

Your number ten received

Executive Ommaittee approve your

recommendation leaving on deposit with National Bunk of Belgium 80 or 90
million gold marks earmarked for safekeeping

4.

For your and Mr. Kent's information Treasury Department desires

pay off 30 million pesetas bills drawn under Spanish credit maturing September 2d and 1/2 75 million peseta bills maturing August 29th and has

requested us obtain pesetas for them at not over mint par in any way we
believe advisable stop

We have therefore requested Mercantile Bank of

Americas to accumulate the pesetas which at Treasury Department's request
will be transferred to our credit with Bank

ope

Spain to meet maturing

certificates.




FEDERAL RESERVE BANK

(Following cable received at Paris August 18th)
vi
Nederlandsche Bank

New York

BENJAMIN STRONG
Nederlandsche bank
Number 9.

QUR

IT

western Union

Amsterdam

August 12th.

Referring your 4 had conference last night with Strauss, whostrongly
reiterated his and Treasury Department's opinion expressed our No.
and paragraph one No 6 No. 7.

6

For your and Mr. Kent's information Blackett has issued statement
that Ottawa Mint Canada is autnorized toseii on benarr of Secretary ofState (Y)
for India immediate telegraph transrer o inuia without Limit or amount in
exchange for go iu tendered at tue O4,tawa itint at tae rate of one rupee or LUIL
10.356, graius iine 6010. wnich rigures out 44.6, coats per rupee
suippiu6

=net

co..

AererrinG para6rapn 5 your uumber 411 tiraiu CorNlation nave given
satisfactory opiigation fulLy covering any ..eficienay or gola in Ou'uu oe1414.4u
compliou wit we nave um010
aud uoitanu WAL evrmula maViug txwed ionic;
aUvauces
tiaitit4 Crpoat.z oi*X1063,.6,6, 7.4/ Macula-4, gold A-A(1,W .01 .4601041115
.1.14 Ateruow. (?)
audig.0,4.,4,10.J8 sgaiust iirit six lots ue
7.




;..4)

iakdiAL

A.

FEDERAL RESERVE BANK
OF NEW YORK
August 13, 1919.

Dear Governor Strong:

At the meeting of our senior officers yesterday we decided to put
the new chart in effect on September 1, and at the directors' meeting to-day

we discussed the amendments to the by-laws which will be presented at the
next directors' meeting, making the necessary adjustments in the titles of
the officers.

Probably you had heard before you left of the announcement just
made that Dean Gay is to become the head of the New York Evenilg Post on January 1.

Mr. Twine was at our board meeting to-day apparently quite recovered
from his recent set back.
Partly due to the German gold operation, partly to shifting of Government funds, our reserve was down to 42.4% yesterday.

We are still carrying

the German gold as "Gold in Transit or Custody in Foreign Countries" and not
counting it as part of our reserves.
The second issue of 1920 series of certificates seems to be going
very well.

We have to-day, two days before the certificates are dated, about

$81,000,000 of subscriptions,

which is the largest we

issue two days before the issue date.

Sincerely

Benjamin Strong, Esq.,

C/o Morgan, Grenfell & Co.,
London, England.

PJ/RAH




yours,

have ever had for any

r

FEDERAL RESERVE BANK
OF NEW YORK
August 15, 1919.
Dear Governor Strong:

717

The enclosed memorandum on emigration statistics may be of interest

to you as indicating the flow of credit from this source.

frIn a conversation which we had with Mr. Albert Strauss this week he
indicated that a considerable part of our exports were being financed in effect
in this manner.

He stated that the absence of actual requests from foreign

governments for credit on this side was quite remarkable in view of the fact
that the Treasury Department had such a large sum available and that the War
Finance Corporation was able to be of assistance.
You may be interested also in the enclosed copy of a letter from the

Board indicating their present position on the kind of renewal credits which
they will sanction.

The letter, we understand, was the result of much discus-

sion between the different members of the Board.

Mr. Strauss and I feel that

they would be justified in granting renewals for a sufficient time to take care

of the export and such delays as might be incurred therein and to cover the time
of manufacture on the other side up to the time of the sale of the goods;

but

that from then on, a new relationship is established and the period of credit
extended by the foreign European importer or manufacturer should be financed
by him or his customer.

We are having an interesting
serve Board about our reserve position.
we should show 50%;
should show 45%;

att

e .iscusii with the Federal ReL.-1ft

If we counted the German gold as reserve

if we used it merely as a deduction from gross deposits we

if we considered

it merely as an investment we should show 40%.

We are trying to have it accepted as a deduction from gross deposits.
Mr. Case left for Cleveland last aight to attend a meeting of the subcommittee for the transit conference which Hendricks, owing to a recurrence of
his spinal



trouble, is feeling too ill to attend.

Mr. Case will also attend

.RAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.,

#2

8/15/19.

f)tht
the

conference in

Washington on Monday, whether or not Mr. Hendricks goes.

We have reduced the

rate on

selling Napoleons from 4.18

to 4.15,

but the transactions are very small.

AQ

You might be interested to read the enclosed letter from the Board
to Senator McLean, which has received very favorable reports in the papers.

I don't know who put the red marks upon it.
Sincerely yours,

Benjamin Strong, Esq.,
Care Morgan, Grenfell & Co.,
London, England.
IV/RAH
Enos.




MIGRATION STATISTICS.

Authorities approached in the course of an inquiry conducted by
the bank to discover how much and in what form money is being carried from
the country by emigrants, variously estimate the average amount per person
at between $1,000 and $4,000.

That branch of the Internal Revenue Collector's office which looks
after income taxes payable by emigrants tells us that although no systematic
search of emigrants is

being

made they estimate that an average of $3,000 to

$4,000 per person is being taken out of the country, most of it in money
orders other than Post Office Money orders.

Mr. Norwood, head of the Customs Intelligence Bureau, said that
emigrants for the most part carried from $3,000 to $5,000 per person in the
form of money orders.;

and in addition he believed they carried a small

amount of United States currency, sufficient to meet current expenses.
The manager of the Scandinavian Trust Company said that from his
observations persons returning to Scandinavia invariably took drafts ranging
in amounts from $500 to $5,000, the average amount

being $1,500.

The officials of the American Express Company say that

95% of the

emigrants to whom they sell express or money orders do not take on the aver-

age more than $1,000 per person, and that the maximum amount per person for
the remaining 5% may average $3,000 to $5,000.

This estimate can be con-

sidered as most authoritative in view of the fact that this company handles

the bulk

of

the

money order

business.

As a back-ground for the estimates secured in
ination of the records of the branch of

the Customs

the

inquiry an exam-

Intelligence Bureau which

regulates the issuance of passports showed that from the signing of the armistice until July 7, at which date the bureau ceased operations, over 200,000




EgIGRATION STATISTICS.

Authorities approached in the course of an inquiry conducted by
the bank to discover how much and in what form money is being carried from

the country by emigrants, variously estimate the average amount per person
at between 431,000 and $4,000.

That branch of the Internal Revenue Collector's office which looks
after income taxes payable by emigrants tells us that although no systematic
search of emigrants is being made they estimate that an average of $3,000 to
$4,000 per person is being taken out of the country, most of it in money
orders other than Post Office money orders.

Mr. Norwood, head of the Customs Intelligence Bureau, said that
emigrants for the most part carried from $3,000 to $5,000 per person in the
form of money orders;

and in addition he believed they carried a small

amount of United States currency, sufficient to meet current expenses.
The manager of the Scandinavian Trust Company said that from his
observations persons returning to Scandinavia invariably took drafts ranging
in amounts from $500 to *5,000, the average amount being $1,500.
The officials of the American Express Company say that

95% of the

emigrants to whom they sell express or money orders do not take on the average more than $1,C00 per person, and that the maximum amount per person for
the remaining 5% may average $3,000 to $5,000.

This estimate can be con-

sidered as most authoritative in view of the fact that this company handlesthe bulk of the money order business.

As a background for the estimates secured in the inquiry an examination of the records of the branch of the Customs Intelligence Bureau which
regulates the issuance of passports showed that from the signing of the armistice until July 7, at Which date the bureau ceased operations, over 200,000




-2-

emigrants were permitted to leave the country.

At the time the bureau closed

applications for 60,000 additional passports were on hand.

An analysis of

passports issued in a period of six weeks develops that of every 29 issued,
17 went to aliens.

Authorities agree that very little United States currency is being
taken from the country.
person.

One estimate puts the average at less than 4100 per

Foreign money dealers state that many of tne emigrants take foreign

paper money in small amounts.

hmigrants returning to the Balkan states are

particularly anxious to take Napoleons, but these are rather difficult to obtain.

There is alsoa fair demand for sovereigns.
little foreign gold is being taken:

It is shown., however, that very

which is natural enough in consideration.

of the fact that while money orders and drafts or European countries are at a
discount in the United States it is necessary to pay a premiim for foreign gold
in this market.

It is certain that travelers are not taking American gold with

them in any appreciable amounts.

It was reported that whatever gold was being carried by emigrants was
chiefly in the possession of
mine.

paniards, but how much was not possible to deter-

However, the number of Spaniards represented a very small percentage of

the total number of emigrants.

Postal money orders are not being used by travelers doubtless because
of the higher rates as compared with the rates charged by foreign exchange
dealers.

In this connection it is reported that beavy withdrawals have been

made from Postal Savings accounts credited to foreign born residents for the
purpose of purchasing money orders, drafts and foreign exchange.

Exchange

dealers also report a considerable business in the sale of foreign money here
to foreigners intending to send it to relatives abroad.




The investigation showed that most of the emigrants are from the

-3--

interior industrial centers.

For this reason it is difficult to secure estimates

as to the probable Amounts of money which have been withdrawn from banks by alien
The secretary of the Bowery Savings Bank says that emigrants who

emigrants.

have resided in the 'mediate vicinity of New York City, are taking very small
amounts of money out of the country with them, since withdrawals from savings
banks have been on a small scale and present a small total.

Mr. Pulleyn, president

of the Emigrant Industrial Savings Bank, said that he had made a very careful
study of this question and that he could discover no evidence in the reports of
any of the savings banks in -iew York City to show that foreign born depositors

have been withdrawing their savings to be taken abroad.
It is believed that large amounts have possibly been withdrawn from
banks in the coal regions of Pennsylvania and similar localities of dense foreign
population.

It is also true that emigrants from these regions often have had no

bank deposits.

Residents of the nationalities chiefly employed there are in-

clined rather to hoard their savings.

To the extent that savings have been

hoarded the withdrawals of money from the country have no effect, of course, on
the banks.

In conclusion, it appears that the effect of emigration has been negligible, both on New York savings banks and on the floating supply of currency. A
far more serious effect - an effect which deserves close attention by the state
banking authorities - will be upon the private bankers, especially in New York
and other centers of foreign-born population, who deal chiefly with aliens.

We

understand through the Foreign Language Division of tne War Savings Organization
that the emigration is already adversely affecting small private bankers on the
East Side and in other alien centers of New York.




August 7, 1919.

Dear Sirs:

Receipt is acknowledged of your letter of the
6th instant regarding a proposed acceptance credit for
five million dollars available by ninety-day dollar drafts
of the Paris, Lyons and Yediterranee Railroad against
exports of coal from this country to France for the railroad.
You ask whether the Board would hold to be eligible for
rediscount with Federal reserve banks renewals of such drafts
covering the full period of time from the purchase of the
coal in New York, to include possible delays in ocean and
iniand transportation in France, and such further time as
will elapse until the coal is needed for consumption.
The letter addressed to you yesterday in connection
with another inquiry made by you sets forth the Board's vie
of the general principles which would govern in the present
In ruling on the eligibility of renewals of
case as 1.6.1.
the coal drafts, the Board will take into account delays in
The Board cannot, hcrever, adtransportation to destination.
of renewal drafts drawn to cover "such farther
mit the eligibilit
time as will elapse until the coal is actually needed for consurption."

Drafts covering coal stored by the French Railroad
would represent actually part of the working capital. of the
Railroad, which should, in the opinion of the Board, be financed
through the investment market and not by the issue of paper --hich
is self-liquidating .only in form.
Very truly yours,

Governor.

hessrs. Goldman, Sachs & Company,
60 7all Street,
New York.




FEDERAL RESERVE RAMC'
OF NEW VDRK

C OFT
August 5, 1919.

Yessrs. Goldman, Sachs & Co.,
60 Wall Street,
New York City.
Dear Sirs:

In response to your communication of July 26th, you are informed that
the Board fully realizes that conditions abroad are still far from normal and
that allowance for this fact must be made in estimating the duration of any
transaction involving the exportation of goods on account of which an original
draft is drawn, and consideration will be given to these abnormal coaditions by
the Board in ruling upon the eligibility of renewal drafts.
It is clear, however, that no renewal draft can be held to be eligible if at the time of its acceptance the period required for the conclusion
of the transaction out of which the original draft was drawn shall have elapsed.
In cases where it is practicable at the time the original draft is drawn to
foretell with substantial certainty the conditions which will exist at the time
the renewal draft is to be drawn, the Board may be able to rule in advance as
to the eligibility of such renewal drafts; but in cases where it is not possible, the question of the eligibility of renewal drafts must necessarily depend
upon the stage of the transaction that may have been reached when such renewal
drafts are drawn.
In cases where transactions have been fully concluded but where the
vendor in this country deems it inadvisable, or his customer abroad finds it inexpedient to remit the proceeds of the sale, owing to adverse exchange rates
or to other circumstances, you will realize that to permit the renewal of bills
based on such a state of facts would be to render eligible bills which in their
nature are merely finance bills.
After four years of war many industries abroad require not only current commercial accommodation but also what is in effect replenishment of permanent working capital, and efforts to replenish permanent working capital by
means of bills which are in form self-liquidating but which actually represent in substance a permanent investment, cannot be encouraged by the Federal
Reserve Board.
Any parties interested in transactions of this kind should
finance themselves through the investment market.
Subject to the limitations above outlined, the Board is prepared to
take full account of the extraordinary conditions now prevailing and to make
rulings accordingly.

With reference to the narticular transaction mentioned in your
letter; to wit:
the opening of an acceptance credit of two million dollars
to be utilized against three months' sight drawings with privilege of
three renewals, drafts to be drawn by a French bullion dealer and the proceeds to be used for the parchase of gold bars for shipment to France to be
used in the manufacture of jewelry, the Board is unable to rule in advance
that the renewal drafts would be eligible for rediscount by a Federal
reserve bank.




Very truly yours,
(Signed) W. P. G. Harding,
Governor.

(Received at. Paris August 17)

Rio
Z211/17 :Kew York 95/93 1/50/49

BENJAMIN STRONG

Morgan Harjes AaD CO Paris
aumber

August 16th.

O.

Referring your number 9 Uhubb taink after further Investigation
that if entire amount placed in America none eisewhere prooaniy possible
insure seven million five hundred thousand dollars one conveyance and
possibly might increase to ten million uollars one conveyance

ne cannot

guarantee out requests that you advise if business likely eventuate so he
can make preliminary arrangements and advise definitely.
We nave advanced Grain Corporation
cable received from aederiandsche Bank

Lot

waich has

equal to amount completed kilograas

kierman weight

KM 7945.4138

$4,372,285.02

against following

/6

been confirmed quote

4111 7945.2725 troy ounces

Difference grams 141.3 stop

255,446.252

Coins genuine

P

Are weighing eighth lot unquote




5.

/04iowing cable also received from aederlandsche Bank quote Agreed

with Strong to continue weighing gold up to 20_0,000,000 marks Remaining
gold will be roughly weighed
cable July 19th.

with

margin of one-half per cent, as per our

Advices of weight follows soonest possible unquote

We presume you will confirm this arrangement to us.
FEDERAL RESERVE BANK

FEDERAL RESERVE BANK
OF NEW YORK

August 18, 1919.

Dear Governor Strang:

Your letter of July 31 to Mr. Treman has just arrived and has been
shown to me in his absence.

I note what you say about Mr. Beyer and that

possibly Miss Bleecker is looking after your personal affairs.

Miss Bleecker

is substituting for the summer at the Buffalo branch, but Mr. May is looking
after your personal affairs here and is now taking all of your mail up to Mr.

Beyer every other day, who looks it over and forwards anything to you which
he thinks should be sent.

Mr. Beyer is now able to walk about and hopes to

be back at the bank in the course of a week or ten days, the operation having
been entirely successful.

Your cablegram No. 14 came to-day with regard to your trip to Constantinople.

Mr. Case was in

Washington and he and I

both felt that as far

as we were concerned personally you ought to use your own judgment as to the
time of returning.

I asked him to speak to Mr. Leffingweli and

Governor

Harding on the subject and cabled you this afternoon what Mr. Leffingwell
said; namely that he should think it a great loss to both himself and his
organizations if you were away while plans were being matured to sell some

more notes and to stimulate better buying of Liberty bonds in the market.
He relied upon you very much for advice and for inspiring bankers and Liberty
Loan organiations

to activity.

the first of November.

He therefore hoped thatyouwould be back by

Governor Harding said that it was a matter for our

good deal of
own board to act upon but that he was advised that there was a
typhus

that


in

Constantinople and had declined to let his daughter go there on

account.

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.,

#2

8/18/19.

Mr. Case telephones that he thinks the presence of Mr. Wills and
himself was of considerable value at the transit men's conference this morn,

ing in persuading the Board to postpone for another six months the discussion
of their plan for fixing exchange charges and putting Federal reserve symbols
on all checks collectible at par.

This news is a great relief to all of us

here.

Hendricks has been laid up again with his back, as I may have written
you last week, but was at the office again for a part of the day to-day.

Sailer returns from ten days' rest to-morrow and I expect will jump
in and help put the chart across on September 1.

All

hands are working to that

end at present.

The strikes on the subways and elevateds in Manhattan did not affect
us very adversely this morning as we had engaged five "Seeing New York" buses,
each holding about sixty people, to start from different points uptown and
bring clerks to the bank.

I went up to the transit department about nine fifteen

a. m. and found about two thirds of the people there.

I think the situation

will be better to-morrow as the ability of the various existing street car and
B. R. T. subway lines are better understood.
Our total subscriptions to iate to the second series of 1920 certifi-

cates of indebtedness due January lb, 1920, are $198,000,000.
Sincerely yours,

Benjamin Strong, Esq.,
Care Morgan, Grenfell & Company,
London, England.

?J/RAH







CABLEGRAM (received in badly mutilated condition August 23; repetition
asked)
BENJAMIN STRONG

Morgan Harjes

No. 12.

Company $ Paris

August 20.

Your cable advising Constantinople trip abdndoned received.
Have communicated contents your No, 12 to Strauss and have re-

ceived copy Leffingwell's direct reply to you.
Replying to paragraPh 2 your No. 13

we requested details alter-

native from Treasury and were advise, Leffingwoll cabling direct to you.
Following cable received from Nederlandsche Bank, Which has been

verified and against which we have advanced Grain

7,945? grams 93-1/2 5roy

quote 3th lot equals amount completed kilograms

ounces

255,440,497Q--erman weight

Coins genuine

7,945,3103

Corporation 112,182.32

Difference grams 216.8

Are weighing 9th lot unquote

5.? Following cable received from Nederlandsche which has been vent'ied and against which we have advanced Grain Corporation 31,624,601.41 cone

leting 5100,000,000 and balance of advance on 9th lot 2,747,478.21 we
have NE BUST THAT "IILL FOLLOW

lot unquote
6.

Referring paragraph 1 your No. 13 Treasury will pay off 30,000,000

pesetas bills maturing September

? using therefor? 12,000,000 pesetas

now? on? deposit their credit? Bank of Spain and 18T million pesetas lAkkit
chased through Mercantile Bank Americas stop

75? million pesetas bills

maturing September 29th will be renewed as nercantile Bunk could buy? only

18,500,000 pesetas at par or better trifle over?

to meet maturity stop

These will be held by Treasury for future uee
FEDERAL RESERVE BANK

pur-




(The following note and portion of mutilated Bank cable No. 12 was received
from French cable office August 250

"Herewith second sheet of 525 August 22, from New York, addressed to
(copy was mutilated)"
Benjamin Strong, Morgan Harjes and Co.

BQ HSITH BENCH 2/2189 BENJAMIN
point

3,103

Difference grams

51/50

216.8

C3ins genuine

Are weighing

9th lot unquote

4-1/2?

Following cable received from Nederlandoche (bank) which has

been verified and against which we have advanced Grain Corporation

1,624,601

dollars 41 cents completing 100,000,000 dollars and balance of

advance on 9th lot

2,747,478

dollars 21 cents we have paid to Guaranty

Trust Company for credit Commission for Relief of Belgium quote 9th lot
equals amount completed kilograms

7,944.902

troy ounces

255,434.'402




PS X A 20/15/25 New York 71/69

BENJAMIN STRONG

Morgan Harjes and Co. Paris
Number 13.

August 22.

Replying paragraph 2 your No. 15 Chubb has placed insurance in

this market payable in dollars protecting shipment against all risks up
to 110 million dollars at

7-1/2

cents per 100 dollars but only 5,000,000

dollars on any one conveyance stop

Chubb hopes to advise of a larger

amount by Monday.

Protection attaches irrespective when declarationsof shipment

are made but it is expected we will be advised by cable the amount of each
shipment and the date stop
bars at dollars

20.67183462

Value to be based on mint par of coin and
per ounce all plus one per cent, to cover

shipping costs.

Nave confirmed to Nederlandsche Bank arrangements made by you for
roughly weighing balance.

FEDERAL RESERVE BANK




New York

CABLEGRAM

Benjamin Strong

Morgan Harjes and Company Paris
Number

14.

August 27th.

Our directors believe inasmuch as earmarking of gold is not source
profit to the

institution

holding same that all gold should be moved to

Bank of England as expeditiously as possible in accordance with arrangements outlined in cable

WA

paragraph 6 subdivision E, from Rathbone to

Davis, which view is concurred in by Federal Reserve Board stop

On Aug-

ust 2, Treasury Department cabled you that it did not expect to require
gold in Spain for peseta payment, in view of which Federal Reserve Board
feels it is not desirable to have gold scattered in several different
places.

Strauss suggests you confer with Bank of England with regard to
possibility of effecting

arrangement

whereby Bank of England would deliver

in New York gold held by it at Ottawa in return for gold held by Bank of
England in London for account of Federal Reserve Bank, both banks thus
profiting by the saving in expense.

Chubb has succeeded placing not exceeding six million five hundred
thousand dollars by any one conveyance which practically exhausts market
and nothing further can be placed stop

The six mil

thousand dollars is to include the value of the gold plus one per ceit.
cost of shipment stop

Chubb disturbed by cables received from abroad

which seem to indicate that this insurance or at least a portion of it is
being placed direct in London market stop

If this is so we will have

very troublesome question of double insurance but assume no insurance is
being placed except under policies arranged for by us in New York stop




2

Please confirm this to us.
4.

The following cable received from De Nederlandsche Bank Which has

been verified and against which we have paid advance of 4,371,703 dollars
and six cents to Guaranty Trust Company for credit Commission for Relief
of Belgium stop quote Tenth lot equals amount completed kilograms 7944.212
troy ounces 255,412.1562 German weight 7?44 grams 63 difference grams 149.
Coins genuine

Total?

7mucl:/.
1200,000,000 now weighed

unquote.

FEDERAL RESERVE BANK

REPORT TO GOVERNOR STRONG

August 28, 1919.

Reserve Position

43.1

Earning Assets

856,063,0

Commercial paper
Loans secured by Govt. obligations
Acceptances
U. S. securities owned

.

.

43,155,069.30
648,318,821.79
96,977,881.78
67,611,300.00

Total Gold Reserve

526,611,3

Deposits (net)

585,253,4

7ederal Reserve Notes (net)

751,464,3

Due from Depositary Banksas Fiscal Agents

276,435,0

Call Money -

6%

Total Brokers Loans -

,

Subscriptions to certificates of indebtedness.

Loans to-day decreased about $4,000,000.

August 29, 1919.




160,000,000.

FEDERAL RESERVE BANK
OF NEW YORK




9/5/19

Recd.

TRANSLATION OF CABLE

New York
zENJAMIN STRONG

Care Morgan Grenfell & Company

No. 16

London

September 3d

Your No. 19 only received today.

We have covered insurance

440,000,000

marks from Amsterdam and

200,000,000 marks from Brussels
As previously advised our Executive Committee and Federal Reserve
Board have approved your recommendation of leaving on deposit with National

Bank of Belgium temporarily 90,000,000 gold marks earmarked for safekeeping.
Please repeat paragraph 4 your number 19 which paragraph was
received badly mutilated.

For your information we repeat our number 12 quote
advising Constantinople trip abandoned received.

2.

1.

Your cable

Have communicated

contents of your No. 12 to Strauss and have received copy Leffingwellls

3.

direct reply to you.

Replying paragraph 2 your No. 13 we requested

details of alternative from Treasury and were advised Leffingwell cabling

4.

direct to you.

Following cable received from Nederlandsche Bank

which hasbeen verified and against which we have advanced Grain Corporation

$4,372,182.32

7945 grams 93-1/2

quote

Eighth lot equals amount completed kilograms

Troy ounces

Difference grams 216.8

255,440.497

Coins genuine

German weight

7945.3103

Are weighing ninth lot unquote

Following cable received from Nederlandsche Bank viaich has been verified

and against which we have advanced Grain Qorporation

$1,624,601.41 com-

pleting $100,000,000 and balance of advances on ninth lot

$2,747,478.21

we have piid to Guaranty Trust Company for credit Commission for Relief of
Belgium quote

Ninth lot equals amount completed kilograms IX

7944.902

FEDERAL RESERVE BANK
OF NEW YORK




F.R.Bk.- *.

Troy ounces

255,434.3402

Coins genuine

German weight

7945.1245

Difference grams 222-1/2

Are weighing tenth lot unquote
FEDERAL RESERVE BANK

copy

FEDERAL RESERVE BANK
OF NEW YORK




TRANSLATION OF CABLE

3502/3

New York 75 1/4t

Recd. 9/6/19
BENJAMIN STRONG

care Morgan, Grenfell & Company
London
No. 15

September 2d

We have notified Mr. Kent that as requested by him we have increased
insurance to a total of

0136,000,000

and further that it is understood and
shipments by two vessels

agreed that in case9 where

arrive at ports in England and both or parts of both of these shipments
should go forward by one train or other land conveyance to destination in

rrkftivaAT-44

London the olause-ia-poliley

as to limit of liability is waived

as regards these shipments while so conveyed by land to

Londou stop

Reported Argentina contemplates 20 per cent, tax net foreign
banks having branches there stop

Exception made in favor of the

countries permitting branches Argentine banks to accept deposits

Governor

Harding suggests that you inquire into the matter for recommendation on
your return

We add suggestion you ascertain whether similar legislation

contemplated in Europe

New organization chart published and mailed member banks on
August jOth and becomes effectiVe September 2d
FEDERAL RESERVE BARK

copy

FEDERAL RESERVE BANK
OF NEW YORK




TRANSLATION OF CABLE

B Z 2123 New York 40/39
Sept.

5, 1919, 2:30

p.

BENJAMIN STRONG

Care Morgan, Grenfell & Conpany
No. 17
1.

London

September 4th

Referring paragraph 2 our number 15 with view of making recom-

mendations to Banking Superintendent upon your return should modifications
of New York State law seem desirable Strauss suggests that you go into
matter in considerable detail ascertaining among other things whether
banks in Great Britain specializing in the business of particular foreign
countries are mostly British banks or branches of banks incorporated in
the respective foreign countries
FEDERAL RESERVE BANK

Cur
RESERVE BANK
FEDERAL
OF NRVV YORK'




Recd,

TRANSLATION

OF CABLE

New York

BENJAMIN STRONG

Care Morgan

No. 18
1.

Grenfell

Company

London

September 5th

Chubb has succeeded

$7,500,000

9/6/19

effective on

and

increasing

$6,50O,000
insurance from

after September

8th

BANK
FEDERAL RESERVE

to




Recd. at London Sept. 11, 1219, 7:43 pm

CABLEGRAM

AY 726/11 New York 53/51

BENJAMIN STRONG

Morgan, Grenfell & Company, London
No. 20

September 10

Your No. 20 received

Have instructed Chubb arrange insurance additional 90,000,000
marks and will cable you when effected
Have communicated paragraph 5 your No. 20 to Chubb who will
endeavor increase insurance each shipment to 310,000,000 and we will cable
you as soon as possible
Nederlandsche Bank cabled weight balance German gold
92,881,425-1/2 grams

We calculate value at $55,557,309.27

On receipt

of confirmation through State Department will advance 92 per cent.
Our No. 11 unimportant

Referred Constantinople trip

FEDERAL RESERVE BANK




CABLEGRAM

Received at London, Sept. 10, 1919, at 12:25 pm

B157

New York

20

BENJAMIN STRONG
c/o Morgan, Grenfell & Company, London.

No. 19

September 9th

Please ask Bank of England to cable

us next Saturday the total amount of our German gold Which has been
arrived Bank of England up to that day as it is important we have
information on September 15th

FEDERAL RESERVE BANK

copy

FEDERAL RESERVE BANK
OF NEW YORK

Received at London Sept. 13, 1919.

CABLEGRAM

A X3205/12

New York

39

BEgJAMIN STRONG
c/o Morgan Grenfell & Company
No. 21

London

September 12th

Referring to par-graph 4 your 20 Chubb has increased insurance
4-84-?1- million 72, thousand dollars naking tot,A1 insurance 084,325,000

Chubb advises cannot incre-ee present amount insurance one conveyance

Referring to paragraph 3 our No. 20 confirmation received and
advance made today

In view of present low rate sterling and francs do you consider it advisable to increase our balances in London and Paris




FEDERAL RESERVE BANK

WEST
ANGLOAMERICAN
xxol

JH

mci)

CA Ft

DIRECT UNITED STATES

R,A,M,Via Western Union.

RECEIVED AT 22, CREAT WINCHESTER STREET, LONDON, E.C.2.

NY 2035 NEWYORK 22
BENJAMIN STRONG C/0 MORGAN GRENFELL AND CiVPAY/3
23 OLD BROAD STREET LONDON

YOUR TWENTY RECEIVED PARAGRAPH THREE NOT CLEAR PLEASE REPEAT
FEDRESERVE

5240

No inquiry respecting this Message can be attended to without the production of this paper.



THE WESTERN UNION TELEGRAPH -CABLE SYSTEM.
THE LARGEST TELEGRAPH AND CABLE SYSTEM IN EXISTENCE.

DUPLEXED ATLANTIC Ci8g31,.$,,,
OVER 251,m6:01AL5ES AND

1,500,000

MILES OF WIRE,

Direct Wires from Cable Stations to all the principal commercial ceArelairkprpt gEb§inyWniteel,
States and Canada, and Direct cqnne2ttdn with Central America, West InVes, gedt'f, Arnepica, Austvalia,
New Zealand, Fanning, 1, Tykd
rfolk Islands.

DIR EelYV

(.

,./W 0 .11.16A J_J--IV_13HD 1/1ADHOM

04 DV 0 HT2 VI

I M A UV' 38

r-AuLUSIVE CONNECT! N WITH MEXICO.
CIJO ES

RECEIVING OFFICES IN THE UNITED KINGDOM

,agpL,.

Ct 3V 1, 54 Y1713
Wester., ITutoat No--kV.,ii".11774A4,4,es litra 2.P 8 P14.M.. 3354-1T 1-1qASIDASiAci
..,
Central 309
BRISTOL: C..atada ouse, Baldwin Street
LAiLhani,e)
11-iisate
P.RADFORD: 10, Forster Square
Bradford 771
The Ealti, 5n. Mary Axe, B.C.._
A.E..
*2, Chariag Cross, S.W.
...
...
Central 1351
71i
Londaral 0 TILF31,1119EE: 1, Panninre StreetStreet
10, RoLborm Viaduct,
EDINSURG:H: 50, Frederick
400
Mark Lazo,
771
Royal Exchange,
;(Jrtvate
.. City 3717
Donington House, Norfolk Street, W.C. ..
.
GLASGOW: 23, Waterloo Street
'Branch
Central 2274
1.
Exchange)
LIVERPOOL: D 0, Exchange Buildings.(Private
...J
MANCHESTER: 30, Brown Street
City 1455
Cotton Exchange
Branch
...
NEWCASTLE-ON-TYNE: 1, Side ...
Exchange)
Central 1329
Also Regent 3073.
General Offices
WESTERN UN!ON HOUSE, 22, GREAT WINCHESTER STREET, corn:yap', E.C. 2.

.

LONDON:

TELEPHONE No.: LONDON WALL 800 (Private Branch Exchange).

PRINCIPAL CONTINENTAL OFFICES AND AGENCIES:
AMSTERDAM:
BARCELONA:

4, Weesperzijde.
57, Calle Gaspe.

96, Paseo de Gracia.

BERGEN:
Leppen, Tyskebryggen.
CHRISTIANIA: 4, Prinsensgacie.

COPENHAGEN: 4, Jernba.neg,acle.
HAVRE:

118, Boulevard

MADRID:
NAPLES:

Via Marina Nuova.14119.

Strasbourg.
Calle Valenzuela 10.

PARIS:

1, Rue Auber.

37, Rue Caumartin.
ROME:
49/50, Piazza di Spagna.
STOCKHOLM: Drottninggatan 3.
ZURICH:
Pelikanstrasse, 22.

The Public are recommended to hand in their'Teagrams at the Company's Stations, where free receipts are given for the

amounts charged.

Telegrams for this Company's Cables are also received at all Post Office Telegraph Stations; but in order to insure transmission by the Western Union Telegraph-Cable System, the forms upon which Telegrams are written should be marked "Via Western
Union," "Via Anglo" or "Via Direct." This indication is signalled free of charge.
Cable addresses are registered free of charge.
All important Telegrams should be repeated for which an additional quarter rate is char,ged.






HA NY 2089 New York

4a

BENJAMIN STRONG

c/o Morgan, Grenfell & Company
No. 22

London

September 16th

Bank of England cable received yesterday giving amount
German gold arrived.

We desire sinilar advises when lot aggregating

approximately 100,000,000 marks are received.

A

London we are distributing it Awng other Reserve Banks and carrying
it as reserve.

Referring to paragraph 2 your No. 20 have corrected our
calculation and iigure value

$57,064,27a.57.

Regret error.

Your family advised sailing date and Treasury will facilitate
landing.
FEDERAL RESERViN BANK'

AW...NY 2090

New York 22

BENJAMIN STRONG
c/o Morgan Grenfell & Co.
No. 2,
21

arrangement

London

September 17th

Replying to paragraph 3 your No.

outlined therein meets our views.

it to Strauss and have not yet obtained reply.

We h
Matter not yet

submitted by representative Indian government.




FEDERAL RESERVE BANK




CABLEGRAM

HOD NY 15,0

New York 28

BENJAMIN STRONG
c/o Morgan, Grenfell & Co.
No. 24

September 18

London

New York agent Bank of

Montreal

desires to pay us gold received by them in payment rupees in exchange
for equivalent amount our gold with Bank of England.

We understand

this is arrangement referred to in paragraph 3 your No. 21 and unless
you have made other arrangements we would agree to this exchange with
Bank of Montreal.

At present only $3,500,000 involved
FEDERAL RESERVE BANK

FEDERAL RESERVE

MISC 4

BANK OF NEW YORK

Date November 7), 11j.

OFFICE CORRESPONDENCE
To_
From

Subject:

Mr. Strong
Mr. day

k

4301'

"01\

,C40

I should like to do this if I had plenty of time.

Tnere

ne one or two other things I should like to write first as I think

they are more important as

bearing

therefore,going to be asked to

on Government




on the

work of

be excused from

tae bank, and I am,

-iting this article

bonds.

I suggest

Lewis 3.

Franklin as the

next victim.

\

e""?

FEDERAL RESERVE BANK
OF NEW YORK
January 20, 1920.

Dear Governor Strong:

After receiving a postal card or two from you en route I was

glad to get your letter of Sunday, January 11, advising me that you
had landed somewhere in the foliage of the Castle Hot Springs' palm.

I have not been writing you very much because we have been pretty busy
and there has not been very much eventful to write about.

I presume

that you take the New York papers (perhaps you will confirm this) so
you will keep informed by them of anything which is of public interest.
At our meeting last Wednesday we agreed to raise our rate to
5 1/2 %.

There was a bare quorum present and Mr. Alexander dissented

from the view that we should raise our rate on certificates to 5 1/2 %.

He, Case and I were appointed a committee to go to Washington to confer
with the Board and the Treasury Department to see if some comprehensive
program could not be worked out for dealing with the situation so that
we would not be acting as hastily as we have sometimes had to act in
the last two months, and so that if possible some consistent policy
could be reached.

We had our conference in Washington yesterday and Mr. Leffingwell outlined to us the very large reductions of his floating debt

which

he expects to accomplish this year, which I think none of us fully appreciated.

Apparently the last certificate sale just closed, which

resulted in subscriptions of sometinng over $700,000,000, is the Awayiast large sale he expects to have to make.

After the small sale in

February of March 15 certificates there will bb no more sales except



v//

benjamin Strong, Esq.,

#2
-.SERVE BANK OF NEW YORK

1/20/20.

.....

,//////
two or three small ones of, say,
May.

200,000,000 each in March, April and

There will then be possibly no others until the autumn, and these

will also be small ones.

In view of this situation Mr. Leffingwell

believes that he should be able to borrow at not exceeding 4 3/4%, and
should be able to borrow at less than our discount rate.

He feels that

we should leave the preferential rate of 4 3/4% in existence for a short
time while the banks are disposing of their 4 3/4% certificates, but
would be quite ready to see it raised later to 5% or possibly a little
more in accordance with circumstances.

We discussed with the board having this rate available only
on certificates actually owned by the banks borrowing upon them in order
that it might not be abused.

Inasmuch as I believe the Reserve Board

would not approve a rate of 5 1/2 % without a differential on certificates at the present timt;, I believe that is what we should it-owe-ratio do

with the idea of raising this differential a few weeks hence.
It is a great disappointment to both Case and me to have to

backwater on the matter but I am not sure that in view of the extraordinary progress anticipated in cleaning up the -floating debt we are not

justified in making this exception.

At the present time only about 10%

of our discounts are secured by certificates, as Against about 50% last
May.

The thole matter will have to come up again at our directors'
meeting to-morrow.

You doubtless saw the action of the New York Clearing House in
fixing the maximum rate of interest on bank balances at 2 1/4 %, leaving

a sliding scale to work from there down.
We heard nothing in Washington regarding the new secretary of
the Treasury, or just when Glass was going to leave, but the latest



RESERVE RANK OF NEW YORK

Benjamin Strong, Esq.,

1/20/20.

information We have is to the effect that it will probably be Leffingwell.

Everything seems to be running along reasonably smoothly nere
and I am in hopes that you will enjoy that rest and loaf to the uttermost
degree.

I was very sorry to hear that you had felt rather seedy the two

days before you left.

Faithfully yours,

Benjamin Strong, Esq.,
Castle Hot Springs Hotel,
Hot Springs, Arizona.
PJ/HAII







Perm 1207

WESTE

LASS OF SERVICE DESIRED
Telegram

'ay Letter

UNION

WESTERN UNION

Night Message

TEL

Night Letter

Patrons should mark an X opposite the class of service desired:

OTHERWISE THE MESSAGE
WILL BE TRANSMITTED AS A

NEWCOMB CARLTON, ',RESIDENT

FULL-RATE TELEGRAM

Send the following message, subject to the terms
Oil hack hereof, which are hereby agreed to

Receiver's No.

R.TM
Check

AM

&4Ni 74
Time Filed

GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT

NEW YOBK CITY.N.Y. JANUARY 23rd. 1920

191

To iindibuollsr BEM STRONG

Street and No.

CASTLE HOT SPRINGS PORED,

Place

HOT 2PRINGS, ARIZONA.

SORRY MY TELEGRAM GAVE YOU SOME WHAT WRONG IMPRESSION BEGIRDING ORIGINATION OF
RATES.

OUR DIRECTORS ORIGINATED CERTAIN RATES CHARGED WHICH WERE CONSIDERABLY MODIFIED

BY THEM AFTER OUR COMMITTEE HAD IZENXIMEXKLIEML

comultEuLut4
AND ONE HAlF PJ

CONSULTED WITH BOARD.

ONLY RATES

OUR BOARD WERE SIX PER CENT FOR COMMERCIAL PAPER INSTEAD OF FIVE
CENT. THINE THERE IS NO REASON FOR:RADICAL ACTION

ANNOUNCE RATES LAST NIGHT AS DID BOSTON AND ISILALELPHU.
4

PIKERS JAY

SENDER'S ADDRESS

FOR ANSWER

SENDER'S TELEPHONE NUMBER

Fr

ALL MESSAGES TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERMS:

To guard against mistakes or delays, the sender of a message should order it REPEATED, that is, telegraphed bark to the originating office for comparison
this, one-half the unrepeated message rate is charged in addition. Unless otherwise indicated on its face; THIS IS AN UNREPEATED MESSAGE AND PALI,it
AS SUCH, in consideration whereof it is agreed between the sender of the message and this Company as follow,:
The Company shall not be liable for mistakes or delays in the transmission or delivery, Or for non-delivery, of any UNREPEATED message, beyond the amouni
received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED message, beyond fifty timesthe
..um received for sending the sante, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lines; nor for errors io
--iio- pher or obscure messages.
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 message.
' Whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this message is hereby valued, unless a greater value
is stated in writing hereon at the time the message 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.
The Company is hereby made the agent of the sender, without liability, to forward this message over the lines of any other Company when necessary to reach
its destination.
4. Messages will be delivered free within one-half mile of the Company's office is towns of 5,000 population or less, and within one mile of such office in other cities
or towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense.
endeavor to contract for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning messages until the same are accepted at one of its transmitting offices; and if a message is sent to such
office by one of the Company's messengers, he acts for that purpose as the agent of the sender.
The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the message
is .filed with the Company for transmission.
.

10"
.

-

.

erated
Special terms governing the transmission of messages under the classes of messages enumerated below hall oppN to messages in each of such respective classes in additio n
to all foregoing terms.
S. No employee of the Company is authoriz,ed to vary the foregoing.
THE WESTERN UNION TELEGRAPH COMPANY

.

INCORPORATED
CARLTON,
PRESIDENT

.

NEWCOMB
1'

CLASSES OF SERVICE
TELEGRAMS
A full-rate expedited service.

NIGHT MESSAGES
Accepted up to 2.00 A.M. at reduced rates to be sent during the night
and delivered not earlier than the morning of the ensuing business day.

DAY LETTERS

A deferred day service at rates lower than the standard tele-

gram rates as follows: One and one-half times the standard Night
Letter rate for the transmission of 50 words or less and. one-fifth of
the initial rates for each additional 10 words or less.

SPECIAL TERMS APPLYING TO DAY LETTERS:
In further consideration of the reduced rate for this special "Day
Letter" service, the following special terms in addition to those enumerated above are hereby agreed to:
Day Letters may be forwarded by the Telegraph Company as a
deferred service and the transmission and delivery of suchDay Letter,
is, in all respects, subordinate to the priority of transmission and

delivery of regular telegrams.
Day Letters shall be written in plain English. Code language
is not permissible.
This Day Letter may be delivered by the Telegraph Company
by telephoning the same to the addressee, and such delivery shall be a

complete discharge of the obligation of the Telegraph Company to
deliver.

This Day Letter is received subject to the express understanding and agreement that the Company does not undertake that a Day




Letter shall be delivered on the day of its date absolutely and at all
events; but that the Company's obligation in this respect is subject
to the condition that there shall remain sufficient time for the trans-.
mission and delivery of such Day Letter on the day of its date duni
regular office hours, subject to the priority of the transmission of r
ular telegrams under the conditions named above.
No employee of the Company is anthorized to vary the foregoing.

NIGHT LETTERS
Accepted up to 2.( )1i
for delivery on the morning of the (lista
business day, at rat,, still lower than standard night message rat,,

follows: The standard telegram rate for 10 words shall be charged for the
transmission of 50 words or less, and one-fifth of such standard telegram
rate for 10 words shall be charged for each additional 10 words or less.

SPECIAL TERMS APPLYING TO NIGHT LETTERS:
In further consideration of the reduced rate for this special "Night

Letter" service, tin' following special terms in addition to those
enumerated above are hereby agreed to:

Night Letters may at the option of the Telegraph Company
be mailed at destination to the addressees, and the Company shall

be deemed to have discharged its obligation in such cases with respect

to delivery by mailing such Night Letters at destination, postage

prepaid.
Night Letters shall be written in plain English. Code language
is not permissible.
No employee of the Company is aothorized to vary the foregoing.

Form 1207
uLASS OF SLR,
degram

DESIFiL
1

Jay Letter

WESTE
VOTER N UNION

Night Message

TEL

Night Letter
Patrons should mark an X opposite the class of service desired:

OTHERWISE THE MESSAGE
WILL BE TRANSMUTED AS A
FULL.RATE TELEGRAM

NEWCOMB CARLTON, PRESIDENT

Send the following message, subject to the terms
on back hereof, which are hereby agreed to

To

VIR\

JNION
AM

GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT

Receiver's No.

CSR
Check

59 tel
Time Filed

1.a. 6.02 pm

LOS ANGELSS,_CALIE.,JANUARY 22nd.. 292O

191___

BMW STROM

Street and No._

CASTLE HOT SPRINGS HOTEL

HOT SPRINGS, ARIZONA.

Place_
RESERVE BOARD HAS BEEN CONSIDERING OLD RATE MATTER FOR 21,2/ DAYS AND TODAY

ESTABLISH= TI S FOLLOWING UNIFORM RATES FOR BOSTON NEW YORK AND PHILADELPHIA

STOP.

COMMERCIAL PAPF.R SIX Pial CM'T

001fr,F=NT-B0
BANKERS ACCEPTANCI&S FIVE PER CENT
CERTIFICA2ES-FOUR-AND-mea.--QuARTERE--2-AR--carT

STOP-.

CAN RRIAJZZa YOUR SENTIMENT ON RECEIVING THIS =5 STOP.

Digitized SENDER'S ADDRESS
for FRASER
FOR ANSWER


JAY

WILL WRITE FULLY STOP.

1
011

SENDER'S TELEPHONE NUMBER

ALL MESSAGES TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERMS'
n,lor of a message shoul.L order ir REPEATED, that is. telegraphed hack hi the originating office for compari
T. guard against mistake, or delay, t I
this, one-half the unrepeated message rate is charged in addition. Unless otherwise indicated on its face. THIS IS AN I. REPEATED MESSAGE AND PM
AS SUCH, in consideration whereof it is agreed between the sender of the message and this Company as follows:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED message, beyond the :Imo
received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED message, beyond fifty times t
sum received for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lines; nor for errors
cipher or obscure messages.'
In any event the Company shall not be liable for damages for any tnistakes or delays in the transmission or delivery, or for the non-delivery, of this messag
whether causetlby the negligence of its servants or otherwise, beyond the suns of FIFTY DOLLARS, at which amount ads message is hereby valued, unless a greater value
is stated in writing hereoulst the time the message is offered to the Compapy for transmission anti an additional sum paid or agreed to be paid based on such value equal
to one-tenth of one per cent. thereof.
The Company is hereby made the agent of the sender, without liability, to forward this message over the lines of any other Company when necessary to reach
its destination.
Messages will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such office in other cities
or towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense,
endeavor to contract for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning messages until the same are accepted at one of its transmitting offices; and if a message is sent to such
offite by one of the Company's messengers, he acts for that purpose as the agent of the sender.
0. The Company will not be liable for damages or statutory penalties in any ease where the claim is not presented in writing within sixty days after the message
m filed with the Company for transmission.
Special terms goeerning the transmission of messages under the classes of messages enumerated below shall op',/,' lo messages lo earl, o'1 sorb respective classes in addition
to all foregoing terms.
No employee of the Company is authorised to vary the foregoing.
THE WESTERN UNION TELEGRAPH COMPANY
IN

NEVVCOM8 CARLTON. PRESIDENT

CLASSES OF SERVICE
TELEGRAMS
A full-rate expedited service.

NIGHT MESSAGES
Accepted up to 2.00 A.M. at reduced rates to be sent during the night
and delivered not earlier than the morning of the ensuing business day.

DAY LETTERS

-

Letter shall lie delivered on the day of its date absolutely and at all
events; but that the Company's obligation in this respect is subject
to the condition that there shall remain sufficient time for the transmission and delivery of such Day Letter on the day of its date during
regular office hours, subject to the priority of the transmission of rigttlar telegrams under the conditions named above.
No employee of the Company is authorized to vary the foregoing.

.

A deferred day service at rates lower than the standard telegram rates as follows: One and one-half times the standard Night.
Letter rate for the transmission of 50 words or less and one-fifth of
the initial rates for each additional 10 words or less.
SPECIAL TERMS APPLYING TO DAY LETTERS:
In further consideration of the minced rate for this special "Day
Letter" service, the following special terms in addition to those cue-

NIGHT LETTERS
Accepted up to 2.00 A.M. for delivery on the morning of the ensuing
business day, at rates still lower than standard night message rates, as
follows: The standard telegram rate for 10 words shall be charged for the
transmission of 50 words or less, and one-fifth of such standard telegram
rate for 10 words shall be charged for each additional 10 words or less.

.

1
.

-

merit ted above are hereby agreed to:
A. Day Letters may be forwarded liy the Telegraph Company as a
deferred service and the transmission and delivery of such Day Letteis

SPECIAL TERMS APPLYING '1'0 NIGHT LETTERS:
In further consideration of the reduced rate for this special "Nig

is, in all respects, subordinate to the priority of transmission and

Letter" service, the following special terms in addition to tho-

Code language

Night Letters may at the option of the Telegraph Compa
be mailed at destination to the addressees, and the Company slut

delivery of regular telegrams.
B. Day Letters shall be written in plain English.
is not permissible.

c. This Day Letter may be delivered by the Telegraph Company
by telephoning the same to the addressee, and such delivery shall be a

complete discharge of the obligation of the Telegraph Company to
- deliver.
D.

This Day Letter is received subject to the express understandCompany does not undertake that a Day

ing and agreement that the



enumerated above are hereby agreed to:

be deemed to have discharged its obligation in such cases with respect

to delivery by mailing such Night Letters at destination, posta

prepaid.
Night Letters shall be written in plain English. Code language
is not permissible.
No employee of the Company is authorized to vary the foregoing.

FEDERAL RESERVE BANK
OF NEW YORK
March 18, 1920,

Dear Governor Strong:
I am enclosing herewith a letter which was received two or three
weeks

ago from

contained some
foreign banks.

the Bank of England and given to me by Mr. Beyer since it

information
I asked

about

for this

which we had cabled;
in view

of

namely, branches of

the fact that Mr. Skinner

recommended that branches of foreign banks in this state be given wider
latitude and is now preparing a bill on the subject,

of which I

have just

received the first draft.

Inasmuch as this is a confidential letter I do not think it wise
for us to answer it here, and should have sent it to you a week ago so that
it would reach you on your return from the trip, which, I hope, was a great
success.

I am just leaving for South Norwalk to talk with the directors of
I am planning

the trust company there who want to withdraw from the system.
soon to write you a long letter about everything under the sun.

In the meantime, as Case has already written you, the present 4 3/4%
certificates which opened on March 15 are going very poorly.

We have about

$57,000,000 of subscriptions in this district and we understand the going is
very poor all over the country.

Mr. Leffingwell is strongly advised, from

140% York and from all over the country, to make the rate 5% but said that he

had formed his own judgment and was willing to back it.

He came up about a

week ago and discussed the situation with our bankers, but having made up his
mind in advance he did not ask their advice.
Sincerely yours,

Benjamin Strong, Esq.,
0/0 Phoenix National Bank,
Phoenix, Arizona.
PJ/RAH




WVe-e

Misc. 4

Office Correspondence
To
From

Mr. Jay

FEDERAL RESERVE

BANK OF NEW YORK

Date-March 22nd,_19 20

FILINebive

AMIN

Mr. Beyer

MAR 25 1920

FEDDAL

Faiskin 13Ani

Mr. Strong can be reached by wire at Phoenix National Bank, Phoenix,

Arizona, until Aprilnd.
Mail address is care of Federal Reserve Bank of San Francisco from
now on..




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Copy of handwritten letter
-49-East-44th-Stpeet

Bryn Maur, pa. Apr.1

Dear Ben-

I understand that Case wrote you a week or so ago about the doings in
the bank up to date, + I am writing you therefore more to say good bye to you as you
start on the long out trail than for any other purpose - + to wish you a wonderful
trip. You haven't said much about your health during these 3 mos. except the post
card "feeling fine." Send us a little longer word on it before you sail. That's
what we want to know + be reassured of more than anything else.
I envied you that
6 wks on horseback a whole lot. Its what I'd like most to do. I'm down here
with my 2 youngest for a bit of a spring vacation + riding every day the weather
permits.
Well, the pressure in the bank keeps up, + as usual a considerable part
of it comes from disagreeing with Washington + urging them to do something else.
I have no doubt Case wrote you of Leffingwell's visit + the mediocre success of
his 1 yr. 4 3/4's - now he's offering 3 mos.
If they go very well which
you will know before this reaches you he may try more.
If not he'll come to 3 mos.
his mind is all ready for that. The worst thing he did by putting out the
1 yr. 4 3/4s was to break up the buying morale of the N.Y.banks (+ others too I
suspect) Case has doubtlessyritten you that the Bk of Japan has opened with 20
millions, 4/-5Of it in bills taken over from our portfolio. Since bills hit 66 1/4% there has been the most wonderful change in the mkt. for them.
Country
bks, savgs. bks + corporations are buying them freely + the mkt is often bare of
them. ctf.buyers are going in for bills at the better rate. We buy at 5 3/4 fpr
endorsed bills. A month ago we had 43 country banks buying bills thrul us, now we
have 85. Our traveling men are, inter alia, bill salesmen. This is the golden
moment to get a market stock on a 6% basis + Case at the Govirs conference, Apr.7,
is going to try to get the other banks interested in pushing it, once get the
country banks started on 6% basis + even if it goes to 4% later many will stick; but
few would begin at that basis.

4 3/4's.

5's.

/

We think that the 6% rate is having a good effect. It has certainly slowed
up expansion, which, with supply + demand out of gear is perhaps all we could expect
or wish for just at present.
The British gold movement has started + more is to come I am told very
confidentially by a friend of yours. Meantime the outward flow has ceased. If
you have views on how to deal with this gold + the further expansion it may permit
'1+ encourage, send us a parting thought.

25 copies of the annual report go to you by special traveling arrangement +
should reach Frisco about the 6th (F.R.Bk). I had hopes for a good one but they fell
by the wayside in the press of other things.

We have been trying hard for a deputy gov'r. Ray Morris, Ardrey + Jackson
Reynolds have all failed us, + we approach the situation without a candidate. We're
looking for a good one as you see; better than those whose names we wired you. We
must get some one who will make good with our organization from the start. We think
of making Kenzel Asst. Deputy-Gov. He has big limitations as you know, + that would
give him a try out, fair to him + us both.
Rithard H.Wms. of Wins + Peters, Coal, is the man recommended by the
committee for W. B. Thompson's place on our Bd. The circular goes out shortly.
The committee vent slow, + got turned down by one or two, but this man is a corker.
Lives in Morristown + office 1 Blway. Stone is a great success as director. Treman



rl

iyurged by Houston to take Leffingwells place 10 days ago but has declined. Plan was
'1 to get him on Bd. eventually (very confidential) . Have no idea who will succeed L.
He wqnts to quit May 1. Houston has recommended 3 names to Prest. for Bd but had
Meantime Harding is holding the fort
no reply. I have not heard who they were.
alone. He had flu a week ago but recovered very quickly. The southern banks are
up in arms against par, have introduced several amendments; have an injunction suit
(n.g.) in Ga. + Mississippi has passed a law compelling (but without penalty) all
banks in state to charge exchange. St. Louis jobbers are declining to receive
Miss. state bk. checks. So the final battle of the war is on. Meantime Va. goes on
the par list today; 36th state.
We have Hart as counsel. He is taking hold well - + is liked by all.
The Hudson Co. clearing house is born today with Hendricks Dilliston + Coe as
managers - will soon be followed by ssex Co. Bk of America absorbs Franklin Tr.
Co. with Delafield as Pres't of combined bk. Manhattan Co. has absorbed Merchants.
Chemical is to take over Citizens (not yet out) and j.n Newark Fidelity Tr. + Union
Nat. are to join (very confidential as yet) Prosser just back from Europe, but
haven't seen him.

Some one (you can guess) in the Bd heard you were joining the Vanderlip
party + sputtered a bit.
I have your parting memorandum before me to see how it looks after 3 mos.
Hopf hasn't seen as much of us as he should, our fault. He is very busy on the
planning committee tho: they are doing good work, + are soon to present their views
They have some
to the managing committee regarding vault, 1st fl. + mezzanine.
radical views I understand, including putting the officers upstairs to make room
for more cages etc. Wont you send me a parting word on your views as to starting
building. Things, as I see them, are worse then they were last Nov. when we decided to postpone while the resnt situation in N.Y. is frantic. Everyone with an
apartment lease falling due is getting 100% raise for renewal.

We put thru a 20-15-10onus on April 1st. The new organization of the Club
is doing well + Gilbart claims he is making a man of Jefferson. Oakey seems to be
doing well + getting fine cooperation in his dept. + throughout bank.
Cooperation regarding anticipation of bank failures.
+ making progress on this.

Dilliston is working

Case has been inclined to be a bit
Rate policy; You are advised on
impatient on rates + Treman ver much so. Case however went to Boston Monday +
spent a day with Morss (at his invitation j + the Boston bankers + came back full
of the idea that we had been too jumpy + not apparently sure of our own minds. +
rather strong for a policy of steadiness which I am a believer in for the present
at least. There is persistent talk of higher rates in London, the B of E. cables
tell us, but they haven't acted. They are having a flood of new issues just like us.
We are trying to send better cables to B.of E. + I think theirs to us are better too.
.

We haven't seen as much of Rudd as we should but he is operating on a much
reduced appropriation + programme.
Case is going very well indeed, I think. He had a tendency to jump at
conclusions a bit + to recommend rate changes to directors without sufficient
consideration; but he is gaining by time + experience + you can go off feeling
that that end of the lptainfts is well taken care of. He is doing less detail
than before. I am improving slightly. We all miss your imagination which we




-3-

e
C-

can't attempt to replace; and there are probably lots of things we are missing
doing, accordingly. When we get a new deputy, we can both feel much relieved.
The pressure has been pretty stiff all winter.
Well, this is a rambling kind of letter, touching on only a few points.
Were I writing it in the office I would doubtless think of others, but if I were
writing it there, sure I wouldn't be writing it at all
Keep up sending us postals, + write us any long distance thoughts you
may have on ours or ether peoples' business. + above all take the best of care of
yourself. I don't feel any too keen about that moist hot weather in India etc.
for you.




Affty yrs.
[signed] P.J.

-

CLAP
I.

P SEP JICE SYMBOL

,

usage

Day Letter

Blue

WESTE

CLASS OF SERVICE SYMBOL
Day Message

Day Letter

TEL

NL
If none of these three symbols
Night Letter

appears after the cheek (number of
words)this Is a day message. Otherwise Its character is Indicated by the

NEWCOMB CARLTON, PRESIDENT

10.1y

Nfte

-

AM

Blue

Night Message

WESTERN UNION

Night Message

symbol appearing after the cheek.

UNION

Nile
NL

Night Letter

If none of these three symbols
appears after the check number of
words)this is aday message. Otherwise its character is Indicated by the

GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT

symbol appearing after the check.

11

RECEIVED AT PINE & MONTGOMERY STS., SAN FRANCISCO. ALWAYS OPEN.

B86KS 117 BLUE° NEWYORK NY 1003A '15
BENJAMIN STRONG

259

CARE IFEDERAL RESERVE BANK OF SANER ANCI SCO SANFRANC I SCO CALIF

PERSONAL AND CONFIDENTIAL YOUR SUGGESTION THAT CASE OR

I

JOIN YOU IN

EUROPE WAS CONSI DERED BY DIRECTORS YESTERDAY AND APPROVED IN PR I NC I.PLE
I

NOTE YOUR RENEWED INTIMATION THAT YOU WILL PROBABLY NOT RETURN UNTIL

SOME WEEKS AFTER JANUARY FIR ST AND WISH TO EXPRESS MY PERSONAL ADV ICE

TO YOU TO PLAN YOUR TRIP SO THAT YOU COULD BE HOME BY JANUARY FIRST
SUGGEST THAT WHEN YOU REACH EUROPE IN AUTUMN YOU COMMUNICATE YOUR

PLANS TO US AND WE WILL THEN.



411111111111111111111Milloppip
Cl."^

I, SERVICE SYMBOL
,Atniestge

Day Letter

Blue

Night Menage

WESTEz

Nits

Day Message

Day Letter

TEL :"Cre4 AM

wordefthis is a day message. Otherwise Ito character. indioated by the

NEWCOMB CARLTON, PRESIDENT

NL

If none of

three symbols
appears after the check number of
words)this is aday messaie. Otherthese

wise its character is Indicated by the

GEORGE W. E. ATKINS, FIRST VICE-PRESIDENT

RECEIVED AT PINE & MONTGOMERY STS., SAN FRANCISCO. ALWAYS OPEN.

Nite

Night Letter

II,VWX-74111

Blue

Night Message

WESTERN UNION

NL
Night Letter
If none of these three symbols
appears after the check number of
symbol appearing after the check.

UNION

CLASS OF SERVICE SYMBOL

symbol appearing after the check.

1920 A

10

L.-)7

B86KS 'SHEET TWO

ADVISE MORE DEFINITELY REGARDING PES IR ABLE DATE OF RETURN ,STOP CASE

CONCURS IN THESE PERSONAL SUGGESTIONS WHICH ARISE OUT OF OUR ESTIMATE OF
'SE'NTIMENT HERE AND IN WASHINGTON AND ARE MADE.' liN THE INTERESTS OF
YOURSELF AND OF HARMONY




PIERRE JAY.

1.1.141V1-4-LV
1

FEDERAL RESERVE BANK
OF NEW YORK

COPY OF TELEGRAM
SENT IN CIPHER
DICTATED BY

CASH DEPARTMENT

CODES & TESTS SEC.

TIME

rde

G'ornmereial .
COPY FOR WIRE TRANSFER DIVISION

VE BANE
NE'

Benjariiin St Tong,

July 31, 3.920.

)1i1C

t;tateebank, Shanghai.
1. Teetword Tread. Approximately when will you.errivo
landon 111.11 you stop at Rome PaTIB neeeseary to make plans if

Case or I are to join you.




Jay.
( ON GOVIMIENT BOB MESS (JW)

FtX-18

Cable Order
CF

ent. via Commercialj

FEDERAL RESERVE BANK
OF NEW YORK

(Outgoing Message)

Copy of Cablegram sent to CODING DEPARTMENT.

Date "IalY 31, 1920*

From

Please code the following message addressed to the

Benjamin Strang, Statesbank, Shanghai.
Number of Cable

(If Payment Cable)

Approzimatay when do you arrive London Will you stop atcApme ParlA Necessary

to make plans if Case or I are to join you.

61-07,
CON FIRM ED
DY MAIL



Time

(Officer's Initial)

COPY OF TELEGRAE

August 12, 1920.

37 Words.

Strong, c/o
Javasche Bank, Batavia, Hold for delivery.

#2. Tokay (testword)

Referring to your letter of 19th

ultimo at the request of Java Bank gold earmark limit increased
to 40 million.

We are holding 15 million earmarked on their ac-

count also 2,000,000 bills for collection.
with them.

Nothing new contemplated

We are considering moving 111 million German gold to

New York no transactions several months are you opposed.

Telegraph

how are we to address mail also telegraph any news of substantial
change in itinerary.




Case or I plan join you London early December.

(Signed) Jay.

FEDERAL RESERVE BANK
OF NEW YORK

September 17, 1920.

Dear Governor Strong:

As I sit down to write you a letter, the number or possible topics

presents itself to my mind in somewhat the manner in which one looks over a
list of topics for a governors' or reserve Agents' conference in Washington.

Mr. Crane is preparing a good orderly statement with regard to our transactions with foreign bunks, etc., which is going to go to you to-day.

I am

merely going to touch on some of the high spots which have occurred since I
last wrote you.

YOUR LETTERS
We have been greatly intereeted in the letters you have written us
from Japan, both as to your impressions of general conditions in the country
and as to the specific suggestions you have made regarding the purchase of

silver, the furnishing of information for the Bank of Japan, and the passing
of gold shipments through the Federal Reserve Bank,

All of these we have

discussed with the agent of the Bank of Japan here, Mr. Nagaike, and areawait-ing his views upon them.

He has suggested to us the possibility of letting

one of his assistants, who is-.soon to return to Japan, come in and spend a

couple of months here, observing our methods and practicee,
they might be of benefit to the Bank of Japan.
a request, but Mr. Case and I are
he make it.

inclined

thinking

that

He has not definitely made

to be thoroughly cooperative, should

We also are greatly interested in your statement about the

Japanese balances abroad and

their policy of diminishing them.

Your letters

covering Japanese conditions have, wherever you suggested it, been shown to

Governor Harding who has been greatly




interested.

FEDERAL 'RESERVE BANK OF NEW YORK

9/17/20.

Benjamin Strong, Esq.,

#2

FRENCH LOAN
The Anglo-French loan matures October 15.

The tiritish have already

provided for their half of it, but the French have let the matter run along

until about four weeks ago, when a special representative of the French Government, M. Parmentier, arrived.

They wanted to renew ,$150,000,000, but

Morgan & Co. would not agree to offer more than $100,000,000.

They were

8% bonds, offered to the public at par, redeemable at 110, with a sinking
fund operating by drawing, if necessary, at that price.
6%.

The commission was

MM. Parmentier and Casenave were down in Washington about three weeks

ago and called on Messrs. Houston and Harding,

The French were unhappy

at the terms of the loan, and I suppose that they so expressed themselves.

Whereupon, Harding suggested that this was a pretty tight time to sell bonds,
and that if they wanted to earmark $100,000,000 of gold in the Bank of France
he would see no objection to the Federal reserve banks accepting it and pay-

ing out $100,000,000 here, but said that they would have to talk the matter
over with tde Federal Reserve Bank of Aew York.

The next morning early

they were in our office and we had quite a talk with them, without committing
ourselves, but making it perfectly clear that if we undertook the transaction

we should have to be free to ship at will.

We were rather reluctant to

undertake it, knowing the French hesitation to letting gold go out of the
country, and feeling that as they had been so dilatory in meeting this fixed

maturity they might want to continue along indefinitely after the first of
the year about meeting the current rates for money.

We suggested that they

should talk it over with Morgan at once, which they did, and Morrow and
Cochran promptly came over and said that they would be delighted to put off
the whole transaction;

that they hated to make such stiff terms for the

French, but that they felt it impossible to assure the success of the issue
on any better terms.



Our executive committee felt that the country was set

September 17, 1920.

Benjamin Strong, Esq.,

#3

FEDERAL RESERVE BANK OF NEW YORK

for the issue, much pblicity having been given to it in the papers, and that
the wisest thing would be for the French to go ahead and take the matter up

rather than postpone it by some earmarking operation.

Later in the afternoon

we had another talk with the French, M. Bloch and M. De Sieyes, the representative of the Bank of France, being also present.

It appears that they thought

Raraliggis proposal was a suggestion that we would lend them *100,000,000 on

gold as the Bank of

England

did during the war.

iQien we told them taat this

could not be considered and that the only proposition we could consider was a
straight out purchasing and earmarking one, they said that that woula not be
at all satisfactory to

the

Bank of France nor to the Government, and our eon-

ference ended.

The next morning they were hard at work with Morgan, thrashirvout
september 15
t3 offered/ was really substantially overthe details of the loaqwhich
14,

subscribed by about 3,000 subscribers, and is selling at about 102.
nection with it, however, as the French are having to

snip

In con-

considerable gold

over dere to take up the balance of their *250,000,000 obliation, we have
agreed to receive and earmark up to i,'350,000,000 of

gold al the bank of France,

subject to our absolute right to ship the gold, in case by October 15 they may

not have been able to make the necessary arrangements for the liquidation of
their indebtedness.

About a month ago M. Pallain resigned and his deputy, Georges Robineau,
succeeded aim.

Mr. Grano is sending you some copies or correspondence we have

had with him.

CERTIFICATES OF INDEBTEDNESS

The certificate market continues in excellent shape with the 6% certificates selling at par or a slight premium..

and March are also moving freely.

Tile 5 3/4 per cents. due in January

The Treasury sold $150,000 000 of one yeiLr 6s

on August 15 and had a substantial over-subscription.



I enclose the offering for

FEDERAL NESERVE BANK OF NEW

#4

Benjamin Strong, Esq.,

aeptember 15, on which date $357,469,000. matured.

September 17, 1920.

The Treasury offered

,400,000,000 of these certificates and received subscriptions for about
$475,000,000, $280,000,000 of wnich came from this district.
to take about
lar.

450,000,000.

They are going

The 6% one year certificates are very popu-

I am enclosing a copy of the last monthly review, on page 4 of which

you will see a discussion of the volume held by the banks and held by the
public.

CBEDIT CONTROL
You will also see in this monthly review a discussion of the credit
situation.
done;

The chart on page 1 is a graphic statement of what our rates have

namely they have checked expansion.

I think the figures for the fol-

lowing thirty days are likely to show a slignt decrease in the loans and in4e feel that the credit situation is in very comfortable snape,

vestments.

and while the reserve ratio for the country. will probably go lover before the

end of the year, we are not

expecting

it to go below the legal minimum,

although four or five months ago we all thought that such an eventuality was
not unlikely.

The combination of high rates, of the throwing over of specu-

lative holdings of commodities, and of the determination of consumers to buy
(is little as possible, has reestablished an equilibrium between supply and

demand in many industries, and brought about declines in prices which had been
stimulated by unhealthy speculation, and in many industries, competitive con_
ditiona are beginning to be reestablished.

In the meantime, we are in a

political campaign in which the republicans are not attacking us at all actively.
."aenator Owen, however, is attacking our high rates, and Comptroller Nilliams
is making

great to do about the high rates charged for call loans.

Some of

the republican papers are having disagreeable editorials about tne effect of

our rates on business, but our general feeling has been that it is bestfor us
not to do much talking while the campaign lasts so that we may keep out of



#5

FEDERAL RESERVE BANK OF NEW YORK

politics as far as

Esenjamin Letrong, Esq.,

possible.

September 17, 1920.

We are planning, however, when the

campaign is

over, to undertake as a regular part of our work to educate the public of
this district a

litLle on

tde work and functions of the Federal reserve bank

as they relate to the credit situation.

At the present time there is pro-

found ignorance on this subject, resulting in the oft-repeated suggestion
that as the Federal reserve

banks are earning so much money they ought to

reduce their rates and make credit cheaper.
EARMARKED GOLD AT BANK OF ENGLAND
In accordance with the suggestion in your cable, we wired the Bank

of England and were advised by them that there was no reason whatever for
leaving the gold with them.

We have, accordingly, decided to bring it over,

the first shipment leaving next week.

We have made an announcement about*

it, of which a copy is enc osed.
BUILDING

Since I last

wrote you tne managing committee have had a long ses-

sion with the architects and discussed a number of things with regard to our
main building, one of which is the elimination of a floor in order to get
better ceiling height.

I think we are all in favor of it, especially

since

they have inserted another floor above the first set-back,and tae result of

thee two changes is to leave us with as much net usable space as we had in
the original plans.

Figured Mr. Hopf submitted this morning indicated that

after allowing 100% expansion space over that occupied at present, we shall
still have about 90,000 square feet, or the equivalent of three entire floors
wholly unoccupied.

We intend to have a meeting

of

tne building committee next

week to pass upon a number of recommendations coming from Hopf's committee
and the managing committee which, when determined, will permit rapid progress
to be made upon the completion of the plans and the tentative assignments of
space.



FEDERAL RESERVE BANK OF NEW YORK

#6

September 17, 1920.

Benjamin Strong, Esq.,

With regard to the storage building at the corner of Gold Street and

maiden Lane, we have succeeded in getting the corner piece in time to incorporate it in the building without added eApense, having agreed with the National

Surety Co., the tenant, to house them temporarily at 37 Liberty Street and to
replace them in the corner on an eight year lease when the building is completed.
I think I wrote you that our architect, contractors and engineers are the same

for the storage building as for the main building.

The excavations are com-

pleted, and the foundations are going in rapidly.
FOREIGN BANK AGENCIES
Mr. Harrison and I have had a talk with the new superintendent of banks

about greater latitude to the branches and agencies of foreign banks here.

He

is not averse to the subject, but I rather think he is not inclined to recommend
it as Mr. Skinner did.

Mr. Harrison and I are now considering what programme

should be undertaken to set the thing in motion at the coming session of the legislature.
FEDERAL RESERVE BOARD

Mr. Loehlenpah's term expired on August 9 and he has not been reappoi nted.
There is, therefore, a vacancy in the Hoard for the place originally occupied by
Delano.

Harding has been appointed governor and Platt vice governor, each for

two years from August 9, 1920.

The board has called a joint conference of gov-

ernors and Federal reserve agents to be held October 13-17, to discuss with the
Board matters relating to the policies of the system.

The

have submitted the

following programme for us to discuss, copy of which I enclose.

Instead of 24

papers we are going to have 12, 7 by governors and 5 by Federal reserve agents,
on different parts of the programme.
note issues.

Morss and I are

-iting on the question o

You will see that the questions call for a discussion as to wheth er

we should attempt to exercise credit control to the note issue, Miller having




"EDERAC RESERVE BANK OF NEW YORK_ ...7._

this idea in his head.

Benjamin Strong, Esq.,

September 17, 1920.

Here we are all violently opposed to the idea.

But it

will be, undoubtedly, an interesting conference and on a much higher plane than
the discussions we have so often had as to details of operation.

FOREIGN EXCHANGES
The foreign exchanges continue to fluctuate widely.

My purpose in

mentioning the matter at all is to enclose a. copy of a paper which Shepard Morgan

and Snyder prepared very hurriedly for Governor Harding in response to a request
from the Labor Section of the League of Nations for an authoritative statement
as to the effect of the present discounts in the exchanges on labor in this
country.

The memorandum presents a. point of view somewhat at variance with

the ordinarily expressed theory that the discounts would check exports and facilitate imports.

But the theory therein expressed, having been pronounced correct

by Messrs. Rovensky, Breton and Duis (National City Bank) we send it along.

I

am enclosing it to you as you might be interested.
OUR CONDITION

I am enclosing a statement at the close of business yesterday, which
will give you our condition to date.
EXPLOSION IN WALL STREET
I am enclosing papers which give you an account of yesterday's terrible explosion.

Little or no damage was done in our offices, although a pane of

glass was broken in yours.

Some of our clerks, especially among the women, were

somewhat disconcerted by the event and our hospital facilities were working
overtime, both for our own people and for outsiders who came in.

This morning

business is going on as usual in the street, with the hundreds of broken windows
either boarded up or covered with cheeseciotn.

The matter is so fully treated

of in the papers that I don't need to eniarL,e on it here.




FEDERAL RESERVE BANK OF NEW YORK

YOUR .11EALTH

We are delighted to learn that you are feeling so fit and making
such good progress towards a recovery of your nealth.

That you may keep it

up and improve it still further is the earnest wish of everyone here.
Sincerely youre,

Benjamin Strong, Esq.,
C/o International Banking Corporation,
Bomb,,y, India.




MEMORANDUM ON FOREIGN TRANSACTIONS FOR LETTER TO GOVERNOR STRONG

1.

Bank of England. -

After receiving your cablegram from Singapore suggest-

ing that we cable the Bank ofEngland to ascertain whether there will be any object
cerved by leaving a portion of the gold with them, we cabled the Bank of England on
4uguet 31 as follows:

"As there have been no transactions in recent months we
contemplate some time in near future gradual shipment our gold
earmarked with you to New York but before making final decision
would appreciate your cabling us whether there will be any object
Will you also cable whether
served by our leaving portion with you.
in case we decide to move gold to New York yoU would again be so
kind as to handle shipment."
to which they replied:

"From our position we see no object in leaving portion
of your gold here. le shall be glad to arrange and handle gradual
shipment for your account in such amounts as you may from time to
We assume we should settle freight and charges leavtime desire.
ing insurance to be effected by yourselves."

We arranged for the insurance through. Messrs. Chubb & Son and *mere able to
get up to *10,000,000 on any one steamer.

At first, Chubb was able to arrange for only

*9,700,000, but this has since been increased to *10,000,000.

I am quoting below, in order, further cablegrams exchanged with the Bank of
England in this regard, which 1 think will be of interest to you.
"September 34, 1920.
"Bank of England,
London
Referring to your telegram 2nd we have decided to move our
gold earmarked with you to N0w York and would therefore be glad to
have you arrange and handle shipment for our account and settle
te have effected insurance here the limit on
freight and charges.
any one mail and passenger steamer of 1st class lines being *9,700,000
Please cable us name of steamer
which must include cost of shipment.
We will leave to
and value of gold in each shipment when made.
selection of vessels.
your judgment the frequency of shipments and

Federal Reserve Bank."
"September 16, 19204
."Federal Reserve Bank,
New York, N. Y.
Referring to your telegram 14th proposed shipment of 1,000
bars total approximate weight * 459,400 ounces fine. First ship-




2.

Shipments being in due course par"ment Sept. 22nd Baltic.
ticulars will necessarily appear in published customs returns.
Bank of England.
*

$9500,000"

"September 17, 1920.

Bank of England,
London

Have increased insurance limit one carrier to ten million dollars
including cost shipment.
Regarding your reference to appearance
particulars of shipments in published customs returns we have
issued for publication statement announcing movement gold to iiew York.
Federal Reserve Bank."

I am nttaching herewith copy of a letter which we have sent to the governors

of the other Federal reserve banks informing them of our decision to bring home the gold
and outlining a possible transaction with the Bank of France in earmarked gold.
I am also sending you copy of a press statement which was issued yesterday regarding the return of the gold from the Bank of England.

Bank of France -

Negotiations which we have carried on recently with res-

pect to the Federal reserve banks' accepting a deposit of earmarked gold with the Bank
of France are fully described in the attached copies of letters marked "Rank of France."

We received a cablegram from M. Robineau, the new governor of the Bank of
France, who has succeeded M. Pallain, a copy of which I am enclosing, together with copy
of our reply to M. Robineau, as well as copy of a cable which was sent to M. Pallain.

Japan

-

You will be interested in the enclosed

copy of a letter from

Mr. Case to Governor harding regarding Japanese balances in the United States, which
gives the substance of a recent conversation between Mr. Ichinomiya and Mr. Case.




3.

4.

India

-

I am enclosing copy of a letter from the Treasury, dated July 16,

1920, regarding rupee credits, together with a copy of our reply.




4*.
FEDERAL RESERVE BANK
OF NEW YORK

PM'S STATLMENT

September 16, 1920.

The Federcl rarerve banks have decided to bring to this country the
gold which le

')eing heal at the +lank of England, London, eftruarked for their

account, t.nd shipments will

probably begin

vaspurch.ised in August, 1919, by

ithin P short tiae.

the Federal reserve

This gold

btaks from the United

States Grain Corporation,which received it from Germany in i)ayment of food-

stuffs.

In 8eptember and. October, 1919, thiu gold ASE

Continent to the an of

'ngind,

sti,)ped from the

nd since its arrival there has been in-

cluded ,Nmong the reverves of the Federka reserve Danko appearing on their

state,uents under the caption "Gold Rith Foreign Azencies."

At that tioe,

the total value of the gold was 4176,Z-48,876.71, but this total has been reduced to

A1,458,044.95 through sales of ?old from time to tillo in moderate

amounts to banks desiring to ship gold from the United States in settlement
of tr-,de balances.

and it

hRs now

In recent months such sales have ractically cw,red,

been decided to bring, the gold to Ati4 York.

Inasmuch :)s this

eold has been continuously earried as renerve by the Federal reeerve t,anks

its arrival at the 3ank of Engl4nd, sh4ment of the -old to this

country will

have no effect whatever upon the res,erve position of the Federal reFerv
4

Of this gold, *40,905,694.42 is held for the Federal Res,erve 6ank of N
and i70,552,850.515




forrother Federal reserve °arms.

:ns.
'. York,

C_EA_ci

5)
Xp-1996 a

August 20, 1920.
JOINT OO1'FERele0E OF FeWeAL RILJEM AGeaT6
AND Fle/eRAL feeeTe eANK GOVIeeRORei, 'iVASHINGTUA,

UCTOBleR 13-16, 1920.

The Board's plan with respect to the joint conference with the

Vederel :eserve :Igents and C:everelors on Octoeer 13th and succeeding days

is to have each body arrange its awn program for separate discussion,
while the Board will suggest a program for discussion at the joint meetings. The first joint meeting will be held at 10:30 or 11:00 a. m. on

Wednesday, October 13th, and will continue throuehout the day. Thursday,
the 14th, will be reserved for the separate discussions by the Governors
and Federal Reserve Igent:. of topioe eeleoted by themselves, and on the
13th the joint discussion will be resumed. following is the Board's

tentative list of toelcs for the joint disoesaiense
I

0REDIT 004TROL

1. What are the objects sought to be attained Dy the policy of
credit control in the exieting circumstances?

Is the object
To maintain or to strengthen reserves?

To stabilize the existing situation by prevention of further
expaneion?
(o)

To brine about a discriminating deflation by redueing the
total volume of credit?

Can a substantial reduction in the volume of credit be effeoted
2.
without injury to the legitimate business of the country and without
curtailment of eseential productions"?
3.

To what extent has one or more of these objects been attained

4.

To what extent is it necessary to distinguish between the immeeiate

in each District and in the country at Large?
objective of the policy of credit control and the remoter objective,
such as reduction in the cost of living?
What is the proper conception of the "normal

credit condition"

Which the Federal Reserve Banks should seek to bring about?




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Misc. 36

FEDERAL RESERVE BANK
OF NEW YORK

(SEND TO FILES)

Sent by

TELEGRAPHED IN 9"."`'r"''F111$
CIPHER
OCT 1 14"
41 lord* Via W.

M. RFS
YC.4k.

Septet-A:ler

30, 1110.

Den,. Strong,

Caro ibnukong tr4hangliai ilenkind (Am),
nangoon, Ini.1i.n

'four Paris proposal looks interesting bomb explosion casualties 2u0
injured 31 killed one :"Orgon clerk won is thezi rlo 'mom frionde Oil list.
Jacob ',oh:1 if buried "iliesdny. 4x uniziportent Tzston norrturibor trust
csnrenius closed owing to poor ritelsi:;ectunt. no resulting disturivileo.
Devid ii.L
1eve/1-17d reeoivo teraporary appoint:no/A ioderal
f.uscoading .roshlunpah ell well.




.114,

ese

CDE 1.1-15M-4-20
1

FEDERAL RESERVE BANK
O r NEW YORK

P366inreeiVitti.:Et

CASH DEPARTMENT
CODES &. TESTS SEC.

SENT IN CIPHER
DICTATED BY

TIME

COPY FOR WIRE TRANSFER DIVISION

0,
STBONG

1)/to

October 29,1920

International Banking Corporation - 80144

Following sent yesterday in code by mistake.'4 After mature consideration

Case and I agree with directors that m should both remain here this auta=
postponing visit -flurope till spring or sumer.

Arerything progressing

quietlY. Your cable address expired October fifteenth.

asked for new adSress.




JAY

Our 44 only

FEDERAL RESERVE BANK
OF NEW YORK
November 26, 1920.

Dear Governor Strong:
I received your cable from Delhi some time ago and noted your

request to have a full statement of conditions sent you in London early
in December.

I delayed writing this letter as long as possible so that

you would have the latest information upon your arrival there.

I figured

that the Olympic, on which it goes, should reach England on December 4,
probably the same day on which you land in Marseilles.
I have asked each of the

controllers to prepare a memorandum

which would bring you up to date on the work of the functions of the bank
under their respective supervisions.

I think these will give you a fair

idea of the work going on in the bank, and I will attempt to write you
about other things.
CREDIT CONDITIONS.
if

Enclosure

During the past month there has been a tre-

mendous acceleration of the decline in prices which is, in turn, having its
effect on the volume of credit as indicated by the enclosed chart, which

No. 1.

is merely a preliminary draft for our November Review.
copies of the reviews for this year in which you may truce the course of the
decline in prices.

These price declines have, of course, caused mnavalanche

of cancellations and these, in turn, have greatly depressed many businesses
so that production in many industries has been greatly sloweiup and the banks

have had to be very free in extending loans to industries to enable them to
balance inventories to take up the slack caused by poor collections, etc.
In the agricultural districts the drops in wheat., corn and cotton have, in

the past three months, been simple revolutionary
tricts into a very unhappy frame of mind.



and have throw

In ir. Case'a letter of October

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.,

*2

11/26/20.

.

21 he commented on the firmness shown by Messrs. Houston and Harding in the
face of most tremendous preseure from southern growers to do something specil
for cotton.

The same group stormed the A. B. A. convention held in Washing-

ton a week later, but without success.

They are now organizing an

Corporation in the South to help finance cotton shipments abroad.
nclosure
No. 2.

I am send-

ing you copy of letter just received from the Board written to some individual
in the Northwest whicn indicates that they are still under fire.

As far as

I can learn the Goodyear Rubber Co. and the International Fur Company are the
two largest concerns which have gotten into difficulties.

Thus far both of

them have been dealt with by the banks without any publicity whatever.

In

fact, this has been the whole policy of the banks throughout the country.

It goes without saying that many other industries are going through a most
trying time.

There is just as much of a movement Eloinstspending now as

there was for spending a year

ago.

Everybody is waiting for lower prices.

The retailers are holding out, trying to dispose of their accumulated stocks
at the holiday period.

Thera is a great deal of discouragement abroad and,

of course, in such a time many rumors as well.

humors have been most persis-

tent as to W. R. Grace & Co. and the Guaranty Trust Co., many banks here haviqg
received inquiries from Europe about these two concerns.

Of course, the

'-

Guaranty Trust Co. statement speaks for itself, and V. R. Grace & Co. to-day
lodged with their banks 4 full statement of their affairs, showing a net
capital of between $30,000,000 and $40,000,000, together Inith a statement of

earnings
good earnings in spite of the losses

and shrinkages due to falling prices.

This will enable their banks to speak with complete confidence with regard
to them.

A fortnight ago we were in the midst of a severe stock market
decline lasting for about a fortnight.
hanging over the market.



It was evident that something was

At the end of last week it was found that two

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.,

#3

11/26/20.

individuals were in trouble; namely, Durant of the General Motors Co., and
Allan Ryan.

Both of them had very large

liabilities which

were taken care

of by bank syndicates, and the brokerage and general situation was thus relieved.

My recollection is that Ryan's liabilities were some $12,000,000

or $14,000,000 and Durant's about *27,000,000.

With this situation

cleaned

up the market recovered considerably.
The drop in sugar precipitated a crisis in Cuba about six weeks
ago, following which a moratorium was declared.

The Federal reserve banks

shipped between $50,000,000 and $60,000,000 of Federal reserve notes down to
Cuba on the order of their members in order to have plenty of currency on
hand.

Following the Cuban collapse

steadily worse.

conditions in South

America have gotten

Exchange is becoming more adverse to them.

Their industries

oaccArwr
are depressed, and they are not paying their lakits:

Mr. Stone told me this

morning that there was some talk of a general moratorium throughout South
All of this has had its reaction upon our export and import houses

America.

who are feeling the strain very severely.
These are the broad lines only.

It looks as if we were in for a

period, the length of which is anybody's guess, of industrial depression here.

its

This is already having

effect upon

labor,

and considerable unemployment

is developing all over/with accentuatIonsin certain places like Detroit and
Akron.

Many people are going back from the cities to the country places whence

they came two or three years ago and this, in turn, is showing some tendency to

relieve housing conditions.

LEGISLATION

The Federal Rweerve Noard is not contemplating any

important amendments but is preparing for a tremendous onslaught of the green-

backrnd

inflationists at the coming short session.

of appeal to compel the

granting

prices will be introduced.



Every known au*,aikelikty

of credit to maintain agricultural commodity

Incidentally our friends in the

South who

are

#4
FEDERAL RESERVE BANK OF NEW YORK----...

Benjamin Strong, Esq.,

11/26/20.

opposed to par collections are going to make a last stand.

of Canton, Pa., is chairman of the
Mr. Platt.

Banking Committee in the House, succeeding

He is a pretty intelligent man.
JAVASCHE BANK.

reception

Mr. McFadden

We were all much interested in your reports of the

you received in Java and nave just received the following telegram

from Governor Calkins:

"Replying yours 18th will have Seattle Manager
meet steamer wnich should arrive about 30th.
Glad to
offer such attentions as possible.
Have learned Mr.
Zeilinga will come to San Francisco.
Will wire his route
and time of New York arrival when learned."

and shall await his arrival in New York with much interest and anticipation
prepared to do the best we can, although we have no local Sultans here.

We have voted, as you suggested, to appoint the Javasche Bank our
agent and correspondent in Java, and are obtaining the Board's permission, with
a view to taking the matter up with Mr. Zeilinga when he arrives.

curred to us, however, that as Jaya is a colony of

Holland and as

It has oc-

we have never

appointed the Nederlandsche Bank as our agent and correspondent, Dr. Vissering
might think it a little unusual of us to appoint a Dutch

colonial

agent when we had not apFointed the Dutch Government bank itself.

bank our
Will you

not please give this your consideration upon receipt of this letter and cable
us your views so that we may be guided accordingly in mentioning the matter to
Mr. Zeilinga while he is here.
BRANCHES OF FOREIGN BANKS HERE.

We have had some conversation with

the new Superintendent of Banks, Mr. McLaughlin, a vary good man, about liberalizing the provisions regarding the taking of deposits by branches of foreign
banks, and are considering discussing this matter with some of our New York member banks during December.

As you know, we asked the Bank of England last year

for their views on this matter and they sent us a printed report, which did not
give us much constructive thought.

Possibly opinion may have crystalized there

in the meantime, and I hope that you can bring us their latest views on this



Benjamin EArong,

FEDERAL RESERVE BANK OF NEW

subject when you return.

sq.

11/26/20.

If anything is done here, I am sure that it will

only be under the most careful restrictions.
Sir Charles paid us two calls in the

SIR CHARLES ADDIS' VISIT.

bank and came to dinner at my house with Case and Alexander shortly before he
sailed.

He did not give us much time to entertain him until just as he was

leaving, to our great regret.

we had a most interesting evening discussing

central banking conditions in England and this country, as well as all kinds
of other kindred topics.

He visited Washington during his stay and talked
He is very sympathetic with Dr.

with members of the Federal Reserve Board.

Miller's view with regard to the desirability of limiting the total amount of

0,1
1

I ventured to get him to read a memorandum I prepared on the sub-

our notes.

ject before our joint conference in Washington in mid-October, a copy of which
I am enclosing in case you get around to looking at it.

As you will see from

my conclusion, it all comes down to the question of whether we shall have the nerve
and public support to raise rates, should it seem necessary to us, when we have
a fairly high reserve.

I am rash enough to think we ought to try it on, and

I think that most, if not all, of the conference agreed with the point of view
I expressed.

I must say, however,

badly managed and inconclusive.

that this

conference, like most others, was

We were given a list of questions and asked

to prepare papers upon them, which was done.

Hardly any discussion was had of

the papers, and thus the opportunity to exchange and crystalize ideas on most
important policies was allowed to pass.

However, during the same week cotton

was meeting its Gettysburg and the attention of the Board was centered on things
far more immediate and practical than the discussion of reserve bank policies.
If you see Sir Charles Addis, please tell him that we all enjoyed his
visit immensely and only wished we could have spent more time with him.
OFFICERS'LlINCH ROOM.

The foregoing paragraph has suggested to me

the plan we are working on for a lunch room for the principal officers of the



.SERVE BANK OF NEW YORK

Benjamin Strong, Esq.

#6

11/26/20.

We have felt our inability to get into contact with

bank in this building.

the bankers here and have decided that the only way is to have a private room

in which

we can ask them to lunch with us and discuss the situation from time

We hope to have this room in operation, if we can make arrangements

to time.

with the Bankers Club, before you return.
CONDITIONS AFFECTING RATE ACTION.
great diversity of interests.

This is a

It may well be that the methods of ascertain-

ing when rates should be raised, as ascertained in England, will not be adequate here.

We

asked Sir Charles Addis
its rates.

.what

criteria. the Bank of England used in changing

He said the reserve percentage, the foreign exchanges and the

flow of gold.

It may be that in this country we shall want to look at some

other factors in addition to these.

Perhaps you wouldn't mind discussing these

points with your friends in Paris, Amsterdam and London.
MY TRIP ABROAD.

As I cabled you, we all felt that as this autumn

was likely to be a vary trying period, it would be unwise for me to join you at
the present time.

With this view I was in entire

sympathy, much as I

regretted

missing the pleasure of talking over things with our European friends in company
with you.

It would have been a most interesting experience.

I

am planning to

go over with my family next summer if the times seem favorable, and shall certainly expect to make the visits which I would have made with you, but of course
it won't be half so interesting or profitable making them alone, and I shall
probably not meet a number of your friends whom I would have met were I there
with you.

CERTIFICATES OF INDEBTEDNESS.

The November

15th

issue of $200,000,000.

5 3/4 six months certificates was very heavily oversubscribed.
ficates are selling at par and the 6%s at a slight premium.
market for both issues.



The 5 3/4 certi-

There is an excellent

FEDERAL. RESERVE BANK OF NEW YORK

MONEY RATES.

11/26/20.

Benjamin Strong, Esq.

#7_.

Commercial paper within the past fortnight has

eased considerably and there is a fair volume of sales at 7 .3/4%, with an occasional one at 7 1/2%.

The great volume, however, is still at 8%.

Call money

has been down to 4% and 5%, call loans having dropped off considerably in volume.
Some of the banks are reducing the rate on commercial loans from 7% to 6%.
The American Exchange National to-day publicly announced that it was making this
reduction on all its loans.
OUR BUILDINGS.

We have recently asked the architects to speed up

the plans for the main building and they are doing so.
in fair shape when you return.

I hope to have

them

It may be that we shall want to start demol-

ishing at the west ena lot next May.

Sawyer and Eidlitz will advise us defin-

k-

itely on this during the next few weeks.

It looks as though building prices

were apt to come down somewhat in the next few months, especially after the
revelations now going on before a committee of the State Legislature in regard
to the various building material rings and the large bribes which a representative of labor has been enjoying during the past six months.
The concrete foundations for the storage building are completed and
work on the steel grillages is to begin Monday.
building.

I am enclosing plans of this

The outside material is buff brick, with a yellowish sandstone trim.

In the first floor you willsee that the corner of Maiden Lane and Gold Street
is to be occupied by the National Surety Company.

They have leased it for a

period of eight years, together with practically the entire second floor.

They

occupied the corner building and we were obliged to make them this lease in order
to get possession of the building.
CURRENCY.

Through the clogging of the Bureau of Engraving and Print-

ing by the permanent Liberty Bonds our printing of notes has fallen behind and the
reserve banks all over the country have had to keep in circulation an extremely
poor quality of notes.



It has finally been determined that the limiting factor

FEDERAL RESERVE BANK OF NEW YORK

#Ft

Benjamin Strong, Esq.

11/26/20.

is presses and the reserve banks have just paid a $540,000 assessment from the
Federal Reserve Board to purchase additional presses, which within six months
should be giving us substantial relief.

You will see from the chart contained

in Enclosure No. 1 that Federal reserve notes have begun to drop off in volume
six weeks earlier than usual.




Benjamin Strong, Esq.,

FEDERAL RESERVE BANK OF NEW YORK

11/26/20:

During the summer six trust companies in

BANKING CONDITIONS.

Boston closed their doors owing to local troubles and poor management.

At

the present time a dozen small state banks in North Dakota have closed
their doors owing to frozen wheat loans and to iithdrawals of deposits
by state authorities.

What with politics (the Non-Partisan League barely

won the election in North Dakota) and the drop in wheat prices the tension
is pretty great out there.

But Minneapolis advises us that it does not

consider the situation at all serious.

The City Bank & Tr

Syracuse had a short run upon it on November 22 but this was short-lived
and seems to be over already.
spot very promptly.

As in all such cases we had our men on the

You will note from one of the Comptroller's reports

that we have also had similar situations in Sidney and Ogdensburg during
the past few months.

Our action in such cases is generally much appre-

ciated.

REORGANIZATION OF CHAPIN'S DEPARTMENT.

We are planning to relieve

Chapin of all responsibility for managing the discoudtdepartment and leave
This will

him free to undertake the making of loans to our member banks.
mean putting another manager to ran the discount department.

We also intend

to get a first class crelit man to follow more closely both commercial and
banking credit conditions,

BANKERS DECLINING TO ACCEPT. I am sending you a memorandum which

_.'ncaosare

o. 3

Mr. Kenzel has made to Mr. Case and me to-day regarding banks which have declined to accept under confirmed credits.

Mr. Kenzel has since informed me

that the Appalate Division of the Supreme Court of New York State has just
rendered a decision that injuactions should not be issued by the courts
restraining the banks from accepting drafts drawn upon them.

Mr. Case and

I hope to consider this whole matter to-morrow and determine upon some
course of action to be pursued.




REPRESENTATION ABROAD.

I have not talked this over with Mr. Case

#

#10
FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.,

11/2020.

but I feel that it would be a great advantage to us to have at least one
representative abroad who could keep us informed as to what was going on.
Perhaps you will give some thought to this before you return.

During the

next few years so much depends upon conditions in Europe that I believe
such a man would be of great value and use to us.
DISCOUNT RATES.

If money eases after the first of the year and

business is dull there is sure to be considerable pressure brought upon the
Federal reserve banks to reduce discount rates.

We had some discussion of

this a fortnight ago when Governor Harding was over here and lunched with

/the leading bankers.

V/

The expressions were quite unanimous to the effect

that we should keep our rtes up no matter what other rates did in order to
keep the pressure on the banks gradually to reduce their rediscounts here.
I think the feeling of our officers and directors is pretty unanimous along
this liqe at the present time, but I can see that in the papers a propaganda
is getting. under way for lower discount rates and, later on, this pressure
will probably grow.

iset,You:will doubtless go into this thoroughly with the

Bank of England when you are in London.

I am not at all sure that we may

not have to divide the Federal reserve banks into two classes,

in one group

would be Boston, New York, Philadelphia, Cleveland, Chicago and San Francisco.
In the other group would be the other six banks.

The first group, represent-

ing more or less creditor districts, might move their rates in accordance with
market rates to protect our gold supply.

The second group, consisting largely

of agricultural districts requiring long time credits might have a more stable
rate

covering periods of agricultural production and distribution.

This is

just an undigested thought which has been running through my mind, as I see.",

the difficulties of getting unity of action among the Federal reserve banks
in the face of a common situation to be coped with, such as existed during
1920.



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.,

.....

MR. WARBURG'S CORPORATION.

bank on January 1.

11/26/20.

Paul Warburg is starting a discount

They have taken part of the 37th floor from the

American International Corporation which is interested in the stock of
the Discount Bank, as is also the First National Bank of Boston and several
foreign banks.whom Mr. Warburg made connections with on his trip abroad
this summer.

Goodhue, vice president, of the First National Bank of

Boston is to be president and Warburg chairman of the Board.

They are

7oing to deal in bills and probably do some accepting, and I imagine that
it will be a lively concern.
MR. RUDD'S DEATH.

Channing Ruda died very suddenly about three

He had been suffering from indigestion for several months

weeks ago.

and on reaching Hoboken from his home in Morris Plains one morning he
felt:faint.
there.

He went to a drug store to get some medicine and died while

His widow is still living in Morris Plains.

has six children.
ance.

As you know, she

Fortunately he had about $50,000 or $50,000 of insur-

The directors have continued his salary until January 1.

It is

a terrible tragedy and I am sure that Mrs. Rudd would appreciate it if
you felt like writing or cablin
YOUR RETURN.

er.

Her address is Morris Plains, N.J.

.We are looking forward with the greatest pleasure

to having you back with us shortly afterthe first of the year, and only
hope that.you will be able to keep your fine physical condition on your
return.

ith best regards from all, I am,
Faithfully yours,

Benjamin Strong, Esq.,
C/o Morgan, Grenfeld Co.,
London, England.
PJ/RAH




MISC.3.1-9012-1 20

FEDERAL RESERVE BANK
OF NEW YORK

OF 'ICE CORRESPONDENCE
TO

Mr. Jay

DATE

November 24

1920.

SUBJECT:

Shepard Morgan
FROM

Mr. Strong might be interested in the following developments in the Federal
Reserve Agent's function:

1.

Statistics Deartment:
This department has been organized as an independent department of the
bank, under a manager, and its operations are an outgrowth and development of the work done by the small group on the mezzanine floor at the
.

time Mr. Strong went away.

It has three divisions - a tabulation division;

a division of reports, under which are two sections, a research section
and the bank's reference library; and the press and circular division.
The tabulation division assembles current figures of the bank's operations,

receives reports from member banks and tabulates them, and similar current
statistics.

The division of reports writes our various published and un-

published reports, summaries of business, etc., and the press and circular
division handles the department's relations with the printer, maintains
address lists and prepares and issues formal bank circulars.

The monthly

review of business and credit conditions,-which had a circulation outside
the bank of 1500 last January, now has a circulation of 50,000 and is being
asked for in many parts of the United States and also foreign countries.
Other productions of the department include the annual report of the bank,
a weekly summary of business conditions for the confidential information
of the directors, the daily letter on current financial events in and out-

side the bank to Governor Harding, copies of which are circulated for the
ihformation of the officers of the bank, also a daily mimeographed summary




MOSC,A90M4,0

FEDERAL RESERVE BANK
OF NEW YORK

DE :ICE CORRESPONDENCE

DATE

SUBJECT

TO

FROM

-2--

of financial news in the newspapers, and a semi-weekly digest of foreign
and domestic financial and economic periodicals.

Latterly the department

has undertaken to prepare speeches for the officers.
2.

Member Bank Relations Department:
Member bank luncheon conferences have been continued and all member banks
outside of New York City and the Buffalo district have been invited to
attend conferences for the second time.

Our traveling represent

have visited twice all member banks outside of New York City and have succeeded in broadening the

country

bank market for bankers acceptances, and

additional banks upon being informed have made use of our transit department.
We have also given special services to member banks by furnishing clerical
help during periods of special strain, and since July I have had as many
as six men out at one time assisting members in a clerical or advisory capacity.

Also, at the request of member banks we have investigated and made suggestions
for changes in their accounting systems.
3. Bank Examinations Department

This department has been strengthened by the employment of one examiner who
has been thoroughly trained in the State Banking Department, and by three others
who have been taken over from other departments of the bank.

The department

participated, as heretofore, in many of the most important examinations of
State banks, and latterly the three men taken over by this department from
other departments in the bank have seen practical service with the national
bank examiners.




In

all cases where members of this bank have been in

MISC.3.11-90M-1-20

FEDERAL RESERVE BANK
OF NEW YORK

OFICE CORRESPONDENCE
TO

DATE

SUBJECT

FROM

difficulties or in a condition which might result in difficulties,
the department has had men on the ground working in

collaboration

with the credit department and the National Bank or State examiners,
as the case might be, to relieve embarrassing situations.

Among the

banks which have been aided in this way were the Sidney National Bank,
of Sidney, New York, the City Bank Trust Company- of Syracuse, New York,
and the St. Lawrence Trust Company

of Ogdensburg, New York, and the

department has also continued its interest in the First National Bank
of Woodridge, New York.

4.

Note Issues Department:




This department aside from its regular work has taken over the bulk of
the routine correspondence of the function.

.SC.3.1.9014-1-20

FEDERAL RESERVE BANK
OF NEW YORK

OF-710E CORRESPONDENCE
TO

DATE

SUBJECT

FROM

November 23, 1920.

Activities of Organization Counsel.

H. A. Hopf

REPORT FOR GOVERNOR STRONG
1.

Organization Manual:

After studies and investigations, consuming all available time during the
first 9 months of this year, the completed Manual was issued September 2, 1920.
Copies of the Manual have been sent Governor Strong.
Planning Committee:

This Committee has held 84 meetings since January, and is devoting its attention to problems relating to the New Building, among which are the following:
Auditorium, Cafeteria, Elimination of One Typical Floor, Employee Control, Estimated
Space Requirements in 1923, Executive Suite, Gymnasium, Laundry, Officers Dining Room,
Service Floor, Service Elements, Vaults, Ventilation.
Job Analysis and Salary Standardization
Questionnaires were sent to each employee in the bank. These have been
analyzed and the description, title and salary rates tentatively established. The
Committee on Salary Standardization is now engaged in a final review of the material
and the establishment of the qualifications and educational requirements, in conthe job
ference with the managers and chiefs. The present plan is to compile
specifications, establish lines of promotion (this has been tentatively done) and
issue the completed information in book form for the guidance of the Salary Committee
and of the employees.

all

Questionnaire on Personnel Activities in the Federal Reserve Banks

As a member of the Committee appointed at the Governor's Conference in
April last, I was instrumental in preparing the questionnaire referred to above. These
have been sent to all the Federal Reserve Banks and answers are being received regThe district banks have been requested to solicit answers to the questionnaire
ularly.
A complete report
from their principal member banks and leading local industries.
of the activities and recommendations pertaining to approved practices and policies
will be issued by the Committee in the first part of next year.
,

Pension Committee
I was appointed secretary of the Pension Committee and considerable study
has been given to the administration problems involved. The Committee is sending a
preliminary report to the Federal Reserve Board at this time.
Personnel Problems

Cooperation with Controller of Administration and with Manager of Personnel
Department in the solution of many personnel problems whfch have arisen in the daily
work of the bank.
Rating of Employees



New plan of rating has been introduced and considerable time is being given

I FEDERAL RESERVE BANK
OF NEW YORK

OF-710E CORRESPONDENCE
To

Mr

FROM

Pierre Jay, Chairman
H._

A

DATE

SUBJECT

November 2.3_, 1920.

Activities of Organization Counsel.

Hopf

to training chiefs and superviors in rating methods.
Committee on Procedure and Accounting
This is a new Committee which expects to begin activities shortly.
My function Nil be to act as adviser.
Miscellaneous

Among other more important activities to which I have devoted time
and energies are the following:




Illumination of Bank Premises
Ventilation
Elimination of Noise
Interdepartmental Communications
Clerical Costs
Additional Compensation studies
Manual of Operations

MO9C.3.1-90/41-1-20

I FEDERAL RESERVE BANK
OF NEW YORK

OF 7ICE CORRESPONDENCE
TO

DATE

Mr. Jay

SUBJECT:

November 24, 1920.

Cmsh k Custody Function Activities.

J.D.Higgins,Controller of Cash & Custodies
FROM

Paying

Transactions

Date

Division

Jan. to Oct. 31,1919
"

ShipAng.
Currency
tt

Ti

VT

VI

tf

Jan.

1920

1919
1920

34380
33076

400,846,649
416,358,287

1919
1920

17409
21024

428,898,581
179,271,671

"
"

Vi

Mch.

"

"

tf

Coin

Receiving

"

ft

"

TV

"

Vt

VT

VT

"

VT

It

11

"

Express

TI

Vt

tf

"

Wire Transfer

VI

VT

VT

"

Rea. Mail and

$1,432,625,000
1,696,950,000

"

"

Securities

1919
1920
1919
1920

1,582,488,000
450247 rolls
wrapped and shipped
1,313,908,443
1,626,529,337

II

TV

TV

VT

TV

1919
1920

64743
88023

"

Codes & Tests

Amount

1919
1920

64700
114200

"
"

1919
1920

15,015,000,000
14,050,000,000

46401
102459

(Note) Includes shipments of mutilated currency to Washington now being made
by Money Division (approximptely 15,000).

Nat ITEMS:
Receiving deposits from national banks for credit Treasurer United
States for account 5% Redemption Fund for redemption of outstanding national
bank notes.
Shipping wrapped coin to banks outside New York City.
Condition of paper currency in circulation very dirty. Supply of new
only 50% of amount needed. Treasury promising improved output. Board authorizing
$543,000 expenditure for new presses for Bureau of Engraving and Printing.
Uncounted currency on hand approximately 15,000,000 one dollar bills;
235 people counting.
Cancelling before shipment to Washington all kinds of paper currency
except national bank notes.
Making payments to banks in this district for U.S. Treasurer for currency
sent to Washington for redemption; no shipments now made by Treasury; preparing
to assume balance of N. Y. Sub-treasury functions about middle of December.
All gold from Bank of England received but c58,000,000 yet to be assayed.
Treasury Department deposited $59,000,000 standard silver dollars first
part of year and have since given *40,000,000 in silver certificates and propose
to deliver balance of $19,000,000 after January in exchange. We are following
Treasury Department request to pay out no silver dollar8.
We are still conserving gold.



/415C.9.1-80141-20

I FEDERAL RESERVE BANK
OF NEW YORK
DATE

OF ICE CORRESPONDENCE
SUBJEcT

Mr. Pierre Jay

TO

FROM

November 24, 1920.

of the activities of the

Fiscal Agency Functions as requested in
your memorandum of November 22.

J. W. Jones

CERTIFICATES OF INDEBTEDNESS DEPARTI1ENT

During the year 1920, the Treasury Department has offered for subscription 16
issues of United States Treasury Certificates of Indebtedness at rates varying from Q.
to 6 per cent.
The allotment for the entire country for the 16 issues was :)3,350,152,000, of which
1.,449,773,500 was allotted to the Second Federal Reserve District, or 42.6 per cent.

The latest available figures Show that at the present time there are outstanding
In the entire country $2,487,206,000 Certificates of Indebtedness, of which 31,037,203,000
are outstanding in this district. Of the outstanding for the country 1.,794,040,000
are tax certificates (which are self liquidating) and 3693,166,000 are loan certificates.
Although there has been a substantial Government deposit following each of the
Certificate of Indebtedness issues throughout the year, the number of depositaries using
This is due to an increase in
the book credit method of payment have gradually diminished.
the secondary distribution of the Certificates, i.e., the institutions instead of tahing
the Certificates for their own accounts, are taking them for their customers and paying
Calls for Government Deposits have
at once for the Certificates with the cash received.
averaged two a week and in the past four months the deposits have been drawn rather heavily
at times; the life of the deposit only running about 25 days on the average.
The last issue of Certificates of Indebtedness was dated November 15, 1920,
The total allotment for the entire country was
232,124,000. The total subscription for this district was $106,896,500 of which
03,515,500 was allotted.

maturing May 16, 1921 at 5=-. per cent.

On each of the tax payment dates we furnished the Collector of Internal Revenue
with a staff of clerks, Which resulted in receiving the major portion of the pwments
through the Treasurer's account on the payment dates. The amounts received are as follows:
March. 15, 1920

June 15, 1920
Sept.15, 1920

3253,570,234.
248,615,534.
233.192.733
3735,378,501.

GOVERMENT BOND DEPT.
From the standpoint of volume the principal activity during the year has been the
exchanging of temporary for permanent bonds. This work commenced on March 15, 1920 and to
date we have received 3,804,707 pieces of temporary coupon bonds of the First, Second and_
Third Loans amounting to 31,618,342,200 and an equal amatint of permanent bonds have been
delivered. It is expected that the exchange of temporary Fourth Liberty Loan bonds will
commence sometime in January 1921. Based on the latest available figures, it is estimated
that there are still outstanding in this district approximately 8,000,000 pieces of temporary
bonds of which 6,000,000 are of the Fourth Liberty Loan.




WSC,A-90M4-20

FEDERAL RESERVE BANK
OF NEW YORK

OF ICE CORRESPONDENCE
TO

Mr. Pierre Jay

FROM

J. W. Jones

DATE

November 24, 1920

Report of the activities of the
SUBJECT:
Fiscal Agency Functions as requested in your
memorandum of November 22.

The other activities of importance are:

Exchange of Denominations of all Liberty Loan
coupon bonds and Victory Notes
Receiving registered bonds for exchange and transfer
and coupon bonds for registration
Conversion of 4 per cent bonds and Victory notes
Sale of thrift securities
Paying all United States Government bond coupons,
Certificate of Indebtedness coupons,
Farm Land Bank coupons.
Receiving certain British Government coupons for
collection.
The turn-over of securities in connection with the various
activities of the Government Bond Department since the first of this
year has been 06,128,761,605.90 as compared with the total turn-over
for 1919 of 06,363,359,652.72.

The personnel of the entire Fiscal Agency Functions consists of
410 employes as compared with a maximum force of 559.




MISC 3

FEDERAL RESERVE

BANK OF NEW YORK

0 "FICE CORRESPONDENCE

Date November 23,92O,
SobjecV_Report

To

Mr. Jay

From

for

Governor Stron&

J. E. Crane

Replying to your memorandum of November 22, Governor Strong has been
advised from time to time of the trend of affairs in the foreign activities of
the bank since the first of the year in letters written to him by Mr. Case and
yourself.

Mr. Case's letter to the Governor of October 21 brought the review up
to that date and the following summary will bring us down to today:

Bank of Thipland.

The last consignment of the 4111,000,000 gold from the Bank of
England arrived here on November 2 and all of the gold has now been
transferred to the Assay Office.

However, returns have been received

from the Assay Office on only the first five shipments (there were
twelve in all) and it will probably be some time before final
returns on the entire amount are received, owing to the fact that
the Assay Office is kept busy handling imports to

Dihr,

Loeb and
Morgan, which are given precedence over our Bank of England gold.

We have reimbursed the Bank of England for their expenses in
transferring this gold to New York.
Bank of France. On October 30 the Bank of France earmarked for our account

43,300,000 in gold under the terms of our recent agreement with
them, and we have credited their account with us for that amount
in dollars.
They have not as yet instructed us as to the disposition of these funds here for their credit. This deposit of

Aki.kAttO

,

,6.4%/f-ea'tlfttl

61.AM

gold has been pro rated among the Federal reserve banks.
Reference is made
me to Mr. Case's letter to Governor Strong of
October 21 with regard to the details of the arrangement with the
Bank of France whereby we agreed to accept earmarked gold with
them. At present this agreement is limited to January 15, 1921,
and the question of its extension beyond that date is left open
for discussion between Governor Strong and Governor Robineau.

Ac&R,L511

Aj,,,,c,

I

7j)

Argentine Government.
During the summer and early autumn, the Argentine Government
drew heavily against its balances with us by transfers to New York
banks ,and on October 19 their balance was practically wiped out
except for 489.42 which still remains to their credit.
Bank of Japan.




Our operations with the Bank of Japan continue as heretofore.
To date we have purchased for their account a total of 047,955,820.40
bills, of which 416,200,608.21 are now carried in portfolio for
them.
Their balance in current account is approximntely $4,000,000
and has remained at that figure since the inception of the business.
Yokohama Specie Bank just advised us that they desire to export
during December 415,000,000 in gold.
Similar advices were received
\,,The
for October and November when they withdrew $13,000,000 and $15,000,000
respectively.

FEDERAL RESERVE

MISC ,

BANK OF NEW YORK

FICE CORRESPONDENCE
To

Date_1nvember23,_1920
Subject.

Mr.- Jar

-2-

FromJ. E. Crane

De Nederlandsche Bank. where have been no recent changes in our relations with
de Nederlandsche Bank. To date we have purchased for their account
a total of 443,405,939.07 bills of which 4 6,477,311.287x are now
In addition to this, we are holding
carrpowissin portfolio for them.
8,174,515.28 Oubills deposited with us by the
for their account 0
by the National City Bank.
Guaranty Trust Company and $ 2,019,437.23
Their balance in current account averages about $900,000. They

have never asked us to discount any bills held for their account but
we have received instructions from them to return to the Guaranty Trust
Company upon their demand, bills which they lodgeawith us for account
of de Nederlandsche Bank. We assume this is for the purpose of sale
or discount to replenish the account of de Yederlandsche Bank with the
Guaranty Trust Company.
De Javasche Bank. We receive from this institution dollar bills bought by them
in Java covering exports to this country which we present for acceptance,
collect at maturity and credit to their account in accordance with
their instructions. We have received to date from them ,6,536,052.17
bills of which 41,290,630.46 are nau held in portfolio for their acTheir balance in current account is now 4160,000 and averages
count.
In addition we are holding earmarked for their acaround 4200,000.

count 420,500,000 in U. S. gold coin and have agreed to earmark for
them up to 440,000,000. We are making application to the NEral Reserve Board for permission to appoint de Javasche Bank our agentAin
Java and to open and maintain an account with them. Preparations are
being made to properly entertain Mr. Zeilinga upon his arrival.
Russian gold.Since Mr. Case's letter to Governor Strong of October 21, the Treasury
Department has adopted a definite policy in regard to the purchase of
Briefly stated it is as
Soviet gold by the mints or assay offices.




follows:
"In accordance with advice from the State Department that

no assurance can be given that ggo title to Soviet gold will.
to future internationaltropiftkoWemo, the
not be
Treasury has instructed the mints and assay offices not to
,

purchase gold known or suspected to be of Soviet origin."
The Russian gold roubles from Sweden imnorted by Brown Bros. & Co.
were tendered to the Assay Office and the Treasury has refused to
purchase them. There have been one or two
gold imported from Sweden and suspected to
the Treasury has also refused to buy. The
have recently been exchanged with the Bank

other instances of Russian
be of Soviet origin which
following cablegrams
of England on this subject:

06.-

FEDERAL RESERVE

MISC 3

BANK OF NEW YORK

Date Roveuber 23, 1920.

0 'VICE CORRESPONDENCE
To
From

Subject.

Mr* JAY
J. E. Crane
-3-

/9

0

"Federal Reserve Bank,
New York City.
"Confidential for Governor. We are receiving unexpectedly from Riksbank
Stockholm about 60,000 standard ounces gold in identical bars with original
assay sent to them by us in 1918. We are making payment at statutory price
.311719 and no question of Soviet gold or ownership arises which we mention
lest doubt should arise in your mind in consequence of our cable of June 5th.
Bank of England."

AA-vrglo
,

"Bank of England,
London.
Confidential for Governor. Nhny thanks for your telegram regarding gold
This banks position as to purchase Soviet gold unchanged
from Stockholm.
In accordance with advice received
from our telegram of 6eptember 20th.
from State Department Treasury does not purchase gold tendered to mints
or assay offices which is known or suspected to be of Soviet origin. We
believe Secretary of Treasury and Governor of Federal Reserve Board would
be interested in your cable but in view of its confidential nature we would
communicate its contents to them only if agreeable to you.

Federal Reserve Bank."

71-Arr 2 2

2

"Federal Reserve Bank,
New York City.
Confidential for Governor... First in answer to your message pray consider
yourself free to inform Secretary of the Treasury and Governor of Federal
Reserve Board as to our unexpected receipt of gold from Stockholm provided
information is treated by them as confidential. Second signature of proposed
trading agreement between British and Soviet Government may place us in diffi-

ti),1

culty as to continuing our gold policy but we anticipate that any arrival of
Soviet gold here would lead to legal action as to title but that no export
Bank of England might be legally
licenses for such gold would be granted.
obliged to purchase such gold at statutory prices subject to indemnity or
legal decision as to title but on this whole subject I can make no forecast
Third farther for your information we are likely to receive shortly
at present.
shares
on similar basis about 1,200,000 ounces gold from Paris which represents
of British Government in certain Russian gold received from Germany at armistice
and since held by French Government and now applied to replace gold previously
withdrawn from Bank of England and shipped to New York by ,British Government
in connection with repayment of Anglo-French Loan. Please do not divulge this.
Bank of England."




FEDERAL RESERVE

MISC 3

BANK OF NEW YORK

0 TICE CORRESPONDENCE
TO

Date

Nov. 23, 1920.

AX1r,

/.19--,,

Subject:

Mr. Jay
J. E. Crane

From

-4',Bank of England,
London.

Confidential for Governor. Exceedingly grateful for your cable twenty
second instant.
We have been anxious to learn effect upon your gold
policy of signature proposed trading agreement with Soviet Government
and would be glad to learn of any future developments of which you may
care to advise us in confidence.




Federal Reserve Bank."

0

MISC.3.1-0014-11-20

FEDERAL RESERVE BANK
OF NEW YORK

Or--PICE CORRESPONDENCE
TO

DATE

SUBJECT

George L. Harrison.

FROM

November 23, 1920_

DATA WTTH REFFRI-PACql TO SUBTREASURIES

FOR MR. STRONG'S INFORMATION

Under the terms of the Legislative, Executive and Judicial Appropriation Bill,
approved May 29, 1920, Section 3595 of the Revised Statutes of the United States and all
other laws in so far as they authorize the establishment and maintenance of subtreasuries
of the United States, are repealed as of July 1, 19211 and tha Secretary of the Treasury
is directed to discontinue each of the subtreasuries on or before that date.
The subtreasury functions at Boston were transferred to the Federal Reserve
Bank of Boston on October 25; those at Chicago were transferred to the Federal Reserve
The subtreasury committee of the Treasury Department
Bank of Chicago on November 5.
is at the present time at the New York Subtreasury preparing to make formal transfer
to the Federal Reserve Bank of New York.
It is estimated that this will be effected
some time the first week in December, although there are at the present time very few
of the subtreasury functions not exercised by this bank.

On November 1 of this year we undertook the exchange, replacement and redemption
of United States paper currency, under regulations issued by the Secretary of the Treasury
We have, for some time, acted as custodian of cerLain railroad
dated August 30, 1920.
securities deposited with the Treasurer of the United States as collateral to loans made
by the Treasury Department to the railroads under the terms of the Transportation Act,
and are counting and taking over more of them each day, or as fast as our vault facilities
permit.
The trust funds of the Treasury Department, such as the gold held in reserve
against United States notes and gold and silver held against certificates, are now being
checked and transferred to the New York Assay Office.
As soon as that transfer is completed, active steps toward the formal transfer of the remaining subtreasury functions, limited almost entirely to the exchange and redemption of United States coin, - will be
undertaken.
With reference to the cashing of Treasury checks and warrants, Federal Reserve
Banks and the Treasury Department have realized the impossibility of having Federal Reserve Banks attempt to cash such items for the general public.
It is expected, therefore, that when we formally take over the subtreasury functions we will cash Treasury
checks and warrants only for Government Disbursing Officers, upon proper identification
and for no one else, although we will, of course, continue as in the past to handle
Treasury items for our members.
It is proposed to have the Federal Reserve Bank of New York take over, temporarily, all of the employes at present on the subtreasury roll with the exception of Mr.
Vogel, Assistant Treasurer, and eight others who have, for various reasons, been specifically excluded.
They will be placed on our rolls at their present salaries (aggregating
approximately *110,000 per annum) with the understanding that the Treasury Department will
transfer to some other branch of the civil service, within a period of one year, all of
those employes who have expressed a desire to remain in the Government service, as well
as any others whom we may find, prior to the expiration of one year, to be unsuited for
our purposes.

All of the equipment and space in the subtreasury building, with the exception
of possibly two or thres vaults and two rooms, one, that which is now occupied by the
Assistant Treasurer, and the other the room directly over it, are to be assigned to the
Federal Reserve Bank of New York, although there is still some question as to whether the
Treasury or the Federal Reserve Bank is to have legal custody of the building as a whole.
 are insisting that it be the bank.
We


FEDERAL RESERVE BANK
OF NEW YORK

Or-FICE CORRESPONDENCE
TO

Mr. Jay

George L. Harrison

FROM

DATE_

SUBJECT

November -2-_1_9

Data with Reference to Subtreasuries

2 -

For Mr. Strong's information (cont'd)

When the final transfer is completed, we will conduct all subtreasury functions
in the bank, except coin operations, which will remain in the subtreasury building,
and, inasmuch asmost of those functions will be carried on in our capacity as a
depositary instead of that of fiscal agent, we will assume practically all expenses of
operation with the exception of the costs of transporting coin and currency between
This will
Washington and New York, which will be paid by the Treasury Department.
do much to keep us without possible Congressional supervision of salaries, as well as
appointments.

GLH.MSB




OPERATIONS 01 TEE BUFFALO BRANCH
JANUARY 1, 1920 to DATE

The business of the Buffalo Branch has increased materially as will be noted
from data given in the attached tabulation.

Development has been along the lines of

the original plan of organization except that in order to make for greater convenience,
the accounts and loans of all member banks in the city of Buffalo have been transferred
to the Buffalo Branch, discount applications being passed upon by the local directors subject to final approval of the main office.
In December, 1919, notice was given to Mr. George F. Rand, president of the

Marine Trust Company, that we anticipated withdrawing the arrangement whereby they carried
with us a nonmember clearing account and obtained all privileges except rediscount facilities.

Following Mr. Rand's death in an aeroplane accident in London, the matter was

again taken up with the newly elected officers, including Mr. Walter P. Cooke, Chairman of
the Board, and shortly thereafter the company decided to apply for membership, which was
completed in February, 1920.

A continuance of the trend toward consolidation of banking institutions has been
noted in both Buffalo and Rochester.

In Buffalo, during 1919, the Liberty Bank and the

Union Stock Yards Bank were consolidated as the Liberty Bank, and the Bank of Buffalo absorbed the Market Bank and the City Trust Company.

On September 1, 1920, the Marine Trust

Company of Buffalo absorbed the Bank of Buffalo, with Walter P. Cooke as Chairman of the
Board, John H. Lascelles as Chairman of the Advisory Committee, and Elliott C. McDougal as
President.

The merged company has deposits of approximately 3100,000,000., capital, sur-

plus and profits of 318,800,0006and now has 18 branches.
In Rochester the Union Trust Company several months ago absorbed the Citizens Bank,

and the consolidation of the Alliance Bank and the Lincoln National Bank under the title
Lincoln-Alliance National Bank, will take place December 1st.
will have deposits of around 335,000,000. and rill
Rochester.

The combined institution

we understand, be the largest bank in

The Alliance Bank interests will control.

Business conditions in Buffalo and surrounding territory have held up much better



-2-

t.
than those in some other centres.

Unemployment thus far has not been extensive.

Among the farming interests some groups, such as grape and berry growers, have had an
extremely profitable season.
tremendous crop.

Fruit growers have not fared so well, but are moving a

Dairying interests have been injured by refusal of large milk compan-

ies to buy milk and prices have been reduced.

sell produce for next to nothing in many cases.

Truck gardeners have been obliged to
In Buffalo itself there has been some

slackening noticeably in such plants as the Pierce-Arrow and other automobile, truck and
accessories factories, but the slackening has been more tardy in arriving than in many
other places, and the situation is only beginning to be acute.




DATA ON BUFFALO BR1NCH OPERLTIONS

JINUARY 1, 1920 to DATE

NO,OF
EMPLOYES
O

SALARY
ROLL

SilLARY

Elr'ENSES

EARNINGS

AVERAGES (Thousands)(Thousands)

ff. gm. EXCL.

CURRENCY

CHECK COLLECTIONS

DISCOUNTS

REC'D DISBURSED Dailyfor
(In millions)

Average
Number

OFFICERS

RESERVE

DEPOSITS

(Million
TRANSOF

Al=n7tato 3l7FAIO
(Millions)BANKS AT

(Thousands)

CLOSE OF
MONTH

WIRE

BUFFALO
BANKS

(Millions)

(Millions
23.4

4188.6

8.3

12.

23.3

165.9

10.7

12.9

26.8

235.3

17.2°

21.1

11.

14.1

25.4

225.9

20.2

22.8

11.3

13.1

25.7

212.4

32.9

27.5

14.

14.0

26.8

246.

45.6

239.8

413.9

417.1

2

92

February

2

96

19.

March

2

96

April

2

100

May

2

102

June

3

July

3

110

August

3

109,300

1,093

103

24.4

4135.4

15.8

15.4

26.6

127

21.1

169.1

13.4

15.3

September 3

126

30.3

154.6

13.4

16.7

27.1

October

123

21.

169.4

13.1

18.2

28.4




119,000

133,600

1,082

1,087

-

15.3

433.3

419.9

36.4

23.9

19.5

35.3

245.6

31.6

19.5

39.E

231.6

37.8

17.7

40.

25.4

3

$27.1

410.4

22.7

4103,500 $1,125

January

DATA ON BUFFALO BRANCH OPERATIONS

JANUARY 1, 1920 to DATE

NO ,OF
EMPLOYES

SALARY
ROLL

SALARY

EXPENSES

EARNINGS

AVERAGES (Thousands)(Thousands)

Off. lam. EXCL.

CURRENCY

CHECK COLLECTIONS

REC'D DISBURSED Daily

(In millions)

Aggregate

DISCOUNTS

for

Average

Amount

EUmber

OFFICERS

DEPOSITS

(Millions)BANKS AT.

(Thousands)

:OUFFALO

OF
BUFFALO
BANKS

CLOSE OF
MONTH

(Millions

January

2

92

February

2

96

March

2

April

2

100

May

2

Juno

4103,500 $1,125

417.1

$13.9

8.3

19.

RESERVE

WIRE
TRANSFE

(Million

MBER

SECURITIES

LLECTION 12LD
EKS

(Millions)

housands)

(Millions)

$10.4

23.4

4188.6

-

$27.1

4.8

414.9

12.

23.3

165.9

_

15.3

4.5

15.6

26.8

235.3

-

17.2

7.

17.9

96
22.7

10.7

21.1

11.

14.1

25.4

225.9

-

20.2i

6.6

21.3

102

22.8

11.3

13.1

25.7

212.4

_

32.9

6.7

22.6

3

103

27.5

14.

14.0

26.8

246.

-

45.6

8.2

21.1

July

3

110

419.9

36.4

9.1

25.1

August

3

23.9

19.5

35.Z

8.7

26.2

Sel:tember

31.6

19.5

39.E

8.2

26.2

October

37.8

17.7

40.E

7.8

24.2

109,300

119,000

1,093

1,082

24.4

4135.4

15.8

15.4

26.6

127

21.1

169.1

13.4

15.3

25.4

3

126

30.3

154.6

13.4

16.7

27.1

3

123

21.

169.4

13.1

18.2

28.4

12.9




133,600

1,087

232.5

231.6

239.8

245.6

MISC,A-40M4,0

FEDERAL RESERVE BANK
OF NEW YORK

Dr- CE CORRESPONDENCE
Mr. Pierre Jay

:.ROM

DATE

November 23, 192a.

SUBJECT

L. R. Rounds

As requested in your memorandum of yesterday, I submit
the following brief report of the matters in which Governor Strong
would perhaps be interested.
Preparations have been made during the last month for
the establishment of an expense budget for the bank for the six months'
period from January 1 to June 30, 1921 and this work will be completed
before January 1.
Plans are now practically complete for the consolidation
of the former comptroller's office of the Government Loan Organization
with the Expense Division of the bank. The physical amalgamation is now
being made and from January 1 the work will be handled as a single unit.
Ibis consolidation will effect a considerable economy in operation and
will result in the release to other work of from six to eight people.
The amounts collected during this year from member banks
as penalties for deficient reserves show a very large increase over
previous years, the total collected this year to date being t131,000. as
compared with $36,400. during the calendar year 1919. This large increase
is accounted for in part by the difficulty many banks experienced in the
early part of the year in adjusting themselves to the new conditions requiring the averaging of the reserve over a period of one week for the
city banks and half month for the country banks. During recent months the
large amount of penalties collected has been due to quite frequent deficiencies on the part of a few of the large New York City banks, which indicates that vntremany of the banks are endeavoring to maintain their reserve as near the legal requirements as possible. Banks who had trouble
in maintaining their reserve at the proper point have been assisted in
this respect with the result that several banks who sere quite persistent
offenders in this regard in the early part of the year have shown a very
considerable improvement.




FEDERAL RESERVE BANK
OF NEW YORK

ICE CORRESPONDENCE
TO

Governor Strong

FROM

DATE

SUBJECT:

November 24, 1920.

Discount Market,

E. R. Kenzel

The development of the discount market since the first of this year is best
indicated by the salient facts that of approximately $1,000,000,000 in bills outstanding at the close of last year and the same amount as at present outstanding, the System
had purchased and held in its portfolio a-the close of November 19 only approximately
$275,000,000 as distinguished from about $385,000,000 at the close of June 30 and approximately $574,000,000 at the beginning of the year. We held in our portfolio approximately $203,000,000 on December 31, 1919. Our holdings decreased to $192,000,000 at the
end of June and to approximately $90,000,000 at the present time.
This d
the rise in the dealers' selling rates from 5% at the beginning of the year to 6 1/4%
at the present time for the best known names, and de not only a larger but a much wider
distribution. There has been a continually increasing number of investors throughout
the country - not only banks but corporations and individuals.
he Superintendent's call of June 30, combined with the Comptroller's call of
September 8 last, discloses 174 banks in the Second District which hold bankers' acceptances. This compares with 58 banks a year ago and 40 banks in March, 1919.
Since the first of the year, we have ourselves purchased for 210 of our country members, bills aggregating approximately $35,655,000. This is compared with approximately $45-8e6706& purchased by us for 38 member banks during 1919.
cto VG* ,0%

Purchases by savings banks have been an important factor. We are informed that
on June 1, 1920, fifty savings banks held approximately $30,000,000 of bills. On July 16,
At the present time their hold1920, sixty-nine savings banks held about $66,700,000.
ings are probably over $70,000,000.

There has been a particularly good demand for prime New York member bank bills
as distinguished from those of out of town and non member acceptors. The supply of the
first mentioned class of bills has frequently been insufficient to meet the demand.
The recent Regulations 'of the Federal Reserve Board provide that renewal bills
should not be drawn and will not be eligible in cases where the transactions have been
concluded within the life of the original bills: that drafts should properly in all cases
be drawn for the periods necessary to conclude the transactions, not, of course, exceeding
In this connection, there is an increasing demand for four months bills at
six months.
or about the rate for nineties, but banks hesitate to try five and six months, although
some of them realize they should and must.

..

At the last Governors Conference, a standing committee was appointed consisting
of Governor Fancher as chairman and Governor Morss and myself as the other members, to
gather and collate information regarding rates and general conditions existing in the various districts and to study the general situation with a view to the further development
of the market along proper lines in the respective districts.
The market for call money on bills has not shown as much development as might be
desired, and the dealers have had to lean quite heavily upon us at times, but some progress
has been made, particularly with regard to the number of banks and in some cases corporations who are acquiring the habit of lending to the dealers at preferential rates.




.19C.3:1-90M 1-20

FEDERAL RESERVE. BANK
OF NEW YORK

OF 'ICE CORRESPONDENCE
TO

DATE

Governor Strong

FROM

S U BJ ECT

November 24, 1920.

Discount Market.

E. R. Kenzel

-2-

The dealers' purchase rates at the beginning of the year of from 5 to 5 3/8%
for the best known member bank names according to maturities have increased to from
6 1/8 to 6 3/8% according to maturities. Their selling rates at the beginning of the
year of from 4 3/4 to 5% for prime bills, according to maturities, have increased up to
the present time to from 6 to 6 1/4%, but the market still discriminates against nonmember names by about 1/2%.
Our open market minimum purchase rates of from 4 3/4 to 5% for prime indorsed
bills, according to maturities, have been increased since the first of the year to from
5 3/4 to 5%. We purchase at these rates, however, only bills of the highest class. Others
are taken at somewhat higher rates. While our minimum rates have for sometime past been
somewhat under the outside market for unindorsed bills, we have been continually mindful
of this situation. Ne have seen to it that it has not been taken advantage of by the
dealers, whom we have at all times continued to urge to achieve a greater outside disOur contribution, and we have seen no material evidence of disregard of our desires.
tinued prodding and slight preferential in rate for short bills has resulted in portfolio
averaging atout thirty days with us as compared to forty days or longer in the other
Federal Feserve Banks.
On the whole the development is distinctly encouraging and the outlook good for
a broad and stable market when money and credit conditions become less acute.




MISC 3

FEDERAL RESERVE

BANK OF NEW YORK

rrFICE CORRESPONDENCE
To

Mr

From

Francis Oakey

JaY _

Date November 26, 1920.

Subject'
Outline of Conditions in the
Auditing Department.

In accordance with the request contained in your memorandum of November 24, I submit
the following:

Auditing Program
Since the first of the year the program of auditing has been changed both fundamentally
As a foundation of the audit a balance sheet and general security examinaand in detail.
This examination is made as of a given date and includes every
tion has been introduced.
Two such examinations have
department in the bank except the Government Bond Department.
In addition periodic departmental examinations are made but these
been made this year.
The current auditing work has been continued
also have been considerably consolidated..
including the semi-monthly reconcilement of accounts, checking of earnings, expenses, curAll work of an operating character has been elimrency shipments, ledger entries, etc.
inated.
Auditing Procedure

The procedure for nearly every examination has been revised, particularly for the
purpose of further safeguarding cash, notes, securities, etc., during the examination, and
also for the purpose of saving time in the work and releasing the securities more promptly
The procedure of the Government Loan Division has been completely
after the examination.
changed in order to save labor.
Organization and Personnel
The department now consists of four divisions instead of six as was formerly the case,
the Partial Payment Division having been absorbed in the Government Loan Division and the
The position of Manager has not yet been
Stenographic Division having been abolished.
filled but the Acting General Auditor has selected a man whose name will be submitted at
the next meeting of the Audit Committee.
The number of persons employed in the Auditing Department January 1, 1920 was 112,
On
consisting of 65 men and 47 women, at a total annual salary cost of ;:;191,900.00.
November 26, 1920, the number of persons employed was 110, consisting of 94 men and 16 woWith the exception of such stenmen, at a total annual salary cost of $230,150.00.
ographers and file clerks as are necessary the department is now composed entirely of men.
This change is necessary in order that the balance sheet and general security examination
may be made without the temporary employment either of Persons from outside or of persons
'from the operating departments of the bank.

Specifications for the standardization of positions, grades and salaries have been
worked out and adopted with the approval of the Audit Committee, the Board of Directors
Provision has been made for a method of payment to emand the Federal Reserve Board.
ployes for work performed during evenings, Sundays and holidays and has been adopted with
the approval of the Audit Committee, the Board of Directors and the Federal Reserve Board.
The salary committee no longer has any authority over the salaries or Promotions of the
Auditing Department so that now this department is subject solely to the authority of the
Chairman, the Audit Committee, and the Board of Directors.




4P
MSC 3

FEDERAL RESERVE

BANK OF NEW YORK

C7FICE CORRESPONDENCE

Date

To

From

Subject

2.

Program of -Education and Training

A program of education and training has been adopted by which the men will be required to thoroughly acquaint themselves not only with the procedure of the Auditing
Department as a whole but also with that of the various operating departments of the
bank.
They are also required to study the Federal Reserve Act and the Ilegotiable
Instruments Law.
Controlling Access to Vault Compartments

Inrsuant to resolution passed by the Board of Directors the Auditing Department is
required to ascertain that access to any compartment in the vault is permitted only to
those officers specified by the Board.
In order to insure that this work shall be thoroughly performed the Auditing Department has placed special padlocks on each vault compartment and certain men from the Auditing Department have been permanently designated
to hold keys to these padlocks.




Fos

Mr. Case,
Chairman, Managing Committee,,

Proms

BU8INE33 AND ACAUNTING
PROCBDURR-of the Bank.

Francis Oakey,Acting General Auditor.

Subject:

In accordance with your request I submit herewith my opinion in
respeoti to the stepe that should be taken to determine what changes, if
say, should be made In the business and accounting procedure and lathe
personnel of the bank in order to establish the most economical methods of
operation.

natiLen 01 T45.2119M1
On the date of this memorandum the Federal Reserve Bank of New York
consisted of 24 department', in which 2815 persons were employed.- In
the *slender year ended December 31, 1919' the total ourrent expenses of
the bank amounted to '5,5640830.50.
For the six months ended Jane 300
1920 these expenses amounted to 43,2490711.79S It is estimated: therefore,- that for the year ending De:SO:Aber 31, 1920 the expenses will amount
to $6,500,000.00. It should be stated that there are several lane
items' of expense over which the Board of Dimeeters and the officers of
the bank have as cestrol, namely, Federal Reserve Beard assessments,
Clearing Rouse assessments, cost of currency and currency shipments.
In
the calendar year 1919 these items amounted to 41,0790822010, leaving
$4,485,008.40, representing expenditures subject to the managemant of the
directors and officers of the Bank.
.

In the recent meeting of the Managing Committee held in respect to
the subject of this memorandum it was stated by several of the officers
present that the business and accounting' procedure had never bees
thoroughly surveyed for the purpose of eliminating unnecessary expense
as& it appeared to be the comeasus of opinioa that if such a survey
were made in a competent manner considerable saving would be effected°
Sffecting savings in operating expenses is not the only consideration in
the problems there are other equally important questions, vii,




Whether our bmsiness and accounting procedure is the best
that can be devised for safeguarding the resources of the
,bank and the securities held in a fiduciary capacity.

Whether our business procedure is such *swell best serve
our member bank
Whether our personnel is such as cam meet the requirements
of a satisfactory standard ef safety, emsnemy sad service.

13101333.gtntaLLWA.
graanisatioa
After a detailed study of organisation imprtaat changes were decided
apes sad put late effect en September 2, 3919, sad a_chart prepared showing
in detail the various departments and divisleas se established and
offloial positioas created. Siam, that date I am tat armed that the
study of orgazisatlea was continued with the result that a new chart WAS
Issued en September 1, 1920, which iscAndes a description of the functions
sad activities of the varlins departments sad divisieas.

Standardisation of Orme
I äa Informed that one of the activities of the Methods and Supply Department is the co/animation sad standardisation of forms proposed to be
This work
printed and the approval thereof before they are put late use,
has undoubtedly resulted in elinizatiag to some extent unnecessary ferns and
In establishing standard fermis in mazy Instances for the exist lag procedure.
I am also lafermed that oftsiderable work has bees done by this departmeat
with 4 view to elinizatiag uazooessary labor.

Standardisation of Pesitions. Oradea and Salaries
1 ali'liferied that this project has been in progress for some time sad
taat at the present date it has been practically completed for the existing
rgailsatioa and procedure.

Conclusions in Respect to Present Progress

all

the facts in respect to the existing organisation functions
Obtaiaiag
and lines of authority sad putting them on record In ooncise form is undoubtedly the first step to be taken In a constructive program. The data
that has been collected and recorded in the form of charts would ha-ladispens It is my opinion, however, that the stead able in attacking the problem.
ardisatlea ef forms and the standardisation of positions, grades and salaries
are projects which cannot be effectively worked upon until a comprehensive
survey of existing procedure has been made and the revisieas decided upea,
These projects should net be undertaken until that
if any are necessary.
of surveying said revising the existing prooedure is well under way. Other
projects that are subject to the same treatment, namely, the selection,
braining and oducatiez of personae], all of which must necessarily ba"carried on under any oenditions, comet be pushed forward with any degree of
effectiveness until the procedure that is most desirable has been worked sut.
In view of these conditions end having in mind these principles it seems to
Ale it is clear that at the present time we have no definite and comprehensive
program of constructive work looking to the Improvement of business and
accounting procedure from the bottom.




A PROPOSED PROGRAM

Next Steps to be taken
After the facts respeeting existing organisation, funstions,.activities
d lines of authority have been obtained the next steps to be taken are as
floret

-

A survey La complete detail of the existing business
and accounting presedure. and the revision of gush
procedure where that shall be necessary.
The design and standardization of forms, documents,
and records that are required in enter to carry en the
revised presedure.
5.

The standardisation of positions, grades and salaries
that are required in order to perform the work under
the revised procedure.
The revision of details in organisation in order to
perform the work under the revised procedure.
The selection and training of personnel required to
perform the work efficiently under the revised procedure.
The selection and standardisation of supplies and
equipment (ether than forms) that are required to
perferm the work under the revised preoedure.

1
surve in co lets dotal of the
isti
bugle as
suet
procedure and the sovietise of such procedure where that shall be 1200011011X7

A survey of this kind means an exhaustive inqUiry In each department
and divislea to ascertain exactly every step in the daily procedure;
it
else means ascertaining the volume of work connected with each stop er
process.
The facts obtained must be recorded by means of charts or written
notes, or both, as a basis of study directed to such revision as may be
advisable. The work of obtaining the facts AS to existing procedure and
the volume of work should be done by the same man who is to attempt the
revisions. In all this work close cooperation with the head of the department or division is essential; in fact it is highly desirable, if
possible, that the controller in charge of operations should take an
portent and leading:part in any revision of procedure. On account of the
close relationship of the procedure of one department or division with that
of another no proposed revision should be adopted and installed until its
effect en all ether departments is ascertained and carefully considered in
all its aspects. Many phases of the prosedure cannot be effectively
fined without close cooperation with other $ederal Reserve Banks.
Msuy
questions will also arise
involve our relations with member
banks; these will require most careful eonsideration.




re-

that will

The design and standardisation of forms: (lova:rents.
reouiyed in order to carry on the revised Drotedure

and records that are

As has been stated, the design and -Standardisation uf forms, doeuments
and records mnstAplism the revision of the prosedure.
This work also
requires sloe° cooperation with other federal Reserve Banks ant a careful
consideration of the requirements and sonvenieneee of member banks in the
case of *external', forms, forms must be designed to meet the requirements
of the most effective procedure that can be established, ant meat be such as
would be easily understood by member-bankao
Their standartisation permits
the control of the cost of printing end ststionery.

The standardization of positions grades and salaries that are reouirei
in order to puerto:lathe wort under the revisit proseture
L.

As has been stated, this project must follow the revision of the procedure.
Until we know exactly what work is to be dons and haw it is to be
performed it is impossible either to determine the grades, qualifications
and number of employes required or to fix salaries fairly,
An effective
standardization of positions, grades and salaries means not only a great
increase in personal efficiency and a higher morale but a considerable
saving in executive labOr0

4
The revision of details in orgnizstIon in order to perform
under the revised procedure

.

the work

The main structure of our organisation has been established and appears

to

the writer to be sound and effective. Until the procedure is
examined and revised where necessary it cannot be said, however,
that the details of our organization have been settled satisfactorily.
If changes in procedure are decided upon it will undoubtedly be found that
changes in the details of organization will be required.

thoroughly

The selection and training of personnel retRittill_magmaljula.
under the revised

rocedure,

Employes cannot be effecItively selected until we know exactly what
work is to be done and how it is to be performed and also what the
qualifications and salaries of the various positions are to be; nor can
the_eduoation and training of personnel be carried on in a practical
manner until procedure is definitized and until positions, grades
and salaries are standardized.

The selection and standardization of su lies and e ui " nt
than forms) -that are required to perform tile work under the reviled prodedure
6

The work of selecting and standardizing suoliie, materials and equipment must follow the revision of procedure. This work means the preparation of specifioations drawn with a complete understanding of the work
that is to be done; it lays the foundation for controlling purchases by a
:3finite plan carried on under centralized authority. It me;,.- the reducof :bsoescence and depreciation to the minimum.




oth

-b-

All departments should be included in the survey
It is not to be understood that the program that is
suggested is intended
to include only those departments that are involved
in accounting work. It
Is proposed that every department of the bank
be investigated.
It is the
wish. of the writer that, if this work is
undertaken, the Auditing Department
be examined with the same thoroughness and
for the same purposes as the other
departments of the bank.
In the case of the.Auditing Department, however,
this one exception should be observed, namely,
that the man assigned to make
the survey be specifically instructed that his findings
must be held strictly
confidential and must be reported solely to the
Chairman of the Board of
Direotors.

THE ORGA41ZATION AND CHARAGT2R oi 1w1".gpmEnisqqau
PROPOSZDCONSTRWTIVE NO44

LN onaR TO UNZPTita

The oonstructive work that has been suggested
constitutes one of the
largest undertakings of its kind. A job of
this sloe and character cannot
be aone by operating officers who at the
same time are charged with supervising the work of departments.
In other words, if the job is to be done
at all the man, or men, who are to do it
must concentrate upon it and do
nothing else. Furthermore, on acoount of
its size and complexity it requires the most experienced and praotical
men that can be obtained.
The constructive work that is proposed
as a project of the operating management. should, however, be carried on
It is suggested that it be
performed under the supervision of a
committee of three senior officers
two of whom should berelifnedot their present
duties and detailed specifically to this work so that they might
coneentrate upon it and have no
other duties until the work is done.
This committee should report
periodically to the Managing Committee.
The only part the Auditing Department should
take in this work would
be to examine and investigate proposed
revisions before they are installed9
in order to determine whether or not they meet
the requirements of safety.
This would mean that the Auditing Department
would have to detail a man to
make these investigations and to teport thereon to
the Acting General Auditor..

The organisation suggested for this work is as follows:
Committee on Procedure
Three members as follows:

Chariman
Ex officio member: Controller of Accounts
Consultant to Committee:I
,4318tants to Oomadttee:




(retained from outside)
(6 men to be selected by the Committee)

6.

Organization Couneel.

(to act in consulting capaoity to
Committee)

Acting General Auditor: (to approve proposed revisions aa.
to safety before installation)

It is essential that the chairman and the second member of the comudttee
be relieved Of all other duties and detailed solely to this work. The
Controller of Accounts should be an ex officio member of the committee but
the surveys or designs of revisions,
should not be required to take
his only duty consisting of attending meetings of the oommittee in order to
examine proposed revisions before their adoption.

part in

The chairman and the second mortar of the committee mast together cormbine the most thorough training and experience in beak praotice and in accounting. It would, of course, be desirable if eaoh.were thoroughly
trained in both these subjects. But this is not essential provided one
bas had most intensive training in banking and the other most complete
At the same time the accountant most have a good
training in accounting.
understanding of banking and the tanker a good understanding of amountings
The man selected for his banking experience mat be one who himself has
marked in every phase of bank operations and who has either been in charge
The
of a large beak or else in charge of large departments in a bank.
Should be one
man who is selected for his qualifications as an accountant
who has bad most thorough training and experience in this field,
should
The records of both men ;elitismlarly
in bank accounting and auditing.
show that they have accomplithed in their respective fields effective
results in important constructive work.

As to the advisability of obtaining as .a member of this committee a
it is the opinion of the writer that this should not
man from outside
is believed that there is ample experience and ability
be necessary;
present officers of the bank to undertake this work and to carry
among the
There are, undoubtedly, advantages in
it to a successful =elusion.
obtainin the Opinion of a mind that has not been concentrated for several
years upon the operations of the bank, but it is thought that the present
If this step is believed to be decase does not require such a step.
sirable it is suggested that the man who to selected be employed as a
°gym:natant rather than as e member of the oommittee.

it

The necessity for a membor of this oommittee bed,* a man of thorough
needs no comment.

and practicalbanking experianoe is so obvious that it

this

The reason that thorough experience in accounting is needed tor
At the date of this report the bank was °ono,
work is easily explained.
posed of 24 departnents of Which 11 were not subdivided and 13 were Domposed of 45 division., making 38 units of which 38 were mgaged in account-

ing en* or work relating to aocounting. This Means that the procedure




ta

7.
of the division' of the bank involves accounting problems and cannot possibly be revised except by men who thoroughly
understand accounting. In oonnectionwith this assertion it is interestingto note that on the date of this report there were 2815 employes in the bank
of whom 2172 were engaged in the divisions that do accounting work or work
that relatee to accounts.
In other words 76 per cent of the employes of
the bank are engaged in accounting work or work relating to the accounts.
in appa!o;:zinately 68 per cent

If this work is undertaken it is highly desirable that similar pre.
be undertaken by the other Federal ReBOITS Banks. With this and
in mind the writer suggested at the Auditors' Conference at Chicago the
desirability of each Federal Reserve Bank making a thorough survey of its
business and accounting prooednre with a view to establishing the safest
4nd most economical procedure that can be devised.
The suggestion was
also offered at this.00nference that each auditor take this matter up with
his governor to ascertain whether it is thoug0 advisable to begin six&
work at this time.
For the purpose of cooperation with other Federal
Reserve Banks, I suggest that an attempt be made to interest the other
banks in this project and that the suggestion be made that the several
Federal Reserve Banks form themselves into groups according to their loostin for the purpose of cooperating in the matter with the mad in view that
at a later date all groups effect a thorough exchange of ideas.
With this pmrpose in mind I suggest that an attempt be made to establish
what might be called an eastern gronp consisting of the banks in Boston,
New York, Philadelphia, Richmond, and possibly Cleveland.

Joao

FO:F0
9/26/20




FEDERAL RESERVE

MISC 3

BANK OF NEW YORK

Date _1k1 23_,. 1920.

( :TICE CORRESPONDENCE
To

Mr. Jay

From

B. M. Grant

Subject

Activities of Government

Securities Sales Department.

The Activities of the Government Securities Sales Department during 1920 have included an
effort (1) to secure a secondary distribution of the outstanding Liberty Bonds and Victory
Notes;
(2) to make saving seem more attractive than spending; (3) to create a permanent
and constant demand for Government securities through specially organized buying units
known as Government Savings Associations; (4) to keep in touch with developments in
Certificates of Indebtedness market, with special reference to their absorption outside
of the banks; (5) to prevent solicitation of the public to part with their Liberty
Bonds and Savings Securities at rates below their market or redemption values, and to
discourage unnecessary sales.
The General Policy has been to educate the public regarding the individual advantages
of saving and sound investment, having in mind that such 7.ork will prepare the way for
any future funding or refunding operations that the Government may find necessary.
Intensive, rather than extensive, rork has been attempted, effort being concentrated
mainly on the development of Savings plans in industrial establishments and in the
school rooms.
The General Method of forming groups of savers has been to enlist the cooperation of
influential leaders, particularly the heads of large business organizations, the Commissioners of Education and school instructors, officials of labor organizations, etc.
there is little inclination ,Dn the part of such influential men and women to
give, individually and actively, of their time and effort to the Savings Movement,
there has been a disposition among them, to assist in a general way.
The method of organizing Government Savings Associations in industrial and connercial
establishments has been (a) to work direct through the larger employers, (b) to enlist
the co-operation of Chambers of Commerce and similar organizations, and (c) to stimulate
through the workers a demand for Government Savings Associations in their respective
shops and offices. From January to October, inclusive, the Government Savings Association plan was introduced in 1,188 establishments employing 342,397 employees.

A special effort has been made since June to have employers revive their partial-payment
machinery for the sale to their employees of Liberty Bonds and Victory Notes at current
market prices. A nation-wide publicity campaign for this purpose was contemplated by
the Secretary of the Treasury, but later was postponed as a matter of expediency.
Public sentiment has undergone a marked change during the past four months as readjustment of economic conditions has been accelerated.
Both employers and employees, for
the first time since the Armistice, are actually desirous of the Government's cooperation
in introducing Savings plans.

1920, the Secretary of the Treasury
states: wdith the approaching maturity of the largest series of War-Savings Certificates,
on January 1, 1923, it is of real importance that the Treasury Savings movement assume
a relatively larger share of the current financing of the Government, and perhaps reduce
to some extent the financing by means of Treasury Certificates of Indebtedness." Sales
of Savings Securities through September in the Second District amounted to $4,34A,855.12
New Securities, a "11 Thrift Stamp and a U5 Treasury Savings Certificate will be offered
in addition to existing securities commencing January 1, 1921. It is expected that the
issuance of these securities will form the technical basis for a re-birth of the entire
Savings movement on a permanent peace-time foundation.
In a letter to 1.".r. Case under date of October 23,




FEDERAL RESERVE

MISC 3

BANK OF NEW YORK

C 7FICE CORRESPONDENCE
To

Er.

From

Date

B. M. Grant

Jay

November 23, 1920.

Subject Activities of Liberty Loan
Association Department

The regular payment period of the Victory Liberty Loan Association expired
on April 10, 1920.
As an accommodation to subcribers, the Association however continued to accept payments and deliver Notes in connection with the
Victory Loan accounts, in the same way the Third and Fourth Loan accounts
were being handled.
On July 29, 1920, 5,601,250 Victory 4-3/4% Notes held for incompleted accounts were sold to the Treasury Department at the prevailing market price
of 95.78.
As in the case of the Third and Fourth Loan Associations sufficient Victory Notes were held by the Association to accommodate belated bookholders who desired to take up their bonds.

On July 30, 1920 the Victory Liberty Loan Association syndicate was dissolved
and balances due 136 participating banks were paid.
Subsequently a letter
was sent to participating banks expressing our appreciation for their splendid services and making a general report of the work accomplished by the
Third, Fourth and Victory Liberty Loan syndicates.
A small staff of clerks at the office of the Association at 44th Street is
continuing to receive payments, deliver bonds and redeem outstmding coupon
books.
The following figures, as of the close of business November 20, 1920,
show the aggregate totals of the Third, Fourth and Victory Loan Associations:




Pieces

Books Sold
Books Redeemed
Bonds Delivered
lncompleted

2,425,521
67,205
2,358,316
2,088,812
269,504

Par Value
$144,478,200
3,891,050
$140,587,150
125,610,300
4 14,976,850

FEDERAL RESERVE BANK
OF NEW YORK

MISC.4.1,1201M4-20

OPFICE CORRESPONDENCE
To

Mr. iicrro Jay

FROM A.

DATE irovanber 23

SUBJEaT

Gilbart

I an attaching the information requested in your memorandum of
1A)vember 22.

I thought tho attached statement might be of interest to the
GOvern0r, as it shows the increase or decrease in personnel of the various
divisions, and also the salaries.




1920

ADMINISTRITION FUNCTION
SERVIOE DEPARTMENT

High standard with regard to selection of employes still being
maintained. Interviewing fifty to sixty applicants daily.
Attached
comparative statement shows increase or decrease in personnel of various
divisions; also salaries, exclusive of extra compensation. Extra commensation paid quarterly-20% on first Q1,500. or part thereof, and participated
in by all officers and employes receiving up to Q5,000. No additional percentage on anounts between Q2,500. and Q5,000.

Under t'ne new monthly anniversary adjustment plan, the relations to
the bank of 2,574 employes have so far been considered, and the 'salaries of
1,229 have been increased Q135,600 since January 1. Average salary of all
anployes now Q1,457. -- Men Q1,747., Women Q1,121.
graphed.

As a moans of identification we have recently had all employes photo-

Protection force increased, and now has reached high state of efficiency through pistol target piactice and military drills. New electric
alarm system, covering entire bank, recently installed.
WoJk of our 'Post office has increased 35% since January 1now
handling 9,000 pieces of ordinary mail and 1,200 pieces of registered mail
daily.
Work of Telegraph Section has increased about 50% since January 1-tele grams now running about 20,000 per month.

On SepteMber 2, 1920, three new divisions were created in the Service
(1) Filing Division (2) Steno craphic Division and (3) Duplicating Division. The latter division comprises all the work of all of our duplicating madhines, addressographs and photostat.
Department .

=QUM, DMAIMENT

Since January 1, 1920, 840 applicants have been examined; 42 were
declined. 9,459 visits have been made to the division by employes for consultation, advice and treatment. 273 applications for leaves of absence have been
presented and investigated. Two classes in corrective exercise work were conducted during the summer with good results. The services of male physicians

will shortly be added.
Food Supply:-

202,048 meals were served to the girls and women of the bank since

January 1 1920, at an average cost per meal of .32521

Q35,924.09 worth of

high-grade groceries taken from stock of cafeteria were sold to employes at
reduced rates since April 1, 1920.



Personnel Servic e

Approximately 512 interviews have been held. with employes on personal
matters affecting their welfare.
Many difficult situations have been investigated and. adjusted..
A number of satisfactory transfers have boon effected..
That the work has been carried on without bias is evidenced by the fact that not
less than twenty-eight resignations or dismissals have been arranged by this
division.
A surnmecr boarding house register was operated during 1920 and over
500 of our employes satisfactorily located.
'Living accoranodations were found
for forty of our employes.
Efta cat ion : -

All °ducat iona 1 work, including the large classes at the .American
Institute of Banking, were turned, over to the Club on January 1, 1920, in
accordance with instructions.
O new work has been undertaken except a course
in public speaking for the of
and. another for chiefs of divis ions.

Training:-

Two classes in adding machine practice were held in the spring as
try-outs for further work.
Additi onal study is now being put upon the work.
Two classes for pages and messengers are now running.
'Studies are being made
to prepare a course for messengers of the city collection divis
Social Servic

Hany things too numerous to mention have boon. engineered under this
head, vthich have served to bring the clerks together, including Saturday afternoon hikes, contributions for general charitable work, managing and directing
a military organ.ization for the boys, supervising dressmaking, banjo, mandolin
and ukeiele classes, the entire 0:Tense of vhich is borne by employes.

On October 22, 1920, clerks of the bank brought 431 articles of their
own lrindwurk for a hobby exhibit
The exhib it was open for one week and entertamed 4,525 visit ors, including representatives of forty up-state and many downtown baniis.
It created Much interest anong the clerks.







iiEDIMAL IEV1 BA1UC
OF 1EV1 YORK

OOLTABATIVE

AiaLysis

OF PAYROLL

October 31, 1919
January

2, 1920

October 31, 1920

0

0

ANALYSIS OF PAYROLL
Function by divisions

October 31, 1919

October 31, 1920

No.

NO.

arm.

January 2, 1920

Amount

Er..

Amount

11:,*

Amount

ACOUUM
Accounting Ref. Files
Accounts other F.11. Bks.
Bookkeeping
Reserve Balance

Tense

19
28
76
5
15
2
10
5
7
5

Insurance
Mach. & Equipment "Repair
Purchasing
Supply
jarehousa
Planning
Total for function
172

17

-

-

-

-

4

6,980

7

11,180

10

16,520

12

19,120

4

5,520
10,020
18,820
292,440

4

5,100
7,500
21,700
291.860

.19

-

3,240
14,200
5,160
8,120
9.920

20,720
43,100
114,700
17,420
31,240

19,960
47,020
121,000
15,960
30,640

16,800
42,320
97,980
9,540
22,000

17

26
79
8

7

9

229.280

24
72
9

19

5

13

182

ADMMISTRATION
Educational (Library)
Service

Personnel

1
9

6

Food Supply (Cafeteria)
interviewing

Adirossograph
Application.6'4

20
6

Record

16
20
2
5
13
3

Files
Float Force
Investigation
Office Messengers
Payroll
Photostat
Porters, Latrons & Elev.
28
Post Office
Protection
76
46
Stenographic
6
Telegraph
12,
Telephone
1
Service
Total for function
314

1,140
7,980
10,620
14,660

4,800
17,820
20,120
1,620
4,800
8,820
3,900

45,280
92,560
58,400
8,800
12,000
3.000

2

,
2580

2

4

7,620
13,820
17,160

.8

20

-

2

a
19
7
16

26
5
11
5
61
31
85
50
6

10
1
347

9

7,260
26,560
31,320
6,420
7,800
9,420
69,840
43,540
116,220
74,080
10,440
11,400
3.500
458.980

12
1
386

188,560

110

183._560

110

8

2,580
14,300
14,900
18,000
3,400
8,340

12
19

18,600

1

2,800

5
10
11

6,180
6,660
20,000

65
31
99
64
7

24,190

-

75,000
44,260
132,800
88,980
12,000
13,800
3.700
510.490

AUDITING
Auditing
Total for function




117
117

164.100
164,100

112
112

218.650
218.650

350

-2-

0

AAALYSIS OF PAM/OLL

Function bv divisions

October 31, 1919

No.

January 2, 1920

No.

No.

anr.

Amount

17179.

uctober 31. 1920

Amount

Firm

Amount

alsH & CUSTODY

Authorities

4
4

Code
Coin & Bullion
Inc. Reg.
Honey
Paying
Receiving
Shipping
Wi n Transfer
Custody
Vault

4

mil

Total

7,240
5,400
6,760
780
241,860
17,600
14,040
28,120
22,140
24,440
10,060
378.440

1

198
7

10
18

17
17
5

for function
fu

COLLECTION
Adjustment
(Day)
Inc. Mail

24

Inc. Mail (Night)
Return Items
Transit
(Day)
Transit 5-12

Transit (Night)
City

Collection
Country Collection

Coupon Collection
Gowrnment Chadic
N.N.J. Cl. House

285

Assn.

Collection (ITight)

Total for function

32,640
55,660
26,980
43,360
287,320
53,580
38,300
73,020
114,340
43,360
31,660
3,880
3.060
807.160

51
23
46
327
59
35
78
115
38

34
2
3
835

211
12
11

4

3,080
5,940
7,140
22,460
305,780
22,380
19,040
24,240
26,560
32,800
10,000

312

48 4.420

359

24

36,780
68,260
46,780
53,540
363,720
72,280
40,980
88,540
161,280
58,080
39,360
4,060
3.840
1.037.500

18
57

4
4
4
15
212
8

11
13
18
19

51
35
45
321
63
31
85
131
43

34
2
3,

868

6

8
10

14

17

25
37
8

/IA

36
301
67
29
86
148

34
24
3
3
850

14,440
10,380
14,900
20,600
310,860
26,260
18,580
29,780
34,880
70,820
17 620
569.120

28,140
-73,060
61,440
44,280
328,460
75,460
43,240
92,870
183,820
45,620
30,840
5,970
4.260
1.010.260

=MAL YESEIVE AGENT
Bank. Examinations
Relations
Note Issues

4

Reports
Reference

1

(Library)

Tabulation
Press e: Circular
Total

for function

FISCAL AGENCY
Coupon Paying
Tota1.2for




6

6

5,420
14,500
4,100
1,000
7,900

13

21,160

15

3
34

6.040
60.920

3,
39

81
81

73 440
73,440

78

4
3

'

4
3

4
4

11,940
13,080
5,020
8,720
5,280
28,100
6.960

79loo

3
69

19,400
18,440
5,080
22,400
11,820
43,980
6.480
127.600

87,660
87,660

68
68

00,680
80,680

9

6

5
12

a
26

(Bank)

function

78

-3-

ANALYSIS OF PAYROLL

FUnctiml -

by divisions

October 31, 1919
Nb.

Emn

January 2, 1920

Nb.

No.
Amount

am.

October 31. 1920

Amount

Amount

FOREIGN ILLATIONS

Foreign

Total for function

6

10,800
10,800

7
7

14.360
14.360

18
42
60

25,060
59.280
84,340

21
54
75

35,940
86,260
122,200

36
58

39,640
61,840
101,480

6
6

11.760
11.760

5
5

12,180
12.180

4
4

8,660
8,660

33
72
105

45,660
100 400
146.060

35
71
106

55,640
115.360
171,000

35

56,060
133,100
189 160

1

2,400
2,400

1

3.000
3.000

1

1

3,200
3 200

19,300
19,300

8
8

17.200
17,200

6

6

6

13.000
13.000

INVESTMENT

Bill
Securities
Total for function

22

LAW

Legal

Total for function

LOAN

Credit
Discount

Total for function

ARCHITECT'S OFFICE

Total for function

1

NEW BUILDING

Total for function

BUFFALO BRANCH

Total for function

116

3

16,340
16.340

4
4

20,653
20.653

2

14.893
14.093

3

2

3

15,893
15,893

88
88

90.500
90,500

93
93

104 100
104,100

121
121

132,550
132.550

311,780
53,940
79,700
49,040

254

317

6,264
500,724

4

369,520
61,300
93,040
54,600
7,440
585,900

482,275
33,840
39,520
53,650
3,600
612,885

ORGANIZATION* COUNSEL'S OFF.8

Total for function

1

81

8

8

FISCAL AGENCY

Government Bond
Custody

Government Deposit

Cert. of inaebt.
War Finance

Total for function




249
31
50
33
4
367

29
46
34
367

18
20

32

2
389

-4-

ANALYSIS OF PAYROLL
2unctiOn by divisions

October 31, 1919
No.
arm

January 2, 1920

am).

Amount

Gol/MELTIIT LOIN

Administration

Partial Papent #5
Partial Payment :?4

Partial Payment 43
War 3av.Gov.Sec. Sales
Cert. of indebt. Sales
Total for function

54
140
3

4
175
1

377

1920

No.

No.

Amount

October 31

lamp.

Amount

')9
.....
12

33,360
19,200

4
85

70,840
166,480
4,920
6,420
152,340

-

38

75,780

-

-

-

-

264

401 000

72

128,340

25
2

314,600
15,000
22,500
20,500
372,600

29
3

364,000
18,400
22,500
20,500
425,400

71,760
162,670
4,140
5,460
256,010
7,200
507,240

51
121
3

309,700
12,000
12,000
20,500
354,200

OFFICERS

Bank
Buffalo
Fiscal Agency
Government Loan
Total for. function

25
2
,)

3
32

3
3

3Z

3
3

38

RECAPITULATION
2053

2,665,573

2168

3,300,193

2249

3,529,253

90

102,500

96

119,100

124

150,950

FISCAL AGENCY

369

512,724

370

608,400

GOIMINrETIT LOAN

380

527,740

267

421,500

75

148,840

GRAND TOTAL

2892

3,808,537

2900

4,449,193

2840

4,464,428

BANK

BUFFALO BRANCH




635,385

FEDERAL RESERVE

BANK OF NEW YORK

Date

C'FICE CORRESPONDENCE
To
From

November 25, 1920.

Subject:

Mr. Jay

L. H. Hendricks

Replying to your memorandum of the 22 instant regarding the activities of the
function under my direction, in practically all of its divisions an increased amount of work
has been handled.

Due largely to the activities of the Member Banks Relations Department,

more banks are using our facilities than ever before. At the present time there are 863 employes in the Collection Function.

Theliedemption and Return Items, Government Check and Cit

Collection departments decreased their forces; all other divisions show an increase.

Cost
per item

Jan.
Oct.

85
100

Number
of items
821,401
1,010,661

Evening and Night Forces Jan.
Oct.

383
403

4,450,374

.01

5,111,714

.008

Jan.
Oct.

44

91,390
116,591

.055
.042

Jan.
Oct.

22
21

Jan.
Oct.

34
24

786,265
1,020,041

.004

Jan.
CITY COLLECTION DIVISION--includes messengers,
Oct.
N.Y.Clearing House, Bronx and Brooklyn clearing
arrangements. In the last ten months the approximate total number of items going through this
department was 2,657,833 amounting to $3,866,633,537.

91

221,144
278,315

.043
.032

Jan.
Feb.

125
152

INCOMING MAIL DIVISION
An average of 12,000 pieces of mail daily with
approximately 17,000 enclosures (not individual
checks, but letters and other enclosures.)
TRANSIT DEPARTMENT - Day

REDEMPTION AND RETURN ITEMS DIVISION
ADJUSTMENT DIVISION. The work of this department is of such a nature that any statistics
would mean practically nothing. It is proposed
shortly to have all the adjustments in the entire
bank go through this department.

GOVERNMENT CHECK DIVISION

OUNTRY _C_OLLECTION

Employes

36

89

87,115

.015
.011

.002

.19

.316**
56,952
*The apparent discrepancy is due to the fact that a large number of items received
in January were checks from the Treasurer of the U. S. These went through the N.Y.
Clearing Houfletelad our Transit Department at a low cost, while the October items
were straight/draI4ts and other non-cash items. Of the items handled in January,
only 39,908 were straight collection items.

Formerly the protesting of unpaid items was done by some of our clerks, but on
July 1 this work was turned over to Mr. Curtis.
On May

19, the Northern New Jersey Clearing House was started with 17 members, all

situated in Hudson County.




This arrangement still continues in force.

Clearings take place each morning at 35 Liberty Street at ten

MISC 3

FEDERAL RESERVE

BANK OF NEW YORK

C'FICE CORRESPONDENCE
To

Mr. Jny

From

Date

L. H. Hendricks

Subject.:

o'clock, and the arrangement has proved very successful.

We feel that as soon as we are

able to get some of the clearing houses throughout the country,-for instance, in Chicago,to place on their discretionary list checks drawn upon members of the Northern New Jersey

Clearing House, it will be an easy matter to get most of the banks in Newark and other
nearby cities to join.

There is now in operation, in addition to the above clearing house,

a clearing

arrangement with all banks and trust companies situated above 59 Street ,and another one

with those banks situated in Brooklyn.
Arrangements are under way for the banks in Herkimer County to exchange checks
on each other direct and settle balances on our books the following day; also, a. similar
scheme for Delaware County.

LHH EL




FEDERAL RESERVE

IVIISC 3

BANK OF NEW YORK

Date 170.- s.-

;FICE CORRESPONDENCE
Jay
From

Subjecr_LOAN DEPARTMENT'S STATISTICS,

FT_ P. Autnnnk

FOR q07113N0R STRONa

At the beginning of this year our rediscounts and advances to member banks

amounted to 0811,723,049 of which 0571,821,843 was against United States Government
obligations and 0239,901,206 unsecured.

We had 373 borrowing banks at that time made up of 327 country banks and
46 New York City banks.

On November 1, 1920 our rediscounts and advances to member

amounted to 01,035,794,066,81, which was a new high line.
0529,129,429.27
fbanks

Of this amount

was against Government obligations and 0506,664,637.54 unsecured.

283 member banks were on our books as of this date made up of 240 country
banks and 43 New York City banks.

For the past several months our country banks

have been steadily liquidating their borrowings with us,

313 country banks on May 31,

1920, were borrowing 0126,223,26165, while on November 25, 1920, 229 country banks
were borrowing V.18,800,979.52.

While the reduction in amount is not substantial,

still it is interesting to note that 84 banks went out of our debt in this period.
Using the above dates 47 New York City were borrowing 0615,319,876.02 on May 31, 1920,

while on Nov.25, 1920, 37 New York City banks were borrowing 0794,120,738.67.
While there has been some liquidation in the borrowings of our country banks
the borrowings of our New York City banks have been extremely heavy of late.

The

following twenty banks were our largest borrowers at the close of business November 24
1920, in New York City:

National City Bank
s;117,760,000.
Guaranty Trust Co.
113,096,000.
Chase National Bank
94,950,000.
National Bk. of Commerce
69,401,000.
First National Bank
65,000,000.
Mechanics & Metals Nat'l.
59,000,000.
Bankers Trust C4mpany
55,000,000.
National Park Bank
37,596,000.
Equitable Trust Company
26,650,000.
American Exchange Nat'l
18,681,000.
Bank



Irving National Bank
Liberty National Bank
Chemical National Bank
New York Trust Company
Bank of the Manhattan Co.
Central Union Trust Co.
Importers & Traders Nat'l
Brooklyn Trust Company
Seaboard National Bank
Coal & Iron National Bank

018,000,000.
16,900,000.
11,620,000.
11,190,000.
11,000,000.
8,000,000.
7,037,000.
5,059,000.
5,000,000.
3,729,000.

FEDERAL RESERVE

M1SC 3

BANK OF NEW YORK

Date _NOvambar_21920-

,..FFICE CORRESPONDENCE
To
From

Subject:I-Alia DEPARTMENT'S STATISTICS

Mr. Jny
H. P. Aumack

FOR GOVERNOR SLRONG

-2-

Listed below are figures showing the commercial paper indebtedness of member
banks for the last six months as at the close of business each month:

$221,594,374,
240,527,920.
273,021,733,
378,494,651,
384,260,766,
461,657,929,

Lay 31, 1920
June 30, 1920

July 31, 1920

Aug, 31, 1920
Sept, 30, 1920
Oct, 31, 1920

It will be seen that we have been receiving more commercial paper for rediscount each month.since

May

31, 1920,

Our rediscounts of commercial paper for

members continuedto grow larger and on November 12 this figure reached

$507,355,657,

a new high mark,

During the past monthisix uptown New York City banks went out of our debt
while others were off our books for short periods.
indebtedness to us substantially.

Several others have reduced their

This liquidation we understand has been due to the

paying of loans by customers of these banks occasioned no doubt by the turning point of
high prices.

This change brought about sales of merchandise in

various lines

and with

the business outlook rather uncertain these merchants have been buying in much smaller
quantities than formerly,




MISC3A-90M1-20

FEDERAL RESERVE BANK
OF NEW YORK

OF-ICE CORRESPONDENCE
To

Mr. Jay

FROM

0A,-E_Iiovember_

1920-

SUBJECT. Refusal_ofaAmerican_Bank.s__to_flonor

E. R. Kenzel

Bills Drawn Under Their Confirmed Credits.

This is a subject which, while not spoken of openly, is of great concern to
a number of our accepting banks and also to holders of bills bought in foreign markets
or remitted to them by foreign clients.
From all of the information that I have been able to gather in respect of it,

it is not by any means a onesided question.

In some few instances, accepting banks may

not have realized their absolute obligation to accept bills when drawn in conformity with
the terms of their credit, and in a few instances, they may have declined acceptances in
the hope of saving loss either to themselves or their importing customers.

In one or two

cases, I have heard that circumstances pointed to collusion between the bank and its
importer to avoid loss, but by far the great majority of cases that I have heard of have

arisen either from fraud or sharp practice on the part of the exporter or the carelessness
of the negotiator of bills in not seeing that they were drawn in strict conformity with
the terms of credit, so that the drawee bank would incur grave danger of liabilities and
damage if it accepted such bills and could not hold the taker of credit.

The epidemic of sharp practice on the part of exporters, particularly in sugars
and very largely in Java, has caused importers to endeavor, by every means possible to

protect themselves and in many cases they have sought and obtained injunctions temporarily
restraining banks from accepting bills.
I feel that only in rare and isolated cases have banks been a willing party to
such action but the extent of it could only be developed through investigation of each and
every case.

As you are aware, the American Acceptance Council is about to publish an editorial, written by Mr. Kent, which supplements the references made in his speech at the
A. B. A. conference at Washington in October, and I had a long talk with him yesterday
about the whole thing, and his views and experience coincided with those stated above.



m4SC.3.1-00M-1-20

I FEDERAL RESERVE BANK
OF NEW YORK

Or9CE CORRESPONDENCE
TO

DATE

Mr. Jay

FROM

November 23, 1920.

SUBJECT.

E. R. Kenzel

-2-

In the discussions of the Publicity Committee of the American Acceptance
Council, in reference to the policy of the Council in treating this subject, Mr.

Rovensky stated that his bank had had no experience of non-acceptance of any bills
handled by them and seemed quite surprised to learn of the prevalence of the trouble,
having heard of only a few instances and no specific cases, and he rather deplored

the apparent necessity for washing dirty linen in public but agreed with the other
members of the Committee when the facts were related by Mr. Kent, without, of course,
stating any names, that the matter must be dealt with.

Mr. Warburg felt so strongly that he urged at first that a bank which deout

dined to honor its letter of credit with/undoubted just cause, should be denied the
privilege to accept, but as that privilege is statutory that would seem not a tenable
position for the Council to take, and it was, therefore, determined to suggest in the
editorial that action be taken by the Federal Reserve Board or the Federal reserTe
banks toward the non-purchase of acceptances of any bank proved a welsher.

The whole matter is so important to the future standing of the dollar bill
and American credit in world markets that I would recommend that either each Federal
reserve bank in its own district cause an investigation to be made, or that the Federal

Reserve Board direct such an investigation by the reserve banks in each district as
would develop the evidence and circumstances in every case where acceptance of bills
drawn under a bank's confirmed credit has been refused for any cause.
It is an exceedingly delicate subject and probably could best be handled by

a questionnaire, to which answers would be required under the provisions of law which
permit examinations of member banks to be made by the Federal reserve banks, and as
doubtless every bank would endeavor to make the best case possible for itself, I would



MiSC.3.1-901A-1-20

FEDERAL RESERVE BANK
OF NEW YORK

Or7ICE CORRESPONDENCE
TO

FROM

DATE

Mr. Jay

November 25,

laaa.

SUBJECT

E. R. Kenzel

-3-

suggest that the questionnaire require also that each bank relate the circumstances

under which bills held by them were declined, which would provide a check-up on the
reports of declinations from the drawee banks.
If these suggestions are approved, I would suggest further that Mr.

Harrison and myself draw up a form of questionnaire for further consideration by the
officers of this bank and possibly by the Board.




1,90M4,0

FEDERAL RESERVE BANK
OF NEW YORK

NCE

DATE

SUBJECT,

FROM

R. G. Reilah

(/2L-EOLS:21:43

rk,t

Ase140

November_ 23, 1920-

Salient Features

of Acaompanying Report_

RESMIVE PERCENTAGES
Our reserve percentage on November 19, 1920, after allowing for rediscounting and for
acceptances sold, was 40.0 per cent. If there had been no transactions like these, our
reserve percentage would have been 37.9 per cent.
The twelve Federal Reserve Banks, with their actual and adjusted reserve percentages,
are as follows:

Actual
Reserve
Percentages
1.
2.
3.
4.
5.
6.
7.
8.
9.

10.
11.
12.

Boston
New York

Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Yinneapolis
Kansas City
Dallas
San Francisco

Change of Actual
Reserve Percentages
from Previous week

Percentages
after
Rediscounting

Order
According to
Actual Reserve
Percentages

51.6
40.0

2

49.4
56.0
43.2

3

10

7.7
2.5

40.1
40.2
40.8
39.0
40.9
41.3

1.4

49.5

62.4
37.9
56.6
79.6
38.0
22.0
40.2
32.4

4.3
3.3
4.4
0.2
0.4
2.0

24.8
18.3
49.5

2.4
0.3

7

1
6
5

8
11
9
12
4

Boston, Philadelphia and Cleveland are lending banks. Chicago and San Francisco are
neither lending nor borrowing. The other seven are borrowing banks. Kansas City made the
greatest gain with 7.7 per cent. Philadelphia made the greatest loss with 4.4 per cent.
The amount of our rediscounting with other Federal Reserve Banks is $14,750,000.

WEEKLY REPORTING UMBER BANES OF THE COUNTRY
All the loans of the New York City reporting banks decreased from January 2 to
November 12, $347,000,000. Those of the balance et the country increased $476,000,000, making
a total increase for the entire country of $129,000,000. For the four weeks ended November 12,
there was a decrease of $244,000,000 in the city, $202,000,000 in the balance of the country
and 4p446,000,000 in the entire country. For the week ended November 12, there was a decrease
of $42,000,000 in the city, $72,000,000 in the balance of the country and $114,000,000 in the
entire country.
On November 12, all the loans for New York City reached a new low point.
The loans on stocks 4nd bonds, Which are included in all loans, decreased in New York City
2 to November 12, $291,000,000, in the balance of the country $51,000,000 and in
For the four weeks ended November 12, there was a decrease
the entire country$342,000,000
of $109,000,000 in the city, $4,000,000 in the balance of the country and $113,000,000 in the
entire country. For the week ended November 12, there was a decrease of $35,000,000 in the
city, $3,000,000 in the balance of the country and $38,000,000 in the entire country.

from January




18

1-90MA-20
;

FEDERAL RESERVE BANK
OF NEW YORK

OFPICE CORRESPONDENCE

DATE

November 23, 1920.

SUBJECT:

TO

-2-

FROM

The deposits of

the New York City Reporting Banks decreased $651,000,000 from January 2
to November 12, but in the balance of the country there was an increase of $40,000,000,
making a net decrease for the entire country of $611,000,000. For the four weeks ended
November 12, there was a decrease in the city of $320,000,000, 4188,000,000 in the balance
of the country, and 4508,000,000 in the entire country. For the week ended November 12,
there was a decrease of $20,000,000 in the city, but in the balance of the country there was
an increase of $25,000,000, making the total increase for the entire country $5,000,000.
The deposits of the Weekly Reporting Member Banks of New York City stand on November 12
at the lowest point of the year.
DAILY REPORTING BANES

Net Deposits Increased in Week ending November 20
Borrowings of City Banks from Federal Reserve Bank Decreased in Week
Street Loans Decreased in Week
Balances of Out-of-town Correspondents Decreased in Week
Street Loans of Out-of-town Correspondents Decreased in Week

$36,063,000
49,902,000
21,979,000
11,937,000
31,916,000

GOLD IMPORTS AND EXPORTS OF THE UNITED STATES

From January 1 to October 31, 1920 total Imports of Gold equalled
n
is
9*
*.
n
" Exports of Gold equalled
Excess of Imports over Exports




**4.1,*****

$315,519,000
285,263,000
30,256,000

OM-I-20

FEDERAL RESERVE BANK
OF NEW YORK

ACE CORRESPONDENCE

November 23, 1920

DATE

SUBJECT.

TO

St reet Loans, Borrowings

and

Deposits of Daily Reporting

ROM

Banks.

.000 Omitt ed
Net Deposits
City Banks

City Banks.
Borrowings
from
F. R. Bank

Street Loans
City Banks

Street Loans

i Balance
Out-of-town
Correspondents

Out-of-.town
C orre.spondent st.

Oct. 24
1918 High Point

NR

1918 Low Point

N P.

NR

1919 High

N R

N R

Point

N R

July 30

463 608
Nov. 1
847,776

647 101

Feb. 15
148
Nov. 1:

Jan. 15

749,373

868,670

-

4

Au_ st

2
2

Se tember

MIUMAIIIII

1

October

1

November

1

November

4
4

3 63

4

4

20

-----==========

Point
Low

41

4Lj.L159

917091

4, 630, 749

800,592
_

Jan. 2

High

684,909

214,473

.820 436
740 73

634 566
..11 323

1111141010351111

720

'

4
4
41

Nov.-------

1

917,991
June 17

5,372,453
Nov. 13

0.

4

44 37

442

.11

734 40

120

24

9

7

670 74

96

0

-

Jan. 2

.714 7r6

7

4
0 220
IIMME11111111111111F- 0 2
4
1 63
11111MISMIIII
IEJIMIISAIIII
.34 O.

Ma,

June

661

30

May 29

503,716

N R

3 243
07

o

March

Jul

$234,924

Feb. 19

-------2.2.22
Aril

Dee, 24

$854,302

Apr.-15

1919 Low Point

Janua
Februa

Jan. 15

$639,912

NR

2

.

373 302

.

07:

.1 173
27 4.

tg;

11111111KIMEMI

.7

.12 9:4

: 4.7
22 02

921

1.11.09

39 4, 913

325,899

559,668
__,====...========

==========

Jan, 5

Feb. 3

726, 560

683,186

- -- --.

Sept. 9

June 30

279
50279

264
----35,-=:-._

741,704

138,835

388,857

197,014

34,877

71,579

36,063

49,902

21,979

11,937

31, 91 6

from Now Point
Decrease °v. Al

36,063

298,313

635

5,216

59 198

from High Point

741,704

117,399

400, 661

238,397

123,518

4,594, 68 6
Point
---======----===
----====
Change for Year

Jan. 2 . Nov. 20

Change for Month

Oct. 20 .. Nov. 20
Change for Week

Nov. 13 - Nov. 2.
Increase Nov. 20

============

500, 470

74,898

8 246

# Included in Net Deposits City Banks.
From January 2 to November 20 $nclusive, the net deposits of the city
This decline was met in whole or in part as follows;




Decrease in Street Loans
Increase in Borrowings from
Decrease in Other Assets

F. R. Bank

banks

declined $741,704

$388,857
138,835
491, 682

$741,704

1,410M-1-20

MI

I FEDERAL RESERVE BANK
OF NEW YORK

40,

OFFICE CORRESPONDENCE

DATE

SUBJECT

TO

November 23, 1920

Loans, Deposits and Street Loans
of Weekly Reporting Member Banks.

FROM

The following table shows the amount of all loans and also the amount of loans on stocks
and bonds of the Weekly Reporting Member Banks of the country. The figures for the seventy-two
Weekly Reporting Member Banks of New York City are contrasted with those of the rest of the banks
of the country and a total is shown.
(The seventy-two Weekly Reporting Member Banks are not the
same as the Daily Reporting Banks, although forty-nine of the latter are among the seventy-two
banks.) The high and low points are indicated in each case and also the net change for the year,
In addition, the increase from the low point and the decrease from the
the month and the week,
high point are shown.
WEEKLY REPORTING MEMBER BANKS
As reported by Washington)
000 Omitted
1k ALL LOANS
LOANS ON STOCKS MD BONDS
===Date

NewYorkCity

Bal.ofCountry-

--,.....7.--

No. Amount
Ell Oct.10

No.

22122a h Point lal

6 00*

1919 Low Point

5, 514, 713

Februar
March

2

Amount

No
+

1111 Dec. 26
7 41;71'7 16 20 q

Dec. 2.

June 2

Amount

Total

Bal.ofCountry
Amount

No.

Oct. 31

No.

Amount
Dec. 2.

Dec. 2.

71 1 45 617 726 1 7 248

3 300 373
ug.
'llgo. '
1, 635,634 774 2,915, 491

GO.

une

1, 256,169

9, 221, 649 IkFJ 14, 675, 264

32

3

.4

2

Va

0: .

June

4

Jul

2

August
SG .tomber

73
Efil

.

FiEll

October

1

Ma

107

Emplguargill 02
VM

8 1

712 o78 Fl

04 imaglimmummjim
11017 3.8

*4: B1111 327 440

ail maggilioni ii 32

oi bui i

o

32

oo 739 MoiasgitEmMai 74

3 363 Fixammumigi6 2r O.2
00 Eill 11 20 000 Eall6 12 00

04 Fal 11
Dig:gpion 20 -4 KEEI1 144 34
. Lim.
, 2 2,44 751 11

12

High

Point

92

:

741

2

1

2

213

2

Point
Change for Year

Jan.2

Jan. 2

5,586,052

10, 775, 851

16, 708, 586

1

mg 2

88 12 798 339o,646
020 819.8

-8-04

33o1

979

1 179 503 liffll 1 994 707 00 3,174,210
302 811 31 8 .43
1 19 41 WM 1 9
9.2 34
3 13- 2:

immungu

IjJ1 929

5 .12 3 111 03
742 1 933 104 . 3 1192.4LL
1 094 2r3 743 1 91 10
8,01V5-6
.

71 1 111 4 S mumpages] 3 044 120
1 17 04 749 1 924 2 e
3 099 309
2 1.J.410.QQ
1
1 44114 ;2 3.g:7.514

Fr
lug.1 0Aug.i3
July lb

1,085, 346

I, 912, 005

2,997,589

71111111M

Jan. 2 - Nov.12
Che.ngr for Month

20

2.1 0 3.

2 5,586,052 753 11,251,620 825 16,837,672 72 1,111,751 753 1,937,267 825 3,049,018
------15 - Jan, 2
Jan, 2
Oct. 15
Oct.
Jan. 2
5,932,735
11,454,005
1 4o2 524
220,898
3 390 646
17,283,996
Nov.12

Lots

1 402

86

16 708
1

11

001

November j
November

NewYorkCity

.

6

A.ril

No.

Amount

77 726 10

July

DA
Januar

Total

46 68

4

69

12

086

290 769

50,859

341,628

Nov. 12

243,939

446,324

3,761

Change for Week
Nov. 5 w Nov.12

113,239

42,393

114 664

3,047

3896

129 086

25 262

51 429

0 et. 1

Increase Nov. 12
from Low Point

Decrease . °v. 2
from High Point
34 :
_2Q2k3a5
A Includes rediscounts with Federal Reserve

4461324

Z22x769

83.6

341.628

Banks and investments in government securities.

# Included in all loans.
1 The high and low points for All Loans during 1919 cover the period from June 27 to December
+ The high and low points for Loans on Stocks and Bonds during 1919 cover the period from

August 15 to December



31.

31.

I FEDERAL RESERVE BANK
OF NEW YORK

OFFICE

DATENovember 23, 1920

JRRESPONDENCE

Net Deposits of Weekly

SUBJECT

TO

.3.

FROM

Reporting Member Ranks.

NET DEPOSITS OF WEEKLY REPORTING MEMBER BANKS

(As reported by Washington)
1000 Omitted
New York Cit

Date
----r191

-Higt:tIPoii--t

No.

No.

70

1918 Law Point
Feb. 1 Dec. 31

8

1919 Low Point

Igsi--2

January

February

6

Aril

4 796 21
Mch. 15
4 416 0

680
618

_4004461_

750

6 168 882
Dec. 19
26 328

796
0
0

8

Amount

Nov. 1
12 104 471
July 19
252
le
Dec. 19
14 136 367

Feb. 7
11,985,328

1

064 69

33

18 82

804

14 572 2
14 177 91

228 02

401 166

1 1 089
9 113 216

8o8

14 146 .21

1

1

4

422

RM. 3
7.307069

Feb. 7

65

4

7

Feb. 1
725

43

70

No.

Amount

Nov. 1

Sept. 19

73

March

Amount

Nov.

Feb. 1 - Dec. 31

1919 High ,Point

Total

Bal. of Countr

3

811

14 306 0

9 127 019

810

14 171

798

Ma

2

100

2

2

044

2

38

094

1

38

161 26

812

14 25

46

June

4

4

July

2

72

5,123,240

742

9,171,112

814

14,294,352

Au' st

6

2

4,945,377

743

9,151,120

815

14,096,697

71

4 84- 4 1

48

232 420

81

14 081 871

Se t embe r

580

October

1

71

519221396

749

9,2j6,576

820

14,298,972

November

5

72

751

22.186,573

823

13,956,311

November 12

72

4,769,738
4,749,903

753

9,211,507

825

13,961,410

Hi h Point
Low Point
Change f oF-Year

Jan. 2 - Nov. 12

Tan. 7

5 401 166

'ov. 12
1049,903

Oct. 15

400 02

May

:

9,109,325_

Jan.CC

14 62* 816
Nov. 5
13,156,311

651,263

40,418

610,845

319,633

188,585

508 218

19,835

242934

5,029

Change for Month

Oct. 15 - Nov. 12
Change for Week

Nov. 5 - Nov. 12
Increase Nov. 12
from Law Point

0

Decrease Nov. n
from High Point



651,263

102.112
188,585

54211.______

668,406

1.0M4,0

RESERVE BANK
OF
FEDERALNEW YORK

OFFICE CORRESPONDENCE

DATF

Reserve Percentages of the lwelve

SUBJECT .

TO

Federal Reserve Districts.

-4-

FROM

November 23, 1920

COMPARISON OF THE RESERVE PERCENTAGES OF 'THE

TWELVE FEDERAL RESERVE DISTRIZL

__Date___

,

A

117r8 High Point
Aug. 9 . Dec. 31
1918

Low point

Aug. 2 - Dec. 31
1919 High Point
1919

Low Point

D

C

Dec 2 Aug23 Nov13 Aug23 Sep12 Nov22 Augi:
67. 6
70.5 75.9 68. 7 54.4 62. 6 59.1

Nov 6 Oct10 Aug23 Nov14 Dec16 Oct25 Nova
4',3
Mchl

43.0

2

43 7

Jan. .. Aug.

Point.

Jan2
74.3 68.6 72.4
Dec29 Mch22 Dec26
39.4
41. 2
49. 3

Low Point

====.---

November 19

25
43.9
8

1
2
21

29

49.6

36. 6

10

19
40.0

57.7
18

51.3

53.1

38.3

38.5

38.0

45.0
30

38. 7

38.8

42.3
11
38.3

0
40.5
18
38.9

54.9
16
48.7

43.4
16
39.0

9

from Low

Point

Decrease Nov. 19
from High Point

0.5
11.

7.6

2.1

0.6

2.6

0.8

0

0.2

1,0

0.4

1.4

0.5

?.6 1.6
15.3 19.3 13.9

1.0

2.9

3.2

124 3

12.2
5.3

18.0

4.

1.3

1.7

0.8

4.5

The net exports of gold from

4.2
the

2.5

0.1




0.2

11

_

41.8
4
38.9

6

44.7

6

42.9

41.3 49.5 44.1
======.-.-_==:_-==

Federal Reserve Bank of New York from January

November 20, 1920 inclusive, were 405,749,500.

17
50.0

0.4

3.1

-

4. 3

40.5

43.7
16
42.5
38.
19
44.1

6.0
0.4

6.0

14.9 11.

2

3.1

7.9

5.3

39. 2

47.6

7.3

8. 4

==

0.)

38.0

42.1
25

3. 3

40.8

1.7

12'

1. 6

40.2

5'

for Week

Nov. 12 .. Nov. 19
Increase Nov. 19

54.0 ' 45.8
June3 Apr29 Mchl;
38.1 38.0 41.1
1
7
43.1 46.7 44.3
27
29
3
42.5
40.1
38, 7

59.3

40.9

56.0

11111

43.

0 Jan

39.0

49.4
-=== ---

1.

2.6

Jun

5

43.4
19

Jan

38.6

6

40.0

20

48. 6

4
44.3
11
38.9

39.0

51.6

23
38. 4

40.6

3

50.0

35.4

42.1

1

40.9

1

42.2

58.5

53.1
6

29

7

48.4

47. 2

Jan. 2 - Nov. 1*

54.7

44.1
19
40.8

10 '

fa.

20

10

2

44. 2

38.6
15
44,3

2

53.6
15
47.9

40. 6

Jan 7 Mch20

e.--4=

Aug

Mch31 Aug17 Aug24 Apr15

a

44.5

48.0

46.8

_

38.2 46.3 49.1
Nov
62.3 59.7
60.2 54.2
Dec17 Jun18 Nov 1 Dec3(
39.0 37.5 45.5 44.5
42.8

59.5

29

1
41.1
13

57.3

anl

s

53.2
15

52.8

35. 6

19

Change for Year

Change for Month
Oct. 1, Nov. 3*

46. 2

J8n13 Jen31 Mch15
34.7 34,5 44.1

Jan. .. Aug.

September
High Point
September
Low Point
October
High Point
October
Low Point
November
High Point
November
Low Point

38.7 41.0 481
Apr22 Aug25 Jul27
44.5 53.3 57.2

*. 2

Fe

_....

Janua

Change

B

Aug26 Aug10 Aug23 Aug23 Oct24 Aug23
67.9
64.0
69.2 69.9 60. 4 56.5
Oct30 Dec 30 Nov21 Dec17 Aug10 Dec31
.6
46.0 44.6
40.
0
3
Aug14 Sepl Jana) May20
56.1 56.3 46.8 66.5
Nov12 Dec30 June3 Nov25
37.5 38.7 38.8 43.0

---12m
High

Rich,.Atlan.. Chi- St, Lai-nue-Kansas
ta cago Louis a.olis_gity DallaS r'ren.,.Tota.
L
I
J
K
E
G
F

New

Boston York Phila.Cleye.mond

2,

11.

4.5
1920 to

3.0

MI9C.3.1-DOM-1-20

I FEDERAL RESERVE BANK
OF NEW YORK

Or-710E CORRESPONDENCE
TO

Governor Strong

FROM

13_

June 30. 1920

DATE

SUBJECT .Di_V&E.1-1nAlarket

ofHp

During the last three months the discount market has passed through
alternating states of depression and activity, but has shown, however, a decidedly broadening tendency.

New bills have been coming into the market in good volume

and have as a rule been in excess of the demand, with the exception of prime New
York member bank bills for which there has been an excellent steady demand and
which the dealers have been able to place without difficulty.

A good portion of

bills have been coming from out of town from various sections of the country but
have not been very well absorbed and I understand that the dealers have been able
at times to sell even the primest out of town bills only at rates 1/8 per cent
higher than those at which they have been selling the best New York names.
The largest proportion of the bills that have been drawn both in and out
of town have been in connection with import and export transactions with a noticeable predominance of acceptances against sugar, cotton, grain, tobacco, wool, rubber
and leather.

During the period under review there has been a large renewed influx

of bills drawn by the packers.

The amount of this character of paper during the

early part of the year was in considerably decreased volume but there have recently been large blocks coming into the market.
while only fair, has been encouraging.

The demand for bills on the whole,

The dealers informed me that they have added

many new customers to their list of buyers, noticeably among the small banks in all
sections of the country as well as among the savings banks, commercial houses and
individuals who in the majority of cases hold the bills until maturity.

Of the

$50,000,000 Belgian credit acceptances, $10,000,000 of the fourth renewals matured
on June 7 and $40,000,000 matured to-day.

None of these will be renewed and presum-

ably are being retired out of the proceeds of the recent Belgian loan.




9C.3.1 -90M-1-20

I FEDERAL RESERVE BANK
OF NEW YORK

9CE CORRESPONDENCE
TO

FROM

June 30, 1920

DATE

Governor Strong

SUBJECT

Discount Market

R. M. O'Hara
-2-

The aggregate amount of bills which the dealers were carrying in their
portfolios at the beginning of April was approximately $45,000,000 and at the
present time amount to about $55,000,000.

Considering general conditions, they

have been able to secure a fairly liberal amount of money from the market at from
5 1/2 to 6 per cent, but as the volume of money which they have been able to obtain
from that source has not been in a steady and sufficient volume to meet their

reasonable requirements, we have frequently considered it necessary to assist them
by purchasing bills from them under their agreement to repurchase them from us
within 15 days.

I attach hereto a statement showing the dealers' buying and selling rates,
our rediscount and open market purchase rates, call money renewal rates and the
rates for prime commercial paper during the last three months.

It will no doubt

be noticed in this statement that our purchase rates have been slightly below the
open market rates during the period and that when our rediscount rates were recently advanced we made no change in our purchase rates.

Were the market in a normal

and healthy condition with a good general demand for bills, our purchase rates

mi0at

of course be properly considered too low, but we have had in mind the value of our
maintaining as stable rates as possible and experience has shown that each time
that we have advanced our rates the dealers have immediately advanced theirs, the
banks have ceased buying for several days or a week and the whole market has been
seriously disturbed.

We have, therefore, been very reluctant to raise our purchase

rate since the third week in May and we have been hopeful that the development of
a better market would tend to ease the dealers' rates down to a level with or below,
our present rates.

I might mention, however, that our purchase rates indicated on

this statement are minimums for the very choicest bills and we are not at all slow




MISC.3.1.0M-1-20

FEDERAL RESERVE BANK
OF NEW YORK

Or-c10E CORRESPONDENCE

DATE

TO___Cravarnar_a_trome___
FROM

SUBJECTD1

June 30, 1920

scount Market

R. M. O'Hara
-3-

to shade these rates up materially and more in line with the open market on bills
which are not thoroughly prime.

We have also been following the situation closely

to avoid buying more bills, particularly from the dealers, than are absolutely
necessary for us to take in order to properly support the market.

We have been tak-

ing practically no bills from the dealers maturing beyond about 70 days except
those drawn abroad covering importations into this country; and we have been watching closely the offerings to us by the banks with

a view to deternining Whether or

not they are taking advantage of our lower rates as distinguished from those of the
'

open market.

There has recently, however, been little indication that the situation

is being abused.

I might also mention that we are buying no 90's at less than 6%

except "salt water" bills which we have been buying at 5 7/8% for the choicest names.
At the beginning of this year our total portfolio was approximately
0203,000,000.

It declined to about 0182,000,000 at the beginning of April and at

the close of business to-day amounted to $192,000,000.

While our portfolio has shown

an increase during the last three months, it is interesting to note that the aggregate amount held in the System declined from $574,000,000 at

the

beginning of the

year to $424,000,000 three months ago and to approximately 3400,000,000 at the
present time.

This reflects the fact that since last January our distribution of

bills to the System has been much lighter than last year.

During 1919 our gross

purchases amounted to approximately $1,950,000,000 of which we allotted to certain
other Federal reserve banks about $739,000,000 and out of approximately 01,211,000,000

which we retained for our own account we made special sales from our portfolio to
certain other Federal reserve banks principally San Francisco, of approximately
$313,000,000.

Our gross purchases for the first six months of this year aggregated

$1,320,000,000 out of which we have allotted to other Federal reserve banks




402,000,000

MI9C.9.19011-1-20

I FEDERAL RESERVE BANK
OF NEW YORK

Or- ICE CORRESPONDENCE
TO

FROM

DATE

June 30, 1920

SUBJECT 3li_snaunt Market

Governor Strong
R. 1. O'Hara
-4-

and af the balance of 3918,000,000 held for our own account we have made special

sales from our portfolio to other Federal reserve banks of only 03,000,000.

Our

present daily distribution to other Federal reserve banks is as follows:
Chicago
Cleveland
San Francisco
Total - - - -

10
10
6-1-

per cent
"

"

"

24 per

"

cent

It is of interest that during last lay the bills aggregating approximately p16,000,000 which we purchased under our agreement with, and for account of the
Bank of Japan commenced to mature.

Bank of approximately

This fund together with that of the Nederlandsche

6,000,000 of the same nature is proving quite helpful in the

daily distribution of our general purchases.
The marked development in the number of our member banks for Whom we are
purchasing acceptances and the aggregate amount of bills purchased for them is also
of considerable interest.
no bills

In the beginning of 1919 we were purchasing practically

for our member banks.

During the year 1919 we purchased for 38 member

banks acceptances aggregating approximately 38,200,000.

During the first six months

of this year we purchased bills for 133 member banks aggregating over 316,000,000.
I attach hereto a chart which shows the general trend of the bills purchased by us since the beginning of this year indicating the sources from which our
purchases were made, our total purchases, allotments and sales, and the course of
our own holdings as well as those for the System and also the bills carried by the
dealers.




The chart also shows the trend of call money during the period in question.

NiLL ONS o

ACC .PTANCES PURCHFISE)
FROM 15/INK

a- 5

DE.RL.LRS
ON 5 DAY AG MT.

L40

35

10
25
o
5

10

4
to* *A

I 00
Bo

ToTAL PURCHAsED
ToTA ALL0TrEp AND 504,

o
So

3o
o
0

MILLIONS 6 O0

550
5oo

450
400
35o

300
2. 5 0

Zoo
I

so
00
5 a.
0




ACCEPTANCES HELP
9ALANCE5

13% wEEKS

F.R.SXSTEM

OURSELVES
DEPILERS

AmTs.By wE.Ercs

RATES AT FEDERAL RESERVE BANK, NE7 YORK AND

IN OPEgiLLIKET ON BANKS ACCEPTANCES,

ALSO RATES FOR common" PAPER AIM
CALL MONEY DURING APRIL, MAY AND JUNE 1920.
OUR RATES
PURCHASE
REDISCOUNT

DEALERS RATES

SELLING

BUYING

Week

Ending

60

30

1920

90

30

90_

60

30

RATES MILT

CALL MONEY

RENEWAL RATES COM'L PA2itai

3-6 Months

90

60

6 3/44

5 7/8

6

5 5/8

5 3/4

5 7/8

5

5 1/2

5 5/8

5 3/4

6 to

53/4

57/8

6

55/8

53/4

57/8

5

51/2

55/8

5

6 to 10

7

5 3/4

5 7/8

6

5 5/8

5 3/4

5 7/8

5

5 1/2

5 5/8

5 3/4

7 to

9

6 3/4-7

30

5 34

5 7/8

6 1/8

5 3/4

6

5

5
5 1/2 5 5/85/8

5 3/4

7 to

8

7

7

5 314

5 7/8

6 1/8

5 5/8

5 3/4

6

5

5 1/2

5 3/4

5 7/8-6

7 to

9

7-7 1/2

14

5 7/8

6

6 1/8

5 3/4

5 7/8

6

5

5 1/2

5 3/4

5 718-6

7 to

8

7 1/4-7 1/2

21

6

6 1/8

6 1/4

5 3/4

5 7/8

6

5

5 3/4

5 3/4

5 7/8-6

7 to

8

7 114-7 1/2

28

June

5 3/4

23

May

9

16

April

61/4

63/8

57/8

6

61/8

5

53/4

53/4.

57/8-6

6

-

7 1/4-7 3/4

4

61/8
61/8

61/4

57/8

6

8

7312-8

6

57/8-6

6 to

8

73/4-8

18

6

63/8

57/8
57/8

57/8
57/8

6 to

61/4
61/8

6

6

53/4
53/4
53/4

57/8-5

61/8

63/4
61/4
61/4

6

11

63/8
63/8

57/8

57/8-6

7 to

8

7 3/4-8.

25

6

61/8

6318

57/8

6

61/4

6

53/4

57/8

57/8-6

7 to

9

8




6

7

FEDERAL RESERVE BANK
OF NEW YORK

December 13, 1920.

Dear Governor Strong:.

We were all delighted to learn of your safe arrival in Paris, and
Case and I have just to-day received your letters from Delhi.

Your saying

that you are going to prepare the way for me in London and Paris is a suggestion to which I respond very cordially because I am terribly keen to get over
there and talk with the European central bankers, particularly those in London,

about all kinds of things concerning which a little perspective on my part
would be most valuable.

I am l hoping to take my family abroad next summer,

and perhaps to put in a month with the bankers after they come home, if that
can be arranged.

I have got

El

big credit balance on vacations, and feel just

about ready to have a good long rest.
Especially so, Mr. Governor, since we took on that war horse, Zeilinga,
last week.

I am enclosing a radiogram received to-day which I hope you will

accept as payment in full of the draft you drew on us in Java.

He was a de-

lightful fellow, all the same, and everyone here took to him mightily.

The

manager of the Seattle Branch wirelessed him four or five days out from
Vancouver, asking when he'would arrive, etc., which he now tells us scared
him to death because he thought that some of his family must be ill.

The

Seattle manager met him in Vancouver, but could not do much about customs.
Shepard Morgan and I met him on his arrival here,,,(yia
D.

.

P. H., Montreal, and

& 5% managed by great luck to pick him out of the crowd, took him and his

friend , Mr. Dezwaan to the UniversityClub for breakfast, had them at lunch
that day and the following day;

our directors gave a dinner for the

University Club Wednesday evening, inviting a number Of bankers and merchants.

Thursday and Friday they also lunched with us, and Thursday Morgan and I took
them to the Ritz and the opera, and Friday Case and Sailer took them to the



Benjamin Strong, Esq.,

#2

12/13/10.

FEDERAL RESERVE BANK OF NEW YORK

Union League and the theatre.

Saturday they sailed on the Rotterdam, with a

basket of fruit, etc.

It was a great week, but the greatest event Of all was yesterday when
Hendricks and Mrs. McLaren were married in Atlanta and set out for San Francisco
and Honolulu, Hendricks taking a six weeks' vacation.
I sent you a copy of a bill which Harrison tells me McFadden has

introduced in the House and, I believe, Calder in the Senate, which I think
will interest you.
The Treasury is offering *500,000,000 of six months 5 3/4% and one
year 6% certificates, dated December 15.

Our quota is *170,000,000.

received *383,000,000 of subscriptions for them thus far.

We have

It looks as if they

would be heavily over-subscribed.
Harrison is just back from Chicago where he went to a large meeting

of bankers and merchants interested in the establishment of the *100,000,000
Edge Bill Corporation to help finance foreign trade.

He says there has seldom

been such a representative, and probably never such a unanimous gathering of
bankers.

He thinks there is no doubt that the *100,000,000 will be subscribed,

but none of them feel so sure as to whether the corporation will be able to
sell its debentures.

We took over the subtreasury a week ago to-day.

On Wednesday we are

going to have a meeting of the building committee to determine whether we snail
not recommend to the directors the following week to begin demolition of buildings on the western end of our main building site on May 1, 1921.
Yesterday, being Sunday, I thought of a nuinber of things to suggest

your inquiring into while in London other than those I have already written you
.about, but Secretary Houston has unexpectedly been with us all day and has just
left.

It is now six p. m. and all of these thoughts have escaped me, I regret




FEDERAL RESERVE BANK OF NEW YORK

#3

Benjamin Strong, Esq.,

12/15/:0.

-,)
to say.

The exporters are having a hard time with cancellations, falling
prices, depreciated exchanges, and people declining to pay.

The Board has

been ruling that a six months' credit may not be split upintio two bills of

90 days each, End this makes financing long time credits by acceptances difficult.

Harrison has just showed the Board that six months' bills were eligible

for purchase by Federal reserve banks if the Board so ruled, and we are going
to discuss the matter here to-morrow.

Without having given it much considera-

tion it strikes me that if they were made eligible for purchase we would not

have to buyatny of them but those who held them would be able to sell them
quite readily from the mere fact that they were eligible.

Perhaps you will

inquire a bit about this in London, also about the kind of credits English
banks and acceptance houses are extending to finance long time transactions
in depressed portions of the world.
Remembering that I sent you a couple of years ago a book by Henry
Adams which I had not read, and which, when I later read it, I wished I had

not sent, I am sending you this time one I have read, called "Nocturne," not
very much of a book, but altogether very readable of its kind.

If you have

time to do anything but think or talk finance on the steamer coming home it may
help to fill in your time.

President-elect Harding is back from his vacation trip and talking
with "the best minds" on the international situation.

These minds come for an

hour or a day at a time, but Col. Harvey seems a permanent lodger in Marion, 0.
which makes the changes of a forward-looking policy seem very dubious to me.
If you see Sir Charles Addis, please tell him I am going some day soon

to answer his interesting letter, written after reading my memorandum on Federal
reserve notes.

I have also just received to-day from Mr. Norman, who apparently

also waded into what I had written, a very nice letter upon the subject, touching



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.,

12/13/20.

also on the gold situation, regarding whic;h you will doubtless bring us the
latest news.
Oh!

one of the things I had meant to ask you to inquire into in

London is to look over some of the cablegrams we have been sending the gank
of England during the past few months and get their views as to what kind of
information we have been sending interests them and what kind does not;
what things they would like to be advised upon which we have not referred

also
to

L

at all in our cables.

With best wishes for a pleasant Christmas

and looking forward greatly

to seeing you again so soon, I am,
Faithfully yours,

LAJ-1)-11L

(
P. S.

It is now 6:30 and I am going to ask Miss Holmes to sign this

without my first looking it over.

Benjamin Strong, Esq.,
0/0 Morgan Grenfell L Co.,
22 Old Broad Street,
London, England.
PJ/PAH







?

All ACT

JA,1

SlirTION 1C OP SIM ACT ALTROYVID Drcrom

23, 1913, Krnrn A$ THE mum, Rimmvm ACT,

AS rlicrYbn) BY TiPg ACT

APPRIIYIlli 'ARCH 3, 1919.

BR IT 'T,Twrnn)BY Tug' SWAT!? AM) TYATMC

T:77PBTrY1ITATirrl nir "'HT

TIMM SliATTIT OP Ay:MICA IF CONGRITP ArSTIBLI), That F sett on 10 of the

Act approved %comber 23, 1P13, known

ND

the Pederel Reeerve let,

Inued by the Act approved March 3, 191!),

as

he further asqended re that

said section S hitt 11 read as follows:
The Foder:.1 Reserves Bet.rd

hI1eon,,ist of 7,ever weza,verr:
-Zileihr.4141t,-arie-61,1460-041-44-Xis.a.4.

appointed

by the Presidcnit by end with the tAvice 41ra conserA of the Sencte.

Rach-.4--4a.1.44414.at

.1.,erve for e. tem of

(4atyear% unless sooner removed for cause by the President, provided, howevir, that the ter-as or the present 'lerriber% or the Beurd
AMA

ny1,4 itcce9sor 4,.!17-nintoa to fill any vacancy in en office creeted

snAer the term of this section 64? it *FA ortginflly enacted, shall
expire as heretofore provided by law.
.

The--414-140.?....,p-

Ir select: ng the eipe44444-eke- cAert-

2ere, of the Federal Ftworve Board, not store than one of whom rhall

he selected from am one Feder1 Rererve district, and at least
three of whom rhall be persons, experi.erceet in banking or flmnee,

the President shall have dee regt4'd to

fair representetion of the

different comiercial, ineustrial and geograrhicNt1 divisions of the

urPOtnted by
=entry. Thn ±los gombern of the filmiest,/ Roserve
the Proridert and eonfirned am aforeetkid !hall devote their entire

Wo to the hurinets of the Podercl. liverve Board and shun enoh
oeivo v annual salary or !helve 1Lousond Dollcre, pyb1e oonthly,
together with 4.otua1 n000reary traveling earenres,
,

...-----

SeIrmtnry of the Treasury, sorvini; en om-effieio Locher,gf-the 78do
jeReserve Board, shall, In :addition te th e nalsoAe p aid h im ss Assit nt
- ------'
F4erotary of the Trev/Tury, receive-Aft nun ef reven Thowslxid Dollars
mmally for his aerviono-ast a amber of said Board, provided, however,;thei
m_,-----

the aggrogiAorbf tLoro two sr4urint shial not oroeod the suit of tselv.

i--------- dell,,,,--.
th,Keepri
f^ of the Federal Reserve Rokrd shell be

Ineligible during the tie they urn in office to held rm. office, poettion, or otv:Loysinnt in any in,-bor bank.

Of-titn--.41%-rn000kwom-44164.-.414.44044iir

one to tics-Governer
on 001 be ieriiwited by the Prcvident ac Covernor a(4,51 a chairman and vice
The members of the Board shall elect from their members

41Vicrinet'AgeggjorgilleV1Litin441AlniNcifWir tna es Ocv,rnor s tes/1
shall,
rubjeot to Its sidprvi,
elected to act wa aWenttn




_

sion, mhtli be the uotivo execIttive officer. The !eoretury of the Trepotury
mar, at the rogneet of tbo FgvdeprO Reserve Moard, sesign ofrioes end vault
'pane in the Dorartment of the Trevoury for the use of the Federal Peserve
:,,ettoor of Cho ri4ora-.1 hotoryn Board shell, eithin fifteen
Bord.
rie,r4 af or notice of mveintuant, nolTo and oubaorite to the ot:th of office.
Tho Yodoral Resiwve Bnard

hcve poKor to leer sella.sarnotaly

upon the lo4erft3 reoerve banhs, in proportion trt their oupital steak srd ouroleo, an easorwlent nufficient to pay its; ottigmted exporwo und the saleres

of its fwei bere and ooployaes for the half yets senceedinc the levying of

mob asseesonnt, together with any deficit carried forward from the pre

half ysnr, anti oball have poser to provide itself with suitable effifee
aca vanitA in the City ot rkabington, District of Columbia, and to levy
c*d1fl

assoRs),iont!% upan the Federal re6erve banks

afficient to corer the expense,

thereby incurred; rrovi6ad, That in care of the perohase of property or the

erection of a building or vliultr the s4trunt i;rsecood for thora purposes
shall be limited to t3,000,000: AniLtzoztalliarliar That the title to or

the interest Snarly property ervired for those 'purposes by purchase,
rental or otherwise under authority of thi eWon, phs01 he in the
United Stateo bnt the proviolone of Section IC of the Act of Concrete al,,roved Arch 1, 1919, making anpropriations for the lenislettve, esecutive
4ed jualaiel osromneo of the Government for the fiscal year endin6 June 30,

1920, obeli not be appliouble to such property. The anoint aFsetsed by the
',dowel Reserve Board a4al.nilt each Federal reserve han17 rimy be credited by said
bank to an Iwo-mint.which way be drurn von by the Federal Reserve Board. All

fonds derived bly the Federal Reserve Board from any aesessNent upon the Federal
recerve bank* spr be depeeited with any Federal reserve bank, uny member bank, cr

with the Treasurer of the United Ftatee and shall be expended in accordance with
the term* of the Federal Reoarve Actond all accounts of salaries, end other es.
Oshawa of the Federal Reserve Bocrd eholl be audited at 1east once over *Is
.




months by a oertified public accountant, in lieu or any Other audituend a mortified copy of ea0h

dit shall be tmazatted by the Federal Rovorve Board to

the fipenker of the Honest of Repreventativet.
No member of the Federal Reeerve Beard shall be an officer or

Aireoter fa' tiny bunk, banking inatItution,

trust company, or Federal re..

serve bank nor hold etook in any bank, banklne institutien, or trust camley; and Oafore entering upon his duties as a
serve Board he shall certify under
reouirement.

menber

of the Federal :we-

oath that he has complied with this

Uhenever a vaoaney shall occur, other than by expiration

of term, amonr the eadr-members of the Federal Reserve Board appointed

within 60 dvs
by the President, as above provided, a successor sn.11 be appointeb/by

the President, with the advice and consent of the Senate, to fill Mal
vacancy, and When appointed he Shall hold office for the unexpired term

of the meeuer whose place he it selected to fill.

The ?resident shall have power to fill all vacancies that may
happen on the Federal Reserve Board during the recess of the :;-enate, by
granting oommiesions which shall expire

at the and of the next session

of the :,;elante.

towers
,

heretofore vested by law

in the

Seoretaofthrastu7 w oh

elate to the expervision,memageme!!,_emi-eintrol of the Treasary epartt and bureaus under.'

this sec

...--

with

-freiartment, except as
..

respect to

hereinafter provIlded

the bureau in charge of the Oomptr ller
1

The iederal Reserve Board shall annually rake t full report
of its operations to the Speaker of the Rouse of 1:epresentatives who shall

cause the sans to be printed for the information of the Congress.

No

separate annual report need be made on account of those operations here-

tofore teaming within the jurisdiction of the Comptroller of the Currency'.




election 324 of the Revised statutes of the United etates, creating
reau of the eepartment of the Treesury,ltnowa es the einem, of the
Comptroller of the Currency, and Sectio1F325 and 326 of the Revised btat-

otos of the United States, relating to ehe appointemet of 3 Comptroller
of the Currency to act ls chief of that bureett ere hereby repealed and
all powers and duties heretofore conferred or imposed hy law upon the
Comptroller of the Currency or the bureau 9C ehioh he is the chief officer

are hereby transferred to the Federal Reserve Doerdl Such board Shall
exercise all of those powers and duties, under such rules end reeulations

as It -ray preecribe, through its active executive officer, the Governor,
or through such other officers or employees vs it may appoint or desig-

nets for that pureose.
All mats of the iederal Reserve Soard in tee perforeance of the
powers or duties transferred to it under the terms of this eat shell have
the seee force and effect as acts heretofore arformed by the Comptreller
of the Currency or the bare of whiala he is the chief officer.
Rxcept as otherwise provided in this act, any officer or employee
of the Federal heserve'Board porformine or exercising any of the powers
or duties heretofore exercised or eerformed by officere or employees of

the eureau of the Comptroiler of t,e Currency shall be subject to all
of the privilege's, imeunities, restrictions and obligations in the perform-

ance or exercise of those functions or duties ae are now conferred or
ineosed upon officerr or employees of the Aereau of the Comptroller of the

Currency in the exorcise of their duties as such, provided, however, that
the iederal Reserve Aoard, in the exercite of the powers or duties conferred

upon it by this act, shall not in aey way be subject to the jurisdiction,
supervision, or approval of the Secretary of th; Treasury.




e6All smite and proceedinge arising out of the provisione
of iew governing netionel banAng essociations in which the United

Statile, the Federel Reserve ]3rd, or any of its officere or aeents
sha/1 be pertiee ellen he conducted by the District attorneys of
the several dir.tricte under the direction and sepervision of the Attorney General of the United States. AN' action ut lew or !rt equity

brought by or egainet the Federel Reserve %ere in cennection reth
the exercise or perforeanoe of the powers or duties imposed or con-

ferred ueon it by ler shell be brought in the =ea of the Governor
of the Board, under the neon nonditiona and in the sable court or everts
es mc,,y tow be provided for by law in uctions brought by or agaiest

the Comptroller of the eurranoy.

The Federel Reserve Beerd is herebe authorized to eeploy in it
service under the Eluria terns and coneitione Us otharo in ite employ erte or

all of the officers, olerke and eeployees now in the zervice of the Bureau

of the Courtrceler of tho eurrency, and all salaries end exeenses incident
to such .eeployment ehell be paid in the same manner as those of other persona

In the eervica of the Federel Reserve Poard,

Tha

t,of

cti

F4g624m4414;444:,.44tirwhiclaiN11434":14040444ermigtvilleg44Arie4Aeevegeteeeleeee

ngi eweio.flalie,e4;41.4,64.901.1fia4AaeageiO44414ilike.444,4Aepteeei,e
upee-Veseeeseee-emweerreet.

Tee library,furniture,fixtares, recoree, end other property belonging
to or assigneA to the office of the CametroIler of the Currency are eereby trace

forme to the Federul Reserve Board for Its tee in connection nith the performer
of




tower e

deties placed upoti it by law.
-r parts of ects ineeneistent frith the terms of this act are




CLASS OF SERVICE SY MF,01:

Teleram

m.

D4 I ore,
"ye

J

Nite

.r.

WESTE412ESNI UNION

TEL

NL
Mgr,
I
If none of these three symbols
appears after the check (number of
words) this is a telegram. Otherwise its character is indicated by the
symbol appearing after the check.

Form 1201

AM

Telegram

Day Letter

Blue

Night Message

Nite

NL
If none of these three symbols
Night Letter

GEORGE W. E. ATKINS. FIRST VICE-PRESIDENT

NEwCOMB CARLTON, PRESIDENT

CLASS OF SERVICE SYMBOL

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

RECEIVED AT

190W1 BGZ 44 RADIO

PIERRE JAY

S3 ROTTERDAM VIA WZ NEWYORK

1199
FEDERAL RESERVE BANK

LETTER
MANY THANKS FOR YOUR

NEWYORK

MOST CORDIAL THANKS TO YOU

4ND

FOR
CASE AND ALL YOUR OFFICERS

GREAT
ALL THE KINDNESS AND

MYSELF AND
SERVICES RENDERED TO

"ME TO ALL

DEC11r920

REMEMBER
DEZWAAN DURING OUR STAY

AUIREVOIR

ZEILINGA
631PM

DC 1

1920

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