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411 UNIVERSITY AVE

-FT

rfciK 24, 1915 rv
My dear Mr. Strong

I want to thank
you again for a very pleasant evening on Monday, and only regret
that by misunderstanding your words
"very informal" I did not appear in
a "wedding garment."
If the paper recording the
five questions and answers thereto
which you read is not considered so
confidential as to not permit of my
having a copy, I would like to secure
a copy of it in order to have infor..
mation contained in the answers, Be
perfectly frank, however, in not
sending it if you do not think it
proper to do so.
With kind regards to the "trio",
I remain

Hon. B. F. Strong

New York




Very truly yours,

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1:,.ZN,T.

Sri }ZONG, Jr.

ROBERT H. TREMAN pERsoN. L.
ITIIACA
NEW YORK

Dec. 24, 1914
Dear Governor Strong
Two or three days since
I sent you a box by Adems express, cherges prepaid, containing a few apples of two different
varieties, which I hope you and yours may enjoy,
with the compliments of one of your "country Directors".
I wish for you the happiest of Holiday Seasons
and that the New Year may bring you the richest
blessings.
Permit me, in addition, to assure you how
great has been my pleasure in working under your
leadership in the New York Federal Reserve Board,
and in this association my respect for your ability
and wisdom has constantly increased, and I trust
that still further success may attend it.
It is
indeed a privilege to be associated with you and
the other Directors, and I hope that the friendships thus gained may continue.
With kind regards, I remain
Very sincerely yours,

Hon. B. F. Strong, Jr.
Federal Reserve Bank
62 Cedar St., New York



0E RATE KAIN

i'S: BANKERS MEET':r
FIND NEW REEDY

Pound Sterling Back to
$4.67

Despite Success
of Big Loan

MAY FLOAT NEW ISSUE
Dollar Threatens to Replace English Money as Standard
of World'
NEW YORK, Oct, 11./9/r
reign

exchange rates

went down

n today, in the face of. the successful
ation of the $500,000,000 credit loan to
Great Britain and France, to their lowest
point since September 15.
So disquieting was the situation that a
three-hour meeting, attended by Wall

street bankers and Sir Edward Holden,
v of the Anglo-French financial commission,

, held late in the day at the National
y l,

-k for the reported purpose of delew method to bolster the value

of the English pound sterling.

Since the arrival of the commission
here September 10 the trend of sterling
values has been steadily though slowly
upward.

For the last week sterling has been

selling at about. $4.12. One day recently

it went as high as a fraction above
$4.73.

Today it sold down to $4.6'7%,

too low to make continued buying of
American exports desirable from the

British point of view.
The meeting held today, it was 'reported, was Primarily to reach an under-

,
1

- -...,,
method of us,. .....---.V.,, SS to the best ....
ing the $500,000,000 to stabilize
and also with a view to arranging a private agreement between New York and
London hankers for credits which woUld
tend to

send the value of sterling up

in this foreign eXchange market. A. supplemental credit of $250,000,000, it is said,
was discussed.
To what extend American bankers

would be prepared to advance credit to
London bankers, if at all, was a Matter

. of

surmise.

Many

millions,

it

was

thought, would be needed to,restore the

rate on sterling to nearly normal. The
arrangement would involve' private rin,,- ring on a scale secondary only to
otation of the mammoth Angloch loan, and probably would be a

private arrangement between groups of
large banks.
Al today's meeting were Benjamin
Strong, Jr., governor of the Federal Reserve Bank of New York; Frank A.
Vanderlip and James H. Perkins, Presdent and vice president, respectively,
the National City Bank; Charles
.

-

Sabin, president of the Guaranty

ust Company: W. H. Porter, of J. P.
organ & Co., James Brown. of Brown
Brothers & Co.; J. S. Alexander, presilent of the Bank of Commerce.




Foreign exchange experts of several
'al institutions also were present
-,,erts were reported to be unan, the opinion that there would
--lv left when the pro000 loan would have
ial elimination of the
e standard of world
itution of the dollar
the end of the war.
f $250,000.000, it WaS

loated under these
banks and bank-

offered to the

S 1800
'0 DEATH

If




LOST AND 1
LOST, NEAR CHELTENHAM,
Highland terrier, with blue co
name of Robbie. Liberal reward.

Pearse. St. David, Pa.

LOST--LADY'S HA ND BAG, SW',

ernoon at 13th and Walnut street
105 South Camac street.

HELP WANTED-MALE
BILL CLERK; LARGE ORDER TRADE; Hi
8-5; salary $18; advancement. T 28, North A

jean.

BOY, LIVING IN GERMANTOWN, TO EL
errands and make himself useful in ship
ping room; state age, reference, where lao

emplo,d: chance of advancement.

T 2t

North Ammican.
BOYS, 16 TO 18 YEARS OF AGE, NEAT Es
appearance, as stock clerks. Apply Burea,
of Employment. before 11 A. M.; 414, door
STRAWBRIDGE & CLOTHIER.
BOY, YOUNG, FOR OFFICE WORK. 201
East Letterly street, Kensington.
CANVASSER, MUST BE OF NEAT AI'
oearance, for a new house-to-house proposi
don, salary and commission; good opportunity
Apply 4 P. M., sixteenth fioor, North America:
Building.
CTGARMAKERS ON FINE HAND WORK. Al
ply 932 Market street.
APPL7
WEAVERS WANTED.
CLOTH
blanket millz

John &/-James Dobson, Inc.,
Scotts lane, Falls of Schuylkill.

CLOTHING SALESMEN, EXPF,R/ENC
wanted. Perry & Co., 16th and Chestnut

ni,EVATOR MAN, COLORED, WANT
with license. Apply personally, Univer
Hospital, 3400 Spruce.
SITTERS WANTED IN A MASSACHUSE
ehop, familiar with drawings; fitting str
work: squad boss over 5 men; write
Hem, age, etc. C. W. HigleY, 1238 Kiv'
Ennycal street; Harrisburg, Pa.
FOREMAN ON FLANNELETTgowns and house dresses. (=Mr,
121 North 7th.
GOOD MEN 'FOR BOILER SHOP; STEA
work. The Pueey and Jones Company,
mington, Del.

LABORERS WANTED FOR OUT-OF-TO
work; positions permanent; wages. 20 cep
per hour. Apply 36 North 16th,

MAN, WHITE. WANTED FOR GENER
work. Apply at hospital, 21 21 North

lege avenue.

NIGHT DOOR MAN WANTED.
personally.

APP
'University Hospital, 3900 Spr

EFFIOM BOY, AGE 16, NEAT IN APPE
ance; opportunity for bright, energetic b
to learn business. Apply after 9 o'clock,
tersfield, 32 Letitia street, near Front
Chestnut.
WANT,,ri
rtE AND PLA
hands; steady work, good wages; in desi
shop and location; give references and ex
perienee. Address Gurney Electric Elevate:
Company, Honesdale. Pa.
General
CHAUFFEURSDON'T RE FOOLED; SPEN1

YOUR MONEY WHERE YOU GET RE
SULTS; if you want to learn the AUTOMC
RILE F.USINESS RIGHT, don't go to the
tle cheap shop on the back streets, but go
the OLDEST. LARGEST and BEST PLAC
FOR AUTOMOBILE INSTRUCTION IN PH
COUNTRY and ask for MR. ROBERTSOI,
1

MAIN OFFICE, 629-631 N. BROAD ST.

YEARS AGO I STARTED SMAL
mail-order business at home in spare tim
with a few dollars capital; I wanted to mak
12

$80 to MO a month evenings; the net profits th
first year averaged $200 a week; 5 years' wor
netted ate $50,000. I will show you how t
start a small mail-order business. Semi
for my proposition. It's interesting.
vassing. Heacock, Box 692, Lockport,

ell NORTH BROAD STREE
Robertson's old original
AUTOMOBILE SCHOOL
teaches you how to repair_
and how to drive autos.
911 NORTH BROAD STREET
PROSPECTIVE CHAUFFEURSLEARN T
business thoroughly while w,rking for
to 6 weeks; small cost; driving included;us; 4
day
or evening; license guaranteed; write or cal,.
Modern Auto Company, 811 North Broad at,
AUT OM OB I L E WORK IN ALL ITS
branches taught quickly; road lessons given:
expert teachers; complete course, $18. Day c
night classes. R. 0. Gill:es. 619-618 Brown s
RAILWAY, MAIL CLERKS
month; Philadelphia examinatic, ;;°
write immediately. Franklin
partment S. Rochester. N. Y.
INTELLIGENT PERSON MAI'
$20 weekly during spare tit
writing for newspapers. Send
Press Syndicate, 507,
AH1E-BODIED
ME
brakemen, $120 mor
essary. 11 5, North
fl

BR:
aluminum tri
tachable handl
one burner; sa.
$300 per mon,
9 00 other an
Manufacturi
Lemont, Ill
AGENTS




ROBERT H.TREMAN
ITHACA
NE'W YORK

My dear Governor
Will you permit me
at this season to express my appreciation of your many courtesies to me
manifested at different times, and to
further express my great satisfaction
in being able to serve on the same

Board with you, as I have grown to
not only respect your great ability,
but have valued more and more the

friendship which, on my part, at least,
has grown with these months,
I desire that the New Year
may bring to you and yours great hap.'
piness and contentment, and that you
may be given health and strength VO
carry on the great work to which you
are committed.
Very sincerely yours,

Hon, B. F. Strong, Jr.

62 Cedar St.
New York City

December twenty-third
Nineteen fifteen

)rttl_A-Th




THE TOMPKINS CO-MY-NATIONAL BANK
ESTABLISHED 1836
R.H.TREMAN, President
J.C.GAIINTLETT, e e -Pre sident
G.STONE, Cashier

D.N.VAN HOESEN, As st.Cashier

My dear Governor

ITHACA,N.Y.

April 21, 1916

:

Just a word of greeting
and an expression of gladness that you
are back again safe from your somewhat
perilous trip.

I am anticipating with
pleasure hearing an account of your
trip, and have no doubt that it has been
most useful, and I hope, in addition,
that it has enabled you to have the
rest which you had so well deserved,
and that as well you feel physically
benefitted by the trip.
With kind regards, I
remain

Sincer ly yours,
'7 g

Hon. Benj Strong
62 Cedar St,
New York City




THE TOMPKINS COENTYNATIONAL BANK
ESTABLISHED 1836

R. H.TREMAN, President
J.C.GAIINTLETT, Vice -President
A. G. STONE Cashier
D .N:VAN H 0 E SEN, At.Cshie.

ITHACA,NX.

May Eighteen
Nineteen hundred Sixte

My dear Governor :

I received your telegram
last evening, and your letter by this
morning's mail.

.

From you telegram I am
led to think that possibly you may have
thought the invitation 'was for this week
May 20th, whereas the Spring Day and
races are next week S%turday, May 27th,
so I am writing to ralteat the invitation
for Saturday, May 27th, next week, hoping that you can st"11 arrange to be here
and enjoy the diver ion and recreation.

May/I ask that you will
kindly wire me on receipt of this letter
as to the possibi ity of our having you
with us next weell Saturday, May 27th ?
Very truly yours,

Gov. Benj. St*ong
Federal Reserire Bank
Equitable Bl g.

New York Cit

it

ROBERT H. TREMAN

0

ITHACA.

8-/6

NEW YORK

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THE TOMPKINS C 0 IINTlig:WpWitektNK
ESTABLIS HE
R.H.TREMAIST, President

1

JUN 2 7 1916

J.C.OAUNTLETT,Vic-Presidet

A. G. STONE Cashier
D.N.NANHOESEN, As st.Cash ler

'FEDERAL
ITHACA1

My dear Governor

i-i4f1 v?3R P4 16

:

That was a mighty nice letter
you wrote me on June 21st, and I appreciated it.
I had, by telegram yesterday, an announcement of the creation of the Deputy Governorship,and that I had been chosen to fill it
temporarily, but Mr. Jay's letter has not yet
reached me giving details.
I hope to begin work next Tuesday
morning, and shall do my best to contribute
all that I can to the smooth running of the
Federal Reserve bank, but at no time have I
been over confident as to my ability to be
of much assistance./ It willbe an
thought, however, that I am doing something
to help you get well and be back on the job,
and this alone would be compensation sufficient
for whatever sacrifices I may be called upon
to make in taking up this work.

lauttine

During our association I have
grown to not only admire and respect your
ability, but with it has came a deep affection for you personally, and my very best
wishes go with you in your rest, and I shall
hope to keep in touch with you from time to
time with the thought that you will be interested in the details and will contribute what
you can from time to time towards our common goal.
My very best regards to you and yours.
Sincerely yours,

Hon. Benj. Strong, Jr,
903 Park Avenue
New York City




FEDERAL RESERVE BANK
OF NEW YORK

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FEDERAL RESERVE BANK
OF NEW YORK

August 28, 1916.

7 dear Governor:
I have your letter of August 24th and I can tell you that the last
paragraph, in which you told me of your improvement, was the best news I

have had in many a day, and I am sure will be most welcome to all of your
old associates.

By all means follow up religiously the routine prescribed,

and I hope that Mrs. 7cLaren will limit you to a reasonable amount of work.
7e have just had a long call from 1.:r. Buck, president of the Jeffer-

son County National Bank, who seems to be a loyal supporter of the reserve
system and asked if there was anything he could do to assist in the work.
I suggested that if he would have his tellers sort out gold certificates and
send them in to us from time to time, and other banks would do the same,
withdrawing the certificates from circulation, it would be a good thing.
I will ask Curtis to send you a detailed report of his meeting
with Secretary 7pAdoo, provided he has not already done so.

He returned

this morning from Boston, where he remained after the governors' conference.
I sent you Saturday a very crude detailed report of the governors'
conference, which I hope you will receive in due time.

The general impres-

sion at the governors' conference was that Governor Harding had softened and
was quite judicial in his utterances.
I am glad that you are writing 21-*. "'arburg about the Kansas City

Convention, and I an writing to-day to Governors rancher and Wold, who have

thought they might attend, urging then to be present, and it probably would
have a great influence on such

overnors as you would choose to write to,

if you were to urge them personally to go, and to me their presence is high-




VEBANKOFNEWYORK

2A_

Benjamin Strong, Esq.

8/28/16.

ly desirable.

I note that you will soon be ready to take on more work, to which we

may assign you, but I nersonally should be in favor of prescribing certain regulations against your doing any more than what is absolutely necessary, except
that in connection with the B. of E. matter, we shall have to call on you from
time to time, if the Board approves of the plan.
I will have )i.enared a memorandum in re gold transferred to other

banks and to the Gold Settlement Fund, and forward it either in this letter
or within a day or so.

Mr. Curtis will write you about the B. of 7. matter, sending you a
copy of our formal application, and I sent you Saturday the copy of the memorandum as it will go to Thshington.
The letter for Deputy Governor Cokayne has not been sent, as we
are awaiting the result of the action this week.

Regarding the cost of operating the Transit Department, we are having figures made up by Mr. Higgins as to the cost, but we hope to reduce it

to 1 1/4or nossibly lO per item.

It was generally assumed that we would

begin September 1st to bill out cost of this work, and a conmittee of Messrs.
Hendricks and Fart was appointed to prepare a uniform bill for rendering to
the member banks.

Mr. Curtis goes to Washington to-night to present the application
and to be there in case he can do any good in furthering the progress of
our application.

r. Jay will probably go with him to consult about the

Clayton Act.

. '"arburg telegraphed, inviting Messrs. Jay and Curtis and myself

to dine with him at the 3elmont to-night, so I-assume they will all go down
to 7ashington together.




I note what you say about Mr. Morgan, and it is a very great disap-

EDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

8/20/16.

pointment that there should anything arise to prevent the coming into the
system of some of the large trust companies at the present time, when it would
do much good.
.

Higgins has had offers from the National City and from the

American Exchange, and we are to bring this matter before the directors who
meet this week.

We are nutting into effect in the Transit Department the block
system to-day, and two of the four blocks checked up the first tine through
and they are now checking un for the second time in the other two blocks,
but I believe that is the proper system for us to use.

7e had quite a fright in the bank this morning on reading in the
Financial Chronicle of Saturday that the proposed amendment permitting the
/three days of grace had not gone through, but on

.

Curtis telephoning

Governor TTarding, he found that 7r. Glass had crowded it through just at

the last minute, so that the conferees' recommendation will nrobably carry.
I hope to get away for ten days or so on Thursday of this week
and will probably be at Neachan Lake, Franklin County,

r.

Y., up to Tuesday,

September 12th.

I am very glad that you may begin to take some more exercise and
hope that your cheeks will "blossom like the rose."
ith kind regards, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
"The Lewiston,"
Estes Dark, Colo.




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FEDERAL RESERVE BANK
OF NEW YORK
3eptember 20, 1916.

0
Dear Governor Strong:
I was mighty glad to hear that you had been taking a week off with
your friend, nrofessor Crampton, and I an much pleased at your statement,
"Results are at last being achieved," which is the best news I can have.
I told the officers this morning that you were pleased that 7r.

Higgins was to remain with the bank, and I will show him personally the extract from your letter.

7r. Towne told Mr. Jay this morning that while he personally would
prefer not to stand again, if we thought it was best not to have any change
now and if it Bo worked out, he would be willin7 to stand for re-election

provided that after your return, or in a year or so, he would be free to resign, if he desired.

7r. Jay and I will have a talk with 7r. 'Toodward and

meanwhile, this morning, we talked with 7r. Alexander and asked him to ascertain the sentiment of some of the principal bankers here as to Mr. W.'s reelection.

When we receive the letter which you have had translated from
Governor Pallain, we will give it consideration, as you suggest.
Regarding 7r. Figgins, .1" think it would be a good thing for you to

write him direct, expressing your pleasure that he has decided to remain, and
I think he is happy in his decision.

7e will probably have to readjust

others around, the first of the year, but that can be taken care of later.

We had a directors' meeting this morning and all were present, including 7r. Locke.

There was some discussion over the selling of the one-

year 31, notes, of which we now have about two and a quarter millions, one and



FEDERAL RESERVE RANK OF NEW YORK

Benjamin Strong, Esq.

2

a half millions of which mature April 1st.

9/20/16.

It was finally thought wise

to sell some of the notes to get them started, and hold the balance.
Ifle have made. application for the conversion of about two million

government 2s into 3(1: bonds and one-year notes, which will be done as of

October 1st, I assume.

I am sending you to-da7 an analysis made of the cost in the Transit

Denartnent of handling the items, and you will note that the cost now is about
nineL-tenths of one cent per item, so that the directors decided, on the recom-

mendation of the officers, that we charge the member banks 1¢ per item as
being the approximate cost up to September 1st of the handling.
have a report from Mr. Holmes, vault engineer, giving the present status of the vault work, in which he shows that the lining is about

half finished, as is most of the other work, and that they expect to have it
ready between January 1st and 15th.
7o change was made in the rates of discount but the special rate
for fifteen day paper was made 3%.
I expect to go UD to Mamaroneck to-night to stay with ny friend,

Colonel Sackett, and to-morrow and next day play golf at Apawamis in the
Seniors' Tournament, this ceppleting my formal vacation.
Hoping that you are enjoying this season at Estes Park and that
later you will be located satisfactorily elsewhere, as you suggest, and with
kindest regards, in which all the officers loin me,
Sincerely yours,

el- 76
Strong, Esq.,
"The Lewiston,"
Estes Park, Colo.

 7HT/CEP
http://fraser.stlouisfed.org/
-Enos.
Federal Reserve Bank of St. Louis

fr/ii.

I remain,

SEPTEMBER 12TH, 1916.

DIFFERENT KINDS OF CASH HELD BY MEMBER RANKS
(In thousands)

1_tional Bank
Notes

Federal
Reserve Notes

Gold

Legals

4,246

3,401

287,840

38,287

Reserve City Banks

21,295

5,141

165,263

24,300

Country banks

36 697

6.282

209.919

42.514

6;,238

14,824

663,022

105,101

Central Reserve City
Banks

ATIO OF

qim

Total Net
Deposits

HELD TO TOTAL NET DEPOSITS

Lawful Money
in Vaults

% of
Derosits

2,711,000

326,127

12.02

7,647

.28

12.30

Reserve City Banks

2,839,000.

189,563

6.67

26,436

.93

7.60

Country banks

4,697,000

252 433

5.37

42,979

.91

6.28

10,247,000

768,123

7.45

77,062

.75

8.20

Other Moneys
% of
in Vaults
Deposits

Total

Central Reserve CIL:),

Banks

PERCENTAGE OF RESERVE TO TOTAL NET D17.POSITS

R&UIRED UNDER ACT
In Feaeral
Reserve Banks

In Vault

Optional

Total

Central Reserve
Cities (18)

6.88

5.90

4.92

17.70

Reserve Cities (15)

5.52

4.60

3.68

13.80

Country banks (12)

4.12

3.30

2.48

9.90




COMPARISON OF VAULT RESERVES CARRIED
UNDER OLD LAI AND UNDER FEDERAL RESERVE ACT.

% of Total Net Deposits

Average from
Feb. 5, 1909 to
Aug. 9. 1913.

Dec. 31. 1915.
Nov. 10. 1915.

Central Reserve
Banks

25.5

16.41

Reserve City Banks

12.7

7.42

7.5

5.75

Country Banks

14.86

12.0!"

7.24

7.06

6.6,

5.56

5.52

5.37

15.

RZSERVES REWIRED IN FEDERAL RESERVE BANKS
UNDER SUGGESTED PLAN WHICH DUID MAKE NO REJ,UIRRMENT
AS TO VAULT RESERVES.

Central Reserve Banks:
12% Demand Deposits
3% T ime

)

11.80 against 6.88 present Act

11

Reserve City Banks:

9% Demand Deposits
3% Time

)

8.28 against 5.52 present Act.

Country Banks:

6% Demand Deposits
tf
3% Time




SeT;.12+16
Jun.

5.10 against 4.12 present Act.

FEDERAL RESERVE BANK
OF NEW YORK
September 26, 1916.

My dear Governor:

We were all mighty glad to have a telegram from Mr. Warburg, advising us that he had spent Sunday with you and that he had found you looking
much improved.

This certainly is good news to us.

With this improvement will cone the temptation to you to let down
in your training and to overdo in your work, and you must, for the sake of
your friends, as well as your own, guard against this by living up strictly
to the rules and regulations, playing the game fairly.
I enclose a clipping from this morning's New York Commercial in
reference to the provision that member banks could be permitted by the Federal Reserve Board to accept up to 100% instead of 50%.

Possibly you have

seen it through other channels.

A letter from Governor Harding this morning proposes that we
ship

our surplus silver certificates to New Orleans Subtreasury and possibly

to Cincinnati and St. Louis,'receiving gold certificates at the Subtreasury
in New York in return for same, and this we will do if we can arrange the
details satisfactorily.

We are running rather shorthanded now with Ur. Kenzel, Mr. Curtis,

and Mr. Hendricks way, but I hope that after a few more weeks we shall have
our force complete and can perhaps give more attention to the more important
problems.

We shall have the question of election of directors in place of
Messrs. Woodward and Towne before us soon, and I am not sure that Mr.



Jay

_RVE BANK OF NEW YORK

-

2

Benjamin Strong, Esq.

has had a talk yet with Mr. Woodward for a final decision.

9/26/16.

It seems to me

that we should keep Mr. Morgan as the Advisory Member for another year in
view of rresent conditions.
I am ordering two or three books to send you in hopes that they
may interest you and that you have not read them all.
With kind regards, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
"The Lewiston,"
Estes Park, Colo.

RET/CEP
Pnc.

P. S. --- I had a call from Baron Sakatani and Mr. Ichinomiya of the Yokohama
Specie Bank to-day.
The Baron is the minister of finance, and I entertained
then for a while and had them lunch with me at the Bankers' Club.




FEDERAL RESERVE BANK
OF NEW YORK
V.

September 26, 1916.

My dear Governor:

I returned from my vacation yesterday morning, although I was
here two or three days of last week.

I spent Thursday and Friday with

my friend Colonel Sackett at Mamaroneck and we played golf at the Apawamis
Club in the Seniors' Tournament on Thursday and Friday.

I made 92 Thurs-

day and 93 Friday, and assume it was a fair score considering my inexperience with the course.

It was really a great pleasure to see from 150

to 200 men from 55 to 80 years old driving off from the tee in pairs
every ten minutes, and to note with what pleasure anialandon)they entered
into it all.

It recalled the pleasant day you gave me at Greenwich last

year, and permitted the hope that we may have similar pleasure next year.
We just receiv41 a telegram from Mr. Warburg, advising against
the selling of the one-year 3r{, notes maturing in April and July.

It is

rather late, because we have already seld, as I reported to you yesterday,
a large portion of then on the basis of 2 5/8.

It is possible, of course,

that we may have then offered back to us to some extent at least after the
tax period.

With kind regards, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
"The Lewiston,"
Estes Park, Colo.

RET/CEP




FEDERAL RESERVE BANK
OF NEW YORK
September 27, 1916.

My dear Governor:

Yours of September 23rd reached me this morning and you need not
worry about my holidays, as I had a very nice vacation, am feeling well,
and my friends seem to think I am in fine condition.
You will be interested in knowing that our Collection Department
is working more smoothly all the time, and I talked yesterday with Mr.
Jefferson about the advisability of our studying this department especially,
and the other departments of the bank, as to the individual efficiency, just
as soon as we have then so that the work is progressing smoothly and satisUnder the block system the differences are generally a few

factorily.

cents, and a number of the "blocks" give an even balance on the first lineout.

They are still working at the differences in this department and

they now have a surplus of about ,':14,000. and they have checked up all of
the deficit.

We will keep at it until we get to the end, and I hope will

balance without much difference either way.
I asked Mr. Alexander for the clearing house information you de-

sire this morning, and found that they do not include awcqerhead in their
cost and up to the present time their cost per item is 6.7 mills or 4O per
thousand dollars.

Mr. Gilpin told me that they included no overhead for

rent, light, heat, administration, or any other item except the actual items
incurred in handling the collections.

You will note from the detailed sheet I sent to you that we have
included what would seem a reasonable amount for overhead, and it is the
opinion of the junior officers that we will gradually reduce our cost to



Benjamin Strong, Esq.

FEDERAL RESERVE BANK OF NEW YORK

9/27/16.

3/4 of a cent per item or less, so I hope you will have no anxiety further
about it.

I note by the morning papers that the country bankers had an infor-

mal meeting and are to petition Congress to relieve then from the free collection system, but the testimony of a number of bankers who drop in at the

bank is to the effect that the system is working very satisfactorily and they
approve of it, and it is only the opposition of the small country banks, who
have lost their exchange, that seems to be in evidence.
I am glad that you are to see Governor Aiken and your other friends,
and hope that you will have a fine time, but "keep on the brakes."

Have you given any more thought to our accumulation of gold, and in
what ways it may be done?
Mr. Jay returned from Canandaigua this morning and is to have a
talk with !Ir. Woodward to-night about his directorship in this bank for the
next term.

With kind regards, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
"The Lewiston."
Estes Park, Colo.

RHT/CEP




FEDERAL RESERVE BANK
OF NEW YORK

;{
.4.4vs

September 29, 1916.

,p/

My dear Governor:

We are running somewhat shorthanded now as Messrs. Curtis, Kenzel.
and Hendricks are away.

I am awaiting with much interest the copies of the full addresses
of Messrs. Warburg and Vanderlip at

Kansas

City.

The Vanderlip address was

given much publicity and evidently was very well received.

I have not as

yet seen much comment on Mr. Warburg's address but assume that will appear
in the banking publications.

Mr. Delano was here yesterday afternoon and said he had not been
in Washington much of late.

We discussed with him the selling of the 3%

one-year notes, stating that our thought was to put out this sample lot
to have them distributed somewhat and make them known.

He seemed to think

that we had acted rightly, as did some of the others, and I hope that you
will acquiesce, even if it was against your awn judgment.

We sold yester-

day the balance of the July 1st one-year notes, J. P. M. & Co. taking ,;',500,000.

and the other

..

250,000. we sold to Morgan, Bartlett & Company, all on a 2 3/4%

basis.

The Evening Post representative brought in your letter to-day in
reference to their tabulation of the cash holdings not being correct.

We

will arrange to give him information as to the weekly settlement of the Fed)

eral reserve banks also, and hope that the figures will be more correct.
Mr. Alexander was in this morning talking with Mr. Jay about the
ruling of the Federal Reserve Board against Mr. Mellon of 'ittsburgh remaining as a director of the National Bank of Commerce.



Mr. Alexander feels

RAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

2.

9/29/16.

very much aggrieved at the way his board of directors has been shot to pieces
by the Clayton Act.

He stated that there is every evidence just at present that rates
would rule law, in view of the large amount of gold coming in.

We are having

a very active market, this being the 20th or 21st consecutive day that they have
sold over a million shares.

Apparently there is a good deal of distribution

going on, but with low money and so much prosperity I an inclined to think
that we shall have a speculative frenzy gradually increasing in intensity for
some time to come, and personally I think it is a good time to

lean house and

get on a conservative basis.

We are installing a time clock, in order to make proper adjustments
of the time put in, especially in the Transit 'Department.

7e purchased to-day nearly one and a half millions of acceptances,
about t400,000. of the Bank of Commerce, part of it with the Metals Bank as
additional indorser.

'7e also had Lee, Higginson & Co., and a Philadelphia

bank, as well as the Guaranty.

We got some of the Gu

and in the system we now have about t,14,000,000. of the Guaranty, of their

approximate !40,000,000. they have issued.

r. Jay will write you probably within a day or two about his talk

.431
with Mr. De Neuflize.

FeAfeels that he could conduct the negotiations with

you, representing the Bank of Prance.

We expect Mr. Turner of Elmira, President of the National Bank Section of the State Association, to meet next Monday with Perkins, Smythe, and

Burden of Cazenovia, to discuss the directorship question and plan for carrying it out.

I hope that you are not having so many visitors as to overtax your
strength.




A reasonable number and a reasonable length of visit would undoubt-

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

3.

9/29/16.

edly be helpful to you.

My best wishes go with this to you.
Sincerely yours,

Benjamin Strong, Esq.,
"The Lewiston,"
Estes Park, Colo.

PHT/CEP

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(1,-FEDMILL RESERVE BANK oe NEW YORK

Close of businesb SEPT.29, 1916.
Number of items hanaied

25,681

$7,290,409.68

Totaling
Short
c'erenee

50

Over

A.E.RACK PROVED

P.R.

T!

4.30 P.M.
6.30 P.M.




7--;.),ERAL RZSgi. ri; BANK OF

' YORK

Close of businesz, ._.SEPT.30, 1916
Number of items handled

Difference

23,893.
$8,155,307.15

Short

19

Over

O.Z. RACK PROVED

F.R.

3.55 P.M.
4.40 P.M.




1.4..

4.

.1.....1.111,.4,41.,401

ILL RESERVE SANK OF NEW YORK

Cloee of busines
Number of items handled

1916.

27,871.

$8,599,153.59

Totaling
renee

OCT. 2,

Short

.47

Over

A.E. RACL PROVED
O.Z. RACK PROVED

4.4n P.M.
5.15 P.M.

FEDERAL RESERVE BANK
OF NEW YORK

mat

;Cee
October 44 ,19161:
cY;eir

My dear Governor:

I have your good letters of September 29th and I an delighted to
know that you had a visit with Messrs. Warburg and Aiken, and have no doubt
of your thorough enjoyment of it.

I did not win the "old man's prize" at Rye, but it was an interesting experience, as there were nearly 400 men entered and it was largely
a question of handicap, btt I believe I ended about number nine or ten on
the list.

Regarding the Collection Department, it seems to be moving now

very smoothly apparently, and I enclose the last three reports concerning

\J

same, I having asked to have a report every day as to the situation, and
I believe that you will agree with me that the results of these three days
are very gratifying.

I hope that you will not worry about our reduction

to 1¢ per item, as we all feel that the volume will tend to increase--or
not drop much below what we are doing now--and we ought tobe able to reduce
the cost to about 75¢ to 80¢ per hundred items.
Messrs. .Jay and Curtis are in Washington to-day, discussing with

the Federal Reserve Board the question of private bankers under the Clayton
Act.

I hope that they may be successful in securing a most liberal inter-

pretation, as this feature of the bill does not appeal to me as being sound
and wise.

Yesterday we purchased somewhat over three million dollars of
acceptances, the American Exchange and Commerce

being about 0300,000. each.

We purchased 01,280,000. of the Guaranty at 2 11/16 for the longer periods



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

10/3/16.

0
or a sixteenth higher than we bought about ',900,000. of the Bankers.

To-day

we are getting about , 5,000,000. of the New York City warrants maturing December 1st on a 2 5/8% basis.

As I wrote you, we have now about fourteen or fifteen millions of
the Guaranty Trust Company acceptances in the system, scattered among the

banks, and I shall be glad to learn if you have any thought that we should

Iput any definite limit on the amount that we should purchase, as evidently
I

ithey

are making heavy acneptances now in connection with cotton and other

business.

\

We are glad to have these additional lines being offered now,

as our warrants and acceptances both were running off rapidly.
In re allotment of purchases of warrants and acceptances, you will
appreciate that when this matter was presented at the governors' meeting,
I was not in a position, by reason of my knowledge, to offer any objection,

and I assumed that they understood from former discussions haw the New York
bank felt in regard to its business.

I have been

over the matter to-day

here in the bank with :Ir. Cann (hr. Kenzel being away), and he advises me

that there is a demand from the different banks for acceptances and warrants,

we receiving almost a peremptory order this week from Kansas City for

500,000

I shall be glad of any suggestions as to what action we can take at the present time;

otherwise I judge it will go over to the governors' meeting in

November.

The balances seem to be running quite heavy against us at the present
U/7

time in favor of the other Federal reserve banks, and to-morrow we shall have
about '25,001,000., I think, to settle with the Gold Fund of adverse balance.
I think that there is quite general agreement of the wisdom of

charging off items of organization expense, excepting the cost of unissued
Federal reserve notes.

I assume that this natter will be settled by the

Federal Reserve Board, as it properly should be, because all of the banks



FEDERAL RESERVE BANK OF NEW YORK

3.a

Benjamin Strong, Esq.

10/3/16.

should pursue the same policy in regard to dividend disbursements, and the
Board has already stated that they would only approve dividends declared as
of July and January.

I hope Mr. Jay will be able to induce the Canandaigua National Bank
to remain in.

I took up the matter of our taking gold from J. P. M. & Co., unless

we had silver certificates and legals to use in settling our C. H. balances.
7y impression was that we had had sufficient to meet these balances in nearly
every case, and Mr. Sailer informed me that he could only recall one instance
in which We were not able to do so, that day we losing about three million
dollars in gold.

I feel very strongly the necessity of getting under way our foreign
arrangements with the different banks, and if there is anything that you could
suggest for us to do from the bank here in the way of urging action at 7:ashington, advise us.

In my judgment we ought to be able to begin buying bills

in London this winter, and create a favorable balance while money and credit
are in such abundance here.

Mr. Sailer informed me that while I was auay, the Atlanta bank
offered a million dollars of domestic acceptances put out by the 7hitney
Central of New Orleans, if we wanted them at 2 5/8.

Mr. Sailer and Mr. Jay

talked with Mr. Rhoads of Philadelphia, who had had the same offer, and they

both wired offering to take200,000. at 2 3/4 and were advised in reply
that they had all been sold at 2 5/8.

I asked Mr. Sailer to follow up the

matter to see who bought them, as possibly Chicago or some of the other banks
have bid against us.

I shall be glad indeed if the books I sent may serve to brighten
even a few minutes of

our time there, as I feel quite helpless in my desire

to make your stay there as pleasant as possible.




It certainly is a great

,AL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

4.

10/3/16.

will
joy to us to feel that you are improving steadily and I hope that you
keep the brakes on yourself.

With kind regards, I remain,
Sincerely you-s,

Benjamin Strong, Esq.,
"The Lewiston,"
Estes Park, Colo.

RHT/CEP




FEDERAL RESERVE BANK
OF NEW YORK
October

4,01.21&60,
< j,
<

My dear Governor:

In reading over the copy of your letter to the Honorable Carter
Glass in re issue of Federal reserve notes against gold, I am all the more
impressed with my feeling that as there are so many features of the Federal
:Reserve Act which are not understood, and so many policies that should be

inaugurated for the good of the banking system of the country, you should,
if you have leisure, write articles similar to your brief on the issuing of
Federal reserve notes, which could be published in papers like the American
Bankers Association Journal(which would reach every bank which has membership in that association, some fifteen thousandl, and thus you would contri-

bute very much to the education of bankers generally, which, as you recognize, is necessary, in view of tl'ieir lack of information and their real ig-

norance in many cases.

Our directors' meeting was held this morning, all present except
Starek and yourself.

No Change was made in the rate of discount.

The question was raised whether in making up our charge to the
Yederlandsche Bank for services rendered, we should charge them the 1/20th
of 1% for the first three months, which was of course as per agreement, or

whether it would be better to make the uniform charge of 1/10th of 1/ per
annum and have this apply to the three months instead of the original rate,
which was, of course, much higher.

It being a question of Policy, it was

thought advisable to lay the matter over and to secure your ,ludgment on it
before making a decision.

I enclose detailed statement concerning same

and think it might be well for you to answer promptly concerning this so we



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

2

10/4/16.

would have same for our next meeting.
The question of additional banking space, which some of the officers
feel is quite essential, in view of the increase in business, was laid over for
further consideration.

Ladenburg, Thalmann & Company, havinr filed a statement with us and,

with their consent, having same considered by Messrs. Jay, Woodward and myself
the directors decided to make their paper eligible, with the understanding that
we would temporarily have a limit of within a half million.
I had a talk with Mr. Woodward this morning about his remaining as

director, and he feels quite strongly that the principle of rotation so far
as the elective directors is concerned should be established at this time.

re expect Mr. Turner and his committee will have a meeting to-morrow, at which
will be thoroughly considered this question, and I can report more fully to you
then.

I have accepted an invitation to address the National Hardware Association (manufacturers and jobbers), generally about 600 to 800 of the representative manufacturers and distributors of hardware from all over the United
States, at Atlantic City, on "Trade Acceptances."
mation at the present time,

I am gathering some infor-

Do you see any reason from a bank's standnoint

why the substitution of the trade acceptance for the open book account is not
a move towards making dead capital of the open book accounts into liquid cre-

dits which can be utilized?

I shall be glad to have any suggestion.

"le are nurchasing about a million and a quarter of acceptances today at the usual rates.

I hope that we may continue to have more warrants

and acceptances offered us, so as to hold up our investments.
There was considerable discussion this morning as to our policy as
to dividends, but decision was deferred until the last of December when we

will know more accurately, but I think the prevailing opinion seemed to be



; FEDERAL RESERVE BANK OF NEW YORK

3,-

10/4/16.

Benjamin Strong, Esq.

that if if we could declare a dividend, paying up to say April 1, 1915, or possi-

bly July 1, 1915, and still have sufficient undivided profit as a "back log,"
it would be a matter of policy to do so.

Mr. Jay will write you about some of the other matters which came
up, all of which will prove of interest to you, I hope.
I have not had tine yet to go over the Bank of France matter with
him but will hope to do so within a day or so.

nth kind regards and my very best wishes to you, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
"The Lewiston,"
Estes Park, Colo.

EFT/CEP
Enc.

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FEDERAL RESERVE BANK OF NEW YORK
STATEMENT OF CUSTODY CHARGES - GOLD COIN

FOR THEJVMUNT OF THE NETHERLAEISIL4ji,Alimaima.

Number of
ilaa.

From

1,001
1,002
1,003
1,004
1,005
1,006
1,007
1,008
1,009
1,010
1,011
1,012

Boissevain & Co.

1,013

Bo:ssevain & Co.

1,014
1,015
1,016
1,017
1,018
1,019

1,020
1,021
1,022
1,023
1,024
1,025
1,026
1,027
1,028
1,029
1,030
1,031
1,032
1,033
1,034
1,035
1,036
1,037
1,038
1,039
1,040

National City Bank
National City Bank
Blake Brothers & Co.
Blake Brothers & Co.
National City Bank
Kissel Kinnecutt & Co.
Maitland,Coppell & Co.
Bolssevain & Co.
Blake Brothers &'Co.
Kuhn, Leob & Co.
Hayden, Stone & Co.

Date
;Received

March 16116
ft
23/16
ft
24/16

Amount

616,635
600,000
88,000
16,000
75,000
293,500

24/16
27/16
28/16
April 1/16
ft
3/16
3/16

4/16
E/16

ft

.Al24m

1.137,F

515,000
64,600
10,000

14/16
15/16
15/16
17/16

36,000
105,230
900,003

ft

17/16
17/16

ft
ft

18/16

65,000

17/16
17/16

43,000
3,000

Hausman & Co.

Pt

17/16

Kidder, Peabody & Co.
A. A. Hausman & Co.
Kean, Taylor &Co.
Blake Brothers & Co.
Holland-American Line

Is

10,000
11,194

18/16
19/16
June 22/16

Speyer & Co.
J. & W. Seligman & Co.

July
"

12/16

"

13/16

k

/

Hallgarten & CO.

National City Bank
Kean, Taylor & Co.
Guaranty Trust Co.
Guaranty Trust Co.

Boissevain& Co.
Guaranty Trust Co.
J. S. Bache & Co.
Boissevaln & Co.
Speyer & Co.

Maitland, Coppell & Co.
Kuhn, Loeb & Co.

Blake Brothers & Co.
Blake Brothers & Co.

ft

ft

tl

18/16
St

5/16

a ,00W,

(Sliver 2.20) 91,094.70

21/16

Aug. 14/16

"
"

,

St
O

51

63,q04

44.2

ft

It
vt

et

ft
ft
ft
IS

ft

5/16

20,000

It

5/16
20/16

10,600
19,000

It

05,955,459.99

199

545.21
166.56
313.97
46.05
9.42
58.63
150.37
13.24
255.38
27.08

.22AMIL1410.

192
191
191
191
188
187
183
181
181
180

Telegrama

.0,Na

1,j3

15.12
6.37
6.37
6.37
6.37
15.78
15.78
11.20
21.37
21.37
5.32

.68
.68
.68
.68
.54
.55
.71

4.93

.67

3.73

.71

5.32

170
169
169
167

16.30
48.75

.77
.74

23.52
22.96

167
167

416.71
43.01
73.21
57.19

.23
.23
.23
.23

5.67
5.67
5.67
5.67

166

29.56

.39

19.67

.23

167
167
167

1.37
4.58
5.12
3.64
2.73
.52

.20

4.94
5.67
5.67
5.67

138.36

.68

17.22

21.96
.71
7.89
39.45
13.15
17.18
1.52

.86
.68

17.22
17.22
17.22
17.22

166

3.3

3,180

36,000

200,000
100,000
209,000
Sept. 1/16
"
1/16 (Silver 1.29) 79,286.29
"
1/16
116,000
"

o7 . 0

6,000
1,140 _rt. /2!) "
500,000

Custody Charge

167

3

94,000'

17/16 (Silver 1.50)

Days to
Oct.1/16

179

A

160,000
125,000

Hanover National Bank
Hallgarten & Co.
Kan Loeb & Co.

y3.0%
"
ft

7,600

PS

It
It

Io

0 1,000,000'

24/16

It
It
ft
tI

Rate Per

166
165
101
88
81
80
72

48
30
30
30
26
26
11

-1_2'9613

9.53
1.42
.76
.57

02,554.43

.23
.23
.38
.38

.64
.66
.68
.70)
.76)
.76)

.32)
.32)
018.44

5.67

4.95
4.95

iO46.74

yet
rerorted by
rethorlande
Legation

FEDERAL RESERVE BANK
OF NEW YORK
It\d.

ber 5, 1916.
41"

dear Governor:

I acknowledge the receipt of the copy of your letter to Mr.
Towne and Mr. Jay arranged with Mr. Towne yesterday to hold his decision
in abeyance pending the outcome of a meeting being held to-day at the National
City Bank of the conmdttee of the State bankers in re selection of directors.
Mr. Jay tells me that the Canandaigua National Bank has decided
to remain in the system, as he and Mr. Curtis evolved a method to satisfy
them.

I have asked Mr. Sailer to write to you the details of his handling
of the Gold Settlement Fund this week, thinking that you would be interested
in the attitude of Dallas and St. Louis.

Regarding Mr. Locke's proposed resolution, I do not think that after
the directors have had a discussion of it, a majority would vote in favor of
it, but it is to me disappointing that there should be even a minority who
would think it wine to make si3ch a restriction in view of the efforts being
made to develop the discount market.
I hope soon to hear of your tramping and fishing instead of working
your brain over time by discussions with your numerous guests.

Dr. Treman

suggests that you quiet down 'now and lead the simple life again, having the

visits in memory and working your brain only on the most important of the
problems.

To my mind, just now the making arrangements with the foreign

banks is of mch more importance than anything else.
Mr. arburg's speech was very well received apparently and the 7all
Street Journal has taken up cudgels against the Chronicle.



It was a forceful

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

2.ft

10/5/16.

address, delivered at the right time, and can-lot but have weight, and if you

can later follow it up with an occasional article in some one of the principal
banking magazines, the situation will be further strengthened.

The political situation is a very interesting one, as many are apparently either undecided or are keeping their views to themselves.

I do

not think Justice Hughes has succeeded yet in developing any great heat in
the campaign, but I believe he will receive the vote of the business men
generally, while apparently Tilson as yet has a strong hold on the masses.
Personally I think it will be a close race unless something arises to develop
an unusual situation between now and election.
Tith kind regards, I remain,
Sincerely yours,

(4------01-(cAA-eL
Benjamin Strong, Esq.,
"The Lewiston,"
Estes Park, Colo.

RHT/CEP




FEDERAL RESERVE BANK
OF NEW YORK
40/

'

\ 157

October 6, 1916.

c9
es

dear Governor:

I have yours of October 2nd and when I realize that you are within
three and a half to four days' mail service from us, it does not seem far.
I am glad that you are to have Mr. Kains of San Francisco with you
and hope that Messrs. Vanderlip and Trumbull will not overtax you.
The Boston bank, when Governor Aiken was away last week, fixed a
rate for domestic acceptances of between 3% and 4%, which has caused quite
a furor up there and to-day the Old Colony Trust Company sold us
of their own acceptances on a 2 3/4% basis.

100,000.

I talked with Governor Aiken

about it and he thought our doing so would help strengthen his position-that the rate should have been between 2% and 4%, as is ours.
7-e are having some offerings of acceptances, as you will note from

the statement sent you, and are picking them up wherever it seems desirable.
I trust that notiyithstanding the delay in the State Department, you

will feel free to keen up your personal correspondence, working out details
of what

may be an effective arrangement at the proper time.
To-day we have a report that Ambassador Gerard is one the way here

with a peace proposal, which I question, but it has had the effect of making
the first break in the market for about three weeks.
I go back to Ithaca to-night for Saturday and Sunday but expect to

be here again Monday morning, and shall hope to hear that you are taking a
vacation from work after your guests go, and are slowing down again.




FEDERAL RESERVE BANK OF NEW YORK

2.

Benjamin Strong, Esq.

I think of you often, and with this goes my very best.
Sincerely yours,

Benjamin Strong, Esq.,
"The Lewiston,"
Estes Park, Colo.

RHT/CEP

7 S. --- Kindly remember me to Mrs. McLaren.




10/6/16.

FEDERAL RESERVE BANK
OF NEW YORK
Octobe

1916.

';149P
My dear Governor Strong:

Your letter of October 4th reached me this morning.
I was over at the subtreasury this morning as one of the officers
and was impressed b7 the amount of gold which they have in storage and was
equally impressed by what seemed to me to be a lack of security for the building and its contents.

Regarding the one-year notes, we will have this week about one
million of one-year notes payable October 1, 1917, which we will hold, and
if occasion offers, will rebuy some of those we sold.
The good work in the Collection Department goes on and now it becomes a question of haw soon we aught to consider making collection of items
of different kinds for the banks--the same service that is being rendered
now by the regular New York correspondents.

7hat do you think about it?

Mr. Warburg is in the bank to-day, as he came over to register,
and I have discussed several -matters with him.

He seemed pleased that we

had taken the action we did in regard to your salary, and I hope that this
disposition of it was in line with

our min thought, because that wa

desire of the directors and they would have taken any reasonable action which
would satisfy you, because they are looking forward to your returning here
at the earliest possible moment consistent with your strength and health.
I want you to understand that we are all much interested in every
indication of improvement on your part; that more and more there comes a recognition of the great work you have done, not only for the New York bank,



,EsERVE BANK OF NEW YORK

Benjamin Strong, Esq.

10/9/16.

but for the Federal 'Reserve System at large, and this grows more and more im-

pressive the longer you are away from us.

It seems to me that it is provi-

dential that you are able to continue to study the larger problems in their
broader aspects while we are struggling with the details.
I talked with Er. Warburg this morning, telling him that I was
greatly impressed with the need of our opening relations with foreign banks

at the earliest possible moment; that we had already received suggestions from
different banks, among them the Netherlands, a bank in Greece, one in Java,
another one in Italy, as well as the Bank of France and the Bank of England,

with whom, of course, we should like to open relations, as well as the Reischbank in Germany.

Quite to my surprise he said he saw no rea:son why we should

not open an account with any neutral country as soon as it could be brought

about, but as far as the belligerent countries were concerned, we should proceed more cautiously, which, of course, is good sense.

Will you let me know whether you are taking up these matters in a
personal and private way with the Bank of England and the Bank of France, and
any others, and if not, whether you cannot bring about a quasi-permission on
the part of the Federal Reserve Board for you to do this work, it being merely
preliminary and without official sanction and recognition as yet; but if the

preliminary work is done, when time for official action matures, we will then
be able to start business promptly instead of being held up.

Would you

think it well for us to let Yr. Curtis go over to Washington in a diplomatic
way to see if progress cannot be made, and if not advisable to do it before

-

election, would you think it wise to do so immediately after?
Frankly I an strongly impressed with the desirability of doing these
things now when apparently everything is in our favor, rather than having it
held up until we will have to negotiate when things are less favorable and more
certain to be in favor of the one with whom we make arrangements.



B.

ERVE BANK OF NEW YORK

I understand

Benjamin Strong, Esq.

10/9/16.

r. Jay sent Hr. Turner's letter to you and that

will advise you of what has been done and I hope will meet with your approval.
I shall be glad to know what rate you think we should make on domestic acceptances.

Should we act on the theory that it is a matter of

credit entirely and that domestic acceptances should take the same rate, asTurning the strength of the credit is the same, as would foreign acceptances,

or should we have in a general way a small differential which we charge additionally for domestic acceptances, on the theory that we should make our competition with the member banks as little felt at present as possible.
I was glad to see for myself that the subtreasnry had about

S370,000,000. of gold bars, coin, etc., and only wish that the Federal reserve
vaults were filled with gold in the shape of reserve against troubles that may
come.

We had a shaking out in the stock market for about an hour this
morning similar to the panic times of 1907, about a million shares changing
hands in an hour or so, with fluctuations of from ten to thirty points on some
stocks.

With this goes my very best regards to you, and the hope that you are
doing your level best to make good in health.
Sincerely yours,
61.44.4*-te.-

Benjamin Strong, Esq.,
"The Lewiston,"
Estes Park, Colo.

RHT/CEP




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rf/4-

FEDERAL RESERVE BANK
OF NEW YORK

October 11, 1916.

dear Governor:

By reason ,)f the shortage in the official force this week, I am

taking my turn at attendance on the vaults and have been impressed by the
amount of gold in the subtreasury, which emphasizes to my mind my constant

wish that we could be accumulating gold more rapidly in the reserves of the
Federal reserve banks.

Did you and Mr. 7axburg give any consideration to a plan of settling
our balances, in New York at least, by silver and legals and is such a plan
feasible?

Could you give it at your convenience some thought along these

lines or make any suggestion of a plan under which we can accumulate more of
this gold while it is coming in and before the crucial test comes later.
Then convenient, will 7ou indicate your opinion of what would be
a proper allotment for the Federal reserve bank of its investments purchased,
and should it be taken up previously with the governors or that committee of

which Governor Seay was chairman, or would it be better to leave it until
the meeting of the governors the latter part of November.
I expect that Governors Aiken, Rhoads and Fancher will cone to New
York next Tuesday for an informal meeting.
think we should discuss at that meeting?
77e had a request from the Bank of Commerce yesterday for a ruling

as to whether bills created in the purchase by a foreign nation (probably
Germany) of hides in Argentina, the sane to be stored in warehouses there,

for a period longer or shorter, but with the understanding that there should



Have

F.DERAL RESERVE BANK OF NEW YORK

Beniamin Strong, Esq.

10/11/16.

be the privilege of extension up to two years' time, at which time, if the war
is not over, the bills should be paid in full, would be eligible for purchAi.se

by the Federal reserve banks.

I shall be glad to know your opinion of such

a transaction, as it may be a precedent for others of a similar kind.

Our balances with the other Federal reserve banks sem to be running
quite heavily against us and to-day we shall probably have an adverse balance
of $.15,000,000.

To-morrow being a holiday, Columbus

ray,

the bank will be closed, but

I expect to put in part of the day at least in working on an address on "Trade
Acceptances," which I an scheduled to make at Atlantic City next week.
The connittee on directorship in the Federal Reserve Dank of New
York of the New York State Bankers Association is having a meeting this afternoon to discuss the situation, and we have had !!r. Burden of Cazenovia to lunch
with us.

I shall be glad to hear a report as to how you are feeling, and

assume you will give us ample time when you change your address.
'ith this goes our best wishes, as ever.
Sincerely yours,

Benjamin Strong, Esq.,
"The Lewiston,"
Estes Park, Colo.

RHT/CEP

P. 5. --- I am enclosing herewith report received from the Bank of France.




FEDERAL R ESE RV E BANK

OF NEW YORK

0

"A/

.

October 13, r916.

My dear Governor:

I wish that you could properly understand the very great
pleasure that we had to-day on receiving the news contained in Mr.
Fendricks' letter, that you hnd gained so much in weight and were
looking so fine.

No news could give us greater pleasure and I

just want you to know how happy we all are that yours is a constant
gain.

Do not let up a moment in your efforts to gain fifteen to

twenty-five pounds more and to add to your reserve strength much
more, so as to fit yourself for speedily taking up your work again.
The bank needs you and, more than this bank, the Federal Reserve
System and the country need your service and ability, so let this
be a responsibility that you feel rests unon you to consecrate yourself to this one object, getting well.

I have been struggling with trying to put together some
thoughts on trade acceptances, but the interruptions make it difficult to concentrate one's mind for any long period, and when you
haven't very much mind to concentrate, it makes it all the more
difficult.

I am not writing on business to-day, but just want to send
you this message of cheer and best wishes.
Sincerely yours,

'oenjamin Strong, Fsq.,
4100 7!ontview Toulevard,
Golo.

http://fraser.stlouisfed.org/ rTIT/C7P
Federal Reserve Bank of St. Louis

FEDERAL RESERVE BANK
OF NEW YORK

z

007
,

October 17, 1916.

Dear Mr. Strong:

I spent yesterday in Atlantic City in connection with the

Hardware Convention and came up to-day to New York, spending the day
here and finding your various letters.

I cannot answer them in de-

tail as I am putting the finishing touches to my address on "Trade
Acceptances," which I have to deliver to-morrow in Atlantic City.

Later, perhaps, I shall send you a copy which you can criticize to
your heart's content as long as I get it out of my system.
Oar

Mr. Curtis brought his family back from Massachusetts today, having motored down yesterday and to-day.
Things apparently are moving smoothly here, except that the
balances run against us. and yesterday Chicago telegraphed us to ship

them 41,000,000. silver certificates and legal.
To-morrow we shall have a directors' meeting, and Mr. Locke

wrote that he would postpone the introduction of his resolution until
later and probably would not come down to the meeting to-morrow.

Mr. Woodward has returned from his coaching trip to Maryland
with August Belmont and other members of the Knickerbocker Club.




,.FRAL RESERVE SANK OF NEW YORK

...........

Benjamin Strong, Esq.

-

10/17/16.

I hope to be more regular in my correspondence as soon as
the "Trade Acceptance Address" is delivered and I am back on the
job.

With kind regards, I am
Sincerely yours,

CV/V.,
1W

Deputy Governor.

LIBenjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/HAB




FEDERAL RESERVE BANK
OF NEW YORK

Ciober 20, 1916.

Dear Governor:

I made my address on "Trade Acceptances" at the joint session
the hardware manufacturers and jobbers in Atlantic City on "ednesday,

peak-

ing to probably 350 to 400 for about a half hour, during which they gave me
very close attention and evidently were much interested in the
Judging from the comments afterward, I think that it awakene

'estion.

in the ninds

of a good many the question of whether they should not ado .t the trade acceptance system.

I understand that they contemplate having

e address printed for

circulation among the membership and also some on -ide, and I hope that at
the meeting yesterday they apnointed a connitte

to consider and report upon

the advisability of their adopting this plan and cooperating as to the time
and methods, but as I came up to the bank

esterday morning and did not re-

main for the last two days of the conve tion, I an not informed as to what
action was actually taken.
Thanks to the criticisms

eminent colleagues, Jay and Cur
printing and I hope will not

the Tugf-estions, and the advice of my

a, the address has been put in shape for

ast any adverse reflection upon the bank, what-

ever may be the criticisms against me personally.
I an very gla
as is possible and I

statement is core.
your part which



to note that you are taking as good care of yourself

hink that resplts thus far shown indicate that your
I do not approve, however, of any mental attitude on

ecognizes a poAsibility that you are not coming back to the

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

10/20/16.

bank, as I am hanging on here, making a very evident bluff about even filling
temporarily this position, and while this can be carried on for a reasonable
length of tine, the stockholders and friends of this bank will be very glad
when they learn that you are back on the job.
the place.

You are certainly the man for

You have done a great constructive work already but no one can

realize more than you do that there are other important problems to be worked
out in the development of this great financial structure, the existence and
improvement of which are so vitally important to this great country.
I would be the last one to want you to come back too soon but I
also appreciate most thoroughly the bank's need of your constructive mind,
and when you do cone back later, I hope that arrangements can be made so that
every unimportant detail can be handled by others, leaving you free to put
in a few hours each day, probably in the morning, at the bank, and reserving
the afternoon and evening for recreation, diversion, and meditation.

Dr. Trenan advises against entering into the social life of Denver
to too great an extent, urging that you will always keep within the limit of

weariness and preserve your strength for the great work for which you are so
eminently fitted.

I hope your new house

is in the midst of a pleasant environment,

free from cats and dogs at night and German bands by day.

Do not consider your idleness as irksome but as being a part of a
great constructive plan for you personally, and remember that "they serve
who only stand and wait" until the opportunity cones for action.

"e

hope 7r. rendricks will be back next week and also that 7r. Cann

will be here, but 7r. Sailer will be away probably another week or two.

I go back to Atlantic City to-night, where Mrs. Trenan is spending
a week or so, and expect to be back at the bank on Monday morning and remain
all next week until Friday, when I hope 7r. and Mrs. Jay will go up to Ithaca



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

3.

and spend Saturday and Sunday with us.

I never succeeded in getting you up

there but have not despaired, and the visit is only postponed.

1th my very best wishes to you, I remain,
Sincerely yours,

Benjamin Strong, Fsq.,
4100 7ontview Buulevard,
nenver, Colo.

RTIT/CEP




10/20/16.

FEDERAL .RESERVE BANK

OF NEW YORK

October 24, 1916.

e?,816.
Dear Governor:

Mr. Jay has returned to me some letters of yours which I had permitted him to read and I will go over some of the matters again, even at the
risk of duplication.

I do not feel that Mr. Warburg's plan of inducing member banks to
nut all of their reserves in the Federal reserve bank will work out in practice, as I think there will be a general reluctance on the part of bankers
who ha-e been trained to harbor reserves to discontinue the practice.
cannot but feel that in some way we ought to be able to induce the menber
banks to sort out gold certificates from their daily cash,- sending same in

to the Federal reserve bank and permitting us to issue Federal reserve notes
to them, they paying out sane through pay rolls; etc., to overcome their
reluctance to take then, as they do'not count as reeerve.

I believe, at

least, that I could write to a number of bankers whom I know personally and
induce them to do this without any stir, but whether enough could be accomplished to make any impression by doing it simply through those whom I know
is a question.

In regard to our foreign arrangements, I take it from ynur letter
that you do not believe anything can be done more than what you are accomplfshing in.a personal way and through Mr. Morgan and in other indirect methods.
-t does seem a shale, however, that we are not in a position now to be putting
up the brest-works against the future on-slaught.

Both Mr.

Jay

and Mr. Curtis

are in Washington to-day, and I hope will discuss the matter informally with

.

Governor Harding and possibly Curtis may be able to discuss it with the State




FEDERAL RESERVE BANK OF NEW YORK ...2

Benjamin Strong, 7sq.

10/24/1C.

CA

Department.

I think it would be well for 7r. Curtis to prepare a brief for

submission later when the proper opportunity offers.

What do you think of

this?

I note your impression as to the amount of the Guaranty Trust Company acceptances.

7r. Jay has, I think, written to you about the stir-up

in Washington over the newspaper articles on the newla00,000,000. French
acceptance plan."

I think the trouble originated in the circular issued

by the 7ankers and Guaranty trust companies, especially the two paragraphs
I have narked, indicating that there was some obligation on the Federal reserve banks to purchase these and indirectly urging State banks to put themselves in a position to handle them with the Federal reserve banks.

The

Federal Reserve Board telegraphed each Federal reserve bank as per the copy
sent to you last night, answer to which is not yet at hand, and after a discussion with 7sssrs. Jay and Curtis last night until nearly 7 p. 71. I urged
then both to go over to Washington, which they did, in order to straighten
out the matter to-day and if possible prevent Washington from issuing some

pronouncement which would tend to interfere vith the .development of the open
discount market or night affect the placing of the French acceptances under
the plan now being developed.'

I am sending you a copy of the confidential information sent out,
and I told 7essrs. Jay and Curtis that if 71.. Kent would issue another circular in which he would state that he would like to correct any possible misapprehension their statements made in the former one, may have led to, and then

if Tashington would hold the matter in abeyance for a short time, we could
of an
find some opportunity Soon for the issuing of a statement or the making

address in which the position of thee Federal reserve banks could be clearly

stated and it could be done undoubtedly without jeopardizing the development
of the acceptance business.




FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

10/24/16.

What would be your view about raising our acceptance rate about
1/6?

7oney, of course, is very easy and plentiful ,lust now, but it has

seemed to me that we might nossibly make this mall advance without affecting
adversely the situation, and it night be wise to do so.
I am glad that yr. George Boberts of the rational City Bank is to
make you a visit, as I have always tho,7ght him very wise in his discussion
and viewpoint of foreign matters.
I assume that you will gradually work up some briefs to be submitted
to Congress in re currency legislation in December.
I note what you say about Ladenburg and Thalmann and it is in line
with our own views.

Did you write to Mr. Locke about his proposed resolution?
7e expect Governors Aiken, Seay, Fancher and Rhoads to have an informaL conference at the bank next Tuesday, October 31st.
(Later)

I have just been talking with Mr. Jay at 7ashington and he reports
that they discussed the matter of French acceptances with the Board this

mornig and the Poard will permit 7r. J4:7 to work up some kind of a statement
and later, next week, when

7:17.

7ardingnonesto make an address before the

American Institute of Banking, he will discuss it somewhat at length in a
general way, so that, as I understand from Mr. Jay, they thought they could
put up the bars in a way to satisfy the Board.

I am glad to learn from 7r. 7endricks that you are nleaaantly
situated in Denver, and

I hope that you may still keep up the self-denial

regime so as to constantly add to your surplus strength.

The country needs

you, Governor, and yoU have a great responsibility resting on you to save
every bit of strength which you can develop and not allow the things which



.EDERAL RESERVE BANK OF NEW YORK

4

10/24/16.

Benjamin Strong, T1eq.

are not worth while to interfere with the bigger realities.

(You need not

worry about the amount of Pr. Tiernan's bill for medical advice as yet.)

While dictating I have just received your telegram at 2:30 p. m.
in re French acceptance announcement and will transmit same to Curtis or
Jay if I can reach then.

I am glad you feel so strongly, as I felt most

clearly yesterday that it would be a very great mistake for them to make any

announcement whatever--that they should allow us to handle the situation in
"ew York, which we can do, and accomnlish what they want and at the sane
time not interfere with the acceptance development.
T"e

are whipping into shape to-day the note which 7r. Jay ea-pects

to have the New York state 73ankers Issociation Committee send out to bankers
to-morrow.

Regarding the rates for domestic trade acceptances, unquestionably
the same rates should prevail as for foreign acceptances, but in the interests o' member banks we thought that temporarily we might discriminate a little,
-nd in doing so, we have had no complaint as yet.
pardon this long letter, but it see/is like talking to you every day

or two to have this touch by correspondence, and it is a great sustaining force
in the organization to know that we are in such close touch with you.

7ith kind regards, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
4100 Ilontview Boulevard,
Denver, Colorado.

"1111/EP







TRANSIT DEPARTMENT

EMIL RESlavN BANK OF NE'l YORY

Close of business

OCT.26, 1916.

30,781.

Number of items handled

',)9,858,346.99

Totaling
Short

--,rence

'7 4_

Over

F.R. RACK PROVED

A.E.

"

H

3.50
4.15

-6.

n(-

FEDERAL RESERVE BANK

OF NEW YORK

A:r5;ober 26, 1916.

7y dear Governor:

7e began our officers' meetings to-dau, although Mr. Jay is in
7ashington, having returned there last night after spending one day in 1lTew

Mr. Jay had Mr. Kent of the Bankers Trust Company and ne for lunch

York.

yesterday and we discussed ways and means of urrecting the unfortunate impression occasioned by the telegrams sent out to the Federal reserve agents
in re French acceptances.

"r. Kent stated that they had already heard from

the sane from different banks, and evidently the action of the Board created
a hesitation which was unfortunate.

7r. Kent prepared a form of letter,

which he was to send out to the banks circularfzed by the joint circular
of the Guaranty and the Bankers, and he sent Mr. Jay a copy so that Mr. Jay
could submit same to the Board to-day.

-r. Kenzel is making an address to-day before an exporters association on the Federal Reserve System and its relation to export business,
and

r. Curtis and I spent most of ye,terday afternoon with Kenzel acting

as critics to his composition.

Mr. Pendricks has submitted the question of the bank acting as a
clearing house for State bank items in Yew York City and the same is to be
.considered further by the officers.
I an in receipt of yours of October 18th, containing copy of letter
just received from Mr. Cokayne and your

Curtis and hold for M.




Jay

reply, which I

will take up with Mr.

to see to-no-row probably.

I an hoping to take 7r. and Mrs. Jay b. ck to Ithaca with me to-morrow

) cDERAL RESERVE BANK OF NEW YORK

Benjamin strong, Esq.

2

10/26/16.

to remain over Sunday, rr. Jay going on t_ "tica to speak before a small gathering of the friends of T!r. Rogers of the First rational Hank of Utica.
-te are arranging our securities in Vault A at the Clearing House pre-

& Co., which begins to reach us

paratory to receiving the gold from J.

on Friday and will continue for the next four business days.

"e

were quite disturbed in the bank here over the action of the 'oard

In the matter of the French acceptances, but hope that we may straighten out

sae satisfactorily, as outlined above.
I hoe that you are finding it pleasant and agreeable in Denver and
that you are continuing your improvement.
kindest regards to you.
Sincerely yours,

CleiWirtnA4,A4A----1

Benjamin Strong, Esq.,
4100 Montviev: "oulevard,
Denver, Colo.




FEDERAL RESERVE BANK
OF NEW YORK

October 26, 1916.

Dear Governor Strong:
I had a pleasant talk this afternoon with nr. Roberts of the NationCity Bank,

7ho stated that he contemplated going out to you later if he

could arrange the time so as not to conflict with some engagements he had
made for addresses, although he had not heard from you directly as to the
time at which you desired him to come.

I told him that you had written me

that you were anticipating with pleasure his coming out to see you and discuss certain important financial problems, and I assumed, without knowing
your views, that it would be advisable for him to make the visit before
Congress convened again, as I thought you were anticipating some sug-estions
requirin

legislation.
7e said he was to address the 'uffalo Credit 7Ten's ,".ssociation on

November 16th and that the time following that, from November 16th to the
latter part of the month, would be probably most convenient for him, but

T

think he hesitated to so express himself to you, so I am giving you the
benefit of our exchange of views for you to act as you may deem best.
7r. Roberts stated that he had just returned from a meeting of the
Indiana Bankers at Indianapolis and that Doctor !!iller of the reserve board

had spoken the day before he spoke and both along the same general line:
said that Doctor 7iller's address seems to have been well received.

He

Did

nr. "iller send you a copy of it?
I have just had a telephone conversation with yr. Jay, who advised
me that they are having a spirited debate in the Board over the French accept


Benjamin Strong, Esq.

FEDERAL RESERVE BANK OF NEW YORK

10/26/16.

ances and that they may want 7r. Kent to go to Washington and he,

Jay,

to

It seems to me unfortunate that these matters

stay over for to-morrow.

cannot be handled at r"ashinFton in away which, while carrying out any conservative and restraining views they may have, still will not embarrass the
development of the open market and other important matters of this kind.
Kr. Kenzel has just reported that he was very well received at

the exporters' meeting, about fifty to sixty present, and we will endeavor
to have his paper given publicity for the general educational effect.
7ith kind regards, I remain,
Very truly yours,

Benjamin Strong, Esq.,
4100 7ontview Boulevard,
Denver, Colo.

6110,4.

oft...

e

"RA-A-6,

09-Ny A,Ak

(.4444.-

1<414.4-1

C.7-4.4"1
44-44,

74,1"40/1.,

e

0.1113

4k4,4-64

RHT/OEP




tot-

AaA

Ois

4(444e4,4,,,,e_

444r

-(94.-41

FEDERAL RESERVE BANK
OF NEW YORK

r

,

1916.

Octobe0
My dear Governor:

There is evidently "something doing" in the Federal Reserve Board
about the French accentance matter.

Mr. Jay, who was over there discussing

the matter yesterday, telephoned late yesterday afternoon for 11r.

Curtis to

go over and also Mr. Kent and Mr. re-lphill, the two representing the Bankers

From what I nick up, the Comptroller has

and Guaranty trust companies.

taken the position that as the French acceptances were arranged on the basis
of the participating banks not only accenting but agreeing to rediscount the
acceptances themselves for five renewals, making a total period of eighteen
months, it was contrary to the nrovision of the Reserve Act.

I hope that

the matter will be strgightened out to-day in some way, so that the development of the acceptance business will not be interfered with.
I attended as a guest the banquet of the Mew York Credit Men last
night and from wliat T pic

-A

from my brother, who was down yesterday

from up-state, it aprears that there is a strong movement just now towards
rrilson, although, Whitman may prevail over geabury.

I feel, however, that

the whole situation is so sensitive that no one can tell until the votes are
counted what the result will be.

Yenzelis address was very well received and the Mew York Commercial
gave over a column of space to-day to its reproduction, and I think it will
annear in others, all of which helps the system.
I will certainly be glad to send you a copy of my address on
"Trade Acceptances," provided yo-fl will have restoratives at hand to revive



FEDERAL RESERVE SANK OF NEW YORK

......

Benjamin Strong, Esq..

10/27/16.

you after reading same, as you will find it dry.
I shall be interested to know what position Mr. Locke will take at
the next meeting of the board, but in any event we must try and kill the resolution.

I an mailing you a copy of the circular sent to the 7ational Bank

Section of the State Bankers Association under date of October 25th.

Possi-

bly it has been sent to you, but I know you will be interested in reading it.

Mr. Jay's being obliged to remain over at 7ashington to-day, will
deprive us of the pleasure of having Mr. and Mrs. Jay at Ithaca over Sunday,
as we had-planned, but we must keep on the firing line, especiary when such
important natters as this French acceptance business cone up.
"7y best regards to you, and I want you to know how many inquiries

cone to us from every side as to your progress and how keen is the pleasure
of those who inquire when they know that your progress is favorable.
ent ones at the Credit

ssociation banquet last night asked after you, among

them Judge Hand.
ever,

Sincerely yours,

rsq.,

Benjamin strong,
4100 Montview Boulevard,
-enver, Colo,

P.F.72/07P

rncs.




Differ-

NEW YORK STATE BANKERS' ASSOCIATION
ORGANIZED 1894
OFFICERS, 1916-17
PRESIDENT
BENJAMIN E. SMYTHE,

The committee has considered whether or not the principle of rotation in office should apply in
the selection of directors of the Federal Reserve Bank and wishes to make it clear that by its action this
year it does not wish to establish a precedent either for or against the principle.
The committee recommends, with their consent, the following gentlemen as candidates for directors
of the Federal Reserve Bank of New York :

BRONIMLLE. N. Y.

JOHN H. GREGORY,

VICE-PRESIDENT
ROCHESTER, N. Y.

ALEX. C. SNYDER,

BROOKLYN, N. Y.

WILLIAM J. HENRY,

TREASURER

N

.YORK
STATE,

11 PINE STREET

BANKERS.
SECRETARY

11 PINE STREET, NEW YORK. N. S.

New York, October 25th, 1916.

NATIONAL BANK SECTION.
To the Member Addressed:

The undersigned committee appointed by the National Bank Section of the New York State Bankers
Association and by the New Jersey and Connecticut Bankers Associations, has had a number of meetings to
consider what policy it should pursue in carrying out the instructions of the resolution adopted last June,
during the convention at Atlantic City, "to the end that all proper steps be taken to secure the best possible
men as directors of the Federal Reserve Bank of New York."
Specifically, the committee is authorized by the resolution
to make recommendations to all member banks of candidates for directors of
the Federal Reserve Bank of New York,
to inform all member banks of the qualifications of all candidates for such
directorship.

In seeking for names to suggest as candidates for directors the committee has restricted its search to
those who are not only of high character and business standing but also fitted by temperament, ability and
breadth of experience to pass upon the important questions of policy, domestic and international, which must
present themselves for solution in the Federal Reserve Bank of New York. In ascertaining and describing later
the qualifications of those who are actually nominated for directors, the committee will apply the same tests.
In accordance with the resolution of the Federal Reserve Board dated December 23, 1915, those
active in political organizations may not appropriately be nominated for directorships in Federal reserve
banks.
The committee has considered whether it should suggest several names or only one name for each
vacancy, and it is unanimously of the opinion that its policy should be, unless under exceptional circumstances, to suggest a number of names for each vacancy in order to make clear and preserve its position
as a non-partisan committee.
The committee has considered the geographical aspects of the second Federal reserve district, which
embraces the entire State of New York, with 482 members, the twelve northerly counties of New Jersey,
with 129 members, and Fairfield County, Connecticut, with 15 members, and believes that the various
sections of the district may properly expect to be represented from time to time on the board of directors.
It feels, however, that such representation may be obtained more satisfactorily by general understanding

and co-operation on the part of the member banks than by a contest each year between the different
sections. The two vacancies occurring this year are at present filled by residents of New York City.
The committee recommends that these vacancies be filled by the election of residents of New
York City because it is desirable that a certain number of the directors should always be available at
short notice for consultation and service on the executive committee, and because the New York City
banks, which are in the group voting this year, contribute so large a proportion (approximately 90%)
of the total resources of the Federal Reserve Bank of New York. The committee will therefore suggest this year only names of residents of New York City; and while it will not assume to lay down
any policy to be followed in the future its present view is that when an opportune time is reached for
a certain section to expect representation on the board of directors, only candidates from that section
should be suggested by the committee.



FOR CLASS A DIRECTOR.

HEADQUARTERS

WILLIAM WOODWARD OF NEW YORK:
Mr. Woodward graduated from Harvard University in 1898, was admitted to the New York
Bar in 1901 and has since that time been connected with the Hanover National Bank, serving as its
president since 1910. He is director of a number of banking and industrial corporations, a trustee of
various charitable institutions, and has served as a Class A director of the Federal Reserve Bank of
New York since its organization.
Mr. Woodward has repeatedly stated to the committee his conviction that elections for Class A
directors should be rotative, and it was only after considerable urging and an agreement by the committee
that it would express his view that he has permitted the committee to suggest his name as a candidate.
The committee has decided to suggest no other candidates for the Class A directorship because
the intimate knowledge of its affairs which Mr. Woodward has gained is of particular value during the
formative period of the bank's development. Furthermore, Mr. Woodward has held the office of a deputy
governor of the bank since its organization, and during the temporary absence of Governor Strong on
account of ill health the committee considers it of importance that the bank should be able to retain his
counsel and advice. The committee in reaching this decision has also had in mind the fact that
Mr. Woodward has not yet served a director's full term of three years.

FOR CLASS B DIRECTORS.
NEWCOMB CARLTON OF NEW YORK:
Mr. Carlton graduated at Stevens Institute of Technology in 1890. He was managing director of
the British Westinghouse Electric & Manufacturing Company in London, 1905-1910, and since 1914 has
been president of the Western Union Telegraph Company. He is a director in a number of industrial and
railroad corporations and a trustee of Stevens Institute and Columbia University.
EUGENE H. OUTERBRIDGE OF NEW YORK:

Mr. Outerbridge is sole resident partner of the firm of Harvey & Outerbridge, import and export
merchants, and is managing director of the Pantasote Leather and Agasote Millboard Companies. He is
president of the Chamber of Commerce of the State of New York. He is a student of banking affairs and
was an active member of the special committee of the Chamber which reported on the Federal Reserve Bill
after its introduction in Congress.

HENRY R. TOWNE OF NEW YORK:
Mr. Towne was educated at the University of Pennsylvania. He was president of the Yale &
Towne Manufacturing Company form 1868 until 1915, when he became chairman of its board of directors.
He was president of the Merchants Association of New York 1908-1913, and has served as director of the
Federal Reserve Bank of New York since its organization.
Mr. Towne has requested the committee to state that while not seeking reelection, and indeed
preferring to retire, he is willing to accept reelection if in the opinion of the member banks his continued
service in that capacity is desirable.

Respectfully submitted,

HENRY BURDEN, 2nd, Chairman,
F. N. BENHAM, JR.,
JOHN D. EVERITT,
JAMES H. PERKINS,
B. E. SMYTHE, Secretary,
Committee.

0

FEDERAL RESERVE BANK
OF NEW YORK

October 31, 1916.

7y dear Governor!

Last week, with the trouble developed by the action of the Federal
7leserve 'oard at -ashington in re French acceptances, was a strenuous one,

7r. Curtis returning to the bank Saturday morning, but 7r. Jay remained until
Sunday,

taking

a horseback ride to overcome the effect of the suffocating and

depressing air of the city and the particular environment in which he was precipitated for a few days.

Yesterday noon he went up to Utica to make an

address before a few bankers there and will not return until to-night

in

time

for the directors' meeting to-morrow.
I had a telephone conversation with Governor Harding late yesterday
wcfternoon and enclose a copy of my letter to him confirming the same, which
Ives you the facts.

Messrs. Kent and Hemphill thought that if member banks

were permitted to accept up to e20,000,000. with what they could place with
State banks, trust companies and individuals they night work out of it satisfactorily.

'le

will try and arrange a meetinc between 7r. Kent and some or

all of the governors to-day at the meeting which is to be held here in New
York, thinking that 7r. Kent will put the governors ri-ht as to the general
situation from the standpoint of the pr,actical handling of these acceptances

which are developing so rapidly.
Yesterday I interviewed 7essrs. Hepburn and '"i,;gin of the Chase and

Clarke and 'Bennett of the .Anerican Px. in regard to whether they had any criti-

cism to offer as to our handling of the acceptance business, our rates, etc.,
but incidentally directed the conversation so as to draw out from them without



Benjamin Strong, Esq.

FEDERAL RESERVE BANK OF NEW YORK

10/31/16.

seeming to make it a pointed question, whether they thought it advisable for
the Federal Reserve Bank of New York to purchase in the open market acceptances
other than those accented or indorsed by member banks
lution).

in re Mr. Locke's reso-

Hr. Repburn was most emphatic that to restrict it to member banks

would be a very narrow viewpoint and action on the part of the New York bank,
and that it certainly should be made as open as possible.

Me questioned whether

we shouldn't possibly have bought more acceptances to have helped out our earnings.

The American Ex. people at first were somewhat inclined to think we
might discriminate against State bank and other acceptances, but after exchange
of views, finally accepted

he broader viewpoint of purchasing in the open mar-

ket other acceptances, leaving until a later time the question of discrimination
against the State institutions.
I shall hone to see "r. McGarrah, Mr. Griggs and possibly one or two
others before the meeting to-morrow, so as to be primed in case the discussion
becomes interesting on the Locke resolution.
To-day we are expecting Governors McDougal, Seay, Aiken, Fancher and

had expected Governor Rhoads, but I have just received a letter from him stating that he is called to be 'pall-bearer in Philadelphia and cannot be present,
much to my regret.

e have quite a programme for discussion, among the items

the New York bank's proportion of investments purchased, the French acceptance

lter, the question of selling more bonds and if so, at what price, and a number of detail questions, a report of which I will endeavor to give you promptly.
I shall try to have Mr. T"oodward lunch with the governors to-day.

Governor Yarding is to make an address before the Bankers Institute
of New York to-morrow (Wednesday) night, which address will be on the acceptance
business and the policy of the Board wi-1 be outlined.




Fe intimated yesterday

/A AL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

3.

10/31/16.

that the Poard would send a confidential letter to each Federal reserve agent
in re French acceptances and would probably recommend a discriminating rate
against finance bills of from 1/6 to 1/4, and I assune that he would class the
French acceptances now being put out as finance bills.
I shall hope to write you more later, and with this goes my very best
wishes.
Sincerely yours,

enjamin Strong, Esq.,
4100.Montview 13oulevard,

Denver, Colo.

RET/CrD
Encs.




e741,

er-qf

ciA.4 )4-7

FEDERAL RESERVE BANK
OF NEW YORK

November 1, 1916.

.7y dear Governor:

In the Sunday New York Times, October 29th, you will find an article

on Page 8, "Planned referendum of check problems," which I think you should
read if not already read.

Jerome Thralls of the A. B. A. framed

1111

the

questions, I think, and has sent them out to the secretary of each of the
State asgociations, asking then to take a referendum vote in their district
on the questions submitted.

The questions do not seem to be framed to

bring out a perfectly fair consideration.and it would seem as though -

there

ought to be some speech made or paper written or influence sent broadcast
to nut up the more favorable side of the collection system.
In the :Tovenber 1st Journal of Commerce there is an item, "Reserve

Board has new clearance plan," which would seem to have emanated from
Willis, in my opinion, but which, as sent out, does not seem to me put in a
way to be helpful.
I told Governor 2dncher to-day of my anxiety lest this A. B. A.
committee evolve some scheme, and if a propaganda was entered into and a
big effort made on the part of the small banks, the movement might result
in bringing much pressure on Congress and perhaps leading to unwise legislation unless It is headed off.

He agreed and said he would call on 77r.

Thralls, which he later did, and I understand yr. Thralls stated he would
call on us here in the bank and discuss this question with us before his
committee takes action.

Would you think it wise for me to write to the

various governors, asking them to try and reach dFferent members of the



.SERVE BANK OF NEW YORK

Benjamin Strong, Esq.

11/1/16.

committee who reside in their districts?

Yesterday we had a very good meeting of the governors, Aiken, Seay,
Fancher and McDougal, Governor Rhoads being absent because of attendance
at a
funeral.

With Governor 7cDougal came a renresentative of the First National

Bank of Chicago, Mr. Hardenbrook, who made a firm offer to purchase C5,000,000.
conversion 3s at 101 1/4 and interest.

Farvey Fisk offered to take ",500,000.

at 101 1/4 provided they had an option on C3,500,000. more for three months
at the same price.

By combination of the Scotch, Irish and 7:nglish brains

represented by the governors present, negotiations were entered into, result-

ing in the governors agreeing to sell C5,000,000. and the First National Bank
of Chicago purchasing that amount at 101 1/2 and interest, deliveries one
million per week for cash.

To-day they purchased an additional C1,000,000., making a total of
6,000,000., and Parvey Fisk agreed to take whatever balance there may be in

the pool, possibly C500,000., at this same price and will want the option on
any additional amount developing for sale up to January 1st.

INS all thought

it a good deal to carry through and the governors felt repaid by the extra

price secured. Kemel is handling the detail of it.
Mr. Jay returned from -Utica last night but not in time to have dinner

with the governors at the Biltmore or to attend the theatre afterward.
We had a directors' meeting this morning, all being present except
you.

. Locke did not offer his resolution and told me privately that he had

had a long let,er from you and thought it advisable for him not to present it
as he did not care much about it evidently anyway.
"Ye had a communication from Governor Harding, which

Jay will

write you about nrobably, in re 2rench acceptances and their suggestion to
make a differential of 1/4 to 1/2 of 1% over the rate for pure commercial credits.

The directors, however, after a full discussion, did not feel that we




Ar.40 ERAL RESERVE BANK OF NEW YORK 3
'''

Benjamin Strong, Esq.

11/1/16.

should differentiate at all at the present time, and I feel strongly that it
is the function of the officers of this bank to decide our rates within reasonable limits, based on the credits represented by the bills and denendent upon
conditions existing when the bills are offered for sale.

The enclosed cony

of letter dictated by Governor Harding will explain itself and you can destroy
same.

Mr. Peabody seemed to be impressed. with the idea that Wilson would
carry the State of New York, as he believed the farmer vote, normally Republi-

can, would swing over somewhat to 7ilson.

On the other hand, the betting

in Wall Street to-day _lumped to 10 to 6 on Hughes as against 10 to 9 earlier
this week.

It is a very mixed situation and opinions differ so widely

that evidently it is to be a close election or else politicians are being
very much deceived, as'leaders in both parties seem to be under the surface
quite anxious.

Governor Pancher remained over to-day, leaving to-night, but he was

te only one who called at the bank to-day.

it is supposed that there will

be a meeting lf the governors in Washington about the 20th to 25th of November
and if you have any matters that you think should be brought up, kindly advise
our genial secretary or me.

-

Governor Harding is to speak here to-night at the Bankers Institute
in re acceptances, and a copy of his address will undoubtedly apnear in some

of the periodicals which reach you; otherwise advise us, and we will send on
a copy for you.

I enclose herewith a comparison of the activities of the bank a year
ago and now, which, while not as complete as I hoped it would be when I asked
for it, still gives you some interesting information.




I think this is enough to weary you on this trip and I will defer

,VEBANKOFNEINYORK

Benjamin Strong, Esq.

the balance until to-morrow.
With kind regards, I remain,
Sincerely yol7rs,

Benjamin Strong, Esq.,
410n 71ontviem Boulevard,
Denver, Colo.

RHT/CEP
Encs.




11/1/16.

tY OF TRAWIT g.PARTA4g

40.NTH OY OCT-43i916.

50. OF

DAM

Oct, 2
3
4
5
6
7
V

10
11

13
14
16
17

-3
.9

20
21

23
24
25
26
27
28
30
31

Total
Average




lTUB
8,508,640.39
9,036,162.50
8,568,737.13
8,657,646.75
8,577,282.30
7,215,534.63
7,851,438.46
7,706.234.78
9,632,659.62
12,770,717.43
12,643029.87
11,383,961.52
12,918,493.87
9,686,482.43
9,524,090.08
10,469,278.32
8,675,775.12
10,012,091.56
8,859,919.04
9,431,199.44
9,724,758.45
8,736,492.31
7,626.465.96
9,314,625.78

D1YINTLIT0H

27,071
33,342
30,894
31,658

.36
.17
.X1

.03
.43

31..531

9,67AAP,§0

31,552
29,725
39,910
36,355
40,906
48,113
40,922
42,868
38,872
36,845
31,383
29,746
31,253
37,557
3202030,781
31,116
28,158
30,119
34.054

236,807,826.21

857,550

9,472,313.05

34,302

1.50

*
4.

1.44
.01
1.70
.40
1.26
2.27
1.67
.83
.63

21

.15

35

.15
.05
.66
1.87
.40
23
13.48
4.

5.ul
.34

FEDERAL RESERVE BANK

OF NEW YORK
November 2, 1916.

::77 dear Governor:

I have your favors of October 27th and 7:essrs. Jay and Curtis are

going over your letter to Governor Pallain and we will endeavor to get it off
to-day or to-morrow unless we find something in it objectionable, which does
not seem at a11 probable.
I note your favor to Pr. Miller and Shall enjoy going over it carefully.

Personally I have no doubt that we could draw into the bank a con-

siderable amount of gold certificates, replacing same with Federal reserve
notes, if we were to take the matter up individually with people who we know
are interested in the successful development of the Federal Reserve System.

Governor yarding in his address last night spoke of the replacing
of gold certificates in the rockets of the people by Federal reserve notes
Of course, if

as a desirable thing to accomplish, if it could be done.

the Federal reserve notes could be treate,1 as bank reserves, it would be
easy.

I think if 7essrs.' Jay and Curtis approve, that i would try this mat-

ter out in a small way and see whether we get any results.
Governor "arding reached Mew York about 6 p. m., dined at the
.0Alpin and left at midnight for Washington, so that Mr. Jay and I did. not

have a chance to have any satisfactory talk with him.

He made some verbal

additions, which modified one or two of the objectionable statements in his
address, and I think, taken as a whole, it was very good and well received.
-.77 put him on the grill afterward and Same of the questions he handled very

well but t-7o or three luestions rut up to him by the foreign exchange men he
floundered.



0

,ERAL RESERVE BANK OF NEW YORK

2._

Benjamin Strong, Esq.

11/2/16.

Governor Harding told me that he thaughtimmediately after election
the foreign arrangements could be taken up actively, but said that it was very
difficult to accomplish anything satisfactorily just at present.

I told him

that I had not taken the matter up with him direct as you were in touch with

him all the time but I did feel very strongly that we were losing valuable
time and that we ought to make these arrangements so that the machinery would
be oiled, and do it at the earliest possible moment.
You speak of the necessity 'yt" looking up the old correspondence and

I assume Hr. Curtis has told you that he took the files to Washington with
him and I think the matter was put up to the Board as strongly as it could
have been done.

this matter came up

I am personally convinced that it was a good thing that
as it did, although the handling of this particular case

was most unfortunate except that it brought to the surface the feeling in
regard to these accentances, and I think cleared the atmosphere for the future
so that such a condition will probably not arise again.

It remains to be

41

seen to what extent they killed the goose which lays the golden egg at the
present time.

Regarding foreign vs. domestic acceptance rate, I think it is
clearly understood by all of us that we should not discriminate against the
domestic acceptance in the rate, and inquiry made among some of the prominent

bankers here this week indicates to me that thus far we have not raised unfavorable comment by our handling of the matter.

I cannot tell you how hapny your paragraph about your own condition
has made us all feel here.

Every report of your gaining in flesh and of

your having more strength and better spirits (not alcoholic) gives us new
inspiration to tackle the many problems which come to us every reek.

If

you will just keep on gaining and criticize us all you can, we will stand
plenty of hard work and take the discouragement as it comes.



e certainly

RESERVE BANK OF NEW YORK

3

Blemjamin Strong, Esq.

11/2/16.

expect you to be back on this job "as good as ever" and will welcome the day
when you can be with us to direct affairs sgain.
77e have been talking about taking up immediately after election the

question of bringing the State banks into our collection system and trying to
do some other constructive work.

We have been somewhat demoralized by the

vacations this summer and fall, but now that all the junior officers are back
I hope we can find more time for the bigger problems.

he Hughes sentiment seems to be growing here in the financial district.

Haw it is outside, it is difficult to tell and we mustawait the deci-

sion at the polls.

If the Comptroller was an elective office, we might secure

some results by a vote.

-ith this goes my very best wishes.
Sincerely yours,

Benjamin Strong, Esq.,
4100 Ilontview Boulevard,
Denver, Colo.

RHT/CEP




FEDERAL RESERVE BANK

OF NEW YORK
November 3, 1916.

77.y dear Governor:

To-day Jay, Curtis and I had 17,. Thralls, Secretary of the American

7ankers Association for luncheon with us and aiscrssed with him the work of

the committeeCf the American Bankers Associatioj twenty-five in number, of
which Mr. Lyford of 7'aver1y is a 7ew York representative, which cummittee has

in charge the legislation pertaining to the collection system.
71r. Thralls indicated that he had prepared the questions in the
article to which I called your attention in the :Tew York Times known as the

"planned referendum," and he statea that already the State secretaries were
sending out these questions for a referendum vote.

Fe stated further that

the questions were not drawn in the way that he would naturally have nut them
e7cent that he knew the temper of the member banks and wanted to have questions propounded of such character as they would answer.
He proposes to go to r:ashington next week to discuss the matter
with the Federal lieserve loard and others, and later after he has compiled

his information, some of which he has asked of us, he proposes to call his
committee together.

-

It is too late to change the form of question pro-

pounded, so we had .a _rank diScussion and will try and keep in touch with
him.

He feels that the collection department should be handled by the
Federal Reserve Banking System and that additional clearing houses or branch
collection departments should be installed in places like Cincinnati, Pittsburgh, etc., to insure more direct collections.

Fe further feels that.the

member banks should be authorised tp make an exchange charge on checks sent



cDERAL RESERVE SANK OF NEW YORK

2.

Benjamin Strong, Esq.

them as compeneation for the service, time, overhead, etc.

11/3/16.

He did not seem

to be very clear as to what that charge should be or how it was to be worked
out, except that he would have a committee of competent people go into different banks and make an analysis of the cost of this work.

There are more acceptances being offered now and they will probably
increase.

r7e are carrying, as Mr. Kenzel has advised you, $2,500,00. of

Brown 7rothers, and I am led to ask whether it would not be well for you to
write to T.Ir. James Brown, suggesting that he have his Boston and Philadelphia

branches make statements to the Federal reserve banks in those cities and to
consider further making a statement which he would permit us to send to other
member banks like Chicago, St. Louis, etc., which banks might, if they had
these statements, buy their acceptances in much larger amounts.
I assume you have the record of the total amount of acceptances of

each accenting bank or house, and if you find we are accepting too heavily of
any one line, ",:indly advise.

:7r. Sabin told me the other day that they had

accepted about $60,000,000. of bills at the present time, which I assume is
quite largely of cotton just at present.

7e have about t4,500,000. in the

New York bank at present of the Guaranty and they are being offered, as well
as Brown 7rothers, quite freely now.

I am enclosing herewith a copy of our letter to H. Pallain and you
wil- note therefrom that we are forwarding now the various pamphlets, books,
etc.,

which you

suggested, and -r. Hendricks made up a very good brief on the

operation of our transit department.
I assume that on receipt of a letter written to-day by .Mr. Curtis,

making One or two suggestions, and especially in view of the $20,000,000. item
mentioned by you, about which we seem to be in the dark, you will rewrite the
letter and forward it direct to M. Pallain, sending us a copy for our files.
I trust that we are handling this in a manner satisfactory to you.



AL RESERVE BANK OF NEW YORK

Benjamin Strong,

Esq.

11/3/16.

Your leter of October 31st came to-day but by this time you probably.
have all the detail in regard to the French credit, which caused so much discussion.

They are working now on the basis of a. 050,000,000. credit, of which

the Federal Reserve Board permits 020,000,00
banks.

.

to be acceptances of me.lber

Mr. Kent made a very favorable impression in his r=.tatements and atti-

tude at the meeting of the governors here on Tuesday.
Mr. Jay and .1 contemplate making an effort to exchange Federal reserve
-

notes for gold certificates with some of ourmember banks, who we believe are
favorable to the Federal Reserve System.
From what I learn from 7r.. Jay, the nominations which are coming in

for Class B. director are decidedly in favor of Mr. Towne.
I go hone to-night and expect to remain there until Tuesday noon,
so as to vote on Tuesday.

-Tilson had a very big reception here last night,

wdather was favorable and parade big.

The situation, however, is a very

mixed one and I make no forecast of the result.
r!ith hind regards, I remain,

Sincerely yours,

Beniamii trong, Esq.,
4100 7ontview Boulevard,
Denver, Colo.




FEDERAL RESERVE BANK
OF NEW YORK

November 9, 1916.

y dear Governor:

You can imagine the tnnaoil in Wall Street yesterday over the closeness of the electoral vote for president, which was intensified by the conflicting news from hour to hour, first indicating Hughes' and then 7Ilson's
election.

Regarding the scheme of imposing penalties for deficient reserves,
I would state that when .7efferson

as at 'Richmond he secured all this informa-

tion and at the meeting of the junior officers yesterday the matter was thoroughly discussed and the impression, I think, was that it would be better for
us to keep two accounts, a reserve and a collection account, instead of one,
but decision was postponed for further consideration and study.
I think the French credit matter will come out better than 7:e figured
and believe that after all the discussion of the question will lead to a better
understanding and more care by those who handle the accentances in the future.
Our bills discounte

now are running about one million and our in-

vestments keep about the same but are gradually running off.
I regret that the Federal Reserve Board ruled as they did in regard
to the 7echanics

apnlication, as there is a demand at present for

dollar exchange and personally I cannot see why'Italy, France, England and
Russia should not be able to put into effect the machinery necessary, as well
as South American or other countries.
.

I assume that you will keep in touch with what legislation in Con-

session, and it might be helpgress you think is essential for this winter's



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

2.ot

11/9/16.

44,
ful to us if you will write just what you contemplate attempting, so that
possibly we might contribute a little along the same lines when some Gf the

Federal Reserve Board or representatives in Congress can be reached from this
end.

After discussion with Mr. Jay, who is laid up for a couple of days

with bronchitis, I shall write to a few bankers up the State, and as soon as
possible Mr. Jay and I will visit some of the city bankers to discuss the
substitution of Federal reserve notes for gold certificates, after which we

will be in a better position to know whether there is any possible development worth while along these lines.

Of course, if Congress will make the

Federal reserve notes reserve, then our accunulation of gold will be simpler.

Rave you any suggestions to make to us in regard to the State Department, now that election is over, taking up the foreign relation matter?
I should think you might write to Governor Parding and possibly !7r. Delano

and others to see if they will not take the matter up at once.

Mr. Warburg was here on Monday and seemed strongly to feel that we
shoUld differentiate against finance bills in our rates, and we shall bring
it before our directors next Wednesday, although from my standpoint I should
not be very particular about. developing this differential just now.

I an glad that you are enjoying such fine weather and hope that you
will keep out in the air and receive the benefit. of it.

we are rendering a statement to the Nederlandsche Bank up to October 1st, .showing the charge for the first three months at 1/20 to be

15,704.

and the later charge at 1/10 per annum ,1,597., the total, with telegrams
and cables, of :!!7,707.

The balances are still running against us heavily and we will be
obliged to transfer e,15,000,000. in gold to the Gold Settlement Fund to-day
to keep up our reserve there.



I think we shall be forced to adopt :Tr.

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

11/9/16.

Gibney's plan for pooling the holdings of United States notes and silvers, or
work out some plan to hold our gold.
I enclose statement of "Due to" accounts as of the close of business
November 8th.
To-day :Tr. Snithers has invited Messrs. Jay and Kenzel and myself to

lunch with Mr. Darling of the London Join Stock Rank, who is at present in this
country for a while.

Mr. Jay, being sick, will not be able to attend.

I think I told you that the governors' meeting would be held in the
second week in December, and it would seem to me that we should at that time

try to get a more equitable division in our investments and also that we should
have some plan to suggest which will enable us to hold our gold in New York
rather than have it slip out through the other banks into circulation.
Thinking that this is enough for you to absorb in one day without
weariness, I will stop and try and give you more to-morrow.
7)e have the annual meeting of the trustees of Cornell University in

Ithaca on Saturday, and I hope to go up Friday night to attend that.
rrith kind regards, I remain,

Sincerely yours,

7enjamin Strong, Esq.,
4100 Montview Boulevard,
'`enver, Colo.

RFT/CET3

Encs.

,. S. --- Mr. Hendricks has been away for a couple of days attending a funeral

but is to go to Rutherford, N. J., to-night to talk to a group of bankers on
the collection system.

Next week he and I expect to attend a meeting of the

Essex County Rankers at Newark, giving them informal talks.



Do you not think it wise, when we have a request from any group of

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

11/9/16.

47)=1

bnflkers in our district

for someone to talk to them on some phase of the

Federal Reserve System, that we should attempt to do so, and is it not all
right to let Lr. Cann or :;:r. Hendricks or Hr. Kenzel go out occasionally to

talk on some particular phase of the operation of the system with which they
are familiar?




R. H. T.

FEDERAL RESERVE BANK OF NEW YORK
aTATENOT OF "DUE TO" ACCOUNTS

At the Close of Business Nov. 8, 1916.
DUE TO

Boston

Philadelphia
Cleveland
Richmond

Atlanta
Chicago

St. Louis
MInasapolis

Kansas City

Dallas
San Francisco

RETAINED

11,474,402.30

11,474,000.00

4

4

8,398,624.77

8,398,000.00

5,114,602.43

5,114,000.00

6,002,000.31

6,002,000.00

1,772,494.55

1,772,000.00

5,086,442.00

2,000,000.00

1,008,000.00

2,810,866.89

2,810,000.00

1,035,274.52

500,000.00

3,475,000.00

3,600,918.73

3,600,000.00
2,500,000.00

nrcusTmENT ACCOUNTS.

Minneapolis

Philadelphia
St. LOUIS

San Francisco

368,020.74
1,237,910.04
250,000.00
485,178.93
668,595.72
153,843.06
499,118.71

4 3,662,667.19

All of these balances have been retained by us.




535,000.00

3,475,652.81

DUE TO OTHER FEDERAL RESERVE BARKS

Clevaand
Dal/as

3,065,000.00

1,008,902.02

6 49 779 181 33

.Amton

REPORTED

47,273,000.00

BULLION CHECKS RECEIVED BY THIS BANK THROUGH THE CLEARING HOUSE FROM




OTHER MP.Mad,R BANKS WHICH WERE CASHED INSTEAD OF CHARGED

TO THE GOVERNMENT'S ACCOUNTS ON OUR BOOKS.

1916.

February

4 2,887,000.

March

2,470,000.

April

1,632,000.

May

3,697,000.

June

9,084,000.

July

8,446,000.

August

6,154,000.

September

2,773,000.

October

17,304,000.

054,447,000.

FEDERAL RESERVE

OlOrrapondenc

BANK OF NEW YORK

Date_November_B., 1916.

Subject: ______Dia_erence___ka. count.

Treman

romq4_11. Jefferson

COPI

In response to your inquiry of November 3rd, I submit the

following summary of thedifference account," as at the close of
business November 4, 1916:
SHORT

OVER

$40.40 Over
previous

)

1

to

From July 15th to,31st
" Aug. 1st to 24th

0

69.14

0 109.54

Block System
41,041.59 Short
since instalation of
Block System

Aug. 25th
Sept. 1st
Oct. 1st
1st
Nov.

"

)

"
"
"

)
)
)

232.69
594.65
193.01
21.24

to 31st
to 30th
to 31st
to 4th

0 109.54
Net short

01,110.73

- _,001.19

There are some big differences which occurred prior to the
instalat ion of the block system of proving, among which the following
are the largest:
SHORT

July 17th
"
18th
" 28th

4

OVER
254.09
1,306.09
366.14

July 19th
"
20th
"
22nd
Aug. 24th

4

273.61
472.69
1,058.27
326.59

The net result of these differences is a shortage of 069.14
from July 15th to July 31st and an over difference of 0109.54 from
August 1st to August 24th.




Since the return, on August 25th, to the block method of

FEDERAL RESERVE

Correspondence

BANK OF NEW YORK

Date

Difference Account.

Subject:

4411Lgreman

November 8, 1916.

ARLAL,Jefferson




COPY
-2proving, the transit department is proving very much better.

The fol-

lowing large differences are the only ones that need any attention:
OVER

SHORT

Aug. 30th
Sept. 8th
Sept.18th
Oct.

6th

Oct. 9th

4232.98
405.80
104.93
278.56

0.00.62

We found that in the operation of the transit department, in
the early days, checks were sometimes left over from one day to another,
in the rack, and that short differences of one day would be offset by
While we cannot determine that some

over differences on the next day.

of these differences prior to the return to the block system on August

25th were caused in that way, the differences so nearly offset each
other that it would seem to be not worth while to attempt to clear them
from the books.

I think we should make someeffort to locate the dif-

ferences since August 25th.

The men who have been engaged in this work

have lately been spending their time on the ledgers, clearing up old differences occurring during the early stages of the collection system.
They are making good progress, and as soon as they have cleared up the

differences in the ledgers we shall have them return to the transit work
and find the differences since August 25th.
I do not believe that it will be possible to estimate the time
that will be necessary to clear up all the old "shorts" and "overs," but I
amyleased with the progress that

is

being made.

FEDERAL RESERVE BANK
OF
1F0k,

ia
494

November 10, 1916.

dear Governor:

I have yours of Kovenber 6th and read extracts at the officers'
meeting to-day, which meetings we are now holding again.
I have asked Mr. Curtin to send you the text of the application
covering the accentance credit granted the Bank of Comnerce for the purpose
of carrying hides for German account in Argentine.

"e had some discussion yesterday as to whether finance bills
drawn, for instance, by a London stock bank on the National City Company
would be eligible for purchase by this bank and Mr. Curtis said they would
not, but a letter received from Mr. Thrburg this morning stated that such
finance bills, originating in countries where the trade custom permitted such

and in which the demand for dollar exchange would naturally arise at the
present time, are eligible for purchase under the recent ruling.
Governor Aiken expects to be here next Tuesday or 7ednesday to discuss various rates with us and we will go over with him the question of the
American Bankers Association committee in re the collection system.
This morning's pacers generally concede the election of 7ilson but
the stock market has shown decided strength, and I hope that the result will
not be detrimental to general business.

Personally I am hopeful that there

will he a Republican Mouse with a Democratic Senate, if the president is to
be a Democrat, as we will then have more conservative and better digested
legislation, I should think.

Knowing that you are interested in the "difference account," I am
enclosin7 a renort under date of November 0th from Mr. Jefferson, in response



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

11/10/16.

to my request, and think that it should prove interesting to you.
I had a talk this week with Mr. Sailer concerning his salary, which

you will recall is at !lo,00n. whereas when he came he stated that he would
like e12,000.

He has been here since July 1915 but told me this week that

he was leaving the matter entirely in the hands of the directors, and I suggested that I would report the matter to you but assumed that inasmuch as it

was only six or eight weeks to the first of January when the officers salaries
would be reconsidered by the board under an understanding to that effect, it
might be well to let the matter now run along until that tine.

Have you any

suggestion to make for my action in this matter other than what is above outlined ''

You will have the latest bank gossip in the office report sent you
to-day, so I will not go into detail further.
Be assured that we all maintain our very great interest in your life
and improvement and want you to keep us posted from time to time as to your

progress for the benefit, not only of the officers, but of your many friends
who inquire of us.
'-ith kind regards, I remain,

Sincerely yours,

Benjamin Strong, Esq.,
4100 7ontview Boulevard,
Denver, Colo.

:/g70




FEDERAL RESERVE BANK
OF NEW YORK

40k,

November 13, 1916.

My dear Governor:

Mr. Jay has been confined to his house for about a week and this morning I called on him on my return from Ithaca, finding him still in bed with a
bronchial cough, which is annoying.

Fe hopes to be around, however, some time

this week.

Ne showed me a letter from Mr. 7arburg, in which was stated that a
copy was being sent to you, in re finance bills.

in view of the differences

of opinion, it would seem that it must be a matter of educating the Federal Reserve Board and Congress to see the wisdom of extending the privilege to certain

ther countries, leaving it to the officers of the Federal reserve banks

to 11e their discretion in the buying.

I assume that you will formulate a

brief or in some way discuss the matter with Zr. '"arburg and the hoard, but so
long as the regulations are as at present, we must be governed accoOingly.
I heard indirectly to-day that there was serius consideration, if
mot decision, at "rashington, rn favor of issuing !!%5. gold certificates.

earnestly hope that this report is not true or that the action can be headed
off and an writing to 7r. '-arburg concerning this.

7rUt

The Assay Office is ready to take the gold which cane to us from J.

Co. but would it not be well.for us to hold on "to it Somewhat longer,
in fact as long as we can?

Please advise.

I am sending out to-day a number of letters to different bankers
for Federal
horn I know personally in regard to the gold certificate exchange
reserve notes.



matters.
!Ir. Hendricks has given me a brief on the clearing house

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

.......

11/13/16.

I note that you have written Mr. Brown and will await further advice
from you.

I will go over the matter of the standing of the different banks

with Mr. Kenzel and advise you later.
Mr. Jay's illness unfortunately is holding up some of the more important things, as it keeps the rest of us busy with detail.

We will, however,

'ry and keep matters going along and expect to have a meeting of our directors
on Wednesday.

earnestly hone that you are improving all the time and am glad to
learn from your letter to 7r. Curtis that you are acquiring a knowledge of the
French language.

ith kind regards, I remain,
Sincerely yours,

Benjamin trong, Esq.,
4100 Montview oulevard,
Penver, Colorado.

CO.A.

reYtt1piqtet, 72'11




/41" WIrriA.41

gicatt,14... 714-4

1/11T/CEP

/47

/1/'°'

)-(D7tA,reo

0A/vett...,.,1.14

rif-144"a4

°'

(i4FAAMA4ri

FEDERAL RESERVE BANK
OF NEW YORK

)(47'
Naki3

November 14, 1916.

7y dear Governor:

Jay is somewhat better to-day but still confined to his house
and will probably not be out before the latter part of the -ieek.

I an enclosing one or two sheets from the ticker this morning,
which may be of interest to you.

You will note that the French credit has

been closed up and quite a number of out-of-town banks participated.

Tegarding Mr. Glass, I assume from what I have heard that if 7:r.
McAdoo retires, it will be in order to engage in business for more money.
I enclose copy of a letter being sent to-day to Governor 7arding
by "r. John 7. Gardin, in which I thought you might be interested.
I note what you say about finance bills and assume that there is
nothing for us to do under the present regulations. but to follow instructions.
In a letter from Governor }larding to Mr. Gardin he wrote, "Though

there is

no necessity for requiring that a draft should be connected with some specific
exportation or importation of,goods, nevertheless the accepting bank should be
Tare that the proceeds of the draft are to be used for the Purpose contemplated
by the Act."

Would it not be ,)ossible for the Federal Reserve Board to per-

then,
mit of finance bills being accepted by member banks and our purchase of

not made then the
even if they do emanate from countries where trade usage has
satisfied,
7eneral custom, requiring of the accepting member banks that they be

before accenting, that the proceeds are to be used for connercial purposes as
indicated by the Act.

If some arrangement of this kind should be made, it

but at the
would seen as if it might help develop the acceptance business,

same time maintain proper restrictions as to the amount.




.ZDERAL RESERVE BANK OF NEW YORK

I enclose

Benjamin Strong, Esq.

copy of a report made to me at

11/14/16.

mu request that the officers

of the bank should consider the nroposed plan of /Ir. Gibney at Washington for

the creation of a silver and legal fund, which will be of interest to you, I
think, whether you agree with the conclusions or not.

At the meeting of the directors to-morrow I shall bring up the question of increasing our acceptance rates a little, say 1/8 to 1/4, as I believe
that by so doing we will not interfere seriously with the development of the
acceptance business, as our rates seem to be below the market at the present
time, and personally I think it is time that we should take this action, as
a slight warning signal against undue expansion, as I find the country banks

are in many cases well loaned up, having taken up the slack caused by the reduction of reserve requirements; and upon asking the opinion of T7r. Alexander
and r_r. Hepburn, I find that they think it wise and that the conditions justify
it.

I expect to talk with Hr. Vanderlip as soon as I can reach him by phone.

If the action is taken, I hope that you will feel that we are acting wisely.
In view of the report that the government is considering the issue
of

5. gold certificates, I hope that you will be able to work up your brief

on the currency problem.

Governor Aiken has written me concerning the fiscal agency matter,
:closing letters from Fancher and 7a1burn, and I think we will arrange a meeting in Thshington prior to the Conference of Governors for a report.

It seems

to te that Judge Elliott's suggestions to the effect that the national banks

be used_as depositaries for customs and revenue and the Federal reserve banks as
agents for the disbursements is apparently sound, so far as my limited knowledge goes.

Have you any suggestions otherwise?

I find that in the year between rovenber 11, 1915-1916, the deposits
in the Yew York clearing house bnrks have increased ::'253,000,000. while loans

have increased



:532,000,000.

There is nothihg new in the clearing house rela-

110

FEDERAL RESERVE SANK OF NEW YORK

Benjamin Strong, Esq.

11/14/16.

tions as yet.

7e shall discuss to-morrow the advisability of our buyinf; any more
2'/ bonds with the idea of converting them January 1, 1917, or soon after, if

they can be bought between 99 and 1n0.

What do you think?

7ith kind mgards, I remain,
Sincerely yours,

AAW
Pen.lamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colo.

RHT/CEP
Encs.

Later --- I just talked with Mr. Vanderlip about the raising of our rates, say
1/4%, and he said that he thought it was wise to do so but that probably the

market would not follow us just at present; on the other hand that we would be
taking the right step in anticipation of what he felt would surely come later.
That the directors will do to-morrow, of course, I do not know, but I knew you

would be interested in the opinions of these men as to the wisdom of this proposed action.




R. H. T.

FEDERAL RESERVE BANK

OF)/

November 16, 1916.

My dear Governor:

We had a long directors' meeting yesterday, lasting until after one
o'clock, all being present except Mr. Starek, who, I understand, has been ill.

The board authorized the purchase of one million dollars United
States

e

bonds but put a unit of 99 7/8 on same.

The narket is about par

but we may pick up some at the price, with the idea of converting them in January.

I have been thinking for some time that our acceptance rates were
somewhat too low and that we could advance them 1/8 to 1/4 profitably, and
after consulting with the three bank presidents and Mr. Woodward, as I wrote
you, I brought the matter up yesterday and the directors authorized an increase
of 1/4 of 1%, making our base rate 2 3/4% for member bank acceptances, ninety
days, with the usual differential of 1/4% for member bank indorsements.
are bidding 1/87 higher for non-member bank acceptances.

7e had a long discussion over the differential that Mr. Warburg
suggested we should place against the "renewal credits," and his letters to
7r. Jay were read to the board, but I think the opinion of those who felt prepared to express an opinion, like Mr. Woodward and Mr. Peabody, was to the
effect that we should not make any differential just at present but that possibly our advance in rates of 1/4 of 1% would clear up the situation so far
as our accumulating too large a percentage of the renewal credits was concerned.

The matter was finally referred to the two deputy governors (Woodward and
Treman) with power to fix a differential if in their judgment conditions demanded it, and I have so advised Mr. Warburg.



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

2.

11/16/16.

ILA

Mr. Darling of the London Joint Stock Bank came in yesterday with
Mr. Smithers and asked about the eligibility of certain kinds of bills, being
particularly interested as to whether bills drawn against and accepted by a
member bank here, provided the proceeds were used for the import and export of
goods, would be eligible.

So far as we could judge, he was considering the

establishment of revolving credits here but did not so state definitely.
This morning I had a talk with Mr. Gardin of the National City Bank,
suggesting to him that he, Mr. Kent, and some others, representing the Mechan-

ics & Metals, Chase, or such banks as accept, should go down to Washington and
have a frank talk over the whole subject of the development of the open market
for acceptances and that would give them an opportunity for discussion over
details and rules and regulations pertaining thereto.
a good idea and would see if it could not be done.

He said he thought it
If they do it tactfully,

I think that they would do much good and it would help the situation

all

around.

I am sending you a copy of my address on "Trade Acceptances," which
the hardware association sent to all of its members, and one or two other associations have secured sufficient copies for their membership also.
I wrote to about thirty banks up-state about the exchange of gold

certificates for reserve notes but have not tackled the city banks, as I am
waiting for Mr. Jay to return tc the bank, which I hope he will do Monday.

Every bank, so far as I have heard, has taken kindly to the idea except one
and he is an individual whom I know and he has his peculiarities.

It raises

the question whether if this should work out satisfactorily, it would be wise
to send a circular to every bank in this district, sugcesting that this be
done and that they send us gold certificates for reserve notes.

I am enclos-

ing copy of the style of letter I am writing to them and will be glad to
have your views on the subject.




To-night Mr. Hendricks and I are to appear before the Essex County, N. J.,

FEDERAL RESERVE BANK OF NEW YORK

as_

Benjamin Strong, Esq.

11/16/16.

bankers for an informal talk on the operation of the Federal Reserve Act, and
I hope we may give them a little but I have been so busy that I have had no
time to prepare any address.

Mr. Curtis will write you about some new developments concerning Mr.
Starek, who has not attended the last three of our meetings.
I advised Governor Aiken and Governor Rhoads yesterday of our advance in acceptance rates of 1/4% and Aiken telephoned me this morning that

he very much approved this action and that he would come over to-morrow to
talk over the differentials and other matters with us.

I have invited Governor

Rhoads to come also, although I have a meeting of the finance committee of
Cornell University at the bank; but I can arrange to see Aiken and Rhoads, as
I think it is essential we all work together so far as we can.

Evidently

we must expect that we will not be able to purchase as many bills for a time
but I believe that on the whole, from the comments made by different ones
around town, our advance of rates is now justified.
I enclose a memorandum of our gas tests on the concrete work for the
vaults.

We are pushing the matter and hope to have the vaults soon after

January 1st.

We discussed yesterday printing Mr. rarburg's address at Kansas City
but the consensus of opinion was that it having been published in the American
Bankers Association Journal and in various other ways, it was rather late now
for our bank to attend to it.

I am sending you herewith a brief prepared by Mr. Kenzel at my request, in answer to your letter about some of the acceptances we have nurchased.

Regarding the Brown Brothers acceptances and the limit placed upon the purchase
of private bankers' acceptances, the matter was discussed yesterday and it was
thought advisable to keep the limits about as they are now, pending further
developments.



A. FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

11/16/16.

I shall be glad personally to have you advise me as to how you are
getting along, and with lcind regards, remain,

Sincerely yours,

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

EHT/CEP
Encs.




VT
Report of blau

is tests held at the X-G Cutting & Welding

Company's yard, 556 Went 34th Street, New York City, :Alivember 13, 1916,

on samples of concrete.
One sample, one yard square by one foot thick, composed of

a four to one mixture and trap rook.

Gas applied at 537 p. m.
"

off
Heating

Jledge & Chisel
to

Cutting

556" "
19 minutes

5167 p. m.

611"
17 minutes

Hole made 6 in. by 10 in, and 5 in. at the deepest point
approximately 133 cubic inches in 36 working minutes, or about 3.7 cubic
inches the minute.

Second sample similar to first except that instead of trap
rock, glasL, slag was a component.
Gas applied 6:17 p. m.
"

off
leating

Sledge & Chisel
to

Cutting

"

18 minutes

6:36 p. m.
6;52 sv

16 minutes

Hole made 12 in. by 12 in. and Zi in. at deepest point

-

about 168 cu. in, at the rate of 4.9 cubic inches the minute.
While the glass slag sample seemed to out away faster on the

surface, it was appreciably noticeable that the cutter could not gain the

depth in it that he did In the trap rock.



PIUSENT:

L. F. 3ailer, L. H. Hendricks,

Zenzel, J. D.

Higgins, H. V. Cann and H. M. Jefferson

M6,37

e)ffice Correspondence
To

FEDERAL RESERVE
BANK OF NEW YORK

DateNovember 14. 1916.

Mk. Treman

From

Subject:

Er. Strong's letter

of Vov-Bth-

Kenzel.

Referring to the items that Er. Strong has remarked in his letter of November 8th, I beg to report as

follows:

FOURTH ATLANTIC NATIONAL BANK, BOSTON.

This is a consolidated institution as the name indicates.

Capital

,1,500,000., surplus ;1.,726,000, deposits slightly in excess of ;20,000,000,
total resources 424,858,000.

They are acceptors under the new Brown credit.

Mr. Aiken has checked the name for us, and on October 25th wrote:
"I enclose herewith copy of their last published statement.
This bank is one of the smaller
banks and specializes in the market men's businesses.
It is, I believe, a conservative and well-managed institution.
We have bought their acceptances in small
amounts and at the same rates as those of the larger
banks."

BANK OF CHARLESTON, N. B. A.

The directors November 3, 1915, authorized a line of this name of

4100,000., which we

purchased shortly thereafter.

At that time the bank

was trying to establish its name in New York on practically the same rate
as the bills of the larger New York banks.

We declined offerings at the

a-3
low rates and have not

ought the name until this fall when it came at 2 3/4%.

ANGLO SOUTH AMERICAN BANK.

This bank particularly active on the west coast of South America
is apparently doing an increasing and profitable business.
checked up in this country and also abroad.

We have had it

The foreign comment was favor-

able applying to the institution as at present organized but referred to antecedents that were not altogether prime.

Their acceptances that we have pur-

chased are bills drawn by the Calumet & Hecla Mining Company on exports



Misc-37

Office Correspondence
To
From

FEDERAL RESERVE
BANK OF NEW YORK

Date Nov. 14, 1916.

Treman

Subject:

E. R. Eenzel.
-2-

of copper from Chile and are indorsed by either the Girard National Bank
of Philadelphia or the Corn Exchange National Bank of Philadelphia.

The

name also appears as indorser on a great many bills originating in Valparaiso which are drawn to the order of the Valparaisian branch.

MULLER, SCHAIL & COMPANY.

We have taken this name only in very small amounts with banking indorsements.

The Bank of the United States has indorsed and sold us

most of this name now held by us at from 3 1/4 to 3 1/2% discount.

NATIONAL CITY BANK.

We get none of this name from or through the City Bank, which,

I understand, buys all of its own paper that it can, and I have never heard
Of it disposing of any of its bills to any one.

BALFOUR, WILLIAMSON & COMPANY.

We have no statement of this concern but all of their bills that
we have purchased are well indorsed, the line at the present time being:
497,000.

29,000.
64,000.

Indorsed Chartered Bank of India, Australia
& China,
f

Hongkong & Shanghai Banking Corp.
International Banking Corporation.

A.2. KLINGSMITH
This man has for a long time been a nominee for the Bank of New
York, N. B. A., and more recently assistant cashier of that institution.

We have had his name only on paper that has come through the Bank of New



Jffice Correspondence
To

Date

Mr. Treman

From

FEDERAL RESERVE
BANK OF NEW YORK

Nov. 14, 1916.

E. R. Kenzel.

Subject:

-3-

York either directly or indirectly and is also indorsed by the Bank of
New York or indorsements guaranteed by them.

MERCHANTS NATIONAL BANK, WORCESTER, MASS.

We have had this name only as indorser on acceptances of the
First National Bank of Boston, which come to us from the Federal Reserve
Bank of Boston.

F. D. V. TEIPAIR.

This man is not of Paris but of New York.

He is in charge

of the commercial credit department of J. P. Morgan & Company in New York
and is the drawee of a great many of the bills drawn under their syndicate
credit to the Paris & Orleans Railroad.

ERVIWB.




FEDERAL RESERVE BANK
OF NEW YORK
November 17, 1916.

et612; gAON

My dear Governor:

a'J1V

I have yours of November 14th and regret that they did not reach

me a few hours earlier, as by appointment Governors Aiken and Rhoads were
here for a meeting this morning and fortunately Mr. Tarburg dropped in unexpectedly and I invited Mr. 17oodward to come over, so that we had, with Mr.

Curtis, quite a satisfactory meeting and discussion of the renewal credits,
our rates, etc.

Governor Aiken cane with the idea of trying to persuade the New

York bank to make our differential for member bank indorsements 1/8 instead
of 1/4 but while Mr. Warburg agreed that ultimately that would be the proper

way, evidently Governor Aiken stood about alone in his contention for action
at the present tine.

We had quite a discussion over the renewal credits and secured
Mr. Tarburg's views as to our general attitude toward them, which seemed to

me a reasonable one, but M ;Curtis will write you more in detail, as I was
obliged to leave the conference before they had finished, having made an ap-

pointment with the finance committee of Cornell University, who net in our
directors' room for a meeting.

rvidently our raise in rates has not made any material difference
as yet except to have received commendation on all sides that we had taken
this action, and to-day we secure a small piece of Bankers Trust Company
domestic acceptances on a 3% basis.

I had an appointment to-day with Mr. George Blumenthal of Lazard
Freres, who called with the idea of making arrangements so that the acceptances




FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

of his firm would be eligible for purchase.

11/17/16.

I told him that if he would

kindly prepare a statement and submit it to Mr. Jay and myself next Wednesday
or Thursday, after Mr. Jay returns, I thought there was no question but that
we could arrange the matter satisfactorily to him.

After discussing the

acceptances business, into which he said he was entering very conservatively
to the extent of about

1,500,000. at present, he vouchsafed the statement
4.%

that our rates had been too low and that he thought our raising them would be

advanta-mous, and also stated that he was sorry to notice in the development
of the acceptance market that some acceptors bought their own acceptances,
which he thought was very bad banking practice.
I noticed Mr. Darling of the London Joint Stock Bank with Mr. Kent

at lunch to-day and I assume Mr. Darling is discussing some arrangements for
credits for the London Joint Stock Bank.

I think Governors Aiken and Rhoads felt very well repaid for their
visit here and that the conference with Messrs. Woodward and Warburg helped
all of those who participated.
Mr. Hendricks and I spoke at Newark:, N. J., last night before some-

what over a hundred New Jersey bankers from Essex County.

They treated us

very nicely and I think we each talked about twenty to twenty-five minutes
possibly.

Then they asked Mr. Hendricks a few questions about the Collection

Department.

0* course it is always difficult to estimate impressions, but

we felt that possibly we had given them a little light on the operation of the
reserve banks and the function of the Reserve Act.
There does not seen to be any end to the advance in commodity prices,

especially those affected by the war, like cotton, copper, steel and iron
products, etc., and I assume we must expect a continuous upward movement so
long as the war lasts.

Mr. Peabody told me this week that he understood

from good sources that feelers were being put out and that possibly President



FEDERAL RESERVE BANK OF NEW YORK ..

Benjamin Strong, Esq.

11/17/16.

Wilson would try and ascertain some terms on which peace might be worked out.
You can take this for what it is worth.

I understand Mr. Curtis is writing you two or three volumes to-day
and so I will not send more than one as a contribution to the good cause.

Doctor Treman is somewhat concerned, I find, for fear that in your
great interest in the bank and its matters you will be led into over-work and
side-sterping the everyday plain duties which you owe to yourself and to your
friends to build yourself up in every way.

If you think it necessary to

serve an injunction upon you, let me know, so I can consult some good attorney out there.

If you are bound to keep the peace and live rationally, we

will accept your statement in the matter, without proceeding further.
I hope to spend to-morrow and Sunday in Ithaca but to be back on
the job early Monday morning.

"7 very best to you.
Sincerely yours,

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colo.

RITT/CM)




FEDERAL RESERVE BANK
OF NEW YORK

4/
4i
*r$fir

November 20, 1916.

My dear Governor:

I spent Saturday and Sunday in Ithaca and am now back on the job.

Yr. Jay also showed up this morning for a half a day and seems to be improving
each day but will probably only put in a half day at the office for part or
all of this week.

We are getting quite a large amount of acceptances, buying to-day
some eight or nine thousand, and our total amount, as you have probably noticed, is something over $32,000,000. (high water mark.)
The responses from member banks as to their willingness to cooperate
in sending us gold certificates are very pleasing and in a letter from Mr.

Warburg this morning he expressed the thought that it would be a good thing
to send a circular to all the banks in this district, but Mr. Jay and our

astute counsel, in discussing the matter this morning, thought that it would
be better for me to continue sending personal letters to each bank, so that

within a couple of weeks We will have circularized them all, and we can reach
some of the larger banks in the city by personal interview.

Mr. Curtis is sending out a notice to the other banks, requesting
a conference of the auditors and transit men in the middle west about December 4th, and should you thinl,: of any matters which you would suggest to be

considered by then, kindly advise and we will have Mr. Jefferson look after

I will endeavor to have the governors prepared to vote upon the
questions as outlined in a general way by you in yours of November 14th but




=SERVE BANK OF NEW YORK

2

Benjamin Strong., Esq.

11/20/16.

would like to discuss same with my colleagues as to the form of letter, etc.
T!essrs. Jay and Curtis hope to go up to New Haven for the annual foot-

ball game on Saturday, and the results of the games played Saturday last (Yale
beating Princeton and Brown beating Harvard) only adds zest to the earning conflict.

Do your best to keep in good spirits and if there is anything more
that we can do to aid, do not hesitate to command us.

With kind regards, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

RHT/CEP




FEDERAL RESERVE BANK
OF NEW YORK
November 22, 1916.

My dear Governor:
Vie had another call this morning from Mr. J. F. Darling of the London

Joint Stock Dank, he making further inquiries as to the kind of bills which
would command the best sale in this market and those which would be eligible
for purchase by this bank.

He was asking particularly as to how we would

compare acceptances of the Chemical National and the Bankers Trust Company,
and we advised him that af the present time there would be a 1/8% differential
in favor of the Chemical National accertances.
I asked Mr. henzel to give :Ir. Darling a list showing the rates now

prevailing, with their differentials, for his guidance, the same, of course,

being subject to change without notice, and assured Mr. Darling that we would
be very glad to give him any information pertaining to our acceptances or
other matters, which he might desire from time to time.

We had an inquiry from the Credito Italiano from Milan under date
of October 27th, asking if we are in a position to enter into reciprocal banking relations with them, and I am replying as per copy enclosed. herewith.

I an enclosing copy of letter from Governor Yarding to the National
City Bank, which has stirred them ur somewhat and Mr. Gardin, I think, will
probably go down there this week to see them.
That brings ur the question whether there is anything can be done

to bring about better relations between the banks and bankers of New York
City and the President and other officers of the Federal Government.

We must

recognize that the President and the democrats will be in power, and it would
seem as though a committee of bankers from New York might make some impression



FEDERAL RESERVE BANK OF NEW YORK

2,

Benjamin Strong, Esq.

11/22/16.

on certain people, if they should go down there occasionally and keep in
touch with the situation.

There ought to be the same cordial relation

between the government and the bankers as prevails in other successful nations.
I also feel that there should be more frequent interviews between

the men who are actually transacting the foreign exchange business of the
country and the Federal Reserve Board, and if once a month or so two or
three of the foreign exchange men could visit and discuss matters with the
Federal Reserve Board, it seems to me it would be productive of good.

Have

you any suggestions along these lines?
I had a letter from Mr. Starek to-day, in which he says, "I have

been on annual leave, of which I was greatly in nee
erably better as a result.

and am feeling consid-

I am leaving the city again to-night but ex-

pect to return in a few days," but he makes no mention of his taking

WO

his work again.

Are you studying the currency question and do you propose to make
any suggestions for legislation concerning these matters at the coming term
of Congress?

I will ask Mr. Curtis to prepare a memorandum on the liability of
*

Federal reserve notes being extinguished or reduced.
Governor Seay writes that he is working with his committee on the
question of investment allotments and Lir. Jefferson is working un a brief
to submit to him.

To-day we had offered by Bernard, Scholle

Co., t300,000. of

Brawn acceptances in connection with the Paris-Orleans Railroad, same being
indorsed by the Girard National Bank.

-hile we were up to our limit of

the 'Brown acceptances, after discussion of the same with Mr. Toodward, he

thought, and I agreed, that we should buy then, which we did, at 2 7/8.




/Kt /4-4A-et 4- ye2-decti
tetk.iCa..tt

6te'

FEDERAL RESERVE BANK OF NEW YORK

3.

Benjamin Strong, Esq.

11/22/16.

Ct
Mr. Jay came down to the bank Monday but was back in bed again
yesterday and has a nurse,

he did not follow Doctor Treman's advice) but

is better to-day and I have suggested to LIrs. Jay that they go to Atlantic

City for a few days before he takes up his arduous duties in connection with
the Federal Reserve Agents' Conference December 4th.

He probably will be

away from the bank, however, for a few days yet.

Am I unwise in sending you so much of this detail?

will

If so,

I

cut it down, because we do not want to overtax you and certainly to do

want you to feel that you are under any obligation to reply in detail except
in re matters about which we ask your advice.

While

ou are absent from us, you are still a great inspiration to

us all and we rely very much upon your judgment, and it is a source of great
gratification that while you are so far away from us, you are able to give
your mature thought and judgment to the important problems which are constantly coming up and which will develop for a while yet in connection with
the Federal Reserve System.

Realizing as i do hum few men are fitted by

natural ability, by training and experience, and by a rare combination, as
you, my dear Qovernor, are for this particular work, I hope you will pardon
me if I serm to be too persiStent in my urging you to be faithful

in doing

everything which will tend to improve your health and develop your reserve
strength, and to refrain from anything which will interfere with that work,
to which you should consecrate yourself.
Just be good and give the country the benefit of your rare talents,

as it certainly does need you, and there is much yet to be done and we all
feel that you are the one to do it.




With assurances of my sincere affection and interest in all that

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

you are doing, I remain,
Sincerely yours,

67eheeVg>44-41-Lit-1.4-----,
Benjamin Strong, Esq.,
4100 rontview Boulevard,
Denver, Colo.

MIT/CEP
Enos.




11/22/16.

FEDERAL RESERVE BANK
OF NEW YORK
November 24, 1916.

My dear Governor:

Your personal letter came in to-day and as I am going home to-night
I shall not attempt to answer but hope to talk with Mr. Peabody and Mr.

Woodward in the early part of the week and will write you then, but I am
perfectly clear in my own mind as to the arrangement the bank should make
with you for a continuance of your service.

We have had a regular forum on the question of
and the mooted question of the "renewal credit" accer
just finished of Messrs. "roodward and Curtis and

this afternoon with Mr. Jay, who is still at h
ly to instruct Mr. Kenzel to continue the p

eptances rates
ces.

Had a meeting

4self, Curtis having talked
-le have agreed unanimous-

chase of acceptances based on

the credit largely)represented in each bi 1 but without making any differential at the present time against the r

ewal credits, and that if we are

approaching a point where we think w have as large a proportion of accept-

/

ances in our investments as we can wisely carry, we will raise the rate and
regulate future purchases accord ngly.
I assume that Mr. Cu

is will write 'you more in detail to-morrow

but hope that you will telegyaph us, if you get this it time, as to whether
you think this is right or riot.

We have a meeting of the directors on

Tuesday at 11 a. m.

With kind regards, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colo.
RET/CEP


46;vg,4_,ez

FEDERAL R
RVE BANK
OF NEW*K
November 27, 1916.

4!

Dear Governor Strong:

I spent Saturday in Ithaca but returned t41,As morning, as Mr. Jay
is still ill although Mrs. Jay has just reported-'t

he is better and hopes

that he will, by being quiet this week, be recovered to permit of his attending the Federal Reserve Agents' Conference in Washington next week Monday,
after which he may go to Atlantic City for a few days before taking up his
work here again.
I wrote you Friday afternoon the result of our discussions during

two or three days, trying to crystallize into a wise decision the various
apparently conflicting views as to the handling of the "renewal credit" acceptances being offered, and Mr. Kenzel Sent you, I believe, Saturday morning a brief covering the situation.

For myself, I can say that our con-

versation with Mr. Smithers and my conversations with Mr. Alexander and NY.
Woodward confirmed the opinion that we had better continue handling the acceptances as they were offered based on the credit of each bill, having in
mind, of course, all the time not becoming too saturated with then, and in
case they should be offered in such large volume as to be in any way a menace,
we should raise our rates and continue doing so until we had found a proper
level to control the situation.

I hope that this action will meet with

your approval and that we shall so conduct ourselves as not to have the disapproval of the Thshington authorities.

The newspaper discussions about Mr. Glass succeeding Mr. McAdoo
were nipped by Mr. Glass' statement, which you probably saw, that he was not
a candidate, etc.

The general impression here seems to be that Mr. McAdoo

of the
will consider retiring into business life some time in the early part



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

2,a_

11/27/16.

next administration.

The junior officers are expecting to meet to-night to have an informal discussion over matters which will be brought up by the auditor and
the transit men at their meeting next week in Chicago.

A circular letter from the Federal Reserve Board this morning indicates that they favor having a bond committee to control the purchase, as

well as the sale, of government bonds, which to my mind is most essential.
I have sent to the various governors a copy of the letter we are
sending out to our member banks about transfer of gold to us in excess of
their reserve requirements.

Governor Seay has responded by making an argu-

ment in favor of Federal reserve notes being counted as cash reserves in vault
and says, "Nevertheless it is advisable to corral that gold if by doing so
Federal reserve notes can be forced into circulation.

It will serve a good

purpose to accumulate gold in the present fashion against the time when the
Act shall be amended."
Governor McCord has written requesting permission to have Mr. Walker,
Manager of their New Orleans Branch, invited to the Governors' Conference.

Mr. Peabody is here this week and has been in the bank this morning,

at which time I discussed with him the question of Mr. Starek and suggested
that he get in touch with the facts and keep a line on the situation.
I judge from the fact that gold is beginning to come in again to-

day that we shall have an easy market for money for awhile yet, as long as
gold comes in.

Curtis is feeling a little sore over the Harvard game with Yale on
Saturday, but we must all take the bitter with the sweet.

With kind regards, I remain,
Sincerely yours,
Benjamin Strang, Esq.,
4100 Montview Boulevard,
Denvor, Colo.


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

FEDERAL RESERVE BANK
OF NEW YOI7
iivember 28, 1916.

/816
MY

dear Governor:

We had an interesting meeting of the directors this morning, Messrs.
Locke and Starek being absent.

It was thought wise not to change the rates of discount, notwithstanding that Boston expects to make a change in their rate for short maturities.

About our rates for acceptances there was considerable discussion.

The announcement made by the Federal Reserve Board at Washington as to the
foreign credits and the warning contained therein had a marked effect on
many financial people this morning.

We considered the many phases of the

situation and it was thought advisable not to make any change in our acceptance rates but to continue purchasing bills as they are offered, assuming
that they come in fairly normal volume; and that in case conditions should
develop so they cone in such volume that we would desire to limit our purchases, we should do so by raising the rate, and the board then adjourned
subject to call of the officers at any time within the next two weeks, it
being sonewhat uncertain as to when we could have a meeting because of Mt.

Jay's illness, the meeting of the Federal reserve agents next week and of
the governors the following week.

The general comment on the Federal Reserve Board's announcement
has been that it was a proper function of their's to issue warnings but
there seems to be in some circles a question whether they had not exceeded
their function somewhat in going to the extent they did.

Mt. James Brawn was in this morning and stated that he thought
the warning as to the British Exchequer bills was timely and right, but
somewhat questioned their covering as many matters as they did in this




FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

11/28/16.

announcement and applying sane to private investors as well as banks.

Mr.

Woodward said that the general comment among his board was that for the Board
to 'issue a warning was not unwise.

The matter of the amount of purchases was left With the officers and
the matter of making a differential, if advisable, to Mr. Woodward and myself.
The immediate policy as to acceptances, approved by the board to-day, was to
continue purchasing prime bills, even if we should accumulate .D10,000,000. or

so more for the New York bank, but to be conservative as to an over-accumulation
9
of renewal credits or others of which we might, in our judgment, be up to our
limit.

It is rather a mixed situation just now but we shall endeavor to
handle it conservatively and wisely.

i am expecting now to talk with Mr.

Warburg over the phone concerning this and other natters.
The board approved of raising our bid on United States 2% bonds
to nar, as we have only accumulated about ,1,350,000. at 99 7/8, the price de-

termined last meeting.

I hope we may get some at par.

The question of dividends was discussed informally, no action being
taken., however.

Apparently we shall have about t300,000. of net profits by

December 31st and I should judge that the board will decide in favor of making
a 6% dividend for the period from November 1E, 1914, to March 31, 1915, although if we should have increased profits, they might decide to pay up to
July 1, 1915, although that would not leave so very much surplus.
I am enclosing an editorial from the New York World this morning,

which possibly you will not see, referring to the action of the Board.
Mr. Jay has just called me up and talked with me, saying that he
was somewhat better and would try and go to 7ashington for the meeting next
Monday, Mrs. Jay accompanying him.



I enclose statement showing liability as acceptor and indorser on

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

11/28/16.

bills purchased up to date and would be glad if you would advise if you see
among them any acceptances about which we should be cautious.

I hope to go to Detroit tomorrow (Wednesday) evening to spend
Thanksgiving, but will return promptly, or at least to be on hand for work
Monday morning, unless something unforeseen develops, and Mr. Peabody and
Mr. Woodward will be here Friday in case I should be absent.

The board felt that it =Is wise for us to keep liquid by not buying
warrants with more than thirty days maturity, and we shall try and keep in
touch with the situation satisfactorily.

With kind regards and best wishes, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colo.

z

b/covt-4-42
-6-0-4y4/- c-e-044,eRHT/CEP
Enos.




eoLit

-

t°4

FEDERAL RESERVE BANK
OF NEW YORK
November 29, 1916.

My dear Governor:

Mr. Jay is better to-day and Miss Holmes has been at his house for
some dictation.

We have been very sorry that he has been laid up this way

and it has, of course, kept us busy with more detail at the bank.

Regarding the extension of our Collection Department to include
State banks in this district, I would state that we have only had four or
five State banks agree to cone in as a result of our letter appealing to

We are following up now with letters where they have not answered

them.

at all.

I discussed with Curtis to-day having Messrs. Hendricks and Higgins

take a list of those who had not come in by, say, December 15th and go out
to visit the banks in person, thinking that these two men might cover the
ground within a few days, and then those which by the end of December we have
not brought in, try and collect through express companies or in some Other
way.

Have you any suggestions contrary to the above plan?

We had a number of City of New York warrants offered us yesterday,
maturities, which we
amounting to 02 700,000., mostly December and January
bought.

We also purchased about 04,000,000. of acceptances, retaining about

t1,500,000. for ourselves.
I am sending herewith a statement of the acceptances held under
have to
the various credits issued and shall be glad of any comment you may

make on the quantity the New York bank is holding.
have about

You will see that we

13,500,000. of these credits out of a total of acceptances of

about 035,000,000. now held by this bank.

I have asked Mr. Kenzel to ad-

held, and we will
vise me from day to day as to the amount of renewal credits




4C;;;L

---FEDERAL RESERVE

BANK OF NEW YORK 2

Benjamin Strong, Esq.

11/29/16

49
endeavor

to keep them within a reasonable amount but from our discussion in

the directors' meeting yesterday, I think the directors would not oppose our
purchasing :71_0,000,000. or more of acceptances but holding within50,000,000

for the New York bank.

I am enclosing sheets from the ticker as to bank acceptances, etc.,
as of to-day.

We are having only a few acceptances offered to us to-day.

Your telegram was received about two hours too late for our meeting
but was considered later by Messrs. Curtis, Sailer and Kenzel and myself when
we were formulating this bank's policy as to acceptances after the discussion
of the board in the morning.

I read extracts from your letters of November 18th and 22nd in re

rates to the directors at their meeting yesterday; also read extracts from
Governor Harding's speech, indicating the position of the Federal Reserve
Board concerning same.

We are having some gold certificates sent in to us every day and
are averaging nearly a half million dollars a week thus far, with only a
small proportion of our banks already written to.

I am sending more letters

to-day and will follow the matter up from time to time until we have practically covered the district, at least banks which would be apt to have a reasonable
amount to send.

I sent copies of my letter to member banks to different governors
and Governor Rhoads thinks he will follow it by a similar one.

Governor

"iller writes that there is so much gold coin held by banks in his district
that he does not want to stand the abrasion, although Richmond proposes to
absorb that.

Your letter of November 25th is just at hand.

Doctor Treman has

had Mr. Jay in time and has read chapters of the riot act to him and has made,
I think, tactful suggestions to Mrs. Jay.




FEDERAL RESERVE RANK OF NEW YORK

Z

Benjamin Strong, Esq.

11/29/16.

I will talk with Mr. Jefferson and Mr. Hendricks about their respective approaching meetings.

I am glad that you have some local doctors who are looking after
your interests, as well as the professionals.
To-day while lunching at the India House with Mr.

many friends you have.

Curtis, I heard one of the head waiters ask, with evidently much interest,
haw you were and how soon you would be back again, apparently, having missed
you.

I will talk over with Mr. Curtis the Governors' Conference, etc.,
as per your letter.

He has been talking to-day with Governor Aiken about

this being the psychological time to take up the Bank of England matter
and he will write you more in detail.

With kindest regards, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colo.

RHT/CEP
Enos.




FEDERAL RESERVE BANK
OF NEW YORK
December 5, 1916.

:044
My dear Governor:

We certainly had quite a strenuous day yesterday, with call money
touching 15%, and we purchased acceptances up to $3,800,000. of which about
!!1,900,00'. were renewal credits.

be divided up.

All of the acceptances, of course, will

For your information I am enclosing the amounts we have

Purchased in the last five days and the divisions.

Yesterday morning Kenzel suggested my calling the executive committee together to discuss raising the discount rate, but it did not seem wise
to me to make any change, believing that with the disturbance over call money,

our increasing the rate just now would add fuel to the flame, so we maintained
the same rate yesterday and to-day, and to-day have had fewer offerings and
the situation has been quiet.

We purchased $1,160,000. acceptances, of which ,583,000. were French
credits, and we contracted for to-morrow for $2,500,000. of commercial credits
at regular rates, no renewal credits among then.
December 6, 1916.

Tas interrupted, so an finishing the letter Wednesday morning.
I discussed with Mr. Alexander this morning whether the big banks

would not rediscount at the present time, setting an example to some of the
others and using the money to reduce the call -money rate as while conditions

might lustify 4% to 6, they to my mind do not justify 8% to 15%, and just
now I think it unfortunate for a longer continuance of unusually high call
would be bad Outside.
money rates, fearing that the sentimental effect
received some encouragement
talked also with Messrs. 7iggin and Vanderlip and
considered and decided to-day.
with the understanding that the matter would be



FEDERAL RESERVE BANK OF NEW YORK

2

Benjamin Strong, Esq.

12/6/16.

e are continuing our acceptance rates but will probably think it
wise to advance them when this flurry subsides, as apparently conditions justify our doing it, making the basis 3% for ninety day member bank acceptances.

You will be interested in knowing that since May 1915 we have had

credit balances at the NewYork Clearing House to the extent of .411,000,000.
and a debit balance of 120,148,000.

Mr. Frew was in yesterday, discussing some collection and transit
matters, and I asked him why the member banks could not settle their clearing
house balances by checks on the Federal reserve bank, saving the handling of
so much currency back and forth to the clearing house.

That would you think

about this plan and is it worth pursuing?
I wrote Mr. 7arburg about the Starek situation.
vestigate but I have not received any information.

He agreed to in-

Will advise when received.

I note that Mr. Masson has visited you and that he will call on us
at the bank soon, and we shall have pleasure in doing what we can for him.

Mr. Miller, vice president of the Chase, was in about five o'clock
last night and said that if two or three of the other banks would rediscount,

the Chase would do so to-day, taking e2,000,000. on their own note with collateral for fifteen days, and would sell us some acceptances besides.
I have an idea that the sudden calling in of the British Exchequer

bill plan at the time when it was expected they would have returns coming in
has made a temporary pinch at the corner and pending the arrival of the gold
imports in transit, there will be a stiff demand, as there are very heavy
obligations to meet :Just now.

I shall keep at the rediscount matter to as great an extent as would
seem tactful and wise and hope for, but cannot count on, success.
When I was in Detroit on Friday last, I learned from Mr. Emory
Clark, president of the Old Detroit-First National Bank. that there is con


FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

12/6/16.

siderable hoarding of actual gold by the foreign element in Detroit, they
bringing in cheeks and currency, asking for gold, and I assume that this is
going on to quite an extent in other foreign element centers.
I will talk with Curtis, to-day if we can get the time, about the
Bank of

ngland matter, but am inclined to think at the moment that it would

be wiser not to lay the entire matter before the governors and they to their
directors, but to have Curtis nrepare a brief for submission next week.

Mr. Woodward is in Chicago this week attending the Clydesdale Association meeting but returns Friday.
If conditions continue fairly normal, we will probably postpone our
directors' meeting until next week after the governors' conference.

Whether

I shall go down will depend, I think, on whether Mr. Jay stands the week in

-ashington this week all right and can be back here for next week, as otherwise it would not seem advisable to have Curtis, Jay and myself away.

Dr. T. has given his advice freely to Mr.

jay

but confesses that he

is somewhat anxious about his not taking better care of himself and living

within the limitations of his strength, which by this time he ought to be able
to gauge somewhat correctly.
We had a very ,pleasant call this week from 7r. Ward Bannister of

Denver, who stated he had been you within a week or ten days, and it was
next best to, although not nearly so good, as seeing your good face ourselves.

a

also had a call yesterday from Mr. Smith, vice president of the Internation-

al Trust Company of Denver, who said you gave a very interesting talk at a
club recently.

1

naw York this fall has been more full of people than I have ever
seen it before, and apparently the hotels have done the best business in
their careers.

Money, by some people who have made it easily, is being

spent, not only freely but most lavishly and in many cases unwisely.



A

FEDERAL RESERVE BANK OF NEW YORK

4.

Benjamin Strong, Esq.

12/6/16.

The last two days have been very strenuous ones but I think thus far

we are handling the situation fairly well, at least Alexander, 7oodward and
the others seem to say so, but T try to keep in touch with those who know
more about it. than I do and will hope that we will make no grave blunders in
these more crucial periods.

It is fair to say that the bank misses you but

there a-e always compensations, and I am sure that being away from the petty
detail, you are able to give better and sounder consideration to the most
important problems in which your experience and judgment is invaluable.

It

is a great joy to me to feel that the doctor reports you doing as well as

could be expected, and it would seem that it is only for you to continue living this strict simple life and to take time enough to put yourself on your
feet ready for active service.

Hendricks and Jefferson are away this week in Chicago and we are
all busy but if we keep well, can carry the work all right.
In yoursof December 2nd, you state that you approve of the board's
action in not establishing a differential on acceptances as yet.

I know

that this has been your real opinion all the time, and having had some experience now, I fully agree that it is wiser not to have a differential, at
least until it becomes much more necessary than it is at the present time.
Regarding the accuyiulation of gold, it is certainly most gratifying

to note the cheerful cooperation of the member banks to which we have written,

and while re may not be able to retain very much under present conditions, I
believe that keeping the importance of accumulating gold in each bank's awn
reserves or with us before the member banks will repay the trouble we are
taking, and it is interesting to note that Governor Van Zandt, without appar-

ently knowing of our doing it, has within a week or two been sending out a
circular along the same general lines to his members.

T'a also may succeed

in keeping out more of our Federal reserve notes in circulation, and if we



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

12/6/16.

can substitute for them gold certificates, even to a fair amount, would it not
be wise?
My best regards to you, my dear Governor.
Sincerely yours,

Benjamin strong, Esq.,
4100 7ontview Boulevard,
Denver, Colo.

RITT/CFP
Fnc.







ACCEPTANCES PURCHASla

Ourselves

Others

Total

Nov. 27

698,000

994,000

1,692,000

28

1,676,000

2,337,000

4,013,000

29

1,169,000

817,000

1,987,000

1

1,275,000

-1,849,000

3,124,000

4

1.653.000

2.139,000

3.792.000

6,471,000

8,136,000

14,608,000

"

Dec.

FEDERAL RESERVE BANK
OF NEW

December 6, 1916.

PERSONAL

MY

dear Governor:

Replying to your letter, in which you speak of your condition and
the uncertainty as yet as to your ultimate plans, and in answer to your request that I give you my own candid opinion of what is best to do in the matter of the bank's organization,

I will devote this letter to my views, which

please construe as an expression of my own personal feelings.
FIRST:

After six months' connection with the detail work of the

bank and in view of the probable continued increase of the more detailed work
caused by the development of the collection system, the increase in acceptance
business, and the expected greater use of the bank's facilities by member
banks, T believe that an officer, probably a deputy governor, doing about the

work which I have been doing, will be a necessary addition to the organization, such officer doing much of the same work that I am now doing but leaving the consideration of the more important problems, which will continue to

develop for some time yet, to the governor.

SECOD:

Even if your health and strength will permit you to do it,

I do not believe it would be wise for you to attempt again to carry the detail

work mentioned above, as well as devoting so much of your energy and thought
to the bigger problems, as you attempted to do before, resulting in your having to take a long rest.

On the other hand, it would seem that with the

assistance of a competent deputy governor, who would take the detail, you
could continue as governor, devoting yourself to the more important questions
and bigger problems, and acting as adviser and general director of the bank's
policies;




in short, keeping about the same position as Mr. Hepburn as chairman

FEDERAL RESERVE BANK OF NEW YORK 2

Benjamin Strong, Esq.

12/6/16.

does in the Chase, under which arrangement it would seem that you could have

reasonably short hours at the bank and arrange each summer to take a long
vacation (three months or so), which would enable you to live out doors and
escape the heat and debilitation of a summer in New York, and then at such
periods during the winter as seemed necessary, you could run off for a shorter
time for rest and recuperation.
THIRD:

I know of no one available who can bring to the solution

of the very important questions,which will arise for a few years yet at least
in the development of the Federal Reserve System, the ability, the experience,

the acquaintance, and the knowledge required which you, Governor, can do, and
I feel that you should not give any consideration whatever to your giving up
acting as governor of the New York bank but should rather feel that you have
a call to this great service for which you have been fitted through these
years of varied training, and that you should consider it your life work to
continue giving your thought and strength to the working out of these problems.

In expressing this view of your signal fitness for this great work,

I feel confident that I an voicing the sentiment of the directors and the
officers of this bank also.

POUTTi

Now pardon a reference to my position in this matter.

As you know, I did not seek this position and took it up very reluctantly
because I felt my awn limitations.

It was thoroughly understood on ny part

that I was asked merely to fill in temporarily to meet the emergency caused
by your unexpected illness, and one of the deternin'mg factors in leading me
to attempt it was the statement you made that if I would take this position,
-,,au would go away contented, without anxiety, and satisfied with the arrange-

ment, so I felt I would be contributing a small share towards your ultimate
recovery, and if this could be accomplished, the question of any sacrifice
on my part should not be considered.




RESERVE BANK OF NEW YORK

3

Benjamin Strong, Esq.

12/6/16.

crFEDERAL

...--"-.../

o.
I have been here now nearly six months and am willing to continue

until spring or, if the doctor should determine later that you aught not to
take up. the work even in part here at the bank till next summer or early fall,

I could probabl: arrange to stay such portion of that time as may be deemed
advisable, but I should want it understood that that would be the extreme
limit of my holding this position.

On the other hand, one cannot be a fair judge of his own work and
effort and I, of course, do not hear the criticism of the bank's conduct at
the present time.

I realize that up to the present time the directors have

felt it wise to let matters run along until such time as you could indicate

with some degree of certainty as to the future, and they undoubtedly will be
willing to continue this policy for such time as is necessary for the doctor
to reach a conclusion as to your future.
Should you finally decide that a plan along the general outline

above wouY be your desire, it would seem then advisable for the directors
to select a suitable deputy governor, and I would hold myself in readiness
to drop the work at once, or to continue for such time (not later than next
autumn) as would seem best for your interests and those of the bank.
Please, therefore, consider my position as that of a "fit-in" for

a longer or shorter time according to the way matters develop, and I want you

especially to use me in just such away as will best serve your interests, my
dear Governor, as I am truly happy in being of service to you and to the bank.
I have, since the receipt of your letters, suggested to Mr. 7oodward

and also at a different time to Mr. Peabody that in my opinion they two, being
the committee appointed, should have a conference and outline some general
policy as to the future, and they have agreed to have this conference soon,
probably within a week or two, after Mr. r7oodward returns.

As Mr. '"oodward

suggested that he would like to bring me into the conference, I shall be glad



FEDERAL RESERVE SANK OF NEW YORK

Benjamin Strong, Esq.

12/6/16.

to have you indicate to me your own opinion as to the best arrangement and
your personal wishes in the matter, so that I may govern myself accordingly
in any suggestions which I may be permitted to offer.
I apologize sincerely for this long letter, but you asked me to
write candidly my opinion, and you have it now.

Let me add that I have

enjoyed my work and it has been a fine experience; I have been treated with
very great consideration and kindness by my co-workers in the bank, and while
I have had periods of anxiety and have realized the responsibility, so far as
I can .iudge it has done me no harm physically, and, therefore, I summarize

that I am at your service and the bank's to stop now or to go on for such
neriod as may seem best.

with kindest regards, I am,
Sincerely yours,

Benjamin Strong, Esq.,
4100 MontvIew Boulevard,
Denver, Colo.

RHT/CEP




6

FEDERAL RESERVE BANK
OF NEW 16) FR IA:
4°e/-:

'44?1

4/6

December 7, 1916.

My dear Governor:

I enclose herewith copy of the vote of the district reserve director and I think it quite interesting.

Had there been any organized effort,

I think nrobably Mr. Carlton might have run closer to Mr. Towne as Carlton
has quite a following here in the city apparently.
You 'will be interested to know that yesterday we rediscounted for
banks as follows:

National Bank of Commerce
National City Bank
Liberty National Bank
Chase National Bank
American Exchange National Bank
Union National Bank, Newark, N. J.
First National Bank, Utica, ". Y.

.1:33,255,000.

2,000000.
2,000,000.
1,000,000.
1,000,0On.
300,000.
174,000.

I an enclosing two or three clippings from the morning papers in regard to
the rediscounts for your information.

I had talked previously with Messrs.

Alexander, 7iggin, and Vanderlip, and this action yesterday was the result

of their agreeing to do this,as a starter, but each one basing their rediscounting on others also doing it at the same tine.
7e also took in about

5,000,000. acceptances, of which .1'2,500,000.

were purchased from the Guaranty the day before, delivered yesterday.

The

Chase National also sold us '1,500,000. accentances.
Call money closed at 3%.

A letter from Mr. Warburg this morning says, "I am trying to watch
.

Jay as closely as I can, but it is difficult to keep him from being right

in the center of things.
him."



So far, however, it appears rather to agree with

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

12/7/16.

You will be interested in knowing that a meeting Of the Association
of State Banks was held December 5th at Syracuse, N. Y., at which I understand
a plan to inaugurate some kind of a clearing house for State banks was promulgated, in which plan Superintendent Richards and 7. C. McDougal were the
sors.

spon-

As yet I have been unable to get further details.
I had a telenhone from "r. Jay this morning, stating that he was

feeling fine and that the two or three days in Washington had brought improvement every day to him in his physical strength.

He expected to go to Atlan-

tic City to stay until Sunday afternoon and then come to New York to be here
while Curtis and I are in Washington.

Aiken telephoned this morning that his committee probably would raise

61tar4 atscrua"
the avg&3:ctertat rates to-day, as he felt that conditions justified it and was
--e0

a CLY-a.-cg-

c-xt-pczia,241c 044)

advised by acceptance brokers in Boston, in whom he had much confidence
told him that we felt here that we were justified in raising the acceptance
rate up to 3c/, for ninety days' bankers' acceptances, usual differentials for

short maturities, etc., but thetweprobably would not do it until our meeting next

week, although most likely we will do so then.

-e are all very much pleased to-day over the news from Mr. Jay, which
said he had telegraphed -;ou, in re foreign bank relations, and Curtis is tele-

phoning that we assume that you will begin the correspondence as soon as you feel
justified in doing it and send us a copy for our files.

I assume that you know that the committee of twenty-five bankers of the
American Bankers Association having in charge legislation which will kill the
present Federal Reserve Collection System, is to meet next week at Chicago.

They have been doing considerable corresponding and no doubt have worked up a
sentiment among the smaller banks decidedly opposed to the present system, but
I hardly believe that the Federal Reserve Board will permit adverse legislation
if it can be prevented.



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

3

12/7/16.

I an very sorry to learn to-day that Governor Kains will not be at
the 17ashington conference.

We had a debit balance against us at the clearing house this morning
to the extent of about ,112,000,000. caused by the Commerce withdrawing
Chase

2,500,0V., Corn Exchange

5,000,00fl.,

3,500,000., and others smaller amounts.

The enclosed clipring from the American of yesterday perhaps will

give some inkling of the inside workings in the Federal Reserve Board as between
them and the Comptroller, leading to the announcement they made about two weeks
ago.

I received to-day from Mr. E. C. "cDougal an extract from his speech

made at the meeting of the State banks on December 5th at Syracuse, in which he
asks for my criticism of it.

I enclose a copy herewith.

My best regards to you.
Sincerely yours,

Benjamin Strong, Esq.,

4lO7ontview Boulevard,
Denver, Colo.

EHT/CEP
Enos.







J

MEVORANDUM TO W. TfoldiAN

ILAARDING PURJHASib Ji BA/al-2W AJOEliA2Jt2
BY,THE4#.4,JcIRAL RRVZ BANK JO NW YORK
ITSELi AND 02114a 04DiRAL DISSRVZ BANKS.

DECEIBER 9, 1916.

U

A000rding to the rewrap of the Federal Reserve Bank of New York its hold-

ings of "Bills Purchased" on the dates named were as follows; the first column show-

ing the total amount of bills held and the second showing the amount of those bills
whioh were drawn under renewal credits;
Total°

Date

$ 20,326,000
36,600,000
41,306,000

November 10th
Deoember let

8th

Rengeftle,

# 10,406,100
14,063,700
16,451,600

On the same dates the records of the Federal Reserve
Bank. of New York indicate that the system as a

whole held "Bills Purchased" witsielott as
per statement of November 10, 2916, -

90,913,000

of which the records of the Federal Reserve Bank of

New York show as drawn under renewal credits about
26 or

On December let total bills purchased
held by system as per weekly statement

2Z,559,000

#106,379,000

Add estimated amount of bills bought
by the iederal Reserve Bank of New
York throuith the close of business
Deoember let and allotted to other
iederal reserve banks but which

were probably in transit and, therefore, not included in the Above
amount

3.o84soo0

109,964,000

aboat 28 1/3; or
On December 8th in the absenoe of publiehed figures total amount of "Bills Purchased" held by the eyetem,
estimated from transnotions that have been through the
Federal Reserve Bank of New York

Of which the reoordo of the Federal Reserve Bank of
New York show as drawn under renewal credits about

28.0 or




31,249,000

120,000,000

34,104,400

(2)

TOTAI, PURJRAES ut BANKIMS, AO0EPTANOBS BY THE OW0A1 RESKRVE BANK 0? NEW YORK

VoR 1T4ELY aD 101 LUOTUStaTJ OTHR filIg&RAL Rii;J.4RVE SAM 'WU DBOB:31001 1 TO
8, 2916, INCA:AMY& BY DAUS AND 0HARAOTa, WERE Ali ?QUM:

Totals

"

.

410

1,396i92.0.

_

.04

OW . . .

1,963,1732

14u7,487

.0

$ 1,240,J00
2042900

_imam

/5,481,432

4th .

$ 3,124,463

4,89,316

Deoember let

6,192,897

3,792,764
1,159,512

5th
6th
7th
8th

583,332

50000

......101.111111101.1110

Of the above amounts the ioederal Reserve Sank of New

York during the period from December lit to .aeoer.

ber 8th retained for its own account totals uf bills
as follows:

1,275,665
1,652,805
696,824
2,262,312
588,012
k.029,673

4th
5th
6th
7th

6th

4

285,443
844,166
508,233
875,0T)
25,000
413.333

7,505,26.

DeoeHmir let

$

2,851,275

Tao oall money rates in 14ew Iorx during that period are
&leo indicated he. dates:
Openbougrawal

DeMeeker let

4th
5th

4 2/2

4 1/2

6

6

4 1/2

4 1/2

4

4

a 1/2

.6th
0
ft

7th
8th

8 1/2
7

kliga

4 1/2
6
6
15
a 1/2
10
5
7
4 2/2 3 1/2
4
3/4

4 1/2
10
10
3
3 1/2

4

Of the above volume of bills the Vederal Resorve Bank of
New York received and retained from the gederal neserve
bank of Boston ,029,177 of which O6.,-.6.666 were is..
sued under renewal credits.




(3)

The following is an itemised memorandum of the 46,1920:J0 of bills drtLwn

under renewal oredits purdhased by New York from December lst to 8th inolusives
Total
Days

Deo. 1st

Deo. 4th

90
Bankers Trust Jempany
90
tion9.1 Park Bank
90
Amerioan 'A. Nat. Bank
keeheelcs & Metals Nat.Bk.90

3

Irving National Bank
Lazard Awes

Indorsed by

liellew40

Rate

Member Bans

2 7/8
2 3/4

87

36/51

87
Bankers Trust Company
Mechanies & Metals nat.Bk.28

J. P. Morgan & JO.
Brown Bros. & '..:0.

tirst Nat. Ba.,Boston

60
60

4-

2 3/4
2 1/2
2 1/2

406,270
166,666
333,3$3
333,333
683,000
540,000
408,000
333,000
27,500
50,000

2 1/2
2 3/4
2 3/4

86 3-1/8e2 7/8
2 3/4
62
2 7/8
62
2 3/4
55

2 3/8
2 3/4
5/27 2 5/8
33/48 2 3/4
2 7/8
72

Lazard ereres

60

2 3/4

80,000

26

2 1/2
2 1/2

166,666
146,666

J. P. Morgan & Jo.
Rational Park Bank
jhase National Bank
If

Dec. 7th
Dec. 8th

27,500
60,000

500,000
333,333
500,000
530,000
100,000

Brown Brothers & Jo.
Lazard ererea
01

Deo. 6th

3

333,333
100,000
100,000
50,000

Laggard dreres

Dec. 5th

333.333
n.3.33,3

4

Of

ft

*First Nat. Bk., Boston
"
'Union Nat. Bk.,

27
27

26

$6,192,000

500,000

$1,244,166

Reoeived from Vederal Reserve Bank of Boston.
Totals

liammikt

Of tbe total of bills bought by the Federal Reserve Bank of New York December 1st ta December

8th inclusive, say

There were reoeived from the 1, R. Bank of Boston

Leaving totals lurchased looally

# 15,481,432

6,192,897

102v.aw

646,700

; 14,452,000

s4.

5,546,000

Of whiah the e. U. dank of New York retained

6,476,000

2,369,000

And allotted to other E. R. banks

7,976,000

3,177,000




s

(4)

Totals

Of the total amount of BBills Purehasod" held by the
federal Reserve Bank of New York at the close of
business December 8, 1916,
say

Renewals

$ 41,386,090

4

Those drawn under renewal credits amount to - Of whioh those indorsed by
the acoepters amount to

15,451,650

member banks other than
5,930,500

The total, ','41,2586,090, of bills purohased held by
the iederal Reserve Bank of New York at close of
business December 8th mature as follows:
Within 10
ft
10/30
30/00
60/90

dads

4,105,635
9,601,606
17,096,794
10,581,854

1,671,000
4,547,750
7,397,600
1,635 300

$ 41,366,090

4 15,451,650

Bills

Bills Drawn
Under Renewals

ft
If

The net increase in bills bought for the ystem by
the Federal Reserve Bank of New York during Dedember is shown in the following tablet
Amount bought
Amount paid
Increases

$ 15,481,432
6,960.675

4

6,192,897
2,100,000

$

-

4

4,092,897

8,520,757

Of the total renewal bills bought December 1st to
8th inclusive, there will mature from December
llth to January 2nd inclusive
And there will mature later in January

Renewals
1,580,000
-

1,121,666
A

A total maturing within 60 days of

9

3,101,000

Of the total renewal bills held by the system according to the records of the iederal Reserve
Bank of New York, say 04,100,000, about one
half mature within one month, say

4

17,038,000




MATURITIES

ge

FRENCH AND RUSSIAN CREDIT RiNEWAL BILLS.

Close of Business December 8, 1916.

Other eed.
lies. Banks

New York
December 11

4 1,101000

18

690,000
1,010,750
440,000
200,000

26
27
28
January

2

2,697,000
200,000
818,000
550,000

4

1,838,500
1,013,500
997,250
475,000
350,000

Total
4::

3,019,500
1,703,500
2,008,000
915,000
550,000

946,600
800,000
430,000
800,000
680,000

4,045,000
150,000
932,000
450,000
250,000
397,000
1,150,000
610,000
275,000
610,000

6,742,000
350,000
1,750,000
1,000,000
250,000
1,343,600
1,950,000
1,040,000
1,075,000
1,290,000

26

1,395,500
V77,500
183,000
244,000
25,000
50,000
300,000

1,179,500
997,500
241,700
6,000
150,000
350,000
350,000

2,575,000
1,976,000
424,700
250,000
175,000
400,000
650,000

1

833.300

1.833.300

2,666.600

015,451,650

08,652,750

034,104,400

4

s
9
11
15
22
23
24
29

February

1
9
13
15
16

oh

-

RU33IAR CREDIT RENEWAL BILLS.
December 8, 1916.

ionbright

rown Bros.
Marais Freres
Lie Neuflize

Pyxis & Orleans R. R. Co.
Paris, Lyons & L. R. R. Co.
Banque Russo

Ourselves

Other Yed.
Res. Banks

4 5,194,900

4 5,774,100

4,662,700
905,000
400,000
2,400,000
1,540,000
350 000

5,947,700
1,775,000
1,000,000
1,500,000
1,505,000
1.150.000

115,452,600

Credits

018,651,800

Total

410,968,000
10,6/0,400
2,680,000
1,400,000
3,900,000
3.045,000
1,500,000

4

34,104,400

The total amount of renewal credits, a portion of the bills drawn
under which the Federal Reserve Bank of New York has bought Is about
493,000,000.



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FEDERAL RESERVE BANK
OF NEW YORK
December 15, 1916.

JAN10 19;/
My dear Governor:
In answer to yours of 'December 6th as to the statement given to

the press and your query as to the net figures of

0,641.84, I am sending

you statement of the items of which these figures are the balance, and would
be glad of any suggestions from you as to how you would suggest our putting
it out in our s,-1Elarized statement.

I an sending you by mail the report furnished to the governors

and to the Federal Reserve Board by Governor Seay, containing his recomnendations as to naking drafts on all Federal reserve banks immediately available
at any one of them.

There is unquestionably much pressure being brought to carry this
through, but I think a majority of the governors would not favor this but

might favor a plan for permitting the issuing of a draft on one reserve bank
so drawn as to the paid at some other one duly designated Federal reserve bank,
if proper advices are sent l

Possibly Governor Seay has sent you a copy and

in that case kindly return, this one, as we only have a few copies.
77'e are having a very heavy snow-storm, there being about eight inches

on the level to-day.

My very best wishes to you and yours.
Sincerely yours,

Benjamin Strong, Esq.,
4100 7ontview Boulevard,
Denver, Colo.



FEALPRESERVE
-

BANK

alp.
'31

OF NEW YORK

December 15, 1916.

My dear Governor:

The Governors' Conference adjourned yesterday after having a two
hours' session with the Federal Reserve 3oard from 11 a. m. to 1:15, all
present except Secretary McAdoo, Governor Harding (who was in Boston making
a speech), and the Comptroller, who was there for a part of the time.
As Mr. Curtis will undoubtedly give you a full detailed account
of this, I an not attempting to go into details, simply sparing you.

7e were very glad to have a telegram stating that Mr. Kains was
v/

much better, nnd I think we had quite a good meeting.
I am somewhat anxious about a number of the proposed amendments,
which have either been formulated. or are being considered by the Board, as

a few of them seem to me unsound.

Probably you know more about these than

I, but I am sending you a confidential list of those which have either been

formulated and presented to the Congressional committee or are being considered.

We discussed them at the Governors' Conference and approved of Nos.

1, 5, 7, 8, 9, 10, 11, and

la.

7o. 2 is embryonic yet and Governor Seay is preparing some statistics in more detail than those he presented, in which he showed that the
average vault reserve of country banks had been before the Reserve Act

about

7 1/2'7, and during the year 1915, about 5 1/2, including all vault reserve.

At the meeting to-day Mr. 7oodward and, I think, mr. Locke, did not seem to

take kindly to the idea of not having any vault reserves, at least in the
central and other reserve cities.
Regarding No. 3, Governors Aiken, Van Zandt and I voted against

the reduction in capital to 1 1/2.



7e

were advised later, at the conference

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

12/15/16.

c3
with the Federal Reserve Board, that they meant to give the option to the
Federal Reserve Board upon application of any(zember)bank for such reduction
to have the power to grant it, which of course is somewhat different, as I

had understoodthat it was to be obligatory on all banks, and I thought it
a mistake and do still to reduce the amount below 3%, because having been
paid in, it will have a sentimentally bad effect and there are other reasons
why it did not appeal to me to reduce them.

The question ce earning dividends

upon them is one that is righting itself speedily and does not impose so
great a burden that so far as I can see we need be anxious about it, at least

until we have given the matter a test for a period of a few years.
As to the proposed change 1n reserves, I think Mr. Woodward feels,

and I share in it somewhat, that if we are to make the shift of the balance
of the local reserves required to the Federal reserve bank in March instead
of November, it is a question how wise it is to make other changes reducing
the reserve and permitting of further credit expansion just now.
No. 4 was approved of in principle, I think, but the question of
the detail in the way of surtax, etc., was left in abeyance.
No. 6, which proposed an associate membership for State banks and
trust companies by keeping the same reserve with the Federal reserve bank as

member banks and giving them no privilege as to rediscount unless their paper
was indorsed by a national bank, did not seem to appeal to the governors.
I hone that in their desire to make headway they will not undertake to make so many changes, some of which are quite radical, as to evoke
further widespread criticism in these tines when things are becoming more
and more tense.

I have your letters, but as I am hoping to run up to Ithaca tonight for to-morrow and Sunday, I shall have to defer writing more until
Monday.



FEDERAL RESERVE BANK OF NEW YORK

3.

Benjamin Strong, Esq.

105/16.

So far as the matters pertaining to myself are concerned, I want

you to feel perfectly free in your nind as to this and that whatever arrangement seems best can be carried out.

Just go on gaining, doing your full

part and leaving the time for final decision until it cones naturally, and
Meanwhile I hope that the

then we can begin to make more detailed plans.

amount of rediscounting at the bank will please you, as it does me.
With kind personal regards, I remain,
Sincerely yours,

73(
Benjamin Strong, Esq.,
410r) Montview Boulevard,
7enver, Colo.

RET/CET,

Enc.







Advancing date for final transfer of reserves.

To reduce reserves and provide that no reserves need be held
except those in Federal reserve banks;
Say:

7% demand 3% time,
Country banks,
it
3%
tt
Reserve city banks,
10%
It
tt
Central reserve city banks ,13%

Federal reserve banks to keep a normal reserve of about 70%.

Reducing paid in capital of- Federal reserve banks to 1 14/2%.

Retirement of greenbacks and acceleration of retirement of
national bank note currency.

Branch banks in cities.

Associate membership for non-member banks for clearing purposes.

Put 100% acceptance provision back in law.

Make 15 day notes legal collateral for Federal reserve note issues.

Clarify section 22, about compensation for officers, directors,
employees, etc.

Amend section 5202 R. S. by adding a sixth exception to provide
the bank's liability as an indorser upon acceptances.
Issue of gold certificates in denominations of

Issue of Federal reserve notes against gold.

100,000.

FEDERAL RESERVE BANK

OF NEW YORK

DL23

December 18, 1916.

si

My dear Governor:
I made a flying trip to Ithaca for'Ia.turday and Sunday
11

this morning.

Curtis and I read the riot act to Mr.

Jay

returning

on Friday and we

least to build up
told him that he should absent himself for two weeks at

absence, he does
his strength, as while he was here last week, during our
not look strong and he has some cough remaining with him.

He disliked very

that he started
much leaving the bank for a longer period, but I an glad
to be gone until
yesterday for the Hotel Hon Air, Augusta, Ga., end expects
about January 2nd.
directTo-day we are investigating names to suggest for a class C

created January 1st, and will
or for the vacancy which we understand may be
probably suggest Messrs.

Carleton, Outerbridge, Appleton and some others to

,Mr. Jay for him to pass on.
Governors'
Curtis advises that he has given you a description of the
repeat.
Conference and the directors' meeting on Friday, so I will not

with Mr. Dow of
e had a very satisfactory interview on Friday
his good instiJamestown, a very high-grade man, who told us that fro7 now on
items on other points in
tution would cooperate with this bank in collecting
Jamestown and in every other way.
rediscounts of the last
I am glad that yOu were pleased over our
been most gratifying to me beten days and those during the Past week have
before to secure the cooperation
cause I felt when I made the effort the week
others would consider it
of some of the banks, that once the ice was broken,
been verified.
a normal procedure and this has already



FEDERAL RESERVE BANK OF NEW YORK

Z.

Benjamin Strong, Esq.

12/18/16.

We had notice this morning of an assessment of 128,000. for expenses
connected with the printing of more Federal reserve notes, but I think it most
desirable that we should keep up to our 1.300,000,000. stock.

We expect to send out a notice on Thursday to our member banks that
the directors have authorized the payment of thscumulative dividend on their
stock up to March 31, 1915, and will notify each bank of the amount which
they will receive, so that they will have the amount on Saturday to include
in their earnings of 1916, if they so desire.

Messrs. Woodward and Thompson were appointed a committee on salaries
and also to consider the question of a bonus this year on account of the high
cost of living.

!7r. 7endricks is to-day in Buffalo seeing some of the State banks and

I hope that he and Mr. Figgins will be able to visit some of the more important

State banks, urging their cooperation in the collection system during the
next month or so, but I am convinced that not later than February 1st we should
put on the thumb-screws and collect all State bank items sent us either through
the express companies or otherwise, and I hope you approve of this course.

The absence of Mr. Jay, of course, makes it difficult for me to
inaugurate any of the constructive matters such as clearing house settlements,
etc., but if we are all on the job after January 1st, I hope we can take them
up one by one.

Personally I had hoped to write an article on the domestic

exchange' problem and the collection of checks for the information of the pub-

lic and esnecially of the business interests, so that they would better understand what the Federal Reserve Collection System is trying to accomplish
and that the one for whom the service is performed is really the one who should
pa- the charge equitably, but it seems difficult under present conditions to
secure any time for thought and preparation of such an article.

Can you

suggest anyone who would be well qualified to put the matter fairly and equitably before the people either in an address or paper?




FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

12/18/16.

I have this morning received a letter from M. Pallain dated November
29th, acknowledging the reception of my letter of November 2nd announcing our
sending information relative to the organization of the Federal Reserve System
and stating that he appreciated our courtesy in so doing.

Evidently some of

the material had not reached him, but I assune it is due to the delay in the
mails.

I h'pe that we can do something in the Tray of advancing the arranging

of the machinery not only with the Bank of England, but with the Bank of France.

Curtis probably told you that Governor Aiken, in addressing the Federal Reserve
Board at the last meeting with the governors, stated that it was the opinion
of the governors that if such machinery was perfected looking to our having
reciprocal relations with the Bank of England, that as soon as the machinery
was ready we should immediately begin to operate, if only to a small extent,
to indicate our good faith, and I hope that this view of the governors thus
conveyed to the Board will have its good effect.

The natter of the change in acceptance rates was left to the executive committee with full power to change then any day prior to the meeting of
the board, which will probably not be held until the first week in January.
I am in receipt of your favor of December 8th, enclosing a letter
from M. Lewandowski, and we will try and give same our consideration to-day.

Just keep up your good work and be assured that we will do everything we can here to keep things going in the right direction.
I saw Comptroller Williams and Mrs. -illiams at luncheon in 'lashing-

ton and he asked most kindly about you and said that he was clad to hear that
you were improving, as you were so capable that you were very much needed,

all of which goes to show that what we have been telling you as to the system
and the 'country needing




you is confirmed by this and many other similar remarks.

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

4._

Now, after this, will you believe us?
with kind regards, I remain,
Sincerely yours,

Tienjamin Strong, Esq.,

4100 Montview Boulevard,
Denver, Colorado.

RHT/CEP




12/18/16.

FEDERAL RESERVE BANK
OF NEW YORK
December 19, 1916.

ALP.
My dear Governor:

,

In answer to your longhand letter of December 10th and your subse-

quent letter of December 11th, I would state that I had quite a long talk with
mr. l'eabody in Washington concerning the organization of the bank after your

return, stating to him that in ny judgment it would not be wise for you to
take up active work here again until next fall;

furthermore, that I person-

ally felt that it would be highly desirable to have a permanent deputy governor, who would continue to carry on the work which I an attempting to do at
present.

He said he would have a talk with 7!r. Woodward on his return to

77ew York, and I understand he is to lunch with Mr. Woodward to-day and they
are to discuss the situation.

I have shown Mr. woodward my letter to you and your answer, so that

he is informed of the situation and I shall now leave the matter in their
hands unless they consult me further.

note your statement, "I an tremendously relieved to feel that I
must not as yet be making plans but can go along for a while and just keep
loafing," and I essime that both Messrs. 'Peabody and i-oodward will feel that

there is no immediate hurry to bring this about but that they will probably

begin now to consider one who would be best fitted and available for the
position of deputy governor, and they also understand that so far as I am
concerned, assuming ny health to remain good, I am willing to continue the
work for any reasonable time to enable them to make satisfactory arrangements-all of which I hope is satisfactory to you and will relieve your mind from any
anxiety and the feeling that you need rive any further consideration at present




FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

12/19/16.

to this natter.

Regarding Mr. Starek, I was unable to secure any definite information
at Washington, as aside from the fact that he is not and has not been for some
time in the examiner's office, they seem to have no further information.

From

information I have picked up in the last day or two I am led to believe that
there may be a vacancy in Class C directorship the first of January and to that
end Mr. Jay is recommending a number of names for consideration.

We have suggested a number and Mr. Curtis has given considerable
thought to it and I hope that some very vise and able man may be appointed.
Personally I have thought that the nomination of Mr. Carleton or Mr. Outerbridge,
they having been recommended by the bankers committee of the State Association,

would be eminently proper but as the appointment emanates from Washington, I
assume that we must sit still and await developments.

Answering yours of December 15th, I would state that Mr. Curtis tells
me that he has already sent you a full report of the Washington conference, and
we will write you more fully in regard to the foreign relations as soon as possible.

we are doing some rediscounting from day to day and I should not be
surprised if we were called upon during this week and next for further rediscounts, because until another foreign loan, which is contemplated, shall be
floated, which I assume will be right after the first of the year, some of the
banks are liable to have pretty heavy demands upon them from the "Corner."
It is quite certain that we shall have very large importations of gold and
undoubtedly an effort will be made to create an easy money market in January,
or whenever it is thought advisable to float this loan.

we are all awaiting with tremendous interest the speech of Lloyd
George as indicating the peace policy of the Allies, all of which will have
a bearing on the financial situation in the immediate future.



<2

,,DERAL RESERVE SANK OF NEW YORK

Benjamin Strong, Esq.

We had a telegram from Mr.

Jay

12/19/16

to-day, indicating that he had arrived

at Augusta, Ga., and I earnestl:* hope
that his stay there may restore him to
robust health again.

I have been somewhat disturbed over his
apparent inabil-

ity to recuperate quickly, and I hope
this rest will bring him out all right.
"ye are having clear winter weather here,
with plenty of snow in
New York City.
I hope that you will continue to gain
regularly and systematically

and that you will avoid overdoing.
My best wishes to you.
Sincerely yours,

Benjamin Strong, Esq.,
4100 r!ontview 7oulevard,

Denver, Colo.

EHT/CEP




talk

J2 1

FEDERAL RESERVE BANK
OF NEW YORK

:

December 20, 1916.

My dear Governor:

We received notice this morning of the appointment by the Federal
Reserve Board of Mr. Jay as a Class C. director and Federal Reserve Agent
for the ensuing term.

Mr. George Blumenthal made a confidential statement to Mr.
Peabody (in the absence of Lr. Jay) and myself about a month ago.
you, I think, at the time.

I wrote

This statement was very satisfactory and we

indicated to Mr. Kenzel that he could purchase up to one million dollars
of their acceptances and I trust you approve of this action.
Later I sug..3ested to Lazard Freres whether they would desire

to have this statement submitted to Philadelphia, Boston or any of the
other banks, and ior. Blumenthal advised me that for the present they would

prefer not to have the statement furnished the other banks, as he did not
anticipate doing a very large acceptance business.
I assume that you will write me your opinion concerning. the pro-

posed amendments to the Federal Reserve Act now being considered by Cong-cess or which are soon to be presented to them.

I have talked with Mr.

Woodward and also LA*. Alexander, hoping that we might have a conference

with a

few of the bankers here and it is possible that we may get together

next Wednesday or Thursday, at which time I hope to secure their opinions

as to the various amendments proposed, feeling that the Reserve Board ought
to have on such important matters the advice of practical bankers.




FEDERAL RESERVE BANK OF NEW YORK

a-

Benjamin Strong, Esq.

12/20/16.

Yesterday I lunched with M. Masson, also the Secretary of the French

Legation and Mr. Curtis' friendkthe representative of the French government)
and had a iery pleasant conversation with them, in which they expressed,
rather guardedly of course, their opinion of the pronouncement of the federal
Reserve Board in re British Exchequer bills.
The stock market is in a somewhat nervous condition at present

and it would seem as though we might have some erratic movements, both in
call money and on the exchange, before the end of the year, but I hope
nothing serious.

I understand from you that Mrs. McLaren will return here for the
Christmas holidays, and I assume that she will call upon us.

Messrs. Peabody and Thompson and I expect to have a meeting tomorrow to discuss

any changes in salaries which may be recommended by the

cashier and also to consider the question of an emergency salary or bonus
based on the higher cost of living.
I enclose herewith information as to our acceptances up to to-day.
At a meeting of the committee on admission of State banks yester-

day, I asked Mr. Curtis to reach Mr. Starek, if possible, and he surprised
us by coming into the meeting yesterday afternoon and assisting in passing
upon the admission of the Montclair State Bank, whose application we forwarded to Washington last night.
With kind personal regards and my very best wishes to you,
remain,

Sincerely yours,

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colo.


AHT/CEP


I

--

.e Correspondence

FEDERA
,ZIESERV1
BANK 01- NEW YORK

Date

Dec. 21, 1916,

Governor Strong's Letters of

Mr. Treman
E. R. Kenzel.

OM

Subject:

November 20th and December 6th,

MID
'

LETTER - NOVEMBER 20th

BANK OF CHARLESTON
Two and three quarters was a low rate for this paper

but at the time of purchase was 1/4 of 1% above the best rates
obtainable for members located in New York.

MULLER, SCHA1L & CO.

Mr. Strong's comments are noted and his suggestion
will be followed out.

KLINGSMIZH & TELFAIR

This question was considered as to Klingsmith about
the time we first purchased bills.

Mr. Curtis has the sub-

ject before him for further investigation as to the law.

. LETTER - DECEMBER 6th
,

HIGGINSON & CO,

and other private bankers th t have not filed statements
with us.

All our purchases are indorsby member banks.

These Boston names are mostly indorsed by

e First National

Bank of Boston and are received by us from the Federal Reserve
Bank of Boston.

GUARANTY TRUST CO.




This line reached its apex when we were purchasing
freely in the early days of the December flurry.

About one

DERAL RESERVE

.NK OF NEW YORK

ce CorrespoL

Date

...

21, 191A.

Subject: Governor Strong's Letters of

Mr. Treman
From

1)Pr._

November 20th and December_flth.

R. Kenzel.
-2-

million of it was indorsed by member banks and it is

expected

that the line will decrease.

ENBURG

THAIMANN & COMPANY
All bear bank indorsements.

.LAZARD FRERES

All bills purchased bore bank indorsements until their
statement was filed.

WHITNEY CENTRAL NATIONAL BANK
NEW ORLEANS
These bills were all taken at least one quarter per cent.
above rates for New York members and about ,25,000. of them bear banking indorsements.

THIRD NATIONAL BANK OF SPRINGFIELD
AND OTHER BANKS IN NEW ENGLAND OUTSIDE OF BOSTOY
These are institutions that are taking the overflow of

1




acceptance business from the Boston banks which are getting more
business than they can accommodate themselves.

Their lines are

principally credits for the imports from South America but recently have been largely increased by domestic credits on cotton
and wool in warehouse.

This class of bills comesto us from the

Federal Reserve Bank of Boston and all bear the indorsement of
some of the large Boston banks.

eippor

.,ice Correspondence
-

min

FEDERAL RESERVE

BANK OF NEW YORK

Date

Subject,

Treman

Dec. 21, 1916.

Governor Strong's.Letters of

November 20th and December 6th.

S. R. Kenzel
-3-

All merchants such as Balfour,'Alliamson & Company and Tata: are
all import trade bills and well indorsed - some cases by the Yokohama Specie
Bank, Hongkong & Shanghai Banking Corporation, Chartered Bank of India and
International Banking Corporation, and some by member banks, and quite a number of them by both the foreign and member banks

SOUTH-AMERICAN BANKS
The liability to us as indorser of these names arises from

I

their purchases in South America of prime bankers' bills which they
indorse.

Our purchases of bills indorsed by the South American

banks have been on the credit of the acceptors or American indorsers,
or both.
't

The larger liabilities cover a diversity of acceptors.

The principal acceptors who do this South American business are the

Guaranty Trust Company, National City Bank, National Park Bank, National Bank of Commerce, Irving National Bank, Bank of New York, Mechanics & Metals National Bank, First National Bank of Boston, Philadelphia National Bank, the Bankers Trust Company, private bankers and
to a smaller extent the Equitable Trust Company which, however, is
developing its business in South America.

mrimmitonio,
ERK/IWB.




MEMORANDUM FOR MR. TREMAN AS TO THE VOLUME OF BILLS HELD
AND THE PROPORT/ON UNDER RENEWAL CREDITS, DECEMBER 20, 1916.

According to aar records at the close of business December

8, 1916, the amount of such bills held by the Federal Reserve Bank
of New York was

- 15,451,650.

and by other Federal reserve banks

18,652,750.

44,104,400.
At the close of business December 19,

1916, these

amounts

had been reduced to:

For the Federal Reserve Bank of Jew York - - -

13,931,122.

Other Federal reserve banks

16,973,041.

t30,924,163.
There will mature daring December:
Federal Reserve Bank of New York

$ 1,650,750.

Other Federal reserve banks-

1,822,250.
4 3,473,000.

On January

2,

1917, maturities will be:

Federal Reserve Bank of New York

$ 2,697,000.

Other Federal reserve banks -

4,045,000.
0

11110IGC




6,742,000.

FEDERAL RESERVE BANK
OF NEW YORK
JAN2

1,;1

December 21, 1916.

-7 dear Governor:

I have received your favor enclosing a letter received by you from
. Lewandowski and copy of your answer to same.

I an writing to 9uperintendent

Richards to-day, asking for certain information and then will, with 7r. Curtis'
aid, make up a memorandum of the other information he desires and forward it
as early as possible.

Certainly we should give him all the information which

he seeks in regard to the opening of a branch bank, and personally the establishment of branches of the most important European banks here should, I should
think, facilitate an exchange of business between the countries.

You will be interested in knowing that our vault work is progressing
very rapidly and we are assured that if we desire, we can move in and occupy
same on December 31st.

7e discussed the matter this morning, however, and

will await further developments before making final decision as to the date
of transfer, but will probably be able to move by the 7th or 8th of January.
7e are sending out to our member banks to-day the letters as to
our dividends and will announce same this afternoon for the morning papers,
they
as Philadelphia did yesterday after the meeting of their directors,

paying up to July 1, 1915, whereas we pay to April 1st only.
Just at the moment the market is going through the throes of disturbance caused by the President's letter and Lansing's subsequent statement
acts of
that we were being brought to the verge of war by the intolerable

the belligerents on both sides.

It would seen most desirable that peace

should be restored as quickly as possible, so far as the world's condition
is concerned, but I an not prepared to believe yet that they are ready for

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

rending settlement.

FEDERAL RESERVE BANK OF NEW YORK

2 t_

Benjamin Strong, Esq.

12/21/16.

Answering your letter of December 1th in regard to our foreign banking relations, I understand from Mr. Curtis that he has written longhand his
personal impressions of the situation.

Personally I agree that so far as we

can judge Governor Harding and some other members of the Board agree with the
4-governors that we should not proceed to develop the machinery for such rela-

-

tions unless we are prepared to do some business under the machinery, and I
cannot but feel that natters are tending strongly in this direction.

Possi-

bly the events of this week, i. e., Lloyd George's speech and peace suggestions,

will all have a bearing and it would seem ought to hasten our action in this
matter, so that we may perfect those arrangements at the earliest passible
moment.

I assume that you are keeping in touch with Washington direct but

if there is anything we can do in New York to hasten the matter by suggestion,
kindly advise us.
I understand that Mr. Jay has changed his address from the Hotel
Pon Air, which I assume may not be open, to the Palmetto Inn, Aiken, S.C.

At this point I was interrupted, after which I received a confidential letter from Mr. Warburg, stating that the foreign agency matter
had been disposed of in a manner which he thinks will be pleasing to you and
that he is writing you accordingly confidentially to give you an advance
notice, all of which is especially gratifying in view of the disturbed condition of affairs just now by the peace talk.
I invited M. Masson to drop into the bank occasionally while he
is here and assume that he will feel at perfect liberty to do so now.
Mr. Warburg ,writes me that he is going to Pinehurst for a few

days' rest but will be back at Washington next Tuesday or Wednesday again.
I shall be glad to have your viers as to any changes in salaries
of the junior officers, who are receiving as follows:






PHT

Colo. Denver,
Boulevard, Montview 410C
Esq., Strong, Benjamin

yours, Sincerely
remain,

I

regards, kind Tith

medicine. the taken have you that sham

will events subsequent that hope shall but present, at asked being fee no

with along prescription this send

I

work. office to aprlication less and

etc., motoring, as such activities, outdoor in interest more life, outdoor more

rest, more prescribe better had Treman roctor that think not you do and much
too fretting and worrying not you Are

business. to closely too yourself

devoting and letters many too writing not are you whether ask

I

May

o'clock. one about to Up sold been having shares

million two over to-day, turmoil big a having is market stock The
1916. of employees to apply to 1st January of as paid be to bonus or

salary emergency an of recommendation the on agreed tentatively have we and
Thompson and Peabody Messrs. with meeting a from cone just have

I

week. text early me to report to he best, deems he as recommendations

such for others the of list the over go to Sailer Mr. asked have

I

discussed. originally figure the to raised be

should Sailer Mr. that think but you from expression an have to glad be should
I

and 4th January about held be to meeting the at them upon nass will s

Jefferson
Higgins
Kenzel
Cann
Hendricks
Sailer

4,200.
October) about (since 5,000.
4,800.
!
6,000.
6,000.
(now)

12/21/16.

Esq. Strong, Benjamin

3.

Mr.
Mr.

Mr.
Mr.
Mr.
Mr.

YORK NEW OF BANK RESERVE FEDERAL

FEDERAL RESERVE BANK
OF NEW YORK
December 22, 1916.

Tly dear Governor:

As there has been some mix-up in regard to the delivery of Special
Instructions of the Federal Reserve Board dated September 15th and known as
Special Instructions No. 2 of 1916, I am sending you herewith a cony.
I also give to you greatly belated information in answer to yours

weeks
of November 20th and December 6th, which I asked Mr. Kenzel about three
ago to furnish, but we have been short-handed because of absences for various
reasons; hence the delay.
7r. Woodward has invited 7-essrs. Alexander, Vanderlip, Hine,

7cGarrah, Perry, Peabody, Curtis and myself to dine with him next 7ednesday
night, and he has also invited Messrs. Warburg and Delano to come over, givBoard
ing these gentlemen an opportunity to talk with members of the Reserve

as to the amendments now being considered, etc.

Would it not be well at

discretionthat time to bring up the question of the New York Clearing House
ary list and see if it is posgible to bring about closer cooperation.

There

to draw as
is no doubt of the desire on the nart of banks in other districts

the transmuch from New York as possible, and they are anticipating that with
bank, the other
fer of the reserves from correspondent banks to the reserve
districts will gain.

It would seem to me that the clearing house banks and

after the interests
we should cooperate in such way as is proper in looking
of this district.

As yet I have not been informed in detail as to the foreign arrangeadvised and
ments but assume that before this letter reaches you, you will be
 that we


shall later hear from you as to the developments.

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

.....

12/22/16.

George Allen of the American Bankers Association, who is now secretary
of the new State Bank Section of the American Bankers Association, was in today showing me a crude draft of a circular he is issuing to all State barks
in the United States, outlining the present basis on which State banks can core
into the Federal Reserve System and asking a number of questions, such as

whether they believe it is for the interests of State banks to be connected
with the Reserve System, what changes should be made in the present law which
would enable them to do so, etc.

He stated in the conversation that from

his knowledge, based on interviews all over the country, he was certain that
there was better feeling towards the Reserve Board,(and I interpret it the
Reserve System,) than was apparent on the surface, and that there were many
banks, esnecially in the west, about ready to join the system.

Personally I do not take very kindly to the plan of associate membership, giving the State banks privileges without perhaps properly safeguarding the situation.

I should prefer that the larger State banks at

least should come in under regular membership, like the Corn Exchange, and
then if any associate membership is permitted, that it be on the part of the
smaller banks.

Mr. Peabody has gone to Saratoga to-day to remain next week.

Curtis went this noon to Boston and I hope to get away to-night to snend
Christmas in Ithaca.

Referring to yours of December 13th, with which you enclosed an
extra copy in case I desired to send same to Mr. Thrburg, I would state that
I did not think it wise to forward the fetter and have held it, and the subsequent events have shown that it was better that it did not go forward, as
I hope now, the decision having been made, that matters will develop quickly,

unless the President's peace letter shall arouse more or less bitter feeling
 against


us on the other side.

FEDERAL RESERVE BANK OF NEW YORK

3..

Benjamin Strong, Esq.

12/22/16.

with this goes, my dear Governor, the heartiest greetings and very
best wishes to you and yours for a happy Christmas season.

Certainly for

many of us the fact that you are gaining in strength and are.able to cooperate
so influentially in the further development of the system is one of the things
for which we can be most grateful.
Sincerely yours,

Benjamin Strong, Esq.,
4100- Montview Boulevard,
Denver, Colo.

RHT/CFP




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FEDERAL RESERVE BANK

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OF NEW YORK
December 26, 1916.

JP-,142

gear Governor:

I snent Saturday, Sunday and Monday in Ithaca, reaching New York

this morning, and at our junior officers' meeting was greatly surprised by
having my attention called to an article in the New York Times headed "Federal
Reserve Bank has London Agent," and then later seeing the headlines in the
New York American, clipping from which I enclose.
If you could have heard our comments, you would have understood

what a shock this gave us all who were conversant with the efforts that have
been made to protect in every way the confidence and secrecy which you had at
different tinesemphasized to protect the situation.
T-e put in a call for Governor Harding, Mr. 7arburg being at Pine-

hurst for this week and Mr. Delano having been away last week although he is
in Thshington to-day.

\Mile waiting for the call, Hr. Jay's telegram was

.,'eceived, stating that he had forwarded on Saturday the official authoriza-

tion of the negotiations with the Bank of rngland, the same having cone to

him by mail forwarded from the New York bank, it having been marked "Confi-

dential.

He added that he had telegraphed you what he had seen in the

papers.

In a short time I talked with Governor ?larding and later Hr. Delano

called up Mr. Curtis, memoranda of our conversation being transmitted to you
herewith.

-e telegraphed you, as per copy which 7'r. Curtis will send you, and
also had a talk with Hr. re ITeuflize, a memorandum of the conversation with

whom we will also forward, and are awaiting such instri:ctions as you think
best to send to us.



T"e discussed the same with Hr. -oodward at luncheon to-

FEDERAL RESERVE BANK OF NEW YORK

2

Benjamin Strong, Esq.

12/26/16.

day and the general impression, pending further light on the situation from
Washington, is that this act on their part was a direct violation of confidence
and may seriously jeopardize your negotiations with the Bank of England.
I hope that we straightened out Hr. De Neuflize, as we told him in substance

that this authorization of the Board would have no adverse effect upon the
negotiations now being carried on informally between Governor Strong and
H. Pallain and that we were awaiting a reply to Gevernor Strong's last letter
to H. Pallain before proceding further.

So far as we can learn at the moment, matters arose while most of
the members at Washington were away and Governor Harding assumed the responsibility of letting this go out, but this surmise on our part may be changed
later by additional facts.

We have disliked very much to trouble you with this matter when you
are trying to have a vacation with your boys, but there seems to be no alternative, inasmuch as you were the one who succeeded in bringing about in so
successful a manner the preliminary agreement, and we assume that you will
want to communicate by cable with the governors of the Bank of England, and
we shall be ready to carry out any further instructions you are pleased to
give us.

Governors Aiken and Rhoads were very much disturbed by this action,
as

I assume the other governors are also.

7e are to have a meeting of our executive committee to-morrow at
3 D. M. and expect to have every director of the bank present, whom we can
reach, to determine what further action we shall take.

Personally it seems

to me that whoever may be acting governor of this bank is entitled to have

sent to him directly, and not through the Federal reserve agent, communications from the Board affecting or bearing upon the operation of the bank,
and where instructions are sent to the chairman or Federal reserve agent as



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

3

12/26/16.

now

a matter of procedure, unless they be confidential communications for the
Federal reserve agent alone, they should be duplicated direct to the governor,

thus preventing occurrences like to-day, when this bank had no knowledge of
the official action of the Board other than Mr. Warburg's confidential state-

ment that the Board had acted in away which he thought you would approve.
Tow, my dear Governor, we have done the sputtering and expect to
do whatever, further protesting is necessary, but I just hope that you will

rise to the occasion and pull the chestnut out of the fire and if possible,

enable us, for the good of the country at large, to perfect the necessary arrangements with the Bank of England.

Do not let the bungling way in which

this has been handled, nor the breach of confidence, affect your trying to
save the day, if it is possible.

Certainly we want to assist in every way

possible, whatever may be our personal feelings of what the Board at Washington has or has not done.

We have taken the position to-day that we had no comment to make
on the facts as sent out from Washington, but I have learned from some of
the reporters that the fact that negotiations had been authorized had been
most favorably commented upon in the Street in various quarters, as being
a move which would be of great benefit to the country at large, if it can
be carried through.

We had a call to-day from Mr. R. Y. Rebden, agent of the Bank of
Montreal, who stated that he understood we had completed reciprocal banking
arrangements with the Bank of England and he thought that his bank would be
very glad to enter into some similar arrangement to handle Canadian business.

e also had a call from M. Alexander Bungener, who brought a letter
from M.

allain to you, introducing him as a director of the Banque Nationale

de Credit.

Re is here making a study of conditions with special reference

to handling cotton bills.




4.

FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

12/26/16.

It is a perfect shame to have you disturbed at this tine by this

unpleasant upset, but I have the utmost confidence in your taking the broad
unselfish view of this situation and directing the handling of it in a way
which, I hope, will be most satisfactory in its results.
Woodward had asked Messrs. Warburg and Delano to come over for dinner to-morrow night but Mr. Warburg has a

cold

and is in Pinehurst for the

week and Mr. Delano will not be able to come over until Friday night, when he
spends Friday and Saturday with

Charles Norton.

We will probably have

the dinner at Mr. Woodward's house, however, and I hope that we may have an
informal exchange of Views on some of the amendments and the clearing house
proposition.

-ith kind regards, I remain,
Sincerely yours,

Benjamin Strong,
Esq.,,
4100 Montview Boulevard
Denver, Colo.

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POSTAL TELEGRAPH

400

COMMERCIAL CABLES

CLARENCE N. MACKAY, PRESIDENT.'

RE,9EIVVIotTF-ice,, E,ENtER
92r,s,

St., Ernest & Cl-anmer Ridg

:L.EpHoNE MAIN 4-500
The Post.,
16L-21

TELEGRAM

DELIVERY NO.

ph-Cable Company (hcorporated)transmits and delivers this message subject to the terms and conditions printed an the back of this blank

CH

- DESIGN PATENT NO. 410529

184

MG-

6151311

Dec 26 1916

CB New York NY

Benjamin Strong

-4-

4100 Pontview Blvd, Denver Colo
Newspaper headlines

quote "the Board has
to appoint as one of

carry announcement by reserve board as follows

the Federal
correspondents and

authorized
its

Reserve Bank of NewYork
agents the

Englandthere follows quotation from
granting the authority to
section fourteen continue qud;e `in
establish the agency the board has authorized the Federal Reserve

Bank of England of London

Bank of NewYork to maintin accounts

Bank of England so that

either

for or with

the

operations, both in England and

in the United States are

possible.Other Federal Reserve Banks

may participate in the agency
England uiron the mum terms

relationship with the Bank of
and conditions that will govern

the Federal Reserve Bank of NewYork if they so desire 0

end qucte,we had no notice
Board/Of Intended publicity
copy of boards vote which

either of action of
except

a sealed envelope contaning

was forwarded

I telephoned

Harding our astonishmmt

had developed

suddenly make immediate

Have failed

to reach you by t8lephone

with

to

today he replied that reasons
publication

expedient stop

assume you will communicate

England or advise us




Jay Friday

R H Traman

Zj.` 44 flbi

PCITFiTAL TELEORAPH-COMMERCIAL CABLES
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OPERATOR'S NOTATIONS,

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The Company shallmot be liable for mistakes or delays in the transmission or delivefY,,it'for nondelivery, o anPUNREPEATED telegrati, beyond the
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In any event the Company shall hot be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery of this
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Sent as a REPEATED telegram, is hereby valued, unless a greater value is stated in writing hereon at the time the telegram is offered to the Company for
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Messages will be delivered free within the established free delivery limits of the terminal office. For delivery at a greater distance a special charge will be
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If none

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20 D G
fIRK NY-121 PM DEC 26
IN STRONG,
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183

71 EPH NED TO

TIME
CAMP HEWES,KIRKLAND, ESTES PARK.
PAPER HEADLINES CARRY ANNOUNCEMENT BY
RESERVE BOARD AS FOLLOWS
QUOTEBOARD HAS AUTHORIZED THE
FEDERAL RESERVE BANK OF NEWYORK TO
APPOINT AS ONE OF ITS
CORRESPONDENTS AND AGENTS, THE BANK
OF ENGLAND OF LONDON ENGLAND --- HERE FOLLOWS QUOTATION FROM SECTION
%

FOURTEEN,CONTINUE, QUOTEIN GRANTING THE AUTHORITY TO ESTABLISH
THE AGENCY THE BOARD HAS
AUTHORIZED THE FEDERAL RESERVE BANK OF
NEW YORK TO MAINTAIN ACCOUNTS,EITHER
FOR,OR WITH THE BANK
OF ENGLAND_,S0 THAT OPERATIONS
BOTH IN ENGLAND AND IN
THE UNITEDSTATES ARE POSSIBLE OTHER
FEDERAL RESERVE BANKS MAY
PARTICIPATE IN THE AGENCY RELATIONSHIP
WITH THE BANK OF ENGLAND UPON
THE SAME TERMS AND CONDITIONS
THAT WILL GOVERN THE FEDERAL
RESERVE BANK OF NEWYORK IF
THEY SO DESIRE END ROUTE
WE HAD NO NOTICE EITHER
OF ACTION, OF BOARD OR
OF INTENDED PUBLICITY EXCEPT A
SEALED ENVELOPE CONTAINING COPY OF
BOARDS VOTE WHICH WAS FORWARDED
TELEPHONED
TO JAY FRIDAY
HARDING OUR ASTONISHMENT TODAY HE
REPLIED THAT REASONS HAD DEVELOPED
SUDDENLY MAKING IMMEDIATE PUBLICATION EXPEDIENT
STOP HAVE FAILED TO
H YOU BY TELEPHONE ASSUME
YOU WILL COMMUNICATE WITH ENGLAND
ADVISE US.
I

R R TREMEN.
303PM.
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FEDERAL RESERVE BANK

OF NEW YORK

talk

December 27, 1916.
)1

JAN2
My dear Governor:%:,

I mn enclosing herewith a copy of a letter I am writing to M.

Maurice Ledandowski, and beg to advise you that the infornation is being
forwarded to him to-day.

I thought you might like a copy of the letter

sent for your own files and shall be glad of any criticism, in case the matter was not handled as you desired.
I beg to advise you that Mr. Jay wrote, which letter was received
this morning, enclosing a copy of the resolution of the Federal Reserve
Board, stating that the same had been received by him marked "Confidential;"
hence we at New York were justified in forwarding it notwithstanding Dr.
Willis' view.

I also enclose for your information copy of a letter received from
Governor Harding and would state that I shall bring the letter before the
executive committee at their meeting this afternoon for their consideration.

Personally I am convinced that no self-respecting man would care to continue
as governor or deputy governer of the Federal Reserve Bank of Hew York unless

important communications, such as the foreign bank matter, are sent by the
Federal Reserve Board direct to him and not to the Federal reserve agent or
through any other channel, and I expect to write Governor Harding to this
effect as soon as I can find time.

7e received your telegram this morning and Mr. Curtis has already
had an interview with Mr. M. and he has cabled and hopes to straighten out
the situation nnd put us in the proper light, and we will keep you advised
by wire as events develop.




FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

12/27/16.

I imagine that we shall have an interchange of views between
the

guests of Mr. Woodward to-night at dinner, and I hope that
we shall be able
to enlist their sympathy more heartily in the development of
certain matters
affecting the New York Federal reserve bank.
with kind. regards, I remain,

Sincerely yours,

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

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FEDERAL RESERVE BANK
OF NEW YORK
December 28, 1916.

7y dear Governor:
r7e have lust received an answer in re foreign banking relations

through the channels you suggested, as follows:
"The governor surmised exactly what had
hanpened and was in no way put out by the premature
announcement, nor does he consider that it need interfere with the continuation of discussion as to
terns eventually to be submitted to the respective
boards, but he thinks it would now be best neither
to contradict nor confirm or explain it but to let
the matter rest for the present."

We will undoubtedly telegraph or nhone you the contents but I an merely
sending this on to confirm it, and assume that you will make further suggestions as to our action as you may decide.
:Tr. Towne formulated a letter for us to sign to the Federal Reserve

Board and Curtis and I went over it carefully at lunch and it is now being
put in shape for the final approval before sending.

I hope that it will

appeal to you as being a wise letter to send under the circumstsnces, and,
further, that Mr. Jay will' not feel that the suggestion as to direct corres-

pondence between the Federal Reserve Board and the executive officers reflects
in any way upon his relations with the Board.
In regard to the acceptance business of to-day, I give you these
facts:

Bills bought to-day
We shall keep about
Matured to-day (ours)
(all)

Our balance to-night about

02,250,000.
1,200,000.
807,474.
1,482,000.

40,600,000.

and we rediscounted for the National Butchers & Drovers Bank !7100,000. at 4%.



FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

With kind regards, I remain,
Sincerely yours,

Benjamin Strong, Esq.,
4100 Montvievi Boulevard,

Denver, Colo.

RHT/CE?




12/28/16.

FEDERAL RESERVE BANK
OF NEW YORK
December 28, 1916.

Jr..I12
My dear Governor:

Your letter, enclosing one from the National Association of Credit

Men, is received and the same will be answered from this office.
It was very gratifying to hear from Hrs.

fcLaren, who called yester-

day afternoon, that you were weighing more than ever before and that you were

gaining steadily, all of which is confirmed by your own letter of December
24th.

Let me caution you that you will be inclined, as your strength devel-

ops, to call upon the surplus strength more and more, which it seems to re is
the very thing you ought not to do, but you should steadfastly persist in
self-denial and sacrifice of the pleasures and rigorously devote yourself
to the daily regime, especially the living outdoors and the absorption of
all the ozone possible.

There will be much work for you to do and many problems for you to
solve and the longer I am in this work the more convinced I am of the great

need of the revision of our currency, the substitution of modern for antequated treasury methods, etc.:, and for this work I know of no one so admirably fitted as are you.

I have wished during the last month that you could

have been here to straighten out some of these difficulties arising from the
actions of the Federal Reserve Board at Washington.

We had a meeting of our executive committee yesterday, at which
were present :7essrs. Peabody, Towne, '7oodward, Palmer, Thompson, Starek, and

Curtis and myself.

had a discussion of about an hour over the action of

the reserve board in making public the foreign bank relations, and decided to
have a comnittee of Tessrs. 7eabody and Towne draw up a letter, which will be



.*DERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

2,

12/28/16.

done to-day, to forward to Washington, expressing the views of the directors
as to this action and also as to the relations between the Federal Reserve
Board and the New York bank.

7essrs. Towne and Palmer both seemed to feel

strongly that we should protest vigorously against their action.

7:r. Peabody

seemed to sympathize also, while Mr. Thompson suggested milder action because
of the abnormal conditions and our not understanding all of the influences

which had led to the action at Washington, but all were in substantial accord
as to our sending a letter and the lines along which it should be drawn.

-e

will endeavor to send you a copy of the same later.
Last night Mr. Woodward entertained at dinner Messrs. Vanderlip,

Fines, McGarrah, Alexander, Ferry, Curtis and Peabody and myself-Wiggin
unable to be present, Warburg sick in Pinehurst, and Delano unable to come
but will be in New York Saturday of this week.

We had a very pleasant and

to my mind rrofitable evening, Mr. Vanderlip leaving about 11 p. m. and the
rest of us remaining until 12.

We discussed some of the suggested amendments, the collection s7stem, and other matters, some in a very satisfactory manner although, of course,
the dissatisfaction over the Clayton bill and various acts of the Federal Reserve Board came to the surface.

"e informed them of our proposed offer to our member banks of telegraphic transfers free except cost of telegram.

The same was freely discussed

and approved by all as being apparently a wise move, but we shall in our circular, to be sent out. to-day or to-morrow, say that for the present we are
offering this to our member banks.

We discussed the New York Clearing House charge of 1/40 of 1% and
Alexander said, while originally favoring this and while he still felt that
should there be any effort to make drafts on Federal reserve banks available

at par at all reserve banks, he should feel that the clearing house should



Benjamin Strong, Esq.

FEDERAL RESERVE BANK OF NEW YORK

12/28/16.

impose a charge for such drafts and should be prepared to protect itself in
other ways.

71e did feel personally that the clearing house might drop the

1/40% charge, at least to try it out.

Mr. McGarrah, who is chairman of

the clearing house committee, seemed to be impressed favorably, I thought,

by the discussion, and I expect to take up with him to-day the question of
whether he will not put the matter through.

There seemed to be a very strong sentiment against the proposed
amendment doing away with the necessity of any vault reserves and there were

different expressions of the necessity for strengthening and keeping strong
the position of the New York City banks and the Federal reserve banks against
what may develop suddenly at any time.
To my mind it was a most helpful meeting, and I urged upon those

present their trying to induce members of the Federal Reserve Board to come
over to New York more often and meet representatives of the larger banks for
exchange of views informally, so that the Federal Reserve Board might be more
in touch with the conditions prevailing and the views of the men in the finan-

cial center, as I believe they would accomplish more by an occasional talk
with the men in New York than by their going down to Thshington, as two or
three of them had reported the reception they had received at Washington.
I am inclined to think that we should raise our acceptance rate

another quarter per cent., because the rates in the outside market for such
acceptances as Brown Brothers, Morgan, Goldman, Sachs

Co., Pte., are around

3 3A, while our rates are from 3% to 3 1/4%.
The stock market is in a very nervous condition and probably
remain so while peace negotiations are going on.
"!ith kind regards, I remain,

Sincerely yours,

Benjamin Strong, Esq.,
noulevard,

 4100 Montview
http://fraser.stlouisfed.org/
Denver, Colo.
Federal Reserve Bank of St. Louis
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FEDERAL RESERVE BANK
OF NEW YORK

la

Lk

JAN2

December 29, 1916.

i;:.?

dear Governor:

Jay writes, "I am in the dark about the foreign bank announcement.
ft seems to me incomprehensible that they should have done it and about as
stupidly worded as possible.

I am simply foaming on the subject and hope

something will reduce my pressure or there will be an ascension."'

7Te further

reports that he is gaining but may want to stay a few days longer as he wants
to be sure and get well, and I had already written him in a letter two or
three days ago that he should stay until his cough was removed and I shall
reiterate it.
As a result of our discussion at the 7roorlaard dinner, I talked with
Citarrah yesterday, asking him to exert his influence to bring about a

removal of the 1/40 of 1(1 charge by the ITew York Clearing House from checks
not on their discretionary list, so as to make all points in the ITew York

district discretionary, thus doing away with the charge.

He told me that

he was in favor of so doing and that if we would be patient; he would endeavor to have it brought about but it might take some time to do it.
At our officers' meeting to-1day we decided to continue arranging

all the necessary machinery to collect from nonmember banks not assenting)
checks on them through the express companies, so as to have everything in
readiness to act but not to make a definite date for inauguration until we
know more about what Congress does in the short session.

We also decided

to have personal calls made on a number of the larger institutions during
January, so as to gain some more, if possible, before drastic measures are
taken.



FEDERAL RESERVE BANK OF NEW YORK

2,

Benjamin Strong, Esq.

12/29/16.

I will ask Mr. Sailer to instruct the Money Department that if the
amendment to the note rrovisions of the Reserve Act is passed, the :7oney De-

partment will send notes for redemption direct to 7ashington.

The directors did not feel justified in raying a dividend beyond
April 1, 1915, just at present but I shall hope that we will by July 1st be
able to make a dividend up to December 31, 1915, as the Boston bank has just
done: also Chicago, I believe.

e shall probably have a meeting of the committee on making drafts

on Federal reserve banks available at par the week of January 22nd in 7ashing
ton, mid now that Governor Seay has nresented the argument in favor of this

action (and I think it quite complete and exhaustive) I wish that you would
prepare a brief on the objections to the plan for consideration of our committee and send it to me, when completed.

I assume that our action, which

will take ef.7ect next week, making telegraphic transfers free except cost

of telegram, may have some bearing also on this question.

As a compromise we may be obliged to accept the plan in its application to any one designated Federal reserve bank based on the member bank
notifying the district reserve bank when the draft is drawn, stating upon
what other Federal reserve' bank it is drawn, and then the reserve bank of

that distridt notifying the other reserve bank of the draft and guaranteeing
it against loss.

I wish that you would send me a copy of your memorandum to Mr.
7arburg In re rroposed amendments to the Reserve Act.
I had a call from !7r. George Roberts yesterday, during which he

stated that he might be able to visit you between January 2nd and 15th and
would telegraph you at once.

7r. Curtis also may be able to go out some

time soon, he hopes.




I am enclosing copy of some statistical information prepared by

,.."......* FEDERAL RESERVE BANK OF NEW YORK

Benjamin Strong, Esq.

12/29/16.

Governor Seay in re proposed amendment requiring member banks to keep all reserves in the Federal reserve bank and not to count money in vault as reserve.

7e are sending out a letter on telegraphic transfers, copy of which
I will enclose or have mailed to you.

I am sending copy of a letter received from M. Pallain, dated 7ovembar 29th.

I assume that you will suggest any answer you think advisable,

but apparently it is only an acknowledgment of some of the literature we sent
him.

I assume further that you will immediately begin negotiations with
the Bank of England and will send copy of same to this office for our records.
17e are most happy over the knowledge that matters are not misunderstood on
the other side.

yr. Curtis is cabling, as you requested, advising as follows:

"Strong expresses his deep regret at
premature announcement.
We will continue negotiations by mail."
and it is now for you to direct same in such manner as you deem best.

7e received a communication from H. V. 7eredith, President of the
Bank of Montreal, as per copy herewith, and will acknowledge same stating
that it will be brought before the directors at their meeting next Wednesday
for their consideration.

If you think we should take any Other position

than that of encouraging preliminary negotiations towards a.reciprocal relation at a later period, perhaps you had better wire me suggestions to
nresent to the directors on 7ednesday.

"e have just had an application from the Merchants Yational Bank
of Yew York for a loan for fifteen days of 43,600,000., and yr. Woodward has
approved in advance of the meeting of the committee, because he leaves at
1 p. m. for 7aryland for the week-end.

7ith kind regards, I remain,
Benjamin Strong, Esq.,
Boulevard,


4100 Yontview
http://fraser.stlouisfed.org/
Denver, Colo.
Federal Reserve Bank of St. Louis

Sincer

ate-,

FEDERAL RESERVE BANK
OF

ARK
Ducemb:r 29, 1916.

JAN2 U7
Dear Governor Strong:

I am deeply chagrined at not having sooner acknowledged the receirt of the beautiful desk clock which you sent me for Christmas.
dzl.p.2z.aglriative of this

I am

more perhaps than you can understand, as I

have a sincere affection for you;

but thisl'as certainly been a most stren-

uous week. for us in the bank in view of the additional work incident to the

end of the year, and especially because of the Board's announcement in re
foreign bank matters.

I had both Mr. Woodward and Mr. Peabody read your letter of December 24th in regard to the organization and your return, and we are all
mighty glad that you are gaining so regularly.

Do not worry about the

long absence as half of it has already passed and the bank is still ran-

fling,

and it will await your return which it longs for most earnestly.
I am enclosing herewith crude rough draft of a proposed report

from our executive committee which:will be:presented to the directors next
Wednesday for their action and approval, such report then being forwarded
in the shape of a letter to the Reserve Board at Washington.

Minor de-

tairg-will be corrected but we shall be glad of any criticisms as to any
of the major parts of the report, should you desire to make them
before
Wednesday next.

I assume the committee on salaries will report at that time.
Sincerely yours,

P. S.

I enclose also copy of my letter to Governor Harding,

which explaint itself.



--

F ED ERA L RESERVE RANK OF NEW YORK

Benjamin Strong, Esq.,
4100 Montview Boulevard,
Denver, Colorado.

PET/BAH
Encs.




Benjamin Strong, Esq.,

12/ 29/

16 .




December 28th, 1914.

Ly dear r. Treman:
The ppplos arrived in Tory good condition, and I can assure you
that the members of the family have enjoyed them very much.

Apples, as you

realige, are an important part of the supplies of a family where there are
small Children like mine.
You will I hope pardon my taking advantage of this opportunity
to send you a sample of some apples which are grown on the place whore Mts.

Strong and I live in the country.

As you probably know, it is awned by

215. Strong's father who has redo a great otudy of the cultivation of Nor-

thern fruits.

I m trying to get a box of lisakinteshes.

If they are all

gone, I hope to send something equally good.
Accept my warmest thanks for your good wishes which are very

heartily reciprocated.

It is particularly gratifying to no just now to

rr,00lve such expressions as are contained in your very kind letter.

We

have a bg undertaking ahead of us and if, in addition to accomplishing
the work, ee make some good friends, we will certainly have been amply

repaid.
With kindest regards, believe me,
Very truly yours,

R. H. Troman, Esq.,
eeeeeeeeeee

Ithaca, New York.




August 2nd, 1915.

My dear Mr. Treman:

received your note of last 7:ednesday and felt

a little guilty about that golf party after reading what
you said.

We put In rather a strenuous day, and possibly

none of us realized how much of a gallop we took over the

links, for I was pretty tired myself tAat night and usually
36 holes is just about a good day.

We nue try it again,

and soon I hope, for I enjoyed the party imnaasely.

sincerely yours,

R. H. Treman, Seq.,
Ithaca, New York4
'-;!3 Jr/VOM




Aug. 21, 1915.

Dear Mr. Treman:

In the absence of Governor Strong, I beg to reply

to your letter of the 20th instant and would advise you that
ordinary business dress will be worn at the luncheon on the
"Corsair."

Very truly yours,

Secretary.
R. H. Treman, Esq.,
Ithaca, N. Y.

PE




October 13th, 1915.

Dear Mr. Treman:

Thank you for

your note of the 12th.

Although I have had a good many conferences with
gentleman

the

referred to, the meeting Monday was the only one which

brought my name into the affair at all.
Illustrating the two points of view, I quote

from a letter

just received

extract

from Mr. Locke:

"I was very glad to have your presence at the meeting
ntional City Bank to talk over the matter
of foreign exchange, noted in the Associated Press dispatches.
The more we come forward in such things, the
is for the Beak, according to my belief, end

held at the

bettor it

I doubt if anybody there knew as much about the question
of foreign exchange as you did, or was as capable of making meritorious mlggestions."

At the Monday mooting, we haepened
porters at the National City Beak and in that
of the

to walk into some re-

way they got a list

names of those who were present.
I guess this

matter

is now about

concluded,

far as I am concerned, as Mr. Curtis and I leave on
attend the

conference in Minneapolis and the

left by the time we

return.

'th kindest regards,

Very truly yours,

at any

rate,

Sunday to

Commission will have

WESTE

UNION

WESTERN UNION

NIGH

.

TTER

NEWCOMB CARLTON, PRESIDENT

IRGE W. E. ATK/NS, VICE-PRESIDENT

TIME FILED

ECEIVER'S No.

\VI

BELVIDERE BROOKS. VICE-PRESIDE4T

CHECK

I.

SEND the following Night Letter, subject to the terms
on hack hereof, which are hereby agreed to

NoveMber 15th, 1915.

R. H. Treman,

Ithaca, N. Y.

I am arranging fer our Directors to dine at in apartment Monday
night very informally and discuss some bank matters.

you can be there.

Benj. Strong, Jr.
B$ Jr/VCM

Charge to




Federal Reserve Bank,

62 Cedar Street, H. Y. C.

Form 2289

I hope

ALL NIGHT LETTERS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TE
The Western Union Telegraph Company will receive not later than midnight NIGHT LETTERS, to be transmitted only for delivery on the
the next ensuin, hosinese day, at rates still lower than its standard night telegram rates, as follows: The standard day rates for ten words shall be charged fc
rate for ten words shall be charged for each additional tcn words or less.
'
'
'1 standar '
...ss, and r-'
transmissio.
-hould order it REPEATED, that is, telegraphed back to the originating office for eotnpari
. a night
's or dei.
To ,
.,rd in
Unless otherwise indicated on its face, THIS IS AN UNREPEATED NIGHT LETT
I night
For this, c
' the sender of the night letter and this Company as f.ollows.
eonside:
AND PAI
,nsmission or delivery, or for non-delivery, of any UNREPEATED night letter
at be liable for m
'I.
, transmission or delivery, or for non-delivery, of any REPEATED night letter
. same; nor f,
tinor in any case for delays arising from unavoidable interruption in the working of
.lig the sari.
Ii
t,
ry, or f.
aunt ti
an add
his the
of any other Compar
'

.1

.

.R

N TELEGRAPH COM PA:

OR PORATED

NEINCONIB CARLTON, PRESIDENT

CLASSES OF SERVICE
TELEGR,...i S
A full-rate expedited service.
NIGHT TELEGRAMS
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 next ensuing
business day.

DAY LETTERS
A deferrer) day service at rates lower than the standard, telegram
rate, :is follows: One and one-half times the standard night letter
rat, Sro the i ransinissioa of50 words or less and one-fifth of the
10 words or less. subordinate
inn
to :H.
and delivery of regular telegrams.
.

.

Mtmi

written

E.105sii.




Code language not permissible.

Telephonic delivery permissible. Day Letters received
express understanding that the Company only undertake,
the same on the day of their date subject to conditions th,
time_remains,fOr such transmission and delivery during IN
hours, subject to priority of the transmission of regular

NIGHT LETTERS
Accepted up to midnight for delivery on the morning of t
ensuing business day, at rat es still lower than standard mg
gram rates, as follows: The standard day rate for 10 war
charged for the.transmission of 50 wor, Is or less, and one-fl
be c:ii,rired for t.
standard day rate for 10 words
10 words or less. Must be written in plain English.
not permissible. Mail delivery, postage prepaid, per




Eecerpher 27th, 1915.

, dear lir. Treman:

Your note of the 23rd ha n afforded me a

great deal of 'sleasure and satisfadtion.

It was,

of course, a good deal of a wrench to break off mv
old associations in the ?rust Oompany and endeavor

to create new friends and new surroundings.
Your friendship and the constant encouragement you have always given us without stint has made

it a good deal easier than I antickeated it would be
I want you to know that it is warmly appreciated.
th many good wishes,

Sincerely yours,

Mx. R. H. Tramaa,

Ithaca, N. Y.
BS Jr/MI




April 25th, 191i.%

Dear

Mr. Treamn:
Your kind note of

welcome is just received on my return

from :ashington where I was literally "yanked" immediately on ar-

rival.
It is impossible to say how perilous the trip was. There
were perils - some of them, I am sorry to say, physical - but those
involving the greatest danger to one's well-being consisted of din-

ners every evening, lasting until all hours of the night with a
superabundance of food

survived the

and all that goes with it.

However, I

strain and am back home sage and sound, I am glad to say.

I am looking forward to seeing you on 'r;ednesday and make
some account of the trip.

One thing it is impoosible to do and that

is to put into words the impreseion one geins from living for two
months in an atmosehero

GO

different from aeything we gave ever ex-

perienced.
ith kindest regards

aed many thanks for your note, I am,

Sincerely yours,

H. H. Treman, ?sq.,
The Tompkins County National Bank,
Ithaca, New York.
BS Jr/VOM




May 17th, 1916.
My dear Mr. Treman:

As I was in Washington yesterday and the day before,

your note of the 15th only reached me this noon, and I am telegraphing you to-day my regrets that I am unable to accept

your invitation.
This is the time of the year when the Spring eeting

"crop" needs attention and vo are in the midst of our difficul-

ties over the check collection ratter and I really feel obliged
in the interest o-f the bank to attend the meeting at Garden
City, as well as the one at Warwick, t e latter being the
Group VI meeting on Friday.

Mr.Jay and I have been dividing

this work up but it still takes a lot of time and I am afraid
I must deny myself the pleasure of this visit with yfaa and
Mrs. Treman.

I am very regretful indeed that this is the

case.

Very tuly yours,

R. H. Treman, Esq.,
Ithaca, New York.
ES Jr/VCIA

err E

IVESTEkaeLS

WESTERN UNION

TEL
I

TIME FILED

the following Telegram, subject to the terms
back hereof, which are hereby agreed to




AM

NEWCOMB CARLTON, PRESIDENT

W. E. ATKINS, VICE-PRESIDENT
'.11'S No.

111W11.17

UNION

Form 260

BELVIDERE BROOKS, VICE-PRESIDENT

CHECK

19, 1916.

R. H. Treman,

Ithaca, Ile! York.
Very much regret will be out of town on twenty-seventh.
about mistake of clato.
Benj, f-3trong. Jr.
Jr/V7,7'

Charge to Federal Re 13erVe

Equitabl.z: building.

'3orry

____---

ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOL.

1%.11

.g offic
To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the origi
For this, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEr,'ED TEJ.
PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the telegram and this Company as follows;
I. The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNIth,
'ED telegra
_legram, bey,
amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEA7.
the sum received for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its
errors in cipher or obscure telegrams.
In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery
gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby v
a greater value is stated in writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to 1
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 telegram over the lines of any other Company tvhei
reach its destination.
Telegrams 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
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 age:
expense, endeavor to contract for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a teleg
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 a
gram is filed with the Company for transmission.
I

No employee of the Company is authorized to vary the foregoing.

THE WESTERN UNION TELEGRAPH C
INCORPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
TELEGRAMS
A full-rate expedited service.

NIGHT TELEGRAMS
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 next ensuing
business day.
DAY LETTERS
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 rate for each additional 10 words or less. Subordinate

to the priority of transmission and delivery of regular telegrams.
Must be written in plain English. Code language not permissible.




Telephonic delivery permissible. Day Letters receive(
express understanding that the Company only undertake
the same on the day of their date subject to condition a
time remains for such transmission and delivery during r
hours, subject to priority of the transmission of regula

NIGHT LETTERS
Accepted up to midnight for delivery on the morning
ensuing business day, at rates still lower than standard
rates, as follows: The standard day rate for 10 words shal
for the transmission of 50 words or less, and one-fifth of st
day rate for 10 words shall be charged for each additional
less. Must be written in plain English. Code langur
missible. Mail delivery, postage prepaid, permissible.

111111E
r
TEL

UNION

WESTERN

E W. E. ATKINS, VICE-PRESIDENT
ER'S No.

;

IliS

la."1\

AM

NEWCOMB CARLTON, PRESIDENT

I

TIME FILED

Form 260

BELVIDERE BROOKS, VICE-PRESIDENT

CHECK

) the following Telegram, subject to the terms

back hereof, which are hereby agreed to




w York, May 17, 1916.

R. H. Treman,

Ithaca, New York.

Your letter Just receivdd on return from Washington.
eorry am engaged for Group 3even meeting ex Saturday.
-

Benj. Strong, 3r.

Jr/VC1,:,

larP0 t

P.

--..;t1 Reserve Bank,....d.

,able

LW

`,.7

Very

ALL TELEGFIAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE F(
To guard against mistakes or delays, the sender of a telegrari%slitoujd °ray it REPEATED, that is, telegraphed back to I
Fnr this, one-half the unrepeated telegram rate ischarged in addi *.:IiillesS otherwise' indicated on its face, THIS IS AN U.>, ,I,
,Bender of the telegram and this Company as follows:
I AID FOR AS SUCH, in consideration whereof it is agreed betw
The Company shall not be liable for mistakes or delays i
received for sending the same; nor for mistakes or delays in
ansinission'or delivery, or for non-delivery, of any REPEAT'
the sum received for sending the same, unless specially valued; nor in
case for delays arising from unavoidable interruption in th4

offic,.

7 TEL
PAinigsiorf
,D telegral
;gram, bey
..rking of its
errors t ry cypher or obscure telegrams.
In any event the Company shall not be liable for damagaa for,,any mistakes oridelays in the transmission or delivery, or for the non-delive
gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby
a greater value is stated in writing hereon at the time the telegram it offered to till Compdny for transmission, and an additional sum paid or agreed to
.,
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 telegram over the lines of any other Company whe
reach its destination.
Telegrams 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
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 ag
expense, endeavor to contract for him for such delivery at a reasonable price.
No responsibility attaches to this Company. concerning telegrams until the same are accepted at one of its transmitting offices; and if a teleg
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

Lamount
.

gram is filed with the Company for transmission.

THE WESTERN UNION TELEGRAPH (

No employee of the Company is authorized to vary the foregoing.

INCORPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
TELEGRAMS
A full-rate expedited service.

NIGHT TELEGRAMS
Accepted up to 2.00 A.M. at reduced rates to be sent during the

Telephonic delivery permissible. Day Letters receive
express understanding that the Company only undertak
the same on the day of their date subject to condition t
time remains for such transmission and delivery during
hours, subject to priority of the transmission of regul.

night and delivered not earlier than the morning of the next ensuing
business day.
NIGHT LETTERS
DAY LETTERS
Accepted up to midnight for delivery on the mornin
A deferred day service at rates lower than the standard telegram
ensuing business day, at rat es still lower than standard n
rates as follows: One and one-half times the stand-a4 night letter
rates, as follows: The standard day rate for 10 words Si

rate for the transmission of 50 words or less and

initial rate for each additional 10 words or less.




Subc>rdinate

the priority of transmission and delivery of re;c.til,r telegrams.
be written in plain English. Code language not permissible.

for the transmission -fifthwords or less, am:Lone-fifth of
of 50 of the
day rate for 10 words shall be charged for each addition
less.

Must be written in plain English. Code lang
Mail delivery, postage prepaid, permissibl,

missible.

May 19th, 1916.

Dear Mr. Treman:

It is a shame to feel obliged to ask you to read your
letter of the 15th inst., that led to my mistaking the date of
your invitation to Ithaca.

You did say 'Saturday of next week,

but described it as May 20th and the figures naturally caught my
eye.

I might have been a little shrewder and noticed the dis-

crepancy.

I have made some plans for neat Sunday which I cannot
very well change and only on that account feel unable to accept
your invitation.

I would have enjoyed having a visit with you

very much indeed.

My older boy and I indulged in the mortifying experience
a couple of weeks ago of seeing your baseball team humiliate
Princeton by a score of 1 to 0.

I looked around to see if, by

chance, you were not in Princeton to see the game, but was not
able to locate you.

Hoping to see you at our meeting next week and with

many thanks for wishing me to spend the weekend with you, I am,
Sincerely yours,

R. H. Treman, Esq.,
Ithaca, New York.




Jr/VCM




JICE

SYMBOL

sage

Ater

Blue

Message

Nile

ght Letter
NL
one of these three symbols
pears after the check number of
ords) this is a day message. Otherwise its character is indicated by the

symbol appearing after the check.

WESTEk UNION
TEL
AM
WESTERN UNION

NEWCOMB CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVIDERE BROOKS, VICE-PRESIDENT

Forn... 1201
CLASS OF SERVICE

Day Letter

Blue

Night Message

N it e

Night Letter
NL
If nane of thee three symbols
appears after the check number of
words) this is a day message. Otherwise its character Is indicated by the

symbol appearing alter the check.

RECEIVED AT

M6D

CCO 16 NL

litoL

DENVER COLO., JULY 2 1916

R H TREMAN

8688

FEDERAL RESERVE BANK NEWYORK

/

ARRIVED LAST EVENINC AFTER COMFORTABLE

TRIP BEST REMEMBRANCES AND

MANY THANKS TO ALL AT THE OFFICE
BENJAMIN STRONG JA
320A

SYMBOL

Day Message

POST CA
661/10A970

lie. Lewiston, estesTlrk,-COIO:.'

PA

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Rocky MoontainNatienal
Colo,
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Estee Park, Colo., July 25, 1916.

Mr. R. H. Treman,
Federal -2ezerve Bank,
Dew York City, 14. Y.

;

My dear 4,1r. Treman:

Yours of the 20th is just received 4, d I am

puzzled to know what answer to send about Pr. Higgins. Of
course Mr. Jefferson out ranks him>an4-ze_O'uld not make
ing with Mr.
F.r. Higgins an Assistant Cashier wrtImut-de
very unJefferson, who I think you realistr- s a man
I have a
s regarded
usual capacity. On the other: ia
the kind
f)ications
Mr. Higgins as having unusua
rganization, and when
of work that has to be done
very sure that in the
our business is more active\
uture with us than he will
long run he will have a bett
al Bank.
with the American

Good men * so har to g that I am reluctant
to see him leave. i Looking e, the future rather than to the
present, I think\ the wh1 my judgment would be to keep
rehim if he-Itriaill , to 04i, and meke the necessary Kenzel's
And ;Jr. Jefferson's and Mr.
adjustment-TT{ his

as wel11if that provell-advisable.

rider ourT-trrangement with :Ir. Sailer, hie salary
but considering the
o
is als o be in, eased this year, been called upon toamount
-44'of these men have
de,
of wor'
I am not a-bit-reluctant to see them better paid. We have to
bear in mind that if a considerable number of state institutions join the System, we will need a large examining force
and a good organization to manage it. The same may be true
if any change in the Comptroller's situation take place so
that we woulj. have more direct relations with the examinatice
of member banks.

I am glad to know that hie two years' work for the
bank turns out to his advantage whether he stays or leaves,
and when the matter comes up for discussion with him I hope

you will be willinc to say this to him aa coming from me.
All goes well here and I am glad that you and the

others keep me so well posted -- it keeps my mind occupied.

with best regards to you all,



Sincerely yours,

BENJAMIN STRONG

Estes Park, Colo., August 1, 1916.

Mr. R. H. Treman,
Federal Reserve Bank,
New York City, U. Y.

FEB WW1

Dear Mr. Treman:
v/

Replying to yours of the 27tk, which enclosed
Governor Delano's letter and Judge/Elliot's memorandum on
the subject of Fiscal Agency, possibly the following comments may be of some interest:
The theory of the independent treasury system
contemplated that the Treasury of the United States should
hold all of the funds of the United States in cash in the
government's vaults.
This was the way the government
finances were originally managed 100 years ago, or thereabouts, and, as I recall the listory of the second bank
of the United States, when the Charter was granted the
independent treasury system was entirely abandoned pnd
all the funds of the government were deposited in the
Bank of the United States. Prior to the expiration of its
charter President Jackson withdrew all the funds from that
bank, notwithstanding that there was no legislation then
in existence which re-established the independent treasury
system.
Later and, as I recall, some years later,after
complete disorganization had resulted to the government's
finances, and after a lot of very disreputable transactions
between the Treasury Department and State Banks, the independent treasury system was restored and the basis was laid
for the methods of the past eighty years, which have really
gone from bad to worse. The present law really does not
correct the evils of the independent treasury system; it
simply gives the Secretary of the Treasury the power to deposit the general fund in the Federal Reserve Banks, which
are constituted fiscal agencies of the government. de have
inherited all of the bad effects of eighty years experience
of the independent treasury system and vested in the Secretary
of the Treasury complete power to remedy these defects, if
The real question is how may his dishe sees fit to do so.
cretion be so exercised that we may gain all the benefits of
the proper system of government finance without, however,
having any more than the discretion of the Secretary of the
In a general way,
Treasury upon which to base the reform.
my thought is that the change should be in the direction of
having the Reserve Banks act as the depositaries for all of
the general fund of the government and pay all checks drawn
by the government, but have all the accounts kept by the
Treasury Department. To bring about this change, it seems
to me many of Judge Elliot's suggestions must be adopted.
For the general fund the government should carry only twelve
accounts, one with each Reserve Bank, and these account should
be so managed that checks drawn by the government cannot be




BENJAMIN STRONG
2.

used for the purpose of making exchange in any part of
the country at the volition of the holder of the government's
The development of this practice gives the government
check.
check some of the qualities of currency which is in every
way bad, as pointed out by Judge Elliot. There seem to be
few difficulties in the way of arranging the handling of checks
There are, howdrawn on the accounts in the Reserve Banks.
ever, many difficulties in the matter of depositing the govThere I think Judge Elliot's suggestion
ernment's revenues.
You will find t in the copy of a bill, known as
is good.
Mr. Curtis' possession that it was prothe "Burton
vided that National Banks might be employed for the purpose
of receiving and transmitting the government's revenues.
That is just what should be done and I don't see why an amendment to the Act is necessary to accomplish it. If caa bank
in Buffalo will furnish the necessary bond to cover u fixed
balance of say 050,0D0 and in consideration of that account
will receive on deposit all internal revenue and customs collections at Buffalo, the excess of ;;50,000 to be either transferred to the Federal Reserve Bank at New York or charged to
that bank's reserve account on our books, we could still carry
the entire fund, including that balance as a part of our account with the government, letting the bond run to us for the
protection of the government and consider that we are handling
the account in that way, simply as the government's fiscal
agent.

So far as the accounts of the various disbursing offices
are concerned, I should think all of the accounting in connection therewith should be conducted at dashington and the various
checks paid by the Reserve Banks to be charged against the one
If disbursing offices draw too much, or
general fund account.
draw incorrectly, or without authority, that is the government's
affair and they should obtain protection by bond of their offices in the usual way.
You will gather from the above that I agree with Judge
Elliot's memorandum almost in its entirety, my only doubt being
If ;,,a,.; National Bank is
as to the necessity for legislation.
appointed a depositary for the government for the purpose of
receiving and transmitting its revenues, certainly the government should have the power to direct that depositary to transmit the funds and render its accounts to the government's fiscal
agent, that is the Federal Reserve Bank of the District. We
could include the balance carried with the Buffalo Bank in our
balance due to the government and show it as an a8set on the
asset side of the account as due from government depositary
banks, having of course no financial responsibility as to the
balance, which the government would cover by the usual bond or
security.
In connection with this correspondence I believe it
should be pointed out that the present system needs perfecting



BENJAMIN STRONG
3.

so as to avoid the shifting of funds at present thought
necessary by the Secretary of the Treasury. If he made it
his policy to carry in gold in the general fund a round
amount of say fifty million dollars or one hundred million
dollars, and deposited all excess revenues with the Reserve
Banks and left them there, the country would rapidly readjust itself to the idea that the fluctuating account was
not the cash held in the general fund, but the balances
carried with reserve banks.
I am very much impressed with what Judge Elliot
says about the lack of care in scrutinizing checks paid
when they reach the Treasury Department.
can be cured if the force of men which is now doubtless
employed in keeping the hundreds of accounts maintained by
the government were allowed to devote their time to making
a proper examination of the government's vouchers.
1,1r.
Curtis is interested in a little organization
that is at present undertaking to look into matters of
economy and efficiency in the government's service.
While
many improvements have already been made in the Treasury
Department, I believe many more could still be made through
cooperation by the Reserve Banks and such an organization
as the one I refer to, provided of course the Treasury officials are willing to take a friendly interest in it.

Secretary McAdoo has always evidenced the right
spirit in these matters and I am sure his cooperation could
be obtained.

There are two other features of this work that should
also receive consideration: one is the transfer of the accounts at the Post Office Department, which has already been
investigated by eur Junior officers; the other is the development of some system by which the Federal Reserve Banks
may be of service to the government in handling checks drawn
in connection with redemptions of currency.
This ia a rather sketchy dissertation in reply to your
letter, but the fact is this subject requires study on the
ground in dashington where the accounts are kept.
I will be greatly interested in hearing the result of
anything that is done.




Very sincerely yours,

The

Bates Park, Colo., August 3, 1916.
Mr. R. H. Treman,
% Federal Reeerve Bank,
New York City, V. Y.

Dear Mr. Treman:

.7

1:5,....(1

The enclosed letter from Brien Cokayne, Deputy
Governor of the Bank of England, should be placed with the
papers relating to our negotiations with the Bank of
England which, of course, are of the most confidential
Shortly after I received i--I-wzpte the Bank
character.
of England, advising them of my illnoOrlTrida, at I would
repared
11aave /am
answer the letter a little later.
and signed the enclosed answer, while it seem to me
should not be sent until you and your associa, es have
considered it very fully an .-a-pKoved of its oentents.
--,

If you do approve

then be necessary for u
cipation of favora

e a

-./

'11
it, it will
\and
two things more in antion lett'%)Federal Reserve Board:
by th

e

o do

/t i /
` \ salemexdadum,
re

or form of resoOne is to pr
bm tato---the other eleven Reserve
lution, or letter, to
Banks and to the Fe 9,ra, \ Reserve Board, outlining the
,rig the obligation to be incurred)
basis (as well a expre
in th ficcount. My idea is to have the
for participati
/New York complete the arrangements
Reserve ank
Fede
and, irrespective, of what the other
Bank ol
with
s may determine to do in the matter. When the
Reserve
letigtawe can then offer participations to them
plan is c

if they

nt them, but figure upon going ahead with the

Ourselves whether they join or not. As a matter of
courtes j however, the form of obligation, as well as a descriptiai of the plan, might as well be submitted to the
accounti
Board and to the Banks prior to its final adoption, with
the request for criticisms and comments. The matter is of
sufficient importance it seems to inc to require this course
as a matter of courtesy. I am preparing a paper as a suggestioa for you and the others to consider, which will go
forward in a few days.
This, at the proper time, when you
have made any necessary changes, could be submitted to each
of the Reserve Banks in confidence, together with a copy
of the memorandum of my conference with the Bank of England
and a copy of the memorandum submitted to the Federal Reserve

Board.



dhen that has all been done, or while it is being
done, we should be considering the Second matter, which is
the employment of a competent man to take charge of transactions of this character. What I have in mind as a possible

2.

solution of the difficulty is to give Mr. Cann charge of
the handling of the exchange and the bill accounts, and
imploy in addition a man from the Assay Office, or the SubTreasury, who is thoroughly familiar with the whole subject
of coinage, gold and the assay office practice. It will
not require a very expert foreign exchange man to handle
the account, at any rate at the outset, and I believe Mr.
Cann could handle the account perfectly well; but he would
need the assistance of someone thoroughly conversant with
making figures on gold. Such a man could work out the details of a plan by which we could hold sovereigns as they
are imported so as to avoid melting charps.

It will

not be long now befor /16-i-317o
to start this account in operation, 4n1 case we
Reserve
do so at all this year, and I hope t
view of the plan.
take a reasonable

be moving
oard will

/I

If the Board makes
prove sufficiently out he
spend the last month or s
and Paris and put the fin
..\

e to jus

4 weeks of

Oing tou

oriand I imdoidg so, I might
ply exile in London
hes on the arrangement.

yely,

P.S. MY suggestion about Mr. Cann is entirely tentative
and it would require some discussion with him before determining whether he feels fully competent to handle these
transactions.




6t.e Ant,

BENJAMIN STRONG

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BENJAMIN STRONG

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Form 1207
DESIRED

is.

I

TI

sage

Receiver's No.

WESTERN UNION

go

:it Letter
, should mark an X oppoAe class of service desired;
IERWISE THE TELEGRAM
.L BE TRANSMITTED AS A
FAST DAY MESSAGE.

TELP4---W-

Co

AM

Time Filed

NEWCOMB CARLTON, PRESIDENT

:es Park, Col., Aug.

Id the following telegram, subject to the terms
on back hereof, which are hereby agreed to

Fede. al

Check

1916.
191

Reserve Bank,

7quitable Building,
New York City.

Confrorcee report on amendment bill printed in: full in Chronicle
Paragraph "E"
August twentysixth makes no provision for amendment toASeetion

Fourteen in r,spect of days of FrrIce.

Can it be possible that

thie hae been olAtted with no possibility of amendment pacing

at t' is session!
Benja: in Strong.
BS/Val

SENDER'S ADDRESS

FOR ANSWER




ME

SENDER'S TELEPHONE NUMBER

ALL ELEGRAMS

BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING

To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office for con
le-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAI
consideration whereof it is agreed between the sender of the telegram and this Company as follows:
I. The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, bi
eei red for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty times
.
r 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 in ciphei
!egr tins.
In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery!, or for the non-delivery, of this telegram
sued by the negligence of its se
ru
servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued, unless a greater value is s
iti ig hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be pail based on such value equal to one-ti
ie per cent. thereof.
The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to rea

;ad iation.
Telegrams 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 cit.
,vsnt 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 hisexpense, endeav

ntract for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sent to such
o le 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 telegran
ed with the Company for transmission.

Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in addition to

e foregoing terms.
No employee of the Company is authorized to vary the foregoing.

THE WESTERN UN ION TELEGRAPH COMPANY
INCORPORATED

NEWCOMB CARLTON, PRESIDE.

CLASSES OF SERVICE
\ST DAY MESSAGES
k full-rate expedited service.
G HT MESSAGES
Tepted up to 2.00 A.M. at reduced rates to be sent during the night
' delivered not earlier than the morning of the ensuing business day.

Y LETTERS
deferred day service at rates lower than the stnndard day mes-

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

SPECIAL TERMS APPLYING TO DAY LETTERS:

further consideration of the reduced rate for this special "Day
cr" service, the following special terms in addition to those enuted above are hereby agreed to:
Day Letters may be forwarded by the Telegraph Company as a
red service and the transmission and delivery of such Day Letters

all respects, subordinate to the priority of transmission and

cry of regular telegrams.

Day Letters shall be written in plain English. Code language
permissible.

This Day Letter may be delivered by the Telegraph Company
phoning the same to the addressee, and such delivery shall be a
;e discharge of the obligation of the Telegraph Company to
his Day Letter is, received subject to the express understandagreement 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 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 reg-

1

ular telegrams under the conditions named above.

No employee of the Company is authorized to vary the foregoing.

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 day rate for 10 words shall be charged for the trans-,
mission of 50 words or less, and one-fifth of such standard day rate for 10
words shall be charged tor each additional 10 words or less.
SPECIAL TERMS APPLYING TO NIGHT LETTERS:

In further consideration of the reduced rate for this special "Night o,
Letter" service, the 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 shah
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 authorized to vary the foregoing.




Estes Park, Colo.,
September 29th, 1916.
(altr Mr. Treman:

The pnckage of books had just been received from

you and I am very grateful indeed for your contribution. If

I stay here another six months, it will result in the accumulation of quite a library. I an gaid to have some light
reading which is used to pass. the time while I am lying down.

I have just returned from Denver after a fine visit
with Warburg and Aiken.

Aiken could only stay one day, but
Warburg was therr for three days and we discussed every ponding matter. I will write you in detail a little later about
30M0 of them.

Ath warmest regard°, and hoping tiazt you won the
old ma:1LT. prile,at Rye, I am,

'Faithfully yours,

R. H. Troman, Esq.,
Deputy Governor, Federal Reserve Bank,
Equitable Building,
New York City.

,

Estes Park, Colc.,
Cctober 4th, 1916.
Dear Mr. Treman:

Mr. Jay will show you my letter and telegram in regard to
the directorship matter end the l'ederel Reserve Advisory councilmen.
hope this Lite in with your own views end thet 1Vr. Vloodward and

. Towne viii see it in the eame way.
c-nnot always expect to agree about ttern of policy,
while I am sorry the one yeer note were sold, you need not for
a moment think that I feel badly about it. -t is just a oese of
having a different view of the aevantages of the poliey adopted. I
really do not teink that the dietribution of eeeee netes doss the
government any good and, of eourse, wA lope earninge.
I asked
Mr. Venderlip how he felt about it, and he said he woeld be g'ad
to take all we are selling on a 2 :0 basis. if he would be wile
ling to buy them, it is r pretty good indication that he would
teink it good policy for us to keep them.
!bout shipping out silver certificates, 1 suppoee Governor
Hardirg hae in A.ne that we will pay the cost, the government thereby being relieved of somr expense and we having the advantege of ge*
ting the gold. .4.his would be an evasion by the government of its
statutory obligation and I would rather le-t th stuff accumulate .nd
go right to the he lork Subtreasury and ask them to give us gold
for it. At any rate, I am vonvinced from the statements which come
every day that you are succeeding in hanling thet situation without
any expense and you can imagine how gratified I am.



-2
To

Get. 4, 1916.

R. H. 'Treman, Esq.

The report tf good progress in the collection denartment,
contained in yours of the 27th, is very encouraging indeed.
I am also tremendously pleared to her from Warburg that
things went off so well in Kansas City.
Fyster, wee well represented and that undoubtedly suppressed some kicks.

I will write you more fully about a number of matters
next week after my visitorr leave. Thank you very mach for your
letters which keep we rested and encourr..ge me to believe that you
are hepeful of soeing me hack there.
i2 disappointing that the Eew York bankers

sc, ag-

grieved over the operation of tne Clnyton Act, but I do not see how
it can be helped. It is the law and must be observed and the Federal Reserve Board could rot be expectsd to exercise discretion in
such a. way aa to defsat the real lurnom of the 1:kr,.
I :lave, not written about the Bank of iruce matter, as it
renlly ledsmadot of careful thought and 1 in spending most of each
day with my visitors.
It will be interesting to *near
Turner and the others
think ebwit the dirso.tors:do matte:-. I do node that we h.v as a
result of this year's effort some decent organIzaton to take this
mIttter in hand on behalf of our stockholders.

Ath best regards, I

am,

Faithfully yours,
R. H. Treman,
Deputy Governor, Federal :- eserve Bank,
EqAitable Building,
New York City.



Lstee Park, Colo.,
October 11th, 1916.
Dear Mr. Treman:

There are one or two mfIttere mention in youia of October
3rd waich I do not seem to have rsferred to in my rocent letters.

About the luaranty Trust Company acceptances, 1 think
f14,000,000 or l5,OOO,OOO divided among toe ystem ia a pretty

good line and should not be greatly exceeded. Other reerve
ban%s hi,
of their bills wnich they oeclined, net know-

ing, of course, the total line for the whole System. I explained
this to C/ains who has grumbled a bit about declining tpportunities
to buy their bills
hr, thought a total line of 0.4,000,000 or
115,000,001 las about large enough.
Warburg and I discussed the question of apportionment
of.investments made by the NOW York Pork.

He thinks our allott-

ment in too sm.P.11,'or 1 do, but 1 have no data on wnich to check

the calculations made by the Committee.

Certainly, it was a
great surptiso to see our proportion reduced.
It Jo out of the qunstion to execute special orders such
:13 the one received from Kansv.0 City.
If they are not satisfied
with what they are getUng, theyabould deal with the matter with
the apportionment committee, and not ask us to ignore the arrangement and make special purchases for them.

Abut the foreign arrangements, it seems to me nothing
can be done until the State Department has acted. 1 believe we



-2To

R. H. Treman, Esq.

Oct. 11, 1916.

ore entitled to a hearing on the subject and think some on should
take the matter up officially with Harding and get it straightened
out. There is a special committee of the Reoervo noard to deal
with the matter and Warburg has expressed his determination not to
interfere in the discossion. We ought to be buying bills in London this rall and ..diuter. I would not hositatc to write to teors.
tary Lansing or Frank Polk from here, except that it would be a discourtesy to the Board and one which they woul>\ke justified in resenting. I am junt ae tentless an you are at the'lack or progress.

r:lle decision about the iihitney Central :lank acceptances is
it aeems to me,a wise one. They are not entitled to a better rate

or a$ Good a rate, ae the boat O.ew York institutions and I think we
should decline to buy thu bill.
You will find that the "itney

1k deolined to furnish us with statements in the form required and that ia ample justificotion for declining to buy the
bill. I wrote to Mr. 4exIer about it, and ha was very positive
that he did not care to furniah us with the information we ought
to have.
Central

.'

Please let ma know if there is anything more 1 can do

in the foreign matter.
Sinoerely yours,

R. H. Troman, Esq.,

Deputy Governor, r'eUerul Aeuorve Hanks

Equitable Building,

New York City.
BS/VCM






Estes Park, Colo.,
October 11th, 1916.
Dear Mr. Treman:

I have just returned ftom spending n few days in Denver
where I was obliged to go to

arrange

about my boy's health cer-

tificates, etc., and start him off for the Hill School.
down with the

Vie went

Vanderlip-Trumbull party, meeting Kaine at Loveland

where we spent the night in hr. Trumbull's car, and then next dhy

Hendricks joined us in Denver.
The weather wes so bad that I was obliged, willy nilly,

to observe Dr. Treman's orders, although we did eenage to get

one drive about town when I was able to point iut my new Winter
residence to Hendricks.

I also

heard Vanderlip and Trumbull

speak at the Mile High Club luncheon and then went out with them
to a little informal tea in the afternoon.
Dr. Sewall whom 1 saw twice, seems to be quite satisfied

with my progress and has

greed that

a little

later it would

be

feasible for Oegge Roberts of the City 3ank, to come out. and male
me a visit to help formulate some of the piens we

back and forth about some changes in our

have discussed

currency laws.

I wilt

send you the meterial when it is in anytning like good shape.
Hendricks has returned to the Park with me and will stay
for a few days.

To

R. H. Treman, Lsq,

Oct. 11, 1916.

I find yours of the 4th and 5th here and I hope you
will pardon rather a cryptic reely.

About my letter to Garter Glass, that as well as -Wier
material is gradually taking shape with the idea that immediately after election the question of further currency legislation

must be preseed.

I have been all over the matter with Mr. Vanderlip who, of course, has hnd four years in the Treasury at Wash-

ington and is

thoroughly posted on this

whible question.

He ap-

scheme which I outlined and believes if it is not
adopted pretty soon, we are going to have a terrible smash.
do not share his views quite, but realize the urgency of doing
proves of the

something, and would like to make my contribution from here.
Regarding the Nederlandsche Bank, it seems to me

that the

bill we ace now rendering which covers services from }Aarch

practically to Cctobor let, is moderate and fair.

16th

The 1/20 per

month charge at the outset was during a period of very high

rates

for Dutch exchange and the transactions resulted in a very large

saving which one might construe as profit due the Nederlandsche

Bank, and I believe the charge is justified. It would be a good
plan to submit the bill promptly, but I would se,gest that it be
done by communication

with

the Ambassador in Washington, and the

There is no necessity
for exposing the extent ef our operations to the British censor.
bills sent by him in the Embassy pouch.

The best plan would be to write to the Ambaseador and ask him if
he would be willing to transmit the communication to the bank, of

wnich a copy should be sent him unsealed, so that he can read it

and return it if it violates their policy or rules.



3To

R. H. Treman, :Keg.

Oct, 11$ 1916.

In taking additional banking space, might it not be well
to so arrange the departments that the cost of additional space
can be added to the cost of the Tranbit Department!

I would be a little cautious about lines to Ladenburg
Thalmane.

My recollection is that both the Ladenburg estate and

the Thalmann estate
business.

withdrew large amounts of capital from the

Furhermore, a considerable part of their

financial

strength came from foreign connections wnich not now be valuable
or as strong as they were prior to

commercial banking

the war.

They do a large

business and, as you know, a considerable amount

of stock and investment business as well, and the two do not go very
well together.

Have telegraphed and wrieten Mr. Jay about the directorship and Advisory Council matter, so will not repeat hero.

doubt whatever that the
use of trade acceptances in place of the open book accounts is
About your address, there is no

sounder and OE*

It makes the

our merchandising

on the proper banking basis.

open account a much more liquid asset, but should not

be construed as justifying complete abandonment of the practice of
obtaining borrowers statements, ns some people have incorrectly ascriticism
oumed.

A

for book

accounts grows out of the old custom of merchants or job-

frequentaof the proposal to substitute trade acceptances

bers drawing on customers whose credit is not very good. This is
an added argument for developing the practice. It educates buyers to pay bills promptly; it substitutes a epecific claim for a
general ciltim against the drawer of a bill, in other words, it is




To

R. H. Treman, Esq.

Oct. 11, 1916.

the same as pledging the customer's account as security for the
It will have the effect of cutting out a lot of had prac-

loan.

tice in the matter of deducting discounts not justified

by the

terms of the aale, return of goods claimed to be defective or

otherwise

not as represented, and

out mercantile practice.

I think

in many was improve

On the other hand, it would

be a great

deal better for the country as a whole not to encourage the use
of drafts in settlement of accounts between retail merchants and

their customrs.

Drafts should be drawn by manufacturers, whole-

salers and jobbers on retail houses,

they presumably

being the last

handlers who convert goods into cash.

attained from our standto give automatic evidence that advances made to manufacOne very

point is

important

object to be

turers and merchants are nct for the purpose of furnishing perma-

nent capital to be used in melting
I

the

turn-over.

nm glad to learn that or investment ac:ount is being
have written Mr. Jay about Mr. Locke's preposal and

built up.

suggested by telegraph deferring a vote for

another meeting so

that

I could write to Er..koc'ee personally.
About our dividend policy, if we wipe off of

organization expense, except

our books all

the cost of printing Federal reserve

notes not yet issued to

the

bank, it seems to me that we woeld be

justified

all

but a very moderate amount of our

ings

earn-

anu catching up as far as possible with out dividend accruals.

If we have




in pnyint out

say, $15,000 in excess of the amount required to pay

T-3

5
To

Oat. 11, 1916.

R. H. Tremens Esq.

the dividend to that date.

Mr. Curtis is acquainted with the

recommendations of the Dividend Committees of the Governors and

the lateet euggestion of

tee Boerd as to the dividend period, end

i thine some object will be gained by promoting uniformity among

all of the reserve bailbsin that matter. Our expense account will
be helped out by the Transit Department which as I figure contributed about V75,000 a year and provided for some part of

the rent and

other overhead.

Neve not yet prepared the Rank of ?ranee letter but will
do so shortly.
Please congratulate Mr. Jay on the outcome of his talk
with Canandaigua.

I an interested in the

particulars of the Gold Settlement

Fund and, of course, we cannot club those fellows into withholding

settlement but they ought to make their contribution to help our

situation.
Warburg's speech was very good.

I am glad it was 71111

reeeived and am all ready with one article along the line of our

correspondence, but feel that it should not be published until
after election day. I hope eughes is elected, but he is making
a wretched campaign and is not making the kind of impression at
here that is really needed.

So much for the present.
other topice mentioned in your two

I will write ::r.Jay on the
letters.

With beet regards,
Very sincerely yours,
R. H. Treman, Esq.,
Deputy Governor, Yederal Re erve Bank,
New York qty.



R. H. Treman, Esq.

Oct. 11, 1916.

P. S. Yours of the 6th is received since dictating the
Am writing lAr. Jay about the delay in the State Departabove.
ment and, of course, nothing can be done so long as they hold us
The matter should be brought to a conclusion, but I would
up.
deplore an unfavorable decision. My hands aie tied out here as
it would be the heighth of discourtesy for me to correspond with
friends in the Ltste Department about the muiter when it lhas suitmitted by the Federal Reserve Board. I think Mr. Curtis should be
permitted to discuss the matter with Rr. Folk.




Be S.

To

R. H. Treman, Esq.

Oct. 11, 1916.

P. S. Yours of the 6th is received since dictating the
Am writing Mr. Jay about the delay in the State Departabove.
ment and, of course, nothing can be done so long as they hold us
up.
The matter should be brought to a conclusion, but I would
deplore an unfavorable decision. My hands aie tied out here as
it would be the heighth of discourtesy for me to correspond with
friende in the State Department about the mutter when it viae submitted by the Federal Reserve Board. I think Mr. Curtis should be
permitted to discuss the matter with Ur. Folk.




B. S.

4100 Montview Boulevard.

Denver, Colorado,

October 17th, 1916.

Dear Mr, Treman:
Thank you heartily for your nice letter of October 13th.
I believe from all accounts

that

Im taking as good care

of myself as it ever will be possible for me to do, considering the
At any

impatience of the patient and the irksomeness of idleness.

rate, the results so far acoomAished seem to give some indication of
My being fairly reasonable in following orders.
Of course, it is always in my mind that I may not get
back to the bank.

Should that develop to be finally

the

case,

would be inclined to ask the directors to permit me one last flicker
before the flame goes out, by letting me go abroad once more and conclude those foreign arrangements.
I am all settled in the new house.

It is delightful and

attractive beyond my expectations and fortunately, the owner, who is
a very nice fellow indeed, left the house practically as it
every blessed thing we-need,including servants.

was with

We are having the

most won-erful weather, the thermometer above 70, brilliant sunshine
and a background of the Rookies, now well covered with snow.
Once more, many thanks for your constant thoughtfulness
of me and my welfare, of which I despair of giving you adequate evidence of

my gratitude.
With warmest regards, which I hope you will extend to the

boys at the office, I am,
Faithfully yours,

R. U. Treman, Esq.,
Federal Reserve Sank,

Deputy Governor,

http://fraser.stlouisfed.org/ New York 6ity.
Federal Reserve Bank of St. Louis

4100 Montview Boulevard.

Denver, Colorado,

Uetober 18th, 1916.
Dear Ur. Treman:

Thin is really my first day of office work since moving
to Denver as the office has been packed up ardeit took some time
to get the necessary accomodations for typewriter, etc. We are

now all straightened out and 1 can take care of mail as fast as
it comes.
The statement of the Bank of France enclosed with your

letter will come regularly to the bank but it really is not necessary to send it to me. We should have a file at the office
and I am returning the one you have sent me.
ebout a week aeo I wrote you about the matter of accumu-

ting gold.

There seems to be noteing that we can do until the
Act is amended.
There are only two ways of mcumuleting it; one
is by the deposits of member banks which Mr. Werburg advocates and

which I do not think willbe a Permanently effective plan, and the
other is by note issues for the development of which we must await
the pleasure of Congress. Some of the other rererve banks might

do more than they are doing, but I think they all hesitate to incur
the expense involved.

. Warburg and I did discuss at length various plans
settling balances in silver certificates and United States
noteu but it will be a cumbersome and expensive method.




To

uct. 18, 1916.

R. H. Treman, Esq.

The law provides by the Act of Larch 4, 1866 that silver
certificates may be issued in denominations of one

two and five

dollars, the ,Act of Match 14, 1900 provides that thereafter issues

of silver certificates shall be limited to iesues of ten dollars
and under except that 10

7.

of the total volume of such certificates

may in the discretion of the Secretary of the Treasury be issued
denominations of twenty, fifty and a hundred dollars. There is

in

no

provision for the i7eue of large certificetes in any form and con-

eequently they cannot be

surrendered at one Subtreasury and reis-

sued at another.

The issue of United States notes is I believe also surrounded by eimiler limitations. Themamimum denomination now being
issued being notes of one thousand dollars and no order certificates
are ever issued or, in fact, is their issue authorized by law. This
state of the law makee it imprectioable to settle balancee in silver
certificates and United States notes unless we are willing to incur
the

expenoe

of physical shipment.

the gold situation.
the liability for Federal reserve

One suggestion has occurred
Our prenent method of
notes is

treating

based upon a ruling of

ing, the liability of Federel

to me about

the eeserveBoard.

Under that rul-

reserve notes is extinguished

'hen

gold is deposited in place of commercial paper. The law however providee that the liability is reduced When gold is so depositThere is nothing in the law requiring any specific bookkeeping
ed.

method in dealing with this operation and as a matter of fact the
reserve bankc will always remain liable for the payment of notes outstandingthather secured by gold or by




commercial

paper.

We

might

Oct. 18, 1916.

A. H. Treman, Esq.

be able to persuade the Board to change their ruling in this respect
and do by ruling what was contemplated should be done by amendment

to the Act.

It might be well to have Mr. Curtis look this up and
prepare a memorandum on the subject which I would like to see. It
should be done promptly so that any change in the present ruling
etan be put into operation promptly.
About the allottment of warrants: I have just received
a memorandum of dividends paid by reserve benke indicating that six
of the banks are now paying dividends and it seems to me that their
allottments should be reduced and the allottments of the three or
four which are without dividend prospects should he materially increased.

Mr. Warburg's view was that the New York bank should he

allowed about one-third

present.

of all purchases, instead of 23 % as ae

Of course his suggestion was only a guess and 1 think

more accurately than that but nevertheless should give us a conaaiderably increased proportion.
till, basis should be figured

This is a good subject to take up with Aiken, Rhoads and
Fancher when you have your regular conferences. 1 an sorry not to

have been able to get something to you before the meeting of last
Tuesday but it was impossible as mail was delayed in reeehing me,
having first gone to the Park and been forwarded.
I have a letter from Curtis about the request of the Bank
of Commerce about ruling on certain bills to which I have replied by

separate letter and will not repeat.
Warmest regards to all at the bank.
Faithfully yours,
R. H. Treman, Esq.,
Deputy Governor, Federal Reserve Bank,
New York ciiy.


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

Denver, Colorado,

October 20th, 1916.
Dear Ur. Treman:

Enclosed please find copy of a lette just received
from Brian Cokayne, Deputy Governor of the B- k of England, to-

gether with original and two spare copieo of a eply which
have prepared to be mailed in case it Z.
meets withsa, royal at
\ss\
the office.
In eau° it appears t yu th4 he Bank of England
people are a little dense abou
change matter, 1 think
the explanation is that
k o Fband has never done a
foreign exchange busine other t an cidesional transactions

The air ngement p

with France.

osed between our banke and

that inatitutio
1

ment and 1 h

tain unoffi

new departure for them.
e most irksome to be held up by the State Departyou we

find it possible in some way to ascer-

ly wk t their attitude will be.
Very truly yours,

h. H. Treman,
'Deputy Governor, Federal Reserve Bank,

:riuitable Building,

kiew iork City.
nspem




Denver

Colorado,

October 23rd, 1916.
Dear Mr. Troman:

Yours of the 17th is just received.
1 sympathize with you in your stru g es over the ad-,
dress.

/

Nothing bores no more than doing jt--1-h

t you had

do.

A long letter from
posed the introduction of th

were a little

ntimates that he proution because the Lettings

/

ought it might provoke

unintere,kettITIr

am sure he will not press the

interestirg d s ussion.
matter.

Br

copy of your trade acceptance

addre5e.

am writi

letters w

lay on other matters and presume the
d around, wo will not repeat.

Sincerely yours,

R. H. Treman, Esq.,
Deputy Governor, Federal Reserve Bank,
Fquitable Building,
New York Gity.







TATIU.1

.,..2,zEDLIIIL RESERVE 1411: f' 1011/

Close of business
Number of items handled

Totaling

Difference

OCT.24, 1916.

37,557.
$8,859,919.04_

Short

2.96

Over

O.Z. RACK PROVED

4.10

JERSEY "

4.50

TI




.

Air .11.,..1.1611.

--MAL RESERVE 3ANK OF FR7 YORK

Close of businesu

OCT.'5, 1916.
32,020.

Number of items handled

Totaling
Difference

$9,090,738.55
Short

.59
R.R.
JERSEY

RACK PROVED

4.10
5.30

Denver, Colorado,

October 26th, 1916.
Dear Mr. Treman:

A flock of letters from Mr. Jay to
ch 1 have been
replying seems to have temporarily d verted the
stream from you to him but now 1 have/oaugh_ up,,, fill around
\gradually

on correspondence, as he has, and
again.

With this is a pro
have dated October 31st to co
mail time. I am sor
undoubtedly arrived /t

develop

of an arrangement w4

seems

to work alopt

begin to

Or you

't to M. Pallain which

,/
ond with its New York

ong but the t]me has
some detail the character

be desirable if he is willing

sameweAris the Bank of England.

Won't

you and t e others reftd this carefully and please do not hes-

itate to p
Two

out ay,)objections which may occur to you?

al.e_-pies are also enclosed for the bank's
qncerely yours,

R. R. Treman, Esq.,
Deputy Governor, Federal Reserve Bank,
Equitable Building,
New York City.
BOCM




Denver, Colorado,
October 27th, 1916.

Dear Mr. Treman:

I was delighted to receive your fin long letter of
October 24th.

It is amusing after reading
I dianapolie
s\
speech to find that you credit, or
rge,'Warbu )vith being
the author and promoter of the 1 of ducing member banks
to deposit all of their reaeti,ey ear spare with the
reserve banks.

He does believ

general plan for

enlapIi.

less believes just a

.0tg.

n

old

he plan as a part of the

urces, but he neverthe-

strongly nthe principal of accumulating

gold by note issue*.

MO

:

1

nglesed 0-iroy_ot a let'er recently written

Miller

expressesyviewssoI
_11y that I won't attempt to repeat here.
You undoub e ly have

': ler's speech in the office.

If draiO utei nquiry can be made of a few banks along
the lines of your su zeetion, it might indeed be a good plan.
In my former letter, I expressed some doubt of the wisdom of
doing anything to excite comment or cause alarm and of course
that still holds good.
cannot be made a

Ly real feeling is that our note issue

permanent means of accumulating a large vol-

ume of gold until the whole currency problem is
new legislation is passed.




worked out

and

To

Oct. 27, 1916.

R. 11. Treman, Esq.-

About the foreign arrangements, aside from the Bank
of France correspondence, I really do not see how we

can do

anything in England until the State Department has acted.

right ahead.
Thank you for sending me the copy of the confidential
circular sbout the French credit. A long t egram from Curtis
indicates that he is in Washington today,
g away on the
Just as soon as they have acted, I think we can go

subject.

I have telegraphed him my 9aenaina

nd

to the office and won't repeat in this letter
good enough to ask him for them

at headquarters a

dealt with

report.
domestic

glad the

11

written him

will be
matter is being

uch interested in their

It is most important "4 t e protection of our own
situation in
aretD uild up the lergest vole.
Ns.

urns of these credits/ ossible.

The more obligations the bel-

ligerents enter

ld at future

intctp pay us

weAreVe aganit-th

protection

it is very

later demands upon us for gold

portant in dealing with this

Jay ehoul

eview

the

matter th7A Curtis and

ld correspondence and memoranda relating

\

to the Brow ice

the more

dates,

otherwise it may not be

apparent

how completely the Board has already committed itself

just

to the

principles underlying these transactions.

About increasing our acceptance
upon the comdition of the money
1/8,or even 1/4




in

market.

rate, it all depends
If we are

the case of the best bills,under the rate at

which other banks are buying bills, I do not
it.

no more than

think

1 would change

Our steady rate at this 16w level is attracting

all the time to this country.

business




To

Oct. 27, 1916.

R. H. Treman, Esq.

of outlining currency
to prepare one or two more articles along

Before doing anything in the way
legiclation, I want

the line of the one already sent you and see wh,lt the effect
is,essides that, it helps crystallize one's views to get them
down on paper.

e about the resolution and advised Jay that there was no p o ability of his
I am in

correspondence 7:ith Mr. Lo

1

z\

pressing it.

..4%

Don't worry about my progr--8 s or the

7

I

following your advice.

he

ered that I had gainid a

Be is now recommending a cart

pretty good ev iden'

AO

man's bill for ad i
ways that it woul

I

o

t me

n which I am

tor yesterday and discov-

o)urnds since I last saw him.

ount of exercise which is
or do I worry about Dr. Trese.
him so much already in wrious
sttle the debt. I will be back

as goiil-as ver, or good enough to finish the job

there soma

before u tting ent/i7ely.
out the
domestic d

i crimination in rates between foreign and
t im rather

illogical to make any difference

and there is one very strong argument for not doing so.
course, we want

to develop our

foreign

Of

banking business, but

there is always the possibility that when the war is over, we
will lose what we have gathered in London.
It would leave our
market bare of bills; in other words, the very thing we are endeavoring to develop, which is a

large volume of banking paper




To

Oct. 27, 1916.

R. H. Treman, Esq.

for which there is an immediate market, on the drop of the hat
would be indefinitely deferred in accomplishment and we would

have to start all over again with a big campaign of education
to get our domestic business on a bill basis. Why not use
our resources now when they are abundant, to stimulate the donamgest argument
velopment of this domestic business/ Th
to the drawer of a bill will be a lower rat
he has heretofore paid; so I am in

TOT 0

cerns that are willing to adopt

f interest

than

ang these con-

s w basis,

benefit of

a preferential rate.

sus weather.

We are enjoying th m s
and to-day were perfect

warm ngh to be out without a coat,

and one is always 004;r5-11,3,
just now white wit

Best regar

the

nd man

hanks for your bully letters.

Deputy Governor, Federal Reserve Bank,

Equitable Building,
New York aity.
BS/VOM

kground of the Rockies,

snow.

Faithruill-yours,

R. H. Treminsq4

Yosterday

_




November let, 1A6.
Dear Mr. Treman:

A letter just

received from Seay of Richmond advises

me that hs 'i:as adopted the scheme of imposin penalties for

deficient reserves and that last month he h d collected 000
in penalties from member banks/ that ho is h v ng no overdrafts

but that, on the contrary, his depos bz

ased from

#15,000,000 to nearly 22,000,00

Conditions in his d'
materially and I am still ve

ict

or from those in ours
1 of the wisdom of invok-

ing penalties, but
benefit
the benefit of his,vk erience

that

sion some change of\ lewe.
(

ells me that Nr. Jefferson has

lan to ask Seay to give us

matter, as it

might occa-

,

been therean

*ed. 1

1/2:letter
ter teilef ifhat

ment

for

story u

he "n ormation is already in his hands.
from Mr. Curtis on the
to

date.

French credit mat-

It is a grievous disappoint-

sue,ithe Reserve Board made a great blunder.

Mth testlesgardb, I am,
Sincerely yours,

R. H. Treman, Esq.,

Deputy Governor, Federal Reserve Bank,
Equitable Building,
New York City.

November 6th, 1916.

Dear Mr. Treman:

have yours of ectober 31st and Nove or let.
The French retter seems! to 11F:ve been
after a fashion and I

nally eettled

suppove considering the m s akee made by

both the benkers snd the Ecerd, it was the best t

a

could be

done.

Tould you mind sendin

the

submitted to the Boerd covering the
granted by the Berl,: of Co
68for German account in
rgenti

Board's ruling, which

eire most

I nots,xhat y

7

and others cry

,

t of the application
years

acceptance

credit

urpone of carrying hides

together with text of the

oyx ous to see?

--abo't the position taken by Hepburn

policy of the reserve bank in buying bills.

It

/

is just whatI1 would exe t Mr. Hepburn to do.
cle in the Sunday Times about the A. B. A.
eeferendum on the collection systen. The questions proposed by
Mr. Thralls are bad in that they seggest a further poorly coneidered alternative.

As they have already gone out, T belicve it is

too late to do anything about it.
the result of this




arise as

referendum and possibly of discussion at Waeh-

ington, as intimated

movement by an

Some temptation might

offer

in the Journal of Commerce, to head off this
on the part of the reserve banks to perform




2
R. H. Treman, Esq.

To

Nov. 6, 1916.

these services for nothing.
1

If the circulars have not gone out,

believe it might be wise to

endeavor to reach all the members

possible, to have a meetgotten together for a meeting

of the committee of twentyfive and, if

ing with

them.

eith the

4oveenors,

If they cannot be

there is danger of twelve different suggest-

ions being made from twelve different sources a d a good deal of

confusion resulting.

In no event, would I we

o see the re1\

serve banks undertake the check collectfon
seesing tne cost.
to.

It

There is

no kno

is wrong in principle,

serve Act and might well be

bneine'sj. without as-

ng-what it mi.not lead
r r

the spirit of the Re-

cd4 ued47pening the door to a

N
policy of paternalism for the con uc of which the reserve banks
would indirectly use g e
erfiii5;n
nds. I really think it is a
...,...

very dangerous preced

.
1(

About discrimi ation

ates between the new French

,

bills and tne/t7e for litile---1O-re directly ceMmercial in
ter, i do n
at any rats

charac-

arg such policy can be adopted with safety,
til t1ieJb,siness develops further. Why is the

see how

bill of the iaiv

tional Bank drawn by a French manufacturing

establishment worth any less than is the bill of the Hanover Na-

tional Bank drawn by an American ex.porter?

a distinction without a

difference.

I am rather inclined to think
election are much the best
'hank you for
interesting.

It seems to be almost

the

although
office

that Wilson's chances of

much will depend on New York State.

reports which are very full and




3
To

R. H. Treman, Esq.

Nov. 6, 1916.

Just as soon as election is over, I hope the question
of our foreign arrangements can be actively

taken up.

With kindest regards to you all, I am,
Very sincerely yours,

#. H. Treman, Esq.,
Denuty Governors Periers.7
Equitable Building,
New York City.
Bs/11T'

Penerve Dark,




3
R. H. Treman, Esq.

Nov. 6, 1916.

Just as soon as election is over, I hope the question
of our foreign arrangements can be actively taken up.
Sith kindest regards to you all, I am,
Very sincerely yours,

H. Treman, Esq.,
Deputy Governor, Pederal Reserve Bark,
Equitable Building,
New York City.

Bspcm

November 7th, 1916.
Dear Mr. Treman:

Thank you for your letters of the 2ndA and 3rd.
Both you and Mr. Jay write 1116 about he question of
do no

getting more gold by issues of notes.

ate my hearty endorsement of such a pla

3red to reiter-

ottnco,ver the rec-

ord of last year's note issue howev

t we do not'l*
gel a permanent hold on more tha a/ninirAn amount of the gold so

of the large

accumulated because

as soon ns demands for

curr

hold about 475,000,000

r and redemption of not*s

fee a mini

subs

m.
\

beyond

are issue,,

a

that most of them will

z' .----1

em a more p

a li

T

the extent that notes

1

----- ,-

1

holding

We seem able to get and

e tain mini
we may expect with certainty
e deed/in a few months. It does seem
-___

to be a needle i expense.
ly will give

realizes t

The .plan of distributing them rcre wide

rmanent circulation and make our gold
manent, so I really think it is Tort

trying.
Your views about foreign vs. domestic acceptance rates

are exactly mine and I am glad they are confirmed by the opinions

of other bankers.
I wrote

r. Jay a

little program of development work,

the result of considerable cogitation out here,and it is growing t,
in my mind that we should start an aggressive

campaign to bring

state banks into the par collection scheme.

It is a point of con-

tact which may result in augmenting our membership in the System.






To

Mr. Treman.

Nov. 7, 1915.

Yours of the 3rd crossed mine in regard to the Committee
of 25.

It is too late I think to do more than watch the situation and cooperate with Thralls. He exaggerates, in my Opinion,
the present antagonism of country bankers.

An able leader at
Kansas City could have brought about a revolt and many withdrawals.

Now that that meeting is passed, I believe the 'at is behind us.
If the Committee has a meeting, i woula

establishing cooperative relations with
the eational Bank Section.

It

hem

1 means advocate
us

*.s, we did with

makes,i4-mightyhard

them to de-

/iberately adopt a eolicy injurin
Sy tem when they have convincing evidence that the officers o the eserve banks are endeavoring
to help them and not injure them.
psychology of this situation
is simple enough efter a
le rares0e bank officers invite
co

these gentlemen to moat(

em to di o a ss plans for mutual

benefit and

show them that we are wil ng to e p within the scope of the law.
)

It ,to

\

mehae.

'ne of ro

acceptances is a fairly

full one alt

gh, as Mr -lay will tell you, Jim grown is an exceedingly careful,* d conser *tive banker. The affairs of that firm
to the'eatate ent made to us, are so conservatively handled
;:/according

that I would not feel uneasy about this line or even a larger one
any emeriency necessitated enlarging it. I am writing Jim Brown
as you suggest. On the question of lines generally, I will write
separately.
Thank you for sending the documents to Pallain.

mr. Cur-

tis has written me about the letter and I will revise it to cover the
points raised.

3To

Nov. 7, 1916.

Mr. Treman.

The other matters mentioned in your letter will be
covered in one I am writing Mr. Jay to..day or tomorrow.

Best regards to all of you.
Very sincerely yours,

R. H. Treman, Esq.,
Deputy Governor, Federal Reserve Bank,
Equitable Building,
New York City.

BS/VCM







November 7th, 1916.

Dear Mr. Treman:

The dai1y statement now snows our
bullion as distinguished from coin and I

a

erty of suggesting that in the figures/4e pu
not separate these but should show

one

Coin, Gold Certificates and Bul

what upon the SAMS

----,

now

r

banks in reporting th4 reserve
Rae:

u horizing national

o show qs one item, "Cash
e Bank."

y yours,

R. B. Treman,
Deputy Governor, Federal Reserve Bank,
Equitable Building,
New York City.
BS/VCM

iteold

0lose to the public

what we are doing, which would be

Ver

we snould

7 is particular ac-

,

in Vault and Due to F

Is

the lib-

)

count should not be so expose

principle that the Com

g of gold




November Sth, 1916.

Dear Yr. Tn____121.Lperl___

The weekly report of November 2nd contains one or two

matters to which I want

to refer briefly:

Mr. Hendricks is working on certain
discussed when he was here and one ofitneee

ugestionswhich we

re-

of Clearing House charges and our rgeLations with
House.

e inco

I certainly hope that

orke

apparent in this matter can

whole subject
Clearing

istencies now perfectIS
and eliminated.

I

won't go over them in detail for. Hendricks is thoroughly
posted.

I have been disturbed b

\

einees c

Board in ruling thet

ionalNbala

permission
drawn for

h

of Europe.

the attitude of the Reserve

s cm does not justify granting
o accent finance drafts which are

nking trade settlements by the banks

purpose

le'makes u

the tail of the kite.

We cannot es-

./
tablish a bus

ss

stor between this country nnd some other

country until the principal banks of Europe have taken the lead
by establishing such n custom.

It may be that the statute is

too restrictive to permit any other ruling, but I believe the
Reserve Bank of New York can afford to make representations to

the Board pointing out

that fsw York banks for

the fact, Isinich is a wellestablished one,

many years have drawn finance drafts on

European banks in anticipation of
grain.

our exports of cotton and

Bills of that character are recognized in both London

and Paris as being legitimate finance bills justified by our




-2-

Tremar.

Nov. P, 1916.

seasonal business and they have the highest
market.

standing in the
and
Just now, conditions ara reversed.
Inglish Conti-

nental banks 'Tian to draw biite on New York banks.

Why is it

not perfectly appropriate for the board to rule that a custom
has already for many years beer established and give the necessary rulingt

At any rate, I

ould like

to argue the question with them.

have opportunity

Please ba ir mind that

-burg's experience in these matte

,onfinad to his
lianking experience While in Ger
y
d London,
, he has not
had occasitn to deal practio ),y/wiI, hese matters from the
American standpcint eince C/41
fAis country. He may not
appreciate what an important p
'nee° finance bills have
played in our busin s with odon
Paris in past years.
The Board o ruling
he case of South America,,of
which Mr. Kenzel wrt me
course is perfectly sound.

R. H.
LS

?T

Deputy Governor, Federal deserve Bank,
iquitable 3uildihg,
New York City.

BOCU




November 8th, 1916.
Dear Mr. Treman:

his

I enclose copy of a letter I am writ g Jim Brown about
firm's acceptances, wnich I hope will ent r ly meet your views.

In case you feel that this letter is a little
explain that Ir. Brown is not only a very warm

but in some
in order

e

of these matters I h

to get his

frank, let me
nal friend,

lted him rather freely

judgement

The boys sent me a eta

eett showing the lineu

we are now holding, and

of bills

eng comments occur to me:

FourtheAtla t c Nation]. Bank, Boston, $150,000.

I know 1 ttle aboqt this bank but presume that
Aie has chi ed it and we hew> full state
men

Charleston, $50,000.

This isialfine old bank
a4

Anglo

but should not command
/rates as apply to New York prime bills.

American Bank, :7,52,'14.
This is a comparatively new nene. I checked it
up abroad if i am not mistaken and got only

a fair

report.
The line seems all ri3ht and
I presume the bills are endorsed anyway.

Brown Brothers & Company,

Covered in
Muller, Schall

separate

$2,216,588.02

letter.

Company,$36,520.41.

i am not

sure whether these bills are endorsed.
to be taken very cautiously
and only aftrr careful investigation.
It is a rilme

National City

Bank, $76,099.69

They should give us more of their bills

unless




-2To

!r. Treman.

Nov. 8, 1916.

of course, they are distributing them

to their correspondents.
Balfour, Williemson

Co.,01 6,(.95.62

Kains can give you some information about this
name.
is an English concern add a very
old and respectable one.
I know the head
of the firm in London, Sir obert Balfour,
who is .a Member of Purlia e T and stands
high in the city.
This 1 m however never
makec a statement. They h e offices in London, New iork and San Fran a co and on the
west coast of 5outdAmerica.
While I regard
the bills as absolutely goo ,
would not buy

It

them without res.-vs/1,4b1°

get satisfact
The long list of nua

Company I presume all bear end
bankers.

5ome of

thea-

only slightly known.

While I

bills drawn or endor d by Germ
(s

ordinary prud
ors for al

req'i

endor

ent unless we

a ements from them.

r

g Balfour, Williamson

ollo

//
s

of responsible banks or
ly unknown to me, others

uld not

discriminate against any

banks in South America, I

think

we have good endorsers or accept-

f that paper.
.

A. Klin s i h

ew York, $60,435.71

not mistaken, t.A.s man is in the employ of
he Bank of New York and the bills doubtless
have good endorsements.
The question arises
however, as to the character of these bills
and the legal status of the acceptors. it
might bd well to look into that situation a
little.

chants National Bank, Worcester,

$357,F30.50

This is a good line for a comparatively small bank

but I presume Aiken knows all about it and
checks it.

F.

D. V. Telfair, Paris, '4,500,000

This name is unknown to me, but I presume checks
up all right with endorsers, etc.




To

m

Nov. 8, 1916.

. Treman.

Generally speaking, the statement of foreign trade
acceptances strikes me a3 being very conservative and well
within the limit we are justified in carrying. The same ap-

plies to the list of bills of private bankers, the only special rmarks being those in my separate letter bout Brown 'Thos.
know Mr. Kenzol is watching this m tter with a great

deal of care and intelligence, but the busine s is new and it
anted. This
might be well to caution him to take
in peculiarly the ease where we a for the other r serve banks.

I return the list herein.
Very trul

R. H. Treman, Esq.,

Deputy Covernor,.Fed
Equitable Blkini]ng,
New YorkAt'i.

357V CM

B,nk,

November 14th, 1916.

Dear Ur. Treman:

I have yours of the 9th and

a

h and thank you

lacartily for all the news.

Do I understand

ours of
from)( ..._

10th that War

burg thinks that the present ruliaFf the
our banks in accepting bills

English and

banks for the purpose of

exchange!

any possibility of starti
take advantage of it.
can now be encour

would justify

mental
If there is

tice, I think we should

The mo

mportant development which

A woul

theColonial banks draw

bills on New Yor

particularly

ose

is too obvious

course, to n

seitate any argument.

I had a
we program

legisl
says
est

r

lk with Sen

at except by.

ssibility of g

House

That mean

Act must

ocated in the East. It

r Thomas last week about the

ext session of Congress and h
nanimous consent there is not the slighting any measures through the Senate and
of course, that amendments to the Reserve

e with the Reserve Board, come before the Com-

mittees of Congress and very strongly supported by the reserve

banks,be dealt with as nonpartisan legislation.

It can be

done if handled right and the only amendments I are interested

in are those having to do with our currency, concerning which
I have written separately.

That is the only matter in which

I am doing anything and to be effective, it must be dealt with
by the Governors.







-2To

Nov. 14, 1916.

Mr. Treman.

hear that Mr. Jay was laid up.
contained in your letter and previous

I am sorry to

Somtthing

ters indicates that possibly you and Mr. Jay in dealing

the

our member banks in New York are developing

their offices to discuss

ing to

matters

at I

be wi

er

those fellows to come over
wanted.

X have not bee

ed in

se past

run to train
they are

to ask

any of them,

or whoever it may be, to

while

a trifling matter, it is

nevertheless one
should be

am entirely

Reserve Bank

Vanderlip, Jack Yorgan
come to the bank,amd

he 1

n

It is a

ter of policy, but

right and you entirely wrong in a little
I really believe it would

with

habit of go-

th them.

small matter and I do not want to assume

let-

which it seems

ngs

reg

to me

This is just a

OMS.

suggestion.
dealing with the State

opportunity to
g

make our own er-

s on the que tion of neutrality and on the merits of the
to foreign accounts.

proposition

I do not
work we

ke;Jr. Gedney's plan

and

fear that

to aid in effecting a postponement

eration of more important plans for
long as we are importing
will arise as to our
that I

Depart-

have always

gold,

reserves

currency

think

I do not

it will

of consid-

legislation.

So

any real danger

and it is no exaggeration to say

pressed this matter

the other reserve banks very largely

with the

for

the

strating how weak our currency position is.

Board

and with

purpose of demon-

-3To

Mr. Treman.

Nov. 14, 1916.

/ hope you are successful in effecting a more

equita-

ble division of investments.
It is certainly

speech-making and of

desirable to shift as much of

attendance at conven

men whose names you mentioned.

It is go

education, but it might be well to review

the

ons, etc., to the

practice and good
1 at

they contem-

plate saying.

I would like to see that difference a

to smaller figures.As lo
there may

e is any difference net,

be some large

My recollection o
was that his salary
If his services
in the bank, p

nt reduced

gross.

rangement with Mr. Sailer

sod at the end of a year
at matter is of record
tes and, certainly, in my

private files.
your good letters.

Sincerely yours,

R. H.
aman
#
Deputy
ederal Reserve Bank,
Equitable Building,

New York city.
BS/VDM




November 14th, 1916.

Dear Mr. Tremane

I have recently been in correspc nee with Dr. Miller
of the Reserve Board in an effort to get lei to modify the views
on the subject of
which he expressed in his Indianap
issues or iederal reserve notes.
donee his memo andum No. 854

He has now sent me

'prepared for his associate
very definitely set out an
eroposel that the gold

rd in which his views are
1m altogether opposed to the

ch we

eive through issues of r-ites
erve

should be made to
This

ethf;r surprised to find, is based

largely upon the

!federal reserve notes reserves

for member nks

elop the note issue powers of re-

serve

make a great cantrel bank of the Fed-

s would eve

eral

serve System.

This is the most important argument

dealt

ith in his In

not

hapolis address.

In the

would be inc

1ette

I

had from him, he

states that he

to subordinate his views to those of

his asso-

ciates if he finds himself alone or substantially alone in disagreeing with them and states that he thinks this question is of

such great importance that the Reserve Board and the Governors

of the reserve banks whould at once take
and endeavor to agree upon a policy.



it up for discussion

-2To

Mr. Treman.

Nov. 14, 1916.

Of course, this means that if all the Governors are
in agreement and make strong representations to the Recerve
Board, they may be able to get practically unanimous support
from the Reserve Board to plans for amending

My 1, therefore, sugast that a let
sent to all the Governors prior to the nex

ubject

ing that each of them consider the

the Act.
be prepared and
eeting, request-

or to the next

meeting end be prepared to discuss and vote u

lowing questions which are on
Should the

the fol-

tively augges
cinbacke. se retired

Should th

of national bank notes be

rome

accelerate

otes issued against gold

Shot

lities and th, gold so obtainasset of the reserve banks?
Sh
merber h e be permitted to count Federal
tee as cash reeerves?
Should our currency laws be so amended as to vest
ci

d

r tion in

some government body or official

that the denominations of silver certificates and gold certificates could be readjusted from time to

time and thereby

become a means

of forcing more silver certificates into cir-

culation and more gold into
These questions can be elaborated

constructive program

that



to suit your taste.

should be discussed,

the meeting be asked

to

bank reserves?

If a

my suggestion would be

vote upon various methods which might

0

3
To

Nov. 14, 1916.

Mr. Treman.

be employed for perfecting a complete reform of our currency.

won't elaborate this as I think you and r. Jay already
know my views.

With kindest regards, 1 am,
Sincerely yours,

R. H. Treman, 2sq.,
l'Oputy Governor, Federal Reserve Bank,
Equitable Buil.ding,
New York City.
BS/VCM




4100 MONTVIEW 3319ULEVARD

DENVER, COLO.

OW.
November 17th,17th,

1916

Dear Mr. Treman:

I have been doing a little work with Professor Kemmerer of Princeton University in connection with their course
in Economics and last Spring arranged to assist the University
in getting the documents mentioned in the enclosed letter.
On account of my uncertain absence, it seems to me
a good deal better to have the correspondence and all the data
handled at the offic'e in New York, and I am sending the papers

to you to ask if you could have a letter prepared to each of
the institutions named, addressing it if possible, to the President, Governor or head in each case, explaining the character
of the request and enclosing with eabh one a copy of the letter
addressed to me, which gives the signatures of all the men connected with the course in Economics.
The letters'when prepared I will be very glad to sign

and I presume it will be proper to send them on the bank's regular letterhead.

'-hese letters should request that the reports

be addressed directly to the Pliny Fisk Statistical Library,
Princeton University, Princeton, N. J.
This is in the nature of a public service which I
think the 'sank can well afford to promote.
Sincerely yours,

R. H. Treman, Esq.,
Deputy Governor, Federal Reserve Bank,
Equitable Building,
New York City.




ovember 17th, n16.
Dear hr. Truman:

I have been doing a little work e h Professor Kemmerer of Princeton Univcreity in eonnection th their course
in Economica and last Spring arran
the Univcesity
in getting the documents mentlned in the enclos
bsence, it seems to me
good deal better to hay
ondence and all the data
handled at the office in New
id I am sending the papers
to you to ask if you
a
ter prepared to each of
possible, to the Pres.,.
-inctitutions
1111111111P* ".overnor
ideet,
, explaining the cbaracter
requeat a
cf
each one a copy of the letter
*
-eddreesed
give YT signatures of all the men conreel:6d
h the coeree jr Economies.
en prepared I eill be very glad to sign
and I
esure it will se proper to eend them on the bank's regular le
lead.
se letters should request that the reeorts
be addressed directly to the Pliny Fisk Statistical Library,
Princeton University, Princeton, N. J.
This is in the nature of a public service whien I
think the bank can well afford to promote.
Sincerely yours,
-

R. e. ereman, Esq.,
Deputy Governor, Federal Reserve Bank,
Equitable Buildine.
New York City.



yacivnu

November 18th, 1916.
Dear Mr. Treman:

NEW

_Yours of the 14th is just receiv
I do hope Mr. Jay gets about in
shape end is not
rash in coming out too soon.
Thank you for the cli
i belie
Glass is
an honest earnest and publi
representative, far above
the average in Washingt
o man to be at the head
ofthe Treasury. His health
he is excitable and rathAmer truculent and a
of the work of that dopartment is the()
ry sorry to see the appointmene muds
sider him an unfortunate
driving force in
em where his radical ideas
might p
dist
nee. His insistence upon an
unsou
collection plan in the earlier days of our development
caus

us all a good

must

his accept

that in

a1 of trouble and uneasiness, but I

e of

present conservative plan shows
at least he was willing to have an open mind.
the

I have already written you about the Gedney plan. The

report the boys made seeme to me all right so long as they stick
to the recommendation of the last paragraph of the second page.
It is a good scheme to have the plan all ready for operation,
but i would not think of attempting to operate it now when we
are able to deal with greenbacks an. silver certificates by a
less expensive, and for the time being, effective method.



-2To

Nov. 18, 1916.

Mr. Treman.

In answer to

what you say about finance bills, wont

you ask Mr. Kenzel to show you my letter

to him which I think

If the drafts are so

covers exactly the point you raise.

ts, they would be
ot. If they can

drawn that they can be identified with exp
covered by the

original

provisions of the

non the amendment

not be so identified and reliance is placea

anctior drafts

to the Act, then I fear the Board
of the character Mr. Gardine suggests..

I am not sure tha
bers of our Board have u
market

eo

cers of the b nk and memn other in regard to our open

rate policy mentione

The objec
course,

tes by a

to buil

fluence higher

n money rnd
ney

rates.

bank is, of

thereby in-

raising rates at the pr. sent

0

time would not

d would be at the

expense of

dred millions invested in New

our ear

needed only fifty millions

York

reserve

nly

to pay

our expenses

and div-

advancing rates now,

idea

,

thro

rig the burden f carrying sixty millions, say, of our in-

vestme

we might cer

on

be justified in

general market, but we have to expand before

t.

we can effectively

few million dolof rates, would be no

contract and to pull in the

lars w-ich would result from

this

advance

ligible in the

present expanded situation and would siply cost

us earnings.

I am sorry to disagree

Alexander, Hepburn and

and associates.



Vanderlip, not

with such

authorities as

to mention your--good self

Nov. 18, 1916.

Mr. Treman.

To

Rather than make any general advance in rates, might

it not be wiser to mark up our rates a trifle on purely finance
paper, which is what the Reserve Board wants and which would, of

course, ilve some effect as to that particular class of paper!
Pe:sonally, I doubt if I would do it at all except,as a concesg in our own Board,
sion to their feeling and possibly the f
it. might be a good plan.
I have written

Warbur, about t

5 gold certifi-

*ust as soon as
cates and will send tha.L article or publicati
in Washinggive offe
I have assurance that it is
/1

ton.
About the fisca

ncy

to do a lot of work for the g

ter, I think if we are going
ant, we ought to carry a larger
ational bank depositaries
paid outside of our own re-

proportion of the

as collecting a
serve cities and

king disbursements.
vor of huy

am in
fro

ce

more 2s, if we can get asuuran-

ersions will be promptly made.

a9hington

The mail ha been rather heavy lately so I am trying to
conde

e my letters.

to all of you.

Best rega

Faithfully yours,

R. H. Treroan, Esq.,
Deputy Governor, Federal Reserve Bank,

Equitable Building,
New York City.

lapcm




T

November 20th,

1916.

Dear Mr. Treman:

so I will send only

Monday is always a heavy mail d

a condensed reply to yours of the
he rate changes can b

16th.

than by me out here.

the one outdoubt is al right. Rates
easily be reduced at any
eft at the new levelif that

lined in my

mined on

The program is not exa

last letter b

on bills of commercial
time and those for financ
later

the ground

seems desirab

having a committee of

There

As I recently wrote
York bankers gain the impres-

ggest.

bankers meet

Warburg, we mu

ily gather from suggestions of
thi ind, that the New ork bank is obliged to ask permission
fr Washington evefl time any important matter comes up. We
1

lose the led
Person

which the
,

Reserve

Boerd wants us to de-

I would like to see advantage

the

taken of

the Reserve Board in New York from time
local bankers to our office to meet them. This

members of

to time to invite
is

only

a suggestion.

I like your letler

about the gold

was to send out two or three to your best




very much.

'!'y

thought

friends, following

-2!o

Mr. Treman.

with

them up

Nov, 20, 1916.

others if you found the rroponse favorable.

too many are sent at once, some one

be unfortunate to have

is sure to talk and it would

it get into the newspapers.

danger in advertising the

necessity for so Ing

is one of those curious suggestion which

mind of the public to develop

If

s

There is

currency.

It

etimes work on the

to panicky f5T ings.

I do not understand the

o

the

vault.

Are

they satisfactory or not?
'thank you very much

rt

ull report.

comments occurred to me a

el's memorandum:

strikes me as a

Bank of Charleston.
rate for

The following

pretty 16w

this paper.
'n lo

names of the

endorrers make t

d I have no rcason

drawer and

to doubt

the

goodness of the
This name ought to be strict-

ly 11

ed and

not

much strength to the paper.

the Bank o

Klingsmith:
would

buy the

by the Bank o

the United States as an

f he is acting

for

Is simply upon the

ew York.

guarantee of

whether Mr. Curtis is

that all questions of "consideration" are
arrangement between Klingsmith and his

endorsement

satisfied

fully covered by

the

employer.

The same remarks would apply

apply to the Klingsmith bills.



the Bank of New York, I

They give an unqualified endorsement

of the bills and I am wondering

Telfair:

endorser does

to this

that

3
To

r. Treman.

Nov. 20, 1916.

mr. Curtis' letter about Mr. Starek has not yet arrived
and naturally my curiosity is aroused.
With kind regards to you all,
Sincerely yours,

R. H. Treman, Esq.,
Deputy Governor, Federal Reserve ank,
Ne w York City.
3S/VGM







November 20, 1916.
PFRSONAL.

I have not been ver

good about le

fact is I have had a very much larger corres

ers lately but the
ndence than any

of you realized, endeavoring amon

membersof the Federal Reserve

o

without being

stir

pp the

tnsive, to

start something going in th

rency legislation and to

keep things smooth about

credits.

as you know, a certain amount

Besides that,

me spent in the open air is

necessary every day
mys

This is

I see him at least once a ,:eek

most encouraging

s me with the

when he makes me
have had
covers

thefar
Friday,

utmost care.

I

ads recently from which he dis-

hat the number of TB bugs is less than one-fifth of what

e examination last July and, as he says,

re when hemade

they

The doctor is still

.

nguid and tired.

etting very

sound of moisture in

When he examined me on

r5

lungs at all; by

moisture, he means the accumulation of secretion caused by irritation of the areas of infection.
slight infection in my

right

About a month

ago, I had a

lung caused as he thought quite nat-

rally and probably inevitably, b

coming down here from the ?ark

ore

to this altitude and to somewhat less pure air.

Soft coal smoke

-2-

To

Nov. 20, 1916.

Mr. Treman.

was a very likely cause.
then I have been tatooed

He got at it riht away and sirce
like a South Sea Islander with iodine.

The spot has entirely cleared up and the only

very unfavorable

development is an occasional digestive upt caused almost
itably by taking more food,

accustomed

pazticularly cr

inev-

rn, than I have been

to for years.

will not be able

There is always the pos
to live in the :(3w York climate a ain or possib
for long periods.

I fregu

live there

guilty in retaining my po-

in regard to your affairs

sition at the bank, and

.crifice which you are making,

when I realize the 'xtent

and that I have no right to

largely for me as
ask Of expect it

ink that a time is approaching

If you

n my enforced absence, I am

when a time lim

ly enough on
you f

I justified e.-1
At this wri

imprment, I real

any time in so advising me.

g, unless I should show unexpectedly rapid
do

not see

how it is possible to plan for

der a year from now.

of suggesting

this subject to make

Sometirres I ha;e thought

that my place be filled or, at any rate, that a per-

manent jeputy Governor be appointed night away who would be competent

to

fill my position, and then if I were able to get back

only temporarily, the Board might be willing to let me go
and finish up our foreign




arrangaannts and

then finally

abroad

retire.

To

Lgr. Treman.

Some

Nov. 20

time ago

1916.

I told Dr. Sewall that I would want from

him in

the

dition

and prospects of my complet: recovery intending to send

near future a full written report of my present con-

it to you and to the Board in Washington.
however, and saw Dr. Sewall and got

the wh

1 have not asked the doctor to prepare a ro

if you think it would

' arburg came

e story froL-3 him, so
rt.

deep obligation to you and,

well as the members of the
more consideration than

frankl

thing.

7.4 '




R.
Feder

New

reman, Esq.,
1 Reserve Bank
o k City.

I will do so

be desirable

It is unnecessary for me to repeat th

Please write me

out here,

to all

at

feel a very

the sank, as

showing me a good deal
umstances really justified.

that it is time to do some-

November 22nd, 1916.

Dear

.

Treman:

Yours of the 17th is just recei
It seems quite derirable to meet 'rburg's views about
lusion reter rerate differential. I have cor-,

luctently but feel after all that it is advise.

renewal creAte.

r..:urtis about the whole
Ae to the gener

bankers thereon and purticu

our rates, the comments of

umenthal, I would nat person-

heir vie:s.

ally be too strongl
ers want to see

#-

Am writing

All the bank-

itably employed.

all exaggerateur operations upon
think, almost w

vantage

dire

out exception

is

They

rates and I

they overlook the ultimute ade volume of business whic- can be

influenced by the maintenance of low and stable rates

this country. I believe I have written
ted this ten ousand times in the last two years, - but
and
too frequently,. ... tha, it is the strongest
es
it can
Aimftak,
elost effective influence for the establishment of dollar exfor c.mmercial bllls

AP

ear



chan?;e.

You have already found no

doubt, a

I did, that it re-

quires- a mulish disposition to st nd out against the current of
opinion.




To

Mr. 'rreman.

1916.

I have recently
had more mail than for some time past, but it does not take me
Thank you for your constant thoughtfullong to dispatch it.
Do not worry about my overworking.

ness.

Beet regards,
Sincerely yours,

R. H. Troman, Esq.,
Deputy Governor, Federal R
Equitable Building,
New York City.
BS/VCM




November 25th, 1916.

Dear Mr. Treman:

I have written you and Yr. C
suggestions for discussion at the Governor

tie about
Conference on the

11th and am now inclined to reco

meeting be

asked to consider the subject of arrangements

of

pointment

foreign corres!)ondents.

There is some d

as to the wisdom of

submitting in detail the

ngland memoranda.

ado public in respect of

imperative that not
engagemen

that matter, as

It is

Cunliffe.was not to

permit publici

without the c

ent of both parties.

see no reason,

wever, to def

discussion of the plan out-

you for managing such an ac-

.which 1

coun
is
ern

with

or the twelve reserve banks.
at the letter
at the meeti
Board

My

mimeographed and submitted to the Govwit.

a statement of the negotiations

the State Department and that all progress

possible be made in the direction of concluding arrangements
promptly between the reserve banks.

This should be done in

such a way that we are protected from any "leak" by reason of
submission of the matter to the respective Boards of Directors.
If you and the others believe that it is safe to go into the
terms of the proposed arrangement itself, I do not want to obstruct progress by suggesting

-It

that this is do. the t
not

entirely as to how that should be




2-

Mr. Treman.

To

Nov. 25, 1916.

The most important thing is to put the Reserve Board

Into motion
Department.

the State Department

sibility of any official

decision which

strongly tempted to go to Washin

personally, if the Board had
Ly old friend,

be adverse,

asson

been out here spending two

me an

11 on you at the bank

as soon as he

He is a man of very great

ability and en

h.
ly

conn

onfidence.

ticu1ar in

any

,overnment

la.

he had to 'say

s interest in
ion

discusse

of the G edit Lyon-

Government in negotiating

financial arrangements.

Fren

doing so.

the French Army and sent

over here to represent t

Us ha

the matter up

no objection to

:r.

for

ion, I would be

a

nais has recently been d

of

advance of the pos-

they are inclined to an unfavorable op

days with

State

I urge very strongly that personal unofficial

inquiry be made at

if

from the

so we can get some sort of reply

est

While we none

in the negotiation of the

thought you would enjoy hearing

bout conditions in France and particularveioping the use of dollar exchange in
nch imports from this country.

with

fully the

We have

possibility.of an arrangement with

the Bank of France along the lines of those considered in
London and he tells me that M. Pallain, he is
favorable in every way to

the

suggestion and

believes that a close arrangment
and the reserve banks would
after the conclusion

of the

between

satisfied, is
he personally

the Bank of

France

prove of great advantage to both
war.




-3To

Nov. 25, 1916.

Mr. Treman.

1 arranged a little luncheon for Wr. Masson here

when he met most of the
dously interested

in

local bankers and

they were treme n-

hearing him talk.

Won't you let me have your views 4 regard to the
suggestion for the meeting*
Sincerely yours,

R. H. Treman, Esq.,
Deputy Governor, Federal

Equitable Building,
New York City.

BS/VGM




November 25th, 1916.

Dear Ur.

Treman:

It has disturbed a good deal to

alize that

who has written me from his house, makin
has really been laid up for ten

a

ight of hie illness,

-osibly quite ill.

-

Dr. Treman must take him in hand and make h
reading him a lecture mys
The decision t
gold certificates by per

is certainly wise

Mr. Jay

by separate

I am

have.
etter.

correspondence about

ter rather than by circular,

a matter that should not be

agitated publ
Abou

only suggesti

auditors and transit men, my

son is to

urge cooperation among

$ nearly as possible absolute

-t,ne

ormity of methods in all departments and to reduce and sirs-

fy.the volame
W

statistical material now being prepared for

ington.

transit men, I would like to see them work
out some scheme looking towards progress in the matter of domestic exchange.
There is no news be. cnd what I am
separate letter.

sending you

in a

I wn taking good care of myself, following

2
Nov. 25, 1916.

Mr. Treman.

To

doctoreorders and when I say "doctors" I mean plural because
I seem to have a good many, including some right on the ground
here.

Best regards to all the boys at t e office.
Sincerely yours,

R. H. 'reman, Esq.,

Deputy Governor, Federal R

Equitable Building,
New York City.

-4




Ban k,

-2Mr. Treman.

To

Nov, 28, 1916.

If you do not agree with me in this it is locauee
heve

you

are much more charitable and, e great deal more confidence in the
good will of human nature than I have, in my experience, New
York bankers generally go to Washington when they want something.

The mere fact that they want something ar

es distrust and opposition. If these matters can be arranget through the intervention of the Reserve Bank, much
that
be avoided and
better feeling result. So I am sorry to be
d to state
frankly that I disagree with e xws expressed i our letter.
'

P,bout currency

on the subject and I am
46
seer your inquiry. I have
jr-6, d

gr:at

additional statement that a
e the Roser

carried out by the Democratic
Act legislation and be the

dminietration in the way of construetive rform. There s little more that can do from here.
have ven urged the
rd to take the matter up with the ?resident
and t to get him
put it in his message to Congress, but have
not yet h
they propoee to do about it.
IV mail fluctuates a good deal, some days, particularly
being quite heavy. Dr. Sewall. stoped to see me yesp
terday and told the that while I was doing wonderfully well, he
would be glad to h2va me take a little more rest for various
.

Voe-,
e-

compl

long letter which will anwritten you to what extent
-orsisting of recommends-

aCti en

tions repeated
program of this
party woul

Jay hes just telegraphed me




1111111iays,

-3To

Mr. Treman.

Nov. 28, 1g16.

reasons and temporarily at least I am going to reduce work.

am all right, so you do not naed to feel uneasy about me.
Many thanks for your bully letter.
Faithfully yourz,

R.

Treman,

Deputy Governor, Federal Reserve Bank,

C

Equitable Building,
New York City.
BS/VCM




I

3
To

Mr. Treman.

Nov. 28, 1416.

reasons and temporarily at least I am going to reduce work. I

am all right, co you do not naed to feel uneasy about me.
Many thanks for your bully letter.
Faithfully yourc,

Treman, Zsq.,
Deputy governor, Federal Reserve Bank,
Equitable Building,

R.

New York City.
BS/VCM




00°'




November 29th, 1916.

)ear r. Troman:

Cur exteneive correspondence cn o subject will have
mede clear to you my vieee about theee fore n credits under

e aoo.t proposed action
have sent as
by our Board and asks for telegraphic reply whie

differential rate.

Mr. Kenzel

por enclosed confirmation.

so as to discusx another

feature of the matter.
1 have been consc

Boerd taking a very

the possibility of the Reserve
about theee renewal credits
by Warburg in a recent

and of the furtil

notify national banks that rewere ultra viree. Besides

letter that the
volving credito

hat I have been exceedingly
that,
,tiff-necked in my attitude toeards the Board on these
riei
nett s whenever we 'agreed. M.ehing, therefore, to avoid
esult in ceme radical ruling and not wishe which migh
OM 1

ing th

eerve

'

to feel that I was trying to unduly influm..

ence either the NeW York Bank or the views of the members of tie:

Roe.rd themeelves I reluctantly recommended establiening a differential between regularbills and those issued under renewal

credits in order to convince the Board that 1 did not telne ihe
position that I was always right and they eere always wrong.

Jr. Treman.

Nov. 28, 1916.

My personal view is that a differential between one
bill accepted by a national bank and another bill accepted by
the same b,ank in an anomalous treatment to accord to that

bank and would lead to untold difficulties.

Discrimination of

that character should he applied when any given bank is accepting excessive amounts of bills and if we
ht a
ank, such
as the Bar. of C,ommeree, was

accepting

excessive am

t of

french finance bills, then cur policy uld be diF:crim ite
against all bill* accepted by the National '3an: of C,o _roe,
rather than some oC the parti
r bll.0 ich
nnd accepted.
I h']ve further f
that it ic u e reaonable for
the Reserve Board, which is
responsible, to

be oatisfied at all'an k
invests for ihe whole
as to the amonnt of p
amount of any one eines
erence for any psrticul

of New York which

a conservative course

purchaser, particularly the
ch might indicate Undue pref-

business or bills of any oar-

.tution or class of institutions.

rate if we decide to establish it
ouLht

'o convi

the Bco.:.rd that we res)ect its views and are

not pig-headed a

t thes.e mattrs, 30 reluctantly I wrote you
recently, urging is change in our policy. I would not be
honest, if i aid not tell you frankly that i personally do not
think it a
one' and that it ill prove to be impracticable,
but it can he better oroven by experience tnan by letter writing.

If I am wrong, I would naturally like to



e shown.

Pr. reman.

Nov. 28, 1916.

Since sending the telegram enclosed, the Denver papers
. ve an account of an announcement by the Reserve Board in re-

*- gard to these foreign credits. This is not a matter in which
I feel that I am justified in attempting anything ih the nature

of a protest.

The Tleard is ot liberty,
oursa, to express
ite views on any metter, but candidly I do
entertain their
views on this subject anci believe at this neunoement is the
Torst is-take that could he made at thie time.
own conceplion of the country's bolicy
ally differen from theirs.
Instead of ,impoeing reetrai
ncial transactions which
are recersery nnd invite
eeent conditions of cur ex
port trade, I think the effort
the Reserve :-..00rd and of the
Reserve 93 ke, boll
advice and influence,
should be to dev
the this commerce and the
financial trans,
m it will not later prove
aemenace.
by fortifying the reserve banks
and by
lation. Such a course woul-, be

1
-

410

)
1

const
evid
which

ctive rather t an repressive and I greatly deplore tis
is timidity in the face of u situation
uires a re y bold an,.1 _constructive policy.

would be right in meking thi announcer.:Ient
if they thought that lot:mete belligerent governments would not
'

.

be olid. They say in their stalement that they have no :i.teh
thought but the mere feet of making the statement discloses that'

it ilethere, elthough possibly latent.




al* ....I NI.

ix'. Treman.

Nov. 23, 1916.

411c.

Issues of Treasury bills by-:rance and England 4;e are
rf
n"concerned with but ac general eervisors of member banks
,
_At may 3assib1y be ecme concern of the Reserve Board or certain

,

-r5 2y of -the Comptroller's.

ir

hope the matter passes off wit t difficulty, but
have
very muuh 'fear it will ivet a disastrous eno ebressing effect.
A th war m regai,is,
mP
Sincerely yours,

lif
it. H. Treman,
Deputy Covernor, iederal Reser%
Equitable Building
I4ew York




December 2nd, 1916.

Dear Mr. Treman:

This is answering yours of the

The action of

the Board

in

the ma

er of acceptances

hat

of course pleases me for two reasol

ing my suggestions about a differential,
to follow a course which I

notwithstandhas seen fit

the B.

but state

h7'reslly ap-

peals to me as the best;

that you and your associates

do not feel that you must

influenced

view I have in these matters
fairs.

distance from

I am sur

iscussion

that I suggest

of ret
real

seat of at-

about gold recently

circular to member banks

e co

ing it

the

detached

ht in Washington.

There

throughout

the

by

We have no means

ositing gold.

until

involve expep

that o r small denomi

issue is made right and it will
without much gain, except to the extent
lion notes are carried

in

the

pockets

of

the p

e glad to learn further developments in the
Starek matter as any change would make it desirable for us to
submit recommendations concerning a successor.

Best regards and thanks for all
Sincerely yours,

R. R. Treman, Esq.,
Governor, Pederal Reserve Bank,


l'eputy


the

ne s.

December 6th, 1916.

Dear Er. Treman:

Replying to yours of the 26th, I am

lad the Board
.hat it may be

made no change in rates, but realize of cours

forced on us

and certainly the situat en
A change in

careful watching.

is on

hat will bear

a greater

our rates would h

effect sentimentally than actua
ways have this in mind.

hope the Boa

will al-

Curtis separately on

this subject.

would not be at all a
bills and as our hol
We are finally rea

re our policy will have

some inporte.nce in

uently, no change would

eume that endorsements are not

out the line

but ohl

warrants run off.

,urting effect.

be desirable

shnwn f

to accumulating more

many of the b

is

following

the

ax-ant

our books and

Tr

held such as Lee,

Higginson,

ments occur to me:
Com any.:

This is

the

largest

beyonli the present amount.

in this

going much

On the other hand, many of the bills

line may be already endorsed,in which case I

should consider the line fairly moderate.




line on

in an emergency, in which case we would

only get endorsed bills, I see no good reason for

included

et al,

-2To

Mr.

Dec. 6, 1916.

Treman.

Ladenburg1, Thalmann:

I judge these bills

b(ar member

bank endorsements.

These also I suppose bear meuberbank

Lazard Freres:
endorsements.

Muller, Schall and Company:

This

robably endorsed

and I have already suggested great caution of t
Whitnay Centre

t bill.

bank should not

National

n former

get any such rates as the best tew York banks enjo
years, the Whitney Central has b.

eaviest

th

and while

national system

bovro

r in the

it

t is perfectly good,
ank of even equal

is not entitled to the same ra

ize

in New YorkCCity would
The Third

I know nothing

ield:

about this name.

Third National of Spring-

All the n

endorsed bills and if they were

field would
not endo
hold of

certainly.

would not take

even as much es we now

Co., Hadden and Tata.

lfour, William

mm not well e ough informed in regard to

rican banks to be able

Sout}

to

the standing

express an opin-

ion end certainly would not attempt to do so from here without
having available all the credit information in our files.
would not be fair either to the brIk or to the
ceptors of these bills.




information

and ac-

This is the time, however, to watch

these credits with the meet
avenue of

endorsers

It

discriminating care and I hope

in connection with the

every

various obligors

Mr. Treman.

Dec. 6, 1916.

will be will be considered and the lines watched very carefully
by the me.n in charge.

Would you mind askihg'Mr. Kenzel to ad-

vise me of the status of the bills endorsed by-those.South American banks, as well as those accepted by vari e New York imThe list is getting so long that feel very much
porters!
out of date as to my own information..
fors.
'Thank you very much for a
Sincerely yours,

R. H. Treman, Esq.,

Deputy Governor, Fed

Equitable Buildin
New York City.

BS/VOY




December 6th

1916.

Dear M. Treman:
Replying to yours of the 29th.
I am very glad to hear of Mi.. Jay's

provement and

also pleased that energetic steps ar
the state banks.

In that matter

get after

ould repeat t

ggest-

ion in my former letter that

sonal acquaintance of

officers of state banks can

e basis of correspond-

ence with them, it will be foun

effective than., either

general circulars or

s of the banks where

no personal relati

ors°

undoubtedly necess

l visits, however, are

time has come to get after

all thc state bank
t renewal.drafts.
thihk t
by our

I do not

lines are excessive as shown by the statement, either
44

ly the

k or the othe
judge o

eserve banks, but really that is hardhis matter.

We should base our consid-

40.4 the character and responsibility of the accentors.

7Ye hold, for instance, only $500,000 drawn under the

de Neuflize credit.

These bills might all be accepted by, say,

one of the smaller banks like the Bank of New York and we might
hold

in

addition two or three millions of their bills by the

same acceptor and the basis of discrimination would not be the
character of this particular $500,000 of bills, but the total



2
Te

Ur. Treman.

Dec. 6, 1:116.

line of the Bank of Nev York.

This illustrates the difficulty

of discrimination and between bills of this character and any
other character.

I am writing separately regarding the lines

shown it Mr. Kenzel's statement sent me with
About gold certificates, it is a go
the stream coming in but I doubt if it

Faith full

R. H. Treman, Esq.,
Deputy Governor, F
Equitable Buildi

New York City.
BS/VCM




thing to have

will be t all effective

until the Act is amended.

Thank you very much for

sure of the 28th.

our letter.




December 7th, 1916.

Dear

r. Treman:

Some tiMe ago I wrote Dr. Willis a
welcome on his return from the Philippines an

ttle letter of
aked him for

e, he sends

come account of his doings out ther
which I hnve

me the enclosed letter and papers

ed as

per copy of leter enclosed.
essons why Federsl Re-

rihere seem to be

to form a connection with

serve MJnks should make every

ny as these institu-

the Philippine nation

tions are fiscal

governments and have

connections with tha

a natural associa on through the
eral Government.

waver, which can be dealt

ny detail from Denver and I am taking the liberty
of son rig you the car pondence with the suggestion that
you ma
eel willing o discuss the subject personally with
with i

Reserve Board when you are in WaE-h-

Dr. Willi

ington next week.

If this 1et,er should reach thg

office after you

have left for Washington, possibly yc:ur secretary will be

good enough to forward it with the

enclosures.

Faithfully yours,

R. H. Treman, Esq.,
Deputy Governor, Fede al Reserve
Equitable Building,
New York City.

Bank,




December 6th, 1916.

Dear Mr. Treman:

The enclosed statement'which I
is the

one given

become

misle-ding in that it

as now

to the press,

on both sides of the vani
to the conclusion that
net figure of t70,641.84 m
dicating an actu
Don't you thin

to give theils
s and might lead

osing

D

E

. Treman, Esq.
ty Governor,

table Build'
ark Cit

eral

money.

The

11 be construed as in-

rried as an asset.
into etter shape fur

the newspaper

.

derstand

Reserve Bank.




December 8th, 1916.

Dear Mr. Treman:
....semeR.M.ferr

I am enclosing a letter just reeei
-nrice Lewandowski, one of the directors
Comptoir

and

from Monsieur

nagers of the

ational d'Escompte, which

the second

largest and most important joint

bank in Fran

andowski is an old friend who

years was second man

in charge of the foreign b
a man named Ulman, was regarde

Lew-

at bank.

His senior,

eying pro-German sympathies

when the aar broke 0

fficult experiences was

obliged to retire
Copy of

tter enclosed, details cer-

tam n information w
and whic
does n

sed that you will send him

ope you

sitate to do quite fully.

seem al4ogeth r wise for me to conduct a correspondence

of this sort when away
n general
frequently
cies.

It

om the office.

t me repeat observations which have been
ondon on this subject of foreign bank agen-

While some of the English bankers have at times claimed

that their busidess was taken away from them to some extent as
a result of the liberality of the English law in permitting foreign banks to establish themselves in London, I think the soundest opinion in London is altogether faverable to this development on the ground that it brings just so much grist to the English banking mill.

There are no less than 150 foreign bank




To

Mr. Treman.

Dec. 8, 1916.

ggsncies in the City of London.

They do an immense business

and they, together with the English, Colonial and foreign banks,
furnish the London discount market with the great bulk of bills
for which that

market is

est view of this

famous.

subject,

Taking,

ther fore,

I would personally d

power to facilitate such a first class foreign

the broad-

everything in my
k as this one

in establishing itself in New Yirk.
During the past four years, the French ji

banks have been very severely cr
banking.

stock

for doing a 1.

The Credit Lyonnai

of bad

he largest and strong-

est, entirely escaped this on

d its management has al-

ways been above reproach.

r National d'Escompte was

subjected to some or

y had made bad loans

and investments so

ch as because

system of branches,

it was claimed,

fied and som
in Paris

thei

sore rapidly than was justinot profitable.

carrying in ex

bilities

Under the s

When I was

their figs which disclosed that

wandowski show

they wer

French ban

ey had established their

se of 50

of reserve

of sll their lia-

ter of the French moratorium, all the
d house and aside from the hazards of war,

aste c

I should say that as a whole they are in better condition

than

they have been for some years.
With this general statement, I hope you will feel willing to write Lewandowski very fully and send him all the data he
asked for.
Faithfully yours,

R. H. Treman, Esq.,
Fed(ral Reserve Bank,
New York City.




December 11th, 1916.

Dear Mr. Treman:

This is my first chance to answer y.r
5th and 6th which,

letters of the

however, were pettly answerd by my longhand

letter of yesterday.

The rate situation it se

and if souleof the big New

to me was h

id

Yor

I think we could view the s

ber of times about Clearing

House settlements and

ject

do some rediscouling,

equanimity.

I have written fully

fully.

perfectly

ffice know my views quite

You will

an open mind on the sub-

and probably

ell.

arranged as soon a

The matter

should be

Clearing House will agree to

it.

About our rates for acceptances, I doubt if it would be
wise t

a large

advance it morortfolio

th

an a fraction

before

the bank accumulates

at. present provided, of course, that we do
special lines which might become embarrassing.

not get

My recommendation

about

a deferential was, of course, made in def

erence to the wishes of the Board, bu

my confidtrce in their judge-

ment has had a sad jolt lately on account of that wretched annour teement of theirs.

As to yours of the 6th, I agree entirely with yumbers
1 and 2.

As to number 3, I really feel that you and the others




-2-

To

Lr. Treman.

Dec. 11, 1916.

have greatly exaggerated the importance of my connection with
the bank.

As to number 4, no one could have handled th,

sit-

ualion with greater tact and skill than you have and your willingness to continue takes a great load off o

niy mind.

I am not back there by next Summer or early

1, the bank

If

should not wait for my any longer.
bank, it

I am satisfied that if I

must be under some arrangement by which 1 need not

the

long hours or take as much war

I have done in the past

and that means, of course,

the bank and a permanent

deputy Governor, who could ste

shoes at any minute,

either temporarily or

Aiken were availeble,

that would be a f

ccount should you and

the others feel t

f the bank should b3t in any

way sacrificed in

overy or take any chances as

to my retu

There are four things which I am anxious to see accomplishe

and which I wou

is the

elusion of a

satisfact

make every sacrifice to promote.

One

foreign arrangements6 another is a more
of the domestic exchange and collection

system, the third is to see the Reserve System

successfully meet

the after-war crisis and the fourth is to see some sensible,
to-date currency

legislation

adopted by Congress.

important things ahead of us just now and if it is worth while
for me to continue my connection with the bank although a little




To

Dec. 11, 1916.

Mr. Treman.

less actively than formerly, my work might be so arranged that

I could give more particular attention to some of these matters,
as you suggest, and be relieved of the bank detail. in any
event, I am entirely in the hands of the dire tors to stay or
go as they think the interests of the bank rq ire and am more
than grateful to you and to them for the unus 1 consideration
which has already been shown.
With warmest regards,

Sincerely

R. H. Treman, Esq.,

Deputy Governor, F

Equitable Buildi
New YorLk City.

BS/VCM

December 12th, 1916.

Dear Mr. Treman:

Thank you for yours of the 7th.
sfactory and

The result of the election ie most

it is far

while Mr. Carlton would have made n
better for the bank to have

14.

1.

continue

-Landing

riot :\

that it means a real sacrifice
a the report you sent

I am tremendously

New York.

of discounts made for member ban

me and it begins

of business in one da

our

as been admira. y handled and the fact of

willingness und

meet the r
materia
as 1 re

such

onditia

as those of last week to

ers in a big way und without

emonts

hange of rate will have a greater effect sentimentally
ntly suggested

t,

han actually.

tions systems there are, the more com-

he more col

petition

to

a real bank.

look as though the
think the situatio

t16,000,000

;

the more competition, the lower the

charges, and I think every move such as that

inaugurated by

Riohards and rcjougal will eventually make our work emsier. It
does not worry me a particle.

I am without particulars so far about the decision of
the Board in re foreign




banking relations

and as soon

as they




-2¶o

Mr. Treman.

Dec. 12, 1916.

are received, will prepare something to submit for your consideration. The matter really should be handled by a visit to
London and my mind now strongly inclines to making a temporary

Bank of Priglend simply to get the machinery
organized and explain to them that more exte ve arrangements
arrangement with the

will be completed

later by a personal visit.

Was anything done to bring

'le Coned_ tc of 25 tankers

into relatione with the Governors and mcmhers

Board:

If that could be done,

robbed of its dangers.

o

the movement

You

Reserve
d be

sent a suggestion

*along that line some months

What McDougal said in

me an extract, is tr

ddress, of which you sent
ere

much the s. me thin
coming from the pe
War

R. M. Tr
Deputy Go

Equitable

Yeq.

New York City.
BS/VCM

ral Reserve Bank,

sey ane you will find
lett monthly circular




December 13th, 1916.

:ir Yr. Treman:

For some time, I have been debatin
letter in regard to our arrangements abroad a

of

riting you this

the

developments

the last few days seem now to ma

copy is enclosed in case you th:

A spare
desirable to

it to

r. Warburg.

am advised by

and letter from Mr. Curtis tha
to Mr. Jay

had stated verbally

d complete our arrahgebusi

ments as we may m

es under such arrange-

authority from the Reserve

Board.

ly to a formal application

made by

ank to

.eserve Board in accord!ince with

s of the statute, requesting their consent to
of a corresp

pointm
all sat

Harding

that we m

ments in England b

the t

om Yr. Jay and a telegram

factory to

briefly th

the ap-

ent in London, and naturally is not at
for a number of reasons.

Let me review

ces leading up to the preEent situation:

After our Board authorized my trip to Europe and after
advising the Federal ReserveBoard informally of my intention of
going and the object of the trip, I finally returned home in April
and submitted to our Board of Directors and to the Reserve Board
a formal and tentative plan for the establishment of relations




To

Mr. 'reman.

Dec. 13, 1916.

with the ' ank of England.

shortly following that, a formal

written request was submitted to the reserve Board for its consent

Bank of

to the appointment of the

England as our correspondent and

for its approval of a plan by which other res rve banks could par-

ticipate with us

upon equal terms in our tran

Bank of England.

ctions threugh the

This matter has been formcl

Board for seven and a half months,

before the Reserve
ubject of volumes

of correspondence and of personal discussion, has

n submitted

to the State Department and f

r all this de ay, the Board

says informally in

ritten reply to our appli-

effect,

cation,that we may complete

ements, but must not do any

business.

You can i

o which we will be sub-

jected if we now c
and

ements with the Bank of

then are obiig

r'ngland

that the Reserve Board has aps unwilling that we should do

any bun

ss with them for the present.
have given

have co

good deal of

thought to

this matter and

to the concl a on that it is time that a definite and

mitted to the Board for its consent or its
disapproval of our application
correspondent.

to appoint

the Bank of England our

Any consent with a string

attached to it, ar

present one, and any informal consent in reply
cation impresses me as being

much less than

to

our formal appli-

the Reserve

hew York should expect from the Reserve Board.

Bank of

To

Dec. 13, 1916.

Mr. "-reman.

After all, the principle underlying this matter is a
The Board is authorized by the statute to give or

simple one.

withhold consent.

It is not authorized to conduct the business,

what bills

to determine

we shall byy or how much money we shall
cted to do more

use in investing in bills abroad, nor is it e

tem as a whole.

than generally supervise the operation of the
'he delay

in saying "yes"

or "no" to our applic

placed me in a position of a

good deasent
f a successful

fear has jeopardized the possibilit

elusion

ther to do with negotia-

tem. Personally, I would hav

might

and

rice to our banking sys-

of an arrangement of unpreceden

tions abroad which

ion has already

her embarrassment and crit-

result

the Federal Reserve Bank

icism if the Board sho

no to speak, as seems

Of New York must do
to be indicated by

aling my true feeling in this

There is

g or from the Reserve Board.

om you

matter eit
am griev

ly disappointed to have met with

apparent

developed in

jected t

important

matter

resistance which has

and to have been sub-

e criticism .;used by this unfortunate delay.

4401,00

of a conference

ly appreciate being advised of the result

on this subject between yourself, Mr. Jay and

Mr. Curtis.
Sincerely yours,

R. H. Treman,



the

Deputy Governor,

Federal
Eauitable Building,

Reserve

Bank,

I




December 13th, 1916.

Dear Mr. Treman:
It has be' n whispered to me that so

roe urc

in Washington were stirred up at our
when money jumped up.

On no account allow your

The action of the bank

not a supervising body 250

fly right, was the strong

in doing just what it did do was

disappointed had any

policy and I would

ing to watch closely under

other course been

of any one house or bank

such conditions

hand

it

or sug

refully considered in all pur-

at t
'I would

joyed being there to have had a

the episode an

particularly to answer any criticisms

stions from Wa

ington, which I am sure were not justi-

e.

fied.

Faithfully yours,

R. H. Treman, Esq.,
Federal Reserve Bank,
Equitable Building,
New York City.
gb

BS/VCM

o be in

ge in these matters and

Reserve Bank of New York mus

chases

ses of bills

Federal

the least degree disturbed by

and I assume

of our friends




1-*
Denver, Colorado,
December 15, 1916.

R. H. Troman, Esq.,
Federal Reserve 3ank,
New York City.

Dear Mr. Treman:

Thanks for yours of the 11th from Waenington vintorests
me very much.

By now you will

relations. Of course I am kee
you or Warburg before prenari

1 wish yo'i or Curtis
ments in Washington

importance with

B9/CO

, but await reply from

rs, etc.
a full report of develop°mos of increasing

I hope your meeting is in

ever; way a succee
With

y letter about ur foreign

ega

""11.

Denver, Colorado,

December 15, 1916.

R. H. Troman,
Federal Reserve 3ank,
New York City.
Dear Mr. Treman:

Thanks for yours of the 11th
me very much.

By now you will

relations. Of course 1. am kee

you or Warburg before prepari
1 wish yo,:, or Curtis

ments in Washington
importance with
every wa-! a succes

B3/CO

-




from Wastiington

,

y letter about

interests
r foreign

, but await renly from

re, etc.
a full report of developones of increasing
1 hope your meeting is in




Augusta, Ga.,

Decembr 19, 1916.

Dear Mr. Treman:-

In leisure hours of which I have a few down
T sometimes think of that plan of parring P.7.:Rank

here,

drafts which the Richmond and other banks want.

Yow does

this stri"e you as a summary of the situation?
A year or more ago the F. R.Tlanks established a

transfer system for

Under

the

use and convenience of member banks.

this system and through the medium of the G. S. Fund,

the F. P. Banks undertook to transfer funds between one
another by mail without charge and by wire at a small charge.

The theory was that funds which a memher bank had in, say,
Richmond, could thus be transferred on its order to the 7.
Ranks of Dallas for account of any of the Da4las
banks,

The

member

G. S. Fund did away with interdistrict shipments

of currency and therefore with the expense of making transfers.

This savinp was handed on to the members in the

shape of free mail transfers.
This was sound and a proper service to render.
But, it is claimed, the members have not used it

much because it is cumersome and
their own checks.

they

would much rather draw

That can he arranged, I believe, rith

soundness and safety, if we follow the principles laid dorm
in the transfer system, which are,
1.
The member hank in Raleigh has the funds in
the F. P. Bank at Richmond at the time the order to
transfer reaches the latter.




The P. R.Bak of Dallas makes the transfer only
on the order of the P.P. Rank of Pichmond.
It is a transfer of funds from one district

to another specifieddistrict.

The F. R. Rank of Richmond owes (and should

pay) the F. P. Bank of Dallas the day Dallas credits
the funds.

As this is ddine for the convenience of its
members and without cost to iyself the 7.P. system
make no charge.

The same thing can he done as follows:

The Paleigh member bank draws its draft on
thp F. P. Rank of Richmond to the order of Rotan (lrocery
Co., Waco, payable at F. P. Rank of Dallas.
The Paleigh Bank advises the 7. P. Bank of
Pichmond the particulars of the draft, the amount of
which, on receipt of such advice, the P. P. Rank of
Richmond charges to Paleigh's account.
The F. P. Rank of Picbmond writes or if necessary wires the F. P. Rank of Dallas Sufficient advice
of particulars of draft to justify the latter in paying
it when presented.
The P. P. Rank of Dallas declines to receive
it if it bears the endorsement of any bank outside the

district.

The F. F. Rank of Richmond owes( and should
pay) the P. P. Bank of Dallas the day Dallas pays the
draft.

As this is done for the convenience of its
lembers, and without cost to itself, the P.R. System
(Possibly it might charge the drawmakes no charge.
ing bank the cost of telegraphing the paying 7. T. Rank,
but those banks which are so anxious to grant this facility co their members !ray be willing to absorb the
charge.
With proper coding it ought not to cost more
per annum than an extra clerk or two Which they wluld
not hesitate to employ for the convenience of membOrs.
But T believe it is sound to charge the member banks
the telegraphic cost, if any.)
Seay's plan to draw checks and par Chem all over the
:ountry of course goes too far and T believe has no chance
of acceptance.

is suggestion to call it " P.P. Rank Exch-




3.

meaning far broader than plan which I have outlined justifies.

What he wants to do

is to rive Raleigh the right to

draw, through Richmond, on New York and send the draft w to

Taco to pay a debt there.

This simply incrPares the volume

of checks in transit, and vitiates that important principle
which someone wrote into the collection plan, namely, that
checks passing through the collection system must ro directly
to the district where they are payable in order to assure
their conversion into cash as promptly as possible.

That Raleigh is entitled to do, and the P.P. System
should help him do

it,

is to pay his debt in the Dallas Dis-

trict as cheaply as possible.

This should be done by a draft

payable at Dallas, not at New York.

Not only does the draft

payable at New York postpone for two or three days the final
conversion into cash, but the transfer of the money takes a
triangular course, Richmond - Ne': York - Dallas, instead of

a direct course, Richmond - Dallas.

trachanre" has a much broader si7nificance than the
limited function which these transfer checks should perform.
The surrestions which have been made that the 7. P. Rank
of Richmond should "ruaranten" the paying v. P. Rank, and
that the ambunt of such drafts a member bank should draw r4411

should not exceed at any one time ten percent of its capital
and surplus are both

.7tire indications of the fundamental un-

soundness of the 'Dian.

They mean, first that the paying

P. P. Bank ddesnot know whether the drafts are good and there-

fore cannot trust the F. R. Bank of Richmond surely to pay
them; and second, that the F. P. Rank of Richmond cannot trust




its member banks, but will take a chance on them up to ten

per cent of their capital and surplus.
The

77.

P.

System ourht to have nothinp to do

wit"

funds until they are on deposit ith it. Then
once deposited it should transfer them wherever directed no
teansferrinp

matter

.

what they amount to.

It ha v already .apreed to do so

under the transfer system. Tf a member bank wishes to draw
its drafts apainst uncolected--or even undeposited-- funds,
a ripht to do SO and to send it where it wiebes, but
it
no responsibility attaches to the F. P. System for thP payment of such a draft, which ir everywhere received for col-

lection, as is proper.
Another thinri I have an impression, perhaps incorrect,
at eoine of these F. P. Tianke want to make an exchanre charre
to their member banks who draw those drafts, just as they did
in the early days of the system when 7. P. 'lank drafts were
parred for about six month.. I believe that such a charpe
when the

funds are actually on deposit in

-flank and when we have the q. S. 7undt

wronr and should not be pernitted.

the

convenience of member banks.

charpe

7e
to operate,., L. all
is

We should do this for

Thpre at liberty to

the public exchanre as lonP as the

Perhaps I

the Piebmond

Pet unduly concerned about

public will pay it.

this matter.

T'ut

it took a year of almost constant discussion to p,tittl-.,P collection system astablished on a sound basis, and T

feel That

this iv nearly as important as the collection system, and we
should try just as hard to pet it ripht.

If it is estab-

lished on a wrong basis it is sure to throw our dwieetic

5

//




exchanges all out of gear the first time the system runs into

a strain.
I am sending a copy of this to Clovernor Strong to see
what his comments are and should appreciate having yours.
They will make iteresting reading for a lonely winter's eve.
With best repards, and hoping that you and all your
family will have a very happy Christmas, I am,
Sincerely yours,
j.

L$72.61F11976,1




Colorado,

lnber 20, 1915.

ear '

?reman:

7.1ank you ver7 muc'l for yours of the 15th
about amendments.

drafts of all of them tnd I
On each one.

These will be

is all Warburg wanted from me.

Mr. R
Tremont
Fede 11 Reserve Bank,
New Y

BS/CC

k City.

for the report

I was delighted t

Avernors' views, as Warburg has

-

,

record of the

confidentiall

ailed

pare a little memorandum

f oersonal views, ahich




Denver, Colorado,
December 1,0, 1916.

Dear Mr. Trel,Isn:

Thank you for yours of the 15th. It will

otndy to reply, both in regard to the abkm of
and Governor Seay's report, so I will e or an an

some little
veekly statement

until I have

been over them carefully.
They are much more carol

York - it dribbles a bit ev
long.

I rejoice to get tood news

graph, for I was f
which would be a

Best rez;ards

R. H.
Feder
Ilea' York

BS/CC

siren, Esq.,
serve Bank

with snow than in New

but does not stay very

ectly from gr. Jay by telehere to keep me company,




Denver, Colorado,
December 21, 1916.
= S.

Dear Mr. Treman:

Reading over the last weekly report,

the bA..,

reports to the

directors and some of your recent letters suggest
mind which I take the liberty of writi

you will, no

doubt, pass them along the line if
1.

gestions appe:

te to December 31st

EARNINGS ..U1D DIVIDENDS

dividend requirements to

shows ii283,000 available for

June 30, 1915

- you:

11 organization expense items

2£30,000, after dedu

except cost of unused

In view of our

situati.

effort to clean up kvidends to June
is considered insuf

I

Jovernin should make every
we

th and if the margin of ;;;2600

ot be improper of course to reduce

Equipment

Furniture

,

charge

next year.

writin

ou sceetime. ag

I

7 ,ci,43,000, leaving say 420,000 to

this connection, however, you will recall my
,esting the real importance for purposes

, etc., that on, uniformi aeserve Banks should
all Federal

of compa

deal with th

organization expense uniformly.

up and disposed of with the Reserve Board?

iias this taken

It will effect our own

policy as to dividends.
2.

SAWIES.

the usfle3 committee.

This matter is no doubt having the attention of

The officers and clerks have worked with such un-

exampled loyalty and self-sacrifice and there is such an unquestioned
increase in expenses for all of them, that 1 think they should receive




2.

To - Mr. Treman.

December 21, 1916.

every consideration in readjustments for the New Year.
REPORTS TO DIRMTCES.

Z.

The character of our bank makes it

rig record of mat-

highly desirable to preserve a permanent and e

the directors.

tors submitted to

out the data upon Which the

The Minute boo

resolutions

therefore, take the liberty of suggest

a,; that arra

inscription on

1915.

the

Ina

or binding, with

the back and with an

from the organization of

rac ion of 1914

firs

11 be

that you and

statements with them
Ja:: arrange

a

in

great confidence,

policy for the New Year and

tly to bring our statement

.

the private

anuary let. As Ur. Jay and I dis-

se their book
e matter of th

and all of

rather fragmentary.

Almost all of

-2

suitable

es which will make the contents

Of course t

J. P. Morgan

at each

node corresponding to our

readily accessible.
the bank,

I,

s be made,

h is now submi

in the blue binders as

financial year, bound

with-

f the Be-are based.

if not already done, to have the

meeting

incomplete

files up to date.

and Brown Brothers & Co. made verbal

statements

which were not even reduced to writing by Mr. Jay and myself for our
own satisfaction.

At the proper time it

few words with Jack Morgan and Jim

might be desirable to have a

Brown to ascertain what, if any,

important changes have transpired in their affairs.
5.

NEELLY STATEUEUT FOR THE PRESS.

closed with yours of the 15th,
a grouping of

I return the figures en-

together. with a pencil

the items, which, aline I 6C, not

=MO. suggesting

finall

recommend us-




3.

December 21, 1916.

To - Mx. Treman.

tug, will offer opportunity for discussion by the officers and,
possibly, directors.

You will observe that the difference between

4 will show our net earnings with fair

items 1

ccuracy; also that

it will eliminate item #3 entirely as the statei

will balance

without forcing a differendtentry of this charact
e entirely

If the policy of writing off or
is adopted, item #5 will be elimina
t th

if you or the others think

tern of uncollected de-

ular objection to doing so

posits should be published,

suggestion on the ground that

and if you see objection to the
it

exposes

in

mind that pract

t detail, please bear

the affairs

be obtained by anyone

taking the trouble
6.

ES.

CHICKS O.

deal of thought.

t Which

on this s

ANNUAL REPORT.
freque,,

get thi.

absence

for mee

,ut on time.

delay can b.,

:,.

I am writing separately

Mr. Jay's
rs, etc.,

illness
will

and the necessity for

undoubtedly make it hard to

was very late last year and I hope a similar
his year by dividing up the work of its prepara-

tion.

If there is time to send me a draft of it, I would appreciate

seeing

it, but not at the expense of delay.
Please don't think 1 am worrying you aith these matters.

organization like ours needs someone whose job it is to do
follow up matters

An

nothing but

and these are everyone of them of that category, so
',-

I hope you will keep the pressure on and

get

thon off the unfinished

business list.

Yours faithfully,
BS/CC




Denver, Colorado,
December 21, 1916.

Dear Ur. Treman:

write a letter

This lest move towards neace inspires me

which I have long been considering

end ahich 1 d

th apologies for

making sugestions of the character t

erience and parthere handled

ticularly after the magnificent way in which you and
the situation during the money Cl
I believe that the

Presi

his power to

peace and that his efforts will
any of us realize. I would

brine about

success possibly sooner than

thin

had he not stated his

tion so positively to

determina-

country's influence in

will be just as

the scales in any bi

ent.

a factor in insuring

he allies are determined to achteve

as will be a

ary

It

deciding

t is all that makes me hopeful of the

outcome.
1

for the
portunity

ling as I do,

s time that we took council about policies

ture and I wan

rind pr

upon the Reserve Board to

of as many amendments as
at this session
the

urge that you and the others take every op-

secure

the passage

possible for the strengthening of the System

of Congress.

am writing Narburg a memorandum on all

proposed amendments probably tomorrow.

The Board should be

urged not

to confine this to single handed efforts, but to add to their own influence that of all the

Reserve Banks and all important bankers Whose in-

fluence would be felt in congress.

2.

To

- Mr. Traman.

December 21, 1916.

The second point I want to urge is in regard to our awn

internal policy, and 1 know you will pardon my ref rring to personal

and the fall

' 1914, because

no one had any more intimate insight into the dif
two periods than I had.

u].ties of Lhose

experiences during the panic in 1907

panics in New York gain impetus from two sours

One is the

timidity and selfishness of interi

who lock up m ey at hame

and withdraw money from New Yor

s not so much the timidity

or selfishness of New York banke

s a rule, desire to be public

spirited, but who are gene

d, not by lack of leadership

but by lack of the ve

hing which

and that is currency nd credit.
is the result of act

and I am cony
of peace

Bank

Thi

observations

can readily furnish

is not

guess work, but

rtatament
times of serious difficulties,

thingorarily break down as

tha

otiations, or i

iey show a tendency to

the result

break down, that

a skill

and courageous iolicy by the Reserve Bank can be made the

instrume

for saving

paper, to

the ituation. We will

bills

need to discount commercial

o issue currency at such a rate as

to demonstrate

the strength of Our awn resources and to kill panicky feelings.

At such

a time there are certain dangers to be guarded against, which I am going
to enumerate as they appear to me:

Arst, the

danger

that in our haste and anxiety to meet the situa-

tion, we may extend credit to banks which are not

id

as good condition as

they should be, and to guard against this we should take steps, if not already taken, to inform ourselves fully about every member bank in our






3.

December 21, 1916.

To - Mr. 2reman.

district

and every bank whose bills we buy.

This does not mean with-

holding credit from weaker institutions. Mhich should be saved from
embarasmment if possible,

but

it does mean to require them in every

instance to give ample collateral for advances.

The second danger is that we may be too g .tly controlled by
the supertechnical requirements of the Reserve Ac
in respec

and attempt too minute a discrimination
of paper, etc.

Don't ever forget that

esult and no

i

t liberal int.r etation

criticism will be caused if we appl
on all these

nd the regulations

matters in time of

of course, as we are

careful to take only good pap
The

third

is that our

danger

organization mi6ht break down
short of competent men or

in time of emergency,
al

because the men lost

men, and the way to insure that

making calls an m

quire every man to stay at his

our force will not b

desk when
of the

d to take his time.

king under p

k, but not giv

turbed or

easy.

show the AAg

.

The ideal picture

in an emergency is to see every man busy at

eerve Bank worki

his aan

ys enlarge our force by

, the
'ute

the

slightest evidence of

being rushed, dis-

men who are dealing with the public
The

donee of loss of control of their own

should be sent down to

the

work,

they

money room to count money - they do more harm

than good.

The last danger is one inherent in the Federal Reserve System.
Emergencies require a combination of deliberation and promnt decision.

One cannot wait to confer with associates who are 225 miles away

and

associates who are 225 miles away are not usually in position to judee




4.

To - Ur. Treman.

December 21, 191G.

of the correctness of the policy to be adopted oh the spot and promptly.
I dread the possibility of Warburg, or any other member of the Reserve
Board, calling on the telephone at a time of cri
timidity, or anything of that sort.

,

The manage.

York on such occasions must assume responsibility
if it makes mistakes and it is much mor

between its aun judgment

Lnd so

limited period and

,

becaus

hout serious ha

am q ite able to do so for a
1 shall apologize for this letter
egard as an

responsibi
'0;ctionate regara:

o you all.

Yours faithfully,

R. H. Treman, Esq.,
Federal Reserve Bank,
Washington, D. C.

BS/CC

ates timidly

ion developed, particularly at a

which I hope you don

A

va

bone of you need hesitate

.rs m

home

'stakes if it

n in my mind on this score

except that if at any time a real s

to telegraph me to c.

take the consequences

judgment from a distance.

This is pretty much all

time when soue of Our

the Bank at New

la

hington or

attempts to shift its responsibilit.

with a counsel of




Denver, Colorado,
December 22, 1916.

Dear Mr. Tremor.

The policy of the Federal Reserve Bank at present is to return

Federal Reserve notes of

issue for redemption. This may be
reads.

he banks of

other reserve banks
require

Much expense could be saved in

I

shina notes to die

if the notes of all Reserve Banks, except Boston aad Phil
possibly Cleveland and Richmond,
If tlae Reserve Act does not p

this time, but wont you see
bear in mind that if th

Act proposed by the Federa
it will permit us to redeem
consent of the bank of i

R. H. Treman, Esq.

Federal Reserve B
NewhinztoCity, N.

it now

the statute

Nashi

nt

points,

'a, and

r redemption.

othing can be done at
ent is instructed to
°visions of tne Reserve
d be passed by Conaress,
Washington, provided we gain the




ii
Denver, Colorado,
December 23, 1916.

Dear Mr. Treman:

Just a line to acknowledge yours of the 18th before knocking
off work for a week, which we will spend in

with the boys

Who are here fron school and college.
I fear the limitation that Class "
bank connection whatever will disqualify

irectors shall

e no

*Um

most every sug

advanced by you, Jay, Curtis and

suggested

that Curtis be appointed whe

and I believe it is

the best ap,lointment that
I knew :dr. Dow, w

you say, a nJ. man with an in,rowing

is,

egotism, however, as ys.ed.
The policy about Feder

2

serve notes is absolutely correct,

but as to the ditidend,

to have seen it paid up

e any time and possibly two bites

June 30th, although ti-

will b

4e

I hope the bank

-encouraging

cated proc

the compli

he Board in this dividend matter, thus

eivdencing our

About an

to

ference to their wishes.
_

sketch somethint,

icle on the Collection System,
t on- this subject after

1

will be glad to

returning

from the Park

and send it to you in the rough, if you care to have me do so, but
I an sure it will need a lot of polishing to bring it up to date.

e ought to start our

England

arrangement pretty soon, but, as

I said in a former letter, not until we have an unqualified consent
from the Board.




111.nice

to hear that Alliams thinks kindly of mo.

With

one or two exceptiona, he has shown me unusual courtesy and I believe

the past two years have convinced him that we are trying to run the
bank honestly.

I have just received a bully telegram fr
the good wishes of the Whole staff, which has
very much.

the office, containing
died and pleased me

I hope every man in the

you Who stand in my shoes and

bully Christmas.
With much affection,

H. Treman,

Federal Reserve
New York City.

particularly
u

y of my trou

have a

eit

Denver, Colorado,

December 24, 1916.

Dear Ur. Trem2n:
of the 19th, Which

Thank you most warmi-j for your mice 1

refers particularly to the matter of a

Deput/cernor.

of mullet, be ridiculous for us to be discussi
is a possibility of your remain" mg,
were riding a willing horse to

It would,

this matter if

there

as though we

oes

nd guilty of a

ous impo-

sition upon your good natu

along indefinitely, inter

tt

he present arrangement to run
ur domestic and business plans

and arrangements and kee ing

milpir




vaing back and forth between New

York and Ithaca.

It is win

°peat that I am deeply concerned
me or my illness

that no feeli

f this matter.

bet rthan

ever, a

is:
4

ever

it is a very

u and the

I expect to return

11 has conditionally

I might be abi

th

to make a trip to

should interfere

Europe in

stated that he
June.

Ir absence and one that I deeply

ere decide about the future will

satisfacto

With warmest regards to you all, I am,
Faithfully yours,

Neverthe-

deplore.

:That-

be absolutely

di*
v%E
4rk7-1774%1

altWESTE

IOW

'IMk

UNION

Farm

2580

WESTERN UNION

DAY

RGE W. E. ATKINS, VICE-PRESIDENT

TER

NEWCOMB CARLTON, PRESIDENT

CEIVER,S No.

TIME FILED

BELVIDERE BROOKS, VICE-PRESIDENT

CHECK

1

ND the following Day Letter, subject to the terms
on back hereof, which are hereby agreed to

COPY.

"Estes Park, Colo., Dec. 27, 1916.

R. H. Treman, Federal Reserve Bank, New York.
Jay wires that de Neuflize requests authority to wire Pallain that we
are willing to conclude arrangements with Bank of France same as London. Stop.
As de Neuflize has never been formally authorized to represent Pallain in
this matter I think you might wire Pallain direct that we have all along
desired to conclude arrangements with Bank of France same as in London and
had not expected to authorize any announcement regarding London which we
would not also hone to conclude in Paris. Stop. If Jack Morgan agrees will
be wise, would also say we had so stated to Cunliffe.
Stop. Think matter
may get tangled unless all communications handled through New York and you
keep me posted by 'phone. Stop." If you wire Pallain better show message
to de Neuflize.




Strong."

to\

111110L.
ALL DAY LETTERS TAKEN BY THIS COMPANY SHALL BE SUBJECT ,TO THE FOLLOWING TERN
The Western Union Telegraph Company will receive DAY LETTERS, to be transmitted at rates lower than its standard telegram rates
one and one-half times the standard night letter rate shall be charged for the transmission of fifty (50) words or less, and one-fifth of the initial .rate
words shall be charged for each additional ten (10) words or less.
To guard against mistakes or delays, the sender of a day letter should order it REPEATED, that is, telegraphed back to the originating office for compar
For this, one-half the unrepeated day letter rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEA'ED DAY LET'
AND PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the day letter 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 nay letter, beyon,
amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED day letter, beyond
times the sum received for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its
nor for errors in obscure day letters.
In any event the Company shall not be liable for damage,for any mistakes or delay in the transmission or delivery, or for the non-delivery, cf thi:
letter, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this day letter is hereby vs
unless a greater value is stated in writing hereon at the time the day letter is offered to the Company for transmission, and an additional sum paid or agreed
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 day letter over the lines of any other Company when neee
to reach its destination.
Day Letters 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 cif
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 agc n
at his expense, endeavor to contract for him for such dedvery at a reasonable price.
No responsibility attaches to this Company concerning day letters until the same are accepted at one of its transmitting offices, and if a day letter
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 th
letter is filed with the Company for transmission.
In further consideration of the reduced rate for this special "DAY LETTER" service, the following special terms are hereby agreed to:
DAY LETTERS may be forwarded by the Telegraph Company as a deferred service and the transmission and delivery of such DAY LETTE
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 cot
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 LE,
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 that there
the condition
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 trc
sion of regular telegrams under the conditions named above.
No employee of the Company is authorized to vary the foregoing.

THE WESTERN UNION TELEGRAPH COMF
INCORPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
TELEGRAMS
A full-rate expedited service.
NIGHT TELEGRAMS

Telephonic delivery permissible. Day Letters received subji
express understanding that the Company only undertakes de

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 next ensuing

regular office hours, subject to priority of the transmission of r(
telegrams.

business day.
DAY LETTERS

NIGHT LETTERS
Accepted up to midnight for delivery on the morning of th(
ensuing business day, at rates still lower than standard night tel,
rates, as follows: The standard day rate for 10 words shall be eh

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 rate for each additional 10 words or less. Subordinate to the
priority of transmission and delivery of regular telegrams. Must
be written in plain English. Code language not permissible.




of the same on the day of their date subject to condition

sufficient time remains for such transmission and delivery d

for the transmission of 50 words or less, and one-fifth of such sta
day rate for 10 words shall be charged for each additional 10 we
less.

Must be written in plain English.

missible.

Code language no
Mail delivery, postage prepaid, permissible.

urtivri

110 1r 1 r
t

TTER

AIGH

W. E. ATKINS. VICE-PRESIDENT

IS No.

NEWCOMB CARLTON. PRESIDENT

TIME FILED

BELVIDERE BROOKS. VICE-

F oriel:5:89

IDENT

CHECK

the following Night Letter, subject to the terms
back hereof, which are hereby agreed to

NIGHT LETTER.

Denver, Colorado, December 26, 1916.
. H. Treman, Federal Reserve Bank,
Equitable Bldg., New York City.

Announcement by Board violates my definite written agreement with
Bank of thgland and will certainly cause serious criticism and throw doubt
on my good faith. Stop. Suggest following course. Stop. Advise Board in
that owing to last clause my agreement you must notify Bank of England
Stop. Then ask Jack Llorgan
that announcement was made without my knowledge.
to cable privately to Cunliffe and inquire What course sank of England desires
-Is
to follow respectinL; further publicity.
Stop. As I have no kno;:ledge of
3oards reasons for violating my agreement suggest you get full particulars and
3rite Cunliffe in my behalf making any explanation necessary and expressing mg
regret and hope no harm has been done. Stop. Please aire me fully here after
. onferring with Jack.
Stop. You can reach me by telegraph care Charles E.
qwes Estes Park until Saturday.

Jriting

Benjamin Strong.

JOLLWT.




i

ALL NIGHT LETTERS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOW..IG TERI% .
The Western Union Telegraph Company will receive not later than midnight NIGHT LETTERS, to be transmitted only for delivery on the
the next ensuing busines,day, at rates still lower than its standard night telegram rates, as follows: The standard day rates for ten words shall be char
transmission of fifty words or less, 'and one-fifth of such standard day rate for ten words shall be charged for each additional ten words or less.
To guard against mistakes or delays, the sender of a night letter should order it REPEATED, that is, telegraphed back to the originating office for con
For this one-half the unropeated night letter rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPE,ATED NIGHT I
AND PAID FOR AS Si_. CE-I, in consideration whereof it is agreed between the semier of the night letter 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 night letter
the amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED night letter
fifty times the sum received for sending the same, unless specially ettluod; nor in any ease for delays arising from unavoidable interruption in the working of
I
tier for errors in obscure n,ghl letters.
elivery, or
In any event the Company shall not be liable for damages for any mistakes or delay in the tr,
amount
letter, whether rose -'j ,;,.,.. i'n, negligence of its servants or othcrwic, beyond the sum of FIFTY DOLL
mi an a
unlc,, a greater vaiae is stated in writing hereon at the time the night letter is offered to the Company fa
paid based on such value equal to One-tenth of one per cent. thereof.
nes of any other
y when
'flu, C,inpany is hereby made th, agent of the sender, without liability, to forward this night letter
to rcaeli it- d,- iinatIon.
l'Ci.zio. :et ten, will be delivered free within one-half mile of the Company's office in towns of 5,000
.1.
in other eiti.- ot tow,. it,yiin.1 th., limits thc Company does not undertake to make delivery, but will,
and at 1,1s -!,,,,, -,,!: a,i.c it it tact for ilior Cr :inch delivery at a reasoitable price.
if a nigl
[ i r t. 16, t,'h'-'' , ., t hi, 0,11!,11, ,..ni.erning Melt lettrirS until the same are accept
fi,ni.17 eitCh ,11: by 1,:,, f ?hi. t'ompi.ny', 1:1,,,,Ers. ID1 ails for that purpose as the agent of the sen
' tfter
1,,T .1.,,,,,, ,,,,tiiiory pC1121111,5 in any case where the claimi.ti.
Ti, (,,,,,,, ,11 ,,,,, I. 1,,
.

,

:

let: it- i, fili-.1 c-cii ii,-- I ..iiiiuity ,,, ,,,,11,-.H.
1,, fur. i.. , ...,,,,hi...,i..,, ,,, ii- H----------:-

f,., 1!,i, ,,,, iI 'NIGHT LETTER" service, the follow/
1,,,,i , .,- ,I.,.- -1 ,['1,1,11 Company be mulct at destintition I t
f4!-IT LETTEFIS ,., .. ::1
rhat,-1 .,,i i.' .i_,,,i,,. ir, .,--!, ,:,:.- it-Id 1..-,,,, t 1-, (, ',. ry by mailing such NIGHT LETTERS at d

r,..

hay,

ei

1

-

L. m : 'a, N T LETTERS ,-!...11 1,, v.1:t1,, in 111:tin E!,liA. Code language is nut permissible.
C Of ti, COMPal, L (,,thlrii,t to zary iht, foregoing.
7.
THE WESTERN
.,,, o , ,,,, /,,,,

UNION TELEGRAPH COI
INCORPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
TELEGRAMS
A fuli-rate expedited s-ervice.

NIGHT TELEGRAMS
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 next ensuing
business day.
DAY-LETTERS
A deferred day service at rates lower than the standard telegram
rates as follows: Om, and one-half times t he standard night. letter
rate for the I imistoission of 50 words or less and one-fifth of
rate for each additional in words or le,. Sitbordin,
to I
priority of itiansmission bid delivery of regular teleg,,,s.
MI,FL be writfim in plain English. Code language not permissible.




Telephonic delivery permissible. Day Letters received s
express understanding that the Company only undertakes d
the same on the day of their date subject to conditions the'
time remains for such transmission and delivery durint
hours, subject to priority of the transmission of `regt

NIGHT LETTERS
Accepted up to midnight. for delivery on the morni,,
ensuing business day, at rates still lower than standard 11
gram rates, as follows: The standard (lay rate for 10 word
charged for the transmission of 50 words or less, and one-flf

standard day rate for 10 words shall be charged for each t
in lainEnglish. Code
10 words or less. Mos
..

not permissible. Mailits

Office Correspondence
To

FEDERAL RESERVE
BANK OF NEW YORK

Date April 2, 1917.
Subject:

Miss Parker

Bank Reports.

Mr. Treman.

From

I note that copies of various reports of different
Canadinn and foreign banks are beginning to come i




The purpose of

asking

for additional reports from -them

was in order that we might furnish to universities and libraries

in this country copies of the reports should they desire them.
A letter to Governor Strong from Princeton University
requested him to write to a number of foreign banks in

behalf

of Princeton University, but instead of our doing it in thaLt
way we asked for additional copies and I trust that you will
bee that one copy of each kind is mailed to Princeton University,
they having asked for them.

Will you also send to Cornell University Library,

Ithaca, New York, a copy of each as received ad whatever expense is connected with mailing them to Cornell University,
please advise me so that I

RHT/VCM

may pay the same:

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