Full text of Papers of Benjamin Strong, Jr. : Correspondence with the Board of Governors of the Federal Reserve System : Staff of the Board of Governors of the Federal Reserve System, 1914-1927

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rs'"ICIO MEMBERS
WILL?

CHARLES S. HAMLIN, GOVERNOR
FREDERIC A. DELANO, VICE GOVERNOR
PAUL M. WARBURG
W. P. G. HARDING

. McADOO
.. ARV OF THE TREASURY
CHAIRMAN

FEDERAL RESERVE BOARD

COMPTROLLER OF THE CURRENCY

FILI

FEDERAL RESERVE BOARD

DjAPT,

ALJL- 2 1918

7FDER.

July 13, 1915.

RF.RERVE BANK

Sir:

By direction of the Federal Reserve
Board I enclose copy of a brief filed with
the Board by Mr. H. R. Fowler; and wculd ask
that you give it consideration, making such
comment thereon as you may deem best.
Respectfully,

Secretary.

Governor Benjamin Strong, Jr.,
Federal Reserve Bank of New York.
Enclosure.

H. PARKER WILLIS, SECRETARY
OVERMAN ALLEN, ASST. SECRETARY

ADDRESS REPLY TO

WASHINGTON

HS




-

ADOLPH C. MILLER

JOHN SKELTON WILLIAMS




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A J

T H E

Industrial News
™

The Condition of Labor Is the Condition

VOL.

IV .

N O . 1.

(P u b lis h e d 44 Y e a r s U n d e r O t h e r T it le s .)

NEW

0f the Nation Itself—

Y O R K , S A T U R D A Y , J U L Y 10, 1915.

Woodrow Wilson

S U B S C R I P T I O N , $1.00 P E R

YEAR, 2 CENTS

A

COPY.

An Open Letter to the Governor
Charges Open Violation o f
Germany CANNOT Yield
and Members o f the Federal
the Neutrality La<ws
Until We Bring Britain to
Reserve Board
National Peace Council
Terms, Says Hannis Taylor Labor’s
Cites Instances of Breaches of
a n o ff e n s iv e e x p e d it io n , a n d in w h ic h
it fin d s a r e fu g e a t n eed .

W a s h in g t o n , J u ly 9, 1915.

T h e m e m b e r s o f th e s a id firm o f J.
P. M o r g a n & C o. fu r t h e r r e p r e s e n te d
t o o ffice rs" o f t h e g o v e r n m e n t s o f G r e a t
C o u n c il th e u n d e r s ig n e d r e s p e c t fu lly
B r ita in , F r a n c e a n d R u s s ia t h a t th e
s u b m it s fo r c o n s id e r a t io n a n d a c t io n s a id fir m o f J. P . M o r g a n & C o., an d
on th e p a r t o f y o u r h o n o r a b le b o a r d c e r t a in in d iv id u a ls a n d c o r p o r a t io n s ,
th e c o m p la in t a n d p e titio n f o llo w in g : b u s in e s s a s s o c ia t e s o f th e firm , in th e
e v e n t o f J, P . M o r g a n & C o. wTere e m ­
T h e d e c la r a t io n o f e v e r y n e u tr a l g o v ­
p lo y e d a s a g e n ts , w e r e in a p o s itio n to,
e r n m e n t in "E u rope m a d e s in c e th e b e ­
a n d w o u ld fu r n is h a la r g e n u m b e r o f
g in n in g o f th e p r e s e n t w a r a s c o n ­
v e s s e ls a n d s h ip s f o r u se a s t r a n s ­
ta in e d in th e p r o c la m a t io n a n d d e cr e e s
p o r t s in th e s e r v ic e o f th e s e g o v e r n ­
issu e d b y e a c h a n d a ll o f t h e a fo r e s a id
m e n ts, in c a r r y in g a n d t r a n s p o r t in g
n e u tr a l g o v e r n m e n t s s h o w t h a t e v e r y
th e w a r m u n itio n s , m a te r ia ls a n d s u p ­
o n e o f th e se c o u n t r ie s h a s fo r b id d e n
p lie s to b e p u r c h a s e d a n d p a id fo r
th e e x p o r t o r s a le o f m u n it io n s o f w a r ,
w it h th e p r o c e e d s o f th e c r e d it s h e r e ­
e x p lo s iv e s , f o o d s tu ffs , m e ta ls , h o rse s,
in b e fo r e r e fe r r e d to.
m u le s a n d o t h e r s u p p lie s to a n y o f th e
A f t e r p r o lo n g e d
p e r s o n a l n e g o t ia ­
b e llig e r e n t n a tio n s.
F u r th e r m o r e , a ll o f th e s e n e u tr a l t io n s b e t w e e n m e m b e r s o f th e firm
g o v e rn m e n ts
have
s c r u p u lo u s ly
re ­ o f J. P . M o r g a n & C o. a n d r e p r e ­
of
th e
g o v e rn m e n ts
of
fr a in e d fr o m a f fo r d in g a id in m o n e y s e n ta t iv e s
t o a n y o f th e b e llig e r e n t s , a n d e a c h G r e a t B r ita in , F r a n c e a n d R u s s ia ,
in
fu r t h e r a n c e
of
th e
con­
E u r o p e a n n e u tr a l g o v e r n m e n t h a s e x ­ a n d
p r e s s ly f o r b id d e n a n y b a n k o r b a n k in g s p ir a c y , a s h e re in c h a r g e d , a s e r ie s o f
in s tit u t io n h a v in g a n y r e la t io n to o r a g r e e m e n ts w e r e e n te r e d in to b e t w e e n
t h e firm o f J. P . M o r g a n & C o. a n d
c o n n e c t io n w it h
th e g o v e r m e n t , o r
r e p r e s e n ta tiv e s o f th e g o v e r n m e n t s o f
w h ic h r e c e iv e s o r is e n t it le d to r e c e iv e
G r e a t B r ita in , F r a n c e a n d R u s s ia , u n ­
g o v e r n m e n t a l a id , d i r e c t l y o r i n d ir e c t ­
d e r w h ic h th e p r o p o s a ls o f th e firm o f
ly, fr o m m a k in g a d v a n c e s o r lo a n s o f
J. P . M o r g a n & C o. w e re a c c e p t e d an d
m o n e y t o a b e llig e r e n t g o v e r n m e n t o r
th e t e r m s a n d c o n d it io n s o f th e ir e m ­
its; r e p r e s e n ta tiv e s .
p lo y m e n t a n d a u t h o r it y a s a g e n ts , to ­
T h e a t t it u d e a n d p o l i c y o f th e s e n e u ­
g e th e r w ith t h e ir c o m p e n s a tio n , d efin ed
t ra l E u r o p e a n g o v e r n m e n t s , a s a b o v e
a n d fix e d .
r e c it e d , r e fle c ts a p r o p e r o b e d ie n c e to
F o llo w in g
c o n s u m m a t io n
of
th e
a n d r e s p e c t f o r c e r t a in w e ll-k n o w n an d
t h o r o u g h ly e s t a b lis h e d h ig h p r in c ip le s a g r e e m e n ts a s a f o r e s a id , t h e firm o f
o f in t e r n a t io n a l la w , w h ic h m a y b e J. P . M o r g a n & C o., w it h th e a id an d
a s s is t a n c e o f c e r t a in o ffice r s a n d d i­
s t a t e d a s fo l l o w s :
A . T h e g o v e r n m e n t o f a n e u tr a l n a - r e c t o r s o f F e d e r a l R e s e r v e a n d m e m hm*
n « Vi prei?i b e f o r e sn eoified .
O n b e h a lf o f L a b o r ’ s N a t io n a l P e a c e

.“ a le o f a n y m a te r ia l o r s u p p lie s o f a n y
d e s c r ip t io n in te n d e d f o r u s e o f a b e l­
lig e r e n t g o v e r n m e n t a t War.
C. T h e g o v e r n m e n t o f a n e u tr a l n a ­
t io n m u s t n o t p e r m it s h ip s o r v e s s e ls
in th e s e r v ic e o f a b e llig e r e n t g o v e r n ­
m e n t a t w a r t o r e c e iv e i n th e h a r b o r s
o f th e n e u tr a l c o u n t r y a n y s u p p lie s ,
e q u ip m e n t o r m a t e r ia ls in te n d e d f o r
u se o f a b e llig e r e n t g o v e r n m e n t a t w a r ,
e x c e p t t h a t n e c e s s a r y r e p a irs m a y b e
m a d e to a s h ip o r v e s s e l in th e s e r v ic e
o f a b e llig e r e n t g o v e r n m e n t, a n d s u ch
v e s s e l m a y r e c e iv e a n d s e c u r e , in th e
h a r b o r o f a n e u tr a l n a tio n , w a t e r , p r o ­
v is io n s a n d c o a l su ffic ie n t o n ly f o r a
v o y a g e to th e n e a r e s t fo r e ig n p o rt.
W e c h a r g e t h a t th r o u g h th e m e d iu m
o f a n e x t e n s iv e c o n s p ir a c y , c o m p o s e d
o f c e r t a in b a n k e r s a n d o ffice r s a n d d i­
r e c t o r s o f F e d e r a l R e s e r v e b a n k s an d
m e m b e r 5b a n k s e m b r a c e d in th e F e d ­
e r a l R e s e r v e s y s t e m , a c t in g in c o n ­
ju n c t io n w it h o ffice r s a n d a g e n ts o f th e
g o v e r n m e n t s o f G r e a t B r ita in , F r a n c e
a n d R u s s ia , th e U n ite d S ta te s h a s b e e n
in v o lv e d in v e r y g r a v e a n d s e r io u s
b r e a c h e s o f n e u tr a lit y , a s d e fin e d in
p a ra g ra p h s A , B and C a b ov e m en­
tio n e d .
T h e p e r s o n s c h ie fly r e s p o n s ib le f o r
a n d th e d o m in a n t fa c t o r s in th is c o n ­
s p i r a c y a r e th e m e m b e r s o f th e firm
o f J. P . M o r g a n & C o., a n d c e r t a in
o t h e r p e r s o n s n o w s e r v in g a s o ffice r s
a n d d ir e c t o r s o f v a r i o u s F e d e r a l R e ­
serve ba n k s and m em ber banks, w h o
s e c u r e d th e s e p o s itio n th r o u g h th e in ­
flu e n c e o f th e firm o f J. P. M o r g a n &
C o. o r o t h e r b u s in e s s a llie s o f s a id firm ,
o r w h o a r e s u b je c t to a n d u n d e r c o n ­
t r o l o f its in flu e n c e .
T h e m e m b e r s o f t h is firm , a s e a r ly
a s A u g u s t , 1914, in fu r t h e r a n c e o f th e
c o n s p ir a c y ,
began
m a k in g
p erson al
r e p r e s e n ta tio n s to o ffice r s o f th e g o v ­
e r n m e n t s o f G r e a t B r ita in , F r a n c e an d
R u s s ia to t h e e ff e c t th a t in t h e e v e n t
s a id g o v e r n m e n t s w o u ld e m p lo y th e
firm o f J. P . M o r g a n & C o. a s a g e n ts
s a id firm w o u ld p r o v id e f a c ilit ie s in
th e U n it e d S ta te s w h ic h w o u ld e n a b le
o n e o r m o r e o f th e s e g o v e r n m e n t s to
o b t a in in th e U n ite d S ta te s c r e d it s to
th e a m o u n t o f a t le a s t fiv e h u n d r e d
m illio n ($500,000,000) d o lla r s , s a id c r e d ­
its t o b e b a s e d u p o n a n d s e c u r e d b y
o b lig a t io n s o f o n e o r m o r e o f s a id
g o v e r n m e n t s , o r b y s e c u r it ie s o f A m e r ­
ic a n F e d e r a l, S ta te a n d m u n ic ip a l g o v ­
e r n m e n t s o r r a ilr o a d a n d in d u s tr ia l c o r ­
p o r a tio n s , a s m ig h t b e b e s t a v a ila b le
a n d p r o c u r a b le b y o r o n b e h a lf o f th e
g o v e r n m e n t s o f G r e a t B r ita in , F r a n c e
a n d R u s s ia .
T h e p r o p o s a l p r o v id e d
t h a t th e p r o c e e d s o f c r e d it s t o b e o b ­
t a in e d a s a f o r e s a id w e r e t o b e a p p lie d
an d u s e d u n d e r th e d ir e c t io n o f th e
sa id firm o f J. P . M o r g a n & C o. f o r
th e p u r p o s e
o f p u r c h a s in g
in
th e
U n ite d S t a t e s s u p p lie s o f m u n it io n s o f
w a r , m e ta ls , h o r s e s , m u le s, c lo th in g ,
fo o d
p rod u cts,
a u to m o b ile s , s u b m a ­
r in e s , a e r o p la n e s a n d o t h e r s u p p lie s
f o r u se o f th e a f o r e s a id fo r e i g n g o v ­
e r n m e n ts .




H E follow in g dispatch from H annis T a y lo r gains added
w eight from the fact that.he was form erly M inister to Spain
and special counsel o f the State Departm ent,—and is one o f the
greatest authorities on international law in the w o r ld :

International Agreement.

T

Let us not deceive ourselves with illusions. Germany lias her
back to the w all; she is fighting for her life ; she cannot make
the concessions we demand as to her submarine warfare, no mat­
ter how illegal it may be, unless we compel UFreat Britain— and
we can— to make such modifications in her illegal blockade as
w ill render such concessions upon the part of Germany possible.
Who is so blind as not to see that through such a course of
action lies our only path to peace?
We cannot hope to make a friendly settlement with Germany
until we first bring Great Britain to terms, and that can only be
done through the action of the Congress of the United States.
There never has been a moment in our history when the as­
sembling of the great council of the nation was more impera­
tively necessary.
The time is rapidly approaching when we must either place
ourselves in a state of war with Germany or accept a rebuff at
her hands. The decision of the question of war-er peace is vested
by the Constitution in Congress alone, and no other authority
should venture to exercise it.
I believe firmly in representative governmen';. It was devised
as a substitute for autocratic rule, and it is a good substitute.
I have an abiding faith in the wisdom, patrionsm and sense of
justice of the American Congress, to whose counsel at this crit­
ical moment the people of the United States are entitled.I have no sympathy whatever with the suggestion made loudly
in certain quarters that it is dangerous at suclr a time to trust
to the discretion of the representatives of the American people.
There should be an urgent and a nationwide demand for the imm ed iate nrmvnnatimi nf Hnno-roco

W a s h in g t o n , D. C., J u ly 8 , 1915.
H on.

R obert

L a n s in g ,

S e c r e t a r y o f S ta te,
W a s h in g t o n , D. C .:

“ T h e s u p p ly in a n y m a n n e r .” s a y s
a r t ic le 6 o f th e X I H t h c o n v e n t io n o f
th e s e c o n d H a g u e C o n fe r e n c e , ‘d ir e c t ly
o r I n d ir e c tly , b y a n e u tr a l p o w e r t o a
b e llig e r e n t p o w e r , o f w a r s h ip s , a m m u ­
n itio n , o r w a r m a te r ia l o f a n y k in d is
fo r b id d e n .’ ”
T h is w o u ld h a v e p r e v e n te d t h e s a le
o f d is c a r d e d a r m s b y th e U n ite d S ta te s
G o v e r n m e n t t o th e F r e n c h d u r in g th e
F r a n c o -G e r m a n w a r o f 1870. A lt h o u g h
th is s a le b e g a n b e f o r e th e o u t b r e a k o f
h o s tilitie s , its c o n t in u a n c e a f t e r w a r d
w a s u n ju s tifia b le .

M y D e a r M r. S e c r e t a r y — I n c o m p l ia n c e w it h y o u r h o n o r ’ s s u g g e s t io n to
o u r c o m m itt e e o f l a b o r ’s N a t io n a l
P e a c e C o u n c il, vve b e g le a v e to s u b m it
th e f o llo w in g c h a r g e s t h a t th e r e a r e
c e r t a in s te a m s h ip s , n o w lo a d in g a t the
D u r in g th e R u s s o -J a p a n e s e w a r s e v ­
p o r t o f N e w Y c r k in v io la t io n o f th e
er a l m e r c h a n t s t e a m e r s o f th e N o r th
n e u t r a lit y la w s a s fo l lo w s :
G e r m a n L lo y d a n d o f th e H a m b u r g I.-—T h e s t e a m s h ip C ity o f C h ic a g o ,
A m e r ic a n S te a m s h ip L in e s w e r e so ld
n o w a t p ie r 69, N o r th R iv e r , N e w Y o r k ,
t o th e R u s s ia n G o v e r n m e n t a n d a t o n c e
is a t r a n s p o r t in t h e s e r v ic e o f th e B r it ­
e n r o lle d in t h e R u s s ia n n a v y a s s e c o n d
is h G o v e r n m e n t , a n d is a b o u t t o sail
c la s s c r u is e r s .
H e r s h e y s a y s o f th is
f o r S w a n s e a , W a le s , w ith a c a r g o o f
th a t “ in v ie w o f th e c lo s e a n d in t im a te
a m m u n it io n f o r (h e B r itis h G o v e r n ­
r e la t io n s w h ic h s u b s is t b e tw e e n th e s e
m en t.
c o m p a n ie s a n d th e G e r m a n G o v e r n ­
IX.— T h e s t e a m s h ip L o r d E r n e is n o w
m en t, t h e s a le a n d d e liv e r y o f s u ch v e s ­
a b o u t to sa il fr o m p ie r 84, H u d s o n
se ls w o u ld seem to b e im p o s s ib le w it h ­
R iv e r , N e w Y o r k , w it h a c a r g o o f a m ­
o u t th e c o n s e n t o r c o n n iv a n c e o f t h a t
m u n itio n , a u t o m o b ile s a n d o t h e r w a r
g o v e r n m e n t, a n d it c a n h a r d ly b e c o n ­
s u p p lie s , in te n d e d f o r th e B r itis h an d
te n d e d t h a t s u ch c o n s e n t o r c o n n iv a n c e
F ren ch G ov ern m en ts.
T h is sh ip is a
c o u ld b e g iv e n w it h o u t a s e r io u s b r e a c h
t r a n s p o r t in th e s e r v ic e o f t h e B r itis h
o f o b lig a t io n .”
an d F re n ch G overn m en ts.
A r t ic le 8 r e a d s t h a t :
I I I .— T h e s t e a m s h ip M a s u ria n , n o w
“ A n e u tr a l g o v e r n m e n t is b o u n d t o
a t th e B u sh D o c k s , p o r t o f N e w Y o r k ,
is b e in g fitte d u p w ith a c c o m m o d a t io n s e m p lo y th e m e a n s a t its d is p o s a l to
fo r 1,500 h o r s e s , the s a m e to b e sh ip p ed p r e v e n t th e fit tin g o u t o r a r m in g o f
f r o m N e w p o r t N e w s , V a ., to F r a n c e , a n y v e s s e l w ith in its ju r is d ic t io n w h ic h
f o r d e liv e r y to 'm ilit a r y lin e s o f th e it h a s r e a s o n to b e lie v e is in te n d e d to
B r itis h a n d F r e n c h G o v e r n m e n t s . T h is c r u is e o r e n g a g e in h o s tile o p e r a tio n s
sh ip is a t r a n s p o r t in th e s e r v ic e o f the a g a in s t a p ow 'er w it h w h ic h t h a t g o v ­
e r n m e n t is a t p e a c e . I t is a ls o b o u n d
F r e n c h a n d B r itis h G o v e r n m e n ts .

F ir s t . T h e p r o c u r e m e n t fr o m v a r io u s m a n y o m c e r s a n d d ir e c t o r s o f v a r io u s tlons. o f a c h a r a c t e r a b s o l u t e l y f o r b i d ­
T h is a r t ic le is s u b s t a n t ia lly t h e first
F r a n c e . Th\s v e s s e l is a t r a n s p o r t in
m e m b e r b a n k s , in c lu d in g th e F ir s t N a ­ m e m b e r b a n k s a n d F e d e r a l R e s e r v e
den b y C o n g r e s s in th e F e d e r a l R e ­
th e s e r v ic e o f th e E n g lis h a n d F r e n c h r u le o f th e t r e a t y o f W a s h in g t o n in
tio n a l B a n k , N a t io n a l C it y B a n k . N a ­ b a iik s , t h a t th is v a s t m a s s o f lo a n s,
se r v e a c t , a n d w h ic h s e e m e d w e ll d e ­
G o v e r n m e n ts .
r e g a r d to * th e C o n fe d e r a t e c r u is e r A l a ­
t io n a l P a r k B a n k , N a t io n a l B a n k o f d is c o u n t s , a n d m o n e y a d v a n c e s , h a v e
s ig n e d to a ffo r d c e r t a in o f t h e b e llig ­
V I .— T h e s te a m s h ip J e th o n , n o w a t b a m a a n d o t h e r s o f th e s a m e n a tu re .
C o m m e r c e a n d o t h e r b a n k s a n d b a n k ­ b e e n o b t a in e d b y th e c o n s p ir a t o r s a c t ­
er e n t g o v e r n m e n ts n o w a t w a r a p e r ­
p ie r s 36 a n d 37, H u d s o n R iv e r , N e w T h is h a s b een r e fe r r e d to in p r e v io u s
in g in s tit u t io n s in th e c i t y o f N e w in g a s a g e n t s a n d r e p r e s e n ta tiv e s o f
fe c t o p p o r t u n it y in th e ir o w n g o o d tim e
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B r ita in , to p r e s e n t a h u g e b ill o r c la im f o r in ­ Y o r k , is n o w t a k in g o n w a r s u p p lie r p a g e s. F o r t h e p h r a s e “ d u e d ilig e n c e ”
fo r H iv r e , F ra n ce.
T h is v e s s e l is a th e t e r m “ m e a n s a t its d is p o s a l” h a s
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d e m n ity fr o m th e U n it e d S ta te s .
t r a n s p o r t in t h e s e r v ic e o f t h e E n g lis h been s u b s titu te d . I t w o u ld se e m b oth
w h o m w e r e m e m b e r b a n k s , in c lu d e d in u tiliz e th e m o n e y s r e c e iv e d e x c lu s iv e ly
A c c o r d in g to t h e w e ll s e ttle d p r e c e ­ a n d F r e n c h G o v e r n m e n ts .
fr o m th e in t e n t a n d w o r d in g o f ' th e
th e F e d e r a l R e s e r v e s y s t e m , loa n s, fo r th e p u r p o s e o f p u r c h a s in g in th e
V I I .— T h e s t e a m s h ip P a s c a l, n o w a t a b o v e a r t ic le t h a t th e c o n s t r u c t io n o r
d is c o u n t s a n d m o n e y a d v a n c e s an d U n ite d S ta te s w a r m a te r ia ls , m u n i­ d e n ts o f in te r n a tio n a l la w , s h o u ld s u ch
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p lie s f o r th e B r itis h G o v e r n m e n t , a n d tra l. B y th is a r t ic l e n e ith e r th e sa le
in d e s c r ib e d , a n d th e c la im b e s u b m it ­
t r a n s a c t io n s it w a s m a d e to a p p e a r o r c h a r t e r in g s h ip s a n d v e s s e ls t o b e
is a t r a n s p o r t in th e s e r v ic e o f th e B r it ­ o f th e G e r m a n v e s s e ls j u s t r e fe r r e d to
te d to a r b it r a tio n , it w o u ld , o f c o u r s e ,
t h a t th e s a m e r e p r e s e n te d b a n k e r s ’ u sed a s t r a n s p o r ts fr o m p o r t s o f th e
ish G o v e r n m e n t .
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a p p e a r f r o m the f a c e o f t h e t e s t im o n y
fo r e ig n b ills o f e x c h a n g e a n d a c c e p t ­ U n ite d S ta te s in th e s e r v ic e o f t h e g o v ­
V I I I .— T h e s t e a m s h ip
L a p la n d , a t b o a t fo r J a p a n e s e u s e b y A m e r ic a n s in
a n c e s , in n o c e n t ly d r a w n in t h e r e g u la r e r n m e n t s o f G r e a t B r ita in , F r a n c e an d th a t t h e c a s e w a s o n e d iv is ib le in t o tw o p ie r 60, N o r t h R iv e r , N e w Y o r k , is n o w th e s a m e w a r w o u ld b e p e r m is s ib le ,
p a r ts, fo r th e r e a s o n t h a t a d e c is io n
c o u r s e o f le g it im a t e b u s in e s s b y J. P. R u s s ia .
t a k in g on a c a r g o o f g u n c a r r ia g e s an d ev e n i f th e la t te r g o e s a s c a r g o i n ­
c o n c e r n in g lia b ilit y o f th e g o v e r n m e n t
M o r g a n & C o., w h o s e m e m b e r s w e r e ,
o t h e r w a r s u p p lie s in t e n d e d f o r th e s t e a d o f u n d e r its o w n p r o p u ls io n .
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fa ile d t o c o n fo r m to t h e o r d e r s a n d r e g ­
th e c o n s p ir a t o r s w a s to s e c u r e lo a n s a b e tte d th e c o n s p ir a t o r s in th e c a r r y ­ u p o n c o n s id e r a tio n s t h a t w o u ld n o t a p ­
I X . — T h e s t e a m s h ip T o r o n to , n o w a t u la tio n s m a d e b y it, o r w h ic h h a s v io ­
fr o m m e m b e r b a n k s in b e h a lf o f o n e in g o n a n d t h e c o n s u m m a t io n t h e r e o f, p ly in th e s a m e d e g r e e or w ith s a m e p ie r 54, N o r th R iv e r , N e w Y o r k , is t a k ­ la te d n e u tr a lit y , to e n te r its p o r t s o r
o r m o r e o f th e ir n u m b e r , t h e c o lla te r a l a t th e r e q u e s t a n d b e h e s t o f th e c o n ­ fo r c e a n d e ffe c t In d e te r m in in g th e lia ­ in g on a lo a d o f a m m u n it io n a n d o t h e r r o a d s t e a d s .”
f o r th e lo a n s b e in g s t o c k s a n d b o n d s s p ir a to r s , a n d t h a t a ll th e s e p e r s o n s b ilit y o f o u r g o v e r n m e n t, b e c a u s e o f w a r s u p p lie s in te n d e d f o r th e B r itis h
C a llin g y o u r a t te n tio n to t h e s e s e c ­
o f v a r io u s d o m e s t ic c o r p o r a t io n s an d h a v e s e d u lo u s ly c o n c e a le d fr o m y o u r lo a n s o r a d v a n c e s m a d e b y m e m b e r G o v e r n m e n t . T h is sh ip is a t r a n s p o r t t io n s o f th e tr e a tie s n o w in fo r c e , w e
T h e t r a n s a c t io n s h e r e in c o m ­
b o n d s issu ed b y d iffe r e n t c it ie s an d h o n o r a b le b o a r d , th e C o m p t r o lle r o f th e b a n k s.
in t h e s e r v ic e o f th e B r itis h G o v e r n ­ b e g le a v e to e n u m e r a te t h e fo ll o w i n g
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t h e r e fo r e , b e c o n s id e r e d s e p a r a t e ly . It
m o r e o b t a in e d fr o m F e d e r a l R e s e r v e
m e n ts h a v e b e e n u s in g t h e d o c k s o f b e llig e r e n t c o u n t r y o r a p r iv a t e m e r ­
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w o u ld se e m to us t h a t th is s e p a r a tio n
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t h e W h it e S ta r L in e a n d F a b r e L in e c h a n t sh ip o f o u r c o u n t r y c a n n o t lo a d
w h ic h t h e m o n e y s w e r e b e in g u sed , an d
a s t o o r ig in a n d d e g r e e o f g o v e r n ­
s p ir a to r s , s u m s in e x c e s s o f t w e n t y
t o s t o r e a n d sh ip o n th e ir t r a n s p o r ts a t o u r p o r t s “ a s u b m a r in e ” o r “ c o m ­
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th e s e m e m b e r b a n k s a n d F e d e r a l R e ­
a s fo l lo w s : W it h r e s p e c t t o lo a n s, d is ­
d is c o u n t o f n o te s, d r a ft s , a c c e p t a n c e s
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s e r v e b a n k s h a v e b e e n in d u c e d s o to do
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co u n ts o r m on ey a d v a n ce s, m a d e b y
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C IT A T IO N O F A U T H O R IT IE S .
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p ro p e lle d b y their' o w n p o w e r o r t r a n s ­
r e a d in g o f t h e F e d e r a l R e s e r v e a c t
R e s e r v e b a n k s w e r e s e e m in g ly u sed
T h e fir s t a r t ic le o f c o n v e n t io n X I I I p o rte d on s u ch v e s s e ls a s a p a r t o f th e
c a s e s b e c a u s e s u ch o ffice r s a n d d ir e c ­
m a k e s it p e r f e c t l y p la in th a t F e d e r a l
in fu r t h e r a n c e o f p u r e ly c o m m e r c ia l
o f T h e H a g u e C o n fe r e n c e r e s p e c t in g c a r g o .
t o r s w e r e u n d e r th e c o m p le t e d o m in io n
R e s e r v e b a n k s a re g o v e r n m e n t in s t it u ­
t r a n s a c t io n s f o r a g r ic u lt u r a l, in d u s tr ia l
th e r ig h t s a n d d u tie s o f n e u tr a l p o w ­
a n d c o n t r o l o f t h e c o n s p ir a to r s .
T h ir d . I f th e b e llig e r e n t c o u n t r y ’s
tio n s , a n d t h a t th e ir o ffice r s , a s w e ll
a n d c o m m e r c ia l p u r p o s e s . T h e a g r ic u l­
e rs in m a r itim e w a r tr e a ts o f th e in ­ v e sse l, t h o u g h o w n e d b y p r iv a t e m e r ­
W e fu r t h e r c h a r g e th a t it is th e p r e s ­ as th e m e m b e r s o f th e F e d e r a l R e s e r v e
tu ral p ro d u cts or oth e r w a res, m er­
v io la b i li t y o f n e u tr a l t e r r it o r y a n d w a ­ c h a n tm e n , h a s b e e n c h a r t e r e d o r r e g is ­
c h a n d is e o r liv e s t o c k , p u r c h a s e d an d en t in t e n t io n o f th e c o n s p ir a t o r s to o b ­ B o a r d , a r e office rs o f t h e U n ite d S ta te s
t e rs in m a r itim e w a r . T h is a r t ic le r e a d s te re d b y s u ch g o v e r n m e n t o r o t h e r w is e
p a id f o r w it h t h e p r o c e e d s o f th e ta in fr o m m e m b e r b a n k s a n d F e d e r a l w ith in th e m e a n in g o f th e C o n s t it u t io n
a s fo ll o w s :
p u t e v e n in p a r t u n d e r t h e c o n t r o l o f
m o n e y s th u s o b t a in e d b e in g a p p a r e n t ly R e s e r v e b a n k s a d d it io n a l lo a n s a n d a d ­ o f tlhe U n ite d S ta te s , a s c o n s t r u e d an d
‘ ‘B e llig e r e n t s a r e b o u n d to r e s p e c t th e b e llig e r e n t n a tio n f o r th e p u r p o s e
p u r c h a s e d o r s o ld in th e o r d in a r y v a n c e s o f m o n e y f o r th e b e n e fit o f th e a p p lie d b y t h e S u p r e m e C o u r t o f th e
th e s o v e r e ig n r ig h t s o f n e u tr a l p o w e r s o f “ r a m m in g '' o r u s in g th e v e s s e l in
c o u r s e o f a c t u a l c o m m e r c ia l t r a n s a c ­ g o v e r n m e n t s o f G r e a t B r ita in , F r a n c e U n ite d S ta te s in n u m e r o u s d e c is io n s .
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p o w e r , c o n s t it u t e a v io la t io n o f n e u ­ sh ip ,” a n d s u ch v e s s e l w ill n o t b e p e r ­
a m o u n t in g to t h e sa id s u m s o f t w o b e in g a c t i v e ly c a r r ie d o n f o r th e p u r ­ tio n w ith r e fe r e n c e to g o v e r n m e n ta l
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n a v a l o p e r a t io n s a g a in s t t h e ir a d v e r ­ p orts.
m e m b e r b a n k s , a n d in r e g a r d t o th e g r e a t su m o f m o n e y f o r th e b e n e fit o f R e s e r v e b a n k s . W h ile i t is, o f c o u r s e ,
sa rie s, a n d , in p a r tic u la r , to e r e c t w ir e ­
F o u r th . A m e r c h a n t sh ip o w n e d o r
o t h e r t w e n t y m illio n ($ 20, 000, 000) d o l­ t h e a f o r e s a id g o v e r n m e n ts , f o r u se in t r u e t h a t b y te r m s o f t h e F e d e r a l R e ­
le s s t e le g r a p h s t a t io n s o r a n y a p p a ­ o p e r a te d b y a b e llig e r e n t n a tio n sh a ll
la rs, o r m o re , o f m o n e y s s im ila r ly o b ­ th e s a m e m a n n e r a s h e r e in b e fo r e d e ­ s e r v e a c t a ll m e m b e r b a n k s a r e s u b ­
r a t u s in t e n d e d to s e r v e a s a m e a n s o f n o t b e p e r m itt e d to lo a d a t o u r p o r t s
t a in e d b y o r . on b e h a lf o f th e c o n ­ s c r ib e d .
je c t in th e ir o p e r a tio n s to c o n t r o l a n d c o m m u n ic a t io n
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s p ir a t o r s fr o m F e d e r a l R e s e r v e b a n k s ,
s u p e r v is io n o f o ffice r s o f th e g o v e r n ­
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W e r e s p e c t fu lly r e q u e s t t h a t y o u d i­
in f a c t b e e n s e c u r e d b y t h e c o n s p ir a ­ a ffa ir s a b o v e s p e c ifie d a c t u a lly e x is t s o f g o v e r n m e n t d e p o s its , a n d m e m b e r
to r s a s a g e n t s o f th e g o v e r n m e n t s o f w ith r e fe r e n c e to m e m b e r b a n k s a n d b a n k s t h e m s e lv e s a r e in v e s t e d w ith b o d ie s t h e p r in c ip le o f th e fir st p a r t o f r e c t t h a t a p u b lic in q u ir y b e h e ld a t
G r e a t B r ita in , F r a n c e a n d R u s s ia , a n d F e d e r a l R e s e r v e b a n k s in th e F e d e r a l p o w e r , s u b je c t to c e r t a in c o n d it io n s , o f t h e s e c o n d r u le o f th e t r e a t y o f W a s h ­ o n c e b y t h e c o lle c t o r s o f t h e p o r t s o r
t h a t s a id m o n e y s h a v e b e e n u tilize d R e s e r v e S y s te m , w e fe e l fu lly ju s t ifie d is s u in g c u r r e n c y , fo r p a y m e n t o f w h ic h in g t o n o f 1871, w h ic h is w o r d e d fr o m o t h e r p r o p e r g o v e r n m e n t o ffic ia ls a t
th e s t a n d p o in t o f th e d u t y o f a n e u tr a l w h ic h o r a l a n d d o c u m e n t a r y e v id e n c e
e x c lu s iv e ly in c o n n e c t io n w it h th e p u r ­ in s a y in g th a t th e c o u n t r y is a b o u t to
th e g o v e r n m e n t it s e lf b e c o m e s o b l i g a t ­
S ta te a s fo ll o w s .
can
b e s u b m it t e d a n d
o p p o r t u n it y
c h a s e a n d s h ip m e n t fr o m w ith in th e b e c o n fr o n t e d w it h a c ris is , n o t o n ly in
ed u n d e r t e r m s o f th e N a t io n a l B a n k
“ ‘ A n e u t r a l g o v e r n m e n t is b o u n d g iv e n t o th e c itiz e n s to e x a m in e w it ­
U n ite d S ta te s o f w a r m a te r ia ls , m u n i­ its b a n k in g s y s te m , b u t a ls o in its r e la ­
a
c
t,
y
e
t
it
is
n
o
t
c
le
a
r
t
h
a
t
th
e
o
r
ig
in
a
l
* * * s e c o n d ly , n ot to p e r m it o r s u f­ n e s se s to th e e n d t h a t y o u r d e p a r t ­
tio n s, fo o d s u p p lie s , c lo t h in g , h orses, tio n s t o c e r t a in o f t h e b e llig e r e n t c o u n ­
a c t o f a m e m b e r b a n k in m a k in g lo a n s
fe r e ith e r b e llig e r e n t to m a k e u se o f m e n t b e fu l ly in f o r m e d a s to t h e s i t ­
m u le s, s u b m a r in e s , a e r o p la n e s , v e s ­ t r ie s n o w a t w a r . I n o u r ju d g m e n t it
o r a d v a n c e s o f m o n e y , fo u n d to h a v e
its p o r t s o r w a t e r s a s th e b a s e o f u a tio n . R e s p e c t fu lly s u b m itte d ,
s e ls a n d f o r t h e p u r c h a s e o r c h a r t e r ­ is p e r f e c t ly c le a r th a t u n le ss th e o p e r ­
b een u tiliz e d f o r th e b e n e fit o r a c c o u n t
n a v a l o p e r a tio n s a g a in s t th e o t h e r .’
H. R O B E R T F O W L E R ,
in g o f s h ip s a n d v e s s e ls to s e r v e a s a t io n s o f th e c o n s p ir a t o r s in o b t a in in g
o f a b e llig e r e n t g o v e r n m e n t, w o u ld be
“ J o m in i g iv e s th e d e fin itio n o f a b a s e G e n e ra l C o u n s e l o f L a b o r ’ s N a t io n a l
t r a n s p o r ts fr o m p o r t s o f th e U n ite d m o n e y s fr o m m e m b e r b a n k s a n d F e d ­
h eld b y a n in t e r n a t io n a l c o u r t o f a r ­
o f o p e r a tio n s a s a p la c e fr o m w h ic h an
P e a c e C o u n cil.
S ta te s in t h e s e r v ic e o f o n e o r m o re er a l R e s e r v e b a n k s a r e im m e d ia t e ly
su p p r e s s e d a n d p u t a n en d to, th e c o n ­ b it r a tio n to b e th e a c t o f th e g o v e r n - a r m y d r a w s its r e s o u r c e s a n d r e in ­ F . S. M O N N E T T ,
o f s a id b e llig e r e n t g o v e r n m e n ts .
fo r c e m e n ts , fr o m w h ic h it s e ts f o r t h on
(C o n tin u e d on p a g e 4.)
O f C ou n se l.
W e fu r t h e r c h a r g e t h a t th e r e h a s s e q u e n c e w ill b e th a t th e se in s tit u t io n s




THE

IN D U S T R IA L

NEW S

Business Office and Editorial R o o m s : 444-446 Pearl Street, N ew Y ork
T elep h on e W o rth 1002-3
A w eek ly journal o f direct interest to all w h o labor.
A dvertisin g rates on application.

Odd Happenings
In the Day’s News
Mrs. Flake Keyes of Hollis, Okla.
has given birth to quadruplets, all girls
New York boy leaned too far out of
i third story w indow to catch a soap
bubble, fell out and w as killed.

Subscription O ne D ollar per year.
W IL L IA M

IN D U S TR IA L

D E L A H U N T Y , Publisher.

George Harding, an eleven-year-old
boy, w on first prize for the best display
of cooking in a Portland (Ore.) school.

N ew Y ork , Saturday, July 10, 1915.

T h e great question o f the unem ployed m ust be solved in the very
Th e mass o f w age earners w h o for years battled and

fough t for a D epartm ent of L abor in W ash in g ton expected great

Fort W orth, Tex., negro lad, sen­
tenced to be hanged, asked the judge
to grant him one watermelon a day un­
til his execution. He w ill get it.

things from the Secretary o f L abor, w h o is also a m em ber o f P resi­
dent W ils o n ’ s Cabinet.

W om en twins, eighty-six years old.
w ill celebrate their birthday at Leonardsville, N. Y., by being rocked in the
H ow ever, w e are cradle in w hich they slept as children.

A n y intelligent w orkingm an w ill tell you

that the D epartm ent o f L abor is a disappointm ent.

glad to notice that Secretary o f L a bor W ilso n is to con fer over the

INDIVIDUAL INCOME TAX
p roject for co-operation o f the Federal labor authorities over the un­
RETURNS SHOW INCREASE
em ployed.

T h e S e a W in d

Verses Muenter Wrote on

It is ca llin g fro m the ocea n o ’ er the swirl
o f brok en foa m ,
W h ere the rollers sw eep in squadrons
fr o m the w est;
B low in g d ow n the path o f sunset where
the g ra y w inged sea birds roam ,
W ith w ide tireless pinions on their end­
less quest.

Am ong the effects of Erich Muenter,
alias Frank Holt, w ho tried to kill J.
Pierpont Morgan, w as found a poem.
“ W hen I A m Dead,” which he wrote
a number o f years ago and sent to his
sweetheart, Leona Sansabaugh, now
his w idow , in 1908. Several verses fol
low :

±i(

It is calling, calling, calling, and I know
that I shall go
Out bey on d the su nset ed ges o f the sea,
T o a clean w hite bea ch o f co ra l and an
island th at I know ,
W h ere the palm top s in the trade wind
thunder free.

South Norwalk man raised his um­ T h ere's no charm in .a ll y o u r cities—only
brella in a thunderstorm and got a
sm oke an d d u st an d ro a r;
Only ch ok in g air and screech o f cla n g ­
shock that knocked him unconscious.

A N IS S U E T H A T M U S T B E S O L V E D .

near future.

NEWS

In future issues o f T h e Industrial N ew s w e p ropose to

sh ow the L a bor D epartm ent h ow to find w ork for the jobless.

Co lle ct io ns

F ro m

Co rp or at io ns

Drop,

ing cars,
A n d I ’ m hu ngry fo r the thun der o f the
breakers on the sh ore
A n d th e v elv et n igh ts ben eath th e tropic
stars.

F o r the sea w ind’s v o ic e is callin g and
old m em ories stir an d flare—
Old y e a r m em ories soa k ed in trop ic sun
and rain;
A n d I ’m d eath ly sic k and w ea ry o f you r
“ com m erce” poisoned air
F o r I ’m hu ngry fo r the blu e sou th seas
again.
—M arshal South in L o s A n g eles T im es.

BUSY BERTHAS FIRST
MADE IN THIS COUNTRY.

O w i n g to D e o r e a s e J j i E a r n in g s.
Bl ue pr in ts

Substantial decreases in the corpora­

E N T IR E

C H R IS T IA N

W ORLD

APPROVES

OF

metal trades w orkers w ill be indirectly affected.

«««

Guns

Sai d

to

H a v e Been St ol en F r o m P a t e n t Office.

M o st o f these co m ­

The big guns known as “ busy Ber­
thas,” the conception o f a Baltimorean
and w hich w ere first made in Ger­
many, are now being used by the Brit­
ish in the western theater o f war.
W hen the blueprints showing the
design o f the huge g u n 'w e r e filed in
the patent office in W ashington they
were, it is alleged, confiscated by a
spy em ployed in the office. H e resign
ed, it is said, and hastened to the
Krupp works in Germany, where the
guns were manufactured.
Fearing that other governments
would spy out the guns, the Krupps
laid them aside in their yards and
marked them as failurtjs; hence they
attracted no attention.
Their long
range w as not discovered until they
w ere put into service.
A chem ical com pany o f Baltimore
had filed the patent. W hen Colonel C.
W ilbur Miller, president o f the com ­
pany, read o f the havoc w rought by
the “ busy Berthas” his suspicions were
aroused. At the patent office he learn­
ed that the blueprints w ere abstract
ed. Duplicate prints were prepared
nnrl

o

orl

iTTitli

f-liacia

1m

irrnnf

GERMANS EXPORT DIAMONDS.
Stocks

F ro m So u th

Africa

Being Sold

to A m e r i c a n s V i a Ho lla nd.

POPE’S NEPHEWS AT FRONT.
O n e a Ca p ta in an d O t h e r a L ie u te n a n t
of C a v a lr y .

W h e n I am dead
P erh ap s kind m em ory w ill lose
T he sa d m istakes I ’ v e often m ade
A n d hold th e g ood —yes, let the best
R ev ea l itself as errors fade.
Oh, L ord m y God, 1 toil ea ch day
T hat X m a y h ave som e g o o d to stay.
B u t w ill the blunders, then forg ot,
G ive ba lm to those th a t n ow are n o t?
W h en I am dead
A nd broken, heartless sod s o f earth
W ill m ark w h ere la st I seem ed to b e;
P erh aps—I can n ot know —there w ill
B e heard the v o ice o f praise fo r me.
Oh, L o rd m y God, help m e b e s tro n g
In trials m uch, in lab ors lon g !
F o r me, w h o live in hu nger great,
A ll p raises then w ill com e too late.
W h e n I am dead
I f I th e silen ce o f the tom b
C ould break, I w ou ld n ot think t o stay
T he eag er hand or loosen ed tongue.
B ut sa d ly I to all w ou ld say,
"B elov ed , flow ers n ow y o u cast,
N o fr a g r a n ce to hours p ast;
B elated w ord s o f love and tears
W ill n ev er ease the broken y ears.”

VANISHING GUNS FOR
AMERICAN SUBMARINES.
Officials

Reveal

F ou nd T h a t

Pl a ns

Germany

A fter
Had

It

W as

S e c re t.

The navy department has ju st an­
nounced that hereafter disappearing
guns w ill be mounted on all American
submarines.
It developed that Am erican naval ex­
perts secretly have been w orking on
the submarine gun for more than two
years and that plans were completed
several months ago to mount such
pieces on undersea craft.
It is understood that the departmeu'
did not divulge the plans because offi
cers w ere under the impression that
the idea had not occurred to other na­
vies.
The announcement w as made aftei
officials o f the department had satis­
fied themselves that it would be use­
less to keep the fact secret longer, be­
cause Germany already is using such
guns on the U type of submarines
which are now operating against mer­
chantmen in the so called w ar zone.
I f the present plans o f the navy ex ­
perts are carried out submarines o f the
M type w ill be the first to receive the
new guns.
The gun carriages are

tn

ropean war.

panies are operating under sub-contracts w ith the R em in gton people
for the m anufacture o f w ar material.

Great

L A B O R ’ S tion tax and increases in the individual

income tax as compared with last year’s
collections are shown jn the record for
N A T I O N A L P E A C E C O U N C IL .
the last fiscal year as given out by Sec­
P op e B enedict, archbishops and priests, also leading Protestant retary o f the Treasury M cAdoo.
The total corporation tax collected
clergym en in all parts o f the w orld, are in sym pathy w ith the m ethods amounts to only $38,817,000 for the fis­
cal year 1915, whereas on June 30,
o f L a b or’s N ational Peace Council. T h e H o ly Father says organ ­ 1914, when the income tax law had
been operative only ten months, $43,ized effort on the part o f labor w ill be a pow er for g o o d and its in­ 079,000 had been collected from this
source.
fluence b ring universal peace to E urope, and at the same tim e keej
On the other hand, there was a jump
A m erica out o f the war. T h e Pope recom m ends A m erican Prelates from $2S,30G,000 to $41,011,000 in the
income tax collections. Many officials
to rely on the w isdom o f President W ils o n , w hose peaceful intentions are at a loss to explain these changes.
It is evident that during the Iasi
are w ell know n, and urges loyalty to their adopted cou n try on the tw elve months the corporations o f the
country sustained a considerable loss
o f earning pow er and that the falling
part o f Germans.
off o f corporation tax can be attributed
to this fa ct alone, but the increase in
the individual tax is not so easily
E I G H T H U N D R E D A N D F I F T Y M I L L I O N D O L L A R S IN ­ solved. This increase is certainly due
in part to the exertions o f internal rev­
V O L V E D IN S T R IK E .
enue agents in ferreting out persons
having taxable incomes w ho failed to
T w o hundred thousand em ployes b y the great war material-making make returns last year.
Doubt exists, however, as to whether
firms in various sections of the U nited States w ill g o on strike foi the main pari o f the increased taxes
should be attributed to these efforts.
shorter hours and m ore pay. T h e R em in g ton C om pany and other? Officials believe that despite the falling

M ore than tw o hundred concerns em p loyin g

F or

“ When I A m Dead”

gun will rise immediately over mT7top. The mechanism is so perfect, it is
said, thn-t the gun may be raised, fired
and low ered within a few seconds.
Each submarine w ill be protected by
tw o three inch guns.
One w ill be
mounted fore and the other aft. By
the use o f these guns officials believe
that submarines w ill be enabled to pro­
tect themselves from any light craft.
The M type o f vessels, on w hich the
guns will be tried out, are o f about the
same type as those being used by Ger­
many in attacking merchant vessels.
They are approximately 230 feet in
length and displace 730 tons.

The Giornale D ’ltalia relates this in­
A ccording to the Manchester Guar­
D ie and tool makers, especially em ployed in m aking o f shells and dian, there is one export from Germa­ timate episode in the pope’s fam ily.
The pope has tw o nephews at the front,
small arms, w ill be the first to be called out if the union’ s differences ny which is quite lively and very diffi­ one a captain and the other a lieuten­
cult to check, that o f diamonds. When
ant o f cavalry. Both are the sons of
the w ar broke out a syndicate in Ber­
are n ot settled.
Connt Perisco o f Venice, the pope’s
lin w hich buys diamonds from South­
W a r m aking material com panies have rush orders o n from the allies w est A frica found itself with a stock brother and a rear admiral o f the re­
serves.
on hand worth $1,500,000. These dia­
It is recalled that the latter’s son.
am ounting to $850,000,000.
monds are being cut for very low
Joseph, eighteen years o f age, express­
wages by craftsm en in Belgium and
ed a wish o f enlisting. H is mother se­
sold via H olland to the United States.
cured him a place in the sanitary corps,
The United States is practically the
MUNITIONS ON MINNEHAHA.
21,770,000 M E N F I G H T IN G A T D A I L Y C O S T O F $42,250,000. only country buying diamonds now. but the young man objected and ap­
pealed to the pope. H e said he wished
V e s s e l on W h i c h B o m b E xp lo de d C a r ­
and the Am erican appetite for them
to receive a commission as an officer.
Figures that show the stupendous scale on w hich the European is described as amazing.
ried M u c h V a l u a b l e W a r M ate ri al.
The mother was present at the audi
On the declaration of war the syndi­
Whether or not it is ever proved that
w ar is w a g in g have been com piled b y W illia m M ichaelis, o f Berlin, cate w hich takes over the De Beers ence.
Erich Muenter, alias Frank Holt, placed
The pope said that the boy’s wish
fam ous as a statistician. H e estim ates that there are 21,770,000 men and Jagersfontein products had a stock was natural and to let him go to the the explosive on the Minnehaha which
o f diamonds worth $4,000,000. It al­
Ldused her to return to port, there is
military academy, which the youth en­
and 2,018 warships engaged, at a total daily cost o f $±2,2o0,000, or ready has disposed o f half o f this tered recently. H e w ill graduate three no p roof necessary that it w as a ves­
stock. The Premier mine, which mar­
sel literally filled w ith w ar munitions.
kets its ow n diamonds, has got rid of months hence.
Here are some o f the things she car­
$15,420,000,000 a year.
a third o f its surplus. Almost all of
ried:
these stones have gone to the United
•2,S00 cases loaded shrapnel shells.
MONUMENT TO GREENE.
1,723 cases loaded cartridges.
States.
1.000 cases cordite.
Good judges anticipate a scarcity of Unv e il in g o f S t a t u e on Battlefield
E V E R Y I N T E L L I G E N T W O R K I N G M A N IS O P P O S E D T O
1,400 cases trin itrotolu ol. (T h is ia a
diamonds when peace comes. Produc­ W h e r e He D e fe a te d C o r n w a ll is In 1781. chem ical o f g reat force, w h ich goes into
tion has as good as stopped. The
W AR.
One hundred and thirty-five years: high explosives.)
54 cases rifles.
mines in South A frica are closed down, after he led his command to victory
826 cases em pty projectiles.
T h e peace propaganda o f the great labor m ovem ent is m ost fa v or­ their, engineering staffs having been over General Cornwallis’ men at Guil­
4 cases firearm s.
disbanded and their native laborers ford Court House a monument w as un
3.001 plates spelter.
ably com m ented upon b y intelligent w orkin gm en and friends o f hu­ repatriated. Only a handful o f river veiled recently on the fam ous battle­
8E6 cases and bundles brass rods and
sheets.
diggers are still at work.
field in honor o f the memory o f Gen­
432 m otortru cks.
manity.
eral Nathaniel Greene, w ho com m and­
1 m otor am bulance.
230 horses.
ed
the
Colonial
forces
in
the
south
dur­
W e w onder at the am azing fatuity that led E urope into its present
NEW MISSIONS MOVEMENT.
18 cases au to parts.
ing the latter part o f the American
100 ca ses m agnetos.
tangle. W e w onder hardly less at the singular stupidity and lack of C o n v e n t i o n s In S e v e n t y - f i v e Cit ies B e ­ Revolution.
G cases fuses.
It
was
in
this
vicinity
that
the
bat­
80
bundles copper wire.
gin nin g N e x t Fall.
vision that led the average A m erican editor like a blind bull b y the
34 plates zinc.
A national missonary campaign, like tle w as fought on March 15, 1781.
10 cra tes air guns.
which resulted in such heavy losses to
nose, so that he follow s on ly the fatal cow path o f E urope, and can­ that begun by the laymen’s mission­ Cornwallis, the British leader, that he
ary m ovem ent in 1909 and 1910, is to
be organized again for the com ing fall was forced to retreat to Wilmington. ITALIAN KING COUNTS SHELLS
not see the better, m ore intelligent A m erican w ay.
and next spring. As in the first cam­ N. C. Cornwallis subsequently decid­
N o w orkingm an wants war, because war brings us under military paign, the laymen’s missionary move­ ed to transfer his activities to Virginia. V ic to r E m m a n u e l U n a w e d a s S ix te e n
T w e l v e - i n c h S he ll s B u r s t N e a r H i m .
ment, w hich is an interdenomination­ The result w as his surrender at Yorkrule, and m ilitary despotism destroys organized labor. A s C on gress­ al organization, w ill work in eo-opera- town on Oct. 19, 1781, w hich virtually
A soldier in a letter to his parents in
Rome relates this incident o f the Ital­
ended the war.
tion
w
ith
the
home
and
foreign
mis­
man Buchanan, president o f L a b o r’ s N ational Peace Council, says:
ian king’s coolness under fire. Along
sion agencies o f the country, holding
with the general staff, the king had
“ I feel that I ow e to 'la b o r in general and organized labor in p a r­ a series o f seventy-five conventions in AN AVIATOR TO HUNT FIRES.
visited an outpOst to see how opera­
as many cities in all parts o f the
tions were progressing. The news of
ticular, a statement o f facts regarding m y activity, both as a mem ber United States.
W i s c o n s i n F o re st r y D e p a r t m e n t Puts
his presence was com m unicated to the
The meetings w ill start in October
H
y
d
r
o
a
e
r
o
p
la
n
e
In
S
e
r
v
ic
e
.
of the-U nited States C ongress and as a private citizen, in striving tc
Austrians by a spy. They immediately
and end in April with a national mis­
Wisconsin has enlisted the services
crystallize the prevailing peace sentiment into practical action that sionary congress at Washington, April o f an aviator to search fo r forest fires fired sixteen twelve-inch shells at the
spot, some exploding within 120 yards
2G to 30, 191G.
Forty thousand
w ill prevent this cou ntry from b ecom in g involved in the European churches are to be invited to send in the known w oods o f W isconsin, it o f the king and his officers.
was announced. The hydroaeroplane
His m ajesty counted the projectiles
conflict, through the instigation o f such self-styled A m erican patriots their most able men as delegates to will be stationed at Trout lake.
as they fell, and then sat dow n on the
ihe various conventions, there being
E. M. Griffith, head o f the state for­ grass and penciled out an account “ to
as are engaged in the manufacture o f w ar m unitions and supplies, no limit to the number from each
estry department, made a flight in the show howr much it had cost the Austri­
and are w illin g to plunge this country in all the horrors o f w ar with church. Last year the attendance ran machine and located a fire thirty miles ans to try to take the life o f one man."
above 75,000 delegates, and the an­ distant. Heretofore the view a ranger
som ebod y or everybody in order that they m ay realize brain stag­ nouncement for this year speaks o f an has had o f the surr#unding country has
W h a t Ca us e d H is D e a t h ?
been from a sixty foot tower. The
gerin g profits for them selves. B y elimination o f this tribe o f finan­ expected total o f 150,000 men.
An Arizona man set a trap for rats.
Buffalo, N. Y., will be the place of air craft w ill reach the scene o f fire
cial ghouls, substituting therefor the governm ental ow nership, con ­ holding the first convention. Oct. 17-20. within a few minutes, it is figured, A dog was caught in the trap and up­
set a can o f gasoline. The dog’s bark­
New York city is on the list. No whereas with the ordinary facilities of
ing aroused a man, who took a lighted
trol and m anufacture o f all instrumentalities o f war, together with
financial appeal is to be made, but the a forest ranger hours would be con­
lamp into the room and lost his life in
work
is
to
be
educational.
the supplies o f every description acquired on the field o f battle.”
sumed.
the explosion.

LETTERS TELL OF
MEN’S SUFFERING
Show What the Soldiers In the
Trenches Are Thinking Of.
ONE WAS HAPPY IN DEATH.
As k e d P a r e n ts to R ejo ice W i t h H i m In
T h a t H e Died F or H i s C o u n t r y — G e r ­
mans

Do

Not

Understand

W h o S h o o t at T h e m

Enem ies

In D a y t i m e an d

S i n g S o n g s A f t e r D ar k .

A correspondent at the front w ith the
French army sends tw o letters from
soldiers. The first was found ready to
mail on the body o f one killed in bat­
tle. H e w as the only son o f a tow n
clerk o f A njou:
M y D ear, D a rlin g P aren ts—I f this let­
ter should reach y ou som e d ay expect a
g rea t unhappiness fo r y o u rselv es an d a
g reat happiness fo r me.
I shall be cu t o ff b y death, bu t y o u r
sorrow w ill b e soften ed by the th ou g h t
that y ou r son has died fo r F rance, fo r
ou r coun try, to defend the right. A n d
su rely y o u can n ot h a v e g reater con sola ­
tion.
B e as happy as y o u can. A ll y o u r life
lon g think o f me, bu t n ot to p ity me, and
be com forted .
T o u r son w h o lov es you,
A LBE R T AUBRY.

The n ext w as written by a lieuten­
ant in the midst o f the fight at Arras
after half his fa c e had been torn off by
a shell. Feeling death com ing on and
unable to see, he traced on the pages
o f a pocket blank book stained by his
blood a fe w legible words, show ing the
invincible conscience o f the man.
Dead So ld ie r’ s E n c o u r a g e m e n t .

On one page w as written, ‘‘500
francs to Poussard” (his orderly); on
another, “ 500 francs for the poor at
home,” and then on yet another a
w ord to his men:
“ H old out to the end, for the Germans
are going to take the trench again.
“ Inform my fam ily, Lucquiaud, at
Bellevue.
“ Thanks to all those w ho have
fou gh t with me. Say to my parents I
have always done m y duty.”
In one o f those curious little note­
books in which the German soldiers
are encouraged to write their impres­
sions o f the day’s doings this was
found on a prisoner:
“ The French are all day up in the
trees firing at us, and when night
comes they play the accordion or sing

os l iy I Hose Who
at homc :

iJll VtH'j 1 1‘UllllOl'lllUU

Pr o te st A g a i n s t Being Cal led Her o.

“ Ah, dear friends, one w ho is here
does not speak so com placently o f dy­
ing and sacrifice and victory as do
those who are behind there, ringing
bells and speechifying and w riting in
newspapers. One who is here makes
the best he can o f the bitter necessity
o f suffering and death, i f that be his
lot. But he knows, he sees, that noble
sacrifices, numberless and numberless
sacrifices, have already been made
and that for a long time there w ill be
enough destruction on our side as w ell
as on the other. Precisely when one
has to face suffering as I do, it is then
a bond o f union enlaces me w ith those
w ho are over there—on the other side.
* * * i f i get out o f this— but I have
little hope—my dearest duty w ill be to
plunge into the study o f what those
who have been our enemies think.”
A German prisoner o f the French
w rote to a Swiss professor:
“ From the 20th to the 25th o f Au­
gust I took part in great battles. Since
then I suffer morally until I am utter­
ly exhausted, in body as well as in
soul. M y soul finds no rest. * * *
This w ar will reveal to us how much
o f the brute still lives in man, and the
revelation w ill help us to make a great
step forw ard out o f animality—or it
w ill be the end o f us!”
Another w rites: “ A s for me, I do not
know such a thing as a holy war. I
know only one war, that w hich is the
sum o f all that is inhuman, impious,
bestial in man—a chastisement o f God
and a summons to contrition for the
people that rushes into it or allows
itself to be dragged into it.”

ORGANIZE DENTISTS’ SQUAD.
C a n a d a to S e nd

150 to

F ro n t to

Ca re

Fo r So ld ie rs ’ T e e t h .

That the teeth o f the soldiers in the
field are not to be neglected is ev i­
denced in the fa ct that a company
called the Canadian dental corps is
being organized and w ill soon be sent
to the front. The com pany comprises
dentists from all parts o f Canada who
are prepared to drill for service with
the different units in the Canadian ex­
peditionary forces.
The new dental corps, w hich is being
form ed at Ottawa, will be enrolled as a
regular military unit, and the officers
w ill have full rank. H ow ever, it will
not see service as a corps, for when it
reaches France it w ill be divided, with
tw o dental officers going to each mili­
tary unit in connection with the army
medical service. Some w ill be sent to
hospitals and elsewhere.
In view o f the fact that some o f the
soldiers have been on active service for
nearly six months, with practically no
opportunity to have their teeth attend­
ed to, it is believed that there will be
a great deal o f w ork for the dentists.

%

T H E IN D U S T R I A L N E W S

I
t
t♦

MANY SHATTERED

T h e T r u e P hi los op her .
from the day o f her disappeai'ance she
The
true
philosopher makes a con­
had been living at Pittsburgh, where
she had gone to await the death w hich siderable to do over his love o f and his
she knew she w as to suffer from a dis­ search for knowledge. But if he is a
truly w ise philosopher and if he values
ease.
A nother law yer who has reason to his reputation he will stop safely short
curse his connection with Thaw is of ever acquiring exact information.
John N. Anhut, who w ent to New York E xact inform ation is fatal to the philo­
city from Michigan after serving a sophical temperament. A philosopher
term there as a state senator. He was is a man w ho can make solemn and
admitted to the New York bar. Up to profound remarks about any matter
that time no breath o f scandal had whatsoever without knowing anything
Three of His Lawyers Have | ever attached itself to his name, and about it. As soon as he learns som e­
he was fast building up a circle of thing about a matter he is to that-exBeen In Serious Trouble;
friends both in and out o f the legal pro­ tent excluded from philosophizing
about it. H e is no longer a pure phil­
fession.
One Now In Prison.
H e w ent to live at a hotel in W hite osopher; he is now part scientist. This
Plains, N. Y., where he w as at the explains w hy there are so few promi­
time o f T h aw ’s hearing before Su­ nent and prosperous philosophers these
known as a magazine writer. Lewis preme Court Justice Keogh. The pris­ days. W ith the vast development o f
became interested in Thaw while the oner obtained a meeting with the our means o f communication, the mul­
latter w as in Matteawan and subse­ young lawyer, and it w as not long be­ tiplication o f books and newspapers
quently becam e engaged in a publicity fore the latter w as em ployed by Thaw. and the obtrusiveness; o f reformers, it
is almost impossible to get through the
campaign in his behalf.
J. N. Anhut Indicted.
world w ithout picking up a great deal
On one o f the visits w hich he made
to the asylum he advised the man in
During the habeas corpus hearing o f correct information, and conse­
whose: behalf he was working, if Dr. John W . Russell, the then super­ quently it is w ell nigh impossible to be
Thaw ’s ow n sworn testimony on this intendent o f M atteawan, was living a philosopher—Life.

CAREERS IN TIE
'S

§♦
♦

!
i

Evelyn Nesbit Says She Is One
of the Many Victims of
the Jinx.

i

i

S there a Thaw jin x ?
Is there some subtle and m ys­
terious influence which pervades
the atmosphere about Harry K.
Thaw and renders those who associate
with him more liable to the misfortunes
o f life? asks the New York World.
The question has been called up by
the failure o f Deputy Attorney Gen­ point may be taken as true, that if he
eral Franklin K ennedy, w ho has made were sane he had a perfect right to
a wider study o f the Thaw case than
any other man in the attorney general’s
office, and who devoted most o f his
time fo r the last tw o years to an effort
to get Thaw back to Matteawan, to
take any part in the last proceedings
before Justice Hendrick.
A t last reports Mr. Kennedy w as in
Buffalo recovering from a nervous
breakdown w hich he experienced soon
after the conclusion o f T h aw ’s conspir­
acy trial last March.
Not long after the beginning o f the
conspiracy trial Mr. K ennedy’s friends
began to see signs o f nervousness on
his part.
They becam e more and
more pronounced until after one o f the
arguments before the appellate divi­
sion. Attorney General W oodbury sent
fo r him and advised him to take a com ­
plete rest. Kennedy went aw ay with­
out leaving w ord o f his destination,

I

at the same hotel and w as introduced
to Anhut.
Finally Anhut received,
through one o f Thaw ’s agents, $25,000,
which the young law yer called a re­
tainer, but w hich it subsequently de­
veloped w as to be used in attempts
to bribe the authorities to let Thaw
out o f the asylum.
In probing the scandal which fol­
low ed the authorities heard a great
deal o f contradictory testimony. Sum­
moned to Albany, Russell told the
governor that W illiam F. Clark, sec­
retary o f the Sulzer inquiry commis­
sion, had told him the governor w ant­
ed Thaw out; that he had been offered
$25,000 by Anhut.
Clark charged that the “ prison ring”
was making money out o f pardons,
that $25,000 had been paid to Russell
by Thaw and that $11,000 had been
paid back when the “ ring” became
alarmed.
There w as a public inquiry, during
the progress o f which Dr. Russell re-

Lots of V ow els.

In the H aw aiian language every
w ord ends in a vowel. A Hawaiian
finds it almost impossible to pronounce
tw o consonants together, and in Eng­
lish he has the greatest difficulty in
pronouncing any w ord ending with a
consonant. Mr. Hale in his Polynesian
grammar says: “ In all the Polynesian
dialects every syllable must terminate
in a vowel, and tw o consonants are
never heard without a vow el between
them. It is chiefly to this peculiarity
that the softness o f these languages is
to be attributed. The longest syllables
have only three letters, and many syl­
lables consist o f a single vow el.”
Again, no syllable, as a general rule,
in the Bantu fam ily o f A frican speech
can end in a consonant, but only in
vowels.

READYMAIO
CONCENTRATED•

P R E P A R E D BY

iHE FfWNCO-/lMERlC/lN FOOD CO.

Welch
Grape
B all

T h a t “ D e ad M a n ’s C h e s t . "

The rendering o f the first line o f
Stevenson’s immortal song as “ Fifteen
men on a dead man’s chest” spoils the
significance o f the phrase, writes a
correspondent.
License is permitted
to poets, but no fifteen men could ever
find room on the chest o f any man,
dead or alive, unless they w ere Lilli­
putians on the top o f a Gulliver. The
actual phrase is “ the Dead Man's
Chest,” w hich is the name o f one o f
the Virgin islands, lying to the east o f
Porto Rico. It is said that when Co­
lumbus discovered the group he named
them after St. Ursula and some o f her
mythical virgins, but the English buc­
caneers rechristened them in homelier
terms, such as “ Dutchman’s Cap,”
“ Broken Jerusalem,” “ Rum island”
and “ The Dead Man's Chest.” K ings­
ley refers to the matter In the first vol­
ume o f “ At Last,” and Stevenson ac­
knowledged, in his account o f “ Treas­
ure Island,” that he had lifted the
phrase from the older novelist’s pages.
—Manchester Guardian.

18-20 O A K S T R E E T
C or.

N ew

,

C h a m b ers St.

P h o n e O r c h a r d 2300

piiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiniiiiiiiiiiuuiniiiiiiiiiiiniin^

1

The Ovens in |
the Sunshine I

H o w to Sh a rp en Y o u r K ni fe .

In the Woman’s Hom e Companion
a contributor gives boys the follow ing
advice as to how to keep their knives
sharpened:
“ Few boys who undertake to sharp­
en a knife have any great difficulty in
getting a sufficiently keen edge. It is
in keeping this edge that the trouble
arises.
This is due to holding the
knife blade too fiat when sharpening.
“By holding tfie knife blade very flat
a sharp edge can be readily produced,
but is so very thin that it is easily
broken and the blade is marred by
jagged nicks.
“ The men who are employed in fac-

P h oto b y A m erican P ress A ssociation
E V E L Y N N E S B IT T H A W , V IC T IM OS' J I N X

P h oto b y A m erican P ress A ssociation .
P h o to b y A m erica n P ress A ssociation .
TH A W ’S
L A T E S T P IC T U R E O F H A R R Y T H A W .

and for days his office w as making
vain efforts to get in touch w ith him.
Later he w as found in a restaurant.
It being apparent that he w as still far
from recovered he w as persuaded to
go to his home in Buffalo fo r a long
rest.

Many Other Victims of Jinx.
Illness, however, is only one o f the
lesser evils that have follow ed in the
trail o f H arry K. Thaw. Other mis­
fortunes that have befallen his asso­
ciates have included death, 'state pris­
on terms, the loss o f positions, attempts
at suicide, insanity and disgrace. Eve­
lyn Nesbit Thaw, w ho claims herself
as one o f the victim s, says it is all due
to the Thaw jinx.
Law yers are among those w ho have
suffered after association with the
slayer o f Stanford White. T w o have
gone to jail since serving Thaw, one
as a direct result o f that service and
the other after enjoying the distinc­
tion o f being the only law yer to be
engaged by Thaw at both of his mur­
der trials. T w o other lawyers who
served him died soon after ending
their connection with him, and one
w as disbarred as an attorney.

0 ’Keilly Incident.

P h o to b y A m erican P ress A ssociation.
J. N. A N H U T , E X -T H A W L A W Y E R , N OW IN
PR ISO N

escape. A cting on this advice, Thaw
testified that he engaged the men who
assisted him in his getaway. Lewis'
death made it impossible to get from
him his ow n version o f the story.
A t T h aw ’s first trial A. Russell Pea­
body was engaged by the slayer as
his personal counsel. Peabody played
a prominent part in all the proceed­
ings and of the many lawyers in the
case was regarded as the one best liked
by the defendant. When he died in
September, 1908, six months after
Thaw ’s commitment to the asylum, the
prisoner was deeply affected by the
news.

A pathetic Instance is that o f Dan
O'Reilly, w ho when he w as retained as
Hartridge Disbarred.
counsel at the first Thaw trial w as a
One
of
those whose dow nfall is di­
popular crim inal lawyer in New York.
H e had been an assistant district at­ rectly attributable to his connection
torney and as such had prosecuted the with Thaw is Clifford W . Hartridge, a
case against Samuel J. Kennedy, who young lawyer, who acted as Thaw ’s
was charged with the murder o f Dolly counsel o f record on the first trial. In
Reynolds. Later he figured in the Nan 1910 he brought suit against Mrs. Mary
Copley Thaw for $93,000, which he
Patterson case.
He served as a member o f the Thaw claimed he had expended in behalf o f
counsel until T h aw had been sent to Thaw.
In the course o f the trial evidence
Matteawan. Later he appeared as per­
sonal counsel for Evelyn Nesbit Thaw. was offered to show that about $40,000
His final dow nfall then came in had been expended in keeping a num­
connection with the sensational rob­ ber o f women friends o f Thaw out of
bery o f Aaron Bancroft, an aged bro­ the way. Hartridge lost the suit. At
ker w ho w as knocked down in the the conclusion o f the trial Judge Holt
Produce Exchange building and de­ directed that an investigation be made
prived o f $85,000 worth o f securities. to determine whether or not Hartridge
O’Reilly figured in the negotiations fo r had been guilty o f obstruction o f ju s­
tice. The matter was finally taken up
the return o f the stolen property.
After one o f the men involved had before the appellate division in disbar­
turned inform er and made a state­ ment proceedings brought by the Bar
ment implicating the lawyer in the association.
attempts to dispose o f the loot the once
Mrs. Hartridge Dies.
assistant prosecutor w as charged in an
indictment with having received stolen
Even more tragic than the fate of
property. H e was tried before Justice Hartridge w as that o f his w ife. In
Davis in the supreme court, w ho sen­ October, 1907, the lawyer called at po­
tenced him upou his conviction to five lice headquarters and reported that
months in the penitentiary.
Mrs. Hartridge had disappeared. A
V| hen he cam e from prison it w as as search was immediately begun which
a m a* broken in body and spirit. His Uioluded the morgues o f a dozen cities.
okl friends, o f whom he had had a Tst was suspected for a time that she
host, w ere shunned, and on Nov. 7. had com m ittel suicide. In the follow ­
1913, at the age o f forty-four, he died.
ing July a woman died in the H om eo­
Another law yer whose association pathic hospital in Pittsburgh who, it
with Thaw w as follow ed by death was was afterw ard learned, was Mrs. HartAlfred Henry Lewis, who w as better l'Ulge. It then developed that almost

<£
V



D EVOTED MOTHER,
C O l’ L E Y T H A W .

M RS.

MART

signed his post as superintendent o f
Matteawan.
The governor’s inquiry
was follow ed by a grand ju ry investi­
gation, w hich resulted in the indict­
ment o f Anhut fo r attempting to bribe
Dr. Russell.
Anhut w as placed on trial, Dr. Rus­
sell being one o f the chief witnesses
against him. On May 12, 1913, he
was convicted o f attempted bribery
and a week later w as sentenced to a
term in state prison o f from tw o to
four years. He was released on bail
pending his appeal, but the convic­
tion w as subsequently affirmed, and he
is now serving his sentence. His con­
viction w as follow ed by his disbar­
ment.

Dr. Russell’s Statement.
Dr. Russell claimed that he had
twice been offered a bribe o f $20,000
to issue a certificate that Thaw was
sane and that he had both times re­
fused it. I f the jin x was active in bis
case it contented itself merely witn
bringing about a set o f circumstances
that got the superintendent a lot o f un­
pleasant notoriety and caused his re­
tirement from his official position.
H ow ard Barnum, the guard who w as
at the gate on the morning that Thaw
made his escape from the asylum, lost
his jo b as the result o f being there,
though It w as denied that there had
been any counivance between him and
the alleged lunatic.
W hile Thaw was in the Tom bs he be­
came friendly with R afaello Gascone,
who w as charged with a double killing
in Mulberry street. The tw o men played
checkers and cards together and ex­
changed confidences. The friendship
was interrupted when Gascone w as sen­
tenced to die in the electric chair. W ith
the help o f Albert T. Patrick, Gascone
managed to get a new trial, which re­
sulted in acquittal. A year later he was
shot in the little wine shop which he
kept at 108 M ulberry street.
As far back as 1900 there are evi­
dences o f the strange fatality which
has follow ed the Pittsburgh millionaire,
it was then that he was spending his
income in making a splurge along the
Paris boulevards. A dispatch in 1900
told how six months before the Comtesse Louise de Mortane, a pretty
w idow and member of the provincial
aristocracy, had tried to com m it suicide
because Thaw would not marry her.
She recovered from the grief, however,
for she w as next reported as contract­
ing for a private submarine boat in
which she announced her intention of
making her home.
“ Big D ick” Butler and fou r others
who helped Thaw escape from Mattea­
wan do not consider themselves victims
o f the jiux. It is true they had to stand
trial on a charge o f conspiracy, but
they were acquitted. They also got
$5,000, it was reported.

In great, shining ovens like this, in the largest bakery in
the w orld— flooded with sunlight and spotlessly clean—
w e do the daily making and baking o f the many

thick and strong to stand any ordinary
usage.”
T e m p e ra m e n t.

“ W hat the dickens do they mean by
artistic temperament?” asked young
Arbuthnot o f his talented pa.
“ W h y,” explained pa, “ if you go to a
tailor and ask him to make you a suit
the tailor is satisfied to go ahead and
make you any kind o f suit you want
any w ay you want it made. If you go
to an architect he’s tickled to build you
any kind o f house you w ant any w ay
you w ant it built. But if you go to a
man and ask him to w rite you a cer­
tain kind o f book or poem in any par­
ticular way, or i f you w ant him to
paint you a picture or sculp you a
statue o f any particular kind the man
with the artistic temperament, instead
o f being tickled to get the job, will
say:
“ ‘N ow ju st look w hat this durn fool
wants n ow !’ ’’—Judge.

B is c u its
that you ’ll find in tempting variety w henever you step
into any good grocery store. T r y a box o f Sunshine
Graham Crackers today. Y o u ’ll note their quality at
the first bite.

] o q s e -W iles
|J lS C U lT

(O M P A N Y

B a ke rs of S c m h ia e Biscuits
NEW Y O RK

Going the Lim it.

“ W hat foolish things a young fellow
will do when he is in love.”
“ Yes. Some of them go as far as to
get married.” —Kansas City Journal

lllllllllllllllllllllllllllllllllllllllilllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll

J H E INDUSTRIAL NEWS is in
favor of Universal Peace and
the rights of the Workingman.

If

you approve of what it advocates
send one dollar

to

INDUSTRIAL

NEWS, 444 Pearl Street, New York,

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4

TH E IN D U STR IA L N E W S

A n Open Letter
to the Governor
(C o n tin u e d fr o m

s o lu t e ly n o in fo r m a t io n t e n d in g e v e n to
p u t i t on in q u ir y o r n o t ic e t h a t th e
t r u e o b j e c t f o r w h ic h th e lo a n w a s
s o u g h t o r t h e m o n e y t o b e u sed w a s
o t h e r th a n a n e n t ir e ly le g itim a t e c o m ­
m e r c ia l p u r p o s e .

p a g e 1.)

b e llig e r e n t g o v e r n m e n ts , a n d so in e f ­
fe c t c a u s e o u r g o v e r n m e n t to b e f u r ­
n is h in g a id in m o n e y to b e llig e r e n t
g o v e r n m e n t s a t w a r ; o r, on t h e o th e r
h a n d , y o u r h o n o r a b le b o a rd , i f it n e v e r ­
th e le s s d e te r m in e d t o a u th o r iz e a n d d i­
r e c t th e F e d e r a l R e s e r v e b a n k s to c o m e
to t h e r e s c u e o f t h e m e m b e r b a n k s in
su ch a n e x ig e n c y b y d is c o u n t in g an d
r e d is c o u n t in g on a n e la b o r a te sc a le ,
y o u r b o a r d w o u ld b e th en s u b je c t e d to
th e p a in fu l e m b a r r a s s m e n t t h a t th is
a c t io n o f t h e F e d e r a l R e s e r v e b a sk s,
w h ile it w o u ld a c c o m p lis h th e p u r p o s e
o f p r e v e n t in g a b a n k p a n ic , w o u ld , at
th e s a m e tim e , m a k e o u r g o v e r n m e n t
lia b le to c e r t a in o f th e b e llig e r e n t g o v ­
e r n m e n t s n o w a t w a r , f o r th e p a y m e n t
o f a n e n o r m o u s w a r in d e m n ity b e c a u s e
o f th e b r e a c h o f n e u tr a lit y c o m m itt e d
b y o u r g o v e r n m e n t in p e r m itt in g o n e
o f its b r a n c h e s (th e F e d e r a l R e s e r v e
b a n k s ) to fu r n is h m e m b e r b a n k s w ith
h u g e s u m s o f m o n e y to e n a b le th e
m e m b e r b a n k s t o c o n t in u e lo a n s a n d
d is c o u n t s t o o t h e r b e llig e r e n t g o v e r n ­
m e n ts a n d a g e n ts th e r e o f.

T h e c o n t e n t io n s a s a d v a n c e d b y o u r
o w n g o v e r n m e n t in th e A la b a m a c a se ,
a s u p h e ld b y t h e in t e r n a t io n a l c o u r t
e r n m e n t in a n y w a y .
o f a r b it r a tio n , a n d a t th e in s t a n c e o f
H o w e v e r , sh o u ld it a p p e a r in e v i ­
o u r g o v e r n m e n t w r itt e n in t o th e b o d y
d e n c e th a t , s u b s e q u e n t to th e o r ig in a l
o f in t e r n a t io n a l la w , w h e n e x a m in e d ,
a d v a n c e o r lo a n b y t h e m e m b e r b a n k
■are fo u n d su ffic ie n t in t h e m s e lv e s to
(a n u n d e r t a k in g in w h ic h t h e r e w a s n o
e s ta b lis h th e c o r r e c t n e s s o f t h e v ie w
p a r t ic ip a t io n b y a n y o ffice r o f th e g o v ­
h e r e e x p r e s s e d on t h is b r a n c h o f th e
e r n m e n t ), t h e m e m b e r b a n k h a d a p ­
m a tt e r n o w u n d e r c o n s id e r a tio n .
p lie d t o t h e F e d e r a l R e s e r v e b a n k f o r
In v ie w o f th e fo r e g o in g , w e e a r ­
a lo a n o r r e d is c o u n t , w it h a c t u a l in te n t
o f o b t a i n in g a id in m o n e y fr o m th e n e s t ly u r g e t h a t y o u r h o n o r a b le b o a rd
F e d e r a l R e s e r v e b a n k f o r th e p u r p o s e im m e d ia t e ly t a k e s t r o n g a n d d r a s tic
o f e n a b lin g it (t h e m e m b e r b a n k ) to p r e v e n t a t iv e a c t io n to tihe e n d o f s a f e ­
c o n t in u e o r re n e w a p r e - e x is t in g lo a n g u a r d in g th e U n ite d S ta te s a g a in s t f u r ­
m a d e to a b e llig e r e n t g o v e r n m e n t o r th e r v io la t io n s o f it s n e u tr a lit y , a n d so
it s a g e n ts , a n d i f it a p p e a r e d t h a t th e a s to g u a r d e ff e c t iv e ly in th e fu t u r e
m e m b e r b a n k d id in f a c t o b ta in a lo a n a g a in s t t h e c o m m is s io n o f a c t s b y
o f m o n e y fr o m th e F e d e r a l R e s e r v e m e m b e r b a n k s a n d F e d e r a l R e s e r v e
b a n k , w h ic h in tu r n e n a b le d th e m e m ­ b a n k s in c lu d e d in th e F e d e r a l R e s e r v e
b e r b a n k t o m a k e a lo a n to a b e llig e r ­ S y s te m , w h ic h , i f n o t s t o p p e d b y a c ­
A s s t e p s in p r e v e n ta t iv e a ction * on
e n t g o v e r n m e n t o r its r e p r e s e n ta tiv e s tio n on th e p a r t o f y o u r h o n o r a b le th e p a r t o f y o u r h o n o r a b le b o a r d , w o
o r a g e n ts , th e n a n in t e r n a t io n a l c o u r t b o a r d , w ill, in th e n e a r fu tu r e , an d e a r n e s tly u r g e t h a t y o u w it h o u t d e la y ,
o f a r b it r a t io n w o u ld d o u b t le s s h old w ith u n e r r in g c e r t a in ty , c r e a t e c o n d i ­ m a t e r ia lly m o d ify a n d reTorm y o u r v a ­
t h a t o u r g o v e r n m e n t w a s lia b le f o r t io n s t h a t w ill r e s u lt e ith e r in o u r g o v ­ r io u s r e g u la t io n s , o r d e r s a n d r u lin g s
h a v in g e x te n d e d a n d fu r n is h e d a id in e r n m e n t b e in g m a d e lia b le f o r a n in ­ a s se t f o r t h in F e d e r a l R e s e r v e c i r c u ­
m o n e y to a b e llig e r e n t g o v e r n m e n t, d e m n it y p r o b a b ly r e a c h in g in a m o u n t la r s N o s . 2, 3, 4, 5, 8, VI a n d 12, serie s
e v e n th o u g h it w a s c o n c e d e d t h a t th e th e su m o f o n e b illio n d o lla r s , o r find o f 1915. W e r e q u e s t th n t th e s e s e v e r a l
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F e d e r a l R e s e r v e b a n k h a d n o n o t ic e o r th e
d o c u m e n ts b e s o m o d ifie d a s to m a k e
in f o r m a t io n t h a t th e p u r p o s e o f th e t h r e a t e n in g m e n a c e o f a n im p e n d in g p e r f e c t ly p la in b y p r o p e r o r d e r a n d
m e m b e r b a n k in o b t a in in g th e m o n e y b a n k p a n ic c o n s e q u e n t u p o n th e a c ­ r e g u la t io n ,
in s tr u c t io n s
c o n t r o llin g
w m t o u s e it f o r e ith e r o f th e a f o r e ­ t io n s o f th e m e m b e r b a n k s in b e c o m ­
upon F ederal R eserve banks and m em ­
sa id p u r p o s e s , n o r w o u ld s u ch a r u lin g in g w a t e r lo g g e d w it h lo a n s m a d e u p o n b e r b a n k s th e f o llo w in g ;
o r h o ld in g o f the. c o u r t o f a r b it r a t io n a n a b n o r m a lly la r g e s c a le t o a g e n ts o f
F ir s t . N o F e d e r a l R e s e r v e b a n k sh a ll
b e a f fe c t e d o r m o d ifie d u p o n a s h o w in g b e llig e r e n t g o v e r n m e n ts , a n d s e c u r e d h e r e a ft e r d is c o u n t a n y n ote, d r a ft o r
th a t t h e m e m b e r b a n k in o b t a in in g a o n ly b y s t o c k s a n d b o n d s a n d n o te s , b ill o f e x c h a n g e p u r p o r tin g to a r is e ou t
lo a n fr o m th e F e d e r a l R e s e r v e b a n k , d r a ft s a n d a c c e p t a n c e s o f s u ch a g e n ts . o f a c o m m e r c ia l tr a n s a c tio n , o r a p ­
I n a s it u a t io n o f t h a t o h a r a c t e r , on e
h a d d o n e s o b y t h e u s e o f c o lla te r a l
p a r e n t ly d r a w n f o r a g r ic u ltu r a l, in d u s ­
u p o n w h ic h t h e F e d e r a l R e s e r v e b a n k w h ic h w e a g a in r e p e a t, w ill m o s t s u r e ­
tria l o r c o m m e r c ia l p u rp o s e s, s e c u r e d
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t o th e t e r m s o f th e F e d e r a l R e s e r v e y o u r h o n o r a b le b o a r d to t a k e im m e ­
w a r e s , m e r c h a n d is e o r o th e r w is e , e x ­
a ct.
T h e d e te r m in in g fa c t o r , a s a f ­ d ia te p r e v e n t a t iv e a c t io n , y o u r b o a r d
c e p t th e o ffice r s o f sa id F e d e r a l R e ­
f e c t i n g th e lia b ilit y o f o u r g o v e r n m e n t, w ill fin d it s e lf f a c e d w ith t h e u n p le a s ­
s e r v e b a n k fir^t m a k e p ro p e r a n d d ili­
w o u ld b e t h e o n e c o n s id e r a tio n a s to a n t a lt e r n a t iv e o f b e in g u n a b le o n th e
g e n t in q u ir y to d is c o v e r w h e th e r the
w<hat th e m o n e y w a s a c t u a lly u se d fo r, o n e h a n d t o r e d is c o u n t f o r t h e m e m b e r
p e r s o n o r p e r s o n s in w h o se f a v o r su ch
a n d n o p le a in a b a te m e n t c o u ld b e s u c ­ b a n k s , b e c a u s e t h e r e d is c o u n t s w o u ld
n o te , d r a ft o r h ill o f e x c h a n g e is
c e s s fu l ly in t e r p o s e d b y w a y o f p r o o f e n a b le t h e s e b a n k s t o C on tin u e th e
d ra w n , o r th e m a k er or m ak ers th ereof
t h a t t h e F e d e r a l R e s e r v e b a n k h a d a b ­ lo a n s a n d d is c o u n t s m a d e to a g e n t s o f
o r e ith e r o r a n y o f th em , a r e a c t in g a s
a g e n ts o r r e p r e s e n ta tiv e s o f a n y f o r ­
eig n b e llig e r e n t g o v e r n m e n t a t w ar.
a n d w h e n e v e r th e a m o u n t o f a n y su ch
n o te , d r a ft o r b ill o f e x c h a n g e o ffe re d
fo r d is c o u n t s h a ll b e $50,000 o r m o re ,
th e F e d e r a l R e s e r v e b a n k s h a ll r e q u ir e
to b e fu r n is h e d a n a ffid a v it fr o m th e
m aker,
a ccep tor
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in
w h ic h m u s t b e se t fo r th in d e ta il th e
tru e f a c t s a n d h is to r y o f t h e t r a n s a c ­
tio n s o u g h t t o b e a c c o m p lis h e d b y th e
p r o p o s e d lo a n o r d is c o u n t ; a n d sh o u ld
th e in q u ir y o r a ffid a v it r e v e a l a n y e v i­
d e n c e t e n d in g to sh ow th a t t h e p r o ­
on the dining cars o f the N orthern Pacific R ail­
c e e d s o f th e lo a n o r d is c o u n t a r e to
w ay is N O M E R E F A D . It stands, first, for
b e u s e d f o r t h e b en e fit o f a n y b e llig e r ­
the excellence o f these toothsom e and specially
e n t g o v e r n m e n t , o r its a g e n t, o r u t il­
selected potatoes; second, it emphasizes in a fo r­
iz e d in c o n n e c t io n w ith th e p u r c h a s e
cible way, the high character and quality o f the
o r s a le o f a n y m a te r ia ls o r s u p p lie s in ra e n t o r a n a c t w h ic h b o u n d th e g o v ­

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They mean the Maid
Who’s made away
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To

The Road




A s h a v in g a b e a r in g u p o n t h e f o r e ­
g o in g , a n d a c o n s id e r a tio n t h e r e o f b y
y o u r h o n o r a b le b o a r d , a n d a s a c le a r in ­
d ic a t io n o f th e o p in io n o f o u r g o v e r n ­
m e n t c o n c e r n in g th e p r o p e r p o li c y to
b e p u r s u e d b y a n e u tr a l g o v e r n m e n t
w ith r e g a r d to lo a n s o r a d v a n c e s o f
m o n e y f o r t h e b e n e fit o f a b e llig e r e n t
g o v e r n m e n t, w e r e s p e c t fu lly s u b m it th e
f o l lo w i n g :
I n A u g u s t, 1914, J. P . M o r g a n , o f th e
firm o f J. P . M o r g a n & C o., in fo r m e d
M r. S e c r e t a r y B r y a n th a t h is firm w a s
c o n s id e r in g t h e m a k in g o f a lo a n to
th e F r e n c h G o v e r n m e n t o f o n e h u n d re d
m illio n ($ 100, 000,000) d o lla r s , a n d d e sired
b e f o r e m a k in g th e lo a n to a s c e r t a in
w*hat th e p o s itio n o f o u r g o v e r n m e n t
w o u ld b e t o w a r d s u ch a t r a n s a c t io n ,
w h e th e r in t h e ju d g m e n t o f th e o ffice r s
o f t h e g o v e r n m e n t th e m a k in g o f s u ch
a lo a n b y th e firm w o u ld in v o lv e o u r
g o v e r n m e n t in a b r e a c h o f n e u tr a lit y .
S p e a k in g fo r o u r g o v e r n m e n t, M r.
S e c r e t a r y B r y a n a n s w e r e d a s f o ll o w s :
" T h e r e is n o r e a s o n w h y lo a n s s h o u ld
n o t b e m a d e to th e g o v e r n m e n t s o f
n e u tr a l n a tio n s , b u t, in th e ju d g m e n t
o f th is g o v e r n m e n t lo a n s b y A m e r ic a n
b a n k e r s to a n y fo r e ig n n a tio n w h ic h is
a t w a r a r e in c o n s is t e n t w it h t h e tru e
s p ir it o f n e u t r a lit y .”
L e s t y o u r h o n o r a b le b o a r d fa ll in to
th e e r r o r o f r e fu s in g to c o n s id e r s e ­
r io u s ly t h e m a te r ia l a lle g a t io n s o f th is
c o m p la in t, in th e m is ta k e n b e lie f th a t
n o o n e s e t o r c liq u e o f b a n k e r s o r
fin a n c ie r s c o u ld p o s s e s s su ffic ie n t p o w e r
a n d a u th o r it y , o r a r e in c o n t r o l o f a n
o r g a n iz a t io n h a v in g all th e r a m ific a ­
t io n s o f in flu e n c e w h ic h w e fr a n k ly
c o n c e d e m u s t b e in th e p o s s e s s io n o f
p e r s o n s e n g a g e d in a c o n s p ir a c y su ch
a s is h e r e in c h a r g e d , in o r d e r t o r e n ­
d e r e ff e c t iv e th e o b je c t s o f s u ch a c o n ­
s p ir a c y , w e r e s p e c t fu ll y s t a t e to y o u r
b o a r d t h a t d u r in g th e p a s t t w e lv e
y e a r s , in p ra .ctfca.lly e a c h a n d e v e r y
c a s e w h e r e a g r e a t c o n s p ir a c y in v o l v ­
in g g r o s s m is u s e o f fin a n c ia l p o w e r in
v io la t io n o f t h e la w s o f th e c o u n t r y
h a s b e e n p r o s e c u te d b y t h e g o v e r n ­
m en t, it h a s a lm o s t w it h o u t e x c e p t io n
p r o v e n tru e, t h a t th e d ir e c t in g a n d c o n ­
t r o llin g f o r c e in p la n n in g a n d e x e c u t ­
in g th e s e c r im e s h a v e b e e n th e m e m ­
b e r s o f th e firm o f J. P . M o r g a n & C o.,
a n d t h e s e lfs a m e g r o u p o f a s s o c ia t e s
w<ho h a v e been, s o a c t i v e in fu r t h e r in g
th e c o n s p ir a c y a lle g e d h e r e in . A s in ­
c id e n ts to t h e o r g a n iz a t io n a n d o p e r a ­
tio n o f t h e N o r th e r n S e c u r itie s C o m ­
p a n y , S teel, C o a l, M ea t, H a r v e s t e r , T o ­
b a c c o , O il, M o n e y a n d R a ilr o a d T ru s t

e r a ! R e s e r v e B o a r d , a d d r e s s e d to all t o th e e x te n t o f s e v e r a l m illio n d o lla r s
F ed e ra l R e serv e ban ks and m em ber a day.
b a n k s , it sh o u ld b e m a d e p la in th a t
T h e r e h a v e b e e n v is it e d u p o n t h e
th e F e d e r a l R e s e r v e B o a r d d is a p p r o v e s c o u n t r y w it h in th e la s t fo u r t e e n y e a r s
where these tubers, which weigh tw o pounds or
o f t h e m e m b e r b a n k s m a k in g a n y n o le ss th a n fo u r d iffe r e n t p a n ic s ,
more, each, are raised. T h ey are found on A L L
lo a n s , d is c o u n t s o r a d v a n c e s o f m o n e y th e o u t g r o w t h a n d c o n s e q u e n c e o f th e
in te n d e d f o r th e u se o f a n y b e llig e r e n t o p e r a tio n s o f t h e s e m e n , a n d m o r e th a n
our D IN IN G and C A F E cars, and are indeed
g o v e r n m e n t at w a r , o r f its a g e n ts , an d o n e o f th e se p a n ic s w a s d e lib e r a te ly
E P IC U R E A N in quality and form an im portant
e q u a lly d is a p p r o v e s o f m e m b e r b a n k s b r o u g h t o n b y th e m , in o r d e r to a c c o m ­
part o f our
m a k in g a n y lo a n , d is co u n t o r a d v a n c e p lish t h e ir o w n selfis h a n d u lt e r io r
o f m o n e y w h e r e th e sa m e Is to b e u sed a im s a n d p u r p o s e s , a t th e e x p e n s e o f
in p u r c h a s in g o r p a y in g f o r a n y m a t e ­ t h e g r e a t b o d y o f t h e p e o p le .
ria l o r s u p p lie s In ten d ed f o r th e u s e o f
A s c o n v in c in g e v id e n c e o f th e tru th
a n y b e llig e r e n t g o v e r n m e n t, a n d re ­ o f th e s e a lle g a t io n s , w e a s k y o u r h o n ­
q u e s tin g a ll o lllc e r s an d d ir e c t o r s o f o r a b le b o a r d t o e x a m in e :
m e m b e r b a n k s tn use e v e r y r e a s o n a b le
T h e g o v e r n m e n t ’ s b ill o f c o m p la in t
p r e c a u t io n an d m a k e d ilig e n t in q u ir y a n d b r ie f o f e v id e n c e a n d o p in io n s o f
in e a c h c a s e to p r e v e n t th e u se o f th e C ir c u it C o u r t o f A p p e a ls a n d S u p r e m e
le n d in g an d d is c o u n t in g fa c ilit ie s o f C o u r t o f th e U n ite d S ta te s in th e c a se
m e m b e r b a n k s fo r th ese p u r p o s e s , an d o f U n ite d S ta te s v s. N o r th e r n S e c u r i­
in s t r u c t in g F e d e r a l R e s e r v e b a n k s to tie s C o m p a n y , th e m e m b e r s o f t h e firm
r e fu s e r e d is c o u n t s o r lo a n s to a m e m ­ o f J. P . M o r g a n & C o. a n d o th e r s.
b e r b a n k w h e re It a p p e a r s th a t th e r e ­
T h e r e c o r d s o f th e S p e c ia l I n v e s t ig a t ­
su lt w o u ld b e to e n a b le a m e m b e r b a n k in g C o m m it te e a p p o in t e d b y th e H o u s e
t o c o n t in u e o r re n e w a p r e - e x is t in g o f R e p r e s e n t a t iv e s in 1912, w h ic h sa t
lo a n o r d is c o u n t fo r a b e llig e r e n t g o v ­ d u r in g 1912-1913, to in v e s t ig a t e t h e r a m ­
e r n m e n t. o r its a g e n ts , o r w h e r e th e ific a t io n s o f a g r e a t c o n s p ir a c y e n g i­
p r o c e e d s h a d b een used in th e p u r c h a s e n e e r e d b y th e m e m b e r s o f th e firm o f
o f m a t e r ia ls o r su p p lie s in t e n d e d fo r J. P . M o r g a n & C o. a n d c e r t a in c o n ­
u s e o f a b e llig e r e n t g o v e r n m e n t.
fe d e r a t e s , f o r th e p u r p o s e o f m o n o p o ­
T h ir d . U s in g the p o w e r v e ste d in th e liz in g a n d c o n t r o llin g th e e n tir e b a n k ­
in g , m o n e y a n d c r e d it fa c ilit ie s o f th e
TTThP'
c o u n tr y .
EMME>
R e c o r d s o f in v e s t ig a t io n c o n d u c te d
b y I n t e r s t a t e C o m m e r c e C o m m is s io n ,
u p o n o r d e r o f U n ite d S ta te s S e n a te in
1914, c o n c e r n in g c o n d u c t o f m e m b e r s o f
firm o f J. P . M o r g a n & C o. a n d c e r t a in
o t h e r p e rs o n s a s s o c ia t e d w ith t h e m , in
t h e w o r k in g th e g r e a t N e w H a v e n
R a ilr o a d c o n s p ir a c y .
I n d ic t m e n t s c o v e r i n g th o s e a c t s r e ­
tu r n e d a g a in s t th e s e p a r tie s , n o w on
file in U n ite d S ta te s D is t r ic t C o u r t fo r
S o u th e r n D is t r ic t o f N e w Y o r k .
B ill o f c o m p la in t o f th e g o v e r n m e n t
a g a in s t th e s a m e p e rs o n s , filed in th e
U n ite d S ta te s D is t r ic t C o u r t o f M a s s a ­
c h u s e tt s a t B o s t o n , t o g e t h e r w it h p lea
o f d e fe n d a n ts a d m it t in g t r u th o f a ll e ­
g a t io n s in th e g o v e r n m e n t 's c o m p la in t,
an d
c o n s e n t in g to e n t r y o f d e cr e e
a g a in s t d e fe n d a n ts .
T h e o p e r a t io n s o f th e m e m b e r s o f th e
firm o f J. P . M o rg a n & C o. a n d th e ir
c o n fe d e r a t e s in t h e N e w H a v e n c o n s p i­
r a c y r e su lte d in a lo s s to s e c u r it y h o ld ­
e r s o f N e w H a v e n a n d a llie d c o m p a ­
n ies, a s s h o w n b y t e s t im o n y b e f o r e th e
c o m m is s io n , o f m o r e th a n t w o h u n d r e d
a n d f i f t y m illio n d o lla r s .
R e c o r d o f in v e s t ig a t io n c o n d u c t e d b y
I n t e r s ta te - C o m m e r c e C o m m is s io n in
C h i c a g o
1914 in r e g a r d to lo o t in g o f B a lt im o r e
a n d O h io R a ilr o a d C o m p a n y b y m e a n s
And T H E
WEST
o f a se r ie s o f h u g e t r a n s a c t io n s in th e
Phoebe Snow.
s e c u r it ie s o f C in c in n a ti, H a m ilt o n an d
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a n d P ie r r e
M a r q u e t t e an d
oth er
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of
w h ic h , a s it a p p e a r e d fr o m t h e t e s t i­
m o n y , w e r e e n g in e e r e d b y th e fir m o f
J. P . M o r g a n & C o. f o r th e ir o w n p ro fit,
a n d in c o n s e q u e n c e o f w h ic h t h e B a lt i­
m o r e a n d O h io R a ilr o a d C o m p a n y w a s
lill^lllllIjlllll'llinfflllllffMlllllllll^llllliPll^llliiilllllPlllllilillllllllllillllllllllllllllllllllllllllllllllTPS
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Northern Pacific Country

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F e d e r a l R e s e r v e B o a r d u n d e r s e c tio n
11 o f t h e F e d e r a l R e s e r v e a c t , th e r e
s h o u ld b e fr e q u e n t e x a m in a t io n s o f th e
a c c o u n t s , b o o k s a n d a ffa ir s o f t h e m o re
im p o r t a n t m e m b e r b a n k s a n d F e d e r a l
R e s e r v e b a n k s to a s c e r ta in w h ic h o f
th e s e , i f a n y , a r e c o n t in u in g to m a k e
d is c o u n t s o r a d v a n c e s o f m o n e y f o r u se
o r b e n e fit o f a b e llig e r e n t g o v e r n m e n t
o r its a g e n ts .

of

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n th r a c ite

m a d e to p u r c h a s e m illio n s o f d o lla r s ' o f t h e firm o f J. P . M o r g a n & C o. a n d
w o r th o f s e c u r it ie s a n d g u a r a n t e e p a y ­ th e ir a s s o c ia t e s , a s c o n t e m p la t e d b y
m e n t o f m a n y m illio n s m o re , a p p r o x i­ th e s e m en in th e c a r r y in g o n o f th e
m a tin g s e v e n t y m illio n d o lla r s , a ll o f p r e s e n t m o s t in iq u it o u s c o n s p ir a c y .
w h ic h h a v e p r o v e d to b e o f litt le o r no
T h e m en in t h e o r g a n iz a t io n s w h o m
v a lu e . R e c o r d s o f th e t r a n s a c t io n s r e ­ w e r e p r e s e n t, m illio n s in n u m b e r, lo o k
la t in g to th e s t o c k s a n d b o n d s o f th e w it h h o r r o r a n d d e te s t a t io n u p o n th e
H a m ilt o n a n d D a y t o n a n d P ie r r e M a r ­ te r r ib le g a m e o f s la u g h t e r , m u r d e r ,
q u e t t e c o m p a n ie s , in w h ic h m e m b e r s r a p in e a n d b lo o d -g u ilt in e s s n o w b e in g
o f th e firm o f J. P . M o r g a n & C o. w e re p la y e d on t h e b a tt le fie ld s o f E u r o p e ,
in v o lv e d , a b o u n d w ith in s t a n c e s o f t u r ­ in flic t in g u n to ld m is e r y a n d d e s t r u c ­
p itu d e , o f w h ic h th e f o llo w in g is a fa ir tio n u p o n h u m a n it y .
e x a m p le : A t a t im e w h e n th e se r a il­
A lr e a d y t h e c o n s p ir a t o r s h a v e d r a w n
r o a d s w e r e a b s o lu t e ly b a n k r u p t an d fr o m th e b a n k s in th e F e d e r a l R e s e r v e
th e ir s t o c k s w o r th le s s , m e m b e r s o f th e s y s t e m s o m e t w o h u n d r e d a n d t w e n t y
firm o f J. P . M o r g a n & C o., a s o w n e r s m illio n s o f d o lla r s a n d
u sed th e s e
th e r e o f, a c t u a ll y s o ld th e s e s t o c k s at m o n e y s o n c o n t r a c t in g a n d p a y i n g fo r
t h e p r ic e o f t w o h u n d r e d d o lla r s p e r t h e e r e c t io n o f h u g e fa c t o r ie s in d i f ­
sh a r e , t o a n o th e r r a ilr o a d c o m p a n y , on fe r e n t p a r ts o f t h e U n ite d S ta te s f o r
th e B o a r d o f D ir e c t o r s o f w h ic h c e r t a in th e m a n u fa c t u r e o f in s tr u m e n t s o f
o f th e ir n u m b e r s a t, a n d w h o s e e n tir e d e a th , a n d
d e s tr u c t io n
on
a
s c a le
d ir e c t o r a t e w a s n o m in a te d a n d e le c te d h it h e r t o u n d r e a m t o f, s o th a t e v e n
b y a v o t i n g t r u s t m a n a g e d b y th e n o w , b y th e u^e o f th e s e v a s t s u m s
firm .
A n o u t c r y fr o m s t o c k h o ld e r s o f m o n e y , g e c u r e d fr o m in s titu tio n s ,
fo r c e d a r e s c in d in g o f th e in fa m o u s p a r ts o f a b a n k in g s y s t e m o n ly r e c e n t ­
b a r g a in , a n d in th e n e x t t h ir ty d a y s l y c r e a t e d b y t h e r e p r e s e n t a t iv e s o f
b o th t h e H a m ilt o n a n d D a y t o n a n d th e p e o p le in th e h o p e o f b r e a k in g th e
P ie r r e M a r q u e t t e c o m p a n ie s w e r e in g r ip o f th e M o r g a n g r o u p u p o n th e
th e h a n d s o f r e c e iv e r s , a n d r e p o r t s o f fin a n c e s a n d m o n e y o f th e c o u n t r y , w e
th e s e r e c e iv e r s In d ic a te d th a t s t o c k s o f h a v e th e a w f u l s p e c t a c le o f th e m e m ­
th e s e c o m p a n ie s , a s w e ll a s v a s t m a s s e s b e r s o f th e firm o f J. P . M o r g a n & C o.
th e ir
c o n fe d e r a t e
c o n s p ir a t o r s
o f t h e ir b o n d s , w e r e w it h o u t rea l v a lu e . an d
T h e u n d e r s ig n e d , c o u n s e l f o r th e c o m ­ t u r n in g o u r p e o p le a n d o u r m a n u fa c ­
in d u s tr ie s in t o
one
trem en ­
p la in a n t s a n d p e tit io n e r s h e re in , s e r v ­ t u r in g
in g a s a m e m b e r o f C o n g r e s s , p e r s o n ­ d o u s ly g r e a t a g g r e g a t io n o f m u r d e r
a lly la id b e f o r e t h e I n t e r s t a t e C o m ­ fa c t o r ie s , s e n d in g f o r t h e a c h d a y in ­
m e r c e C o m m is s io n e v id e n c e r e la t in g to s t r u m e n ts su ffic ie n t to k ill c o u n t le s s
th e B a lt im o r e an d O h io m a t t e r s , as h u m a n b e in g s , a n d s e n d in g to th e b a t ­
a b o v e r e c it e d , a n d a t h is in s t a n c e th e tle fie ld s o f E u r o p e fr o m d a y to d a y
c o m m is s io n
co n d u cte d
sa id in q u ir y . th o u s a n d s o f p o o r d u m b a n im a ls , th e r e
T h e p re s id e n t a n d c o u n s e l o f th e B a lt i­ to b e s la u g h t e r e d in th e m o s t in h u m a n '
m o r e a n d O h io C o m p a n y , b e f o r e th e m a n n e r, a n d a s w e h a v e s a id b e fo r e ,
c o m m is s io n , a d m it t e d e n o r m o u s lo s s to a ll t h is d o n e b y t h e u se o f th e m a ­
th e ir
c o r p o r a t io n
con seq u en t
u p on c h in e r y a n d r e s o u r c e s o f a b a n k in g
th e s e d e a lin g s w ith th e firm o f J. P. s y s t e m c r e a te d b y th e p e o p le a n d su s ­
M o rg a n & C o., b u t in s is te d t h a t th e ta in e d b y th e m o n e y a n d c r e d it o f th e
c o m m is s io n a llo w a n a d v a n c e in ra te s p e o p le .
O n ce m o r e s p e a k in g f o r th e m illio n s
s u ffic ie n t to e n a b le th e B a lt im o r e an d
O h io to r e c o u p it s e lf f o r th e se lo s s e s , o f m en e m b r a c e d in th e o r g a n iz a t io n s
a n d th e c o m m is s io n , a f t e r s o m e little r e p r e s e n te d b y o u r b o d y , w e s a y to
d e la y , d id in f a c t g iv e it s c o n s e n t to y o u r H o n o r a b le B o a r d th e s e t h in g s
th e B a lt im o r e a n d O h io C o m p a n y c o l­ o u g h t to c e a s e a n d c e a s e n o w . W e s a y
le c t in g fo r t h is v e r y o b je c t fr o m th e to y o u fu r t h e r t h a t i f th e r e is n o p o w e r
p e o p le in th e t e r r it o r y s e r v e d b y its in t h is g o v e r n m e n t s u ffic ie n t ly s t r o n g
lin e s a m a te r ia l in c r e a s e In fr e ig h t t o c o p e w ith t h e in s id io u s a n d m a le fic ie n t in flu e n c e a n d p o w e r o f th e m e m ­
ra te s.
b e r s o f th e firm o f 3. P . M o r g a n & C o.
A n in s p e c tio n o f th e t e s tim o n y a n d
an d th e g r o u p o f c r u e l-h e a r t e d m o n o p ­
p r o o f p r o d u c e d in c o n n e c t io n w it h in ­
o lis t s a n d fo r e s t a lle r s a s s o c ia t e d w ith
v e s t ig a t io n o f e a c h o n e o f th ese, an d
th e m , a n d t h e r e fo r e y o u r H o n o r a b le
m any
o t h e r s im ila r
n e fa r io u s c o n ­
B o a r d sh o u ld fin d it s e lf w it h o u t effi­
s p ir a c ie s d ir e c t e d b y th e s a m e g r o u p ,
c ie n t s u p p o r t in th e g o v e r n m e n t in a n
r e v e a ls t h a t in e a c h a n d e v e r y c a s e th e
e ff o r t to c h e c k m a t e th e w o r k o f th e s e
n a tio n a l b a n k s u n d e r th e c o n t r o l a n d
v a m p ir e s u s in g th e b a n k s a n d m o n e y
m a n a g e m e n t o f th e s e m en w e r e m a d e
ol' t h e p e o p le a s p a w n s in th e ir a w fu l
to fu r n is h h ig h s u m s o f m o n e y f o r
u n d e r t a k in g o f m a k in g o u r la n d in t o a
th e
d o u b le
p u rpose
of
fa s t e n in g
n a tio n o f m u r d e r e r s f o r h ire, th e n th e
m o n o p o lie s a n d c o n s p ir a c ie s u p o n th e
w o r k in g p e o p le o f th is c o u n t r y in te n d
p e o p le o f th e c o u n t r y , u s in g th e p e o ­
to d e a l d ir e c t ly w ith th e f o r c e s t h a t
p le ’s o w n m o n e y in th e b a n k s a s a
c o n t r o l a n d d o m in a te th e in d u s tr ie s
m e a n s, a n d fu r t h e r m o r e u s in g th e f a ­
n o w p r o d u c in g th e in s tr u m e n t s o f m u r ­
c ilitie s ,
books and
record s
o f th e
d e r a n d d e s tr u c t io n , a n d w h ile th e l a ­
b a n k s t o c o v e r t h e ir t r a c k s in a se r ie s
b o r in g p e o p le r e c o g n iz e t h a t w e r e t h e y
o f p r e t e n d e d s im u la t e d t r a n s a c t io n s ,
c o m p e lle d to t a k e d ir e c t a c t io n to s to p
fr e q u e n t ly u s in g in t h a t c o n n e c t io n
th is in fa m o u s tra ffic fn n n being- c.n-i-ipd
tvio m e n onm hi ned w it n tn e m n a v e i

in a s e r ie s o f bi-ave s t r u g g le s a g a in s t
n e v e r h e s ita te d to c o m e d o w n u p o n th e
t h e g r e a t o d d s o f th e M o r g a n p o w e r
g o v e r n m e n t w it h in s is te n t d e m a n d s
in e ffo r t s to im p r o v e th e c o n d it io n o f
th a t a ll th e m o n e y a n d c r e d it o f th e
g o v e r n m e n t b e p la c e d a t th e ir d is p o s a l th e m a s s e s o f th e p e o p le o f th is c o u n ­
w h e n e v e r it s u ite d th e ir p u r p o s e so to t r y , so t h e y w ill n o t h e s ita t e n o w to
m a k e t h e s a c r ific e n e c e s s a r y f o r h u ­
d o, a n d h a v e n o t h e s ita te d , o n m o r e
m a n it y 's s a k e in w h a t o u r p e o p le a ll
th a n o n e o c c a s io n , to b r in g o n a p a n ic
a s a m e a n s o f c o m p e llin g o r in d u c in g b e lie v e to b e t h e g r e a t e s t c r is is h u m a n ­
th e g o v e r n m e n t to y ie ld to s u c h d e ­ it y h a s e v e r h a d t o d e a l w ith .
I t is to b e h o p e d t h a t y o u r H o n o r ­
m ands.
U n f o r t u n a t e ly p a s t a d m in is t r a t io n s a b le B o a r d w ill fin d it s e l f a b le a n d
h a v e b e e n t o o a m e n a b le t o th e ir w ile s e q u a l t o t h e ,t a s k o f e n f o r c in g t h e la w
a g a in s t th e m e m b e r s o f th e fir m o f J.
a n d in flu e n ce .
I t is o n ly t o o n o t o r io u s t h a t in 1907 P. M o r g a n & C o. a n d t h e ir c o n f e d ­
m e m b e r s o f th e fir m o f J. P . M o r g a n e r a te s , so a s to p r e v e n t fu r t h e r u se o f
& C o., a f t e r fo r c in g a p a n ic in o r d e r to t h e m o n e y s o f th e b a n k s e m b r a c e d in
c o m p e l th e o w n e r s o f th e T e n n e s s e e t h e F e d e r a l R e s e r v e S y s te m f o r th e
C o a l a n d I r o n C o m p a n y to tu r n th e ir p u r p o s e s d e n o u n c e d h ere. Y o u r d o in g
p r o p e r t y o v e r to th e S te e l T r u s t , a r ­ so w ill a v o id m u c h tr o u b le a n d c o n ­
r o g a n t ly d e m a n d e d o f th e th e n a d m in ­ fu s io n to o u r c o u n t r y , b u t a s a v e r y
is t r a tio n , a s c o n d it io n s p r e c e d e n t f o r la s t w o r d , a n d s t a t in g w h a t w e k n o w
a lla y in g th e p a n ic , th e d e p o s it o f all to b e th e s e n tim e n t o f th e la b o r in g
a v a ila b le g o v e r n m e n t m o n e y s in su ch p e o p le o f th e U n it e d S ta te s , w e s a y to
it
b a n k s a s m e m b e r s o f th e firm o f J. y o u r H o n o r a b le B o a r d t h a t e n d
P . M o r g a n & C o. w o u ld n a m e , an d s h a ll, i f n o t b y y o u r a c t io n th en b jr
t h a t th e a d m in is t r a t io n p le d g e it s e lf to o t h e r m ea n s.
H . .R O B E R T F O W L E R ,
p r o c u r e fr o m C o n g r e s s th e e n a c t m e n t
G e n e r a l C o u n s e l o f L a b o r ’s N a t io n a l
o f le g is la t io n o f a c h a r a c t e r to e n a b le
th e M o r g a n c liq u e t o o b t a in fr o m th e P e a c e C o u n cil.
T r e a s u r y in th e fu tu r e , a t w ill, a n y
su m d e s ir e d u p to fiv e h u n d r e d m illio n
d o lla r s b y s im p ly d e p o s it in g w ith th e
S ecreta ry o f T rea su ry stock s o r bon ds
o f t h e ir d iffe r e n t c o r p o r a t io n s . U n f o r ­
t u n a te ly th e a d m in is t r a t io n a t th a t
t im e w a s s u ffic ie n t ly w e a k a n d fo o lis h
to y ie ld to a ll o f th e s e d e m a n d s .
W e r e s p e c t fu lly r e q u e s t t h a t y o u r
H o n o r a b le B o a r d g r a n t a s p e e d y p u b lic
h e a r in g u p o n t h e w it h in c o m p la in t a n d
p e tit io n , a n d th a t a t s u c h h e a r in g o r
h e a r in g s th e u n d e r s ig n e d b e p e r m itt e d
to o ffe r e v id e n c e a n d t e s tim o n y e s t a b ­
lis h in g th e tru th o f e a c h a n d e v e r y
m a te r ia l a lle g a t io n h e r e in c o n t a in e d .
S h o u ld y o u r b o a r d d e te r m in e to g r a n t
o u r r e q u e s t in t h is b e h a lf, th e u n d e r ­
s ig n e d w ill b e s u b je c t to c a ll o f y o u r
b o a r d a t a n y t im e in o r d e r to c o n fe r
c o n c e r n in g o r d e r a n d m e t h o d ' o f p r o ­
c e d u r e to b e fo llo w e d a t s a id h e a rin g .
W e fe e l it o u r b o u n d e n d u t y to s a y
to y o u r H o n o r a b le B o a r d , v o i c i n g w h a t
w e k n o w to b e t h e s e n tim e n t o f th e
t o ilin g m a s s e s ' o f th e U n ite d S ta te s ,
th a t th e p e o p le o f t h is c o u n t r y a r e e x ­
c e e d in g ly t ir e d o f b e in g e x p lo it e d in
th e s e w a y s f o r th e b e n e fit o f th e M o r ­
g a n g r o u p a n d its c o n fe d e r a t e s , e s p e ­
c ia lly b e c a u s e t h r o u g h th e m e d iu m o f
th e s e v a r io u s M o r g a n c o n s p ir a c ie s th e
g r o u p h a s fa s te n e d its c lu t c h e s u p o n
n e a r ly a ll o f th e ir o n a n d s t e e l p la n ts ,
r a ilr o a d s , b a n k s , c o a l m in e s, t e le g r a p h
a n d t e le p h o n e lin e s, a n d m a n y o t h e r o f
th e n a t io n ’ s in d u s tr ie s .

F^ags of Tranc e.

France had numerous national f)ag»
before it adopted the tricolor. Although
its present banner is not particularly
artistic, its predecessors ranked among
the most beautiful flags in the world.
The first French flag w as extremely
quaint. It consisted o f a blue hood
hung on a cross bar and. represented
the cloak o f St. Martin, a saint great­
ly reverenced by the French, and years
ago his helmet c Tas carried in their
wars to inspire the soldiers. The sec­
ond French flag w as a beautiful banner
o f red, with its loose end cut into three
tongues resembling flames, between
each o f w hich was a green tassel.
Some picturesque banners w ere at one
time carried by the French warriors
before the tricolor w aved over the
French battlefields. There w as the sky
blue cavalry standard wTith the golden
sun o f Louis X IV ., the white and gold
banner o f Joan of Are, magnificently
embroidered w ith the Madonna, angels
and lilies, and the fam ous old banner
o f the city o f Paris, w ith its w hite
ship on a blood red field.
The

S u b l i m e Por te.

The phrase “ the sublime porte’’
arises from an aspect o f the sultan's
capital. The French words “ sublime
porte” are derived from “ porta sublima.” meaning “ the lofty gate." Con­
stantinople city used to h a v e,tw elv e
gates, and near one w as a building
A n d w e fe e l it o u r fu r t h e r d u t y to with an im posing gatewray called Babs a y to y o u r H o n o r a b le B o a r d , s p e a k in g i-Humajun.
In this building resided
b y d ir e c t io n o f th e g r e a t m a s s o f la b o r the grand vizier, and there also were
o r g a n iz a t io n s a ffilia te d w it h o u r b o d y , the offices o f the chief ministers,
th a t th e la b o r in g m en o f th e c o u n t r y whence all the edicts o f state w ere is­
a r e in n o h u m o r o r fr a m e o f m in d to sued. The French phrase w as adopted
o b s e r v e w it h p a t ie n c e o r e q u a n im ity because at the time French w as the
th e fu r t h e r c o n t in u a n c e o f o p e r a tio n s Jangnage o f European diplomacy.

Aug. 14, 1915.

Pear Sir:

-ith this I be to enclose five copies of a report, one copy of which has just been sent to Governor Ham-

lin. This relates to Laborte National Pence Council and
its work. Hill you he good enough to advise the remIATs

of the Board to whom this is delivered that it isa copy
of a report that has been furnidhed to me Or confiden,

tin2 use, and oblige,
Very truly yours,

Governor.

Eon. ,4 Parke
retary, Yei
Reserve Board,
hington, D. C.'

B.S.Tr/PE



Enos. (5)

polPT.
if
#4h.-1

-74 3

r

296.

rEarlIAL REBENVE OANK
TO THE GOVERNOR AND MEMBERS OF
THE FEDERAL RESERVE BOARD,

Washington, D. C.
On behalf of Labors National Peace Council, the
undersigned respectfully submits for consideration and

action on the part of your Honorable Board, the complaint
and petition following:

The declarations of every neutral government in
,Europe made since the beginning of the present war, as

e.R.410,04'1441.9k °Contained in the proclamations and decrees issued by

tfttii: so;

'idAs'r.

each and all of the aforesaid neutral governments, show
that every one of these countries has forbidden the export or sale of munitions of war, explosives, food stuffs,
metals, horses, mules and other supplies, to any of the
belligerent nations.

Furthermore, all of these neutral governments
have scrupulously refrained from affording aid in money

ojg,emos

to any of the belligerents, and each European neutral
government has expressly forbidden any bank or banking
institution having any relation to or connection with the
government, or which receives, or is entitled to receive
governmental aid, directly or indirectly, from making
advances or loans of money to a belligerent government,
or its representatives.

The attitude and

attfi

ptIlicy

of these neutral Euro-

pean governments, as above recited, reflects a proper
eri

6"

cfp61-e

/14/;thorou ghly established high principles of internat-

14,

svy.4004.7.

obedience to, and respect for certain well-known and

rb

cattle" °I' reco-"



ional law, which may be stated as follows:-

The government of a neutral nation must not
directly or indirectly furnish or aid, or abet in the

e-

furnishing of aid in money to a belligerent government
at war.

The government of a neutral nation must
OuA

not furnish, or aid, or abet in furnishing means for the

erj

etc.-

^I

14"

purchase or sale of any material or supplies of any de-

0-''

scription intended for use of a belligerent government
413'

at war.

The government of a neutral nation must
64,not permit ships or vessels in the service of a belliger-

ent government at war to receive in the harbors of the
di

neutral country any supplies, equiF.:ent

Vrf'e
c.41A-N

fifilajajjj:

4-0

c.120Aft

trt

or materials

intended for use of a belligerent government at war,

except that necessary repairs may be made to a ship or
vessel in the service of a belligerent government, and
such vessel may receive and secure, in the harbor of a
neutral nation, water, provisions and coal sufficient
only for a voyage to the nearest foreign port.
We charge that through the medium of an extensive conspiracy, composed of certain bankers and officers and directors of Federal reserve banks and member
banks embraced in the Federal reserve system, acting in

revA'
conjunction with officers and agents of the governments

itoo




of Great Britain, France and Russia, the United States
has been involved in very grave and serioua breaches
of neutrality, as defined in paragraphs A, B and C above

-3-

mentioned.

The persons chiefly responsible for, and the
dominant factors in this conspiracy are the members of
the firm of J. P. Morgan & Company, and certain other persons now serving as officers and directors of various
61




Federal reserve banks and member banks, who secured
these positions through the influence of the firm o
J. P. Morgan & Company, or other business allies of said
firm, or who are subject to and under control of its
influence.

The members of this firm, as early as August
1914, in furtherance of the conspiracy, began making
personal representations to officers of the governments
of Great Britain, France and Russia, to the effect that
in the event said governments would employ the firm of
J. P. Morgan & Company as agents, said firm would provide
facilities in the United States which would enable one

eJWI' or more of these governments to obtr.in in the United
States credits to the amount of at least five hundred
million ($500,000,000.) dollars, said credits to bc based
upon and secured by obligations of one or more of said

government, or by securities of American federal, state
and municipal governments, or railroad and industrial
corporations, as might be best available and procurable
by, or on behalf of the governments of Great Britain,
France and Russia.

The proposal provided that the pro-

ceeds of credits to be obtained as aforesaid, were to

be applied and used under the direction of the said

-4-

firm of J. P. Morgan & Company, for the purpose of pur-

chasing in the United States supplies of munitions of war,
metals, horses, mules, clothing, food products, automobiles,
submarines, aeroplanes and other supplies, for use of the
aforesaid foreign governments.

The members of the said firm of J. P. Morgan
& Company further represented to officers of the governments of Great Britain, France and Russia that the said
firm of J. P. Morgan & Company, and certain individuals
and corporations, business associates of the firm, in
the event J. P. Morgan & Company were employed as agents,

//

were in a position to, and would furnish a large number
of vessels and ships for use as transports in the service
of these governments, in carrying and transporting the
war munitions

materials and supplies to be purchased and

paid for with the proceeds of the credits hereinbefore
referred to.

After prolonged personal negotiations between
members of the firm of J. P, Morgan & Company and rep-

orr

resentatives of the governments of Great Britain, France

41

,"7"

and Russia, and in furtherance of the conspiracy, as
herein charged, a series of agreements were entered into
between the firm of J. P. Morgan & Company and repre-

r-t(




sentatives of the governments of Great Britain, France
and Russia, under vhich the proposals of the firm of
J. P. Morgan & Company were accepted and the terms and
conditions of their employment and authority as agents,

I 7/

together with their compensation, defined and fixed.
Following consummation of the agreements as aforesaid, the firm of J. P. Morgan 8,; Company, with the aid

.ps

and assistance of certain officers and directors of Federal reserve and member banks, as hereinbefore specified,
and in furtherance of the conspiracy, completed a large

10P-(14

1-




number of transactions for account of the English, French
and Russian governments, acting as the agents of said
governments,

which accomplished:

FIRST:

The procurement from various member

banks, including the First National Bank, National City
Bank, National Park Bank, National Bank of Commerce and

other banks and banking institutions in the City of New
York, and from various banking institutions throughout
the country, all of whom were member banks, included in
the Federal reserve system, loans, discounts and money
advances and credits, amounting in all to more than
two hundred million ($200,000 000) dollars.. In a large
number of these transactions it was made to appear that
the same represented bankers' foreign bills of exchange

and acceptances, innocently drawn in the regular course
of legitimate business by J. P. Morgan 8: Company, whose

members were, and are, parties to the conspiracy,
In a still greater number of said transactions the method pursued by the conspirators was to secure loans from member banks in behalf of one or more of

their number, the collateral for the loans being
stocks and bonds of various domestic corporations and

-6-

bonds issued by different cities and states.
SECOND,

from Federal reserve banks, by or on behalf of the con-

cIves°

AP'
(41)

there have been furthermore obtained

spirators, sums in excess of twenty million (020,000,000)

(i.14

dollars, through discount of notes, drafts, acceptances
and bills.

S

cdA--

These transactions were made to appear on

their face so that the moneys furnished by the Federal
reserve banks were seemingly used in furtherance of pure-

Crr?(.KA,'

ly commercial transactions for agricultural, industrial

and commercial purposes,

0114r

The agricultural products or

4wiother wares, merchandise or live stock, purchased and

P5'

'OAA

gi**ALI

paid for with the proceeds of the moneys thus obtained

-

ow

being apparently purchased or sold in the ordinary course

1,,

of actual commercial transactions.

We charge that in respeA to all the loans,
discounts and advances i amounting to the said sums of

two hundred million (0200,000,000) dollars, or more, which
have been obtained by or on behalf of the conspirators

from member banks, and in_regard

to

the other twenty

million (20,000 000)dollars, or more, of moneys similarly obtained by or on behalf of the conspirators from
Federal reserve banks, that all of the sums so procured,
r\__ have in fact been secured by the conspirators as agents

of the governments of Great Britain, France and Russia,

and that said moneys have been utilized exclusively in
connection with the purchase and shipment from within the
6x!)




United States of war materials, munitions, food supplies,

clothing,

horses, mules, submariues, aeroplanes, vessels




-

and for the purchase or chartering of ships and vessels

to serve as transports from ports of the United Stats
in the service of one or more of said belligerent governments4

We further charge that there has existed, and
now exists, a full and complete knowledge on the part of
many officers and directors of various member banks
and Federal reserve banks, that this vast mass of loans,
discounts, and money advances, have been obtained by
the conspirators,acting as agents and representatives of
the governments of Great Britain, France and Russia,
with intent to utilize the moneys received exclusively
for the purpose of purchasing in the United States war
materials, munitions, food supplies, clothing, blankets,
horses, mules, submarines, aeroplanes, and defraying the
cost of purchasing or chartering ships and vessels to be
used as transports from ports of the United States in the
service of the governments of Great Britain, France and
Russia4

We charge that these officers and directors
of member banks and Federal reserve banks, possessing

this guilty knowledge as aforesaid, have aided and
abetted the conspirators in the carrying on and the consummation thereof, at the request and behest of the con-

spirators, and that all these persons have sedulously
concealed from your Honorable Board, the Comptroller of

the Currency, and the national bank examiners, the real
character of these transactions and true purposes for

it)
-8-

which the moneys were being used, and that the said officers and directors of these member banks and rederal

oks,

reserve banks have been induced so to do by the conspirators, in some cases through personal profit to be derived from the transactions, and in other cases because
such officers and directors were under the complete
dominion and control of the conspirators.
We further charge that it is the present intention of the conspirators to obtain from member banks
and Federal reserve banks additional loans and advances
of money for the benefit of the governments of Great
Britain, France and Russia, to the amount of more than
three hundred Million G300,000,0'00) dollars) and that
negotiations at.e now being actively carried on for the

purpose of enabling the conspirators to obtain immediately
from member banks and Federal reserve banks this great
sum of money for the benefit of the aforeaaid governments,
for use in the same manner as hereinbefore described.
With knowledge that the condition of affairs
above specified actually exists with reference to member
banks and Federal reserve banks in the Federal reserve
system, we feel .fully justified in saying that the

-;P:c4 ofrr°

,

country is about to be confronted with a crisis, not
only in its banking system, but also in its relations to

,IPTJ

certain of the belligerent countries now at war.

svs3'

(P),)fr

6Ara'N Cuttr''

'




In our

judgment it is perfectly clear that unless the operations

'

of the conspirators in obtaining moneys from member banks
and Federal reserve banks are immediately suppressed




and put an end to, the consequence will be that these
institutions will be loaded down with enormous commitments, growing out of transactions of a_character absolutely forbidden by Cbrigress in the Federal reserve act,

and which seemed well designed to afford certain of the
belligerent governments now at war a perfect opportunity in their awn good time to present a huge bill
or claim for indemnity from the United States.

According to the well settled precedents of
international law, should such a claim for indemnity be
made, based upon a state of facts, such as are herein
described, and the claim be submitted to arbitration, it
would, of course, appear from the face of the testimony
that the case was one divisable into two parts, for the
reason that a decision concerning liability of the

government of the United States on account

ok loans or

money advances, made by Federal reserve banks, would rest
upon considerations that would not apply in the same de-

gree or with same force and effect in determining the
liability of our government, because of loans or advances
made by member banks.

The transactions herein complained

of as being now .carried on by the two classes of insti-

tutions must, therefore, be considered separately.It
would seem to us that this separation as to origin and
degree of governmental liability may be fairly described
as follows:

With respect to loans, discounts or money

advances, made by Federal reserve banks, these are clearly
the

Get of the government itself,

A reading of the




Federal Reserve Act makes it perfectly plain that Federal reserve banks are government institutions, and that
their officers, as well as the members of the Federal
reserve board, are officers of the United States within

(\tAfl

the meaning of the Consitution of the United States,
as construed and applied by the Supreme Court of the
United States in numerous decisions,
As regards loans, discounts and money advances, made by member banks, in our judgment the legal
situation with reference to governmental liability is
somewhat different from that which would be found controlling and decisive in reference to Federal reserve
banks.

While it is, of course, true that by terms of

the Federal Reserve Act all member banks are subject in
their operations to control and supervision of officers
of the government, and many of them are recipients of
government deposits, and member banks themselves are invested with power, subject to certain conditions, of is-

suing curremy, for payment of which the government itself bocomes obligated under terms of the National Bank
Act, yet it is not clear that the original act of a member bank in making loans or advances of money, found to
have been utilized for the benefit or account of a belligerent government, would be held by an International Court
of Arbitration to be the act of the government or an act
which bound the government in any way.
However, should it appear in evidence that,

subsequent to the original advance or loan by the member

Cf:-2




bank (an .undertaking in which there was no participation

by any officer of the governent), the mamber bank had
applied to the Federal reserve bank for a loan or rediscount, with actual intent of obtaining aid in money
from the Federal reserve bank for th.9 purpose of enabling

it (the member bank) to continue or renew a pre-existing
loan made to a belligerent government or its agents, and

if it appeared that the member bank did in fact obtain
a loan of money from the Federal reserve bank

which in

turn enabled the member bank to make a loan to a belligerent government or its representatives or agents, then an
International Court of Arbitration would doubtless hold
that our government was liable for having extended and
furnished aid in money to a belligerent government, even
though it was conceded that the Pederal reserve bank
had no notice or information that the purpose of the
member bank in obtaining the money was to use it for
either of the aforesaid purposes, nor would sUch a
ruling or holding of the Court of Arbitration be affected or modified upon a showing that the member bank

in

obtaining a lean from the Federal reserve bank, had done
so by the us a of'collateral Upon which the Federal re-

serve bank had a perfect right to loan, according to

the terms of the Federal Userve Act.

The determining

factor, as affecting the liability of our government,
would be the one consideration as to what the money was
actually used for, and no plea in abatement could be
successfully interposed by way of proof that the Federal

reserve bank had absolutely no information

tending

even to

put it on inquiry or notice that the true object for

which the loan was sought or the money to be used was
other than an entirely legitimate commercial purpoee.
The contentions as advanced by our own government in the Alabama case, as upheld by the International
Court of Arbitration, and at the instance of our govern-

ment written into the body of International Law, when
examined, are found sufficient in themselves to eztablish the correctness of the view here expressed on this
branch of the matter now under consideration.
In view of the foregoing, we earnestly urge
that your Honorable Board immediately take strong and

drastic preventative action to the end of safeguarding
the United States against further violations of its neutrality, and so as to guard effectively in the future

against the commission of acts by member banks and Federal
reserve banks included in the Federal reserve system,

which, if not stopped by action on the part of your
Honorable Board, will, in the near future, and with unerring certainty, create

conditions

that will result

either in our Government being made liable for an indemnity probably reaching in amount the sum of One Billion Dol.-

rill'

lars, or find the country confronted with the threatening
menace of an impending bank panic consequent upon the
actions of the member banks in becoming waterlogged with

PAtell




loans made upon an abnormally large scale to agents of
belligerent governments, and secured only by stocks

',6




and bonds and notee, iraft'J anl acceptances of such agents.

In a situation of that characters one which
we again repeat,

will most surely happen in the event of

the failure of your Honorable Board to take immediate preventative action,

your Board will find itself

faced

with the unpleasant alternative of being unable on the
one hand to rediscount for the member banks, because
the rediscounts would enable these banks to continue the
loans and discounts made to agents of belligerent governments, and so in effect cause our government to be furnishing aid in money to belligerent governments at war;

or, on the other hand, your Honorable Board, if it nevertheless determined to authorize and direct the Federal
reserve banks to come to the rescue of the member banks
in such an exigency by dkcounting and rediscounting
in an elaborate scale, your Board would be then subjected to the painful embarrassment that this action of the

Federal reserve banks, while it would accomplish the purpose of preventing a bank panic, would, at the same time,

make our government liable to certain of the belligerent
governments now at war, for the pvment of an enormous
war indemnity 1-ecause of thotral01 of neutrality comMitted by our 'government in permitting one of its branches

( the Federal reserve banks) to furnish member banks with
huge sums of money to enable the member banks to continue
loans and discounts to other belligerent governments and
agents thereof.




-14-

As steps in preventative action on the part
of your Honorable Hoard, we earnesly urge that you without delay, materially modify and reform your various regulations, orders and rulings as set forth in Federal Reserve circulars Nos, 2,
1915,

3,

4,

5,

8, 11 and 12, series of

To request that these several documents be so

modified as to make perfectly plain by proper order and
regulation, instrActions controlling upon Federal reserve
banks and member banks the following
FIRST:

No Federal reserve bank shall here-

after discount any note, draft or bill of exchange purporting to arise out of a commercial transaction, or apparently drawn for agricultural, industrial or commercial
purposes, secured by staple agricultural products, goods
wares, merchandise or otherwise, except the officers of
said Federal reserve bank first make proper and diligent
inquiry to discover whether the person or persons in whose
favor such note, draft or bill of exchange is drawn, or
the maker or makers thereof or either or any of them,

are acting as agents or representatives of any foreign
belligerent government at war, and whenever the amount
of any such note, draft or bill of exchange offered for
discount shall be $50,000 or more, the Federal reserve
bank shall require to be furnished an affidavit from the
maker, acceptor or beneficiary in

which must

be set forth

in detail the true facts and history of the transaction
sought to be accomplished by the proposed loan or discount;
and should the inquiry or affidavit reveal any evidence




-15-

tending to show that the proceeds of the loan or discount
are to be used for the benefit of any belligerent government, or its agent, or utilized in connection with the
purchase or sale of any materials or supplies intended
for the use of any belligerent government or its agents,
then the Federal reserve bank shall refuse to make such
loan or discount.
SECOND:

By circular from the Federal Reserve

Board, addressed to all Federal reserve banks and member
banks, it should be made plain that the Federal Reserve
Board disapproves of the members banks making any loans,
discounts or advances of money intended for the use of

any belligerent government at war, or its agents, and
equally disapproves of member banks making any loans, discount or advance of money where the same is to be used
in purchasing or paying for any material or supplies

intended for the use of any belligerent government, and
requesting all officers and directors of member banks
to use every reasonable precaution and make diligent
inquiry in each case to prevent the use of the lending
and discounting facilities of member banks for these
purposes, and instructing Federal reserve banks to refuse rediscounts' or loans to a member bank where it ap-

pears that the result would be to enable a member bank

to continue or renew a pre-existing loan or discount for
a belligerent government, or its agents,

or where the

proceeds had been used in the purchase of materials or

-16-

supplies intended for use of a belligerent government.
THIRD:

Using the power vested in the Federal

Reserve Board under Section 11 of the Federal Reserve
Act, there should be frequent examinations of the accounts, books and affairs of the more important member
banks and Federal reserve banks to ascertain which of
these, if any, are continuing to make discounts or advances of money for use or benefit of a belligerent
government or its agents.

As having a bearing upon the foregoing,
and a consideration thereof by your Honorable Board,
and as a clear indication of the opinion of our government concerning the proper policy to be pursued by a
neutral government with regard to loans or advances of
money for the benefit of a belligerent government, we
respectfully submit the following
In August 1914,

3. P. Morgan of the firm of

J. P. Morgan & Company, informed Mr. Secretary Bryan that

744

his firm were considering the making of a loan to the

N.

French government of one hundred million ($100,000,000)
dollars, and desired before making the loan to ascertain
what the position of our government would be toward such
a transaction, whether in the judgment of the officers
of the government the making of such a loan by the firm
would involve our government in a breach of neutrality.
Speaking for our government, Mr. Secretary Bryan
answered as follows :-

"There is no reason why loans

should not be made to the govemmonts of neutral nations,

hf't
1;00--







-17-

but, in the judgment of this government loans by American bankers to any foreign nation, Which is at war, are
inconsistent with the true spirit of neutrality."

Lest your Honorable Board fall into the error
of refusing to consider seriously the material allegations of this complaint, in the mistaken belief that no
one set or clique of bankers or financiers could
sess sufficient power and authority, or are in contrbl
of an organization having all the ramifications of
influence which we frankly concede must be in the possession of persons engaged in a conspiracy such as is
herein charged, in order to render effective the objects
of such a conspiracy, we respectfully state to your
Board that during the past twelve years, in practically
each and every case where a great

ccnepiracy involtring

gross misuse of financial power in violation of the laws
4. A
of the country has been trosect.e,
by the government,

it has almost without exception proven true, that the

directing and controlling force in planning and executing these crimes have been the members of the firm of
J. P. Morgan & Company, and the selfsame group of

associates who have been so active in furtheriLvthe
conspiracy alleged herein.

As incidents to the organi-

zation and operation of the Northern Securities Co.,
Steel, Coal, Meat, Harvester, Tobacco, Oil, Money and
Railroad Trust conspiracies, all the product and work
of the men involved in the present conspiracy, the mass
of the people of America have been during the period

above named and are now being robbed to the extent of
several million dollars a day.

There have been visited upon the country within
the last fourteen years no less than four different




-18-

panics, the outgrowrth and consequence of the operations
of these men, and more than one of these panics was

deliberately brought on by them, in order to accomplish
their own selfish and ulterior aims and purposes, at
the expense of the great body of the people

As convincing evidence of the truth of these
allegations, we ask your Honorable Board to examine
The government's bill of complaint and brief
of evidence and opinions of Circuit Court of Appeals

and Supreme Court of the United States in the case of
United States -v- Northern Securities Company, the
members of the firm of J. P. Morgan & Company and others.
The records of the Special Investigating Committee

appointed by the House of Representatives in 1912, which
sat during 1912-1913, to investigate the ramifications
of a great conspiracy engineered by the members of the
firm of J. P. Morgan & Company, and certain confederates,
for the purpose of monopolizing and controlling the entire
banking, money and credit facilities of the country,
Records of investigation Conducted by Inter-

State Commerce Commission, upon order of UniteA Sates
Senate in 1914, concerning conduct of
are

mealarc

:1:111 Of

J, P. Morgan & Companyi2 and certeAnAther persons
associated with them, in the working the great New Haven
Railroad conspiracy.
Indictments covering those acts returned against

these parties, now on file in United States District Court
for Southern District of New York.

Bill of complaint of the government against
the same persons, filed in United States District Court
of Massachusetts at Boston, together with plea of




-19-

defendants admitting truth of allegations in the govern-

ments complaint, and consenting to entry of decree against
defendants.

The operations of the members of the firm of
J. P. Morgan & Company and their confederates in the
New Haven conspiracy resulted in a loss to security

holders of New Haven and allied companies, as shown by
testimony before the Commission, of more than two hundred and fifty million dollars.
Record of investigation conducted by Interstate

Commerce Commission in 1914 in regard to looting of Baltimore & Ohio Railroad Company by means of a series of

huge transactions in the securities of Cincinnati, Hamilton & Dayton and Pierre Marquette and other railroad
corporations, all of which, as it appeared from the testimony, were engineered by firm of J. P. Morgan & Company for their own profit,

and in consequence of

which the Baltimore &. Chit) Company was made to purchase

millions of dollars worth of securities and gUarantee

payment of many millions more, approximating seventy
million dollars, all of which have proved to be of little or no value.

Records of the transactions relating

to the stocks and bonds of Hamilton
Marquette Companies,

J. P. Morgan

a

Dayton and Pierre

in which members of the firm of

Company were involved, abound with in-

stances of turpitude, of which the following is a fair
example

:

At a time when these railroads were absolute-

ly bankrupt and their stocks worthless, members of the
firm of J. P. Morgan

a Company, as owners thereof, actuall7

sold these stocks at the price of two hundred dollars per

share to another railroad company, on the Board of Directorwof




,

-20-

which certain of their number sat, and whose entire
Director dB was nominated and elected by a voting trust
managed by the firm.

An outcry from stockholders

forced a rescinding of the infamous bargain, and in the

next thirty days both the Hamilton

Dayton and Pierre

Marquette Companies were in the hands of Receivers,
and reports of these Receivers indicated that stocks
of these Companies, as well as vast masses of their
bonds, were without real value.

The undersigned,

counsel for the complainants and petitioners herein,

serving as a Member of Congress, personally laid before
the Interstate Commerce Commission evidence relating
to the Baltimore

CG

Ohio matters, as above recited, and

at his instance the Commission conducted said inquiry.

Ihe President and Counsel of the Baltimore

6c'

Ohio

Company, before the Commission, admitted enormous loss

to theircorporation consequent upon these dealings
with the firm of J. P. Morgan

ec

Company, but insisted

that the Commission allow an advance in rates sufficient
to enable the Baltimore

c%

Ohio to recoup itself for

these losaes, and the Commission, after some little
delay, did in fact give its consent to the Baltimore

Ohio Company collecting for thie very object from
the people in the terri*oKy served by its lines, a
material increase in freight rates.
An inspection of the testimony and proof

produced in connection with investigation of each one
of these, and many other similar nefarious conspiracies
directed by the same group, reveals that in each and
every case the national banks under the control and
management of these men were made to furnish high sums
of money for the double purpose of fastening monopolies




-21-

and conspiracies upon the people of the country, using
the people's own money in the banks siskimane., and furth-

ermore using the facilities, books and records of the

banks to cover their tracks in a series of pretended
simulated transactions, frequently using in that connection fraudulent book entries and counterfeit loans,
purchase and sales, to give a simulated appearance of
legitimacy and legality to the dealings.
In the past the members of this firm and the

men combined with them have never hesitated to come down
upon the government with insistent demands that all the
money and credit of the government be placed at their
disposal whenever it suited their purpose so to do, and
have not hesitated, on more than one occasion, to bring

on a panic as a means of compelling or induc14g, the
government to yield to such demands.

Unfortunately past administrations have been too
amenable to their wiles and influence.
It is only too notorious that in 1907 members
of the firm of J. P. Morgan

Company, after forcing a

panic in order to compel owners of the Tennessee Coal &
Iron Company to turn their property over to the Steel
Trust, arrogantly demanded of the then administration,
as conditions precedent for allaying the panic, the
deposit of all available government moneys in such banks
as members of the firm of J. P.
name,

Morgan & Company would

and that the administration pledge itself to pro-

cure from Congress the enactment of legislation of a character to enable the Morgan clique to obtain from theTroasury in the future, at all

any sum desired up to f.ivol hun-

dred million dollars by simply depositing with the Secretary




-22-

of Treasury stocks or bonds of their differont corporations.

Unfortunately the administration at that time was sufficiently weak and foolish to yield to all of thoso demands.
We respectfully request that your Honorable

Board grant a speedy public hearing upon the within complaint and petition,

and that at such hearing or hear-

ings the undersigned be permitted to offer evidence and

testimony establishing the truth of each and every material
allegation heroin contained.

Should your Board deter-

mine to grant our roquost in this behalf,

will

the undersigned

be subject to call of your Board at any time in order

to confer concerning order and method of procedure to be
followed at said hearing.

We feel it our bounden duty to say to your Honorable Board, voicing what we know to be the sentiment of
the toiling masses of the United States,

that the people

of this country are exceedingly tired of being exploited
in those ways for the benefit of the Morgan group and its
confederates, especially because through the medium of those
various Morgan conspiracies the groupb-10 fastened its clutch-

es upon nearly all of the iron and stool plants, railroads,
banks, coal mines, tolograph and telephone lines, and many
other of the nation's industries.

And wo feel it our further duty to say to your
Honorable Board, speaking by diroction of the great mass of
labor organizations affiliated with our body,that the laboring men of the country are in no humor or frame of mind to observe with patience or equanimity the further continuance of operations of the firm of J.P.Morgan

e4

Company and their associates,

A

as contemplated by these mon in the carrying on of the
present most iniquitous conspiracy.
The men in the organizations whom we represent,
millions in numiber, look with horror and detestation upon
710D




the terrible game of slaughter, murder, rapine and bloodguiltiness now being played on the battlefields of Europe,
inflicting untold misery and destruction upon humanity.
Already the conspirators have drawn from the
banks in the Federal Reserve System some two hundred and
twenty millions of dollars and used those moneys on contracting and paying for the erection of huge factories in
different parts of the United States for the manufacture
of instruments of death and destruction on a scale hitherto undreamt of,

so that even now,

by the use of these

vast sums of money, secured from institutions, parts of a
banking system only recently created by the representatives
of the people in the hope of breaking the grip of the Morgan
gy6415 upon the finances and money of the country, we have

the awful spectacle of the members of the firm of
Morgan

a

P.

Company and their confederate conspirators turning

our people and our manufacturing industries into one tre-

mendously great aggregation of murder factories, sending
forth each day instruments sufficient to kill countless

human beings, and sending to the battlefields of Europe
from day to day thousands of poor dumb animals, there to
be slaughtered in the most inhuman manner, and as we have
said before, all this done by-the use of the machinery and
resources of a banking system created by the people and
sustained by the money and credit of the people.

.

cc




-24-

Once more speaking for tho millions of men
embraced in the organizations represented by our body,

'we say to your Honorable Board, these things ought to
cease and cease now.

'Jc say to you further that if

there is no power in this government sufficiently strong
to cope with the insidious and maleficent influence

and power of the members of the firm of J.P. Morgan

a,

Company and the group of cruel hearted monopolists and
forestallers associated with them, and therefore your
Honorable Board should find itself without efficient
support in thc government in an effort to checkmate
the work of these vampires using the banks and money
of the people as pawns in their awful undertaking of
making our land into a nation of murderers for hire,
then the working people of this country intend to deal
directly with the forces that control and dominate the
industries now producing the instruments of murder and
destruction, and while the laboring people recognize
that were they compelled to take direct action to stop
this infamous traffic from being carried on by the use
of the money of the people, that their doing so would be
attended with great temporary loss and privation to
themselves, yet

having in the past endured all these

things in a series of brave struggles against the great
odds of the Morgan power in efforts to improve the
condition of the masses of the people of this country,

so they will not hesitate now to make the sacrifice
necessary for humanity's sake in what our people

all believe to be the greatest crisis humanity has ever
had to deal with.

It is to be hoped that your Honorable Board




4R

r

-25-

will find itself able and equal to the task of enforcing the law against the members of the firm of

Je P.

Morgan 0; Company and their confederates, so as to pre-

vent further use of the moneys of the banks embraced in
the Federal Reserve System for the purposes denounced
here.

Your doing so will avoid much trouble and con-

fusion to our country,

but as a very last word, and

stating what we know to be the sentiment of the laboring people of the United States, we say to your Honorable Board that end it shall, if not by your action,
then by other means.
(SIGNED)

H. ROBERT FO7LER,

General Counsel for Labors National Peace Council.

7/12/15

falivi
O. or'," K E

Ttg

LI S
ETARY

SHER MAN P. ALLEN
ASSISTANT SECRETARY

'Jc-r

-1" DESPair RESERVE BOARD

lint

WAS H IN GTO N

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Yi-411 e

November 22nd, 1915.

My dear Mr.

hills:

Your publishers have just delivercd to me e co ,y of
your book 'The Reserve :ystem", which I am ftaticipating read-

ing with keen eleesure.
I know you eill not object to my making a few margin-

al notes in regard to some features of the :,ct that we have
recently been discussing and then writing you on the subject.

e must get together on this clearing metter and agree
to a course to be pursued.

I mn glad to have this book to study

in connection with it, as it will throw more light on the origi-

nal plan of the bill than I have yet ben able to gather from
the proceedings before theenato Committee nd the debate in
Cougrecs.

I am also taking the liberty of sending this copy to
you under separ.te cover, as I would like very much to have
your autograph in the front.
Very truly yours,

Pr. 1. Parker illis
Federal Recerve 4ard-,
*ashington, D. C.
BS Jr/vCM




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2809 ONTARIO ROAD

kalr,

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1F4--P6

December 13th, 1915.

Dear Sir:

:Ir. Strong is greatly interested in securing

a bound volume of the various issues of the Pderal
Reserve

Bulletin for his private library.

';;ith the

exception of the June issue, there is a set of the Bulletins for which there is no need in tha bank, and
Y,r. Strong would greatly appreciate it if you could
supply this copy.

Thanking you in anticipation of your courtesy,
I am,

Very truly yours.

Secretary to 11r. Strong.

Dr. N. Parker Willis,
Federal Reserve Board
Washington, D. C.
VCLI

CHARLES S. HAMLIN. GOVERNOR
FREDERIC A. DELANO, Vict GOVERNOR
PAUL M. WARBURG
W. P. G. HARDING
ADOLPH C. MILLER

EX-OFFICIO MEMBERS

-

wILLIAM G. MEADOO
`TcRETARyopTHETREAsuRy
JOHN
CON

LTON WILLIAMS
.OLLER OF THE CURRENCY

PC.




FEDERAL RESERVE BOARD

H. PARKER WILLIS, SECRETARY
SHERMAN ALLEN, Ass, SECRETARY

ADDRESS REPLY TO

WASHINGTON

FEDERAL RESERVE BOARD

December 14,

1907
,

Yr. Benjamin Strong, Jr.,
Governor, Federal Reserve Bank,
rew York, N. Y.
Dear Sir:-

Your letter of December 13th, asking for
an additional copy of the June issue of the Federal
Reserve Bulletin for binding, is received and I have
directed that it be sent to you under separate cover.
The issue of this month is practically exhausted.
For your information I may say that we are

not having the first volume bound for the Board pending
a decision as to whether the annual report to be issued
early in January may not be printed of the same size for
binding with the Bulletin.
Very respectfully,

Secretary.







A

December 18th, 1915.

DeAr 3ir:

'-ith further reference to your favor of
the 14th to

Strong regarding the Feeral Re-

serve Bulletin, r.r. Ctrong would like to know if

it wili be possible to secure one of the bound
copies to be is:3120d by the :card for his private
library?

If this is possible, the June copy -.Mich

you were good enough to forward will be returned.
"itrong wishes me to thank you for your courtesy

in this connection.
Very truly yours,

Secretary to Mr. Strong.
Dr. H. Parker
Federal heserve Board,
-ashincton, D. C.




Trpri,

November 13th, 1916.

My dear Dr. Nillis:

Just a line to express my congra
success of your mission to the Phillippine

lations ypon the
and to extend a

welcome home which I am unable t

I am sorry not to be at home and lairortunity
es in the East and the

to learn something of your

he Philippine Islands.

plans for development of

n where the Federal Re-

there anything in that
serve Bank of New Yor
know you will no
aith

Jr.

Fed
Wa

Parker W'
Aeserve
ngton, D. C.
a

be

ny service!
out.

If so, I




December 7th, 191C.

ry

dear Dr. Willis:

was a pleasure.to receive your le or of December 2nd
the
ilippine National
re,.d the account of the affair
It

and to
Bank.

roe and I

You must have had a most interesting exo

judge that this institution is

ted on a-ucef

perous career.
The powers conferre
2hi1ipp3ns Legislature

are ac mu

ore general and

comprehen-

banks that the limi-

sive than those con

tations as to the

bank by the act of the

cuii and char

ter of the bueiness we could

transact with the hi1ipine Nati al 9ank are -tose which

ap-

,ealing with them as a foreign

ply to uzi

be necessary, opens the possiinstitu n which woul
bility or us to condu t the following rather limited transactions

view the 1
rst:

ould receive a deposit account from the

Philippine Na ional 'lank, or if circumstances justified doing
so', we could likewise open an account with them.

Such accounts,

if the business developed to be an active and important one,

would be reciprocal in character, we probably
OD

carrying an account

their books in pesos and they carrying an account on our books

in dollars.




-2To

Dr. Willis.

Dec. 7, 1916.

In case of need we could invest balances

second:

carried with the Philippine national Bank in paper of the character described in the Federal Reserve Act as eligible for us
to buy in foreign countries.
Should their funds accumul

Third:

York, we could in a similf,r way, doubtles

Philippine National Bank and hold

thea

unduly in New

bu

in )ort

ills for the
lo for their

account.
Fourth:

We could han

ections and o

transactions for them in Now
transactions for us

y could handle like

in the

We could handle

Fifth:

bullion transactions such

as shipments of gel

arket for exchange

made it profitable
the

aturally be conducted through

employment of

Bank of San irancisco in

rensotatior oh

order to say

long as
are as
the re

present

the

s.

ions,

of the Federal

this ould seem to be

ionship which
the atilt.

Bank will nee

r cash

Rescrve Act

the outsic scope of

uld he established.

and, I presume the Philippine National

o establish en exchange reserve account in dol-

lars of some import.,nce, just as most of

the

banks in the East

have found it necessary to establish exchange reserve accounts
in sterling.

If that is the

se, there is no reason why we

should not carry such reserve account for the Philippine National Bank, nor in fact, why the federal Reserve Bank should not




To

Dr. Willis.

:Jec. 7, 1916.

accomodate it from time to time with advances against bills
if for any reasor its reserve account in dollars became reduced or impaired temporarily.

Unfortunately, reserve banks have no power to open

commercial credits,-that most profitable fie d for a bank
relationship would not be open to us in this
, but I
should think that in any event the P
tional Bank
would find it necessary to maintain affiliations,
probably very close ones, with one o
171-ercial bank
in this
country through which comer

could bc opened for

the benpfit of importers and

of the two countries.
" our government through

The intimate r

.ne National Bank

the Thilippine gove

hat that institution and

would seem to mak
the

Federal honer

associated in some way

and, person=

ith that in vieT7

about.

thit 04

respondence to

mend

im that the m

when he i

n Washi

much to see it brought
am taking the liberty of sending

Treman at New York and will recomer be taken up

with you personally

n next week.

ac.:..ept my warmest thanks for the kind things

you say in

regard to my illness.

While I am now well enough

to feel very guilty at being away from

the office, I have

reached that stage of recuperation which seems to he slowest
and most tedious and I fear it w511 still be a good many




-4To

Dr. Willis.

Dec. 7, 1916.

months before I will be able to resume my duties .
With kindest regards, I am,
Very truly yours,

Dr. H. Parker ;anis,

Federal heserve Board,
Washington, D. C.
BS/VCM

-

z- F44we.

EX-OFFICIO MEMBERS

(

ADOLPH C. MILLER
CHARLES S. HAMLIN

SECRETARY OF THE TREASURY
CHAIRMAN

N WILLIAMS

FEDERAL RESERVE BOARD

.LER OF THE CURRENCY

WASHINGTON

HS




-

FREDERIC A. DELANO

LLIAM G. McADOO

JOHN SCE
MP/.

7

-4

P G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR

A41.P.
FEB1

H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
AND FISCAL AGENT

ADDRESS REFL.( To

FEDERAL RESERVE BOARD

January 27, 1917.

1917

ar. Benjamin Strong Tr
4100 Liontview Boulevard,

Denver, Colorado.

My dearrelr. Strong:

Your letter of December 7 reached me, I believe,
on December 11, just as t:2 meeting of Governors was about to assemble

here.

Permit me to sayt7nat I felt very much gratified at the tone

and content of your letter, and found myself in entire agreement

with the thoujits you had set forth with refereme to possible relations with the Philippine National Bank.

Noting that you had said

that you were sending the correspondence to 11r. Treman at New York

were recommending to him that the matter be taken up with me personally,

I thougat it proper to hard him my copies of the correspoalenceiwith-

out commit, because I inferred that the copies transmitted by you
would not have reached him before he left New York, so that if he had

anything to say tome in the matter, the opportunity would. pass by.
. Treman , however, said nothing further to ma on the subj act until

just before he was to leave Viathington at the close of tne ccrifereire,

when he said that the contents of the letters had been noted, and that

the nutter would be brought before their board of directors at its
next me et in g, or, at all event s, at the meeting following that one.
I did not hear anything fUrtner from Yir. Treman, however, and, of course,




-2did not wish to annoy him with importunate questions.

A few days

ago, however, I had an innediate need for the correspondeme in ques-

tion, and so wrote to him asking for it, but suggesting that if he

still had any need for the data contained in the letters I should appreciate his taking copies of then and retaining them within his files.
There has,- therefore, been no further development since your letter
of December 7, and I rather think that any that may occur ii 11 be due

to such action as you may think fit to initiate.

Whether or not you

should see your way clear to any further steps in the matter, I a.ppreci ate very sincerely the intelligent interest you have shown in the
subject.

I trust that you are making steady progress in health,

and that it will not be a great while before you will be able to get
back into harness again.
Yours sincerely,

/

Denver, Colorado,
February 1, 1917.

My dear Dr. Willis:

Your letter of January 27th is just receiv
that anything that I can do to promote the estab'''
along the lines of our

:

it ent of relations

ine National

correspondence

Bank and the Federal Reserve Bank

In

and you may be sure

York

general, it seems to

wi1laf:4114..i.

F

pleasure.

le applying in this matter

is that we should deal reel

h other to the

respective powers as these two i

extent of our

one are designed to serve

the

that a
e connection is justified

business and banking

try, and I believe

someWhat different

than in the case

gn correspondents to be appointed

by the Reserve Ba

not be a

or you to advise me in just what ways

at the present time give some
ew York?

Upon

ceipt of

service to the

Philippine National

your letter I would write to

LI'. Treman,

edure and then ask him to take it up with you.
I am g

y that my health continues to improve and I am be-.

ginning now to look forward to the time

When I can return home.

With personal regsrds, believe me,
Very truly yours,

Dr. H. Parker Willis,

Federal Reserve Board,
Washington, D. C.
BS/CC




'.4.4441

ef

'Pk.A.01101-.0.
W. P. G. HARDING, GOVERNOR
PAUL M. WARBURG, VICE GOVERNOR

G. McADOO

FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN

SECRETARY OF THE TREASURY
CHAIRMAH

i S..
C

WILLI/1\7J

FTROLLER OF THE CURRENCY




FEDERAL RESERVE BOARD

H. PARKEN.W4LLIS, SECRETARY
SHERMANP.-ALLEN, ASST. SECRETARY
AND FISCAL AGENT

WASHINGTON

HS

ADDRESS REPLY To

FEDERAL RESERVE BOARD

1917.

Fobs-.

111484

19/y

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

My dear Governor Strong:

Your letter of February 1 came duly to hand.

A few days after my receipt of it, I had news from San Francisco that the

Reserve Bank of that place had decided to desiate the Philippine National

as its correspondent or agent in the Philippines. This was approved by
the Board in due course, and subsequenti,y a let t:er cam from the Reserve

Bank of San Francisco making inquiry similar to that contained in your let-

ter of the 1st instant.

I have just written them a letter in reply, of

which a copy is enclosed to you.

I have also sent a copy of tne same

Yr.. Jay who was here a few days ago, and who said that they were still
considering the matter in executive committee in New York.

The Boston

Bank has told me that it also has the matter under advisement, :_nd it
would seem that perhaps they

iniAy

perk are both decide to do scenething in

regard to the question.
With persaral regards and best wishes for the
continued improvement of your health, I am

Very truly yours,

Enclosu.res.

z




ilS

February 28, 1917.
Mr. John U. Calkins,
Deputy Governor, Federal Reserve Bank,

5an Franeiseo, California.

My

dear Mr.

Calkins:

Your letter of February 15 was ally received, and I
have delayed glowering it until now in order that I miaht have opportunity
Of talking with Mr. Robinson, the Sew York representative of the ?hilip-

pine National Bank, and also with Others Who are interested in it.

In

reply to your inaairy I would note first the plan outlined by Mr. Strong
in his letter of December P to me, of Walsh I have alreadg seat you a cow,

but from whisk I reprothee here the essential points revalting from his
analysis of the Federal Reserve Act and tbe Philippine National Bank Act.

"First
4 could receive a deposit account from the Philippine
Nations/ Bank, or if circumstances justified doing so, we could
likewise open-an account with them. Such accounts, if the businese
developed to be an active and important one, 'would be reciprocal in
character, we probably camying an account on their books in pesos
and they carrying an account an our books in drallars.
In case of need we could invest balances carried with
Simonds
the Shilipeine National Bank in paper of the character described in
tbe Federal 3eserve ,:ct as eligible for as to Vey in foreign countries.
Thirds

Should their rands accumulate unduly

LB

New York, we

could in a similar way, doubtless buy bills for the l'hilippine sational
Sank and hold them in portfolio for their account.
We could handle collections and other cash transactions
for thee in New York and they could handle like transactions for us
Fourth:

in tbe Philipaines.

Fifth: We could haadle all bullion transactions such as shipments of gold and silver when the market for exchange made it profitable, but this would naturally be conducted through the employmort

of the Federal Reserve Bark of San Francisco in order to save transportation charges."

Specifically applying these ideas in practice, I
would atggest the followings

I.

Bills of .E.Vels,nkts

All colleetions abide the ehilippine National Baik
receives, drawn on San Francisco, to bo forwarded to the ?ederal Reserve Bank of San Francisco and to oe collected and. eredited by then

at par.

Payment et

The Federal Reserve Bank to Make payments, authorized

either by mail or cable, to beneficiaries in San Francisco, without
charge.
Purchase:

The Federal Reserve Bamt of San Francisco to hold itself in readiness to purchase hilippine National Bank bills of exchange payable in the United States, drawn on American banzers or mer-

chants, at current rates, shceld occasion require.
Foreign .:aleilan4S:

The Reserve Bank to sell elle CiE I and cables drawn on

tr Philippine National earic, such drafts to be credited in dollars in
the Philippine National Balk account at an ?rancisco at par, thereby
enabling the lieserve Bank to profit to the extent of, say, 1/4 of 1%.
The Reserve Bank to pay ahilippine National Sank

checks or cables drama on then, at per.

Should the Reserve Balk be disposed to buy sterling

bills of exchange, drawn at, say, 30, 60, or 90 days sight, the Philippine National-Bark could., of coarse, build up a considerable business wit h then, it being understood that they wcu ld transfer to New
York, at the request of th e til ippine National dank, at par.

If they intend, to enter the foreign field through the
purchase of bills of exchange, the Philippine National Bank could do
a considerable business wita then,
Thia leaves open the question of tie opening anount
to be placed on deposit with the Reserve Bank by the Philippine Nationel
Bank.

As Si) do not know What the astcunt of the transactions eat id be

likely to be, pending further everienee, would it be satisfactory to me
an initial deposit of, say, #45,000?






-3I should be glad to hear from ;iou fully on any or

all of these points, end I thould lice to have you regard them merely as
suggestions, aubj eat to such modification as may be cleaned wise.
I have beem very glad indend to hear of the im-

provement in. health of itir. &An s, and I certi nly hope it will continue
rap idly.

'ith pyramid regards, 1 am
Tours si nc °rely,




Denver, Colorado,
Zarch 5, 1917.

Hy dear Dr. Willis:

1 have to thank you for your favor of the 27th ult. in regard to
th which was en-

possible relations with the Philippine II

closed copy of your letter of ?ebruary

th addressed

eputy Governor

Calkins.

ransactioes be

en San Francisco

Direct commercial and banki

and 71anila are undeubtodly of large volune and i am

to observe the
natural relation-

progress that has been made

to both

Ship that should develop t

institutions.

If

the Philiepine National

ing long bills, as intimated

by your letter to

advantageous all around for
some way through New York, When-

these particular bills
over the business actu
entirely at the servi
the P

lippino.Nati

alizos.

Of course our facilities are

ral Reserve

sank

of San Promise° and

the purpose of promoting this business,

he handled either in the general account to be established foz

which

if preferred, in joint account between New York

sterling t

and San ?rano
Ingly anxious to got back to the office in order to deal
on the ground- th all of these questions of foreign arrangements and mea/
time I am addressing a letter to the office to ascertain what progress is
being made.

Again with thanks for your letter and for your good wishes, which I
warmly reciprocate, I am,

Very sincerely yours,

//

-

W. P. G. MARDING. GoveRNOR
PAUL M. WARBURG, VICE GOVERNOR
FREDERIC A. DELANO

EX.OFFICIO MEmDERS

-

ALLIAM G. McADOO

ADOLPH C. MILLER
CHARLES S. HAMLIN

SF' -¢TARy OF THE TREASURY

cH

IOH.

KELTON WILLIAMS

FEDERAL RESERVE BOARD

COMPTROLLER OF THE CURRENCY




WASHINGTON

H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN. Ass, SECRETARY
AND FISCAL AGENT

X-144

ADDRESS REPLY TO

May 15, 1917.

Dear Sir:

Will you for our files kindly send us at
your .earliest convenience your home address, in
order that we ray be able to make use of it in writing you under conditions of emergency.
Very truly yours,

Mr. Benjamin Strang, jr.,
Governor, Federal Reserve Bank,
New York, N. Y.

FEDERAL RESERVE BOARD

May 17t1-, 1917.

Dear Sir:

Replying to your favor of Pay 15th addressed to Lr. Strong asking for his home .address,
I beg

to stae that at present it is 4100 Montview

Boulevard, Denver,

Colorado.

however, Mr. Strong

expects to return to New York City about the middle of June

at which time you will be advised of

his New York residence address.
Very truly yours,

Secretary to Mr. Strong.
H. Pmrrtm Willis,
Federal Reserve noard,

,,,cretary,

7ilshington, D. C.

VO




Denver, Colorado,
May 22, 1917.

dear Dr. Willis:
My Secretary has forwarded to me your

circular letter of :Jay

15th with inquiry in regard to my residence address.

My ?resent address -

4100 Montview Boulevard, Denver, telephone York-1306, will be available
only until Sunday of this week as I an leaving for New York on Monday,
after which time my addresses will be care the Federal Reserve Bank and
the Plaza Hotel, New York City, until you are otherwise notified.
Very truly yours,

Dr. H. Parker Willis,

Secretarw.elTderal Reserve Board,
Washington, D. C.

BS/CC







C

-644

7/5
e2eAt,.1...t4e7

felel

(

RESERVE BANK ORGANIZATION COMMITTEE.

September 17, 1914.

Dear Governor:

For your information I am handing you abstract of replies received to
telegram sent on September 9th to the
presidents of the Clearing House Associations in central reserve and reserve
cities.




Respectfully,




).arch 1, 1919.

v

rz.nrquir

lts:Tt'ir.r.17 7'21:TT:

Dear Yr. Harrison:

I have a note from Yr. Flliott telling me of his
resignation and of your appointment as his mccessor, and

I rant to be the first to congratulate you on this promotion,
which you so well deserve.

I think you knmrlthout my saying so that whenever

you want any cooperation or assistance at this end of the line,

all you have to do is to let us knur and we will do the best
we can.

With best wishes for your success in the office, I
am,

Yours very sincerely,

George L. Harrison

ral Reseive- o
ingtone D. C.

JFC/CEP

June 16, 191.J.

Boar

r. 1Lz,1.rison:

Owing to a numter of important meetings last week

I as anaLle to see you again as I had hoped to uo end continue our oonversation.

In a few days I hope to write you more definitely;
meantime please be ocrd enough to hold your mind Open in

reard to the suggestion I made.
Very truly yours,

G. L. Harrison, Esq.,

0010207nt1 Reserve Board,
WashirOon, D. C.

Bs/Ja

11111111111111L-*




11111111116um

111111111110111MMIIIIIIMIll




Juno 20, 1919.

DeLir Ar. Harrison:

It is ,!uite likely th.t I shall be in Waaniugton
next Tuesday, and I an writing now just a word of warning

to the effect that I prOpose tt, pursue my attack upon you
-vigorously and I hope with 30741 prospeot of success.

You ;Just not close your mind to the suggestion

until we have another talk.

Very truly yo r,

Governor.
-.....11=14a40.114aqueil

Sooretary, ?edema aeserve Board,
C.
Ashinston,
26,

FEDERAL RESER+ JBBRARy
WAS

tbt,ja

GEORGE L.HARRISON




4wwift-one
Nineteen nineteen.
FEDERAL RESp

GENERAL COUNSEL

VE BANK

Dear Governor Strong:
I have jus

received your

letter of the twenti th and shall be
very glad to see y

in Washington

next Tuesday.

The p ctors have postponed
their attack so that I shall surely be
here at that t me.

Hon. Benjami strong, Jr.,
Governor, Federal Reserve Bank,
New York City.




er,

dud

gNI

At CU,

/

LA itt--

7 / l' -

,01.1
Ara:

V

tb?tie

-.

271;
124= OF VUETHER COLD

j. ES:31:11V-e; POLI3T.

'u

(7 ;4
Developments during the past few months suprest the following conclusions

as to Federal reserve bank policy

future:

in the near

Reserve banks should not buy securities when their earning assets decline.
lee,

_-

To do so means to force reserve bank funds into the market and to encourage in.

flation.

It is far bettor for the country to have the reserve barks use up part\

of their surplus to meet exeenses than to start a new period of

Zee fee
4,1.14

call"'

inflation.

Reserve banks should gradually reduce their holdings of securities and let

the volume of their earning assets, which measure the total of reserve bank funds
in the market, be

deterrined by the derand or such funds. This demand will man-

ifest itself by offerings of discounts or acceptances brought to the reserve

banks. Me banks, though being always prepared to take up such offerings, should

keep out of the narket as bidders for bills or securities.
Not only should no further
present, but the

desirability

of

reduction of discount rates be contemplated at
raising rates in sore districts should be care-

fully considered and devoloprents should be closely watched with that in view.

These conclusions are based upon a study
of the present year.

of. tendencies sinee the beginning

Durisg,the winter of 1921-1922 the reserve banes began to

feel that the raid liquidation of their discounts was

depleting their earning

assets to a point where they were apprehensive about being able to meet their iepenses.

;:s a consequence,-the banks purchase censiderable quantities of Govern-

ment securities

the

total of which, as apeears on the attached chart, at the end

of ;,eril rose above the total of discounts.

aseets, after the seasonol

The chart els:

shows that earring

drop in January, remained fairly stationary until

seasonil rise beginning in the middle of August.

the

The stationary condition of

earning aseets in the face of a constaet inn= of cold from abroad indicates that




the funds available for use in the maeiket were increasing.

If it is true that
?

funds required by the market at any elven time are a definite amount, then
funds released by the reserve bank throueh the purchase of securities or bills
the

will return to the reserve bank through a comensurate

reduction in discounts.

It is thus probable that the continued reduction in discounts during 1922 was
ceased at least in part by the eurchase by the reserve banks of Government
securities.

To the

eetent that this was so the purchase of securities had

no

effect on the credit situation, as it loft the outstanding volume of Federal
reserve funds unchanged. It is worth noting that to this extent the purchase
of securities failed of its purpose as it did not increaeo the earnings of the
reserve banks. Put in so far as the release of Federal reserve bank funds
stimulate speceiation or exeansion, such funds did not retern to
bank and were

the reserve

absorbed by the market.

If one considers the reservoir of funas at the disposal of member and non-

that the influx of gold from abroad
raises the level of available funds in the reservoir unless a similar amount is
ber banks

as a unit, it becomes clear

drawn off into the reserve bank. The rise in the reservoir may be measured by
the difference between the vele imorted from abroad and the amount of funds
wit hdrawo by the reserve beaks through the sale of investments.

impossible to determine accurately to what extent this hes

past year, because there are
figures, it would

"Mile it is

occurred

durinr the
the

always numerous temporary factors influencing

appear that the volume of funds in the mrket increased

.hato as gold imL,orts amounted

some-

to about t200,000,000 and exceeded the reduction

in earning aesets of the reserve banks. 'Mother this credit expansion was instruevetal in startine a revival of business, and to what eetent inflation
occurred, it is difficult to determine, but




the fact that prices have advanced

considerably during the year is presumptive, though not conclusive, evidence of

credit expansion beyond the business needs of the country.
In normal times such an expansion beyond business needs would bring about
its own conrectives through the fall of interest rates, the withdrawal of for-

eign funds, the consequent fall in the m.change value of the dollar, and finally
the exportation of gale to

correct the exchange.

Even now there are forces in

operation to counteract the effects of expansion. The Bureau of Labor index of
prices rose from 1 8 in January to 1E/, in 3eptember. This rise in our

rwholesale
r-5

price level was not accompanied by a rise of Pritish
stationary.

This

prices which have

remained

disparity has been reflected in an advance in sterline exchange

from -74.a2478 in January to 4.430696 in Aliptember, or from an average discount of
13 ear cent to one of 9

movement between

per ccelt.

the United

If the pound reaches parity, then

the gold

3tates and England will begin to operate along normal

lines, i.e., a movement of gold will

occur whenever the 0014infe rate will rise

above or fall below the gold point. In the case of Canada this normal condition
has been reestablished and a considerable movement of gold from this country to
Canada is in fact reported.
Rut the normal co rectiies can not operate effectively so long as most of the
world is off the gold standard and most

their international payments.

of the countries

are unable to

balance

3npland has recently made a 150,00C,000 payment on

account of interest on her war debt and a second payment e: an equal amount is

forecast. If to these interest payments

of princiLal, tnen

sterlinE will

there

should be added payments on account

decline again and resumption of normal gold move-

ments will be deferred for an indefinite period.




- 4 -

There is another corrective that might become operative

absorbs large amounts of foreign securities.
equivalent in effect to imports from the

strengthen the exchanes rates on suoh
shipping gold.

if the jnited iLatcs
mmeriosns are

2uch investrents by

debtor countries and

u±d, therefore,

countries and thus lessen the incentive for

As with conditions as far from normal as they are at

But

present, these tendencies would not be sufficiently powerful and would not operate

promptly enough to check the flow of gold to
that for

the United Stotes.

It is probable

several years to come this country will receive substantially all the new

gold produced, or

about 4300,00C,000 of gold annually.

A more detailed.discussion of the various steps through which gold inr:orts
beoome translated into

additional credit and of the effects of such .additions on

the general credit situation follows:

On tovember 1, 1922, the combined balance sheet of the twelve Federal reserve
banks was about as follows:
(In millions of dollars)

Reserves
Discounts
Acceptances
Government securities
Total earning assets
Other resources
Total resources

$3,212
£88
260
360
1,208

Other liabilities
Total liabilities

2,309

919
5,142

722
5,142

What will happen if another ::1,000,000,000
this country?

q,914

Deposits
F. R. notes

or more of cold

is imported into

For the purpose of clarifying the operation of separate factors in

the situation let it be asumed that the volume of production in this country will
remain about constant and

that consequently the credit and

of business will also remain about at the present level.




currency requirements
Also for the purpose of

simplifying

the problem, let it be assumed that there are only two banks

United states - the Federal reserve bank and the

in the

member bank, the latter repre-

senting the entire banking resources of the country.

Aecordinr to the above

balance shoot the somber bank at present is receiving from the reserve bunk about
1,200,0:0,000 of credit, partly through discounts and partly through the
by the reserve bank of acceptances and Government securities.
leased by the reserve bank in

purchase

For the funds re-

payment for these purchases enter the money market

and relieve the member bank of a commensurate ammint of demand for funds.
Consider now the effect of the arrival of a shipment of `100,000,000 of gold
from abroad consigned to the member batik.

with the reserve

bank, because

The member bank will de esit this gold

the metal is of no use to the bank itself, except

as an inconvenient form of cash.

The member bank does not keep any more cash in

its vaults than is niceseary for till money and deposits the rest
bank, where the fold

member bank's

creates a deposit credit available for

indebtedness to the reserve bank or

It Is li'eely that

the

the

no then

the

reserve

the reduction of the

for other purposes.

geld deposited with the reserve bank will be used by

member bank to reduce its indebtednecc

If this is

with the

to the reserve

bank by !'100,000,000.

reduction in the member bark's own loans occasioned by

the receipt of the gold will be reflected in a corresponding decline of its accommodation at the reserve bank, whose reserves will be increased by the awe
amount.

Suppose, however, that the reserve

reserve

increase in gold reserves,

that

bank policy to pay for gold with investments than with

corn-

mercial paper, which by the canons of reserve
reserve

bank may thus decide

sult in the



dispose of Government
on the principle

securities to the extent of the
it is better

bank decides to

banking is a favored asset.

to sell $100,000,000 of securities. This

The

would re-

withdrawal from the market of $100,000,000 of fun's, the merber bank

would feel this drain and would borrow 0.00,000,000 from the reserve bank to replenish its supply of funds.

The consecutive steps in the transaction would be

(1) earning assets of the reserve bank will be reduced by F100,000,000 through
the liquidation of the member bank's disoounts by the payment of

cold,

(2) earn-

ing assets will be decreased by a further $100,000,000 through the sale of Gov-

ernment securities, and (3) earning assets will be increased by %00,000,000
through the subsequent borrowing of -.100,010,000 by the member bank.

result would be that earning assets of

The final

the reserve bank would have declined by

$100,000,000 and $100,000,000 of investments would be %Inverted into discounts,
while $100,000,000 of gold would be added to reserves.

The reserve ratio eould

be higher.

This method of disposing of new gold can continuo until the

reserve bank's

investments are all converted into discounts, and total earning assets are rebe the amount o

duced

new gold

deposited. After that the result of further

gold deposits would still be approximately the same, but the two later steps
would be eliminated, i.e.,

the member bank would pay off its discounts with

the new gold and there the matter would rest.

Thus the earningeassets of the

reserve batik would be gradually reduoed to nothing.

If the

coarse of action

of the reserve bank were to be as just outlined, then $1,200,000,000 of addi-

tional

gold would wipe- out all the earning assets of the reserve bank.

Disregarding for
banks to pay expenses,

the moment

the effects on the ability Of Federal reserve

although there is no doubt that

this would be an important

practical consideration and that some method of handling it would have to be
devised, let us continue our story..

bank has nothing but gold
would hae en if




WO have arrived

at the point where the reserve

against which it has deposit and notiliabilities.

still more gold arrived?

lhat

The mmeber bank woald have no important

object to serve in depositing it with the reserve bank but for convenience it
probably would deposit it.

Put the member bank would have no way of using the

gold within the reserve bank, its reserves would, therefore, be excessive and
it would seek a market for its funds.

borrowing at home by reducing

ginal enterprises and would

The member tank would then encourage

its interest rates, or by

encourage

granting loans to

the flotation of domestic and

mar-

foreign

securities.

This would inorease the member bank's deposits and its reserve re-

quirements.

It would also increase the need for

currency. So that the excess

reserves would be used up in part by withdrawals of notes and in part by increased
reserve requirements.

There would, in short, be an abundance of money, which

mould resat in inflationary tendencies at home, or in the financing of foreign
Industry or other foreign enterprises, possibly including military
It will make little difference in effect

whether the

cold

will

enterprises.
come in pay-

rent of past loans, for current merchandise, or for the purpose of building up a

balance to

pay for future exports, or in payment of interest or principal due to

the United States

Government.

In any ease the gold would reduce the demand for

funds on the part of the public, or increase the supply of funds at the disposal
of the member bank.

for

This

may require further explanation.

If the gold comes

the purpose of paying a loan at the merber bank the member bank will

in

cancel

the loan, deposit the money with the reserve bank, thereby obtain an increased
reserve deposit and will thus have more funds

at its disposal. If the gold comes

direct to a customer in payment for goods, he

will

deposit it

with the member bank

and the subsequent development will be the same as in the first case; and if the
gold is deposited with the member bunk for the purpose of building up a balance,
the series of consenuences will also be the same.




If the gold comes for

the credit

Of the United States Treasury, the 'reasury will either use the money to _meet its

ourrent obligations, in which case it will deposit it with the Federal reserve
bank and transfer it to its creditors who will reeeposit it with the member bank,
or it will use the money to reduce its outstanding obligations by buying Government securities in the market.

In either case the Treasury will

funds at the disposal of the public and the member bank.

place additional

Thus it makes no differ-

ence what immediate circumstances occasion the shipping of the gold, the effect of
its arrival on our credit situation will be the same.

As will be remembered, the foregoing discussion purposely omits all reference

to

the effect that the arrival of

productive activity.,

It would

additional gold might have on the country's

seem not unlikely

that this additional gold would

liquidate some frozen loans and relieve the financial condition of same manufacturers or producers who were heavily in debt to their hanky on account of having
bad debts abroad.

With this burden taken off their minds they might turn

their

attention to the expansion of business and to this extent a. revival of our own
industry might take :lace.

It would make no difference to the oredit situation

whether this revival would take the form of additional commercial credit requirements or of a demand for investment securities.

In either case it would mean more

business which would absorb the additional funds created by the arrival of the new
gold.

In this discussion it has been assumed that there was one member bank controlling the entire banking power of the nation, and one

reserve baek. In reality

there are about 10,000 member banks controllinr about 60 per cent of the nation's

banking: resources, 20,000 non-member banks, and twelve independently managed reserve banks.




The fact that data for the reserve sy:tem alone do not give a

Complete picture of credit conditions in the country is undeniable, yet genera/

nOst of the

tendencies affecting the system will affect the entire structure.

large banks are member banks and many of them are bankers' banks standing in

much the same relation to their numerous correspondent country barks as the reserve bank stands to its member banks.

that

Another connectine link is in the fact

Federal reserve notes are the only elastic currency, and that, therefore,

a demand for additional currency, no matter whote it originates,

will

be reflect-

ed-ln increased Federal reserve note oirculation and will, therefore, affeot,credit
situation in the reserve system.

It seems safe to say that when

the

forces

affecting the reserve system are clearly understood, it will be found that the
entire credit reservoir is. affected by the same forces, and that credit eondie

tions are,broadly speaking, the same without and

within

the reserve system. The

attached chart showinr the five of reserve bank credit may help to make this
clear.

But there are twelve reserve banks and conditions in the twelve districts
may and do differ widely.

Temporary tendencies which manifest themselves in one

district may not exist in another, and influences affecting an industrial district may not appear

in an agricultural section. This is

reflected

ences between condition statements of the twelve reserve banks.

in the differ-

For example,

while discounts declined between February 1 and October 4 in all the reserve banks,
the rate of deoline varied from 39 per cent in Foston to

a per cent in eleveland,

and while total earning assets decreased in most of the districts, increases are
reported for the

York, Cleveland, St. Louis and .an Francisco districts.

On

.

the other hand, Federal reserve note circulation shows expansion in nine of the
twelve districts, but the New York, Richmond and :3t. Louis districts show reduced




-10oirculation figures.

Differences

of this kind may

suggest different orneit policies in the

several districts, but from the national point of view the
a unit.

ystem is nevertheless

The reservoir of credit constructed by the rederal Ileserve f,ot is such

that, in the final analysis, the entire ;ystem responds to the same influences,
and in outlining broad general tendencies one is j.estified in treating the twelve
reserve banks as one.

In fact, it is only by considering the combined resources

and liabilities of the twelve banks thet one can obtain a correct piottre of the
national situation, as the relations between the twelve reserve banks are constantly shifting.

It may be asked:

what would happen if the reserve bank paid out

rold

instead

of reserve notes and thereby decreased its supply of gold and its reserve ratio?

Under present circumstances this would have little effect on the credit situation.
It makes no difference to a man whether the $20 bill in his pocket is a reserve
note or a gold certificate.
and no less than before.

The cash requirements Of the nation would be no greater

The only difference would be that the reserve ratio would

be lower and declining, which micht have some psychological effect on the public
mind.

Not unless the

ratio Went down to below BO, however, would the decline become

a matter of real importance, and the ratio can not fall below 50 at the present
time without expansion, as the sUbetitution of gold for all the Federal reserve notes
in circulation would still leave enough cash reserves to constitute

deposit

47 per cent of

liabilities.

To recapitulate; further gold imports will increase the

amount of loanable

funds, and, other things remaining equal, will reduce the demand for reserve bank
credit on the part of the member bank.




Up to the saturation point of the reserve

11

bank sponge gold imports can be absorbed and credit expansion delayed.
oretically this point will be reached when additional

cold

The-

in excess of one

billion dollars is imported, which would wipe out substantially all of the reserve bank's earning assets.

Beyond that point, unless business revival caused

by other forces takes place, inflation at home or encouragement of investment of
funds abroad is inevitable.

And the saturation point will be reaehed sooner in

proportion as the reserve banks will endeavor to keep up their earning assets
by the purchase of securities to replace liquidated discounts.




1 46

July

.

A. Goldonweisser,
Rscerve Board,
Washington, b. O.

7

m Mr. Goldenweiseer:

In accordance with our telephone conversation,todal, the following
1111111111
'

paragraphs are quoted from Governor ttrong's recent lett,r asking for informa-

tion, and we should greatly apnreciete it if you could supply us -vita the data
requested:
"(1) A reasonably accurate fi6ure of the .,aymente which
have been made to our Government by foreign Governments on

account of war debts, 1,yments for war materials sold, relief
loans, and various adjustm-nts growing cut of the war.
rlhe lreasury eT,otement shows a figure which I

believe will enable Lnis information to be gathered very easily.
'r(2)

The emount of 1.-.,yments now under contract or impenc:-

iug, xhich ,vcula include, of course, th. -3 payments by tae 6litish
and uth;,3
tins Yhich have funded, and, in general, all Df
those raymente onumor,Ited above, plus paymeats arising out of
th( :alit., adjustment of distributien under the Laike.6 Elan."

1

Fiom previous. experience vdth the Governor it AOLIU be my imiression

that he would like a fairly detblisd statement showing payments by countries,
with dates, together with a summory.

I presume th.t for scm:. of this informa-

tion you will have to 6c. to the Treasuly, but I cul. f.ritin6 you with the idea

tEct t




cerxetiloceb.urt le for 1.16 to Le-,1, tile sort oi thing through you.
Yhaak you such for your to.11..

Very txu7y yours,

)(e/2J
RADOLEH 811hGi.,SS

Atsisttnt Feceral Reserve ?gent




.04

I2

/91-P
54-




May 8,

1925

Lear Dr. 8tewa:rt:

Mr. Strong, being rather pressed for time,
has asked me to forward to you the attached copy of a

letter which came to hiM today, together with the
enclosure addressed to you.

I believe you will find

the letter self-explanatory.
Very truly ours,

Secretary to

Mr. Benj. Strong

Dr. Walter O. Stewart,
Federal Reserve Board,
Otis Building, Washington, L. O.

Ence.

FEDERAL RES'ERVE BOARD
(.,.

WASHINGTON

ADDRESS OFFICIAL CORRESPONDENCE TO
THE FEDERAL RESERVE BOARD




<

'June
U.!
21)

.:18:0EN

Dear Governor Strong:

All of the preparations for the trip are now
about completed and in thought and interest I am facing
toward '1.1rope. 2he ticket has been received, the passport
and visas fixed up, and the data which you suggested have
been collected. Today and tomorrow will be used in clearing
my desk so that I will not have to think about it for the
next two months.
I regret that I was not able to attend the meeting
of the Open Market Committee, not primarily because of the
importance of the meeting itself, but because I would like
to have heard your presentation to the Committee Of the
present situation of the money market and because I would
like to have been in on the discussion concerning the proposed change in the bank statement.
This latter matter,
however, I am sure can be worked out satisfactorily with
Mr. Smead.
,I plan to leave here Friday noon and on arriving
in New York will go directly to the boat. I appreciate
very much yoilr thoughtfulness in making preparations for
the trip at a time when I realize you are very busy.
Sincerely yours,

Mr. Benjamin Strong, Governor,
Federal eserve Bank of New York,
ew York, N. Y.




GOVERNOR'S OFFICE

FRECE1VED

`.6

JLfl(P25 12 IT tm

,
FDIT

EXTRACT FROM LETTER OF DR. STEWART TO GOVERNOR STRONG

LONDON, JULY 97, 1995

"In general my feeling is that we are dealing with something more
That relation may
fundamental than the relation between the two bank rates.
Inflow
become purely formal if in either market the rate becomes ineffective.
of gold, rather than the generally anticipated outflow, is making the market
less dependent upon the bank, and if in combination with this there is a decreased demand for funds resulting from a coal strike and trade uncertainties,
An increase in the discount rate at New York
rates may become still easier.
could work only indirectly and to a minor extent upon the market here under the
At bottom I believe the forces at work in the market are
present conditions.
the export of $175,000,000 of gold from New York since last December and the
Neither of the movements were particularly related to
import of gold here.
exchange rates, but both of them affected interest rates and the relation of the
As I suggested in the telegram, I believe a more direct
to the Banks.
dealing
with the situation from our end would be an advance
land effective way of
\markets
in our buying rate on bills, which I regard as also now desirable on other grounds
If at the end of three weeks, as indicated in the telegram to
Governor Norman, it seems desirable to reduce the rate here with some prospect of
holding that level through the autumn some adjustment would have been made both
in New York and London looking toward a narrower differential.
You know much
As to the stock market, I feel as I did in Berlin.
but does not a market where pools are active, carry with it its
better than I
own correctives?"




!




ZA

Telegram sent in Ide to MR. STRONG,

0/0

GOVERNOR,

Despatched:

NATIONAL BANK OF BELGIUM,

BRUSSELS.

27th July, 1925.

Your letter indicates belief that present exchange position
could be maintained with narrower differential between
Bank Rates.

I agree, but believe London Rate, because of gold receipts,

is at the moment unnecessarily high rather than New York
rate too low.

Early crop movement and seasonal requirements for currency
will make money firmer in New York without rate action.
Also prospective growth of commercial demand, if realised,
will absorb some funds now in call market and have more
effect than increase in discount rate.

Believe rate advance aimed at stock market would chiefly
influence bond market and further foreign flotations.

Believe rate increase in New York should await clearer
indication of advance in commercial paper rates.

Desirable that increased use of reserve banks this autamn
should largely take form of discounts rather than
acceptances.

Suggest, if action is required, an advance in bill rates to
level of discount rate.

Will join you in Paris after your return from Biarritz.
STEWART.

.asamma immomE qo :MAE JAMIT

o\o

,o7DaTa.gm

AtododsciaeC

noltleoq o3azdoxe dusawall .c3rld* leiled 801430i:bill lodtelImoY .1
od blmoo

neowted

.antzE -Aro&

talcil000." hlon 1.o osEzoed ietzE nobnoI evened tEd (seIns I

.S

i'roY weT nzdd xedds." A3ld .z11.zeeeocarrn tnemom odd J'13 al

.wol ood etzl
VE071J10 loT adnome-slmpo-1 Izaoesec Jrz taemovom cloTo

.ao±doz odzI dmodtic -AloY well al -lom.1.11 .zonom elizm Illw

(license.' 11 (brizmet Ioiinoo lo dtwo.r3 evIdoogeo-lq oelA
o.rom evsd bnz dedIzm Ilzo al won abaml won. dloadz Illw

.editamoosib al eozoloal w311 toolle
Iatelao blEow de.glzm ioote tz bemlz ooazvbs edXf ovelloa
l)nod °octal:11mi
aaoltztoll cralo-rol

.a

_
Iolzolo tlzwa bici6rfa.g.ker..116t
ck oezfrEorzi edirr evol.lea .3
.aotzl ipc Islo.lcrmoo al ooxivb lo aoidzotbni

1

aldd elhzd ov.reael to oem beasosoz! tzlit eldz."±noC .7
nzdt lodds1 adamooelb o mc't eibt 7lowszt blEc.r2:n
.aeonzdqcoos

acts% Illd al ooazvbz az JolImpo." al noldoz '11 (teonauE
dnmooelb lo lewd

.8

m0/1 fffIRt0.1 IMOy; Tej'IS 8±1.2a ni n0i1 nlot 111W

.e

.TgAWETa







/4/7104/

DeceMber 29, 1922.

)ear Mr. Chairman:

received your letter of Dscowber 23rd, in Which you ask

my opinion as to S. 4103, the latest edition of the Bill, introduced
by Senator Lenroot in the Senate and by Congreseman Anderson in the

House of Bepreentatives, to provide additional 'credit facilities

for the agricultural and live stock industries of the Unitd
StatesThis
Bill would set up "Farm Credits Departments in the existing
Federal Land Banks, into eaoh of which it is proposed that the U. S.
Government should pay a capital of $6,000,000, or $80,000,000 for the
tweive banks taken together.

!understand from your letter that this

amount might be incre sad to $10,000,000 for each Federal Land Bank,

or $120,000,000 in the aggregate. With this initial working capital,
the 3111 proposes that these Fnrm Credits Departments would act as

rediscount agsnciss for agricultural paper from banks, credit asso-

ciations, livestock,loan onspanios, and similar institutions, and
that the Federal Land Banks would Obtain such additional funds as my

be needed for the purpose by issuing tux-exempt collateral trust

bonds for sale in the investment markets, and indirectly by rwilacaants with the Federal Reeerve Banks.

The n.nrrations of tha Farm

Credits Departments would be placed under the supervieion of the
Federal Farm Loan Board.

The Bill containe many good fentores, not the least of which

is the provision for aggregating agricultural and livestock naper in
such Shops as to give an adoeptable basis for credit, but it depend.



so ouch upon the large initial contribution from the Treasury and the

grant of fall tax essmption to the new securities, both of which seem
to me objectionable, that I have taken occasion to survey the whole

field of the present discussion in order to see what might be dons to
harmonise the various plane which have been presented and coMbine

their best features in one sound and workable measure. Needless to
say, I am entirely in empathy with the efforts whioh are being made

to provide better credit facilities for the agricultural and livestock
industries, and believe that one of the first conditions of sound recovery in the country as a whole is the restoration of the purchasing
power of the farmer, the impairment of which had so much to do with
the depression in business from which we are emerging. There has al-

ready been a considerable recovery, with sabstantial advances in most

staple agricultural produlate, but prices are still somewhat out

of gear

and there must be farther readjustments and better facilities for distribution and marketing before the farmer's position can be fully restored.

The trouble Iles partly in the derangement of markets and

dislocation of prices, and recovery depends on many factors, of which

credit is only one.

At the same time, however, there Is need for im-

proved credit facilities,
credits

that

and particularly for a better organimation of

will make available the necessary capital and credit for

the use of the agricultural and livestock industries.

I should

that this could best be accomplished through the adoption of some
sudh weasels as the Capper 3111 (S. 4063), with its provisions for to-




.reased rediscount facilities at the Federal Reserve Banks and for the
organisetions of rural credit corporations and rediscount corporations

on a business-like basis, coupled with provision for a further extension
of the life of the Wax lanance Corporation for a limited period, say until March 31, 1924, in order to take cars of any emergency conditions
which may remain and also give opportunity for the establishment of the
new agencies on a practical working basis. A measure of this character

could be drafted without much difficulty along the lino* of the Capper

Bill, and it would, I believe, provide a practicable and comprehensive
plan of agricultural credits, eMbodying the best features of the AndersonLenroot Bill and at the same time avoiding the objections that may proper-

ly be raised against that Bill.in its present form.
The objectionable features of the Anderson-Lenroot Bill as it
now stands may be summarized, I should say, under three heads.

In the

first place, it would place the Government to a large extent in the commercial banking business, for it contemplates what amounts to a ystem of
government banks, capitalised with public fends and supervised by govern,

ment officials. As at present organized the Federal Land Beek. are conducting solely a farm mortgage business. To enable these land banks to

undertake the business of rediscounting agricultural

per for country

banks, loan companies, and credit associations, new officers and new personnel would have to be supplied. Since the Government would contribute

the capital, it would also have to supply the management.

This involves

serious difficulties. Government operation of necessity means centralization and



standardization.

It requires rigid rules

and policies, ill

.4..

aaaptod to a country as large and as varied in its economic structure as
the United States. The Federal Land Banks now can operate upon uniform
Titles, in so far as their present farm mortgage business is concerned,

for the farm mortgade business lends itself to standardisation.

The

handling of current farm credits, however, revires promptness, flexibility, and adaptation to local needs, and these essentials Government bank-

ing could not, in my opinion, supply, -- certainly not without grave administrative difficulties.
The second objection is that the Bill would make heavy drafts

upon the Treasury for the capital of the Earm Credits Departments, and
that would mean either more Government borrowing or higher taxes on all

the people in order to supply the funds. Either would be unfortunate, for
the Government's borrowings are already heavy enough, and existing tames

are too high for the good of agriculture, business and industry.

The

Government's contribution, moreover, would be insufficient to handle

more

thane fraction of the agricultural rediscounts of the country, and the
Bill accordingly contemplates the sale of collateral trust bonds to secure
any necessary additional Ainds.

These seouritios would be entitled,

under the terms of the Bill, to bull exemptions from all Federal, State

and local taxation, and from this arises the third serious objection to
the Bill,.

Tax exempt securities afford perhape the most outstanding

avenue of escape from the income surtaxes imposed by Congress, and their

continued issuanoe is prejudicing the revemos and at the same time haying a most unieksolesome effect on the development of business and industry.

An amendment to the Constitution of the United States restricting further



issues of tax-ezempt securities is already pending in Congress, and I
repeat here the hop. mcproased in my Armual Report that this amendment

will have early consideration and soon be sulemitted to the States for
their approval. Public opinion is crystallizing more and more against

tax exemptions, which are defeating our wet= of taxation and
threatening the public revenues, and it would come with particularly
bad grace, it seems to me, for the Federal Government to authorize the

creation of a large volume of new tax-exempt securities at the very
time of proposing to the States a Constitutional amendment directed

against each issues in the future.
I may say in this connection that I have been following with
mach interest the reports of the hearings before your Committee, and
am impressed with the wide diversity of opinion among the witnesses

upon the Anderson-Lenroot Bill in its present form. The repreeuntatives




of the American National Live Stook Association testified that the
livestock industry did not want Government funds or tax-exemption

privileges, and that the Bill would not meet the needs of the industry.
The representative of a large number of the corporative marketing associations in the United States, while reamer:ending enactment of part of

the Bill, merely to provide a reserve agency in case of need, stated
that the associations which he represented believed that their main
financial reeource should and would be the Federal Reserve System.

The

representative of the Farm Loan Board, while not opposing the Bill,
stated in effect that the Farm Loan Board mas not equipped to adminis-

ter it, and 'tweeted that it be transferred to the Federal Reserve

-6,rd.

The representative of the Federal Reserve Board reoommendad that

it be placed under the Farm Loan Board. The representative of one of the

national farm organizations asked that neither of these Boards have

charge of its administration, but that a new and independent beard be

created for the purpose.
In view of this diversity of opinion, and of the substantial ob-

jections to the Bill already pointed cut, and I believe that the most
help/hi course that can be pursued now is to adopt a substitute measure

along the lines of the Capper Bill, with the suggeeted extension of the
life of the War Finance Corporation until March 31, 1924.

This would.

adept our present banking system to the needs of agriculture, and include
the best features of the various plane, upon which there is virtual
agreement.

It would admit to discount at the Federal Reserve Banks ag-

ricultural paper with a maturity up to nine months, secured by commodities in eroceas of orderly marketing or by livestock which is being
fattened for market. To this there can be no substantial objection.

It is safe, and the testimony before your Committee shows that it will
be he1pIC.1.

Nor is there any disagreement as to the wisdom of Federal

incorporation and supervision of livestock and agricultural loan com-

panies, which is also a feature of the Anderson-Lenroot Bill. Representatives of the great cattle breeding industry have testified, wereover,

that each a provision is essential to the proper oonduct of their businefss

These proposals embodied in the Bill introduced by Senator Capper,

have met with general support eat arc in or opinion strand and construc-

tive, and I hope that this Bill, with such changes of detail as may seem



-7neceae_..4 will commend itself to the favorable consideration of your
Committee.

am convinced that in the long run car preeent banking system,

modified and liberalised on these lines, will serve the needs of agriculture for better than any rival system built upon Government capital
and under Government control.

A rural credits program like that, em-

bodied in substance in the Capper Bill, would draw capital and credit
from available sources for use where needed by the agricultural and
livestock industries, and would Accomplish this on a business basis,
without depending on Government money or tax exemptions.

At the

SWAN

time it would enlarge the facilities of the Federal Reserve System, to

provide further for agricultural discounts, and I hope so as to encourage larger membership among eligible bank* in the agricultural dis-

tricts, and would extend up to $2.5,000 the limit on loans by Federal
Land Banks.

Altogether, it presents a comprehensive plan of permanent

relief on practical lines. To meet any emergency situation that may
remain and bridge the gap until the new facilities can be organised,
it is by far the best course, in my judement, to make use of the War
Finance Corporation, which is a temporary organisation and will expire
with the emergency.

This Corporation is already in existence, and it

has safficient fands at its command, with a trained personnel able to
make those funds effective to the extent that they ars needed. Its

operations have been condnoted, it is generally agreed, to the satis-

faction of the agricultural interests, and its extension for a limited



period., coapled. with the enactment of the Capper Bill, would give to

the lamer full assurance that credit will be available for his needs
on a scund basis during the period required for the practical working

out of the enlarged facilities of the Federal Reserve System and for
the organization of the more pernanent credit agencies provided by the
Capper Bill.

Cordially yours,
(Signed)

A. W. Mellon

Secretary of the Treasury.

Ron. George P. McLean,
Chairman, Committee on Banking and Currency,

United state e Senate,
Washington, D. C.




1VRESERVE BANK

OF NEW YORK

ifICE CORRESPON6Wa3
To

DATE January 3, 1923.

Governor Strong,
George L.

FROM

Ha!='Ic

1 9 2__

T:

11eEc

1)/0)
You have, of course, seen Secretary Mellones letter to the Chairman
of the Senate Committee on
credit legislation.

Banking and

Currency concerning the proposed agricultural

It opposes the so-called Anderson-Lenroot bill upon two

main grounds, first that it provides for a very substantial contribution by the
Treasury Department (amounting to $60,000,000, as compared with $12,000,000 proposed
in the original Anderson-Lenroot bill) and, second that it makes tax-exempt those
securities that will be issued by the Farm Credit Departments of the Federal
Land

Banks.

Each of those objections is, of course, valid, and it is probable

that they form the basis of the change in Mr. Mellon's opinion concerning this
bill.

As you may remember, in a letter addressed to the

Banking and Currency

Committee at the last session of Congress he favored the bill as it was originally
introduced.

He further opposes the Anderson-Lenroot bill on the ground that the
Farm Land banks are now organized solely to do a farm mortgage business and that
to undertake the additional powers conferred by the Anderson-Lenroot bill would
necessitate new officers and new personnel.

That, of course, is an objection

that was applicable to the bill as originally introduced and seems to me to be
an objection that is eaually applicable to any other plan that provides for an
entirely new class of organization, such as the Capper bill does.

The interesting point of Mr. Mellonts letter, however, is that he
suggests affirmatively that the Committee favorably consider Senator Capper's
bill, with such changes of detail as may be necessary.

What are the main

provisions of that bill?




ltprovides for Federal incorporation of two Asses of corporations,

FEDERAL RESERVE BANK

OF NEW YORK

4.FICE CORRESPONDENCE
To

DATE

Governor Strong

192

SUBJECT:

9

Georoe L. Harrison

FROM

January 5, 1923.

(1) Agricultural Credit Corporations and (2) Rediscount Corporations
Agricultural Credit Corporations

Agricultural Credit Corporations may be organized with a minimum capital
of $250,000 and may have branches anywhere within the same State as the parent
corporation.

The powers granted the corporations are

To make advances upon, to discount, rediscount, or purchase
notes, drafts or bill of exchange which are issued or drawn for an agricultural
purpose, or the proceeds of which have been used for such a purpose, which have
a maturity at the time of discount not exceeding 9 months and which are secured

at the time of discount by warehouse receipts or other like documents conveying
or securing title to non-perishable and readily marketable agricultural products,

or by chattel mortgages or by other like instruments conferring a first and
paramount lien on livestock which is being fattened for marketing.
To accept any bill of exchange of the kind which it is authorized
above to discount.

To make advances on, or discount, rediscount, or purchase and
sell notes secured by chattel mortgages conferring a first lien upon maturing and
breeding livestock provided that it has a maturity at the time of discount,
rediscount, reciti:ftbeftafti. or purchase not exceeding three years.

To buy stock in Rediscount Corporations not exceeding 20% of
its own capital and surplus.
To

issue

its

own

collateral trust notes for periods not

exceeding three years and to pledge its bills, notes, drafts or other securities
as collateral therefor.



FEDERAL RESERVE BANK

OF NEW YORK
,

To
FROM

FICE CORRESPONDENCE
Governor Strong
-

DATE

January 3, 1923"

192

SUBJECT-

George L. Harrison
6.

To exercise certain other specified and incidental powers not neces-

sary to mention here.

Rediscount Corporations
These corporations may be organized with a minimum capital of $1,000,000
and shall have all the powers that are conferred upon Agricultural Credit Corporations,

except that instead of being authorized to make advances upon or to discount paper
of the kind which Agricultural Credit Corporations may discount they shall have
power to rediscount such paper upon the indorsement of any Agricultural Credit
Corporation.

In other words, as their name implies, Rediscount Corporations have

no authority to make direct loans to Agricultural interests but may only rediscount
the paper held by Agricultural Credit Corporations or other Rediscount Corporations.

They do have, however, the same authority to issue collateral trust notes that
Agricultural Credit Corporations have.

Miscellaneous Provisions of the Bill
The Comptroller of the Currency has general supervision over all of the
operations of both classes of corporations provided for in the Act.

National Banks are authorized under the terms of Section 12 to invest
not more than 10% of their own capital stock in the stock of Agricultural Credit
Corporations or of Rediscount Corporations, provided the Comptroller of the Currency approves.

Section 14 authorizes the Federal Reserve Banks to act as "Fiscal

Agents in the general performance of the powers conferred by this Act" and are
expressly authorized' to receive deposits both from Agricultural Credit Corporations

and Rediscount Corporations.




-

FEDERAL RESERVE BANK

OF NEW YORK

-ICE CORRESPONDENCE

DATEJanuary 3, 1923.

:::overnor Strong

io

FROM

192

SUBJECT

George L. Harrison

-4-

Amendments to the Federal Reserve Act.

Title II of theAct makes certain amendments to the FederalReserve Act 1.

It specifically authorizes the Federal Reserve Banks to buy 8 months

acceptances when secured by warehouse receipts covering readily marketable staples.
1The recent ruling of the Federal Reserve Board in substance accomplishes this same
purpose.)
2.

It adds a sub-section to Section 13 of the Reserve Act which

authorizes Federal Reserve Banks to rediscount agricultural paper with a maturity

up to 9 months, provided
it is secured by warehouse receipts covering readily marketable

non-perishable agricultural products, or
it is secured by chattel mortgages upon livestock being.
fattened for market.

(Such paper based upon a chattel mortgage on breeding herds.

is specifically made ineligible.)
3.

The paper of cooperative marketing associations is made eligible,

even though the money borrowed by such associations is used to lend to their
individual members.
4.

Section 14 of the Federal Reserve Act is amended 80 as to authorize

Federal Reserve Banks to purchase and sell acceptances of Agricultural Credit
Corporations of the kind previously defined.
5.

gary144-Il.

Section 9 of the Federal Reserve Act is amended so as to permit the

smaller ineligible State Banks to become members provided they enter suitable agree-

ments to increase their stok within three years to the amounts required of national
banks.




FEDERAL RESERVE BANK

OF NEW YORK

.-FICE CORRESPONDENCE
To Governor Strong

SUBJECT:

Csoree L. Harrison

FROM

192_

DATE January 3, 1923

-5Comments

For the life of me I cannot see how this bill will accomplish any great
purpose other than in its amendments to the Federal Reserve Act authorizing the
rediscount of 9 months paper in certain cases and in authorizing the admission of
the smaller State banks into the Federal Reserve System.

The so-called Agricultural

Credit Corporations are given no powers greater than those now possessed by member
.

banks, .except that they may accept for 9 months, instead of 6 months, and except

that they may issue their own collateral trust notes secured by their assets.

It

is doubtful in my mind whether the power to issue these collateral trust notes will
in fact provide any great amount of additional credit for the agricultural sections.

Certainly all of the objections that were raised against the saleability of the
debentures of Farm Land 3anks even with their tax exempt feature are applicable to the
collateral trust notes of the Agricultural Credit Corporations.

In fact, if there

is any substantial question of the marketability of the former, there can be little

doubt that there will not be any great market for the collateral trust notes of
individual Agricultural Credit Corporations of such small capital as $250,000.

If

that is true, the bill will not provide any helpful amount of additional credit to
the agricultural sections.

The so-called Rediscount Corporations will be no more

effective in this regard, unless, perchance, the required capital of

1,000,000

will make their trust notes a little more saleable than the notes of the smaller
Agricultural Credit Corporations.
You will also notice that while the Federal

eserve Banks are authorized

to rediscount agricultural paper with maturity up to 9 months, that authority tightly
enough relates solely to their own member banks, and neither the Agricultural Credit
Corporations nor the Rediscount Corporations provided for in the Capper bill can go



FEDERAL RESERVE BANK

OF NEW YORK

/FICE CORRESPONDENCE
To Governor Strono.
FROM

Georee T.

DATE

January 3, 1923

192

SUBJECT
ffsirrison

-6-

directly to the Federal Reserve Bank for assistance as was provided in a limited
way for the Farm Land Banks in the Anderson-Lenroot bill.

The only exception to

this statement is that the Federal Reserve Banks are authorized by he Capper bill
to purchase the acceptances of Agricultural Credit Corporations, and I presume that
thIlt authority would permit of the purchase directly from the Credit Corporations
themselves.

The picture, therefore, presents itself in this fashion:

The Anderson-

Lenroot bill contemplates providing additional credit to the Agricultural sections
in two ways, first by an appeal to the investment market through the debentures of
the Farm Credit Departments of the Federal Land Banks; (whether or not these deben-

tures are made tax-exempt, they would seem to have a much better chance of finding
a market than the collateral trust notes of either of the classes of corporations
provided for in the Capper bill)

and, second by permission to rediscount directly

with Federal Reserve Banks paper that comes within the 9 months of maturity.

These

two powers might well provide a reasonable amount of additional agricultural credit
in a time of stress such as that through which we went in 1920.

But there is

some question whether the powers granted by the Capper bill are sufficient to provide
that additional credit when it may be needed, first because there is some question
as to the marketability of the collateral trust notes,

and second because there is

no authority, and there should be no authority,for these corporations to go directly
to the Federal Reserve Banks for rediscounts.

I hesitate even to mention this

latter point for it would be most unfortunate if the Capper bill should extend to

Agricultural Credit Corporations, - individual private banks, -.the rediscount
facilities Which are now given only to member banks and which the Anderson-Lenroot
bill proposes to. extend only in a limited fashion to the Federal Lend Banks, - twelve



,

FEDERAL RESERVE BANK

OF NEW YORK

4.FICE CORRESPONDENCE
To

DATE

Governor Strong

1 9 2__

SUBJECT:

gear

FROM

January 3, 1923,

-7-

institutions of substantitl cbpital operated under the supervision of the Federal
Farm Loan Board.

In other words, it would be much simpler properly t,o contra

the rediscount facilities granted to the Federal Farm Land Banks than it would be
if those facilities were extended to any number of smaller nonmember banks such as
those authorized in the Capper bill.
Either the agricultural interests need or do nct need additional credit.
If they do need more than can be given through an extension of the maturity of

agricultural paper eligible for rediscount by the Federal Reserve BanLs, the Capper
bill does not seem to answer the purpose as well as the Anderson-Lenroot bili.

If

they do not need such additional credit, it may well be argued, as has been argued
before the Senate Banking and Currency Committee, that there is no need to provide
for any new Class of corporations or even to extend the powers of the Federal Land
Banks, it being felt by some that an extension of the maturity of eligible agricultural paper from 6 months to 9 months is enough.

GLE.MSB




iatis4411 4d 14.00111.00I '1-




60,

d-o




FILING DEPT.
FEDERAL R E '

''th-'14\53

^

-afrfoAR D

viveMAtclittERVE BANK
April 2nd,--1915.

I have your letter of the 31st ultimo from Hot
Springs, Va., and while I do not want to bother you with
business, I do want to acknowledge this letter.

I think I realize your sympathy for the country
banker and I think I also understand and respect your general
views on this general clearance auestion, so I shall not go
into it.
It is the feeling of the 35EY1, I believe, that
we had authorized the Governors to go ahead and work out a
scheme in their own way and that it was better that we should
not in.any way approve it.
If it had come to approving the
scheme%'the circulars, etc. in detail, it would have meant
the same slow process of winnowing out each word and phrase
which makes many of our deliberations so long and tedious.
I want the plan you are working out to be a great success
and a tribute to the ability of your Committee.
.

O PMDFOR.

IL,
E No

rIS.
LIEU ECTcC

Quite a number of co-ontry bankers have been here, com-0
plaininR about the loss of exchange and a number of them
have said that if the Reserve 3anks would allow them interest on reserve deposits, that would go a long way towards
I do not believe it woild ever
smoothing the rough places.
do to pay interest on minimum legal reserves, but I Ô think
there is a good deal to be said in favor of paying two per
cent ifit.92s.ten
balances in excess of minimum reserves and
04.
I prepared a brief on this subject
on speclal7I'eserves.
which has gone only to members of our Board, out which I do
My own view about paying interest
not mind having you see.
on/deposits of country banks is that it is a vicious thing and
ought to be broken up, and I think there is a better chance
of breaking it up if you allow reserve banks to meet the competition than if you tie the reserve banks' hands.4,

X/I have been doing some work on a regulation for the
purchase in the open market of domestic bills of exchange,
accepted by a banker, manufacturer, or merchmit in good standSUBJECT 0-e- cling, and am trying to hedge the thing with every possible
safeguard, using forms which will be standardized by the
Federal Reserve Banks and with a list of the attached 'documents Shown on the back of the bill - such a form, for example, as I enclose herewith.
Our friend, P. Y. W., has

COPIED FOR_
FILE No, IS.S




-2-

RFCEIVED
Acp,

Fr"
about a thousand reasons why it is a vicious practid'e and
I am sorry to say that I do not yet know enough about the
One thing in favor of it,
business to stand up against him.
it seems to me, is that these bills would pro'bably bring up
as much as two per cent higher than foreign acceptances;
that they would help to popularize the new banking system,
to standardize our methods, etc.
In fact, I think the Governors can do a great deal
by trying to standardize the forms of bills of exchange and
commercial paper of all kinds, that little by little, through
the examining force, you could get town and country banks to
carry in their portfolios an increasing proportion of paper
Mr. D. C. Wills, Federal Reserve
which is rediscountable.
Agent of the Cleveland Bank, sent me an interesting letter
from a western Pennsylvania banker, who said he did not see
how the system would do him any good, that he never expected
to rediscount, that he carried, in addition to his cash reserve, quite a large investment in standard stocks, such as
Pennsylvania, Reading and other things which were readily
convertable into cash!
There are hundreds of men of this
kind, who need a lot of education, and it is going to be a
slow process, but I an laying a great deal of stress on the
fact that the Federal Reserve Bank, as the central reserve
bank of its district, furnishes the first effective bond of
The city
interest which the National banks have ever had.
banks have been able to get together in their clearing house
associations; and country and city banks have had voluntary
associations in club meetings, etc., where banking politics
have played an important part; but never until now have the
city and country banks been united in a joint stock company
which ought, if properly managed, to prove an effective
bond of sympathy.
%

But excuse this long letter.
I did not intend
to say so much, or to bother you to such an extent.
If
you will stop over in jashington, I will give you a real
horseback ride.
Yours very truly,

Mr. Benj. Strong, Jr.,
C/o The Homestead,
Hot Springs, Va.




EBM