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Other Directors of the Bank of England in 1920's given in the September issue of the Bankers Enc*clopedia 1927 1924 1922 192 5 1926 1927 1928 119,C1921 7C -Booth, George M.,* r x x x x x x Asbury, Col.LionelA x x X x x e derson,George W. ,x x x x x x Wallace Robert X x X Whigham,Walter K z ..X z z x z z Whitworth, Arthur X qmith,Renry B Ai Spencer-Smith,M.S Shaw, Alexander z 2-4F z . z z z X z z + z z z tt'hee.act date of changes is not clear as there Appears to be n lag of a year and a half, as A election in the spring of a year is not'i'Pcorded to the ne t year, For ev. mple Peacock became a director in the spring of 1921 but the Bankers Enclyclopedia did not give it until Sept. 1922. The,---1-4-st=i44' g-ef-f-rrr-et-gru_Lha_t*q_ One of more of directors above mey have been elected as early as 1900. * According to Who's Who,/Booth served as a director 1915-1247. / 4t4q. IL004(10 1950. GO.Lo LLdact,,-c ce C 4ti:EM/t1 1,0,a L' 4,4 ic /11 G y (b/ t 1,4 di Z3 -1 1111- jr;227- 6 /9 2 / 4e_a----4:i.d_e74.27C---; 7ez i 1:e1-- 4 ( .I ' Lf-ti Ce. to 7 4, i ..e 1.4'i , i i-," te k(""""" (1) 1. Sir E04 "c""".1 - I I g -T4 -vr ti: - w - fr 1 r,3. 11,211o7o; 1879-1925 [Clay, p.951 -- )k2. Brien Cokaynt (Lord Cullen), 1902-1932 IClay p.921 3. Edward Grenfell(later Lord St.Just)of nor:an,Grenfell(f 1905-1940 10lay,p.87( -)<4. Lord Revelstoke, 1898-1929 [Clay, p.95] )5. Monta7u Norn-lan, 1907- -.6. Cecil Lubbock, 1909-1942 N7. H. A. Trotter, 1909-1934 40 F. C. Tiarks: 1912-115 7( R. I:. Kindersley, 191 -1946 [Clay, p.55]..-- (Clay, p.107].0-1a-, . ^cr w [Clay, p.189]-.414 74- 24i [Clay, 149] [Clay, p. 0] - 10. Alan Anderson,Sir, 1918-1946 [Clay0.303] 0,- ).,,,.,/.... t:L0_,.t1 toe 9 was chosen. ;avernors.[Glay,p.8] 1 ' -/ 1/0-12 v-zi .24,7z4 /9)-3--)f 11(y * c c Directors of the Bank of England, elected by 1900 who served during period 1914-1928. .Sandeman, Albert George, director,1866-1918, Governor, 1895-1987 GbscheiliCharIes Herman, director, 1868-1915 Aprooks, gerbert, director, 1872-1918 e-Hambro, Everard Alexander, 1879 - 1925 Morley, Samuel Hope, 1882-1921, Governor, 1903-1905 'Arbuthnot, Charles George, 1884-1928 (p.629) vBonsor, Henry Cosmo, 1885-1929 /Campbell, William Middleton, 1886-1919, Governor, 1907-1909 v Wallace, Alexander Falconer, 1887-1918, Governor, 1905-1907 1/Jackson, Frederick Huth, 1892-1921 bJohnston, Reginald Eden, 1893-1922, Governor, 1909-1911 vCole, Alfred Clayton, 1895-1920, Governor, 1911 - 1913 Cunliffe, Walter, 1895-1920, Governor, 1913-1918, Newman, Robert Lydston, 1896-19T L!--27 Deputy Governor,19131915 6-Hcateg William Douro, 1898-1928 Baring, JohnLord Revelstoke) 1898-1929 (p.630) Acres, W. M., The Bank of England from Within, Vol.TI(published in 1931) a Directors of the Bank of England Year elected Name 1914 nschen, Charles H. 1868 - - x sandemsn, Albert G. 1866b x Brooks, Herbert 1872b x WallacikAlex.F. 1887b x Campbell, Willimn M.1886b x Cunliffe, Walter 1895,, x Cole, Alfred C. 18951', x Morley, samuel H.* 1882 x x Jackson, FrederickH.1892b Johnston, ReginaldE 1893 x Hambro, Everard A. x 1879 Albuthnot,CharlesG. 1884 x wosre,William T. 1898 x Bonsor,Henry C. Develstoke,Tord + Newman, Robert L. 1885 1898 1896c x Cokayne,Rrien Grenfell, Edward Norman, Montagu Lubbock, Cecil Trotter,Venry A. Tiarks, F. C. Kindersley, R. M. l902 1905b 1907c 1909c 1909 1912 1914c 1918 1918 1923 1924 1921 1925 1928 x x x x x x x Anderson, Alan 6: tladis, Charles, Airedale,Lnrd 0 Glsdstone,AlbertC. peacock,- Edward Nairtiti.;,J0'18.ordon Harvey, lrnest stamp, Josiah 15 16 17 18 19 x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x 20 22 27 24 25 26 27 x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x xx x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x xx x x x x x x x x x x x x x x x x x x x x xx x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x 192 8 x x x x x x x x 1922 regischen, Yenneth 28 x x x x x x 21 x x x x a. The names and dates of office and directorship for-f6ose---selectsd before 1900 are from W.M.Acres, The Bank of England from Within, Vol.11(rm.629-60). The names of those following 1900 are not complete as there should be 24 directors, plus governor and deputy governor. The names and dates of all directors thereafter comp from Clay's Lord vormsn, with the exception of Lord Airedale and sir Albert 0. Gladstone, which come from the Annual Deport of the Bank of England for 1947 And from Who's Who, 1951 /(The term of office starts to April so if all were listed,. when there were changes -there should be more than 26.) b. Served as governor (as well as earlier as deputy governor) c. served only as deputy governor. and Kenneth Voschen whose data come from wuropa, Who's Who(undated) V01.11.......:---- .)-e4 gut, ,s F-7,2e fit's'', yi * Lord wallenden it/ t John Baring t- Lord Cullen in //0 0.Rqtald Kit son in the 15201s,. -c-`1. /40,2,1L-Utr i" P_L Lt .J441 * C4-1Ati ef-14/ cc ci 141 i" 1:6_,Ate-,.0-1c; /el UPS' ( /77 ) ....7 8FFICE CORRESPONDENCE DATE TO Mr. S. V. 0. Clarke FRO/ Evelyn Nay 13, 196r, SUBJECT:- Committee of Treasu:Qrin_Jan.1925 H. Knowlton It is difficult to asce:-tein flion Cloy's Lord Norman who were memberz of the Committee ()I the Treaeufy, 'who here ar.onE the mor,lert of Court of the Bank of England. In 1918, a cow ittee recorL,aemtptIon its accented that they rumter rine, at least including the governor, deput.,,/ ,overro-, enn fhree who had not seltzd 38 7svernor. 14.107) 1. Mon The probable m4mbei.s iu ;u Norman, C4overnox u 192;: rtre: the :wank, Vao becane a rierber May, 1(21:::!.p.93] 2. Cecil Lubbock, Deputy Governor,[meatfoned as member in 1917, p.106: 3. Brien Cozayne (Loru CnILeL), for-er gown.= ]f. H. A. Trotter, forme:: Deputy Goveruor /cAl in 1917(paO6] Cornittee 5. Lord Revelstoke, montonet.;. as c?,a1.7-11`3:1 r_t the A 7. R. Y. Kindersleyonenionel as rac,,ber in 1917 [p.1061 8. Sir Charles Adas, nentioned an absent at Committee of We,-u_y neetini7, in B of E c-able to Nor..411 iu F3 52, Jan. 7, 19:5. 9, Si.: Iztiffic.N1 Hambro or Wvard Granfell, RS senior directors and vith Revelstoke; those whom Nor men 1%ost fellea upon in international banhing [p.951 Lei' 494 -Yrrro b1-31 12 "atiprp 9,GRACECHURCH STREET, LONDON, E. C.3. February 26t11, 1920. My dear Mr. Strong, In the absence of Sir Charles Addis on the Continent, and in view of the urgency of the case as you are leaving for the Far East so soon, I take the liberty of enclosing a letter of introduction to each of our Maaagers in Yokohama and Shanghai for you to rake use of on your arrival at those ports. No doubt Sir Charles Addis, on his return to London, will write you and give you letters of introduction to Yr. Stabb, our Chief Manager in Hongkong, and to the Managers of other branches with which you would be in touch during your trip via Suez to London. Wi:.hing you a pleasant journey and hoping to have the pleasure of meeting you in London next winter, Yours sincerely, Benjamin Strong, Esq., Federal Reserve Bank of New York, New York. /-----?-7-------------- R 9, GRACECHURCH STREET, LONDON, E. C. 3. March 18th, 1920. R. My dear Strong, I receiveiyour letter of the 6th Februury this week on my return from Paris. I enclose a few letters of introduction, which I hope may be of service to you, although I think you will find that your reputation has preceded you a.-Id that you are much better known in the Far East than perhaps in your modesty you are inclined to admit. I ar.1 exceedingly glad to hear that you are to have a rest from your strenuous labours, and I most heartily wish you a prosperous voyage and an early return with a renewed freight of health and spirits. Believe me, with kind regards, and all good wishes, Yours sincerely, Mr. Benjamin Strong, C/o American http://fraser.stlouisfed.org/ Tokio. Federal Reserve Bank of St. Louis Embassy, CKNOWLEDOED VP 1 3 1921 POS EMPRESS OF BRITAIN. ion` )4Ny OkAo.At- ( )4101, (KM/0 1/4A/k, 4L-A/AA tet- vttiLL/ (^ P;"1 CNo ryvv41-- Nsethi7rki-$.A. (Nft "jj1/4d Q-P4A:-v"LkorM4)-k-sniNAL. Att4^^/C X4-7, tAk40 t_tov.Nit tea.. q&. tANAI rv- 1,vvira>t- INAUGURAL ADDRESS OF THE PRESIDENT, SIR CHARLES ADDIS, K.C.M.G. [Delivered in the Hall of the Goldsmiths' Company, Foster Lane, E.C.2, on Tuesday, November 8th, 1921, at 5.30 p.m. [ By the eon rtegy If the Prime Warden and Wardens of the Compiny]. GENTLEMEN, -My first and most agreeable duty is to thank you for the honour you have done me in electing me your President.. I can make no claim to the authority and experience of my imme- diate predecessor, but I can at least try to emulate 'his zeal and devotion in your service. It shall be my constant endeavour, withhi the measure of my capacity, to advance the interests of the Institute of Bankers and to uphold the high traditions of a a long line of distinguished Presidents. The educational work of the Institute was carried on under .difficulties during the war and we are still suffering from its aftermath. The technical education of the young banker had hardly begun when he was called to arms. Military life is not favourable to the formation of studious habits. It is one of the minor harch_ ships of war, that our young men are suddenly called upon *, resume sustained mental effort after a life which, despite its dangeis and hardships, may be regarded as upon the whole moieattractive to the spirit of youth. So far as numbers are concerned 1 we have more than recovered the ground lost. The number of candidates who presented themselves for examination last year is a record one. I am sorry to be unable to say as much of Ake quality of the work dove. It is disquieting to find that in English composition, for example, 65 per cent. of the candidates failed to obtain 50 marks out of a possible 100. After every allowance is made for the disturbance of war, that is not a satisfactory result. It is good to master a foreign language ; it is better to begin by mastering one's own. I wish we could get the young banker to realise that the first and essential factor of success in his calling is the ability to think clearly and to express himself accurately in his mother tongue. The activities of the Institute are not confined to the sphere of education. It was founded to organise the business of banking into a profession ; to collate and codify a corpus of custom and unwritten law ; to procure the adoption of common procedure and uniformity of banking practice ; to conserve the gen interests of its banking members ; to raise the standard of banking education and to test its efficiency by lectures and qualifying The Inaugural Address of the President. examinations. In the forty odd years of its existence the Institute of Bankers has acquired a position of influence apd authority, together with a corresponding responsibility not only to its men. bers, now numbering over 12,000 bankers, but also to the Government and to the general public, who naturally look to it for guidance in all problems of national finance which require technical banking knowledge for their correct interpretation and solution. This is especially true of such questions as the control and management of the currency. The Cunliffe Currency Committee. The Cunliffe Currency Committee, for the most part composed of members of the Institute of Bankers, in an interim report published in August, 1918, recommended the restoration of the effective gold standard which had been practically suspended by the war. ' It is important to discriminate at the outset between a gold standard and the gold standard, i.e., the pre-war standard of 123k grains of gold to the pound. It must be borne in mind that it was the latter the Committee had in view. By an effective gold standard they meant that notes could be freely exchanged for exportable sovereigns. The conditions precedent to a return to an effective gold standard were stated to be threefold ; first, cessation of Government borrowing ; second, raising of Bank rate in order to check a drain of gold abroad and the speculative expansion of credit at home ; and third, the limitation by law of fiduciary note issues. The Committee after waiting for a year, during which time their main contention remained unshaken by any serious criticism, issued their final report in December, 1919. " We have reviewed," they said, " the criticisms which have been " made upon this part of our report, but we see no reason to modify " our opinion. We have found nothing in the experience of the " war to falsify the lessons of previous experience that the adoption " of a currency not convertible at will into gold or other exportable " coin is likely in practice to lead to over-issue, and so to destroy " the measure of exchangeable value and cause a general rise in all prices and an adverse movement in the foreign exchanges." The report in its final form met with general assent, and on the 15th December, 1919, the Chancellor of the Exchequer announced in the House of Commons the measures recommended by the Cunliffe Committee for the restoration of an effective gold standard, which had been formally adopted by H.M. Government as a part of the national policy of reconstruction after the war. The Committee recognised that the process of restoration to economic health must necessarily be slow. No support for any scheme of drastic deflation will be found in their report. On the contrary http://fraser.stlouisfed.org/ Inaugural The Federal Reserve Bank of St. Louis Address of the President. 3 4 The Inaugural Address of the President. trouble); I do not despair of seeing a balance on the right side at the end of the year. But it is not the internal debt of which I wish to speak n but of the external debt, the consideration of which is more strictly germane to the discussion of a return to the gold standard. The present position is this. Exclusive of one or two negligible amounts, all our obligations to other nations, except the United States, have been discharged. I wish we could say the same of the obligations of other nations to ourselves ! I admit that the United States is a grave exception, but surely it is no small achievement, an achievement which has aroused the admiring envy of other nations, an achievement in which we ourselves are entitled to take a legitimate pride, to have succeeded, during the last two troubled years, in paying off over £200,000,000 of our foreign debt.* Furthermore the Chancellor of the Exchequer announced on the 15th December, 1919, that it was the deliberate policy of H.M. Government to abstain from further borrowing, and to that resolution his successor has consistently adhered. oversy, but of banking e of the past ffectiveness practically ve credit and On the cessation of hostilities in d unchanged ng power of y the device es continued arply accen had carried http://fraser.stlouisfed.org/ ched. Reserve Bank of St. Louis Federal The The Inaugural Address of the President. 6 The Inaugural Address of the President. reduction, as opportunity offers, by further transfers to the credit of Currency Note Account of notes from the banking reserve of the Bank of England. The present position is that the vol of legal tender money (Bank of England and Currency Notes) circulation is now nearly two and a-half times as much as it was before the war. Bank deposits, in themselves a potential currency, are also two and a-half times greater than they were in 1914. On the other hand, wholesale prices are less than double. Retail prices, unfortunately, have lagged behind. The importance of a further and early fall in retail prices to correspond with the fall in wholesale prices can hardly be exaggerated. The general conclusion is that if the supply of purchasing power is to be reduced to a due proportion with prices the process of contraction will have to be carried considerably further. a a contraction credit or How is this to be accomplished ? Bybycontraction ofof currency ? The ca two is still a subject of controversy, a variance it is perhaps hazardous for a But in this ccrrpany, at any rate, I m the personal view that it is largel The expansion of credit and the are so closely inter-connected as effect. It is possible to hold with the expansion of credit there would of currency, and with another, that bu rency the expansion of credit would ha which came first opinions will differ. the fact that, at any rate for the first increase of currency in this country p I must, however, qualify this stateme being withdrawn from circulation, and more correctly be described as one o currency expansion and credit expans between currency expansion and price There is also to be considered the s tween the increase of currency and th It is almost universally t is highest where the expansion of cu The real point in dispute is not wh due to the expansion of credit or to t It is due to both. Both were cont The real subject of controversy is borne by each in producing a comm emphasis on the one ; some on the countries. dissent from the general conclusion of in his paper on Inflation read before http://fraser.stlouisfed.org/ The Inaugural Federal Reserve Bank of St. Louis Address of the President. 7 8 The Inaugural Address of the President. Stability of Prices. High prices or low prices as such are obviously indifferent. To use John Stuart Mill's celebrated illustration, if all the units of purchaft ing power of the community were by a magician's wand doubled in the course of a night, nobody would rise up the next morning one whit better off. Prices would have doubled just as the circulation, using the word in its widest sense, had doubled, and that would be all. U fluctuations in prices were uniform we might view the result with equanimity. Unfortunately for the happiness of mankind, fluctuations in priceonever are uniform. The index number is only a convenient common measure of the movement of the prices-some of which may be rising while others are falling-of certain selected commodities which may be taken as representative of the whole. It is striking how at every turn of a survey of the actual economic situation we are confronted with the problem of prices. It is not too much to say that upon the successful solution of that problem it depends whether this country is to continue to expand its. activities, or to contract them to the measure of a few expert occupations on which a diminished and probably shrinking popu- lation might continue to subsist. To produce more goods for home consumption will not save us. It is not even enough to produce surplus goods. They must be the right kind of goods, the kind of goods our customers want, offered at the price they are able and willing to pay. This does not necessarily imply a return to the pre-war price level. International trade depends upon comparative cost. It is a question of relative prices. Goods will only be exported to those countries where there is a reasonable expectation of their exchanging for a greater purchasing power than they command in the country of export. When the gold standard is in function, if gold is under-valued relatively to goods, in other words if prices are relatively high, it is more profitable to ship goods than gold. Conversely, when goods are under-valued, that is when prices are relatively low, then it is the gold that is shipped. What follows is that the quantitative relation between goods and gold is altered. In the one case prices fall, in the other they rise until the equilibrium of world prices is restored. The great advantage of the gold standard is that the possibility of the export of gold limits the fluctuations of exchange, to round about the parity. The great disadvantage, from the point of view of foreign trade, of a paper money regime is that there is no definite limit like the specie point to the fluctuations of exchange. But this must not blind us to the fact that the principles which determine the general level of prices under an effective gold standard operate in the same way under a paper money regime, with this important difference, that the supply of gold is limited by the The Inaugural Address of the President. 9 amount of gold dug out of the ground, while the supply of paper money is determined by the financial policy of the Government. present circumstances a rise in the price level of this country elatively to that of any other country is no longer adjusted by an export of gold ; it is compensated by a fall in the exchange. The old parity of exchange between gold-using countries has disappeared for the nonce, and its place has been taken by what is known as the " purchasing power parity," a theory lately associated with the name of Professor Cassel, of Stockholm. The theory is not indeed new. It will be found stated, at least by implication, in the works of the standard economists. An analysis of the general formula was made as far back as 1888 by Professor Shield Nicholson in his " Money and Monetary Problems." To return to Professor Cassel. Our valuation of a foreign money, rIn he says, depends on the relative purchasing power of the currencies of both countries. Hence, the following rule : When two currencies have been inflated, the tew normal rate of exchange will be equal to the old rate multiplied by the quotient between the degrees of inflation of both countries. The rate calculated in the way indicated must be regarded as the new parity between the currencies. This parity may be called the " purchasing power " parity," as it is determined by the quotient of the purchasing powers of the different currencies.* It is a neat formula, but its practical utility, it seems to me, greatly impaired by the difficulty of determining what is the relative purchasing power of the two currencies. Ordinary index numbers iefer to the prices of things in general and not specifically to the smaller group of things that enter into interis national trade. " To know that things in general had quadrupled " in price in France and doubled in price in America would not, " therefore, enable us to infer that a fifty per cent. fall in the dollar " valuie of the franc was required to restore equilibrium. That " inference would only be warranted on the assumption that the prices of things in general, as recorad in the index numbers of " the two countries, had moved exactly parallel with the prices " of the goods actually entering into the international trade : and " that assumption cannot properly be made.'1. Devaluation. I do not know how far I have bees able to carry you with me, but if we accept the finding of the Currency Committee that there Quoted by Dr. Chandler in the "Commerce Monthly," May, 1921, National Bank of Commerce in New York. t "The Political Economy of War," p. 172, by Professor Pigou. MacMillan and Co.,. 1921. 10 The Inaugural Address of the President. are sound reasons for a return to the pre-war parity, then I think we must recognise frankly that this cannot be done-unless, indeed, ' new and unexpected inflation should take place in America-with:, out a considerable amount of farther deflation in this countrAill This once more raises the question, How much farther ? deflation gone far enough ? Has not A short time ago I asked : Far enough for what ? I now If the question is put to the ask : Far enough for whom ? working man who is out of work, to the mineowner who has had to shut down his mine, to the manufacturer who has had to close his factory, to the farmer who has turned his tillage into pasture because he can no longer raise crops at a profit owing to the decline in prices, the answer will be in the affirmative. If the same question is addressed to the workman who is fully employed or to the mineowner, or the manufacturer who is so advantageously . circumstanced that he can still produce at a profit ; above all, if we ask the question of the great mass of- the professional classes who depend upon a fixed income, the answer will be in the negative. It is this clash of different interests within the community which makes it so difficult to determine at what point deflation may be said to have gone far enough. One popular argument against further deflation requires notice here. It is argued that a return to the old pre-war parity would increase the proportion the internal debt bears to the sum of money incomes. It is not high prices, but rising prices that are the cause of large profits. Conversely, falling prices are associated with diminished profits. Salaries fall in sympathy with the fall in profits. Income Tax becomes more burdensome and less productive. Taxes on commodities which are fixed in money tend to become unproductive altogether owing to diminished consumption. In effect it becomes more difficult to balance the budget. All this may be admitted without conceding the paradox that the proper way to balance the budget is by more inflation and not b more reduction of expenditure. The general conclusion with regard to further deflation is that the interests of the community as a whole are likely to suffer if the fall in prices is carried to a point which will check the future production of the raw material of industry. There would then be the danger of the revival of trade we all expect meeting with such a shortage of raw material as to provoke a violent reaction in prices and thus to prevent or delay the advent of that relative stability upon which successful trade depends.* The serious decrease this year in the area of cultivation of such staple crops as cotton and jute is significant. For a summary of the evils of deflation see: "Inflation awl High Pzices," by Prof. Kemmerer. Oxford University Press, 1920. The Inaugural Address of the President. 11 Stability of prices in this country will not, of course, in itself produce stability of exchange with another country, America for There must be stability at both ends. We know how the iiexample. in the way of correcting the New York exchange last year obstacles were increased by the fact that deflation took place more rapidly in the United States than in this country. In fact, if Ametica should again inflate, exchange will be steadier if we inflate too than if we do not. So far, therefore, as the maintenance of our international trade is concerned, it must be admitted that the argument in favour of pushing deflation to the point which would ensure a return to the pre-war parity is pro Canto weakened. Why then, it nny asked, should we continue to wrestle with the burthen of deflation with all its attendant ills when a way of escape presents itself not by abandoning the gold standard, but by the simple expedient of altering it ? Is there anything sacrosanct, it . may be asked, in the ratio of 123 grains of gold or 4.86 American dollars to the pound ? How could we be prejudiced if the pound were reduced to 924 grains gold and the American exchange to a new parity of 3.65 to the pound ? It is true that gold would then command a premium of 33 per cent. that is, it would be quoted at £5 3s. 8d. instead of £3 17s. 9d. per ounce in paper money, while the paper pound would be worth only 15s. in gold. What would that matter ? It is worth a good deal less now. And as for the American exchange, we should go ; back at a stroke to the much vaunted automatic standard system by which we set such store. Prices would be stabilised at the new level by *gold flowing out when exchange fell below the new parity of 3.65, and flowing in when it rose above it just as it did when the parity was 4.86. Why not ? An unlettered man, I never listen to the learned Dons-I hope I have stated their case fairly-who advocate this course, and suffer the charm and vivacity of their exposition, and realise my incompetence to make an adequate response, without feeling constrained to adjure them in the words of Oliver Cromwell to the General Assembly of the Kirk of Scotland, " I beseech you, con- " cider it possible you may be mistaken." Do not let me be misunderstood. I intend no sneer. I hope I should be the last man to underrate the value of the theoretical economist. I am too sensible of my obligations. Where long periods have to be considered the theoretical economist is indispensable to business men. Indeed, if ever I felt tempted to treat his judgment lightly it would be sufficient, in order to render me dumb, to remind me of the great boom of 1920, and where our hand-to-mouth business opportunism led us then. I know that economists have no other aim than to consider these questions strictly on their merits, and with the scientific object of discovering which solution will 12 The Inaugural Address of the. President. most promote the general good. That is the criterion to which we must all bow. For my part, I am not concerned to deny that in an ideal world devaluation might be the ideal plan. But la must be allowed to remark with respect, that it is not enough fo a principle to be shown to be logically indefeasible in the seclusion of the economist's study. We have to take the world as it is. The principle must be brought down into the hurly-burly of the market place and proved in operation there, through the medium of the heart and mind of ordinary men, in conflict with their opposing interests, their changing purposes, their unruly passions and their defective wills. That, to my mind, is where Professor Cassel's devaluation proposal falls short. It may have all the merits claimed for it, but if it fails to take sufficient account of human nature, or, shall r say, of human nature as we know it in these islands, it is doomed to nullity. To suppose that a people so conservative by instinct, so tenacious of custom so careful of tradition, could be induced to trample on their monetary past and to relinquish the dearly purchased gold standard, which rightly or wrongly .they believe to be bound up with the prestige of their national credit and their supremacy in international finance, is to live in a world of illusion. Sentiment ? Yes, certainly ; we have to take account of sentiment. The world is swayed by sentiment. It will not do to say that devalu- ation is merely the recognition of an accomplished fact, since the pound is worth less than fifteen shillings to-day. Is that a reason for perpetuating a tort ? Even a fifteen shilling pound we might put up with, if it offered any reasonable hope of'permanence. But does it ? Suppose the process of deflation were continued in America, or that, owing to further inflation in this country, priceswere forced above prices in America, then gold would be exported. It is true that on the supposition of a lower parity it would take less gold at 3.65 than at 4.86 to bring about the adjustment of relative prices and restore the new parity of exchange. But if the difference in prices were maintained or extended by further inflation, the gold would continue to leave us with all the evils of uncertainty of exchange enhanced by the haunting fear that our stock of gold might prove unequal to the strain. " Oh, but then," says the theorist, " you could fix a new parity of exchange." but what then becomes of your stability ? Quite so ; I do not wish to push take any dialectical advantage or to this argument too far. I admit that if trade were more or less in balance there would be no more reason for a breakdown from a new parity than from a restored old one. I am only concerned here to make the point that the times are not propitious for the change. The fact is that the condition precedent to the success of Professor Cassel's scheme for the stabilisation of exchanges abroad is the stabilisation http://fraser.stlouisfed.org/ The Inaugural Federal Reserve Bank of St. Louis Address of the President. 13 14 The Inaugural Address of the President. was surely impending in 1914. There is too much similarity between the crisis of to-day and the great crises of 1847, 1857 and 1866 to let us doubt Jhis paradox. All the great historical crises os have been marked by a departure from sound, and by sound I mean established, currency principles. The practical sense of the business men of these days led them to the conclusion, that the only cure for these evils was to reverse the process and to return to the old paths. They have been justified in their action, as we shall be if we share their faith. Let us have done with short cuts and by-paths, and, ohne bast ohne rast, bend our energies to return to the old standard. The road may be long and painful, but our fathers have trod it before us and we know the way. On this point bankers are bound to speak with no uncertain sound, and for my part I take my place by the side of that veteran banker, Sir Felix Schuster, in his' resolute determination to " return as soon as possible to the pre-war gold " standard . whether it be this year, next year, or in five, six, " or ten years." That is the policy he believes we in the United Kingdom should have constantly before us.* That is the policy . . which ,I hope the Institute of Bankers will endorse to-night. One word in conclusion. Since its origin is similar, the crisis through which we are passing is not likely to follow a materially different course from those we have experienced in the past. There has been the same speculative boom. We are now passing through the usual sequence of a .period of stagnation. We shall shortly enter upon a period of trade recovery. Already in the Far East, where the trouble began, are to be discerned the first faint streaks of dawn. In India and China trade is reviving. A little more patience, a little more steadfastness, and success is assured. A little longer and the old supremacy of this country as the acknowledged leader in the finance of the world will return. Is this a time to lose heart or to falter in our task ? If we make ourselves " too little for the sphere of our duty-if, on the contrary, we do " not stretch and expand our minds to the compass of the object" be well assured that everything about us will dwindle by degrees, " until at length our concerns are shrunk to the dimensions of " our minds.- It is not a predilection to mean, sordid, home-bred " cares, that will avert the consequence of a false estimation of our interest, or prevent the shameful dilapidation into which a great Empire must fall by mean reparation upon mighty ruins." International Chamber of Commerce Conference, London, 1921. by Sir Felix Schuster. Speech J November 28, 1921. My dear Sir Charles: I note from your letter of November 7, that you have not received the copy of the Agricultural inquiry Report, which I sent f0',1 sometime aRo. I do hope that it will arrive in tine so that you may read it pt leieura on your voyage to China. I in grateful to you for the copy of your Inaugural Address at the Institute of i-antcers on Nuvember d, which I reaO' with much interest and pleasure. Pl+h kind personal regF:rde, and eishing yuu a meet deli,ihtful voyage to the Far East, I am, Yours sincerely, Sir Charles S. Addis 9 Graceohurch London, E. C. S. GB: MM /lAkt . 1r- gdikowika; JAN 3 0 1922 B. S. Osovv4k /v_ J . ry.r.t._c_&Am7 &A,7LPP, E, KONG. hiv-ttikoli44, (7. p,v \rt-k-ks-A&A-- ST. %4-..- Gvy&L atAkkAK nritA7_ ,a/tE kA4.417-- O i(CW÷LIJ LAX :( 444-r;v7 , -74MW %,e0k/ kAkw kvv IAA".41_A} AIW fiz )41(#41C- treSviLAnk Kt-Ot evt& "YV%4/ er.etk/ t t 1144 41"k^m,t-- 9-4tvt%&,/ Chr_LL_.-AP-ku. LIv/Va fa-PAA/LA7 "414" r-)r4^ A,:,,,7Vvyvt.o./ 1. IWN41,0-4-Vvvi (w4.A.A.,ki "14:ht tYyAvvv A.1111V, 111 ev.,Nwelk- yy.47 4tANA;)-%4i, 111,LA,01,-s, 014. ht"4, Avt,"LA. 44, Jit 111)).4, . citdvalv, \PH,vtrt. (1,04,4\fv\-,vv4 All/k, 0-41-4A-A- fvv .44,i.,,,(17 hl'AAA;-Ar tf 77.9/0 ft-v.1K hkAovr%-*vv%, Ar450 ren-t, rt../ HKA/ 611+Arti ke-r:tk, }sr"' fYVNA/ Afr.ftft NANYW4- 0A-A41- 4 t'Al`Prt./467-- A;) CArril-A7tid at/v.0C tovw tWX4- 77k )ire, . January 10, 14;42?. My dear Addis: It *tea most kind of you to write me ec fUlly on January 1, after reading the etatenent shiet I mtes heft-re the Commission. But 1 must say pour letter elver evieence of t degree of natience and fortitude, in having read so auot of it, teyond what I could ex2eot of the beat of rriande. .that you eay about iilliams it altogether true, and can be said of a number of others 1b) have been aseoci ted fith him la thie unfortunate 'tnd guided atLac on the System. Unfortunately, also, matters have taken a DON turn, sore personally disegreetble in Lova mays, but on the other hand reflecting no credit T.:on those responsible for the de7elopment, in that attacks are now being made upon the salariee ?aid to the offizarn the reserve bank, our ex2ense acoaantg the oust of our bank buildifws, kc. The main onestiQn GRRXS to be ?deposed of for the moment. irc. In time, hoirever, it may crop up again, all only another evidence cf e desire upon the part of the ignorant to maks money either by printing it, or credit easy by manufucturinti it in some fashion or other. I cm co pleased with that you say about the restraint which I ha:! sliovn in avoiding aneodotage. There was 4 tremendous temptation to throw in a lot or that sort of thing tc bring ridicule upon some of our critics. I think I did let go once or twice, but beyond thtt had eense enough not to mar tliaL we tried to develop as a dignified presentation. I envy you your trip, which covers much of the ground that I took going the other say; but look forward with keen pleasure to seeing you here #1 January 7,, 19??. - r-71 74.0 1102C 1924 STREET, 9, GRACEinplUIW LONDON , Ovw- tae,.. ki4 E. C. 3. (4-4PYNANN-1_ t'NeN-NrN4.vv 01- K(/vv,44, Gec7ik vektr (11. r04,,Nkx NYIAtt4) h1,471,4,41 e (NrY/OVW a S Nay 26, 1324. My dear iddie: It was most kiwi of you to remember the interest I took in s'aat you said scout hameuy ClopOnsldla book. Tt reached Le Barely in Faris and 1 lead it with a greet deal of interest. titer little upset in hrie I aanaged t_ very comfortable return tome end now am about half Jr. herneFE, but tills year 1 propose to tae rbtLer easy. It vas L great pleasure -60 ,ee you in London. T ;Ash Je could do it oftener. lith kindest regards & tank, you And the othivra in th? I um, luurs sincerely, Sir Onsrisa S. Addis, 9 Grac.mhureh Bt., London, Encland 9, GRACECHURCH STREET, 7 ck.Lco,. -z. App-Au it Afsf. vq-ke.,cct pLq.k7, okft_4.& Atok.fr. 7-4-07 " oko r o'et -1L,Lxktik C rkAtr 06 r,,v9v Q./14 Nr-4/ rYNE AN%*kkk &Mk ovk OWNA.' 1/4140 -,,Ck NOW LEDOED APR 24 1925 hP\77 ck/E.00v AiN/r. oAL 'QC) \.Q (ZI1N4-1/4sak. /40 W4 AP-wt-- r -10ta. it) -7t /\.N.t_ Nvt 0A st"1.4,,,t 1 u. Av.4 7tk- Wsky) . 1\14 Ao "r-- ta7t-vs/t- a 40VVvvvvvir (fAkktA,v .A./D -N1 0,ev 42.AvLwk) Nrvn-ok/ cNNeN4km,-, , r v "'vl'or ocAk 4-12/Z.0 Ovv-(/ , 04) kivv4,4i LIN/ N-NNd- ckftm, akw1,42-- GRACECHWOH STREET, LONDON, E. C. 3. )r\r\T cLz-ah, Mme. 7t7AN. _Ar.A.,1/4;0 ovvv -7t QiNAr*Il IteLL -7t-LkkA tVst 'Ltc trv4k/ e\t-krs, v S 1 4_ TELEGRAMS 41kDRAZAL.LONDON. Old Broad Street, TELEPHONE LONDON WALL 7932. _E. C. 2. S c/Ka 9th July 1921 B. Strong, Esq., Federal Reserve Bank of New York, NEW YORK. My dear Strong, Many thanks for your letter of the 21st June telling us of Mr. Pierre Jay's arrival. Unfortunately, I have to leave for Paris tomorrow but I hope to be back in a few days, when I shall do myself the pleasure of calling at Mr. Jay's hotel. I have already written him a note to say that if there is anything we can do to help him during his stay he must not hesitate to make use of us. No doubt we shall also meet on several occasions at the Bank. Conditions here are it anything slightly better since the finish of the Coal Strike but they are still far from satisfactory. Our reuail prices are taking, in my opinion, much too long to adjust themselves to the wholesale prices, and this is making the wage situation naturally much more difficult than it need be. There is no doubt that our retailers are still exacting a great deal too much from the July 27, 1921. ell Ly dear Kindersley: Many thanks for your nice note og July 9. Uorman has written me of igy's arrival, and pleased mo greatly by commentin; upon the fact Which I had anticipated right slow:, that yen had found him a satisfactory menber of the bank family. He is a rare an deliditful person, anu you vill enjoy knowing him. Many thanks also for what you write of conditions in I trunk you credit ns with mem Una we deserve in the way of progress in the solution of meet' of our difficulties. Jut we are makin,; proaress, and underlying conditions are improving,, although superficially the evidence of it is not very convincing as yet. SiVCtrely, Sir Robert Ll. -Aindersley, 11 Old road iltrest, London, Ze. Knelemi. BS ala ---t RVc BANS THIS ENVELOPE NOT TO BE I, :M/ YORK INTER OFFICE CORRESPONDENCE ON - ffteletelCkevlee-' 1 41 TO N/ ME DIVISION FROM TIME I THIRTY THREE LIBERTY STREET NEW YORK 45, N.Y. Cc ik RCCPc /1: ?C cc [In envelope marked private and confidential] g. i o_ z I, ibt 8, BIS HOPSCATE, ION DON, E.C. 2. c.,14 C-""4----"---1" 8, BISHOPSCATE, LONDON, E.C.2. _ Zo_aeer to- z&_ -t_ 4_10.d Ic_c_ L rY we 4e4 .4 fi N ilb PERSONAL October 20, 1926. Dear Mr. Peacock: I have just returned from leshington after a hurried trip and cant to give you a message which Governor Strong asked me to send you two days ago just before I left town. As you may have heard, he has been suite sick since his return to this country. Three weeks ago he was sent to bed with a bud attack of influenza, which be learned later developed into bronchial pneumonia. mile at first there were no very alarming symptoms, nevertheless aoout a week or ten days ago his condition wts quite serious. Fortunately, however, the pneumonia has now run its course and while he is still very weak and in need of the ,;reateet care, he has turned the corner and is progressing as sell as we =it hope or expect in the circumstances. Until the day before yeaterday he had not been allowed to see any one, but when the doctors let him tend for me that day, he asked me to erite you to soy that he ass received your personal note to him but that cu account of hie illness it has been impossible for him even to acknowledge it. Because of the confidential nature of your letter he says that you will understand my telling you merely that he has received it bnci that he will answer it himself when he ie able to ao so. I cannot tell you how upset we have all been about his illness nor indeed hoe much lee miss him at the bank. cut we are all so happy that he is October PO, 1926 2 know quite out of danger that it is easy for ua to reconcile ourselves to his Alpsence, which I am afraid will still be a matter of weeks, and perhaps months. This letter is not very cheerful, but it it least gives me the opportunity again to thank you for your kindness to M3 iideo we croueed together on the Majestic lest yeel. I felt so miseraUle moat of the time that I was doubly grctcful to you. I oily hope I may have an opportunity to see you again some day ah-,n I airy not be ouch a load on your handel Alta kind percional regards, I .o71, F4ithfUlly yours, Mr. F. P. Peacock, 2') fAlrzon St., London, England. qz1 S, BISHOPSCATE, LONDON, E.C. 2. A.-Z-e----t--e-c-C---,=r 4-7 77-- C 7-47 A- 1-e ;--71_ /)/ R"-fa-e"--1---4_1___. /-r71 2 & T Gcl AZ/e- f J lacw_e__ A tc._.4.A.z Z--e 74-g ._IL--r442. 12 6.- Y C.-`t-It-4e-- 14-7--t-4----1 7( e."-c-c_ -ZV-e-t_ - -( 4f-e,"" 8, BISHOPSCATE, LONDON, E.C.Z. 0 NOV I kp NatAs-VtS) 270 gwklte,o C(ckit , S 61 11.8.2b Mr. Peacock 2 0the whole subject having caueed him the greatest anxiety until your last letter. the receipt of So that you may suite fully unaeretend the apparent neglect in Mr. Stroag's not answering your letters before, I wish to let you snow, at his request, just what ha. ,.ened about his illness. Only two or three days after his return, Mr. strong was taken ill with influen2.a, ehich almoit immediately aevelopec into bronchial pneumonia. He was desperately ill for some ways ( which may not hbve been fully realiwed because of the guarded cables sent both to Mr. Norman and Mr. Jay in the beginning) - in fact he had a very narrow escape. but about LIFO weCSkb izb60 he turned the cornor, and recently he has been improv- Now he is being prepared to be taken ing steadily, though slowly, of course. to Colo:adu to complete his recuperation. It scarcely seems possible that he will be able to go before early December, and the length of his stay there But I depenue upou the rapidity with which his streegth returns. not be misleading to say that the office. For the present, it $11 think it will be Spring before he is able to return to therefore, meea_gue of the later he will are about all that he can attempt, although foregoing character endeavor to write you by fiery truly yours, Secretary to fir. Benj. Strong. Mr. h. R. Pe.tbock, 2A Curzon SLreet, Loncon, 6eland. Mr. Strong aietatect the whole of this letter, save the last paregraph, ano Nov. 8, 1'w26 that he asked me to aad. 4'5 (3.(1 8, BISHOPSCATE, LON DON , E.C.2. Private 17 Nove:nber 1926. Dear Mrs. Lundie, I all very grateful to you for your letter of November 8th and am so glad to learn that my letters relieved Mr. Strong' s anxiety I have taken the liberty of showing your letter to Lord Revelstoke and we are both very much pleased to have Strons,'s comments on the settlement and to find that he 3onsi der s i t sati sfactory. We did not realise for some time how very seriously ill ;dir. Strong was or I should probably not have troubled him with . a letter at all until later on; however, my letters have apparently done no harm and i t is lomforting to learn that he is now on the way to recovery and will soon be in Colorado. I hope when he gets there he will pick up. rapidly. Yours si noerely Mrs. Gordon Lundie, Federal Reserve Bank, 33, Liberty Street. New York. , TWENTY -SEVEN PINE STREET NEW YORK ie an this matter. 0 Yours very truly, Governor Benjamin Strong, Federal Reserve Bank, 35 Liberty Street, Nev. York City, N.Y. Ootobtr 16, 1925 My dear Mr. Tiarket Governor Ltrong h,e asked we to F.aknowledge thank you for your note of Uctoter 15. ebacht arrived on Monday, Governor AB Dr. Strong thinke beet to defer sn ..newer until he has had o2:,ortunity to lay before rim the arrangements that have They rather completely engage Dr. thus f',.r beea made. ,-chchtis time, thouih I dm cure that it would pleise him very much to dine with Baron Schroder if the brevity of he stay dOeu not sake it neceecary for Lim to declinc this, as he already has bac to decline several other invitations for enterLiament. very glad to see that flail worn reachee you ae soon as possible after Dr. Schacht's arrival . Very truly your Mr. Henry Tinrks, 27 Pine :itreat, Hew York Secretary to Mr. Ben j. Strong