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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



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*

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.
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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.

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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




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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





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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







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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
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FROM

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I




THIRTY THREE LIBERTY STREET

NEW YORK 45, N.Y.

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marked private and confidential]

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8, BISHOPSCATE,
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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

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LONDON, E.C. 2.

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gwklte,o C(ckit

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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





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102