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MISC. 4. I -ZOOM- I -2.4
FEDERAL RESERVE BANK
OF NOW YORK
OFFICE CORRE-1-20NDENCE
To
Mr. Snyder
FROM
Governor Strong
DATE
January 8, 1925-
SUBJECT:
Thank you for sending me the memorandum on Trade for December,
and I hope you will continue sending it to me, as I want to keep very
closely posted.
BS.LS
192_
1
FEDERAL RESERVE BANK
misc.4.1.1w.9-23
OF NEW YORK
OFFICE CORRESPONDENCE
To
Mr. Snyder_
SUBJECT:
Benj. Strong
FROM
34(
In reading over your confidential January 6 memorandum on pyramiding of
deposits, I find no reference made to the fact that New York City banks, under
the Clearing House rule, have now established a lower rate on out-of-town bank
balances than the rates which prevail in the other central reserve city, - Chicago,
or generally in the reserve cities of the country.
That has been, probably, the most important influence in effecting a
distribution of these bankers balances to other reserve centres and away from
New York, and it strikes me that the point of the memorandum is missing without
that.
FEDERAL RESERVE BANK
MISC. I. 1-6061-4-24
OF NEW YORK
FFICE CORRESPONDENCE
Mr. Snyder
Palm Bea
Fla.,
January
24,
e925
DATE
SUBJECT:
Benj. Strong
FROM
Thanks for your two memoranda of the 19th and 20th.
I have a suspicion that you are right as to the course
of business this next year, when it will likely be good, but
nothing in the nature of a boom or bulge.
Good prices for
farm produce cannot possibly do us harm when we have a big
surplus for export.
exchange speculation;
Of course our bugbear is the stock
and just how far we should feel a
responsibility for what is happening there is, of course, a
question.
I only wish they would come to their senses!
FEDERAL RESERVE BANK
MK.3.1-60,41.24
OF NEW YORK
OFFICE CORRESPONDENCE
Mr. Snyder
DATE
Palm Beach, Fla.,
January 26, 1_9251,2
SUBJECT:
Benj. Strong
FROM
If you will look back over some memoranda of mine, you will
find, somewhere, that my opinion about the index of business activity
was simply reserved until we had had more experience with it; all
of this merely indicating that I am lacking in the enthusiasms of
youth, or the specialist, and, in fact, bookkeepers have enthusiasms
anyway:
Now, I have watched the index much more closely than you
believe that I have, and am very far indeed from being skeptical
about it.
I think, also, you will find among the memoranda a suggestion
that my doubt arose from only two points;
one was whether the
weighting of the different factors could be properly worked out (and
the reply that you gave me on that point was pretty convincing) and
the other was whether it was feasible to project a normal line into
the future.
As to that, I have no opinion, simply doubt.
But
you know, in general, as to all of these charts, my principal comment is that the chief factor in all business activity, - that is
the mood or state of mind of the public - cannot be allowed for,
and that it will defeat any effort at prophesy.
Your index is not an effort at prophesy, but is really an
attempt to draw a line which will coxrectly express the true course
of business in the past, and that, I think, has been very notably
All that I gather from the experience of the last
accomplished.
that
two years is substantially identical with your own view;
there are no indications of a smashing boom, nothing to be frightened
about, but that we have 'a situation which will require very careful
watching.
I read the business summary very carefully when it came
out,.
.
MISC. 4. I-200M-1-U
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
FROM
Mr. 3nyder
Governor Strong
SUBJECT
Juet a reminder that you are to dine with me on Friday of
next week, March 6, at tay apartment, Room 002, in the Hotel Marguery,
270 Park Avenue, at coven o'clock.
MISC. 3. I-75M-9-23
FEDERAL RESERVE BANK
OF NEW YORK
,--PFICE CORRESPONDENCE
Mr. Snyder
FROM
SUBJECT:
Governor Strong
You heard something of the discussion the other night in regard to purchasing price parity.
Don't
you think it would be some little contribution to
this discussion to pick out certain of our most important exports, such, for instance, as cotton, copper, Wheat and other commodities which are standardized,
graded and capable of being dealt in promptly by cable with almost instant variation in prices to conform to changes in the rates of exchange.
Then ascertain
what difference in price between the point of shipment and the point of receipt
in England arises through Shipping costs, interests, commiesions,etc.etc., and
see whether, in point of fact, the prices of these commodities do not conform almost exactly to the purchasing power parity of the currencies.
Such an inquiry should be carried through to indicate what proportion of
our trade, say with England, is of a character Where the purchasing power parity is
always automatically maintained almost from day to day or week to week, and how
much of the trade is of a.character where there is a distinct lack in price changes;
where it is possible to say that fluctuating rates of exchange are not a cause of
price change, but.may indeed result from price changes because those are the prices
of consumers' goods which result in an increase or decrease in the amount sold by
competitive countries.
BS.LS
FEDERAL RESERVE SANK
MISC. 3. 1-60M-4-21
OF NEW YORK
OFFICE CORRESPONDENCE
Mr. Snyder
FROM
DATE
May 4, 1925.
SUBJECT.
Governor Strong
I do think that Mr. Hoover would be interested in a discussion such as is indicated in the attached paper, but it strikes
me, offhand, that it presents a point of view in regard to the
steel industry which is and must be rather speculative as to its
conclusions until it has been pretty thoroughly discussed with some
practical steel men.
There are a few men in this country who have a very thorough
knowledge of this matter and are interested from the standpoint of the
public, as well as from the standpoint of the success of their own
enterprises.
One of them is Judge Gary.
Another in whom I have great
confidence is Eugene G. Grace of the Bethlehem Steel Corporation.
Before dealing with the suggestions such as you employ, might it not
be well to talk this over with some of the practical steel men and see
what their point of view may be?
has not been considered.
Att.
BS.I,S
They may bring out some slant which
192_
FEDERAL RESERVE BANK
WM3.1404414
OF NEW *fORK
OFFICE CORRESPONDENCE
0
Mr. Snider
DATr May 21, 1925.
192_
SUBJECT_.
Governor Strong
FROM
Replying to your memorandum, of course, every situation like the present
one, is a puzzle.
ity of harm.
There seem to be three developments which do have the possibil-
One is overbuilding and real estate speculation.
Another is too
much enthusiasm in automobile production, and the third, of course, is the everpresent menace of the stock exchange speculation.
But where does our responsibility lie?
every economic development in the country?
We would have a large family of children.
we might have to spank them all.
tions.
Must we accept parenthood for
That is a hard thing for us to do.
Every time any one of them misbehaved,
There is no selective process in credit opera-
If we undertake "direct action" in one case, we would be saddled with the
responsibility for direct action in all cases.
Have we infallible good judgment
as well as sufficient knowledge to play the role of parent, and attempt to restrain every unwholesome boom, and as a concomitant undertake to correct every
class of business which shows signs of languishing?
May it not be the case that
the world is now entering upon a period where business developments will follow
the recovery of confidence, so long lost as a result of the war?
Nobody knows,
and I will not dare prophesy.
Of one thing I am sure, however, and that is that we have no direct
responsibility to deal with isolated situations, and must rely for the development
of our policy upon estimates of the whole situation, and at the moment I see no
reason for any particular action beyond what we are doing.
BS.LS
FEDERAL RESERVE BANK
.c. 4. 1.100111.8.25
OF NEW YORK
PONDENCE
OFFICE
To
Mr. Snyde
FROM
Cove
DATEOctober
r Strong
in France has
newspaper
article which was
published
some bearing on the memorandum you wrote about the French
capacity to pay.
BS.LS
192_
SUBJECT-
The attached translation of a
Att.
5, 1925.
It can be filed after you have read
it.
FEDERAL RESERVE BANK
MISC. 3. 140M-4-24
OF NEW YORK
OFFICE CORRESPONDENCE
Mr..:.-nyder
FROM
DATE
October 26, 1.925-62_
SUBJECT
Governor Strong
Mr. Roberts' memorandum with your comnents attached only
reached me this morning, three or four weeks after it was written;
so any influence that it might have had on the decisions of the
past few weeks, so far as I am concerned, has been lost.
While a foundation has probably now been laid for dealing
with the matter, I nevertheless am of the opinion that if the
Federal Reserve Bank assumes too much responsibility for price
movements, either of stocks or of any other particular thing, as
distinguished from general prices, it won't be long before it gets
into hot
Att.
BS.LS
water.
FEDERAL RESERVE BANK
Mm. 3. 1.50m.8-25
OF NEW YORK
DATE
)FFICE CORRESPONDENCE
To
March
6,
1926.
192_
SUBJECT:
Mr, Snyder
Benj, Strcng_
FROM
what is
I have read the attached, and have been wondering myself just
ahead of us.
But, after all, is there anything that we can do?
FEDERAL RESERVE BANK
Misc. 3. 1-50M-8 25
OF NEW YORK
'FFICE CORRESPONDENCE
To
Mr. Snyder
FROM
Governor Strong
DATE
SUBJECT:
March 13, 1926
Non-Agri cultural Prices
The chart attached is one of the most significant I have yet
seen.
For two years now we seem to have had practically no important
swing in the index of prices of non-agricultural commodities, the only
important change in the general price level being that occasioned by the
abnormal fluctuation in wholesale prices of unmanufactured primary agricultural products.
The cause would seem to be the condition of world markets.
The bearing upon such nice problems as purchasing power parity would seem
to lie in the fact that agricultural production is capable of greater fluc-
tuation, because of weather and other conditions,while the demand remains
constant.
There may be something here to explain the vagaries of the
difference between price levels and external purchasing power.
192__
Misc. 3. 1-50M.8-23
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
Mr. Snyder
DATE
March 29, 1926
192
SUBJECTS
Benj. _Strong.
FROM
Concerning your memorandum of March 18, you need have no concern about
the stock market.
Like most ills of the character, it prepares its own medicine,
and has now taken it.
Our problem now is to discover at that moment we should change our
policy.
Contrary to the statement in your memorandum, and one repeatedly
reiterated, we are not in a period of cheap money.
A minimum rate of 4-1/2%,
with 5% or more for most customers loans, is not cheap money.
And a bank rate
of 4%, with the members borrowing $500,000,000 or more from us, does exert
pressure and has been for some time exerting pressure for liquidation.
fact the liquidation has taken place.
In
We cannot attribute it to our rate,
nor to any other one particular thing, nor will we ever be able to do so.
I am clear that there has been a widespread change of psychology;
that some recession of business will follow it.
Its first manifestation will
be in retail trade, with production going merrily along and stocks piling up.
As we cannot get prompt figures on inventories, we must rely upon our reports
of distribution of goods to consumers, and the evidences of accumulating stocks
of goods afforded by commercial borrowings, plus borrowings at the Reserve Banks.
If this heavy stock exchange liquidation, with the consequent reduction
in loans and deposits, does not result in liquidating our member banks' borrow-
ings,
but we see commercial borrowings of member banks advancing and borrowings
from us not declining, we can be almost certain that production has overtaken
consumption.
Then what should be our policy?
production is necessary.
I think a little check up on
Misc. 3. 1-5031.8.25
FEDERAL RESERVE BANK
OF' NEW YORK
OFFICE CORRESPONDENCE
To
Mr. Snyder
FROM
DATE
1 92
March 29, 1926
SUBJECT:
Re.j
st rnne
This is the kind of thing that has got to take care of itself,
certain
but when the process has reached a/point, then I think we should buy securities
.
In _other words, I agree that some recession in activity may be a good thing, but,
on the other hand, it will not be a good thing to see a decline in prices of
agricultural produce,
which is what I fear.
Messrs. Jay
.,/
Case
Harrison
Kenzel
Saler
Misc. 3. 1.50M.8.25
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
DATE
Officers Council
April 6, 1926.
192_
SUBJECT:
Benj. Strong
it^1ROM
This memorandum is sent well in advance of my sailing on the 17th
in order to make sure that the officers of the bank are alive to a situation
which will require the most careful watching.
The course of the money market since the March 15 fiscal agency
transactions were cleaned up, has been a little unexpected, as to money rates
at least, and as to the reserve position of the banks
which apparently the officers of the bank were not alive to as promptly as
sometimes is necessary.
The reserve position still called for heavy borrowing by the New York
I believe it was due principally to two or three factors which
City banks.
should always be closely watched.
One was the unexpectedly large increase in
Treasury's balances in the Reserve Banks due to unexpectedly large revenue
collections;
and another the gradual, but considerdDle increase in the amount
of 9rmaçked gold for foreign account.
part
this,this,
To be sure, gold importations are
but the influence was undoubtedly felt in New York in ageneral
way.
I am convinced that a 4% discount rate in New York and the other'
money centers, at a time when the banks are borrowing heavily and when business
is hesitating a bit, exerts a very considerable pressure upon the credit situa*,
tion.
Others have not always agreed with me in this, but I am, nevertheless,
convinced that it is so, and that if the borrowings of our members continue, and
we maintain a 4% rate, and extend no relief to the market, we may well
slide into a period of gradual, almost imperceptible, liquidation, which may
Misc. 3. 1.5031.8-23
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
DATE April 6, 1926.
Officers Council
FROM
Benj.
192__
SUBJECT:
Strung
-2-
have an undesirable effect upon business.\
This matter must be watched.
The reports of the retail trade which will now be coming in for the
month of March, will probably make an unfavorable showing, because of unseasonIf the unfavorable reperts are attributed entirely to
able weather.
unseasonable weather, it may be that any action for open market purchases will
be postponed again for another month, - until the April reports come in.
As matters stand now, I em inclined to continue purchases of
governments as rapidly as we carti It will not do harm after the liquidation
that has taken place in the stock market and when prices are declining and
business is showing some hesitation;
Look back at the records following
heavy sales of securities in 1922, and it will be seen how curiously similar
the characteristics are for the two periods.
This matter should be studied by the Officers Council, and no
hesitation should arise as to acting.
BS.MSB
(Attached to Mr. Jay's copy of this memorandum is a memorandum "Bank Debits and
Velocity of Bank Deposits", together with a chart *Weekly Bank Debits in 140
Centers for 1926" which kindly study in connection with the subject matt2ri'
http://fraser.stlouisfed.org/
of my
Federal Reserve Bank of St. Louis memorandum)
_
0
FEDERAL RESERVE BANK
OF NEW YORK
Hotel du Cap d'Antibes,
Antibes, June 29, 1926.
My dear Mr. Snyder:
I have just been looking over your confidential memorandum of
June 8th on the activity of bank deposits.
You point to the divergence of the two lines on the chart which
occurred in 1923 and again in 1924-25.
Why don't you try and associate this
with the activity or inactivity in the securities market?
It has always
struck me that, notwithstanding that New York City is excluded from
the
velocity index because of the speculative market, a nation-wide
speculation
which involves a very large number of payments and especially
transfers in
connection with loans and security transactions in New York would have
a considerable effect upon the index of velocity as the tides of
speculation ebbed
and flowed.
At any rate, it is worth thinking about.
SiLcerely yours,
Mr. Carl Snyder,.
c/o Federal Reserve Bank of New York,
New York.
c.4A
FEDERAL RESERVE BANK
OF NEW YORK
180 M 1-26
OFFICE CORRESPON
rl onyder
To
Mr.
FROM
Mr_ ,Iny
LJP
NCE
DATE
ikugue,t 12,
SUBJECT
Plet.se confer with me before attempting to reed this
badly confused memorandum.
192g.
FEDERAL RESERVE BANK
Misc. 3. 1.5031-8.25
OF NEW YORK
OFFICE CORRESPONDENCE
To
(3M
Mr. Carl Snyder
August 12,
DATE
192_
SUBJECT
Mr. Jay
I am very much interested in your reply to the Governor.
As to Stock
Exchange accounts and their velocity it seems to me that they are almost sui
genevis.
Let us spy that there are 500 firms in the Stock Exchange (I don't
know the number) and that they each keep a balance of $200,000.
mean an average balance of t100,000,000.
-This would
Tl-is smell volume of balances has a
daily turnover even in dull periods several times the mount of the balance,
and in active times the turnover is correspondingly larger.
In the Manhattan
Company when I was there we had net deposits of around t50,000,000 and our
brokers' balances were possibly t4,000,000 or .t5,000,000.
In busy stock ex-
change periods this small groupcf brokers' balances aggregated
cent. of our total deposits.
about 10 per
while tl-is situation hes been somewhat reduced
by the Stock Clearing kdorporation, nevertheless the activity volume arising
out of the bplance of stock exchange firms is wholly abnormal and without
parallel elsewhere.
The foregoing figures are from memory only.
MIGIC.3.1001141-1-20
FEDERAL RESERVE BAN
OF NEW YORK
FROM
Governor Strong
DATEr(L-.
January 5, 192
rICE CORRESPONDENCE
TO
'
J
A.
serf
Mr. Snyder
itOkti
Preliminary estimates indicate that volume of trade for the country
for December was at somewhere near the same rate as the two preceding months.
Bank debite outside New York City increased over November somewhat more than
the usual 10 per cent, which is the normal increase indicated from our seasonal estimates.
This brought the index figure up to 104, as against 99 for November
and 106 for October.
But, as I noted in a previous memo., the index figure
for November was probably two or three points too low on account of the occurrence of five Sundays, together with a national election, which things are
difficult to allow for, without an enormous amount of computing.
Debits in New York City rose to a very high figure, 27 billions,
This, of course,
which carried the index up to almost a record figure, vie., 121.
merely reflects the volume of speculation and general financial activity; but
as a rule a rise in this index forecasts a rise in the volume of trade.
It
would not be surprising, therefore, if ourtindex of Trade should show a sharp
rise in the next two or three months.
As yet, however, outside of heavy steel orders, there still seems
little to suggest the approach of a boom.
R.FPFl"71 "Y
FEDERAL RESERVE BANK
ACW. 4. 1-20M-1-14
GOt-
OF NEW YORK
/
4.'64\
OFFICE CORRESPONDENCE
Governor Strong
FROM
t;,1])...\
e_DATE
SUBJECT
Incr
J4ipry
in
6,J925
sits
Snyder
.tJAN 6 1925
You will recall sometime ago that I
crepancy between the reported increase in the
Reporting Banks and the amount of increase in
and also between this increase as reported by
and in the reports for the Comptroller of the
drew attention to the disdemand deposits in the weekly
their loans and investments,
the weekly Reporting Banks
Currency.
It seems fairly clear that this discrepancy has been due to a
marked increase in bankers' balances in the Reserve cities, and that this has
It is quite a
not been so much in New York as in the other Reserve cities.
striking little development and I have written a little memorandum regarding
this for the Business Summary this week.
101-6-ca,d
c
etK;7'.T
-9ccep9
.uLJA
90-r
wLice_
192
!ESC. 4. 1-200M-1-Z4
FEDERAL RESERVE BANK
OF NEW YORK
,lh
OFFICE CORRESPONDENCE
Nu\ Governor Strong
192_
SUBJECT
B 1
Mark
FROM ,..,,,,t Mr. S nyder
tiAN
8 192
I note that the Standard Statistics weighted average of 202
industrials, which is now the court of last resort on stock averages,
last Monday reached 123.9, which is two points above the highest point
registered by this index in 1919, and therefore at the highest point in
their history.
Which finally makes good my prediction and steady be
lief which I have had for two years or more that on this prolonged bull
movement the average of industrials would peak higher than in 1919.
Registered in view of the fact that some other expectations have not come
out so well!
-
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CC)F/F3E:E5F2C)P4DE:INCE:
Governor gtrong_
DATE
SUBJ EET: _Eareign_Bs1
titti3,-. -9
1925
nces_in new York
FRomh____MrSnyder
You will see by the attached that Mr. Hoover's department is again
asking for a questionnaire to our banks as to foreign balances and the holding of foreign securities in the past year. I took this question up with
Mr. Jay and he asked me to put it up to you.
It seelis clear that the figures are little representative and therefore of little value; we don't get some of the biggest houses and the
questionnaire is burdensome and irritating to those to whom it goes.
That should we say?
192
FEDERAL RESERVE BANK
M/SC. 4. I-200M -1-24
OF NEW YORK
e,
OFFICE CORRESPONDENCE
ro
Governor Strong
FROM
Mr. Snyder
4859
I
day
DATE_Jan.-9,_ 1925
SUBJECT.
St
Market-
er
es
AND NO
'B. S.
As to your question:
i3A11 6 1625
Very heavy volume of trade, with stocks at a very high point,
We now have a wide
has usually been the characteristic of the peaks.
average of stocks at a record high point in their history, and over 75 per
cent above the low point of 1921, and the last eight weeks have likewise
seen the largest volume of trading of any eight weeks in the history of
the stock market.
The inference would be that the averages were reaching near or
But I believe near to the universal belief is the
are at their peak.
opposite.
192_
Li
?CSC 4. 1-200M-1-24
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
Governor Strong
FROM
DATE_Jan--9,-1925__
SuBJECT._Frwich-F-Lahnce
Mr. Snyder
The memorandum on French finance, sent you by Governor Crissinger,
eeems to me, as you very mildly suggest, very much exaggerated and overdrawn.
You remember our friend, Dr. Anderson, had France going utterly
bankrupt three or four years ago, and the old hulk is still afloat.
As
you say, French:Ifinance has been a long time wallowing in a good deal the
same trough.
But is it not clear that the internal debt of a country, where it
is only within the country, is really only a question of lifting from the
right hand of Peter to pay Paul, very uncomfortable to Peter but not
ruination?
192_
ry
ilke'lIC. 4. I-2OOM-1-Z(
......,
FEDEI/AL RESERVe JaiRE.0 MAD NO1E3,
OF NEW Y013
\111(7'.
OFFICE CORRESPONDENC
DATE__JR:n
)2 ,1225_
199
,
to
Governor Strong_
FRom
Mr.Znyder
'
1.1
C.,
925
For a second week our index of the20 great basic c
to show any advance, although Fisher's wider but soMe)hat er A%
a slight advance.
But i should imagine this pause in,-the:19.dv-:-.
pause and that the increase in prices might continue or\some t
1
ities fails
dex shows
s only a
We are endeavoring to work up a current estim
the volume of
trade from the weekly bank debits outside of New York
It has been a
rather difficult job, owing to the influence of holidays, tax payments, etc.,
on particular weeks.
But the three weeks ending last Thursday showed an increase in debits outside of New York City of 8.3 per cent over the corresponding three weeks of a year ago; and our index figures indicate that debits
were then running very close to the estimated par or normal.
From now on we
can keep you advised of the trend of this estimate on Monday of each week.
MO
FEDERAL RESERVE ,ANK
OF NEW YORK
...ZO0M4-14
OFFICE CORRESPONDENCE
Mr. Snyder
FROM
DATE
SUBJECT:
January 19
1 90
Bank Debits in 140 cities
Kay_ser
The following figures show a comparison of Bank Debits in 140 cities for the
three weeks ended January 14, 1925 compared with the
Three weeks ended
January 16, 1924
Three weeks ended
January 14. 1925
$14,118 millions
$14,806 millions
corresponding period of
General Price Level, January 1924 = 182
1924.
Per cent increase
over 1924
4.9
Is I
GOV: FEOERAL,RESERVE BANK
OF NEW YORK
,..SC. 4. I -ZOOM .1-24
OFFICE CORRESPON
To
Governor Strong
FROM
Mr. Snyder
ENCe
0
OW
oiruftsB
-
DATE
Jan. 19,19_4_5_
Volume of Current Trade
192_
S.
4/
1P.25
JAN
Our three-weeks moving average of bank debits outside of New York
City do not show, for the latest three weeks, nearly as large a gain over
The total debits outside of
a year ago as did the computation last week.
New York City in 140 identical cities for the three weeks ending Jan. 14
showed a gain of 4.9 over a year ago, as against nearly 9 per cent for the
This is partly due to the fact that debits
moving average of a week ago.
last January began to rise in the middle of the month, so that the difference
over a year ago is not so large.
But the two sets of figures apper to be closely comparable, and
we estimate that the general price level or average of all kinds of payments has changed not more than one or two points from the computed index
of a year ago, 182 on a 1913 basis.
-
Ic
cli
FEDERAL RESERVE SANK
OF NEW YORK
OFFICE CORRESPONDENCE
TT-r
FROM
Mr. Snyder
DATE
SUBJECT.
January 20
192_5
Annual Bank Debits in 140 Cities
Kayser
The following table compares the annual bank debits in 140 cities for the
years 1920 - 1924 inclusive, together with the average yearly General Price Level
for these years.
Annual Bank Debits
in 140 Cities
(In millions)
1920
1921
1922
1923
1924
$
239,595
191,4.59
198,954
224,481
228,161
General Price Level
Yearly Ayerm,e,
213
178
170
181
181
FEDERAL RESERVE BANK
nano
OF NEW YORK
OFFICE CORRESPONDENCE
7
FROM
Mr. Snider
DATE__ January 20
SUBJECT:
1925
Annua2 Bank Debits in 140 Cities
Kayser
The following table compares the annual bank debits in 140 cities for the
years 1920 - 1924 inclusive, together with the average yearly General Price Level
for these years.
Annual Bank Debits
General Price Level
239,595
191,459
198,954
224,481
228,161
213
178
in 149 Cities
(In millions)
1920
1921
1922
1923
1924
$
Le-alaP.9
170
181
181
FEDERAL RESERVE BANK
1.-200M-7-M
OF NEW YORK
OFFICE CORRESPONDENCE
.-r-
FROM
Mr. Snyder
DATE
SUBJECT:
January 20
i92_5
Annual Bank Debits in 140 Cities
Kayser
The following table compares the annual bank debits in 140 cities for the
years 1920 - 1924 inclusive, together with the average yearly General Price Level
for these years.
Annual Bank Debits
in 140 Cities
(In millions)
1920
1921
1922
1923
1924
$
239,595
191,459
198,954
224,481
228,161
General Price Level
ISIILLL.ALMaLl
213
178
170
181
181
FEDERAL RESERVE BANK
MISC. 8.1-200M^1.4
OF NEW YORK
OFFICE CORRESPONDENCE
To 'N2Sovernor
Strong
DATE____Ian-20, 1925
SUBJECT:
Growth of
Deposits
FROMMr. Snyder
Here is a piece of silliness from the American Banker. The
facts are, of course, that the deposit gain in these hundred biggest
banks was very near to five-sixths of the total gain for all the banks
of the country, which was apparently only a little over 3 billions of
dollars.
-vo
192_
.419C.3.10004-1-20
PC
FEDERAL RESERVE BANK
OF MEW YORK
LL,
'FFICE CORRESPONDENCE
TO
FRO
DATE
Jan. 20, 1925
I
Governor Strong
SUBJECT
Mr. Snyder
Volume of Trade in 1924
--ACKNOW-1--XDOE-oAN 24 1925
JAN ,O 1925
In view of the extraordinarily close corrAlonSnce we have
found between our Volume of Trade index and bank debits outside of New
York City, it is of interest to compare the total of these debits for
1924 and the preceding years.
According to our computations the general price level, or
average of all kinds of prices, was the same for 1923 and '24, viz., 181.
On this basis then the debit figures should be very closely comparable.
And it is interesting to see that they come out less than 4 billions apart.
Inasmuch as 1923, allowing for a small rise in prices, estimated
at about 6 per cent, did not show much more than about the usual or normal
rate of increase over 1922, it seems evident that trade in 1924 did not
This, at least, is clear
expand at the usual or characteristic rate.
proof that there was nothing like a boom in 1924, and I am wondering,
therefore, if this does not provide the basis for at least a reasonably
good year in 1925.
distinct
Of course it might do much more than this, but there is no
evidence yet of its appearance, so far as we can discover.
CI" "-"°4-
FEDERAL RESERVE BANK
OF NEW YORK
C-').OFFICE CORRESPONDENCE
f"o
FROM
Mr. Snyder
DATE,Lan
SUBJECT:
Miss Carlson
Car loadingsMerchandise and Miscellaneous.
Total, latest three weeks, 1925
Total, corresponding, 1924
Per cent 1925 to 1924
457,245
433,256
105.5
21, 1925
192
MI9C.3.10011-1-20
RAL RESERVE BANK
YORK
OF
10
.
ICE CORFREEE3P
Governor Strong
Mr. Snyder
1
4fWEARZIel,
cram/
SU/4 r 83
$BJECT :
Tr) 7471.4ira
(M41
DATE
January 21. 1925
Today's Business Summary
DOED
2'.(
Ate
I should be indebted if you could read with some care the
little memorandum accompanying today's Business Summary; on "Trade
It seems to me that the very close correspondence which
for 1924."
we have found in the annual averages for our volume of trade and
two other extremely good samples of general business or trade, viz.,
bank debits, corrected, and car loadings, speaks pretty strongly
for the reliability of our calculations.
These correspondences are so close as almost to raise a
question as to whether they have not been ingeniously doctored.
I
can only assure you that nothing could be farther from the fact, and
that I myself have been astonished at the results.
I know your doubts about the soundness of this work which,
I take it,have been carefully instilled into your mind by those who
are unfamiliar with or unsympathetic to this type of work.
It seems
to me that the internal congruences are about the strongest answer
that could be given to these doubts, aside from the conscientious
care with which each and every one of the 56 or 58 indexes which are
here included have been worked over year by year for the past five
years to make this composite..
The further fact is the strong support which the work has
had from those who, like Prof. Mitchell and others, have followed it
most closely and on this, as well as on general grounds, are the most
competent to judge of its value.
-EDERAL RESERVE BANK
OF NEW YORK
JAN §2
1925 2 *4O PM
RECEIVED
30VERNOR'S OFFICE'
Copy forwarded with yesterday's mail (1/21/25)
(014-.1-"j
/
.:EDERAL RESERVE BANK
1. 4. I-2.00M-7-24
oFAf:51,4,44n.i7VSERVE BANK
OF NEW YORK
/ I 6FFICE CORRESP01\381SygE3
Tor
Governor Strong
FRom
Mr. Snyder
4pm
SUBJECT:_
RECEIVED
DATE January 22, 1925192_
AEn AND NOT
t'
30VERNOWS OFFICE'
I attach herewith the record of ear loadings for the latest
three weeks, as compared with the same period a year ago.
You will
notice that, very curiously, the percentage of increase in these merchandise and miscellaneous car loadings is almost exactly the same as that
shown by bank debits outside of New York for the same three weeks. This
is very interesting because, in general, we have found that these merchandise car loadings are an excellent business indicator and forecast fairly
well the general movement of our trade index.
It would appear, therefore, that we are still without evidence
of any marked upturn in business; and you will notice that our index of
And it looks
20 basic for the third week running showed little change.
as if the stock market had about reached its apex and was ready for a
down turn.
A sharp increase in street loans appears to be rather a characteristic just at the top of the market.
FEDERAL RESERVE BANK
MIS',-L0014-1-14
OF NEW YORK
DATE_Ianuary 26, 1 925
OFFICE CORRESPONDENCE
Tr
FROM
SUBJECT:
Mr. Snyder
192_
Bank Debits in 140 Cities
Kayser
The following figures show bank debits in the 140 cities for the three
weeks ended January 21, 1925 compared
with the
period of 1924
Three weeks ended
Three weeks ended
t 22,429 millions
$ 15,349 millions
$ 24,684 millions
January 23, 1924
$ 13,589 millions
Five weeks
corresponding
January, 1924
January 21. 1925
General Price Level = 182
Per cent
Increase over 1924
12.95%
10.05%
MI9C.3.1.0011-1-20
I FEDERAL RESERVE BANK
OF NEW YORK
3F. ICE CORRESPONO,ENCEMI
TO
FR
Governor Strong
DATE
SUBJECT
January 26, 1925
Volume of Trade
Mr. Snyder
-U.
'JAN
1q25
Very heavy bank debits outside of New York ,,ity last week,
at a time when there is normally a falling off, brought up our moving
three-weeks totals very sharply so that the increase over the same
three weeks a year ago amounts to 13 per cent.
Just to make sure that this is fairly well sustained, I took
also a moving five-weeks total, and even this shows an increase of
This is a pretty stiff
10 per cent over the five weeks of a year ago.
increase.
We shall soon have our moving index of the current three or
four weeks so that we shall express this figure much more clearly in
But it
index numbers, in percentages of the normal rate of growth.
happens that the beginning of last year was pretty close to the normal
line, and there has been in the meantime practically no change in the
general price level, so that the comparisons given above have a real
significance.
It looks as if business was really taking a sharp upturn, and
that the January figure for the volume of trade would show a very con-siderable rise, possibly as sharp as the upturn last September.
FEDERAL RESERVE BANK
OF NOW YORK
MISC. 4. I -ZOOM-I-24
OFFICE CORRESPONDENCE
Jan.28,1925
SUBJECT:
Mr. Snyder
FROM
DATE
Miss_Carlson
Car LoadingsMerchandise and
(Lec.20-Jan.17)
Miscellaneous.
Total, latest five weeks, 1925
Total, corresponding, 1924
Percent of 1925
1NH
to
1924.
2,445,003
2.335.081
104.7
1 92__
ML 4. t -200M-7-24
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
Governor Strong
MranYaer
FROM
DATE
SUBJ ECT
January 26, 1925
192
Car Loadings
READ AND NOTED,
E3.
The running total of merchandise car loadings for the last three
weeks does not show any such sudden increase as bank debits.
For the
last three weeks it was only 6 per cent over a year ago, and for five weeks
the totals were only 4.7 over a year ago.
It is not very clear just what have occasioned the heavy debits
of the last two or three weeks.
4LIS
DAN
Is 1525
FEDERAL RESERVE BANK
OF NOW YORK
OFFICE CORRESPONDENCE
mr. Snyder
SUBJECT:
February 24 1925
in_
Bank Debits in 140 cities
Three and Five weeks
C. Kayser
A
DATE
comparison
The following figures show a comparison of bank debits in 140 cities
for the three weeks and five weeks ended January 28., 1925 compared with the corresponding periods of 1924.
,L
Three weeks ended
January 30, 1924,
Three weeks ended
$ 12,951 millions
$ 14,500 millions
Five weeks ended
ISMUE.Y.-.12.1.1221
$ 22,525 millions
Per cent. increase
January 28, 1925over Jan.30.
8:n19215
.T:a717128
924.
12%
Per cent. increase
over
$ 24,388 millions
General Price Level for Jarwary, 1924 = 182
Jan. 30, 1924
8.3%
e
HEDERAL RESERVE DR
OF NEW YORK
IL8
1925 3
PM
RECEIVED
GOVERNOR'S OFFICE
t.vr
MS.4.1,004-7-24
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
lir Ran
FROM_
DAlE
Feb. 2
1925
SUBJECT:
Mr. Snyder
So far as I can discover, this thing has not been repaired at
When I took it home it worked just about as much as when I sent it
up to you, and then I gave it a thorough test yesterday and it is simply
no good.
They kept it an unconscionable time--over a month, I think-and I can't see that they did anything.
Won't you be good enough to
see what is the matter with it?
all.
192
7
MI.
200M-7-24
FEDERAL RESERVE BANK
OF NEW YORK
/OFFICE CORRESPONDENCE
7FROM
DATE._
Governor Strong
SUBJECT:
Mr-5nydex_
)11EAP AND
-7/(-7
_i_eb-r11.1325
Volume of Exchanges
Nen%
7,01 3,
a
)0,c_f_
The heavy volume o' bank debits outside New York City, as compared with a year ago, continues and the running total for the last
three weeks shows an increase of 12 per cent over last year.
The running taptal for five weeks is up 8.3 per cent, all this
with practically no change in the general price level. /Just as an indicator, it is of interest that on the Times list of st377'averages the
industrials have now failed to make a new high for four consecutive
weeks, and rails for six consecutive weeks.
Ahich would seem to indicate
that the market had lost headway.
1 92_
MI9C.3.1-00M-1-20
FEDERAL RESERVE BANK
OF NEW YORK
DATE
-WFICE CORRESPONDENCE
TO
FR.
Governor Strong
suB,,Volume
February 2, 1925
of Exchanges in January
Mr. Snyder
BM AND
NOTED,
E3.
S.
Taking the preliminary figures o bank debits as reported weekly,
debits in _the 140 cities outside of New York, used in our index, after
allowing for the usual seasonal upturn, show an index figure of 12 per
against 4 per cent above normal for December and
cent above normal as
1 per cent above normal for January of a year ago.
This index figure of 112 for January may be modified slightly;
and it is quite possible that our composite Index of the Volume of Trade
may not rise to quite the same extent; but the figure of 12 per cent above
normal is unusually high and bears out the impression that we had from the
weekly returns, that there had been a very sharp upturn of business in
This figure of 12 per cent above normal is about
the month of January.
as high as we have had since the end of the War.
It is very striking, it seems to me, that this upturn has not
been accompanied by any corresponding rise in the great basic commodities.
For the month of January our index of 20 basic was nearly stationary.'
On the other hand, it does seem to bear out the idea that the rise
in the stock market was based in part upon extremely good business prospects.
Possibly you would suggest that it might be, also, that the buoyancy of the
stock markets had imparted some enthusiasm to business and trade.
One might also infer possibly that the considerable increase in
demand deposits last year may now be having its usual effect.
EDERAL RESERVE BANK
OF NBA/ YORK
ft2 E5 3 iPM
RECEIVED
GOVERNOR'S OFFICE
FEDERAL RESERVE BANK
MISC. 4. I -200M-7-24
OF NEW YORK
OFFICE CORRESPONDENCE
Govarnor-Strong_and
ROM
Mr,Alay
DATE_
February 1,119 25___ 192_
SUBJECT:
Mr. 34y4Or_
You key be interested to know that the Federal Valuation of the
Railroads of the U. S., Eaetern Group, have asked permission to reproduce
at their expense severil hundred copies of the Prticle describing end containing our index numters of a generel price level from 1875, for use in
connection with their railwq valuation Ivor*.
Al9C.3.1-0014-1-20
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
Governor Strong
DATE
SUBJECT
Feb. 16, 1925
Volume of Trade
Mr. Snyder
BEAD AND NOTED,
The volume of bank debits outside of New York City (as well as in
The running total both for the last
it) continues to run pretty high.
three weeks and the last five weeks shows about 13 per cent over last year
and our monthly index of outside debits for January was 113 as against 101
for January of 1924.
Merchandise car loadings are not running so high, about 5 per cent
over the same periods last year, but other car loadings, of coal, ore, lumber, grain, etc., are up very sharply.
The interesting thing is that all this heavy tide seems to carry
with it no expansion of bank credit.
The usual seasonal run-off from the
The increased
high point of the first of the year has been quite heavy.
volume of trade has been accommodated 4ra sharp increase in the turnover
or velocity of bank deposits.
A part of the increase in debits is doubtless due to the very
heavy volume of speculation which affeats clearings in Eoston, Philadelphia
and other centers as well as New York, though in a lesser degree.
The
index of bank debits in New York City for January shows 23 per cent above
normal and, as you will see by the attached chart, the total volume of
trading on the Stock Exchange for the last three months has exceeded any
three months in the Stock Exchange history.
GOVERNOR'S OFFIO7
RECEIVED
ttp i61925 12
OF NEW YORY
"EDERAL RESERVE BANK
FEDERAL RESERVE SANK
MISC. 4. I-LOOM-7-24
OF NEW YORK
OFFICE CORRESPONDENCE
Governor Strong
I-ROM
DATE._
Fall._
174_1925 _192
SUBJECT- McKenna!_h_ Speech
Mr. Snyder
The Rt. Hon. ex-Chancellor, like so many others, continues to
dream, as you will see, that the pre.ssure of gold will bring down the
dollar to the value of the pound.
Queer thet these distinguished advocates of a "managed currency" have no good word to say for about the
best managed, all difficulties considered, of any I have ever known of.
Nor would his argument for a more stable pound than dollar
hold if we consider the general price level or average purchasing power
and not merely commodity prices at wholesale.
1419C.3.1.00.1-1-20
I
FEDERAL RESERVE BANK
OF NEW YORK
-)FFICE CORRESPONDENCE
TO
Gove;:a
FP'
Mr. Snyder
DATE
SUBJECT:
February 18, 1925
Dinner
Is this about the list that you were thinking of:
Kemmerer
Mitchell
Hollander
.Allyn Young
Chandler
Foster
Bullock
Rorty
Roberts
Is this too many?
..,
RIO bf,614>
Sivititk
It is the same number, I think, as last
year.
I imagine that some evenings are easier than others for Kemmerer
and perhaps also for Hollander and the Cambridge folk.
We could easily
sound them out by telephone, and possibly you would indicate what evening
of the week would suit you best.
If a topic is desirable there are plenty of good questions, but
it seems to me that, for one thing, it would be quite interesting to get
the varying views as to the general course of prices in the next four or
five years following the general restoration of the gold standard.
I
imagine there would be quite a diversity of view.
07-n
/;)
4-142
ht-f&P
" 67e
LI* Pi
a&c.,--ererit Attor,,/m
(Peiv-e
'&7111
44,4140 eaniar
4,g7te
644444e0 104014,0--
(Prer-&-Attfitt
127
afctlePoteeAt
)6t-/4tr
4A* let
30VERNOR'S OFFICE
RECEIVED
i 4 !,:ti
11
18 1925
EDER,'
C2OF
FEDERAL RESERVE BANK:,
NEW YORK
:":5Li
MSC. 4.1-200,4-7-24
I
c...: Lio
OFFICE CORRESPONDENCE
Governor Strong_
-1-
FRom4- krnycLer
/
0
' Ckl.
._ _
SUBJECT:4_3
.._. !...,
L.;..1
DA_Tx
91 I ) r,
Feb -
04._
19 25
192
/
and Business
Or
W'..7.
0-,
...e,
E
40.
The weekly Reporting Banks again report no expansion of bank loans,
...-:,..--
...0
although demand and time deposits continue to rise slowly. This is in the
face of unquestionably a very heavy volume of both production and trade.
The Standard Daily Trade service report that their index of production for January rose to 111, which was a fairly high point, and this is
an extremely good index, much better than that prepared by the Federal Reserve Board. That in spite of this the tendency of iron, steel and other
soften
metal
tstiT:atjoirais:ndeleTpl=ndirdii=ns
treircee;.ghlilea: :ralltiheer:
I of a runaway boom.
The stock market began its spectacular rise in the middle of
October, and the strong upward move in business came in September, and if
any runaway tendency
as in prospect it would seem as if it ought to de-
velop by this middle of February.
a& in! kow
.
ua
r,
'EDERA'
!
ttli 16 1925 12 ;fe'l PM
RE'CEIVED
GOVERNOR'S OFFICE
FEDERAL RESERVE BANK
MISC. 4. I -200M-7-24
\
OF NEW YORK
OFFICE CORRESPONDENCE
FROM
d-
-
<
c
s'd
F0414TY 20.
.
.0
SUBJECT:
Governor Strong
Mr. Snyder
Mr. W. T. Layton has asked Franz Schneider to write two articles
for the "Economist," and one is on the question of the ability of the
Federal Reserve Banks to curb any severe inflation; and Mr. Schneider has
asked if you would care to look over the article before he sends it and
give him any criticisms.
irinaliT
rit4
dell11.4.14441442s.
192_5_
1
-TUDA.1
OOLE.,1
SC 7,
itfjf:
TAIT
I.
'TUN
'a T".1' A1,9
MI9C.3.1.90.1-1-20
I FEDERAL RESERVE BANK
OF NEW YORK
-1FFICE CORRESPONDENCE
TO
Governor Strong
FROM
Mr. Snyder
DATE
Feb. PO, 1925
SUBJECT
C'
It really seems to me extremely interesting, what I was showing you today, that the average of our index of the-General Price Level
for the last two years should be so close to the average for the last
six.
The individual figures ran:
1919
1920
1921
1922
1923
1924
Average, 1919-'24 inclusive
186
213
179
170
181
181
184
This does not give very much present comfort to the whilom
prophets of "a long, continuous price decline."
It also gives me a
little bit of superstitious faith that the present levels could be
'. maintained without a great deal of difficulty--unless something blows
up.
http://fraser.stlouisfed.org/
cr,
Federal
Reserve Bank of St. Louis
'4
1925
"
11
is;
RECEIVED
30VERNOR'8 OFFICE
j
-I
FEDERAL RESERVE BANK
MISC. 4. I -ZOOM-7-24
OF NEW YORK
OFFICE CORRESPONDENCE
Governor Strong
FROM
L:
CtUf-E_
SUBJECT:
'The
February 24, 19251g2_
bainffes Prospect
"PI
Mr. Snyder
Here is a very interesting view of the business 1i uation.
Their
Index of industrial production is necessarily, Prom the material which is
available by months, rather heavily weighted with iron, steel, coal and coke
production, and therefore showed a very heavy 41ump last summer, and also
very high levels through 1916 and 1917.
AL,
tr,
But their suggestion that anything much above 10 or 12 per cent
over normal is Aomething of a danger signal is interesting.
Our three and five-weeks running total of outside bank clearings
continues to show about 10 per cent over last year, while car loadings are
only slightly above the normal rate of growth.
'It
.21
1925
I
RECEIVED
CiOVERNOR1S OFFICE
MISC. 4 I -200M-7-54
FEDERAL RESERVE BANK
OF NEW YORK
C'
OFFICE CORRESPONDENCE
DATE Feb. 244 1925
r,
T-
Governor_fftrong
FROM
Mr. SAy4er
1 92.
SUBJECT.
Prof. Bu1lo4k replied that he wife was to have an operation
this week, End that he could not be &,t, all certain abouL his attendance
on this account. I wonder, tho,-efore, if you would like to su6gest
to Prof. hullock that if, at the last moment, he was unable to attend,
it might be possible Lc mend Prof. Wa--ren M. Persons in his steau.
latter is a quiet person and does not talk as much as Prof. Bullock,
but he has a good heLd.
The
FEDERAL RESERVE BANK
MISC. 4. I -200M-7-24
OF NEW YORK
c()_
CORRESPONDENCE
....,.
CiFFIC!'W
DATE
March 6, 1925
,
Governor_arcng
FROM
iik,
Snyder
c) SuBJECT'ilthste_A1.._
(g_td---<
:.10111_1!
bmary
--
,,
Our preliminary figureTb7;trad'edn February would be about 106.
Bank debits, allowing for ususl seakinal 1/9.riation, are down about three
points from January and our revised.i,ndex4f
trade for January will run
_...
we.
about 108.
AO.
.
S-74
In making up these February estimates we found clear evidence
that our index figures for February of a year ago were about three points
too high, owing to leap year and an extra business day.
Curiously
enough, in the previous leap year, February of 1920 had five Sundays,
thus compensating for the extra business day, so that this defect did not
appear.
These calendar differences, which can now be allowed for, seem
to make clear how very sensitive and therefore, I should think, how accurate, so far as the available data go, the index of trade actually is.
th/1/1.7:4
(074
go- t-ceet4afrvo__--
192_
EGFP
R1925
I
,i PM
RECEIVED
30VERNOR'S OFFICE
MC.3,1404444
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
SUBJECT.
Governor Strong
r
FROM.
Mr.
DATE _March 10,
SnyderEngland
_192 5
Purchasing Power Parities with
As to prices of such things as cotton, wheat, copper and similar
commodities in, say, Liverpool and New York, it occurred to me we might get
a direct answer to the first part of your inquiry from ootton factors here.
I have consulted with a cotton arbitrage house having offices in
Liverpool and New York, and the tell me that the only reason that there is
the slightest variation between the equivalent price of cotton in the one
city or the other, at a given rate of exchange, is that there is a speculative position forcing the price higher or lower in the one city or the
other.
This rarely amounts to more than 20 points, or 1/5 of a cent a
pound, and is almost instantly seized upon, as a rule, by the brokers as
an opportunity to make a trade in the difference, that is, for an "arbitrage."
The situation between New York and Liverpool seems exactly parallel
to the differences which arise between New York and New Orleans cotton markets, when a speculative difference of opinion appears, and may create a
similar small difference in prices.
A gamble in exchange would have the same effect, but would tend to
be met immediately by others of a contrary opinion.
Of course the "equivalent'price" allows for the current cost of shipping, insurance, interest, etc.
They tell me that practically the same is true of wheat, copper and
other things for which there is an extremely liquid market; that is, that
there are always on hand traders and brokers keen for any chance to extract a
thin profit from any difference which may arise.
exchange
In other words, it appears that any variation from the exact
parity in. these prices is very slight, and quickly erased.
The second part of your inquiry looks to me like a rather difficult
piece of investigation, unless we can find something regarding this already
done, as it is extremely difficult to get at exactTy comparable prices of
articles or commodities outside of the big speculative raw products.
I will report later.
ct---cmike
cagun,L9nt
(Peuts24,14
O-11-0-h,
;vvra-Lete: /ier;-rveyvt, he;
carit Ut-o-v-SPCL---4)4
714-4
RECEIVED
30VEMOR'S OFFICE
tMP lo 1925
II
- POW
FEDERAL RESERVE BANK
MSC.4.1,001-7-24
OF NEW YORK
DFFICE CORRESPONDENCE
Governor Strong_
FROM
DATE
Maroh 12, 1925
SUBJECT:
Mr. Snyder
Just on the chance that you may not
have seen it, and you
latest article
probably haven't, I am sending up Jim Corbett's
in the
Saturday Post, which I happened to be reading last night, with to me
a great deal of interest in what he had to say about the sports of other
days, and likewise of the characteristics of some of the fighters like
Young Griffo, Terry McGovern and Benny Leonard.
Very shrewd observation, I should say.
192,__
4119... 4. -LOOM-7-44
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
Governor Strong
C.)
DATE
March 20,
SUBJECT
ALADAN
k.kOM Mr. Snyder
fL:
You may be interested to look ver a study made by a, Chicago engineer of
prices back for three centuries or more, which a friend of mine brought in to me
yesterday.
The most interesting thing to me was the suggestion that the Napoleonic
wars were a period of really profound disturbance, quite comparable with the World
War of this century, and that apparently there had been nothing like it for England
at least for a long time preceding. The figures from 1800, of course, are quite
reliable and comparable, and while the estimates for the preceding two centuries
are on a much more slender basis, they do give a suggestion that the really great
disturbing influences on price levpls are the great wars and the attendant debasement of the currency.
&Oa-,
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ec
711"--
14:
30VERNOR1S OFFICE
RECEIVED
195 4 09 PM
gAq
misc. 4. -zoom-1-44
FEDERAL RESERVE BANK
OF New YORK
COFFICE CORRESPONDENCE
Governor Strong
,4RON4
March 25,
DATE
192A,
SUBJECT-
Mr. Snyder
C
TheliP and down blue line gives
Here is, to me, a quite amazing chart,.
the aggregate sales by quarters of 24 big chain store eystans, with total sales
Just
of around $600,000,000 a year; adjustment made for changes in the price level.
You
look at the thing grow and the astonishing regularity of the fourth quarters.
could drew a line across the tops with a ruler.
The calculated rate of growth is aboutla per cent, per year, while national
income grows at a little over 3 per cent.
I
gg44
k. Utters'ikd
614
30VERNORIS OFFICE
RECEIVED
pft1. 6 1925 4 OiNvl
(IF f!'
PFRFP,VE, Pi,",!01,(
EDPAL
FEDERAL RESERVE SANK
MISC. 4. 400m-1-2.4
OF NEW YORK
FFICE CORRESPONDENCE
Governor Strong
FROM
19254
DATE----- tifkr-ola
SUBJECT:
--The Taylor System.
Mi. Snyder
I we very much interested in these reviews of the work of
Precierick Ta:,iory coo of the best hen 6 the diEest. by Fisher.
work, it eeems to hne, pardlele to a oonsiderable .stunt the policies
you hE.ve developed in this bark.
Perhp he we overlytl-egr es.ei v e5,
and he encountered the usual fate of the piollez°.r, the man 1,ho tries to
(feviF,te in any way from the trodden path. But he old a work, aLd I was
astoniEhed to find that he died t 59.
An elnusing story about fiviab at the Slaci of p. 51.
s
MISC. 4. -2004-1-44
FEDERAL RESERVE BAIN,
OF NEW YORK
UFFICE CORRESPONDENCE
L440)
TD
FROM
G.)vernor Stmng
DATE
SUBJECT:
Maroh 25,
Volume of Trade.
Snydor
Bank debits outside of New York continue to run about 10 per cent.
hove 1nt yr, which in turn was rather above normal; !,._tai with tic. signs
as yet of any let-up, the running total for the lateet three weeks being
higher then for the latest fire weeke. There err; come signs of a softening in prices, F. 1'1 a I understand the steel trade does not feel very buoyant,
in spite of about a normal rate of production.
1925!
MM. 4
FEDERAL RESER1,_ BA,r,
OF NEW YORK
100M-7-14
bFFICE CORRESPONDENCE
GIverr-or Strong_
FROM
DATE
suBJECT:
Narnh 25,
1925_
Malden lams.-
MrSnyder
is Frankenstein and
Etz 7! ere t the Public Library yesterday to
see what they could aig up tbout Maiden Lane, and the library he ransacked what
we have here, and I am sending their recults up to ise Oleedrer in the hopes that
some of it may be what you klehed. There is probably not much that #4,s cE..r, get
now thp,t the Eietcrical Scoi.ty bk,e: not bed mlrevdy; eo it seems to me it might be
interesting to tell them a little about the etert of banking within stone'
throw almc.,,st of the present site of this hank, At least it might have been
stoney s throw if, as Senator Everts declared, George tashinaton could surely throw
a dollzx across the F'otoma.c since he thrc r. ovareign Lcross the sc.:a.
5,
Mies isurnett is sending you up some bite with this thought.
FEDERAL RESERVE BANK
MX.4 -2NP4-7-U
OF NEW YORK
OFFICE CORRESPONDENCE
DATE
Governor Strong
FROM
March _31,_ 1925
SUBJ ECT
CD
Mr. Snyder
L.
es,
The indications are that fairly complete returns on our Index of
Trade for February will carry the figure up nearly to 112, or some 3 points
higher than our preliminary estimate.
This is equal to about the highest
points which the index has ever reached in the last six years.
The running totals of bank debits indicate that this high pitch of
activity has been continued in March and that the volume of trade for this
month will be only slightly lower than last month, making due allowance for
the number of business days in the two months.
/
This, with the sharp decline in basic commodity prices in the last
threefaittseems to suggest rather strongly that we may have hit another
of activity, just as in February of last year and in March of
'23, and that the next few months might show another rather sharp reaction,
It would be very curious if it
just like last year and the year before.
should thus come three times in succession, about the same period of the
year.
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DATE _ March 31,-1225
suB3434JAbolt'a Managed Currency
Goverwor Str_gn_g
_Ir.,
LL1
logarA\and,1---In)
seems to me, on whether we should have a
I don't see how it can keep
building boom.
told that the activity is quite feverish.
the rest, I get the impression that business has been going
Already
oo fast and will have to do a bit of readjusting.
about half the recent rise in basic commodities has been lost.
a littl
If we get a liquifying stock market, and slackening in business,
Then I should think it
that might ease money off a good deal by summer.
might be a fine time to rebuild the investment account--?
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MISC. 4. I -200M-7-24
FEDERAL RESERVE BANK
OF NEW YORK
#"OFFICE CORRESPONDENCE
Governor _Strong,
FROM_
SUBJECT:
Mr. Snyder
My reason for suggesting in this morning's Business Summary
that we might have a pretty severe set-back in the building trade, and
that this might have a rather wide repercussion, was mainly based on the
two attached charts.
Building contracts for 1925 have started off at
the same tremendous pace as last year (and the year before), and I do
not see hop it can possibly keep up.
Just for a shot I have made a guess on what the year might show.
This article is protected by copyright and has been removed.
The citation for the original is:
“F.W. Dodge Corporation’s Building Statistics (Vol. 6, No. 2)” F.W. Dodge Corporation (New York, NY),
February, 1925.
MISC. 4. 1-n0M-7-24
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
Governor Strong
FROM
linSnyder
7.7
:JR
C-D t' 'DATE April 13, 1925
01 '
SUBJ ECT
192_
-Volume of:Trade
CI
it-,
...., C)
t
Apparently there is no let-up as yet in the tide of trade, the
running total of outside debits for the last three weeks standing at about
10 per cent over last year, and last year was not low.
This compares
with a cumulative total for the first fourteen weeks of this year of 11 per
cent over 1924.
The normal rate of increase is, of course, about
per
4
cent.
In other words, business is still at about the same high levels
that it struck last October, and this has continued without any let-up
But that, in the face of this large volume and continued high
ever since.
constructional activity outside of New York City, the average of commodity
prices should fall off so sharply in the last monthseems pretty clear
eoiedemm that there is no present tendency to inflation; if it does not
mean that from now onwards the tendency will be rather downwards.
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!..60.14.74
--...-OF NEW YORK
OFFICE CC)
il
FaS P a N D E Nt C E
I
"ro
Governor Strong
" \, VI
ESERVEMaili
flailtk
Mr. Snyder
Or
DATE
SUBJECT
April 13, 1925
Bank Debits and Speculation
\
WUK-g.- '
------mm,,-...i,
I don't think that there is much evidence that bank debits outside of New York City are very heavily influenced by large security issues
or speculation.
You know that Chicago clearings only run about 30 or 40
Boston and
billions against 8 to 10 times that number in New York City.
Philadelphia are only about half as large as Chicago, and after that none
over 10 billions.
Bank debits in the 140 cities outside New York are only just
about as large as those for New York City.
And even for New York City
the evidence seems to be that speculation and financial activity now
represent, with the Stock Exchange clearing house in operation, only a
small part of total New York clearings, since the difference between times
of low and high speculative activity is not very great.
But the main point is that our index number of bank debits outside New York City runs very close with our Index of Trade, and therefore
gives us a reliable indication of the current volume of general trade,
since we can get it from week to week.
This seems to me a very valuable finding.
In our Index of Trade both new financing and stock speculation
are included, but with a weight of only 2 per cent each, so that even a
very heavy rise in these counts for very little in the composite total.
_192
00VERNOWS OFFICE.
RECEIVED
i3 1925 4 I4 PM
RANK
EDERA!
FEDERAL RESERVE BANK
lil$C.4.1-200M-7-24
OF NEW YORK
(
OFFICE CORRESPONDENCE
Tc
Governor Strong_
DATE
April 21, 1925
192_
SUBJECT:
Mr. Snyder
I wonoer if your eye, last night, caught this amazing chart
and the statement about it.
You will note that the statement is that in seventy years
the populauion of New York State, outside of this narrow belt, has been
stationary, and in this narrow strip today is four-fifths of the population.
Amazing if true.
1111..
FEDERAL RESERVE BANK
I. 1-100M-1-24
OF NEW YORK
(
DFFICE CORRESPONDENCE
To
Governor Strong
DATE__
SUBJECT:
April
FrAncb_Debt -in 19-14
1111r. Snyder
The figures I spoke of last night that were given me as to the
The official figures
French debt in 1914 appear to have been correct.
at the end of the year 1913 were:
Fixed debt
Floating debt
2,081
33,538
11
On July 51, the latest statement before the War broke out, this
had risen to a little over 34 milliards.
31,457 milliards
1925
FEDERAL RESERVE BANK
OF NEW YORK
3FFICE CORRESPONDENCE
To_
Governor Strong_
FR ,v1
Mr. Suder
DATE
April
P14_
1921_
SUBJECT:
This aTticle seems to me worth glancing over, as revealing a really
desperate situation that may ariee from the pressure of economic forces outside of the nation itself.
Here is a great and basic industry that is apparently being crushed
Our
by the rise of another industry, and the whole nation must suffer.
troubles look very mild when we consider their..
FEDERAL RESERVE BANK
I -200M-7-24
OF NEW YORK
'OFFICE CORRESPONDENCE
To__
T
FFOM
Governor
SUBJECT:
Strong
Mr. Snyder
C
READ
NOTED,
DATE
April 27, 1926
Volume of Trade
t_.,i
Apparently thetre h s been as yet no let-up in the high level
of trade which has prevailed in recent months.
Our running totals of
bank debits for the latest three weeks and for the latest five weeks
stand at about the same, 10 per cent above last year, as do the totals
for the first sixteen weeks of the year.
This is in spite of greatly reduced activity on the Stock
Exchange, and, in all probability, a similar abatement in speculative
activities, like wheat and cotton.
But in the face of this heavy volume of exchanges prices continue to soften, and the stock market shows no tendency to a ralp#al of
the boom, which would suggest that,probably,general activity
not
continue at the present pace.
iiiht
192_
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APR 27 1925 4 56
RECEIVED
00VERNOR'S OFFICE
-
FEDERAL RESERVE :DANK
4. I-LOOM-7-24
OF New YORK
OFFICE CORRESPONDENCE
)11
Crw,_
Mr. Snyder
ithAD AND
FROM
C. Kayser
--luBJEcTI
El
DATE
17
April 27, 1925
/92_
Bank Debits in 140 Cities and
0):Jamlative totals for 1924 and 1923.
7,5
5
Ari1 23, 1924
Three weeks ended
APLL122.212.1
$ 13,101 millions
$ 14,479 millions
Three weeks ended
Five weeks ended
April 23, 1221
$ 21,959 millions
First 16 weleks
of 1924
$ 69,755 millions
Five weeks ended
April 22, 1925
Per cent increase
over
10.5
Per
cent increase
over 1924
$ 24,018 millions
First 16 weeks
2L222.1
1924
9.4
Per cent increase
over 1924
$ 77,362 millions
General ?rice Level for April, 1924 = 180
10.9
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FEDERAL RESERVE BANK
MISC. 3, i-Lt.h.4-74
OF NEW YORK
<
OFFICE CORRESPONDENCE
FROM
DATE April 30, 1925
Governor Strong
sueJEc-Business Stability and the
Mr. Snyder
Steel Trade
If it were really desirable to attain a rather high degree of
stability of industry and of employment, I got to thinking last night
of the following:
(The vast volume of buying and spending for the necessities and
usual enjoyments of life,goe3on with little change from year to year,
save of steady growth.
This makes up probably from 75 to 85 per cent
of the total expenditure.
This applies even to such luxuries as the use of silk.
I
attach a chart showing the amazingly steady growth of silk imports in the
But one case of a two-years decline.
last half century.
The wide variations are, of course, in construction work of all
kinds and in the industries supplying these; and of all the important industries showing the most extreme variations, steel and iron stand at the
Within the last five years steel production has shown a drop of
head.
60 per cent from one year to the next, and then back again.
Practically
no other industry of any social importance shows such variation of product
and employment as this, and, it may be added, outside of crop products,
of prices as well.
In other words, the chief and dominating factor in businese instability is here, and it seems as though it would not be very difficult
to overcome.
It is not at all clear that these wide swings are in the least
necessary.
The cost
of production of steel varies little.
You spoke once of the policy the steel companies have of stackLast night I was making a calculaing up steel before they shut down.
tion that a whole quarter's maximum product, 10 or 12 million tons of
steel, could be stored in a single warehouse a hundred feet high and seven
Divide this among ten distributing depots over the
hundred feet square.
country and it would scarcely be noticed.
The cost of storage and interest charges on 10 million tons of
steel at, say, $50 a ton, would not exceed $35,000,000 per year in an industry whose annual product now exceeds in value 2,000 million dollars.
But once in fifty years has the consumption of steel ever
It would seem perfectly feasible
dropped off 50 per cent in a single year.
to stabilize the production to meet the probable demand so that it would
And it would seem as if the resulting gains
scarcely vary by 10 per cent.
FEDERAL RESERVE BANK
MISC. 3, 140M-4-24
OF NEW YORK
OFFICE CORRESPONDENCE
DATE April 30, 1925
To
Governor Strong
SUBJECT:
FROM L
Mr. Snyder
Steel Trade
Business Stability and the
from steady employment and the higher efficiency thereby attainable would
far more than cover the carrying charges for such a storage of steel as
would preclude any scarcity or scarcity prices.
If it was possible for years to stabilize the price of steel
rails, why not of all steel products?
As a matter of fact, a normal surplus of 5 million tons would
probably be far more than ample to supply any possible access of demand.
From a social point of view, the business practice of the steel
companies is probably the worst of any great industry in the country.
In
the long run does not this also injure the companies themselves?
If
their own practice is a powerful contributing factor to the very instability
from which they suffer, would not an intelligent policy suggest that they
work their own reform, greatly to the gain of their employees and of a considerable part of the country?
The most formidable difficulty, apparently, would be the question
of assuring the steel companies against any sudden fall in the general price
level, such as came in 1920.
But will not the return to the gold standard
sufficiently take care of that for all practical purposes?
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71'
MISC. 4. I-2DOM-7-24
FEDERAL RESERVE BANK
OF NEW YORK
FICE CORRESPONDENCE
To
FROM
Govern_or _Strong
DATE
SUBJECT:
May_1_, 1925
192
The attached memo.
_Mr. Loyder
Do you think that Mr. Hoover would be in any way interested in the
attached memo.?
Its practical importance is that it now looks as if we
might run into a rather serious slump in the building industries, this year
or next; and as the prosperity of the motor car industry in the last three
years has been bound up largely with the tremendous building boom, I suspect
that if this slump comes it will occasion a corresponding slump in what is
now claimed as our first manufacturing industry.
The combination of these two might be of considerable weight, and
if the steel companies continue their usual practice of shutting down hard
and throwing a large number of people out of employment the combined effect
of all three might, I should imagine, be sufficient to bring on a rather
serious industrial depression.
This was in my thought in going into this question.
Colonel Rorty.
thinks that the steel companies are great social sinners and that they ought
to be brought to book for their practices.
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MISC. 1. I -200M-7-24
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
'ROM
Mr. Jay
DATE
SUBJECT:
MaY 4, 1025
192.
Commodity Price Fluctuations
Mr. Snyder
In regard to your inquiry:
The attached chart show& the fluctuations of the Bureau of Labor index of commedity prices at. wholesale, which with all its obvious and very distinct defects, is still the best commodity price index that we have.
You will
note that when reduced to a percentage or ratio basis, as here, the differences
from the pre-war period do not appear so large.
The fluctuations in the last
three years, from about Nay of 1922, have been within ft range of about fifteen
points.
This is something like three times the average fluctuations shown
by the same index in the ten years preceding the War.
But it seenee clear that a good part of these later fluctuations, as
well as the extreme depression in 1221, has been due to farm prices, many of
whIch have'..).3.en at the mercy of worldwide conditions.
A comparison of other
than farm prices for the three-year period from the spring of 1922 would, I
think, show pretty well with those of pre-war years.
The real test of our aoility to maintain the balance of credit and
traie, I should think, might come within the next to or three years.
FEDERAL RESERVE BANK
MISC. 4. I-ZOOM-7-24
OF NEW YORK
OFFICE CORRESPONDENCE
Governor Strong
FROM ____
DATE
SUBJECT:
May_44_1925
Volume of Trade
Mr. &actor
Last week's bank debits outside of New York City (taken in
connection with volume of debits for the preceding week), shows about
the first sharp turn down of the present year.
There may be a little
seasonal in this, and it will be interesting to watch whether there is
any sharp recovery in the next two weeks.
If there is not I should think that this would be pretty
definite indication (taken in connectiolu with the continuous weakening
of commodity prices) that the boom of the last six months is distinctly
over.
192
FEDERAL RESERVE BANK
MISC. 3. 1.60M.441
OF NEW YORK
OFFICE CORRESPONDENCE
overnor Strong
Ta\
FROM
DATE_
May 5, 1925
192
Steel Trade Policy
SUBJECT
Mr. Snyder
In a memo. for the Business Summary tomorrow, I have set forth a
little more fully my reasons for thinking we might have some reversal of the
business trend of the last three years.
If this should come, it seems to
me that much could be done if, for example, the policy of the steel trade
and perhapa some others could be radically altered so as to supplement
Federal Reserve policy, in the direction of trying to mitigate ae-idierity
of slumps and unemployment; and for this reason I should think it would be
very well worth while to talk the question over with Mr. Grace and possibly,
also, with Judge Gary, if this were feasible.
Another matter:
The problem of the young man who was in yesterday was whether we
are to have the "long fall in prices," thethirty-years fall, that Anderson,
One reason I sugAyers, and so many others have so confidently predicted.
gested for doubting this, I had not thought of much before.
This was that OW.lija6""644"45/5,4 reviewing the tremendous outcry
at the full in prices which came in the 70's (with the Greenback movement),
and in the 90's (with the Populist movement, Sockless Jerry, Peffer, and
Bryan, too), and considering the quite distinct advance in popular education
as to the cause of the rise and fall in prices which we have gained in the
last ten years, that the 2eople would not stand for any prolonged and drastic
decline; and that this strong popular feeling would he a tremendously strong
a rational Reserve policy directed, as in the past three
am of support for
years, against any such sharp and, as it would seem, needless decline.
I feel as though this was really something that could be counted on.
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RECEIVED
GOVERNOR'S OFFICE
FEDERAL RESERVE BANK
MISC. 4. I -200M-7-24
OF NEW YORK
OFFICE CORRESPONDENCE
rL
FROM
Governor Strong
DATE
SUBJECT:
May 5, 1925
Retail Sales in April
Mr. Snyder
The Times thie morning, has a sensational article about the sluMp
toe have made up a preliminary total of the 44 depattment
stores whose returns have been sent in for April.
in retail sales.
As compared with a year ago this shows an average increase over
a year ago of 3.8, and for New York City, excluding Saks' new store, of
6 per cent.
This suggests that business has been better in this dietrict in
New York City than outside.
26 show decreases.
Of the 44 storee only 18 chow increases and
all the large stores show increases, so
But almost
that this brings the dollar figures up higher than last year.
1 92__.
lc
lli(,-ZOOM-7-4
C=I
FEDERAL RESERVE
MD AND '
OF NEW YORK.
To
DATE
May 11, 1925
192_
Bank Debits in 140 Cities and
SUBJECT
FROM
S.
111'
\TICE CORRESPONDENCE
.
Cumulative totals for 1924 and 1925
Three weeks ended
May 7, 1924
Three weeks ended
$ 13,034 millions
$ 14,498 millions
Five weeks ended
Mav 7. 1924
$ 21,828 millions
First 18 weeks
of 1924
$ 78,482 millions
LIALL-1.2.2.1
Five reeks ended
May 6, 1925
Per cent. Increase
over 1924
11.2
Per cent. Increase
Over 1221
$ 24,119 millions
First 18 weeks
of
24
10.5
Per cent. Increase
over 1924
$ 87,002 millions
10.9
General Price Level for April, 1924 = 180
for May = 180
Volume of Trade for April, 1924
for May = 101
= 104
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FEDERAL RESERVE BANK
MISC. 4. 1-240M-7-24
OF NEW YORK
OFFICE CORRESPONDENCE
o
FLil
Governor Strong_
DATE
SUBJECT:
May 11,
192 5
Gold Figures
Mr. Snyder
Cassel's estimate of what he calls the "normal" gold supply for 1920,
that is, the amount of gold that, according to his interesting curve, would be
required to keep the price level relatively stable, was 68,466 million gold
marks.
Increasing this for five years, at his estimate of the required 3 per
cent addition per year, would bring this up to 78,599 million.
This, reduced
to dollars, would amount to approximately 19,650 million dollars.
The estimate for the total existing amount of gold in the world for
1925 is derived by taking Cassel's estimate of the total amount for 1910 and
adding to this the subsequent reported gold production.
This is to be decreased
by the very small estimated annual loss of .2 per annum.
See pages 443 and 453.
READ AND NOTED,
--E3.
FEDERAL RESERVE BANK
MISC. 4. I -200M-7-54
OF NEW YORK
OFFICE CORRESPONDENCE
To,
Goitornor Strong
FkOM
lir._Sayder
DATE
SUBJECT:
May 1210 125
__rederea_Reverms Questions__
I .am wondering if it might not be excellent strategy to cooperate with Senator Shipstead in his demand for an investigation of the
control of credit under the Federal Renerve System, and, so to speak,
take the enemy into camp, at several years ago. This struck me as perhaps a real possibility for driving straight ,s,t the questions which have
been raised by Mr. McFadden in his demands for a change.
192
/c-
FEDERAL RESERVE BANK
tAr' .-24o4-7-u
OF NEW YORK
(
OFFICE CORRESPONDENCE
To
Governor Strong
Fkom
Mrnyder
iqr DATE__ May14-1925
SUBJECT:
Volume_ofTrade__
There seems little let-up in business.
Outside bank debits
make a big jump this week, car loadings are very high and building contracts awarded for April show a fantastic increase over last year, continuing our index at something like 50 or 60 per cent above the estimated
normal.
And the general expectation seems to be for another big surge
in the stock market.
The current volume of trade apparently continues
at about the maximum points above the normal which our index has shown.
READ AND he'
,c11-1,4- L.
192_
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ec .
Ot.,\(
30\10-
RE.GE.\\/ OV1OL
10qS
o0
12
V2,5
FEDERAL RESERVE BANK
MISC. 4. I-2.00M-7-24
OF NEW YORK
OFFICE CORRESPONDENCE
To
Governor Strom__
DA.TE.-__May 14_1925_
SUBJECT
_192_
McFadden
Mr. Snyder
have looked througb Mr. McFaddents article and it rather seems to
me as if he had driven in the wedge and wae forcing a fair fight on the
question as to whether this country is to have a unified bank policy and some
reasonable control of extremes, or whether we are going to go back to the
headless monster of pre-war days.
On the whole, it seems to me a very
fortunate time that it should come.
Could anything really serve the interests of the System better than
that the instructed public should come tc understand thpt the System is being
attacked by bankers on the ground of bankers' profits, and that the supposed
intereets of the bankers are to be put above those of the clear public and
social interest?
And does it not seem to you that a clear statement of all this by
someone in no way asoceiated with the Federal Reserve System should be made
In the next issue of The Bankers' Magazine?
FEDERAL RESERVE BANK
MISC. 4. t -200M-7-Z4
OF NEW YORK
OFFICE CORRESPONDENCE
To
Governor Strong
FROM
Mr. Snyder
DATE
SUBJECT:
May 15,
192
A. B. A. Oosaittes
Apparently the two persons most responsible for the A. B. A. resolutions of last 3ctober were Traylor and his fidus Achates, Lichtenstein. The
latter, former Curator of the Hohenzollern Collection at Harvard, Librarian
in Northwestern University, etc., considers himself an economist and banking
authority. Be is apparently well read and I have a fancy could be reasoned
with.
If you feel as I do, that this "report" might really be a matter of
same considerable impostance, I should think be was a person to be considered,
as perhaps the voice of the opposition and one who would make it difficult to
put through a clean-cut report that was not an amiable compromise.
5
MISC. 4. I-MOM-7,4
FEDERAL RESERVE BANK
OF New YORK
OFFICE CORRESPONDENCE
To
_OM
Skaernor Strong
DATE
SUBJECT
May 14.4925
Th* Balding Book_
13nycter_
I suppose it is just that supersensitive balance downstairs, but
the indications seem to be that in the half century or more over which the
record extends, we have had no such building boom in this country as we
have had in the last three and a half years, and I find it very difficult
to believe that it can keep up.
The showing for 358 cities does not materially differ from that
for 50 cities, and very close to one-half, about 45 per cent, by value, of
this construction has been residential.
With this building boom has been associated a parallel boom of
like proportions in the auto industry, and my belief is that they are closely linked together and the motor boom largely the product of the building
boom, and that if there should be a collapse in the one the other would go
with it.
Building permits and motor car production for April both break all
Does it not look as if both industries were near a
previous records.
condition of saturated demand?
192_
:
4. 1.200M-7-24
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
Governor Strong
FRo'`1,
Mr. Snyder
0420
DATE
SUBJECT:
Parental
May 22, 10P5
ties
As to the memo on building
d auto. production: that was just
a report and a conjecture.
No th..ght whatever as teparental duties:I
Quite agree we have none, not ev
as to stock exchange speculation,
though that often has a powers
effect and rocks the boat.
192
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310
FEDERAL RESERVE BANK
MISC. 4. I -ZOOM-7-24
OF NEW YORK
OFFICE CORRESPONDENCE
To__
Governor Strong
FROM
Mr.Snyder
DAii
May 26
1 95_
SUBJECT: Our_Trade_Indexea
192
In a little memo. for the thusiness Summary this week, on a new
index of trade for this Federal Reserve District outside of New York City,
I have made note of how closely this new index runs with our Volume of
Trade Index for the whole country; and how this is parallel to a similar
resemblance between the wages and employment figures for New York State and
for the rest of the country.
In other words, that New York State is an
extremely good sample.
But I do think that this steady tying in of one kind of index with
another has a real bearing on the question of how accurate and reliable
the different indexes are.
MISC.3.i4W4-24
FEDERAL RESERVE BANK
OF NEW YORK
)0FFCE- CORRESPONDENCE
To
Governor Strong
FROM
Mr. Snyder
DATE_ June 1, 1925
Si' AD MO14OTEsuBJctC,General.. Price Level
E3 .
14.1
a4
8hriri
tN)..<
C)
As to the question as to what is the present general price level,
relative to 1913, raised by Mr. de Sanchez, I would call attention to the
index given on page 103 of a very careful volume of statistics issued by
the Metal Bureau, which has just come to my desk.
By quite different methods Mr. Ingalls, who is a competent
statistician, has reached the same average figure for the last two years,
as our own, viz., 180 as compared with 100 for 1913.
I do not think that any economist of standing now believes that
any index of commodities at wholesale is now an accurate measure of general
purchasing power.
192
GOVERNOR'S OFFICE
RECEIVED
1925 ,4 6iPM
JUN
OF NEW YORK
-EDERAL RESERVE BANK
3. ,60M.4-24
FEDERAL RESERVE SANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
Governor Strong
FROM
Mr. Snyder
DATE
June 1, 1925
_192
SUBJEC?J The Burden of French Debt
-I
t .t
It does not seem to me that either the attached letter or the
comments touch very seriously upon the main point of my memorandum on
the French debt; which was, very simply, that, measured in terms of either
foreign or internal purchasing power of the franc, the present burden of
that debt is not crushingly greater than the debt before the War.
I take it that my memo. was read rather hastily and with a hostile
eye, for I did not, for example, say or suggest that:
"Germany and France, by inflating their currencies, have somehow enhanced their financial and economic strength;" or that:
"The present situation of France is better and not worse,"
with respect to her debt.
The letter states that the loss of lives and the devastation of
industrial France "is a real economic loss of immeasurable importance."
What I said was that France, by virtue of her territorial gains, is now richer
"in so-called natural wealth."
The letter states that when the job of reconstruction "is completed
it will only put France back where she was before, and where England and
I do not think this is the general impresAmerica were on Armistice Day."
sion or the evidence from the available facts.
I an sorry that the writer does "not think much of the memorandum,"
but this would not be the first time I have found myself at wide variance
with his economic ideas, and I have a recollection of your showing me some
letters of your own; upon the same subject.
GOVERNOR'S OFFICE
RECEIVED
4 6PM
JUNI 1925
7.1,1'1K
7
c
EDEP,!_
ONIMP
IS-2-25M I1424
INTEROFFICE
DERAL RESERVE BANK
ROUTE SLIP
OW/ YORK
'IMF
°O
*MARKS
FROM
V
f
V
MESSENGER SECTION
DATE
/1,
DEPARTMENT
DIVISION
SECTION
p
DEPARTMENT
DIVISION
SECTION
I. B. USE THIS FORM INSTEAD OF OFFICE ENVELOPE WHEN POSSIBLE.
INSURE PROMPT AND ACCURATE DELIVERY ALL COMMUNICATIONS SHOULD BE DISTINCTLY LABELED
FEDERAL RESERVE BANK
MISC. 4. 1-200M-7-24
OF NEW YORK
OFFICE CORRESPONDENCE
ToV
Goirernor Strong
DATE__ June .21925
SUBJ ECT
French_Restorations-
FROM:\T Mr. Snyder
Just as bearing on the question of the nature of French
"restorations," raised in the correspondence you sent me yesterday, I
was interested to note the first two paragraphs from the London Times'
correspondent's report, in their current Banking and Financial Review,
On a preceding page (p. 28), Mr. B. M. Anderson has renewed
page 30.
remarks on the effect of Federal reserve policy.
READ AND NOTED,
192_
FEDERAL RESERVE BANK
MISC. 4. I -2.00M-7-24
OF NEW YORK
(
OFFICE CORRESPONDENCE
To
Governor. Strong
FROM
gr.nyder.
S,
DATE
"la. to
Growth
June 4, 1925
(1:f:itailwayTraffic
r
r)
In an old Poor's Man al we found figures on railway freight
traffic, on the principal lines, running back to 1852; and it seemed
It seems to me a quite
to me worth while to have them plotted up.
amazing picture, and another illustration of how largely the steady
growth of traffic covered up the reactions and depressions, even the
greatest and those that seemed so violent and perturbing when they
occurred.
I do not know when I
An increase of 400 fold in 73 years.
have seen anything that quite so vividly depicts the irresistible growth
of trade.
192_
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FEDERAL RESERVE BANK
MISC. 4. 1 -2001-7-24
OF NEW YORK
OFFICE CORRESPONDENCE
DATE_ June 5, 1925
-
To
Governnr Strong__
FROM
Mr. Snyder
St...4BJECT:
GurAevisod
10(ol(/
(
We have just completed the final revisions of all the series
in our composite Volume of Trade Index, which we have been
You may like
working at at odd moments for a year and a half or more.
to see a few of the group indexes.
incl.Ided
The red line is the revision.
I wonder as to the implication that comes from turning these
slowly over to the last page.
09t,
(
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a
a
c.
,
60111
00VERNOWS OFFICE
RECEIVED
JUN 6 1925 5
OF iliPN YOps/..
-EDEPAL RESERVE BANK
!ABC. 4. I -201M-1-24
FEDERAL RESERVE BANK
OF NEW YORK
C".1
r
OFFICE CORRESPONDENCE
To
Governor Strong
FROM
mr.L.
71 DATE-2
SUBJECT:
June lh,
.Belanee: of Paynente
Snyder
Remembering the difficulties we had in the two efforts that we
made to get some idea of the amount of foreign balances and foreign funds
held for investment in this city, for the Commerce Department (and the
fact that returns from some of the most important sources were unobtainable), one cannot but marvel at the accuracy which it is here announced
has been obtained; and likewise the perfect and comforting concordance
with the amount required to balance the ledger.
You will recall that in the previous year the same authorities
computed a debit balance against the United States of something like half
a billion dollars, to be settled somehowat a time when gold imports continued at an unusually heavy pace.
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FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
Governor Strang
FROM
Mr, Snyder
DATE
SUBJECT
4
June 16,
1911_
New_ComparLson-
I should be especially interested if you could take note of the comparison of our index of electric power production with our volume of trade
and bank debits for this week's Summary.
Although the growth of electric
production is three times as fast as the average growth of trade (and debits),
the percentage of deviation from the line of growth in all three cases is very
much the same.
I can't help feeling, despite Dr. Stewart's skepticism, that this is
added evidence that it is now actually possible to measure the trade of the
nation with an accuracy that no one dreamt was possible a few years ago.
And
very, very few believe it now--and, maybe, ever will!
You remember that practically all the learned professors in astronomy
in the universities of Europe refused to believe in or teach Newton's law of
gravitation for nearly forty years after the "Principia" was published.
But it is much better now.
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FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
DATE
SUBJECT:
June 16,
192.5_
Street Loans and Speculation
GovernorFROM
Mr Snyder
.
I was curious to see how far the increase n street loan was due simply
o
to the increase in the average r
As you wi
ie
see by the
attached, the relative vo ume of securities from the
19 to the low
of 1921 appeared to fall about 25 per cent and then increase to the high point
in the spring of '23, and again at the present time, by something like 40 per
cent.
It is interesting that almost all of the difference between the high
point of 1923 and the present time appears to be covered by the simple difference
in the average level of prices.
Similarly the expansion of the volume of speculation from the boom of
1919 to the present boom would appear to be about one-third; which is a pretty
stiff rate of increase.
AND NOTED,
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FEDERAL RESERVE BANK
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OFFICE CORRESPONDENCE
To
FROM
DATE
SUBJECT:
'4iSC. 4. I-ZOOM-/-24
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
DATE
To4
Governor Strong
SUBJECT .
FROM
Mr_Snyder
of Trade
Railwa
June 18,
Traffic and Our Lon
1925_
Index
You will recall a plotting I sent up a week or so ago, showing the
amazing inorease in railway traffic--400-fold since 1852.
It seemed worth
while just to take,the deviations from the line of growth and compare these
with our Clearings Index of Trade (by years).
It is very interesting to see how closely the two lines have run
together, from 1875, until about the last ten years, when in the War, and in
the slump following 1920, the divergence was very wide--very much as has been
true in the case of pig iron and other basic production.
Undoubtedly, too, the big rise in exports in the War and the violent
slump which came in 1921-122 strongly contributed to these wide variations.
AND NO-TO,
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FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
Governor Strong
FROM
Mr. Snder
DATE
SUBJECT:
June_25, 1925
'MP RATI1C_Rate in 1020
Since you are delving into ancient history, may I produce a
bit of my own?
No need to look at more than the two or three paragraphs
have marked.
You will note that my proposal on December 1 was to reduce the
rate to 6 per cent, as a notice that the worst of the crisis had passed;
and to keep it there until the larger part of the loans of the Federal
Reserve Banks had been paid off.
192_
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OFF131:
FEDERAL RE'SERVE BANK
OF NE d YORK
OFFICE CORRESPONDENCE
To
Governor Strong
DATE_June 26, 1925
SUBJECT:
_192
State of Trade
Mr. Snyder
The volume of trade is still running at a Iligh figure, as high
as at any time since the Coolidge boom started; and this means as high as
anything above normal growth as we have had in the last 'varter of a century
or more.
Building activity and motor car production conti nue at a breakneck pace, at least so it seems to me.
The bunco artists are out in force--you doubtless noq ced the
hashish dream of Mr. Simon Strauss in the morning papers, which i,attach
herewith.
N\
.
I am wondering this: the urban building boom, for it has bei>i, almost
wholly urban, has attracted to the cities large numbers of carpenters, fsicklayers and artisans from the country, so that in the last four years ther4\
must have been a very considerable migration to the cities from the country,,,,
0 ,41,4Azi
044,4
strongly stimulated b.y.the collapse iQuir,..1:ey and thecv iling farm
1. ,
4 A 61 1;
.
depression.
VV.& A 1- gl
There must be a limit to this somewhere and when the building boom
drops, and with it the motor car boom (10 million new cars since the War
closed), where will we be?
And especially if we do not have the stimulus
of steadily rising prices, as we have had practically ever since 1897?
Is it so certain that prolonged depressions, like '93-'98, are a
thing of the past?
t:D
\
FEDERAL RESERVE BANK
3, f-60111-4-24
OF NEW YORK
C)FFICE CORRESPONDENCE
Governor Strong
FROM
DATE_ August 6, 1925
192
SUBJECT: Our Business Indexes
Mr. Snyder
Just as indicating that our work here on business indexes has not
been without some direct fruit, I should like to note the following:
Mr. J. H. Barber, of the Walworth Manufacturing Company, Boston,
makers of cast iron fittings, with several plants over the country, was
telling me yesterday that as the result of their statistical work and
planning based on that, they have been able to shift their peak of production
from the summer, when costs are relatively high, to midwinter when they are
low; that they have been able to regularize production and employment so as
to raise heavily the product per man (almost double); to buy their pig iron
near the bottom of the market and to stabilize their prices so that there
has been little change in the last three years, whereas they used to be
jumping around all the time; and in general to reduce their business to a
highly scientific basis.
The especial point of reporting this is that Mr. Barber is good
enough to say that their work is very largely based upon the methods and
the results of the business indexes devised by this department; that they
did not seem to be getting anywhere at all until they began to make use of
these new indexes; that at first they regarded these indexes as "just bunk,"
and that things could not be done that way; and now that they are the background of all their work and their forecasting.
Their rate of business is
now expanding at about 18 per cent per year.
All of which is not a mountain but at least some small satisfaction.
FEDERAL RESERVE BANK
OF NOW YORK
misc.4.14m4-1-24
OFFICE CORRESPONDENCE
T,
Governor Strong
FRO
Mr. Snyder
DATE Sept. 29, 1925
SUBJECT.B
1 9
tmentA
Just as indicating how closely the operations of the Reserve Banks
are being watched in various quarters, you may be interested in the attached
chart showing the ratio of investment holdings to the total earning assets
of the Reserve Banks, prepared in the Research Department of the Irving Bank.
I gather they were imbued somewhat with the L'hronicle's idea that the great
rise in the stock market has been due in some way to the investment operationa
of the Reserve Banks; but the chart does not give very much support to the idea.
`4,41,,,4adivo,
ettro-x-t-rritim
FEDERAL RESERVE BANK
W5.4. 1400M-7,4
OF NEW YORK
OFFICE CORRESPONDENCE
T-
.,oTeraer4tropg
FROM
Mr. Snyder
DATE
SUBJECT.
October 7, 1925
Railway Equipment Prices
seems to me quite interesting that railway equipment prices
should continue to range about 100 per cent above pre-war prices, while the
general average of basic commodities is less than 60 per cent above pre-war.
Is this possibly evidence that the extremely high wages which are being paid
in many types of industry really do have a serious and notable effect upon
the prices at which the manufactured product can be sold, and that it is an
illusion to think that it could ever be otherwise?
The average of wage earnings in manufacturing industries in New
York State has been pretty steadily around 120 per cent above pre-war, for
the last two years.
The index numbers are based upon the average price per pound of
the total sales of the large equipment and locomotive companies, and therefore are genuine sales prices and not mere current quotations as so large a
part of our price indexes are.
oxe.4
ttah9
192__
FEDERAL RESERVE BANK
MISC. 4. 1.00M-7-i4
OF NEW YORK
OFFICE CORRESPONDENCE
To
_GavemaciLlitrong_
FROM
Mr. Snyder
DATE
Oct. 8, 1225
SUBJECT.
You may be interested in the attached which is a part of the money
market studies which we are making.
It aims to show what would have been the increase in bank loans,
in National Banks, and in all banks, since 1900, if there had been no change
in the general level of prices, i.e., what would have been the rate of growth
due wholly to the expansion of trade.
It seF,ms quite possible that the decreszent rate of growth shown---".
in the last ten years is due to the steady increase in the proportisgi--51 hank
investments to loans proper.
This might explain in part whyIho.4 has been
so little increase in so-called commercial loans within the past few years.
192_
FEDERAL RESERVE BANK
MISC. 3. i-60M.4.24
OF NEW YORK
OFFICE CORRESPONDENCE
\P ,Governor
R
Strong
4 Mr. Snyder
DATE Oct. 13, 1925
192
SUBJECT:
BEAD AND NOTED,
As you will see from the attached plotting of bank debits outside of
New York City, there appears to have been a heavy surge of activity in the
last three or four weeks, bringing the three-weeks cumulation to nearly
19 per cent over the same period of a year ago, and you will remember that
September of a year ago likewise showed a very sharp recovery from the depression prevailing through the summer--in fact, the largest increase in a single
month for two years or more.
So the comparison this year is from a rather
high level, about 5 per cent above normal, for last year.
Nor is this increase principally in the large financial and speculative
For example, the comparison of 246 clearings centres for the last week,
over the same week a year ago, with New York, Boston, Philadelphia and Chicago
eliminated, shows an increase of 17.6 per cent; which is really a quite extraordinary jump.
centres.
All this can scarcely be due to mere Stock Exchange activity, as it is
equally in evidence in the remoter Reserve Districts of the country.
And, as
you know, our outside debits index has, throughout the huge stock market boom,
run steadily under our composite Volume of Trade, which, of course, includes
several series reflecting stock market activity.
d24.7)
All the more remarkable, then, that in he last three or four weeks
our sensitive index of twenty basic commodities, and likewise Fisher's more inclusive index of over two hundred commodities, have shown a slightly sagging
tendency, instead of any disposition towards runaway markets.
Furthermore, we
have ample evidence that production in the basic industries has been only slightly above normal, and some of them below normal for the larger part of the year.
It is a paradoxical situation.
Six years ago this fall we had just
the opposite conditions, viz., a sagging tendency in the actual volume of trade,
with wildly rising prices and expanding bank deposits and loans.
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FEDERAL RESERVE BANK
MISC. 4. 1-100M-7-24
OF NEW YORK
,3FFICE CORRESPONDENCE
To
FROM
_
DATE
Governor Strong
SUBJECT.
Mr. Snyder
the Business Cycle
°Ct._ 16, 1925
Tile "Deliberate Regulation" of
192_
You may be interested to look over the Harvard comments on the role
of the Federal Reserve in the course of business in the last few years, and
The article,
their opinion of "the probable result of efforts to control."
which has just come in, is nominally by Prof. Crum, a young man whom I tried
to get into this department a couple of years ago, and who went to the Harvard
pretty clearly a Bullock-Vanderblue-Crum composite.
folk instead. But
it is
It is interesting to note their idea of the last two and a half years
as "one of deliberate regulation of cyclical fluctuations by those having control of the credit resources of the nation."
Pages 231-233.
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FEDERAL RESERVE BANK
OF NEW YORK
OFFICE. CORRESPONDENCE
lovernor Strong
F4/
Mr. Snyder
DATE
SUBJECT,
Oct. 16, 1925
Growth of Bank Loans
READ AND NpTED,'
E.
7
a. -
You may be interested in the attached, which is part of the money
market studies which we are making.
I wished ta see if it were possible to show how much of the increase
of bank loans was due to the growth of business and trade, and how much to
mere changes in the level of prices.
So, as you will see, we divided the
actual dollar figures by our index of the General Price Level, with the results attached.
For comparison we introduced our index of production, first, because
it is a purely quantity index, and secondly because we have found that this
runs very closely parallel to our index of trade, i.e., there is apparently
not a great deal of change in the rate of turnover of the goods produced.
One chart shows bank loans proper and the other bank loans and investments.
The proportion of investments to loans has shown a rather rapid
increase in recent years.
The indication is that, with no changes in the general level of
prices, bank loans grow pretty steadily with the growth of trade.
192
30VERNOR'S OFFICE
RECEIVED
AJUI. id 1925
12 3.i3
Dti
MISC. 3. 140M.4-21
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
-Governor Strong
FROM Mr. Snyder
DATE
OCt. 23, 1925
192
Outside Street Loans in
SUBJECT
New York
It is curious how steadily outside funds continue to flow into the
call market, while the advances of the New York banks through the market remain almost stationary.
In the last four weeks there has been a further
reported gain of 160 millions.
The present bull movement in stocks began in the summer of last year,
and since then, say from August 1, 1924, total outside loans to the market,
including the unreported loans, have increased probably by 1200 to 1400 millions,
and now stand, on a rough computation, above 2 billions.
This is a rather
staggering sum.
In the same period, from August 1 of last year, the street loans of
the New York banks have fluctuated around one billion dollars.
In other words,
the larger part of the financing of one of the greatest stock booms ever known
has been with funds from outside banks.
The interesting thing is that this boom has taken place in the face
of a net outflow of gold of about 150 millions.
It seems, therefore, evident
that this expansion of stock loans could not have taken place except with the
increase of about 400 millions of Reserve Bank credit which has taken place in
this period.
Almost all of this Reserve Bank expansion has been in the form of rediscounts, and about one-half of this increase has taken place in New York City.
As in this period total loans and investments of New York member banks have
not greatly expanded (about 300 millions), while the loans and investments of
outside banks have increased heavily (about 1700 millions), the inference would
be that, on balance, the New York banks have lost funds to the interior banks,
which have then been reloaned by the outside banks directly to the stock market.
In this period there seems to be very little change in the balances
of correspondents in the street loan reporting banks of New York City.
The
increase of loans for correspondents, therefore, has not been due to the conversion of balances into
loans.
If it should happen
the great stock boom should eventuate either in
(1) a disastrous collapse, with a corresponding reaction upon trade, and large
unemployment; or (2) a great burst of general speculation and rapid rise of
prices, as in 1919-'20, with subsequent collapse, would not the Reserve System
be held accountable as having supplied the funds?
With a current inflow of perhaps 50 millions of new gold, I am wondering if some measures should not be taken to avert the possible consequences.
Mr. Roberts has been thinking along these lines, and I attach a memorandum from
him which went to Mr. Jay and may have reached you already through him.
FEDERAL RESERVE BANK
MISC. 3. 141/M-444
OF NEW YORK
OFFICE CORRESPONDENCE
4Governor Strong
FR'
DATE
SUBJECT
Oct. 26, 1925
Reserves Credit for Speculation
Snyder
N DA4OT ED;
a S:
It seemed onediat the point of Mr. Roberts' memorandum was that
credit created by rediscou ts at the Federal Reserve Banks is being used to
finance a gigantic speculation in stocks, and not for legitimate business.
This seems to me quite a different question from the matter of stock prices,
high or low.
From the minimum of speculative loans, reached in 1922, the market
has now absorbed about 2 billions of additional bank credit.
In part, at
least, such an expansion would have been improbable except for increased rediscounts at the Federal Reserve Banks.
From the point mentioned, in 1922, the total expansion of bank credit
has been enormous--amounting, for the weekly Reporting Banks alone, to some
5 billion dollars (the total of loans and investments).
This total is now 2 billions above the highest point reached in the
period of post-war inflation.
Yet, commercial loans, so-called, in these banks,
are still about 1300 millions below the peak of 1920.
On the other hand, loans on stocks and bonds, as nearly as we may
estimate, are now nearly 2 billions higher than at the peak of 1920.
I wonder
if this is an entirely healthy development.
You will note from the attached that comments on the situation are
beginning to multiply.
It is evident that Mr. Roberts, Sr., is a little
uneasy over the outlook, and Prof. Chandler has expressed the view that we are
not likely to escape a general spread of speculation and a period of inflation.
192_
MISC. 4. 1-200M-7,4
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
FROM
:ovornor Strang
Mr Snyder
DATE
Oct. 2e,, 1925
sueJEcT.Volume of Tr-Pie
Another et.iff shoot in the volume of exchanges outside of New York,
as recorded in bank debits; and again this was not confined to the larger
centers. Excluding the five largest clearing points the increase was &Lill
12.7 in 243 outside cities.
This seems to indicate that the volume of trade in October 4.11
show a very high point, even after nacing allowance for normal growth and
s6asonal upswlag.
1 9 2__
Mit
MISC. 4. I-200M-7,4
FEDERAL RESERVE BANK
OF New YORK
OFFICE CORRESPONDENCE
To
FROM
' ,1;vernor Strong
DATE
SUBJECT,
Oct. 26
1925
Dr. Schacht
Mr. Snyder
We had a most enjoyable dinner, but with much regret at the absence
of our host.
Dr. Schacht gave us an extremely interesting and very incisive talk,
revealin?, clearly enough what a different type is at the helm now in Berlin.
One could not but contrast hie clear grasp of economic relations with
the curiously strabismic impresoioa which I got from an extended interview with
his preaecessor in the summer of 1921.
1 92._
miSC. 4. I -200M-7-Z4
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To_
FROM
Mr, Jay
DATE
SUBJECT,
November 10, 1925
The Nstionts Savings
\-Mr Snyder
This brief report on the question of national savings is a part
of the studies we have been making, trrihg to get at what are the forces
which influence the amount and incregse of bank credit; and seems to throw
an interesting light upon the ideahat there has been some phenomenal
saving in the United States in ti
last few years.
4
192
FEDERAL RESERVE BANK
MISC.4.1,00M-7,41
OF NEW YORK
OFFICE CORRESPONDENCE
4
FROM
Governor Strong
DATE
SUBJECT.
Nov. 10, 1925
Street Loan figuren
Mr. Snyder
Thie student for a Ph D. asks for street loan figures given in
your testimony before the Joint Agricultural Committee, brought up to
Will you plet,se tell me wht reply should be made to
the end of 1924.
his request?
a4.,;
II
o /41 /
192
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
N\Governor
To.
DATE
SUBJECT,
Strong
f.t774
r,
FRom_mr.
Snyder
Nov. 23, 1925
Volume of Trade -
READ AND NOTED,
U. S.
.441
After a low week which seemed to be due in part to the Artistice Day,
debits came back again very strong this week to the highest week yet known-about 17 per cent over last year, which was in turn just about the highest
week ever recorded.
The actual figures for 140 centers outside New York
City for the last four years have been, for the same week:
1922
1923
1924
1925
4262
4776
5173
5974
In other words, the surge of business continues at very high levels.
It seems to me highly instructive for the formulation of both sound theory
and sound policy that this heavy expansion of the last few months should not
have been accompanied by a clearly defined rise in prices.
In this connection
it seems significant that demand deposits in the Reporting Member Banks should
show today almost no change from a year ago.
You remember that our finding was that the ',cyclical swings" of
seem about compensated by corresponding changes in the velocity of
deposits, and therefore that the price level does not tend to rise unless
the increase in bank credit exceeds the normal secular increase in the volume
of trade.
business
You will agree, I think, that the present instance is at least very
interesting.
.192
FEDERAL RESERVE BANK
MISC. 4. 1-ZOOM-7-Z4
OF NEW YORK
OFFICE CORRESPONDENCE
To_Governor Strong
DATE
SUBJECT
November 24, 1925
192_
Discussion of Federal Reserve
.06E3
FRoA_Mr. Snyder
Problems
You will note by the attached that the session of the American Economic
Association devoted to discussion of Federal Reserve policies comes on the last
morning, on Thursday, December 31.
Dr. Chandler thinks that most everybody will be then in a hurry to get
away and that the attendance will be largely limited to those seriously interested in the subject.
In view of this it occurred to me that it might
really be worth while, in case you were in the city, if you could find time,
without any notification of any kind, to attend.
There will be no reporters present, and it might prove well worth
while, in case you felt like joining very informally in the discussion which
will follow.
It might be sowing very good seed.
avuLtiti
nEAD AND t
Li. :0.
V.)
FEDERAL RESERVE SANK
MISC. 4. I-ZOOM-7-24
OF NEW YORK
- OFFICE CORRESPONDENCE
To
Governor Strong
FROM
Sr,
Mr. Jay
DATE
November 24, 1925
SUBJECT:
Snyder
Did your eye happen to catch Premier Painlevele little wail on
Sunday, as to the utterly coiltradiotory advice he had received from the
financial "experts"?
Mr. Leffingwell, I believe, haa told of almost exactly the same
experience as to our financing when wa went into the War.
Does not all of this pretty vividly illustrate the need of definite
or concrete knowledge as to the relations of business or trade to bank
credit and allied things, precisely such as we have been seeking to find
in the recent work described in the memorandum sent you?
192__
FEDERAL RESERVE BANK
MISC. A.
OF NEW YORK
JFFICE CORRESPONDENCE4
To
Governor Strong
DATE_NOV. 24, 1925
SUBJECT:
J
4.
Mr. Snyder
,cn
c
r
Here is the work-sheet chartftf the attempt to take out the effects
of inflation from industrial enam!prias.
It really seems to me quite
extraordinary that the estimatedaverazp for 1925, deflated in this manner,
should land directly on the comlifit4id llie of pre-war growth.
vr.s,
With it I am attaching several other graphs of this same work,
attempting to take out the element of price change in the growth of bank
loans, bank clearings, savings deposits, etc.
I should deeply appreciate it if you could give this work a little
attention, for I can't help thinking that it is an interesting new slant
and really gives us a clearer idea of the nature of business demands for
bank credit than anything we have ever had.
Such different series, treated in this way, yield such singularly
parallel results that, in its cumulation, it seems to me the evidence is
very strong.
192_
"istm
L)
')Oke
c. 0
Opp,
/-/r,
Taw. 3. 1-50M 8 25
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
Governor Strong
DATE
SUBJECT. Loans
December 8, 1925
on Stocks and Bonds
rzomMr. Snyder
The figures as to loans on stocks and bonds in all National Banks
are available for only once a year.
They are given on the attached chart,
from 1890, and with this the nearest division to what we now call "commercial
loans."
With this I have put in at the top, dettedline, the figures for
loans on stocks and bonds in the weekly PirfilianTEATTInf the System, so
far as they are available,from 1919.
You will note that these seem to fall
less in 1920-'21 and to rise faster than the corresponding loans in National
banks alone.
It is evident that the National Bank figures furnish only a fair
approximation, and of course do not give the extreme ranges of the cyclical
swing, such as we now possess.
But it still is of great interest that these
loans appear to have risen pretty steadily with so-called "commercial loans,"
and that, for example, in such a period as 1906-08 the fluctuation appears
to have been slight.
All the annual figures are as of June 30 each year.
of any other figures now available for long-range comparisons.
I do not know
192_
FEDERAL RESERVE BANK
kisc.cf-zoom-7-24
OF NEW YORK
OFFICE CORRESPONDENCE
To
Governor Strong
.-14om
Mr. Snyder
DATE
SUBJECT ..
December 8,
Lord Grey
If you are interested in Lord Grey's Memoirs, you might like to
read what seemed to me a very penetrating little review by Leonard Woolf,
in the English Nation, which I attach herewith.
1
99._
FEDERAL RESERVE BANK
I -200M.7-24
OF NEW YORK
-TFICE CORRESPONDENCE
To
Governor
w
4- 411,
DATE
UBJECT
Dec. 94_12 2_5
______ 192_
Bustiman_ixt_1225_
Mr. Snyder
I should be glad if you had time to look over the figures given
for 1925 in this week's comments in the Summary, and note the very striking
agreement between just a straight average of a very wide number of items
of all kinds of production and trade, 74 in all, and the actual average of
our monthly Index of the Volume of Trade.
Slowly, I believe, the evidence is piling up that we have in our
monthly index a pretty sure and reliable guide as to what is going on.
MiSC
FEDERAL RESERVE BANK
4, I -I0404-7-Z4
OF NEW YORK
jFFICE CORRESPONDENCE
To
Governor Strong
DATE
SUBJECT:
Dec. 9, 1925
192_
Hirsch Book
Mr. Snyder
As you will note, this book on his American visit, 'r4f Reichsminister
Dr. Hirsch, is dedicated to your friend, Logan, and in very warm style. It
reads:
"In deeply grateful recollections of the
first courageous steps towards the solution of
the post-war chaos of Europe, especially in
the days of the deepest need of the German
people."
The title of the book is "America, the Industrial Wonder."
FEDERAL RESERVE BANK
Misc. 3.1.501
OF NEW YORK
OFFICE CORRESPONDENCE
To Governor Strong
.tdmMr. Snyder
DATE
SUBJECT:
Dec. 10, 1925
Realiaavinge
EAD AND
a
i NOTE]'
El.
yef_a.,_
time to take a look
I wonder if you would have
we have made as to real savings in the country.
to know your feeling about it.
at these computations
I should be much interested
The extraordinary thing to me is the way that savings deposits,
time deposits, building and loan assets, and life insurance assets seemed to
grow along in such an even way throughout the whole quarter of a century, in
spite of the tremendous price upheavals that occurred therein.
Deposits in
savings banks, especially, seem to me simply astonishing, in view of the
enormous rise in wage levels and in the actual money increase of the wage
earners.
770 ;-14.
a(0.4W04,
ci,t4 ,,te,
The third chart shows how wages and workers' incomes rose in the
period, along with our composite estimate of savings.
In the fourth chart we have divided our index of wages by the cost
of living, with the result that "real wages!' seem little higher now than in
1913, and were considerably lower kh44(in the War.
The same result has been reached by other workers in this field,
especially Paul H. Douglas, of the University of Chicago.
It is all so different from one's offhand impressions.
19
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m..3.1.50m.8-25
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
Governor Strong
tROM
Mr. Snyder
DATE Dec. 10, 1925
SUBJECT:
Total Stook and Bond Loans
As some further light upon the question of total outstanding loans
on stocks and bonds, the Federal Reserve Bulletin for this month gives for
the first time a classification of loans in all (ember Banks of the System.
Loans secured by bonds and stocks other than U. S. Government
(which latter was very small), as of last June 30, amounted to 6,474 millions,
which was 31 per cent of the total loans and discounts for all the System.
The figures for previous years are not available.
But I find that on June 30, 1919, when the stock boom of that year
was well under way, total loans on stocks and bonds in Vational Banks only,
amounted to 3,437 millions, which was again just 31 per cent of the total
loans and discounts in these banks.
It is quite possible that this percentage is a little high for all
the reporting banks of the country, but if we take a round 30 per cent of
the total loans and discounts reported for last June 30, in all incorporated
banks of the United States, excluding the mutual savings banks and private
banks, 29,464 millions, we should have a total of about 8,800 millions.
This compares with a reported amount of loans on stocks and bonds
in all Yember Banks of the System of about 6500 millions, which would leave
an estimated amount of about 1300 millions in stock and bond loans in banks
outside of Lhe System.
Since June 30 last stock and bond loans in the Weekly Reporting
If we applied this increase to the
Banks have increased about 8 per cent.
whole System, this would give a present estimated total of such loans for
all incorporated banks of somewhere near 9600 millions, or, say, in round
figures, between 9i. and 10 billions.
192_
FEDERAL RESERVE BANK
/disc. 3. 1-501.8-25
OF NEW YORK
OFFICE CORRESPONDENCE
Governor Strong
To
FROM
Snyder
bond loans
DATE
SUBJECT.
Dec. 11, 1925
Stock and Bond Loans
tr;319_
As to the black line at the top of the chart, comparing stock and
in the weekly Reporting Banks with those in all National Banks,
from 1919:
These loans in the large banks in the large cities would naturally
tend to rise more rapidly than would be the case with all National Banks
where you have included some 8,000 or more small banks and country banks.
I was
not, therefore,
loans on stocks
memo., I am not
inclined to think from this that the National Banks were
very representative of the total for the Whole country, of
and bonds; but from a new computation given in the attached
so sure about this.
It is certainly of interest that the percentage of these loans to
all loans and discounts, in all Member Ranks of the System, was, on June 30
last, exactly the same as the percentage of these same loans in all National
Banks on June 30 of 1919.
We have good evidence, as you know, from 1919 on, that street loans
in New York City vary much more widely than the total of loans on stocks and
bonds in the weekly Reporting Banks of the System.
Does not this indicate pretty clearly that in the total of these
loans for the whole country,only a portion is directly for speculative purposes?
s
oimt-
Mc. 3. 1.50M.8.25
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
Governor Strong
FROM
DATE
December 26,
Volume of Speculation.
SUBJECT:
Mr. Snyder
SOD
"Fi,
S'
It seems very curious how much of the increase in brokers' loans
appears to be due rather to the rise in prices than the increase in the
For example, if you take street loans at the
volume of speculation.
lowest and highest points of the market swings and divide these by a very
wide and properly weighted average of stock prices, like the Standard
Statistics average of 201 industrials and 31 rails (and estimate that the
shares are largely at $100 pauvalue), then we should have the following for the estimated number OfAmargined on street loans:
Low of 1918 (Feb. 1)
High of 1919 (Nov.3)
Low of 1921 (Sept.3)
High of 1925 (Dec.21)
97,140,000
13,850,000
8,814,000
19,558,000
In other words, from low to high in the two big booms of which
we have definite knowledge,margined stocks just about doubled in the one
case and rose about 150 per cent in the other.
But the amount of bank funds engaged, of course, varied much more
widely, especially in the last four years.
Where the volume of loans little more than doubled in the 1918-19
boom they are not more than four times what they were in 1921, i.e., the
rise in prices in the present boom has been very much greater.
1925,
-354
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FEDERAL RESERVE BANK
Misc. 3. 1.501.8-25
OF NEW YORK
OFFICE CORRESPONDENCE
To
FROM
Governor Stro
DATE
SUBJECT.
Jan
11, 1926
Trade in December
r. Snyder
Apparently trade in December was very close to the high point
reached in November, which in turn was the highest point shown by our
index of the Volume of Trade in the seven years for which it is available.
This, of course, is allowing for the normal growth in each of
the several lines included.
Outside
Our debits index for December is down two points from November,
but this may be due to the fact that many firms closed on the Saturday
following Christmas, and this may have cut down the average slightly.
Outside
This view is borne out by the fact that clearings last week
were the highest ever recorded in a single week, and the first week of
January is, as a rule, below the high points of the preceding year.
In other words, there seems nothing as yet to indicate any
decline in the high pitch of current trade.
192_
t.
0
--:
',
\\J
4
rtf,^
FEDERAL RESERVE BANK
MI.:. .1. 1.50M-8-25
OF NEW YORK
3FFICE CORRESPONDENCE
DATE
SUBJECT:
January 11, 1926
192_
Bark Debits and
Velpqity_of Bank
FROM
Deposits
Rough Method
NEW YORK CITY
READ AND- NaT Et),
Dec. 1925
Nov. 1925
Dec. 1924
$ 30,313
$ 27,009
$ 27,327
1,166
1,174
1,051
109
106
11
Monthly Bank
bits - In Millions
Average daily bank debits - In millions
Seasonal Index
Average daily bank debits (Seasonal Removed)
1,070
1,108
109
964
121
125
116
62.8
116.5
65.0
120.6
100.4
Index of Bank debits
Velocity of Bank Deposits (Seasonal Removed)
Per cent of Normal (1919-1924 Average)
54.1.
OUTSIDE NEW YORK CITY
Dec. 1921
Nov. 1925
Dec.1924
$ 24,038
$ 21,314
$
Average daily bank debits - In millions
Seasonal Index
Average daily bank debits (Seasonal Removed)
926
108
856
108
874
Index of Bark Debits
109
Monthly Bank Debits -
In m illions
944
'
32.0
99.1
of Bank Dersits (Seasonal Removed)
1
Average)
l' er cent of Normal
Velocity
21,830
840
108
777'
111
104
33.3
103.1
29.7
92.0
141 CENTERS
Nov. 1925
Dee. 1924,
$ 54.351
$ 48,343
$ 49,157
Average daily bark debits-In millions
2,131
2,102
1,891
Bank Deposits (Seasonal Removed)
Per cent of Normal (1919-1924 Average)
44.5
108.8
45.6
111.5
39.6
96.8
Dec.
Monthly Bank Debits - In millions
Velocity of
195
L
IL
RECEIVED
11V"
VERPOR'S
,
L.
It Pvl
_
Irl'e)e 4
I
FEDERAL RESERVE BANK
OF NEW YORK
MISC. 3. 1.50M.8.25
OFFICE CORRESPONDENCE
To Governor Strong
FROM
DATE Jan. 19, 1926
SUBJECT:
(Were Book
Mr. Snyder
Turning it over, it has occurred to me that, in skillful hands,
an extremely colorful and moving libretto might be made out of Joseph
It seems to me that the
Hergesheimer's interesting story of "Java Bead."
story of the Chinese princess who saved her life by marrying the American
sailor might be woven into some highly picturesque and original music.
I could see the first act with a Chinese wedding, a whole blaze
of Oriental color and effective five-tone melodies, then perhaps a scene at
sea and then the vivid contrast of the arrival and reception in old Salem.
Of course it parallels a good deal the story of "Madama Butterfly,"
but I do not think that this would needfully
music was extremely well done, and, for that matter, the book, too, it would
suffer very sadly by comparison and contrast.
hurt it, though unless the
wielq
d like to t
d
act -mo-re
techaiaItrMThd then-Rlenty of--- time,
i t mysellt:
A lifetfme's fantasy'.
192_
4. 1-2004-7-24
FEDERAL RESERVE BANK
OF New YORK
OFFICE CORRESPONDENCE
__Governor_Strang
FROM
DATE
SUBJECT:
Jan. 224
192.fL
Opera Book
Mr. Snyder
I have made a few inquiries just on my own account, and have collected
the following suggestions:
maid, etc.
"Lorna Doone," an attractive story (I believe) of robbers
Once an extremely popular novel.
and a
stolen
"The Garden of Allah," which would provide lots of desert color.
"Venetian Glass Nephew," by Eleanor
with lots of color.
Wiley, a
mediaeval story,
"Green Mansions," by W. H. Hudson; a story of the discovery
marvelous voice in the wilds of South America, and lots of things.
likewise
of a
Q11 of these seem very promising, though I oannot speak of them at first
Perhaps for that reason I still think that "Java Head" offers the largest
possibilities for lovely music and scenic effects.
And it is much the same in
theme as perhaps the most popular light Opera of the last generation.
hand.
MiSC
4
1-20404-7-24
FEDERAL RESERVE BANK
OF NEW YORK
..EFICE CORRESPONDENCE
Governor Strong
FRom_
DATE
January 25, 1926
19Z__
SUBJECT:
Snyder
As you will see by thE attached, outside debits, which we find such
a good index of trade, are still running well ahead of last year, although
last year was high.
The extreme high point of the first week was accounted for in part
by the general bftlf holiday following Christmas. This high level of business
has now continued for over fifte.en months.
lum.3.1.5m4,25
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
Governor Strong
FROM
Mr. Snyder
DATE
March 4, 1926
SUBJECT
There seems an interesting situation in the iron and steel'trade.
In the face of a great boom in building and notor car construction and
pretty fair railroad and general buying, the industry has not been as prosAnd latterly the price
perous in the last year as, for example, in 1923.
of scrap steel, which is a very sensitive index of conditions, has shown a
It rose very little( even when the coal strike put up
declining tendency.
the price of coke, and has now been sagging for eight or ten weeks.
You know there is a saying in the trade that three weeks of steady
This
decline in the scrap steel price forecasts a downturn in production.
hapoened very strikingly in the first quarters of each of the last three
years.
These things, and the steady sagging in our index of 20 basic
commodities, since about last August, suggest that we might see a sharp downturn in the high rate of production and trade which has been generally charBut outside of these things there are almost no specific signs
acteristic.
The
volume of trade, as indicated by outside bank debits, still
yet.
of
http://fraser.stlouisfed.org/ continues high.
it
Federal Reserve Bank of St. Louis
192
a
MISC. 4. I-ZOOM-7-24
FEDERAL RESERVE BANK
OF NEW YORK
_.IFFICE CORRESPONDENCE
T.
Governor Strong
FRom
Ir. Snyder
DATE_
SUBJECT:
March 10 1928192_
Non-Agricultural Prices
I have been very ruch interested to follow the course of a new index
of Non-A rioultural commodities at wholesale, prepared by the Agricultural
Department.
Chart attached herewith.
This new index is simply the Bureau of Labor 404 commodities minus
only 30 current crop prices; i.e., it does not exclude the immediate derivatives
of farm products, as wheat flour, eto., but simply the primary farm crops.
It is very striking what a different picture this presents in the
And if farm product
last five years--for over two yeers now almost stationary.
derivatives were excluded I should imagine that its tendency would be still firmer
In other words, farm products seem in recent years the wide variables;
and because they have been given undue or overweight, I feel that they really
---And that our nwn averages of the General Price Level
distort the picture.
are much more representative.
Misc. 3. 1-50M-8-25
FEDERAL RESERVE BANK
OF New YORK
OFFICE CORRESPONDENCE
To ir. Harrison_
FROM
itra_Snyder
DATE__MarchalD,a1Q28
SUBJECT. _iota _on_the Ussof_Purchasing
Power Parities (Re.
mary onaBelgium)
paragraph 5, Sum-
In times of great disturbance of price levels it may and
does happen that Wholesale prices of commodities, for example, may
all an accurate measure of the general internal purchasing power of
Such, for example, is very clearly the case at the present time in
frequently
not be at
money.
the United
States.
The depreciation of the dollar, or its average purchasing power over
goods, lands and services, compared with 191$, appears to be at least 20 per
cent greater than as indicated by our familiar indexes of commodity prices at
wholesale.
Wages, for example, which are so important a part of total payments
in exchange, have risen nearly twice as much as commodities at wholesale.
An attempt, therefore, to measure the supposed internal and external
value of the Belgian franc by comparison of rate of exchange with wholesale
prices has little value.
In fact, anyone who has had much experience with
the attempt to compute the p. p. p. of a currency has learned to his cost how
For another thing,
uncertain are the results for any purposes of prediction.
Belgium's exports are largely of raw materials and her exports largely finished
goods.
This further complicates the problem.
19;
Misc. 3. 1.50M8.25
FSDERAL RESERVE BANK
OF NEW YORK
- OFFICE CORRESPONDENCE
Governor Strong
DATE
March 18, 1926
SUBJECT
Fnom Mr. Snyder
I have been a good deal impressed with the figures I gave in this
week's Summary, as to the increase in bank credit in the last four years; and
it seems to me that this increase has potencies which should be considered.
As you have seen from the chart I sent you, the chief factor in
the decline of commodity prices in the last six months or so has been farm
In the face of
prices, subject more or less to international influences.
this there has been a distinct tendency to rising wages, and this, coupled
with the great wave of speculation and financial activity of every sort,
backed by the steady increase in bank credit, might, it seems to me, readily
breed an unhealthy situation.
We have had a. sharp drop in brokers' loans; but it is rare that a
bull market breaks in the face of continued easy money--1917 may have been
due to war conditions.
The building boom continues at an accelerated pace--the total of
contracts let for the first two months of the year are up over 30 per cent
of last year.
And motor car sales are enormous.
Inevitably the farther
the building and motor boom goes the sharper will be the reaction.
Contrary to what one might expect, we have gained a net of about
65 millions of gold since the first of the year, that is, in about ten weeks.
This does not make for contraction.
to
hake
a look some ways ahead; I am wondering if some recession
in activityo.might not be salutary, and make for a more healthy course of trade
in the latter part of the year.
92__
MI. 4.
FEDERAL RESERVE BANK
OF NEW YORK
11-4(4.04-1-24
)FFICE CORRESPONDENCE
FROM
DATE_MA
192_
The State _of_Tracts, -and Interior
Governor Strong_
SUBJECT
Mr. Snyder
Demands
The volume of trade, as indicated by bank debits outside New York
City, appears suill to be running high, and continuously above last year, although last year was, in the first quarter, very much higher than the two
preceding years.
But since January 1 it seems clear that the volume of production and
trade has been below the very high peak reached in October and December; and
this impression i.e borne out by the weekly deekits. Business el:pears again
to have mane a peak about the same time as the stock market.
It is interesting that re should have lost approximately 300 millions
in security loans, withdrawn to the interior, with a very alight gein in bank
balancee in INew York in the laet throe weeks. Poesibly it iP mother instance
of the general tendency of commercial loans to increese an bueinees recedae
from a high peak. But the extent of the recezeion to date eppeare to have been
very email.
FEDERAL RESERVE BANK
or NEW YORK
MI, 4. 1-11104-1,4
.DFFICE CORRESPONDENCE
.1
.4
FROM
Gov ernorjgt rang_
DATE
March 30. 1926
SUBJECT:
Mr. Snyder
\
George Harrison tells me that a George 11,.:
Shibley, of Washington\,
of mine in\his testimony at
made several references to some
that
I
don't
know the man, by correspondence
Just like to say
Washington.
or otherwise, but I have always underetood he hadn't much in hie bean.
article
192_
M454. 4. 1-W04,24
FEDERAL RESERVE BANK
OF NEW YORK
\-aFFICE 'CORRESPONDENCE
Governor Strong
FROM
M
DATE MarD11_30, 1926
SUBJECT:
. Snyder
The chart on the attached seems to me to give a very interesting
and quite definite picture of the Florida boom and how sudden it really was,
at least for heavy public participation.
192_
FEDERAL RESERVE BANK
MISC. 4. 1-2004-7-Z4
OF NEW YORK
iFFICE CORRESPONDENCE
4
FROM
Governor Strong
DATE
April 5, 1926
92-
SUBJECT:
Mr. Snyder
Our index of bank debits outside of New York continues to run high, but
the gain over laet year has been distinctly lower in the last four or five
In the last two weeks there seems to be a perceptible shading off.
weeks,
If this should mean some decline in business and the end of the boom,
it would again happen that the top tide of business snd of the stock market
would have been reached in nearly the st,.me month (Deeember or January).
FEDERAL RESERVE BANK
MISC. 4.1.100M-9-22
OF NEW YORK
OFFICE CORRESPONDENCE
ro
"-ROM
Governor Strong
j
,fir.
DATE
SUBJECT:
April 15,
March adverseinernhandiRe
balance.
SnTder
It is interesting that the adverse merchandise balance shown for
March is the third consecutive month now, in a period normally showing
and that to find the next previous instance of a
an export balance:
consecutive adverse balance in these three months one must go back for
And back of that to 1873.
33 years, namely to 1893.
It looks a little as if the tide were turning.
del%)
If
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7-6r-fitritI
re
rot(
ar-kw107
co"),4(A.,,
/00
_190
Rut
FEDERAL RESERVE BANK
MISC. 4.1.100/4.9-22
OF NEW YORK
OFFICE CORRESPONDENCE
co
FROM
Governor Strong
DATE
Alturik :15,
SUBJECT:
Mr. Snyder
This was the quotation which Professor Cannon dug out of General
Walker' s "Poll ti cal economy," wri tten nearly a half a century ago:
"Men who are c.-.4ndid and even liberal in politics alio re-
ligion become furiously or stupidly fanatical as soon
as their views on money are controverted. When Sir
Later Scott made a surly critic say to the author of
certain Letters on the Currency, 'In your ill-advised
tract you have ehown yourself as irritable as Balaam
and as obstinate as his ass,' he evidently intended to
characterize the whole race of writers on this theme."
..._
192'
FEDERAL RESERVE BANK
OF NEW YORK
MISC. 4. I-200M-I-24
OFFICE CORRESPONDENCE
Governor Strong
om
Ir. Snyder
DATE
SUBJECT.
aPril 20
1926
new compilation by the
A.T. dc T.00.
You Tney be interested to know that the iinerican Tel. & Tel. Co. has
been making up a new Tafiex of the trade of the country-, a weighted averge
of nearly 150 separately computed indexes; and that especialy in its time
relations, th major turns; this new index compares quite closely with our own
composite of the Volume of Trbde, - and rather better than with their own index
of "general business," which they have been using for a number of years.
This ,:ew index is £. weighted composite of 15 regional indexes, for
different sections of the country, each made up of 8 to 12 separately computed
series, on the basis of which they make up their budgets of projected expenditures.
MSC. 3. 140,1421
FEDERAL RESERVE BANK
OF NEW YORK
'OFFICE CORRESPONDENCE
To_
iOM
Governor Strong
DATE__
Su ELI ECT
April
The State of Trade._
Mr. Snyder
Though there is some decline from the very high levels reached
from November to February, outside bank debits still continue well
above last year, both for the last three weeks and five weeks.
Very
little evidence yet of any let-up in industrial activity.
Actual retail deliveries of passenger care (outside of Ford
cars), for the first quarter, were nearly one-third higher this year than
lest, and stocke on hand April 1, while 50 per cent above last year, were
still much below the high point of April 1, 1g24.
sides have been much beyond most expectations.
In a word, motor
The declines in the stock market so far seem to have brought
very little liquidation of total loan. The decline from the high point
of the stock market, about February 10, in loans secured by stocks and
bonds in the weekly reporting member banks, all districts, has so far
amounted to only about 150 million dollars, or less than 5 per cent of
the total.
_192_
misc.4.1400.-1,4
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
,_Governor Strong
OM
Mr. Snyder
DATE
SUBJECT:
April
25,
Seawall_ variation.a in thi
bank a gold hol din A.
Ile have tried a number of ways to attempt an answer to your
question as to whether there is a seasonal movement.in thi& bank's sold
holdings, masked by open market operations.
We really have only the last four yeExs for a real test, and in
the first two of these it looks as if there was such a seasonal and that
in the following two years this had been masked by other factors.
But this is very far from being proof.
19P
THIRTY THREE LIBERTY STREET
NEW YORK
July 16, 1926
My dear Governor Strong:
The question you raise in your note of June 29, as to the
relation of turnover of bank deposits to activity in the securities
There is, I
market, is one that has intrigued us a good deal.
think, no doubt that the latter is a strong influence, but apparently not a dominant one.
About the best index of the securities market that we can
The
get is the number of shares traded in on the Stock Exchange.
reported turnover of bonds on the Stock Exchange does not seem to be,
so far as we can learn, a very good index of that side of the market.
As you will see by the enclosed chart, even the variations in
rate of turnover of deposits in New York City alone correlate only in a
broad way with volume of shares traded in, and there are frequently
very wide differences.
The index of velocity, or rate of turnover, which we use for
comparison with our Volume of Trade Index, is a weighted composite of
It is very interesting that
141 cities, including New York City.
neither the variations for New York City nor for the outside, alone,
gives the striking congruence with the Volume of Trade Index that we
find for the composite.
There is no question, I think, that, as you suggest, there is
a close general correspondence between activity in the securities market
and deposit activity; but so, also, and still more closely, is the association between business activity and the share market.
In other
words, as you know, we find that, in its time movements at least, the
stock market and even stock market prices, are a pretty fair index of
the business of the country as a whole.
Of course the swings of the stock market are much more violent
than the fluctuations of trade, but, in the last ten years at least, their
time relations seem to correspond pretty closely.
We have also, as you may have noted, been working out a new
price index of twelve early-moving commodities, which in its ups and
Hall. Benjamin Strong--2
downs corresponds likewise very closely with our Volume of Trade.
In
the last seven years the turns of the two have been rarely more than a
month or two apart.
The advantage of this index is that we can have
it weekly, and it is, I believe, a very sensitive barometer.
The down-turn of this index, as you may have observed, which
began late in December, seemed to end about the first of May, and since
that period the index has had a 4 or 5 per cent slow rise; the last five
weeks about stationary.
cm
This index gets away from
prices about as far as any
commodity price index can; and it is interesting to observe how closely
its movements have corresponded with the stock market prices.
Its recent course, like that of the stock market, does not suggest any serious
down-turn in trade as yet.
Neither does our Index of Outside Debits to
date.
Nevertheless, I should not be surprised if last mid-winter
marked the peak of trade activity for the present phase of the "cycle"-if any suchuanimile there now be.
But the degree of recession is slight and the country seems
The Florida
moving along in a strong current of prosperity and optimism.
boom has, of course, gone very flat, and this last week has seen the
failure of a chain of sixty-four banks, principally in Georgia; and probably there will be others.
There has-been deep interest in your movements in and conjectured
mission to Europe; and I should imagine that the English settlement of the
French debt would somewhat predispose our people towards rather more friendly
cooperation with Earope, and especially countries like France, Belgium
and Italy, with their currency troubles, than has recently been manifested.
At any rate, I am quite sure that this would be true of the more enlighted
and informed.
Otherwise, scarcely a ripple of large interest.
We have, of course, been watching the steady sag of francs and
lires, but with little greater profit than instruction in how slender a
hold has economic teaching upon the political or popular mind, and how
little one country or generation seems to be able to learn from another.
I should add that the figures for total building contracts
awarded in thirty-seven states show, to July 1, no letup in the steady
average of gain this year over last year, and of course, therefore, over
Hon. Benjamin Strong-5
And the motor car industry flourishes in a fashion
any previous year.
But you can buy thousands of secondhand
no sane man could predict.
Fords, cars that will propel themselves, for $25 and up.
We hope you are having as enjoyable a time as the romantic
accounts in the newspapers would suggest.
Sincerely yo
Hon. Benjamin Strong,
Hotel du Cap d'Antibee,
Antibes, France.
I -2001-1-a4
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
r.
FROM
Governor Strong
Mr. Snyder
DATE
September 25. 1926192_
SUBJECT:
Mr. Brand, of London, is coming in for lunch 40, on Tuesday, at
12:45, and I dare say would like to pay his respects either before or after,
unless perchance you wevid be able to lunch.
Misc. 3. 1.5031.8-25
FEDERAL RESERVE BANK
OF NEW YORK
FFICE CORRESPONDENCE
To
DATE
SUBJECT
Covernor_Strong
September-27t-1926-192__
_Exporting Percentag 88
Snyder
FROM
domestic exports
Below are the percentages of total
indicated (yearly averages):
for the periods
9,,orl:
1
Year or
rea:sly
Average
Crude Crude
Mate- Foodrials stuffs
Manufac- Semi- Finished MMis-\ Crude Crude
tured
Manu- Manufac-
Food- i fac- tures
stuffs
tures
Semi- FinManu- ished
tured fac- ManuFood- three facstuffs
tures
Manul-
cel- \Mate- Food, fac-
stuffs
lane- rtals
0U8
,
CseellaneOU8
1906-10
31.26
8.90
18.12
14.23
27.07
.42
31.58 10.98
11.80
17.82 24.68
.76
1911-15
29.78
8.83
14.32
15.41
30.70
.96
34.00 12.80
12.56
17.37 22.36
.91
1923
29.39
6.29
14.26
13.78
36.12
.16
36.55
9.58
13.98
19.00 20.34
.55
1924
29.49
8.73
12.75
13.57
35.32
.14
34.24 11.77
14.45
18.17 20.76
.61
1925
29.4
6.6
11.9
13.7
38.2
.2
40.7
11.8
10.3
17.9
18.8
.6
25.7
1925
(Fiscal)
7.3
12.2
15.2
39.6
40.0
11.5
11.7
18.2
18.6
1926
22.6
(Fiscal)
5.5
10.8
14.7
46.4
42.4
11.7
9.2
18.2
18.5
The proportion of manufactured products
steadily for the last forty or fifty
reached the highest point ever, save for 1916.
has, of course,
been
rising
years, but this last fiscal year it
I shall have some figures on North American
to Europe
tomorrow.
exports of
foodstuffs
Misc. 3. 1.50M-8.25
FEDERAL RESERVE BANK
OF NEW YORK
OFFICE CORRESPONDENCE
To
Mr. Case
Deee_eitovemher lg,
SUBJECT:
192_8
fieleri cat a Prnfit iathOi *Fir
FROM _Mr. Snyder
Shepard Morgan has written a letter to Harper's Magazine, suggesting
to them that a very timely and helpful article could be written on the question:
Did America Profit Greatly by the War?
What he had in mind were the curves of long-time growth of production
in steel and coal and copper and cotton consumption, and the like, which we have
o puted in this department, the upshot of which was to show that the actual
expansion of our total product in and after the War was not greater than in
several peace-time periods in the past fifty years, and that actually in some
lines the rate of growth had been considerably diminished.
Of course our exports were very considerably stimulated, even when the
effect of a great increase in prices is eliminated; while our imports were considerably curtailed with the result of giving us (even relatively) very heavy
merchandise trade balances leading to very heavy imports of gold.
While all this was, of course, a very considerable stimolus, the effective increase in actual production of goods--and that is, of course, the
real wealth of the country--has been much less than popular imagination, and
especially European imagination, has painted.
Morgan's sugeestion to Harper's was that they aek me to write such an
article, and they telephoned down this morning to know about it. Unless it
should seem a worth while contribution at the present time, to counteract prevailieg erroneous impressions by means of a very careful and detailed statement
of the facts, I have no particular interest in doing the article. But I thought
I should bring the matter to your attention in CaB6 you felt it is something
which ought to be done.
k.",62?-44/
(kier.,:(
Misc. 3. 1.50M.8.25
FEDERAL RESERVE SANK
OF NEW YORK
friCE CORRESPONDENCE
Governor Strong & Mr. Jay
FROM
DATLDecember
SUBJECT:
192A
State of Trade
Mr. Snyder
As an evidence of the trend of trade, bank debits in 140 leading
cities outside New York have now fallen below the corresponding weeks of
last year for three consecutive weeke.
This is the first time this has
happened since the midsummer of 1924, and of course the normal or usual
relationship is that, Kith no particular change in the general price level,
bank debits should show an increase of from 3 to 4 per cent each year.
Taken with a decided softening of a very sensitive price index in
the last six weeks, this seems distinct indication of some lessening in the
volume of trade.
But there does not now seem much to suggest that any very
drastic recession is in prospect.
192_
@FedFRASER