View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

COPY

June 11, 1923
My dear Governor:

Since June 1, when I acknowledged your letter of May 31 and advised
you that copies were being sent to members of the Open Market Investment Committee, I have heard from each of them and find that each received the letter
with the same surprise as that which I had expressed to you in our telephone
conversation on June 6.
The facts are as follows: Early in May it was suggested that the
Open Market Investment Committee should have its next meeting in Cleveland on
or about June 25.
The Board was advised of the proposed meeting and on May 9
requested that the meeting be held in Washington as there were some other matters which the Board might like to discuss with the committee.
At about the
same time the committee decided that an earlier meeting would be advisable, and
this meeting the Board arranged should be held in Washington on Wednesday, May
At this meeting the first act of the committee, all the members being
23.
present, was to advise the Board that the committee was in session and to inquire if the Board had anything to communicate to itThe Board replied that
it had nothing to communicate to the committee.
Toward the end of the morning
I was called into a meeting of the Board to discuss a currency matter, and while
there I stated to the Board that the committee was proposing to recommend to the
Federal reserve banks the sale of about $50,000,000. of Government securities.
This statement was received by the members of the Board without comment.
A resolution to this effect was finally adopted by the committee.
Late in the day and
towards the end of our session, Vice Governor Platt attended our meeting but expressed no dissent from the program we had adopted.

The surprise of the members of the committee arises out of the fact
that a few days after our meeting, the Board having been fully advised of our
action which we felt was in entire accord with the letter and spirit of the
Board's letter No. X-3689, the Board should not only express disapproval:of our
action but without opportunity for discussion should in substance direct the committee to take action to dispose immediately of all the remaining Government securities held by the banks.

The Open Market Investment Committee succeeded the "Committee of Governors on Centralized Execution Of Purchases and Sales of Government Securities."
This committee functioned for about a year and had several meetings in New York,
Cleveland and Boston.
At nearly all of these a member of the Board was present
throughout, Messrs. Platt, Miller and Mitchell having from time to time represented the Board on these occasions.
The presence of the Board member permitted,
through discussions of policy and of market and credit conditions, the development of a program for recommendation by the committee on which the Board and the
committee were in full and harmonious agreement.
The new Open
Committee had assumed that the same relationship would prevail in connection with
their meetings and work.
The members of the committee hope that at its next
meeting the Board will be represented through as in the past, that they may then
have the opportunity- of discussing with the Board it views concerning the disposal




COPY
- 2 -

of the remaining Government securities, and that the Board will give the committee
its opinion as to the manner in which such a course would accommodate commerce and
business, and affect the general credit situation, these being the principles by
which, under the Board's resolution, open market operations should be governed.
Your letter of May 31 requests me to"advise promptly of the sales of the
Government holdings of the various banks, and to what extent each of the banks contributed."
I am sending you herewith a statement showing in detail the holdings
of Government securities of the various Federal reserve banks as at May 23, 1923,
amounting in the aggregate to $140,788,000. exclusive of about $31,000,000. held as
miscellaneous investments for self-insurance funds, etc., and about $15,000,000.
held under sales contract.
Appended to this statement are the quotas for sales
which the committee has suggested to the respective banks, and the amounts sold up
to June 8, 1923.
As a result of the sales already consummated you will note that
four of the Federal reserve banks, namely, New York, Richmond, Atlanta and Dallas,
hold no Governments except fluctuating amounts of securities held under sales contracts, and nominal amounts of miscellaneous long-term securities held as investment for certain special funds.
Governor Norris of Philadelphia, a member of the committee, has just sent
me as its chairman, a communication upon this subject, copy of which, with his permission, I am transmitting herewith.
Very truly yours,

(Signed)

Ends.
Honorable D. R. Cirssinger,
Governor, Federal Reserve Board,
Washington, D. C.




J. H. Case
Chairman, Open Market Investment
Committee for the Federal Reserve
System

September 22, '923.

Sirs:
We have received and have given careful consideration to the
Board's letter of September 8, 1923, (X-7R9F) which requested our views

on the subject matter of the inquiry by Congress into Vie question of
membership in the Federal Reserve system.
The matters suggested for discussion seem naturally to fall
into two classifications, vie.:

What is the effect of the present limited
membership?

Why do not more eligible banks become members?
With respect to the first, we submit the following:
The proportion of membership in this district is relatively high.
Out of a total of 1183 banks, 830 or 70 per cent. are members of the Federal
Reserve system.

The division by states is as follows:

Member Banks
New York

(entire)

New Jersey (12 counties)
Connecticut (1 coenty

Total Benks

84

Percentage of
Membership

870
285
50

204
12

Total

71
72
40

1183

With this high proportionate membership, and partly because of
It, the banks of this district were not affected by the adverse economic
conditions of 1920 and 1921 to the same extent as were the banks in parts
of the country where membership was less general.

There were in fact no

instances of bank failure during this period which could be attributed to
general banking or economic conditions.




A substantial number of banks

-2temnorarily affected through the dereliction of officers or from other
'causes, were able to meet demnans upon them throngh their relation to

the Federal Esse:no syetem, altoeether eith the assistance of nationn/
or State banking departmenta.

This is- a condition which has been

more or less general in Fedora Feserve dietriatn tenving a ltrge proportion of member banks.

The cuection, hooevenn cannot be enseered from the United

experience of one dietrict.

In the country %a a whole one-third of

the banks belon6 to the Federal heserve eysten.

But thie -,e-third

repreeento epproximately two-thirds of the total bailki46 resourcee of the
country; memberehip hes nppenlea bore nenerelly to the lnrner city inenn.

Hence the Federel heeerve eysten he been nble Le enezcise its infleence

more generndly in the contere of populetien than in th- rurel oonnunitiec.
In those statee enere menbershie ewe peoportienately emellect it we
nntural that the credit-mnking power of the Federn1 Reserve system should

be least evnilable to the public.

Neverthless it cennet be doubted thet

even in those rein e where the Federel Reserve eystam

unnele to exercise

a direct influence, non-meaber Onnke cenuren benefits indirectly throu0
corresponnent member banks.

An indirect influence is never as effective ns e direct influence.
From the standpoint of the Federhl Reserve nenks niainterpretations of the
note :id purposes of the system have been moet generel in those regions

where ito influence ens felt indirectly; and fron the stnndpoint of the nonmeaner banke the direct relntiun hns limited their ability to adjnst themselvee.to varying economic oonditione. If the influnnce of the Federel nesrve




Federal Reserve Boerd,

-3-

Seetember 22, 1923.

eystem is to be of maximum effect and benefit, indirect rel tions must
yield to direct relations and the proportion of membership must increase.
The system is bound to move in one direction or another; its
membership will increese or decrense.

Any large decrease will impair

its ability to serve the credit needs of the country, not only because
the member banks, which are the principal means for making Federel Reserve

credit available to the country, will become fewer, but beceuee tee creditmelting powers of the Federal Reserve Benke themselves will be lessened.
Individually both member and noneember banks wilt benefit from
rn extension of membership.

In e crisie the member banks now have to

provide credit for any nonmember banks, which may involve additional exeenee

to the latter and poseible deneer to both.
Outside but export testimony on the benefits of a wider extension
of membership is furnished in t resolution adopted by the directors of the
National Association of Credit Men on September tt:), 1923:

"The Federal Reserve system has saved the country from

several esnics; end :r to .resent membersnie has rendered so ereet s service to the country no stretch of
imagination is required to appreciate how yore safe we
would be if every qualified bank were to enter the
system."

A larger membership would make credit more generally available,
not only because the Federal Reserve Banks would have added credit-making

power but because that credit would rewoh the users of credit more directly.
This would result to the special advantage of those regions *here membership

is now less general and where credit is now inadequately supplied.




Federal Reserve Board,

(2)

-4-

September 22, len.

The reesons elven by nonmember banks in this district for not

joining the Federel Reserve systee may be summarized sk6 follows, ta the

order of their importance:

Cost, because of the lose of interest on belences,
intbility to oeunt ctee in vault *s reserve,
snd limited dividends.

Ability to secure benefits from correspondeets
without memberehip, and disinclinination to
sever these relationships.
State laws, rescribine reserve requireeents at
verience with the requirements prescribed
by the Federal Reserve system.

Incoevenience of further xaminetion end supervision.
A.

Cost.

Of these teree consideration the argument of cost is

most often encountered.

Yet the officers and other representatives of

the bank, woo are most closely in =Asset with member banks, neve found
that in most CAROB eemberehip in the Federal Reserve systee involved so,

or very little, additionel expense. It does not epeear, generally seekins, that membership has reeelted in reduced profits to state beaks either
thromee loee of interest on reserve balances foreerly keet with city correspondents, or through lose of exchange 311 checks; weere earnines :AVO been

reduced in one direction they have been increesed in others.

The social

services afforded by the system end the earmark of security which memberseip

elves is usually regarded as ale comeensetion for any adeed expense incurred.
Few country bankers have a cost aceountine system welob onebles

ttem to comoite precisely tee cost of membership.

T-6 MOSt Obvious factor

ee an active deterrent to eembarehip Is the loss of the interest which the



Federal Reserve Board,

September 22, 1925.

country benker aes been enrning on his reserve balance with his city oorreeyondent.

Under t e Federal Reserve Act country eember banks are obliged

to keep 7 ver cent. of their demend deposits, as reserve, wholly with the
Federal Reserve thank.

Under the betional B5nk Act a country eationel hank

had to keep 6 per cent4 in vault
9

an

eermitted to keep ab edditionfl

er cent. on decosit in t reeerve or central reserve city, ..e,kin6 a total

reserve requirement of 15 per cent.

Sui.erficially the reserve requirement

for country member banks under tl.e Federal Reserve systee is 7 per cent.,

se coal,. red with 15 per cent. foroerly reired undr tee Xa lone' Bfik 4ct.
But actually there should be added to the 7 etr cent,. which country banks
ere reluired to keep on de,eosit with the Federal deserve %Alice the folloaing
emounts, whIc

are not counted RS reserve:
Cent, in veult . . .
.
.
Fleet
Belances wIth city oorre eondents

4

.

0

0

.- about

Z per cent.

"

"

Total

21/2
9

"

71/2

s

R

"

"
Thus the reserve actually required of ceuntry national beaks is very
close to tLe reserve previously required and the amount on which interest is

earned is much reduced.

In the ease of liew York State country banke, for
which the State Alm reluires only 10 per cent. reserve, the lose in intereet

on memo deposits is even more pronounced.
It has been observed, however, that. country bankers ere now thinking

lees and less about tie loss of interest on reserves. They recognize the fact
that if te Federel Reserve Banks it s sons of slack credit "lowland as 11411 as
in setson a of active credit deeand, were obligated to pay interest on deposits,
they would be obliged at ell times to invest their funds freely and in consequence




Federal Reserve Board,

-6-

would necessarily compete with banks everywhere.

Soptember 22, 192S

They recognize also tuat

such action by the Federal Reserve 9anks w-uld crete forced inflation with

all the evils appertainin6 to it.

Latterly the country banker in this

district he Friyed rather that hie ;-artioipation in the eernings of the
Federal Reserve Bank abAald not be limited to 5 per cent. on hie stock owner-

ship, and that in yeare when Federal leserve profits warranted the rnember
banks should sflare eouwhat more largely in those eornines.

Taw loss in exclon60 on checks is not at preent a factor of importance in 'L.'s district since all banks, ehet'isr 2eff.lber or nonmember, pay

their checks at per.

This is a question whicb may sell be argued on its

oval merits, quite apart from membership in the Federal Reserve system.
BeC511815 of the check collection system now oerated tbroutt the Federal

Reserve 13anks and the absorption by the latter of coats formerly held to
justify the oargiag of exchange, the axe:maze charse has beco_ce obsolete
and unnecessary.

Apt:ended 'hereto is a maeorenium prepared for another

purpose whioll discusses the various objections to the payment of checks at
per.

In sutrgary of the foregoing ttere are certain tangible losece which

cluntry bsnks in this district may nave to incur if they join the Fodf,re.1
Reserve system.

Balanced against these are intangible banefits derived from

the servics rendered by the Federal Reserve 9anks, the s.ivertising value at-.
tech% to membership, end added insurance in times of severe credit demand.

These benefits, If fully taken advantage of, permit the country beaker to
operate more effectively aai therefore more profitably.




Federal Reserve Board,

B.

-7-

September 22, 192!.

ebility to secure benefita from corres ondents.

s'any country

bankers believe teat through their city cerreseondente they can obtain

any

of the benefits of membership indirectly and at the sane time secure from
their city oorresie)ndents advantaeme end services which the Federal Reserve

Banks ere not in a position to give.

It is undoubtedly true that certain

of the services performed by city benks for their country correseondents
cannot be performed by the Federal Reserve Bsnks.

The latter have confined

themselves to eivine meceanicel servicee as distineuished from such services

43 giving information and advice on securities, lending money on call or time,
affording :participations in leans and syndicates, '-urchasing comeeroial paper,

etc.

These and other similar eerviees the city banks can and do render to

their country corr ieondents, and in consideration of them many country banke
maintain balanecs with one or more city correspondents.

The services which tbe Federal heserve Banks render are or a nature

consistent with the purposes of the Federal Reserve system and include the

supplying of currency mad coin, the collection of checks, the collection of

non-cash items, the afekeepine of securities, the purehase and srie of severi-

ties on instruction, the trensfor of funds by mire, etc.

Vany of teese ser-

vices are interrelated with other eeerations of the Reserve Banks en e tend to
give the c3untry member banks a participation in the benefits of the system
equal to those enjoyed by city member bunks.

Many of thee ere of such a

character that they cannot be carried on as expeditiously by city correspondents,
or in the gross so economically, as by the Federal Reserve Banks.

These services are ineortant factors in insurime the :ermeaency of
the Federal Reserve system, becauve through Um' the Federal Reserve Banks are



Federal Reserve Board,

September 22, 1925.

constantly in contact with the PM b e r banks end without them contact with
:member beaks, vertical arly country member benks, would be itaieired.

To

eost state banks the velue of these services rendered directly and wLhout
cost, constitute a benefit which considerably offsets the ex,..enses involved
in membership.

To country national banks, whose membership is compulsory

as lone as they remain in the nationel syatem, the services are often imi-ortent considerations in determining their continuance as national banks.

Further, the services tend to steke the Federal Reserve systee a
living bank organisation, beceuse efficiency of operation cannot be effected
on an emergency basis.

The services are sufficiently continuous to insure

the maintenance of a well knit organisation, available for use at all times,
emereency or otherwise.

IL Federal Reserve system regarded solely or mainly

as a means to supply currency and credit in

rgencies is a rederei Reserve

system frozen and without humpee relation.

No corres?ondent beak can Ave the seme services as the Federal
Reserve Bank as directly or as Ail:4011d 110,611 the city correasoneent serves

as the eedium through which these services are rendered, expense of handling

Is incurred aed that exeense naturally falls upon the ueerof the services,
n moll the country banker.

lost of the Federal Reserve Ranks maintain limited organizations

which maintain, by visit and otherwise, reiations with amber banks.

Their

mein function has been to ascertain and eliminate the difficulties which
country banks have met in their various dealleze with the Reserve Banks.




Federal Reserve Board

September 22, 1923.

-9-

They have also informed tee country banks how to make most effective use
of Federal reserve services.

They

on a parity *ith city banks in

have done much to place

country banks

their relations to the Federal Reserve system.
In the States of Nei rork and New Jersey
state

State Laws

reserve requirements are no longer effective on member banks; on tte contrary e state bank becoming a member of the

Federal Reserve system becomes

subject to the reserve requirements of the Federal Reserve system only.
In the State of Conneoticut, however, state reserve requirements are still
effective against member

banks.

There state laws require the retention of

a certain amount of cash In vault and specify the type of security in which
ssvings deposits may be invested.

Thus upon Connecticut state banks which

join the Federal Reserve system two sets of reserve requirements are effective, those of the state

and those of the

Feeeral Reserve Banks, and in

every item the more stringent of the two eets of regulations prevail.
sequently state banks whi-lh become members of

Con-

the Federal Reaerve system

are often in unfavorable competition with both national ban ke and state
beaks.

ThereBre many state banes are deterred from becoming members.

This beak, however, is affected only to a limited extent, because only the
western most county of Connecticut is in this district.
Inconvenience of further examinations and sueervision.

in

tics past there has been considerable complaint of the number of reports

required by the Comptroller of the Currency and Reserve BAnks, and particu-

1,rly of *interference in banking sethode on the pert

of bank exeminers.

Recently there have been fewer complaints of ttis character.

complaints were based upon




eany of these

misunderstanding and in general may be regarded

Federal Reserve Board

-10-

geptemeer 22, 1923.

as an unimportant factor in restraining banks in this district from joining the systee.
A snore positive deterring influence has been a reluctance on the

part of state banks to submit to an examination preparatory to entrance
into the Reserve eyetem. These cease have resulted Alually from the posses-

sion of slow or doubtful weeate which might be criticized, and discussion

of this as a restraining feetor may therefore be dismissed.
Possible Remedies

There are four ways, emeng others, to encour-

eee increased membership in the Federal R-serve systems

To compel membership by federal law sae undergo the test of

the courts on the question of constitutionality. A possible precedent was
the teeing out of existence of state bunk currency when the Rational Banking
System efts established. Such a plan would lead to endless controversy and to

a type of unwilling membership of doubtful beeefit.

To secure uniformity of reserve requirements for banes, both

state and national. This %Lane a modifioation of aany state lacs and possibly a modification of the Federal Reserve Act itself. The effect of such
legal ohangee, however, would remove the penalty now attaching in some states
to state banes becoming members of the Federal Reeerve system.

To educate systematically all eligible nonmember banes upon

the value of lemberehip, appealing both to their self Interest end to tLeir

public spirit. This 'would result in t voluntary membership of joint benefit
to the banks and the systee. It is necessarily a long process, but in certain districts has been suocessfully pursued.




Federal Reserve Board,

A.

-lie

Seetember 22, 1923.

To %eke membership more attract:ve finencially.

Mould this

prove to be eossible, it would remove the lain obstacle in the way of an
enlarged memberable of state banks of this district in the liederal Reserve
system.

But any plan so desieened should be f eed so .1S to preclude the

chences of inflation.

evitably to inflation in




(a)

Two of the elens sometimes eroposed would lead in-

reater or lase
deereel

Peyment of interest on reserve deposits.

This pre-

supposee greatly enlarged eernings by Reserve Banks in

yeara of any but the most intense credit deeand.

At

all times, slack or active, the Rseerve Banks would
heve to keep their funds very generally invested.

The

result would be that the Reserve Beaks would save to

initiate comeetition with national end state benke, interest rates would be out and businese be unhealthily
stimulated as inflation advsnced.

It should be borne

in mind that an investment by a Reserve 3ank correseonde

to the interjection of free t eold into the money earket,
and funds so invested erovide adeitional reserve upon
which member banks can build deposits.

In otter words,

an investment by a Reserve Bank is likely to be multiplied

in the loan accounts of banks generally.

And excessive

investment would lead to exceseive multiplication of bank

lotns.
(b)

Reduction of the reserve requirements for country banes.

To reduce reserves rele es funds not ereviously available

Seetember 22, 1923.

Federal Reserve Board,




for inveeteent.

linlees Vie revised reserve requirements

represented a fair evere.ge of all reserve requirements now

effective on country banks, both State and national, and

uni ese there was fair neserance that a great majority of
banks in states where reserve requirements are now lowest
would seedy for 31611bershi2 in the system and be admitted,

a large volume of fresh funds would be reLeseed for investment.

Or funds co releesed would be available as

reserve for additional deposits.
would result.

In either case inflation

Veen reserve raluirements have been reduced

in this country heretofore, loan expansion has followed.
A third plan may or arty not be opin to a similar ob,L

jection, depending on how it is framed.
(0)

Payment of additional dividends upon Federal Reserve

Bank stock, when and if earnings warrant.

Such a plan

would result in e closer relationship between the member
banks and- the Reserve Banks, and no doubt also in a fuller

attention on the part of the zember banks to the operations
carried on by the Reserve enks.

But if from suce a elan

pressure resulted upon the Reserve Renke to make eernines,

it would lead to inflation.

In years of quiet credit

demand the Reserve Banks are unlikely to earn Tore this

their expenses, and in that case under t e present law no
return to the Treeeury results.

In years of larger credit

demand, if additional dividends to the banks are to be

Federml Reserve board

-13-

Sgptember 22, 1925,

allowed,d if pressure to make large &.rniugs tre
resisted, the return to the Treasury would be lose than
ander present law; in other words, seise of the funds
now derived by the Treasury would be shared with the
h411'4.6.

The foregoing views 4re offered for your consideration.
Very truly yours,

J. h.

,ce.

Deputy Gev5rnor.

Federal Beserve Board,
Washington, D. C.




December 11, 192$.

Dear

r Governor:

I have been asked by the New York State Chairman, Mr. A. 3. Colvin,

if I will serve as a member of the Advisory Board of citizens in this ,§tate
which will have charge of the organization of the Harding Memorial Association

I have never accepted appointments of this sort, even though strongly tempted to do so at times, without having a word with the Federal Reserve

abard, as it is so easy to create the impression that the officers of the
Reserve Banks are in some way engaged in political activity.

Of course, none

but a very cheap mind would offer such a suggestion in this matter, but I think

I should still bring it to your attention, if you or your associates have any
views on the subject that you would care to give me before I answer the

invitation.
Yours very truly,

Honorable D. R. Crissinger,
Governor, Federal Reserve Board,
Washington, D. C.
3S. lir




Lecember 15, LivK,o.

Dear Mr. Criesinger:

Thank you for your note of the 12th.

I have decided that

on the whole it v,uld be unwise for me to accept the ap2ointment,
much as I ahould like to have mv ntme associated with thr movemon

to establish a Memorial for our late President.

Thei.o aro some

personal considerations which I shall explain to you when I see you.
Yours very truly,

HonorabLe D. F. Criseinger,
Gov:rnor, Federal Reserve BoP.ird,
Washington, D. C.
BS.MX




ky

6 Al

cA
II

7-r a 1-34 ZaUjfz,
Gt. #

t

af,t144.1.

Usrob 4, 1924,
Federal Ileserve Board,
r;ashington, D. 0.

2 1 r s
hreve to refer to mar letter to you of February 4, in regard to your letter
'x-Z9E3 of ,January Zb, 1924, in which time was asked to consider oertain quoetions
raised by the reeolution quoted In your letter. Also I have to aoknorledge receipt
of Govornor crisainger's letter of Februery 14, end have coma-utilize:316d with the
The following consideretions
Federal aeserve Bank of Philodelphia, vs euggested.
result froLza study of the proposals in x-Z9b3:

An to the law - Is there any authority in law for a resolution or rogulation
of the peservo aoard making it possible for reserve banks to ooneider cash in transit,
either or both ways, an part of the required reserve of member banks, or to take
such currency In transit into account in computing penalties for defloienoies in
reserves?

,

Section 19 of the Federal nosorve Act, among othor things, definitely fixes
tho amount nnd chureoter of the reserves to be maintained.
it requires that each mombar bank "shall hold and maintnin with the ?ederal reserve bank of its district an
actual not balance equa1 to not loss" than a fixed percent of its deposits.
The
effeot of the aoardfs resolution, if adoptod, In practice, is to roduoo those reserve
requirements, (so far as they relate to banks outside Federal reserve and branch bunk
cities) below the figure fixed by the law. The purpose of it seems to be to obviate
elements of time and space, - factors which we believe wore fully considered when the
present different reserve requirements for oity and country banks wore determined
by Congress. The requirement of the lwn is unequivocal that °doh member bank shall

hold and maintain "an eetual net balance." trbitrarily to rule that cash in truntit
is such a balanoo, neoessarily results, therefore, In the possibility of a member
bank's reducing its reserve below the figure fixed In the law.

The legal reserve of meesber banks, that is, the reserve to which the Government.
looks as the minimum below which the public interest demands that banks should not go,
Congress intended and proscribed by law should be kept on deposit In Federal reserve

banks, rhioh, the history of this legislution shows, was to establish national reser-

voirs of reserve menoy of fixed amounts and specified character.

These reservoirs

will, of course, not servo their purpose if in one my or another their supply is re-

In short, Congress proscribed by beotion 19, as amended by the Aot of Juno 21,
1917, that only one form of legal reserve should be recognised, namely, the "actual
not balencese which member bunks should "hold and maintain" with their reserve banks.
Is it not obvious that money on a railroad train or in to hands of an express company
cannot bo said to be an actual balance "hold and maintained" with the Federal reserve
bank, oven If title Is hold by the hoserve bank, but not actual pouseasiono Certainly.
Congress in fixing the reserve percentages for oeuntry banks never contemplated that
cash in transit would be coneidered an "actual balance."
duced.




,

0

2

ffiedoral !'Yonorve 9oard.

170 boliovo, thoroforo, tint thoro to nocolthoritv in law for a b1ru1

"noorvo incb- to oanoidor oaoh in transit, oithor or both vnyo, Z1E3 a iv.rt of the
roquirod rosorvo of rambor brooko, rant boing co, we boliovo that it to itr;poo-

oiblo to ttke rooh aida in tranoit into ncooirat in oor;outing pmaltioo for
doficioncioa in rosorvoo. Fuoh cash oithor lo or is not "an actual not balanoo" with
the Tlosorvo bank. If, no wo boliovo, it in 29.1 stash a balanoo, thon thoro somas to
be no p000iblo justfleation tbr taking it into oonnidoration In computhAg ponaltioo
tor ".19.!,Lciompag. in ro rvo,', If Chore io a klaficioncy the pcmaltoattaohoa,
oause of the 03301o:143y, 410 amattor of Iva, .tvould smolt to bo irrolovant,

c.

wtxr itvortant oopoot of .t:o.e can% Ifflo Board*o r000lution
This pr000nto
givoo to each 7Oooro1 rmorvo trifit the 27,..41m, to oonaider curronoy in trdloit
conyoutin,3 te rosary° reouiromonto ond pornitios Der tioficioncios, It in norLront

that this option my result difforontlyin the novord. dintricto, and it rny woll
that a cealtrg /milt in one district will to poralttad, in acasequonco, to ta:lint:4n
different renorfe from that of a country bank, In an adjoining district. ):apt for
the difforont rosorvo roquirominto for aourstrj and °itj ban, cicz.lr17 cczpronsod in

the 1a, tbAro is nothina in tho licoorve .4ot which on be oonstruod as r;Ivinc: the
"Rosary° 3oard or tho :losorvo bt-Anko authority to aoplo difforont rosorvo rovirmenta

to the saw °lass of bonito in difformt distriato, It in our boliof, thoroforo, that

any roling or rodblution. of the nosorve Board, whidl til:.;ht be oonotrood an civing
authority for such dincrorxancien in the rosorvoo of marabor bcotho, mold rooult in
=authorized variations of the plain provision of the law that oach rombor ban% 'oha3.1
hold and rrointain with the :'odoral moron bank of ito die triot an aotual not balance
equal to not loos" than a fi;tod poroont. of Ito dope:alto,

,

7,1nal1y, there are important praetioal co712 i tiara ti ono of polio y involved.

in the Board's rulinti, rhich will inevitably arise and flood to be dealt tith in kue

tiro,

If ourroney in trassit to to be taken into aocount in detorminina rosorvea,,

It moot be a r000rvo balan(oo "riaintaload" at the rteaomo bank, AO ooh, it must

opooar upon the boos of the bank at the crodit of Ito tortoor, Othordoo it is not a
"balance" and not "roservo," '31%o law by affirmativo prevision givoo roonbor banks
the right to thoolt out rosary° bolancon and to use them vdth provicion for inpooins
certain ponaltioo in ono° thou do, if thoreA)r0, curronc In trnnsit is sot up
upon the balks of the :l000rvo bank no a r000rvo baanoo -(which should not be
woo), and 5 f the turabor bani Ia antitlet to me those boInoces by chock or
tolormaphio trknotor, oto,, than the cotton at once arl000 whethor a 'llocorvo bank
would bo justified In roftioino- to pay a cheek which ovorirow an a<r"ount, altholch
that account in fact mold not hive boon overarm.= bad currency in trannit to the
bank been on torod on the be eke as a balance,

o what extont the universal application of this rule will load to

IlruS0 In ohipromto of currency cannot be dotorraine,

!;Ci thr an wo are amre

no investilation of the actual amount in transit ban bow, attic, "n do know by
c.z.tvrionco, however, that thorn is a tondo:Icy in the cane of com banlIs to abuse
tho privileac or thIPPlrig3 OtirMIV at the ezp4tone of the n000rve Van1t siTapIr

for the porpooe or siftina out now billo ;;;n4.1 traciatol shippinz; bad: bills
which are not now but which the 'Troaoury connidora tit .for furthor alroula.tion.
Intorvicwo with norm of our di roc taro Ilto are familiar with those mm ttorm

dovolop the toot that thoy believe tot advantage will be takon of this priviloge
to increase the amount of cash ohippoo for roporve puroosoo

f.)11,y mporionoo

will dovolop whether Clio is the that. novorrilr ;lords oatimtoo t1v.tt in the

middle of loot year the LIVOStkea allowance on ineonim and outgoing nhipnontn of




3

em

eederel ieserve eoerd

3.4.24.

curronoy in the reserve oelculations amounted to )2,i13,00O daily. An cote:vete
ceeld be made as to Mrif muoh 040A in tna nil, azeordIng to the ezperienee of,

say, 1923, vould be lite' to be empleyed 46 a ration of resetrve releireteets
Dee figure subeitted by Philedelphia weeld ineieate,
roughly, Chat for the eystem the /event woeld eteeed ee5,000,C00. it might be
by country meeber banks.

very ouch wore after the praotioe deeelopod and extended.

In eau) the Federal Roaervo Bank of to York ahould deoldo not to treat
cash in trunsit us U part of Cho ronorvu balanon, and the lecteern1 neeerve nunk of
Boston iheeld decide to do so, bank:: in euolt neighboring titles as erideoport end
Now Huveno end benka sleilerly vitneted in edjeiniee dintricts vbero different de-

olsions *ore errivoe at, would in time bootee teere that different referee requirements applitd to their respective banks, notwithstanding that they ere located in
the Ban* state, and in tome oases in adeolning cities. This Is certain to oaeoe
ocnfasion and complaint, and is in feet a type of disorieinetion whioh herdle SOOTS
justified in preotice, irrespeetive of octsideretions of law.
eeterve concessions mede to oeuntre banks beve been shown in the past
to Invite apeeels for tartest* oenceselono. There aro meny countre eanes which now
oiaim that they are requiree to carry more is on hard teen 'Omura of lorremeoneine

size are reeeired to *am, in reeerve end Contra/ reeerve citiee, end they are still
aakine that oh on hand be allowed as a dedeetion fie= the required rewire() and in
acme ceEee, that it count us reeorvo. eau,' oountry banks whinh have considerable
balances due rrom banks, eut welch haw) no beluneon of importanee ette.12 bunko
frOra ;titian the eden to belenoes oan be deduotee, claim thnt they uro uudnly

penalized in Aueltrett with the city banks by roenen of Icontion end the charucter
or their bugle:ace. The boerd'u letter X-e977 indiaetes Chet applicetlems are
still beirg received for reemotlene of required reservel by member bus located
in outlying dibtricts of rottrvo oitioe. Indeed, tho teedency is eleays in the
direction of loworine reterve roquiremento lAtti rover inorseeltg theme And the
tenaenoy to convert *tete boctunteento ties depovits reeeiritte but 24 reEerve is
gaining impetus at le disturbing rate.
The requireeent of les tnat country benks mey carry lee* reoereos

than bulks in reboree oitlet, end those in roterve cities a oenller reterve than
tetra in contrel telt:tree citiet, tee L. recognition of tcr,* of there ivenuelities
arising fro Che imeopoIbilite of eliminating diettect end time. It feet, this

Is a reeerve odjuetmett vhioh hns alroody on mede by Cercreet.
cessicns woule not scam to be enetifiod, ueletee maee in tee seem say. ate

eituution in gonerui es to the affect of the roverve provioices of the ester,.

Act upeu the reeereoe-cf country monber bunko hne tete very elebrately
°eared in a ieper recently erepered by Ocvernor eesty of the Vedcrel etterve tank
of =amend, welch settee to shoe tnot contrary to tho °lams ef meny country backs,

the provision of the eoterve eot bete bad tht effect tf reducing the n:tel of

reserves, bunk balences, snd cash which ocentry banks find it tie:watery to carry
In emetic:0, considerably more, relatively, then those ef atty. other °lets of
bunks, and that the grounds for there veritus ueevels for ccueessecne in reterves
are very slender indeed.

even bread greenest, it seems Very difficult tc justify any ruling
lcokine to roducleg reserve requireeetts at a ties when the country is terdend
with a surplus cf reeerves and is regerded es being in some danger thereby of
entering neon a period of infletlet vbion *cold es disattrous to the stability
Of the country's baseness.




Further

4

/federal itosorve Board

3.4.24.

zop1y to your inquiry, tho officers anti
In all these oirourastanoes,
believe we theuld not consider chipnents of currency in transft
direotors
computin,.; reserves uf meruer ban:cs or Su asseening penalties for deficiencies
thereof, and aux directors will thico no Lotion in that reGard ODD way or another
until reoeipt of further word from the Wederal Iieserve board conourninz the
(rogations of law and polioy referred to in thia letter.
Yury truly your s,

BZ.T. LISTONG

Goys? nor.
BSAGLH.11,111$




FEDERAL RESERVE 3ANK

1924

MAR 2

OF NEW YORK

March 28, 1924.
Federal Reserve Board,
Washington, D. C.

Sirs:
LOANS AND INVESTMENTS!

Our total earning

result of today 's operations.

assets show very little change as a

Rediscounts and advances declined $7, 300, 000

but bills held under sales contract s advanced approximately $7,1 00, 000 and

other bills purchased, including those held temporarily for other Reserve
banks, were slightly higher.

The System's holdings of government securities

in the special investment account increased $2, 000, 000 to $1 81, 793,1 00,

as shown in a later paragraph, and our all otment of the new deliveries was
000.

A comparative statement follows :

Millions of dollars
'Mange from
Yesterday
Today
Bills di scounted
Bills held under sal es contracts

Other bills purchased
Special investment a/c
Other investments
Total earning as sets

1 04. 9

39.4
1 8.3
51. 2

3.5
'317.3

+
+
+
+
+

Change from
March 26
+ 11.1
+ 13,5
+
5.0
+
0.6
+
2.3
+ 32.5

7.3
7.1

0.3
0.6
0.9
1.6

The following banks decreased their borrowings materially:
Pre sent indebtedness

- Paid today

Bank of Commerce
National Park
First National
Bank of America

1, 500, 000

New York Trust reopened by borrowing 42, 000, 000.

individual
RESERVE RATIO:

serves were

311, 000, 000
0
32, 200, 000
1, 000, 000

$4, 000, 000
4, 000, 000
2, 800, 000

Changes in accounts .o f other

banks were smaller.
Deposits and notes declined $1 4, 000, 000 today but total cash re-

al, 000, 000 lower.

As a result, our reserve ratio appears to

be unchanged, at 85.6 per cent., according to an early cal culation.

balance in the Gold Fund was practically unchanged.




Our

2

Federal Reserve Board, Washington, D. C.

).1-6TEM'S SPECIAL INVESTMENT ACCOUNT:

3/28/24

Holdings of government securities previously

reported

12.79,793,100

Delivered today:

Maturity
Sept. 15, 1924
Dec.
15, 1924

Par Value
1, 000, 000

2,

1,000,000

Total holdings

;$181,793,100

none

purchases for future delivery and apportionment

$181,793,100

Total purchases to date
JOVERNMENT ACCOUNT:

000, 000

Principal credits to the Treasurer's account were revenue

collections of 0,600,000 and other collections, 1,500,000.

After paying

checks amounting to $6,600,000, the balance in the account is 127,000,000.
Following opening and renewal at 4 3/4 per cent., stock exchange call

MONEY RATES:

money rose to 5 per cent, at noon where it remained until the close.

In all,

,133,000,000 was placed in new loans with only a small amount left unlent at
the closing rate.

Time money was quiet at 4 1/2 per cent. Mercantile paper

fairly active in New York with prevailing rate on prime names 4 1/2 to 4 3/4
per cent.

Bill market continued quiet with rates unchanged.

A summary of

money rates follows:
Week Ago

Today
Call money, renewal
Call money, new loans
Time money, 61-90 days
Commercial paper, prime
Bills, 90 days offer
U.S. 0/I, 4-6 mos., yield
U.S. C/I,10-12 mos.,
U.S.Treas.Notes, 1-2 yrs,yield

4
4
4
4

4 1/2

3

4 1/2-5 1/2
4 1/2
4 1/2-4 3/4

3-2 1/2
4 1/4-4 1/2

4

4

3.56
3.91
4.07

3.50
3.88
4.07

3 7/8
3.43

3/4
3/4-5 1/2
1/2
1/2-4 3/4

3..84

3.97

Bond trading continued moderately active and prices generally were

30ND MARKET:
firm.

Yesterday

Liberty bonds were quiet and

firmer than since the first of the week.

St. Paul issues continued active at slightly higher levels.

A new offering of

10,000,000 Cleveland Union Terminal 5 per cent, bonds, priced at 97 to yield
5.15, was reported quickly oversubscribed.

bond sales decimals express 32rds:



In the following summary of Liberty

c

3/28/24

Federal Reserve Board, Washinzton, D.. C.

3

I
Amount in
Thousands

3
4
4
4
4
4

339
49

299
362
632
265

1st
2nd
3rd
4th

Treasury

STOCK MARKET:

Yesterday

Issue

98.26
99.15
99.12
100.1
99.15
100.7

1/2s
1/49
1/As
1/4s
1/4s
1/4s

Gain
Today

Today
98.28
99.16
99.15
99.31
99.15
100.12

Gain since
Jan.

2

- .12
1.06
1.17

.2
.1

.3
- .2

.19

1.12
.26

.5

In the early trading greater strenttthapneared in stocks generally,

but political developments were used as the basis
in the afternoon.

for a resumption of selling

Following the announcement of increased dividends

for Corr

Products, prices rallied somewhat but the general position of the market at

the close was again lower, the Dow-Jones industrial average in fact reaching
a further new low point for the year.
a million shares.

The Dow-Jones averages follow:

Change from
Yesterday

Today
20 railroads
20 industrials
FOREIGN EXCHANGES:
steady.

Total transactions were slightly under

81.05

- 0.24

92. 54

-

83.06
101. 31

O. 36

1923

1924.

High

High

Low

79.98 90.63
92.54 105.38

76.78

Low

85. 76

Little interest in exchanges was shown and rates remained

Sterling and other European exchanges were virtually unchanged.

South American and Far-Eastern rates were slightly lower.

Closing cablc

rates in New York were:

France
Belgium
Italy
Holland
Rio de Janeiro
Buenos Aires
Yokohama
Shanghai
Calcutta
Canada (check)
-jMMODITY MARKETS:

.7000
.301875
.97
5/8

1.00

Today
4.30
.0548
.0430
.0433 1/2
.3694
.1120
.7599
.420625
.69875
.301875
.97
5/8

Cotton prices fluctuated widely today but closed moderately

wheat closing 7/8 lower at


WRB/GH


.0431
.0434
.3698
.1155
.7619
.42125

.4866

higher, with spot up 60 points

firm in quiet

Yesterday
34.30
1/2
.0547 1/2

Par
4.865
.1930
.1930
.1930
.4020
.3244
.9648
.4935

London

to 27.40.

Grain markets

continued weak, May

100 5/8 and May corn 5/8 lower at 75 1/8.

Rubber

tr4ding.
Respect fully,

W. Randolph Burgess,
Assistant Federal Reservert

-F-

18 me de Tilsitt, Paris.
17 Ootober3.

PERSONAL & COLTIDMIT-LAL

The iionorable

Cressingere
,e(lora1 eserve
Washingten, D. C.
1).

Th.

Governor,

ard,
1.

!?..

Dear Gove rnor arissinge
tb2i

LOC
Mere I wrote you throe or four weeka IW the awning into effect
of the Tames Plan kiss boon proceeding rapidly sadI ara gam to write you
about soma of ten thieees that have been taking place on the ohanoe that
they may not have been in our enerloan papers, none of which I have seen
I hope I ray eot oe repeating thircs I spoke of in try
for many weeks.
earlier Letter., of which I have no copy.

The Loudon agrseennt, providing for the aoceptaece of the DIVAS
Plan and setting forth a definite dated progrFtm fbr its ooriiing into effect,
prnvided for a transition period of five weeks from the Lime the eteseeti on

laws to give
Oftsvnisoion announced that eezeoey L. passed the nooessaw
the 1:alves Plan, namely,
'effect to the requirements of
a moo ns ti tuted siohsbsnk,

the formation of a W.lemei Comaay to take over the
Gernan railroads from the Gertven Government and to
create a mortgaes thereozi of 11 billion eeld marks,
the provision for a mart ;age. of 5 billion :4)1d maries
on the Gorman

industries.

laws
On September 1 the reearation Gorar-is' sion announeed that the German you,
,;:is I wrote
had been passed, and the ,traasit ion period dad begun. a smell rile Ilea
3rd with

the Agent Genera ,;ont to Serlin on eeptember ana other Commissions,
anti=
staff drawn from tho personnel of the
nreelf as temporary volunteer associates,
and with Mr. Tawes, tr. Auld aed
tobinson and his
Mr. iieney
assistants or advisers. el few days latereiterjoined 14. volunteer staff.
this
Tore
brnther, :4r. Thomas eobinson,of Hew received; the Geman Gevernment payments
First of all there was money to be
railroad profits, etc. being reand tie colleotions of oustems, taxes, the Itahr oo 0U ti on. els° there
ceived by the k'reneli azri 3elgians from
other producers for
Was iloney to be paid out to the German coal and .300014.. the flow (Amnon
deliveries in kind, and for verione exp. ns a 8.
its 11 billion bond Is 3411 delivered,
Railway eompazy read to be organized,

Tetra, the Irelustrial eoaik, Allah
ani, the railroads turned over to it. Industries, nad to be orginieed and
mortgage on the
is to deal with the bond on the industries oad to be delivered to it.
the E billion mark
to be contracted fore
fourth, the loan of WO !Allion gold marks hadbe brought into axis tenon.
pifth, the now leioesbank organization had to




In my last letter I remember speaking of Monsieur levorver
sae Commissioner of Railways. Along with Sir William eoworth, the
eailway jeceert, i1. everve spent a fortnight in :earlier getting
the wag Rai bey Comparey organized and takieg over the railroads. The
Ca:true/is have put their best men on the iioard of the eel lway eemparee
taking over the railwsys frnn the State.
'.73re foreign directors are
also ran of hi:* standing. 3asides
rye arid Sir 4l1iarn Acworth,

the French representative is M. Margot, one of the Directors of the
earls, eyon ieediterrenhe eallway. Ire Italian is a large iniustrialist
and the !3elgian is a railmy en4neer interested in railways and traction
companies in Europe and other countries.
The London Agra
nt required
the French. and Belgians by Deoember 5th to return to eenteny the rally/we,.
they am now operating in the auhr. :ey way of showing their desire to
cooperate in returning the leeer to ,..iereen central, the erench and Belgians
have decided to turn over the mi.:mays on November leth, or three weeks
ahead of the reqtairee ties.
The Comitiiceioner of the Iudtwitrial Debentures is an Italian,
n vet, high type of North Italian Ns ne se man, sh reig,
practical anti unemotional. The :airecto re of the industrial Bank, which
Mr.

3. Nogate,

Is to deal with the 6 billion be le marks industrial debentures, has as
it s foreign directors men of the saice high type as the lailvnr Compeny,
he apportionment of this he mortgage
logara beirc one of them.

among the different induetries,on a basis which will be about 210 ';;; of the
taxable value of eaCh plant or concern, is an immense uxxlertaking ant it
will be the middle of December before the German eovemment is ready to
In the meantime it 140$ ro rely
report won the peeposed apeortionceat.
issued to Mr. eeeara a blanket bond for the five billion gold tui Ars.
This week also the Gerran Goverment MS delivered to the proper authorities the bond for 11 billion Feld marks on the German railways.

3ruins, a Dutchman of about
The Bank COntinissiOnOr is ler.
forty, professor of banking in Rotterdam: University. fie was suggested
for the appointment b 'r. Vissoring, il'resident of the litsderlaneacno Bank.
He has been in 3erlin for two or three weaks and is a neat likeable and
intelligent fellow, ge' is evidently thought highly of in Dutch banking
circles for he told ree that he had been offered the Presidency of the
,irank of Java after iIr. Leilinga's resignation. as is to live in 3erlin
lie is required to put his seal
aid have his office in the Beichsbank.
on all notes issued by the new eeichsbank so as to guari ameest overOf course this will be done mechanically
issees of notes in the future.
but he is going to have a small oreenteation in the 3tatt to lop elope
From all I glean he and Dr.
watch on this part of its operations.
Schacht get on feraously together and from what I know of the personalities
of the two ra/n it leeks to me like a very /Peppy arraneerent. The Germans
are putting their Yew best men on the aoard of the Ileionsbank and the
foreign directors are as follows: Great Britain, Sir Charles Addis; erarne,
M. Sorgent, ;lead of the BaliqUO l'Union earisienne; Italy, Ur

eeltrinelli

a very important bus lees:elan and director of arm of the two best of the
banks - I forget ereichs letritzerlard, r, 3achertere foreerly head Bruins;
Swiss Bank of Issee and now head of a private bank; 'folitind, ler,



United States, Mr. eloGarrah; Belgian, 14. Francqui, Head of the Societe
Generale, the largest bank in eelgium. I u*lerstand that Max ..arburg
Is to be one of the German directors.

The reconstituted Reionsbank is all ready to function.
other day in andon ar. Young asked lir. dehacht hoe long it would take
him to get the new Bank into operation. His reply was "Less than a
The TIDNir eatichsmark notes are engraved and only have to have
day."
soma last minute data printed upon them. The stockholders of the
Reichsbank r..tet a for tnicnt am and p as5ed all the necessary resolutions.
The new directors neet October :gt or 31 to put the reeonstituted tee&
into operation.
Perhaps tin most I Portant of tha new organizations is the
Agent Gera ml is ex-officio the head.
The other //webers of this Conrnittee are, Groat nritain, Mr. Bell,
nager of hloydts eank; Frame, Mr. Porrentier, former Urder-Secretary
of eirrince ard a iember of the lerperts Committee; United. States, L.Ir.
Sterrett, dead of Price eraterhouse Oompany; Jelgiwa, ir. Jan.-11E380n,
ore of the directors (vice presidents of the Banque Nationale d
Be lgi que ; Italy, Lir. Jannaocone,
Transfer Commi ttne of which t

The Transfer Committee does not commence to function until

the transition period is over; that is, about 'On end of October. It
will have its first meeting on the 31st of Ootober in Berlin ad ter.
Your* has several very important ristters to lay before it at once,
one of them of a rather far-reaching nature. This Committee, as you
transferring out of nernany the

know, is charged with the duty of
Agent General
moneys paid in to the Relchsbank for account of thethis must not be under
providing that
done
the 1.4wes Plan; the Plan, havever,
the German exchange or the German
in such a way as to damage either
first couple of
industrial and financial eco now. Of course for theGermany as all
to be transferred out of
years there will be no money
of it over and above expenses, eta, will be spent on paying for
deliveries in kind IfirideF. by German producers. Bat the Transfer Committee
deliveries
has very wide authority in deciding not only whether the the 113oovery in
kind are harmful to the German economy but also whetherAllies, are
by other
ts passed by ingiand and eran.ce, and pe rhaps ,,inder these nets, as you
operating harmfully to the German economy. local importers 261 of
know, England axe eranoo oolleot from th.eir keep it against their
the value of goods imported from Geruany and turn reimburses the
reparation claims. The German Government in him in marks. ?hose
German shipper but, of course, only reiliburses
considerable voltam of
dots nave the effect of cutting off a very through exports and the
Germany's available foreign exchange created to the spirit of the
Germans feel that they are entirely contrary
on account of the aritish Reoovery .ect the German
Dawes Plan.




eau.

per month to
Treasury is paving out some 10 to 15 million old Riarks month; so you
by about 60,000
per
its uationals, represented noel end of this vouchersan item as well.
is quite
010
teen see that the neve
Of eourse the sine uua 2.133 of the vadole alen was the loam.
Meentine the Oerman
DI:wire; the latter pert of august D. Schacht, re.ad other auropotin
Gomm/rent, vtsito Italy, Holland, xiteoriand in the loan. About
countries with a view to getting them inWrestedboth °me to London
the WV, of deptember are Youree and Dr. achacht
two of
where, after r sone prod liana ry discus al on vrith Kr. Morgan Raireareeene
Norman and other "Jaiglish bartairs,
his partners. and Governor
and Italy
tatives fie= eden, holland, eelgium, Vennee, eeitseriand came to
ei/vtace ainister,
Dr. lett/a/re
wore called in and ainerica wasthe lerman
to taae o?s-half, iengland about eee
London as welle
quarter and the rest of the countries eel/allied, including eerie/My,
You have deubeless read of the allotments in
the other querter.
although some of the smiler

repeat then
the papers so I won't difficulty inhere.
providing for their quotas it
countries found great
a great
is felt to be of the greatest Iwo rtaree to have the loanaria
represented
countries
international ors) with all important discussion and negotiation,
three weeks of
.finally, after nearly
contract
gr. Young came back to Paris on the 9th with a form of
aid a set of decisions to
agreed upon, a form of bond agreed upon,
remaiug it absolutely clear
be Wean by the asearati on joremission
cieream ahead of reptamation
that the loan would be a first cearfer on
presented to the eieparation
and all other payments.trahese bebareters were feathered together in
sion on Pridw the 10th While the
lin }lobin.son, who
London awaiting the results over the telephone.
which lasted four or five hours,
aceempanied +er. Young at the muting,
tie situation was remarkable.
tells we that Mr. Young's handling of wrote you before, had not ?*-I
The ler aeration ChemadefliOn which, as least, in makine its decieions
the
tofore 'been very prompt, to say called upon by Mr. Yang to make
The
has during the past 'month been
number of decisions on yea/ important /natters.opporpreeptly a large
on the 10th withoarfrevious
one they were called upon to makefor the abeo art e priority of the loan
tunity for discussion, declaringdetails, with the bankere at the other
other
and dealing with a lot of waiting to 3Drld cables that evening to the
telephone wire
end of the
in emerica was an especially
webers of the underwriting syndicatemade, all in toe beet of good
ions .ieferennes were
large order.
the speed with which the
nature and thoroughly appreciatively, to decisions and to Ara Young's
make these
s
that az, Young's
Oomaission was being asked to
aat air. bIuaon says
ti v ties.
_wound up with
mul ti ferious ac
masterful and the evening
/lane ling of tie situation was of the COiNniaiSION a telephone nei-,saae
part
a complete deoision on the their dispstoees of tee necessary eablos
to the London bankers, aid
to the ttelerwriting syndicate*,







Every day only serves more olear3,y to snow Ir. Young as
the mastemind of this whole situations I fiather that the central
Young's
idea of the activities of the 'Transfer Oorsaittee vas
contribution to the Plan in addition to his great contribution as
Uhairraan of the Comaittee that drafted the Report except for those
portions of it drafted by General Dawes hirmelf. ife was in London
all through the Conference and was instrumental in writing into the
report of th ondun Conference two sentences which I see quoted in
the published bond prospectus which protect the bond holders in case
fuither sanctions are imposed on Germany; and be was the final
their
negotiator with the rieparation Commission in more,decision to grant
-.eurthe
he is steeped in
comple to p ri ority to the bond I sem.
the philosontw of the Wiwi° Plan; is thoroughly imbued with the
as with
limitations of the position of Agent General as well line and its
attempts
and never steps over the
powers and responsibilities
within toe authority of the Reparation
to decide questions that are
Commission or of the Posers themselves. With all his grasp of tie
entire situation, his clear mathod of presentation and his ability
the rights and
as a nesotiator, he is so fair and so respectful of completely
that be is
proper sensibilities of other authorities
nfter six weeks of his "activities',
master of tie situation.
decisions the Reparation Commission is
with the need for prompt
today giving him a lunch pa rty

During the past fortnight I nave been presenting some

to ,mrroan bankers and businessiren which
Tiarlts of J. Henry 30hrOeder and Conin&W
were given to mo by Ur.
opinion as to
ahen I was in v..onclon and I find a somwhat divided marks,
of
Mrether Germany can provide the necessary number required under
2,500,000,000. per annuan beginning the 5th year,
the Dawes Pia u but a awl general belief that Germarsr will do her
did not find anybody
best to p roy isle them; on the other /rind Iwoulki be able to get this
who believed that -the Transfer Committee present ti ms the industries
number of marks out of Germany. At the tile proportion of unare very slack, labor is inefficient and
foreign
productive) labor is muoh too high. Adverse tariffs in taxation
high internal
very
countries hinder Gowan exports, while riii; to 14 on the output
was told, from
of industry, varyingI
render competition in warid
kt to the cost of production andthat through inflation a large
.irkets difficult. Tile fact is
means a large proportion
proportion of the investing class,vrniohconsequently the taxes
of tie Lax paying power, ../a.s wiped out
extent on industry itself;
have to be assessed to a very largebasic tax of 10-0, with certain

letters of In

although I am told that there is a
be collected at the source
rebates, on wage earners which is to the GOVertZ11311 t this tax
turned, over
by the industries andimposed by atoiceialistic Government. As
curiously enough was
advised. lates
doubtless
to the credit situation you arewets scarce fullypartly because
and
are high, partly because credit

-6of the :ielahsbank's policy of vostricting credit to /support the renter.mark. Oank Minolta during the period of inflati On shrank re rhaps
75 to 85: and oavinos (ioposite almost oeased to exist.
atlea now

overage slightly over the o YO- r baits' ROM expert kArnic people get-

tiog actually l0ss. nxt womeo kflIOorellled A10 rkft vs get oonnicorabiy
more and this brircs i t)of svornee. &any people think that was will
have to rise fi s buoiress troves, tooyirig that the tooroors ars eiol,y
content with the pmsont sole becoose it is that or nothing. In the
other Ilona the present scale represents oonsiderably more then they have
b -en getting during the past too or throo rears of tre declining moron
Tao thing that am particularly impressed itsolf on me has been the
toad i re es of the aran people loader the Long period f tho loflatirolary
"reign of terror". Amy people olio ow go through that patiently aid
quietly oannot be very rabid radicals. Ani after baying loot all their
savinos through ireflati rn mrsi havin otten onti rely out of the habit
of saving them they have begun to !evert to their old saving practises

in the past fn tenths is

0011 as the mark booamo stable.

Bofore coming back to Parts I male a little, trip to ?Tagus
to see our oorrosponients too oe, oenkovni ete. as tray ale troikikng about
lerroring some money from us. I had a long talk with OW of the unmoor*
and arn bringing horns their figures month by month. ohile they are
ostennibly alai in fact a barking devartment of the Oinistry of oinanee
tneir orerations are novertheless Reverted by a *la Ai of ten Diroetors
who are businosamon, .bank ors, economists, eto.presided over by the
Ooard of Directors ono V.113. t1410 manogers
:. muter of Yinanoe.
are thesroweily imbued with solve. bank of issue ideas, are cond,eo tine,
in a censervative nInns r aid are expecting during the
their if
or
next ,oar to convert the present organisation into an actual bank ale
aid
issrmo with its own eopi tole Oley are highly Tefoorded locally
thoroughly iodooenient of tie oinister of nuance. Not only io they
1_15 ver Leal to the Goverment, but at tines they even deolino to lend
The
on the collateral security of Ozenho-olovakian Treasury 3111.4 under
two ziua,
s toad Joe ss of ti e Cze oho-. Olovak crone Ouring the past
thoir manogerento has been rs :Tara:thin*
will you please tell Or. !.3towart that I looeived his cable
message in Aerlin and will endeavor to arraneo through Colonel Loom
to get reports and statistical data from the 3soaratIon Corooission
of
be as
for the Board. I don't Onow haw difficult this mg other many are
letter,
these, ino/uling the one which I san.t you vrith IV I will do tho
oonsiderod by tho Conmies Ion to be conft tentiol but
boot I caT1.

sendirc
sve just received a letter from lin. Caseregard tome a
the
resolution in
oopy of ton 00000so odoisory 0ouncilis of his letter of September
investrents in foreign bills, also aolv I am planning if Clove rnor
in View of this dtscsaaton
30 to you.
be there to spone aoeuple of euvis in :oorolon discussing
Norfaxn
tues Jac t v:ith him and 1°o:icing over the situation there.






.7..

With kird zemards to yourself and all the Evrabers
of the Board, are looking forward with much interest to the
autumn conference which I understand is to begin November
10th, Iam

iaithfu.11y yours,

Lecember 18, 1i24.

Federal Receive board,

tashington, D. C.
Attention -

Honorable D. R. Criseinger.

dear Governor Criesinger:

/he requeet eubmitted by the Federal Reserve Board et the last Conference
of Governors that

suggestions be offered as to posaible

amendments to

banking Act was, as you recall, received too late to be fruitful of

the National

reeults.

My on opportunity to examine the McFauden Bill has been rather slight,
although I have had one or two

currency,

discussions of it with the Comptroller of the

and our officers have talked it over occasionally in the bank.

There are three matters in connection with thic legislation which, I Aiieve,
enould receive earnest
1.

consideration

before the McFadden Bill ia paeeed.

The proposal to amend the bill 80 that

membership in the Feceral Re-

serve System will be denied to state banks located in states which may hereafter pass
branch banking laws, in case such members

open branches, se believe to be a mistake.

We unueretanci that the effect of this peneing amendment eould be to ?revent beaks in
those -states Which co aibeequently pass branch beak acts, from establishing- branches

unless they rein membership in the Federal Reserve System.

Is not this an attempt

to control state legislation and the development of state banking, Whieh is not justified, and which may indeed have the effect simply of0preventing or reducing membership
in the Federal Reserve System,

rather than preventing the establishmert of branch

bane in a certain limited number of states?
2.

Is it wise to extend the powers of national banks to make mortgage loans,

as is proposed in the McFaduen Bill, without further eafeguarde than are provided?



#2

3.

12/18/24.

Honorable D. R. Grisainger

Even more important, possibly, is trio faot that the McFadden Bill does

not attempt to deal with the growing practice of nationel banks to open savings ac-

counts, the withdrawal of which may be aubject to notice of thirty or sixty days.

A

rapia growth of this type of banking is taking place in the national banks of the
country, End aeeositore of that character in the national banke

eAven no special

protection, in fact, their intereets ere eepecially jecneerdized in the event of embarreeement by the bank.

Those who have small savings aeeountn in natinnal banks are

frequently pooe eeople ehoee entire savings arc inveeted in this wey.

Under the

present law, a national bath pete these eavinge depoelto ieto the common funds of the
bank.

They are eabjected eo all of tlie rieke of oomeeroial ban 1n, and in the small-

er country barele, ae wo knee: Lhese are very eonelaeruble.
of inveutmen'oe, the aavingsedepositor

There ib no segregation

ets no priority of claim as he would receive

if he were a preferred creditor with recouree upon etegregaeee eueetc, ane ehoula a bank
doing this claee of Ducincee L6(.0ME, embarrasaea, and seek the protection of the thirty

or sixty- nay notice contract, the geneeal depositors are then in a position to withdraw their aepoeite,- getting the advantage' of payment out of the liquiaation of the
best aosete of the tank or from the prececte of loene epon them;

wher eae the depositor

who should nave he beet protection, that is the poor eaver, cannot eithuraw his money,

and if the bank fails, the remaining euseta to which he mu'A look ere liable to be the
poorest.
I have not attempted in any way to influence the Comptroller or Mr. McFadden

as to the terms of the McFadden Dill. In a very general eay, I have gathered that it
contemplates improvenente in the National oank Act, by an enlargement of the powers

of the rettionel banks which mostly are to their anvantaee, but i confess a considerable

concern as to the three points referred to in this letter.
Possibly it is not fully retlized thet something like CO % of the increase

in uepEite rtich hes taken place in American banks in the last tea or twelve years,
are those which are generally classed as time deposits, which includes e large amount



Alio
of savings accounts;

#3

Honorable D. R. Crissinger

12/18/24.

that a very considerable eroportion of the accounts are those

of poor leopla who deposit their avings in national banks, and it is my conviction
that, under the law as it now stands and s it will stand after the propoeed McFadden

Bill is - aseed, they do not receive the adequate protection to which they are really

entitlod.
am submitting this brief sugge:ztion Gs a personal reeponee co the Board's

request, for such action as you may think desirable.
Very truly yours,

BLdj. tT5)-i7G

Governor.

.93,JAS







k

\\O

61:

July M, 19n.
Federal Reserve Board,
Washington, D. O.

Sir 6
Your letter- X-4.577, dated July 10, 1V2b, concerning -"EMployment of

Expert Service by Federal fieserve Benke," has been reported to our directors

who have given much thought to it and have asked me to write to you frankly

their views.
They are thoroughly in accord with the object which the Board obvious-

ly desires to accomplish by teking the action reported in its letter.

Clearly,

it seems desirable from a System point of view that in emlioying specie:lists or
experts in any field which concerns the System as a whole, a hoserve bank should

consult with the Federal heserve Board to ascertain its views and thether it may
have any suggestion as to who might berA perform the work contemplated.

Our directors feel, however, that your letter of July 10, if followed

literally, might result in s, very cubstantial curtailment of the obligations imposed upoa them by the termssof the law.

They believe that the effective

organization and admiaistration cf the affairs oI the heservo bank is a responsibility which the law places upon them Ind which they cannot avoid either direct-

ly or indirectly.

The ordinary operations of en institution of this size are SO

numerous and often so far reaching lu their contacts that it may well be imperative

for the directors from time to time to employ counsel or experts, as the .zase may
24,1

be, in order to protect the interests or rights or the bank.

The law does not

contemplate that the Reserve Board must of neceesity be consulted in such a case

or that its aTi,-roval la a prerequisite to any such special mployment.




-2-

Federal Reeerve Board

July 30, 1925.

Of course, under the terms of the law, the emeunt of compensation paid

to "directors, officere or ameloyeee of the Federal reeerve bank" im eubject to

the approve' of the Boerd, but our direotore question whether this right of ealery
approve' eivec to the Board the right to deny the epecial amployment in queetion

or to ;lace zmy such restriction as that contained in its letter, upon the exprees
right of the directors "to perform the dutien usually appertainine to the office
of directors of banking encociations."

To ang&ge the servioee of experte or

counsel ellen the effairn of the bank depend them, eeema not only a right butmay
be e. neoeemery duty of the directers.

In so fer an the Board's letter aubjeetu

the action of the directors in this regard to the advenoe epprevel of the Federal
Reserve Bocrd, it eeeme to place upon the Feeerl Reserve Board tt responsibility
for the operation-5 of the benk which in our opinion is, 5.6 t matter of law, eloced
117:-on the directors.

In fact, a literal compliance with the terms of the Bonrd's

letter or e logical insistence ueon the principle it enunciates might reeult completely in depriving the directors of that independence of ection and control in
the conduct of tho benk's affairs which the law clearly contempletes end which,

indeed, eeems to them to be the spirit of the Federal Reserve Act.

In expressing the foregoing, however, our directors reiterate their be-

lief that in every case her the ',employment of expert cervices involves a question
of Syetem interert, their rhould and wculd consult with the Federal Reserve Board

If the circumstances make it possible to do so.
Respectfully,

Pierre Jz=1.,
Chairmen.

GLH




RECOMBENDATION3 FOTI REVI3ION OF PUBLISRAD CONDITION STATE/LINTS OF THF, FEDERAL RESERVE HAMS

Captions as shown in weekly statement
at present

Captions proposed to be shown in
weekly statement as revised

Items to be included under
shown in precediNLoolumn

Bills bought in open market $

Bills bought in open market $

Bankers' acceptances payable in
dollars
Bankers, acceptances payable in
foreign currencies
Trade acceptances

Foreign loans on gold
All other earning assets

All other earning aseets:
Domestic

Federal Intermediate Credit Bank
debentures
Municipal warrants

Foreign

All other resources

at present

lankerst acceptances based on Imports
Exports

Domestic: transactions
Dobler exchange
All other

Trade acceptances
Foreign loans on gold




Foreign loans on gold
Due from foreign banks at interest

All other resources

Items as ashawn in Federal Reserve Bulletin

e aaptione

Miscellaneous assets

Dae from foreign banks not at
Items proposed to be shown in Federal
Reserve Bulletin Y
Bills payable in dollars:
Bankers' acceptances based on
Imports
Exports
Domestic Transactions
Dollar exchange
All other
Trade acceptances
Bills payable in foreign currencies
.

All other earning assets:
Domestic -Fed. Intermediate Credit bank debentures
Munioipal warrants
Foreign -Loans on gold
This from banks at interest

interest

The renewal of the charter of the Federal Reserve System he been

the eubject of public discussion.

The System hes been in operation eleven

years, its existence create an atmosphere of eonfidence, and benkere and
businese men are united in their desire for its continuance. The American
Bankers Association wiehee to

make two recommendstione

tinuance of the System, which it believes will
uncertainties which misht otherwise

with

reg,rd to the con-

preserve confidence end evoid

arise.

The Act now provides that at the end of its charter period the system

shall automatically cease to esist unlese Congress tskee affirmative action to
continue it.

We believe the situation should be exactly reversed.

The system

should automaticelly continue until Congress tekee affirmative action to dis-

solve it.
Also, the question of the continuance of the Syetem ehouid not be
confueed, or subjected to partisan controversy by involving it with emendments

to the Act.

Amendments Ehould be coaeidered esperetely and on their merits.

The Act confers on

the System no unchangeable rights;

amended seventeen times;

it has already been

and Congress, under our proposal, would forfeit none

of its prenent rights to amend

it further at any time.

we, therefore, respectfully ask Congress, when the question is considered,




To provide that the Federal Reserve System shall
continue until Congress talces effirmeti-ve action to ctiessolre it.

To attach no rider or emendmente to the bill providing for its continuance.
(8)

To consider any amendments which may be offered, not

in connection with the continuance of the System but under the
continuing right of Congress at any time to alter or emend the

Puguet

Federal Reserve Board,

19P5.

Washington, D. C.

51 re
At e recent westing of the Auditing Committee of the directors, who ,.ere

considering a report of the Generel Auditor concerning vsrious matters relative to the

handling of the cesh and operation of the vaults of the bank. the directors reco rended
Vest immeilate etepe be taken to consider the increase in the e.dary of certeAn
employsee cr.nnected with those matters whesc eemineration is no so out of line with

the e tent of

their respective responsibilities.

As a reslt of this

recom-endetion,

the Salary Comeittee of the officers ceneidered the. °see of each cf these men, -nd

while they snd also the directors felt that ordinsrily it would be ranch better to meke

incre-ses ie the usual °nurse at the end of the yesr, n-vertheless, because of the excepticnal circumetences -urrounding the work of ther?te particular 'en, they were forced

to the conclusion that some immediete action is nece-sery. Accordingly, the directors
have voted to approve the recommendetion of the of leers

that the following men h,ve

their salaries increeeed es of August 1st, by the amounte specified below:




Present
,Salery

Blac, Adrian

Senior, Charlee

Anderson, Edeard

.

Preroned

$2,840.

Cash Department - Pkying Divieion

Propored

$180.
180.

:.:5,000.

2,840.
2,500.

pre .e

',-:00.

2,800.
2,500.

,600.

200.

2,800.

2,700.
2,500.

100.
200.

Cesh Derert ent- Cesh Custody Division
Janssen, John
Alminietrstien Department - Veui.t Division
Lynes, Charles
Eschelmen, Chsrlen N.
3/4g. OTAFting Dermrtalont

- 21=2.1.W.L1;lx,

luether, Herbert A.

P,700.

ZOO.

3,000.

2

It will
aggregating in all

6/06.

be seen that there ere

$1,5P0.

Of the

Federel Reserve Foard.

rly 7 men who ere reccemended fer increeees

ven, three are in

the paying telleare deeertment.

Bleck is a paying teller, who eten makes paymente ae high es $9,000,000 a day.

:

et of

these payments ere mede over the eindot in the meet difficult end tedioue circemetaces,
and the strain incident te making so
a oeriod reajuires the

exterience en' ability.

or

any payments in such lerge units and in 80 limi

of een coeeeeeing e;ceptionel qualifications in

tempeteeemik,

Senior Pnd Anderson are alternate paying tellers who substitute

for Black and other paying tellers when occesion demands and ehoee regulPr work invoves
either the erecsretion of or the makine of actual parents over the eindoe.

As regerd

ell three of' these len, the directors feel that there is no justification for tl,is bank
paying to men handling this type of work a enlary under 0,000. per annum. while the

rropoeed increases are recommended to teke -lace as of August 1, the directors 'eel that
it may be necessary soon to rece mend further increeses in this department en of the

first o' the year, certainly in the case of those man whoee salaries rre till under
43,000., even atter the increaees no recomeended.
Jannsen is an ersist nt chief of the Ceeh Custody Divieion. There are in all

six employees in this division, all with about e'uol reap nsibility nnd all representing
the officers in maeing eithdrawals from or le ()siting cash in the vault. Jenn en ie tte

only one of the six zen who is not now receiving et least $2,800. and It in felt that in

fairness to hie and to the benk, his ealery ehoold be raieed at the crest the by an
amount eufficient to piece 'im on a le eel with the ether en deing eim'ler ,erk. Thie

increase will pave the may for an increase in the salaries ef all of the six men in the
Cash Custody Divieion as of the first of January, 1926, to an emount not less than 0,000.
per annum. The directors, as recommended by the Auditing Cemmittee of the Directors feel

that thie is the minimum that should be paid to any of these men.
To of the three remeining men nre emeloyeee of the Vault Divieion who Are the

repreeentetivee of the senior officers of the bank in co-trolling access to all of the
vaults of the bank. Their responsibility, while not so close to the actual cash or

securities of the bank, is levelly importnt in that they have comelete control of the



s/s/n.

Federal Reserve Board.

,ults and access thereto, end the directars feel that as reerese:tatives of the officers
of the b,qnk in their custody or the aesets of the bank, the seven men in the Vault Divi-

sion should ultimately receive not less than $3,000.
nly four of them receive $2,800. or above.
the ere=ent tiae.

Of the seven men in that division,

recommen4-tion

As to these four no

is eede at

The directors feel, however, that Lynes and Epchelean should receive

the -reposed incre -es in order to bring them mere nearly i
view to making the general adjuetment

line

with the others, with

at the first of the year more equitable.

There is only one other men for whom eny increase is proposed at the present

tine. rht is blether, ehe is assistant to the Building Slperintendent.
connected

ith the

building

hip 'newledge and e perience

operations of the bank

)-im

He has been

sice they were first commenced, end

ith the maintenance and operation

an invaluable under-study to the ereeent superintendent.

of

the no* building make

It would be impossible in

the opinion of the directors, to replace him at a s-lnry substentielly in excess of what

tee

is now recemmended, and the directors
the eresent time,

fe

may

fear that unle's this increase of $300. is maJe at

receive hi- resignation and be laced in a position o'2 having to

go -ertsids for a man at a much higher salary.

In conclusion, the directors appreciete the desire of the Beard to have in-

creases in the

clerical force n' the bank take place only at the and of the yeer, but in

view of the particuler nature of the cases ender consideration, all but one relatinr to
the handling or custody of very large amounts of the banks cash, our directors believe
that it is most Ira-portent to .eake these fe:-. inerenses at the proeent time.

therefore, respectfully submitted to the Board for its approval.




Very truly

J.

yours,

Case

Deputy Governor.

They are,

Ateention of
August

G:esernor Crissinger:

6, 1925.

Sire:
The directors arm officers of this bank have carefully considered the
mutters referred to by the Federal Reserve Examiner in Schedule Niir of his

examination as at the close of business May 29, 1925,

and desire to make the

following commente thereon:
CREDIT AND DISCOUNT DEPARTMENT

DISCOUNT DIVISION

Member Banks borrowiag

in excess of their Capital and Surplus.

At the date ef the examination, there were 25 banks in all in this
including one in the territory of the Buffalo Brench, which were borrowing in excess of their capital and surplus. Due to the great variety of business
and agricultural interests served by the bentes in this district, there are always
a greater or leer! number of benke in this poeition. Genereley speaking the reason
be found in the
for banks borrowing in excese of their capital and surplus
seasonal nature of their customers demands for accommodetion. About half the benks
listed by the emaminer are located in summer resort sections. Their deposits are
usually lowest and their icanc higheet each year just before Decoration Day, which
As of July 28, five of the banks
happens to bev also, the dete of the examination.
c),It of our debt and eight of them owed us an
listed by tee examiner were.entirely
A list of borrowings in excess of
amount less than their capital. end surplus.
capital and surplus is furnished the directors every seek.

district,

is to

Member Banks required to pledge Additional Collateral to their General Line.
The additional collateral consists of miecellaneoue securities with par
4D6,000. pledged with us at different times over a period of years in the
past by nine borrowing banks (inclueing two in the Buffalo territory) under d
general loan and oolleterel agreement, either becausc of large borrowings or because
of the condition of the banks.
value of

Maker's Line in Excees of 10% of Discounting Bank's Capital and

Surplus.

There was only one bank where there was a line in excess of 10%. This
bank discounted a note for 5,000. whereas its capital end ourplus was only 1'40,000.
There was an erroneous conclusion that
Our taking this note was due to En error.
It was not
it was not excessive for us because it was secured by Liberty bonds.
excessive so far as the limitations of the member bank were concerned.



Federal Reserve Board

evrIT DIVI$10*

Exoeotpne to Finoitolal,Steteoente suoortiao Notee un,..O-r Rediscounts
(Including Buffalo Branch)

The exsoiner l'ete 17 eloptiono to makooel atateoente. Hia comoonts
tre directed orineinslly to low ratios shown y the stateoenta. *e wee with the
examiner thot the great majority of this poker is not prime. This peper WE'AO taken
on the strength of detailed credit informstion which made the financial ateteoeate
in our judomeno retsonably satisfactory.
Azasui:IloN

O'CAPITAL. STOCK

X ober ?Janke which h*ve not subscribed for re uired amount f Ce.ital Stock of
the ,rederel Hoserve

an error In checkin, the capital and sorplus of two
This woe Ous
&Alai me000er banke, (as shown ty their ponoltion reports) to their stockholdings in
toe reserve bank. Applicotione for the required additional stock hove already teen
received.
CIEERIAL

**ober banks which . eve teen frevuentiv deficient in re o ired reserves.

Four banks out of a total of 573 members were deficient in their reserves
In each °tee the etotutory osnalty W.S8
Such bonks hove hod 000cial attention, sot we 76te oonsttnt efforts to

to 9 times between October 11 sine Yay 29.
ab,iegoaod.

correct the situation.

The thorouoll nature of the board's oxavinatione is alwoye

source of

entlefection to the directors and officers of the beolc- end they aro extremely

gratifiod at the rsoort of your examiner that "no critic's a of enter'el inportance
were developed and conditions enera.Uy were found to be sstiefrotory."

Respectfully,

J. H. Cie.,
Deouty Governor.

Federal heserve Board,
a$tshi.noton, D. 0.
JPC/INE




OTHER ITES OF INTEREE1
WHICH THE DIRECTORS MAY CARE TO FOLLOW IN
SCHEDULES OF THE REPORT

Dnadlusted Items (Carried in Suspense Account General.

Pages 10 & 11 of report.

The euspense account general is reported to the directors each month.

The

examiner states his opinion that undetermined losses will probably be sustained on
some of these iteme which tote]. $1,550.25.

Profit and LOSS Account.

?apes 27 & 28 of report.

Entries made tentatively in the profit and loss account are reported to the

directors each month and are finally passed on when
of the year.

the hook

are cloeed at the end

The ?roflt ano lose account on May 29, 1925 showed a debit of

$1,187.58 and a credit of $3,288.08, a difference of $2,095.48, beine the credit
balance as per the general ledeer.
Losses and Recoveries.

(October 12, 2924 to May 29, 1925) Pace 43 of report.

All losses, totallinF $27,411.12, covered by insurance policies have been
recovered es follows:

Under registered mail insurance:
$10,000. currency in transit from a member bank,
stolen by a bandit

$1,500. currency stolen from the mail in transit
from the Buffalo Branch.
Under policies insuring the fidelity of employees'

Shortege in a package of currency in Paying Tellerte
Division
Amount lout by a messenger of the City Collection
Division
Defalcation of F. G. Adams

*

Of this amount $243.45 was stolen during the
our own insurance and was charged to
last year.

period when we also

$500.00
149.08
15,282.04*

carried

profit and loss at the end of

No claims are pending:.

Pendine Suits.

Page 42 of

RePort.

The examiner comments on pending suite as follows:




02

V . 0, Can Co., Inc.

W.

art qattI Construction Co., and.

P4deral Rover,* Baal of Sea York.

Action for infriumowest of patent on oertain deska which federal hewer,* Bonk
ourokitood from and whiab were installed 6y the At Metal Construction Co. In
opiniot of Coonzel, Rtoorve Bank is pootootod by the Art Kota' Construction Co.
or Sore Lidlits & 2on, Inc., sineral oontroctor. Action in Foderel Court.
atfrounOs Oly pia 4arkeit

Vs.

toot River Notional Bonk,
Pedorsi i'Oseerve Bank of Mew York, and

?trot National nonk or Mount Vernon.

tion in Superior Court, New York County, involving 31 chsaiks totolling. $4,317.10,
ech of sblob lo alleged to 'neer e forgod ndorsoment. Reeerve tenk is joined
as defendant upoa its jairantte ol' *tearoom...at but la ,:rotectod by the 'ewe
oeroates or th ;irat Notional Bank of taunt Vernon and the First NatiOnsa Bank
of Brooklyn.
(The Federal PGASTVO

adironotek Power 1! Light Co.

V. Horkmis ower 00.(Bank woo vouched in
(so t deo:adopt.

Aion it RutIond County Court, Vermont, on *50,000 mote of Rortonia Company.
Deem** booed on fullura of conoiceration, defendant allegizv that °hook isaued
for not. woe mioapproprittod And eolleotsd by onother. Check OAS oollectod

llofondant claiot that tbe inetrulout obowed tat
It bad been sid or credited to ooze person other than the Bortonia C0000ny, the
Payee. Judgoent bee teen recsved ogoinot the Rortonit Cet*any, but exeoution
boo boon rostrsinod. In opinloa of counool Reserve Bank is protected by the
Central Union Trust Co., who doposited the cheek for collection.
throuch Fodera). Roe:woo Bank,




Tlnde:. Budget

Over Budget

0

1

a,

Thous ands of Doliare
0 2. * 6 k 10 IL 14 16
*

1? 40 2-4

Dept.
,Personnel Dept.
IAdministration

Accounting
I

Dept.

Equipmant Repairs

ICash Dept.
Currancy Ship.

3afekocping

Dept.a

Securities Dept.

renter Bank Rel. Dept.
Gov. Fond Dept.
Stock of Supplies

Buffalo Branch4
Total Cur'. Expen be

Building Apprls 5,b00.

*Excess consists

mainly of New

aBudget provided

z. lid not actufor reduction in personnel.
sQme time after first of year; expenses now run-

ally take place until
ning under budget.

xExcess consiste of

Salaries

e2,400, Postage 11,100, and ris-

cellaneouD e1,300.

111111111140



Firet 7 months of 1925
e3,926,169.44
Estimated Budget

Actual Expanses
Saving 1925

First 7 c.cnthe of 1924
Estimated

Budget

3 801 688.61 Ltual Expenses

e

134,480.83

Savij i24

e3,F;86,552.&1

3 825 147.79

,*

0

August 10, 1925.

Dear Governor Ctissinger:
You may remember that before Dr. Stewart left for Europe he and Mr.

Smead prepared a memorandum recommending certain changes in the published
condition statements of the Federal reserve banks in order more accurately to
represent and more clearly to portray foreign transactions.

Mr. Smead and I have considered this natter from time to time, and
at the meeting which we held in Washington two or three weeks ago agreed upon
the changes represented in the enclosed memorandum.

While Governor Strong and

Dr. Stewart had previously cabled that they approved of the substance of the
changes included in this memorandum I forwarded a copy of it to Governor Strong
under date of July 21 in order that there might be no possible misunderstanding
of its purport so far as it concerns possible transactions under the Bank of
England gold credit.

I mentioned to Governor Strong that it would be fairly

easy for anyone at all familiar with the statement to ascertain precisely the
amount of bills bought in the London market as a result of any use of the
credit in New York.

You May remember that Governor Norman was particularly

anxious that the statement should not portray this fact too clearly since it
might interfere with his operations in the London market.

As I have just said

all of this was pointed out in my letter to Governor Strong, and we have
received a cable which reads in part as follows:
"Harrison's letter of July 21 after consulting Norman believe
within legal limitations proposed form is best available."

As I remember the discussion which we had of the possible change in
the weekly statement it was the opinion of most of us that it might be advisable
to make whatever changes are to be made as soon as feasible, and perhaps well in



2

8/10/25.

Governor D. R. Crissinger

advance of any possible use of the Bank of England credit.

In the circumstances

it might now be well to have the Board formally consider the advisability of
issuing a new form of statement.

Er. Snead is entirely familiar with all of the changes proposed in the
enclosed memorandum and the reasons which have prompted them, but if there is
anything further which you may care to have me do or concerning which I may be
of any help I know that you will be good enough to let me know.
Very truly yours,

George L. Harrison
Deputy Governor

Honorable D. R. Crissinger,
Governor, Federal Reserve Board,
Washington, D. C.

GLH/RAH
Etc.




Federal Reserve Bank of New York.

&C..

Cf/62/24

gfrevng

1'6

COPY

August 20, 1925.

Sirs:
The Bank of Poland, which is the central bank of issue in Poland,
has

requested us, through its Vice President, Dr. Feliks nlynarski, who is now

in New York, to give them a credit of 410,000,000 secured by gold of a value of

410,500,000 to be deposited for our account at the Bank of England, London.

The

Board has approved of our opening an account for the Bank of Poland and appointing them our agent and correspondent in Poland.
Because the balance of payments has been running against Poland,

primarily on account of last year's crop failure which necessitated large
importations of food, the foreign currency reserves of the Bank of Poland have

decreased from 254,000,000 zloty on December 31, 1924 to 91,000,000 zloty on
July 31 last.

The resources of the bank abroad are, therefore, inadequate at

the present time and the bank urgently requires credits to support its exchange.

Dr. Mlynarski states that their budget is now practically balanced and, in
order to maintain that position, the stabilization of their currency must be
continued.

Furthermore, he adds that this year's crop in Poland is an excellent

one and that fact, coupled with higher import duties now in effect, is tending
to restore a more favorable balance of payments.

The Bank of Poland is called upon to purchase substantial amounts
of United States currency and dollar checks which are remitted to Poland by
emigrants and that entails a continuing lockup of the bank's funds.

The

credit of 410,000,000 which they require will be used to finance the purchase

and remittance of United States currency and dollar checks and will be liquidated
from the proceeds of such remittances.

In accordance with the recommendation of the officers, our board
of directors today voted to extend a credit to the Bank of Poland under which




h

2-

;/2, 4/Z-S'

1-

COPY

-2-

we will make loans on gold not exceeding 010,000,000 outstanding at any one
time, gold to the value of 010,500,000 to be lodged as security with the Bank
of England, and the term

of the credit to be for a period of three months

beginning from the time the gold is so pledged with interest on that portion
of the credit Which is used at the rate of 4-1/210 per annum.

We have also

agreed to make three renewals of such credit, each for a period of three
months.

The rate of interest on each renewal will be adjusted at the time

it is made.

In accordance with our usual practice we will offer the other
Federal reserve banks their prorata participation in this credit.
The Board will recall that we are now making loans to the Bahkovni

urad Ministerstva Financi, Prague, against gold deposited abroad and, at the
time that arrangement was made, we suggested to the Board that the State Department might be interested to learn of our proposal to make advances to the
Bankovni.

Department.

The Board subsequently advised us that it had so informed the State

Perhaps the Board will also desire to acquaint the Department with

the facts in connection With this credit to the Bank of Poland.
Respectfully,

J. H. CASE,
Deputy Governor.

Federal Reserve Board,
Washington, D. C.

JEC:IIK




ENC 3

:Fit. 6 /I
G- o

Federal Reserve Bank of New York.

Viroyti;

COPY

August 22, 1925,

Sirs:
Referring to our letter of August 20 regarding the creditto
the Bank of Poland, we beg to enclose for the information of the Board
copy of the letter defining the terms of the credit which has been

accepted by Dr. Mlynarski on behalf of his bank as well as a copy of a
memorandum of procedure which has also been mutually agreed upon.
The credit will become effective upon cable confirmation

from the Bank of Poland and on receipt of notice from the Bank of England
that the gold has been deposited with them as security.

Dr. Mlynarski stated that the Bank of Poland is anxious that
no publicity be given to this credit and we have assured him that there
will be no difficulty in meeting their wishes in that respect.

As loans

are made against the gold, they will of course appear in the published
statement under the present caption "Foreign Loans on Gold" which is the
account in which the current loans on gold to the Bankovni are carried.
Respectfully,

J. H. CASE,
Deputy Governor.

Federal Reserve Board,
Washington, D. C.

JEC:MK




.6--

October 3, 1925.

;17 der Governor:
rou ai31 reoF.11 my ere9kirt,,, to you about Dr. Seh6cht,
p MVO teCI vieit to this country.
He ci,bleel me a ofne time ,igo that
he would b". unmvolaably delKyed h rid I aid not expect him until
the midole
he juFt

sailiLv, on tlte ninth of October after all, and ',oil' be here about

the., nineteenth.

ton .tc,i

i 6 hi 6

e

(.31:ii e-

ington, and I aki now writing to Inquire 'whether you 1,ind your
f, to the timecr hi
aseoch.tee have ay
!Ind any
ep ecia1 '21 "in to

ropo se.

It, *ill be poseible for me to take t'im to Vitetitz6ton
ir.mociiately after hi rrLvai to porici poottlitly one aay, or, st

moor.,to, or, if you prefer, he could go to weehington after
vi ;it to N454 'fork,

..ould be About the t7.1entyouid then plan 1".0 retrAkin in
v no6..!...1.'e."./A, end
ch9cri, would

ninth o: thirtieth of October.
Arcohio.,;:...on for Lh'

kb.loh

I

either return to Uere Y..r org-., .iirectly to Chico, where he f.larrh
ai,; end 61 ...'ew (IV

As his !.....tay i.iere is very enort one, smu as he ha(ii a,
great marly people to see, will you be good enatig:...t let me know as

promptly as p.oible

ou olu liicc totove me do

hi visit to iie.ohington, r..).rid greatly obliz,Ye

ioura 5i neerel y ,

Honorable D. ft. Crisainger,
Governor, Federal Reserve board,
shine,tor., L. C.




October e,
My dear Governor

Thank you for your letter of October 6.

I had deferred takinE tk: the (4usetion of Dr. Schacht/a visit until I
knsw dHtinitely that he w

coming and on wht date.

firet on the 19th. of October, ten jecided thA he
in November, and onl Let &tul,y when.I wrote you

He had proposed comin6

L 1tl sometime
et wort! 1,1t, he would

definitely be here about October 19.

Ria visit has no ;articular object such ae the tIrancoment et cred.ite

or anything of that sort.

He iu coming to inform himself Oa the iitu.tton, to

make the aoquainianeu of some of our bankers whom he haa not yet met, and aepecially to make a, visit tc Vashington and New York and beome
acquainted with the 3.0t,ITV

His stay here will be a very short one, probably not over tan days, bnd
he would like, if pos.ible, to limit hie etay in Wauhington to one (lay ernd one
nignt. If he arr1.vei5 on i.

19t, it might Fo that a ,.!hrAer on the evening of the

20th would meet. the situation.

I agree with you that it will not be tieviruble for

him to be in Washington at the time of the confernce .Nhen everyone will te TO
busy, end when his visit might 4Ltiect special attentior. 4u1,1 lead to infe.,:encae

that ere not justified.
I should 1.41cin that Dr. Schacht is determinve to ntke ro puUic
&r;

wishes to cacape Kb much ne..eper discussion te possible.

If this entirely me,As your views, I will make the nacesoary arrafemente
and keep you informed whenever I hear from him further.

Very truli yours,
Honorable D. R. Criesinger,




Governor, Federal Rev:terve Board,
Washington, D. C.

BENJ. MONS
Governor

FEDERAL RESERVE BOARD
WASHINGTON

Governor Crissinger:

Governor Strong's secretary telephoned the following
message, to be conveyed to Dr. Schacht:
"There was an error in the cable received yesterday
from Berlin.

The figure in the cable should be '.,,i13,000,000

less' instead of '4330,000,000 more.'

Mr. Wisemann received

a telegram today which confirms that the first telegram was
in error."




OctobsIT 10, 1925.

My detr Governor:

The progTsm in regard to Dr. Schschtie visit le, of course,
1,1 dependent upon the prompt arrivsl or the. neutechlenr1 on which he

sailed yesterday.

It will be due in New York on the 19th of October.

He 1.41 plenning to spend thtt night in New York City, and go to Wsohington

by (icy train on the 20th, spending the night of the 20th there, snd
returning to Now York on thcl 21st by day trsin.

rw planning to give him N amall dinner party in order to
make him &coal:lied tith some of the leeding New York banker-6 on the

night of the 22d at the Metropolitan Club, and tut sendins you an invitation to attend the dinner.
Dr. Schacht might, of course, be delayed, Bm0 if there is

any change at the last minute, / Ail let you know promptly.
Sincerely yours,

honorable. D. E. Crisisingef,

Governor, Federal Reserve Board,
Wschington, D. C.
ES.LS




April 29, 1v8.

PhaSONZ

Dear Governor Oriesinger:

I understand that this morning you asked Mr. Ti_rrison if
he would submit to you a little informal memor*.ndum of tht re,.6ons

actuating our board of directors in mvkilv tha recent change in our

discount rte.
Mr. Hg.rrison, I find, left the office

little early this

afternoon, and, thinking thr:t you miht possibly desire this informa-

tion tArly prnm:tly, I am tr-n6milting

memor,ndum

herewith.

It is, of course, precticaly impossible for snybcdy to put
claim on paper all the rcscns why
cision;

group, of men re,ch 6 certan de-

so thet this memorsndum must necessarily be very informal and

probably fals short of giving

complete picture.

In view of the informality with which it 117 been preksred,
I hope you will consider it tn. informal memorandum simply for your own
use.

Very truly yours,

J. H. CASE,
Deputy Governor.

Honorable D. R. Criesinger,
C/o Federal Reserve Board,
ThIshington, D. C.
Encl.




April ?9, ION!.
Federal Reserve Board,

Vashington, D. C.
,ATVENTION OF: Governor CrineinAer

Dear Governor Cri si nom:

I hive your letter of 4111 27, in reference to the terms
of the approval given by the YederA Reserve Bosrd on March 8, 19?f.,

to the Federal reserve bankel participation in the credit to the
National Beak of Belgium.

In accordance with your instructions I

qdvising Governor

Strong that, under the resolution adopted by the Federal Reserve Hoard

at the sleeting referred to, be was authorized to 1.rocieed with the mat-

ter, subject to fine): formal approval of the Ford, and that on report
from him that the matter has been coneutamsted in SubstEmtied conformity

with the terms of its tentative approval, the Board will formally approve the transaction.




Very truly yours,

J. H. GiZE,

Deputy Governor.

July 15, 1926

My dear Governor Crissinger:
You may remember that when I was in Washington on July 2, I read to

you a cable which I had just received that day from Governor Strong, Baying
that Governor Moreau, the new GIrernor of the Bank of Franoe, asd ,i,Eked for an

opportunity to discuss

ed to Paris.
natives:

Terid;ny

monetery matters with him ati soon as he return-

48 Governor Strong e,,,easined in hie cable, theTe:, ikere two alter-

(1) to take part jn discuesions tith Ccvernor T4oreau immediately, or

(2) to advise Governor Moreau thst he muLt procsod n his trip wad decide later
whether a meetinq, in desirable after further progress has been made with the
bankers.

He indicated in hie cable that if ixmediAs discussions seemed to

be justified, he would take part in them only provided (a) our directors did not
disagree, (b) Secretary Mellon would support

116

in case a credit on sound lines

was recommended, (c) Governor trow knew whether ratification of the

debt

settle-

ment was a necessary preliminary to a credit, and (d) the Federal Reserve Board
was favorably inclined toward bur aiding.
ifter discussing the matter

with you and Mr. Jades, who were the only

members of the Board present on that day, I cabled Governor Strong end explained

to him that so far as the Board was concerned that you and Mr. James were the
only members available On
they say they want

that day and stated that "speaking for themselves

only

to be helpful to monetary stabilization in France."

I understand from Governor Strong that after receipt of this cable,

he indicated to Governor Moreau thrt he would be glad to talk things over with




Jly 15, 1928

Governor Criselnger

2

him when Governor Mbrenu wanted to do so.

Governor Moreau sent word back to

Governor Strong on July 5 that the situation was still too uncertain to offer the

basis of satisfactory conversations at that time.

I only yesterday received

another cable from Governor Strong saying that he plans to go to furls on Monday,

and while he does not state the purpose of his vtElt, I annume that in the circumstances he will no doubt see Governor Moreau from whom he can very likely ob-

tain much more information that he hes been able in the ;last to obtain indirectly concerninn the pending ;Inns of the French to effect some sort of monetary

stabilization.
The nennen.,Jers ooatinue to lnle vnrioun referfinots to Covernon Strong'e

visit sae. what he is doing or is not din, tut there is little, if any, basis
for most of thnee articles.

As you know, Governor 3tr,

han been renting in

the south 4,,f Fromen since early 1, June, and while 'lc has been Isecirtz himnelf
an fully informed nu possible of development& in Pnrin, nevertheiaes 46 i ex-

plained to the Board, he has onisintently avoided way eort atnegotintione with
the officlalc of the French Government, and since his visit aith Governor Robineau

of the Bank of France in th.: midle of Mny, ho he not had any meetings or talks
with the ropresentativen of the ,Lank of France.

I hope, however, that his visit to Intris next weet may enable him to

ascertain a little more definitely Junt what are the present plans of the Bank
of France, and whether indeed there ie any likelihood of our later being asked
by the for acne sort of a credit.

I nm writing thin letter merely to keep the Feard advised, as I stated
I would nhen I last SGW you in Washington, and shall let you knot if I hear anything further cf moment.

Hon. D. R. Crissinger,
Governor, Federal Reserve Board,
Wneninnton, D. G.

GUAM


Very truly yourth,
GEO.GE L. HARRISON,

Deputy Governor,

July 20, 1928

My dear Governor:

As I telephoned to you this morning, the French

.0203 as contrasted with a closing last night of .0215.

franc opened at

The Belgian franc

dropped from .0227 1/2 to .0219, and the lire from .0333 1/4 to .0319.

No

doubt all these declines reflect the acute conditions in Paris, and while
there is no way to

foresee what may develop out of the present

it seems that matters sill get worse before they get

situation,

better.

The new Herriot Government has not yet officially announced ite

I understand that it is to do so on Thursday.

platform.

we can gather from the press at the

present

But so far as

time, it is apparently against

any foreign loans and against ratification of the debt settlement in its
The Herriot Cabinet is composed almost entirely of members

present form.
of

Herriotts own party, that is, the

to be a National Union Vinistry.

Radical Socialist, and cannot be said
The Socialists, who are headed by Blum,

have not ys yet joined with Herriot because they insist on a capital tax,
and the most

that Herriot has indicated at the moment appears to be a sort

of super-tax on

accumulated capital.

Thie may be near enough to a capital

tax to satisfy the Socialists, but apparently it is not yet certain.

While

the reports from Paris are much confused, and while one guess is perhaps as
good as another, it is difficult to see how the Herriot
vive many

days.

Government can sur-

They lack the support of the Republican Union Party, which

is the second largest in the Chamber, and thus far lack the support of the




Hon. D. P. Criseinger

Socialists, a party almost as large as the Republican Union.

July PO, 1926

Marin, leader

of the Republican Union Party was the one who, according to the newspapers,

really led the fight against Gailleux, and was largely responsible for his
downfall.

It may be that he was piqued at the selection of Herriot to form

a Cabinet.

But without hie support and without the support of the Socialist

Party, it is likely that Herriot could not survive a vote of confidence in
the Chamber.

In any event, at the moment the color of the picture is such that

there seems to be little or no likelihood of any serious request by the
present Government for any
This

morning

sort of

credit in this country.

we received a cable from Governor

that he arrived in Versailles yesterday.

Strong merely saying

It contains no comment on present

conditions or about his plans. In view of the new developments, however,

there would seem to be little basis for any but the most informal discussions
between him and Governor Moreau of the Bank of France.

While conditions

might conceivably change very rapidly, there could be nothing for the Bank
of France to propose at the moment.

It seems a great pity that such a political upheavel in France
should have caused their present serious predicament at the risk of losing
all that they had an opportunity to gain under some competent

leadership.

possible for

forceful

With the right sort of command, it might well have been
the French

to have made come order out of chaos, and on the

basis of the report of the Experts

Committee, to

have formulated a compre-

hensive plan of monetary stabilization with reasonable chances of success

and at 8 figure higher than the present value of the franc.

Indeed, in

view of the fact that neither wages nor the cost of living have advanced
proportionately to the present level of the franc exchange, a much higher
rate than the present level might have been accomplished, although so far



3

Hon. D. R. Crissinger

July

1978

as we knot, there haa been no careful study of the balance of prices and other
factors necessary to determine what rate of stabiliation could be made perman-

ently effective.
cat writing this to you jutlt to confirm What I discussed with you

over the telephone thie morning, and to keep you and the Board advit,ed of

what little tve are able to learn of the present confused eituhtion in France.
Things are heppening co quickly that that lettere we get from Governor Strong

are pretty much out of date by the time they reach us, and most of our present
information comes from tde n(iftipaperti

Very truly yours,

(At
GEORGE L. HARBISON,

Deputy Sovernor.

Hon. D. R. Crissinger,
Governor, Federal Reserve Beard,
Washington, D. C.







.July 21, 1926

Dear Governor CriesInger:

Supplementing my letter to you of yesterdhy, you mt,_y

be interested in the onciosed clipping which appeared in this
morning'e Nee lork Times.

It is the best of the newspaper

references to Governor 9treng'8 presence in Paris
Very truly yours,

GEORGE L. tWriRISON,

Deputy Governor.

,. H. Criseinger,

Governor, Federal eserve Board,
Washington, D. C.
GLH.VM

Enc.




.

. ',AM BANK

,ORK

IN

R0

i.

CE E - Lip

,

'

SERVICE DIVISION
MESSENGER SECTION

DATE

FROM

.

DEPARTMENT

DIVISION
SECTION

N. B. USE THIS FORM INSTEAD OF OFFICE ENVELOPE WHEN POSSIBLE.
TO INSURE PROMPT AND ACCURATE DELIVERY ALL COMMUNICATIONS SHOULD BE DISTINCTLY LABELED

TO

F.
STRICTLY CONFIDENTIAL

August 5, 1928

My deer Governor Crissinger:

As you will remember, when I met with the Board on Tuesday, July 27,

I read to you in full a cable which we had received late the previous Saturday
afternoon from Governor Strong, briefly outlining the political and financial
conditions in France /ending up to and immediately following the nee Coalition

Ministry that week, and expressing the opinion that the crux of the eituetion,

which he regarded as Still serious, was the ratification of the debt settlement, without which American credits would, of course, be out of the question.

de also stated that the general belief in Paris ,as that if debt ratification
was assured, our prompt cooperation was regarded as essential to the euccese
of any program of monetary stabilization.

After referring to two conversa-

tions which he had had with Governor Moreau and Deputy Governor Fiat of the

sank of France, in which he had impressed them with the fact that he could
not participate in any diseussione with them which might create even an
atmosphere of commitment, rover-nor Strong stated in the cable that if the

obstacles to debt ratification, to which he referred, were surmounted, he
would have to decide whether to continue his discussions eith the Sank of
France.

You may remember that you, Mr. Platt and Mr. James and I discussed,

among other things, the prevailing anti-French sentiment in this country,
rhict we believed was due not only to the attitude of the French towards

debt ratification, but also towards the recent anti-American outbreaks in



Vnverner Crieeinger

Paris.

August E, 1925

We also discuseed the f!..et that if Governer ftreng did take part in

any diecu,Dsione with the Bank of Frence, they eheuld, it 3oseible, be of such

a character as to preclude any likelihood of their being misconstrued as

ft

colemitment br him since any credit which might be reeueeted by the Penk of

Frence could not, ef cobree, be consummated ebroed, but would necesearily have

to be eubmiited to our direeters for their speroval and later to the Federal
At the cencluelen of our dieceseion, I

Peeerve Bourd for its e.prrevel.

drafted 4 uartgraph which you, 11r. ?Lett end Pr. Jemee tuthorized frP to in-

clude in a cable to Governor !!trenp.., rciteretine, ycur nersonel der e to be

helgul to eonetery stebi/ity in Frence, end cereceing your individuel viewe
taint you Tereonelly tititt no objections to Governor Strong heving decuesictie
Stith the Bank of Freneee'4

,I

commueicated'Ilese views ever the telephone to eur directore who

were in'eeeeion tArt day, nnd whim IIster returned to Nee York, I advieed
you of a eable whic-e we received from Governor Strong on July PS, eayinF, that

there was then uothin immediate

to

consider until the situation clarified,
-r

It having been ennouaced by-the French Government in the meantime that the

question of debt r Jficetion would not be erented to the Uhamber of
Dcoutiee for the eresent.
But es I told you over the telephone on Tuesdey, August 3, we re-

ceived to cable the previous afternoon from governor Strong, who hae gone
to Afacterdem on 3unday stating in substance that conditions were again in a
procese of change and that Governor Moreau had asked to have further die1.

cussions with him concerning the technique and policiee of the operations of

banka of issue, evidently hecsuee of his unfamilierity with the lerger eepects
of theee mattere.

Gevernor Moreau is apiesrently moot anxioue to have thee

discussions since he feele that the Eank of France might later be asked either

to cooperate in the preparation of a. plan or to assume the responsibility of
executing a plan when and if adopted.




-*rem3

Governor Criseinger

4--

eugust 5, 1926

e

Our directors yestirday cabled Governor Strong thet they saw no
objection to his continuing his discussions with the officers of the Bank of
France, provided, of course, that he shell take every possible precaution to
4Ltor
insure that those discussions shall not in any way be misunderstood or misconstrued as a c

mitment on his

part for the future.

As stated in the press on Tuesday and yesterday, it now appears

likely that the French Government will soon formulate or announce a plan contemplating debt settlement,

stabilization of the currency, some sort of satis-

factory disposition of the question of the internal debt and foreign credits.
Governor Strong's purpose, however, in continuing his discussions with the
ree'
'arlk of France is merely to discuss the technique and policies of Central Bank
,perations, as requested, and of course not

to participate with the officials

of the French Government in any progrem they may be formulating.

You may have noticed that the French franc yesterday reached a high
on this movement of .0E96 5/4 as contrasted with a lo* of .196 on July PO.
This evidently reflects an improvement in eeatiment on all sides, but perhaps

of confidence and the resultant,

sore particularly in France itself where lack

flight of capital from France had done so much to lower the exchange value of
the franc.

portence

I shall, of Course, keep you informed of any further news of i-

that I may hear from Governor Strong.

ertee

to have FurVery truly yours,
f the e

of to

with the I reer

414'

to hee GEORGE L. HARRISON,

,441IN

Deputy Governor.
Hon. D. R. Crissinger,

Federal Reserve Board,
Washington, D. C.
GLH.W




r

be ask,

STRICTLY

August 23, 1926

CONFIDENTIAL

Dear Governor Crissinger:

a

4..

In my letter of Auguat 5 confirming some earlier telephone conversations,
I mentioned,

among other things, that Governor Moreau of

the Bank of France had

asked Governor Strong to have some discussions with him concerning the technique

and policies of the opertione of the banks of

issue, and that our

directors had

cabled Governor Strong that they saw no objection to his continuing the discussions

with the officers of the Bank of

France, provided, of course, that he shall take

every possible precaution to inure that those discussion& shall not in any way
be misconstrued or m-sunderetcod as a commitment on ME part for the future.
that time, Governor Strong was in Amsterdam, and
ed returning to Paris

while I

about the middle of August to eee

At

think he then contemplat-

Governor Moreau, he modi-

fled his plan slightly and spent a few days last week at Lausanne and Fvian les
Dains, where he ea* Mr. Mellon before returning to Paris.
This letter le merely to confirm my telephone call of to-day to the
effect that we received a cable from Governor Ftrong Friday night stating that
he would return to Paris yesterday to

continue his discussions with

Moreau along the lines I wrote you.
Very truly yours,

GEORGF L. HARRISON,

Dep0y Governor.
Hon. D. R. Criasinger,
Governor, Federal Reserve Board,

lashinton, D. C.
GLE.MM



Governor

September 8, 1928

STRICTLY CONFIDENTIAL

My dear Governor:

As I telephoned you this morning., Mr. Strong left Paris for

London yesterday, and while we are not yet certain juFt what date he will

sail for New 'York, it le likely that he will do so a.bout the eighteenth
of September unless developments in London, where I understand he is to

see Mr. Mellon, might make it desirable for him to delay sailing a little
beyond that date.

I shall of course keep you informed of any further developments.
Very truly yours,

GEORGE L. HARRISON,

Deputy Governor.

Hon. D. E. Criesinger,
Governor, Federal Reserve Board,
Washington, D. C.




otember 15, 1025

Dear Governor Crissinger:

This ie merely to confirm my telephone convereAione

in which I reported to you that Governor Strong went to London

from Paris on Tuesday, September 7, and that he is to sail from

there on the "Mauretania" this Saturday, the 18th.
Very truly youre,

GEORGE L. HARRISON,

Deputy Governor.

Hon. D. R. Criesinger,
Governor, Federal Reserve Board,
Washington, D. C.




COPY
FEDERAL RESERVE BOARD
WASHINGTON

May 28, 1923

Dear Mr. Case:

Referring to our telephone conversation this morning,
the matter read to you during the Conference with the Federal
Reserve Board held a few days ago, was as follows:
"The Federal Reserve Bank is authorized to establish
an agency in Havana, Cuba, and through such agency
to buy and sell cable transfers, buy, sell and
collect prime bankers, bills and acceptances payable
in dollars which arise out of actual import or export transactions, bear the signature of two or
more responsible parties, bear a satisfactory bank
endorsement, ha-:e not more than 90 days to run,
an
are secured at the
ex 1 si e o' uays o
time of purchase by shipping documents evidencing
the actual import or export, and the actual sale of
goods, and conveying or securing title; and to
exercise only such incidental powers as shall be
necessary to the exercise of the above powers."

Very truly yours,

(signed) W. W. HOXTON
Secretary.

Mr. J. H. Casa, Deputy Governor,
Federal Reserve Bank,
New York, N. Y.




COPY
FERAL REMRVE BaaRD

iiINGTON

May 31, 1923

My dear Mr. Cases
This will acknowledge receipt of your letter of May 25, in
re the report of the Open Market Investment Committee for the Federal
Res erve System.

You are advised, that the report has been presented to and
The Board notes with some surprise that in
the resolution of May 23, 1923, the committee limits the sale of
government security holdings of the various Federal Reserve banks to
11150000,000, which is prorated among them. The limitation of the
I-..ale of thse securities to the above amount is not in accordance with
the policy of the Board.
The Board. sees no reL.son why there should
be any limitation.
considered. by thc, Board.

Your attention is being directed to the Board's determination
that these government securities should. be disposed. of as rapidly as
possible until all are out of the banks. lit the earliest ppportunity
it is desired. that you bring this to the attention of the Open Market
Investment Committee and. the various banks in order that this policy
of the Board may be carried out in its entirety.

You will also advise promptly of the sales of the goverment
holdings of the various banks and. to what extent each of the banks
contributed.
It appears to the Board. that the time is propitious
for the disposition of all these securities, and. the Board trusts
that you will immediately take action to dispose of the governments,
having due regard., of course, to market conditions.
Kindly let the Board be advised. at your earliest convenience.
Very truly yours,
(Signed) D. R. Crissinger

Governor
J. H. Case, Esq.,
Deputy Governor, Federal Reserve Bank,
New York, N. Y.







C0PY
FEDERAL RESERVZ BOARD

W &SHIN:Ca

June 18, 1923.

My detir kr. Case:

ilelsec to soknowled e raceiet of your letter
of June 11 enoloeint,

co:y of a letter written by Uovernor Georiie

A. Norris in the mtitter of the 0 en Market trineuctions is conYuur letter

trolled by the Open Market inveetment Cormittau.

and MI. Norriel letter are very intersetine.
if in your juo,ment the rflatters which you have

written at length bout conoerninb the Open Market trineactions
re uiro further consideration you are It lib rty to print, them
up at the next 11.etiting uf the Oken Market investment .:,otm;ttes

to be held on June 26, vitt the bu,rc.
Assuring you of iy tjeit esteem,

I

im,

Very truly your,
(Signed) D. E. Crissinger,
Governor.

Mr. j. H. Case,
Deputy. Governor,
New York, N. Y.

REVISED DRAFT OF fX-3734, WHIMCONTAINED AN ADDITIONAL PARAGRAPH AS NOTED AT THE
FOC? HEREOF

X-3779
RESOLUTION ADOPTED BY FEOERAL RESERVE BOARD
AT MEETING ON

JUNE R7, 1923

SWETT:CUBAN AGENCIES
NHEREAS, the United States Goeerneent, by virtue of the ,n-called ?lett
emendment has entered into relations with Cuba ehich it does not have with eny

other foreign eountry, especially in
renoy of the United

States

metters of

finance and currency, the our-

having been made legal tender by Cuba;

WHEREAS, the Federal Reserve Board is of the opinion thet the establishm,nt of an 'Ineney in Cuba is lesirable s 2 moans of stabilizing banking conditione and furnishing an ad iquate supply of 01624 currency;
AIEREAS, the President of the United State& and the State Department have

edvisel this board that it

in important that such an agency should be eatabliehed;

AHEREAS, the Federal Reserve bank of Atlanta and the Federal Reserve Bank of
Boston have each petitioned the Feleral Reserve Board for authority to establish
an agency in Havana, Cuba, for the purpose of conducting operations pernitted
under -ection 14 of the Federal Reserve Act;

WHEREAS, the Federal Reserve Bank of

Boston deeireq to eat blieh suet an agency

primarily for the purpose of buying and selling cable transfers an: buying, selling
and collecting bankers' ecceptanoee and bills of exchange bearing satisfectory bank
eneorsementei

WHEREAS, a substantial nortion of the currency now in cironletion in Cuba
consists of Federal Reserve notes of the Federal Reserve bank of Atlanta; andeit

is feared that the establishment of an a2ency of another Federal Reserve Bank in

Cuba night result in the retirement of such notes from eirculAion4 and the liederal
Reserve Ban of Atlanta deeires to eetablieh an agency in Cuba primarily in order
that it may maintain the circulation of its Federal Reserve notes in Cuba;

WHEREAS, the Federal Reserve bane of Bonton does not Jeeire to gut its Federal
Reserve notes in circulation in Cuba but is willing, if authorized to ee,A.ablieh such

an eeency, to preserve as far as possible the circulation in Cuba of Federal Reserve
notes issued through the Federal Reserve I3an

of Atlanta;

BE IT RESOLVED BY THE FEDERAL RESERVE BOARD, that the apelicetions of the

Felerel Reserve aank

of Atlanta and the Federal Reserve

Bank of Boston for perniseion

to establish such azencies are heieby granted on the following terns and conditions,
(1) The Federal Reserve Bank of Atlanta and the Federal Reserve Bank




COPY
FEDERAL RESERVE BOARD
WASHINGTON

June

le,

1923.

My dear Sir:

This will acknowledge your letter of June 15th advising of the action
of the Federal Reserve bank of Boston discontinuing its participation in the
transactions with foreign banks.
The letter of Governor Harding and your letter to him were presented to the Board for consideration.
The Board is of the
opinion that Governor Harding's letter raises very important questions - which
challenge the transactions as matters of doubtful public interest.

The Board is of the opinion that the questions raised by Governor
Harding's letter and your letter are of such importance as to require thorough
consideration.
You are therefore advised that the Board is of the opinion
hat the question should be given consideration at the next meeting of the Open
Market Investment Committee which will be held on June 26th.
A copy of this letter is being sent to the Governors of all the
Federal Reserve Banks for consideration.
The Board would like to be advised, and is requesting each of the Federal
Reserve Banks to give their views pertaining to the subject matter raised by
Governor Harding's letter_
For the information of the Board it is desired that you prepare a
statement showing the total amount of free balances growing out of these operations for foreign banks; also the total amount of investments; the kind of investments, and the yield upon such investments, and such other information as
will put the board in possession of all the facts incident to and neceseary for
a thorough consideration and understanding of the questions involved.
It would be interesting also to have the view of your bank of the
importance of carrying on these transactions for foreign banks, and whether it
should be continued or discontinued.
Yours truly,
(Signed) D. R. Crissinger,
Governor.

Mr. J. H. Case,
Deputy Governor,
Federal R serve Bank,
New York,
.
Y.




X-577D

of Boston are eoh authorieed to establish an eesucy in Havant" Cuba, and through
such ageecy to buy and sell eableetranufers; buy, sell and collect prime baakers/
acceptances and prime bills of exohange, which acceptances and bills are payable
in dollers, arise out of actual import or export traneections, bear the signatures
of two or more reseonsible ,earties, bear a satisfactory tank erOoreement, have not
more then 90 days to run, exclusive of days of grace, and are seeured at the time
of purchase by shipping documents evidencing the actual import or export and the
actual sale of goohs and conveying or securing title to such doods; and to exercise only suoll inoidental powers as shall be neoceeary to the eeercise of the above
as hereinafter used shell mean cable transfers, beakers/
powers. The tera
acceptance aal belie of exohange of the kinds described in this paragraph.
The Federal Reserve Bank of Atlanta SHALL NOT BUY OR SELL ANY CABLE
(2)
TRANSMRS EXCEPT AT THE RheUESI OF THE FEDERAL RESERVE BAN OF BOSTON AS PROVIDED
IN PARAGRAPH 5 HEREOF; and shall not purchase, sell or collect any bills im Cuba
except such as originate in or arc drama upon beaks or other drawees, in the Sixth Federal
Reserve )istrict and such other bills as it shall be necessary to purchase in order
to maintain ate circulation or its Federal Reserve noted,. in Cuba; and before purchasing in Cuba any bills apt originating in, or drewn ueon banks or other draweee
in the Sixth Federal Reeerve'District it shall first offer to purchase for the
Federal Reserve Bank of Boston bills to be selected by the Federal Reaerve dank of
Boston.

The Feder.1 Reserve Bank of Boeton shall not pay out its on Federal
Reserve notes in Cuba, except as hereinafter provided, and whenever bills OR CAeLE
TRANSFERS are offered for eele to its Havana Agency and tee sellers request payment
in Federal Reeerve notes, the Federal Reserve Bank of Boston shall request the
Federal Reserve Bane of Atlanta to purchase such bills OR CAULE TeANSFERF for it
and immediately pay for them with Federal Re-erve notes iseued through the Federal
Reserve aane of Atlanta. The Federal Reserve Bank of Atlanta may at its option
comply with such requent or decline to do el, but if it purchases such bills or
CABLE TRANSFERS it shall pay for them only with its own Federal Reserve notes AND
SUCH CASH AS 4AY ;eE NECESSARY INCIDENTALLY TO COLVLSTE TEE PURChASE and a:AAA ima
ediately reeell them to the Federal Reserve Bane of eoston at cost and without
recouree. If the Federal Reserve Bank or Atlanta shall fail or refuse to purchase
such bills promptly for the Federal Reserve .'.;ang of eoston or shall not have available in Havana a sufficient sUpply Of its eon Federal Reserve notes, the FeAeral
Reserve dank of BOSLOA may itself purchase such bills and pay for them with its
own Federal Reserve notes or in any other form of money or currency which it my
'Z/)

heve available except Federal Reserve rioter issued through. other Federal R=serve
Banks. ;Nothing in this paragreph shall be construed as qualifying or limiting

In any way the right of the Federal Reserve earik of Boeton to purchase bills through

ency and pay for them with bank drafts, cable transfers, book credits, or
in any other manner exeept aith Federal Reserve notes.
such

(4)

The eeteblishment and operation of such agencies, and the exercise -

all the above powers through such agencies, shall be subject to such chars
such further rules and regulations as the Federal Reserve Board may
time to time.




.

X-7,179

(5) The Federal Reserve

,oard expreeely reLerves the

revoke its
consent at any time to the oontinuance of such ugencias, to right to the disconrequire
tinuance of such agencies JR TO AUTHORIZE THE EST -1LISHMERT OF REi4 AGEhCIES
,enever in its discrAion it con9iAers it de rable to do eo.

OUITTip ?A GRAY OF A-3114, REFERRED TO Aii.OVE

(4) The FLtderal kiserve Board expressly reserves
volume of Federal Reserve notes of any or hll Fejeral the right to control the
Reserve Ban
out in Cuba through such agencies and the right to do everything ku to be paid

necessary to
!ake such control effective, including thz, right to authorize
other Federal Reserve Banks to pay out their notes in Cuba whenever deemed
by the
3oard, and if necessary to authorize other Federi Reserve desir&ble establish
ean)cs to
agencies for tn.t purpose.







COPY
FEDERAL RESERVE BOARD
WASHINGTON
August 6, 1923.
My dear Mr. Case:

The Under Sec4etary of the Treasury transmitted to the

Board, for its information, a copy of a letterthat he wrote
to you on August 4 which raises the question of fiscal agency
expenses of the various Federal Reserve Banks.

This letter and the letter written to you by the Under
Secretary were read at the Board meeting this morning.

The

Board is greatly concerned over the possibilities that may
result if the Treasury Department is not to account to the
Federal Reserve Banks for their fiscal agency operations and.

to pay for the services rendered by the banks.

If Congress

denies an appropriation to the Treasury for the payment of
these expenses on the theory that the Federal Reserve Banks
are making money- and it no doubt is upon that theory, then
it would seem as if Congress was opening up the way for the
Treasury and possibly Congress to place upon the Federal
Reserve Banks not only the expenses of the fiscal operations
as we now have them, but the further possibility of loading
up the Federal Reserve Banks with such expenses as some subsequent Secretary of the Treasury might deem and decide to be
fiscal agency operations.
It would appear that this would make possible inroads

upon the earnings of the Federal Reserve Banks to such an
extent as even to threaten the dividends of the member banks
of the system.

It does not require any stretch of imagination




..#2.

to see how these expenses, which may be termed fiscal Agency
expenses, should so absorb the earnings of the banks as to
make payable a dividend to the member banks impossible.
The payment of such expenses might further raise a very
serious problem in the matter of the discount rate, or, put it
in other words, in providing adequate revenues for the operation
of-the banks.

The Board notes that Mr. Gilbert suggests that the Treasury

Department would hesitate to ask the Committee on Appropriations to
make a supplemental deficiency appropriation for the payment of

these fiscal agency expenses; the Appropriation Committee having
denied such an appropriation.

The Undersecretary suggests that

such a request should come from the Federal Reserve Banks to the
Board.

It is suggested that you prepare a statement expressing your
views upon the questions and such recommendation to the Board as you
think proper in the premises.

It seems that the Appropriation Committee and the Budget
Committee have not a clear understanding of what is possible to
happen with reference to the earnings of the Federal Reserve Banks

at any time and partnularly at the present time.
Kindly let us have your views about the matter at your
earliest convenience.
Very truly yours,
(signed) D. R. Crissinger,
Governor.

J. H. Case, Esq.,
Acting Governor,
Federal Reserve Bank,
New York, N. Y.

FEDERAL RESERVE BOARD

ACkNOWLEDCIED
DEC 1 3 1923

WASHINGTON
OFFICE OF GOVERNOR




December 12, 1923.

My dear Yr. Strong:

I have received your latter of the 11th
instant and at the meeting this morning brought
it to the attention of the other members of the
Board. We will interpose no Objection to your
acceptance of the membership tendered you on the
rew York State Advisory Board in charge of the
organization of the Hailing Memorial Association.
The Board would, however, request that you accept
this appointment in your personal capacity and
that you do not permit the use of your title as
Governor of the Fedetal Reserve Bank in the connection.

ifery truly jrs,

/
/1
Yr. BenjmnIn-etr,
c/o Federal Reserve Bank,
New York, N. Y.

13 St

(1.30333400$4*.ilik

ORA08 3V5133351 JAiLEC1

0.3a

,si

44)1.4i-IIIVCO

leciaeoso:

4




:ForroTSE iti 76fth; 3,3Y

s twat( I

i -rs/J91. Tiro f,-, /,

,

o.7101! eilf../ .:,71J135.2 sd$ 4a hisit /.ms,
r;
farw Isristo ofi.i.),R froft-, I Sit
'." F tvr e.
41 set o vet e ,,,,-) 2-retie,
f. 1

.1

1

.

.

.1.roftrw3 11:4.7,1
.1 fet7,-,

,,sral .:

i

L

''-

' ntt

'.,-

ati.J.

s

,

,

C77.)

LIT'

...

,:::""

g.?../4,

-.kl.'

i'

i1

....,

. ii

1

'.. '.'.

---,..::

'a

.......

Cz.:::' '`. 1

,..70

....

.

ill''

9V.:C:-.1.--,:'
.?.*

1

,

--

:

: lovic.:

'

..-

:,

......_.

loasa

,1/40.0sehm!

'

,

viotrzoq .,
',

,

rc.,

:

--

?
-.

I
,...

...._____,,......

OSID1710

OFFICERS
HON

EXECUTIVE COMMITTEE

Y PRESIDENT, CALVIN COOLIDGE

CHARLES E. SAWYER, CHAIRMAN

D. R. CRISS/NGER
EDWARD B. McLEAN
JOHN W. WEEKS
JOHN BARTON PAYNE
CHARLES G. DAWES
FRED W. UPHAM

JOSEPH S. FRELINGHUYSEN, PRESIDENT
JOHN HAYS HAMMOND, VICE PRESIDENT
JOHN BARTON PAYNE, 2ND VICE PRESIDENT
ALBERT D. LASKER, 3RD VICE PRESIDENT
GEORGE B. CHRISTIAN, JR.. SECRETARY
ANDREW W. MELLON, TREASURER

THE HARDING MEMORIAL ASSOCIATION'
BOARD OF TRUSTEES
PRESIDENT CALVIN COOLIDGE
CHARLES E. HUGHES
ANDREW W. MELLON
JOHN W. WEEKS
HARRY M. DAUGHERTY
HARRY S. NEW
EDWIN DENBY
HUBERT WORK
HENRY C. WALLACE
HERBERT HOOVER
JAMES J. DAVIS
JOSEPH S. FRELINGHUYSEN
CHARLES E. SAWYER
D. R. CRISSINGER
CHARLES G DAWES
EDWARD B. McLEAN
JOHN BARTON PAYNE
FRED W. UPHAM
JOHN HAYS HAMMOND
GEORGE B CHRISTIAN, JR.
HOKE DONITHEN
JAMES F. PRENDERGAST

PUBUCITYCOMMITTEE
JOHN W. WEEKS, CHAIRMAN

WILL H. HAYS
GEORGE R. HOLMES
MALCOLM JENNINGS
ALBERT D. LASKER
LAWRENCE C. MARTIN
JOHN W. MARTYN
LEROY T. VERNON

SPECIALGIFTSCOMMITTEE
JOS. S. FREL/NGHUYSEN, CHAIRMAN
C. GLOVER
FREDERICK HALE
FRANK J. HOGAN
DWIGHT W. MORROW
JAMES PARMELEE
GEORGE M. REYNOLDS
HENRY WHITE

SPEAKERS COMMITTEE
JOHN BARTON PAYNE, CHAIRMAN

ARTHUR D. CALL
JOHN TEMPLE GRAVES
DR. THOMAS E. GREEN
DAVID JAYNE HILL
WILLIAM MATHER LEWIS
JOHN POOLE
W. L. RADCLIFFE
THEODORE G. RISLEY
ROLLAND S. ROBBING

ORGANIZATION COMMITTEE
R. CRISSINGER, CHAIRMAN
GEORGE E. CHAMBERLAIN
FRANK T. HINES
CLARK HOWELL
HENRY C. WALLACE
W. B. WOODBURY
HUBERT WORK

ASSOCIATIONS COMMITTEE
CHARLES E. SAWYER, CHAIRMAN

NICHOLAS MURRAY BUTLER
MRS. CALVIN COOLIDGE
JAMES J. DAVIS
HARVEY S. FIRESTONE
HERBERT HOOVER
CHARLES E. HUGHES
W. FREELAND KENDRICK
ELMER S. LANDES
JOHN A. LEJEUNE
A. P. SANDLES

HEADQUARTERSTT414-PSTREET

WASHINGTON
January 10, 1924.

FILES
My dear Mr. Presidents

4p--)

171-cr(?:
411

3

1994

On November 21 we wrote you, informing you of the organization
of the Harding Memorial Association, of which President Coolidge is
the Honorary President and every Member of the Cabinet is a trustee.
This Association was organized for the purpose of building a suitable memorial and shrine to the memory of the late President Harding.
We asked you at that time, through the organization, to display
a card of announcement of your appointment as one of the depositories
of the fund, and to this we have had a very gratifying response. We
feel, however, that a more wide-spread opportunity should be given to
people to make smaller subscriptions, in order that a great number of
citizens should be members of the Harding Memorial Association.
We are enclosing herewith twenty certificates for membership in
the Harding Memorial Association, and we are asking you if you will
not undertake to call the attention of your customers to become mombers, issuing a certificate for all individual subscriptions of one
dollar and above, reporting not later than February 1st the number of
certificates which have been issued, together with the names of the
contributors and the amount subscribed by each, and return to us the
balance of the'certificates unused and money received.

The President of every bank in the country is being similarly
requested personally and not officially to assist us so that every
locality can in this small way voluntarily help make the Memorial a
nation-wide one, and through your kind assistance we feel we will be
able to do this. There is no partisanship in this tribute.
It is a
Memorial to a President of the United States, and we are hoping to
have every citizen who respected President Harding give out of the
fullness of his heart and become a permanent member of the Memorial
Association.
Very truly yours,

WAYS AND MEANS
COMMITTEE
EDWARD B. McLEAN. CHAIRMAN
CHARLES J. BELL

DAVIS ELKINS
SAMUEL J. PRESCOTT
THEODORE ROOSEVELT


CUNO H. RUDOLPH


ganization
CONTRIBUTIONS EXEMPT FROM FEDERAL INCOME T

tee.

3.K
I A,

gAWC,
7

..440,4All

v.,1.23 .2/ E3-LRAND
MAH9U .11V Cr3sil

AotTalooaeA 1,41.R06- vs 01.110FIAH 3HT
T.13Ri"-

3.!.10 ,2q3TRAuonA3H
1.10-7Z,.11tHZAW

V1 8L11i43 t.




FEDERAL RESERVE BOARD
WASH' NGTON

OFFICE OF GOVERNOIOD
s74

October 5, 1925.

144.0

,61




1?*
My dear Governor:

I have your letter of October 3rd and note the fact that
Dr. Schacht is to be here along about October 19th.
You understand that on the 29th, 30th:and 31st of October
the Federal Reserve Agents will be here in Washington and on the
succeeding days of the next week the Governors will be here.
It
has occurred to me that you might not want Dr. Schacht to be here
or you may not want to be here during that time.
I do not know
exactly what his purpose is and it occurred to the Board therefore
that if the Board was to give Dr. Schacht special attention, and
the Board desires to do so, probably with a dinner- that it would
be advisable for him to come over here soon after his arrival in
the United States.
However, we want to handle it to meet your
views about when Dr. Schacht should be here.
You are in full possession of the facts and the Board will
adopt its course to whichever date you may select.
You will realize
that during the week the Agents aid Governors are going to be here
that the Board will be pretty busy with them and might be somewhat
handicapped in giving Dr. Schacht the attention that should be given
him.

Will you kindly write me your views about it and whatever
you think best we will carry out.
Very truly yours

D. R. Crissinge
Governor.
Mr. Benj. Strong, Governor,
Federal Reserve Bank,
New York, N. Y.
Dictated but not signed by the Governor.




'1 PM

WA

E

,:re

1.* -.77K

'

P. TIT 07T.T.:\

;Win

TT!

.1

7

r

2.

:174

Or) r

T:1

_

vtr r,c7477

'19(1.
:TAT

1

t-FAI ;Tr

r1To

-101%37 17,17.7

5,0r/ ittue'
,M71.1c.71 r 0 AFT4j7E3A=31. rt7 r
.7)*
ry
0.7a 1,17
firwq.11,Ton

AT-'PT,

T. 03.

n-51.ry q-GeT1.4m

rr

T

tlOç

O.

pin :0

-,

4f

7,7 A,1

74.

nrIpErOTIT

:orta
Tor

rrf 1.717r T

7-

000
f

r nor

r

r:yrp

T

S

11

.171:71;74 ()Li

.

*

frr

ti.101.7.f 0;

.(1./ /154st,,,

oosorni,

BE:4

77,7.
ru'I

fpc,

`,/CrOP,.17.

-11

Ae..20

7;)!

T'

"

IA I h.,.

(1-:1

.?:.7395,01.y.t

.rpc)rtfl4re51:7
on

,777

1!.n.

t.r,t;

r
TT

r

TT
`

7-77

"Tcv

SIE)Xf

.1

ri

rr:10

c:ta,-..

Cf0

cps, c
,,f

7'4'

r

',Tour .0,.;

ra.*
Or'

"In* v'T

--.1/

fpJ IO47(

("I-LT

COPY
FEDERAL RESERVE BOARD
Washington

April 07, icn5.

Dear Mr. Case:

Under date of March 31st, I addressed a. letter to Governor
Strong, requesting information desired by the Board as to the present
status of the credits to the Belgian Government and the National Bank
of Belgium that were in contemplation at the time the Governor apIn a letter received from him
peared before the Board on March 8th.
under date of April 15th, he referred back to a telegram which he sent
Mr. Platt on March 18th with reference to the terms of the approval
given by the Board on March 8th to the Federal reserve banks' yarticipation in the Central Btnk credit.

You are requested to advise Governor Strong that under the
resolution adopted by the Board at the meeting referred to, he was
authorized to proceed with the matter, subject to final formal approval
of the Board and that on report from him that the matter has been consummated in substantial conformity with the terms of its tentative approval, the Board will formally approve the transaction.
Very truly yours,

(Signed)

Mr. J. H. Case, Deputy Governor,
Federal Reserve Bank,
New York, N. Y.




D. R. CRISSINGER,
Governor.

REDUCTION OF THE DISCOUNT PATE OF THE FEDERAL RESERVE RANK OF NEW YORK FROM
4 TO 3 1/2 PER CENT. ON APRIL 22, 1226.

The principal considerations entering into the discussion which preceded the change of rate were as follows:
The reasons which led to an increase of the rate in January had
largely passed away. The stock exchange speculation had subsided and street
loans had been reduced 700 million dollars. There had also been a reduction
in the deposits of New York City banks, and the amount of credit extended by
those banks was no larger than a year ago.
The psychology of business had changed, and there Was some indication of business hesitation, the principal evidence of which was to be found
in weakness in commodity prices and a tendency toward price concessions in
many fields of business.
With business in this condition the amount
rowing of member banks at the Federal Reserve Ranks throughout the country
exerted some pressure on those banks to liquidate their borrowings, and hence
some pressure on business, which tended to aggravate the downward tendency.
put
A lower rate would have a tendency to make funds move away from
New York rather than towerd New York.
It would encourage banks in other
parts of the country to withdraw funds from New York and use these funds
for ouaineas purposes, or to repay the Federal Reserve Banks in thoseaiisSimilarly, lower rates would tend to facilitate gold exports rather
tricts.
team gold imports.

A lower rate was in keeping with what the directors believed to be
a tendency toward easier money rates.
In lowering the rate, it was recognized that there was some possible danger that the lower rate would stimulate further employment of credit
for speculative uses or for overextension of business.
It WES not believed,
however, that this danger was great, and it was recognized that, if the danger
should become a real one, it could be met by sales of securities in the open
market and by again increasing the discount rate.




FECEVEE
IC71

FEDERAL RESERVE BOARD
WASHINGTON
OFFICE OF GOVERNOR




July 17, 1926

)IAA). 4JJILAJ

Dear Mr. Harrison:

I acknowledge receipt of and have brought
to the attention of the other members of the Board your
letter of July 15th, confirming what you had to say to
Mr. James and me on July 2nd, with respect to the cable
you received from Governor Strong concerning the proposal of the Governor of the Bank of France to confer with
him on French monetary matters.
The contents of your
letter was noted by the Board members.
Very truly yours

Mr. George L. Harrison, Deputy Governor,
Federal Reserve Bank,
New York, N. Y.

21
1PR esrvrnp AT Arzwrzma
L

BOARD OF VERSCTOIN.

SalRirrARV




et)

FEDERAL RESERVE BOARD

RECEIVE !.}

WASHINGTON

J

ADDRESS OFFICIAL CORRESPONDENCE TO
THE FEDERAL RESERVE BOARD




23 1C20

July 22, 1926.

09LEJ
Dear Mr. Harrison:

Receipt is acknowledged of your letter
of the 20th instant, addressed to Gacternor
Crissinger, describing conditions in Paris
and the French situation generally. Your
letter was noted with interest by the members
of the Board.

/

Very truliJiurs,

Eddy,
Secretary.

lter

ill'. George L.

.iarrison, Deputy Governor,

Federal Reserve Bank,
New York, N.Y.

2 3 1926

FEDERAL RESERVE BOARD
GT-

WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE TO
THE FEDERAL RESERVE BOARD




July 23, 1926.

/
Dear Mr. Harrison:
I acknowledge receipt of and shall
bring to the attention of the members of the
Board, your letter of July 21st, addressed to
Governor Crissinger, enclosing newspaper clipping which appeared in the New York Times on
July 21st with reference to Cove or Strongls
presence in Paris.

Very truly

o

°".

,,t96.11

alter L. Eddy,
Secretary.

Mr. George L. Harrison, Deputy Governor,
Federal Reserve Bank,
New York, N. Y.

MWMVIAJDATM2WINGOU
°moms on,uwcz.

a- (9

/-73 /4)-r

02_7

L. H.

iv
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE TO
THE FEDERAL RESERVE BOARD




August 6, 1926.

Dear Mr. Harrison:

By direction of Governor Orissinger, I
acknowledge receipt of your confidential
Auust 5th, which the Governor has
brought to the attention of the other members
of the Board present, in Washington, at this
time.
Very truly

rs,

Walter L. Eddy,
Secretary.

Mr. George L. Harrison, Deputy Governor,
Federal Reserve Bank,
New York, N.Y.

'

"-rel) AT W111.0
comma cotroCEL

Ni-/W19
citrrAlav

)

26

44,1y4.4.,241k

FEDERAL RESERVE BOARD

tLCEVIJ

WASHINGTON

AUG a co 1926

a. L. H.

OFFICE OF GOVERNOR

August 24, 1926.

My dear Mr. Harrison:

I have your confidential letter concerning the
movements of Governor Strong, for which I

thank

you.

This of course confirms our conversation over the
telephone,

sincerely yours,

Mr. G. L. Harrison,
Deputy Governor,
Federal Reserve Bank,
New York, N. Y.

lettuir-a-14,




AT IsT=T'ING
01INCEL

TARY

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