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Aug.

2, 1915.

Dear Ir. Jay:
....aaa
I thought you might be curious about the
in the newspapers as having been

aeeting which was reported

held here on Tuesday.

Two meetinga were

held - one the Executive Committee of the Governors and the other a special

r:

meeting of the Federal Reserve Boarda

The Governors' meeting was Amply for

the purpose of discussing various matters referred to that committee at the
o

time of the Chicago conference and

the

result of the discussion of these

matters briefly was to agree to continue our collection plan as at present
operating until

the not

Governors'

conference, to continuo the present allot-

4

nent basis of warrants and acceptances purchased through this office, and to
allow this broil' as reimbursement for expense incurred 5% of the interest earn-

ed on the

investments so

made.

Other

matters discussed were simply details.

The meeting of the Federal Reserve Board occupied the entire day

and was called at the request Of -ecretaryiloadoo for
ruling on the question of 'whether a national

the purpose of making a

bank can enter into revolving

letter of credit contracts which extene for a period exceeding six monthS.

They have made a

ruling favorable to our contention that national banks can

enter into ouch contracts and I have so advised Mr. Brown.

They have not

yet passed on the question of eligibility of renewal drafts or drafts of the
character arising out of such a credit as Brown Brothers have negotiated.

The credit will be concluded in a few.days, but I have been obliged to advise
:Ir. Brown that the question of eligibility is still open.




Warburg and Lliller

2

Axerre

Jay,

8/12/15.

44'
wore positively opposed to the ruling a0 far as I could gather but finally came
around, with the understanding that no ruling

should bo made on the question of

eligibility.

Outside of a busy day on Tuesday, things have been very quiet here
and yesterday afternoon I spent three or four hours

with

Arthur Young going over

his proposed report on the examination of the five typical banks.

This is to be

rewritten and ,after I get it, in the course of a Levi days, I may burden you with

a draft to look over.
to my expectations.

I am a little disappointed in the result; it is hardly up
Curtis telegraphed he would be back Friday morning and I

have replied urging him to stay over the rest of the week.
about being away.

-

This morning I received but five letters in the

ILuneasiness
mail and you received two only and those of no importance.
-ith best regards,
Sincerely yours,

Pierre Jay, Esq.,
Crescent Beach,
Conn.

BSJr/PE




You need have no




ne 14th, 1916.

ne^r fir:
"1.th the deepest regret, I hereby tender my
resignation as Governor of the Feder--1 ReFerve Bak of
7ew York to t,-ke effect at the pleasur- cc the Board r,f
Directors.

Resnectflly,

Governor.

erre Jay, 'so.,

Chairman, r-47)..rd of ?irectors,
Federal Reserve Bank,
New York City.
35 Jr/'/CM

June 14th, 1916.
My dear Mr. Jay:
sometimes embarrassment arises through lack of definite understanding, so I feel thnt I mast write you a note such as will enable the
Directors of the b lc to

t2ke

whatever action they m,-'y think best and

right in regard to my position, without the 7,ossibility of misunderstanding.

Enclosed is my resignation, which should be in
the meeting on Thursday

in case it is wise to

nor your associates need feel the

decide

slightest

use

your hands at

it, and neither you

hesitation if you

should

that the interests of the bank or my own interests call for

an acceptance of this resignation, in

acting upon it at once or when-

ever the Board thinks it necessary.

If the Board should

not accept my resignation but give me

a leave of absence for a definite or indefinite period, I would like
to have you retain this resignation, so that it may be presented and
acted upon at any time in the future.

I have explained to you already how I feel about my salary
and wish you would explain

to

the Directors, as I did to you, that I

do not need the salary and could not

po=7sibly draw n salary when I

was not earning it.

I hope you fellows all understsind hew deeply I appreciate
your kindness and help and sympathy.
Very truly yours,
Pierre Jay4_,AA,.,

4gent,
Federal Reserve Bank,
FeVral Reserve

New


York City.

Office Correspondence

FEDERAL RESERVE
BANK OF NEW YORK

-7

Date June

Subject :_French credits.

Mr. Jay
Mr. Strong.

Attached is all the correspondence relating to the French
credits, as it has come to me from Washington in the lest day or

t770.

I guess Delano's letter had better go in my personal files_

and, possibly, Warbarg's also.

Would you mind having a statement

prepared by Mr. Kenzel to go in my letter to 7arburg?

4111-1 f-

BS Jr/VeM




-6,0{0-1

aiWZG-41i-




Lstes

Park, Colo., July 24, 1916.

Mr. Pierre Jay,

Cody, Wyoming.
Dear Mr. Jay:

I am not certain that this indefinitoladdress will

reach you, but I shall not ask you to adyibe me by postal
if it

does not as the Captain of the Foot l13al1 Team over

in Orange did with me When extending a c4ai lenge for a
match. Mr. Treman's last letter mention0 your address
as "Cody" and I presume that is 611-therels

to it.

/----,
\\
So far as I can tell, th iOrce is ageing with

me and I am gradually getti
Denver doctor holds me de
up here in a week or two
to be treated with more in

hour a day for wok2ice

a little

work tone.

The

0-oft'deal, but he is coming
me over, when I expect
6o far I have one

gnce.

04 e o aring a
an
tive
Treman and the others att
ce.
in "Denver I havalead

nice viSit with you

correspondence with
Things seem to be

going beautif447.
,

Th.-et

th \s,

the Brikar-otJEngl

that la'on my mind very strongly is

:.iysi

arigement, and

-ail

carrying out

the

working on a memorandum to be
submitted to t1 Board through the bank, which I hope
willesult in/ me action being taken before it is too
lateget aw oenefit this fall.
last (understanding

ways I wish you and your party had decided
In
to come here. -4e would probably have had our noses over
the desk too much, particularly you, but it is one of
the most beautiful places in the country, wonderful riding
and a delightful climate.
4-room cottage
about 100 yards from the hotel, one room already converted
Into an office, where later on I hope to dispatch a lot of
business, particularly something in the line of a solution
to the problem of domestic exchange. Why don't you try

I have a little

and chop off a few days for a visit up here on your way

home?

Don't bother to answer this - you are on a vacation
to get into partner-

and I am not.
I am going to take this opportunity to tell
you what pleasure it has afforded me
ship with you for the past two years. Thinking over our
experiences, I see nothing to regret and many things to
be proud of; the best of all the warm friendship that has
developed among all of Us in the office. Won't you give

my warmest regards to Mrs. Jay and my best to you.
Very sincerely yours,




Estes Park, Col.,
August 25th, 1916.

Dear Mr, Jay

With considerable diffidence, Ilm writing you
about a matter which it seems tome4h.oul----a- 1) considered by
e

an4/(71?74

the Directors of the bank,

is of sufficient importance
\,

ten without a

7
attention to

tter whif

a

to the Directors

1n that this letter is writ-

tie s

the*

Mitted

b

hope in doing so you will '

feel t1.11\ he subject

may

and simply to

draw their

ater on cause embarrass-

men t.

rectors are interested in various
enterrises andre3re serving as Directors in companies in
Some OTaur

which\ ey

ars'. '

/

terested.

Advertisements have appeared oc-

casionally, in each instance, I believe, over
responsible bankers or

the names of

brokers, offering securities of some

of these corporations' and giving in

these

advertisements a

list of the Directors of the corporation, describing in each

instance the

members of

our floerd as Directors of the Federal

Reserve Bank of New York.

However remote may be the possibility of criticism in the event of difficulties arising in connection with

securities, I nevertheless feel that the in
terests of the reserve bank will be best served by arranging
these investment

with our Directors that they

eliminate any reference to

the




-2-

August 25, 1916.

Pierre Jay, Esq.

Federal Reserve Bank in advertisements of this character.
While in London recently, I took the opportunity to inquire as to the custom there in regard
matters and

was told that not

to these

only in the case of the Di-

rectors of the Bank of England, but as to the directors of
any of the prominent banks of London, serioullriticism

would arise were the name of a banking insti ultion used in
this way.

Doubtless no consiør
i

n has

iven by

tjlki

atterd if you think it

wise to bring up the subject

sure they will. agree

any of our directors to

with the views w

expi.pod.
Very tiu y yours,

Pier4

Jay, Esq.JJ
n Board f Directors,
keserva ank,
Feder
ing, New York City.
Equita
Chai

BB Jr/VCM




Estes Park, Col.,
August 25th, 1916.

/1

Dear Mr. Jay:

0

It is now nearly three months slice I was
first incapacitated from attending tr-any----dail.

at the

bank and I have been out herts#ewo month
In
)
view of the fact that it
been e essary to temporarily fill my place at the o
I do not feel justified
in continuing to/dr iv my

an officer of the bank
and am writing "/ ask you t \ take such action as may be
.o
appropri,a4e-Ito\ 0 yr the ,Vutiora.
ar

\

N.,...,_

t is anomalous for any bank officer
to Ao dc his posii ion when quite incapacitated from perform/
ing h s'.dulieS/end in the case of a Federal Reserve Bank,
it seems to me unwise to risk the criticism by my being
Of cours

continued on the payroll.
of the

I need not assure you of my deep appreciation
action of the Directors in .giving me this long leave

of absence.

Very truly yours,

Pierre Jay, Esq.,

Federal Reserve Bank,

Equitable Building,
New Yorl'




Estee Park, Col.,
August 25th, 1916.

Dear Mr. Jay:

Your letter of the 11th, baring evidince of preparation on the installment plan, reached me lae night, and I
was deligh4ed to get all the news of eur-4;41Vdty, and
saying that
porticolarly,
Mr. Tram
by the same mail, a letter/
you are looking very well and/
subject of interlocking diree

ntly fit to uckle the
You have my deepest eympa-

//-

thy.

r of fac
out here, and fredm from
As a ma

I ha done very little work
it ruption enables one to cover

o sible in our busy office.
It woul have been a great pleasure to have had a
visit h you eAt here on your way home, but I realize it could
not be ar yed: At the risk of upsetting °Mot' plans, I may

much mo e

d th

later on take you at your work and try to coax you out here for

a little visit. It really is not such a

bad trip when the wcAther

is not too hot.
Your vacation took you pfIrtly over ground that I have
visited and found delightful in every way, but traveling as you
0.

did does not strike me as a very restful holiday.




.2-

Pierre Jay

Esq.

August 25, 1916.

What you say about our work at the office gives me
no end of pleasure and I suppose we are all selfish enough to
feel gratified when we hear that we are missed.

It has long

been apparent to me that everything accomplished at the office has been made possible by our complete accord and by the

absolute lack of friction of conflicting purpose, and as I
have

repeatedly said, you

and Curtis have real

share of the work, while I get the credit.

I

Idone the lion's

ill be a great

joy to be back with you, and for the_first

life, I

,

are really making an effort to t

car )of myself

The order reppecti

it is

fiasco, and

masters was a silly

gratl.,f_yinztoe4 that the Governors were
-

on record as opposing/any su

)draIt, measures.

You and I

are also in accord( bout the du))ernatorial situation in Ya.shington.

imp6,y1a,,,t4 see how anybody can be pleased,

and the/

ly thing accomplished is the establishment of the

ptinoi 1

of rota i

than Ham

--144aw

solutely cryptic.

.

Harding, as you say, has more punch

and then he is erratic and again he is abEither Delano or Warburg would have made a

better leader.

I share your worry about the epidemic in New York.

Two of my kids are going to be here Sunday and I may hang on to
them until matters clear up in New York.
keep my little girl here all Winter.

At any rate, I will

If I were you, I would

put those girls of yours somewhere out in the country until, the

city was absolutely sere.

Cold weather is supposed to stop it,

but the doctors seem to know very little about the real cause of
the trouble.




..3

Pierre Jay, Esq.

August 25, 1916.

We are expecting to hear Hughes speak here net week.

I agree with you regarding the opening of his campaign, and his
speech of acceptance did not impress me at all. On the other
hand, he has put more punch into the campaign now and if he will
only wind up with some suggettion of a constructive program,
he may have a chance of election. I have been surprised at the
expressions of disapproval of Wilson's adminiet tion heard here
from men coming from all parts of the country.i( While they do

f

not seem to be particularly enthusiastic_ abouyughes, most of
those with whom I talked have some_gr4dge a-gaill Wilson and

are likely to vote accordingly/
My other letters

/

//
e

news of my doings here-an-4-4 wo

contain all the recent
repeat in tnis letter.

will surely do the same.
i
The two 1 ttere enc eed explain themselves. The one
Write me n w and

regardin0i-aairec
teel

,y decide to "gun", but I really
t the time has come to deal with the subject mentioned.
With wa 71 regards and many thanks for your leVer and

many oth

4

I am,

Faithfully yours,

Pierre Jay, Esq.,

Federal Reserve Bank,
Equitable Building,
New York City.
BS Jr/VC!




Estes Park, Col.,
Sept. 1, 1916.

Dear Mr. Jay:
1

During your absence, I have had a liit le correspond1

ence with

Mr. Treman and one or two

m Warburg in

A!_y:t4ora_ir

...

regard to our office orgamizationne sugge. on I sent
Mr. Treman was to give Cann,

\ '-

4Ppor

in our new foreign business -,1\arr.e

/"..

-...

\

or the Subtreasuiyit'who wa.ti,
coinage,

eta.

work

arted this Fall possibly

the Assay Office, the mint

additi,on--E-man f

employing in

inity to do a little

,

N

oroU,Oily acquainted with gold

in
s suggeeiti/ may not bn feasible.

Warburg's

'Td-06kiken to come to New York as Deputy
Governior, and thpre are many advantages to be seen in that plan.
Anotl-t\zuggestto/n, which also appeals to me strongly, is to have
Kains CO'rff-0_14--18W York as Deputy Governor, if he will, which I
idea 00

we sh

doubt.
have go i

of view.

to look at

the matter from

If we should determine to do a large

we would need a man

different points

forein business,

like Kains; if the business were of little

importance, possibly Cann could handle it.

On the

other

if it seemed unlikely that I would return permanently,
might be the beet man to take into the organization.
I do not fool that

hand,

Aikem
Just yet,

my own mind in fully mde up on this import-

ant subject, but it ought to be

in course of

consideration and




To

Pierre Jay, Esq.

Sept. 1, 1916.

discussion so I am writing this with the suggestion that you
and Mr. 'reman, with Mr. Warburg and Mr. Curtis, talk it over
from time to time and if you feel like doing so, let me have
your own views.

After a week's upset, I am fe ling a good deal improved and hope from now on to keep up with

9211.

quite a little accumulation, but none of it
Please don't forget to

matter.

write

ofi
&bQuk

There is

I
much

importance.

I

'the Clayton Act

If I can give you any)aiiit-aor sugge Vans about

those New York bankers and th

r aft 1

ations, I

ill be mighty

le\ tywou1d hel:) to solve that
puzzle of "substantki
eti n and what it really is.
e my reg
s t 11 the boys. I have letPlease
glad to do it or

anything

ters from a number of
short
recc

can ilv_su

the

ofA.cors which will be answered

_yeu that

e

Sincerely yours,

Pierre Jay, Esq.,
Federal Reserve Bank,

Equitable Building,
New York City.
BS/VCM

they are very gratefully

Form 1207
,S OF SERVICE DESIRED

UNION

VelESTE

St Day Message

4r;kslANA

'ter

WESTERN UNION

lessage

TEL

Night Letter
Patrons should mark an X opposite the class of service desired;
OTHERWISE THE TELEGRAM
WILL BE TRANSMITTED AS A
FAST DAY MESSAGE.

14&-%-irr.
-74

AM

NEWCOMB CARLTON, PRESIDENT

Send the following telegram, subject to the terms
on back hereof, which are hereby agreed to

qi c 191

Estes Park, Colo.,

Pierr. Jay,

Federal Reserve Bank,

Equilc Building, New Yorl,.
Telegram
-nd naticr,

recei-

The only kinds of tusiness of trust companies

banks which require "consideration in determining competition

are deposits, foreign exchange and open 4arket loans
paper.

Stop.

including comMercial

As tc deposits generally speaking, I believe the trust

companies get a class

of business which

national banks cannot handle

ecnuse trust companies have special earning capacity and lower reserve
tquirements

which enable them

to pay

high'er

rates for dormant accounts

or which they make no promise of lines of accomodation, whereas, national
nks in
,

BENDER'S ADDRESS

FOR ANSWER




ral allow less interest and ,ive
Tr

romise of other accomoda-

p.xrprinnne, mos+. hi, ne.not,
SENDER'S TELEPHONE NUMBER

truQi

ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERMS
To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office for comparison.
one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
I. The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, beyon,
amo
received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty times the
reedi
for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lines; nor for errors in cipher or obse
telegrams.
In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery, of this telegram, whetIn
caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued, unless a greater value is stated i
writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be pail based on such value equal to one-tenth o
one per cent. thereof.
The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach its
destination.
Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such office in other cities or
towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeavor to
contract for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sent to such office
by °be of the Company's messengers, he acts for that purpose Es the agent of the sender.
The Company will not be liable fel. .damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the telegram is
filed with the Company for transmission.
Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in ad.
the foregoing terms.
No employee of the Company is authorized to vary the foregoing.
THE WESTERN UNION TELEGRAPH COW
INCORPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
FAST DAY MESSAGES
A full-rate expedited service.
NIGHT MESSAGES
Accepted up to 2.00 A.M. at reduced rates to be sent during the night
and delivered not earlier than the morning of the ensuing business day.
DAY LETTERS

A deferred day service at rates lower than the standard day message rates as follows: One and one-half times the standard Night
Letter rate for the transmission of 50 words or less and one-fifth of
the initial rate for each additional 10 words or less.




SPECIAL TERMS APPLYING TO DAY LETTERS:

In further consideration of the reduced rate for this special "Day
Letter" service, the following special terms in addition to those enu-

Letter shall be delivered on the day of its date absolutely and at all
events; but that the Company's obligation in this respect is subject
to the condition that there shall remain sufficient time for the transmission and delivery of such Day Letter on the day of its date during
regular office hours, subject to the priority of the transmission of regular telegrams under the conditions named above.

No employee of the Company is authorized to vary the foregoing.

NIGHT LETTERS
Accepted up to 2.00 A.M. for delivery on the morning of the ensuing
business day, at rates still lower than standard night message rates, as
follows: The standard day rate for 10 words shall be charged for the transmission of 50 words or less, and one-fifth of such standard day rate for 10
words shall be charged for each additional 10 words or less.

merated above are hereby agreed to:

Day Letters may be forwarded by the Telegraph Company as a
deferred service and the transmission and delivery of such Day Letters
is,

in all respects, subordinate to the priority of transmission and
Day Letters shall be written in plain English. Code language

delivery of regular telegrams.

is not permissible.
c. This Day Letter may be delivered by the Telegraph Company

by telephoning the same to the addressee, and such delivery shall be a

complete discharge of the obligation of the Telegraph Company to
deliver.

This Day Letter is received subject to the express understanding and agreement that the Company does not undertake that a Day
D.

SPECIAL TERMS APPLYING TO NIGHT LETTERS:

In further consideration of the reduced rate for this special "Night
Letter" service, the following special terms in addition to those
enumerated above are hereby agreed to:.
Night Letters may at the option of the Telegraph Company
be mailed at destination to the addressees, and the 'Company shall
be deemed to have discharged its obligation in such cases -with respect
to delivery by mailing such Night Letters at destination, postage
prepaid.

Night Letters shall be written in plain English. Code language
is not permissible.
No employee of the Company is authorized to vary the foregoing.

Form 1207
a

WESTE, UNION
11,V11
AM
TEL
E

OF SERVICE DESIRED

Fast Day Message

Receiver's No.

47,A

Letter

WESTERN UNION

ssage

NighL Letter
Patrons should mark an X opposite the class of service desired;
OTHERWISE THE TELEGRAM
WILL BE TRANSMITTED AS A
FAST DAY MESSAGE.

17-71r-v

Time Filed

NEWCOMB CARLTON, PRESIDENT

Send the following telegram, subject to the terms
on back hereof, which are hereby agreed to

To

Check

191_

Sept. 8, 191C,

Pierre Jay.
companies

-t hirh rates vi imtxrxm±

same depositors carry t:-Hr au
ximtkr)ext with national b[:

e commercial accounts at lower rates
Stop.

As to foreign exchange, it

is the most competitive busi_ss done by the New Yor

hanks.

Stnp._ ThA

only point where this business competes is in buyirg long bills.

Stop.

All other operations are simoly swanning checks with no effect on credit
ansactions.

Stop.

ate bankers bu,, ler er

Osnirailxxs

.;

Generally speaking, the trust companies. and pri-

uantities of long bills than the national barks,

smkirx xiknxtristxramxiniFs,

ix r

10 are, competition is universnl between

A.

11 lending institu-

tioris in the Wall Street district and indirectly so as to many others which

--N

ke loans through Well StrEet corresnondents.

SENDER'S ADDRESS

FOR ANSWER




Stop,

This charscter

SENDER'S TELEPHONE NUMBER




ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERks:
To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office for comparisor
one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR a qFor
RTT(
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
1. The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, bey,
SITIO
received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty times t
receifor sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lines; nor for errors in
or obse,
telegrams.

In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery, of this telegram, whetht
caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued, unless a greater value is stated i
writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be paid based on such value equal to one-tenth 01
one per cent. thereof.
The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach its
destination.
Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such office in other cities or
towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeavor to
contract for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sent to such office
by dile of the Company's messengers, he acts for that purpose cs the agent of the sender.
The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the telegram is
filed with the Company for transmission.
Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in addition to all
the foregoing terms.
No employee of the Company is authorized to vary the foregoing.

THE WESTERN UNION' TELEGRAPH COMPANY
INCORPORATED

NEWCOMB CARLTON. PRESIDENT

CLASSES OF SERVICE
FAST DAY MESSAGES
A full-rate expedited service.
NIGHT MESSAGES
Accepted up to 2.00 A.M. at reduced rates to be sent during the night
and delivered not earlier than the morning of the ensuing business day.
DAY LETTERS

Letter shall be delivered on the day of its date absolutely and at all
events; but that the Company's obligation in this respect is subject
to the condition that there shall remain sufficient time for the transmission and delivery of such Day Letter on the day of its date during
regular office hours, subject to the priority of the transmission of reg-

A deferred day service at rates lower than the standard day message rates as follows: One and one-half times the standard Night
Letter rate for the transmission of 50 words or less and one-fifth of

NIGHT LETTERS
Accepted up to 2.00 A.M. for delivery on the morning of the ensuing
business day, at rates still lower than standard night message rates, as
follows: The standard day rate for 10 words shall be charged for the transmission of 50 words or less, and one-fifth of such standard day rate.for 10
words shall be charged for each additional 10 words or less.
'

the initial rate for each additional 10 words or less.

SPECIAL TERMS APPLYING TO DAY LETTERS:

In further consideration a the reduced rate for this special "Day

ular telegrams under the conditions named above.

No employee of the Company is authorized to vary the foregoing.

Letter" service, the 'following special terms in addition to those enumerated above are hereby agreed to:

SPECIAL TERMS APPLYING TO NIGHT LETTERS:

Day Letters may be forwarded by the Telegraph Company as a
deferred service and the transmission and delivery of such Day Letters
is, in all respects, subordinate to the priority of transmission and

In further consideration of the reduced rate for this special "Night
Letter" service, the following special terms in addition to tboso

Day Letters shall be written in plain English. Code language

Night Letters may at the option of the Telegraph Company
be mailed at destination to the addressees, and the Company shall

delivery of regular telegrams.
is not permissible.

c. This Day Letter may be delivered by the Telegraph Company
by telephoning the same to the addressee, and such delivery shall be a

complete discharge of the obligation of the Telegraph Company to
deliver.

This Day Letter is received subject to the express understanding and agreement that the Company does not undertake that a Day
D.

enunierated above are hereby agreed to:

be deemed to have discharged its obligation in such cases with respect

to delivery by mailing such Night Letters at destination, postage
prepaid.

Night Letters shall be written in plain English. Code language
is not permissible.
No employee of the Company is authorized to vary the foregoing.

Form 1207
. SERVICE DESIRED

I

TI

Oay Message

'or
.essage

TEL

tter
Patrons should mark an X opposite the class of service desired;
OTHERWISE THE TELEGRAM
WILL BE TRANSMITTED AS A
FAST DAY MESSAGE.

II

,NN

4r/A7AA
WESTERN UNION
1....z;274,
4Ce-

UNION

Cheek

AM

Time Filed

N EWCOM B CARLTON, PRESIDENT

Send the following telegram, subject to the terms
on back hereof, which are hereby agreed to

To

E

Receiver's No.

3,

1916.

191

Pierre Ja-:

of competition I believe is ner7ligible as it

cannot possibly

through interlocking directors. Stop. As
business is so highly specialized, and rates
brokers thso I do not consider there is

to commercial

be controlled

paper, the

so largely cortrolled by
situati

to be

Stop.
This is alr-cFlt equally true of tine ccliar
'dealt vit7n.
Such little competition as exists between instit,1 ns
Stop.
loans.
having security departments is in my opinion negligible. Stop. Joint
purchases by conpetitors of large sc.,rity issues is in the public in-

4erest and necessary. Stop. With this very general classification
believe business done by
institcn must be considered in order
to do
SENDER'S ADDRESS

FOR ANSWER




justice.

Ren. Strnr,.
SENDER'S TELEPHONE NUMBER




ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERM
To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office for comparison.
one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
I. The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, beyond
emou.4
received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty times the
. ,eceive d
for sending the same, unless specially valued; nor in any ease for delays arising from unavoidable interruption in the working of its lines; nor for errors in ci
or obscu
telegrams.
In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery, of this telegram, whethe
caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued, unless agreater value is stated in
writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be pail based on such value equal to one-tenth of
one per cent. thereof.
The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to reach its
destination.
Telegrams will be delivered free within one-half mile of the Company's office in toWns of 5,000 population or less, and within one mile of such office in other cities or
towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, endeavor to
contract for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sent to such office
by dile of the Company's messengers, he acts for that purpose as the agent of the sender.
The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the telegram is
filed with the Company for transmission.
Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in addition to all
the foregoing tern..
No employee of the Company is authorized to vary the foregoing.

THE WESTERN UNION TELEGRAPH COMPANY
INCIRPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
FAST DAY MESSAGES
A full-rate -expedited service.
NIGHT MESSAGES
Accepted up to 2.00 A.M. at reduced rates to be sent during the night
and delivered not earlier than the morning of the ensuing business day.
DAY LETTERS

A deferred day service at rates lower than the standard day message rates as follows: One and one-half times the standard Night
Letter rate for the transmission of 50 words or less and one-fifth of
the initial rate for each additional 10 words or less.

SPECIAL TERMS APPLYING TO DAY LETTERS:

In further consideration of the reduced rate for this special "Day
Letter" service, the following special terms in addition to those enu-

Letter shall be delivered on the day of its date absolutely and at all
events; but that the Company's obligation in this respect is subject
to the condition that there shall remain sufficient time for the transmission and delivery of such Day Letter on the day of its date during
regular office hours, subject to the priority of the transmission of regular telegrams under the conditions named above.

No employee of the Company is authorized to vary the foregoing.

NIGHT LETTERS
Accepted up to 2.00 A.M. for delivery on the morningt e ensuing
business day, at rates still lower than standard night message rates, as
follows: The standard day rate for 10 words shall be charged for the transmission of 50 words or less, and one-fifth of such standard day rate for 10
words shall be charged for each additional 10 words or less.

merated above are hereby agreed to:

SPECIAL TERMS APPLYING TO NIGHT LETTERS:

Day Letters may be forwarded by the Telegraph Company as a
deferred service and the transmission and delivery of such Day Letters
is, in all respects, subordinate to the priority of transmission and

In furlher consideration of the reduced rate for this special "Night
Letter" service, the following special terms in addition to tiffc.

Day Letters shall be written in plain English. Code language

Night Letters may at the option of the Telegraph Co,upan,,
be mailed at destination to the addressees, and the Company she

delivery of regular telegrams.
is not permissible.

c. This Day Letter may be delivered by the Telegraph Company
by telephoning the same to the addressee, and such delivery shall be a

complete discharge of the obligation of the Telegraph Company to
deliver.

This Day Letter is received subject to the express understanding and agreement that the Company does not undertake that a Day
D.

enumerated above are hereby agreed to:

be deemed to have discharged its obligation in such cases with respect

to delivery by mailing such Night Letters at destination, postag
prepaid.

Night Letters shall be written in plain English. Code languag,
is not permissible.
No employee of the Company is authorized to vary the foregoing.

Estes Park, Colo.,
September 0th, 1916.
Dear Mr. Jay:

I received your telegram about Clayton Act matters too
late to send a very early reoly, but I hope my telegram of yesterday reached you in time tc be of some service and was intelligible.
From my experience in the Bankers Trust Compony, where

our Board of Director!: aoloinede up of the presidents of almost

every important bank in town, I am satisfied thet there is much
less competition between the well..yonaged trust companies and the

nationni banks than would superficially appear to be the case. The

principil reason for th4 I think can be traced back to the eld
state banking law which prohibited trust companies from discounting notes. The trust companies, with a few exceptions, rarely
hevo token accounts where thdrundertpok to give regular lines of

accomodation to their depositors, nor could they do t:ois witnout

violating the law ac it stood three or four years ago because witch
unsecured leans !:.e they made had to be in the shape of purchaoed
paper.
The trust companies enjoyed so many sourcos of revenue

that national banks did not enjoy pa:ticularly, in their trust
departments, etc., that they were able to pay higher rates o interest ,:,nd bid for th reserve accounts of corporations and firw,s,




To

Pierre Jay, 'sq.

Sept. 9, 1916.

whereas, the national banks took the regular active commercial
accounts and undertool; to make loane when asked to do go.

some of the most valuable businnee which we had at the
Bankere Trutt Company consisted of dormant eccounte of customers

of national bnnks who made it a practice of dividing their accourts, alw*ye, of courEe, expooting more interest from us be
Cause they got no accomodation.
I ehoul

say that tide situation applied to nuch Cases

as the Farmer:3, United States, Union Central, Bankers, New York

ife Trust and other of that general character.
It would apply elso, but poseihly to a slightly less extent, to
Trust, New York

the Columbia, U. 5. Mortgage

Truet,

pire and Broadway.

The

Astor 7rust Campeny, on account of having taken over the business
of

he old Astor National Tank, always did more or less commerciel

busieee3s, but their location up town really makee them non-elompetitive

with the down town institutions.

The Guaranty Trust Comolny does

a larger commercial bueinese than almost any of the other truot
comeaniee.

it is, however, in my opinion, a fact that so far ac

depocite eee ooncerned, the charecter of the business done by national ben'es and trust compenieo ie quite dicsimiler and comnetitier is really much lose than one would imagine. This, as explained in my telegram, is not the case to 00E16 extent in foreign
exchange transnotione. There is no such thing as xompetition in
credit and in the handling of demand exchange end cable transfers.
There ic competitiono of curse, in buying long billet which is




To

Pierre Jay, Esq.

Sept. 9, 1915.

simply another form of extending credit.

But no interloyking

director situation has ever had the effect of reducing that competition, which is the keenest of eny depertment of the business
end for years pact, profits have been shot to eiecee an a result
of rate -cutting. The Guaranty, National City and Bankers Trust
I guess do the largest foreign business of any institutions in
New York, but the keener competition is between the Guaranty end

the Bankers Trust, and the Guaranty end the National city. The
City Beek and the Bankers Trust are rarely in contact, ae they

work along entirely different lines.
egein, the :eurchese of long bills is nowadays so, much

in the bends of brokers and middle men,(just ae is the hendling
of commercial paper), that there in very little direct domeetition. Furthermore, tho great mass of long bills originete in
other section!:. of the country and not in New York,and most of the
handlers of long bills, such as cotton and grain billn, in the
South end Test, have connections with different institutions and
broeere in1;ew.York eed sell their bills on rates which gee quoted
deily by telegraph and, el coureo, they always take the highest

rate.
do not coneieer that the competition which theoretically exists in making loens to customers is a factor in teis businece at all, and underetand from your telegram that you have arrived at the same conclusion. This leaves for consideration only
the go-called open market loans, that is to say, collateral time
I

and call loenu an purchasee of comeercial paper.




To

Pierre jy, rsq.
e cannot

Sept. 9, 1916.

get away from the fact thet

all institutions

compete in this genertl open money market, either directly

where

their office are directly acceseible eo Wall Street, or indirect.through

1y, by making lome ta their correspondents. The keenest competition will always exist in this department of the business and
it is the. one pl-e, whore the nun uhines alike on the just and the
unjust, the big and the little.

understand that you take the view that each case must
be judged on its own pertiour circumstances and Curtis takes
the view thet judgement murt rest upon the determination of whether
thc two clauses of institutions in general compete with each other.

i rather inclined te tike the view that, on the whole, these
cleeeee of inetitutiene are not in very active competition,
.t they do a different class of business entirely, but that there
are any oxceptione to this rule; tonsequently, some consideration

must be given to epeoiel cases.
sideration are the r.;uaranty Truet

The special cales requiring conAstor, Bankers, U. S. Mortgage

True-L, the Columbia "rut and Fquitahle Trust.
speaking for thn Bankers, 1 think competition in deepsite is negligible, competition in foreign exchange is always present, but ie not of a character that will affect the purposes of
the Clayton Act.

Conpetition in

street loans is equally present, but

again doee not affect the purposes of the Clayton Act.
goin




This is

further than the Beard would be willing to follow, hut

it

-5To

Pierre Jay, r

Sept. 9, 1916.

is probably based upon a more intimete knowledge of the circum-

stances than a ytif them have been able to acquire. I will be
mighty gl%d to hear from you the result of this puzzling eituati:;a.
ath kindest re7ards,
Sincerely yours,

Pierre Jay, Esq.,
Federal

eserve Agent,

Feeral v;ieserve nark,
New York City.
BSPCL,







Form 1207
SERVICE DESIRED
Day Message

I

TI

UNION

47:42NA

Receiver's No.

WESTERN UNION

Passage

Check

TEL W:13:46 AM

Letter

said mark an X

ass of service desired;
ISE THE TELEGRAM
TRANSMITTED AS A
DAY MESSAGE.

Time Mr

NEWCOMB CARLTON, PRESIDENT

following telegram, subject to the terms
k hereof, which are hereby agreed to

Eetes Park,

191_

,ierre
norenaL :!() el,

asninton, J. C.

111;
Your telegram

delayed

and suggested plan

decision with

transmission.

btop.

your generEll concltions

impressed me most favorably. Aop.

oviso for further obee vation

appeal to public opinion wnich is n,w

willsailb y

y

ommerce

an

oi

Gu.t6it,b1, unu

L,ure IJudelatu t}is foaiesly. ,top.

itors are uuaranty, City and 3nnkers. Stop. Recent
usiness

buLn

BeL.i

Ul

giowin

0, fui.gzi
It

make them slightly competitive. btop. Hanover, lark, Irving,
Pmpire 'Irust, rarmers Loan do Ioreign business, but are not 11,poran
Chase

U

sADosEct.n Ioreign
NSW ER

1

exchani,,e are

1 y,
express

companies and

P IZTERN'suIrril'EVer

s.

btop.




ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING

III

To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office for comparisoz
all the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN -UNREPEATED TELEGRAM AND PAID FOI
nsideration whereof it is agreed between the sender of the telegram and this Company as follows:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED 1legram, beyonu
I. 7ed for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyor
-fty times the
ending the same, unless specially valued; nor in any ease for delays arising from unavoidable interruption in the working of its lines; ncn
srrors in ciph,
In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-deli
y, of this telegra
(I by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is herby valued, unless a greater value
ii3g hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be pail based on such value equal to
,er cent. thereof.
The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessar Y
aation.
Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such office in ot
3.
Beyond these limits the Company does not undertake to make delivery, but will without liability, at the sender's request, as his agent and at his expense,
act for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sent to
ae of the Company's messengers, he acts for that purpose as the agent of the sender.
The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the
with the Company for transmission.

Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in ad
regoing terms.
No employee of the Company is authorized to vary the foregoing.
THE WESTERN UNION TELEGRAPH CC
INCnRPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
T DAY MESSAGES
full-rate expedited service.
HT MESSAGES
,cepted up to 2.00 A.M. at reduced rates to be sent during the night
delivered not earlier than the morning of the ensuing business day.

Letter shall be delivered on the day of its date absolutely
events; but that the Company's obligation in this respect
to the condition that there shall remain sufficient time fo-1
mission and delivery of such Day Letter on the day of its'
regular office hours, subject to the priority of the transmi'o
ular telegrams under the conditions named above.

' LETTERS
deferred day service at rates lower than the standard day mesrates as follows: One and one-half times the standard Night
-sr rate for the transmission of 50 words or less and one-fifth of

NIGHT LETTERS
Accepted up to 2.00 A.M. for delivery on the morning of tl
business day, at rates still lower than standard night niessag,

aitial rate for each additional 10 words or less.

SPECIAL TERMS APPLYING TO DAY LETTERS:

further consideration of the reduced rate for this special "Day
T" service, the following special terms in addition to those enu-

No employee of the Company is authorized to vary the foregoing

follows: The standard day rate for 10 words shall be charged for
mission of BO words or less, and one-fifth of such standard day;
words shall be charged for each additional 10 words or less.

ted above are hereby agreed to:

SPECIAL TERMS APPLYING TO NIGHT LETTERS:

Day Letters may be forwarded by the Telegraph Company as a
-ed service and the transmission and delivery of such Day Letters
all respects, subordinate to the priority of transmission and

In further consideration of the reduced rate for this speci
Letter" service, the following special terms in addition

Day Letters shall be written in plain English. Code language

Night Letters may at the option of the Telegraph
be mailed at destination to the addressees, and the Comp

sry of regular telegrams.
permissible.

This Day Letter may be delivered by the Telegraph Company
lephoning the same to the addressee, and such delivery shall be a

(etc discharge of the obligation of the Telegraph Company to
T.

This Day Letter is received subject to the express understandnd agreement that the Company does not undertake that a Day

enumerated above are hereby agreed to:

be deemed to have discharged its obligation in such cases wit

to delivery by mailing such Night Letters at destination
prepaid.

Night Letters shall be written in plain English. Cad(
is not permissible.
No employee of the Company is authorized to vary the foregmnr,




Form 1207
f SERVICE DESIRED

niter

I

TI

x7.A UNION

Message

x

WESTERN UNION

Day Message

Receiver's No.

Check

TEL

ht Letter

,hould mark an X colass of of service desired;

VISE THE TELEGRAM
TRANSMITTED AS A
T DAY MESSAGE.

AM

Time Filed

NEWCOMB CARLTON, PRESIDENT

e following telegram, subject to the terms
Lek hereof, which are hereby agreed to

ept. 31, 1916.

Believe thorc

analysis of character of business on liasis my former
telegram would disclose that Guaranty, eity and Bakers with pozsible
r2ddition of Commerce, Equitnb1s Trust, Pne rinR Rnd rnoRs qrc, on1y

ones now ir aubstortir,1 nnmpetitinr. for purnhqPn of inr,,;
Bear in mind thRt customers of bnnkR requirinz, lorgsst foreirr.fuxtt-

exchani;e facilities alwnys shop their bukiness either directly with
banks

throu=

Ii

'a

Benjamin Strong.
BS/VCY
'S ADDRESS

'NSW ER

SENDER'S TELEPHONE NUMBER

.1

191_




ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THL 7OLLOWING TER
To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office for compariso
half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGRAM AND PAID FOR
onsideration whereof it is agreed between the sender of the telegram and this Company as follows:
The Company shall not he liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED Ude? -m, beyond
ived for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyone
times the s
sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working of its lines; nor
errors in ciph
rams.
In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery, of this telegr
ed by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is herby valued, unless a greater value
ing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be paid based on such value equal to
per cent. thereof.
The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary
nation.
Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such office in oti
s. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at hisexpense,
.act for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sent to
no of the Company's messengers, he acts for that purpose es the agent of the sender.
The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the
with the Company for transmission.
Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in ad
regoing terms.
No employee of the Company is authorized to vary the foregoing.

THE WESTERN UN ION TELEGRAPH C
INVIRPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
T DAY MESSAGES
full-rate expedited service.
HT MESSAGES
epted up to 2.00 A.M. at reduced rates to be sent during the night
lelivered not earlier than the morning of the ensuing business day.
' LETTERS

deferred day service at rates lower than the standard day mesrates as follows: One and one-half times the standard Night
T rate for the transmission of 50 words or less and one-fifth of
iitial rate for each additional 10 words or less.

SPECIAL TERMS APPLYING TO DAY LETTERS:

further consideration of the reduced rate for this special "Day
r" service, the following special terms in addition to those enu,ed above are hereby agreed to:

Day Letters may be forwarded by the Telegraph Company as a
'ed service and the transmission and delivery of such Day Letters
all
subordinate to the priority of transmission and
-1respects'telegrams.
regular
Letters shall be written in plain English. Code language
..eissible.

fhis Day Letter may be delivered by the Telegraph Company
ephoning the same to the addressee, and such delivery shall be a

'ete discharge of the obligation of the Telegraph Company to
r.
This Day Letter is received subject to the express understandrid agreement that the Company does not undertake that a Day

Letter shall be delivered on the day of its date absolutely a
events; but that the Company's obligation in this respect i
to the condition that there shall remain sufficient time for tl
mission and delivery of such Day Letter on the day of its dat
regular office hours, subject to the priority of the transmissiox
ular telegrams under the conditions named above.
No employee of the Company is authorized to vary the foregoing.

NIGHT LETTERS
Accepted up to 2.00 A.M. for delivery on the morning of
business day, at rates still lower than standard night message
follows: The standard day rate for 10 words shall be charged fort]
mission of 50 words or less, and one-fifth of such standard day ra
words shall be charged for each additional 10 words or less.
SPECIAL TERMS APPLYING TO NIGHT LETTERS:

In further consideration of the reduced rate for this specia
Letter" service, the following special terms in addition

1

enumerated above are hereby agreed to:

Night Letters may at the option of the Telegraph C
be mailed at destination to the addressees, and the Comps
be deemed to have discharged its obligation in such cases witl
to delivery by mailing such Night Letters at destination,
prepaid.
Night Letters shall be written in plain English. Code
is not permissible. No employee of the Company is authorized to vary the foregoing.

Estes Park, Colo.,
September lath, 1916,
Dear Mr. Jay:

You owe me a couple of letters, but I am going to forgive you for I know how closely engaged you have been.
I have a letter from Hendricks, also, the regular week-

ly office memorandum, in which considerable

space is given to the

loss of gold through the Gold Settlement Fund.

It occurs to me
to suggest that we might attempt through the Federal Reserve Board
to require the other reserve banks to accept shipment of silver
certificates and legal tender notes at their own expense whenever
they pile up beyond a certain amount of exchange with us. I
strongly suspect that many of the reserve banks are taking New York
exchange for immediate credit at a

discount, and if that is

the

case, they are simply making a profit out of us which they should
either divide with us or else appropriate some part of it to relieve us of this difficult situation.

It leads to an accumulation

of "chicken feed" money.

could draw a pretty

picture

of the

consequences to

the

reserve syotem of a combination of a discount on New York exchange

interior and adverse exchange with, say, London, in which
case, we would be shipping gold both East and Nest at the same time
in the

and in payment would be getting

through the



Clearing Louse.

silver

certificates

and U. S. notes

Furthermore, whenever a real panicky

To

Pierre Jay, Esq.

Sept. 13, 1916.

situation arises like the one in the Fall of 1914, exchange on
New York is liable to be at a discount at the same time sterling
is at a premium. Our $160,000,000 of gold reserve would vanish
like a snowfall we had here the other day. Our only remedy, of
course, in such an extremity would be to put the brakes on and
absolutely decline to settle balances except by direct shipment
of such currency as we have.

Warburg expects to be out here on

the 25th and 26th and I am going to have a long talk with him

about it. This is just to keep things stirred up at both ends
of the line.
Thank you for the copy of your letter to M. Treman.
surely hope you keep well and don't overwork too much.
Your telegram sent from New York at 3:30 P. M. Sunday,

presumably as you were taking the Congressional Limited, did not
reach me until after luncheon on Monday.

It took a little while

to get up a reply so I sent it regular way to the Shoreham Hotel
and telegraphed Warburg that there Was a telegram awaiting you

there. i hope you got it in time.
in collecting 9.B5, the cost thereof, particularly as I am expecting to live on short rations this Winter.
Let me know how you made out on the Clayton Act matter.

With warmeet regards to you and the others at the office, 1 am,
Sincerely yours,

Pierre Jay, Esq.,

Federal Reserve Bank,

Equitable Building,
New York City.


BS/VCM


Possibly,

Estes Park, 001e.,
September 15th, 1916.
Dear Mr. Jay:

Thank you for your telegram of the 14th about the

interlock3ng directors.

I en terribly disanpointed that

the Board differentiated bctreen '150,000,000 and :1200,000,000.

It just makes the difference between something that will be
accepted as broadminded and something that will fall a hit
short of that. noside3 that, it more than doubier. the number
thnt re created.
of kickers
However, the conclusion in better than might have
been expocted a year or two ago Fuld this ie; one of the things
that will be forgotten an coon c,r readjustments are effected.
What please, me the most is to realize that the backbone of
the work in VA:: puzzling nvotter is broken and you are not
t.
',usetion again.
going to be driven d3ntracted
g;

My best regards, and congratulation on your success.
Sincerely yours,

Pierre .(1.y,
feederal Reserve Bank,

Equitable Building,
New York City.
nsivom



BENJAMIN STRONG

7stee Park, Colorado.

September 16th, 1916.

Dear Mr. jay;

The officers report of September 7th just received
refers to Mr. Kennel's suggestion of selling some of our U. S.
one year notes. The only object stated was that of familiarizing t'ne benks with the security; in other words, to get them
known by the Street.

I think the Jisadvantages far outweigh the advantages.
Every one knows, at least, all well-informed bankers know that
these one year notes of the Government arc held by us under a
contract by which we must renew then at maturity, and for the
comparatively slight advantage of advertising the security, we
put ourselves in the position of borrowing Money in the market

or thereabouts. It would, I tem sure, appeal unfavoraat 3
bly to some of the conservative bankers; furthermore, it costs us
just so much money which just now we can ill afford to 10034 I
am sorry to disagree with so many authorities, that is, you, Mr.
Morgan and Mr. Woodward.

Sc far as the security itself it con-

cerned, we might give it a little publicity through some of the
newspaper boys who might find it interesting some day to fill up
a column by writing a description of this note, and point out the
functions it may later perform with a more complete development

of the system.



To

Pierre Jay, Esq.

Sept. 16, 1916.

Possibly, if some of the other reserve banks want to
sell their notes, some object might be accomplehed by selling
for them, but on the whole, at the moment, 1 would advise the
other banks against pursuing that policy.
I am gitql you decided not to go to Kansas City under
contract to make a talk that would be exceedingly unsatisfactory
to you end probably equally unsatisfactory to your audience.
These five minute discuesions are ridiculous when applied to such
subjects as the collection system.

The field of debate laid out in the program as printed

in

the Chronicle just received, emphasizes very strongly the

necessity for adequate representation by the reserve brinks and

I am glad to be advised that quite a number of the Governors expect to attend.

Mr. Warburg's presence will, also, be important

and as he will be bore before the Convention, I will have a chance
to urge him to stay over the session where these mutters are being discusued.

I am mighty glad to note
Morgan about the gold matter.

that

you are in touch with Jack

So long as the note provision re-

mains as it is and the.operation of issuing Federal reserve notes

is so expeneive, we are tied hand and foot as te exercising any
strong influence on the whole subject of gold reeerves. It is
a help, of course, to have Morgan and others turn in bullion
checks so that we may dispose of our silver and legal tender notes,
byt beyond that we can accomplish nothing, except when we can acquire gold by issuing our notes.




Warburg has

..3..
To

Pierre Jay, Esq.

Sept. 16, 1916.

elaborate address for Kansas City on this matter which I expect will call for yards of editorial from the Chronicle.

Best regards to all of you at the office.
Sincerely yours,

Pierre Jay, Esq.,

Federal Reserve Bank,

Equitable Building,
New York City.
Bs/vcm




BENJAMIN STRONG

Estes Park, Colorado.

September 20th, 1916.
PET SONAL.

Dear Mr. Jay:

have just received notice of the deposit of
salary to September 15th and 1 am not going to sign the
receipt for this because, as I previously wrote you,
do not think I am entitled to any salary or that the bank
should take the responsibility of paying it. I hope my
letter reached you in time to be acted upon at the last
meeting.

Of course, I know how busy you have been and

it may have been overlooked.

Sincerely yours,

Pierre Jay, 7sq.,

Federal Reserve Bank,

Equitable Building,
New York City.
9SPCM







BNEJAMIN STRONG

Estes Park, Colorado.

September 20th, 1916.

Dear Mr.

ay.:

have written Sandy Noyes a letter

as per enclosed copy, which explains itself. It
seems to me much better to give them the information voluntarily rather than let them discover

it and then possibly take occasion to jump on us
for not having elucidated the mystery.
Sincerely yours,

Pierre Jay, Esq.,

Federal Reserve Bank,
Equitable Building,
New York City.

Estes Park, Colo.,
September 21st, 1916.

Dear Mr. Jay:

see by the Chronicle of the 16th that they are
still harping away on the note issue. 1 am just.completi:v
an article on that subject, being the first of those 'Newburg
wanteddme to write, and se. you doubtless know he contemplates

taking it up in :stall At Kansas City.

1 shall se s him next

.;iohday and.e.7At him to go over this manuscript and if he sees

no harm in it thought I would send it to you and see if we
could not get our friends in the Times, or some other Nem York

papers of respectability to publish it.
Bincersly yours,

Pierre Jay, Esq.,

Federal eservo Bank,
Equitiable Building,
New 'iork City.
Opc,!T







W ESTE

UNION

a

WESTERN UNION

4111-0114101IGH
TIME FILED

CEIVER'S No.

TTER

BELVIDERE BROOKS, VICEPRESIDENT

NEWCOMB CARLTON, PRESIDENT

GE W. E. ATKINS, VICE-PRESIDENT

CHECK

-*

END the following Nif t Letter, subject to the terms
on back *Led; which are hereby agreed to

1 4'
f4y1L
,

,

Pierre Jay,

Estes Park, Colo., Sept. 29, 1916.

-

Federal Reserve Bank,

..._ -_1.

New York City.

,

lea

Telegram regarding French matter received.

Stop.

Same principle

of neutrality would apply in this case as in other now under consideration. Stop. Beliei%e safest course would be to submit proposal to Federal Reserve Board before giving definite answer to
DeNeuflize. Stop. On recipt of translation will sand suggestion
for next move. Stop. Warburg doubts any action at Washington until
after election. ;Stop. Do you see any objection to discussing both
Ldters with Vanderlip?

Benj. Strong.
BS/VC/1




the no
a

ALL NIGHT LETTERS TAKEN
BY THIS COM PA
'on Telegraph Comp

day at

i-

receive not loier,tivan rni

till tlef

egr

ak

ARE SUBJECT TO THE FOLLOWING
TL
TERS,

to be transmitted only for delivery on the
The standard day
m
shall
rged for each addi rates for ten wordsless. be charg,
ten words or
hat is, telegraphed
o the originating office for comps.
un its face, Till

at

or fo

AVM NIGHT LET't.
D night letter, beyt
ight letter, bey,

tra

same, IC

in

not be liable
a for any mistakes
orking of its his
its servants o
e, beyond the sum of F
hereon at the ti
',delivery, of this nii
ht letter is offered to the CompanyTfor
at
enth of one per cc'
:letter is hereby valu
of.
71 ad
de the agent of the sexider;Without liability,
wm -paid or agteed to
to forward this night letter oval' the lints of any other
red free within one-half mile of the Company's office
Company when neeessr
hese limits the Company does not undertake
in f., we-sit 5.00°.
0
population or les, and within one mile of such
,:tet kir him for such iti-livery at a reasonableto in at. delivery, but is
priem
wit fin tl t liability, at
i
olli
I , this C,impany
the sender's request, as his a.,,
e C.
eoncerningmight letters until thy some are accepted
pany's rnessemierS, he acts for that purpose
at one of its transmitting
;.,ble for damages or
as the
of
eilirms, and if a night Ii
any ,,, .,smsmission.
statutory penalties in any case a--- iii thethe sender.
where
claim is not presented in writing
.
reduced rate for this special "
within sixty days after-the nip
TOSS m-, :d the omion
NIGHT LETTER "
mai rr: i, Hor cases with of the Tilef,raph Company be mailed service, the following,pocial terms ii hereby agreed to:
at
respect to delivery
LETTERS -',,i 1, written in plain Eni,lish. by mailing such PG-ITclestination to i he addressees, and :he C,iapaay- shall he deemed
LETTERS at destination, postage prepaid.
ycc of 14c, (...,., doe j is authorized
Code language is net
t'citary the foregoing.

permissinim

1

THE WESTERN UNION TELEGRAPH
COMPA
I N CO R PO RATE D
NEWCOMB CARLTON, PRESIDENT

TELEGRAMS

CLASSES OF SERVICE

A full-rate expedited service.

NIGHT TELEGRAMS

Accepted up to 2.00 A.M.
at-reduced
night and delivered not earlier than the rates to be sent during the
morning of the next ensuing
business day.

DA _LETTERS

Tred day service at rates lower than
: One and one-half times thethe standard telegram
letter
mission of .50 words or less standard nightof
and one-fifth the
additional 10 words or less.
Subordinate
ansmission and delivery of regular
in plain English. Code language not telegrams.
permissible.'

Telephonic delivery permissible.
Day
express understanding that the CompanyLetters receive
the same on the day of their date subject only und
to condi
time remains for such transmission and delivery
hours, subject to priority of the transmission d
of re

NtIGHT LETTE-RS
Accepted up to midnight for delivery
on
ensning busirkess day, at rates still lower t the morning
tanud)
gram rates, as follows: The standard day
charged for the transmission of 50 words o
standard day rate for 10 words shall he c
10 words or less. Must be written
not permissible. Mail delivery, in pl.
postage

Estee Perk, Colo.,
Sept -eber 29th, 1916.
Dear Mr. Jay:

The weekly report of September. ;1st tatio conteins come
newspaper clipping;, one being a half column from the Evening

Mail about a talk that W. C. Forbee gave at some dinner party
about our interview with Lord Kitchener. I had always had a
greet respect for Cameron 4 co s' judgement and ability, but

after having seen quite a little of him in London and heard of
sere of hi performances eince returning from Europe, he strikes
me as beine a. great blunderer.
The interview with Kitchener was the result of a long
teak till" Kitchener had with i'red Wolcott who was over there representing the Rockefeller Foundation. Kitchener' s aide, Colonel
Fitzgerald, called me on the telephone and aeked if I would stop
at his office and bring Cameron Forbes with me, which I did, and
we had an exceedingly interesting telk with hire. After leaving,

Forbes thought it would be a good plan to write out the interview.
he dictatee the account,and I went over it and made eome changeo,
and then we agreed that the boot thing we could do would be to "ean2

it.

Since coming how', at least heir a dozen men have ceoken to
'
me of thie interview and now iorbee ha l: finally succeedee in getting

ilk in the preas. I de not know whether he wants to advertise himself, or whether he ie just plain indiscreet foot. It made me
mad to read the article.




ft

-2-

Pierre Jay, E.

Sept. 29, 1016.

The same loWay report contains Mr1 iefferson'A' account
of the mistake thrA *as mrAde ir the !Iccount of the ..;c1d 3ettlement Fund.

This illustrate* the thportnco Qf our rty...omwendation

rhade nearly a year ago tit the Agent's lund and the Bank's Yund
be separated physically as well a* on thc Looks. zjoh'i you think
this can be brought about so ar to avo.l.d any chance of dispute as
to yho might be liable for an,' loco incurr,.,)dY This error demon-

strates that the present eystr is bd.
Sincerely your-,:,

Pierro Jay, Lack.,
feeeral Reserve Agent,
derl Reserve Bank,
New York City.




Estee Park, Colo.,
fAptemher 2ettio 1916.

Dear Mr. Jay:

Yours of the 23rd giving details about the Clayton matter ha n been read with very great inters et indeed.
lotter
ended so abruptly 1 can imagine you grabbing yoer hat elel renning
no the laot word VIRri eictated.

1 am returnieg all the dreta here-

in.
Your apologiee about anewering my leteere are accepted.
I know how busy you have been and awae constantly.

I would like

to hoar from you es soon ac poesible about er. owne and other
matters about which we have been corresponding.
On the whole, I expect the best was done with this situation that could be arranged. One thing 1 had overlookee in our
exchange of telegrams nne that was the eetent to which the unlecl:ing had already taken pleee, which iv strongly brought out by
The private bankers and the First eatiunal group
your memoranda.

seem already to have cmelidd "pith the law to such en extent that
the further retirements forced by the present ruling may in some
cases appear to be a distinct hardship. Rut then these 1;ew York
men are insatiable and were bound to kick anyway. Ae to the private hankers I am convinced that the law must be amended.

War-

explains the mnny difficulties which he encountered with his
associates and I expect even greater difficulties will be encounbur

tered if we recommend an amendment to the Clayton Act to put private




Pierre Jay, Esq.

Sept. 29, 1916.

barkers on the same footing with national bank directors. No
other plan, howover, will get the big New York trust companies

and I hope ehortly to be able to send you 4ouethiog aLong this

line.

Best regards to all at the office.
Sincerely yours,

Pierre Jay, Seq.,

Federal Reserve Bank,
S:quitable Building,
New York City.
BLVVCM




1/
go

-.Letter
should mark an X oppoclass of service desired;

'WISE THE TELEGRAM

.

.

W ESTE/WM LI

BE TRANSMITTED AS A
I.AST DAY MESSAGE.

TEL

AM

NEWCOMB CARLTON, PRESIDENT

.,en d the following telegram, subject to the terms
n back hereof, which are hereby agreed to

To

HOCetver S

Estes Park, Colo., Oct. 3, 1916.

191

Pierre Jay,

Federal Reserve Bank,
:\fter full discussion Vanderlip

able to eny ether

course

and I

ew York City.
believe Vioodward's reelection prefer-

notwithstandingdesirability of later establishing

principle of rotntion when bank is fully orgHt,ized un(-, gcoral policies

thoroughly established. Stop. If Woodwerd positively declines, my Personal
belief is thal V nderlio would prove eiost valuable director, but as we ehould
not have officer of Clearing Eouee on

our Poard, Alexander, unon his

ment from Clearing iloucie is bcst

retire-

tieelection of :'oodward can

be upon theory that directers whose oriiinal terms expiree. jr lese than
fitv years lose opnortunity to conplete service unless reelected. Stop.
oth Woodward and Towne decline reelection intereete of Noetnern Nev
uncilman and Vanderlip fees no objection.
Pen!.
I'S ADDRESS

ANS VER




fli.rlif,1'.

SENDER'S TELEPHONE NUMBER

ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWINt
To guard against raistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office for
one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEGB AM AND I
in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram. beyo'
received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty times t
for sending the same, unless specially valued; nor in any ease for delays arising from unavoidable interruption in the working of its lines.nor for errors in ..
telegrams.
In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the non-delivery, of this telegrI4
caused by the negligence of its se
servants or otherwise, beyond the HUM of FIFTY DOLLARS, at which amount this telegram is hereby valued, unless a greater value
writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agreed to be paid based on such value equal to
one per cent. thereof.
The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when necessary to i
destination.
Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of suchoffice in other et
towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at his expense, rode
contract for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting officeV; and if a telegram is sent tosuch offt
by doe of the Company's messengers, he acts for that purpose as.the agent of the sender.
The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the telegram
filed with the Company for transmission.
.....,

Special terms governing the transmission of messages under the classes of messages enumerated below shall apply to messages in each of such respective classes in addition to a,
the foregoing terms.
No employee of ths Company is authorized to vary the foregoing.
THE WESTERN UNION TELEGRAPH COMPANY
INCORPORATED

NEWCOMB CARLTON,

PRESIDENT

CLASSES OF SERVICE
FAST DAY MESSAGES
A full-rate expedited service.
NIGHT M ESSAGES
Accepted up to 2.00 A.M. at reduced rates to be sent during the night
and delivered not earlier than the morning of the ensuing business day.
DAY LETTERS

A deferred day service at rates lower than the standard day message rates as follows: One and one-half times the standard Night
Letter rate for the transmission of 50 words or less and one-fifth of
the initial rate for each additional 10 words or less.

SPECIAL TERMS APPLYING TO DAY LETTERS:

In further consideration of the reduced rate for this special "Day
Letter" service, the following special terms in addition to those enumerated above are hereby agreed to:

Day Letters may be forwarded by the Telegraph Company as a
deferred service and the transmission and delivery of such Day Letters
subordinate to the priority of transmission and
is, in all
delivery of respects'telegrams.
regular

Day Letters shall be written in plain English. Code language

is not permissible.

c. This Day Letter may be delivered by the Telegraph Company
by telephoning the same to the addressee, and such delivery shall be a

2omplete discharge of the obligation of the Telegraph Company to
deliver.

D. This Day Letter is received subject to the express understandmg and agreement that the Company does not undertake that a Day




Letter shall be delivered on the day of its date absolutely and at a
events; but that the Company's obligation in this respect is subje
to the condition that there shall remain sufficient time for the trap
mission and delivery of such Day Letter on the day of its date duni
regular office hours, subject to the priority of the transmission of
1

ular telegrams under the conditions named above.

No employee of the Company is authorized to vary the fore got

NIGHT LETTERS
Accepted up to 2.00 A.M. for delivery on the morning of the er
business day, at rates still lower than standard night message ra,,,

follows: The standard day rate for 10 words shall be charged for the tri
mission of 50 words or less, and one-fifth of such standard day rate f 03
words shall be charged for each additional 10 words or less.
SPECIAL TERMS APPLYING TO NIGHT LETTERS,

In further consideration of the reduced rate for this specie, `INT
Letter" service, the following special terms in addition to t
enumerated above are hereby agreed to:

Night Letters may at the option of the Telegraph Con
be mailed at destination to the addressees, and the Company
be deemed to have discharged its obligationi n such cases with r
to delivery by mailing such Night Letters at destination, p
prepaid.
Night Letters shall be written in plain English. Code In
is not permissible.
No employee of the Company is authorized co vary the foregoing.

5

Estes Park, Colo.,
tetchier 4th, 1916.
Dear Mr. Jay:

Vanderlip and Trumbull are here and ! am enjoying their

visit very much.

We discussed thc directorship matter and the

re-election of the Advisory Zouncilman at great length and Vander-

lip soemed very clear in hie mind thnt it would he a m3.stake this
year not to reelect '7oodward. He, also, SCE13 no objection to
the reappointment c ir. Morgan. The whole conversation is pretty
well sumvari7ed in my telegram of whicn copy Wns mailed you.

do not think tha4 ory change can be made in the directorship withort. ar effort tc secure representation for Norihern Lew
Jorney, thr0 is t ray, vc far as our advice and counsel in sought
I

by the member barks we should point cut that 1,ew jersey iv really

ontitled to onc director.
Don't let thoee bankers dome in and take all of your time.
I think you are altogether too edey witn them, particularly with
the ones wnc drop in from up-country.

Best regarde to all at the office.
Sincerely yours,

Pierre jay, Esq.,

Federal Reserve Agent,
Federal Reserve Bank,
Lew York City.


http://fraser.stlouisfed.org/
BS/VCM
Federal Reserve Bank of St. Louis

Estee Park, Colo.,
October 5th, 1916.

Dear Mr. Jay:

Your telegram advising of Mr. Locke's proposal to present a resolution with the object of changing the policy of the

bank in purchaeing acceptances is duly received.
I have talked the matter over with Vanderlip very fully.
He says that if it wau solely a question of extending or withholding the advantegee of the System to or from etate banks, ha would
be opposed to buying bills without the endorsement of member banks.

The same would apply to private bankers' bills.

ee thirks that

the state banks ine in a position to indirectly reap most of the
edventages of the System without carrying their share of the burdens.

On the other hand, he is very strongly in favor of bending

every energy to the development of the acceptance bueinees, and
particularly, the opening of foreign credits which he and 1 both
believe will afford

the

war ends.

us sore protection against gold export when

He also appreciates the value of the arrangement

now in force for preventing demoralization in the New York markete
At the conclusion of our discuesion, he eepressed himself as being
entirely contented with any policy which we decided to adopt in
this matter.

Possibly, I had better summarize again the Views

I think you know i hold very strongly:




To

ilierre Jay Esq.

Oct. 5, 1916.

This matter should be viewed from a national aspect
aad not in tna narrow and dartisan aspect of attempting to repress
1.

the activities of atta banks and private bankers in order to promote the business of member banks.

If no energency had acif:en

such as the war, I might feel differently about it.
his wale/
6v,
period gives ua the *nl opportunity such as will never again arise
to establieh Americ.:n bankers in foreign markets and to get a grasp
upon the c.mmercial credits under which the world's co=erce is

conducted, end the object to be attaiied in a national sense is
crl
to get tie largest share of the business possibleAwithout reg%rd
,

4'4 V-

to e'oether it is 11,..wI1ed by stc-te berike or national banks and de-,

fv.r all discrimination es between the to classes of bills during
the period in which we aro bui3ding up this new businers field.
A very large volume of foreign credits will be a
great protection to the country if we suffer the inconvenience and
possible danger of a long period of adverse exchanges. Vhen the
war broke out, Yngland, by cancelling these credits or by reducing
them, drew gold from every -vrt of the world. In the same way, in
1907, the Amerioan :situation put ellen a strain upon the Aank of gng-

lartd that rat s were Sharply advanced and credits extended by FlIglien bankers throughout the world were cancelled or curtailed,

money flowed to London for investment in hills and, as I recall,
Mr. Withers states in one of his books that England drew gold
froro 17 different countries in order to meet the drain which was
imposed upon her by tne United States; and which was caused, not

by high discount rates, but by a premium on gold such as we




Oct. 5, 1916.
Pierre Jay, Leg.
may be facing with conditions reversed when the war is over. The
object to be attained at prceezit is to create volume.
If would be unfortunate for our directore to change
the bank's policy after having concluded arrangements with private
bankers which were, in fact, based upon the policy which we have
followed to date. It was a considerable achievement to effect
arrengemente with all the principal private bankers in lew York
to get the information necessery to make their bills eligible. If
we now declared that their bills are no longer eligible without
the endoreeMent of member banks, it would put us in the light of
having indulged in a speciee of trickery,and would probably justify their withdrawIn6from the errangoment.
To

If the Federal heoerve Bank of New York diecontinued

purchasing theee bills, there is not the remotect poweibility that
we could persuade the other reoerve banks to adopt the Same policy
or even impoze it upon them. The consequeece would be that unless

we dieentinued acting for them, we would etill be buying these sane

bill, probably just as many as at present, only in the division
we would not taee any of then ourselves. Our policy would be one
of form and not of eubetance; the alternative would be to decline

to reprsent the other reserve banks in purchasing this particular
elites of bills; we would reopen the situation as to the New York
morket;
they would be forcing their money without any cooperation
into our district and instead of being able to maintein some discrimination in rates between the bills endorsed by members and
those not endorsed, we would be very likely to see them all cold
on the same basis and the situation would be worse than it ie now.




To

Pierre Jay, Esq.

Oct. 5, 1916.

I am very sure that this would be opening wedge which
afforded
would break down our inveetment arrangement which nasAprotection,
not only to the New York Reoerve Benk, but to ell of our member
banks and the money market generally. Our eeeratione are cone

stattly growing in sire and importance and we cannot afford to

risk the lose of pr-stige which would result from the abandoning
of our present plen.
We must not overlook the question of eernings. We
5.
already owe our stockholders in OXCOS3 of a million dollars in
devidends and I would be relucteekt to see the bank continue to
run behind any feetor than it is at prenent.
5.

In conclusion, it is well to consider whet the ler

really intdnds and whether action as proposed might not be suspending the operation of the law in one respect and defeatirg an
object it was designed to accomplish. The provision nuthori2ing
the reeerve banks to buy these bills in the open merket certainly
I think it meant ( Red in this I am supported
meant something.
by the records of the henrings prior to the adoption of the bill),
that the re,erve banks chould be given broad latitude in buying
eligible bills in the open market, not only for the purpoee of
protecting their earnings, but for exerting an influence upon mone
ey rates and through that in brieging seeindirect influence to hear
upon imports and exports of gold. If the law intended, as t be-

lieve it did, that we should exercise these powers as parttof our
-7etine bueiness, why then should the directors of our bank now
determine that their exercise was unwise in the interest of the




-5..
To

Pierre Jay, Fecl.

Oct. 6, 1915.

his is one piece whore the statute seems to have
recognized that we have a dual system of banking, half sate and
half national and that the importance of the stete nystem as well
as the business of private bankers,must be recognized an pert of
the country's banking machinery.
it would be most unfortunate in my opinion if this action was taken at the present time. No one feels more strongly
thankl do the noceesity for bringing the state banks into membership. This will accomplinh nothing in that direction. It will
caer,e a good deal of irritation and complaint. After tne state
memberhanks?

inetitutions have been given evsry coportunity to form their own
judgement of the value of the eyetem, if they then de not take
meebership, I thin% the reederal Reeerve loard ani the Pederel
serve Bonita ehould join in alking Congrene to fore them ine There
are lots of ways in which thie can be done and I en in favor of
recommending that it be done at the proper time. That object
will net he promoted by the kind of discrimination suggested.
I hope I have not written too strongly about this, but I
am sure you reallze,how extremely embarrassing it will be for all
of us in the Bank if We had to withdraw from the arrangements en-

tered into in goo d faith and upon the basis of which goof) firms
and institutions are undertaking to develop tht acceptance business.
Very truly yours,

Pierre Jay, Esq.,

Federal Reserve Agent,
Federal Reserve Bank,
New York City.




Estes Park, Colo.,
October 6th, 1916.

Dear Mr. Jay:

I really have not answered yours of the 22nd and 27th
owing to my time having been so much occupied with Vanderlip

delightful visit, saving
myself, however, by cutting out practically all mail and other
and Trumbull with whom I have had a

work while they were here.

We

have driven through the Park,

loafed, chatted and endeavored to settle the affairs of the

nation, with the usual success.

This afternoon, we are all

going to Loveland where 1 shall spend the night on Mr. Trum-

bull's car, tomorrow morning going to Denver to attend the luncheon of the Mile High Club, which will be addressed by Vanderlip
and Trumbull.

_

Grandin starts for school on

Sunday armed with a bundle

health certificates quite unnecessary for any health officer

who takes the trouble to look at

him.

He is as husky as a young

bear.

On the 13th, I shall probably move to Denver, stopping

o days at the Brown Palace ilotel, leaving the bother of packing
to the other members of the party. We will be settled in the new
house on the

15th.

conversion is a very important thing.
has, as you say, been wedded to the Bank of tlngland idea, but




Mr. Morgan's

He

To

Pierre Jay, Esq.

Oct. 6, 1916.

surmise that his conversion is as much due to various discussions
in England looking to the abandonment of the Bank of England idea,

as it is to our urgency that the American idea should be adopted.
We are going to see important changes in the English banking system after the conclusion of the war. Their note issue tithout
doubt will be made an elastic one and the change, I believe, will
include the very ideas which we have been discussing for Federal
reserve note issues. Why can't we learn our lessons without hav-

ing a war, panic or conflagration!
I have written about Mr. Morgan's reelection as a member
of the Council. Also, about the directorships.
The Bank of France matter can await

my return

from Denver,

and then I will try to write you Illy and carefully on that whole
subject.
I have discussed both the English and French arrangements

with Mr. Vanderlip, who is thoroughly in accord with the plan.

thinks this is the opportunity to make satisfactory

He

arrangements

while
and thatAthe amount of businese which we would do would have no

considerable effect on the exchanges, it would be of great value
in future years, and oT course, give the System added prestige.

I am awaiting with interest a letter from you giving me
,00dward's views.
About the Ladenburg

some caution in the matter

Thalmen statement, I would suggest

without a very full statement.

A good

deal of money was withdrawn from that firm; first to the Ladenburg




To

Pierre Jay,

Oct. 6, 1916.

estate, as I recall, and financial strength of late years has
been considerably due to strong connections abroad which may

have been impaired somewhat as a result of the war.

This is about all the news.
write me when you have a chance.

Faithfully yours,

Pierre Jay, Leg.,

Federal Reserve Bank,
Equitable Building,
New York City.
nsivam

Dictated by Lr. strong but
signed in his absence.




Don't work too herd and

PERSONAL.

Lutes Park, Cole.,
.

Dear

ot,e

have delayed

too ltlerioar

ucteb,er 6th, 1916.

- rA
in regard to writing you
is our office organsufficient doubt about

of one matter that is much
in my mind, e that
ization. There in still, aa
you realise,

my ability to get into
harness again, at any rate,
to stay in after I return, or still
further, to pull my share of the
load's°
as to justify considering what
ought to be done. I have
no hesitation in expressing my views to
you with the utmost
frankness
end 1 wish you would
consider this letter quite
confidential.
We should have a
permanent deputy Governor.
For a time,
I rather favored trying
to get Kains, but am now disposed
to abandon that view, believing
that such business aa ve might
have abroad
would not be of a character
to require the uervices of a good
foreign exchange

man, the principal part
of that work being directly
managed by the Governor or Deputy
Governor of the bank,
We want
a Deputy Governor who
might be qualified in
time to become Governor
of the bank. The question
is whether the whole
organization ought
to be changed in some way,
or whether we should
simply invite some
good man in from the
outside, and I have concluded that
the beet
man available is Aiken.
The subject has not been
broached to him,
of courae, but I
have thought about it a good deal
during the past




To

Pierre Jay,

hes.

Oct. 6, 1916.

year or more and really think that he is the man.

lie is well

known in New York, has a splendid preeence, ie loyal to the System to a degree, and has as broad a view of tee work as any
the organization.

This is a matter

in

weice is at present in the

hands of a Committee of the Board and I believe that the time has
come when we ought to discus° this matter seriously and see whethmer something cannot be done in the near future.

It would be a

great relief to Mr. Treman who must be under heavy pressure to
attend to the work at the bank and at the same time look after
his own intereets at home.
May I suerast that if the Committee sees no objection,
you take the first opportunity to talk it over personally with
elarburg?

With wermest regards and hoping to get some of those
promised letters pretty soon, I am,
Faithfully yours,

Pierre Jay, Esq.,

Federal Reserve Bank;
Equitable Building,
New York City.
BS/VCM
Dictated by Mr. Strong but
signe6 in his absence.







STE47''",L4

UNION

Form 2289

:19

WESTERN UNION

TTER

NIGH

NEWCOMB CARLTON. PRESIDENT

GEORGE W. E. ATKINS. VICE-PRESIDENT

FILED

RECEIVER'S No.

BELVIDERE BROOKS. VICE-PRESIDENT

CHECK

ITIME

SEND the following Night Letter, subject to the terms
on back hereof, which are hereby agreed to

Estee Puri(

tolc., Cot. 6, 1016.

Pierre_ Jay ,
fie,:erve:

Equitable Building,.
New York

Telegram regarding ficceptenees received.

Stop.

fully givirg Vunderli'a vi ewe Etna rine.
'Benj. .trong.

AL

writ ng




ALL NIGHT LETTERS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERMS:
The Wester
the next ensuing b
transmissio
To

For this o

AID
The

n Telegraph Company will receive not later than midnight NIGHT LETTERS, to be transmitted only for delivery on the morning of
day, at rates still lower than its standard 'night telegram rates, as follows: The standard day rates for ten words shall be charged for the
and one-fifth of such standard day rate for ten words shall be charged for each additional ten words or less.
delays, the sender of a night letter should order it REPEATED, that is, telegraphed back to the originating office for comparison.
ght letter rate is charged in addition. U;less otherwise indicated on its face, THIS IS AN UNREPEATED NIGHT LETTER
consideration whereot it is agreed between the sender of the night lettbr and this Company as follows:
ot be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UN REPEATED night letter, beyond
e same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED night letter, beyond
-

jug the same, unle., specially valued,. nor in any case for delays arishag from unavoidable interruption in the working of its lines:

r damages for any mistakes or delay in the transmission or, delivery, or for the non-delivery, of this night
<otherwise, beyond the sum of FIFTY DOLLARS, at which amount this night letter is hereby
the night letter is offered to the Company for transmission, and an additional sum paul or agreed 1,, be
thereof.
nder, without liability, to forward this night letter over the lines of any other Company. when neeets,y

ne-half mile of the Company's office in towns of 5,000 population or hiss, and within one mile cif's,
patty does nut undertai, to make delivery, but tntll, wit bout liability, at the sender's request, as 1..,
r such delivery at a reasonable priee.
pally cr.neerning nicht letters until the same are accepted at one of itd transmitting offices, and if a night lett,
enters, he acts for that purpose as the a,ent of the sender.
ót be liable Cr damages or statutory penalties in any case where the clairmis not presented in writing within sixty days after the nigkl
y for transmissien.
on of the reduced, rate for this special "NIGHT LETTER" service, the following special terms are hereby agreed to,
ERS may at 1.1, option of the Telegraph Company be mailtal at destination to the addressees, and the Company shall be deem,:
tion in meth cases with respect to delivery Isv mailing such NIGHT LETTERS at destMation, postage prepaid.
ERS shall be written in plain English. -Code language is not permissible.
the Company is authorized to vary the foregoing.

THE WESTERN UNION TELEGRAPH COM PA NY
INCORPOnATED

NEWCOM,S CARLTON, PRESIDENT

CLASSES OF SERVICE
TELEGRAMS
A full-rat, expedited service.
NIGHT TELEGRAMS
to 2.00 A.M. at reduced rates to be sent during the
ered not earlier than the morning of the next ensuing
e at I

er than the standard telegram
andard night letter
nd one-fifth of the
less.
Subordinate
of regular telegrtims.
anguage not permissible.

Telephonic delivery permissible. Day Letters received subject to
express understanding that the Company only undertakes delivery
the same on the day of their date subject to conditions that sufficient
time remains for such transmission and delivery during regular office
hours, subject to priority of the transmission of regular telegrams.

NIGHT LETTERS
C'

wo

not permissi

Estes Park

Colo.,

October 11th, 1916.

Dear Mr. Jay:
of the iith awaiting me on
we delighted to find youru

my return from Denver.
questionsof directorI have already answered fully the
rather brief about 1Lr. lAgan's reship rotation, etc., but was
I think r. ianderlip
Th-re is very little to say.
election.
eouncil and if Mr. Yorgan's reelecwould be glad to serve on the
i'

tion should not be desirable, I

hope Mr. Vanderlip will be elected,

banker, say Lir. Alexander, to take
and then some strong New York
I really believe (as I wrote you),
Mr. Woodward's place, although
should reelected. Re has not yet served his

that Mr. Woodward

full term.

Committee of the Nation-

You will be obliged to advise the
regard to the attitude of retiral Bank Section rather promptly in
ing directors.

reelection, but if
1 hope Mr. Towne will a,:ce?t

place, it seems to me aeould be filled
he finally declines, his
oodward
r.
I am convinced that both
from Northern New Jersey..
Board.
and Mr. Towne should remain on our

determines to do is
About my salary . whatever the Board

entirely satisfactory to me.

I cannot afford to be embarrassed,

which might arise if I remain
nor can the bank, by any criticism
collected my full salary
absent as long as now seems likely and




-2To

Pierre Jay, Esq.

Oct. 11, 1916.

during all this period and then, contrary to all expectations,
fail to resume my work at the bank. The bank should not pay
me one more cent than i should receive from such work ac I am

able to do out here. There are all corts of possibilities of
.embarrassment in the situation and it was on that account that
I asked Werburg to see Dr. Sewall himself. If the noard is
really convinced that half pay ie justified, that is of course,
satisfactory to me. I would be equally satisfied to draw no
salary at all, particularly as I have been on the point half a
dozen times of abandoning any thougnt of return, and take up
some line Of work which would help you fellows, but would still

If the Board's action was fully
considered and no objection developed, it is of couroe satisfactory to me, but if any objection arises there in flew York or in
eTashington, please ask the directors to diecontinue it entirely.

impose no obligation on me.




Won't you convey to the Board in my behalf my thanks

the patience and consideration which they have displayed in
thie mater: They have done more than could be expected of any

Board of Directors, and add to my feeling of guilt at being away
so long.

I heve written fully about Mr. Locke's proposals but in
view of your letier and the proposal to let the vote Eo over in
Mr. Treman's absence, have telegraphed you asking if this vote
cannot bt postponed until I can write Mr. Locke personally, which
I will do toemoreow.

To

Pierre Jay, Esq.

Oct. 11, 1916.

Have written Mr. Treman about the dividend matter and

will not repent here. I think we could afford to pay the dividend to July let, if the margin ( ae appears to be the case),
amount to *10,000 or 0.5,000, after charging off organization
expense.

The discussion about private bankers should afford opportunity for discussion of an amendment to the Clayton Act.
Ras Curtis done anything about my letter on this subject? You

might give him e punch along this line.
Iaam a good deal impressed, if you don't mind my saying
so, with the fact that you are shouldering too much work at the
bark. Please delegate more of it to your associates in your
0-em interest, in the bank's interest and, selfishly, in mine.
eilte the machine do the work and you do the directing. It is
impossible that busy as you are, you should ba preparing material
for Clark Williams to make an address; and being in a frank mood,

let me say that lots of people impose on you when you don't realize it and take lot o of time which you have no business to donate
to casual callors, You will be out here gith me the firet thing
you knew and your errand will unfortunately be the same as mine.
nest regards to you and success to your labors.
Faithfully yours,

Pierre Jay, Esq.,

Federal Reserve Agent,
Federal Reserve Bank,
hew York City.
BOOM



-4To

Pierre Jay, Esq.

Oct. 11

, 1916.

Since dictating the above, yours of the 7th is
received. It is too late to get off a telegram, with any suggestions other than those already sent by mail. In Mr. Twwne's
place, if he insists upon retiring, I really think Northern New
Jersey should have a director. They themselves, however, might
agree upon Mr. Outerbridge, who would certainly meke a good di-

rector, or it might be possible to get Lir. Frelinghuysen. In
Mr. 'eoodward's place, the best suggestion by far is Mr. Alexander; next to him, kr. Hepburn, although I believe that you will
ell agree that Lr. Vanderlip should be a director of our bank at
the proper time, or a member of the Advisory Council, if Ur. Mor-

gan reires.
I hesitate strongly abut the Muller, Schell i Co. bills.
/t might be well to mnke a comearloon of the original statement
which they filed, with the new one and we should have some very
specific information about their assets. I sueeest your conferring with Gates McGarrah or the subject. There have been doubts
expressed about the goodness of the firm and I keow at least one
case where one of the New York bnnks did not care to retain their
account.

In regard to the Evening Poet matter, I believe there is
no objection to having the Clearing House give out figures in regard to our balances similar to those they give regerding other
members of the Clearing House.

Any details, however, should be
obtained by the Post at our own office.




"0

Pierre Jays Tog.

Oc t. 11, 1916.

Congratulations on the result of your trip to Canandaigua.
--1
Your letter about the State Department correepondenoe'indicates that you were going to enclose a copy of a letter from the
Department.
It only covered a letter from Warburg addreseed to you
and copy of a letter wnich you addressea to Governor harding, of
the 5th and 7th respectively. 1 do not like the way that matter

is going at all.

Our whole foreign situation seems to be hung

up

pending dilatory proceedure by the State Department and Warburg's

prognosis of an adverse deciion can be very readily dealt with by
arrerging for Mr. Curtis to meet Mr. Polk, as I understand Secretary Lansing is not very well. This is a matter which should be discussed informally before any formal ruling is made, and I sincerely
hope that it will be done.
shall write the Bank of England a letter that will keep
t1le matter alive, of course, but it seems sort at a puerile position for a great inetitution to assume and I very much regret its
necessity.




B. S.

ArESTE XiSM UNION
WV!

AtO

WESTERN UNION

GEORGE W. .. ATKINS, VICE-PRESIDENT
IRECEIVER'S No.

TEL

014 411.",..

TIME FILED

SEND

the following Telegram, subject to the terms
on back hereof, which are hereby agreed to




AM

NEWCOMB CARLTON, PRESIDENT

BELVIDERE BROOKS, VICE-PRESIDENT

CHECK

stes Park, kdolo., Oct.10, 1916.

*Jerre Jay...._

New York City.
Have just received mail accumulated during few days a'.sence in
Denver.
Stop.
Suggcst deferring vote on acceptance matter
until next meeting unless strong objection made as would like
to write rr. Locke personally.
Stops
Advise Hendrick's house.
He is here.

Benj. Strong.

ALL TELEGRAMS TAKEN BY THIS COMPANY ARE SUBJECT TO THE FOLLOWING TERN S.

To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to the originating office lot
laris,
For this, one-half the unrepeated telegram rate is charged in addition. Unless otherwise indicated on its face, THIS IS AN UNREPEATED TELEC.
I Al'
PAH) FOR AS SUCH, in consideration whereof it is agreed between the sender of the telegram and this Company as follows:
The Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any UNREPEATED telegram, beyond t
amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or for non-delivery, of any REPEATED telegram, beyond fifty ti
the sum received for sending the same, unless specially valued; nor in any case for delays arising from unavoidable interruption in the working
ts lines; nor
errors in cipher or obscure telegrams.
In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or delivery, or for the tna
avery, of this to
gram, whether caused by the negligence of its servants or otherwise, beyond the sum of FIFTY DOLLARS, at which amount this telegram is hereby valued unl
a greater value is stated in writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paidor agreed to be paid ba...
on such value equal to one-tenth of one per cent. thereof.
The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company when nece:sary
reach its destination.
Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, and within one mile of such office in ot
cities or towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sender's request, as his agent and at
expense, endeavor to contract for him for such delivery at a reasonable price.
No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if a telegram is sen
such office by one of the Company's messengers, he acts for that purpose as the agent of the sender.
The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the te
gram is filed with the Company for transmission.
No employee of the Company is authorized to vary the foregoing.

THE WESTERN UNION TELEGRAPH COMPP'
INCORPORATED

NEWCOMB CARLTON, PRESIDENT
lii

CLASSES OF SERVICE
TELEGRAMS
A full-rate expedited service.

NIGHT TELEGRAMS
Accepted up to 2.00 A.M. at reduced rates to be sent during the

night and delivered not earlier than the morning of the next ensuing
business day.

DAY LETTERS
A deferred day service at rates lower than the standard telegram
rates as follows: One and one-half times the standard night letter
rate for the transmission of 50 words or less and one-fifth of the

initial rate for each additional 10 words or less. Subordinate

to the priority of transmission and delivery of regular telegrams.
Must be written in plain English. Code language not permissible.




Telephonic delivery permissible. Day Letters received subject
express understanding that the Company only undertakes delivery
the same on the day of their date subject to condition that sufficiei
time remains for such transmission and delivery during regular offi
hours, subject to priority of the transmission of regular telegram

NIGHT LETTERS

Accepted up to midnight for delivery on the morning of the ne
ensuing business day, at rates still lower than standard night te egra
rates, as follows: The standard day rate for 10 words shall be charg,
for the transmission of 50 words or less, and one-fifth of such su ncia,
day rate for 10 words shall be charged for each additional 10 words
less. Must be written in plain English. Code language m t pc
missible. Mail delivery, postage prepaid, permissible.

4101

Denver, Colorado,

October 18th, 1916.
Dear Mr. Jay:

have just finished an article abou our note issue and
enclose a copy of it herewith. As usual, it d \ not suit me and
believe you have the setae experience w*
efforts. Let
me say, however, that i went over it iti Warburg h e/ ha was here
and later with Vanderlip, both of
th u ht that it should be
published.

None of us, howeve

to just how or where.
ogre,
My personal inclination is to get e iew Iork TiMeS to publish it,
whick they doubtless you
might
ect to running so long

a story in one issue
10.

i\nd the article divided at page
alid(
Should it be neceSaary to d i/de it, use the page marked (2)

which will show

vide it, use
1

Post.

/ you will

On the

\

he dkvision--comes end if not necessary to die
page Mariked (1).
.

;

sk my ne,Ay choice of papers would be the Evening
d

you may have some other suggestions and

would glad of your own views, which please express Very frankly.
Won't you also send me any comments which may occur to you!

My idea in preparing it is to acquaint those who read the
Chronicle and other papers that make a specialty of news of the Federal Reserve System, with some of the practical features of the law
in its operation without, in this article, offering any suggestions
of what is necessary in order to overcoee what we believe to be de
fects in the law. Then I am proposing to prepare another article


e2To

Oct. 18, 1916.

Pierre Jay, Esq.

giving a brief history and the legal statue of gold certificates,
silver certificates, United States notes and national bank

emphasizing the

notes,

fact that through the instrumentality of these is-

sues we have already inflated our currency far beyond that of any
of the nations of Europe and that a thorough

oing reform now nee-

eusitatee putting all of this currency on a kond basis by assembling gold for its redemption. Naturally t4\7ou1d be brought
about by the general conversion of nationaiaHaqtes and greenissue of Federal reserve
backs into Federal reserve notes
"c±------

/7-

notes against gold to provide i.d6uaty eserves and by the manipulation of the denominations

ilk\

tificates into eirculatiatTlee,subil

wRy as to force silver cer-

ry currency, end gold and

reserves.
Federal reserve note into
In corms t n with t)1 same article, or poseibly as a
4\
mphasizing the necessity of prompt
separate arti,c1.011 1 t)i.eu
ft

f

1

e

ing about this reform on account of our aspirations
to become a international banking nation. The letter would be
es of a letter which I wrote Mr. Glass last
somewhat al ni§....the
measures

August, of which I sent a copy

to you or Mr. Treman.

I have tried to prepare the enclosed as "popular" stuff
It might,
and it is not at all in shape for a magazine article.
however, if you think well enough of it, be reprinted so as to
have a few copies distributed if anybodyeshould ask for them.
Mr. Vanderlip is very much possessed with the idea that
we should get some legislation at the next session of Congress. He
feels a good deal of concern about our being unprepared to meet a




Pierre Jay, Esq.

Oct. 18, 1916.

long continued drain of gold. I would feel the same way were it
not that we have $200,000,000 in"gold storage" which can be re-

leased for us by a very simple act of Congress, although it would
be much better to have Congress act when no crisis exists rather
than under the spur of critical times when al m is generally increased by emergency legislation.

If you and the others think it is w r h while to publish
this, I should like to see it printed as promptly, possible and
N\
if it is printed in one of the da
re, say in the Tingss,
won't you ask Mien Parker to g
and sent me, so that I can have
To-day's mail

tmga a n

1 will answer to-morro or next
Best regar to all
%maat
,Vii
----_

Pierre Jay, XII

federal Resei'Ve_Ag_

Federal Reserveflank,
New York City.

BSPCM




y supply, have them cut out
future use?
ong letter from you which

--

he office.
ours,

4100 Montview Boulevard,

Denver, Colorado,

'Jctober 18th, 1916.
Dear 14. Jay:

Tank you for your -elegram in regard to the postponement
of Mr. Locke 's: resolution.
I wrote him from Estes Aark going over
substantially the ground covered by my letter to you on that subject.

hope he does not press the resolution or if he does press it that
the other members of the Board will stand as they have right along
in favor of a broader policy.
I am going to take the liberjey of dictating a general letter to you in a day or two about the work in the bank where in some

particulars I think our system should be changed.

I won't inflict you with a long one today.
Gincerely yours,

Pierre Jay, Esq.,

Federal Reserve Agent,
Federal Reserve Bank,
NeW York City.
BS/VCM




In the meantime,

Denver, Colorado,

October 20th1 1916.
Dear Mr. Jay:

Yours of the 10th with enclosures

been read with

grPat interest. I also have your te,l,wigimmw-i ising that no actier: was taken at the Directors meeting on Wed,
in regard
,

to the acceptance matter.

The clipping in re a
introduction of checks
in France does not give the mo
resting detail on that subject. UnUer certain
i
have beer made legal
,,,,
tender in France tang/ certifieid cheuk drawn on tho Reichbank in
Germany is now legal\ ender thoir. .

ature which

You doubtless saw the liter-

/
t to\l:. which wae forwhrded to me by Pal..
\

e nor of the Bank of irance.
must no verlook one thing about developing this
Celain,
check busin
moo hat: not the facilities in the' way of
Clearing !iouses, etc., for collecting checks even equal to those
already in operation in Germany. furthermore, any material reduction in the use of Bank of France notes will cause a corresponding increase in bank deposit liabilities and what they SNVO
in reserve requirements on one account will to some extent be lost
the

T

W

on the other class of liabilities.




To

Oct. 20, 1916.

Pierre Jay, Esq.

Warburg told of all the Clayton Act diffcultiee end
you and he both have my sympathy. The bankers seem to have
jumped to the conclusion that the Kern amendment relieved them

It just seems to have transferred

of all thibir difficulties.
them to you and the
You are

members of the Board.

probably

right about the r posed amendment

to the Clayt.n Act about which

I

wrote mr.

C

tie.

another crack at it but as you sayi4t-atese4N7
anything can be done with Congre4s o g us Al

I will

teke

doubtful if

is Presi-

dent, prxticulerly, now that e an r wiamed his charge that all
d haft they are conspiring to
Street wants to run the mat*tr
get control of the Federal Reser e stem.
ment is rather better than
Th m n st
The Ladenb r
The i ms which

1 expected.

Rosen mind kr. Guinne er are t
ends.

in stocks

domestic

counts,

do they c

this"u

doubt or thei

think the line

might be well to diecuss with

Mr.

toms of debtors and inve,tmente

In-the analysis of thedebtors';unadjueted

avregate amounts to over 1,500,000. Why
Does it mean that there is any
justed"!

rafikbility or their ultimate collection!
authorized by

-

I ehouEd

the Board wave conservative.

I am glad you took my leolure in good part, particularly
as I am contemplating sending you som, suggestions about the work

of the office designee especially to make it easier for you to cove
at the ground.
Th-re are two or three letters on your desk from me unanswered about which I would like to hear when you are in the



-3..

Pierre Jay Esq.

Oct. 20, 1916.

process of clearing your desk.
Please give my hest regards to all the office and the
same to yourself.
Faithfully yours,

Pierre Jay, Esq.,

Federal Rueerve Agent,
Federal Reserve Bank,
New York City.

rs/vme







NIGH

/

VPTTER

NEWCOMB CARLTON. PRESIDENT

ORGE W. E. ATKINS, VICE-PRESIDENT

FILED

-.:EIVER'S No.

BELVIDERE BROOKS, VICE-PRESIDENT

CHECK

ITIME

END the following Night Letter, subject to the terms
on back hereof, which are hereby agreed to

Denver, Colo., Oct. 22, 1016.

Pierre Jay,

'sdere1 Reserve ;lank,
York City.

ch appreciate yoar wire. Local papers indicate credit directly-covers
ox-ions making sue. bill. ighly desirable method financing. rtop. Board
should understan,J we hnve and will always exercise conservatism it. lines
We purchase. stop. Board's proposed announcement would arouse greet hostilityc:ould interfere with perfectly legitiate transactione over wnich
they hove no auth,)rity an! excite ridicule. 'top. It would be well to inforr b,inXers nanned just whni ia neces-.ary to make bills eligible, irsict
the- they musi mPrket bills so as to -oid any reli;nce on our purchases
and that sunr purchases ac we make will be limited and governed by our own
needs and rules. ntop. This was done with both Brown and ionbright credits.
rtop. Announcement proposed might be construed as indicatirg we wrre pAties
not the case. rtop. In
to 'LAO or onrlier.credit negotiations, which iswithout announcing a pal...
its business
tnese matters, tne System ehoul el.:.
chanjni;.
icy to the public whie later developments might necesaitete reasons, printNaehington for many
-top. Think very unwise to t.dce Kent to
cipally tat Board shoA...i have no p-:rt-in negotiations and such businese
aon't lot tnem
so little understood there thal no good wouly rcsult.
':oodward news bully.
make this huge blunder. Stop.
Renj. Strong.
ss/vcy




ALL NIGHT LETTERS TAKEN
BY THIS COMPANY ARE SUBJECT
nio T
yw
not later than midnight NIGHT LETTERS, TO THE FOLLOW;
ansrm

The Wegt
the nex

dard night telegram
to be transmitted only lei' deliver,
ard day rate for ton rates, as follows: The standard day rates for ten words
on th?,
sh..
night letter should order words shall be charged for each additional
ed in addition. Unless otherwise
it REPEATED. that Li, telegraphed back ten words or less, be cha
to
is agreed between the sender of indicated on its face, THIS IS AN the originating office for c
es or delays in the transmission or the night-letter :And this Company asUNREPEATED NIGH
fellows:
stakes or delays in the transmissiondelivery, or for non-delivery, of
or delivery,
ntess specially ratucd; nor in any ease for delays or-for non-delivery, any UNREPEATED
bf any REPEATED b
arising from unavoidable
not be liable for da
interruption in the wet: ng
any mistakes or clelayln the transmission
servants or oth
oad the sure of FIFTY
on at the time
or delivery, or for
DOLLAR8, at which amount this the non-delivery, of
ered to the Company fdr
night letter is
transmission, and an additionAattm paid here
or ag
to forward ;this-bight letter over the
lineasof any (Alter Company
when
s office in towns of 5,000
o make delivery, but will, population or less, and within-one mile
Ivry'
asonable price.
without liability, at the sender's reef/
concerning
etters until the same are accepted at
rs, he acts for t t purpose as the
e for damages or statutory
agent of -the sender, one of its transmitting offices, and if' a
penalties in any case where the claim is not
eo,e,e1
present,' in writing within sixty .titrys
for the Te,eraph NIGHT LETTER "
this-special "
They ai the
r,f
following
in ,11,11
Company be mailed service, the ion to thespecial terms are hereby
r re,peet to delivery by
at
agreed to:
Ice or: P:1 ii plain English.
mailing such NIGHT desrie,
addressee,. and
LETTERS at dvstination, postagethe Coniptory shall be d
the Company is azahori.zed to tail/
Code language is not permissible.
prepaid..
foreping.

THE WESTERN UNION
TELEGRAPH COM PA
INCORPORATED
NEINCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE

TELEGRAMS
A

NI
ci

edited service.
AM S
00 A.M. at reduced rates
to be sent
not earlier than the morning of the during the
next ensuing

TTERS

Telephonic delivery

permissible. Day
. express understanding that the Company Letters received
only

the same on the day of their date subject
undertakes
to conditions that
time remains for such transmission and delivery
hours, subject to priority of the
during regular
transmission of regular te.lora

NIGHT LETTERS
ates lower ihan thc standard telegram
s the standard night fetter
less and one-fifth of the
or less. Subordinate
ery of regular telegrams,
language not permissible.

-

Accepted up to midnight for delivery
on
ensuing business day, at rates still lower the morning of
than standard IC
gram rates, as follows:
The standard day
charged for the transmission of 50 words rate for 10 words
standard day rate for 10 words shall be or less, and on e-fift
charged fur each a
10 words or less. Must be written
'not permissible. Mail delivery, in plain English. Code
postage prepaid, permissib e.




WESTE01g7A14

_SIRED

TEL,1
WESTERN UNION

k an X oppo'melee desired;

,E TELEGRAM
ASMITTED AS A
X MESSAGE.

CARLTON. PRESIDENT

following telegram, subject to the terms
her :of, which are hereby agreed to

dc

a

rai

Zs

rceived lat

P. Announcement only justified for purpose of correct-

newsoo3or eta-

:1 nrovided billr not eligible. Stop. If eligible, will

crutod i7oal

is expressing opinion that stnte and, natinal hanks are
7

as momber honks rot vileting law. stop. Wille-mnly confirm convicin rew Yr!rk that merbenship rill ipoollie unreasonable interference withLoesv, of state, hunks. Stos. Puhliu st-Aer:eni of rerrve bank's olicy
,cessi,".ry '1rd s-me object c,'n he accom liched by private conference with
rs
op. Oon't let our b!rt:k be res'onsible for any announcem ent. 't op.
,g

-

.

7* war

r:

-tions justify trasactinne not usually nee-

r
ER'S ADDRESS

-k7; ANSWER

410:

ntview Boulevard.

SENDER'S TELEPHONE NUMBER

fork 130t.




To guard against mistakes or delays, the sendel
one-half the unrepeated telegram rate is charged in ad
in consideration whereof it is agreed between the sent
The Company shall not be liable for mistak.
received for sending the same; nor for mistakes or delifor s ending the same, unless specially valued; nor in
Ulm ams.
In any event the Company shall not be liabl
caused by the negligence of its servants or otherwise, b
writing hereon at the time the telegram is offered to th
one per cent. thereof.
The Company is hereby made the agent of t
destination.
Telegrams will be delivered free within one-h
towns. Beyond these limits the Company does not us
contract for him for such delivery at a reasonable price
No responsibility attaches to this Company c
by o'ne of the Company's messengers, he acts for that
The Company will not be liable for damages
filed with the Company for transmission.

Special terms governing the transmission of messc
the foregoing terms.
No employee of the Company is authorized to vary

FAST DAY MESSAGES
A full-rate expedited service.
HT MESSAGES
Accepted up to 2.00 A.M. at reduced rates to be sent during the night

at all
....gamin in this respect is subject
to the condition that there shall remain sufficient time for the trans-

A deferred day service at rates lower than the standard day message rates as follows: One and one-half times the standard Night
Letter rate for the transmission of 50 words or less and one-fifth of

NIGHT LETTERS
Accepted up to 2.00 A.M. for delivery on the morning of the ensuing,
business day, at rates still lower than standard night messa r. tes, \
follows: The standard day rate for 10 words shall be charged for the ans.mission of 50 words or less, and one-fifth of such standard day rate fof 10
words shall be charged for each additional 10 words or less.

and deliverbl not earlier than the morning of the ensuing business day.
DAY LETTERS

the initial rate for each additional 10 words or less.

SPECIAL TERMS APPLYING TO DAY LETTERS:

In further consideration of the reduced rate for this special*` Day
Letter" service, the following special terms in addition to those enu-

_

mission and delivery of such Day Letter on the day of its date during
regular office hours, subject to the priority of the transmission of regular telegrams under the conditions named above.
No employee of the Company is authorized to vary the foregoing,

-

merated above are hereby agreed to:

SPECIAL TERMS APPLYING TO NIGHT LETTERS:.

Day Letters may be forwarded by the Telegraph Company as a
'erred service and the transmission and delivery of such Day Letters
in all respects, subordinate to the priority of transmission and
very of regular telegrams.
Day Letters shall be written in plain English. Code language

In further consideration of the reduced rate for this special "Night
Letter" service,
special terms in addition to those
the following

This Day Letter may be delivered by the Telegraph Company
lephoning the same to the addressee, and such delivery shall be a

be deemed to have discharged its obligation in such cases with respect

A.

I

t permissible.

.y

omilete discharge of the obligation of the Telegraph Company to
elivor.

This Day Letter is received subject to the express understandig aticl agreement that the Company does not undertake that a Day
D.

enumerated above are hereby agreed to:

Night Letters may at the option of the Telegraph Company
be rhailed at destination to the addressees, and the Company shall

to delivery by mailing such Night Letters at destination, postage
prepaid.

Night Letters shall be written in plain English. Code language
is not permissible.
No employee of the Company is authorized to vary the foregoing:

4100 Montview Boulevard.




Denver

Colorado,

October 23rd, 1916.
Dear Mr, Jay:

Yours of the 17th with amplificatio of the explanation
of the Ladenburg-Thalmann statenent is just e dived. I still
do not undei'stand the item of "Unadj4ited Acoou t " which
seems to me is a curious and bli
em to appl
a million

and a half of the firm'e
accounts indicating that a p
either by litigation or otherwis
tate matters, I woul

of their bills, as

ere is nothing in these
firm's capital is tied up
y the settlee:ent of esbuy, say, up to 1'500,000

statemen,
bout

-o not worr

flurry whery(--;74

justifies it.
r hospitality.

liftle

ere here promptly subsided.

eks past

For

-ce I have been setfled at the house, my
dissipatio as cons s ed of one trip to the ci'y to get my
hair cut and
0.4-.6t a little club there and one short automobile ride. The rest of the time has been spent right at
home.
I did enjoy the visitors, however.
over two

..)

_

Sincerely yours,

Pierre Jay, Esq.,

Federal Reserve Agent,
Federal Reserve Bank,
New York Oily.

BS/VCM

111111110




Denver, Colorado,

ctober 24, 1016.

ear 2r. Jay:
Reading Miller's address to be deli e d in
Indianapolis
disclosed a slight omission in the //
article 1 Eibnt iou which occurs on page 6 immediaiely followipt
word "statute" in the
middle of the page. There a
d be a ded the following: "if
/
we exclude the $204,000,000

tained in exchange for
notes issue."
etted at the foot of page 5,
but for certainty sh /A---° re t ted
d be
in the place indicated..
Would you i d having
at page re-gritten for me'

This iøily
u7

yours,

Pierre Jay,

.

.

.

federal Rese
a
Equitable Building,
New York (.;ity.
13.5/VCM

,




Denver, Colorado,

Octobor 24th, 1915.
Dear Mr. Jay:

Thanks for your

twenty letters of

19th covering

the period from July 24th to uctober 11th.
ing responsible for many of your own burdens

own absence bemy lips are closed.

i will only reier to some necessary partftWIII0

f the letter as

this'is a heavy mail day.

I meant what
A

.1 said a6ut y

I wrote you yester&v, it

s

and Curtis doing the work.

of my own deliberate pol-

icy.

About the

settisin

the Board in Washi
in

further

1

f ou directors

on has al ady taken this up and that noth-

oces a

the arrangements for handling
rough

names, I think

indepond41

foreign

transactions

agent, Mr. Forgan write me that the busi-

.

uoted and

nesa °ugh

Bari.

managed by the k4w York Reserve

That will help us a good deal.
I am glad to pee the reserve nGtes going out against gold

and read the Doard's admonition

to McCord, as well as listened to

Warburg's rc,port of a lecture he gave McDougal.

in

connection with the salary arrangement, I presume the

agreement with .7ai1er has gone into effect.




-2-

Pierre Jay, sq.

To

Oct. 24, 1916.

The decision of the Board in the larvey case is most
.arrassing to you.
t seems as though I was absent whewhave

ever unpleasant jobs have to be done and this one would
been more embarrassing to me than any of the otners.
make an effort

to

Te must

have the Clayton Act amended and make it a

little more liberal, both in this matter a

as to private

bankers.
About the loss of gold thr,u_gh
Fund,

G ld

settlement

nothinr: can be done about the New York

settlements as the law prohib
a member of any Clearing b

in
whic'

.etonal bank from being
oeo not permit settle-

silvcr.

ments of Clearing House balan

ing house

I do

not think

j<

it refers to United

and silver

as they are legal tender
a\

certifilctes

of the law makes

are 7

(tillet\te\g

iK\obligat7Y
\

presumably the present state

upon any member of the Clearing

1-0 thaf. arif/money in settlement of

House to a

balances.

The beet/ olution of the difficulty is the one suggested in the
article

sent you

/

Of that

I an surely

convinced.

th your conclusion (b) about possible injury
to tew York.

If the

Board would support us in a plan

for die-

tributing silver certificates and United F>tates notes by

direct

shipment to other rossrve banks or Washington in settlement of
balances when our holdings became excessive, that might do as a
temporary measure, pending comprehensive currency lej,islation.

You realize, I h ope, that if we settle Clearing House balances,




To

Pierre Jay, Esq.

Oct. 24, 1916.

we will avoid, c good deal of difficulty which now arises.

large part of this form of currency will come to us

A

at the out-

set and thereafter the constant accumulation through Clearing
House settlements will not take place.

Only we would want to

be in position to supply small currency upon demand et any time
and wiih enlerged revervc balances would b
ing a reasonable supoly of small denominatio

ustified in carrysilver certificates

and United States notes.

Thanks for the check for
of the telegrams which have n

$9.85.1v
ee.

not kept track

ery heavy as the longer

ones have been sent colleo
en glad you think

I

h,

for thet article.

w York Times the best place
tter and think the next one

will be.
NO COMMO

ooakward'leill n(

understan
about M

requi eØ on the Directorship matter RS

Towne.

run, but I am still in the dark

don't want to lose him.

I have great re-

speck rv-e Wiggins',)a ility, but do not believe he would be the
.(

\\

ee

best direii

we could have.

All the other points about

the Directorship matter, raised by your letter, I think are sound,
particularly the one about the sectional representative.
'I doubt if Mr. Locke nresees his resolution, judging by
correspondence with him direct.
!3r suggestion for having Curtis see Polk

about the

rnglish

arrangeeent was to enable us to get a line informally prior to the




To

Pierre Jay, Esq.

Oct. 24, 1916.

final decision on what their attitude is and to leave the natter
in such shape that we could make our own representations directly to the State Department rather than through members of the
Federal Reserve loard. That, I regard, as exceedile,ly :Importent

and really necessary in order to ensure a favorable decisinn.
Election ie now so near that nothing could b ccomolished by
ayne (recently
pressi.g the metter and my letter meantime to
sent to Mr. Treman), will keep the h4 rolline.
o not see fty the Reserve
About curreney legielati
ar unleee poelibly thny
Agents ehould not go ahead wit
ped sometningout here with
would be willing to wait unt
der it with other data of +heir
Mr. Roberts end then have them
own.

Don't thinkf ny more a ott the tvlary matter for the prosent. Yy plan will
overne ay the doctor's reports and if he
discourages
rly r(4-a-rn o the office, then it may be better
for me to difop off ti ayroll. Whatever happen, I want to fin..
inh the fo e rn,arre , %ants and If necessary make another trip
, for the purpose.
to luropo nex
1

am always conscious of the fact, ac 1 wrote you yen+er-

day, that you are overworking end one victim of that habit in enough.
I will be glad to see the reports cf the office work which you and
Mr. Tremen have hod prepared.

low thot we are up to date, 1 hope to hear from you regularly and am grateful for t he long letter which cleared up n lot
of Matters which i was waiting to hear about. -lest regards to oll.
-iucerely yours,

Denver, Colorado,
October 24th, 1916.

Dear Mr. Jay:

Enclosed is confirmation of my las

ject of

new "'tench

the

teleg

Yours, qu t ng

credit.

did not rench me until 10 o'clock last nigh

the :-,oard's wire

hen I hadelready

turned in.

It seems honeless to r

all the

ter

e have so frequently gone o

gumerts which

matter and

way, as the damage will be

too

late

any-

time this letter teaches

you.

thing




thing

The annoy

is covered by my
are not.

they

If

rl:e.

\

ut

ublic announcement I think

Eith r the bills are eligible or they
/
and if no vielation of law is
and

N"-----___

he transaction,

involved

the Board is exceeding the most ex-

-,

treme acItiorrthe Co pltroller has ever undertaken in the whole

admpii,etration in ihtimaing by public

course o

announcement

what views it enterteined about the goodness of a specific businese transaction.
any national

I never heard of such a thing coming from

or stete banking authority

before end it will con-

firm our critics in their opinion that the System is under

the

supervteion of a lot of schcv,1 teach-re.

Nor is their

telegram to the

Yederal Reserve Agents jus-

tified, except ac a w-rning that the Board recognizes the lenl-

ity of

the transaction, but does not approve of it and fears that

we in New lork

may load them up

with bad paper.




-2
70

Oct. 24, 190.

Pierre Jays Esq.

Nothing in the record of the New York Bank in its reittion to theee transactions justifies any such warning. In both
the Brown and Bonbright credits, the bankers were told that we
would have no part in the negotiation of the credits, nor would
we commit oureelvee to buy any

of the bills and if we did buy

them the amount would be limited

u gement and we would

by our own

expect them to find a merket for the bills in

eir own way and

without any assistance from us.

ould beNts,)fcr!. the

Our attitude in this cre

bankers of what the law end th

gul e

order that the bills might bôe

gib

otatement that we made to !:,r. Br

made necesenry

in

and then to make the same
Vr. Kent, Mr. Cromwell and

nnection with the earlier
-r. Wilcox of Bonbrig/ t/fUcill
the Fedezja. Reserve Board uor the Federal
Beyond t
.t(credits.

Reserve Bank of row
authority t

Tr/cise

sr

pGlioy
wise thet

has ay concern in the business nor any

rged th
wou

eking an announcement is so decidedly un-

our bank have no pet in it.
to be in

Washington to let off some steam

about this matter.

Very truly yours,

Pierre Jay, Esq.,

Federal Reserve Agent,
federal etesorve Bank,
New York
9S/VOW

1t y.




Denver, Colorado,

October 25th, 1916.
Dear Mr. Jay:

I am preparing a letter to

to you tomorrow or next

PaIlain\vich will

day and meantime wri

can have assembled and seat to him

ode in this country.

o ask if you

with this ieter some very

comprehensive data in connection w
and pRrticularly of our Clearin

be sent

erve

he FederaN

use a d check collection meth.

In p

uggost the

can be supplemented by whoever y

following which

t rn this over to:

Copy of the,

erva At, as amended,

Copy of th
ast editi
Yedee 1 Reserve

ard,

\

of the regulations of the

/

Oopie_af at 'Oeuroripialars and forme relating to die7,aaants an

,cal/aotions,

omplete statement of the aeration
tlement Fund and the forms used,
,

)

,

)

f tket,ionstitution, by-laws
4tle--Clearing House,

of the Gold

Set-

and rules of the New

Copy of James G. Cannon's book on dlearing Houses,

Copy of Jerome Thrall's recent

book on Clearing Houses,

As complete statistics as can be obtained Of the volume
of checks handled by the New York Clearing house
Association, by the Federal Reserve Bank of New
York and by all the reserve banks,(the last named
having been compiled I believe by Seay of Richmond
in a recent crcular),

popy of the rules

and forms used by the New York Clearing Association in their country check department,

A description of

the

operation

of

our

Transit Department,

Copy of National Rank Act as recently compiled by the
Comptroller.




To

Oct. 25, 1916.

Pierre jay, Esq.

I think it would be well worth while to give this evidence
of our friendly desire to keep them informed of our own development
and to assist in the work they are doing to
checks.

It might be well to mark that

Federal Reserve Act, a

promote the use of

portion of Section 14 of the

recently mended, in regard to investment

in bills abroad and carrying accounts from ou

oreign correspond-

ents.

Then sending this package fopmr4wthiy letter, it might
you
etter expreste Pallain
be a good pian foroor rr. Treman to
i' ur correspondence and exsing regret that there has been
7
plaining that my absence, as
/w delay in mail which at pres.
cult to deal with these matent exists, has ea.de it a little
ters as prmptly aa we ilad 41,EiV1 likad
Abair. beeq' .oping tha
I

some action prior to Sn'ewering

he State Department would take

last letter, but tiiat really

t think that we can wait any longer.
e successful in Washington yesterday.

ana-4_da

seems to b

oe

incerely yours,

Pierre Jay, Esq.,

Fe:leral Reserve Bank,

Equitable Building,
New York City.
BS/VCM




November let, 191,6.

Dear Mr. Jay:
Mr. Hoffman ade.ises me of his change

of Commerce to the Times and asks if I won't

ram the Journal

ears something

for the Times on some subject of current into o.. I have
written him that you have a scree-1 of mine-EFTNested that
to public it as one
he see you about it. rt meld

article instead of to if tha

I am now at work

be

ova a little better than

on another chapter that I thin
the first one.

orts n Waehington on the
am sorry ht your
French credit matter old not me t with better success, but it
I

looks to me as
knew

it an

had escaped before anybody

ugh.

-osing the door, or efforts to close it,

could

not pocsi l do any god.
ig I supoose will be to press matters with

Th

the State Department on

tis does not get too

our foreign business.

tired of traveling to

am sure he ought to meet

Washington

you and the others.

Faithfully yours,

Pierre jay, Esq.,

Federal Reserve Agent,
'ederal Reserve sank,

where I

those peciple and put up the best argu-

ment possible for a favorable ruling.
Boot regards to

I hope Jer. Cur-




November 3rd, 197_6.

Dear Mr. Jay:

Thank you very much for yours of Oc ober 30th1 which
possibly does not call for an answer until 1 g

a further letter

from you in reply to my last "flight."
Ihere is one subject mentioned, howeve
should have careful consideration
As you use the wo

assistant.

nArt

ompetent man to do the work

b>toa

prove a suitable or sai\efactory,4ry1e.

isrlekiply iaurie

reports, etc

man of more

active Deputy Chairman or

it strik it me that this scheme will not

Deputy Reserve Agent

serve Agent

t\is the question of your

assis a t", I understand that

you have in mind getting a thoro
which would ordinarily

ich I think

The work of a deputy Re-

andling the note issue, preparing

and the only part that requires the services of a
an avera

capacity possibly is the preparation of

the weekly at

et'business conditions and the preparation of

the Annual Report.

All of the rest of the work requiring brains

and exnerience, it seems to me falls within the different divisions
of the regular bank organization.

My own conclusion is that you need a better arrangement

and grouping of the bank work, a large part of which you are doing
yourself notwithstanding that it is the work of the bank as distinguis




-2To

Nov. 3, 1916.

Pierre Jay, Esq.

To cover that difficulty which

from that of the Reserve Agent.

I realize ha e been a serious and embarrassing one, made all the

worse by my absence, it strikes me that the regular bank organization should be developed and used to a greater extent than at
present.

We have so many good men in the ban'

ow who are am-

bitious and expecting and deserving advancementa

opportunity

develops that I would hate to go outsidplof the o

anization for

further assistance unless it was

abmplutely
tur .

for instance, in case 1 should no

for me to make this general su4e tic,
absence, the daily i'outine of the
----- -

good deal and I am not/MM

n

forced 40

us as,

It is only possible
ause after six months

has undoubtedly changed a

---...,

an..:}1, acquapited with it to make de-

tailed suggestions.
(

You must have iad a 0

e of discouraging weeks and

\-..

dly to be away at a time when questions are

it makes me f
arising wher(e

could

A 4 t that

poseibly

be of particular help.
you
icle, I agree.withjhat it would be

spoiled if cut\liajwall; although Hoffman wanted to publish in

the Sunday edition where it could probably be run as one article.
I await your advice in regard to the points you did not
think quite clear.
chapter.

Possibly, they would be covered in the next

My general thought was to explain in a general way how

various of the operations of the bank which are not usually understood have been conducted and in the next article I was proposin
to suggest quite frenkly that with $1,600,000,000 of money in circulation, based upon the government fiat and inadequately covered




To

Nov. 3, 1916.

Pierre Jay, Esq.

by Redemption Funds and with nearly *2,750,000,000 of gold in the
country, we should now provide for retiring greenbacks, hastening
the retirement of national bank notes and changing the denominations
of gold and silver

certificates eo

that the former would stay in

bank reservee and the latter in circulation, then gradually replacing the national bank

notes by issues

reserve notes for

of Feder
\

which adequate redemption provision could be ma e

y accumulating

Federal re,arYnt.
-

gold through direct issues of

As you know,

--

that is the scheme which appeals to me as being th

di) i ent that something of

and 1 think one can detect agrowi g
that sort should be undertaken

o

st feasible

a vast sum

that

of gold is

<")

is from the first article

Omit 'n

available for the purpose.
left it a little pointles .

Do not let t
sure they will.work

plications discourage you.

if you will take to heartthe

t all

\

of course, was intended to be

discouraging.
I

AB

t jump to the conclusion that

,please

s/iere responsible

that any of y
fiasco.

I

c3am

ote 11,c

longhand letter

helpful and n

office

for the French

felt
credit

As 1 wrote Curtis, it was due, first, to the unwise cir-

cular sent out by the bankers and, second, to the hasty action of
the Board which nobody could control.

There is a strong feeling out here that
to be re-elected.
Warmest

regards

to all of at the office.

Faithfully yours,
Pierre Jay, Esq.,

Federal Reserve Age,
Equitable Building,
New York City.

Wilson is ping




November 7th, 1916.

Dear Mr. Jay:
Nearly a year ago, Mr. Malburn asked me if I could
suggest a new

connection

would shortly

expire and he did not care to cotinue

Treasury.

for him to make as

i

term of office

in the

My illness prevented my dokg_ishy.thhg.about it.

Mr. Malburn is, I suppose, 45 or 46
ed as a lawyer but has had some

Denver where he lived

age, h
s\lkof as train-

x er en

He is a son-in-law

for m n

of Senator Thomas of Colorado, who

one of the hard-shell

Western senators, but Is/jKa-Wit-

man personally.

in banking out here

a"e

Thr u h hie i

able and

attractive

ence, Malburn was appointed

/
Assistant Secretary,t e Treasta y.
.

of him durin

1 believe t
ligence and

;t/h-e-Past tlifii-sy

I have seen a good

deal

He is a good man personally,

re.

/

o oughly r I able, much above the average in intelther

than a man of action. He
o take as your assistant, but would rethan you have in mind. Assistant Secre-

mph /of

might be just t
quire a lar-er salary

a student

taries of the Treasury get *5,000 a year.

of his finances, but know that he

I

have no knowledge

depends upon a salary to some

extent.

Why don't you have a word with Curtis

and then make inquiry of
and I do

Warburg?

on the

subject

This is only a suggestion

not want you to understand that I recommend him.
Sincerely

Pierre Jay, Esq.,
Federal Reserve Bank,

yours,




November 7th, 1916.

Dear Mr. Jay:

Nearly a year ago, Mr. Malburn asked me if I could
suggest a new connection for him to make as hi
would shortly expire and he
Treasury.

did not care to co

ed as a lawyer but has had

lived

in Denver where he

J

t e-past

t

4h

,t

Secretary o

of him durin

hie i f

a

ther mo

of
)

in banking out here
son-in-law

ence, Ualburn was appointed

I have seen a good deal

e Trsaat*'y.

two-years.

as train-

ar,e,

able and attractive

41/'

,\

He is a good man personally,

the average in

oughly r I able, much above

ligence and

might be

Thr

it.

one of the hard-shell

who

ere

hg, about

He is a

for m ni\yeaphy/

_estern senators, but

man personally.

I

someeries
n

of Senator Thomas of Colorado

I believe

nue in the

My illness prevented my dokhg_anyt

Mr. Malburn is, I suppose, 45 or 46

Assistant

term of office

intel-

a student than a man of action.

just ilte-aam to take as your assistant, but would

quire a larger

salary than you have in mind.

get t5,000 a year.
know that he depends

taries of the Treasury

of his finances, but

He

re-

Assistant Secre-

I have no knowledge
upon a

salary to some

extent.
Why don't you have a word with Curtis on the subject
and

then

and I do

make inquiry of Warburg:

not

want you

to

understand

This

that I

Sincerely yours,

Pierre Jay, Esq.,
Federal Reserve Bank,

is only a

suggestion

recommend him.

November 7th, 1916.

Dear Mr. Jay:

Your handwritten letter of November 2nd came yesterday
afternoon and

this

morning your long letter

Saturday.

I

will reply now only to the former.

This letter of yours gave

mea grw%dl of pleasure.

knew you would understand my sen4inyou the s g ,stions I did
although when one is loafing ou

seems ungracious and un-

grateful to LuTear to be ptik

ellows who are doing the

work.

It is hard i /n,nitu

ours, with so many imhor-

tant and new things(t

be done

let any considerable part of

it go and yet that in

hat mug;

done for the benefit of the

organization/ii5;rdernmake-progress
.'

and protect one's health.

.

t hte assistant, I misunderstood somewhat your thought.
Higgins i

I
o longer,It Tailable

and I would not hesitate to get the

'a \"-------/

man you neenq_a_hi-giter salary if necessary than that you named.
If we have a man down the line in the organization, it would be
better to promote him, but the only available man,

Jegferson,

could not be spared from the bank and is really entitled to pro.di




motion in the regular bank line.

You really need more than one

man, however, and I suggest getting a good man from outside and
selecting one or more

aseistants

from the bank staff, as may be

needed.

The Aiken suggestion seems to be a violation of my
recommendations about promotion, but circumstances really justify




-2.-

To

Nov. 7, 1916.

Mr. Jay.

course, you rAilize how keen I au to be back and
do my part of the work and once more let me repeat the warning
that this cannot yet be definitely expected.

Dr. Sewall makes

very encouraging reports of my progress, but will not yet make

recovery being

any statement as to my

sufficient to justify my

The last time I saw him

living in the East.

said that he

expected me to be as strong or stronger than I e er had been,

practically able to do everything, but2whunk*d him about
returning East, he said ac formerlY, ,
_that that 11;tils.1epend
Nj

hYeica1/yit3 as

upon whether my general

well as my path-

ipg that I could maintain

ological condition would justi

the game in the unsatisfactory N

climate.

Thank you for ,474---c73,i4\of '6,91* espondence with the
.
,

Reserve Board and oth

r

about th )French credit.

also for your suggesti\\
speech, but

o

sendAs

alvi-;ipy
/

Thank you

a copy of Governor

aarding's

y been sent, you need not bother.

P1 lase tell Mrs. Jay that my letter, which I am glad

en somewhat for her benefit.

you showed
At

day.

letter to-morrow.
writing me so

I will try and answer your long

With warmest regards and many thanks for

cordially, I am,
Faithfully yours,

Pierre Jay, Esq.,
Federal Reserve Agent,
Federal Reserve Bank,
New York City.
BS/VCM




November 9th, 1916.

Dear Mr. Jay:

The enclo ed bill for telegram are all
ering
4t2 05
bank business except the item
uld
telegram sent to the Bankers Trust Company
proper charm
you mind putting this thr
for reimbursement*
Thanking you

Very sinc

Pierre Jay,

Federal Rees
Equita e Bui
New

ty

yours,




ovember 9th, 1916.

Dear Mr. Jay:

Yours of the 6th just reache
send the article back in a
in resisting
You are quite r
nation in rates just
of the Board to devel
now.

I

do

ui sh t

would show some appre-

ciation of the fact tha
Besitting the

times are not peace times.

se finance credits

is t

will not

other way around

and they illy should reazo thit. I will vote
with you ety time to gojght ahead as we have been
at the same rates as hereto-

ying

sincerely yours,

Pierre jay, Esq.,

Federal Reserve Agent,
iederal Reservu Bank,
New York City.
BS/VCM

oft
November 14th, 1916.

Dear Mr. Jay:

Dr. Miller is pretty strongly opp d to changing
the note provisions of the Federal Reserve
except, as
he states it, to "regularize" what
doing.
He
would not go so far as to let us count gold he
Reserve
Agents as part of our reserve
that connect'
he
writes me that he did not

views directly on that

subject at Indianapolis,

gly as he might have done,
already come out strongly

because Warburg at Kansa

with a contrary

the time propitious

to develop the
ference of opini

re was controversy or difem.

e setback as to publishing
anythi on this subj
don't want to strengthen his
oppoi ion by doing t e very thing which he scrupulously avoided ds

g himself.

does it

s rike yout

incerely yours,

Pierre Jay, Esq.,
Federal Reserve Bank,
Equitable Building,
New York eity.

BS/VC!




altz

0

070).40

oeC70-fr?

November 15th, 1916.

Dear Mr. Jay:

your two letters of the 11 and am mighty sorry
re ly think you are atto learn that you have becia laid up.
hay

tempting to do too

much and have

lesson

out of

my book.

ion with a member bank un-

Malburn cannot acc
til two

years

after his r

on that account that I had
Corporation or the
would like to se

as

taken effect.

it was

the American International
er than the City Bank.
I
aced

or he is a fine fellow,

but I am so out f touch with ma ere just now that there is nothing I can do..
length your long letter of the 11th
You should certainly have a thoroughly
about le organization.
efertibly a young man with iniative wno could
comp ent asoistant,
salary you suggested. His work should not
tad at about
d with the routine work of the bank. Where
I misunderstood your first letter was in gaining the impression that
you intended to get a. man of somewhat different and largpr calibre.
You and I really differ a good deal in botn our theory and
Your inclination is to do
methods a9 to ban organization work.
all the work yourself and my inclination is to do as little as



To

Mr. Jay.

possible.

Nov. 15, 1916.

My conception of the proper development of the work,

in our own bank would not

justify

using the expression which you

do about being inclined to devote all of your tine to the bank
work rather than the work of the Reserve Agent.

The whole job

g the conduct of the
other e conduct of the

ought to be divided into two parts, one b
business

transacted

by the bank,

the

supervisory department of the Reserve Agent

a good deal of work which is not properly sup

of the bank,
g in his departTent, and

the Reserve Agent would d

hat the responsibility, as

the bank's work could be
balanced.

const

a

ve work could be fairly evenly
ast duplicating our efforts

We hav

by having both

sion.

d shape the w

The Governor would d'

well as the interesting

which would include

isiona of the sank p t in too much time and

energy en the s

or mistqken as to your ram fitstated, your own exuerience and apyou have
ness.
tituh is not in,the direction of organizing the detail work of

I think

the

n

You don'

.

ike it and naturally, not liking it, would

it that you would of the
r influence is stronger both inside thepr-sentposition
bank
and outside. For the sake of emphasis, let me repeat, that the
trouble with our organization is that the work of the senior officers overlaps too much.
not

nearly the

ccess of

As a suggestion, why don't you and Mr. Treman take the
bank chart, wnich I presume has been



kept up to date, and from it

To

Mr. Jay.

Nov. 15, 1916.

sketch out some sort of division of

the responsibility for the

bank's affairs and let me look it over.
it would leave you with the regular

If properly divided,

routine business or

Reserve Agent, all to be conducted under

the

our supervision, but

in its details, by a competent as2istant.

It would likewise

leave you in charge of certain of the act

ties of the bank

such, for instance, as the whole

the Federal reserve

the Directors and to the F

ers, reports to
erve Board, t develo ment

and application of the r

f the Reserve Board and s.

notes, etc., credits, relations with bank exa

good measure of all the

e work

of new features of th

like

the development

nese, trade acceptances, etc.,

etc., together

sly, with most of the

speech-makingt

mpted to describe anything like

the entire fie

Reserve Agent would have super-

Vi sion.

, the Governor would supervise discounts,

op

market oserati ne, the foreign business

th

ransit Depart
I had

mettings o

(if it ever

t and general bank organization.
d through the instrumentality of the regular

e

Governors and Reserve

Agents to

work out a

which would promote organization along this line in all
serve banks.

See how vain those hopes were:

ing in Washington, divided the
those lines about a year

ago,

program and

plan

the re-

We had our meet-

undertook to work along

and from that day to the present next

to nothing has been accomplished.



develops),

-4To

Mr. Jay..

Nov. 15, 1916.
.

It is just the kind of difficulty that one might expect in any organization where there are two heeds, no matter
how good may be the intentions of both of them.
Unfortunately,
my absence has shoved a lot of things to our shoulders, added
to your work tremendously and disorganizes such arrangements

already in e
I really think the only
ible is to get
Aiken, or some other good man, for Deputy Gov, for you to
get an as,istant and then a
/vision of th work along
the lines I suggest.
you will sacrifice your
for division of work as were

health and the work of th

to be able to suggest

1 suffer.
assi

a.t.

I suppose Pisher

do if we could

You a

I am sorry not
might

would be an awful burden.

undoubtedly r

ht in your surmise

as to the in-

guilty indeed
about bei nwa
d about
ding down a job which 1 cannot delinit
expect ever
ag%in, as valuable time is being
was d during which e could be breaking in a successor, if one
definite date

mus

urn.

be appointed.

I feel very

On the other hand, I

am frank to say that

returning to the bark next Spring, or of
ever livin, r New York City or keeping such hours at the bank
as heretofore.
I sometimes think that it would pay for you to run out
here for a little while so we could talk some of these things
over face to face. It is ver. difficult to write about them
I see

prospec4

i

without conveying the



wrong

impression.

To

Mr. Jay.

Nov. 15, 1916.

I am also disturbed at the idaa that you have been ill
sufficient to be confined to your bed and in all probability
are getting out and about again long before you should simply
because our organization is defective or adequate. It is a
very bad situation for the bank to be in.
You will be meeting in lashingto iay after tomorrow.
I have
y reform?
Won't you send me the suggestion rsout
t here and am
been stUdying the subject and thinking it ove
although I
ught to be d
pretty clear in mj mind abo

have not definitely form
rite me as soon
about currency matters.
Thank y

the nice thing

Pie

Fed

e Jay, Esq.,

-ede
BS/VC7!




I Reserve Age
1 1:eserve

g in writing.
ngdevelops about this and

lly and frankly ana for




41
46,

November 17th, 1916.

Dear

z. jay:
It was incautious to show my 1 ter to

Warburg rind I presume has done some

Lrm

though

it is a groat deal better to out these diffe
of opiniin squarely bob.
settlement.

an

ith Warburg and

I am co

while I hflve no expectat

s

changing his viers

hink hie irritation

about this psrti

raightcne. at a

with me CifIfi h

tart of thc wh e matter of foreign
i ut await anof r letter from him be-

mal,.e a fresh

credits.
fore

Sincerely yours,

Pie--re

q

Federal Reserve Agent,
v'eueral Reserve bank,
';ew York City,
BS/VCM

ight and wz can

November 22nd, 1916.

Dear

r. Jay:

r'hank you for yours

Alla_

of the 18th.
fin

When the mood strikes me 1

h

willauhose articles and
word from War-

send them on to you, but just I ha 'e been a':

burg whose opinion I have asked as to the pos

lity of giving

offense to niter.
riller's address
ence between Warburg, fli

around a little tit to

coming

e subject of

elf and I think that
we could.

the correspondence with Mr. !'dller

Thank

inve
I weu

state institutions without the

s sav
of members.

privil
New

beyond what is contained in your

really

let-ter.

Reserve System, the legislature in

k State would never agree to an amendment

like very

is to limit

H

to see such a limitation.

their

It is too hoe..t

uggesting it, so I auppose the best suggestion
them to bills which are eligible for us to buy.

Faithfully yours,

-.T*erx-al-ay,

Federal Reserve Bank,
Equitable Building,
New fork TrIkr4

BS/Vai

restricting

ments in bills t. those accepted by member banks, altLough

less to w




hailer is

'Both Warburg

point of view.

and I have been h

There is

som

November 28th, 1916.

Dear Yr. Jay:

fcur tcleram is just received.
to it fully, 1 am obliged tc ask yo

A,2

by referrin to issue of the Comereial and

11order to rer)ly.
.t what I write
Fine

1 Chronicle

covering the perio,T of 189,;

d the

sides th t, bear in mind t
applied to the situations whi
acteristics in each o

efcrence in my article

le-

oped many different charpanics of recent years.

"th regard to redemption

the situation wit

Ti

907.

a fair account of

With this preface,

when the

Fell of

strain d
reasury had always held as a

part of

General fund

no not recall whether by statutory

rcqtir ent or as a cu

,

never less than 0.00,000,000 of

idered to be free balance unpled ed fol government
in ord
o enable the government to redeem greencxnendit
backs in coin. Various reasons not necessary to recount re4suited in a sudden and very dangenous deficit in the novernmont
gold

reirexues coincident with a long period of adverse exchange.
.nere

exporting gold in large amounts at the same time that the

govcrnment

wan.

experiencing

bf current revenues.




This

difficulty in paying its bills out

developed what was at that

tnme

2
Nov. 28, 1916.

Mr. Jay.

as the "endless chain". Greenbacks were preeented to
governmert for redemption in gold by exporters of gold who

described

the

needed it for exchange purposes and tnase greenbacks eere imme-

diately paid out again by the governmeet in settlement of its

current bills.

They ,.;efe_agair preeented for gold

cess indefinitely continued, very shortly
ance in the Treasury below the h.00,000,00
a very small sum.

Bankers, economists and

uld eventually to
e en officers of the
en lhey coined

but there was a sericus

ation, the Sere-Lary of the
and finally made a con-

Treasury made issue

put" ease about t6.5,000,0 0

-tract with the M

ontract they imeoeed as a

of gold in conn

foreign

condition the re
so hand
paper

all

chain in

ere was no en

the sense implied by this e
deficit ir the eovernmen
In ordee to meet th

exchange

seould

in of gold would stop.

'at th

It reall meant that the

be

The news-

and comments of the day misled the public as to what

ant.

pro-

ducing the gold bal-

government deceived themselves an
the expression "endless chain"

and the

government, having

this

undee-

itself unable tc do so
its gold 'as required to meet its ordinary
during
exoenditures, because coincident with that, banks were demanding
gold of the government fcr redemption purposes in order to y

taken

debts

o redeem gre

abroad.

sacks in gold, found

The government received nrotection through

the !organ contract, not so much on account of the 65,000,000
by

ed by

which it had accuired there but because of efforts direct
bankers to superess gold exports and consequently stop the drain
of



redemption.

-3-

Nov. 28, 1916.

Mr Jay.

To

The function of the government is to so arrange its
revenues and its expenditures that they will substantially
balance and of course to maintain a roserve in the '-reasury
'hen the ordinary

sufficient to meet unexpected demands.

gations, the

redemption

Treasury reserve must perform

government is exposed to the danger tat it

annot redeem,

its exwhen by some circumstances its rave ues fall short of

:

ction of tariff

g ov-

it stimulates imocris and

es rise

o an adverse eiLchangc.

rom t a ycars 1354 - 5 is im-

me to undertake the redemption

vernrnent can a

greentative money wit#out

in gold

,

ing

erve of

!

same time

book on "Banking and

ih

No

a

our currency and some very ii-

remark,'

pressive.

at

re-

er-;/ sound statement On this

subfect in Hepburn's last boo

Currency."

revenues

ire

You will find

lurninatin

hen a

0 wi 1 ari

This almout ievita

penditures.

tl

maintain-

t and character that a bar2,: would

be r

uired to maint in for the redemption of its notes.

gove

ment is obliga

of gr.

Lacks

.

to.redeem directly in' gold 1346,000,000

s obligated to redeem directly in gold or

30,000,000 of national ban: notes (as you

legal ten

will

The

niiS since
find by reading the statutes), and in audition, it

1900 assumed the obligation of maintaining silver certificates
silver dollars on a parity with gold, thereby ddding
t585,000,000 to it

gold ohligations and against this total of

in the General
over $1600,000,000 tnere is simply the free balance
deficient
'und, which is never adequate to face a combination of


http://fraser.stlouisfed.org/
revenues
Federal Reserve Bank of St. Louis

and adverse exchangcs.

-4-

Nov. 28, 1916.

Mr. jay.

During the period referred to, the government found

with

itoeif literally unable to redeem paper money

gold.

Dur-

ing part of that ti-e I believe the premium

on gold amounted

to over 3 % and brought about a panic whic

resulted in tremen-

dous losses to the country.
The period of 1907 was quite difi

ent.

difficulty, neither was it

paniJAy feeling which

chain"
den

wae, however, a

free bal

the

overnmant revenues.

The

peen a greenback, a bank note,
th

imply wanted currency. There

the situation to the extent
0,030,000 or 40,000,000 of its
York and elsewhere.
The diffi-

that it was abl
that the

caused the

r redemption in gold;

the Treasury can

culty

c.

so-cad,

d banks to hoard money;

dev

people did not distinguish ,

a silver or gold cer

had been

t it was not that

losing some gold to Europe prior
fact nor was it the "endless

We

government could not create

mand beyond th

currency to meet

mount which it could issue

through the de-

f its surplus'undo with a number of banks, and this was
I re
to' about t45,000,000 at a tie:e when probalimite
posi

bly ten times that amount would have been required to allay the

panicky feeling.

The lesson drawn from that experience was, of

course, the inability of the banking machinery of that day to
issue notes un6er some elastic system in practically unlimited
amounts.




5..
To

Mr. Jay.

Nov. 28, 1915.

I.

TIvh3 government used up its free gold so rapidly in 1907

that it actually became necessary to use silver dollars in order
to meet the demands made upon it. I have revex told you the ttory but this experience will illustrate: When the gold stock in
tne Treasury became so

seriously

reduced, t

New York Subtreesury

found it necesary to actually use silver d lars in making their
public deposits.

One of our correspondent

n Brooklyn, a very

well-.managed and solvent bank had
the

serve accounts with

Trust Company of America, the Knickerbocker

the lqrst National Bank of 3r
agent), and with the Banee
suspended payment, the pre

and informed us one "

office end three
windows in each

nt Company and

-he latter bi g its clearing
Nhen the first three
this bank came to our office
that he had a ren at his head

ore people at the teller's
e could count on our seeing

him through Satu

was payroll day, he would
clone the
beolutely selvent and did not
gave a d loan in the ins itution. He had a balance of ',136,000
with
e could n get gold eertificatee in small denominations d after conga. rable difficulty we let him have 80,O0O
of our
reserve
ey which was largely gold and then got
t100,000 in ea. ver dollars from th ubtreasury which weighed,
as i recall, sometning over two tons.
e loaded this into trucks
and automobiles and early Saturday morning had a parade across the

bridge and up to the head office and three branches. It took four
or five trucks and automobiles to get the stuff over there. Dumping these bags of silver into the bank before the depositors did
the trick and by Saturday noon the




run stopped, although we had

-6-

Mr. day.

To

Nov. 28, 1915.

assured this man that we would see him through if we

off

had to pay

all of his depositors.

Such a situation

it did

of course but

could not arise to-day

illustrate in a very marked

lying upon the Subtreasury for

way th

mpossibility of re-

assistance

t may be required

in that type of situation which was purely
relation to dificient

government

were then ample,

or adverse exchanges, which did

During

exist.

d of 1907, when our inter-

the whole

ange was in favor of New

est rates were so n gO,

York and as I recall, we imp
gold.

70,000,000 or ,'t80,000,000 of

t so much of its reserve in

One bank in

anticipation

mes

d practically its entire

of

reserve in the

e water in the course of
er natural and emergency means

portati on.

the absence of an elastic cur-

of expa
renc

The third
di

rent type.

urrence in

August of

1914 presents still

e war precipitated demands for payment of
ligations abroad in gold.

declining,

ment revc.nues were in fact

they had

,41ile the govern-

not

yet

reached

a dangerous deficiency on account of a large free balance.
foreign exchanges, however,
there

developed such an insistent demand

suspended gold payment.




went to a tremendous

for

premium

The

and

gold that all banks

Ve haddan emergency note issue which

-7-

Mr. Jay.

To

Nov. 28, 1916.

quickly relieved the currency stringency and avoided a
renee

recur-

of what happened in 1907, but everbody needed gold to

nand abroad and was unable to get it.

Subtreasury demanding

Lines formed in the

-old for greenback

silver certifi-

astonishing feats e of the periodz
In 1900 a statute had been passed setting side $150,000,000
of geld ae a redemption fund for
directing the
Becretar;i of the Treasury to maintain all form
money on
parity with gold and if neces
issue bonds to the purpose.
cates, etc.

Here is the

It met it by dis-

How did the government mee

playing its unwillingness

ty to

$150,000,000 reserved f

paper money and by the ad-

use one dollar of the

miesien that an
gold was either

IJ be ineffective and with

t150,000,000 of

set aside by

ng j.

pose of me

essary

r the Gommit

the pur-

ton, it nevertheless was nec-

which I was a member, to go begging

s abroad.
The

the

such a s

law for

the countr for 4100,000,000 of gold in order to pay

thro g out

our

rpose of acquiring

less

seems to me in this

experience is that

ever can be an acceptable redemption

agency of

paper money because it will only act in an emergency

where the

governm

fund set aside for redemption purposes will always be inadequate and if used for the purpose will always create alarm.
I.think I attended almost every

meeting of the bank-

ere which discussed this gold question in the Fall of



1914.

8
To

Nov. 28, 1916.

Mr. Jay.

at no time did i hear a suggestion seriously discussed that it
would be feasible to use the 4150,000,000 of gold.
What should be done is to have tne reserve banke retire the greenbacks by issuing Federal reserve notes which would
unt of the present
give tnem about153,000,000 of gold, the
Gold rune are

about 4193,000,003 of low in1x st rate government

bonds to cover the difference betwe n the fa of the greenbacks
e national
and the eAount of gold. Tnen we snould retir
n is at el-aeon oeing done.
ban !,c notec very much more rad
In order to obtain
7hi s will necessitate 4 hi
up a holding
otos against gold and build4
it, we should issue Fedora
-

cess of the minimum required

of, say, $750,000 000 or more
reserve.

the denomination of gold

The thi

certificates and

s, inareasing the former and

decreasing the

will flow into all bank re-

serves and ilver

11 leave bank reserves and go

le fourth thing is to have the

into

for

Assa

ue paying cash goldso that all imported

gold a I all of our

eetic wine production can be directed to
can always afford to pay spot cash for
an issue their notes in payment. The fifth

the r-

it because
thing to be uone is to make Vederal reserve notes reserve for
member banks.

A program like the above will result in an immense
have 42700,000,000
concentration of gold in the reserve banks.
in the country. Of this I would like to see 41500,000,000 in
tit

-reserve banks, leaving t1200,000,000



in

general cirdulation.

Nov. 28, 1916.

Ur. Jay.

To Ao

This is three times the amount of gold

in

France outside of that

held by the Bank of France according to the

best known estimate,

and is probably three times or more in excess of what is now
held by both the

ngland, the joint stock banks

Bank of

and all

the private holders in Great Britain so t

the objection ire

quertly raised that we would denude our peo

e of gold circula-

tion would not be true if we left

Federal

1200,000

outside of the

reoerve banks.

In conclusion, let

that in 1894

he Treasury

was unable to furnish gold

in the amount required.

They did not have it.

s unable to furnish cur

rency in

the

amount desired b

1914, it was able

they did not have it.
ncy

of our domestic

gold reserve, because of

chich

had the reserve been t6uched.

your inquiry and you can rub it

hope th

hard as you o ease in making your report.

Am glad of 1rae

evidence of your improvement.

Faithfully yours,

Pierre
Jay, Esq.,
Federal Reserve Bank,

Equitable Building,
New York City.

8S/VCM




take care

unable to meet the gold

demand notwiths

in a

required to

In

el?

L'iSM

WESTERN UNION

GEORGE

TEL

ATKIN

UNION

RAW

AM

NEWCOMB CARLTON, PRESIDENT

BELVIDERE BROOKS, VICE-PRESIDENT

CHECK

SEND the following Telegram, subject to the terms

Novem)-,er 28th, 1916.

on back hereof, which are hereby agreed to




ere .-LIVR..

federal"Rnerve Bank,
gquitable Building,
New York City.

etter to Warburg sent you by mistake.

Please r,A.nclose

nd forward.

Benj. Strong.

Charge 'aid
Benj. Strong,

4100 Vostvie

Telephone

?At 1308.

Boulevard.

Form 260

7

ALL TELEGRAMS TAKEN BY THIS COMPANY AR E

suakEdiri Irict

itie

It

F'b

To guard against mistakes or delays, the sender of a telegram should order it REPEATED, that is, telegraphed back to bile o
or this, one-half the unrepeated telegram rate is charged in addition. ' Unities otherwise, indicated on its face, Tills IS AN UNI11
PAID FOR AS SUCH, in consideration whereof it is agreed between the sender of the
. t?..0,.*stlAgogy as ,follows
The Company shall not be liable for mistakes or delays izt the tran,iilsion or
able
', of ..a...,, 1
rfa4ab
,
amount received for sending the same; nor for mistakes or delays id the t tansmission or'
15f rthif-dell,'ery.O any RE: I
the sum received for sending the same, unless specially valued; nor in any ease fur delays arising from unaVoidable int,rruptio, ,.,.
.

errors in cipher or obscure telegrams.

,

.

,

'

In any event the Company shall not be liable for damages for any mistakes or delays in the transmission or deliver:4410ft, t.

.

fift
lines;

.

gram, whether caused by the negligence of its servants or otherwise, beyond the sum of ' FIFTY DOLLARS, at which amount tig.i.s..tAiegram is ..1.,
a greater value is stated in writing hereon at the time the telegram is offered to the Company for transmission, and an additional sum paid or agre,
on such value equal to one-tenth of one per cent. thereof.

.

The Company is hereby made the agent of the sender, without liability, to forward this telegram over the lines of any other Company'
reach its destination.
,
Telegrams will be delivered free within one-half mile of the Company's office in towns of 5,000 population or less, annirithin:one mile of sum.
cities or towns. Beyond these limits the Company does not undertake to make delivery, but will, without liability, at the sotider's,Ovest, as his a,
expense, endeavor to contract for him for such delivery at a reasonable price.
,.
No responsibility attaches to this Company concerning telegrams until the same are accepted at one of its transmitting offices; and if,a
such office by one of the Company's Messengers, he acts for that purpose as the agent of the sender.
The Company will not be liable for damages or statutory penalties in any case where the claim is not presented in Writing within sixty ,1
gram is filed with the Company for transmission.
No employee of the Company is authorized to vary the foregoing.

THE WESTERN UNION TELEGRAPH
INCORPORATED

NEWCOMB CARLTON, PRESIDENT

CLASSES OF SERVICE
TELEGRAMS
A full-rate expedited service.

NIGHT TELEGRAMS
Accepted up to 2.00 A.M. at reduced rates to be sent during the

night and delivered not earlier than the morning of the next ensuing
business day.
DAY LETTERS
A deferred day service at rates lower than the standard telegram
rates as follows: One and one-half times the standard night letter

rate for the transmission of 60 words or less and one-fifth of the

initial rate for each additional 10 words or less. Subordinate

to the priority of transmission and delivery of regular telegrams.
Must be written in plain English. Code language not permissible.




Telephonic delivery permissible. Day Letters received subjc
express understanding that the Company only undertakes deli,
the same on the day of their date subject to condition that stiff
time remains for such transmission and delivery during regular

hours, subject to priority of the transmission of regyjar teleg

NIGHT LETTERS

Accepted up to midnight for delivery on the morning of thr
ensuing business day, at rates still lower than standard night t
rates, as follows: The standard day rate for 10 words shell be
for the transmission of 50 words or less, and one-fifth of such
day rate for 10 words shall be charged for each additional 10 wol
less. Must be written in plain English. Code language not
missible. Mail delivery, postage prepaid, permissible.




,
W.. EST laimisa
iiijIIIL NIGH. lkar.4- TTER.
......,

fILSTPINUNION

..

...

...

.

.

..-4.

4
...vE W. E. A_

-

.

NEWCOMB CARLTON. PRESIDENT

VICE-PRESIDENT

RECEIVER'S No.

FILED

BELVIDERE BROOKS, VICE.PRESIDENT

CHECK

ITIME

SE

e following Night Letter, subject to the terms
ck hereof, which are hereby agreed to

Decer,ber 1, 1916.

ierre Jay,
49 'pet 64th Street,
New York

nglinh mint delivers to depositors seventy sever shillings ten a
alt panel, in sovereigns for each ounce gold deposited after inetal
ctu7lly refine .i an, c,irei. 'lop. Depositors must wait ten itcyl
r r:ore for return. top. !lank buys bullion at rate seventy 90V4
shiliings nine pence ts-)ot cash. ''top. rhis gives bank control t
intrret loss usu%lly exceeds difference in price. Stop. Our Asa:
Office pays spot cash up to ninety nine percent assumed value of
deposited and adjusts diffarerce when assay 'ade. "'lop.
Gold
tificatee are issue immediately for Assay Office cnecks so deposJ
ors suffer no ieterest loss during assay and mintin. :top.
Assay Office unJ mint made depositors await actual assay und coin
we cc,uld offer a'st c,:h at or sligntly below .ssay ()Mee )rice
4

et all gold. Stop.

Charge Paid

Benj. Strong,

..urther det-tils lalge Tarburg.

!Arong.




The W
the next ens
trans naissi on'
'o g

legraph Company
rates still lo

Union

sd

=3%

all b
rged for each additional ten words
Iegraphed back to the originating office for comparts
THIS IS AN UNREPEATED NIG T
this Company as follows:
in-delivery, of any UNREPEATED nigh
or non-delivery, of any REPEATED night
from unavoidable interruption in the work
smission or delivery, or for the non-de/ive
ARS, at which amount this night letter is
transmission, and an additional sum paid
etter over the lines of any other Company

r ten words_

th

.on

TERS, to be tranSmitted only fo,
The standard day rates for ten word

"legratrathirnigrahttesN,

and one-fif
er

tion

.

0
DO

shall

000 population or less, and within one red
ill, without liability, at the sender's reque
e 'accepted at one of its transmitting offices, and if
the SCI141,-.
es
the claim is not presented in writing within Sixty days
" NIGHT LETTER" service, the following special terms are herebY agreed to).'s
option iifithe elegraph Co o ny be ma led at destination to the addressees, and the Company siml
s w:th r
,ichecry by in-ailing such NIGHT LETTERS at destination, postage prepaid.
it
to p;,ia Lugihd,. Code language is not permissible.
1

ttuthori

vary.t!, furevoing.

THE WESTERN UNION TELEGRAPH
INCORPORATED

NEWCOM B CARLTON, PRESIDENT

CLASSES OF SERVICE

s
[F, edited service.
EGRAMS

.

up to 2.00 A.m. at reduced rates to he sent during the

ivered not earlier than the morning of the next ensuing

Telephonic delivery permissible. Day Letters received subje
express understanding that the Company only undertakes deli,
the same on the day of their date subject to conditions that suffi
time remains for such transmission and delivery during regular o;
hours, subject to priority of the transmission of regular telegrams3.

NIGHT LETTERS
at rates lower than the standard telegram
one-half times the standard night letter
of 50 words or less and one-fifth of the
tional 10 words - or less. - Subordinate
ission and delivery of regular telegrams.
English. Code language not permissible.

Au--1 un to

for dolivor, on

en SU 1

gra,.

nu;,

,NIIMIMPPEEMNP.,

-,501011PRI,

:ng of the

Denver, Colorado,
December 15, 1916.

Pierre Jay, Esq.,
,
Federal Reserve Bank,
New York City.
Dear lir. Jay;

plicat ion of

I was truly delighted to receive

It is a first rate little b

the Bank of Montclair.

there are

ened my

a good many sentimental associat

rowed the first money

first bank account there for

here that I ever borrowed in

transaction which turned
dollar I had ever made out-

profitably and repro

r was for many years

ide of hard earned

11 a stockholder.

director in the

etter of the 9th from

I have also r

deuce that that lecture of

/antic
mine
you say about
eatin,,i5

let us hope t

La a ma

i Lao

.rding's attitude is exceedingly interdoes not take the bit in his teeth.

almost every conservative piece of work

Idertaken during the last two years the Reserve Banks have them-

Ives taken the lead

OW(



the part of the 13oard.

and the holding back has invariably been on
I hope we don't drift into difficulties in

our relations; on the other hand, no one will rejoice more than I
to see a more energetic and progressive management of matters in

-h1n6tnn.

I will be glad to

lead your report and tall you




December 15, 1916.

frankly bow it strikes me.

Objecting to Federal Reserve notes

counting as reserve and to retiring greenbacks strikes me as leaving out the meat courses.

About the Treasury note episode, I was all
that Davidson's visit had a good deal to do with
for one called astute as he, I fall t
of such a stupid procedure.

ong satisfied
he matter and
v he was guilty

You are dead right about

Boards

getting into difficulties if t

door to all sorts of

visitors on all sorts of ea

that way about the Kent-

Hemphill visit; it certainly ac
the fat was in the fir
report of Harding'

matters worse t

d nothing, but, as you say,

ed. Have just read a brief
ay that it rather makes
w much bettor to have left

the whole subject
It

ar about the Starek matter.

Would

mind writing or telegraphing me any names that you pro-

pose

sting before'lug them over? That is one of very few

matte

n Which I

ing my ab

like really to have a voice notwithstandcan get a New Jersey representative, this

may take care of that situation, although on the Whole it might be
.

more logical to have the New Jersey director either of class A or
class B.

Please ask Treman to show you my letter to him about the
foreign arrangements.

This is one of a few instances Where it

seems to me tho Reserve Board has shown absolute distrust of mg




IV

3.

December 15, 1916.

To - Mr. Ja,

intelligence and intentions and I have been suppressing a kick
about it for a long time.
Please do take care of yourself.

I am crazy to be back on

the job any way and if you were seriously

ill, 4 do not know whether

I could stay out here or not.
fear that he

I have not herd from 7iarburg for sometime
is offended as a result of

nv writing

nouncamant of the Board's.

With best regards to you
bully letter,

thanks for your




:arca 1201
11V113E

SYM

sage

Blue

nmg

Rite

NI

tter
at these three symbols
fter the check number of
, this isa day message. Otherts character is indicated by the
.11301 appearing after the check.

WESTE0,sm UNION
TEL- -fl-'1,- AM
3

WESTERN UNION

NEWCOM B CARLTON, PRESIDENT
GEORGE W. E. ATKINS, VICE-PRESIDENT
BELVID ER E BROOKS, VICE-PRESIDENT

CLASS OF SERVICE

SYMB(.,L

Day Message

Day Letter

Blue

Night Message

N ite

Night Letter
NL
If none of these three symbols
appears after the check number of
words) this is a day message. Otherwise its character is indicated by the

symbol appearing after the check.

copy.

RECEIVED AT

Denver, Colo., December 18, 1916.
Pierre Jay,
Bon Air Hotel,
Augusta, Ga.

Heartily approve su,gestion to annoint
Wire received.
oxnerienced banker but would greatly regret having Hebrew element
introduced, and would prefer less exnerienced man rather than risk
possible consequences such appointment. Stop. Who has Warburg in
mind. Stop. The following possibilities ocour to me. Stop. Curtis
of our °Moe, Davis of Blake Brothers if our transactions wit .1 them
do not disqualify Joe Talbert of City Bank if .1(3 has retired and
gi
Outerbridge if eligible or a new deputy g overnor
health nermits.
whenever selected. Stop. Am anxious abou.t your health, What does
tie doetor say.
B.S.

Denver, Colo.,
December 18, 1916.
t4,

Dear Mr. Jay:

Your telegram regarding a now Class C. di

..

me yesterday qnd I replied at once as per encloThe suigestions I realize are rat

r sketch

tor reached
confirmation.
but this is

a matter ono needs to develop by disc salon, parti..
limitations imposed upon Class C.

by as the

rs are so rest

ive

as to make the choice a diffi
Curtis is my first cho

sent juncture.

The suggestion of the Hebrew
badly.

Warburg and

e disc.=

or impressed me very
uite fralikly and we

=

both agreed that

would be inadvi

a man as Frdd or

sort Strauss, or

our Board.

have s
hence

eadi

tween the 1

sted a Hebr

4

ble t. have even so good

es,

on Henry Ickelbeimer, on
I cannot believe you

3ould

s having been suggested to you,

inquiry.

greatly dist
Please

od at the suggestion about your cough.

d me fra

1 the facts - just what the doctor says.

If you don't,

1 begin to telegraph Mrs. Jay about it.

Many thanks for your wire.
Yours faithfully,

BS/CC

4




/
Denver, Colo.,
December 18, 1916.

Dear Mr. Jay:
This letter is not to suggest

a

reply but

you a few comments on your report on the

rrenc

ely to send

have just received, so that you can be studying them

ter, Which I

at your

leisure.

I enclose the copy sent
recent letter to Delano, writte

will send you copies of so

also eqpy of a
quest, and if you desire,

which bear directly on

indirectly on this ma

are not discussed
Please retu
The

revision shoul

1

aihi

notes

occur to Me:

i

senominattona of

dollars,

e for issuing Federal Reserve
y one, five, ten and one hundred thousand

ayable to orde

words "loan certificates"
2.sugcertificates"the as the
word "certificates" might be confused with depository certificates.
3.

The word

reluctant" does not really express the situation

respecting gold exports in August, September snri October, 1914.

New

York banks such as the National City, had they exported gold at that
time to make exchange, would have received from purchasers of the

exchange in payment therefor checks payable through the New York
Clearing



House.

In settlement of those cp.lecks tie rAtv :Rank wmad




2.

December 18, 1916.

To - Mr. Jay.

have received either clearing house loan certificates or Aldrichid the entire

Vreeland notes, which would not count as reserve

reserve of the City Bank would have been shipped I'road without any

possibility of its recovery so long as gold paymen was suspended.

....... "bstituted. for

T think, therefore, that the word
"reluctant".

a bit abstruse and no

The sentence marked

thout elaboration.

congressman certainly will

free gold market put the

Does not your argument

lly the freest gold market

cart before the horse?

ercising control or even

in the world, there
influencing restrai

when the exchange is adverse.

The difficulty is t

method and having had no bank]d exports, the minute they become

tug macbi
excessi

we suspend gold payment and our system breaks down.

a more

urate statement

gold ma

we unfort

we can disc

Possibly

this score should be that having a free
ely don't keep our gold in such shape that

6ponsibilities of such a market by shipeing gold

freely when it is denonded from our creditors.

I should interject, of

course, that so long as we have greenbacks and silver dollars as legnl
tender money, our banks are in position to avoid direct gold payment

and shift the burden on the Treasury by tendering that kind of money
to creditors, Which is a different subject and only another way of escaping the responsibilities of free gold payment.
..,

3.

To - Mr. Jay.

December 18, 1916.

No mention is made in your report of the anclaueous pro-

visions regarding the note issue, Which require

National Banks to

receive Federal Reserve notes in payment of all d
then destroy the effect of this provision by deny
serve qualities, which has the effect

ts duo them and
those notes re-

their use in

of

the

clearing louses.

You use the word "prac

seems to me s

"requirement" inasmuch as it i

d be

irament as mentioned later

in the report.
8.

The point abou

ished liability can be

strengthened from a
eliminates

from

use the present practice

the

eserve Banks all

which have 100% gold

reserve

ing that the reserve

notes

banks are

would have to pay every note,
even tho

the gold was stolen or
Here is the he

suggest
method.

of the controversy, and I am going to

t you treat t
1 fi

destroyed.

part of the report by an entirely different

n this matter goes to Congress that 99% of

all the objection made to this proposed concentration of gold is based
upon fear

of power Which

it will confer upon the Reserve System and fear

of inflation or expansion.
Senator Thomas of Colorado

I talked the

matter over very fully with

and he assured me that While he though my

argument was sound and logical, he and others entertain just these, fears,

consequently effort should be concentrated to overcome




this fear.

The

4.

To - Mr. Jay.

December 18, 1916.

letter to Delano develops this matter only partly and lot me noa illustrate by the folloling figures.

The Reserve System statement of December 9th

condensed is as

folloas:

ASSETS.
Gold
Legals & Silver
Invested
Notes, due from a/c, etc.

,000,000
5,000,000
000,000
000

0715,0 0.000

0;56000,000
647,000,000

Deposits
Notes, etc.

12_2.000,000

0715,000,000
With the sys
holding of free
'hood of 4'

ition, it has a very moderate

gel

ruing just now in the neighboras a whole.

the

In order to meet all

dividend obligations, we should allow for say the following

expense
thcreaec

earnings:
(a)

b)

To coy
To

a greatly ereanded note Josue, say a general increase of expense, duo
anded business, say ltianal earnings to enable the banks to

41,000,000

n

pay 6-,Z, say -

TOTAL -

1,000,000
1,250,000

3,250,000.

This means that at an average of 3-1/4% the system must invest
4100,000,000 in addition to its present total.

Assuming, therefore, that

we can issued notes freely and add 600,000,000 to our note liability (this

being only 350,000,000 in



addition to present gold secured notes), we

5.

December 18, 1916.

To - Mr. Jay.

aould take the 4600,000,000 of _old, pay out 400,000,00 of it for
new investments And the re-adjusted statement would show as follows:
Gold

r.428,000,000

4928,000,000
5,000,000

500,000,000 x
Lead's

Invested

224,000,000
100,000,000 x

24,000,000
58 000 000

Notes, etc.,

Cap.

Deposits
Notes

647,000,000
612,000,000

600 0

41,315,000,000
The new items

about 70% reserve on all

The December

after

liabilities, vlhich I

from banks

y crosses.

cated

deducting the item due

item, the

ithout de

suggested statement

would

74% reserve an all liabilities, or deductind 40% reserve

on note

uld show 106%

on notes

. 35% an dep

erve on deposits, or, after deducting 40
a, would she.' 450,000,000 of

free gold.

sfied that this accumulation of gold

If congress

spell expansion, I believe

does

not

the chief objection to the amendment will

be overcome.
10th.

Your estimate of 4178,000,000 free gold should be

re-

duced 1* such amount as is required to be invested, in order to pay

increased expenses and
not



full dividends, and it seems to be misleading

to allow for this and

so state.

4-

6.
.7444;

a;

December 18, 1916.

To - Mr. Jay.

*4-74.

11th.

the constantly reiterated

The report Should controvert

eesumption that a bank of issue controls the volume of its own notes.
It does se only indirectly and sometimes with gre

difficulty.

The

volume of the note issue is controlled by the ere tor, Who in some
cases requires the use of a bank deposit in order
debts and conduct business

t he may settle

ecks, and in

transactions

live should proceed along the /i

imment, I be-

This

other cases he requires notes for payrolls, etc.

so clearly in .orace

White's "Money and Banking, "pa

s discussed by Professor

Dunbar in the "Theore and Rioter

ne

strongly suggest studyi

stone end referring to these

pages 62-64.

I would

two authorities.

raises the question of
sion".

"inflation" as dioti

Federal Reserve Ilanks

a result of expansion of their
discount

so that from our standpoint no inflation can occur without
first taking p

and that expansion I

, as suggested




is adequately

my letter to Delano.

+:

41116-1*

believe

this sentence so as to read :

"This

latter percentage would make the deposit and note liabilities of the
Federal Reserve Banks the strongest, etc."

14th. As I wrote

you sometime ago, it is quite

apparent that

the Reserve Board has relied too much in the past upon its awn arguments before the coemittees of

Congress in

this matter and that they

should have asked men of experience; that is

both bankers and students

7.

ilTo

-

Decamber 18, 1916.

Mr. Jay

flnfortunately, the

of the subject to submit views to Congress.

argument in regard to notes counting as reserve, which -;Jarburg sub-

er and Delano,

mitted was not the unanimous view of the Board,
and ponsibly some others, having opposed it.

In

t situation, how

could Congress decide between conflicting opinions

thin the Board

itself?

terribly ke

Please forgive this long let

failure unless all forces

st yoar

subject and fear a repetition of

this

basis sake, let me repeat -

are martialed to sugoort the pl
that the heart of the argument is e

on

and we must convince Congress,
danger on this score.

as well as our awn ass

Best regard

BS/CC

Pierre Jay,
Bon Air Hotel,
Augusta, Ga.




P.S. On reading over the above, I find I have failed to comment
every way excellent and a fine
It is
generally on the report.

in

contribution to the discussion.

r

14-2.6\ o

.0

376e,o,e0

,

,061 Oil 0
wet tf-noi,"Ye

S-6. *0

0

-7/sr,6.0,.
o54000.

.00

C,.ø e5 co. d
t ,seis.o.

7 /4"..oe

46.,.00
Nreo

.0 woe

24.648e

5.0.40. 04

.

t.

.

iiiregthre4
t,te:.;

too

a

X,

CA bee .

I-0 I

Pe'
0),

000.6 d
.0oo, e

Trifrt4,




,o

6',1-`1",,estepo,os

, /.0oPoe
660 .--i

.5
4t)

.04,0 .040-0

79)4"-° .10-10
^L.

Wiee&

Denver, Colorado,
December 20, 1916.

Dear Mr. Jay:

or




Your second telegram, just received, clears p both the
directorship matter and, mach more impo taut,

h

uestion about

your condition and I am tremenduously relieved.

I know little about Mr. Craij.isttnct1y re
he was generally rearded as
experience.

Pierre
on Ai

Augus

, Esq.,

otel,

, Ga.

that

banker of some

Denver, Colorado,

December 23, 1916.

1g:ex Mr. Jay:

partly answered

This is a hasty reply to yours of the I

you yesterday.

by that scribble on the Annual Report that I se

arrangements, as

is here and Grandin arrives tomorrow and Christ
well as a week's stay in the Park,

In

rs for awhile.

and abso-

I am delighted you got awayt was more than
lutely necessary, and if you ha

Ben

n taken

SiCK, it

might have

brought me home, -eihich

I am glad we are pushing

-mess if the State Banks don't

us to make another imo
come around, we -ail

Mr. Glees in
result.

I

slam at Seay's report, which as-

I am also

y verbos44Your suggestion indicates
,nroosiure which can be worked out safely, with some thought,

a line

be CRS

atA expecting to arite

matter and will let you know the

rega

tonishes

becau

lection matter; it is time for

it

wui
1:

prevent

any one o

11111°

indisctiminate floating of checks ,which may

welve points, to Which I seriously object.

I

oved by having the member bank drawing the Check
send one advice to its awn Reserve Bank and a carbon
on! which it is drawn.

VO

be 2esarve Bank

The provision for guarantee of payment could be

eliminated by a general exchange of undertakings effected directly between the Reserve banks themselves.

This would necessitate the use of a

enecial form of check and i suppose in practice would be tatamount to the
check being certified and drawn against funcis on deposit to the credit ar




2.

December 23, 1916.

the member bank drawing the check at its own Reserve bank.
I am sorry not to be able to send a prompt and better reply to
the Annual Report inquiry.

The stenographic report of the Reserve Agents

meeting has arrived and will be read with great

Please don't do a lot of work While you

terest.

away, but stay in

the open air and get those pipes of yours in orde
i wish you and Mrs. Jay the ye
a Happy aria Buccessful New Year.

Pierre Jay, Esq.,
Bon Air Hotel,
Augusta, Georgia.

BS/CC




16-

OV#?..

.N

sor

Christmas and




UNION

ESTE.
DAY

za25.9

TER

NEWCOMB CARLTON, PRESIDENT

V10E-PRE5I0ENT

r orrn

TIME FILED

BELVIDERE BROOKS, VICE-PRESIDENT

CHECK

1

..ollowing Day Letter, subject to the terms
,ck hereof, which are hereby agreed to
-

COPY.

Estes Park, Dec. 27, 1916.

,

ierre Jay, Palmetto Inn, Aiken, So. Car.
Telegram received. Am requesting Treman to say to de Neunize that we
'lhave all along desired to conclude arrangements with Bank of France same as
London and had not expected to authorize any announcement regarding London
Stop. Have never underwhich we would not also hope to conclude in Paris.
T
that de Neuflize was authorized to speak for Pallain in this matter
r
and will ask Treman to wire Pallain direct advising de Neuflize of contents
s matter of courtesy. Stop. Danger of confusion if all messages do not
;o from New York. Stop. They are keeping me posted by 'phone and suggest
jou 'phone Treman or Curtis for latest developments.
i

I:.

Strong.




,161,91,ThilEtb/14fPill

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#

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/ESTE'02alaN UNION
3

CLASS OF SERVICE

Day Letter

,y the
check.

!WW1

AM

NOM

Nile

NL
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If none of these three symbols
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NEWCOM B CARLTON, PRESIDENT
BELVIDERE BROOKS, VICE-PRESIDENT
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EIVED AT

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Denver, Colorado,
camber 26, 1916.

Pierre Jay,
?almetto Inn,
Aiken, South Carolina.

Have sent some mail to you care Bonair Hotel, better

telephone

for it. Stop.

Your telegram received.,. Treman has

telegraphed me particulars of Boards announcement.

Stop.

already replied to him suggesting What course to pursue.

Have
Stop.

Please communicate with him by telephone and arrange matters with

him se as to avoid confusion.

Stop.

Their announcement may do no

harm except to throw doubt on my good faith but is most unfortunate.
Reach me by telegraph until -1a.tuiday care Hewes Kirkwood Inn Estes

Benjamin Strong,

Park.

Chg. - Benj. Strong,

4100 MONTVIM BLVD.

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