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March 14
June 1
June 23
May 2

Strong to Norman, 1916 - 1920

IIIJune 28

July 2)4



Jan. 12
Jan. 19
Mar. 22
Mar. 27
Apr. 2
Apr. 19
May 16
May 18
July 2
July 6
Aug. 27
Aug. 28


Feb. 5
May 2
May 7
June 2 C
June 18
June 26 C
June 30
July 28
Aug. 16
Aug. 26


20,with clipping

C- cable

27 C
30 C
31 C

Mar. 'r)

Dec. 24 C


14th :,:arch, 1916.


I am most grateful to you for your ki_d note
of today and regret very much having missed your call.

While my present plan is to s'Al on the S/C
"New York" on 'larch 24th., it seems quite likely that I
shall remain here until the iret of April.
It would be a great pleasure to tc_e diiner
with you, and alone as suggested in your note and I will
say Saturday evening, the 18th at eight o'clock if it suits
your convenience, as I have made engagements for dinner for
the other evenings of this week.
Gronfell tells me that he is hoping to get
you for dinner at his house next week, on lianday evening,
and I shall hope to have the pleasure of seeing you again.
Unless I hear from you further to the contrary, you may expect me at your house next Saturday evening.
With kindest regards, I am,
Sincerely yours,

'Jay 2, 1916.

pry dear ge-man.


Afa 4A.c



disposeaof in


the confidential memorandum prepared while I was in
44 fa-CAA k *tit







,Ia;.-zai4aaa to the difficulty about days of grace, w.111-1e...-Lixam-

to a

((Le, efeetu

arranged'Apemoilie*n, first






the ol'Anion of

counsel of the Federal Reserve Board as to the ta444.04-odf--4114G-atri4444,0 AA14

a 4iiiit-rFAVs, ro ici.2,2 A46-ieer eor,..--t,st<,,,,.;
46..4-d by law in England; and
41re application to days of grace as now


etetv hale 0110
second, in case his opinion


f otol Erwhifr




bap i.ttreas ,



text of an amendment to the sections of the Federal Reserve Act which
relate to these transactions has been prepared and printed for submis-

sion to the comittees of Congress, and I am told that there should be

little difficulty in having the Act amended.


It is, however well not

to count on favorable action until 44--iti.accomIlished.


The other matter is the 9rc,Rti--1 efnipiel earmarking 0 gold and






4164%. an expression of your views as to

I would

is should be dealt with.

Should it be and rstood, for instance,

AMPAthat gold will be earmarked at mint prices,

Air +1-'9.-.0ftee-eria7reid ear C-11 c.;

4.2tip, /1\04C

marked by the Bank of England at mint price less theisawoluat to the Bank
/17 &ro;PKtettibk

of England

so that the net price would be 77 s.


d, Your custom differs

from ours in that the Reserve banks do not intervene between the public

and the mintoSuch gold as we accumulate from Lmportations sues to us in
ti7f...;((114_ CALC44 ifirrsanowatit ttel


the sbag of Assay office allPrtkra
41stub --

lui gold certificates.

t which we gek United States 40a.v.p.41a






5/ 2/16



ns id.eArp b le

mounrt --

coin. ...valic41-4a-ATAiwa, et,..)







here, should

irerefore, It we earmar





we do so in bars when we can get themat the mint price, 9r-when in coin at A6 9,11'1A


bullion value?

Zhis same que


So far I have had little time to study this matter, but I arysies-

bauv4 to 1:1,..e.4. that the fair practice would be to deal with the account on


sides,Ajupon the basis of the actual mint value of fine gold either

LS gold coin is shipped

in bars or as found to be contained in the coin.



in settlement of existing balances it would be faisv-iced by the/bank

can) /,
at bullion value, but if it should have been earmarked


and subsequently re-credited to the accountit would, I surlpse,be credited


back at its legal tender value) giving the


Arcrattir,eACE13==mameiLigtaidithe benefit of the recovery of any abrasion

8..." 91;uatht.

which might have existed in the quantity of coineearmarked.


Of course. these questions would be minimized and possibly entirely

tr, bYitt ca a 1104U,4 Wt.*


eliminated whenever we are able to use gold in the form of fine bars/4,. On the

other hand they would become more complicated if at any time it becomes necessary to earmark or ship any coin other than sovereigns or eagles.
In a preliminary way I feel quite willing to recommend that the mat-

ter be dealt with rather informally and without too detailed a plan being es1t4 40A4AA.e.

tablished so low as we find the means2f carrying out the spirit of the memoCfrxietuilgaii:

-Far 444444 DeeterciA,A., dizate

randum,whi.-;h ?V





In the long run


e 141 it te

tution one year .may liottihr44. its disad7antage

advantage to one insti'=IpttuAAtt ARAWATo

the 213A4-,


.ets-14-aa.lA but I should like to be sure that you and we understand thoroughly the question of gold values with which we will be dealing in case it became
necessary either to earmark or ship gold.








Lontagu C. Norman, Esq.,

I suppose you realize that the South is planting a large cotton

crop this year and so far I have seen no reason to modify the views I exPr12,4:dieesto4N?
pressed to you while in London in regard to the owlet of exchange this fall,

except as the laws might be modified by the success you are realizing
in assembling American securities.

If you can confidentially give me any

light on that subject I will appreciate it.

Since returning I have discussed quite in confidence with some of

my associates the general character of the elan we (14a.ou.s.c44,while in LonTheir attitude justifies
suggesting that we should reeolua-la complete the detailsAas to geTtr

don and have been over the memorandum with them.



ir4/rm,44,K4;1 9Tel

s and be prepared in case of need this fall to start operations on


rather short notic el although it is not possible at this time to advise you

officially that we can do anything before the conclusion of the war.
"ith kindest regards to yourself and your associates, and again
mally thanks for your courtesy to me while I was in London, I am,
Faithfully yours,

i.iontagu C. Norman.


C/o The Bank of Ragland,
London, England.




June 1, 1916.

tLy. dear Norman:

The last few weeks have been devoted to a certain

ent to consideration of various amendments to the Yederal

erve Act designed to strengthen the law in certain reseects
eliminate certain inconsistencies which hove developed

ce we started actual operations.

In a recent letter to

d Cunliffe, I mentioned one of these amendments which will

e the difficulty in regard to days of grace.

Since writing

, a further amendment has been agreed upon but I am not sure
it will be received by the Committees of Congress.

It pro-

es that whenever a Yederal Reserve Benk appoints a corres-

dent abrcad, it will be authorized rot only to open ae ac-

nt with that coreespondent, but receive a similnr account

m its correspondent.

We already recognize the curioee in-

sistency of a statute which would seem to :'oquire us to do

business abroad on one side of en

account only and this

ndment is designed to cure that detect.
Estimates of cotton acreage are jest being; received.

y indicate a 9

increase for the whole country over the

eage planted lest year, the principal increase being in the

thwest, which means, of sour se, Texas, indicating that quite

arge acreage has been planted there.

It wes, ae you know,



C. Norman, Esq.


somewhat for that reason that I was prompted to suggest the im..

portance of considering the exchange situation which might de1 lk lop next Fall.

I am judging from newspaper accounts, the pro -


now undertaken by tae British Government to mobilize American securities is calculated to anticipate this possibility and
we are just as much interested as any of our customers abroad in
maintaining a stable exchange situation.
Jim Brown has been away much of the time since



and I have unly seen him for a few minutes once or twice, nOZhave
I had opportunity to tell him of the many courtesies which you extended to me while I was in London.

Ae is dining with me to-night

however, and I expect to give a very i;ood account of you.
surplus cash reserves of ti:e New York Clearing auLzse

Jenks and trust companies last Saturay were $65,000,000, this contrasting with a maximum of about

225,000,000, as I recall, last

September. It is the most striking change in financial conditions
ever witnessed inthis country.

Bank deoosits of the Clearing

House banks have increased about 41,600,000,000 since ..ovember 1914

and bank loans nearly 41,500,000,000.

The expansion of the


York bank position which represents an eni:rgement on both sides of
the account of about 75 i, is very nearly the equivalent of a normal
10 years growth of the banking resources in this city, and it has all
taken place in less than 22 months.

however, and of course business is

:coney seems to continue easy,

ing all over the country.

1 would be might glad if you would drop me a personal line
now and then telling me how you are and how things are going.
with best regards,
Sincerely yours,
liontague C. Norman, Esq.,
Care Bank of England,
London, England.


June 23rd, 1916.

7y dear 7r. Norman:
Your note of the lOth received and I am
grateful to you for your reply to my letter iniuiring about

one of your Eneish banks.

It gives me just the inf7rmation

needed and when similqr matters arise with you,


hope you

vril give me opportunity to reciprocate.
"'ill you Le good enu4:ht to give my kindest regards
to your

siociatos and thank the ^eputy Governor for his greet-


Please accept my warmest thanks.
Faithfully yours,

Bank of 7nglsnd,
London, -ngland.

C. Norman, -so.,

June 28th, 1916.

My dear Norman:

advise you that my health
I am sorry to be obliged to
lately and I hfive been ordered
has been pl.aying me some tricks

away for quite a long

1 shat probably be in Colorado

continunecessarily interfere with
all Sumner but this will not
orrsngements that we discussed in
ing the development of the

be an unnecessary hardSo that my banishment may not
establishment with me
little office
ship, I have going to hrIve a
to keep
amount of work which will enable me
and do a moderate
office, as well as my Tashington
in touch with the
and I hope with you.
regard to this
During my absence, correspondence in
R. Treman, Deputy Governor
matter mny be handled by !Tr. R.
Federal Reserve gent, but you
the bank or by Mr. Pierre Jay,
and as keenly inI am in touch with tie matter
will know tht

tereste0 as ever.

associates and yoir good
With kindest regards to your
self, I beg to remain,
Faithfully yours,


Montague C. Norman, -sq.,
Bank of 2ngland,
London, 714:gland.

stes lark, Colo., July 24, 1916.
onal .




The Ban:r. of Erveml--ngland,


dear norman:

I wrote you a line before leaving Vow York, telling you of my unfortunate illness, and
ftce-then your
letter of June 21st has followed me to_
where I
am at present in exile.
first, replying to your lette(rithe expansion in
business to which you refer has indeed been phbnomenal.
long as you and your
't nue tp_rimp &old into us, we may expect under t at st i lousL-te-see things
pretty active. here and a optinued
in, expansion.
The Deputy Governor's let e reachedi.
just as I was
leaving Lew York an
am 1Q pectingitp answer it in a day
or two.
.Jy doctor h
onl' allow01,ine an hour a day for
correspondence and I 1
ne 4476-6".rtly been obliged to proy things.
crastinate with a Brea
We have suffered a
disappointment in
ri at the hands of our friends so called. some o
e He ublioan Senators after the House
had pssed the bill contielninG the amendments required,
decided be nastlw an xtfUsed to consider the House bill
at this Isfhsion, a& it will o over until December.
amendments were net_necessary to the carrying out of our
plans, butWottla-have facilitated them.
2here is no doubt as
40 their eventual adoption, and only a tremenduous program
of legisla ion, which had right of way over these little matters, enab ed the _:republicans to side-track our bill.
You seem surprised that the ,eserve flanks are the
darlings of Washington. The explanation is simple:
are the parents over there in aashington of a new baby,
or twelve new babies, and they are naturally proud of them.

I am watching with amazement and interest the tremenduous movement of gold and evidences of accumpulation of
Our foreign trade figures ror the year
American securities.
ending Juno 30th, just published, amply confirm the necessity
for the employment of all the measures hat are now being
taken foiprovide exchange.
;filar developments, stimulating
the market for your local securities, combined Jith patriotic
response to a heavy tax on the income derived from -merican
securities, will help a great deal in financiri:; matters this

Our politics to which you refer are still a mystery.

Ate of the guns have yet been fired in the fall campaign -It looks to me now as though the
campaign would be conductea in a dignified way and that it
would be a very close election.

411r not even the little ones.

:referring to your comments in regard to the unfunded
It amazes me every time I see the figures. no last
statement appearin here indicated that it'4xceeded seven
hundred million sterling. At present rateeof interest, I
should think that prudence, as well as 0000mW,jwould justify
a refunding operation as vex%,, shortly the inter st paid on
these unfUndedikbligatioRs will be-,:t_ as-111,h if not higher,
rate than whatIrould hay' to be paid to -N
he whole debt,
One cann:4\,affordt, \be captious,
including the old debt.
however, in criticizing the/6 due (3-f th6lar st financial
d's history, wnen success
operation ever conducted in he w
seems to have been the rook

Just a word about_mye

and plane for the future.

bo\i ay a year, which does not
he chances are thaji-1 wi,
h with the bank, or dropping
mean however that' 1' am out\ f t
)no offour dire tors, ..1 . 1.obert H. -2remun, is
the viorh.
rnor of the bank and I am suptaking my desk aO'Deput'y G
nee for a your.
My Secretary
posed to be on 16a e of a Zie.
_mditis and I expect to have a little
joins mWkia in &
d keep in tialtaith thin c; by cofrespondence, posoffice
whey seem to think
sibly mike an occasional trip east.
enough of :le to i it a year and they say even longer for
compl t rester t on of health, and the doctors all tell me
r'o :t _y out here will puL me in perfect condition.
that a
The mat mss_ wa-dealt with in London will be handled just as
though 1 were there, although possibly with a little delay
':ie have a somewhat complicated
that otherwise would not occur.
matter of this sort
and cumbersome machine to deal with in
If mu health permits,
and it takes time to get things started.
it is not impossible that I v:ould take six or eight weeks of
my year's exile idp the shape of a trip to London ana Paris,

but that could 'ti,-rdly be arranged under six months at the
I hope youllcite me now and then, at Vie above address,
Also please give my warmwhich for the pre.4g1,7-42 perAanent.

est regards to your associates and the same to your good self.
Paithfully yours,


Estes Park, Colo., 1,ugust 6, 1916.

Mr. Montagu Dorman,
% Bank of England,
London, England.
My dear ilorman:

Your friendly and,encouraging letter;of July 24th
just reaches me and as my sole pleasure and;dissipation just
now i6 correspondence, it had a verl-warty jvelcome.
In my
former letter I said nothing about-the-nat4Ae of my difficult ies as I recall, but they remind me sothh; at of those
Japanese puzzles where you pul)./t
\\peg out
the whole
thing drops apart; that is 1 t ab
what hap erred to me
and, unfortunately, the doc ors
d that my lungs had been
affected, hence my long std w
can tell you
that for some time I was so1q
ing in the Valley of Despair,
but improvement out -gyp; as
as the consolation of having a little °Mae
some work, has helped a
I will be bakk again\ etter/than ever and probably
with more sense i4 my head 'a out taking care of myself.
You and GrenfelL ght wel
oth of you take a lesson from
raj book, t,144%ouili\
real e/that you are making sacrifices
with an ineyfratioh
/does not effect us here.
The changra,in your bank rate was, of course, based
upon o d reasotg, but I cannot help feeling that the
our market may have unduly influenced
feeling `i...u__Tiondon as it was bound to be of short duration.
Our, situhloa-in that respect bears somewhat on your remarks about where the gold is going.
Practically the whole
year's Income Tax payments are made to the government around
June 30th, and this year it meant the withdrawal of over
0103,030,000 from the market, the money being impounded in
the :deserve Banks and in the Treasury.
For thi brief period
government receipts vastly exceed government expenditures
and then the tide turns the other way, so that from now on
tho preseLt current excess of government expenditures will
turn this money back into bank reserves and we will likely
see the continuance of easy mono,/ conditions until sometiHe
in September. As to what becomes of the gold that has been
arriving in such volume, the explanation is rather complicated and I am sorry not to have the data here with which to
work out something in figures. In general, it is accounted
for by the following items:



Inoomo Tax payments to the government above

The increased demand for currency, due to
Apiness activity. A large part of our circulating medium
is still furnished as required by the conversion of these
sold bullion receipts into yl) and 920 gold certificates,
which are shipped throughout the country for pay-roll and
other hand to hand payments. There has been a considerable
movement of currency to the west.

The Federal Reserve Banks some months ago were
accumulating gold against issues of noteq quite actively.
The System now holds about 5,170,0D01,300cbz the note issue
in addition to its banking reserves, but>tirietprocess was

discontinued some months ago, pending/the of certain
amendments affecting; the operation.

I have suspected that s me of the/ old received from abroad has not yet fond its way ,into bank
te4 pen41ac'greater necessity
reserves and is held in sa4e
arising for its deposit; m5 maj khoW moi4e-s:bout this than I



The Tr iNury
Wash' ton for some months past
up the redePtion of Federal
has pursued the poll \of
Reserve notes and hat I 1 Bay notes which come into its
course of business.
At one time,
possession in the ord
as I recall, the :49,a
Department held ,;27,000,000 of
as)well as a considerable amount of
Federal Reserve n
_4i/redemption of this form of currency,
Nations 1 Bank note .
which 4.0.0 not co
_sa reserves for our banks, results in


the tranlr of god and other reserve money to the Treasury


and correapdhoting-reduction by the banks.

Commencing last 144y, some twenty or thirty
million (lc:pars of additional reserve transfers were made
by flationa] Banks to Federal Reserve banks, thereby also
reducin the publishes' reserve figures.
The 2eserve Banks make it their policy to
carry as large a proportion of their reserves in gold as
The enormous expansion in deposits of our Rational
Banks has increased the reserve requirements and that in turn
has resulted in larger deposits with the Reserve Banks, which
so far as possible are carried in

:here have been considerable shipments of -;old
to Cuba which of course is now a creditor nation on account
of the enormous exports of sugar at high prices and very
considerable exports of Cuban ores.

I am sorry hot to be able to make a better exposition
of our reserve position by quottlg figures, but I think the
above influences are the important ones which have caused a
failure of the reflection of gold imports in bank reserves.



4hat you say about our politics and the attitude
our investors is only too true. Politics and politicians,
IT7ce the poor, are always with us.
The difficulties that
are being encountered in arranging credits here I believe
are almost entirely due to a combination of a hazey notion
that the world may go broke as a result of the war and a
general wide soread ignorance as to value of foreign government obligations.
It must not be forgotten that our people
have always been able to employ their money at home profitably and they have not yet been educated to the idea of
conducting a long distance businoss.
Certainly the success
of the French note issue is encouraging,a-a-tepossibilities
of getting money on terms and security tha-t r understood
I suppose you realize that thcf,iargest Nore of gold
in the country is out here in Colora4o, or at east that
has been the understanding ever since the sold/stored in
San Francisco was transferred _to_ Denver, but unfortunately


it is not available for invps,tute-n,

4,n exclackpler-bonds.

About the disparitl In rates that you mention,
I confess it must be a pu le to a0one not on the spot
to study our money trs ket\

The rate Shdrt commercial paper which
of di
t uniform now
'ugh the Federal reserve System.
he longer ds
to 90 days averaging about 41.
gely 0 single name notes, such as our
s give tot, eir ahks and such as ore handled by
kars-' and are only taken to eserve Banks
-r bank
they run short of reserves and need
. --Ilas_dle:35 to say this accommodation is only

,y-thu-sMaller banks. Very few of the large banks
,unting their paper any more than the London
.-t banks rediscount their bills.
This might be de'vn emergency rate.
All twelve banks today only

ie over twenty allions of this class of paper
is principally in the south and west.
Are we to

te as low as the rate for our outside transactions,
encourage wxpansion of a dangerous character.
, many country banks pay as much as
and realize from 6 to
or more, on their local
Such banks in the west and south should not be ento expand by borrowing money from Deserve Banks,
the member bank rate is maintained at a fairly


n the contrary, the open market rate for bills,
averages about
is kept low for various
the principal one, of course, being a-liery high
paper, which general bears three or four
y one of which is absolutely good. Another


f this
any instant
Tri,caper, upon which any member bank can realize
A third idea beitirIF the ieserve Bank at a very low rate.

beinc our desire to cultivate the liquid qualit

ing to establish a favorable relation between rates for
bankers' acceptances and rates for stock exchange called°
loans and another reason, which I transmit with a blush,
is in order to give our bankers an opportunity to establish
this business of creating liquid bills in competition with
our good friend abroad.

arger money
Dealin j in bills is confined to the
'the Reserve arks hold about
centers where money is cheap.
05,000,330 of bills of this character an the rest are
lLadelphia and
very largely held in New York, Boston&

te for rethat the
Frol.a the above you may/infe
osed to bear soine
discount of commercial paper' is s
eral time loans, which
relationship to the rate fro col
n New York as against
today are about 4;, for 6 m
ommercial paper bearing
our 4. 30 and 6C da;vriate fo

m r et rate for bills is sup,The.
bank endorsement
to \, call monsy rate which
posed to bear somo'relat
today is about 24: in New Y rk.


The_aptuideveloArent of our rates will be to
have ban*ra accep.s.ness'9T the fist quality command about
the same rates as Call money and the regular discount rate
for m003erty average4 around the rate for time loans.

are soyoung atlhis business, however, that the above resubjeit to infinite variation as different situaiy
ma a`


se. -

I omitted to say when referring to the gold situation
that if these a:Andments pass in '4ashington, it will enable
the Reserve Banks to accumulate gold much more effectively
issuing their own notes therefor, and this
than at present
we regard as one of the safety factors for future use when
the exchanges may turn. Your surmise in that respect is
The war news to which you refer seems from this side
to justify considerable optimism, general comment here being
that for the first time the whole German situation is de::arch surprise has been expressed at the various
public utterances of prominent Germans from the Kaiser down,
which are interpreteC, hero as being a bit hysterical.
I have had for some days past a letter written to the
Deputy Governor in regard to our discussions, which I am
unable to send until final word comes from 4ashington reo.rding the proposed amendments to the Federal Reserve Act.


Every day seems to bring some new developments.
the bill has finally passed the Senate, after being amended
tare in certain parts not relating to our mutters, so now
it must again pass the House and after passage there, if
not further amended and if not sent to a conference committee
of the two houses, I have no doubt it will be signed by the
In the meantime I have worked out the plan by which
the other ?eserve Banks might participate wIlth us in transacwhich must also be held in suspense,awaitin,: the
outcome at Washington.

1 think I am justified in stlyIng-thi
our people are favorably inclined to eons
when the details are worked out,-;ii.

word of precaution, that one/iCever
to brirv; our plans to naught

I must
n tell

almost all of
ng these matters
o repeat that
t will develop


this very long letter.
You will, I am sure,
ng a chat and when one is
It is the next best thing to
the temptation to let
marooned up here
off steam is irresittible. \Won\ you give ray warmest regards
and respects to thO Govern ,14i and \t e Deputy Governor? I
look bac:: upon my visits witql you. in London with both pleasure
and 'pride, and alit cipate,repeating them just as soon as I
I hope you xeep well and
-mple,-patched up.
get this-*aine

are not' working tocihs,rds-'

Wit h bestrvishes,

Yours very sincerely.

Hartley ,Athers has just sent me his new book "International Piannce", of which an American edition is
It is excellent, written at just
about to be published.
the level to meet the rather unformed ideas on that subject in this country, and I hope it has a very wide

4100 iontview Boulevf,rd.

TJenver, Colorado,

October 18th, 1916.

My dear Norman:

It is distinctly encouraging to learn by yours of :.ept-

ember 22nd that you have had a vacation.

I hope it was a real one

and indeed you must never permit my letters to prove a burden in
the answering.

Time with me just now is a drug on the market and

I am keen to keep in tou%h with friends, even the busy ones.


by chance you do come across any of the Elixir of Life, do not waste
it upon me but send it to tnose boys in 1,1anders.

am sorry my letter of August 8th was not altogether

clear on the subject of the gold.

The explanation, plainly stat-

ed is that some of the gold wnich you have been snipping over here

may have been locked up in safe deposit vuults and held available
for deposit so as to build up

ew York reserves when they become

nd at more advantageous times than the actual day of re-

ceipt on this side.

This is very easily done by our system as the

gold can be immediately sold to the Treasury, gild certificates taken out in exchange and the certificates locked up in the vaults of
a enfe deposit company or more likely private bank and the gold
would then disappear entirely from the figures of bank reserven until it was actually deposited in bank.


Lontagu Norman, ;,sq.

Oct. 18, 1916.

The 5th explanation is rather more important than you may

Our Government in collecting its customs dues, internal

ilkenue, postage collecti ns and other income, receives payment to
a very large extent in national bank notes, Federal reserve notes
and other forms of currency

than gold.

in consequence, the Treas-

ury some months ago had a great accumulation of national bank notes
and Feder. 1 reerve notes which of course it had the right to redeem, just as any private holder has the right to redeem these notes
in gold or lawful money.

The Treasury

cleaned up this miscella-

neous assortment of money in its vaults by presenting to the Federal
reserve banks for redemption in gold all the accumulated Federal reserve notes and this transferred a large amount of gold from the
vaults of the reserve banks where it appeared in the statement of
the bank reserves to the vaults of the '2reasury where it disappeared
ffom the bank reserves.

Our Federal Reserve Act is defective in the provisions for
issues of Federal referve noteo.

They do not count as reserves for

national banks nor for state banks organized under the laws of the
State of hew York and one or two other states of importance in a
banking sense.

Wo have now reached the conclusion that Fedora reserve
notes should be allowed to count as reserve money for all classes
of banks but that they should be fortified by a larger reserve in
g ld than car be accumulated by the reserve banks unless the reserve
banks are allowed to issue the notes against deposits of gold.
failed in an effort to get the law amended to satisfy our taste at
the last sesesion of Congress but are expecting to :rce ::nol,,er


Oct. 18, 1916.

L:ontagu Norman, Esq.

The total gold in circulation in this country
411 effort in 3eoember.
to-day amounts to over 2,500,000,000.
Of this a very large sum
is carried around in the pockets of the people just as your English
bank notes and currency notes are.

I think it desirable to build

up a large holding of gold by note issues against the ti;!.e when dif-

ficulties may arise caused no doubt by adverse exchanges ,nd shipments to rairope.

The Chronicle nas attacked our policy and advan-

ced a lot of absurd arguments to which I am glad to say few people
are paying any attention.

Se must have a thorough overhauling of our 'vole curre;cy

if this country is to set rid of :346,000,000 of dnited

'Autos notes which are simply fiat money, get rid of a lot of silver
certificates which are now n ld in bank reserves of sn,ich the total

is'ue is $484,000,000 and hasten the retirement of over 1700,000,000
of national bank notes which are secured by United States bonds. The
total of these throe classes of currency is between fifteen and sixteen hundred million


'!.3 want to effect its retirement by

issues of Federal reserve nuts° in place of some part of these issues i.Lnd at the same strengthen the note issue by accumulations of

gold as above described.

I am writing some stuff for the newspapers which I will
send to you when comnleted and that may throw some light on a very
puzzlingsad complicated situation.

A let'er just received from the 74puty Governor replying
to my letter of August 3rd will be answered in a do: or two.
realize that in the event of war or panic sudden demands for earmarkinggold might produce a li4U.e neuralgia.

That should be dealt


Oct. 18, 1916.

:..ontagu Norman, Esq.

dorith by the debtor institutions controlling the amount of credits

acLulated by the creditor institutions so that at no time might
the account :)rove it menace to the gold holdings of either.

Your Governiin voiced a sentiment dating our discussion

which it seemed to me covered this situation exactly.

As I recall

it he exereseed the view that we should be able to go ahead and do
business with each other without attempting to define every last
item in exact language and that our transactions be governed by
business prudence end mutual confidence.

You are of course quite rijit that the exchanges would,
following inventrento in bills, permit of liquidation by mail or
cable remittance in ordinary times.

We would buy bills in London

when the dircount on sterling was at or below the point where we could
import gold without lose; we would liquidate bills and sell exchange
when sterling had advanced to or above the point at which you could
withdraw gold from New York without lo ss.
really 17ar timh. danger.

The danger however is

If we should accumulate a large volume of

bills nay at present rates and then due to the exigencies of war,
eterlirg should suffer a sudden decline in New York, we might be
overtaken wit- panic end call for settlements by earmarking gold but
it is Tall to boar in 7!ind that the primary object of the account is

for uc to buy exchange and invest in hills when sterling is at a discount, the greater the discount the greater the inducement to invest

and the greater need for protecton of exchanges.
ditionu exchange of views b.

Under,those con-

cable would be imperative.

You would



1.4ontagu Norman, Leg.

Oct. 18, 1916.

want to know our intentions and to what extent you could rely upon

stable policy by the revery° banks.

As you say in practice

it will probably be a question of the amount which should always
be controlled and could be by uce of discretion by tne debtor inst tution.

Now looking at the other side of the picture:

Some of

us in this country are convinced that the exchanges are not always
going to be in our favor.

Alen they turn we may have a long and

arduous struggle with the same problems which have been cc acute
with you.


Then we will be scrambling for gold and if you are opin dollars we will be wondering to what extent you will

call upon us to earmark gold in New York.

lars will be when uollars are a

Your purchase

of dol-

a discount in London and when the

rate on bills in hew iork is doubtless a:vancingerld approaching or
:bove the rates ih London.

I am hoping and planning just as soon as the climate completes its work with me out nere to make another trip to London and
am sure that all of these details oen be worked out to the satisfaction of everybody.
You doubtless observed that Ciongress amended the Act and

the President signed the amendments oo as to cover the two difficulties we encountered.

We o.n buy bills abroad having 90 dav to run

exclusive of days of grace.

Ne can also receive de osit acoounts

from those institutions in foreign countries which we appoint an our
correspondents in thoee countries.
to do businesu when the time zoems.

This makes it very much simpler


Montagu Norman, Esq.


Oot. 18, 1916.

}slay in final dealing with this matter arises from the
necessity for submitting questions of this bind to a number of different authorities.

1 am hoping to make considerable and possibly

final progress it the course of the next few weeks.

absence has

delayed things a good deal.

our notable success in floating t e last few loans in
1ew lork I taink can be attributed as much to the general education

Of our investing public an the subjeMe
vernmont securities at present ratio

Our people art( all

want to continue our export

we must create the means
the record seems to b

lue of foreign gov-

s to the


ct of any military

ginning to realize that if we

tAnything like its present volu_e,
expa\dig loans to foreign countries and


neliloan meets with greater success


than its predeceser and estabi

is an unlimited cap)
and gene


she. a better market record.


or absorption of securities but until

little know edge of the credit of foreign governments

of in i national financial transactions.
our Oh

operations d

eller is a bola man.

The success of his present

s upon trio state of mind of the people and the policy

as a whole of short borrowings seems possible only to the successful

:inCe your the successful flotation
written, letter w

loon seems to have cleared tne

eck pretty well for your

u will doubtless see Jack Jorgan and Harry Davison and

till in London when this letter reaches you won't you


Montagu Norman, Esq.

*givo them my Ifarmost regards!

Oct. 1S, 1916.

This Jotter carries trio Jane to

your associates an-i to your good self.
Sinceroly yours,

Montagu Norman, 1!!eq.,

Care of Mc 7ank of ::ngland,
London, England.

Denver, Colorado,
December 23, 1916.

My dear Mr. Norman:

The.enclosod copy of letter of introdu

n explains itself.

:.-.r. Johnson is a man of considerable means and

businers men or Denver ,,nd in addition

very c

ly one oc the leading
1g fellow.

purposing to drive an ambulance for t e American n
his sister is expecting to join

tal iu Paris and

relief ins t

ions in Paris.

cry and should .each London

They are sailing the
about the 25t:

He is

am taking the liberty of writ-

or 26th of t

there is the
you to do somothi slightest difficulty

ing, not to as

to intimate, with the great-

or inconvenience in
est diffidence.

way by Which the inconveniences of

landing from the

n, from London to Paris can be

minimized i

to f

atly aonreciate it.


this letter, o_ give them introductions

I would not

nds abroad, vrer= I not able to vouch for them without reservation.

riend of many of those connected aith the

. Johnson is

th letters

You may bo

edthe American Ambulance and is going well fortified
ntroduction, etc.

eamer and date of denarture,


Ls soon as I learn definitely the

will advise you.

Please, however, do

thing about their landing or traveling arrangements if it involves any

ouble, any unusual nrocedure, or, in fact, if my suggestion is i.: any

y out of order.

I hope to write you and more formally to Lord Cunliffe in the

ar future in regard to our banking arrangements.

To the best of my


To - Mr. Norman.


December 22, 1916.

belief, ever' obstacle in the way of concludi

the natter has now

been removed, particularly those Whic', nocesait= ed amending the

Federal Reserve Act, Alich after some dele.


been finally accomplished.
ith warmest regards, believe
Very truly yours,

Montagu C. Norman,
Thorpe Lodge,
Campden Hill,
London, Eng.


lanations has

Denver, Colorado,
;December 23, 1916.

1&y dear Mr. Borman:

This letter will be nresented to you

Johnson, concerning whom 1 have written yo
:r. Johnson realizes how ver; busy

have assured him that he should not

least shakin& hands with you
good wis'qes that i send for
Wit',1 warmest regards,


er separate
- are, but I ne

u6h London
u per


out at

ally many

Denver, Colorado,
January 12, 1917.

My dear Norman:

This most tardy thanks for your

with the


greetings is none the less hearty,

ough delayed.

over the holidays and on returning f

d a great accu

matters which have kept me bus

any medical ajvisor seems to

think I should be, but th
you how greatly 1 appre

In a ter short time
velopments, but


sh is now
to your thinki

hope to write
o now un

r a


vas absent

tion of

am writing to tell

if me.

about recent defficial letters

,Vith warmest re

and your assciates and *est

wishes for the New
ally yours,

Montagu C.
Bank of Eng
London, En

BS /:;C


Denver, Colorado,
January 19, 1917.



My dear Norman:

You and your associates must have been temp
ment of the federal Reserve Board in rejArd-te-

when the announcegotiations was un-

exnectedly made on December 26th to put me in that ea
oeople with whom it

be danger

The announcement came as a co
knowledge or consent, but I want
Washington that they tho

y of undependable

uct confidenti 1 negotiations.
to me and was made without my

n justice to my associates in
tified in making the very brief

statement they did,

miles away, it is not

possible to keen in

like to and my absence may in a

measure account for

hill,: I know you well onough to

write you t
my coil

risking the appearance of criticising

es, who I am sure were most desirous of doing nothing which


Judie° me or em


ve nrepared

through th

ass our negotiations.

After a good deal of

etter which will go forward in a day or two

York, somewhat elaborating on the memorandum pre-

pared while I was in London, and I hope that this,with such changes and
additions as you and your associates feel required to make in it, will form
the basis of an understanding which in course of time will develop the
closest possible relationship between your great institution and our new


January 19, 1917.

To - 1.1r. Norman.

It has seemed important to me for various reasons that even
though extensive transactions were not undertaken at this time, we
should nevertheless perfect our arrangements and put the plan in oneraI attach jreat

tion so that the relationship will be fait
importance to the value of this relati

ip in deali

developments and for the extension of ir operations
which may then develop, it scams desire le that we sho

got away for a short

It now looks as tho

h time we should be able

L'naand po

t develop pending my arrival.

to adjust may minor

been made by correspondence with Lonsieur

Some progress has a

merit of relations with the Bank- of

Pallain lookinj toward

scussions we had in London, and, even


eluded at once,

tters may not

has been
go abroad.

%i '

have the

essation of hostilities.

development of conditions



r or to the

benefit of a period of experie

visit to

with post war



I am hopeful that the start

:ble this matter also to be concluded when I

doctor, who is a very conservative and experienced prac-


tit:loner, ha

id me within the last few days that hP now fuels quite

confident that

the springy; or early summer I will be as f3oo1 as now,

stronger and more vigorous than evaave been for many years and he thinks
a trip such as i have in mind will be just What is needed to put on the
finishing touches.


To -



January 19, 1917.

i think of you Ana your associates a great deal, .yonder how

are gettir, along, Jhether you are overworkin-and 'Another the

strain of these anxious times may not be loading4.- to out too great
a tax upon your strength.

You must understand ho

rksoule it is to be

ac exile here when so nany important mat :re are
With my warmest regards to you and to Lord C
Cokayne, i beg to remain,

Liontagn C. Norman, Es
Care, Bank of Lagl
Landon, iingland.

B3 /CC



Denver, Colorado,
;1arch 22, 1917.

dear Mermen:

enclosures just reaches
Your favor of Larch 5th and its various

e those separate

me and I am grateful for your thoughtfulnes
copies, which will save cmite a bit of

communicated with mj associates in New

otk, but meanti want to say


a word about that wretched art'
American Sankers Associati


ournal of the

which is what its ncme infan bankers, is edited and

nlios - the organ of the

published by men of

it I have

arious changes

I shall not write you about the


he be

one, but in matters of this

kind of the moat prof
I do hope that you

ther sensible and friendly people in
ante to the vain-glorious boasting

London do not attach t

financial developments.

of the American press
le I blame the
stuff they

e of this country very much for the silly
say I

thin;c your own newsnapers fail to show

reproduction someintelligent d :crimination in what they select for
times, and wh
me is doubtios=

one realizes that an article such as the one you

tton by some young follow gettin;; .2500 or

:3,J,)0 a

had opportunity to
could never have been across the ocean and never

be the one to
inform himself, it does seem unfortunate that he should

advertise our ignorance and stupidity about some things.
If, as
this summer,

still hope, it becomes possible for me to

to London

would be glad of your advice as to the least dangerous

To 41. Ur. Norman.

404Ilmethod of travel.

your Canadian troop

Larch 22, 1917.

Maybe I will have to enlist and go over on one of


-)lease pardon the fulminations about this


that always gets under my skin, having be

sort of thing for the last two and a
7.-armest regards to you and yot


Montagu Mortpan,
Care, 3amic of_ England
London, Eng.



It is a

he victim of


Denver, Colorado,
March 27, 1917.

My dear Norman:

Your letter of February 73d is received and has been read with
much satisfaction.
0-! his arrival and 1

;Ir. Johnson has written me of the courte
sure he and his sister very main

annreciated it.

They wrote that they were going at once to 2aris to take up their work
and I have not since heard from them.
Vhat you sae about the announcement last Christmas relieves my
mind very much.

Di.t,ters have developed so rapidly here since your letter

was written that I feel justified now in writing you a bit more frankly

than has up to now been possible.

iZothing has caused me greater concern

and anxiety than the aepearance at times or misunderstandings between
your country and ours.

:hose of us who have opportunity to promote bettor

relations and better understandings must not fail to ta:e advantage of it

and What little I could do towards that accomolishment has been one of the
most agreeable oceurrences of the pest two years.

It now looks as though

-we would shortly be ranged along side of you and your allies,


hone both

in financial, economic and military measures, to bring this war to a decisive and successful conclusion.

My oldest boy is about to be mustered

into the service and you may know that if there were anything I could do in
any department of the work, I would be at it at once.

Now abot our proposals for relations between the Bank of England
and the Federal Reserve Bank.

I have studied the Governor's letter and the

revised memorandum with care, as have my associates, and believe that the

To - Mr. Norman.

.arch 27, 1917.

only really ' .lortant point is the understanding that our transactions

should be conducted upon a gold basis in any eventuality.

This means, of

ilk course, that the Bank of England will from time to time limit its engagement to the Federal reserve Bank to such amount as it considers prudent,

in case the transactions should appear to it to be larger than justified
for the Bank of England to undertake to settle in gold.

with the exception

of One or two unimportant phrases, I think we are in substantial agreement
on all points, and I sincerely hope to soe tho matter concluded very shortly.

You have, undoubtedly, been fully advised of the change of attitude
of the Federal Reserve Board, first evidenced by the announcement of ten
days ago and later by Mr. Harding's speech before the
York, advocating loans by our Government.

Club of New

Let me say as to the last pro-

posal, it has been received with enthusiasm even right here in Denver, the
only comments I have heard being to the effect that it is a ver, small contribution in aid of a cause for Which your people and your allies are making
sacrifices beyond estimate.

My doctor tells me that I can return to New York in June.
the summer aro still indefinite but if there is occasion to do so,

Plans for
1 shall

certainly make an effort to go to England and then to France, so as to make
our arrangements with you and the Bank of France effective and practical.

Will you kindly convey my regards to the Governor and Deputy Governor
and the same to you.

Please don't take valuable time to reply to my letters.

I am a loafer and you are more than busy.
Faithfully yours,

Montagu Norman, Esq.,
Bank of England,


Denver, Colorado,
April 2, 1917.

Dear Norman:
The cablegram of :,;arch 28th Which I have just received from Lord

Cunliffe,through the office. indicates the possibility of an early conclusion
of our long discussed alliance.

I hope it outlives both of us and that it

will promptly demonstrate its usefulness.

It would be of considerable assistance to me if I could have, informally, an expression of your views as to our arrangements in Paris.


will recall that the few words in our original memorandum relating to a
similar arrangement between the Bat'

of France and the Atderal Reserve Bank

of New York really occupied more time in our discussion than all the rest of
the memorandum.

My correspondence with Governor Pallain has been equally

-,;() have recently, however, been able to ma,:e notable progress

and, with slight variations necessary to adapt the arrangements to i'rench

conditions, I have some hope of concluding matters on similar lines before
very long.

There are, however, two points concerning which I would like to

have your views, whiei I hope you will send me quite personally and informally, but as fully as you may.

I have little information as to the status of the English-French
exchanges and of the steps which are being taken to keen rates steady and
under control.

It might be of advantage for us to receive in advance any

suggestions Which you believe will be of value to us, as well as to yourselves, in connection with the management of both the &.gliah and French accounts, in case we are successful in our negotiations both in in London and
in Paris.

'Realizing how difficult it is to deal with these L.t.tters by cor-


To - Mr Norman.

Anril 2, 1917.

respondence, leads me to the second point:

Llignt it not be a good plan

for me to run over to London just as soon as possible after returning to
New York?

I as planning to leave here about the first of June and if the

trip is possible, I certainly should bo able t) sail by August 1st, or even

1 shall need your advice, as suggested in my last letter, as to

the best means of crossing.
Congress meets today and 1 think there is ever,. reason to believe

that within forty-eight hours wo will have formally recognized a state of
war with Germany.

You certainly realize with what satisfaction I shall re-

ceive this news, as i confidently erect that once this first sten is taken,
our people 'will soon realize the obligation and necessity for lending every

possible assistance, - military, financial and economic - toward bringing
the was to a decisive and successful conclusion.
I an taking the liberty of setting the 3ankers magazine straight

on some recent developments, but, of course, doing it without having my name
annear, and I hope what they publish proves to be more accurate this time.
With kindest regards to you and your associates,
Faithfully yours,

Montagu Norman, Esq.,
Care Bank of England,
London, England.
?.S. Since dictating the above the ?resident's message has made our
position clear to the world. 1 could not refrain from cabling Lord Cunliffe
as per enclosed copy. How great a satisfaction this is to me I am sure you
will realize and, frankly, it is a tremendous load off sac; mind.


Denver, Colorado,
April 19, 1917.

My dear
1 have wanted for some time past to write you some expression of

my satisfactioa and happiness in feeling that the restraints of neutrality
need no

longer apply to our correspondence and friendsnipt

It is a

great disappointment to me that my illness prevents sogre more active part

in war activities than seems possible.

i an returning to Sew

June 1st and may be able then to do a little service.



Meantime, my oldest

boy, who has been a Sophomore at Princeton, has bean mustered into the
Federal army and is just now engaged wit'i about twenty of his companions

in guarding some three hundred interned sailors, taken from the merchant
liners in New York.

Ho has had about a year's militar-,' training and I

have no doubt will be amoni:; the first to cross the ocean with an:: expe-

ditionary force.

It certainly brings the war closely home to me, but

then it is no different from the situation with all mw friends, uhose sons

without exception are engaged in some form of preparation for military or
naval service.

This is the situation towards Which 1 was confidently looking
foraard when I

s in London last year-and 1 am happy now to think that

my best hopes axe being realized and that we are .7ith you heart ;Ind soul

and with every resource that the country can provide.

I am daily awaiting word of Lord Cunliffe's arrival and hope to

make a flying trip amt to see him before returning permanently.

Let us

hope that the alliance between England and the United States in the war


Lpril 19, 1917.

To - Mr. Norman.

will be accompanied by a very close alliance between your great institution and mine, vitlic

will be based not upon selfish interests, but

rather upon mutual interests and mutual confidence.
With ever;i good wish and with every assurance that the war will

now be successfully and decisively concluded before very long, I am,
Sincerely yours,

Montagu C. Norman, Esq.,
Care, Lank of England,


:.ay 8, 1917.

Dear rormon:

This letter will be presontod to you by my oldest son, Benj.
Strong, Jr., who is procoeding to Parie to take up his duties in the
American Ambulance service with the French Army.

Ho has been a student

of Prinoeton and is going with a number of his friends from there.
Ben has been in the National Guard for about a year and was
mustered into the United states Army.

Very much to his regret, ho has

been mustered out of the service because his oyes failed to meet tho requirod standard, as he is obligod to wear glassos oven when on duty.

Naturally, I do not rant him to pass through London without taking the oprortunity, if possible, of meeting you.
I have told him not to hesitate to call upon you at any time
for advice.

Thanking you in advance for anything that you may be able to
do for him, I am,
Very sincerely yours,

7lontapx 0.

Torrnon, Esq.;

Bank of England,
London, England,


Lay 10, 1917.

Dear Norran:

I have taken the liberty of giving a note of
introduction, as per the enclosed copy, to my oldest

He may not have an opportunity to present it but

I am sure you will be glad to see him if he does so.
With warmest regards, believe me
Sincerely yours,


Liontague C. Norman, Esq.,
Bank of England,
London, England.


Denver, Colorado,
May 16, 1917.

My dear Norman:

Your letter of April 26th was in Denver on my return this
morning fro

a two wJeks' trip to New York, Where I wont particularly to

moot Lord CunLffe and have a chat with him about various matters of interest to us both.
I have before rue while I am dictating this a photograph of the

first advance made by our Government, Which is a transfer eaeok for
$200,000,000, drawn on tho federal Reserve. Bank of New York in favor of
Mears. J.

P. Llorgan & Company by your Tinancial Secretary t n the Treasury,

Sir Sam H. Lever.

That a magnificent I cannot
change this evidences!

tell you what a joy and satisfaction it has afforded

tJ i)e those first

steps. sordid and oommanalnce as they are reduced to terns of dollars, but
mall:7 evidencing the determination of this nation to pd4 ever' ounce of
strength it has alongside of you and your allies.

You doubtless will hear

shortly from Lord Cunliffe of the details of his trip; ho and his associates

had a grand welcome in New York - nothing could have been morn magnificent
or inspiring, but I shall not burden you with details, Which he will he able
to give you so much better.
My trip to London, while not entirely abandoned, 300L.S a little less

certain because in the first place I have accepted the Chairmanship of the
Liberty Loan Committee in New York, Which will carry the great burden of
placinir those war loans and, second. because the banking transactions grow-

ing out of them will center in our Bank in New York and will require the


To - Lr. Norman.

May 16, 1917.

utmost care in the handling so as to avoid money disturbances.


your good Governor will give you details, with which he is quite familiar.

But for the moment at least I feel that my duty is right here until this
first loan is sincessfully launched and the process of redistribution of
funds affected.

Then I Main: i shall feel free to mere the trip if it

still seems advisable; of course i will lot you know well in advance.

Arrangements are now in course of making to organize
of foreign exchange transactions.


Doubtless the burden of organizing that

will also rest on the Federal Reserve Bank of New York and I have taken the
liberty of suggesting that it might b3 profitable to both of us if you could
be persuaded to come to New York and give us the benefit of your experience.

The plan in detail will depend upon the passage of some legislation now
pending, as otherwise our authority is most limited.
7ie are handicapped in starting our transactions with you on account
of having no competent mp-n to look after the detail

I am hoping to get one in the near future.

of that Department, but

Meantime, as you say, conditions

nake our arrangements of minor importance -.-Then these Government loans are

coming along so fast.

The French arrangement to which you refer is rather difficult I
must confess.

The question of the rate of exchange seems to stick with

our friend Pallain and

ce:! hoping this woe:: to prepare a dissertation on

tie subject which may or may not result in final action.
With my warmest regards to you and your associates, I am as always,
is'aithfully yours,

Montagu Norman, lel.,
Bank of England,

Denver, Colorado,
;slay 13, 1917.

ily aear Norman:
The enclosed loaf from the Journal ofi the American ::,ankers

Association will, I hope,

aice the sting out of that earlier article.

Witt) warmest regards,

Faithfully yours,

Montagu Naxpan, Esq.,
Bank of England,
London, England.



July 2nd, 1917.

July 6th, 1917.

My dear Norman:
Yours of the 12th of June has just re. clued as and I
can only send you a line of thas'Is in :ir;knowledgement as 1 am

cleaning up some work on n holiday preparatory to running over
to liashington.

fly boy went directly to Yrance and is now driving a
munitions truck and probably 1-Iving a fine time.

At any rate,

he got what he wanted shich is the important thing.
About taking cars of myself, I am doing it as well as

;low that the loan is successfully launched and only

the work of cleaning up the icose ends remains, 1 am hoping to
leave for Colorado Saturday or Sundry to be gone a month.
With warme:A regards to you and to my other good friends
in the bank, I am,
cordially yours,

Montague Norman, 7sq.,
Often Bank of England,
London, England.

P. S.

Do you think it would a good plan for us to ex-

change letters and possibly cables at regular intervals in regard

to our resective money markets!

Our government's operations

here, both in the way of loans and tax levies promiset to be so

heavy that we may have considerable develoments to figure on.

August 28th, 1917.

Yy dear 17orman:

I an most grateful to you for your help in rounding

up the posters which will be an important addition to my collection.

Tnclosed is a draft for $30 to cover the Irish pos-

ters and I think on the whale it will be the best plan to have

them all shipped to me here by some good forwarding agent
rather than to await my next rather uncertain trip to London.
I do hone this is not causing you a lot of bother. warmest regards,

Sincerely yours,

Norman, Esq.,
Care Bank of England,
London, E. C. 2, England.




January 21, 1916.

My dear Norman:

I have taken the liberty of giving a note of intro-

duction addressed to you, to my friend, Mr. John T. Pratt, who
is sailing for France this week.

Mr. Pratt is a well-known New Yorker, son of Er.
Charles Pratt whom you doubtless know as one time connected
with the Standard Oil Company.

Since the outbreak of the war

he has been engaged in some important work in the Department

of Labor, in Washington, and has now resigned to take up work
in France.

He is a very warm personal friend of mine and a delightful fellow in every way, and I hope his engagements abroad permit him opportunity to meet you.

Anything that you

can do to facilitate the objects of his trip will be warmly appreciated. kindest remembrances for the New Year, and thanking you in advance, I beg to remain,
Sincerely yours,

mr. MontaiA Norman,
Bank of England,
London, England.

April 27th, 1918.

Dear Vorman:
with the
Only the very busy environment in connection

of warm good
Liberty Loan il'A3 delayed my sending you this note
of the Bank of
wisher: upon your taking office as Deputy Governor

It is a wonderful tribute to you for which, nowever,I
responsibility which
know the penalty is a very heavy one in the
goes with it.

I wish you every possible success and happiness

and honour which, of course,

I know how fully you deserve.

wonderYou will beidaterested I an sure in knowing what a
the war.
ful change has taken niece in rublic sentiment about


world's peril and the
are thoroughly aroused, I believe, to the
in authority for
only criticism one hears row is criticism of those

not gettinr armies to France fast enough.

Give us time and we will

have all the men and all the supplies needed.

The best word one

hold out on the 7:estern
can send you from America is the plea to

in giving Germany
front until we have the privilege of joining you

a sound thrashing.
Incidentally, there are a good many indiscreet Germans in
features as a result of
this country nursing black eyes and damaged

indiscreet remarks in public places.

The enclosed cartoon is a lit-

tle evidence of the extent of the sentiment.


Our loan is booming.



Norman, Esq.

Ap1.27, 1918.

Te have not yet completed the total

but still have eight days to go with about two billions of the loan


October 2, 1918.



Ey dear Norman:

Many thanks for your kind note of September 10th.

I am hopeful that arrangements with the Bank of

ance may

shortly materialize and be of like character with those
already so happily established with the Bank of England.
I wish I had time to write you fully about our
pending loan.

It is an undertaking of immense size, and

will require efforts even greater than heretofore attempted.
We are confident, however, of making the loan go.
Cordially yours,

Llontaguo O. Norman, Esq.,
Director of the Bank of England,
London, England.



Lovember 22, 1918.

My dear :;organ:

Your letter of October 22nd reached me a little delayed
owing to my absence in sasshington, where same of us assembled for
the purpose of discussing that rather difficult and unpleasant
I suspect that you and your
operation of "washing dirty dishes."
associates have made more extensive izeparation for that sort of
work than we nave.
It will be a great pleasure to meet Mr. Rae if I rem here
when he arrives, and, if not, I will bee that he is suitably reThe last year and one-half has not had
ceived by my associates:.
a particularly fa'orable effect upon my physical well-being so I
am going off shortly to patch up a bit in the hope that I can buckle
Anything that we can do for Mr. Rae
down to work in the spring.
will be a pleasure on your account and because, as you know, of our
very earnest desire to promote anything that mane a closer alliance
and better understandinge with you and yours.

e have not been able to eliminate in this country, as you
I regret to say that
have, the detriment of "business as usual."
a large fart of the cost of this mar has been conducted as a luxury,
so to speak, without interfering to as great an extent as it should
with our regular busineee, and, particularly, with our every day
3usiness has really been booming in most lines
and, or coureo, this makes it thl more difficult to clean up war
operations on aatisfaotory terms.
I hope, however, that the slo
down of our war industries will bring about enough liquidation to
liquidate bank loans and, somewhat, the position of the reserve banks,
which have carried, as you Know, indirectly, a very considerable
pert of the load.
We are, however, fortunate in one thing, that
the greater part of nearly seventeen billions of dolleirs of bonds
has boon pretty well absorbed;
the earliest maturity is ten years
hence= and the short borrowings of the aovernment have been cleaned
up twice a year until the present time, wl,en I fear there will be
some overlap, possibly of a pillion or a billion and a half dollars.
The j'ourth sIberty Loan wan an astonishing success.
country took within eleven million dollars of the groat total of
seven billions, meaning nearly a billion dollars over-subscription.
In this district we were charged with raising a billion, eight hundred
million and actually raised two billions, forty-four millions.
best estimate, so far, would indicate that there were about twentyone million subscribers, and this, of course, does not take into

:sheet So. h

account the sale Ox ear savings aria thrift stamps.

I have saved until the conclusion of this letter a word
,hat a
of rejoicing about the glorious outcome of this war.
splendid thing it is
If you will be good enough
letter to your associates, I will convey to all of them, including
lord Junliffe, whom I presume you see regularly, a suggestion that
is very much in my heart.
The principal danger uow ahead of us, to my mind, im not
sooial and political disorder. ee are going to have changed social
and politioel oenditione, but I an confident that order will eradually
be restored even in distracted Russia as the real centre of infection
is in course Of being bootod out, namely Germany.
That I do for
is that our peace negotiations, and possibly their terms and con! see evidence
clusions, :rill develop alona linos of economic strife.

not only in this oountry, but in bland, that business men and them'
in political office who claim to represent business are thinking of
the main chance, and if England and the United etates can not agree
upon a program by which the strife of oonpetition for business in all
departments and in all parts of the world is not held under control,
we will revert, 1 fear, to a period of econoeie barbarism which will
menace our prosperity and certainly not promote our hepeineee.
men who aro about e) sit in Versailles and determine the fate of the
whole world for generations to come, have the opportunity to start
the world toeard better day:,, or they may make it the eecesion to
strive for national advantage one over the other, ehich will make the
fruits of this war rather bitter in future years.
I think that our
President, who is here regarded much as an idealist, has, nevertheless, expreesod in his public utterances about peaoe the eentinents
which should control at 'Leese negotiations, and, for one, I am glad
that ha is vine to attend, as now seems likely, beoauee I believe
he may be relied upon to use his great influence to the limit to
eliminate from the council that very element of strife :which I ereatly fear.

There is no doubt that muoh of the world's happiness in the
future will depend upon the relations now being established between
your country and ours.
Jon't let's permit ourselves to fall back
upon old methods, but set up some sort of economic partnership in which
every self-realecting and deserving nation 'a ;: partioipate.
You may laugh if you please at this exposure of my personal
feelings, inioh were just as strong when I was last in London, although,
I am relying
possibly, I did not then feel at liberty to expreas them.


Sheet No. 3



very muoW in future yearn in financial matters upon the strength of
cur alliance with the Bank of gland to help in the direction of the
above suggestion. //
Why donit you take the time some day to write me just how
you feel about things.
a paid but a amall price comDared to
The sor i s over -you and others iu winning; it, and I want to see this great country
contribute two whiA it ceetmd, unable to contribute in the early
days, and thi.t is a Grant conetructive piece of wurL in rolAoring
so muuh of the diatilie0 that. you and others hpve suffered.
With iwirmost regards to you, Cokayme, aud the others at
I am,

the Bank,,

Vary sincerely



The Banix of






December 9, 1918.


my dear iiormans

With this I am enclosing copy of a note of introduction which
I am handing to Senator Robert L. Owen.


You will doubtless recall him


as one of the authors (associated with Representative Glass of the House)
of our federal Reserve Act.

The federal Reserve Act involved such stupendous changes in our
banking system and methods, and was indeed a venture into such new fields,
that, naturally, its perfection has involved numerous amendment6 since
In this whole matter Senator Owen has had a con-

its original

tinuous interest and responsibility by reason of his chairmanship of the
finance Committee of the Senate, to which legislation of that character.
is referred, and where it generally originates.
Senator Owen is, of course, very much interested in methods

pursued abroad and intends, I believe, to devote some time to their study
during his present visit.

I am frank to say that with some of his views I have not entirely agreed, as I believe them to be rather more radical than is

On the other hand, his deep interest in this great reform

of American banking has resulted in the passage of one of the most important and constructive pieces of legislation ever enacted in Congress,

and he is able to speak with authority and much knowledge of the developments in this legislation.


Montague C. Norman, Esq.



I hope that you may be able to serve the object of his visit,

and trust without too great inoonoanienoe to your good self in these busy


With cordial regards, believe me,
Sincerely yours,

Montague G. Norman, Esq.,
Deputy Governor, Bamkof7England,
London, Zngland.




December 9, 1918.

Ply dear Sir:

This note will be presented, to you by my friend, the Honorable

Robert L. Gwen, United States Senator from Oklahoma, whom I have great
pleasure in introducing..
Senator Owen, who is chairman of the ;Finance Committee of the

United States Senate, was one of the authors and instrumental in the

passage of what is known as the "Owen-Glass Bill," or, officially, "The
Federal Reserve Act," under which the 2ederal Reserve System was created.
During his visit abroad, he hopes to B.L.cce a study of banking

and financial conditions, and particularly of banking methods.

I will

greatly appreciate any courtesies which you may be able to extend to

Senator Owen and any assistance that you may be able to render to him
in connection with this phase of his trip abroad.
With assurances of my esteem, I beg to remain,
faithfully yours,


Montague J. Norman, Zsq.,
Deputy Governor,-Bank7of'4ngland,
London, England.





December 10, 1918.

My dear Norman:
The Interm Report of the Committee on Currency
and Foreign Exchanges After the War is of such interost. that the
several copies .,rich Sir Brien so kindly sent to me have been ox..


Would it be possible for you to have additional copies

forwarded to the bank for its use?
Thanking you in anticipation, and with kind personal
regards, I am,
Sinceroly yourr,

Montague C. Nomsn, ESq.,
Bnnk of Fngland,
London, England.






Lake George, N. Y.,
February 5, 1919.


Dear Norman:


v 191)
I am writing to apologises

failure to reply to your three

nersonal letters of December 11th and 31st and January 4th, and an writing
separately to the Governor in reply to hie official letter of December 27th.

The fact is that I am up here in the country recovering from *he
rather strenuous rnrk of raising money for "Uncle Sam."

After e month of loafing, I am starting in on mail again and now
propose to inflict you with a long letter.
Social and political disorders, I suppose, are inevitable and I
only hope that a generous spirit will prevail in dealing with them.

You are

at pomp disadvantage in that respect because of the inflexibility of 7alglish

tradition and the remnant of influence of the so-called ruline class.


I feer the influence in Tnglish politics of the reactionary and conservative.

They rill not and can not seem to see the great changes which are now upon us
as a result of the war, while, on the other hand, the more progressive states-

men in this country, and particularly our President, I believe do sec with a
more flexible end with a longer vision some of the troubles to be averted by
the adoption of a generous program to "ard the men underneath.

Your election

must have been reessuring and I suspect that still greater reassurance is
coming from the discussions in Paris, There President "ilson seems to be
making progrees in cooperation with your own representatives.
Tlere, in business and finance, 78 are witnessing a rather prompt

recession of prices and a considerable slackening of business.

It is still

epotty, but is nevertheless cell under ray and I presume is a good thing,




Montague C. Norman, ,3ect./.qi)


Sheet No. ?

notwithstanding the hardship that it imposes upon thoea 42oeheve stocks of goods.

re are facing a danger in that respect that you will likely avoid, for we have
inflated under conditions of prosperity which hove left our manufacturers and
merchants with pretty round stocks of goods, 'heroes I imagine that your shelves,
and still more so those on the Continent, are fairly bare of reserve supplies.

You certainly have an immense problem before you in liquidating your
bank nosition with the enormous government floating debt and those wretched currency notes to deal with.

Our problem is really confined to the liquidation of

possibly four or five billions of bank expansion, which I believe would be com-

pletely accomplished if the reserve banks were able to liquidate about a billior
dollars of their advances.

You will observe from the enclosed statement, pre-

liminary to our annual report, that in the past year we have added roughly a
hundred million sterling to our loans, advances end investments at the New York
Bank, which is possibly 40% of the total reserve bank expansion.

When one

examines the reserve bank statement carefully, it will be seen that we have
tremendous resources available for the future and I think much of your own problem

will depend upon such understanding as may be arrived at between our two countries
by rhich these banking resources can be made of service to yourselves.
like to see such an understanding retched between us thee

I would

jeelousys and bickering

will disappear and that these problems may be worked out in partnership so far
as the banking end of it goes.

I believe the greatest difficulty comes from a

fear on the part of your London bankers of the Holden type that we are going
to encroitch upon the .iInglLeh banking preserves.

Frankly, I don't see hoe- it can

be avoided for a time because when the period of temporary unsettlement is over

we are going to have the reserve of banking capital in this country and it is

ontegue C. Norman, Esq.

Sheet No. 3


bound to find on outlet.

Some freedom in these mutters will enable you to get your raw

materils more promptly and at better terms than otherwise, and, in the long
run, the financing of the world's commerce will find a natural place and will
not stay permanently in en artificial place, nor, under artificial conditions,
either remain in London or come to New York.
I have been disturbed at the published reports of a discussion of an
internetionel gold settlement fund to be established by agreement at Paris.

The only international gold fund required for the present is one to be dealt
with by a triangular arrangement between the Bank of England, the Bank of France
and the Federal Reserve Bank of New York.

If we can have a thorough-going,

working understanding between the three institutions in this matter, I doubt
if anything further would be required or desirable for many years to come.
Thank you for the other reports enclosed with yours of December 31st,

Which I have not yet read, but will do so now that I am settling down to work

I hesitated to burden you with those letters of introduction of
Senator Owen.

On the other hand, he is a man of importance in all of our bank-

ing and financial legislation.

I disagree thoroughly with many of his views,

and, unfortunately, he ie one of those men from the rest Who seem to cherish
some prejudices against
of his reception.

1 Street.

You need make no apology for the manner

He is a thoroughly educated advertiser, and I gather from

the import of your letter and the clipping enclosed that you have some of that

Sheet No. 4


Montague C. Norman, Teo.


at ripe in London.

Senator Oven is beset ?with the notion that the difficulties of the

-orld in foreign exchange can be solved by the establishment of a governmentcelled foreign eechnnge bank in this country, ejhich could stabilize exchange

ritein the gold shipping points end furnish all the gold necessary for' Lhe

'e have all If us opposed this scheme, and I fear some of us have

incurred his everlasting animosity in conneouenco.

It is ano

of the degree to Mich the Americen people like to have business menaged by

They aenroech the subject very much us Joshua and King Canute



As bearing a bii upon our diccuesions of brink expansion, I an cn-

closing an article by one of the members of the Federal Reserve Board embreCe
inn verioue view's which I do not pretend to entirely endorce, but giving also

some interesting computations on pages fourteen to sixteen, rhich you mey be
interested in reading.

Fith vermest regards to you and your associates, I em,
Faithfully yours,

C. Norman, Teo.,
The RenkFf Tnglend,
London, 7ngland.




Dear Normane_

I have been intending for some weeks to write you about a number of

matters, but the pressure of this fifth loan keeps me regularly behindhand in

You surely did not misunderstand our action in -ouilding up a balance with
the sank of .i:ngland!

We may add to it some day, but it is to be considered simply

as a peg, to remind you that some day we are going to hang something on it.
Then Lord junliffe was here he displayed a great deal of interest in the
methods pursued in placing our Government bonds.

It occurs to me that you and your

associates may be interested in looking at the chart of our headquarters Liberty
loan organization for the Second Federal Reserve District, which gives a graphic
explanation of the detail with which this work is organized.

This chart, by the

way, simply covers the organization In the Jity of New York, and the so-called headquarters organization, which directs activities all over the Second Federal Reserve
District, which comprises New York estate, the northern half of New Jersey and a small
part of Connecticut.

Very much similar local organizations exist in every city

in the district and generally throughout the country.
'7ith this chart I am sending an illustration of another one of our great

problems,which is reaching peoples of various foreign origins and languages.


of this great organization of ours includes a division dealing with thirty-two foreign
language groups and it is simply astonishing the number of subscriptions that they
turn in.

The loan is going slowly.

We have no such popular interest or enthusiasm

as in former loans, but by the time this letter reaches you I am confident that it
mill have been announced as a great success.


Montagu J. Norman, ,i;sq.,
Bank of :14gland


Jim drown tells me that there is some possibility of your being over
here this summer.

there is some similar possibility of my being in London.

would be disappointed were we to cross in our visits, and, if on recoii.t of this

letter you feel able to send me a brief cable indicating something of your plans,
I would try, so far as possible, to shape mine accordingly.
Last niftht Jim gave a splendid dinner to two of his London partners, when

we pledged the everlasting friendship of Great Britain and the United States in
bumpers of very expensive 44 oppugns.
30 much for now;

a little later I will write you something of what is

going on here. warmest regards to you and your associates, I am,
dordially yours,

Montagu J. Norman, i;s1.,
Deputy lovernor, Benz of :ngland,
London, :;ngland.





May 7, 1919.

Liy dear Norman:

Just to give you a little idea of a Liborty Loan operation, I am enclosing a daily bulletin of the Publicity Department,

giving the program arranged for to-day.

You see we have to keep

things stirred up, and this is the way we do it.
Best regards,
Sincerely yours,

Montagu O. liorman,_Zsg., -Deputy governor, Bank of :gland,
Longon, ngland.


Misc. 35







CONFIRMA' ..',!').°:tfiiifitittrri RAM SENT IIN3t111

by confirm our code message of this day, translation of which should read as followss'ik \ISB'N11(

Jump 2 1911

Bank o


Planning visit to London last of June if possible to arrange




isc. 35







confirm our code message of this drrfranslaiion of which striltiW, as follows:



Aontagu INI7orman

Bank of iligland

Aany thanks



bringing secretary

sitting room at Ritz

Can you get accommodations with

Will gladly visit you on return frog Continent

Jailing baltio July twelfth




Juno 309 1919.

1y clear Norman:

he given instruction:: to /rave oort-tin plorl of some value
sent to me from Franoe in care of Vie Baulk of
it Fill cause no Incomvonience to have nom loatmd up tmd held
cxiaiting my arrival.

bofare this nog* nosebag you I in y have 000asion to
cable you in regard to the handltmg of the matter to which these
pflpers refer.
I sineeroly trust that vs ars not proposinr to
put you to great trouble and incamvenienas In the matter.

.ith cordial regards and looking forward to easing you in the
near future, I am,
Ilinceroly yours,

L'Iontagu C. Narman,Esq.,
0/0 Bank of Zug1 nd4
London, 'England.

July 2B, 1919.

Montagu Norman
Bank of England, London
Will be at Ritz Hotel, Faris, until Friday.

Will appreciate your

that date.
forwarding anything received for me to reach me

Hotel Ritz, Paris,
August 26, 1919.

by dear Norman:

Thank you for your note of the 223.

Since I wrote and telegraphed you

in regard to the Spanish payment, I um advised by the Federal Reserve Bank
that no payment need be arranged by this method, at least in the near future,
so you may proceed with the shipments as covered in my latter of August 23 to
the Governor.

Pseems a shame to give you all of this trouble, but I am counting upon
being able some day to do as much for you.
You may ex,Ject to see me in London some time around the lst of the month.
With kindest regards,
Sincerely yours,

Montague Norman, Esq.,
c/o Bank of England,



Hotel Ritz, Paris,
August 27, 1919.

My dear Norman:
If you hawmptnot already read it, the enclosed clipping from the

New York Times I am sure will interest you.
Sincerely y)urs,

Montagu Norman, Esq.,
c/o The Bank of England,


(1 encl.)

Hotel Ritz, Paris,
August 2c.,",


Dear Sir:

A cablegram just received rim the Federal Reserve Bank will nuke it
is, a,-.:proximately 44Porrry
marks nxl, held by the NedarLindeche Baak, to London, and
while I re;;ret the necorliti r): imposing Ults ueolitim4U trouble -c.pon your
good institution, an inevitttle (::range in our plans taskei it neaeosary.

fIr us

It also may bs necesssxy to shir. the entire amount now 'acid by the
latioaulo do Belgique, uonconill,6 Alloh
telegr4h you
probably from Brussels early next week.


Letters to this effect are bvini; Lent to the NedorL-ndnche
the Banque NatIonals ae 1331ifigoe, /rut it will doubtloaz be :woes:Lay that
alto receive inatructians direct from you.
I am just advise.: by tae Bank
Lesars. Chubb
Sons seam to
have been dioturb.ul by reports irLiCh they had rsceLved from this side
indicating that sol!, insuroo ^hint -oe :Japed d' rocs. in Lon:!on.
I have
oaLi6a ;ix I:ow York L.:la:. cioaOtlesa uroso iron inquirieo as to rates
for shipments to Pt.:Jo or
und ulat no insurance will be placed
it Loauon.
rinis liuita tae V4:040 to 'oo ccv.ered in any one anipment,
plus' the coat of shipmeat, to 46,1.5

um sel:ling Ur. tent a copy of tale letter All greatly tapproolate your further ussis;:anco in carryik; out our Juno.

Very truly yours,

Montagu NorAan, Lei., Deputy C;ovornor,

The Bank of gland,


October 1, 1919.

My dear Norman:
My trizl. home way: in every way delightful and ay

first act on arrival would have been to cable you to that
effect had I not gotten off the boat so late Friday evening
as to make it impossible to do so;

and the next day I ea::

yanked right over to Washington, where I have been staying
ever since, more or

locked up with my associates.

Nothing could have given me greater ;,1eLeure than
my visit with you at your home and, later, hiy induction into
the circles of the Bank.

A little later, when my desk is

cleared u, I shall write you a bit of news from this side
and, in tne meantime, accept iuy warmet thanks for many kindneeses and many acts of hospitality, all of which I dee,ly

Won't you also give my test wiJae: to the Governor?
sincerely yours,

care Ean'i. of England,

London, England.



October 20, 1919.

Dear Norman:



The enclosed article from, the Wall Street Journal i:. re-

lation to our discount rates may interest you.
sariiy reflect

official o inion,

article origiarAedi


I aL, not aware of how the

it did not c,.ime from this

there is a growin] fee:ing in fin-inciR

It does not neces-


circles that our discount

rated should be raised and our idolicy in that regan, will probably
be determined immedi&tely followir._ the conference of governors of
the reserve Ipink


to he held in W-_shintoh on the twelfth of

Until then s. chan.e, seems unlikely.

Hopin, that you keep well, s.nd with kincest rec,rds, I

Sincerely your,,

Montagu C. Iluagdasc.,
c're The Bank of England,
Threadneedle Street,
London, England.




There is only one solution, and that is


1 I I t...ew

York Bank r






for Great Britain gradually to restore
parity by redressing the balance, and

that can be done only by increasing the
volume of exports to the normal ratio of
imports, so that England ceases to be a
debtor nation and once more resumes her
place in the foreign trade of the world.
This, lie contends, can he done by every
man in England realising the position,
and by every man, employee as well as
capitalist, not being satisfied with working harder but by working more intene
sively, so that the output can be greatly
increased ; production on a large scale will

thus decrease the cost and enlarge the
market for British made goods.

The British working man, this hanker
says, ought to be made to understand
that he has as great an interest in
foreign trade as the British banker ; and
while the working man may think it makes
no difference to him what may he the ex-

I have had an interesting talk with one
of the most prominent bankers in New
York, who has just returned from Europe,
where he went on behalf of his own and
Institutions to investigate
European financial conditions and to find
the extent to which Europe is dependent

change rate between the pound sterling

upon the United States for credits and

must correspondingly advance and the
working man's loaf of bread must either
cost more, or, if the price is maintained,

In England this banker conferred
with the Chancellor of the Exchequer and
the leading bankers and industrial chiefs,


and he saw also the French and Belgian
Finance Ministers and important financiers in both these countries.
England, he tells me, has get her face
against borrowing, both on Government
and private accounts, and believes that
._.,,,r oOTK MIL of Ldiffi-

culties by increased production, by
economy, and by limiting her foreign purchases only to the raw materials which are

absolutely indispensable for foreign and
home trade, to foodstuffs, and to other
articles which must be obtained from
abroad. While regretting this decision
from the standpoint of American banking
interests-as there would be a handsome
profit to American bankers if England was

a heavy borrower in this market-this
banker commended it as a sound policy,
and expressed his warm admiration for
the courage and far-seeing vision of the
British Government and the British
bankers and merchants in resisting the
temptation to borrow and in relying on
their own resources and energy to rehabilitate themselves.

and the American dollar, he ought to have




that when the i

sovereign can be exchanged for only four
dollars and ten cents in American money
instead of in the normal exchange for
four dollars and eighty-six cents, the
sovereign will buy less wheat than it did
formerly. Consequently, the price of flour

the loaf will be smaller ; so that the ques-

tion of exchange is as important to the
working man as it is to the hanker or to
the importer, and it is the working man
who cafi send the sovereign up to its
proper price and decrease the cost of his

This hanker believes that unless England

increases the volume of her exports, it is
not unlikely that sterling will go to four
and franc.; he thinks that were it not for
;loners, and would be lowerboth sterling

the gamblini now going on in the ex-

change, which has tended to check their

downward course.
The French believe that they can borrow
in the United States because of the warm
regard the Americans have for the French,
but American bankers have carefully impressed upon the French Government and

France, in the opinion of this banker,
must realise her position and find the
money by greatly inc-easing her taxation,
which she ought to have done, he says,
during the war, as England did. While
the French Government itself is pressed


Belgium's credit is regarded as good.

Recently she secured a credit of 50,000,000

dollars through a syndicate organised by

the Guaranty Trust Company of



Despite the war and the adverse ex-

through the ordinary methods. France
would like to borrow 200 millions sterling
or more in America at from 4 to 43 per
cent., but the American bankers do not behove that they are justified in accepting
the risk.

change, English credit is still rated very
high, as is indicated by the willingness of
American banks to lend practically any

to the point of buying foreign securities,
and while during the war he responded
readily to his own Government's appeal

amount that may be needed, and they
would like to make loans to British muni-

cipalities, but they see little prospect of
that at the present time. In regard to the
depreciation of exchange and the premium

on dollars in their relation to sterling,
this banker says that while various
schemes have been proposed to bring the

pound back to parity, none of them is

feasible and none of them will work, because all are founded on an artificial
basis; and while they might meet the
emergency temporarily, in the end natural
laws will assert themselves and conditions

then would be even worse than they are

The American has not vet been educated

to buy bonds, he did it for the same reason

that ho accepted conscription-the
national necessity left him no alternative.
Believing that the American public would

refuse to buy French bonds, American
banks refuse to stand sponsor for them.
The only way by which France can secure a

large loan in the United States is through
the American Government. but that would
require the sanction of Congress, and
my informant does not believe that Congress would give the Treasury the necessary authority. Some of the
Municipalities can borrow in America at 5


York, and the same syndicate is ready to
advance her another 50 or 100 millions if
she requires it.
Italy would not be averse to borrowing in America, but the American bankers
give her no encouragement.
The new States created by the war, and
also some of the Balkan States, need
money or credits, but can ootain little of
either through private American sources,
and Congress looks with disfavour on any
suggestion to have the American Government act as a general European banker.

taken, and that it would be impossible to

people are


on French financiers that they are mis-

flat a large French


richer than they were before the war, and
if they will submit to heavier taxation the
iehabilitation of their country will be


October 21, 1919.

My dear Norman:

I have juet received and reed with much interest the views of a
New York benker, interviewed Ly the Moraine Poet, in reeerd to European
finance, which you were good enough to eend me.
It may to thet you assume I wee: in some way responeitle for the

article, but the feet is that I have etuck to my determination not to talk
to any newape,er men in regard to conditions abroad.

One i. so liable to

be misquoted, and even if correctly ,uoted to be mieunderetood, that I believe more hem would result than good and yo I am like Brar Rabeit, "lay inn: low."

Much to my chagrin, I lei rned from Mr. Stettinius s few d ye eeo

that what purport d to be an interview with me, or

n exereesion of views

indirectly from me, fled eeeeered in the London Times, and hadebeen extensively quoted in Feria.

These views were underetooe to Le very eee-

simietic about the French situation, and indichte that I had returned
home in some disgust because of my conclusion that the French Government
was ,ereietine in an unsound financial program, which would brine dieeet rs.
The only newseaeer man that I saw etroad was Mr. Kiddy, and, of course, he
coule have written no such article, as I do not recell that the subject of
French finance we

diecuseed at your house that night when I mut hi...


therefore, I as quoted in the newspaere, or rrivetely by neweee,er men,
you may with confidence assume ane state thee anything attributed to me of
that sort can be promptly denied.

Montagu C. Norman, Esq.

- 2 - 10.21.19.

Between you and me, there is a good deal in the Morning Post
article that is very true
ton, I suspect

nd sound, end, et it I, dated from Wahing-

that it mey heve come from a friend of mine who has

recently been abroad .nd who doubtless gathered much the same impreseione that I dio.

We are struggling awey with our problem::, certAnly as
numerous hb yours., but not .s difficult, not the le-at teine later.

There is being A.ecioefed from tie to time evidenced of activity of

extremists end elitetor, which, flb reported in the newska,er, may
give you e. fel.c.e impression at to what is going on.

ha, inherited with its E.rititt blood certain views

in which I have tee grJete,t confidence.

This country
Lout law .nd

Don't rermit your-

self to be disturbed in the slightest degree by these reprts:
Kra bound to have stria ea;


there may be some violence accomi:anying

but I eel more confident than ever that neither yeu nor we

will &Lifter Lnyt.einz, of

revolutionary character coming out of theee

disorders, and 1 am ,re,er d to beck my o.inioe ag_inst thole who
through natur 1 timidity or through their enjoyment of excitement and
disturbances pkophety all sorts of dire things.
Should you hat, n to see my friend Hartley Withers, would
you be good enough to tell Lim th_tt I hove a letter in procee:: of
i,rerparation to him about the Federal Reserve System, will go

fom,ard in due course, as weal


a coy of Frofeesor Kemmerer's

Montagu C. Norman, EN.

- 3 -


With kindest regarde to the Governor and your elf, I am,
Sincerely yours,

Montagu C. Norman, Esq.,
The Eclnk of England,
Threadneedle 'treet,
London, England.


november 6,

9C S.

My deer Norman:

Your letter of October 2lct arrived ju

we were in course

of cerryir4; out the progmm which I had dieoue ed with you end the Governor
before .ailing.

FncloEed iE a copy of the notice of rate °henget tosther

with e A.ttle statement

i-stri to t.e

in explenetioe, which ha terse

to be a very euch enorter etateeent than I bee exected to eake, boiled
coon to thie email compueE

of Lome fear thet ee would t.6 ctireed

with making e direct attack tic):: the speculative etook merket.

All the Reserve bank

are loaning too much :port mon y under

the 15-day rate and the advance of 1/2 of 1% et thi:: center will bring

our rate PO cloe to the unprofitable point for the tenke that use it
test I anticipate they muA begin to think of payinc off e .Little more actively then heretofore.

We have ao leee than t.775,000,000 of advances at


Lest you may mieunderetaed the gyrations., I ehoulo explain
that the market for comeercial borrowin,:e and borrowing e ujoe Coverneeat

securitiee ie now pretty well divorced from the speculative call money

Our 'Lemke seem to have been educated not to uf,e the Reeerve

Fank very extensively in order to make profit on the .tack excilane
Thoee that give evidence of doing 60 we edmonieh, but, in the long run,

will Ld ee effective at, yeu realize ee a rate which is unprofit-

able, and, notwithAAnding that money it loaned et time: at 1 :.)% and stove

on the etock exchan6e, our minimum rate of 4-1/3, with exiemeee and tiocee

Montaeu Norman, Eeq.


added, eivee very cloee to the gross return realized on all inveuted funds
ty the banks in thie city.

If this turn of toe ::crew ie net enoul



we ,oust give it another, but we are determined to stop thy: mad march of

speculation and expane-on, whether it Le in eecurities, reel eetete, come
moditieL, or what net.

The rete of 4-1/4% which you will observe :simply awliee to etout
4100,000M° of Treeeury Certifioetee out. tending ee: meee ie order to belt.
the position for the Treaeury in et:.,e circuinvt:,,net = juetify their ettempting

later in the year to harrow et thet rite.
fied with myttlf a

1 have never felt ,,uite eo satis-

jut now in feelinc that the first end ;test important

step eee t)en taken in freeing the fieeerve Elicit rate tclioy frofe the over-

shacrosing influence of the GovernfLentle borrowing, butrIvately, I mint edmit the t it was not brought about without a grand strugsle.

Than you for your remarke about the
very much.


tuation which ineeeot me

I shall reed the "Economist" on arrivel, althee,h it se .me to

be a bit lats.
f'efore sailing for home, I arranged with Mr. Kent to Lrin


from Frence a consignment of "Luc-f,1 ft.rikew cigarettes and do not uncereten2.

why they nave not arrived.

He proving an uneatiet.ctory coiraiseioner, I

shall try and send some over from here.
I must edc one word et: Alt our ooliticel A.tuetion.

Tice election

which took piece TuaAey gave the following indicatione: ti Governor Coolidge's
re-election in Maeoachueetts by an overwhelmin

majority we


th.t the people through the couetry prefer lea Ald order to l_wlecenese
disorder and is encouraging;

the elections in New York were a distinct

.eta -ok to tn5 Tammany Democratic political or6anizatien
country there we

throughout the

eome evidence of a re.ction from the rather hyetericei

of prohibition, hut: of course, thin will not defeat tee effect. of


Montagu Norman,



ConEtitutionZl amendment.

The election Lt a thole had little bearing upon the ratifiertion of the tre,..ty, but I muA admit that it now seeme lio-oleus to expect

the treaty to he ratified without some rather severe reeervations, al-

though my peronal view is that ouch .entiment again

the tre!ity and league

as exit t5 throughout the country 16 a fairly Lu'rerficial one due partly

to unskillful handling by the friends of the league idea, and partly to the
cultivation of the eplrit of ,:u-calied "Amaricaniem" by the Republicem,4
to that which aro:;e at

creating at tha moment a ;:entiment tomewhht

the time of the free Eilver coinage movement.


eople overlook here

le that the trty and letgue cannot is judged by the text of the document;
it will Le judged Ly what it accom,iishe

or filth to accomi.lieh, nadthe,'

future *ill likely diuclo e the pitiful error of there men in their tittelik

f:on't you write me Game u.fternoon when yoe havt; finiEhed your

tea with the Governor?
With w!irilieEt rega rds Lo you and to him,

Sinoarely your,

Montau C. Norman, Esc.,
Sank of lngland,
Threadneedle Street, London.


I am,

MovemLur 7, 191'il.

My dear Norman:

o: itiy

you may get :erne intere:t or amusement in

lcokinj; over the enclo!.ed puLlication, Lein, the liow.e ur6an

uf Lhiu ini.titution, which is putliAled entirely. ty the emkloy

in such manner

suits their own taste.
Sincerely yours,

Montagu C. Norman, Esq.,

Bank of Englan,
Threadneedle Street,
London, England.


Nover4cer 11, 1919.

ify dear Norman:

I MEA candik; you a shipment of "Lucky Ftrike"
which I hope succeed in passik; the authoritie:, in good

shape if they ever succeed in securing trqnsportation during
these thy

of congtion.
You may be interested in lookint, over the enclosed

news clip. inge in relation to our rata chn:,:::s.

Sincerely your,

MontLzu caixiiap

eedle 3treet,



Ur it the Lank of Englmid i2 picturesque)) would be moz.t intere tiny; inded.

have :loo in mind the phrase which I have heard u_ed,
At lea.t I would not think of submitting thi' re,oue


the chair.*
t without ,:rof--

the saint. for any similar put lication, if tile r-5 is on, published, by your

own org.nization.

gith kindest
ana vill come home

horinz; that you il_VG r.inj.ya to the fLLI a good

for your new re4onsibilitiew, I am,

Montagu C. Norman,
The Eank of England,
Thre,dneedie ;trA,t, .ondon.

December 11, 1:)19.

My dear Normtim:

Wy oldosA Loy, Ben, gr%duates from Princeton University in June
and is quite determined to be a banker.
I want to :end him abroad for
some training, but am uncbrtain at to where I should send him first, London
or Paris, or whether I should give him a year or two in some good American
You remember we once diL,cuk:sed this when I INU.s in London and I will
greatly ap,reci-ite an expression of your own views
to whether I should
turn him loose in London now or give him a little work here first.
if I should sand him to London, where do you think would be the best opportunity for him to really .:earn the business and rie.y the foundation for his career
at home?
You will remembsr thr,t Tiarks was good enough to suggest that he
glad to hen in
chroderis, and I tolti Marks thA I would be
glad to reciirocLe with hie Loy, giving him a little knoe' ledge of banking in
this country.
Would that be a good plce for Ben, or have you some other
It is onl. fAx
he is conscientious to a
he has a working
college, and u few months

to :.ay that Len is an unusual toy in the fact that
degree, serious about his work, and aLsolutaiy dependknowl,de of French, which he is poliahing off at
in FrLnce v.ould, I think, finish it off pretty hell.

PlEwse give me your best advice.
I would be glad to raciproc,ate.

..?era you in similn,r circumsttnces,

With kindest regards, I am,
Eincrely yours.,

i!ontagu C. Norman, Esq.,

The Eank oragland,
Threadneedle Street, London.


DeceAer 1W, AWJW.

My der Norman:
little exhibition
At last I am able to send you e
incAitution with a suitable home.
provide this
ing to do to

of whlt *e ure tryUnder separate cover

I P.m sending you the following


competition for the selection
Cory of the irogre.m of
of an architect.
the comp,?titive plans,
Copy of the decription of
the author of which was
ca.11ed for by


Photographs of the competitive
th_ erogram.
York and Sawyer is not, in

Of course
detail, tne one we ,ill actualiy

solution of our building problem,

a hypothetical
it iv lic,t might be termed

based upon the description contained

in the pro-

idee of the needs of the
it will give you a general
gram of competition, but
rill be
From now on these dravingP
to accomplish.
are Eieukin
and of wh_t
by the
organization will be studied
staff, and the bank and its
studied by our
for buildproduce a workable plan
I hoce ,e
teafeen the two,
architects, ana,
for some
all of our busineF
ill be ade.,uate to mccomodate
ing a structure thich
four and onebe erected hub cost about
The land on whioh it will
year to come.
sill be demoli
standing on the land, which
the buildings
half million dollars;
have written off from the
million and a half, which we
represent a value of about a
tocb,y it miLt. co. I, ten or
the building
If we erected
of the land.

i-enee eArnings

million dollare.

high, notwithttlading our
74e reg4rd that a,. too
until there is some encouragement

going to defer Wilding
and resources, 60 we are
that building

coots A.11 be reduced.

Montag_ Norman, Esq.



This letter is rather confidential, becaua I %ant to tell you of a

little chan_a in my plans.
must. ,o a.vay.

Tne doctor:: have been at me recently and say that

The directors have, accordingly, given me a yf,arle le!.ve of

ateence and early in January I am startinL for Arizona for a couple of months.

After th* if my lie lth is equal to


an old friend of mint who is just no


I am planning to do some traveling with
We will .rotably reach London

some time in Airil, be there long enough to get information, some equipment, and
some letter,. to ;,aople, in tae &a,t, and then .e hope to

some of the out of the way places in that region.
you are in office as Governor of the Bunk.


India and Japan and
I may see you chortly after

My plans are still a tit indefinite,

but, barrinc, bad reports regarding health, I think this is about the



any rate, I am going to forget buiness for a year and try and get well completely.
ay best regards to you and to the Governor.

Montagu C. Norman, sc.,
The Bank of England,
Threadneedle ''treet, London.


P. S.

I xould rather not have these plans known for the present!

YORK, 27th JANUARY 1920.

Banking authorities of state of New York are considering
changing laws to permit branches of foreign Banks to extend their
business beyond the narro'" limit now nermitted.

The late Lord

Cunliffe told us he thought present unrestricted ability of foreign
Banks to establish branches in London was undesirable.

If you share

this view should atpreciate your writing to us what, if any,
restrictions your experience.would suggest if matter were now being
considered in England.

30th JANUARY 1920

Answering your enquiry of to-day rate schedule
adopted last week likely not to be reduced unless pressure
for credit lessens materially.
future rate policy:

Cannot attempt to forecast

in our opinion some time will be

necessary to observe effect of present substantial rate

OY THE 31st JANUARY 1920

Would it be convenient for you to exchange our
weekly financial cable every Monday in order that your
message may be presented at our weekly Board of Directors'
meeting on Wednesday morning.


Mr. Montagu4 Norran,
Care of The Bank of England,
London, B.C., England.

My dear Norman:felt greatly favored, indeed, by two lots
of rail recently received from the Bank which included four
letters from you dated January fifth, sixth, fifteenth and
felt guilty as a loafer in imnsing so much
correspondence on a very busy man but to-day I have an opportunity
to answer them all and will do so, hoping that you will treat
them just as cavalierly as inclination suggests and I shall
certainly understand.

Many thanks for what you say about the Club
We are doing our best to nromote that organization
and I am sending you a copy of the January issue, which is under
a new editorial staff, and which may also prove interesting.
am delighted the cigarettes finally arrived.
I tried various
means of getting them to you without the slightest intention you
should be molested by the customs people for endeavoring to
defraud the British Government.
Let the consequences be on
my head, but I do hope that you succeed in getting the package
from the authorities and am sorry that a stupid blunder seems
to have been made in the method of shipment.
Your rest must have done you needed benefit and
I only wish you could be with me hero in Arizona where there is
a climate, I believe, unmatched anywhere in 'the world.
I am
starting with a friend on Tuesday for a six or seven weeks'
camping trip, sleeping in the open under the stars in air so
clear that one can almost reach up and grab the stars out of
their setting.
You were most kind to write me a good sound
suggestion about Ben's future.
It is a considerable step
in the future to consider his trin abroad,yet I have determined to do exactly that after we have finished our trip to
which I shall refer later, and I am deeply grateful to you



Mr. Montague Norman

February sixth

for your interest which I am sure you will feel is repaid
when you know that boy, who is well worth anything that can
Also, I have to thank you for that most
be done for him.
Keynes' book arrived in
interesting epigram from "Punch."
New York after I left but a copy is on its way to me and I
He is a
shall read it with a great deal of interest.
brilliant hut, I fear, somewhat erratic, chap, with great
power for good and, unfortunately, in such cases, some capacity
for harm.
I am asking my secretary to send you a review,
of the letter written by Mr. Jos. P. Cotton, one of the ablest
of the younger lawyers in New York, who has recently formed a
partnership with our former Secretary of the Treasury, Mr. Wm.
G. McAdoo, and who is a warm friend of mine.
it interesting as representing the point of view of a rather
more progressive type of American public opinion and written
by a man of great-ability and wide experience in our affairs.

Since 1 last wrote you, our trip has radically
changed in character.
My friend, Mr. Basil Liles, formerly
of the Department of State, is with me in Arizona.
in April my son, Ben, will join us and we shall sail from San
After six weeks in
Francisco for Japan on April tenth.
Japan, we are proposing to visit China, the Philipines, Java,
SUMatra, Ceylon, and India, and endeavoring to reach London
sometime early in the winter of this year, as I am planning to
be back in New York by January first, 1921,or a little later.
This change in plan will defer the pleasure of seeing you and
my other friends in London for probably nine months or more
and if you see Blackett possibly you will be good enough to
exnlain this to him.
The rest was necessary cs the only
alternative of retiring entirely, which I was loath to do
until we have developed our new system to a more proven
system under peace conditions than could have been done in
one year after the conclusion of the war.
And nor 1 come to asking another favor which
I am anxious to Pet some
I hope will not be a bother.
letters of introduction to officials in India and the British
Colonial possessions in the east, particularly for use in
India, Ceylon and the Straits Settlements. A We shall not
stop in Egypt according to present plans.
I am taking the
liberty of writing Sir Charles Addis, asking if he will give
me a letter making re acquainted at their various offices in
the east, as we shall probably make a short stay in China and
possibly in the Philipines.
Sir William Tyrrell, at the PorOign Office, as he was good
enough to say that if I would write him he would be glad to
get letters of the character which we could use for our trip.


#azeo 0(.4m-wit./




Mr. Montague Norman

February sixth

1 do want particularly to become. acquainted with some of the
men who have to do with the finances of the Indian Government,,
meeting them personally and getting some first-hand knowledge
of the Indian financial situation.
It occurs to me that you
could arrange these for me better than anyone else and likewise if you have any friends in that part of the world to whom
you would feel willing to make me acquainted, I would greatly
appreciate it.
There will only be the three of us in the
party, above named.
These letters, by the way, should all
be sent to me in care of the American Ambassador at Tokio,
Japan, who will bo advised of our expected arrival and asked
to hold them.
I hope this is not imposing on your good

Finally, I come to your interesting letter of
January fifteenth.
Those plans for our new building, I hope
you understand, aro merely plans prepared in competition to
select an architect.
The ultimate working plans will be
developed by York & Sawyer, who were awarded the competition
and are now working on the practical details.
I shall hope
to explain them fully when I see you in London.
The facade
might appear monotonous, except that it must be borne in mind
that these buildings are built in what is really a canyon of
buildings and but a very small portion is visible from the
The selection of the early Florentine type of
architecture was suggested by the appearance of strength and
permanence which it gives to the building, somewhat appropriate
to the character of the business conducted in the building.

Ly health is improving and I am glad to say
that this rest is doing me everything that I exoected of it.
By the time I see you in London you will not recognize mc, but
you may no doubt realize what a serious blow it was to me to be
leaving New York just at this time and this is emphasized by
action taken since I left.
In the first place our rate
changes were not at all what I would have recommended nor,
indeed, confidentially, did they meet the advice of my
associates in the Bank.
They were a compromise between
differing views of our own with differing views in the Federal
Reserve Board itself and, finally, radically different views
held by the officers of the Treasury.
When this is all past
history I shall give you the story in detail, but one thing may
be said in justification of the rate increases, namely, that
were we to permit such developments as we have witnessed during
the past few months to proceed to their logical conclusion, I
might say, their inevitable conclusion, we would put it beyond
our own power to render any sort of aid to Europe, consuming
our resources in the meantime in extravagant living and wasteful expenditure.
I fully realizeithat these higher rates in


Yr. Montague Norman

February sixth

Now York would make it more difficult for you, but I hope you
bear in mind that the rates last established in New York are
not as high as they look, the effective rate, of course, being
the one which remains unchanged, namely, 4:3 for advances upon
treasury certificates of indebtedness.
The very high rates
quoted for stock market money are inevitable and would have
developed irrespective of any rate made by the Bank, because
we have insisted with the bankers in New York that they must
curtail the advances they were making for the supoort of a
dangerous speculation in industrial stocks, particularly oils
and automobiles.
It was most thoughtful of you to cable me regarding poor Cunliffe's death.
They telegraphed me from the bank
at once the word reached New York and my cable to you was sent
before this had reached me.
I admired him immensely.
have expressed it in a line better than I possibly could have
done when you said that no loss could have been greater than his
at a time when such a stalwart champion of sound money could so
little be spared.
I took the liberty of cabling Lady Cunliffe,
whose hospitality I
while in England last summer.

Your comments on the situation I have read with
great interest.
For some time I have been watching reports
from your side and in them observe many evidences of improvement
which may not, in fact, be so apparent to you on the ground.
The same may be said of our own situation as to Government
finances, but I do not feel as comfortable about private finances.
People are spending too much money, they are borrowing too much
money, and they are doing too much business on borrowed money.
Prices are playing leap-frog with expansion and rates so far
have done little more than check the stock market speculation
but have not reached those who are speculating in their own
I have preached until I am black in the face,
particularly to our bankers, that the test of a good credit is
the period of. time reouired to accomplish the purpose for which
the credit is granted and they do not seem to grasp the idea
that loaning money to an industrial concern which is making
profits on contracts to deliver goods a year hence or longer
are dangerous loans to make, and personally I dread the day,
which will surely come if we don't look out, when a lot of
these unfilled orders will be represented by unliouidated

As to the exchanges, I notice that your Government is becoming interested in the discussion of plans to do
something about it.
I hope they do not do too much.
I recently wrote Blackett, I think the exchanges are being discussed by three classes of people.
The first, a very large
class, who seem to think that the Foreign Exchange is the cause
of somethin.
These can be dismissed as being simply ignorant.


February sixth

r. Vlontague Norman

The second class, a little more intelligent, consider the
exchanges as the effect of something which is taking place
and speak of the Foreign Exchange as a barometer.
I expect most of our Governments belong in that class.
again, there is n select and very small class, who look upon
the exchanges as a sort of thermostat.
I am not at all
disturbed to see the thermostat working.
It is closing
our export door and opening our import door and, of course,
vice versa with you.
Too radical an interference with
these delicate instruments will defer the day of realization of the necessity for hard work and economy, and every
time I read in the newspapers of.alarm about the exchanges
I am hopeftl that some strong man will arise and shout from
the housetops that the exchanges will never get right until
economy is practiced by governments, corporations and individuals, and that, consequently, the correction of the
exchanges is a responsibility resting upon every individual.
It is distressing to learn of the failure of
the French credit in London but, if I may say so, not as distressing as it is'for me to read of the dilatory and, apparently,
unsympathetic attitude of our Congress, but I am still hopeful
of something constructive being finally done after their vocal
chords are really worn out.
This is the last letter you will receive from me
for some time I fear, so I have made it a long one.
I have
a most interesting letter from the Governor which I am also
answering to-day.
Withwarmost regards and hoping that I am not
imposing upon you by asking for these letters and with every
rood wish for your administration of the Bank now shortly to
begin, I am,
Very sincerely yours,


February 11, '920.

My dear Mr. Norman:

In the abEenco of Governor Strong permit me to acknowledge

receipt of your letter of January 28th, and to thank pu in hie behalf
for the copies of the printed lecture on the origin and development of
the Bank of England, whicn I am forwarding to him today.

Governor Strong is away fora much needed rest in Arizona, and
no doubt he will be greatly benefited. by his lay-:%ff from business.

Yours very truly,

Secretary to the Governor.

4ontague C. Norman, Esq.,
Bank of England,
London, E. C., 2,


Rd. Mch 19.

As he leaves Frisco on Apl 6? this
cannot be answered -

A/o, Arizona.

Mch 1st 1920
My dear Norman We dropped into this desert mining Camp yesterday to
have horses and mules shod, buy provisions, ana pick up mail, in

which I find yours of the 26th Jany with Mr.Fhillips most interesting
lecture, which I am now reading.

You will pardon this paper and

pencil, all I have, as we are "bumming", frontier fashion.
thanks for your thoughtfulness.


Those inside your great Bank little

realize the veneration in which it is held abroad,. nor indeed how

many quaint and interesting customs and traditions attract attention
from those who have the good fortune to know you as I do.
I wish my Sec'y were here to take down an account of our

trip, its adventuresand misadventures, but later I shall send you
some photos if we ever reach a place where they can be developed and

The party and outfit consists of Mr.Basil Mills, formerly

in charge of Russian affairs in our State
"Mule Skinner" and cook, - a

dept. - one Dean,

Pima Indian whose choice of names

includes Frank Francisco Pancho Juan, a mule team and "chuck" or
"grub" wagon, three cow ponies, a Russian Wolf Hound by name Peter,
and your humble Servant.

The Indian is horse wrangler and water

locater, guide and interpreter as we are mostly among Pima,
Maricopa and Papago Indians, who all speak much the same lingo.

You and Sir Brien would laugh yourselves sick could you

see us when we arrived here, or in fact at any moment when we were
en route.

Dirty, sun tanned as black as Indians, clothes such as

no self respecting person should wear, and not having been inside a
house, much less a tub of water, for a couple of weeks.


under the stars, spend four to six hours horseback, travel from 12
to 25 miles a day, eat like laboring mep, shave once a week, breathe

the most wonderful air, see the most gorgeous sun sets and generally
live the lives of animals.

The wonders of these western deserts

are endless, but woe betide he who misses waterhole, tank or well.
V!e ran a bit short of water one day and the horses had poor grazing,

so they promptly started back to the nearest water as soon as our
backs were turned that night.

Juan recovered them after a chase.

In a few days we go South West into Old Mexico to try &
get a mountain sheep, and into a wonderful country of extinct

volcanoes, then

work back north to Phoenix Ariz, where we shall take

train for San Francisco about Apr.5th.

I wish I had the gift to

describe the wonders and beauties of this wild west of ours, but
shall tell you of it, in London some time this year.

My warmest regards to you and to Sir Brien and my good

friends in the Bank Very sincerely yours
Benj Strong


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Parenix, Arizona, Maroh 30, 1920.
Mr. Ymtagu C. Norn2r.,
cid J3.41k of Englaald,

London, E.C. En2:land

My dear Norman:

Our extended vamping trip on which we etarted
:irst week in February, and which took us Into ola
Mexico within a few miles of the Gulf of California, was
only eoncluded Ilen 40 reached Phoenix 44.1,1 ;a:to:go
now I have been unable to acknowlede your note pit
Jazuarl. 26th aria almit w bushdi more
lated during Jur absence. is exoeecUngly interest .n
Mr. Phillips' lecture
and contains uet the sort of unusual detail which is 'lit

known, and which appeals etv:ngly to the imagination of
American readers and I know
ti.o editors of
magattne will be delighted with the 'material whioh I undo
stand they are at liberty to use.
7/ere it p-)ssible, I Yuld send you an account o
our many interesting and amucAng experiences dur1ng the p
two mont1.3, but that must keep until I see you in Lond.(:n
next ,,inter.
In the meantime, I Shall send you sore .'c,d1)

pidtures whioa we took, from which you cvn gather
of the country vx.d of whAt we were doing.

sore ;,41

Frog tl-o few newspaperi I have peen, it appears
that matters abrca4
ecntinent arid likewise with us
home, have been going rather from bad to worse,- Certainl
the world seems
side down, and as I wrote Sir William
Tyrrell, it would appear th7.t some of ola important men
making that the excuse for trying
tan an t4eir heads
the only justifioation being the natural desire to get wh
little brains they have into the position thot nature :a:a
ave intended them to occupy.
I ar thoroughly dieguste
the perforranees-cf our ben -tee,

an.. nora especially 31-leco

reading the resolution of sympathy adopted fcr the coLfo
those of your Irish relit ions who have seen fit tc
country as their home and brirtnr their troubles
I am ffritine.: Sir Brien .ecmarately in


tr tvic bank matters, although by nee I r,ather tiiat
s chair and carrying his burdenu.
The letter







Bank of Fngland

Governor Strang now in Paris cable

ill.dress Harjee until December 14th

expects to leave Paris about December 15th for Brussels Insterdam
London sailing for home end December

Federal Reserve Bank

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