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UP- STRONG PAPERS, 1916 March 14 June 1 June 23 May 2 Strong to Norman, 1916 - 1920 1920 Jan. Jan. Jan. Feb. IIIJune 28 July 2)4 Aug. Oct. Dec. Dec. 8 18 23 23 1917 Jan. 12 Jan. 19 Mar. 22 Mar. 27 Apr. 2 Apr. 19 May 16 May 18 July 2 July 6 Aug. 27 Aug. 28 1918 Jan. Jan. Apr. Nov. 21 21 27 22 1919 Feb. 5 May 2 May 7 June 2 C June 18 June 26 C June 30 July 28 Aug. 16 Aug. 26 Aug. Aug. Oct. Oct. Oct. Nov. Nov. Nov. Dec. Dec. 27 29 1 20,with clipping 21 6 7 11 8 19 C- cable 27 C 30 C 31 C 11 Mar. 'r) Be.Tetkb4ttravirertt) Dec. 24 C S 14th :,:arch, 1916. Dear Norman; 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, FEDERAL RESERVE BANK OF NEW YORK 'Jay 2, 1916. pry dear ge-man. - 45144r,c7 Afa 4A.c S--"411P-4-rr-rerErrtrre=kilMO 2114:441iL, OGIC disposeaof in questions the confidential memorandum prepared while I was in 44 fa-CAA k *tit London) ehut er,A4- itcv,) itAk-n-tatitg- 41.9 ,Ia;.-zai4aaa to the difficulty about days of grace, w.111-1e...-Lixam- to a ((Le, efeetu arranged'Apemoilie*n, first idl-riersitiftet,441-er-vrett---erpo 7 A A 1 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 A, /\ etetv hale 0110 second, in case his opinion / f otol Erwhifr i; c r bap i.ttreas , the ' 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 144_i" little difficulty in having the Act amended. c It is, however well not to count on favorable action until 44--iti.accomIlished. IX) kr The other matter is the 9rc,Rti--1 efnipiel earmarking 0 gold and tek shipment4 gold hod ley fr- 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. 9 d, Your custom differs from ours in that the Reserve banks do not intervene between the public 0,7,:641 and the mintoSuch gold as we accumulate from Lmportations sues to us in ti7f...;((114_ CALC44 ifirrsanowatit ttel firnon, the sbag of Assay office allPrtkra 41stub -- lui gold certificates. t which we gek United States 40a.v.p.41a es FEDERAL RESERVE BANK OF NEW YORK #2 C. Esq., w. 5/ 2/16 . lb wo.-Uwe-+mem7-taX171:, ns id.eArp b le mounrt -- coin. ...valic41-4a-ATAiwa, et,..) w- .f- W4CANAmr tIQHC. ) t 1 on. here, should irerefore, It we earmar A . L6.,7.,.. S we do so in bars when we can get themat the mint price, 9r-when in coin at A6 9,11'1A i440'its bullion value? Zhis same que woul 13.3131itel-r So far I have had little time to study this matter, but I arysies- "gakiK, bauv4 to 1:1,..e.4. that the fair practice would be to deal with the account on both sides,Ajupon the basis of the actual mint value of fine gold either afU!Lt., LS gold coin is shipped in bars or as found to be contained in the coin. /6411.41...4 etz4 in settlement of existing balances it would be faisv-iced by the/bank 1.4444.er can) /, at bullion value, but if it should have been earmarked .146 and subsequently re-credited to the accountit would, I surlpse,be credited bank back at its legal tender value) giving the w.hich_las).41-earr-arke41.Ahe...gald Arcrattir,eACE13==mameiLigtaidithe benefit of the recovery of any abrasion ea-4 8..." 91;uatht. which might have existed in the quantity of coineearmarked. kt,/opoct.T.,,e 24_ Of course. these questions would be minimized and possibly entirely tr, bYitt ca a 1104U,4 Wt.* 'A 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 .pax4v17914ha-IxaaaisaaIlan. dwupf f1G 7titA042001 In the long run is e 141 it te tution one year .may liottihr44. its disad7antage A advantage to one insti'=IpttuAAtt ARAWATo the 213A4-, A .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. altra- /frraic Ast . LDERAL RESERVE BANK OF NEW YORK #3 5/2/16. 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 0/(P-mtcre_PLICA my associates the general character of the elan we (14a.ou.s.c44,while in LonTheir attitude justifies dot suggesting that we should reeolua-la complete the detailsAas to geTtr don and have been over the memorandum with them. Mfr t ir4/rm,44,K4;1 9Tel s and be prepared in case of need this fall to start operations on t 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. ',sq., C/o The Bank of Ragland, London, England. BS Jr/RAH FEDERAL RESERVE BANK OF NEW YORK PERSBNAL. 416 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, Montague To C. Norman, Esq. 6/1/16. 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 - 77 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 !l return 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 (3er 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, umm\t' 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. -ONFI'E771:L. June 23rd, 1916. 7y dear 7r. Norman: Your note of the lOth inst.is 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- ing. Please accept my warmest thanks. Faithfully yours, 7ontaga Bank of 7nglsnd, London, -ngland. BS Jr /VCM 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 rest. 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 London. 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 associates, office, as well as my Tashington in touch with the and I hope with you. regard to this During my absence, correspondence in o' 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, Governor. Montague C. Norman, -sq., Bank of 2ngland, London, 714:gland. stes lark, Colo., July 24, 1916. onal . 4/ 4ontagu--14e 1,'r. The Ban:r. of Erveml--ngland, London, 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 she 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: They 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 fall. 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 tp ate. seems to have been the rook debt. 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 earliest. 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, NEW Estes Park, Colo., 1,ugust 6, 1916. Mr. Montagu Dorman, % Bank of England, London, England. My dear ilorman: 1 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 orado. 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 c some work, has helped a lot. 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 tempor flurry, 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: - 1st. mentioned. Inoomo Tax payments to the government above 2nd. 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 3d. 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. ii ) 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 4th. do. 1 if) i The Tr iNury Wash' ton for some months past bth. up the redePtion of Federal has pursued the poll \of i 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 6t14.! million (lc:pars of additional reserve transfers were made by flationa] Banks to Federal Reserve banks, thereby also reducin the publishes' reserve figures. 7th. The 2eserve Banks make it their policy to carry as large a proportion of their reserves in gold as possible. 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 8th. :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. /,?' 3. 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 here. 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 o . 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 et of di t uniform now 'ugh the Federal reserve System. s he longer ds to 90 days averaging about 41. applies gely 0 single name notes, such as our s give tot, eir ahks and such as ore handled by paper 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. As , many country banks pay as much as or for 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 l. 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 4. 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. ,-1 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& ---, Chicago. , 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 s 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. i i 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 40 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` 111111111koe 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 correct. 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 fensive. 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. 5. 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 President. 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 tions 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 circulation. i.S. 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. If 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. I 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 depleted 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. To Lontagu Norman, ;,sq. Oct. 18, 1916. The 5th explanation is rather more important than you may imagine: 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 -3To Oct. 18, 1916. L:ontagu Norman, Esq. The total gold in circulation in this country 411 effort in 3eoember. 40 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 system, 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 dollars. '!.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 -4To 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 -5To 01 1.4ontagu Norman, Leg. Oct. 18, 1916. want to know our intentions and to what extent you could rely upon 40 a 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. erating 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 -6To Montagu Norman, Esq. a 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 developments. 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 40 ct of any military ginning to realize that if we tAnything like its present volu_e, expa\dig loans to foreign countries and that neliloan meets with greater success / than its predeceser and estabi is an unlimited cap) recently and gene her she. a better market record. There or absorption of securities but until little know edge of the credit of foreign governments 1 of in i national financial transactions. our Oh operations d a' 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 belligerent. :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 -7To 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. BS/VCM 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 sure to f atly aonreciate it. heir 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 Ameri th letters You may bo edthe American Ambulance and is going well fortified Cross ntroduction, etc. eamer and date of denarture, I 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 2. To - Mr. Norman. 40 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. an been finally accomplished. ith warmest regards, believe Very truly yours, Montagu C. Norman, Thorpe Lodge, Campden Hill, London, Eng. Bs/cc 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, friend, er separate - are, but I ne u6h London u per er. theless out at ally many Denver, Colorado, January 12, 1917. My dear Norman: This most tardy thanks for your with the son's 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 i sh is now to your thinki hope to write o now un r a I vas absent tion of am writing to tell if me. about recent defficial letters forward. ,Vith warmest re and your assciates and *est wishes for the New ally yours, Montagu C. Bank of Eng London, En BS /:;C o Denver, Colorado, January 19, 1917. 40614 OWIDENTIAL. 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 would Judie° me or em studp, 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 ono. 2. 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 accordano eluded at once, tters may not tho has been go abroad. %i ' have the essation of hostilities. development of conditions France, 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. 3. To - . .1'.oruan. January 19, 1917. i think of you Ana your associates a great deal, .yonder how yo 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 and r. 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 Thtedfrom 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 int: 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= year sennt 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 ships. -)lease pardon the fulminations about this subject that always gets under my skin, having be sort of thing for the last two and a 7.-armest regards to you and yot sociates. yours, Montagu Mortpan, Care, 3amic of_ England London, Eng. Bs/cc icle. It is a he victim of that Denver, Colorado, March 27, 1917. rert#,330NAL. 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, I 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, London. BS/CC 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. You 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. nrotracted. 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- 2. 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 earlier. 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. BS/CC ?.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. 7411C to 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. or about 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 2. Lpril 19, 1917. To - Mr. Norman. 11011 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, London. BS/CC 00 :.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, EQUITABLE BUILDING NEW YORK S0 Lay 10, 1917. Dear Norran: I have taken the liberty of giving a note of introduction, as per the enclosed copy, to my oldest son. 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, 1-111W-i-r) Liontague C. Norman, Esq., Bank of England, London, England. Enc. 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 2. To - Lr. Norman. May 16, 1917. utmost care in the handling so as to avoid money disturbances. Again, 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. censorship 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, London. BS /CC 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. BS/2C 7.24110 July 2nd, 1917. July 6th, 1917. PERSOnL 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 possible. ;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. BS/VCI! 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. :j..th warmest regards, Sincerely yours, Norman, Esq., Care Bank of England, London, E. C. 2, England. Vontagu BS/VCV Enc. EQUITABLE BUILDING S 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. A.th 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. 'HAB E 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 England. 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 me 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. -2- Our loan is booming. To Yontagu 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 / FEDERAL RESERVE BANK OF NEW YORK October 2, 1918. ° 1o7 Ey dear Norman: Many thanks for your kind note of September 10th. /of, 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. B S /LISB P. 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 extravagances. 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. The 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 The 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 1111' 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. Those 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. gontague Sheet No. 3 ilerman, 11/22/18. 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 XfIrtsseue :;o.iiin The Banix of London, ... J. /.2.4 FEDERAL RESERVE BANK OF NEW YORK I 117°6- December 9, 1918. 70(- 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 justified. 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. r Montague C. Norman, Esq. FEDERAL RESERVE BANK OF NEW YORK '12/9/18. 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 410 days. With cordial regards, believe me, Sincerely yours, Montague G. Norman, Esq., Deputy Governor, Bamkof7England, London, Zngland. BS /MSS Eno. 81 FEDERAL RESERVE BANK OF NEW YORK 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, Untie:nor. Montague J. Norman, Zsq., Deputy Governor,-Bank7of'4ngland, London, England. BS/1.213 . FEDERAL RESERVE BANK OF NEW YORK 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.. haunted. 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, '''':? 7 Montague C. Nomsn, ESq., Bnnk of Fngland, London, England. ' (fpW1-1"- ,) , c, $G4 Lake George, N. Y., February 5, 1919. e Dear Norman: raea eeeermz v 191) 4.11.tr)e 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. Frankly 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, ,Ak>. tr 40 Montague C. Norman, ,3ect./.qi) 2.5.19. 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 2.5.19. 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 again. 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 lat Montague C. Norman, Teo. 2.5.19. 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 purpose. '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 legiclation. They aenroech the subject very much us Joshua and King Canute // did. 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., Montag The RenkFf Tnglend, London, 7ngland. BS.MSB LIBRARY MAY 7 1919 OriAi, IMICVE BANK 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 correspondence. 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. Part 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. 2 Montagu J. Norman, ,i;sq., Bank of :14gland 5/2/19. 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. A.th warmest regards to you and your associates, I am, dordially yours, Montagu J. Norman, i;s1., Deputy lovernor, Benz of :ngland, London, :;ngland. B3R3B LIBRARY MAY 9 1919 FEDERAL RESERVE BANK 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. B3/MSB rho. Misc. 35 F AL RESERVE BANK F .NEW YORK 100 trong 114/MBB (TO BE MAILED) 01431. CONFIRMA' ..',!').°:tfiiifitittrri RAM SENT IIN3t111 e .)3 by confirm our code message of this day, translation of which should read as followss'ik \ISB'N11( .V.5)15\ Jump 2 1911 "R-%"Targr, and Bank o London Planning visit to London last of June if possible to arrange BlINJ A2 STRONG it isc. 35 lek-RDERAL RESERVE BANK OF NEW YORK (T0 BE MAILED) 1141 CONFIRMATION OF 11111111=101 SENT IN CIPHER OABLS %%e here confirm our code message of this drrfranslaiion of which striltiW, as follows: .ON clanV1:6 1919 Aontagu INI7orman Bank of iligland Aany thanks A London bringing secretary sitting room at Ritz Can you get accommodations with Will gladly visit you on return frog Continent Jailing baltio July twelfth BMW. L;TRONG. A 1 S 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 and hope it Fill cause no Incomvonience to have nom loatmd up tmd held cxiaiting my arrival. 7 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 STRONG 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, London. B80 ek 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, London. BS/V (1 encl.) Hotel Ritz, Paris, August 2c.,", 1919. Dear Sir: A cablegram just received rim the Federal Reserve Bank will nuke it nJnonsary :f 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. Beu Letters to this effect are bvini; Lent to the NedorL-ndnche and 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:. t.r..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 ..an 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, Loncion. BS/V 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 appreciate. Won't you also give my test wiJae: to the Governor? sincerely yours, Montagulama4jsq., care Ean'i. of England, London, England. BS.IISB sof October 20, 1919. Dear Norman: 1SV c.- 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 .,..nd 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- Nevertnelesu4 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 November. 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 NM, Sincerely your,, Montagu C. Iluagdasc., c're The Bank of England, Threadneedle Street, London, England. BS.MSB Enc. TILE MORNING POST, FRIDAY, CCTOBFR 3. 1919. There is only one solution, and that is EUMOPEAN FINANCE. ITS DEPENDENCE ON AMERICA. 1 I I t...ew York Bank r rireMrer'i - BRITT LICY COMMENDED. "(FROM OUR OWN CORRESPONDENT.) WASHINGTON, Oct. 1. 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 WORKING MAN'S LOAF. 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 affiliated 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, loans. 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 sense enough to see 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 living. 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 WEAK POQITTON OF FRANCE. 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 for the BELGIUM AND ITALY. 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 in America THE POUND AND THE DOLLAR. 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 New 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 loan money, people are easier. on French financiers that they are mis- flat a large French French richer than they were before the war, and if they will submit to heavier taxation the iehabilitation of their country will be French October 21, 1919. My dear Norman: "1111111110011t 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... If, 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; them; We 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, wh.ch will go fom,ard in due course, as weal took. r a coy of Frofeesor Kemmerer's Montagu C. Norman, EN. - 3 - 10.21.19. 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. *I) PRIVATE: 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 4%. 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 market. 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, nothin 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. 11.6.1 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 teen 10P 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 you 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 indication 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 3 Montagu Norman, 11.5.19 f.,,ct. 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. What 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. BS. SE Enos. 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. Enc. 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 England, eedle 3treet, Engle.nd. -Ts 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 fering I 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 prei:::.re horinz; that you il_VG r.inj.ya to the fLLI a good for your new re4onsibilitiew, I am, you'%, 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 bank. 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. Also, 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 would glad to th..ve 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 suggestion? It is onl. fAx he is conscientious to a able. 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. ES. MSB 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 papers: I P.m sending you the following 1. 2. competition for the selection Cory of the irogre.m of of an architect. the comp,?titive plans, Copy of the decription of selected. the author of which was ca.11ed for by Z. Photographs of the competitive th_ erogram. York and Sawyer is not, in Of course build. 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- tank 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 twelve tocb,y it miLt. co. I, ten or the building If we erected of the land. co 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. 2 f 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 t, an old friend of mint who is just no footloLoe. 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. !7:o 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 -rogral. At 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. Sincereiy Montagu C. Norman, sc., The Bank of England, Threadneedle ''treet, London. EiL.ESS P. S. I xould rather not have these plans known for the present! DECODE OF TEL2GRAY RECEIVED FROM FEDERAL RESERVE BANK OF NEW 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. TPL-7GRAM RECEIVED FROM TT- FEDERAL RESERVE nANK 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 increase. DECODE OF TELEGRAM RECEIVED FROM THE FEDERAL RESERVE BANK 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. FEDERAL RESERVE BAN K OF NEW YORK CASTLE HOT 3nING3 HOTEL HOT SP7IN53, ARIZONA February Sixth Nineteen-twenty Mr. Montagu4 Norran, Care of The Bank of England, London, B.C., England. My dear Norman:felt greatly favored, indeed, by two lots I of rail recently received from the Bank which included four letters from you dated January fifth, sixth, fifteenth and sixteenth. I 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 Magazine. 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. I 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 ERAL RESERVE BANK OF NEW YORK 2. 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. Early 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. 1 #azeo 0(.4m-wit./ I FEDERAL RESERVE BANK OF NEW YORK 3 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 nature. 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 street. 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 eDERAL RESERVE BANK OF NEW YORK 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. You 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 products. 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 inventories. 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. As 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. RESERVE BANK OF NEW YORK ....5 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. Then 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, BS -ELK 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, ENGLAND. 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. Many 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 printed. 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. sleep 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 a '; ; . t 'NJ ' ! i '.Nil f-:-..)r--1-z-;p / ...... . r '1 'i" . ..-' i : /I? .. ,.... '... )'-t ,,; ..,, ;,-, -9y ,4*-1 )- - - , si f," ' ) --- / fj - i r). 71' I ., .-) '7 .; , 1 ' t. , -.) ' 'I 1?2),:) . ) ;) '1 1 1 )/4 iik I)! ... . i /9' 11 11 '1 1 . 1 , ' '. 11.1.........1:-.. ' . I 'ff 1 1 ?t? rfr iN;1-16. 1.: --T71 /41/..,7 eltoz_ip jrt (et --33gvy d 13-4 fly -1).,9/v 7ri,2 ).-,1 yrr "V 6, 7 II (.91r Qig c\4/./e,971/3/1/ I/A)v& f17?--1, ,f-'17-/ 4,12; f1TV or -Y.-) p 2-2/ 72.A1-.9 S ; " ; f / t )2_) i) - i. .1 - ----il : /; .. ;. , ,4,. (-,,, . . .; "? 1 1! .42 '2/ I ify b 1 ,' ): i'..`,..: ,:-..... -'1,2 .1 , -'. 4 -7 1- p /,,c , /.._ .... a t. k / 'il. ts VA (..`[.1.-(. . - , .. ,.A. v VC 1\`' ri r ,.. 1 q. 1 . ,(' 4fr ' 7,767 a u_. t-`7;4 77;r' kt, 6 (I - 1 a/Cn-1,1 c ttthi .0.-9-1, ("/ .S7-, --/:) (t)r-fit- 417,1' ,02 al-tt //f)44.tt.C....--4_)-81 &d - a O a olVia-4. ctti.z-ie 1C(at ca.......ion......- -,(ttif .411 '2-71 t.tz,0 t ri r d.TL/ 10.°C1 t?'- okr: y t. . , 1(1 .. ,...1 T'cco Ara /'&-tki---(ze it a ICe7 ) at. 0 Xa, t"--- CiL _c 6.--- -/."/CLI _ 74 i=7/ 1-?" - -rit5e-ey Pe7)-1p.. Ra.'7 c/tJ7 I. t, (I, . - -I- ec -e-m.. , t . c&o , / . i . 11/j iit . 7 d, ..:71"). ,) r f 7 qv- rezetN , J ./ 'it (cut ( Y-21:-) ... ttc, 1-7-abt. lid r )____-.-'-'ic--c 71/-AJ,/3 a,0 Ayr( fil att, 74- ittaxtevc , ,(k.cz_ r. CEnntle-- tV;:fr._ . 0 I.', . 4 0 aarb, . gq- 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 haadbe 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 ,1a tr tvic bank matters, although by nee I r,ather tiiat s chair and E-.re carrying his burdenu. The letter , FEDERAL RESERVE BANK OF NEW YORK COPY OF TELEGRAM SENT IN CIPHER DICTATED BY CASH I MENT CODES & TESTS SEC TIME COPY FOR WIRE TRANSFER DIVISION Bank of Fngland London. 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