The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
F.D. 12A.3 S 12.0 .0 No Federal Reserve Bank S-rfk0 N Q District No. 2 Correspondence Files Division SUBJECT I.) STRo K.) G. 'TO w A k B u, R_G 'PA-PERS f" FEDERAL RESERVE BANK OF NEW YORK Sent by (SEND TO FILES) COPY OFB4i3ELEGRAM fief Leather 7 Paul M. 19.1 Tat rburg -----roaraintrotellar:-IPJ.) Port land Oregon The evidence of good spirits in your postal Wee me great joy Love to you and Nina Ba.i. STRONG alarge Semj 15'Nassau 3treet, New ion. November 6, 1918. Dear Warburg: I am just passing through the city to-day on my my and find yours of the first on my desk. read the Owen article with great interest to Washington You maybe assured that I will and write' you about it just as soon as I get back. The chances are that on returning from Washington I will make myself a guest at Hartsdale for a bit and chew the cud of idle contentment with you, if you feel disposed to give me shelter. I don't want to be at the office more than necessary for a while, but am not sure of the wisdom of very far away. Besides that, a bit of intellectual stimulation, in being our old style, will do me a lot of good. Don't you worry about my forgetting friendships: Avthe last month or six yeeks I have been buried up to my elbows in Liberty Loan work, but now that it's behind me, I am really looking forward to a quiet time with you in the country. Please give my love to Nina, and my best to your good self. Sincerely, Paul M. Warburg, Esq., Hart sdal New York. BS/M3B November 20, 1918. Dear Warburg; I um just back from r;ashington, my stay having been protracted beyond all expectation. This week, and probably Sunday. as well, I will be busy cleaning up and getting ready to go away for a while. Just as soon as I get the burden of accumulated work off my desk, however, I am going to run up and spend at least one night with you, if you still want me. I finished reading the article on Owen's investigation while I was in Washington, and was very much impressed by it. I hope, however, that just now, with things in their present position, you decide not to publish it. When I see you I can explain the reasons in detail. With best regards to all the family, I am, Sincerely, Paul 1. 7;arburg, Esq., Hartsdale, New Yorx. " - ?='; Ir'.:1.4ctO°4) ',+k` 0) Lake George, N. Y., February 11, 1919. 'qs. Dear warburg: I was delighted to Ova yours of the t.njh, and to be able to answer it at once without taking a pen in my fiat. I have finally decided to go to New York night, but owing to your not attending, it looks as though be able to meet, because I must run Grandin, and then I was for the dinner Friday over to Princeton to see my son obliged to make an our ambassador to Uexico, rho we might not annointment with Henry Fletcher, wants to see me about an and is coming over from Washington for that purpose. important matter I Shell come back here at once, as I don't rant to get my feet tangled up in the machine at the bank. I read the extracts from the address in the various New York papers, as well as as soon as I had s considerable writing you about it. accompanying your letter the editorial comment, and accumulation of mail behind me, intended I am glad to have the text in full, which I am just reading. engaged in I won't comment upon the article until I have finished it, but, meantime, I gather that you have made a pen strike in good style and that it is very likely to drew you into the for a *hide. maelstrom again and keep you busy I am mighty glad of it, although it is a controversial question, this railroad matter, and you must muster up enough philosophy to be abused a bit and not feel badly about it. Then dictating the first of this letter, I failed to consider that you are now in the city, and it may be that I can have a visit with MVC.; DiTp 5Iii) Warburg. Sheet Lake George, N. Y., 2.11.19. you a No.F;D;Rt'il%E.SERVZa!TK fter all. I am stopping up here under conditions which I hoped and intended would make it the dullest possible existence, that being *hat I needed, but, es usual, my mail piled up to such an extent that I had to get help, and now I are doing a little work every day. About the budget question - While I am reasonebly optimistic about a lot of things in this country in the future, so far as its business is concerned, the political aspects of it are very troubling. I fear a Republican Congress and Democratic Administration on the one hand, which is likely to produce a deadlock, and, on other hand, when one the or the other °Lefty gets its hands on both ends of the stick, I dread the exploitation that may result. Congress has got a and the fun of spending the money. taste of high taxes As nearly as I can see, as against o pre-war budget of about a billion dollars, two and a half billions is about the smallest that we can expect, and it may run higher than that, deloending largely upon the rapidity with which re pay off the extent to which Congress is willing to disburse the the debt and funds in public enterprises, public buildings and tha usual log ruling. I have been much disappointed in not having that promised visit with you, but it couldn't be helped. My health made it imperative that I get away at once and stay away as long as possible. This loaf is doing me a lot of good, and I think by April I Till be able to get back on the job. It is easier in summer, anyway, as I can get week-ends in the country for golf. Sheet No. Mr. Tarburg 4_, es 41-1)7. Lake George, N.Y. 2.11.19. ' on't you give my love to Nina and my best to your good self. L; 1913 FEDERAL RESERVE DANK Paul M. Warburg, 17 Test 80th Street, New York. BS.MSB Faithfully yours, April 3, 1919. )oar ,,arburg: The enclosed redraft of the budget letter may not meet your views at an Please don't hesitate to chop it up and send it, so chopped, to !John Pratt. He may be sensitive about having his letters torn apart, but I have gotten all over that during the past five years, so crack away at it. I vas very sorry to miss your address last night. Faithfully yours, Paul U. Warburg, Esq., 17 East 80th Street, I;ow York city. B3/1L3B liondon, September 1,, 1919. Dear Jarburg: It Was most disappointing that we were unable to have a meeting in Amsterdam, as there are many matters which I wasmost anxious to discuss with you elaich would take some days of continued discussion And seem quite impossible to cove: by letter without misleading. Next best to having that meeting I am writing Kent, whose address just now is 5 Rue Scribe, Paris, asking him to arrange, if possible, to meet you either in Amsterdam or London, as he is quite familiar with the ground that we have covered And can bring you right up to data. I am leaving London ay morning and sailing from Liverpool Friday afternoon on the Baltic, WI if I can squeeze time to dictate a decent letter bet/eon now and then I will do so. Meantime my best regards to you and success to your your brother-in law. Sincerely yours, Paul M. Warburg, Esq., Company, c/a Messrs. Hope Keisersgraeht, Amsterdam, Holland. BS/V efforts for TELEGRAM London, September 8, $919. PAUL M. WARBURG Sarvetta House St. Moritz Switzerland Just returned from Amsterdam stop Am sailing on nineteenth stop Sorry we missed meeting as I had planned stop present address Olaridge's Hotel stop in London stop Kent remaining for Is there any chance your being Reply care Morgan Grenfell Best regards BENJAMIN STRONG February Si, 19?1. ps,Ax. Mr. 4arburg: I just read your Boston speech yesterday sith a great deal of interest, and confirm your thought that it would also afford ma some amusement. You may be astonished to have me write you that I seem to feel a good deal more sympathy for the purposes of the k;ricultural Bloc than seems to be generally the case in this neighborhood.. Cr the other hand, I do not like some of their methods, or at least some methods that are attributed to them, and my hesitation in charg- ing them against the Agricultural Bloc specifically is because of the knowledge, unescapable for us in the reserve system recently, of the say in shish people can be charged with things when they are not guilty. Yours sincerely, Paul lg. larburg, Esq., 3l Pine St.-, New York, N. Y. 9P1 Q..;tz) November 2, 1922. CONFIDENTIAL Dear Wiarburg: Your note of November first is just received and I have read the enclosures ehich accompanied it. Will you kindly regard this reply as confidential and not quote from it, as the subject referred to in Mr. Wolf's letter was the occasion for soee strained feeling between certain members of the Clearing House and the Reserve Bank, and T6 tiEh to do nothing either by our attitude that we may say or write or by to promote a continuance of that feeling. say generally that the officers and directors of the Federal anything Let me Federal Reserve Bank be- lieve that the Clearing House Association hai an important function to perform in this city and that it is now and always has been our desire to see its and every proper way. influence among its !embers strengthened in any It has not been our intention to this matter., to take any one or long as that action influence the Clearing House,in another action in regard to interest rates so did not directly affect the policies or the affairs of the Federel Reserve Bank, Therefore, the only ground upon which ee felt willing to take exception to the proposed amendment to the Clearing House's constitution which wae made effective July first of this year, and which is all set out in the enclosed circular, was we to Federal Reserve Bank, and those matters which directly related to the we regarded them as two: (1) When the Clearing House Association subjected the great bulk of deposit balances held by the members of the Association to an automatic and purely mechanical schedule of rates ehich as directly determined by our rate of discount, it appeared to us that it introduced a new element or a new consideration of such importance kr. Paul M. Warburg November 2, 1922 in fixing the discount rates of the Federal Reserve Bank that it imposed upon the director? of the bank an obligation which they felt unwilling to assume without making objection and certainly without having opportunity to explain their objections to the members oho Association. (2) The second ground of objection related generally to the banking position in New Yerk in which we have a deep concern by reason of the fact that this vas a definite and arbitrary limitetien upen interest allowed upon deposits of practically every character by emetically all of the large banke of New York, the total amount io affected being poeeible ae high at tielec fib 4;4,500,000,000. , re felt that suclyin arbitrary control of Intereet ratee by the Clearing Heuee Association had objections etich the Federal Reserve Bank wee called upon to voice wher the action vas proposed. Not eishing, hoeever, to impose our views upon the Clearing Reuse* we simply advised them that te viewed the proposed action with concern and ex- pressed the hope that eome other method of dealing with this subject could be found that e2uld aeet the objections,. above euggeeted. Tdtheut desiring to impose our views upon the Clearing House in any way, ee did tentatively and unofficially indicate to some of the eemhere of the Clearing House Committee that the practice which had long prevailed in London was in our opinion mere aeelicable to the situation in New York than tat which was proposed by the amendment to the constitution of the Clearing House, namely, that whenever the discount rate ins .change the Clearing Roues aeuld most, take into ceneideration both the effect of the change by the Federal Reserve Bank and the general level of interert rates as well, end then after conditions determine hether t review of any change in interest retee upon deposits was justified or not. This would make the action of the Clearing 1131166 In changing depoiit interest rates dependent not alone upon our discount rate but upon general, conditions, and would relieve eur directors of the responsibility now thrust November 2, 1922. upon them without volition on their part, of arbitrarily fixing the interest on practically all deposits rate of carried by the Net York Cleering House banke. One of the immediate effects of the amendment to the constitution the withdratal of four or five of the smaller member and I have bean told that others are arrived at sny decision. the present rule the as from the Clearing House, contemplating that ection but have not yet are aopeful that with further experience under members of the Association will -\ find it advisable to change it somexhat elong the line above indicated; latet. but it is not a matter in which we eish to do more than exprase cur iewe to the Clearing house Aesmcietion, tad that was done last June when Lae action wee first proposed. mezbers of the Cleering House, including some important institu- tione, tero definitely opposed to the plan, although it was ratified at a' Clearing House meeting by the large majority of the members. this 7i1l you kindly hold this letter in strict confidence. you/detailed reply because of your connection with the Federal I am tending Reeerve Sank and because it haE e direct bearing upon the consideration of discount retee which must be given fromiiimetoetime by the members of the Federal Advisory Council. tith beat regards, believe me, Yours very truly, Benj. Strong, Governor. Paul V. 4arburg, Esq., 31 Pine Street, Now 'fork City. Enc. Confidential i4oveianer 8, 1922. Dear Warburg: eeeeeseeeeea. With this I ant returning the correspondence which accompanied your letter of November 3. Referring to your comments upon the action taken by the Clearing House Ascociation, I think you will realize that we have felt it necessary to limit. anythitw in the nature of criticism or suggestion simply to those features of the plan which undoubtedly had a direct and important effect upon the policies of the Reserve bank, and those are as I described in my letter of November 2. Aa to whether the arrangement - upon other grounds than those neeed in my letter - is a wise one or not, I feel that it is the responsibility of the Clearing Rouse banks themselves to determine. I do not believe any more than you do in unrestrained competitive bidding for deposiLs, and I have always felleved that the effect of such a development is bad and against the of both depositors and borrowers. interest certainly witneseed a period imaediately priot to the panic of 1907 which illustrated what harm could result from such lack of restraint by bank officers. I have always felt personally - as I believe you do - that one of the worst features of this competitive bidding for deposits was that it applied especially to the deposits of out of town banks and that such °ea:petition" was liable to have a bad effect upon the affairs of the Federal Reserve System. Whether it is wise, however, for the Clearing House Association to go as far as it did in fixing arbitrary limitations upon interest payments is a question which I think would require more consideration and study than we have yet given it to justify If:e in expressing an unqualified opinion. 2 November t3, 1922. Mr. Platt,s views were expressed without any conference with us and I hesitate to onm,, ent upon them. Might it not be desirable if you could met a more explicit expression from him than was contained in the rather brief reference in hie letter to the objection which we had offered to the proposed Clearing House rule? Yours very truly, Benj. Strong, Governor. Mr. Paul M. Aarburg, 51 Pine St., New ior:, City. BS.MM Enc. Novemb.r 20, In22. Dear Narburg: Thank you vary much for sending ma the interview which your brother never gave out. I have not yet had a chance to read it, but will do so with much. interest. It was a pleasure to meet him and I wish I had had more ol4ortonity tor % vist with him but I know he was very busy and I happened to be exceedingly engaged during th6 time that he Wae here. Very truly yours, NILLJASISTirOJeq*, 31 Pine Street, New York Oity. BS.MSE December 2,0, 1922 Dear Pauli I am sending you a funny little remembrance for the, holidays in the shape of a book that looks T)onclerous enough to keep you pretty busy for a while; if indeed you have time for literature on the subject of money and foreign exchange. I am also sending you a tiny little volume by my friend Herbert Hoover, which I hope the Mrs. will read with some interest. At any rate, the most important thing is what accompanies the books, which is my own good wishes. Yours sincerely, Mr. Paul Narburgt 4-/M7rthlrItTr' New York City. BS.= Vsrch 8, 1023. re,',r Petal Meny thanks for sending ms the enclosed. It is mighty interesting: It w9J3 good to have that little visit with you. Good bye, old chap. Yy love to the family. Sincerely yours, Honorable ,Patil M. $1 Pine Street, Ne* York City. BS.MSB Eno. rburg, September 7, 1923. My dear Mr. Wsrburg: I az to_day forwarding to Governor Strong at Colorado Springs, the copy of the book "Germany's Capacity to ?ay", which you were good enough to send him with your compliment. Needless to say he will be glad to have it and that he is most appreciative of your courtesy in favoring him with a copy. With many thanks, believe me, Yours very truly, Secretary to Mr. 3enj. Strong. Mr* P"ul $1,4xnurgr, 17 East 80th St., Now Lark, N. Y. November 7;3, 1923. Dear Paul: I have just finished reading the draft of-the annual address, received with your note of the 28th. Of course, everything that you write is thoughtful and interesting and I feel so about this. noted on pages 7 and 12; but I must say that I don't agree about the tax The whole tendency is "agen it". proves the need and justice of another, and system is based upon an intricate the other. set SO application it goes until the whole of privileges and exemptions, one balancing I took the liberty of mentioning the matter to two or three of our Intimates, after you spoke of hand, I fear exemption. These tax exemptions are special privileges As soon as we get one exemPtion, the most casual and class privileges. of logic The only specific suggestions I have it would be it, and everybody said it was unwise. equally impracticable to suggest accomplishing the same result by asking Congress to eliminate the and indebtedness; yet On the other tax exemption from the certificates of there is good sound logic for that course. It would reduce the attractiveness of the certificate to the banks which now buy them in such large amounts, would effect a. wider distribution among true investors, and would reduce the inflationary tendencies growing out of the Government's borrowings. But I gathered from the look in your eye when I was in your office that you had your heart set on this idea, so I won't burden you with any more argument. Sincerely yours, Mr. Paul M. Warburg, ---31 Pine St.,New York., N. enc. Y. December 27, 1925. Dear Paul: Thank you for yours of the 20th, enclosing a copy of your letter to Mr. You certainly have the gift of persuasion, Winston. not bring myself to agree to the 7roposal. Two wrongs do not make a right. Certificates of indebtedness should not obtain the now enjoy. Neither should but frankly I can tax exemption which they It seems to me a very unsound acceptances. foundation upon which to develop our acceptance market, and one which will be liable to subsequent tinkering and again cure itself in time when the volume of the Trearury is very much reduced f&-the banking community now sectional short-time This will obligations of the or entirely disappears, and I am very sure that to press for tax exemptions at a time when everyone Is complaining that the farmers are given or cause readjustments. this particular benefit as a class concession, and when complaint is general in regard to all tax exempt provisions of law, is a mistake and will bring a lot of criticism and opposition. Sincerely yours, M.Ittitur. Mr. Paul 31 Pine St., New York, N. Y. BS.MM January 2, 1924. Dear Paul: It seems to me that Mr. Cineton's letter is a very sound one. If the Treasury is willing in fact as well as in theory to advocate the elimination of tax exempt securities, here is n opportunity to demon- strate that fact; end Ichile it it militate aEainst the wv,rket for their shortterm paper, it would certainly be helpful to the acceptance market se far as competition goer. Has not Mr. Winston pointed the way out of the dilemma? Sincerely yours, Mr. Paul M. Warburg, 31 Pine 3t., New York, N. Y. BS.vm January 31, 14. Dear Paul: I enclose a check for *100.00, which seems f, very email sum to send in reply to your letter, but you have told the story yourself better than I can, and I will ask you to accept this as evidence of my sympathy with what you and the others ,:-re doing. If we could also get up a fund for the purpose of inercerating seme of the dumb hema around the world, I would like to contribute 'co that, but I em afraid the jail we would hive to build would be rather large. Yo!..ira sincerely, 61 Pine St., New /ork, N. Y. BSAT enc. !CA-ch 11, 1924. ear Paul: The weather is so bad that / am uptown today or I would have a talk with you about the enclosed cables which you were good enough to let me see. The situation has not justified my taking ..ctive part. It really was a shame that I was not able to be abroad and give 'Young few suucstions on the side, but the situetion did not justify it or I would heve been there. quite confidential. Yours sincerely, MK. Paul M. Warburg, 31Pine St., New York City. PS. 77! en c. considerthis June 9, 1924. Dear Paul: I wt's so sorry to have missed you before leaving for Washington, but your letter came in good time and I took the opportunity of handing one cop t of the regulations ohich were enclosed with it to Miller of the eserve Board. le seemed much interested and promised to read it. I had b talk with the Federal heserve Board about this question of domicile bills growing out of domestic Oerman trade and failed to discover that there is any objection in their minds to your going ahead with the program which you outlined to re, to increase the amount of the credit if requested to do so by your friends abroad. I think you uneeret,tnd our position, which is, that .pe must carefully avoid appearing in any ray 82:3 hein an original party to the transaction. If the bills are offered to us in suitable amounts and in Rood form, it is our expectation to take them in due course; but you understand that the bank cannot make any permanent oommitmont. *e would expect to treat them the same as any other good bill, subjecting them to the usual tests and being free, of course, to reject them at any time. Yours sincerely, Mr. Paul 4. Warburg, Pine New York City. 51 BS.NN '' June 13, 1924. CONFIDENTIAL Dear Pauli Thank you for your note of the 12th. The enclosure is most interesting. About those bills; - an intimation has reached me that they are clean enough in appearance to be real finance bills, and I am taking the liberty of asking Mr. Kenzel to have a little chat with whoever ie acquainted with the detail in your office, so that I may know just a little more about it. Of course, we want to be careful not to get too many riders on a willing horse. Yours sincerely, Mr. Paul M. Tarburg, 31 Pine St., New York City. BS. June 170 1924. Dear Paul: Thank you for your note enclosing Mores' letter, which return. It will not be difficult to mdre the situation clear to Mores, but I think it is one about which much misunderstanding can arise if undertaken by correspondence. Mores over here some day and have lunch. Why couldn't we get My own engapi,easents are such that I would probably not be available the early part of next week; otherwise any time would suit me. Yours sincerely, Mr. Paul M. Warburg, 31 Pine St., New York City. BS. MM enc. June 20, 1924. Dear Paul: I am returning Mors' letter. I think he is right about Convention peek, and besides I must be in iiashington the early part of next peek, probably getting back on Thursday the 28th. The following week comes the Fourth of July, and while I bvt.N no engage- ments the early part of the week, the last of the week I want, if possible, to ge out of town over the holidays and not return until the 7th or 6th; so the free time is the fore part of the week comlIencing the 29th or sometime after the 9th of July. Anything you arranee will suit me, and I hope you will let me know promptly so that I can fit it in with other mngagements. Tours sincerely, Mr. Faul M. Warburg, 31 ?in. St., New York. City. Palm Beach, Fla*, February 6, 1925. Lear Paul: conIt was good of you to send me the of the stockholders the fidential report made to Bank. You may be sure International Acceptance Pleasure and keen with that T. have read it know, my interest in your As you interest. the development is quite genuine. And I hope enterprise is successful. down I am having a grand loafweatherhere, and, in Yew York, In the light of reports on your at this time. it to be here am particularly glad to fin be shall shortlyyourback again, and hope then new cluarters. jlIcome in to see P. M. tarburg, ]sq., 52 Cedar Street, Her York City. Sincerely yours, Me,roh 9, 1.92. Dear Pl: wt.,6 only 5.,bic to renu yJui adort44, "Theory and Practice" yeetereay, it take hT,C. I Wwal, 1,0 GCII you thatI think high renk t,mong your ve.riout, b....taresbea It i experience witb them. Sincerely yours, kfirburg, i'ine Street, New York City. BS.1.5 papers. uitiu81on Of i.LIa matter or prince along the linos whicla the tsconoinistb a.duce., sou.wi P.:a ., I no fiorn per- April 17, 1925. Dear Paul: Many thanks for the telegrams and letter you were good enough to send me in regard to the A.B.A. council meeting. Of course, Itm sorry thet you could not go, but it does seem as though your deft hand ht,d snanged mttters estieractorily without th6t meeting. You know, my dear Paul, so long BE, I am in this joo, the occasion will -.rieto when I mutt call tion you for help now and then, and thia did eacm to be 0116 of them. bincerely yours, Paul Y. Warburg, Esq., 52 Cedar Street, Nae Tom City. ))(61/11.1- ., May 12, 1925 My dear Mr. Ws.rbure: I am indeed sorry to say that my a &rob for your cupy of "The Fectert1 Re- serve System" by Allis has been quite without success. it doss not apktear to be in kr. ttrongis library at herze, nor is it uith books here or in our &ilk library. But I know hou anxious you :re to find it, and I shall be 6Iaci to keep it in mind &And let you know directly shos1,1 it tura Unfortunately Mr. 6trone; doss not norrodn. it, e.ed I :grt 1.oucierine; if it wol,id not be worth to make some inquiries in other dirsctions Very truly yours, seerett:ry to Mr. Benj. Strong. Mr. Paul M. Warbur,.. -.70 .-"" A. di June 11, 1925. iy denx Mies Habrich: hill you not be good enough to convey to Mr. rburg Governor Strong's a,)prectietion of bis eourteey in sendind a copy of Dr. Sohact'8 June 6 cable, which will, of course, be tre.:ted confidentially te recuestod. Very truly yours, Secretary to Mr. Benj. 3trong. Mine Mar6aret Secretary to är. Paul Ak. harburg, International Acceptance hank, 52 Cedar Street, Nee.- York. 4 11(Ai0 4' Lit-to.... :11Fim Hotel du Palais, Biarritz, France, August 7, 1925. My dear Paul: While I was in Berlin, Dr. Schacht explained to me a good deal about his plans, including what he had in mind in regard to placing some of the dollar and sterline bills held in the portfolio of the Gold Discount Dank. And he asked my advice as to procedure in case such ,a transaction seemed deHe stated that offers had been made to him by various New Terk sirable. City institutions, all of which he had declined. told him that as you had initiated this business, and had been a helpful friend to Line'aeichsbank in New York, it seemed to me desirable that he should take the matter up with you in case he desired to make any sale. But, in view of criticism which had developed that he was dealing through only one correspondent in New York, that I thought he might be able to make an arrangement satisfactory to you which would leave him free in the future to accept some other offers for this paper in case the criticism made it seem desirable to do so. Of course the transaction is somewhat unusual, and Iam quite aware of the fact that the New York bankers may require a good deal of explanation, The paper is not which you eould be better able to give them than any other. of the sort which would pass freely in the market as domestic paper does, and, in a sense, it will require a "father." I wrote to New York about this matter and have a cable today indicating that possibly some of your associates were a bit irritated at what appeared But the report to be shopping by the Reichsbank among other American bankers. which they send me israther convincing that this is not the case, but rather that a number of institutions have approached Dr. Schacht with offers for some of the paper, and that this has become known in New York, creating, possibly, an incorrect impression as to his attitude. They also cable me that they have stated to one New York institution this paper, accepted in dollars and payable in New York, will be taken in the that usual course at the Bank. I am writing you all of this because just before leaving Perlin I met your brother, Max, at the Reichsbank, and I understood from Dr. Schacht that he would discuss this transaction with him. I have no doubt uself that Dr. Schacht has observed the suggestion whici. T made in response to his request concerninE the way in which the paper should be handled. Of course you uneerstand that is the object of this leter. that my only desire is to be helpful, and Ile have had a fine trip so far, and find Biarritz in every way Biarritz, France 8.7.25 (2) Paul I. Warburg, Esq. delightful, both as to the place itself, and as to the climate. and after ten days or two weeks turn to Paris on the thirteenth, e shall re- there, go on to London, and then sail for horns. I hope you have had a good trip yourself, and that Nina and Petsy both keep well, lon't you give them my best, and the came to yoursolf. Sincerely yours, Paul M. arburg, c/o M. M. 'Parburg Sons, Hamburg, Geraany. P.S. (8.8.25) I had dictated and was about to send the above letter when your telegram reached me, so .I am sending it in care of Dr. Schacht, instead of to Hamburg, and asking him if he will be good enough to see that you get it, as I am not certain whether you are to see him in Berlin or in Hamburg. Amplifying what J. have written above, the impression seemed to have developed in New York, possibly from statements made by one of the trust companies, that Dr. Schacht had made an offering of these bills. But I feel very certain that he would not have done so After our conversation. And I -uggest that you talk it over with him quite frankly. 1 am sending Dr. Schacht a copy of this letter. 11 II Hotel Majestic, Paris, France August 27, 1925. Dear Paul: Your letter of August 21 and the copy of the letter which you We can enclose have just been received and read with very great interest. And I discuss the details of what you have in mind when I reach New York. shall see our friend from Berlin in London and have a chance to discuss the matter with him. My advice to him about the Cold Discount Bank bills was clear Also I was perfectly satisfied with sure he understood it. his intentions, and still am. enough, and I an The man you mention has been very active in placing short paper in New York in the past, as have two of the other big German banks through their I met these gentlemen before I sailed and told them New York representatives. that I thought it was bad business for Germany, was not particularly satisfactory to us, and that the bills, which were then being sold and which were simply domicile bills, would not go at the Bank. Frankly I do not think either of The evidence of the ccrrectness of our pcsition is particularthem liked it. ly clear in the embarrassment that some of these short credits have caused the Reichsbank in its devisen account. I told Dr. Schacht that the only basis on which the Gold Discount Bank paper was justified in New York was the fact that he undertook himself in supervising the affairs of the bank of issue, that the bills actually represented that I type .of business which produced the devisen to meet the bills at maturity. also told him that I thought, if he were to makket a fresh lot of the bills, he should do it through you, as you had originally introduced the paper in New York and that he should stick by his friend. and made up the party that handled it; On the other hand, as he had been criticized for having an arrangement which appeared to be exclusive, he could meet that situation by stipulating that he would be free later on, under some arrangement with you, to get a somewhat wider market. Your brother came into the Bank almost immediately after this talk took place, and while I had no opportunity to discuss it with him, I gathered that the President intendcd to do so, and that the result would be satisfactory to you as well as to him. Your letter leads me to suppose that he has been possibly somewhat embarrassed by the activities of friendslhom he did not wholly control. It will be best for me to have a frank talk with him in London, basec upon a very full report which I have from New *fork. It will be embarrassing to me if troubles of that sort arise in the New York market, and difficult to keep my own asscciates sympathetic toward business of this character. It was difficult encugh anyway in the first instance. Paris, France 8.27.25 Mr. Warburg (2) About your own proposal, I have some reservations which I will discuss on my return. It would make the new paper entirely of one origin. The security, I fear, would not be regarded as of the same type as goods which go into trade, being, in effect, for consumption by the drawers of the bills. And furthermore, the obligation would be by a concern which is heavily committed and consequently directly involved in the Dawes Plan reparation payments, concerning which our bankers are but slightly enlightened, and they might fear complications and difficulties on that account. I shall get more light on this after seeing Schacht. Meantime was very good of you to write me, and most helpful, as you always are. My best regards to you and it to all of the family. We have had a good trip, but a rather tiring one at times, and I shall be glad to sail on the Olympic on the ninth. I agree quite fully with what you say about conditions in Germany. Tach country over here has its especial situation to deal with. And some of them On the whole there has been improvement, Wand are complicated and difficult. if some of the arrangements now being negotiated can be conclude, I would look for better days. If you get home first, please remember me to all of the boys at the bank. Sincerely yours, Paul M. Warburg, Fsq., 52 Cedar Street, New York City. Septamber E4, 19E5. Dear Paul: I tea just back from Washington and will need a little time to clean up Ty desk. Dr. Lindsay has been aft;r me about the invitation to Dr. Schacht, watch he sent to me and which I am mailing to Dr. Schacht today. Dr. Schacht decided, while I was abroad, that it eould be inadvisable for him to make any public addresses, and in this decision I heartily agreed with him. But further than that, I believe Dr. Lindsey hes overlooked one consideration about the meeting of the Academy which would decide me to advise Dr. Schacht not to make the address anyway. Anti-trust legislation hes long been the subject of political oontroversy in thin country. Agitation of this subject can well become active at any time in view of the changing and complicated trade conditions throughout the world. It will be very difficult for Dr. Schacht to make en address mich might not expose him to criticism had give rise to the suggestion that a foreigner was here advising Us how to run our own business. I think it is much better on his first visit to the United btates that he avoid anything of the sort which contains even a remote possibility of unfavorable reaction rrom his visit. all of this I am writing you very frankly and privately, so that you may understand what will probably be the result, namely, that Dr. Schanht will feel unable to attend the meeting. I hope Dr. Lindsey will not feel disappointed. With kindest regards and many thanks for your letter, I em Faithfully yours, arburg, Esq., 52 Ceder Street, Paul M. New York City. September 28, 1925. Dear Paul: Replying to youra of the twentyfifth, I have just talked with Dr. Lindsay on the telephone, and explained to him aomewhat MOr6 fully than in my letter why I believed it would be inedvieable for Dr. Schacht to make the proposed address. He did not aeem to agree with me, and I dialike very much being put in the position of exercieing any control over Dr. i:)chacht's engagements while he is nere or of standing between the Academy of Politicel Science end Dr. Se.eacht in any arrangement that Dr. Lindeuy wiehee to make. It le, however, perfectly clear to me that in any advice I glee Dr. Schecht, coueieretion muet be jeren to verioua circumstancee regarding tile vieit here, which probably and quite naturally would not occur to Dr. Lindsay, awi I hope that you will remove from hie mind any misappreheneion on that score. You are, I believe, & member 3r the Committee of the Academy, and so I am particularly pleezed to have you write me a=. you do. Very confidentially, the date of nr. Schecht's visit i8 still uncertain, which makes an added reason why he might be unable to make the addrese anyway. Ahaut the Council on Foreign Relations, I think we had better talk that over, and possibly we can co so on Monuay. I am sorry to have luncheon engagements all of next week until Friday, but almost any hour you name will suit me otherwise. Very truly. yours, Paul M. Werburg, &eq., 52 Cedar Street, New York City. f). November 11, 192Z. Lee r Pz nk you for lour note of November 2, which was ammiting my return from Wsbhington. 61w11 recd tive documnts onolobed ae 600n F.A)aciible, but suz; so behind-hallo in reading .iust nou., ti:Lat it may be some little tim, be:or Iem able to r,Aurn the papers. Mr. Paul M. Warburg, Cedr .1Areet, New York City. Stuyvesant Road, Diltmore Forest, Biltmore, N. C., March 23, 1927. Dear Paull Your note of the 17th has just reached me. It i like old times to get euch a note from you, and of course, I am wondering what you will do about that article. On the whole I am rather keen that you do not publish it, but I know your ways, old man, and am not hopeful. Sincerely yours, Hon. Paul M. elarturg 17 East 80th Street, New York. Stuyvesant Hoed, Biltmore Forest, Biltmore, N.C., March 8, 1927. Dear Paul: The enclosed memorandum contains my Miles' past record. recollection of Basil 1 think you may know that he is one of my most intimste friends. He wrote me before sailing for Europe that he might have e talk with you about the possibility of his doing something for you abroad. I do not know whether the talk eventuated or not, but if you have it in mind I thought it would do no harm for me to send you something of what I know about him. charactor and much ability. He is a fellow of the highest Ben knows him vory well, and we traveled together in 1920. My best to you as always. Sincerely yours, Mr. Paul M. warburgi 52 Cedar Street, New York City. uyvesant Road, Biltmore Forest, Diltmore, N. C., March 5, 1927. Dear Paul: I was dolighted to have your letter of February 25th, and while Mr. Moore is here, am able to send a prompt reply. Your information is correct, that 17 am improving, but it is a slow job and up to now has kept me very quiet indeed. I shall shortly be able to take a little exorcise. It is n mistake for you to allow anything to ho ruined by those articles, and in some ways I feel that they have been helpful, although, as in always the case with Mr. Claes, they have been written with such vigor an to bring out very strong reactions, such an those which you have felt. He has, however, evidenced in various places a very great re- )ect for you and for your views, and In general for the great contribution you made to tho development of sound banking thought in the United States. 'ye all know how earnestly you devoted yourself to this task for many years, before oven Senator Aldrich became interested. think everybody recognizes In fact, I that, but the difficulty arises from the effort of some of your friends, well meant but possibly misdirected, to attribute to you such a large shore In the specific outhorahip of this particular piece of legislation. There is o vast distinction, in a sense, between what you did and what Congress did. 1111111111 The legislation undoubtedly was the result of preliminary work and agitation, as well as definite, unfortunate experience, and as to the preliminary work, your share was so large and Ur. Warburg. 2. 3/5/27. so well known that its appreciation by the public is in no way altered by the particular expressions used by Senator Glass. I am very strongly of the visw that, for your awn happiness, you are going to be better off leaving the subject alone. So far as the historical record is concerned, nothing that has yet been published about. the Federal Reserve System is adequate. 'jest of it has been either twaddle or filled with personal slants of vindictiveness or ceiticiem that condemn it at once as being tee partisan and notsuffic- iently judicial. An adequete treatise on the System will be written, I have no doubt, before very long, free of all the controversial questions. It will became the text-book, and none of us need feel any anxiety upon historical grounds once it appears. It was like the old days to read your letter, and you won't mind my saying that it is li'e the old days to be writing you in this vein in reply. Mc Carrell will be a great addition to our organization, and it goes without saying that he will be a genial and sympathetic associate. Ton't you give my very best to Nina, and always the same to you. Sincerely yours, Yr. Paul M. 'arburc, 52 Cedar Street, New York City. r: Washington, D. C. Way 8, 1927. kERSONAL Dear Paul: With this I am returning the papers which accompanied your letter of key 2. Of course, all that I feel about the Strong bill was pretty generally set out in the statements I made to the Rouse Banking and Currency Committee. The question raised by your letter is really as to the attitude which the Merchants' Association should assume in regard to the bill. I am satisfied, from what I hear in various places, that the bill in its present form will meet with strong opposition in Congress. But, of course, it contains many elements of danger, not so much in the language itself, but in the assumptions or inferences which can readily be drawn, or indeed in representations k/. which may be made to the public, especially to the farmers, as to what may be expected from the Federal Reserve System in consequence of such an amendmerit. There is a real danger here and I have found that members of the corrznittee -were very well aware of it. It is, however, too often the case that business organizations, and individuals as well, in opposing legisla- tion which they believe will 'be harmful, do it in a spirit of hostility which arouses feelings that do no good, and may indeed promote harm. I do not mind saying to you, quite privately, knowing that you will not quote me, that I think a moderate, well considered statement by the Merchants' Association, pointing out these dangers and expressing the hope that no action will be taken by Congress which will invite thorn, will be a sound and constructive attitude and might help. On the contrary, anything in the nature of an hostile attack on the proposal would, in my mind, do harm. page 2 Mr. Paul M. Warburg Washington, B. C ifill y 8, 1P27. I know Congreseran Strong and respect his convictions ant his earnest intention to bring about a constructive improvement. I think he is mistaken and that he has been led into error largely by the activi- ties of the Stable koney Association (if t)vt is the right title). That organisation, and sae* gentlemen whose opinions carry considerable weight, such as krofessor Commons, have favored legislation along this line on the theory that the Federal Reserve System can accomplish the impassible. Therein lies the danger. If, as I anticipsate, further hearings are held next winter, I be hive it can be arranged to have further evidenoe taken by those who would oppose the legislation, and possibly that would be the beet avenue through which views could be expressed. If, therefore, the :,4yrchants' Association desires to respond to Congressnan Strong's appeal, it seems to me they should do so in &ouch a way as to rive them an opportunity to be heard, and when the hearing occurs they should be adequately represented by those capable of discussing the subject. Does this answer your question? ly best regards to you, old man. I see your heart is with us and your spirit unflagging. Sincerely yoirs, Mr. Paul M. Warburg, 52 Cedar St., New York, N. Y. BS.Mlito Enos. of" February 9, 1928. De.,,x Sir: It. Strong 11W3 asked me to write-you that he jr very appreciative of your interest in hie convalescence. He has been improving steadily, although more slowly than we had hoped, and is not, doing much in the line of correspondence. He has received your letter of January le, and ia looking forward with pleasure to rek.cling your annual report. Very truly yours, Secretary to Mr. Strong. Mr. Paul M. darburg, 52 Cedar Street, New York City. e