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F.D. 12A.3 S

12.0 .0


Federal Reserve Bank

S-rfk0 N Q

District No. 2
Correspondence Files Division


STRo K.) G.


w A k B u, R_G




Sent by


fief Leather 7

Paul M.


Tat rburg

Port land


The evidence of good spirits in your postal Wee me great joy
Love to you and Nina

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


to Washington

You maybe assured that I will


write' you about it


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,



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.

Paul M. Warburg, Esq.,
Hart sdal

New York.


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,


1. 7;arburg, Esq.,

New Yorx.

" - ?=';



Lake George, N. Y.,

February 11, 1919.


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

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


the machine at the bank.

I read the


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


engaged in

I won't comment upon the
article until

I have finished



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.


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


or the other °Lefty gets its hands on both ends of the stick, I dread the
exploitation that may


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


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



visit with you, but it couldn't be helped. My health made it


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


Lake George, N.Y. 2.11.19.

' on't you give my love to Nina and my best to your good self.

L; 1913

Paul M. Warburg,

17 Test 80th Street,
New York.


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.



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.,
c/a Messrs. Hope
Keisersgraeht, Amsterdam, Holland.





London, September 8, $919.

Sarvetta House
St. Moritz


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


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..


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

Yours sincerely,

Paul lg. larburg, Esq.,
3l Pine St.-,
New York, N. Y.



November 2, 1922.


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




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

Reserve Bank, and



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.



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


action vas proposed.

Not eishing, hoeever, to impose our views upon the Clearing Reuse*
we simply advised them that te viewed the proposed action


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



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



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


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


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


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;


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.


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,

Paul V. 4arburg, Esq.,
31 Pine Street,
Now 'fork City.



i4oveianer 8, 1922.

Dear Warburg:

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.


certainly witneseed a period imaediately

priot to the panic of 1907 which illustrated what harm could result from such
lack of restraint by bank


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.


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,

Mr. Paul M. Aarburg,

51 Pine St.,

New ior:, City.


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,

31 Pine Street,
New York Oity.


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

New York City.



Vsrch 8, 1023.


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.



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


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


proves the need and justice of another, and

system is based upon an intricate






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


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



On the other


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.



December 27, 1925.

Dear Paul:

Thank you for yours of the 20th, enclosing a copy of your letter to

You certainly have the gift of persuasion,


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


foundation upon which to develop our acceptance market, and one which will be
liable to subsequent tinkering



cure itself in time when the volume of the

is very much reduced

f&-the banking community now



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

cause readjustments.


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

Sincerely yours,


Mr. Paul
31 Pine St.,
New York, N. Y.


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.

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


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
Yo!..ira sincerely,

61 Pine St.,

New /ork, N. Y.


!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

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.


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.


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,
New York City.



June 13, 1924.


Dear Pauli

Thank you for your note of the 12th. The enclosure is most

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.

June 170 1924.

Dear Paul:

Thank you for your note enclosing Mores' letter, which


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.


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.


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
fidential report made to Bank.
You may be sure
International Acceptance Pleasure and keen
that T. have read it know, my interest in your
As you
development is quite genuine. And I hope
enterprise is successful.
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
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,


i'ine Street,
New York City.


uitiu81on Of i.LIa matter or prince along

the linos whicla the tsconoinistb a.duce.,





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

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.



May 12, 1925

My dear Mr. Ws.rbure:

I am indeed sorry to say that


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,..





June 11, 1925.

iy denx Mies Habrich:

hill you not be good enough to convey to Mr.


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.






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
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
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


in every way

Biarritz, France


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.



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.

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
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

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

Mr. Warburg


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.
was very good of you to write me, and most helpful, as you always are.
My best regards to you and


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

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


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.



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.


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


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


'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.


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.



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

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.


Washington, D. C.
Way 8, 1927.


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

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).


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.



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.


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